BankFinancial(BFIN) - 2024 Q2 - Quarterly Report

Financial Performance - Net income for the three months ended June 30, 2024, was $2.1 million, or $0.17 per common share[92] - Net income for the three months ended June 30, 2024, was $2.1 million, compared to $2.3 million for the same period in 2023[112] - Net income for the six months ended June 30, 2024, was $3.8 million, compared to $4.9 million for the same period in 2023[124] - Net interest income decreased by $367,000 to $12.6 million for the three months ended June 30, 2024, primarily due to a $1.8 million increase in interest expense[112] - Net interest income for the six months ended June 30, 2024, was $25.1 million, down from $26.4 million in the same period in 2023, primarily due to a $4.0 million increase in interest expense[124] - Noninterest income decreased by $185,000, mainly due to reduced seasonal captive insurance premium income[93] - Noninterest income increased by $37,000, or 3.0%, to $1.276 million for the three months ended June 30, 2024, compared to $1.239 million for the same period in 2023[119] - Noninterest income increased by $1.2 million to $2.7 million for the six months ended June 30, 2024, compared to $1.6 million for the same period in 2023, driven by a 24.3% increase in trust and insurance commissions[130] Assets and Liabilities - Total assets as of June 30, 2024, were $1.478 billion, with total loans of $987.7 million and total deposits of $1.252 billion[92] - Total assets decreased by $9.7 million, or 0.7%, to $1.478 billion at June 30, 2024, from $1.487 billion at December 31, 2023[107] - Total deposits decreased by $7.0 million (0.6%), with core deposits representing 82% of total deposits[99] - Total investment securities decreased by $16.6 million due to maturities and redemptions, with a weighted-average term to maturity of 1.24 years[96] - Total average interest-earning assets decreased by $60.1 million, or 4.1%, to $1.399 billion for the three months ended June 30, 2024[113] - Total deposits amounted to $996,938, with an interest expense of $8,960, resulting in a yield of 1.81%[128] Capital and Ratios - The Tier 1 leverage ratio was 10.75% at June 30, 2024, indicating a strong capital position[100] - The Bank's Community Bank Leverage Ratio was 11.32%, exceeding the required minimum of 9.00% for capital adequacy[147] - The Bank's actual capital amount for the Community Bank Leverage Ratio was $165,368 thousand, compared to the required amount of $131,469 thousand[150] - The Bank's Tier 1 leverage ratio target is at least 7.5%, and the total risk-based capital ratio target is at least 10.5%[149] - The minimum capital conservation buffer (CCB) is set at 2.5%[149] - The allowance for credit losses increased to 0.82% of total loans at June 30, 2024, compared to 0.81% at March 31, 2024[98] - The allowance for credit losses as a percentage of nonperforming loans was 39.12% at June 30, 2024, down from 40.22% at March 31, 2024[118] - The allowance for credit losses as a percentage of nonperforming loans was 39.12% at June 30, 2024, compared to 37.36% at December 31, 2023[130] Nonperforming Assets - The ratio of nonperforming assets to total assets remained at 1.54% as of June 30, 2024[98] - Nonperforming assets to total assets improved to 1.54% in 2024 from 1.69% in 2023[104] - As of June 30, 2024, total nonperforming assets were approximately $22.7 million, stable compared to $22.8 million in March 2024 and down from $25.1 million in December 2023[138] - The ratio of nonperforming assets to total assets remained at 1.54% as of June 30, 2024, unchanged from March 2024, compared to 1.69% as of December 31, 2023[138] - Nonaccrual loans totaled $20.8 million as of June 30, 2024, an increase of $305,000 from March 2024, while nonaccrual loans to total loans ratio was 2.09%[137] Interest Rates and Risk Management - The weighted average cost of interest-bearing liabilities increased by 74 basis points to 1.96% for the three months ended June 30, 2024[113] - The yield on interest-earning assets increased by 62 basis points to 5.07% for the three months ended June 30, 2024[113] - The net interest margin, on a tax-equivalent basis, remained stable at 3.63% for the six months ended June 30, 2024, and 2023[125] - The net interest rate spread for the six months ended June 30, 2024, was 3.09%[128] - In the event of a 200 basis point decrease in interest rates, the Bank would expect an 8.37% decrease in net portfolio value (NPV) and a $386,000 decrease in net interest income[159] - Conversely, a 200 basis point increase in interest rates would lead to a 3.26% decrease in NPV and a $381,000 increase in net interest income[159] - The dynamic GAP analysis indicates mismatches in the timing of asset and liability repricing, which is crucial for assessing interest rate risk[157] Expenses and Dividends - Total noninterest expense decreased by $85,000, or 0.8%, to $11.135 million for the three months ended June 30, 2024, compared to $11.220 million for the same period in 2023[120] - Compensation and benefits expense increased by $314,000, or 5.6%, to $5.943 million for the three months ended June 30, 2024[120] - Total noninterest expense rose by $1.4 million, or 6.5%, to $22.9 million for the six months ended June 30, 2024, primarily due to increased compensation and benefits expenses[131] - Compensation and benefits expense increased by $811,000, or 7.3%, to $12.0 million for the six months ended June 30, 2024, due to an increase in full-time equivalents[131] - The efficiency ratio was 80.39% for 2024, compared to 79.11% for 2023[105] - Dividend payout ratio increased to 58.39% in 2024 from 54.88% in 2023[105] - The Company declared cash dividends of $0.20 per share for each of the six months ended June 30, 2024, consistent with the same period in 2023[150]