[10-Q] BankFinancial Corporation Quarterly Earnings Report
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period ended
or
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For transition period from to
Commission File Number
BANKFINANCIAL CORPORATION
(Exact Name of Registrant as Specified in Charter)
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| (State or Other Jurisdiction of Incorporation) | (I.R.S. Employer Identification No.) |
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Registrant’s telephone number, including area code: (
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer |
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| Accelerated filer |
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| Smaller reporting company |
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| Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date. At August 4, 2025, there were
BANKFINANCIAL CORPORATION
Form 10-Q
June 30, 2025
Table of Contents
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Page Number |
| PART I |
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| Item 1. |
Financial Statements |
2 |
| Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
23 |
| Item 3. |
Quantitative and Qualitative Disclosure about Market Risk |
35 |
| Item 4. |
Controls and Procedures |
36 |
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| PART II |
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| Item 1. |
Legal Proceedings |
37 |
| Item 1A. |
Risk Factors |
37 |
| Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
37 |
| Item 3. |
Defaults Upon Senior Securities |
37 |
| Item 4. |
Mine Safety Disclosures |
37 |
| Item 5. |
Other Information |
37 |
| Item 6. |
Exhibits |
38 |
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| Signatures |
39 |
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BANKFINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share and per share data) - Unaudited
| June 30, 2025 | December 31, 2024 | |||||||
| Assets | ||||||||
| Cash and due from other financial institutions | $ | $ | ||||||
| Interest-bearing deposits in other financial institutions | ||||||||
| Cash and cash equivalents | ||||||||
| Interest-bearing time deposits in other financial institutions | ||||||||
| Securities, at fair value | ||||||||
| Loans receivable, net of allowance for credit losses: June 30, 2025, $9,116 and December 31, 2024, $7,571 | ||||||||
| Foreclosed assets, net | ||||||||
| Stock in Federal Home Loan Bank ("FHLB") and Federal Reserve Bank ("FRB"), at cost | ||||||||
| Premises and equipment, net | ||||||||
| Accrued interest receivable | ||||||||
| Bank-owned life insurance | ||||||||
| Deferred taxes | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities | ||||||||
| Deposits | ||||||||
| Noninterest-bearing | $ | $ | ||||||
| Interest-bearing | ||||||||
| Total deposits | ||||||||
| Borrowings | ||||||||
| Subordinated notes, net of unamortized issuance costs | ||||||||
| Advance payments by borrowers for taxes and insurance | ||||||||
| Accrued interest payable and other liabilities | ||||||||
| Total liabilities | ||||||||
| Stockholders’ equity | ||||||||
| Preferred stock, $0.01 par value, 25,000,000 shares authorized, none issued or outstanding | ||||||||
| Common stock, $0.01 par value, 100,000,000 shares authorized; 12,460,678 shares issued at June 30, 2025 and December 31, 2024 | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to the consolidated financial statements.
BANKFINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data) - Unaudited
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Interest and dividend income | ||||||||||||||||
| Loans, including fees | $ | $ | $ | $ | ||||||||||||
| Securities: | ||||||||||||||||
| Taxable | ||||||||||||||||
| Tax exempt | ||||||||||||||||
| Other | ||||||||||||||||
| Total interest income | ||||||||||||||||
| Interest expense | ||||||||||||||||
| Deposits | ||||||||||||||||
| Borrowings and Subordinated notes | ||||||||||||||||
| Total interest expense | ||||||||||||||||
| Net interest income | ||||||||||||||||
| Provision for (recovery of) credit losses - loans | ( | ) | ( | ) | ||||||||||||
| Recovery of credit losses - unfunded commitments | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for (recovery of) credit losses | ( | ) | ( | ) | ||||||||||||
| Net interest income after provision for (recovery of) credit losses | ||||||||||||||||
| Noninterest income | ||||||||||||||||
| Deposit service charges and fees | ||||||||||||||||
| Loan servicing fees | ||||||||||||||||
| Trust and insurance commissions and annuities income | ||||||||||||||||
| Loss on disposal of premises and equipment | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on bank-owned life insurance | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Bank-owned life insurance death benefit | ||||||||||||||||
| Gain on repurchase of Subordinated notes | ||||||||||||||||
| Other | ||||||||||||||||
| Total noninterest income | ||||||||||||||||
| Noninterest expense | ||||||||||||||||
| Compensation and benefits | ||||||||||||||||
| Office occupancy and equipment | ||||||||||||||||
| Advertising and public relations | ||||||||||||||||
| Information technology | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Supplies, telephone, and postage | ||||||||||||||||
| FDIC insurance premiums | ||||||||||||||||
| Other | ||||||||||||||||
| Total noninterest expense | ||||||||||||||||
| (Loss) income before income taxes | ( | ) | ||||||||||||||
| Income tax (benefit) expense | ( | ) | ( | ) | ||||||||||||
| Net (loss) income | $ | ( | ) | $ | $ | $ | ||||||||||
| Basic and diluted (loss) earnings per common share | $ | ( | ) | $ | $ | $ | ||||||||||
| Basic and diluted weighted average common shares outstanding | ||||||||||||||||
See accompanying notes to the consolidated financial statements.
BANKFINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(In thousands) - Unaudited
| Three Months Ended |
Six Months Ended |
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| June 30, |
June 30, |
|||||||||||||||
| 2025 |
2024 |
2025 |
2024 |
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| Net (loss) income |
$ | ( |
) | $ | $ | $ | ||||||||||
| Unrealized holding gain on securities arising during the period |
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| Tax effect |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other comprehensive gain, net of tax |
||||||||||||||||
| Comprehensive (loss) income |
$ | ( |
) | $ | $ | $ | ||||||||||
See accompanying notes to the consolidated financial statements.
BANKFINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In thousands, except per share data) - Unaudited
| Accumulated | ||||||||||||||||||||
| Additional | Other | |||||||||||||||||||
| Common | Paid-in | Retained | Comprehensive | |||||||||||||||||
| Stock | Capital | Earnings | Loss | Total | ||||||||||||||||
| For the three months ended | ||||||||||||||||||||
| Balance at April 1, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Net income | ||||||||||||||||||||
| Other comprehensive income, net of tax effect | ||||||||||||||||||||
| Cash dividends declared on common stock ($0.10 per share) | ( | ) | ( | ) | ||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Balance at April 1, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||
| Other comprehensive income, net of tax effect | ||||||||||||||||||||
| Cash dividends declared on common stock ($0.10 per share) | ( | ) | ( | ) | ||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| For the six months ended | ||||||||||||||||||||
| Balance at January 1, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Net income | ||||||||||||||||||||
| Other comprehensive income, net of tax effect | ||||||||||||||||||||
| Repurchase and retirement of common stock (15,203 shares) | ( | ) | ( | ) | ||||||||||||||||
| Cash dividends declared on common stock ($0.20 per share) | ( | ) | ( | ) | ||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Balance at January 1, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Net income | ||||||||||||||||||||
| Other comprehensive income, net of tax effect | ||||||||||||||||||||
| Cash dividends declared on common stock ($0.20 per share) | ( | ) | ( | ) | ||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
See accompanying notes to the consolidated financial statements.
BANKFINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) - Unaudited
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash from operating activities | ||||||||
| Provision for (recovery of) credit losses - loans | ( | ) | ||||||
| Recovery of credit losses - unfunded commitments | ( | ) | ( | ) | ||||
| Depreciation and amortization (accretion) | ( | ) | ||||||
| Net change in net deferred loan origination costs | ||||||||
| Loss on disposal of premises and equipment | ||||||||
| Loss on sale of foreclosed assets | ||||||||
| Foreclosed assets write-down | ||||||||
| Loss on bank-owned life insurance | ||||||||
| Gain on redemption of Subordinated notes | ( | ) | ( | ) | ||||
| Net change in: | ||||||||
| Accrued interest receivable | ( | ) | ||||||
| Other assets | ||||||||
| Accrued interest payable and other liabilities | ( | ) | ||||||
| Net cash from operating activities | ||||||||
| Cash flows from (used in) investing activities | ||||||||
| Proceeds from maturities of interest-bearing time deposits in other financial institutions | ||||||||
| Purchases of interest-bearing time deposits in other financial institutions | ( | ) | ( | ) | ||||
| Securities: | ||||||||
| Proceeds from maturities | ||||||||
| Proceeds from principal repayments | ||||||||
| Purchases of securities | ( | ) | ( | ) | ||||
| Net change in loans receivable | ||||||||
| Bank-owned life insurance death benefit | ||||||||
| Proceeds from sale of foreclosed assets | ||||||||
| Proceeds from sale of premises and equipment | ||||||||
| Purchase of premises and equipment, net | ( | ) | ( | ) | ||||
| Net cash from (used in) investing activities | ( | ) | ||||||
| Cash flows used in financing activities | ||||||||
| Net change in: | ||||||||
| Deposits | ( | ) | ( | ) | ||||
| Advance payments by borrowers for taxes and insurance | ||||||||
| Repayments of Federal Home Loan Bank advances | ( | ) | ||||||
| Repurchase of Subordinated notes | ( | ) | ( | ) | ||||
| Repurchase and retirement of common stock | ( | ) | ||||||
| Cash dividends paid on common stock | ( | ) | ( | ) | ||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Net change in cash and cash equivalents | ( | ) | ||||||
| Beginning cash and cash equivalents | ||||||||
| Ending cash and cash equivalents | $ | $ | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | ||||||||
| Supplemental disclosures of noncash investing and financing activities: | ||||||||
| Loans transferred to foreclosed assets | ||||||||
| Due from broker | ||||||||
| Recording of right of use asset in exchange for lease obligations in other assets and other liabilities | ||||||||
See accompanying notes to the consolidated financial statements.
BANKFINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation: BankFinancial Corporation, a Maryland corporation headquartered in Burr Ridge, Illinois, is the owner of all of the issued and outstanding capital stock of BankFinancial, National Association (the “Bank”). The interim unaudited consolidated financial statements include the accounts and transactions of BankFinancial Corporation, the Bank, and the Bank’s wholly-owned subsidiaries, Financial Assurance Services, Inc. and BFIN Asset Recovery Company, LLC (collectively, the “Company”), and reflect all normal and recurring adjustments that are, in the opinion of management, considered necessary for a fair presentation of the financial condition and results of operations for the periods presented. Such adjustments are the only adjustments reflected in the accompanying financial statements. All significant intercompany accounts and transactions have been eliminated. The results of operations for the three and six-month periods ended June 30, 2025 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2025 or for any other period.
Certain information and note disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).
Use of Estimates: The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Although these estimates and assumptions are based on the best available information, actual information and actual results could differ from those estimates.
Interest-Bearing Time Deposits in other Financial Institutions: Interest-bearing time deposits in other financial institutions include investments in certificates of deposit with original maturities greater than 90 days. These certificates of deposit are placed with insured institutions for varying maturities and amounts that are fully
insured by the Federal Deposit Insurance Corporation (“FDIC”).
Factored Receivables: The Company purchases invoices from its factoring customers in schedules or batches. These receivables are included in loans receivable on the Consolidated Statements of Financial Condition, and as commercial loans and leases in Note 4 - Loans Receivable. The face value of the invoices purchased or amount advanced is recorded by the Company as factored receivables, and the unadvanced portions of the invoices purchased, less fees, are considered customer reserves. The customer reserves are held to settle any payment disputes or collection shortfalls. Customer reserves may be used to pay customers’ obligations to various third parties as directed by the customer. Customer reserves are periodically released to or withdrawn by customers, and are reported as noninterest-bearing deposits in the Consolidated Statements of Financial Condition. The unpaid principal balances of these receivables were $
Factoring fees are recognized in interest income as incurred by the customer and deducted from the customer's reserve balances. Other factoring-related fees, which include wire transfer fees, broker fees, and other similar fees, are reported by the Company as loan servicing fees in noninterest income.
Reclassifications: Certain reclassifications have been made in the prior period’s financial statements to conform them to the current period’s presentation with no impact on previously reported net income or stockholders' equity. Activity for the six months ended June 30, 2024 for interest-bearing time deposits in other financial institutions has been reclassified in the statement of cashflows to conform with current period's presentation. There is no impact on net income or stockholders' equity.
These unaudited consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC.
Recently Issued Accounting Standards Not Yet Adopted
In December 2023, the FASB issued ASU 2023‑09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires more detailed disclosures of income taxes paid net of refunds received, income from continuing operations before income tax expense or benefit, and income tax expense from continuing operations. This standard is to be applied on a prospective basis, with retrospective application permitted, and will be effective for the Company for annual periods beginning on January 1, 2025. We do not expect adoption of this standard to have a material impact on the Company’s financial position or results of operations.
In November 2024, the FASB issued ASU 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses". This ASU requires public companies to disclose specified information about certain costs and expenses in the notes to financial statements at each interim and annual reporting period. Specifically, public companies will be required to disclose the amounts of (a) purchases of inventory; (b) employee compensation; (c) depreciation; (d) intangible asset amortization; and (e) depreciation, depletion, and amortization recognized as part of oil- and gas producing activities (or other amounts of depletion expense) included in each relevant expense caption. Within the same tabular disclosure, an entity must disclose certain expense, gain, or loss amounts that are already required under current U.S. GAAP. Further, an entity must disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. In addition, an entity must disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. The amendments in this ASU are effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. We do not expect adoption of this standard to have a material impact on the Company’s financial position or results of operations.
Recent Developments
On July 4, 2025, the President signed H.R. 1, the “One Big Beautiful Bill Act,” into law. The legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including the restoration of immediate expensing of domestic R&D expenditures, reinstatement of 100% bonus depreciation, and more favorable rules for determining the limitation on business interest expense. The Company is currently evaluating the impact on future periods.
BANKFINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
NOTE 2 - (LOSS) EARNINGS PER SHARE
Amounts reported in (loss) earnings per share reflect (loss) earnings available to common stockholders for the period divided by the weighted average number of shares of common stock outstanding during the period.
| Three Months Ended |
Six Months Ended |
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| June 30, |
June 30, |
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| 2025 |
2024 |
2025 |
2024 |
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| Net (loss) income available to common stockholders |
$ | ( |
) | $ | $ | $ | ||||||||||
| Basic and diluted weighted average common shares outstanding |
||||||||||||||||
| Basic and diluted (loss) earnings per common share |
$ | ( |
) | $ | $ | $ | ||||||||||
NOTE 3 - SECURITIES
The fair value of securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income is as follows:
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
| Available-for-Sale Securities | ||||||||||||||||
| June 30, 2025 | ||||||||||||||||
| Municipal securities | $ | $ | $ | $ | ||||||||||||
| U.S. Treasury Bills and Notes | ( | ) | ||||||||||||||
| Mortgage-backed securities - residential | ( | ) | ||||||||||||||
| Collateralized mortgage obligations - residential | ( | ) | ||||||||||||||
| $ | $ | $ | ( | ) | $ | |||||||||||
| December 31, 2024 | ||||||||||||||||
| Municipal securities | $ | $ | $ | $ | ||||||||||||
| U.S. Treasury Bills and Notes | ( | ) | ||||||||||||||
| U.S. government-sponsored agencies | ( | ) | ||||||||||||||
| Mortgage-backed securities - residential | ( | ) | ||||||||||||||
| Collateralized mortgage obligations - residential | ( | ) | ||||||||||||||
| $ | $ | $ | ( | ) | $ | |||||||||||
Mortgage-backed securities and collateralized mortgage obligations reflected in the preceding table were issued by U.S. government-sponsored entities and agencies, Freddie Mac, Fannie Mae and Ginnie Mae, and are obligations which the government has affirmed its commitment to support.
The amortized cost and fair values of securities available-for-sale by contractual maturity are shown below. Securities not due at a single maturity date are shown separately. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
| June 30, 2025 | ||||||||
| Amortized Cost | Fair Value | |||||||
| Due in one year or less | $ | $ | ||||||
| Due after one year through five years | ||||||||
| Mortgage-backed securities - residential | ||||||||
| Collateralized mortgage obligations - residential | ||||||||
| $ | $ | |||||||
BANKFINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
NOTE 3 - SECURITIES (continued)
Securities available-for-sale with unrealized losses not recognized in income are as follows:
| Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||||||||||||||
| Count | Fair Value | Unrealized Loss | Count | Fair Value | Unrealized Loss | Count | Fair Value | Unrealized Loss | ||||||||||||||||||||||||||||
| June 30, 2025 | ||||||||||||||||||||||||||||||||||||
| U.S. Treasury Bills and Notes | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||
| Mortgage-backed securities - residential | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Collateralized mortgage obligations - residential | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||||||
| U.S. Treasury Bills and Notes | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||
| U.S. government-sponsored agencies | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Mortgage-backed securities - residential | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Collateralized mortgage obligations - residential | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||
U.S. Treasury Bills and Notes, U.S. government-sponsored agency securities and certain other available-for-sale securities reflected in the above table that the Company holds in its investment portfolio were in an unrealized loss position at June 30, 2025, but the unrealized loss was not recognized into income because the U.S. Treasury Bills and Notes are backed by the full faith and credit of the United States and the other issuers were high credit quality, it is not likely that the Company will be required to sell these securities before their anticipated recovery occurs and the decline in fair value was due to changes in interest rates and other market conditions. The fair values of these securities are expected to recover as maturity dates of these securities approach.
We reviewed the available-for-sale securities in an unrealized loss position within the guidelines of Accounting Standards Codification (“ASC”) 326 and determined that no credit loss is required to be recognized.
