Flushing Financial ((FFIC)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Flushing Financial’s latest earnings call revealed a balanced sentiment, with notable advancements and areas of concern. The company showcased significant progress in net interest margin and asset quality, against the backdrop of a GAAP loss per share and rising criticized loans. This blend of positive and negative indicators reflects a cautious optimism for future performance.
Net Interest Margin (NIM) Improvement
Flushing Financial reported an increase in both GAAP and core net interest margins, with GAAP NIM rising by 29 basis points and core NIM by 18 basis points in the fourth quarter of 2024. Looking ahead, the company anticipates a further core NIM improvement of 10 to 15 basis points in the first quarter of 2025.
Successful Equity Raise
In December 2024, the company successfully completed a $70 million equity raise aimed at restructuring its balance sheet and enhancing net interest income. This strategic move is expected to bolster financial stability and profitability.
Improved Loan-to-Deposit Ratio
The loan-to-deposit ratio saw improvement, declining from 101% a year ago to 94% in the fourth quarter of 2024, indicating better balance and financial health.
Stable Asset Quality
Asset quality remained robust, with an improvement in the tangible common equity ratio quarter-over-quarter, underscoring the company’s solid financial foundation.
Strong Liquidity and Capital
Flushing Financial maintained strong liquidity and capital positions, highlighted by $3.6 billion in undrawn lines and resources, along with strengthened regulatory capital ratios.
Multifamily Loan Portfolio Strength
The multifamily loan portfolio, representing 38% of gross loans, demonstrated resilience with a low average loan-to-value of 43% and a debt coverage ratio of 1.8 times.
GAAP Loss Per Share
The company reported a GAAP loss per share of $1.61 in Q4 2024, primarily due to a $76 million pre-tax loss from balance sheet restructuring, posing a challenge to profitability.
Criticized and Classified Loan Increase
There was an increase in criticized and classified multifamily loans, which rose from 60 basis points to 102 basis points in the fourth quarter of 2024, indicating potential risks in loan portfolios.
Book and Tangible Book Value Decline
Flushing Financial experienced a decline in book and tangible book value per share by about 7% year-over-year, attributed to the current rate environment and capital actions.
Forward-Looking Guidance
Looking forward, Flushing Financial projects continued expansion of core NIM, driven by CD and loan repricing benefits, with non-interest expenses expected to increase by 5% to 8% from a base of $160 million. The effective tax rate for 2025 is anticipated to range between 25% and 28%. The company remains committed to maintaining strong liquidity and capital positions.
In summary, Flushing Financial’s earnings call presented a mixed but cautiously optimistic outlook. Improvements in net interest margin, asset quality, and liquidity provide a solid foundation for growth, while challenges such as GAAP losses and increased criticized loans warrant careful monitoring. The company’s strategic initiatives and forward-looking guidance suggest a focus on strengthening financial performance and navigating potential risks.
