Flushing Financial Corporation (NASDAQ:FFIC) Q3 2023 Earnings Conference Call November 1, 2023 9:30 AM ET

Company Participants

John Buran - President, CEO & Director

Susan Cullen - Senior EVP, Treasurer & CFO

Francis Korzekwinski - Senior EVP & Chief, Real Estate Lending

Conference Call Participants

Mark Fitzgibbon - Piper Sandler & Co.

Stephen Moss - Raymond James & Associates

Christopher O’Connell - KBW

Manuel Navas - D.A. Davidson & Co.

Operator

Good day, and welcome to Flushing Financial Corporation's Third Quarter 2023 Earnings Conference Call. Hosting the call today are John Buran, President and Chief Executive Officer; and Susan Cullen, Senior Executive Vice President, Chief Financial Officer and Treasurer; and Franc Korzekwinski, Senior Executive Vice President and Chief of Real Estate Lending. Today's call is being recorded. [Operator Instructions].

I would now like to turn the conference over to John Buran. Please go ahead.

John Buran

Thank you, operator. Good morning, and thank you for joining us for our Third Quarter 2023 Earnings Call. Following my prepared remarks, Susan will review the financial trends, and we will then answer any questions. During the first quarter, the company instituted a 6-step action plan to enhance the resilience of our business model and strengthen our financial performance. We continue to take significant steps forward in this plan during the third quarter and are pleased with the progress we've made so far.

First, we added $100 million of interest rate hedges during the quarter to continue our move towards interest rate neutral, while emphasizing more floating rate loans, which approximate 60% of the loan pipeline at the end of the quarter. These actions have significantly reduced our interest rate sensitivity position while providing additional income.

Second, we continue to focus on risk-adjusted returns and overall profitability. Yields on the loan pipeline rose 54 basis points quarter-over-quarter and yields on loan closings increased 288 basis points year-over-year. It will take time for new and reprice loans to have a significant impact on overall loan yields, but we're encouraged by the results so far.

Third, we expanded noninterest-bearing deposits by $47 million quarter-over-quarter or 6%, which compares favorably to the overall weaker industry trends. Net loans increased $63 million quarter-over-quarter as well. Our strong deposit and loan performance is driven by our initiatives to expand our client base and build loyalty through our excellent brand of customer service and deep community relationships.

Fourth, credit quality remains solid with net recoveries during the quarter. Minimal exposure to Manhattan office buildings and strong debt service coverage ratios.