Flushing Financial Corporation · NASDAQ:FFIC
Flushing Financial — The Stockbroker Club (November 2021)
32 slides from Flushing Financial's conference presentation, Nov 5, 2021
Slide 1: The Stockbroker Club November 8, 2021
The Stockbroker Club November 8, 2021
Slide 2: Safe Harbor Statement
2 Safe Harbor Statement “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Statements in this Presentation relating to plans, strategies, economic performance and trends, projections of results of specific activities or investments and other statements that are not d
Slide 3: Key Messages
3 Key Messages Conservative Underwriting with History of Solid Value Creation ► Leading Community Bank in the Greater NYC Area ► Well Diversified and Low Risk Loan Portfolio ► History of Sound Credit Quality since IPO in 1995 ► Asian Banking Niche ► Beneficiary of a Steepening Yield Curve
Slide 4: Returns Strengthened From Pre-Pandemic Levels
. GAAP diluted EPS $2.02 YTD21 compared to $1.08 a year ago; Core diluted EPS of $2.14, up 93% YoY .. GAAP ROAA and ROAE of 1.04% and 13.24%, respectively YTD21; Core ROAA and ROAE of 1.11% and 14.09%, respectively, and improved significantly YoY .. YTD21 GAAP NIM increased 45 bps YoY; Core NIM up 3
Slide 5: Flushing Financial Snapshot
5 Flushing Financial Snapshot (NASDAQ: FFIC) Competitive Advantages Balance Sheet Assets $8.1B Loans $6.6B Deposits $6.5B1 Equity $0.7B Performance GAAP/Core ROAA 1.26%/1.38%2 GAAP/Core ROAE 15.42%/16.88%2 Efficiency Ratio 52.3%2 Tangible Book Value $21.13 Dividend Yield 3.5%3 3Q21 Key Statistics Fo
Slide 6: Experienced Executive Leadership Team
6 Experienced Executive Leadership Team Executive Compensation and Insider Stock Ownership (5.4%2) Aligned with Shareholder Interests John Buran President and CEO Maria Grasso SEVP, COO, Corporate Secretary Susan Cullen SEVP, CFO, Treasurer Francis Korzekwinski SEVP, Chief of Real Estate Michael Bin
Slide 7: Year Track Record of Steady Growth
7 25 Year Track Record of Steady Growth Core EPS ($) Dividends per Share ($) Tangible Book Value per Share ($) Assets ($B) Total Gross Loans ($B) Total Deposits ($B)1 $- $0.84 $0.63 1995 2000 2005 2010 2015 2020 YTD 3Q21 $- $1.70 $2.14 1995 2000 2005 2010 2015 2020 YTD 3Q21 $0.6 $6.1 $6.5 1995 2000
Slide 8: Well-positioned to Benefit from Industry Merger Disruption
8 Well-positioned to Benefit from Industry Merger Disruption • 8 bank mergers have been announced or closed involving Long Island area Banks2 • Out of the $328B of total industry deposits in Nassau, Queens, Kings, and Suffolk Counties, $60B or 18% involve a merger participant3 • 93% of FFIC’s deposi
Slide 9: Achieved Empire Goals One Year After Closing
Achieved Empire Goals One Year After Closing 9 1 Gross loans divided by total deposits including mortgage escrow 2 See Reconciliation of GAAP NII & NIM to CORE and Base NII & NIM in Appendix Announced Target Results EPS accretion of 20% • Accretion target met Earn back of 3.2 years • Tangible book v
Slide 10: Strong Asian Banking Market Focus
10 Strong Asian Banking Market Focus 14% of Total Deposits $32B Market Potential (~3% Market Share1) 6.9% FFIC 5 Year Asian Market CAGR vs 3.4%1 for the Comparable Asian Markets Asian Communities – Total Loans $693MM and Deposits $892M Multilingual Branch Staff Serves Diverse Customer Base in NYC Me
Slide 11: Digital Banking Initiatives