There were
BANKFINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
NOTE 4 - LOANS RECEIVABLE
The summary of loans receivable by class of loans is as follows:
| June 30, 2025 | December 31, 2024 | |||||||
| One-to-four family residential real estate | $ | $ | ||||||
| Multi-family residential real estate | ||||||||
| Nonresidential real estate | ||||||||
| Commercial loans and leases | ||||||||
| Consumer | ||||||||
| Allowance for credit losses | ( | ) | ( | ) | ||||
| Loans, net | $ | $ | ||||||
Net deferred loan origination costs included in the table above were $
Allowance for Credit Losses - Loans
The following table represents the activity in the Allowance for Credit Losses (“ACL”) by segment of loans:
| Beginning balance | Provision for (recovery of) credit losses | Loans charged off | Recoveries | Ending balance | ||||||||||||||||
| For the three months ended | ||||||||||||||||||||
| June 30, 2025 | ||||||||||||||||||||
| One-to-four family residential real estate: | ||||||||||||||||||||
| Home equity and junior liens | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
| One-to-four family first liens | ( | ) | ||||||||||||||||||
| Multi-family residential real estate: | ||||||||||||||||||||
| Senior notes | ( | ) | ||||||||||||||||||
| Junior notes | ( | ) | ||||||||||||||||||
| Nonresidential real estate: | ||||||||||||||||||||
| Owner occupied | ||||||||||||||||||||
| Non-owner occupied | ( | ) | ||||||||||||||||||
| Commercial loans and leases: | ||||||||||||||||||||
| Commercial | ( | ) | ( | ) | ||||||||||||||||
| Equipment finance - Government | ||||||||||||||||||||
| Equipment finance - Corporate Investment-grade | ( | ) | ||||||||||||||||||
| Consumer | ( | ) | ( | ) | ||||||||||||||||
| $ | $ | $ | ( | ) | $ | $ | ||||||||||||||
| June 30, 2024 | ||||||||||||||||||||
| One-to-four family residential real estate: | ||||||||||||||||||||
| Home equity and junior liens | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
| One-to-four family first liens | ( | ) | ||||||||||||||||||
| Multi-family residential real estate: | ||||||||||||||||||||
| Senior notes | ||||||||||||||||||||
| Junior notes | ( | ) | ||||||||||||||||||
| Nonresidential real estate: | ||||||||||||||||||||
| Owner occupied | ( | ) | ||||||||||||||||||
| Non-owner occupied | ( | ) | ||||||||||||||||||
| Commercial loans and leases: | ||||||||||||||||||||
| Commercial | ( | ) | ( | ) | ||||||||||||||||
| Equipment finance - Government | ( | ) | ||||||||||||||||||
| Equipment finance - Corporate Investment-grade | ( | ) | ||||||||||||||||||
| Consumer | ( | ) | ||||||||||||||||||
| $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||
BANKFINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
NOTE 4 - LOANS RECEIVABLE (continued)
| Beginning balance | Provision for (recovery of) credit losses | Loans charged off | Recoveries | Ending balance | ||||||||||||||||
| For the six months ended | ||||||||||||||||||||
| June 30, 2025 | ||||||||||||||||||||
| One-to-four family residential real estate: | ||||||||||||||||||||
| Home equity and junior liens | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
| One-to-four family first liens | ( | ) | ||||||||||||||||||
| Multi-family residential real estate: | ||||||||||||||||||||
| Senior notes | ( | ) | ||||||||||||||||||
| Junior notes | ( | ) | ||||||||||||||||||
| Nonresidential real estate: | ||||||||||||||||||||
| Owner occupied | ||||||||||||||||||||
| Non-owner occupied | ( | ) | ||||||||||||||||||
| Commercial loans and leases: | ||||||||||||||||||||
| Commercial | ( | ) | ( | ) | ||||||||||||||||
| Equipment finance - Government | ||||||||||||||||||||
| Equipment finance - Corporate Investment-grade | ( | ) | ||||||||||||||||||
| Consumer | ( | ) | ||||||||||||||||||
| $ | $ | $ | ( | ) | $ | $ | ||||||||||||||
| June 30, 2024 | ||||||||||||||||||||
| One-to-four family residential real estate: | ||||||||||||||||||||
| Home equity and junior liens | $ | $ | ( | ) | $ | $ | $ | |||||||||||||
| One-to-four family first liens | ||||||||||||||||||||
| Multi-family residential real estate: | ||||||||||||||||||||
| Senior notes | ||||||||||||||||||||
| Junior notes | ||||||||||||||||||||
| Nonresidential real estate: | ||||||||||||||||||||
| Owner occupied | ||||||||||||||||||||
| Non-owner occupied | ||||||||||||||||||||
| Commercial loans and leases: | ||||||||||||||||||||
| Commercial | ( | ) | ( | ) | ||||||||||||||||
| Equipment finance - Government | ( | ) | ||||||||||||||||||
| Equipment finance - Corporate Investment-grade | ( | ) | ||||||||||||||||||
| Consumer | ( | ) | ||||||||||||||||||
| $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||
As of June 30, 2025, December 31, 2024 and June 30, 2024 we had $
BANKFINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
NOTE 4 - LOANS RECEIVABLE (continued)
The following tables present the balance in the ACL and loans receivable by class of loans based on evaluation method. Allocation of a portion of the ACL to one category does not preclude its availability to absorb losses in other categories:
| One-to-four family residential real estate | Multi-family residential real estate | Nonresidential real estate | Commercial loans and leases | Consumer | Total | |||||||||||||||||||
| June 30, 2025 | ||||||||||||||||||||||||
| Loans: | ||||||||||||||||||||||||
| Loans individually evaluated | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Loans collectively evaluated | ||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| ACL: | ||||||||||||||||||||||||
| Loans individually evaluated | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Loans collectively evaluated | ||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| One-to-four family residential real estate | Multi-family residential real estate | Nonresidential real estate | Commercial loans and leases | Consumer | Total | |||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||
| Loans: | ||||||||||||||||||||||||
| Loans individually evaluated | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Loans collectively evaluated | ||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| ACL: | ||||||||||||||||||||||||
| Loans individually evaluated | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Loans collectively evaluated | ||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
Management's evaluation as to the ultimate collectability of loans includes estimates regarding future cash flows from operations and the value of property, real and personal, pledged as collateral. These estimates are affected by changing economic conditions and the economic prospects of borrowers. Collateral dependent loans are loans in which repayment is expected to be provided solely by the underlying collateral and there are no other available and reliable sources of repayment. Loans are written down to the lower of cost or fair value of the underlying collateral, less estimated costs to sell. The Company had $
BANKFINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
NOTE 4 - LOANS RECEIVABLE (continued)
Individually Evaluated Loans
The following tables present loans individually evaluated by class of loans:
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
| June 30, 2025 | June 30, 2025 | |||||||||||||||||||||||||||||||
| Loan Balance | Recorded Investment | Partial Charge-off | Allowance for Credit Losses Allocated | Average Investment | Interest Income Recognized | Average Investment | Interest Income Recognized | |||||||||||||||||||||||||
| June 30, 2025 | ||||||||||||||||||||||||||||||||
| With no related allowance recorded: | ||||||||||||||||||||||||||||||||
| One-to-four family residential real estate | $ | $ | $ | $ | — | $ | $ | $ | $ | |||||||||||||||||||||||
| Commercial loans and leases | — | |||||||||||||||||||||||||||||||
| — | ||||||||||||||||||||||||||||||||
| With an allowance recorded - commercial loans and leases | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Year ended | ||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||
| Loan Balance | Recorded Investment | Partial Charge-off | Allowance for Credit Losses Allocated | Average Investment | Interest Income Recognized | |||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||
| With no related allowance recorded: | ||||||||||||||||||||||||
| One-to-four family residential real estate | $ | $ | $ | $ | — | $ | $ | |||||||||||||||||
| Multi-family residential real estate | — | |||||||||||||||||||||||
| Nonresidential real estate | — | |||||||||||||||||||||||
| Commercial loans and leases | — | |||||||||||||||||||||||
| $ | $ | $ | $ | — | $ | $ | ||||||||||||||||||
Nonaccrual Loans
The following tables present the recorded investment in nonaccrual loans and loans 90 days or more past due still on accrual by class of loans:
| Nonaccrual | Loans Past Due Over 90 Days Still Accruing | |||||||
| June 30, 2025 | ||||||||
| One-to-four family residential real estate | $ | $ | ||||||
| Commercial loans and leases | ||||||||
| Consumer | ||||||||
| $ | $ | |||||||
| December 31, 2024 | ||||||||
| One-to-four family residential real estate | $ | $ | ||||||
| Multi-family residential real estate | ||||||||
| Nonresidential real estate | ||||||||
| Commercial loans and leases | ||||||||
| Consumer | ||||||||
| $ | $ | |||||||
Nonaccrual loans and individually evaluated loans are defined differently. Some loans may be included in both categories, and some loans may only be included in one category. Nonaccrual loans include both smaller balance homogeneous loans that are collectively evaluated and loans individually evaluated.
