• GAAP Earnings Per Share: $0.30
• Core Earnings Per Share: $0.26
• Net Interest Income Increase: 6.6% quarter-over-quarter
• Net Interest Margin Increase: 5 basis points
• Non-Performing Assets: 59 basis points
• Criticized and Classified Loans: 100 basis points
• Net Charge-Offs Year-to-Date: 6 basis points
• Available Liquidity: $3.9 billion as of September 30
• Non-Interest Expense Growth Year-to-Date: 6%
• Average Deposits Increase: 9% year-over-year, 4% quarter-over-quarter
• Cost of Deposits Increase: 17 basis points in the quarter
• Loan-to-Deposit Ratio: Improved to 90% from 103% a year ago
• Book Value and Tangible Book Value Per Share: Stable year-over-year and quarter-over-quarter
• Leverage Ratio: Approximately 8%
• Tangible Common Equity Ratio: About 7%

• Warning! GuruFocus has detected 6 Warning Signs with FFIC.

Release Date: October 25, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Flushing Financial Corp (NASDAQ:FFIC) recorded its best quarter in the past seven, with GAAP earnings per share of $0.30 and core earnings of $0.26.
• Net interest income increased by 6.6% quarter-over-quarter, with a 5 basis point increase in net interest margin.
• The company maintains a strong credit profile with low-risk metrics, including a non-performing assets ratio of 59 basis points and a well-collateralized loan portfolio.
• FFIC has a solid liquidity position with $3.9 billion available as of September 30, and a low level of uninsured and uncollateralized deposits at 15% of total deposits.
• The company is actively investing in growth opportunities, including the addition of an SBA team and new branches, which are expected to improve long-term profitability.

Negative Points

• The operating environment remains challenging, with uncertainties around deposit pricing and loan demand due to fluctuating interest rates.
• Non-interest expense growth was about 6% year-to-date, slightly elevated due to investments in business growth.
• The cost of deposits increased by 17 basis points in the quarter, indicating pressure on funding costs.
• The net interest margin is expected to remain stable in the short term, with potential volatility due to competitive pressures and interest rate changes.
• There is a reliance on non-recurring items such as insurance recoveries and discrete tax items, which contributed to earnings but are not expected to repeat.

Q & A Highlights

Q: Could you provide details on the $50 million of securities sold at the end of the quarter? A: Susan Cullen, CFO, explained that they were adjustable rate CLOs sold with a minimal gain as the loan growth increased, prompting the sale of these assets.

Q: What was the net interest margin (NIM) for September, and how did the deposit repricing on October 1 affect it? A: John Buran, CEO, stated that the September NIM was 2.28%, but excluding a large recovery, it would have been 2.10%. They repriced $1.8 billion of non-maturity deposits 50 basis points lower on October 1, expecting some pickup from this action.

Q: Can you provide more information on the charge-off for the quarter? A: Susan Cullen, CFO, mentioned it was a C&I loan that had been fully reserved in prior quarters, and the decision to charge it off was based on new information.

Q: What is the outlook for the net interest margin if the Fed cuts rates by 150 basis points by the fourth quarter of 2025? A: John Buran, CEO, indicated that a positively sloped yield curve or a flatter curve than today would benefit the NIM. Their interest rate modeling suggests a steepening of the curve by 200 basis points could increase net interest income by about $4 million in the first year and $20 million in the second year.

Q: What is the company's target for return on tangible common equity (ROTCE) through the cycle? A: John Buran, CEO, stated their target is 10%, which they believe is achievable, noting they reached this level in 2021 and 2022.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.