Sign in

You're signed outSign in or to get full access.

FF

FLUSHING FINANCIAL CORP (FFIC)·Q1 2025 Earnings Summary

Executive Summary

  • Core profitability improved despite a GAAP loss: Core EPS was $0.23 vs GAAP EPS of ($0.29), driven by 12 bps GAAP and 24 bps core NIM expansion QoQ as cost of funds fell 22 bps; the GAAP loss reflects a non‑cash, non‑tax‑deductible goodwill impairment of $17.6M ($0.51/sh) with no impact on regulatory capital .
  • Credit headwinds modestly worsened but remain manageable: NPLs rose to 69 bps of loans (from 49 bps in Q4’24) largely due to one multifamily relationship; criticized/classified loans increased to 133 bps, driven by one office credit that lost its primary tenant; NCOs were 27 bps, down from 28 bps in Q4’24 .
  • Liquidity and capital stable: Average deposits +6.8% YoY (+1.5% QoQ) to $7.56B; TCE/TA was 7.79% (vs 7.82% in Q4’24) with $4.0B of undrawn liquidity resources; dividend of $0.22/sh paid in Q1 .
  • Near-term catalysts: trajectory of NIM expansion (loan repricing and deposit costs), resolution of identified MF/office credits, SBA ramp and BOLI actions, and operating leverage vs expense growth guidance; management reiterated 2025 expense growth and tax rate ranges, with continued focus on remixing funding and contractual loan repricing through 2027 .

What Went Well and What Went Wrong

  • What Went Well

    • “GAAP and Core Net Interest Margins expanded by 12 and 24 basis points QoQ, respectively… cost of funds declining 22 bps to 3.13%,” highlighting tangible core spread improvement despite an inverted curve .
    • Average deposits grew 6.8% YoY and 1.5% QoQ; noninterest-bearing period-end deposits +5.9% YoY and +3.2% QoQ; uninsured and uncollateralized deposits remain low at 16% of total .
    • Loan repricing pipeline supports future NIM: ~$511M to reprice +171 bps in 2025, ~$706M +190 bps in 2026; management estimates +$9M 2025 and +$13M 2026 annualized NII from repricing, cumulatively ~$50M over three years .

  • What Went Wrong

    • GAAP loss ($9.8M) from non‑cash goodwill impairment ($17.6M, $0.51/sh), overshadowing underlying core profitability; impairment had no regulatory capital impact .
    • Asset quality softened: NPLs rose to 69 bps (vs 49 bps in Q4’24), criticized/classified to 133 bps (vs 107 bps), tied to a multifamily relationship and an office credit (lost primary tenant) .
    • Core noninterest expenses up 5.4% YoY (though down 1.9% QoQ); full-year 2025 noninterest expense expected to rise 5–8% as FFIC invests in branch expansion and SBA build-out .

Financial Results

MetricQ1 2024Q2 2024Q3 2024Q4 2024Q1 2025
Net Interest Income ($000s)$42,397 $42,776 $45,603 $51,235 $52,989
Provision for Credit Losses ($000s)$592 $809 $1,727 $6,440 $4,318
Noninterest Income ($000s)$3,084 $4,216 $6,277 ($71,022) $5,074
Noninterest Expense ($000s)$39,892 $39,047 $38,696 $45,630 $59,676
Net Income (Loss) ($000s)$3,684 $5,322 $8,906 ($49,245) ($9,796)
Diluted EPS (GAAP)$0.12 $0.18 $0.30 ($1.64) ($0.29)
Core EPS$0.14 $0.18 $0.26 $0.14 $0.23
NIM FTE (%)2.06% 2.05% 2.10% 2.39% 2.51%
Core NIM FTE (%)2.06% 2.03% 2.07% 2.25% 2.49%

KPI and Balance Sheet Snapshot

KPIQ1 2024Q2 2024Q3 2024Q4 2024Q1 2025
Yield on Int.-Earning Assets (%)5.32 5.43 5.63 5.60 5.51
Cost of Funds (%)3.42 3.54 3.69 3.35 3.13
Efficiency Ratio (%)86.07 82.57 77.20 79.01 72.21
Avg Loans ($MM)6,804 6,748 6,737 6,780 6,672
Avg Deposits ($MM)7,081 7,196 7,464 7,450 7,561
TCE / TA (%)7.40 7.12 7.00 7.82 7.79
NPAs / Assets (%)0.53 0.61 0.59 0.57 0.71
NPLs / Loans (%)0.36 0.51 0.50 0.49 0.69
NCOs / Avg Loans (%)— (0.01) 0.18 0.28 0.27

Estimates Comparison (S&P Global)

MetricQ1 2025 ConsensusQ1 2025 Actual (S&P)Surprise
Primary EPS$0.21*$0.23*+$0.02*
Revenue ($)$55.38M*$53.75M*($1.63M)*

Values marked with * retrieved from S&P Global via GetEstimates. S&P may use normalized definitions that differ from GAAP or company “core” reporting.

