Flushing Financial Corporation · NASDAQ:FFIC
Flushing Financial — D.A. Davidson Investor Presentation (May 2021)
32 slides from Flushing Financial's conference presentation, May 6, 2021
Slide 1: D.A. Davidson Investor Presentation May 6, 2021
“Small Enough To Know You. Large Enough To Help You.” D.A. Davidson Investor Presentation May 6, 2021 “Small Enough To Know You. Large Enough To Help You.”
Slide 2: Safe Harbor Statement
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 des
Slide 3: Key Messages
Key Messages Conservative Underwriting with History of Solid Value Creation 3
Slide 4: Flushing Financial Snapshot
Flushing Financial Snapshot (NASDAQ: FFIC) Competitive Advantages Balance Sheet Assets $8.2B Loans $6.7B Deposits $6.4B1 Equity $0.6B Performance Core ROAA 0.83% Core ROAE 10.96% Core Efficiency Ratio 58.6% Tangible Book Value $19.99 Dividend Yield 3.6%2 1Q21 Key Statistics Footprint Deposits primar
Slide 5: Strong Asian Banking Market Focus
13% of Total Deposits $28.3B Market Potential (~3% Market Share) 7.0% FFIC 5 Year CAGR vs 5.7% for the Comparable Asian Markets Asian Communities – Total Loans $690MM and Deposits $850M Multilingual Branch Staff Serves Diverse Customer Base in NYC Metro Area Growth Aided by the Asian Advisory Board
Slide 6: Experienced Executive Leadership Team
Experienced Executive Leadership Team Executive Compensation and Insider Stock Ownership (5.7%2) Aligned with Shareholder Interests John Buran President and CEO Maria Grasso SEVP, COO, Corporate Secretary Susan Cullen SEVP, CFO, Treasurer Francis Korzekwinski SEVP, Chief of Real Estate Michael Bingo
Slide 7: 25 Year Track Record of Steady Growth
Core EPS ($) Dividends per Share ($) Tangible Book Value per Share ($) Assets ($B) Total Gross Loans ($B) Total Deposits ($B) $- $0.84 $0.21 1995 2000 2005 2010 2015 2020 1Q21 $- $1.70 $0.54 1995 2000 2005 2010 2015 2020 1Q21 $0.6 $6.4 1995 2000 2005 2010 2015 2020 1Q21 $0.3 $6.7 1995 2000 2005 2010
Slide 8: Continued Strong Execution in 1Q21
Continued Strong Execution in 1Q21 • Core EPS up 184% YoY ‒ Fourth Consecutive Quarter of Record NII ‒ Core NIM expansion of 3 bps QoQ ‒ Core PPNR rose 79% YoY; 6% QoQ ‒ 11% Core ROAE • Loan Growth from PPP; Pipeline Increases ‒ 2.6% annualized loan growth in 1Q21; PPP loan balances of $251 million
Slide 9: Strategic Objectives
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 9
Slide 10: Core NIM Expansion Largely from Lower Deposit Costs
Core NIM Expansion Largely from Lower Deposit Costs 10 1 See Appendix for definitions of Core and Base NII FTE and Core NIM, Net Prepayment Penalties (prepayment penalties received on loans, net of reversals and recoveries of interest from non-accrual loans) and Base Loan Yields Base NIM FTE 2.83% 2
Slide 11: Steeper Yield Curve is a Tailwind for NIM
Steeper Yield Curve is a Tailwind for NIM 1 11 Beneficiary of a Steeper Yield Curve (1.00) (0.50) - 0.50 1.00 1.50 2.00 2.50 3.00 3.50 Treasury Spreads Have Widened 2yr/10yr • 2yr/10yr Treasury spread averaged 71 bps in 4Q20 compared to an average of 118 bps in 1Q21; spread widened to 145 bps on Apr
Slide 12: We Have Tools to Manage Short-term Increases in Rates
We Have Tools to Manage Short-term Increases in Rates 1 12 Forward Starting Swaps To Help Protect NIM From Rising Short Rates • Duration of our assets is greater than the duration of our liabilities • Our balance sheet naturally improves over the next two years without any actions and we can take, o
Slide 13: PPP Near-term Driver; Loan Pipeline Up 16% YoY
PPP Near-term Driver; Loan Pipeline Up 16% YoY 2 $4,819 $5,160 $5,536 $5,757 $6,702 $6,746 $- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 2016 2017 2018 2019 2020 1Q21 Multi-family Commercial Real Estate Construction 1-4 Family M
Slide 14: In Early Stages of Our Technology Enhancements
In Early Stages of Our Technology Enhancements – More to Come 64% Increase in Monthly Mobile Active Users YoY ~3,600 Monthly Mobile Deposit Items Processed 310% YoY Growth $6M+ Monthly Mobile Deposit Volume Processed 850% YoY Growth 24% Digital Banking Enrollment Growth Since 2Q20 ~18,000 Active Onl
Slide 15: Achieving Synergies from Empire Transaction
Achieving Synergies from Empire Transaction • $982MM asset bank with $685MM loans and $854MM deposits • $7MM after-tax cost saves expected in 2021 ‒ Cost savings recognized in 1Q21 consistent with projections ‒ Systems conversion completed in November 2020 ‒ Essentially all cost saves in the 1Q21 ru
Slide 16: Forbearance Loans Continue to Decline
Forbearance Loans Continue to Decline; Little Migration and Minimal Loss Commentary • Loans granted forbearance have declined from a peak of $1.5B at May 31, 2020 to $295.5MM at March 31, 2021 ‒ Loans paying interest only comprise ~61% • >93% of loans on forbearance are backed by real estate and bor
