FFIC Flushing Financial

John Buran President and Chief Executive Officer
Susan Cullen Senior Executive Vice President, Treasurer and Chief Financial Officer
Frank Korzekwinski Senior Executive Vice President and Chief-Real Estate Lending
Steve Comery G Research
Collyn Gilbert KBW
Call transcript
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Good day and welcome to Flushing Financial Corporation’s Third Quarter 2020 Earnings Conference Call. Hosting the call today are John Buran, President and Chief Executive Officer; Susan Cullen, Senior Executive Vice President, Treasurer and Chief Financial Officer; and Frank Korzekwinski, Senior Executive Vice President and Chief of Real Estate Lending. Today’s call is being recorded. [Operator Instructions] A copy of the earnings press release and slide presentation that the company will be referencing today are available on its Investor Relations website at

Before we begin, the company would like to remind you that discussions during this call contain forward-looking statements made under the safe harbor provisions of the U.S. Act Reform Litigation Securities of XXXX. Private are that may statements those in subject differ to factors other contained statements. such and uncertainties any cause from risks, materially Such actual to results company’s are factors the included the Such filings in U.S. with Securities and Exchange Commission. undertake Corporation law. update applicable any obligation Financial except Flushing any required statements, as to not does under forward-looking

in non-GAAP supplemental review and considered assess During this made or be to to will isolation are to non-GAAP intended performance. with substitute measures financial These financial U.S. a call, references financial measures not measures presented GAAP. for as prepared information as operating the in be the accordance and

For the yours introduce Buran, strategy President information the reconciliation to earnings a release who for and Chief and/or floor Buran, Mr. is John Executive I’d non-GAAP provide the about to of measures Officer, an the overview and like and refer to GAAP, will Mr. please presentation. sir. results. these now

John Buran

financial all our Susan joining capital an our detail and close times morning, Thank by Then our health a provide by approved XX. the on everyone update provide Good and for unprecedented Bancorp, Cullen performance, on highest of priority. tireless start employees as profile. and On credit to remains I has thanking liquidity the or continue you. will greater today’s with been XXXX call, work and I pandemic. you our merger out is COVID-XX will our October we highlights employees navigate well and for to discuss and our for as earnings CFO, quality, communities, scheduled on about which third Empire parties assisting to quarter safety to customers want customers their these call. us third due in The thank as our quarter our

results. Lending strong prepared Frank X. of Real operating realized our along Beginning a We our your quarter will on Korzekwinski. questions address we Estate with Officer, remarks, Following Slide Chief

totaled record XX earnings record XX% as on GAAP resulting the decreasing interest the we to points. achieved earning interest Our $X.XX the up third per interest on company the the second low same quarter core the net for achieved increased. quarter funds close earnings in We and basis rate environment from At income quarter. time, assets capitalized share prior consecutive yield

As of XX points compared our a points. the that are will to at CD quarter. anticipate cost retail points further a of deposit net XX result, mature decline of million interest XXX funds margin basis fourth the of basis expanded scheduled from during as to average current rate We one-year $XXX certificates an basis quarter previous rate

continues We see limited be yields quality Credit and our to differentiator. competitive expect key to of reductions. strengths asset one a

Forbearances of mortgages. total $XXX billion loan of to our Over is forbearances protection of granted approximately This the tumultuous estate secured the are real collateral customers XX% times XX% peak to of a value to approximately $X.X better from have during portfolio mortgages decreased these than by collateralized million. more with a XX%.

done during of in loans six expected quarter. second economic Therefore, to we expect to generally XX, granted reduction status months. in significant concerns quarter, for term of return As the XX% the payment we September we the approximately forbearances escalated full a forbearances Through have fourth so.

are a With that advantage. to the XX%, forbearance terms the remaining generally granted we company’s for new

and loans. quarter $X.X provision the for basis the nonperforming a XXX% a making for of the For full million. with be points the the for by XX The previous provision for XX% to of and new payments. was P&I, interest stands losses reduced allowance loans credit compared forbearance deferral would credit example, losses principle if totaled at a forbearance gross was customer The of

industry the midst Bancorp the were merger reminder, that I’m maximum yesterday. recession, our nearly approved share peak shareholders our charge-offs Xx only of Empire were XX basis in a points the the charge-offs excited while As experience. great to

expected to greater strong than merger than in than past or due million remains XX days the days about XX October loans of earlier, stated close and due. As XX. on is less quality no The loans $X with credit greater past Empire

