BankFinancial(US:BFIN)2024-02-29 16:00Loan and Deposit Performance - As of December 31, 2023, total loans decreased by $176.0 million (14%) to $1.051 billion, with total commercial loans and leases down by $159.7 million (29%) to $393.3 million[53]. - Total deposits decreased by $113.3 million (8%) to $1.3 billion, with core deposits representing 82.4% of total deposits[56]. - The company originated loans and leases for investment totaling $760.4 million for the year ended December 31, 2023, compared to $1.252 billion in 2022[301]. - Total deposits amounted to $1.262 billion, with interest-bearing deposits at $1.001 billion and noninterest-bearing demand deposits at $260.9 million[291]. - Net deposits decreased by $113.3 million for the year ended December 31, 2023, compared to a decrease of $113.5 million in 2022[303]. Credit Quality and Allowance for Credit Losses - The ratio of nonperforming loans to total loans was 2.11% and nonperforming assets to total assets was 1.69% at December 31, 2023, primarily due to two U.S. Government equipment finance transactions totaling $18.9 million[54]. - The allowance for credit losses increased to 0.79% of total loans at December 31, 2023, compared to 0.66% at the end of 2022[55]. - The allowance for credit losses was $8.3 million, which is 0.79% of total loans and 37.36% of nonperforming loans as of December 31, 2023[72]. - The company may need to increase its allowance for credit losses in response to future credit deterioration and supervisory reviews by the OCC[72]. - The allowance for credit losses balance was $8.3 million as of December 31, 2023, with no specific loss reserve for individually evaluated loans[316]. - The total allowance for credit losses increased to $10,036 million post-ASC 326 adoption from $8,129 million pre-adoption, reflecting a rise of $1,907 million[386]. - The allowance for credit losses for one-to-four family residential real estate rose to $380 million from $281 million, an increase of $99 million[386]. - The allowance for multi-family residential real estate increased by $630 million, reaching $4,647 million post-adoption[386]. - The allowance for commercial loans and leases saw a significant rise of $1,122 million, totaling $3,670 million post-ASC 326 adoption[386]. Financial Performance - Net income for the year ended December 31, 2023, was $9.393 million, down from $10.494 million in 2022, a decrease of about 10.5%[320]. - Total interest income increased to $66.155 million in 2023 from $55.296 million in 2022, representing a growth of approximately 19.4%[320]. - Noninterest income decreased to $4.417 million in 2023 from $5.976 million in 2022, a decline of approximately 26.1%[320]. - The provision for credit losses was $313,000 in 2023, down from $1.828 million in 2022[320]. - The net income for the year ended December 31, 2023, was $9,393,000, down from $10,494,000 for the year ended December 31, 2022[349]. Capital and Regulatory Compliance - The Company's Tier 1 leverage ratio was 10.54% at December 31, 2023, and the tangible book value per share increased to $12.45 from $11.90 year-over-year[57]. - The total risk-based capital ratio and Tier 1 leverage ratio targets are at least 10.5% and 7.5%, respectively, with the Bank being well-capitalized as of December 31, 2023[306]. - The company is subject to enhanced regulatory scrutiny due to a concentration of commercial real estate loans, necessitating improved risk management techniques[69]. - The company has developed policies to comply with anti-money laundering regulations, but noncompliance could lead to significant penalties and operational risks[77]. - The company assessed its internal control over financial reporting as effective as of December 31, 2023[339]. Market Conditions and Future Outlook - The Company expects to accelerate growth in commercial loan originations in 2024, although growth in multi-family residential and commercial real estate portfolios may be limited due to anticipated market interest rates[58]. - The Company anticipates further volatility in market interest rates and loan demand due to changes in U.S. Government and Federal Reserve Bank policies during 2024[60]. - The Federal Reserve's monetary policies, including interest rate adjustments, significantly influence the company's earnings and growth prospects[78]. - The company faces risks related to economic conditions, including the impact of the COVID-19 pandemic and government fiscal stimulus on loan demand and deposit supply[80]. - Adverse local economic conditions, particularly in the Chicago metropolitan area, could negatively affect the company's financial condition and loan repayment capabilities[81]. Shareholder Returns and Stock Performance - The Company maintained its quarterly dividend rate at $0.10 per common share throughout 2023[57]. - The Company paid $2.4 million to repurchase shares and $5.1 million in cash dividends to stockholders during 2023[330]. - The Board of Directors declared four quarterly cash dividends totaling $5.1 million in 2023, with a cash dividend of $0.10 per share for each quarter[333]. - The Company repurchased 8,070,375 shares of its common stock out of the 8,267,771 shares authorized as of December 31, 2023[307]. Cash Flow and Liquidity - The company reported a net change in cash and cash equivalents of $111,713,000, a significant improvement from a decrease of $435,391,000 in 2022[352]. - Ending cash and cash equivalents increased to $178,484,000 from $66,771,000, reflecting strong liquidity[352]. - Net cash from operating activities was $9,221,000, slightly down from $9,294,000 in the previous year[352]. - Interest paid increased to $14,077,000 from $4,468,000, indicating higher borrowing costs[352]. - As of December 31, 2023, there were no known trends or uncertainties that could materially impact liquidity[304].