The Company’s reserve for uncollected loan interest was $
BANKFINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
NOTE 4 - LOANS RECEIVABLE (continued)
Past Due Loans
The following tables present the aging of the recorded investment of loans by class of loans:
| 30-59 Days Past Due | 60-89 Days Past Due | Greater Than 89 Days Past Due | Total Past Due | Nonaccrual | Current | Total | ||||||||||||||||||||||
| June 30, 2025 | ||||||||||||||||||||||||||||
| One-to-four family residential real estate | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Multi-family residential real estate | ||||||||||||||||||||||||||||
| Nonresidential real estate | ||||||||||||||||||||||||||||
| Commercial loans and leases | ||||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| 30-59 Days Past Due | 60-89 Days Past Due | Greater Than 89 Days Past Due | Total Past Due | Nonaccrual | Current | Total | ||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||
| One-to-four family residential real estate | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Multi-family residential real estate | ||||||||||||||||||||||||||||
| Nonresidential real estate | ||||||||||||||||||||||||||||
| Commercial loans and leases | ||||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
BANKFINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
NOTE 4 - LOANS RECEIVABLE (continued)
At June 30, 2025 and December 31, 2024, the Company had
Credit Quality Indicators
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, including current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. Risk ratings are updated any time the situation warrants. The Company uses the following definitions for risk ratings:
Pass. This category includes loans that are all considered acceptable credits, ranging from investment or near investment grade, to loans made to borrowers who exhibit credit fundamentals that meet or exceed industry standards.
Special Mention. A “Special Mention” asset has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. Special Mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification.
Substandard. Loans categorized as “Substandard” continue to accrue interest, but exhibit a well-defined weakness or weaknesses that may jeopardize the liquidation of the debt. The loans continue to accrue interest because they are well secured and collection of principal and interest is expected within a reasonable time. The risk rating guidance published by the Office of the Comptroller of the Currency clarifies that a loan with a well-defined weakness does not have to present a probability of default for the loan to be rated Substandard, and that an individual loan’s loss potential does not have to be distinct for the loan to be rated Substandard.
Nonaccrual. An asset classified “Nonaccrual” has all the weaknesses inherent in one classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
Based on the most recent analysis performed, the risk categories of loans by class of loans are as follows:
| Pass | Special Mention | Substandard | Substandard Nonaccrual | Total | ||||||||||||||||
| June 30, 2025 | ||||||||||||||||||||
| One-to-four family residential real estate | $ | $ | $ | $ | $ | |||||||||||||||
| Multi-family residential real estate | ||||||||||||||||||||
| Nonresidential real estate | ||||||||||||||||||||
| Commercial loans and leases | ||||||||||||||||||||
| Consumer | ||||||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
| Pass | Special Mention | Substandard | Substandard Nonaccrual | Total | ||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||
| One-to-four family residential real estate | $ | $ | $ | $ | $ | |||||||||||||||
| Multi-family residential real estate | ||||||||||||||||||||
| Nonresidential real estate | ||||||||||||||||||||
| Commercial loans and leases | ||||||||||||||||||||
| Consumer | ||||||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||
BANKFINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
NOTE 4 - LOANS RECEIVABLE (continued)
| Term Loans Amortized Cost Basis by Origination Year | ||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Revolving loans | Total | |||||||||||||||||||||||||
| June 30, 2025 | ||||||||||||||||||||||||||||||||
| One-to-four family residential real estate loans: | ||||||||||||||||||||||||||||||||
| Risk-rating | ||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||
| Nonaccrual | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| One-to-four family residential real estate loans: | ||||||||||||||||||||||||||||||||
| Current period recoveries | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Multi-family residential real estate: | ||||||||||||||||||||||||||||||||
| Risk rating | ||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Multi-family residential real estate: | ||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) | ||||||||||||||||||||
| Current period recoveries | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) | |||||||||||||||||||||
| Nonresidential real estate: | ||||||||||||||||||||||||||||||||
| Risk rating | ||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Special mention | ||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Commercial loans and leases: | ||||||||||||||||||||||||||||||||
| Risk rating | ||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||
| Nonaccrual | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Commercial loans and leases: | ||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Current period recoveries | ||||||||||||||||||||||||||||||||
| $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||
| Consumer: | ||||||||||||||||||||||||||||||||
| Risk rating | ||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Special mention | ||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Consumer: | ||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Current period recoveries | ||||||||||||||||||||||||||||||||
| Current period recoveries | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
BANKFINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
NOTE 4 - LOANS RECEIVABLE (continued)
| Term Loans Amortized Cost Basis by Origination Year | ||||||||||||||||||||||||||||||||
| 2024 | 2023 | 2022 | 2021 | 2020 | Prior | Revolving loans | Total | |||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||
| One-to-four family residential real estate: | ||||||||||||||||||||||||||||||||
| Risk rating | ||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||
| Nonaccrual | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| One-to-four family residential real estate: | ||||||||||||||||||||||||||||||||
| Current period recoveries | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Multi-family residential real estate: | ||||||||||||||||||||||||||||||||
| Risk rating | ||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Special mention | ||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||
| Nonaccrual | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Multi-family residential real estate: | ||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | ( | ) | $ | $ | $ | $ | $ | ( | ) | ||||||||||||||||||||
| Current period recoveries | ||||||||||||||||||||||||||||||||
| $ | $ | $ | ( | ) | $ | $ | $ | $ | $ | |||||||||||||||||||||||
| Nonresidential real estate: | ||||||||||||||||||||||||||||||||
| Risk rating | ||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Special mention | ||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||
| Nonaccrual | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Commercial loans and leases : | ||||||||||||||||||||||||||||||||
| Risk rating | ||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Special mention | ||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||
| Nonaccrual | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Commercial loans and leases : | ||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | ||||||||||||||
| Current period recoveries | ||||||||||||||||||||||||||||||||
| $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | |||||||||||||||
| Consumer: | ||||||||||||||||||||||||||||||||
| Risk rating | ||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Special mention | ||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||
| Nonaccrual | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||
| Consumer: | ||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Current period recoveries | ||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
BANKFINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
NOTE 5 - FORECLOSED ASSETS
Real estate that is acquired through foreclosure or a deed in lieu of foreclosure is classified as other real estate owned ("OREO") until it is sold. When real estate is acquired through foreclosure or by deed in lieu of foreclosure, it is recorded at its fair value, less the estimated costs of disposal. If the fair value of the property is less than the loan balance, the difference is charged against the allowance for credit losses.
Assets are classified as foreclosed when physical possession of the collateral is taken regardless of whether foreclosure proceedings have taken place. Other foreclosed assets received in satisfaction of borrowers’ debts are initially recorded at fair value of the asset less estimated costs to sell.
| June 30, 2025 | December 31, 2024 | |||||||||||||||||||||||
| Balance | Valuation Allowance | Net Balance | Balance | Valuation Allowance | Net Balance | |||||||||||||||||||
| Other foreclosed assets | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
The following represents the roll forward of foreclosed assets:
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Beginning balance | $ | $ | $ | $ | ||||||||||||
| New foreclosed assets | ||||||||||||||||
| Valuation reductions from sales | ||||||||||||||||
| Direct write-downs | ( | ) | ( | ) | ||||||||||||
| Sales | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Ending balance | $ | $ | $ | $ | ||||||||||||
Activity in the valuation allowance is as follows:
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Beginning balance | $ | $ | $ | $ | ||||||||||||
| Reductions from sales | ( | ) | ( | ) | ||||||||||||
| Ending balance | $ | $ | $ | $ | ||||||||||||
At June 30, 2025, there were
BANKFINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
NOTE 6 - BORROWINGS AND SUBORDINATED NOTES
Borrowings and subordinated notes were as follows:
| June 30, 2025 | December 31, 2024 | |||||||||||||||
| Contractual | Contractual | |||||||||||||||
| Rate | Amount | Rate | Amount | |||||||||||||
| Fixed-rate advance from FHLB, due March 17, 2025 | % | $ | % | $ | ||||||||||||
| Fixed-rate advance from FHLB, due September 17, 2025 | % | % | ||||||||||||||
| Fixed-rate advance from FHLB, due March 17, 2026 | % | % | ||||||||||||||
| Fixed-rate advance from FHLB, due September 17, 2026 | % | % | ||||||||||||||
| Subordinated notes, due May 15, 2031 | % | % | ||||||||||||||
| Line of credit, due March 28, 2025 | % | % | ||||||||||||||
In 2021, the Company entered into Subordinated Note Purchase Agreements with certain qualified institutional buyers and accredited investors pursuant to which the Company sold and issued $
The Notes bear interest at a fixed annual rate of
Principal and interest payments due on the Notes are subject to acceleration only in limited circumstances in the case of certain bankruptcy and insolvency-related events with respect to the Company. The Notes are unsecured, subordinated obligations of the Company and generally rank junior in right of payment to the Company’s current and future senior indebtedness. The Notes qualify as Tier 2 capital for regulatory capital purposes.
In March 2025, we repurchased $
In 2020, the Company established a $
NOTE 7 - FAIR VALUE
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:
| • | Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. |
| • | Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. |
| • | Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. |
The Company used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:
Securities: The fair value for investment securities is determined by quoted market prices, if available (Level 1). The fair values of debt securities are generally determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2).
BANKFINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
NOTE 7 - FAIR VALUE (continued)
Loans Individually Evaluated: The Company does not record portfolio loans at fair value on a recurring basis. However, periodically, a loan is individually evaluated and is reported at the fair value of the underlying collateral, less estimated costs to sell, if repayment is expected solely from the collateral. If the collateral value is not sufficient, a specific reserve is recorded. Collateral values are estimated using a combination of observable inputs, including recent appraisals, and unobservable inputs based on customized discounting criteria. Due to the significance of unobservable inputs, fair values of individually evaluated collateral dependent loans have
been classified as Level 3.
Foreclosed assets: Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at the lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals which are updated no less frequently than annually. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach with data from comparable properties. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Foreclosed assets are evaluated on a quarterly basis for additional impairment and adjusted accordingly.
The following table sets forth the Company’s financial assets that were accounted for at fair value and are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
| Fair Value Measurements Using | ||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value | |||||||||||||
| June 30, 2025 | ||||||||||||||||
| Securities: | ||||||||||||||||
| Municipal securities | $ | $ | $ | $ | ||||||||||||
| U.S. Treasury Bills and Notes | ||||||||||||||||
| Mortgage-backed securities - residential | ||||||||||||||||
| Collateralized mortgage obligations - residential | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| December 31, 2024 | ||||||||||||||||
| Securities: | ||||||||||||||||
| Municipal securities | $ | $ | $ | $ | ||||||||||||
| U.S. Treasury Bills and Notes | ||||||||||||||||
| U.S. government-sponsored agencies | ||||||||||||||||
| Mortgage-backed securities - residential | ||||||||||||||||
| Collateralized mortgage obligations - residential | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
The following table sets forth the Company’s assets that were measured at fair value on a non-recurring basis:
| Fair Value Measurement Using | ||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair Value | |||||||||||||
| June 30, 2025 | ||||||||||||||||
| Loans individually evaluated | $ | $ | $ | $ | ||||||||||||
At June 30, 2025 there was one U.S. Government equipment finance transaction individually evaluated with a carrying value of $
BANKFINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
NOTE 7 - FAIR VALUE (continued)
Foreclosed assets are carried at the lower of cost or fair value less costs to sell. At June 30, 2025 and December 31, 2024 there were
The following table presents quantitative information, based on certain empirical data with respect to Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis:
| Fair Value | Valuation Technique(s) | Significant Unobservable Input(s) | Range (Weighted Average) | |||||||||
| June 30, 2025 | ||||||||||||
| Loans individually evaluated | $ | Discounted cash flow | Discount applied to projected cash flow | % | ||||||||
The carrying amount and estimated fair value of financial instruments are as follows:
| Fair Value Measurements at June 30, 2025 Using: | ||||||||||||||||||||
| Carrying Amount | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
| Financial assets | ||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | $ | |||||||||||||||
| Interest-bearing time deposits in other financial institutions | ||||||||||||||||||||
| Securities | ||||||||||||||||||||
| Loans receivable, net of allowance for credit losses | ||||||||||||||||||||
| FHLB and FRB stock | N /A | |||||||||||||||||||
| Accrued interest receivable | ||||||||||||||||||||
| Financial liabilities | ||||||||||||||||||||
| Certificates of deposit | ||||||||||||||||||||
| Borrowings | ||||||||||||||||||||
| Subordinated notes | ||||||||||||||||||||
| Fair Value Measurements at December 31, 2024 Using: | ||||||||||||||||||||
| Carrying Amount | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
| Financial assets | ||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | $ | |||||||||||||||
| Interest-bearing time deposits in other financial institutions | ||||||||||||||||||||
| Securities | ||||||||||||||||||||
| Loans receivable, net of allowance for credit losses | ||||||||||||||||||||
| FHLB and FRB stock | N /A | |||||||||||||||||||
| Accrued interest receivable | ||||||||||||||||||||
| Financial liabilities | ||||||||||||||||||||
| Certificates of deposit | ||||||||||||||||||||
| Borrowings | ||||||||||||||||||||
| Subordinated notes | — | |||||||||||||||||||
BANKFINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Table amounts in thousands, except share and per share data)
NOTE 8 – REVENUE FROM CONTRACTS WITH CUSTOMERS
All of the Company's revenue from contracts with customers within the scope of ASC 606 is recognized within noninterest income. The following table presents the Company's sources of noninterest income. Items outside of the scope of the ASC 606 are noted as such.
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Deposit service charges and fees | $ | $ | $ | $ | ||||||||||||
| Loan servicing fees (1) | ||||||||||||||||
| Trust and insurance commissions and annuities income | ||||||||||||||||
| Loss on disposal of premises and equipment | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on bank-owned life insurance | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Bank-owned life insurance death benefit (1) | ||||||||||||||||
| Gain on repurchase of Subordinated notes (1) | ||||||||||||||||
| Other (1) | ||||||||||||||||
| Total noninterest income | $ | $ | $ | $ | ||||||||||||
(1) Not within the scope of ASC 606
A description of the Company's revenue streams accounted for under ASC 606 follows:
Deposit service charges and fees: The Company earns fees from its deposit customers based on specific types of transactions, account maintenance and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer's request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer's account balance.
Interchange income: The Company earns interchange fees from debit cardholder transactions conducted through the Visa payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder. Interchange income is included in deposit service charges and fees. Interchange income was $
Trust and insurance commissions and annuities income: The Company earns trust, insurance commissions and annuities income from its contracts with trust customers to manage assets for investment, and/or to transact on their accounts. These fees are primarily earned over time as the Company provides the contracted monthly or quarterly services and are generally assessed based on a tiered scale of the market value of assets under management (AUM) at month-end. Fees that are transaction-based, including trade execution services, are recognized at the point in time that the transaction is executed, i.e., the trade date. Other related services provided include fees the Company earns, which are based on a fixed fee schedule and are recognized when the services are rendered.
Gains/losses on sales of foreclosed assets and other assets: The Company records a gain or loss from the sale of foreclosed assets and other assets when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of foreclosed assets to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the foreclosed asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain (loss) on sale if a significant financing component is present. Other foreclosed assets sales for the six months ended June 30, 2025 and 2024 were not financed by the Company. The Company financed the sale of a multi-family residential OREO property in June 2025. The loan was at market value and no gain or loss was recorded on the sale.
| ITEM 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Cautionary Statement Regarding Forward-Looking Information
Forward Looking Statements
This Quarterly Report on Form 10-Q contains, and other periodic and current reports, press releases and other public stockholder communications of BankFinancial Corporation may contain, forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may include statements relating to our future plans, strategies and expectations, as well as our future revenues, expenses, earnings, losses, financial performance, financial condition, asset quality metrics and future prospects. Forward looking statements are generally identifiable by use of the words “believe,” “may,” “will,” “should,” “could,” “continue,” “expect,” “estimate,” “intend,” “anticipate,” “preliminary,” “project,” “plan,” or similar expressions. Forward looking statements speak only as of the date made. They are frequently based on assumptions that may or may not materialize, and are subject to numerous uncertainties that could cause actual results to differ materially from those anticipated in the forward looking statements. We intend all forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for the purpose of invoking these safe harbor provisions.
Factors that could cause actual results to differ materially from the results anticipated or projected and which could materially and adversely affect our operating results, financial condition or future prospects include, but are not limited to: (i) the impact of re-pricing and competitors’ pricing initiatives on loan and deposit products; (ii) interest rate movements and their impact on the economy, customer behavior, the market value of securities and our net interest margin; (iii) changes in U.S. Government or State government budgets, appropriations or funding allocation policies or practices affecting our credit exposures to U.S. Government or State governments, agencies or related entities, or borrowers' dependent on the receipt of Federal or State appropriations, including but not limited to, defense, healthcare, transportation, education and law enforcement programs; (iv) less than anticipated loan and lease growth; (v) for any significant credit exposure, borrower-specific adverse developments with respect to the adequacy of cash flows, liquidity or collateral; (vi) the inherent credit risks of lending activities, including risks that could cause changes in the level and direction of loan delinquencies and charge-offs; (vii) adverse economic conditions in general, or specific events such as a pandemic or national or international war, act of conflict or terrorism, and in the markets in which we lend that could result in increased delinquencies in our loan portfolio or a decline in the value of our investment securities and the collateral for our loans; (viii) declines in real estate values that adversely impact the value of our loan collateral, other real estate owned ("OREO"), asset dispositions and the level of borrower equity in their investments; (ix) results of supervisory monitoring or examinations by regulatory authorities, including the possibility that a regulatory authority could, among other things, require us to increase our allowance for credit losses or adversely change our loan classifications, write-down assets, reduce credit concentrations or maintain specific capital levels; (x) changes, disruptions or illiquidity in national or global financial markets; (xi) monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board; (xii) factors affecting our ability to retain or access deposits or cost-effective funding, including changes in public confidence, withdrawals of deposits not insured by the FDIC or the availability of other borrowing sources for any reason; (xiii) legislative or regulatory changes that have an adverse impact on our products, services, operations and operating expenses; (xiv) higher federal deposit insurance premiums; (xv) higher than expected overhead, infrastructure and compliance costs; (xvi) changes in accounting principles, policies or guidelines; (xvii) the effects of any federal government shutdown or failure to enact legislation related to the maximum permitted amount of U.S. Government debt obligations; (xviii) privacy and cybersecurity risks, including the risks of business interruption and the compromise of confidential customer information resulting from intrusions; and (xix) the effects of tariffs or other domestic or international governmental policies and any retaliatory responses.
