BankFinancial(BFIN) - 2025 Q1 - Quarterly Report

Financial Performance - The company reported net income of $2.1 million, or $0.17 per common share, for the quarter ended March 31, 2025[86]. - Net income for the three months ended March 31, 2025, was $2.1 million, compared to $1.7 million for the same period in 2024, with earnings per share increasing to $0.17 from $0.14[110]. - The effective tax rate decreased to 17.2% for the three months ended March 31, 2025, compared to 22.6% for the same period in 2024[124]. Assets and Liabilities - Total assets increased to $1.442 billion, total loans decreased to $841.1 million, and total deposits rose to $1.233 billion as of March 31, 2025[86]. - Total assets increased by $7.3 million, or 0.5%, to $1.442 billion at March 31, 2025, from $1.435 billion at December 31, 2024[105]. - Total liabilities increased by $6.2 million, or 0.5%, to $1.285 billion at March 31, 2025, driven by an increase in total deposits[108]. Income and Expenses - Net interest income decreased by $182,000 primarily due to declines in healthcare finance lines of credit, while the net interest margin remained stable at 3.50%[87]. - Noninterest income increased by $64,000, driven by higher trust department income and deposit service charges[88]. - Noninterest expense decreased by $287,000 due to reductions in base compensation and payroll taxes[89]. - Total noninterest expense decreased by $854,000, or 7.3%, to $10.9 million for the three months ended March 31, 2025, compared to $11.8 million for the same period in 2024[122]. Deposits - Total deposits increased by $15.4 million, with core deposits representing 81% of total deposits as of March 31, 2025[96]. - Total deposits increased by $15.4 million, or 1.3%, to $1.233 billion at March 31, 2025, with interest-bearing NOW accounts rising by $11.8 million, or 4.3%[108]. Credit Quality - The ratio of nonperforming assets to total assets improved to 1.23% as of March 31, 2025, with expectations of a $5.6 million cash settlement in the second quarter[94]. - Nonperforming assets decreased by $574,000 to $17.8 million at March 31, 2025, compared to $18.3 million at December 31, 2024[128]. - The ratio of nonperforming assets to total assets was 1.23% as of March 31, 2025, down from 1.28% as of December 31, 2024[128]. - The allowance for credit losses as a percentage of nonperforming loans was 44.35% at March 31, 2025, compared to 44.71% at December 31, 2024[120]. - The recovery of credit losses for the three months ended March 31, 2025, was $261,000, compared to a provision for credit losses of $61,000 recorded for the same period in 2024[119]. - Total criticized and classified loans decreased to $12.3 million as of March 31, 2025, from $11.8 million as of December 31, 2024[125]. - The allowance for credit losses to total loans ratio was 0.86% as of March 31, 2025, compared to 0.85% as of December 31, 2024[127]. Capital Management - The company's Tier 1 leverage ratio remained strong at 10.91% as of March 31, 2025[97]. - As of March 31, 2025, the Bank's Community Bank Leverage Ratio was 11.38%, exceeding the required minimum of 9.00%[139]. - The Bank's capital management aims to balance the need for higher capital levels to address unforeseen risks while achieving adequate returns for stockholders[137]. - The Company has adopted Regulatory Capital Policies that will increase minimum capital ratios if necessary[141]. - The Bank is classified as well-capitalized under the regulatory framework for prompt corrective action as of March 31, 2025[141]. Future Outlook - The company plans to prioritize new commercial finance working capital lines of credit and corporate equipment finance transactions for future growth[98]. - The company continues to focus on expanding its small business and commercial deposit portfolio while enhancing noninterest income through wealth management solutions[99]. - The company expects to settle a $10.5 million U.S. Government Contract Disputes Act claim for $5.6 million in cash, expected to be received in the second quarter of 2025[129]. Interest Rate Risk - In the event of an immediate 200 basis point decrease in interest rates, the Bank would expect a 9.72% decrease in net present value (NPV) and a $3.8 million decrease in net interest income[151]. - Interest rate risk management strategies include de-emphasizing residential mortgage loans and focusing on nonresidential real estate and commercial loans[146]. - The economic value of equity analysis estimates changes in NPV over a range of interest rate scenarios, considering historical loan prepayment rates and deposit decay rates[147].