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FF

FLUSHING FINANCIAL CORP (FFIC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 was dominated by balance sheet restructuring: GAAP loss per share was $(1.61) and Core EPS was $0.14; restructuring losses totaled ~$76M pre-tax (net $(1.74) per share), while GAAP NIM expanded 29 bps QoQ to 2.39% and Core NIM expanded 18 bps to 2.25% .
  • Actions included selling ~$445M of 1.98% AFS securities, purchasing ~$384M at 5.67%, terminating a related swap for a $3M pre-tax gain, prepaying ~$251M of FHLB advances and moving ~$74M of 3.91% loans to held for sale; management expects a further 10–15 bps Core NIM uplift in Q1 2025 .
  • Liquidity and capital strengthened: TCE/TA rose to 7.82% (+82 bps QoQ) and undrawn liquidity lines totaled $3.6B; average deposits rose 8.2% YoY though were flat QoQ .
  • Asset quality remained stable with NPAs of $51.3M (0.57% of assets) and net charge-offs of 28 bps of average loans, largely on loans previously reserved; criticized/classified loans were 1.07% of gross loans .
  • Near-term catalysts: down-repricing of $792M CDs maturing in Q1 at 4.59% (current CD rates ~3.5–4.25%), upward loan repricing (>$700M in 2025), and SBA and branch expansion initiatives aimed at improving profitability .

What Went Well and What Went Wrong

  • What Went Well

    • Net interest margin inflected: “GAAP NIM increasing 29 basis points, and core NIM up 18 basis points… The balance sheet restructuring should increase core NIM by 10 to 15 basis points in the first quarter.” — John Buran .
    • Funding costs fell 34 bps QoQ (deposit costs down; favorable deposit betas), supporting NIM expansion; average noninterest-bearing deposits increased QoQ .
    • Loan repricing tailwind: ~$747M of loans set to reprice ~214 bps higher in 2025; similar volume in 2026/2027, largely tied to FHLB-5yr + spread .

  • What Went Wrong

    • Restructuring drove a GAAP net loss: Noninterest income swung to $(71.0)M driven by a $72.3M securities sale loss and a $3.8M interest-rate mark on held-for-sale loans .
    • Credit costs rose: provision for credit losses increased to $6.4M and net charge-offs to $4.7M (28 bps of average loans), primarily loans previously fully reserved .
    • Operating expenses stepped up: noninterest expense rose 12% YoY with a $2.6M FHLB prepayment penalty and investments in staff/branches and higher deposit insurance, pressuring efficiency .

Financial Results

  • P&L and EPS trend
MetricQ2 2024Q3 2024Q4 2024
Net Interest Income ($000s)$42,776 $45,603 $51,235
Noninterest Income ($000s)$4,216 $6,277 $(71,022)
Net (Loss) Income ($000s)$5,322 $8,906 $(49,245)
Diluted EPS ($)$0.18 $0.30 $(1.61)
Core EPS ($)$0.18 $0.26 $0.14
  • Margins and yields
MetricQ2 2024Q3 2024Q4 2024
Net Interest Margin FTE (%)2.05% 2.10% 2.39%
Core NIM FTE (%)2.03% 2.07% 2.25%
Cost of Funds (%)3.54% 3.69% 3.35%
Yield on Avg Interest-Earning Assets (%)5.43% 5.63% 5.60%
  • KPIs and capital
MetricQ2 2024Q3 2024Q4 2024
Average Loans ($MM)$6,748 $6,737 $6,780
Average Total Deposits ($MM)$7,196 $7,464 $7,450
TCE/TA (%)7.12% 7.00% 7.82%
Book Value/Share ($)$22.89 $22.94 $21.53
Tangible Book Value/Share ($)$22.24 $22.29 $20.97
NPLs/Gross Loans (%)0.51% 0.50% 0.49%
NPAs/Total Assets (%)0.61% 0.59% 0.57%

Note: FFIC does not present multi-segment revenue; results are reported on a consolidated basis in the materials reviewed .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Core NIM FTE upliftQ1 2025n/a+10–15 bps expected from restructuring New
Noninterest expense growth (core)FY 20252024 target mid-single-digit increase 5–8% YoY increase from ~$159.6M base; +$2M seasonal in Q1 Raised vs prior-year target
Effective tax rateFY 2025n/a25–28% expected New
CD repricingQ1 2025n/a~$792M retail CDs mature at 4.59%; current CD rates ~3.5–4.25% Downward repricing expected
Loan repricingFY 2025n/a~$747M scheduled to reprice ~214 bps higher (Dec 31, 2024 index) Upward repricing
BOLI incomeQ1–Q2 2025; thereaftern/a~$1.4M (Q1), ~$3.3M (Q2), ~$2.2M/quarter thereafter; timing dependent New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
Net interest margin trajectoryQ2: slight declines; “largely interest-rate neutral” . Q3: NIM bottomed in July and rose in Aug/Sep .NIM expanded (GAAP +29 bps, core +18 bps); +10–15 bps expected in Q1 2025 .Improving
Deposit mix and pricingQ2: average deposits +4.3% YoY; CDs up; NIB ~11.4% . Q3: average deposits +9.4% YoY; NIB ~11.3%; betas favorable .NIB deposits increased QoQ; deposit costs down 34 bps; CD retention ~78% with 88 bp rate reduction; favorable betas .Improving cost of funds
Loan repricingQ2: disclosures of repricing and resets . Q3: loan closings up QoQ; yields ~7.51% .~$747M repricing in 2025 (~214 bps higher); similar in 2026–27; supports NIM .Favorable
Credit qualityQ2: NPAs 61 bps; criticized/classified 1.13%; NPLs 51 bps . Q3: NPAs 59 bps; criticized/classified 1.00% .NPAs 57 bps; NCOs 28 bps (fully reserved loans); criticized/classified 1.07%; reserve added to largest NPA .Stable with isolated charges
Liquidity & capitalQ2: ~$3.1B undrawn lines; leverage 8.18% . Q3: ~$3.9B undrawn lines; TCE/TA 7.00% .~$3.6B undrawn lines; TCE/TA 7.82% (+82 bps QoQ) .Strengthening
Strategic initiatives (SBA, branches, Asian focus)Q2: investing in staff/branches; long-term profitability focus . Q3: continued investments .Building SBA team, branch expansion (two branches in Asian initiative), stronger Asian market focus .Expanding

