Flushing Financial Corporation · NASDAQ:FFIC
Flushing Financial — Debt Investor Presentation (November 2021)
36 slides from Flushing Financial's debt investor presentation, Nov 15, 2021
Slide 1: Fixed Income Investor Presentation November 2021
Fixed Income Investor Presentation November 2021
Slide 2: Forward-Looking Statements & Other Disclaimers
2 Forward - Looking Statements & Other Disclaimers This presentation contains forward - looking statements within the meaning of the federal securities laws . These statements include statements with respect to Flushing Financial Corporation’s (“we”, “our”, “us” or the “Company”) beliefs , plans, ob
Slide 3: Investment Highlights
3 Investment Highlights 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: Flushing Financial Snapshot
4 Flushing Financial Snapshot (NASDAQ: FFIC) Competitive Advantages Balance Sheet & Market Data Assets $8.1B Loans $6.6B Deposits $6.5B 1 Equity $0.7B Dividend Yield 3.72% 4 Market Cap. $ 693MM 4 Financial Highlights GAAP/Core ROAA 2 1.04% / 1.11% GAAP/Core ROAE 2 13.24% / 14.09% PPNR / AA 2 1.32% /
Slide 5: Strong Asian Banking Market Focus
5 Strong Asian Banking Market Focus 14% of Total Deposits 10% of Total Loans $32B Market Potential (~3% Market Share 1 ) 6.9% FFIC 5 Year Asian Market CAGR vs 3.4% 1 for the Comparable Asian Markets Asian Communities – Total Loans $693.4MM and Deposits $892.5MM Multilingual Branch Staff Serves Diver
Slide 6: Experienced Executive Leadership Team
6 Experienced Executive Leadership Team All Senior Executives Have Over 20 years of Experience in Banking Aligned Investor Interest with Insider Ownership of 5.4%² John Buran President and CEO Maria Grasso SEVP, COO, Corporate Secretary Susan Cullen SEVP, CFO, Treasurer Francis Korzekwinski SEVP, Ch
Slide 7: 3Q21 Highlights
▪ GAAP Net Income $25.4MM; Core Net Income was $ 27.8MM 2 , increasing 72.1% YoY ▪ GAAP ROAA and ROAE 1.26% and 15.42%, respectively; Core ROAA and ROAE were 1.38% 2 and 16.88% 2 , respectively ▪ GAAP NIM increased 20 bps QoQ; Core NIM rose 13 bps during 3Q21 to 3.27% 2 ▪ PPNR of $27.9MM; Core PPNR²
Slide 8: Positive Loan Growth Outlook
Positive Loan Growth Outlook 8 ▪ Expected market disruption – 8 bank mergers announced within footprint – Strong organic growth opportunity ▪ New York is coming back – Asian market activities and events are restarting as restrictions are lifted – Apartment rents trending upward with vacancy rates re
Slide 9: Year Track Record of Steady Growth
9 25 Year Track Record of Steady Growth Core PPNR ($MM)³ Core Net Income ($MM)³ Tangible Book Value Per Share ($) Assets ($B) Total Gross Loans ($B)¹ Total Deposits ($B) ² $3.3 $67.8 1995 2000 2005 2010 2015 2020 YTD 3Q21 $6.3 $87.3 1995 2000 2005 2010 2015 2020 YTD 3Q21 $0.6 $6.5 1995 2000 2005 201
Slide 10: Well-positioned to Benefit from Industry Merger Disruption
10 Well - positioned to Benefit from Industry Merger Disruption • 8 bank mergers have been announced or closed involving Long Island area Banks 2 • Out of the $328B of total industry deposits in Nassau, Queens, Kings, and Suffolk Counties, $60B or 18% involve a merger participant 3 • 93% of FFIC’s d
Slide 11: Scaling through Digital Banking Growth
Scaling through Digital Banking Growth 11 In Early Stages of Our Technology Enhancements – More to Come Note: YoY growth or decline as of September 30, 2021 ¹ YoY decline calculated as average number of teller transactions for the month ending September 30, 2020 vs. the month endin g S eptember 30,
Slide 12: Strategic Objectives
12 Strategic Objectives ENSURE appropriate risk - adjusted returns for loans while optimizing cost of funds MAINTAIN strong historical loan growth ENHANCE core earnings power by improving scalability and efficiency MANAGE asset quality with consistently disciplined underwriting 1 2 3 4
Slide 13: Record Core Net Interest Income FTE for the Sixth Consecutive Quarter
Record Core Net Interest Income FTE for the Sixth Consecutive Quarter 13 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 $62.2 2.98% 3.03% 3.06% 3.14% 3.27% 4.07% 4.06% 3.99% 4.06% 4.09% 0.57% 0.47% 0.39% 0.34% 0.29% -0.25% 0.75% 1.75% 2.