Digital Banking Initiatives 11 More Technology Enhancements to Come 39% Increase in Monthly Mobile Active Users YoY ~22,000 Active Online Banking Users 51% YoY Growth 23% Digital Banking Enrollment YoY Growth Numerated Improving Customer Experience through Automated Approval and Origination JAM FINT
Slide 12: Positive Loan Growth Outlook
Positive Loan Growth Outlook 12 .. Expected market disruption – 8 bank mergers announced within footprint – Strong organic growth opportunity .. Metropolitan New York is coming back – Asian market activities and events are restarting as restrictions are lifted – Apartment rents trending upwards with
Slide 13: Third Quarter 2021 Highlights
3 4 1 2 Ensure appropriate risk-adjusted returns for loans while optimizing costs of funds Maintain strong historical loan growth .. Sixth consecutive quarter of record net interest income totaling $63.4MM; record core net interest income of $62.1MM .. GAAP NIM increased 20 bps; Core NIM up 13 bps Q
Slide 14: Record Core Net Interest Income FTE for the Sixth Consecutive Quarter
Record Core Net Interest Income FTE for the Sixth Consecutive Quarter 14 Base NIM FTE 2.89% 2.97% 3.01% 3.04% 3.15% GAAP NIM FTE 3.00% 3.08% 3.18% 3.14% 3.34% $49.8 $54.8 $58.7 $61.3 $62.2 2.98% 3.03% 3.06% 3.14% 3.27% 4.07% 4.06% 3.99% 4.06% 4.09% 0.57% 0.47% 0.39% 0.34% 0.29% -0.25% 0.75% 1.75% 2.
Slide 15: Deposit Mix Improves; Costs Continue to Fall
15 Deposit Mix Improves; Costs Continue to Fall Average Deposits Composition1 ($MM) $4,110 $4,447 $4,735 $5,013 $5,163 $6,408 0.81% 0.91% 1.36% 1.76% 0.82% 0.29% 0% 1% 1% 2% 2% 3% 3% 0 1000 2000 3000 4000 5000 6000 7000 2016 2017 2018 2019 2020 3Q21 Non-interest Bearing NOW Accounts Savings Money Ma
Slide 16: Diversified Loan Mix; Relatively Stable Yields
$4,819 $5,160 $5,536 $5,757 $6,702 $6,627 - 1,0 00 2,0 00 3,0 00 4,0 00 5,0 00 6,0 00 7,0 00 8,0 00 2016 2017 2018 2019 2020 3Q21 Multifamily Commercial Real Estate Construction 1-4 Family Business Banking Total Gross Loans 16 Diversified Loan Mix; Relatively Stable Yields Loan Composition Period En
Slide 17: Well Secured Multifamily and CRE Portfolios with DCR of 1.8x
Well Secured Multifamily and CRE Portfolios with DCR of 1.8x 17 Underwrite Real Estate Loans with a Cap Rate in Mid-5s and Stress Test Each Loan Multifamily Geography 17% 30% 18% 18% 17% Bronx Kings Manhattan Queens Other $2.5B Portfolio • Average loan size: $1.1MM • Average monthly rent of $1,307 v
Slide 18: Loans Secured by Real Estate Have an Average LTV of <38%
18 Loans Secured by Real Estate Have an Average LTV of <38% Multifamily .. In market lending .. Review net operating income and the collateral plus the financial resources and income level of the borrower (including experience in managing or owning similar properties) .. ARMs adjust each 5-year peri
Slide 19: Well Diversified Commercial Business Portfolio
19 Well Diversified Commercial Business Portfolio Commercial Business .. In market lending .. Annual sales up to $250MM .. Lines of credit and term loans including owner occupied mortgages .. Loans secured by business assets, including account receivables, inventory, equipment and real estate and ge
Slide 20: Net Charge-offs Significantly Better Than the Industry
Net Charge-offs Significantly Better Than the Industry 20 NCOs / Average Loans 0.06% -0.2% 0.3% 0.8% 1.3% 1.8% 2.3% 2.8% 3.3% 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2Q21 FFIC Industry 4 basis points of Net Recoveries to Average Loans in 3Q21 1 Note: Includes $11.2MM in taxi medallion writ
Slide 21: Continued Strong Credit Quality