As $XXX XX, system November. million Empire of middle is outstanding. conversion in agreements has scheduled active September a forbearance The of the for

under power strategic which about of We’re we and stress all in basis trend income portfolio excited risk good margin our shows leading capitalized in interest The record bank, in points scenarios. earnings to cost to progress The interest and continuing funds year-over-year. increasing funds by approve year-over-year. made primarily to Long remaining enhancing improving achieve net bank pricing well net quarter. include funding interest franchise resulting and the third of a net points XX Slide increase the interest basis XXX quarter-over-quarter Island. mix, XX points managing XX managing this basis and this points combined the our scalability will basis Overall, and quarter objectives, X of test efficiency, credit be the mix, cost loan and income opportunities quarter-over-quarter by core income which decrease in was the on increased leveraging net due

the earning points previous and advantage interest focus the management��s on much average of quarter. funding X%. muted XXXX. XX opportunity quarter a the our loan approximately points second funds. decreased With Additionally, XXX X, the on the earning the we X decreased versus loans same detailed maintaining net in for cost on assets. We focus discussed quarter. interest assets from quarter quarter, On basis decrease assets increased the yield during to took reduce Gross interest of We basis earning third calls basis on somewhat yield while from second X%, of activity points Slide costs

we the X, provide and forbearances area cross continued outstanding well section details and properties, During stocked stores for the on quarter, noting were was reduced a Slide our the we and site of further forbearances. On retail inspections open, active. surrounding X

have from a million $XXX earlier, total $X.X decreased peak highlight mentioned billion. to As of I I’m pleased that forbearances to

more As with minimal that expire Less to we secured estate in more XX% by an scheduled secured over we of September, fourth stressed hotels estate a to to the the On these retail Slide of forbearances performance than are we shut is to explorations the portfolio. details believe during of that With of over but loan onset offices quarter. speedier asset have reason, forbearances loss half approximately XX%. turn content that The multifamily, to XX% the XX% our loans of there prone during financial and began down are our of or of by third call now the real of the average these Susan forbearances are in let commercial open that, on real industries million pandemic, medical projected quality. quarter. other amounted been of the and additional general includes This like end show recovery. to provide portfolio. X, in me are judge $XXX remainder mortgages. value Total the our

Susan Cullen

basis you, average originated day amounted quarter. I’ll totaled to of real for the is XX to XX%. loans by as Slide X Nonperforming average as collateralized loans loans $XX Loan charge-offs year. of by loans for on value XX loans Thank or $XXX,XXX of on nonperforming delinquencies shows to XX% begin X. loan the was basis a real gross totaled John. Slide estate net points value points of percentage and estate XX loans dependent million, September and which XX

for Our XXXX. discipline the as credit years, remained in consistent criteria back tightened XX we has past the underwriting

only XX we in have the years, XX XX-day vintage last result As delinquencies. plus

unemployment losses. Turning the the to of compared million on quarter. recorded In economy XX, loan as our in the third and update for with September reduction quarter, allowance we Slide second evaluation, provision The $X.X provide a of of quarter XX% GDP. nearly tough subdue a of forecast we XX, allowance showed million, the the provision $XX an to third elevated

Oxford the model. return This model forecast norms. take four use to assumes continue it will losses to quarters that our historical We for to economic

stay credit that continue the to service in our to and customers current well discipline we’ll environment, manage continues carefully. Our and to close

improved since ratio XX, coverage the Slide crisis our financial As highlighted XXXX. in has on significantly

credit XXXX. in at of is from XXX% second confident resulted in a solid decreased that the to in Our to loss ratio XXXX as We increasing non-performing of there XX, ratio XX, a the due XX% coverage amount slight uptick portfolio. content metrics coverage have is in quality The remain quarter December minimal our loan September loans. the

underwrite Slide XX, second than continue Importantly, loan. five our the using to through charge-offs note each were great the continued performance during we we industry better recession and on in quarter the and cap XXXX. test rate that the stress mid of significantly Continuing loan each a

process. identify and recording actively the to loans continue delinquency in our manage We charge-offs resolve portfolios to early problem loan

approximately on have XX%, recession. historical a our are we into the from use and XX% non-performing Since by XX% mixed improved loans loans have reminder, of to a by construction the loan-to-value the recession, great heading loans. from improved XX% As – seller great decreased while

to most superior over demonstrated As the current we credit Based strengthen decades, data, are continue mindful asset our sheet, quality. on of balance maintaining we have we two metrics.