These risks and uncertainties, together with the Risk Factors and other information set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as well as Part II, Items 1A of our subsequent Quarterly Reports on Form 10-Q, and other filings we make with the SEC, should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Forward looking statements speak only as of the date they are made. We do not undertake any obligation to update any forward-looking statement in the future, or to reflect circumstances and events that occur after the date on which the forward-looking statement was made.
Critical Accounting Policies
Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and could potentially result in materially different results under different assumptions and conditions. We believe that the most critical accounting policies upon which our financial condition and results of operations depend, and which involve the most complex subjective decisions or assessments, are included in the discussion entitled “Critical Accounting Policies” in Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as filed with the SEC.
Overview
We reported a net loss of $359,000, or $(0.03) per common share, for the quarter ended June 30, 2025. As of June 30, 2025, the Company had total assets of $1.429 billion, total loans of $796.0 million, total deposits of $1.216 billion and stockholders' equity of $156.0 million.
In the second quarter of 2025, net interest income decreased by $230,000 due primarily to declines in the balances of healthcare finance lines of credit, government, middle-market and small-ticket equipment finance transactions related to ongoing credit risk reduction initiatives. Our net interest margin on a tax-equivalent basis declined to 3.43%.
Noninterest income increased by $325,000 due to increases in deposit service charges and fees and a $417,000 bank-owned life insurance death benefit, partially offset by declines in loan servicing income.
Noninterest expense increased by $936,000 due to increases in marketing, corporate professional fees and nonperforming asset expense, partially offset by reductions in compensation and benefits and office occupancy and equipment.
Cash & Cash-Equivalent Assets
At June 30, 2025, cash and cash-equivalent assets represented 8% of total assets, compared to 6% of total assets at December 31, 2024.
Investment Securities Portfolio
For the quarter ended June 30, 2025, total investment securities and investments in certificates of deposit increased by $66.2 million. The investment securities portfolio had a weighted-average 0.3 year term to maturity as of June 30, 2025, with an after-tax unrealized loss of $127,000 or 0.1% of Tier 1 capital.
Loan Portfolio
Our loan portfolio declined by $45.1 million in the second quarter of 2025 primarily due to scheduled repayments within all portfolios, offset by modest loan originations of multi-family residential loans and corporate equipment lease transactions. Commercial line of credit utilization for commercial finance and lessor finance borrowers increased modestly; however, line of credit balances and commitments declined in the healthcare finance portfolio due to ongoing risk reduction activities. Demand for commercial finance transactions continued to increase modestly during the second quarter of 2025 due to increased marketing activity.
Asset Quality
The ratio of nonperforming assets to total assets declined to 0.85% at June 30, 2025, inclusive of one U.S. Government equipment finance transaction with a gross exposure of $8.4 million as of June 30, 2025. Excluding the U.S. Government equipment finance transaction, our ratio of nonperforming assets to total assets would have been 0.26%. Nonperforming asset resolution activity continued during the second quarter of 2025, including the final resolution of a $1.4 million Chicago multi-family residential nonperforming loan exposure. For the U.S. Government equipment finance transaction that we settled in the first quarter of 2025, we received the final $5.6 million settlement cash payment in the second quarter of 2025.
With respect to the remaining U.S. Government equipment finance exposure of $8.4 million, in May, 2025, we received a response and settlement offer for our Contract Disputes Act claim filed in August, 2024. We deemed the settlement offer inadequate based on the merits of the claim. Accordingly, we are preparing a complaint to be filed with the Court of Federal Claims. Pursuant to ASC 310, we recorded a $2.1 million specific reserve in the second quarter of 2025 to reflect the expected time and costs for the litigation process.
Our allowance for credit losses increased to 1.13% of total loans as of June 30, 2025, compared to 0.85% at December 31, 2024.
Deposit Portfolio
Total deposits decreased by $17.3 million due to decreases in the balances of interest-bearing transaction accounts, noninterest-bearing commercial deposit balances, and money market and savings accounts, partially offset by increases in certificate of deposit accounts. The cost of total retail and commercial deposits increased to 1.84% during the second quarter of 2025 from 1.82% at March 31, 2025. Core deposits represented 79% of total deposits, with noninterest-bearing demand deposit accounts representing 18% of total deposits as of June 30, 2025. Total commercial deposits were 20% of total deposits as of June 30, 2025 and March 31, 2025. FDIC-insured deposits were 85% of total deposits and collateralized public funds deposits represented 1% of total deposits as of June 30, 2025.
Capital Adequacy
The Company’s capital position remained strong, with a Tier 1 leverage ratio of 10.83% at June 30, 2025. The book value of the Company’s common shares decreased to $12.52 at June 30, 2025 from $12.64 at March 31, 2025.
SELECTED FINANCIAL DATA
The following summary information is derived from the consolidated financial statements of the Company. For additional information, reference is made to the Consolidated Financial Statements of the Company and related notes included elsewhere in this Quarterly Report.
| June 30, 2025 |
December 31, 2024 |
Change |
||||||||||
| (In thousands) |
||||||||||||
| Selected Financial Condition Data: |
||||||||||||
| Total assets |
$ | 1,429,177 | $ | 1,434,814 | $ | (5,637 | ) | |||||
| Loans, net |
795,963 | 887,586 | (91,623 | ) | ||||||||
| Securities, at fair value |
436,965 | 360,530 | 76,435 | |||||||||
| Deposits |
1,215,658 | 1,217,541 | (1,883 | ) | ||||||||
| Borrowings |
15,000 | 20,000 | (5,000 | ) | ||||||||
| Subordinated notes, net of unamortized issuance costs |
18,263 | 18,736 | (473 | ) | ||||||||
| Equity |
156,042 | 156,377 | (335 | ) | ||||||||
| Three Months Ended |
Six Months Ended |
|||||||||||||||||||||||||||||||
| June 30, |
June 30, |
|||||||||||||||||||||||||||||||
| 2025 |
2024 |
$ Change |
% Change |
2025 |
2024 |
$ Change |
% Change |
|||||||||||||||||||||||||
| (In thousands) |
||||||||||||||||||||||||||||||||
| Selected Operating Data: |
||||||||||||||||||||||||||||||||
| Interest income |
$ | 16,129 | $ | 17,655 | $ | (1,526 | ) | (8.6 | )% | $ | 32,441 | $ | 35,000 | $ | (2,559 | ) | (7.3 | )% | ||||||||||||||
| Interest expense |
4,864 | 5,079 | (215 | ) | (4.2 | ) | 9,681 | 9,897 | (216 | ) | (2.2 | ) | ||||||||||||||||||||
| Net interest income |
11,265 | 12,576 | (1,311 | ) | (10.4 | ) | 22,760 | 25,103 | (2,343 | ) | (9.3 | ) | ||||||||||||||||||||
| Provision for (recovery of) credit losses |
2,252 | (122 | ) | 2,374 | 1,945.9 | 1,956 | (110 | ) | 2,066 | 1,878.2 | ||||||||||||||||||||||
| Net interest income after provision for (recovery of) credit losses |
9,013 | 12,698 | (3,685 | ) | (29.0 | ) | 20,804 | 25,213 | (4,409 | ) | (17.5 | ) | ||||||||||||||||||||
| Noninterest income |
1,959 | 1,276 | 683 | 53.5 | 3,593 | 2,737 | 856 | 31.3 | ||||||||||||||||||||||||
| Noninterest expense |
11,848 | 11,135 | 713 | 6.4 | 22,760 | 22,901 | (141 | ) | (0.6 | ) | ||||||||||||||||||||||
| Loss (income) before income taxes |
(876 | ) | 2,839 | (3,715 | ) | (130.9 | ) | 1,637 | 5,049 | (3,412 | ) | (67.6 | ) | |||||||||||||||||||
| Income tax (benefit) expense |
(517 | ) | 705 | (1,222 | ) | (173.3 | ) | (85 | ) | 1,205 | (1,290 | ) | (107.1 | ) | ||||||||||||||||||
| Net (loss) income |
$ | (359 | ) | $ | 2,134 | $ | (2,493 | ) | (116.8 | )% | $ | 1,722 | $ | 3,844 | $ | (2,122 | ) | (55.2 | )% | |||||||||||||
| Three Months Ended |
Six Months Ended |
|||||||||||||||
| June 30, |
June 30, |
|||||||||||||||
| 2025 |
2024 |
2025 |
2024 |
|||||||||||||
| Selected Financial Ratios and Other Data: |
||||||||||||||||
| Performance Ratios: |
||||||||||||||||
| Return on assets (ratio of net (loss) income to average total assets) (1) |
