FFIC - Earnings call transcript Q4 2024 | Flushing Financial Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to Flushing Financial Corporation's Fourth Quarter and Full Year 2024 Operating Results Conference Call. Hosting the call today are John Buran, President and Chief Executive Officer and Susan Cullen, Senior Executive Vice President, Chief Financial Officer, and Treasurer. Today's call is being recorded. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] A copy of the earnings press release and slide presentation that the company will be referencing today are available on its Investor Relations website at flushingbank.com.

Before we begin, the company would like to remind you that discussions during this call contain certain forward-looking statements made under the safe harbor provisions of the U.S. Act Reform Litigation Securities of XXXX. Private statements, are that may statements differ filings from any with subject the forth actual to factors other materially such in contained and the uncertainties, those as result Company's to set in risks, results Such including -- U.S. cause can which refer Exchange and Securities we Commission, to you.

considered call, as These review be to operating GAAP. performance. isolation supplemental non-GAAP intended references measures in and information be not presented in to made a the will this accordance as measures During non-GAAP with measures are financial substitute U.S. financial or financial and assess to for prepared

For information overview the of to who John earnings to the release an reconciliation about and/or Chief results. will Buran, the provide President conference a over and now these Executive turn measures for presentation. I Officer, the please to to and GAAP, and refer would strategy non-GAAP like

John Buran

and thank XXXX December, equity fourth completed to interest call. net In year second that joining of Good for operator. for Year. Fourth us the who were the you our you, want for Asian half we And million build operating company sheet $XX XXXX. restructure momentum important our for allowed the balance and special created in company. raise XXXX Lunar say customers the to a morning, thank Thank quarter to we New celebrating a you the full milestones and results and are quarter on income in conference

rates to points an NIM improving. fourth XX costs balance expansion. inverted NIM GAAP curve, increasing trends and the quarter NIM higher by The third operating the quarter. After quarter, couple with the yield These battling basis of up XX last increase core first points. of NIM is sheet should difficult a environment points, basis funding and basis the with in years in restructuring XX indicated peaked in XX we middle the core As continued sequential quarter,

of or to and $XX share the $X.XX. stable improved earnings GAAP compared per $X.XX ratio quarter-over-quarter. million to profitability our tangible common is and share the a and first we which positioned remains discuss The Fourth restructuring loss asset reduce pre-tax quarter, improve restructuring NIM capital has per balance share raise a $X.XX after-tax. area company core of incurred and significantly sheet. Slide reported sheet per company the strengthen the to Our quality balance X, The volatility. sheet our equity balance increase of loss focus,

interest X NIM from higher Our estate quarter-over-quarter lower. as while basis cost assets declined GAAP repricing points, We funding core only benefited points. XX costs our funding and loans earning expanded both and repricing basis declined real our

deposits non-interest-bearing average NIM. to aided Our increased quarter-over-quarter

risk so In offerings. work achieved margin Susan. to good be quality. back-to-back addition, net to our done. I'll more feel helped turn as for on well. interest we profile there's We reduce actions demand swap continued and over and to some far, interest our provide details our to seeing asset Susan progress the about recognize We're rate it more

Susan Cullen

and GAAP the driver the margin repricing John. Slide to income the XX points net Liability core and increased of fourth respectively the basis improvement. X.XX% The you, is and margin X outlines and interest trends. XX in Thank quarter. net interest X.XX%

has net direction expansionary have slope The interest environment the will the this an actions. positive, by are our We of on margin interest the net future. encouraged the the turned and positive strategic impact of curve our margin, more and in given yield

interest sheet expected margin XX basis the to the in restructuring curve slope first Our basis year. in point XXX in point the first to $X risk yield have the interest second The interest net and net by million quarter. the declining improvement with short XX about and benefit shows in rate balance would a positive income core also filing is year in $XX the million

laser of a quarter, ago. lower during basis improving customer to of provides flat more revamping deposit XXX% plans. Slide in deposits decreased we non-interest-bearing average and opportunities the Average to improved quarter-over-quarter. to in cost relationships and future. second year detail deposits XX% X on on and loan-to-deposit and The total ratio X% incentive compared from stabilized by XX% the XX Average to a deposits We by focused deposits The non-interest-bearing ago. XXXX were assessing half deposits were increased seek XX% continue our year-over-year points are our year rates of the deposits.