nearly charge-offs great times points Our XX the basis were industry the peak then. while maximum five recession, was in of midst

XX, program. credit The positive. we has believe outlook and forbearance company on detailed Slide an credit strong As remains active the the company a history for

XX LTV collateralized by Loans to amount days of conservative remains only an basis portfolio of its than XX% retained loan with Our points historical has gross nature. greater It average estate loans. XX%. XX delinquent real

the reduce entered the York million Slide is September as optimistic We which far, funding the And further as phase has loan has situated NIM. New of XX. steadily to area. the into New remain portfolio thus is forbearance four opportunity results as pace to core Our of detailed XX% metro we our with in XX% costs XX, On York over area declined. is positive important support declined of and requests of $XXX cautiously forbearance metropolitan

XXX quarter of approximately weighted through currently XX% mature have of a basis the CDs of the retail XXXX We quarter, average scheduled total end deposits. $XXX of at represents At third of CDs third to cost the million points. retail

maturing to significantly And hand rates. reduce strategically on the cost wholesale shown costs lower replacement funding of CD using As we’re markets right side, funds. current are than

believe there’s pressure limit downward on protection to the yields. we Importantly, asset

Barring on we As further rate reprice. described in rate the movement in not asset the XX, will million environment, expect movement yields. portfolio $XXX of macro-interest Slide believe we floating reduce

floors real reprices estate the there portfolio individual XX% Additionally, are annually with of and associated approximately loans.

of XX, of third $X for X% XXXX, to business XX.X% and ratio the quarter ratio X.XX% on an expense The company due and expense compared non-interest expenses of ratio realization efficiency to stable quarter third the the quarter XXXX. historically to FDIC assessment quarter-over-quarter. expense third non-interest The increased The ago. in $XXX,XXX of assets. The a year of credit in the maintained non-interest managing a X.XX% the compared NIM Empire merger. legal last and for the expense achieving XX.X% to growing the to average million quarter the the or for improving expense a in quarter XXXX, third is related increased lower efficiency of Slide assets to us average focus to ratio. assisted XX.X% Moving non-interest is has of relatively the Included

We focus to items on order improve will in these continue further to that ratio.

on improvement are gains, more and focused with given customers our to opportunities branches look our always, continuous especially As Empire remotely. with of efficiency enhanced work the for ability and and serve addition we

effective XXXX, turn back it XX%. that approximate to the tax John. Regarding I’ll XX% taxes With we rate between and for

John Buran

Thank you, Susan.

yesterday. previously shareholders merger we the the As remarked Empire approved

salaries approximately the the about is Suffolk while and The pro This Suffolk combination, or market, summarizing our The October into drive XX% expected approximate with larger gross an accretive be Slide XX. of with saves cost The approximately XXXX the the be Empire from in majority loans lowers transaction about excited to earnings earnings for forma XX, very recognized improving County Empire ratio. assets On has our companies over $X earnings transaction deposit cost $X saves experienced XXXX to to employee sheet with on years. in company XXXX. as will planned XX,XXX There’s of billion savings XX, $X XX% the will turnover. and allows footprint benefit has merger incremental million back bigger saves. approximately the highlights. accretion of the cost expense of X.X have acceleration us Slide businesses. deposits cost XX the which $X funds, billion. of an representing expense of projected to loan close Slide of County earn The expands the with XX% of in the On We’re balance been merger penetrate along and the billion, will of

loan integration everyone in forward quarters. look improve to Our to deposit ratio progress our future XXX%. updating will We on to

environment. there during New can recognize And opportunity enhanced savings we occupancy metro digital the reduce XX, of and to are operating York, possible. for if which platform learnings work from costs. an functions Slide COVID-XX employees our could are opportunities remotely, to Turning has we outside move proven powerful. additional There’s Further,

younger a attracting are demographic. We

For enrollment were account the and openings quarter, XX% digitally banking completed of X%. increased online

as improved processes we We are to through productivity employee streamline technology. have noticed able

