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FLUSHING FINANCIAL CORP (FFIC)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered a clean core EPS beat versus S&P Global consensus, with Primary EPS of $0.32 vs $0.31 consensus (+3.8%); GAAP EPS was $0.41, up 128% YoY, on stronger NIM and noninterest income . Results benefited from ongoing loan repricing and episodic fee items; core NIM expanded 3 bps QoQ to 2.52% while GAAP NIM rose to 2.54% .
  • Revenue was essentially in line with consensus (actual $59.29M vs $59.27M) as net interest income held steady and noninterest income more than doubled QoQ aided by swap loan closings and fair value adjustments .
  • Guidance tightened positively: core noninterest expense growth cut to 4.5%–5.5% for FY25 (from 5%–8% prior), and the effective tax rate lowered to 24.5%–26.5% for the remainder of 2025, supporting estimate revisions higher on EPS .
  • Strategic themes remain consistent: disciplined CRE/multifamily underwriting, deposit franchise build (Asian community deposits at $1.4B), and strong liquidity/capital (TCE/TA up to 8.04%); buybacks are unlikely near term as management prioritizes capital build and dividends .
  • Near-term catalysts: Q3 deposit seasonality and CD maturities (retention rates and repricing impact), execution on back-to-back swap pipeline (~$41M), and continuing loan repricing tailwinds; medium-term EPS leverage comes from NIM expansion under a more normalized yield curve .

What Went Well and What Went Wrong

What Went Well

  • NIM expansion and earning power: GAAP NIM rose to 2.54% (+3 bps QoQ, +49 bps YoY), core NIM to 2.52% (+3 bps QoQ, +49 bps YoY), with loan yields +7 bps QoQ and episodic items adding ~6 bps in Q2 .
  • Noninterest income strength: Back-to-back swap loan closings of $38.7M generated $0.6M, while fair value adjustments added $1.7M; total noninterest income more than doubled QoQ to $10.3M .
  • Credit metrics improved: Net charge-offs fell to 15 bps (from 27 bps in Q1) and criticized/classified loans dropped to 108 bps of gross loans (from 133 bps), with multifamily NPLs halved QoQ to 50 bps .

Management quote: “We’re successfully improving profitability, evidenced by another quarter of NIM expansion and pre-provision net revenue at its highest level in nearly three years” — John R. Buran .

What Went Wrong

  • Period-end deposits declined 5.6% QoQ ($429M), reflecting seasonal government deposit outflows; management expects further seasonal pressure in Q3 before recovery in Q4 .
  • Nonperforming assets rose modestly QoQ (0.75% of assets vs 0.71% Q1), driven largely by CRE office exposures (3% of gross loans); NPLs to loans increased to 0.74% .
  • Funding costs up 8 bps QoQ (cost of deposits to 3.1%) due to swap dynamics; management noted limited ability to reduce funding costs absent Fed rate cuts, shifting the margin lever to asset repricing .

Financial Results

Income and EPS

MetricQ2 2024Q1 2025Q2 2025
Net Interest Income ($USD Thousands)$42,776 $52,989 $53,209
Noninterest Income ($USD Thousands)$4,216 $5,074 $10,277
Noninterest Expense ($USD Thousands)$39,047 $59,676 $40,356
Net Income ($USD Thousands)$5,322 ($9,796) $14,203
GAAP Diluted EPS ($USD)$0.18 ($0.29) $0.41
Core EPS ($USD)$0.18 $0.23 $0.32

Margins and Rate Metrics

MetricQ2 2024Q1 2025Q2 2025
Net Interest Margin FTE (%)2.05 2.51 2.54
Core NIM FTE (%)2.03 2.49 2.52
Yield on Interest-Earning Assets (%)5.43 5.51 5.59
Cost of Funds (%)3.54 3.13 3.19
Net Interest Rate Spread (%)1.48 2.01 2.01

Consensus vs Actual (S&P Global)