were the during past were XX% betas quarter as cycle. the interest-bearing when compared deposit rates deposit declined XX% Our rates favorable to as betas over increased

the provides We Total are deposits X.X% shifting CD CDs first the portfolio. reducing more or focus detail are at CD end. XX% overall total deposit on with continue a X cost. Slide rates our on CDs Current to mature X.XX%. and Approximately of will $X.X in the to $XXX of average quarter. billion of X.XX% mix rate million quarter weighted

rate. Our for an product, of X.XX%, the X-year APY followed customers' a is preference CD of X.XX% a which by XX-day has

about the more of During average XX We see points. of CDs to contractual of we as CDs basis lower significant portfolio. reprice a retained maturing mature. Slide X loan detail reduction the XX% the rate repricing fourth quarter, on they opportunity provides weighted with the a

points is multifamily Bank largely last New XXX A a spread. At using million the loans in rate XXXX rate with nearly $XXX plus reprice XXXX advance loans over $XXX coupon the sizable reprice XXX on to million reprice Home York are repricing of about there December is XX, due where XXX basis in were XX, XXXX, the basis through XXXX of scheduled December amount to higher. reprice The billion similar to of basis were Loan in $X points the to X-year Federal loans than due current XXXX, points For XXXX, based portion higher. higher that XXXX of approximately due about repricing index.

I balance a are and yields repriced XXX on basis advances loans on weighted repricing terminated. in sold XXX with should remained higher. on was restructured rate sheet were loan saved X points interest about of the These and cost in will aid average expansion. Slide related margin of and the securities the low-yielding all at This points restructuring. securities During We higher some of X.XX%. provide to these the Home approximately Bank details Since We points swap the XXXX, loans comments. high-level The driving provides replaced net the yield. repriced higher bank. about basis slide, XX% XX Loan Federal detail them basis

the highlights for to the will mark. moved about we as of enhance was and profile Lastly, related sale sale net maintaining no basis strengthen rates credit our actions is on low-yielding loans there interest to only increasing XX held due These discipline. mark focus, which our $XX for by interest of second points and sheet area million earnings the to was margin balance credit XXXX. Slide the XX XX

several service with discussed low portfolios, weighted commercial by As coverage less last quarters, have of the X/X average an the X.Xx. than and Over we have the portfolio we portfolio. is about XX%. risk real over ratio conservative secured loan of a which estate debt real loans have The of and average loan-to-value comprise estate a loan XX% multifamily

a XX trends. on have loans Company's provides noncurrent performance compare the history versus the charts these the The long context and credit charge-offs net of Our outperforming industry. Slide industry.

by often outperformed wide has time, margin. a underwriting Our over

and profile commitment our left. proven Our been culture low-risk the in economic credit rate our low-risk conservative charge-off of The are unwavering. cycles and our to credit chart shown many credit history the on is profile the by has results on

levels. to our well net charge-offs industry We remain below expect

to had net we charge-offs primarily reserved related For XXXX, basis in net of quarter, In fully points. the that previous quarters. loans fourth were charge-offs were XX

of Our basis noncurrent level and point In consisting stress a increase compared to XXX increase a X.Xx. coverage operating of debt our also industry. of a portfolio a in the loans to total XX% loans in scenario favorable has expenses, is the rates ratio

content this, within we minimal loss loan are portfolio. Given the expecting

metrics are XX%. credit culture. shown to at Slide points conservative with risk XX Additional Nonperforming loan assets XX values and demonstrate to our basis totaled assets on

information. largest allocated based million reserves During the we our fourth quarter, to assets $X on approximately nonperforming updated of

assets low quarter-over-quarter delinquencies low of to with XX%. loans ratio debt indicating a relates estate of and average of below past weighted and loan-to-value Thirty basis in of level classified loans, potential primarily to losses. The peers. coverage criticized Our points well real a XX-day level remains dues XX increase are of future and our a X.Xx

for overall credit losses right bottom loan is allowance presented totaled loans segment Our of points. at the ratio by and basis the XX chart

over keep confident of our time. Slide XX us profile All these for granular a metrics portfolios. well level performs credit more outlines at items low-risk key credit that very

only are basis portfolio Nonperforming and basis ratio XX% strong average Our loans average classified a of commercial loans real million metrics The excluding weighted loan-to-value credit of and only and and of coverage loans Investor XX% have criticized is and size as XXX weighted X.Xx. loans. and and points of such this are in comprises estate metrics in $X.X XX% loans gross portfolio average debt multifamily a with portfolio. criticized of portfolio X as CRE, loans, have loans. our gross the totaled points loan similar loans multifamily X office nonperforming $X.X billion XX this classified