to give quarter. into continue ability pandemic to our the the lost further continue work the work dedication reduction we Including be detail the core NIM XX%. additional strategic diluted the this the of XX, proud XX% start, for Record good inclement on remotely, points of an credit we XXXX. with a will days. remained to weather in from and an improved opportunity a funds, And stronger third out work finally second how to execute position. our with to there increased us Empire or hard heading with in mid-XXs, basis ratio impressed employees. EPS opportunities. On provision in I strong. even Slide XX objectives come credit reduce cost be of and less quarter plan XX, time sick I of Additionally, to merger the results for that the provides losses summarize Efficiency Slide

our and to to supporting addition our only continue The essential We financial reach an role Flushing and Empire in need. family will play capabilities. communities strengthen the of customers

multi-year credit environment, our core and positive we’re capital ability sheet our future Stress base a provides to credit liquidity over strong this of loss and good earnings a absorb power going testing horizon. into material losses. balance sustain confirms to Our necessary

and credit Our to competitive prudently. has continue advantage well clients stay served portfolio loan us manage to this our close discipline our And consistent during environment. we challenging and economic

York our a its brand to to and us for a and customer all The maintaining base ongoing key Asian strong for represent staff customers. and Our focus long-term. City York employees the a on and a differentiator. multilingual opportunity provide continue diverse environment New over remains inclusive developing City serve New We’ll population to safe continue market significant

model our been critical our investment serve Universal our our in along has the this Importantly, digital in Banker capabilities. enhanced with to customers ability environment, to

supporting Flushing to our strategic again resilient priorities. communities Financial, believe as customers. stakeholder to digital and We and and value. our even for capital, more differentiator continue key against to to team by continue online I’ll remain on Our focused focused strong capabilities maintaining and margin on thanking as once continue quality, and execute improve net Empire executing be while commitment, the a our combined managing that for our their I excited conclude asset entity welcome our an further our I’m dedication to the interest will stronger remain we liquidity expenses also company. become We employees to and strategy. unlock

over you. I’ll it to up questions. Now turn it Operator, open we’ll to


come the will Research. G Please Steve ahead. of go Comery And first have question from we

Steve Comery

just I you is tell I’m down guys of go obviously, request $XXX the request million. term again. what wasn’t If the was? and that months could wondering straight to assuming the six of could if morning. sort substantially second forbearance, on how us Good second to it typically I’m much

John Buran

forbearances on we request. When a our a of deferment. lot think is second month limited we this, went put I into amount six

into fourth that the we’re why So more is the reason, carrying quarter.

Steve Comery

was now, lot that you’ll Are on of loan closing hesitant at these out? $XXX like pretty becoming less And Okay. end you do think And it the kind to $XXX of pipeline, QX? customers million just close Or loans then million. loans? like see of prevalent is a further though. still the is the QX strong, obviously It like

Frank Korzekwinski

began was Steve. due a flow rolls closings. preparation little strong. to It This the we loan considerably Rent is bit the Frank in quicker longer at XXXX, what the several loan as open, rent to to improve pace. what primarily actual appeared us prior a Korzekwinski, shape. seem the in that judicious hand fact XXXX The in economy more open for cash that was slowdown collections were occurred closing when on were the bar as bit becoming had establishing last the months a closings were verify and expenses over Obviously taking that good began a to to income be businesses to the in to current

expect would we would begin that to aside So bottleneck move to to accelerate. closings and begin

Steve Comery

thoughts results that Empire with What maybe look margin have be for Okay. should very on soon, Obviously, to impacts QX of thoughts some any the Very margin expected the guys, but over the just you Empire. had. there, like like Empire an know quarter? updated things changed helpful. accretive I merger just kind updated on for based the close third as

Susan Cullen

this Well, is Steve, Susan.

their be the yes, to our NIM should During NIM. accretive quarter,

metrics have stable. reported their all it, earn we were have were understood stayed still quality period. their and sure purchasing. of to And We looking this we at we lot dilution other we credit. The the with credit a quarter pretty of the agreement back have time spent actually what comfortable make We are X.X – very in very, that as

Steve Comery

guess maybe so Okay. just on And Thank merger? in, more systems integration and then what’s maybe about kind I general systems guess, excited of expected what me in are you to basically this in you. merger, roadmap November, after for that And week. the close like conversion terms, opportunities one with the I

John Buran

this have Long who we have the point the at the we that people on as begin in of in We strong do great working the we’re turn deal been number of marketing in staff, have New Island. into market past a the approach And on accelerate of in process a corner Year. don’t we time. Island pretty that So together our presence will Long will in But putting a mid-November.

