Flushing Financial Corporation · NASDAQ:FFIC
Flushing Financial — Q3 2022 Earnings Presentation
23 slides from Flushing Financial's earnings presentation, Oct 26, 2022
Slide 1: 3Q22 Earnings Conference Call October 26, 2022
3Q22 Earnings Conference Call October 26, 2022
Slide 2: Safe Harbor Statement
Safe Harbor Statement 2 “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
Slide 3: 3Q22 strategic priorities and results highlights
3 4 1 2 Improve and Grow Funding Mix Generate Appropriately Priced Loan Growth Average noninterest bearing deposits increased 12.5% YoY Core deposits are 83.1% of average deposits and mortgage escrow Core deposit yields increased 47 bps QoQ to 0.76%; Deposit beta of 29.9% so far this cycle L
Slide 4: Well-positioned to Benefit from Industry Merger Disruption
4 Well - positioned to Benefit from Industry Merger Disruption • 10 bank mergers have been announced or closed involving Long Island area banks 2 • Out of the $ 363B of total industry deposits in Nassau, Queens, Kings, and Suffolk Counties, $ 85B or 23% involve a merger participant 3 • 93% of FFIC’s
Slide 5: Strong Loan Closings; Loan Pipeline Declines
Strong Loan Closings; Loan Pipeline Declines 5 Closings up – Closings up 90.1% YoY in 3Q22 – Loan pull through rates were 79.6% in 3Q22 compared to 75.9% in 2Q22 and 56.4% in 3Q21 Pipeline declines from record levels – Risings rates could slow closings and prepayments – Became more selective in
Slide 6: Digital Banking Usage Continues to Increase
Digital Banking Usage Continues to Increase 6 Technology Enhancements Remain a Priority 25% Increase in Monthly Mobile Active Users Sept 2022 YoY ~ 26,500 Users with Active Status 22% Sept 2022 YoY Growth 11% Digital Banking Enrollment Sept 2022 YoY Growth Numerated Small Business Lending Platform $
Slide 7: Key Events During 3Q22
Signed Lease for Brooklyn Branch Expanding Asian Banking Footprint Successfully Issued $65.0MM of Subordinated Notes Provides the Bank with regulatory capital flexibility; lowers the CRE concentration ratio Attractive funding as new issue coupons are higher Sponsored and Participated in Fl
Slide 8: Increasing CDs to Lengthen Liability Duration
Increasing CDs to Lengthen Liability Duration 8 Average Core Deposits are 83% of Average Deposits 1 in 3Q22 Total Average Deposits 1 ($MM) 1 Includes mortgage escrow deposits Average noninterest bearing deposits up 12.5% YoY Noninterest bearing deposits are 16.7% of average deposits 1 , up from
Slide 9: Deposit Rates Rise But At Slower Pace Than Fed Moves
Deposit Rates Rise But At Slower Pace Than Fed Moves 9 Year to Date, Weighted Average Interest Bearing Deposit Beta of 29.9% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 Average Fed Funds Interest B
Slide 10: Business Banking Loans Continue to Increase; Yields Improve
37.7% 37.9% 38.0% 37.5% 37.5% 26.3% 26.8% 26.7% 27.6% 27.6% 1.1% 0.9% 1.0% 1.1% 0.9% 13.1% 12.8% 12.4% 12.0% 11.5% 21.8% 21.6% 21.9% 21.8% 22.5% $6,627 $6,634 $6,601 $6,752 $6,948 - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 3Q21 4Q21 1Q22 2Q22 3Q22 Multifamily Commercial Real Estate Constructi
Slide 11: 42% of the Loan Portfolio to Reprice Through 2024
Floating rate loans include any loans (including swaps) tied to an index that reprices within 90 days Through 2024, loans to reprice ~200 bps higher assuming index values as of September 30 , 2022 ~15 % reprice with every Fed move and an additional 10 - 15% of loans reprice annually 42% of the