(0.10 | )% | 0.58 | % | 0.24 | % | 0.52 | % | ||||||||
| Return on equity (ratio of net (loss) income to average equity) (1) |
(0.91 | ) | 5.44 | 2.19 | 4.91 | |||||||||||
| Average equity to average assets |
11.06 | 10.67 | 11.01 | 10.59 | ||||||||||||
| Net interest rate spread (1) (2) |
2.86 | 3.11 | 2.90 | 3.09 | ||||||||||||
| Net interest margin (TEB) (1) (3) (4) |
3.43 | 3.67 | 3.46 | 3.63 | ||||||||||||
| Efficiency ratio (5) |
89.59 | 80.39 | 86.37 | 82.26 | ||||||||||||
| Noninterest expense to average total assets (1) |
3.33 | 3.03 | 3.19 | 3.10 | ||||||||||||
| Average interest-earning assets to average interest-bearing liabilities |
132.78 | 134.44 | 132.98 | 135.16 | ||||||||||||
| Dividends declared per share |
$ | 0.10 | $ | 0.10 | $ | 0.20 | $ | 0.20 | ||||||||
| Dividend payout ratio |
(347.09 | )% | 58.39 | % | 144.72 | % | 64.86 | % | ||||||||
| At June 30, 2025 |
At December 31, 2024 |
|||||||
| Asset Quality Ratios: |
||||||||
| Nonperforming assets to total assets (6) |
0.85 | % | 1.28 | % | ||||
| Nonperforming loans to total loans |
1.42 | 1.89 | ||||||
| Allowance for credit losses to nonperforming loans |
79.65 | 44.71 | ||||||
| Allowance for credit losses to total loans |
1.13 | 0.85 | ||||||
| Capital Ratios: |
||||||||
| Equity to total assets at end of period |
10.92 | % | 10.90 | % | ||||
| Tier 1 leverage ratio (Bank only) |
11.44 | % | 11.23 | % | ||||
| Other Data: |
||||||||
| Number of full-service offices |
18 | 18 | ||||||
| Employees (full-time equivalents) |
190 | 197 | ||||||
| (1) |
Ratios annualized. |
| (2) |
The net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities for the period. |
| (3) |
The net interest margin represents net interest income divided by average total interest-earning assets for the period. |
| (4) | Calculated on a tax-equivalent basis assuming a federal income tax rate of 21% and an average state income tax rate of 9.5%. |
| (5) |
The efficiency ratio represents noninterest expense, divided by the sum of net interest income and noninterest income. |
| (6) |
Nonperforming assets include nonperforming loans and foreclosed assets. |
Comparison of Financial Condition at June 30, 2025 and December 31, 2024
Total assets decreased $5.6 million, or 0.4%, to $1.429 billion at June 30, 2025, from $1.435 billion at December 31, 2024. The decrease in total assets was primarily due to decreases in interest-bearing time deposits we hold in other financial institutions and loans receivable, partially offset by increases in cash and cash equivalents and securities. Interest-bearing time deposits in other financial institutions decreased 40.6% to $20.3 million and loans receivable decreased $91.6 million to $796.0 million, while cash and cash equivalents increased 32.3% to $112.2 million and securities increased $76.4 million to $437.0 million at June 30, 2025 .
Our loan portfolio consists primarily of investment and business loans (multi-family residential real estate, nonresidential real estate, and commercial loans and leases), which together totaled 98.1% of gross loans at June 30, 2025. During the six months ended June 30, 2025, commercial loans and leases decreased by $58.1 million, or 23.4%, and multi-family residential real estate loans decreased by $25.8 million, or 4.9%. The decrease in commercial loans and leases was primarily due to decreases in government and corporate leases of $18.9 million and $13.6 million, respectively, due to scheduled payments and payoffs. The decrease in multi-family residential real estate loans was due to $29.0 million of payments and payoffs in the first half of 2025.
Our primary lending area for regulatory purposes consists of the counties in the State of Illinois where our branch offices are located, and contiguous counties. We currently derive the most significant portion of our revenues from these geographic areas. We also engage in multi-family residential real estate lending activities in carefully selected metropolitan areas outside our primary lending area, and we engage in certain types of commercial lending and commercial equipment finance activities on a nationwide basis. At June 30, 2025, $300.9 million, or 60.7%, of our multi-family residential real estate loans were in the Metropolitan Statistical Area for Chicago, Illinois; $64.0 million, or 12.9%, were in Texas; $63.8 million, or 12.9%, were in Florida; and $30.2 million, or 6.1%, were in North Carolina. This information reflects the location of the collateral for the loan and does not necessarily reflect the location of the borrowers. At June 30, 2025, our concentrations within the nonresidential real estate portfolio were retail shopping malls of $46.6 million, or 45.3%; office buildings of $13.3 million, or 12.9%; mixed use buildings of $13.1 million, or 12.7%; and industrial buildings of $9.1 million, or 8.8%.
Total liabilities decreased $5.3 million, or 0.4%, to $1.273 billion at June 30, 2025, from $1.278 billion at December 31, 2024, due to a decrease in total deposits and $5.0 million of maturing borrowings and a $500,000 repurchase of our Notes. Total deposits decreased $1.9 million, or 0.2%, to $1.216 billion at June 30, 2025, from $1.218 billion at December 31, 2024. Noninterest-bearing demand deposits decreased $16.4 million, or 6.9%, to $222.4 million at June 30, 2025, from $238.8 million at December 31, 2024. Interest-bearing NOW accounts decreased $1.9 million, or 0.7%, to $275.2 million at June 30, 2025, from $277.1 million at December 31, 2024, money market accounts decreased $2.5 million, or 0.8%, to $303.0 million at June 30, 2025, from $305.5 million at December 31, 2024, and savings accounts decreased $1.5 million, or 0.9%, to $159.6 million at June 30, 2025, from $161.1 million at December 31, 2024. These decreases were offset by an increase in retail certificates of deposit of $20.4 million, or 8.7%, to $255.4 million at June 30, 2025, from $235.0 million at December 31, 2024. Core deposits (which consists of savings, money market, noninterest-bearing demand and NOW accounts) represented 79.0% of total deposits at June 30, 2025 and 80.7% of total deposits at December 31, 2024.
Total stockholders’ equity was $156.0 million at June 30, 2025, compared to $156.4 million at December 31, 2024. The decrease in total stockholders’ equity was primarily due to our declaration and payment of cash dividends totaling $2.5 million during the first half of 2025, partially offset $435,000 decrease, net of tax, of accumulated other comprehensive loss on our securities portfolio and net income of $1.7 million for the six months ended June 30, 2025.
Operating Results for the Three Months Ended June 30, 2025 and 2024
Net (loss) Income. Net loss was $359,000 for the three months ended June 30, 2025, compared to net income of $2.1 million for the three months ended June 30, 2024. Loss per basic and fully diluted share of common stock was $0.03 for the three months ended June 30, 2025, compared to earnings per basic and fully diluted share of common stock of $0.17 for the three months ended June 30, 2024.
Net Interest Income. Net interest income was $11.3 million for the three months ended June 30, 2025, compared to $12.6 million for the three months ended June 30, 2024. The $1.3 million decrease in net interest income was primarily due to a $1.5 million decrease in interest income.
The decrease in interest income was due in substantial part to decreases in weighted average interest-earning assets and the yield on interest-earning assets. Total average interest-earning assets decreased $42.3 million, or 3.0%, to $1.357 billion for the three months ended June 30, 2025, from $1.399 billion for the same period in 2024. The yield on interest-earning assets decreased 30 basis points to 4.77% for the three months ended June 30, 2025, from 5.07% for the three months ended June 30, 2024. The weighted average cost of interest-bearing liabilities decreased five basis points to 1.91% for the three months ended June 30, 2025, from 1.96% for the three months ended June 30, 2024. Total average interest-bearing liabilities decreased $18.9 million, or 1.8%, to $1.022 billion for the three months ended June 30, 2025, from $1.041 billion for the same period in 2024. The decrease in interest-bearing liabilities is partially attributable to a $8.4 million decrease in average deposits. Our net interest rate spread decreased by 25 basis points to 2.86% for the three months ended June 30, 2025, from 3.11% for the same period in 2024, primarily due to a decrease in the yield on interest-earning assets. Our net interest margin, on a tax equivalent basis, decreased 24 basis points to 3.43% for the three months ended June 30, 2025, from 3.67% for the same period in 2024.