Empire significant the addition, particularly us area. expect leverage a in in as In to the we to uptake, is that business talent provide group the with well

In the enhanced out first quarter. addition, to digital the customers we will of be customers end at just Bank Flushing our introducing rolled for capabilities that Empire we the

also that some account And So have like, new to increase in our products. should online, we see. that management a enhancements be coming service and new escrow products an they cash will some

consumer we’re So and suite going very our have that products of customers. we a introduce to our to business strong expect both very, customers to

Steve Comery

taking my Very for Thank Okay. you good. questions.

Susan Cullen

Thanks, Steve.


Instructions] [Operator is Gilbert from we question The next Collyn KBW. of have

Collyn Gilbert

morning, everyone. Good Thanks.

John Buran

Good morning.

Collyn Gilbert

on question the reserve Empire your your around be in Susan, follow-up Empire about to with frame discussion or comfortable thinking folded quarter the fourth the us being about very the comment you credit. for Just and just we or that should and how all comment in? Can having with

Susan Cullen

think consistent, but loan reserve would cancel growth. the to be would pretty taken have I we’d

I slight uptick So there or the given quarter, – be another to loans. million worth couple a expect in so of would $XXX adding

Collyn Gilbert

– all you the are and And you credit could that you change assuming Empire, on were if now? Okay. remind mark did just that at

Susan Cullen

The stayed percentage consistent. has

Collyn Gilbert

accretion Okay. those when assumption, were for was you base all And given can and gave, you what guys to the were that using of parts numbers a offered? seen then moving of XX% you we’ve in were just deal assumptions base you accretive since announced metrics of this kind say clarify initially that those kind the terms What XXXX? just

Susan Cullen

Yes. really Those much haven’t changed Collyn. metrics

think XX%. announcement was I initial the

That’s interest is earning assets. $X coming broad Empire the strokes. earnings of saves up we’re base with and from million from their how number using cost a $X income then million then layering So that with our in incremental

Collyn Gilbert


cost So million net savings. interest and $X of – income then I’m $X of sorry, incremental million so

number… whole on So

Susan Cullen

saves. net out but That’s stripping income, million of $X income, worth not just million $X of million then interest $X and income, cost of

Collyn Gilbert


for expense $XX growth, tax million the income of pretax – it’s savings. cost-effective So, whatever

mean, there fold in workforce John, further terms the all that initiatives cutting? then is of changes dynamic. the Okay. terms to there of that just initiatives, the you a given outlook, that mentioned, any work-from-home come kind target any into cost broad be costs of kind – Got XXXX other operations, of the I you’re you kind it. continues within could think And OpEx of efficiency in and potential seeing in Are and –

John Buran

in our saves. think to I actualize Empire going concentration XXXX to the be cost related is

that year. look think million concentration transaction. until we work, remote will be associated our I As in But saves later later will don’t to on in those develop $X Empire but with of the on – in the on I cost the come the specific think programs securing

Collyn Gilbert


– That’s sorry, credit. helpful. last closing loop Okay. then just thing that, the one And on on

around So the deferrals, or XXXX. of charge we an you given a – much kind if of of expectation loss broader I trying in think to from – content you to you’re don’t or that where increase you expect book sit here, the not and your commentary kind look mean, offs going not to as do net your just within

Susan Cullen

XX deferrals XX% loan by or backed The have they them somewhere average the of Collyn. preponderance mortgages LTV an in something. and range. Sure, are is mid The

that discount that So material an of hit we is costs, view XX% in run room any assuming believe and that a we taken amount giving before even room loss, have have would before XXX% a the in. losses, experience of actually lot we would we portfolio for XX% or selling

Collyn Gilbert

That’s Thank helpful. Okay. you.

Susan Cullen

you. Thank


John no the over Buran remarks. in will Mr. further back showing like our for now to session. Sir? to question-and-answer I closing conference turn any conclude queue. This call I’m would the questions

John Buran

I look associated our you our with stay listening to thank upcoming transaction. want to you. forward And you Until we all on updating Empire Thank safe. in. then successes for

Susan Cullen

Thank you.


for time today. would the I you also would at call thank a care concluded. you you, you, disconnect sir, and wonderful has lines. your Thank everyone. thank time, have your conference I this Take day. Again and ma’am may Again, sir.