BankFinancial(BFIN) - 2020 Q1 - Quarterly Report

Financial Ratios and Capital Adequacy - As of March 31, 2020, the company reported a Tier 1 leverage ratio of 11.67% and a Tier 1 risk-based capital ratio of 16.56%[93] - The Bank's total capital to risk-weighted assets ratio was 16.53%, exceeding the required minimum of 8.00%[171] - The Bank's Tier 1 capital to risk-weighted assets ratio was 15.75%, well above the required minimum of 6.00%[171] - The Common Tier 1 (CET1) capital ratio was 15.75%, significantly higher than the required minimum of 4.50%[171] - The minimum capital conservation buffer (CCB) is set at 2.5%[168] - The Bank's total capital as of March 31, 2020, was $170,270,000, compared to $170,203,000 as of December 31, 2019[171] - The Bank's Tier 1 capital as of March 31, 2020, was $162,158,000, an increase from $162,455,000 as of December 31, 2019[171] - The company is subject to regulatory restrictions on dividend declarations without prior approval, ensuring compliance with capital adequacy requirements[169] Loan and Asset Performance - The ratio of nonperforming loans to total loans was 0.07%, and the ratio of nonperforming assets to total assets was 0.06%[93] - Total loans declined by $19.8 million (1.7%) compared to the fourth quarter of 2019, with commercial loan balances increasing by $12.3 million (8.5%) and multi-family mortgage loans decreasing by $21.3 million (3.8%)[96] - Total assets decreased by $37.7 million (2.5%) to $1.450 billion as of March 31, 2020, from $1.488 billion at December 31, 2019[128] - Loans decreased by $20.4 million (1.7%) to $1.148 billion as of March 31, 2020, from $1.168 billion at December 31, 2019[128] - Total nonperforming loans decreased to $764,000 at March 31, 2020, from $847,000 at December 31, 2019[158] - Nonperforming assets decreased by $159,000 to $874,000 at March 31, 2020, from $1.0 million at December 31, 2019[159] - The allowance for loan losses increased by $480,000, or 6.3%, to $8.1 million at March 31, 2020, from $7.6 million at December 31, 2019[146] - The allowance for loan losses as a percentage of nonperforming loans was 1,061.78% at March 31, 2020, compared to 901.06% at December 31, 2019[146] Income and Expenses - Net interest income decreased by $1.25 million (9.5%) to $11.969 million for the first quarter of 2020, compared to $13.219 million for the same period in 2019[125] - Noninterest income declined by $226,000 (13.9%) to $1.398 million for the first quarter of 2020, compared to $1.624 million for the same period in 2019[125] - The average yield on the loan and lease portfolio decreased to 4.72% for the quarter ended March 31, 2020, from 4.82% for the quarter ended December 31, 2019[115] - The net interest margin decreased to 3.44% for the quarter ended March 31, 2020, compared to 3.50% for the quarter ended December 31, 2019[115] - Noninterest expense decreased by $470,000, or 4.7%, to $9.6 million for the three months ended March 31, 2020, from $10.1 million for the same period in 2019[149] - Compensation and benefits increased by $380,000 due to seasonally higher payroll taxes and the addition of new business development resources[120] - Compensation and benefits expense decreased by $185,000, or 3.2%, due to lower incentive and severance expenses as well as decreased payroll taxes[149] - Information technology expenses increased by $130,000, or 18.8%, to $822,000 for the three months ended March 31, 2020, primarily due to equipment upgrades and cybersecurity prevention expenses[149] Dividends and Shareholder Equity - Total stockholders' equity decreased to $173.0 million at March 31, 2020, from $174.4 million at December 31, 2019, primarily due to share repurchases and cash dividends totaling $3.7 million[133] - The Bank declared cash dividends of $0.10 per share for both the three months ended March 31, 2020, and 2019[171] - The company repurchased 206,196 shares at an average cost of $10.65 during the first quarter of 2020[122] Loan Forbearance and Government Programs - As of April 17, 2020, 73 borrowers with $65.5 million in outstanding loan principal balances executed a Qualified Limited Forbearance Program agreement[109] - The company allocated $10 million to the Paycheck Protection Program (PPP) and began accepting applications on April 3, 2020[107] - Approximately 90% of the pending loan pipeline at March 31, 2020, met the revised product and underwriting requirements[100] - The company expects fluctuations in commercial loan volumes based on specific industry and business conditions, with a focus on asset-based working capital credit facilities[105] - The deposit portfolio consists almost entirely of core transaction accounts, with expectations of greater volatility in deposit balances due to government stimulus[112] Interest Rate Sensitivity - In the event of an immediate 200 basis point increase in interest rates, the Bank would expect a 5.49% decrease in net present value (NPV) and a $713,000 increase in net interest income[178] - A 25 basis point decrease in interest rates would result in a 0.44% decrease in NPV and a $19,000 increase in net interest income[178]