Slide 12: Core Loan Yields Increase 20 bps; NIM Compresses
GAAP NIM FTE 3.34% 3.29% 3.36% 3.35% 3.07% Core Loan Yields Increase 20 bps; NIM Compresses 12 $62.2 $61.2 $62.7 $64.6 $60.5 3.27% 3.21% 3.31% 3.33% 3.03% 4.09% 4.05% 4.04% 4.15% 4.35% 0.30% 0.25% 0.22% 0.29% 0.76% -0.25% 0.75% 1.75% 2.75% 3.75% 4.75% 5.75% $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0
Slide 13: Net Charge-offs Significantly Better Than the Industry; Strong DSR
Over two decades and multiple credit cycles, Flushing Financial has a history of better than industry credit quality Average LTVs on the Real Estate portfolio is < 37% 4 – Only $23.1MM of real estate loans ( 0.33% of gross loans) with an LTV of 75% or more 4 Net Charge - offs Significantly Bette
Slide 14: Continued Strong Credit Quality
14 Continued Strong Credit Quality NPAs / Assets Criticized and Classified Loans / Gross Loans ACL / Gross Loans & ACL / NPLs ACL by Loan Segment (3Q22) $2,608 $1,914 $561 $233 $7 $64 $28 $1,533 0.37% 0.44% 0.35% 0.34% 0.00% 0.40% 7.44% 1.18% -70.00% -60.00% -50.00% -40.00% -30.00% -20.00% -10.00% 0
Slide 15: Book Value and Tangible Book Value Per Share Grow in 3Q22
Book Value and Tangible Book Value Per Share Grow in 3Q22 15 131,174 Shares Repurchased in 3Q22; 40% of Earnings Returned in 3Q22 3.2% YoY Book Value Per Share Growth 3.2 % YoY Increase in Tangible Book Value Per Share $21.13 $21.61 $21.61 $21.71 $21.81 8.04% 8.22% 8.05% 7.82% 7.62% 6.90% 7.10% 7.30
Slide 16: Outlook and key priorities
16 Managing through rate increases – Controlling deposit rate increases is key for the net interest income outlook – Net interest income generally rises closer to the base case by Year 3 as cumulative loan repricing exceeds deposits costs Opportunistic capital return with strong dividend yield o
Slide 17: Appendix
Appendix [EEUFLUSHING 7
Slide 18: Reconciliation of GAAP Earnings and Core Earnings
Reconciliation of GAAP Earnings and Core Earnings 18 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 borrowing c
Slide 19: Reconciliation of GAAP to Core Earnings
19 1 Core diluted earnings per common share may not foot due to rounding 2 Ratios are calculated on an annualized basis Reconciliation of GAAP to CORE Earnings (Dollars in thousands, except per share data) GAAP income before income taxes $ 32,422 $ 34,971 $ 24,640 $ 22,826 $ 34,812 $ 92,033 $ 86,452
Slide 20: Reconciliation of GAAP Revenue and Pre-provision Pre-tax Net Revenue
20 Reconciliation of GAAP Revenue and Pre - provision Pre - tax Net Revenue (Dollars in thousands) GAAP Net interest income $ 61,206 $ 64,730 $ 63,479 $ 62,674 $ 63,364 $ 189,415 $ 185,295 Net (gain) loss from fair value adjustments on qualifying hedges (28) 60 129 (1,122) (194) 161 (957) Net amorti
Slide 21: Reconciliation of GAAP to Core Net Interest Income and NIM
21 1 Excludes purchase accounting average balances for all periods presented Reconciliation of GAAP to Core Net Interest Income and NIM (Dollars in thousands) GAAP net interest income $ 61,206 $ 64,730 $ 63,479 $ 62,674 $ 63,364 $ 189,415 $ 185,295 Net (gain) loss from fair value adjustments on qual
Slide 22: Contact Details
22 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 23: [age LUSHING
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