Context: Company reported GAAP EPS of ($0.29) due to goodwill impairment; Core EPS was $0.23, aligning with the S&P “actual” EPS figure above .

Drivers vs estimates: Core EPS modestly beat on stronger NIM and deposit cost relief; “Revenue” per S&P was slightly below consensus, noting definitional differences for banks .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Noninterest Expense GrowthFY 2025+5% to +8% YoY (off ~$160M 2024 base) +5% to +8% YoY reiterated Maintained
Effective Tax RateRemainder of 202525%–28% 25%–28% reiterated Maintained
NIM Outlook2025Core NIM +10–15 bps benefit in Q1 from 4Q restructuring; further expansion dependent on curve Further expansion expected via loan repricing; sensitive to curve shape; no quantified run-rate provided Qualitative maintained
CD Repricing2025~$800M Q1’25 maturing at 4.59% with lower offered rates; retention ~78% ~$602M Q2’25 maturities at 4.16%; current CD offers ~3.5%–4.25%; May 1: 3M CD to 4% Updated detail
Loan Repricing Contribution2025–2027~$750M 2025 and similar in 2026; ~+$2M/+12M NII sensitivity to curve steepening (illustrative) $511M 2025 (+171 bps), $706M 2026 (+190 bps), nearly $1B 2027 (+168 bps); expected +$9M (2025) and +$13M (2026) annualized; ~$50M cumulative over 3 years Updated detail
DividendOngoing$0.22/sh in recent quarters $0.22/sh paid in Q1’25 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24, Q4’24)Current Period (Q1’25)Trend
Yield Curve / NIMQ3: NIM bottomed in July; early expansion with deposit cost decline; curve flattening/stiffening benefits NIM . Q4: GAAP NIM +29 bps; core +18 bps; restructuring to add +10–15 bps in Q1 .NIM expanded to 2.51% GAAP / 2.49% core; further expansion expected but curve inversion late in quarter is a headwind .Improving but curve-sensitive.
Deposit StrategyQ3: Lowered non-maturity rates Oct 1; CD repricing opportunity; betas favorable . Q4: Deposit cost -34 bps QoQ; focus on mix and cost .Avg deposits +6.8% YoY; CD maturities repricing lower; May 1 CD rate cut signaled; NIBD mix focus .Positive mix progress.
Loan RepricingQ3: $775M to reprice 2025 (+159 bps); 2026 and 2027 sizable . Q4: ~$750M 2025 repricing +214 bps (Dec index) .$511M 2025 +171 bps, $706M 2026 +190 bps; 3‑yr cumulative +$50M NII; Q1 reprices retained ~88%, repriced +210 bps .Strong visibility.
Credit Quality (MF/Office)Q3: MF/CRE metrics strong; limited office exposure; 1 office NPA expected to resolve . Q4: ACL 60 bps; low NPA; one large NPA reserved .NPLs rose (MF relationship); one office credit drove criticized/classified; still low LTVs/implied limited loss; no specific reserve on MF case (LTV 43%) .Slight softening, manageable.
SBA & Fee InitiativesQ3: BOLI 1035 to lift BOLI income ~$4M over next year; SBA team expansion . Q4: First SBA sales expected Q1 .SBA premiums ~7%; pipeline building; noninterest income aided by swap loans and BOLI exchange .Building momentum.
Asian Market ExpansionQ3: ~1/3 branches; growth opportunity; community engagement . Q4: 2 new branches planned in Asian markets .Jackson Heights opening early May; second Chinatown later 2025; Asian deposits ~$1.3B (~17% of total) .Expansion underway.
Regulatory/ScaleQ4: $10B prep largely baked in; minimal Durbin impact; inorganic path preferred .No update beyond re‑emphasis on liquidity/capital stability and expense guide .Stable posture.
Tariffs/MacroQ3: Sensitivity to curve/path of cuts . Q4: Positive slope to support NIM .Tariff uncertainty cited in reserve outlook; limited direct trade exposure; real estate focus .Monitoring risk.

