BankFinancial(BFIN) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a tangible book value per share increase from $11.58 to $11.79 over the past 12 months, indicating a positive trend in shareholder value [21] - The company achieved a quarter-over-quarter growth of approximately 3%, with end-of-May balances reaching $1.57 billion [33] Business Line Data and Key Metrics Changes - The multifamily loan generation has shown consistent growth, with originations settling around $30 million per quarter, marking the fourth consecutive quarter of increases [12][29] - Equipment finance has experienced its fourth consecutive quarter of growth, with a better mix in commercial and small ticket contributing positively [16][31] - The company expects to maintain a growth target of $40 million at a 4% growth rate, with potential for stronger performance in the fourth quarter [34] Market Data and Key Metrics Changes - The company is observing a potential increase in sales due to capital gains legislation, which could impact the multifamily portfolio's performance in the second half of the year [14] - The healthcare sector is expected to lag in growth, with liquidity levels remaining high among clients, indicating a cautious outlook for the third quarter [32] Company Strategy and Development Direction - The company is focusing on expanding its commercial asset generation capabilities, particularly in equipment finance and government contracting [10][26] - There is an emphasis on organic growth through talent acquisition in commercial finance and real estate, with a goal to enhance product offerings [36][38] - The company is open to opportunistic acquisitions, particularly in non-bank sectors, while being cautious about community bank acquisitions that may dilute earnings [60][64] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for margin expansion as origination rates exceed payoff rates, indicating a positive trend for interest income [44] - The company is actively managing expenses, with expectations for a reduction in one-time costs in the upcoming quarters [19][66] - The management remains cautious about the impact of external factors, such as interest rates and legislative changes, on loan growth and portfolio performance [14][42] Other Important Information - The trust department is expanding its assets under management, focusing on closely held businesses, which presents a unique market opportunity [51] - Treasury services are set to launch new technology, with initial customers expected to generate significant fee income [52] Q&A Session Summary Question: Trends on the expense line - Management acknowledged higher expenses due to one-time costs related to asset resolution and transitioning to a new data platform, expecting expenses to stabilize around $9.6 million to $10 million per quarter [7][9] Question: Loan growth driven by commercial payoff trends - Management noted steady origination rates in real estate and expressed concerns about potential sales impacting growth, particularly due to capital gains legislation [11][14] Question: Share repurchase strategy - The company has repurchased 650,000 shares this year and plans to continue, with a focus on maintaining a tier one leverage ratio [19][20] Question: Expectations for equipment finance growth - Management expects to sustain and potentially increase growth in equipment finance, with a focus on government and renewable energy sectors [26][31] Question: Credit quality and reserving outlook - Management indicated a stable credit quality with zero deferrals in the real estate portfolio, expecting some recovery of reserves while maintaining a cautious approach to new originations [45][47] Question: Recent M&A activity - Management is open to evaluating M&A opportunities that align with their growth strategy but is currently focused on organic growth [57][64] Question: PPP program status - The company reported over $100,000 in flow-through income from PPP forgiveness in Q2, expecting this trend to continue for the next few quarters [67][68]