BankFinancial(US:BFIN)2022-05-06 21:03Financial Data and Key Metrics Changes - The loan portfolio increased to just over $1.1 billion, with a growth of approximately $45 million in April 2022, reflecting a 6% year-to-date increase in commercial-related loans [7][15][31] - The yield on originations in April was 4.68%, up from 4.56% at the end of the first quarter, indicating a positive trend in yield activity [13][14] Business Line Data and Key Metrics Changes - The Equipment Finance division originated more loans in April than in the entire first quarter of 2022, indicating strong growth despite supply chain delays [8][26] - Multifamily loans and commercial real estate loans saw strong originations, contributing significantly to the overall loan growth [7][20] - The commercial finance area experienced some volatility but is expected to contribute positively moving forward [9][30] Market Data and Key Metrics Changes - The company is seeing increased activity in healthcare finance, although it remains spotty, with cash drawn and returned in lessor finance also being inconsistent [28] - The demand for equipment remains strong, but delivery issues continue to impact transaction timing [25][29] Company Strategy and Development Direction - The company aims for loan growth of $40 million per quarter, with a target of reaching between $1.125 billion to $1.150 billion in the second quarter [10][31] - There is a focus on strengthening capabilities in equipment finance and commercial finance to leverage market opportunities [51][52] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the pipelines for the second and third quarters, expecting strong originations and improved yields [22][31] - The company anticipates that rising interest rates will compress refinancing opportunities, leading to fewer prepayments and a more stable loan portfolio [19][20] Other Important Information - The company expects to maintain operating expenses around $10 million per quarter, with potential fluctuations based on hiring and performance incentives [49][70] - The book value decreased from $11.90 to $11.68 due to market rate changes affecting the value of the Treasury note portfolio [76] Q&A Session Summary Question: Can you walk through the outlook on pipelines and originations versus paydowns? - Management noted that the decline in payoffs is due to fewer refinancing opportunities as rates rise, with a more normal run rate expected in the first quarter [18][19] Question: What are the expectations for payoffs over the balance of the year? - Management estimates around $20 million to $25 million in payoffs per quarter for the real estate portfolio and similar figures for equipment finance, with C&I being more variable [37] Question: How is the company planning to manage operating expenses? - Management indicated that expenses are expected to normalize around $10 million per quarter, with some variability based on performance incentives [49][70] Question: What is the outlook for interest income with upcoming Fed rate hikes? - Management expects an increase of $1 million to $1.5 million in net interest margin with each additional rate hike, as the company redeploys excess liquidity into loans [45][62] Question: What is the company's stance on share repurchases given the current stock price? - Management stated that while there is frustration over the stock price being below tangible book value, the focus remains on deploying excess cash into loans rather than share repurchases at this time [64][80]