21 Continued Strong Credit Quality Note: Texas Ratio defined as nonperforming assets plus loans 90 or more days past due as a percent of tangible equity and reserves. 1 CECL accounting adopted January 1, 2020 NPAs / Assets Texas Ratio Reserves / Gross Loans & Reserves / NPLs ACL by Loan Segment (3Q2
Slide 22: Achieved 8% TCE Target Early; 3.5% Dividend Yield
Achieved 8% TCE Target Early; 3.5% Dividend Yield1 22 Share Repurchase Restarted; 51% of 3Q21 Earnings Returned 5% Book Value Per Share Growth YoY TCE Target Achieved Within 1 Year $17.95 $18.63 $19.64 $20.59 $20.11 $21.78 11.79% 11.59% 10.98% 10.95% 9.88% 10.68% 9.00% 9.02% 8.74% 8.73% 8.38% 8.83%
Slide 23: Key Takeaways
23 1 Calculated using 10/29/21 closing price of $24.02 .. Tangible common equity reached 8% target – Capital priorities remain: • Profitably grow the balance sheet • Return dividends to shareholders • Opportunistically repurchase shares .. Low risk business model; 3.5%1 dividend yield – Average LTV
Slide 24: Appendix
Appendix TEIBFLUSHING
Slide 25: PPP: Forgiveness Increases and Should Continue
$103 $144 $209 $233 $165 1.93% 1.99% 1.98% 3.02% 4.06% 0 50 100 150 200 250 3Q20 4Q20 1Q21 2Q21 3Q21 PPP Yield 25 PPP: Forgiveness Increases and Should Continue Period End PPP Loans ($MM) $111.6 $151.9 $251.0 $197.3 $130.8 • Lifetime originations and acquisitions of $310MM with a balance of $130.8MM
Slide 26: Non-cash Fair Value Adjustments to GAAP Earnings
Non-cash Fair Value Adjustments to GAAP Earnings The variance in GAAP and core earnings is partly driven by the impact of non-cash net gains and losses from fair value adjustments. These fair value adjustments relate primarily to swaps designated to protect against rising rates and borrowing carried
Slide 27: Reconciliation of GAAP Earnings and Core Earnings
27 Reconciliation of GAAP Earnings and Core Earnings 1 Core diluted earnings per common share may not foot due to rounding 2 Ratios are calculated on an annualized basis (Dollars In thousands, except per share data) GAAP income (loss) before income taxes $ 45,182 $ 53,331 $ 65,485 $ 66,134 $ 106,019
Slide 28: Reconciliation of GAAP Revenue & Pre-Provision Pre-Tax Net Revenue
28 Reconciliation of GAAP Revenue & Pre-Provision Pre-Tax Net Revenue (Dollars In thousands) GAAP Net interest income $ 195,199 $ 161,940 $ 167,406 $ 173,107 $ 167,086 $ 63,364 $ 49,924 $ 185,295 $ 139,467 Net (gain) loss from fair value adjustments on qualifying hedges 1,185 1,678 — — — (194) (230)
Slide 29: Reconciliation of GAAP NII & NIM to CORE and Base NII & NIM
29 Reconciliation of GAAP NII & NIM to CORE and Base NII & NIM 1 Excludes purchase accounting average balances for the quarters ended September 30, 2021, June 30, 2021, March 31, 2021, and December 31, 2020 and the nine months ended September 30, 2021 (Dollars in thousands) GAAP net interest income
Slide 30: Calculation of Tangible Stockholders' Common Equity to Tangible Assets
30 Calculation of Tangible Stockholders’ Common Equity to Tangible Assets (Dollars in thousands) Total Equity $ 668,096 $ 618,997 $ 579,672 $ 549,464 $ 532,608 $ 513,853 Less: Goodwill (17,636) (17,636) (16,127) (16,127) (16,127) (16,127) Core deposit Intangibles (2,708) (3,172) — — — — Intangible d
Slide 31: Contact Details
31 Contact Details Susan K. Cullen SEVP, CFO & Treasurer Phone: (718) 961-5400 Email: scullen@flushingbank.com Al Savastano, CFA Director of Investor Relations Phone: (516) 820-1146 Email: asavastano@flushingbank.com
Slide 32: [EaeF LUSHING
[EaeF LUSHING
Flushing Financial — The Stockbroker Club (November 2021) on 6ix