Flushing Financial Corporation (NASDAQ:FFIC) Q2 2023 Earnings Call Transcript July 26, 2023 9:30 AM ET

Company Participants

John Buran - President & CEO

Susan Cullen - Senior EVP, CFO, & Treasurer

Conference Call Participants

Mark Fitzgibbon - Piper Sandler

Christopher O'Connell - KBW

Manuel Navas - D.A. Davidson

Operator

Good day and welcome to the Flushing Financial Corporation Second Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Mr. John Buran, President and CEO. Please go ahead, sir.

John Buran

Thank you, operator. Good morning, and thank you for joining us for our Second 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 six step action plan to enhance the resilience of our business model and strengthen our financial performance. We executed this plan well during the second quarter and are pleased with the progress we have made so far on key points. First, to move more towards interest rate neutral, we added more than $400 million of asset swaps. Additionally, $250 million of funding swaps became effective during the quarter. We're also increasing the percentage of back-to-back swap loans. These loans are over 35% of our loan pipeline and total floating rate loans are approximately 50%. These actions significantly reduced our interest rate sensitivity position while providing additional income.

Second, we increased our focus on risk adjusted returns and overall profitability. As a result yields on the loan pipeline rose 20 basis points and yields on loan closings increased 13 basis points. In addition, our loan pipeline increased 56% quarter-over-quarter. While it will take time for new and repriced loans to have a significant impact on overall loan yields, we are encouraged by the results so far.

Third, we're looking to expand our client base and build loyalty by emphasizing our excellent brand of customer service and deep community relationships. Late in the quarter, we hired a team of commercial real estate lenders with considerable experience and robust client rosters. We also continue to see high single digit growth in checking account openings and robust CD growth.

Fourth, we reviewed new and existing relationships resulting in improved credit metrics and normalized net charge offs. We also added further layers of analysis to our review process for any future deals. This review and actions reinforced our comfort with a low risk profile of our loan portfolio.