Last Update 13 Dec 25
FFIC: Future Results Will Reflect Weaker Upside Despite Improving Credit Costs
Analysts have nudged their price target on Flushing Financial slightly higher to approximately 15.00 dollars per share, reflecting modestly improved assumptions around discount rates and valuation multiples, while keeping core growth and margin expectations essentially unchanged.
What's in the News
- Updated share repurchase disclosure indicates that from July 1, 2025 to September 30, 2025, Flushing Financial did not repurchase any additional shares, leaving total buybacks under the February 27, 2018 authorization at 3,192,036 shares, or 10.74 percent of shares outstanding, for 65.29 million dollars (Key Developments).
- Net charge offs for the third quarter ended September 30, 2025 were 1.1 million dollars, or 7 basis points of average loans, down significantly from 3.0 million dollars, or 18 basis points, in the third quarter of 2024, suggesting improving credit performance (Key Developments).
Valuation Changes
- Fair Value Estimate: Maintained at approximately 15.00 dollars per share, indicating no material change in the intrinsic value assessment.
- Discount Rate: Fallen slightly from about 7.78 percent to 7.74 percent, reflecting a modestly lower risk or cost of capital assumption.
- Revenue Growth: Essentially unchanged at roughly 30.91 percent, indicating stable expectations for top line expansion.
- Net Profit Margin: Remains effectively flat at around 33.86 percent, suggesting no meaningful shift in long term profitability assumptions.
- Future P/E: Edged down marginally from about 5.67x to 5.66x, signaling a slightly lower valuation multiple applied to projected earnings.
Key Takeaways
- Expanding non-interest-bearing deposits and repricing loans are poised to improve net interest margins and drive revenue growth.
- Growing presence in Asian markets and diversifying revenue streams can enhance deposit growth and support earnings expansion.
- Flushing Financial faces profitability challenges from restructuring losses, regulatory costs, increased expenses, and competitive market pressures, potentially impacting future earnings and margins.
Catalysts
About Flushing Financial- Operates as the bank holding company for Flushing Bank that provides banking products and services primarily to consumers, businesses, and governmental units.
- The company's balance sheet restructuring and recent $70 million equity raise are expected to enhance net interest margin (NIM) by 10 to 15 basis points in the first quarter, likely improving profitability and earnings.
- The planned repricing of approximately $750 million in loans in 2025 to higher rates is anticipated to support net interest income and drive future revenue growth.
- Flushing Financial's focus on expanding non-interest-bearing deposits through revamped customer relationship strategies and incentives could reduce funding costs, thus potentially increasing net interest margins and earnings.
- The expansion of the SBA team and planned sales of SBA loans in 2025 are expected to diversify revenue streams and increase non-interest income, supporting earnings growth.
- The company’s strategy to grow its presence in Asian markets, which currently make up 18% of total deposits, by opening new branches and leveraging cultural ties is positioned to capture additional market share and boost deposit growth, supporting revenue expansion.
Flushing Financial Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Flushing Financial's revenue will grow by 14.7% annually over the next 3 years.
- Analysts assume that profit margins will increase from 13.4% today to 25.9% in 3 years time.
- Analysts expect earnings to reach $75.7 million (and earnings per share of $2.07) by about January 2028, up from $26.0 million today.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 10.7x on those 2028 earnings, down from 18.5x today. This future PE is lower than the current PE for the US Banks industry at 12.3x.
- Analysts expect the number of shares outstanding to grow by 2.75% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 7.95%, as per the Simply Wall St company report.
Flushing Financial Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- The company reported a GAAP loss per share of $1.61, primarily due to a $76 million pre-tax loss from balance sheet restructuring, which could affect future earnings and net margins.
- Non-interest expense is projected to increase by 5% to 8% in 2025 due to new branch openings and business investments, which could pressure net margins.
- A significant portion of deposits are in the Asian markets, where they hold only a 3% market share, implying potential market challenges that could affect revenue growth.
- The company faces competition for deposits in the New York metro market, which could impact their ability to reduce funding costs and pressure net interest margins.
- The crossing of the $10 billion asset threshold will involve regulatory challenges and costs, potentially impacting profitability and operating expenses.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $17.83 for Flushing Financial based on their expectations of its future earnings growth, profit margins and other risk factors.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $292.6 million, earnings will come to $75.7 million, and it would be trading on a PE ratio of 10.7x, assuming you use a discount rate of 7.9%.
- Given the current share price of $14.32, the analyst's price target of $17.83 is 19.7% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.