Summary and Analysis of Key Points

Overview

BankFinancial Corporation reported net income of $2.0 million, or $0.16 per common share, for the three months ended September 30, 2024. The company had total assets of $1.418 billion, total loans of $923.9 million, total deposits of $1.199 billion, and stockholders’ equity of $159 million at the end of the quarter.

Financial Performance

• Interest income decreased by $769,000 primarily due to declines in commercial loans and lease balances. Interest expense increased by $146,000 due to retail depositors seeking higher-yielding account types, leading to a decrease in the tax-equivalent net interest margin to 3.47%.

• Noninterest income increased by $206,000, primarily due to increased deposit service charges and fees, trust department income, and improved returns on bank-owned life insurance.

• Noninterest expense decreased by $1.1 million, with declines in compensation and benefits, office occupancy, and information technology expense.

Asset Quality

• The ratio of nonperforming assets to total assets increased to 1.71% at September 30, 2024, from 1.54% at June 30, 2024, primarily due to a $1.5 million multi-family residential borrower relationship placed on nonaccrual status.

• Excluding two U.S. Government equipment finance transactions totaling $18.9 million, the ratio of nonperforming assets to total assets would have been 0.38%.

• The allowance for credit losses increased to 0.85% of total loans at September 30, 2024, compared to 0.82% at June 30, 2024.

Deposits and Liquidity

• Total deposits decreased by $52.9 million (4.2%), with declines in noninterest-bearing demand deposits and interest-bearing deposits, partially offset by an increase in certificates of deposit.

• The company’s capital position remained strong, with a Tier 1 leverage ratio of 11.11% at September 30, 2024.

Outlook

The company’s loan demand was muted in the first two months of the third quarter, but increased towards the end of the quarter for multi-family residential and nonresidential real estate loans. Demand for new equipment finance transactions and commercial finance transactions remained sporadic. The company continues to focus on managing interest rate risk through its asset-liability management strategies.

Overall, BankFinancial Corporation reported a decrease in net income for the quarter, primarily due to lower net interest income, but maintained a strong capital position and made progress in managing nonperforming assets. The company’s outlook remains cautious given the uncertain economic environment and competitive pressures.