Slide 17: Low Historical Net Charge-Offs
Low Historical Net Charge-Offs • Over two decades and multiple credit cycles, Flushing has a history of better-than-industry credit quality • Weighted average LTVs on the real estate portfolio is 38% ‒ Only $24.2MM of real estate loans with an LTV of 75% or more Source: SNL Financial. Financial data
Slide 18: Reserve Coverage and NPA Levels Better than Peers
Reserve Coverage and NPA Levels Better than Peers Loan Loss Reserves / NPLs 31% LTV on 1Q21 Mortgage NPAs $21.9 $18.1 $16.3 $13.5 $21.1 $21.2 0.36% 0.29% 0.24% 0.19% 0.26% 0.26% 0.66% 0.64% 0.55% 0.46% 0.54% 0.42% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 2016 2017 2018 2019 2020 1Q21 $- $5.0 $10.0 $15.0
Slide 19: Outlook
Outlook Benefitting from steeper yield curve; positioning for higher rates ‒ Steeper yield curve helps asset repricing and keeps funding pressures low ‒ Starting to extend liability duration to help protect from rising short term rates ‒ Continue to build out Commercial lending portfolio and shorten
Slide 20: Appendix
FLUSHING FFIC | Appendix
Slide 21: Improving Funding Mix
Improving Funding Mix Reduced Reliance on CDs & Borrowings; Increased Non-interest Bearing Deposits Average Deposits Rise While Costs Fall1 ($MM) Improved Funding Mix $4,110 $4,447 $4,735 $5,013 $5,163 $6,285 0.81% 0.91% 1.36% 1.76% 0.82% 0.39% - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 2016 2017 2
Slide 22: Commercial Business Exposures and Underwriting Standards
Commercial Business Exposures and Underwriting Standards Commercial Business • Businesses in the New York City metro area with sales of up to $250MM • Offering lines of credit, term loans including owner occupied mortgages • Loans are secured by business assets, generally require personal guarantees
Slide 23: Well Secured Multi-Family and CRE Portfolios
Well Secured Multi-Family and CRE Portfolios Multi-Family Geography 17% 31% 17% 18% 17% Bronx Kings Manhattan Queens Other 1 CoStar New York Multi-Family Market Report, 4/12/21 2 Based on most recent Annual Loan Review. 23 $2.5B Portfolio • Average loan size: $1.1MM • Average monthly rent of $1,245
Slide 24: Loans secured by real estate have an LTV of 38%
Loans secured by real estate have an LTV of 38% Multi-Family and CRE Property Type and Portfolio Highlights Multi-Family • 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 simi
Slide 25: Solid Capital Ratios With Growing Book and Tangible Book Value
Solid Capital Ratios With Growing Book and Tangible Book Value Tangible Common Equity/Tangible Assets Approaching 8% by Year End 2021 Book Value of $20.65, Build Capital Ratios in 2021 Tangible Book Value of $19.99 with 3.6%1 Dividend Yield $17.40 $18.08 $19.07 $20.02 $19.45 $19.99 8.24% 8.22% 7.83%
Slide 26: Reconciliation of GAAP Earnings and Core Earnings
Reconciliation of GAAP Earnings and Core 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
Slide 27: Reconciliation of GAAP Earnings and Core Earnings
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. 27 (Dollars In thousands, except per share data) GAAP income (loss) before income taxes $ 106,019 $ 66,134 $ 65,485 $ 53,331 $ 45,1
Slide 28: Reconciliation of GAAP Revenue & Pre-Provision Pre-Tax Net Revenue
Reconciliation of GAAP Revenue & Pre-Provision Pre-Tax Net Revenue 28 (Dollars In thousands) GAAP Net interest income $ 167,086 $ 173,107 $ 167,406 $ 161,940 $ 195,199 $ 40,826 $ 60,892 Net (gain) loss from fair value adjustments on qualifying hedges — — — 1,678 1,185 2,073 (1,427) Net amortization
Slide 29: Reconciliation of GAAP NII & NIM to CORE and Base NII & NIM
Reconciliation of GAAP NII & NIM to CORE and Base NII & NIM 1 Excludes purchase accounting average balances for the quarter ended March, 31, 2021, and December 31, 2020. 29 (Dollars In thousands) GAAP net interest income $ 167,086 $ 173,107 $ 167,406 $ 161,940 $ 195,199 $ 40,826 $ 60,892 Net (gain)
Slide 30: Calculation of Tangible Stockholders' Common Equity to Tangible Assets
Calculation of Tangible Stockholders’ Common Equity to Tangible Assets 1 Excludes purchase accounting average balances for the quarter ended March, 31, 2021, and December 31, 2020. 30 (Dollars in thousands) Total Equity $ 513,853 $ 532,608 $ 549,464 $ 579,672 $ 549,683 $ 618,997 $ 639,201 Less: Good
Slide 31: Contact Details
Contact Details Susan K. Cullen SEVP, CFO & Treasurer Phone: (718) 961-5400 Email: susan.cullen@flushingbank.com Al Savastano Director of Investor Relations Phone: (516) 820-1146 Email: asavastano@flushingbank.com 31
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