MetricQ2 2024Q1 2025Q2 2025
Primary EPS Consensus Mean ($)0.18*0.21*0.3075*
Primary EPS Actual ($)0.18*0.23*0.32*
Revenue Consensus Mean ($)47,153,000*55,381,330*59,268,000*
Revenue Actual ($)46,183,000*53,745,000*59,292,000*

Values retrieved from S&P Global.*

Highlights:

  • EPS beat in Q2 2025: $0.32 vs $0.31 consensus — bold: beat.*
  • Revenue in Q2 2025: $59.29M vs $59.27M — bold: in line/slight beat.*
  • Q1 2025 revenue: $53.75M vs $55.38M — bold: miss.*

Loan Composition (Period-End)

Category ($USD Thousands)Q2 2024Q1 2025Q2 2025
Multifamily Residential$2,631,751 $2,531,628 $2,487,610
Commercial Real Estate$1,894,509 $1,953,710 $1,987,523
1–4 Family Mixed-Use$518,510 $501,562 $493,846
1–4 Family Residential$261,716 $269,492 $258,608
Construction$65,161 $63,474 $46,798
Commercial Business (incl. SBA)$1,403,668 $1,411,310 $1,423,265
Gross Loans$6,775,315 $6,731,176 $6,697,650

KPIs

KPIQ2 2024Q1 2025Q2 2025
Average Total Deposits ($MM)$7,196 $7,561 $7,607
Noninterest-Bearing Demand Deposits ($MM, Avg)$822.856 $855.322 $875.535
NPAs / Total Assets (%)0.61 0.71 0.75
NPLs / Gross Loans (%)0.51 0.69 0.74
Net Charge-Offs / Avg Loans (%)(0.01) 0.27 0.15
TCE / TA (%)7.12 7.79 8.04
Book Value / Share ($)$22.89 $20.81 $20.91
Dividend / Share ($)$0.22 $0.22 $0.22

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Core Noninterest Expense GrowthFY 20255%–8% 4.5%–5.5% Lowered
Effective Tax RateRemainder of 202525%–28% 24.5%–26.5% Lowered
Core NIM expansion (from restructuring)2025+10–15 bps expected Continued NIM expansion; no numeric update Maintained qualitatively
Total Assets Outlook2025Stable assets Assets stable; loan growth market-dependent Maintained
Noninterest Income PipelineH2 2025Pipeline support noted ~$41M back-to-back swap loans scheduled to close Reinforced
DividendQuarterly$0.22 per share $0.22 per share in Q2 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q4 2024; Q-1: Q1 2025)Current Period (Q2 2025)Trend
Yield Curve & NIM SensitivityYield curve turned positive; modeled +100 bps slope benefits NII $2M yr1/$12M yr2 ; Q1 inversion returned; slope impacts NIM Any steepening is positive; expect NIM expansion; a 25 bp cut/steepen adds a few bps to margin Improving slope supportive
Deposit Seasonality (Gov’t)Seasonality reversal in summer months ~$400M QoQ decline mostly seasonal; expect further Q3 outflows; recovery Q4 Seasonal pressure near-term
CD RepricingSignificant opportunity to reprice lower; 78% retention in Q4 ~$391M maturing avg rate 3.93% in Q3; retained ~80% in Q2 with 24 bps rate reduction Favorable repricing continues
Loan Repricing Tailwinds2025 ~$750M repricing +214 bps (Dec index); multi-year tailwind 2025 ~$373M repricing +136 bps; through 2027 ~$2.1B repricing; NII +$5M (2025), +$12M (2026), +$16M (2027) Strong, predictable tailwind
Credit DisciplineLow-risk portfolio; NCOs 11 bps in 2024; peer-outperforming metrics NCOs down to 15 bps; multifamily NPLs halved to 50 bps; criticized/classified to 108 bps Improving
Asian Market Strategy~$1.3B deposits; branch expansion planned in 2025 Deposits in Asian markets now $1.4B; 12.4% CAGR since Q2’22; new branches (Jackson Heights, second Chinatown) Growth accelerating
SBA PipelineTeam build-out; expected Q1 loan sales Pipeline healthy; noninterest income aided; continued hiring considered Scaling
Buybacks & CapitalCapital priorities: invest, dividend, then repurchases Buybacks unlikely; focus on building capital; peers above current capital levels Deferred

