Slide 1: Investor Presentation (May - June 2022)
Investor Presentation ( May - June 2022) May 16, 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: Our Brand Promise: Rewarding Relationships
Our Brand Promise: Rewarding Relationships Nurturing Relationships and Rewarding Customers, Employees, and Shareholders 3
Slide 4: Key Messages
4 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 5: Flushing Financial Snapshot
5 Flushing Financial Snapshot (NASDAQ: FFIC) Competitive Advantages Balance Sheet Assets $ 8.2B Loans $ 6.6B Deposits $ 6.5B 1 Equity $ 0.7B Performance GAAP/Core ROAA 0.91%/0.94% 2 GAAP/Core ROAE 10.83%/11.27% 2 Efficiency Ratio 58.9% 2 Tangible Book Value $ 21.61 Dividend Yield 4.0% 3 1Q22 Key Sta
Slide 6: Strong Asian Banking Market Focus
6 Strong Asian Banking Market Focus 15% of Total Deposits 1 $ 34B Deposit Market Potential (~3% Market Share 1 ) 6.9% FFIC 5 Year Asian Market CAGR vs 3.7% 2 for the Comparable Asian Markets Asian Communities – Total Loans $749MM and Deposits $995M Multilingual Branch Staff Serves Diverse Customer B
Slide 7: Experienced Executive Leadership Team
7 Experienced Executive Leadership Team Executive Compensation and Insider Stock Ownership (6.1% 2 ) Aligned with Shareholder Interests John Buran President and CEO Maria Grasso SEVP, COO, Corporate Secretary Susan Cullen SEVP, CFO, Treasurer Francis Korzekwinski SEVP, Chief of Real Estate Michael B
Slide 8: Year Track Record of Steady Growth
8 26 Year Track Record of Steady Growth Core EPS ($) Dividends per Share ($) Tangible Book Value per Share ($) Assets ($B) Total Gross Loans ($B) Total Deposits ($B) 1 $ - $0.84 $0.22 1995 2000 2005 2010 2015 2020 2021 1Q22 $ - $2.81 $0.61 1995 2000 2005 2010 2015 2020 2021 1Q22 $0.6 $6.5 1995 2000
Slide 9: 2022 Strategic Objectives: Growth Through Investment
3 4 1 2 Improve and Grow Funding Mix Generate Appropriate ly Priced Loan Growth Noninterest bearing DDA growth Increase core deposits Manage overall deposit costs Achieve historical loan growth Price loans in relation to acceptable risk More emphasis on floating - rate loans Manage Asset
Slide 10: Well-positioned to Benefit from Industry Merger Disruption
10 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 $328B of total industry deposits in Nassau, Queens, Kings, and Suffolk Counties, $87B or 27% involve a merger participant 3 • 93% of FFIC’s
Slide 11: Metro New York City Economy Is Rebounding
11 Metro New York City Economy Is Rebounding 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 250 260 270 280 290 300 310 320 330 340 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 House Price Index for New York City MSA 1 Recession HPI
Slide 12: Record Loan Pipeline; Satisfactions Should Decline
Record Loan Pipeline; Satisfactions Should Decline 12 Closings poised to accelerate – Closings up 65% YoY excluding PPP – 10 bank mergers announced within footprint – Strong organic growth opportunity Pipeline up 55% QoQ – Commercial real estate is a larger driver – Business Banking pipeline up
Slide 13: Digital Banking Usage Continues to Increase
Digital Banking Usage Continues to Increase 13 Technology Enhancements Remain a Priority 28% Increase in Monthly Mobile Active Users YoY ~ 24,000 Active Online Banking Users 31% YoY Growth 15% Digital Banking Enrollment YoY Growth Numerated Small Business Lending Platform $4.1MM Originated in 1Q22 J
Slide 14: Deposits Costs Drive NIM Expansion
Deposits Costs Drive NIM Expansion 14 Base NIM FTE 2.60% 2.40 % 2.80 % 3.08% 3.22% GAAP NIM FTE 2.70% 2.47% 2.85 % 3.24% 3.36% ($MM) See Appendix for definitions of Core and Base NII FTE and Core NIM, and Net Prepayment Penalties $168.3 $164.2 $196.9 $243.3 $62.7 2.72% 2.49% 2.87% 3.17% 3.31% 4.38%
Slide 15: Better Funding Profile Today Versus the Last Rising Rate Cycle
Better Funding Profile Today Versus the Last Rising Rate Cycle 15 Prior to the first rate increase in the 2015 - 2019 cycle, higher yielding CDs and borrowings were 52.8% of funding; in this cycle, the starting point declined significantly to 24.5% Funding swaps to reprice 98 bps lower in 2Q22 a
Slide 16: Rising Rate Offsets – Asset Profile
Rising Rate Offsets – Asset Profile 16 We have several items that can mitigate rising rates including: – Business Banking portfolio that has increased to 21.6% of loans in this cycle compared to only 12.2% of loans last cycle – $410MM of loan swaps that convert fixed rate loans to floating rate –
Slide 17: Deposit Mix Improves As Costs Continue to Decline
17 Deposit Mix Improves As Costs Continue to Decline Average Deposits Composition ($MM) $4,736 $5,013 $5,163 $6,416 $6,410 1.36% 1.76% 0.82% 0.32% 0.21% 0% 1% 1% 2% 2% 3% 3% 0 1000 2000 3000 4000 5000 6000 7000 2018 2019 2020 2021 1Q22 Noninterest Bearing NOW Accounts Savings Money Market CDs Mortga
Slide 18: Diversified Loan Mix; Yields Are Stable