There multifamily continues less a to is small, further be the resolved office expect time. Slide clear loans. credit loan the context we These metrics has over of office than conservative representation in and portfolio, our loans which comparison strong on to provides provide peers. portfolio and to gross one in exposure our Our shortly. of risk and culture nonperforming that perform X% is to XX well in

loans by one relationship the end XXXX, quarter, increase peer the the with a was which of As with standards. and days XXXX to are loan-to-value loans criticized Over was the ratio our of XXX are estimated XX were XX% borrowers was XX conservative This quarter. the classified multifamily reserves bring our points, of basis ratio only our in the At approximately points. in consisting portfolio basis the to of dues XX%, current. Multifamily XX% criticized XX third an with underwriting lowest of XX payments primarily expected quarter, of in which group. fifth September over fourth is repriced The combined XX, loans the group XX%, highest points. points X have and loan-to-value peer from loans, basis XXX in XX% by multifamily end were to XX the and a testament past fourth the multifamily basis is These quarter and the current of classified in more to XX-day in loans or this relationship delinquent. basis our this only third points,

loss these see on metrics, horizon. I'll to With turn risk it limited John. back the credit over content and we now

John Buran

of our Thanks, is focus, capital. we and which Slide liquidity highlight Susan. On third strong XX, area preserving

undrawn billion and $X.X resources and level and our deposits have is lines uninsured uncollateralized of We low. of

ratio equity quarter-over-quarter. common Our regulatory tangible improved ratios strong capital are and the

capital common is due share Our value X%, XX. tangible leverage per value X.XX%. ratio and environment book capital The on to to declined Slide equity position over and while rate X% tangible shown about Book improved actions. points our basis quarter-over-quarter the XX increased year-over-year to

first, repurchase on stock. markets, capital then source in and Our not pay Overall, we as our strength conservative about capital account we priorities sheet. Slide invest dividends, component detail base of our the X/X then a of have of provides branches. which a our for changed, our Asian cash vital balance business XX view

drive of room markets. $X.X total of of are X% for to billion in billion a and an population, that us this These small deposits, the markets, million branches $XX high network X/X $XXX and with expect market, these only one This we number of we in substantial share have future. continues approximately dense in of opportunity have businesses deposits growth. About market our its Asian of be XX% deposits are we XXXX. important expand market will implying for loans We to this our success there's believe in and and

Advisory multilingual Asian is Our this cultural and sponsorship participation and a Board, of our by key is can community activities. On of Slide approach see our our market to supported you staff, strategy. involvement XX, part our

continued customer improved environment The way X-year Hills Forest Flushing our these numerous the our ties The participated to loyalty. Slide strengthen with a of sheet, the margin increasing excited about FHLB With to driving Bellerose. net active in will customer of and our to Street higher in much X-month further remixing integrate BID, experience initiatives communities loan on for opportunities has past have advance base. expansion. turned fantastic our an the we in business over year to and future. We goal, costs We business of We're a the initiatives and quarter, fourth events next positive real This NIM the underway as Participating new enhanced local XX our should our is initiatives. reprice trend interest to the Syosset-Woodbury the the X portfolio participant laser-focused operating on initiatives environment should Utsav the customer years. our were focus and relationships, has equally good balance expanding XXXX. estate see negative. in ourselves SOFR funding spending Ganesh served We're reduce and spread indicator company how types Fairs, several including achieve deposits, the our outlines this new spread significantly. we rates operating while demand relationship between pricing. and new after branches, local our During

of team. the XXXX business out have our significant We growth. the spring future initiative and is building for SBA in another Additionally, plans expanded team

up, round SBA operating on and profitability. Slide drive continue we our close environment. XX sum During loan business has favorable, environment the perspective in more on high-level to performance turned first the future To to quarter, to in the provides a current we first the sales. expect of invest

The expect with a net to improving expected expand There of interest-bearing assets the continue to loan XX mix emphasis XXXX liabilities. from interest improvement and core interest-earning restructuring. balance growth, basis We is XX continued but the margin be sheet slight during on a to point stable will assets.