Management Commentary

  • “Both GAAP and core net interest margin expanded 3 basis points quarter-over-quarter… This marks continued improvement… from a year ago levels in the 200 basis point range.” — John R. Buran .
  • “Real estate loans are expected to reprice approximately 160 basis points higher through 2027… Contractually… NII will increase $5M (2025), $12M (2026), and $16M (2027).” — Susan K. Cullen .
  • “Our liquidity position remains exceptionally strong… approximately $4 billion in undrawn lines and resources at quarter end… uninsured and uncollateralized deposits representing only 17% of total deposits.” — Susan K. Cullen .
  • “We’ve lowered our expected core noninterest expense growth to 4.5%–5.5%… and our expected effective tax rate to 24.5%–26.5% for the remainder of 2025.” — John R. Buran .

Q&A Highlights

  • Deposits: ~$400M decline QoQ driven by seasonal government deposits; more Q3 outflows expected, then recovery .
  • Yield curve sensitivity: A 25 bp Fed cut and 25 bp steepening would be “good news,” adding a couple of bps to margin .
  • Capital return: Despite stock at ~58% of tangible book, buybacks are unlikely near term; priority remains profitable growth and dividend .
  • Expense outlook and hiring: Reduced expense growth guide reflects accrual true-ups and tighter cost management; branch openings (Jackson Heights, second Chinatown) and team hiring continue .
  • Funding costs: Limited opportunity to lower deposit costs until Fed cuts; margin support to come mainly from asset-side loan repricing .
  • Credit impact from repricing: No stress observed on loans repriced +154–166 bps; ~92–97% retention; minor delinquencies being cleared .

Estimates Context

  • EPS: Q2 2025 Primary EPS actual $0.32 vs consensus $0.31 — bold: beat.* Core EPS matches S&P “Primary EPS,” while GAAP EPS was higher ($0.41) due to non-GAAP items .
  • Revenue: Q2 2025 actual $59.29M vs $59.27M consensus — bold: in line/slight beat.*
  • Implications: Lower OpEx and tax-rate guidance support upward revisions to EPS; NIM trajectory (asset repricing, episodic fees) could sustain modest beats. Seasonal deposit pressure in Q3 may temper revenue/NII expectations near-term .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • The quarter’s core EPS beat and NIM expansion demonstrate improving earning power; multi-year loan repricing provides a visible tailwind to NII and margin .
  • Expect Q3 seasonal deposit outflows to pressure funding costs and balances; watch retention rates and pricing on ~$391M CDs maturing at 3.93% average .
  • Operating leverage should improve with tighter OpEx guidance (4.5%–5.5%) and a lower effective tax rate (24.5%–26.5%), both supportive of EPS estimate revisions higher .
  • Credit remains resilient with improving NCOs and declining criticized/classified loans; multifamily NPLs halved QoQ, mitigating CRE office concentration concerns (only ~3% of gross loans) .
  • Liquidity and capital are robust (TCE/TA 8.04%); near-term buybacks remain unlikely as management prioritizes capital and dividends—focus instead on execution in Asian markets growth and SBA pipeline .
  • Trading lens: Short term, Q3 seasonality and funding swaps may cap margin upside; medium term, loan repricing and deposit franchise growth underpin a constructive EPS/NIM trajectory under any yield curve normalization .
  • Cross-check: Press release cites $3.6B undrawn lines; call references ~$4B—view difference as rounding/timing; overall liquidity remains ample .