Slide 14: Deposit Mix Improves; Costs Continue to Fall
Deposit Mix Improves; Costs Continue to Fall 14 Deposits Rise While Costs Fall Total Average Deposits 1 ($MM) 1 Includes mortgage escrow deposits ▪ Average non - interest bearing deposit up 58% YoY ▪ Non - interest bearing deposits are 14.6% of average deposits 1 , up from 11.8% a year ago ▪ 3Q21 ch
Slide 15: Loans Flat QoQ Excluding PPP; Pipelines Rise
$5,928 $6,702 $6,746 $6,717 $6,627 - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 3Q20 4Q20 1Q21 2Q21 3Q21 Multifamily Commercial Real Estate Construction 1-4 Family Business Banking Loans Flat QoQ Excluding PPP; Pipelines Rise 15 Core Loan Yields 4.07% 4.06% 3.99% 4.06% 4.09% Loan Composition Pe
Slide 16: Loan Composition
16 Loan Composition Mortgage Loans $2.5 48% $1.7 34% $0.6 11% $0.3 6% $0.1 1% Multifamily Residential Commercial Real Estate One - to - Four Family ― Mixed - Use One - to - Four Family ― Residential Construction $5.2B Portfolio Commercial Business Loans $1.4B Portfolio Well Diversified Loan Portfoli
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 $1,3
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 genera
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 wr
Slide 21: Continued Strong Credit Quality
21 Continued Strong Credit Quality Note: Texas Ratio defined as nonperforming assets, troubled debt restructurings, and 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 /
Slide 22: COVID-Exposed Loan Segments
22 COVID - 19 Exposed Loan Segments Deferral Trends Note: Gross loans are equal to gross loans net of fees and costs ▪ Less than 1% of loans are in full deferral, modifications have primarily been interest - only ▪ As of November 1, 2021, two hotel loans have returned to full payment status totaling
Slide 23: Hotel Loan Portfolio Update
23 Hotel Loan Portfolio Update *Hotel closed for cleaning until November 1, 2021. Expected occupancy forecast at 40% - 50% for months of November and December 1 LTVs are based on value at origination Portfolio Overview: ▪ Hotel loans are making their monthly interest payments ▪ Well experienced oper
Slide 24: Liquidity & Securities
24 Liquidity & Securities Liquidity Position & Sources (3Q21) AFS Securities Portfolio (3Q21) HTM Securities Portfolio (3Q21) Agency MBS $7.9 Muni Tax Exempt $50.0 ABS $86.9 CMO $229.9 Agency MBS $354.3 Common Stock $1.5 Corporate Bonds $106.0 Mutual Fund $12.6 SBA Loan Pools $5.6 $58MM Total Portfo
Slide 25: Investment Highlights
25 Investment Highlights Conservative Underwriting with History of Solid Value Creation ► Leading Community Bank in the Greater NYC Area ► Well Diversified and Low Risk Loan Portfolio ► History of Sound Credit Quality since IPO in 1995 ► Asian Banking Niche ► Beneficiary of a Steepening Yield Curve
Slide 26: Appendix
Appendix GWFLUSHING
Slide 27: Historical Consolidated Balance Sheet
($ in thousands) For the Year Ended December 31, As of Quarter Ended 2016 2017 2018 2019 2020 September 30, 2021 Cash and due from banks $35,857 $51,546 $118,561 $49,787 $157,388 $178,598 Securities held to maturity: Mortgage-backed securities - 7,973 7,953 7,934 7,914 7,899 Other securities 37,735
Slide 28: Historical Consolidated Income Statement
28 Historical Consolidated Income Statement ($ in thousands) For the Year Ended December 31, Nine Months Ended 2016 2017 2018 2019 2020 September 30, 2021 Interest Income $220,997 $234,585 $256,998 $278,956 $264,327 $216,832 Interest Expense 53,911 61,478 89,592 117,016 69,128 31,537 Net Interest In
Slide 29: PPP: 58% of Lifetime Originations and Acquisitions Forgiven
PPP: 58% of Lifetime Originations and Acquisitions Forgiven 29 Period End PPP Loans ($MM) $111.6 $151.9 $251.0 $197.3 $130.8 Average PPP Loans ($MM) PPP NIM Benefit/(Drag) (0.02)% (0.03)% (0.04)% 0.00% 0.02% ▪ Lifetime originations and acquisitions of $310MM with a balance of $130.8MM at 3Q21 and re
Slide 30: Balance Sheet Hedges Help Protect NIM from Rising Short-Term Rates
▪ Liability side rising rate protection via current pay and forward swaps – $592MM of effective swaps at 1.95%; current drag on NIM; the majority mature by the end of 2023 – $405MM of forward starting swaps at 0.77% that largely replace the current effective swaps – On average the forward starting s
Slide 31: 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 ca
Slide 32: Reconciliation of GAAP and Core Earnings
32 (Dollars in thousands, except per share data) GAAP income before income taxes $ 34,812 $ 25,416 $ 26,224 $ 3,878 $ 18,820 $ 86,452 $ 41,304 Day 1, Provision for Credit Losses - Empire transaction (Provision for credit losses) — — — 1,818 — — — Net (gain) loss from fair value adjustments (Non-inte
Slide 33: Reconciliation of GAAP Revenue and Pre-provision Pre-tax Net Revenue
33 Reconciliation of GAAP Revenue and Pre - provision Pre - tax Net Revenue (Dollars in thousands) GAAP Net interest income $ 63,364 $ 61,039 $ 60,892 $ 55,732 $ 49,924 $ 185,295 $ 139,467 Net (gain) loss from fair value adjustments on qualifying hedges (194) 664 (1,427) (1,023) (230) (957) 2,208 Ne
Slide 34: Core Net Interest Income and Margin Reconciliation
34 (Dollars in thousands) GAAP net interest income $ 63,364 $ 61,039 $ 60,892 $ 55,732 $ 49,924 $ 185,295 $ 139,467 Net (gain) loss from fair value adjustments on qualifying hedges (194) 664 (1,427) (1,023) (230) (957) 2,208 Net amortization of purchase accounting adjustments (1,100) (565) (922) (11
Slide 35: Calculation of Tangible Stockholders' Common Equity to Tangible Assets
35 Calculation of Tangible Stockholders’ Common Equity to Tangible Assets September 30, December 31, December 31, December 31, December 31, December 31, (Dollars in thousands) 2021 2020 2019 2018 2017 2016 Total Equity $ 668,096 $ 618,997 $ 579,672 $ 549,464 $ 532,608 $ 513,853 Less: Goodwill (17,63
Slide 36: Flushing Financial Corporation
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