Flushing Financial Corporation (NASDAQ: FFIC) saw a decline in earnings in the first quarter of 2024, but is expected to bounce back for the rest of the year due to loan growth. Earnings per share are projected to be $0.79 for 2024 and $1.01 for 2025, with a high upside potential from the current market price. Additionally, the company offers an attractive dividend yield of 6.7%, although there is a slight risk of a dividend cut.
The company’s margin has been under pressure recently due to a contraction in net interest margin, but this is expected to stabilize. The deposit mix is shifting towards interest-bearing accounts, but with anticipated interest rate cuts, the pressure on the margin is expected to ease.
Loan growth is expected to improve in the coming quarters, as economic activity in New York has shown signs of improvement. The loan portfolio is projected to grow by 0.75% each quarter until the end of 2025, along with other balance sheet items.
Risks for Flushing Financial Corporation appear to be low, with a geographically concentrated loan portfolio in New York. The company’s risk level is considered low, with minimal exposure to office property loans and manageable unrealized losses on securities.
Despite the possibility of a dividend cut, the company is expected to maintain its dividend payout in 2024. With a positive earnings outlook, Flushing Financial Corporation is anticipated to weather 2024 without a dividend reduction.
Using historical price-to-tangible book and price-to-earnings multiples, the stock is valued at a target price of $14.5, representing a 10.6% upside from the current market price. A buy rating is recommended based on the total expected return of 17.3%.