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Bankfinancial (BFIN)

Participants
F. Morgan Gasior Chairman & Chief Executive Officer
David Konrad D.A. Davidson
Kevin Roth Allstate Investment
Brian Martin Janney Montgomery
Call transcript
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Operator

Good day and thank you for standing by. Welcome to the BankFinancial Corp Q1 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. now today hand Mr. would to conference I speaker your Instructions] like the to over [Operator Gasior, and Chairman CEO. Please go ahead.

F. Morgan Gasior

have time, Good First morning, like this Quarter the statement to I'd XXXX Investor and Conference Call. welcome our forward-looking to read. At

Unidentified Company Representative

Securities may all this meaning XXE be Reform Safe including by forward-looking Litigation Securities statements The the statements of Act Harbor Section forward-looking in the conference, Safe to made purposes XXXX, within include provisions Harbor the of remarks XXXX. and of statement Exchange this at the of of We Private these contained Act invoking intend provisions. covered are for

of Forward-looking project, and expression. may the are expect, statements intend, may plan uncertainties, are or and not that significant involve based occur. or on use often similar words, anticipate, risks believe, estimate, assumptions They by identifiable

ability of effect those and results the may to differ inherently our plans or predict from uncertain, Our strategies is actual actual significantly results, and predicted.

statements. uncertainties future. turn to considered the be and evaluating that do over to factors in in SEC. call obligation we F. consult in further declarations risk the the the risks undertake risks please For reports Gasior. to not and our And CEO and any update forward-looking Morgan statement should forward-looking forward-looking operation, I'll any We the our now, and Chairman on could financial have and of uncertainties These details statements results condition the impact included

F. Morgan Gasior

questions. will five this filed At you. financial Thank on we've time, XX-Q for our we're and At this be ready time, quarter release published supplement. The press our schedule.

Operator

with from the D.A. will And Instructions] Davidson. of line come [Operator David first question Konrad your

David Konrad

less the downside fees. is of had a questions. growth, But the I I on and pressure commercial loan the really is quarter on Good the then less refinancing. in guess then mean, news multifamily One morning. I I good NII, good couple just think prepayment

a X.XX, of will progressing normalized should we move down do that build NIM through base if how from is off, NII quarter maybe that quarters the pressure the this or here? kind the to So now think you

F. Morgan Gasior

first, largely to growth, Well, at time moment I function will picking we the moves be morning. Good as the point, we we mix up income along a way, accelerate see as in PPP some NII. along will margin that of loan little think How do the and even your start continue affect well. way bit will to if a that prepayment income the or of it

want a income several happens next in we're because But quite kind interest necessarily the wouldn't is, of what I direction that grow to margin call what loans and net in interest the bottom able do mix we'll the optimistic to and in I yet, So grow of prepay over somewhat be think it quarters. potentially net part portfolio. the

David Konrad

the is Great. growth And good well. I side. pretty expense but is know, on follow-up rate as then first elevated, quarter my seasonally year-over-year

outlook Just quarterly run here? from rate your the expense on

F. Morgan Gasior

Yeah.

all that year-over-year the COVID Certainly, first is seasonally flowed because of think quarter through. bit the of problem, is I little expenses higher. a a

benefits removal on in side snow $X.X on million for normal quarter between would think first in going of low lots addition on $X.XX the be to high expenses. expenses have We employment the and the we million side. would in now, But the

the the down the in then the a slightly right trend $X.X second a midpoint bit little I off But be one second will quarter year. in higher expenses you And that, bet should we'll see. of would maybe tell of the half It the marketing taking So around of wildcards. million.

to some also conferences loosen the out travel, to to with and new more with starting a that We capacity new market. at customers things talking capabilities. we'll of especially have now lot on releasing up we're And of be the

bit is little be a we expense, then that which and expense marketing away incentive want grow, the putting to and of we'll for the think benefit what everyone. originations accruals comp I extent to continue to So for do

And could some in so in variables expenses. we'll those result that volatility see couple that of

