BankFinancial Corporation (NASDAQ:BFIN) today announced its financial results for the third quarter ended September 30, 2024, with a net income of $2.0 million, or $0.16 per common share. Despite a decrease in interest income and a slight increase in interest expense, the company managed to increase noninterest income and reduce noninterest expenses.
Interest income suffered a $769,000 drop, mainly due to a fall in commercial loans and lease balances, while interest expense rose by $146,000 as depositors shifted to higher-yielding accounts. The tax-equivalent net interest margin decreased to 3.47% from 3.67%. On the other hand, noninterest income saw a $206,000 increase due to higher deposit service charges, fees, trust department income, and bank-owned life insurance returns.
Noninterest expense decreased by $1.1 million, with notable reductions in compensation and benefits due to a 9% cut in full-time equivalent staff and lowered incentive compensation expense. Office occupancy and information technology costs also declined.
The company's total assets stood at $1.418 billion, with total loans at $923.9 million and total deposits at $1.199 billion. Stockholders' equity was reported at $159 million. Cash and cash equivalents made up 9.8% of total assets, a slight decrease from 10.3% at the end of the previous quarter.
The investment securities portfolio grew by $42.0 million, balancing out purchases and maturities, and redemptions. The loan portfolio decreased by $63.8 million, with declines seen across multiple categories, including multi-family residential loans, commercial finance, and equipment finance. The average yield on the loan portfolio dropped to 5.07%.
Asset quality showed an increase in the ratio of nonperforming assets to total assets, now at 1.71%, affected by two U.S. Government equipment finance transactions. Excluding these, the ratio would have been 0.38%. The allowance for credit losses increased to 0.85% of total loans.
The deposit portfolio saw a $52.9 million decrease, with noninterest-bearing demand deposit balances dropping significantly. Certificates of deposits, however, increased by $5.0 million as depositors sought higher yields.
Looking ahead to the fourth quarter of 2024, BankFinancial expects cash and cash equivalent assets to be between 10% and 12% of total assets. The investment securities portfolio is projected to decrease by 5% to 15%, and the loan portfolio is anticipated to grow between 1% and 5%.
Total (EPA:TTEF) deposit balances are expected to decline by 0% to 2%, with the cost of deposits potentially decreasing by 0.05% to 0.10%. Noninterest income is projected to grow by 5% to 10%, while noninterest expense may increase by 3% to 6%.
The company's capital position remains robust, with a Tier 1 leverage ratio of 11.11% and an increase in the book value of common shares to $12.77.
InvestingPro Insights
BankFinancial Corporation's recent financial results can be further contextualized with insights from InvestingPro. The company's market capitalization stands at $152.27 million, with a P/E ratio of 17.99, indicating that investors are willing to pay nearly 18 times the company's earnings for its stock. This valuation is particularly interesting given that BankFinancial is trading near its 52-week high, as highlighted by one of the InvestingPro Tips.
Despite the challenges mentioned in the quarterly report, such as decreased interest income and loan balances, InvestingPro data shows that BankFinancial has maintained dividend payments for 19 consecutive years. This consistency in dividend payments, coupled with a current dividend yield of 3.38%, may be attractive to income-focused investors, especially in light of the company's robust capital position mentioned in the article.
The company's profitability, as noted in the InvestingPro Tips, aligns with the positive net income reported for the third quarter. However, it's worth noting that two analysts have revised their earnings downwards for the upcoming period, which investors may want to consider alongside the company's forward-looking statements.
For those interested in a deeper analysis, InvestingPro offers 6 additional tips for BankFinancial Corporation, providing a more comprehensive view of the company's financial health and market position.
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