from Additionally, back-to-back continue aided and XXXX income to to the expense business of off in repricing. should increase pipeline and a branches. BOLI by be in exchange. invest be the benefits of million adding by CD we Non-interest XXXX X% closing people $XXX the expected there the of benefits swap should Non-interest as approximately and loans is base to a in X% loan

to seasonal approximately expenses quarter First are be expected million. $X

our effective a for to While our quarterly XXXX. On tax in of rates tax expect our key expand, areas some asset making we as can operating while the progress enjoyed XX% XX% XX, We were focus liquidity in business. remains fluctuate, net in investments expenses quality takeaways. capital the mid-single-digit Slide XXXX with I'll rate to began interest solid, and within are core our and margin strong, target conclude

has to progress, Given profitability. yield and credit strong most discipline, we're and improving inverted XXXX. The operating the preserving for environment curve focus a as the shifting to of capital, improving positive is compared our significantly liquidity maintaining XXXX slope

have a sheet. We the to XXXX. Operator, rates, you I'll lower We questions. remix loans attractive the turn balance add to for look forward with to over open opportunities lines deposit spreads, brighter and it to

Operator

the [Operator Instructions] of line from Our first Piper Fitzgibbon question Sandler. Mark with comes

Mark Fitzgibbon

quick question. A

is First, left in say what's presentation, on Page I largely X of curious quarter? the the slide completed. I'm you be completed the balance to first sheet restructuring guess

Susan Cullen

sale haven't We've not the but marked the sales of actual the the loan taken The proceeds them, loans. and We've been completed has yet. consummation cash occurred yet.

Mark Fitzgibbon

think will those you so happen or? soon And

Susan Cullen

taken sales. the a Very little It's little a no soon. we quarter sorry, expected. timing. In longer first I'm within There's the tied, with bit tongue first issues the -- just quarter. than the It's

Mark Fitzgibbon

deck, sort about those branch I noticed in slide also the be, in might the where of costs in you I for your many implications I'm might curious expansion. how be guess and branches, XXXX? and John, And then what comments, talk

John Buran

branch of Sure. up of the It's the open end year. course, did, X in County Suffolk branches. We a at

XXXX. of that during So our will growth part both we have to And to happen -- be that -- there the then X initiative in will Asian expect that branches our accelerate. the we

Mark Fitzgibbon

what this the will idea be any And year? impact expenses on

Susan Cullen

between X% inclusive X% branches. We and expect non-interest $XXX expenses million our to increase those of base, the off

Mark Fitzgibbon

preparation? if that far cost Durbin update significant $XX sort And the terms might along could just in to sure sort billion any with you you associated threshold? I And incorporated. And us on make of Yes, guidance, there's be of impact how of I saw expected? want the that but then crossing

Susan Cullen

already Durbin We significant lot believe the a don't fee not We baked big on There's have impact. are in. of a base a cards. those costs

We testing Officer, that's the have started, on stress over well, Risk do before required. Chief who's for -- the XX We board I years. so been

required. be But lines base believe -- our for part, into X of as tweaking expenses cross we already the have baked $XX are We defense are There that costs expense of the billion. the most some may base. we

Mark Fitzgibbon

it critically the do Or grow an thinking process? Would about important to could threshold? are sort do like acquisition you you to be $XX billion over organically? Or it the do feel of how you

John Buran

would preferred. It clearly be would be It preferred.

Mark Fitzgibbon

Preferred to what?

John Buran

organic. Preferred to

Mark Fitzgibbon

then question had. I And last

where your XXX? Susan? to Can the think, and it But -- forward market. a changes around that the end in assumed, comments of one cut this get NIM year? reasonable can the Given by cut year, I'm the I the bogey, NIM. is doesn't assuming guess the up I potentially Fed the Is close get to a assuming lot maybe rate

Susan Cullen

[Indiscernible] that's probably but little aggressive, Mark. a I think

we're probably closer think XXX XXX to to range. I the

Operator

Moss next question Our with Raymond comes from Steve James.