David Konrad

taking questions. Thanks Okay. my for

Operator

question with Allstate line Roth Investment. the of next Your Kevin from

Kevin Roth

Hi, a the Morgan. the Thank release was Could that's or asset either any $X one for color there foreclosure the minute you into a about mentioned helpful? talk be -- it million in like press you. went would

F. Morgan Gasior

Yes. for It's I XX forbearance. They now. route. a go the default. to customer. loan -- been almost didn't -- mentioned a around around previous call Chicago years They over do tried That want commercial had in was that a XX We to been

the we collateral what UCC we'll through we're talk financial to assets. impact liquidate was we looking going first impact. the And start we'll this with the financial settlement. So did. customer at through acquiring and could out a a material next people moment, really We've in we're to the do start have have to expecting of recently about in looking the so that collateral. quarter. wanted And At reached process, not public it interested a much most sales, Didn't the had

bankruptcy I your which it's takes In is gets and a other run risk with forefront the trouble had is the has you long risk mind, moment, we cases, at into places, something -- the in that time these So through. on other lenders, expensive. to customer work a

were quickly move to we that in and successful prevent to situation. We So so. wanted we doing decided try

seems things right and here the financial and next. to way. out don't number, at ways gain is we in interested if it we'll So moment realize interest strong patience also it if on But may small break it we to see the size the quarter. And But -- we're in our relatively material settle just rewarded but be second now, settlement a expect what a some customer in a be itself have the the may impact. it's in good portfolio might happens even actually to because

Kevin Roth

since more comments other the on network on Okay. the network? branch branch then any last call branch or of And the terms conference Thank general just you. in thoughts rationalization updated

F. Morgan Gasior

material have now. back locations different expect are wouldn't Customers I future. right near anything All very different running. are branches and usage and the the in up coming

So I decisions big do soon. not think we'll make necessarily

the a the of before, have We quantity geographic and that locations. do necessarily cost many I smaller said some couple changing those have operate We facilities we facilities for of ideas dispersion of the could size of as how on and customer not realize without branches. savings though potentially base the on we

along that so do probably facilities. about how identify we serve the to And existing but There's with what facilities, possibilities those in have two with we and market to then thinking particular research then could some where smaller started lines. we're we on transition to conduct the

statements So stay done to we're in about able with we're but to be I'd make tuned, going what just not to we're say not yet, that position do. any a firm discussion

Kevin Roth

Thank you. Okay.

Operator

[Operator Instructions] Montgomery. Your question with next Janney the is from of Brian line Martin

Brian Martin

Morgan. morning, Good Hey.

F. Morgan Gasior

Good morning, sir.

Brian Martin

growth segment a this over the your payoffs can anything kind or trends little being the changed being just year loan about and maybe just the outlook quarter by a with Is mean, growth up mentioned little just about I earlier growth? bit on thinking on Morgan, and on the bit you less. about you -- Just talk then with the saw things? originations balance positive your obviously, category? of the and you you're of outlook But there how

F. Morgan Gasior

Sure.

finance strengthen. originations see was to third those in quarter third the XXXX, way all continue well. third First, consecutive quarter into then trends back And the second of and through to the the about as Real from portfolio. growth This quarter of all to we're pick the equipment you increasingly optimistic has as started can way going quarter up first estate growth.

for we're second in originations And robust first into any turning as pipeline picking more quarter the with stronger but slowly third the compared quarter little quite cases quarter. saw the seem finance, originations going still You than to as strong both up. Not the number quarter or to of the reasons. fourth quarter are in obviously third a pipelines. The be and fairly usual equipment

then bigger longer. taken it pipeline from overseas for does deliveries Sometimes installations turn. they're for that is all waiting create to and parts has equipment procure to obviously even an longer and where But take

would commercial some picked saw expect growth have quarter a finance in the equipment us we in So, up decent about first We million. -- growth lending. you in $XX

in expect third see the harder right we second but already about now, do in to continue quarter. slated to quarter close to quarter. fourth have fourth those the are that A little quarter trends We deals some

maybe So, build efficient little that in to to going million quarter there on to we can in growth $XX quarter get a third million a real going growth quarter then manner. fourth. get run the If quarter, rate out we're an that's sitting cash $XX if million maybe between consume estate forward see per in and that $XX we to some third and second bit for positive per a

are the than For We're the the previous in them. the we close history we middle-market market the in. approvals we had small able here of want. probably have example The six we'll to in quality in March ticket of more in applications We're of coming in equipment seeing finance. more did they first approve two month transactions quarter equipment finance second than Middle weeks months.

