Flushing Financial Corporation · NASDAQ:FFIC
Flushing Financial — Q1 2021 Earnings Presentation
24 slides from Flushing Financial's earnings presentation, Apr 28, 2021
Slide 1: 1Q21 Earnings Conference Call
“Small Enough To Know You. Large Enough To Help You.” 1Q21 Earnings Conference Call April 28, 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: Strong Performance Versus Strategic Objectives
Ensure appropriate risk-adjusted returns for loans while optimizing costs of funds • Fourth consecutive quarter of record net interest income • Core PPNR rose 79% YoY; 6% QoQ • Core NIM expansion of 3 bps QoQ • Average Noninterest-bearing deposits rose 91% YoY Maintain strong historical loan growth
Slide 4: Strong Non-interest Bearing Deposit Growth; Deposits Costs Lower
Strong Non-interest Bearing Deposit Growth; Deposits Costs Lower • Average deposits rose 23.4% year over year in 1Q21 • Average deposit growth, excluding Empire was ~8% year over year • Non-interest bearing deposits are 13.7% of average deposits up, from 8.8% a year ago • Core deposits increased to
Slide 5: Fourth Consecutive Quarter of Record Core Net Interest Income
$43.0 $49.2 $49.8 $54.8 $58.7 2.56% 2.89% 2.98% 3.03% 3.06% 4.36% 4.10% 4.07% 4.06% 3.99% 1.47% 0.79% 0.57% 0.47% 0.39% -0.50% 0.50% 1.50% 2.50% 3.50% 4.50% 5.50% $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 1Q20 2Q20 3Q20 4Q20 1Q21 Base NII FTE ($MM) Net Prepayment Penalties Core NII FTE ($MM) Co
Slide 6: Steeper Yield Curve Is A Tailwind For NIM
Steeper Yield Curve Is A Tailwind For NIM 1 6 We Benefit From A Steeper Yield Curve (1.00) (0.50) - 0.50 1.00 1.50 2.00 2.50 3.00 3.50 Treasury Spreads Have Widened 2yr/10yr • The 2yr/10 year Treasury spread averaged 71 bps in 4Q20 compared to an average of 118 bps in 1Q21; The spread widened to 140
Slide 7: We Have Tools to Manage Short Term Increases in Rates
We Have Tools to Manage Short Term Increases in Rates 1 7 Forward Starting Swaps To Help Protect NIM From Rising Short Rates • The duration of our assets is greater than the duration of our liabilities • Our balance sheet naturally improves over the next two years without any actions and we can take
Slide 8: Focus on PPP in 1Q21; Pipelines Remain Solid
Focus on PPP in 1Q21; Pipelines Remain Solid 8 2 Core Loan Yields 4.36% 4.10% 4.07% 4.06% 3.99% Period End Loans Rise ___% ($MM) • Gross loans rose 0.7% from 4Q20 and 14.0% year over year (~3% excluding Empire) • PPP originations were $123.2 million in the quarter and were 38% of total originations
Slide 9: Achieving Synergies From Empire Transaction
Achieving Synergies From Empire Transaction • At close, $982MM assets, $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
Slide 10: Forbearance Loans Continue to Decline; Little Migration and Minimal Loss
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 11: Stable ALL/Loans; Taxi Medallion Loans Completely Charged-off
Stable ALL/Loans; Taxi Medallion Loans Completely Charged-off • Stable allowance for loan losses to loans ratio QoQ • $2.8MM provision for credit losses versus $2.9MM of net charge-offs • Charged-off 100% of the remaining taxi medallion portfolio of $2.8 million • We expect future loan loss provisio
Slide 12: 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 $24.2 million of real estate loans with an LTV of 75% or more Source: SNL Financial. Financia
Slide 13: Strong Reserve Coverage; Low and Stable NPAs
Strong Reserve Coverage; Low and Stable NPAs Loan Loss Reserves / NPLs Are Solid; Flat QoQ 1Q21 NPAs Have 31% LTV 4 13 $28.1 $36.7 $38.3 $45.2 $45.1 167.7% 181.8% 154.7% 214.3% 212.9% 0.5 1 1.5 2 2.5 3 3.5 4 $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 $40.0 $45.0 $50.0 1Q20 2Q20 3Q20 4Q20 1Q21 LLR
Slide 14: Capital Levels Rise; ~3.8% Dividend Yield
Capital Levels Rise; ~3.8% Dividend Yield 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 3.8%1 Dividend Yield 1 Calculated using 4/22/21 closing price of $21.82. 14 $19.48 $20.27 $20.78 $20.
Slide 15: 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 16: Appendix
FLUSHING FFIC | Appendix
Slide 17: 1Q21 Highlights: NIM Expansion; 11% Core ROAE
1Q21 Highlights: NIM Expansion; 11% Core ROAE • Core diluted EPS of $0.54, up 184% YoY; GAAP diluted EPS totaled $0.60 compared to $(0.05) a year ago • Core ROA and ROE were 0.83% and 10.96%, respectively, and improved significantly year over year • Core NIM rose 3 bps during 1Q21 to 3.06%; funding
Slide 18: 1Q21 Highlights: Solid Growth in Core PPNR
1Q21 Highlights: Solid Growth in Core PPNR • Core PPNR increases 79.3% YoY and 6.0% QoQ due to the Empire merger, NIM expansion, strong non-interest income, and controlled expenses • Core Net Interest Income growth due to increase in interest-earning assets and NIM expansion both YoY and QoQ • Non-i
Slide 19: 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 20: 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. 20 (Dollars In thousands, except per share data) GAAP income (loss) before income taxes $ 26,224 $ 3,878 $ 18,820 $ 24,080 $ (1,596
Slide 21: Reconciliation of GAAP Revenue & Pre-Provision Pre-Tax Net Revenue
Reconciliation of GAAP Revenue & Pre-Provision Pre-Tax Net Revenue 21 (Dollars In thousands) GAAP Net interest income $ 60,892 $ 55,732 $ 49,924 $ 48,717 $ 40,826 Net (gain) loss from fair value adjustments on qualifying hedges (1,427) (1,023) (230) 365 2,073 Net amortization of purchase accounting
Slide 22: 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. 22 (Dollars In thousands) GAAP net interest income $ 60,892 $ 55,732 $ 49,924 $ 48,717 $ 40,826 Net (gain) loss from fair value ad
Slide 23: 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 23
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