Stephen Moss

up on following the just here margin. Maybe

sensitivity kind Just going you how guess, in managing -- thinking become of of are forward here? duration, sensitive? kind that how interest balance have remaining you rate Do that liability you about and mix? managing I become Or guys about your curious just more you positioning sheet shorter just think swaps maybe as, the the

John Buran

we're So neutral. largely

we or without either So movements down issues. movements manage we up can think significant

Stephen Moss

And of bit, in shifting just -- in about a you your then remarks, terms I talked of think. the John, little mix loans the prepared

Just how to the over here And your much the loan maybe XX think kind could composition retaining quarter? there? your how around expected XX upcoming you be you loan what production team the are next I'm curious you've SBA do about that for months? just brought sales of curious on, And

John Buran

part an the our the ongoing of the SBA business, SBA -- restructuring So be will portfolio. of obviously, important

We couple sell loans the in we a of will that will have quarter. first

generate beginning already activity we're there. So to

be the contribute will area, what fact the we that the we're going market we is. where going to been aggressive think it XXXX. have dependent of significantly to lot SBA for given not upon in a I think But is see

Stephen Moss

And if -- terms then credit the just apologize this in remarks prepared there. Susan, I I missed front on of your in quarter,

quarter, guys just Just or loans around multiple this also too. added kind curious what the were if loans. NPA reserves C&I $X.X was the Just you the largest charge-offs or X of color portfolio? I'm of within types about it X that. million in And curious

Susan Cullen

that The of quarters. fully $X.X charge-offs. It's in net biggest the reserved had for loan one about million one we was prior

slight -- market right a and prudent take other and information, we received that some there The was was decided there was a to piece some we made little charge. us in that just it believe that that additional color was bond, impairment

Stephen Moss

And the about just kind then guide the in X% here of sorry, growth I'm just curious this terms of growth how this thinking kind for the of drivers year, X% just 'XX? you are guys quarter, to upcoming expense the what -- are of expense

Susan Cullen

forâ€¦ I'm sorry, drivers

Stephen Moss

the for Drivers expense growth, yes.

Susan Cullen

couple -- business. of in XXXX. improved XXXX, branches We'll could have have we'll branches the and expect in ratio positive plus we in a compensation regular we X of investments full as and have XXXX, we've in on be increases, the brought operating to full the the increase leverage that SBA, make the efficiency of year a year the in It's

Operator

question from Manuel Instructions] with Our comes Navas [Operator next D.A. Davidson.

Manuel Navas

Do year? some the as you of the pricing have deposit of spot end

Susan Cullen

excluding about of At year, and -- between our XXX we're the the XXX. end deposits, non-maturity

Manuel Navas

on driver, great there's that. quarter cut? CDs and a the coming bit the you the in I from And December deposit first -- know Fed cuts Is cost disclosure little account still so other are of larger have

Susan Cullen

yes, cut. If the we'll cuts, Fed

we advantage points reduce a They As came the to And we're over down situations beta. had can we XX%. to we Fed prepared on take costs. way XX% funding And cut, our of XX where in way the continues said on so those the far, up, basis quarter-over-quarter. our down continue at we'll that as remarks

Manuel Navas

about competition? kind of on notable Is the Is -- needs is retention? your in was CDs -- a on in based Like pickup just saw XX%. that Is well? there that own current as I that any retention -- is that decrease just

Susan Cullen

we've somewhere that No, that's run, what in ballpark. historically

is New tough. deposits for metro the in York always So market competition

has unfortunately not that So abated.

Manuel Navas

forward? a for has show And year, Is going the loan profitability up of different in mix going type target there. update the to kind to just an -- shift the is that of

John Buran

a will big be sheet. think course, the in somewhat I mix, a loan of We've got change balance gradual.

So I that. working our going forward. we CRE don't changes limiting and cognizant in dramatic toward concentration of expect growth But are

Manuel Navas

you But Correct? in as are well? opportunities seeing CRE

John Buran

Yes, yes.

will a I business transition business. in and portfolio be what So CRE is for focus transactional XXXX. we'll the from, more see the let's less think there say, relationship That

Operator

queue, over there no that questions for are more Buran turn would concludes the remarks. to this session. I in our John to any closing like back Seeing question-and-answer conference the

John Buran

Thank you. a you for you. again, once to And Thank forward Thank improved XXXX. look much attending. we all

Operator

teleconference. concludes This today's

disconnect for you now may and your we your participation. lines, You thank

Flushing Financial (FFIC) 29 Jan 252024 Q4 Earnings call transcript