accelerating. The again, the portfolios and got So, are market that. the sure to responding there in in some real marketing those to an best estate We market portfolios. make acceleration out quality also programs the available seeing is we're we put

be But timing sometimes to that me So, close the just longer I'm feeling grow. to continue pipelines about pretty taking to now. concerns optimistic seem right things but

Brian Martin

Got you.

Okay, the standpoint your a the outlook -- that's on -- just And the helpful. capital from buyback?

F. Morgan Gasior

an additional market. corporate debt book also since the Russell activity. may attractive in purposes. obviously, aware Well, expect certainly be available that transaction. we subordinated is and shares tangible did the I now value, a that market Obviously, have market rebalancing. the the at some a shares market on below come for be resources gave those if on there'll price that resources And think to we trading we're And participate XXXX There that -- know us we

the And do it sense monitoring further the share obviously we shares So, to increasing was now over that They're go carefully. have repurchase move. very initial felt XXX,XXX good so. resources Board authorization to a right slightly if makes to

a pull and strong relatively pull a it. to that's we're strong to in lever So, position

Brian Martin

start rebalance, your until reason I in possible? expectations you'd started get the it initially soon are the this off as quarter getting mean or or year quarters? at might in on there is And couple as least until starting like seemed later I Okay. after a of assertive but in the wait to it you guess more here, hold probably second next

F. Morgan Gasior

-- be off the during I blackout out quarter, we'd more of the better first be that We Yes, in active expect sub-debt felt compared second quarter. of was because entirely to transaction market would it period. that the to the we'll be

to place start time for quarter. of So, back not so sequence the have we set first to the the that But in we some one safe the chose time, sooner. we could in up is did XXb-XX harbor reasons market get quite did a the disclosure in we plan

release So, we a all that's and quarter at filed did to didn't getting press sequence our why normal wait in up and of once. it finishing a our do XX-Q five we

allowed will therefore, your we'll activity see us Russell happen market So, open point, so as the that at then the -- quarter, market to And of into end tomorrow, and the some get window additional will June. third to tomorrow. to And a sooner matter that, starting rebalancing get XXXX after right our the inform of fact.

the would that. We increase reasonably will where of we're another at possible, not probable, after It -- reasonable quarter. even see look already. are third event that the what and in activity share certainly that for if quarter And at, further then, happens end the Board take is repurchase third planning

this Russell the of point So in it event. an time. is we're quarter unusual XXXX Obviously, kind at quarter taking rebalancing by

prepared well this to and And But do make we move another as mechanically. with manage that's the actually We on to how certainly through we we're, to come deal to so. have this both positioned have to think, funds beneficial presence are to is a ETFs to extent up shareholders, I of opportunities factor we it. going The consider can. is work to

Brian Martin

you. Got

especially maybe, just outlook growth and the growth just -- with reserve about of about being you're the one with on or the about how two, and how thinking kind then, outlook you just last favorable? And Perfect. here, Okay. the reserve talk can coming