Management Commentary

  • “Our GAAP and Core Net Interest Margins expanded by 12 and 24 basis points QoQ… Although we recorded a non-cash goodwill impairment charge of $17.6 million… this accounting adjustment has no impact on our regulatory capital ratios or liquidity position… TCE/TA stands at 7.79%” — John R. Buran, President & CEO .
  • “We expect further net interest margin expansion as real estate loans contractually reprice higher… cost of funds declined 22 bps QoQ… a positively sloped yield curve will drive net interest margin expansion” — Susan K. Cullen, SEVP & CFO .
  • “We have ample liquidity with $4 billion of undrawn lines… uninsured and uncollateralized deposits at 16%… company and bank remain well capitalized” — Susan K. Cullen .
  • “We expect to expand our branch network in these [Asian] markets during 2025… Jackson Heights branch opening in early May and a second Chinatown branch later this year” — John R. Buran .

Q&A Highlights

  • Expenses: 2025 expense guide unchanged (+5–8%); Q1 seasonal comp largely offset by nonrecurring adjustments; run-rate similar going forward .
  • Credit specifics: MF NPL uptick from one relationship (3 loans) with ~43% LTV; no specific reserve due to low LTV; criticized/classified increase tied to an office condo loan whose largest tenant moved out; borrower cooperative; active leasing activity .
  • NIM outlook: Too volatile to quantify near-term; moving parts include loan repricing and CD rates; CRE repricing seen as a key opportunity under current rate environment .
  • Deposits: ~$602M CDs at 4.16% maturing in Q2; rates offered 3.5%–4.25%; May 1 move to 4% on 3‑mo CD clarified .
  • SBA build: Pipeline building; gain-on-sale premiums around ~7% for term loans .
  • Reserves: Expect some reserve build given macro uncertainty (including tariffs) .
  • Seasonality: Certain deposit categories show seasonal strength in Q1 that may reverse in summer .

Estimates Context

  • Core EPS beat: Core EPS $0.23 vs S&P Primary EPS consensus $0.21 (beat $0.02); reported GAAP EPS was ($0.29) due to goodwill impairment . Primary EPS “actual” per S&P aligns with normalized/core basis rather than GAAP loss in this quarter’s case ($0.23 vs -$0.29) .
  • Revenue slight miss: S&P “Revenue” $53.75M vs $55.38M consensus (miss $1.63M). Note: S&P’s bank “revenue” definitions may differ from sum of net interest income + noninterest income presented by the company. Values retrieved from S&P Global*.

Where estimates may adjust: modest upward revisions to out‑quarter NII/NIM trajectories given deposit cost relief and contractual repricing; potential modest credit cost upward bias near term given identified MF/office items and management’s caution on reserve build .

Key Takeaways for Investors

  • Core profitability is inflecting as funding costs roll down and contractual loan repricing kicks in; sustained NIM expansion hinges on the yield curve slope and continued CD repricing discipline .
  • GAAP loss is non‑economic and driven by a one‑time goodwill impairment with no capital impact; tangible capital and leverage ratios remain solid, supporting flexibility .
  • Credit normalization is emerging but idiosyncratic and well‑collateralized (low LTVs, strong DSCRs); watch the resolution cadence on the identified MF relationship and the office credit .
  • 2025 opex growth (5–8%) is a known headwind but targeted to drive operating leverage via Asian market branch expansion, SBA ramp, and relationship pricing initiatives .
  • Liquidity position (low uninsured/unsecured deposits, $4B undrawn) reduces tail risk and supports deposit remixing and growth initiatives .
  • Tactical catalysts: monthly/quarterly NIM prints vs deposit repricing, visibility on loan repricing retention rates, SBA gain-on-sale contribution, and any discrete credit resolutions; guidance cadence on tax rate and expenses remains supportive .
  • Near to medium term, the narrative is shifting toward margin recovery and franchise growth (Asian markets, SBA) while managing through a modest credit blip—positive setup if the curve steepens or stabilizes and deposit betas remain favorable .

Additional materials reviewed:

  • Q1 2025 8‑K and press release, including full statistical tables –.
  • Q1 2025 earnings call (full transcript) –.
  • Prior quarter calls for trend context: Q4 2024 –; Q3 2024 –.

Notes: No standalone additional Q1’25 press releases beyond the 8‑K exhibit were found in the document catalog.