BankFinancial(BFIN) - 2020 Q3 - Quarterly Report

Financial Ratios and Capital Adequacy - As of September 30, 2020, the company had a Tier 1 leverage ratio of 10.66% and a Tier 1 risk-based capital ratio of 17.84%[98] - The Bank's Community Bank Leverage Ratio was 10.13% as of September 30, 2020, exceeding the minimum requirement of 8%[169] - The total capital to risk-weighted assets ratio was 16.38%, significantly above the required 8% for capital adequacy[173] - The minimum capital conservation buffer (CCB) is set at 2.5%[171] - The Bank is subject to regulatory restrictions on dividend declarations without prior approval, ensuring compliance with capital requirements[172] Loan Performance and Allowance for Loan Losses - The ratio of nonperforming loans to total loans was 0.22% and the ratio of nonperforming assets to total assets was 0.15%[98] - The allowance for loan losses (ALLL) decreased by $145,000 (1.8%) compared to the previous quarter, with required reserve ratios for multi-family residential and nonresidential real estate loans increasing by 21.5% and 58.2%, respectively[110] - The company expects additional increases to the ALLL if loan balances rise as business conditions normalize[111] - A recovery of loan losses of $187,000 was recorded for the three months ended September 30, 2020, compared to a recovery of $134,000 for the same period in 2019[136] - The portion of the allowance for loan losses attributable to loans collectively evaluated for impairment decreased by $165,000, or 2.0%, to $8.0 million at September 30, 2020[136] - The allowance for loan losses as a percentage of nonperforming loans was 343.08% at September 30, 2020, down from 901.06% at December 31, 2019[149] Income and Expenses - Net income for Q3 2020 was $1.948 million, a decrease from $3.924 million in Q3 2019[121] - Noninterest income increased to $1.3 million in Q3 2020, compared to $1.2 million in Q2 2020[115] - Noninterest expense rose to $9.8 million in Q3 2020, up from $9.5 million in Q2 2020[117] - Net interest income decreased by $2.2 million, or 16.7%, to $11.0 million for the three months ended September 30, 2020[130] - Noninterest income decreased by $210,000, or 14.2%, to $1.3 million for the three months ended September 30, 2020, compared to $1.5 million for the same period in 2019[137] - Net income for the nine months ended September 30, 2020, was $6.7 million, a decrease from $8.3 million for the same period in 2019[142] - Net interest income was $34.3 million for the nine months ended September 30, 2020, down from $39.6 million for the same period in 2019, reflecting an 18.8% decrease in interest income[143] - Noninterest expense increased by $278,000, or 2.9%, to $9.8 million for the three months ended September 30, 2020, compared to $9.5 million for the same period in 2019[140] - Noninterest expense decreased by $415,000, or 1.4%, to $28.7 million for the nine months ended September 30, 2020, from $29.1 million for the same period in 2019[151] Deposits and Liquidity - Total deposits increased by $14.1 million (1.0%) in Q3 2020, with core transaction account balances increasing by $53.5 million[112] - Total deposits increased by $117.5 million, or 9.1%, to $1.402 billion at September 30, 2020[127] - The company anticipates greater volatility in deposit balances for the remainder of 2020 due to government stimulus impacts[112] - As of September 30, 2020, the Company had liquid assets of $8.0 million and an unsecured line of credit of $5.0 million with no outstanding balance[165] Asset Management - Total assets increased by $116.9 million, or 7.9%, to $1.605 billion at September 30, 2020, from $1.488 billion at December 31, 2019[124] - Cash and cash equivalents rose by $239.3 million, or 125.8%, to $429.7 million at September 30, 2020[124] - Total liabilities increased by $118.9 million, or 9.1%, to $1.433 billion at September 30, 2020, primarily due to an increase in total deposits[127] Interest Rates and Risk Management - The average yield on the loan and lease portfolio decreased to 4.43% for Q3 2020 from 4.57% in Q2 2020[114] - The average cost of retail and commercial deposits fell to 0.48% in Q3 2020, down from 0.63% in Q2 2020[114] - The yield on interest-earning assets decreased by 137 basis points to 3.24% for the three months ended September 30, 2020[131] - The net interest margin decreased by 82 basis points to 2.85% for the three months ended September 30, 2020[131] - In the event of a 25 basis point decrease in interest rates, the Bank would expect a 2.48% decrease in net portfolio value (NPV) and a $328,000 decrease in net interest income[182] - A 200 basis point increase in interest rates would result in a 2.39% increase in NPV and a $4.5 million increase in net interest income[182] - The Company has de-emphasized residential mortgage loans and increased focus on nonresidential real estate loans and commercial loans to manage interest rate risk[177] Shareholder Returns - The Company declared cash dividends of $0.30 per share for both the nine months ended September 30, 2020, and September 30, 2019[173] - The company repurchased 66,000 shares at an average cost of $7.82 during Q3 2020[119]