$5,536 $5,757 $6,702 $6,634 $6,601 - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 2018 2019 2020 2021 1Q22 Multifamily Commercial Real Estate Construction 1-4 Family Business Banking Total Gross Loans 18 Diversified Loan Mix; Yields Are Stable Loan Composition Period End Loans ($MM) Empire Bancor
Slide 19: Well-Secured Multifamily and CRE Portfolios with DCR of 1.8x
Well - Secured Multifamily and CRE Portfolios with DCR of 1.8x 19 Underwrite Real Estate Loans with a Cap Rate in Mid - 5s and Stress Test Each Loan Multifamily Geography 16% 30% 19% 18% 17% Bronx Kings Manhattan Queens Other $2. 5 B Portfolio • Average loan size: $1.1MM • Average monthly rent of $1
Slide 20: Loans Secured by Real Estate Have an Average LTV of <38%
20 Loans Secured by Real Estate Have an Average LTV of <38% Multifamily Primarily 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 -
Slide 21: Well-Diversified Commercial Business Portfolio
21 Well - Diversified Commercial Business Portfolio Commercial Business Primarily 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 est
Slide 22: Net Charge-offs Significantly Better Than the Industry
Net Charge - offs Significantly Better Than the Industry 22 NCOs / Average Loans 0.06% 0.25% 1 -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 2021 FFIC Industry 6 basis points of Net Charge - offs to Average Loans in 1Q22 1 Note: Includes $11.2MM in taxi m
Slide 23: Continued Strong Credit Quality
23 Continued Strong Credit Quality NPAs / Assets Criticized and Classified Loans / Gross Loans Reserves / Gross Loans & Reserves / NPLs ACL by Loan Segment (1Q22) 0.96% 0.66% 1.07% 0.87% 0.90% 0.50% 0.60% 0.70% 0.80% 0.90% 1.00% 1.10% 1.20% 1.30% 2018 2019 2020 2021 1Q22 Criticized & Classified Loan
Slide 24: TCE Ratio Remains Over 8%; ~4.0% Dividend Yield
TCE Ratio Remains Over 8%; ~4.0% Dividend Yield 1 24 84% of 1Q22 Earnings Returned; 45% in 2021 7.8% Book Value Per Share Growth YoY 8.1% YoY Increase in Tangible Book Value Per Share $19.64 $20.59 $20.11 $22.26 $22.26 10.98% 10.95% 9.88% 10.86% 10.84% 8.74% 8.73% 8.38% 8.98% 9.05% 0.00% 5.00% 10.00
Slide 25: Summary and Outlook
25 Better positioned for higher rates – Funding costs are at record lows and funding is more favorable versus the last rising rate cycle; noninterest bearing deposits more than doubled as a percentage of funding – Swap repricing starts in 2Q22 and is mostly done by the end of 2023 reducing swaps c
Slide 26: Appendix
Appendix [EEUFLUSHING
Slide 27: PPP: 86% of Lifetime Originations and Acquisitions Forgiven
PPP: 86% of Lifetime Originations and Acquisitions Forgiven 27 Period End PPP Loans ($MM) $251.0 $197.3 $ 130.8 $77.4 $43.2 Average PPP Loans ($MM) PPP NIM Benefit/(Drag) ( 0.04)% 0.00% 0.02% 0.03% 0.03% Lifetime originations and acquisitions of $310MM with a balance of $43.2MM at 1Q22 and remaini
Slide 28: Swaps Help Protect NIM from Rising Short-Term Rates
$125 $321 $121 $25 $125 $230 $50 1.86% 2.09% 1.96% 0.47% 0.88% 0.70% 0.80% 2Q22 2023 2024 2025 Effective Swaps Maturities Forward Swaps Start Date Effective WA Rate Forward WA Rate $MM 28 Swaps Help Protect NIM from Rising Short - Term Rates The balance sheet naturally improves over the next two y
Slide 29: Reconciliation of GAAP Earnings and Core Earnings
Reconciliation of GAAP Earnings and Core Earnings 29 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 desig
Slide 30: Reconciliation of GAAP Earnings and Core Earnings
30 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 $ 109,278 $ 45,182 $ 53,331 $ 65,485 $ 24,640
Slide 31: Reconciliation of GAAP Revenue & Pre-Provision Pre-Tax Net Revenue
31 Reconciliation of GAAP Revenue & Pre - Provision Pre - Tax Net Revenue Efficiency ratio, a non - GAAP measure, was calculated by dividing noninterest expenses (excluding merger expenses, OREO expense, prepayment penalty on borrowings, the net gain/loss from the sale of OREO and net amortization o
Slide 32: Reconciliation of GAAP NII & NIM to CORE and Base NII & NIM
32 Reconciliation of GAAP NII & NIM to CORE and Base NII & NIM (Dollars In thousands) GAAP net interest income $ 247,969 $ 195,199 $ 161,940 $ 167,406 $ 63,479 $ 60,892 Net (gain) loss from fair value adjustments on qualifying hedges (2,079) 1,185 1,678 — 129 (1,427) Net amortization of purchase acc
Slide 33: Calculation of Tangible Stockholders' Common Equity to Tangible Assets
33 Calculation of Tangible Stockholders’ Common Equity to Tangible Assets (Dollars in thousands) Total Equity $ 675,813 $ 679,628 $ 618,997 $ 579,672 $ 549,464 Less: Goodwill (17,636) (17,636) (17,636) (16,127) (16,127) Core deposit Intangibles (2,420) (2,562) (3,172) — — Intangible deferred tax lia
Slide 34: Contact Details
34 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 35: Flushing Financial Corporation
[age LUSHING Financial Corporation