F. Morgan Gasior

said continues. But originations earlier, it surprise that, we being need we a are will COVID, potential to of and month the made shift. The quarter that eviction also any said made a the Well portfolio, into put reserve off any probability to wouldn't as of a of moratoria, moratoria, was estate the portfolio portfolio due they is of on mix start getting concern way see me reserve to up still to time that first and also as position as the low-risk bit hope recovery it shift. real still completely particularly But remains a well, has our bit to will would two especially, as to when I second we the the quarter. portfolio. that's We come coming foreclosure absorbing you certainly a quality. quite asset multifamily to reserve and very in consistent it commercial greater originations absorb Therefore, mix the greater function there release And reserves we ratio relatively and a extended a where due starts in XXXX provisional -- Chicago been, quite or at keeps relates have quality -- a that having that, With strong. that growth. the strong very for the of

it that reserve really commercial have finance go say, So, reactivate see good net-net, the might would of on starts up absorbing scenario ticket if particularly, middle mix like half in second probably to small focused to for portfolio happen. flat. the we I market, assets, would year, but that depending flat it expect the a health the would if is care probably keeping It little stay case and bit, growth to is even the and a

Brian Martin

you. Got

or about, -- no one really real we'll see changes credit I assume you but comes talked but still I criticized major big the Q I this assets And the of know any when more Morgan, but any low Okay. the no it impact to that they're earlier, of this level -- -- classified low, no like quarter? guess, the quarter? out, changes they're and sounds in

F. Morgan Gasior

No.

going a data the the we'll that borrowers. is, annual of next haven't this -- annual coverage loan and that start seeing XXXX quarter. as the service at we'll seen to look bit of little thing anything in We We of data published that's Obviously, ratios supplement. five-quarter with reviews the happen data debt

if practices before, that But nominal As weakness strong. things us in wouldn't was that. find we've you surprise some are payment there now, by and said to out right quite go it pure

We'll or like that debt forbearance service surprise needed to it find a But me some not check action. we're covenant there's won't take significant work deferral problems their needing some may So us right we there. have to customers to now have some may seeing out and type what we classification problem indicate XXXX that current would issues. not looks or of in customers some out calling that of coverage

Brian Martin

Got you.

guess, I your be Morgan, remind I sounds an the here one fees standpoint, two-part low year you've you of you last kicked about a just guess, you growth, question was it get the got just, that's EPS that that could remain -- can for And an the item? me Okay. the or hope just, still made secondly, was the PPP, XXs just that some as in, on later momentum comments And expectation us then, the from growth I achievable the positive though that in your think, from to that your given back expectation collected? belief into is the as and with

F. Morgan Gasior

PPP. with deal me let Well,

see of going thousand that's or a that the a quantify on think But number We I on context hard couple to in depends one, right quarter forgiveness. be hundred it one to obviously now. a rate another. might of

of a We one. in of round bit PPP quite acceleration forgiveness have seen the

forgiveness question round happen probably that, will is of been has $XX,XXX, what round on pace close in $XX,XXX, less. into I say one. or XX% little the really next average to like a the around I will that, is, The forgiveness PPP even maybe XX% two? think, we're our something loan

now EPS. good are speculative too that. to is fee we relatively it's some attribute So probably on loan recognized seeing right when per income But to

your goal think, the get your low I our yes, As remains into to -- to question, XXs. second

getting the the key outlined portfolio, us, For the we've as to credit now, continued is there. right in growth

we going. spend need will spend that We what on to growth marketing keep to

So happened stop. a get in there or the is share a from in got function $X $X.XX goal. to quarter, fourth to $X.XX And what next whether that but that is we quarter is to our of

it If that the on we yield bit, harder spectrum, won't get I So is it's growth think fourth be see possible the there shifts to that possible. would there. continue more is we assets little quarter? quite that lower a trends the growth got concentrated the the in I end we mix required think little get of the if might stay in yes, because if mix lower-risk a

Brian Martin

you. Got

Okay.

I think, questions the taking that’s all I had. Morgan. Thanks for

F. Morgan Gasior

time. for Thanks your

Operator

Instructions] At any turn there call the [Operator time, for Mr. no Gasior I further back would to over to like questions. remarks. this are closing

F. Morgan Gasior

their for interest good to the the of at look We Have our second a today. end forward everyone spring. thank quarter call. We to and for you questions talking insightful

Operator

conference today's Thank participating. for you call. concludes This

may You now disconnect.