Management Commentary

  • “Our Company successfully executed meaningful actions in 2024… The overall result of this balance sheet restructuring is expected to be a significant improvement… with 10–15 bps of NIM expansion expected in 1Q25… shifting priorities in 2025 to 1) Preserving Strong Liquidity and Capital, 2) Maintaining Credit Discipline, and 3) Improving Profitability.” — John R. Buran, President & CEO .
  • “The GAAP and core net interest margin increased 29 and 18 basis points… Liability repricing is the driver… balance sheet restructuring is also expected to have a 10 to 15 basis point improvement in the core net interest margin in the first quarter… We are laser focused on improving our non-interest-bearing deposits.” — Susan Cullen, SEVP & CFO .
  • “We see continued opportunities to reduce our funding costs… real estate loan portfolio should reprice higher over the next 3 years… Non-interest expense is expected to increase approximately 5% to 8% in 2025… expect a 25% to 28% effective tax rate for 2025.” — John R. Buran .

Q&A Highlights

  • Restructuring status: loan sales marked and expected to close in Q1; “Very soon… within the first quarter” — CFO .
  • Branch expansion: two branches planned in 2025, focused on Asian initiatives; expense guidance (5–8% growth) incorporates this — CEO/CFO .
  • $10B threshold preparation: Durbin impact not significant; many costs already baked in (risk, stress testing, “three lines of defense”) — CFO .
  • Growth path to $10B: preferred via acquisition over organic — CEO .
  • NIM outlook: ~2.30–2.40% by year-end is more reasonable than ~2.50% — CFO .
  • Rate sensitivity: “largely neutral” to moves up or down — CEO .
  • Credit details: largest C&I charge-off (~$4.4M) previously fully reserved; added ~$2.6M reserve to the largest NPA — CFO .
  • Deposit pricing: spot deposit costs (ex non-maturity) ~3.25–3.30% at year-end; deposit betas remained favorable .
  • Profitability focus in CRE: shift to relationship business; cognizant of CRE concentration limits — CEO .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024, Q3 2024, and Q2 2024 could not be retrieved due to SPGI daily request limits; estimate comparisons are therefore unavailable for this recap [GetEstimates error].
  • If needed, we can refresh and compare EPS/revenue to consensus when access is restored.

Key Takeaways for Investors

  • NIM has turned and management guided an additional +10–15 bps Core NIM in Q1 2025 from restructuring; combined with lower deposit costs, this should support near-term margin expansion .
  • Down-repricing of ~$792M Q1 CDs (4.59% W.A. rate) and favorable deposit betas create meaningful funding cost relief; CD retention was 78% in Q4 with an 88 bp rate cut on renewals .
  • Structural loan repricing (>$700M in 2025, similar in 2026–27) at ~200+ bps higher rates provides a multi-year yield tailwind as loans reset to FHLB-5yr + spread .
  • Asset quality is stable (NPAs 0.57%, NPLs 0.49%, criticized/classified 1.07%), with higher Q4 charge-offs largely on previously reserved loans; reserve coverage on NPLs ~120% .
  • Capital improved (TCE/TA 7.82%, +82 bps QoQ) and liquidity is ample ($3.6B undrawn), enhancing resilience for continued remix of assets/liabilities .
  • Operating expense growth (5–8% in 2025) reflects targeted investments (branches, SBA); watch for operating leverage improvement as NIM expands and noninterest income (BOLI and swap-related fees) scales .
  • Near-term watch items and catalysts: completion of loan sales (held-for-sale), deposit cost trajectory with Fed moves, branch openings in Asian markets, SBA loan production/sales, and demonstrated margin expansion versus management’s Q1/Q4 NIM guidance .

Source Documents Reviewed

  • Q4 2024 Form 8-K Item 2.02 and Exhibit 99.1 earnings press release .
  • Q4 2024 earnings call transcript (Jan 29, 2025) .
  • Q4 2024 earnings presentation slides .
  • Prior-quarter earnings materials: Q3 2024 8-K and press release ; Q2 2024 8-K and press release .