Average Balance Sheets
The following table sets forth average balance sheets, average yields and costs, and certain other information. Average balances are daily average balances. Nonaccrual loans are included in the computation of average balances, but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees and expenses and discounts and premiums that are amortized or accreted to interest income or expense; however, the Company believes that the effect of these inclusions is not material. The net interest margin is reported on a tax equivalent basis (“TEB”). A tax equivalent adjustment is added to reflect interest earned on certain securities that are exempt from federal and state income tax.
| For the Three Months Ended June 30, |
||||||||||||||||||||||||
| 2025 |
2024 |
|||||||||||||||||||||||
| Average Outstanding Balance |
Interest |
Yield/Rate (1) |
Average Outstanding Balance |
Interest |
Yield/Rate (1) |
|||||||||||||||||||
| (Dollars in thousands) |
||||||||||||||||||||||||
| Interest-earning Assets: |
||||||||||||||||||||||||
| Loans |
$ | 825,988 | $ | 10,646 | 5.17 | % | $ | 1,010,123 | $ | 13,349 | 5.32 | % | ||||||||||||
| Securities |
406,023 | 4,041 | 3.99 | 242,591 | 2,284 | 3.79 | ||||||||||||||||||
| Stock in FHLB and FRB |
7,490 | 111 | 5.94 | 7,490 | 117 | 6.28 | ||||||||||||||||||
| Other |
117,469 | 1,331 | 4.54 | 139,076 | 1,905 | 5.51 | ||||||||||||||||||
| Total interest-earning assets |
1,356,970 | 16,129 | 4.77 | 1,399,280 | 17,655 | 5.07 | ||||||||||||||||||
| Noninterest-earning assets |
67,737 | 70,796 | ||||||||||||||||||||||
| Total assets |
$ | 1,424,707 | $ | 1,470,076 | ||||||||||||||||||||
| Interest-bearing Liabilities: |
||||||||||||||||||||||||
| Savings deposits |
$ | 161,739 | 72 | 0.18 | $ | 170,016 | 75 | 0.18 | ||||||||||||||||
| Money market accounts |
301,368 | 1,764 | 2.35 | 314,711 | 2,059 | 2.63 | ||||||||||||||||||
| NOW accounts |
278,496 | 558 | 0.80 | 290,335 | 574 | 0.80 | ||||||||||||||||||
| Certificates of deposit |
247,101 | 2,130 | 3.46 | 222,070 | 1,916 | 3.47 | ||||||||||||||||||
| Total deposits |
988,704 | 4,524 | 1.84 | 997,132 | 4,624 | 1.87 | ||||||||||||||||||
| Borrowings and Subordinated notes |
33,259 | 340 | 4.10 | 43,710 | 455 | 4.19 | ||||||||||||||||||
| Total interest-bearing liabilities |
1,021,963 | 4,864 | 1.91 | 1,040,842 | 5,079 | 1.96 | ||||||||||||||||||
| Noninterest-bearing deposits |
222,903 | 249,607 | ||||||||||||||||||||||
| Noninterest-bearing liabilities |
22,242 | 22,842 | ||||||||||||||||||||||
| Total liabilities |
1,267,108 | 1,313,291 | ||||||||||||||||||||||
| Equity |
157,599 | 156,785 | ||||||||||||||||||||||
| Total liabilities and equity |
$ | 1,424,707 | $ | 1,470,076 | ||||||||||||||||||||
| Net interest income/Net interest margin (2) |
$ | 11,265 | 3.33 | % | $ | 12,576 | 3.62 | % | ||||||||||||||||
| Tax equivalent adjustment (3) |
326 | 0.10 | 183 | 0.05 | ||||||||||||||||||||
| Net interest income (TEB) / Net interest margin (TEB) (2) (3) |
$ | 11,591 | 3.43 | % | $ | 12,759 | 3.67 | % | ||||||||||||||||
| Net interest rate spread (4) |
2.86 | % | 3.11 | % | ||||||||||||||||||||
| Net interest-earning assets (5) |
$ | 335,007 | $ | 358,438 | ||||||||||||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities |
132.78 | % | 134.44 | % | ||||||||||||||||||||
| (1) |
Annualized. |
| (2) | Net interest margin represents net interest income divided by average total interest-earning assets. |
| (3) | Calculated on a TEB assuming a federal income tax rate of 21% and an average state income tax rate of 9.5%. |
| (4) |
Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. |
| (5) |
Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities. |
Allowance and Provision for Credit Losses
The ACL is a significant estimate in our unaudited consolidated financial statements, affecting both earnings and capital. The ACL is recorded in accordance with US GAAP to provide an adequate reserve for expected credit losses that is reflective of management’s best estimate of what is expected to be collected. The methodology adopted influences, and is influenced by, the Bank’s overall credit risk management processes. All estimates of credit losses should be based on careful consideration of all significant factors affecting the collectability as of the evaluation date. The ACL is established through the provision for credit loss expense charged to income.
The provision for credit losses – loans for the three months ended June 30, 2025 was $2.3 million, inclusive of a $2.1 million specific reserve established for a $8.4 million U.S. Government equipment finance transaction compared to a recovery of credit losses – loans of $98,000 recorded for the three months ended June 30, 2024. The provision for, or recovery of, credit losses – loans varies based on, among other things, forecasted unemployment rates, loan growth, net charge-offs, collateral values associated with collateral dependent loans and qualitative factors.
There was a $2.1 million specific reserve established for loans individually evaluated at June 30, 2025, compared to no reserves established at December 31, 2024. Net charge-offs were $424,000 for the three months ended June 30, 2025, compared to $9,000 for the three months ended June 30, 2024. The $2.1 million specific reserve related to our discounted cash flow valuation of our remaining $8.4 million U.S. Government equipment finance exposure, inclusive of the expected time for litigation and costs related to the litigation process.
The allowance for credit losses as a percentage of nonperforming loans was 79.65% at June 30, 2025, compared to 44.35% at March 31, 2025.
Noninterest Income
| Three Months Ended |
||||||||||||
| June 30, |
||||||||||||
| 2025 |
2024 |
Change |
||||||||||
| (Dollars in thousands) |
||||||||||||
| Deposit service charges and fees |
$ | 972 | $ | 834 | $ | 138 | ||||||
| Loan servicing fees |
76 | 97 | (21 | ) | ||||||||
| Trust and insurance commissions and annuities income |
394 | 349 | 45 | |||||||||
| Loss on disposal of premises and equipment |
(4 | ) | (9 | ) | 5 | |||||||
| Loss on bank-owned life insurance |
(5 | ) | (91 | ) | 86 | |||||||
| Bank-owned life insurance death benefit |
417 | — | 417 | |||||||||
| Other |
109 | 96 | 13 | |||||||||
| Total noninterest income |
$ | 1,959 | $ | 1,276 | $ | 683 | ||||||
Noninterest income increased $683,000, or 53.5%, to $2.0 million, for the three months ended June 30, 2025, compared to $1.3 million for the same period in 2024, due in part to increases in deposit service charges and fees and a bank-owned life insurance death benefit. Deposit services charges and fees increased $138,000, or 16.5%, to $972,000 for the three months ended June 30, 2025, compared to $834,000 for the three months ended June 30, 2024. In the second quarter of 2025, the Bank recorded income from a death benefit on a bank-owned life insurance policy in the amount of $417,000 as a result of the death of a former Bank officer.
Noninterest Expense
| Three Months Ended |
||||||||||||
| June 30, |
||||||||||||
| 2025 |
2024 |
Change |
||||||||||
| (Dollars in thousands) |
||||||||||||
| Compensation and benefits |
$ | 5,565 | $ | 5,943 | $ | (378 | ) | |||||
| Office occupancy and equipment |
1,790 | 1,861 | (71 | ) | ||||||||
| Advertising and public relations |
232 | 112 | 120 | |||||||||
| Information technology |
985 | 1,049 | (64 | ) | ||||||||
| Professional fees |
770 | 382 | 388 | |||||||||
| Supplies, telephone and postage |
284 | 292 | (8 | ) | ||||||||
| FDIC insurance premiums |
157 | 144 | 13 | |||||||||
| Other |
2,065 | 1,352 | 713 | |||||||||
| Total noninterest expense |
$ | 11,848 | $ | 11,135 | $ | 713 | ||||||
Noninterest expense increased $713,000, or 6.4%, to $11.8 million, for the three months ended June 30, 2025, compared to $11.1 million for the same period in 2024, primarily due to increased advertising expenses, professional fees and other expenses, partially offset by decreases in expenses for compensation and benefits, office occupancy and equipment, and information technology. Compensation and benefits expense decreased $378,000, or 6.4%, to $5.6 million for the three months ended June 30, 2025, compared to $5.9 million in 2024. The decrease is primarily due to reduced staffing; full time equivalents were 190 at June 30, 2025, compared to 206 at June 30, 2024. Professional fees increased $388,000, to $770,000 for the three months ended June 30, 2025, from $382,000 for the same period in 2024, primarily due to increases in audit fees, legal fees, annual meeting expenses and general corporate consulting expenses. Other expenses increased by $713,000, or 52.7%, to $2.1 million for the three months ended June 30, 2025, from $1.4 million for the same period in 2024, primarily due to a $635,000 write-down of foreclosed assets recorded in the second quarter and an increase in nonperforming loan expenses of $240,000. The increase in nonperforming loan expenses includes legal, receiver fees and utilities.
Income Taxes
We recorded an income tax benefit was $517,000 for the three months ended June 30, 2025, compared to income tax expense of $705,000 for the three months ended June 30, 2024. Our combined state and federal effective tax rate for the three months ended June 30, 2025 was 59.0%, compared to 24.8% for the three months ended June 30, 2024. The tax rates are the result of a favorable impact of the state tax benefit of interest earned on U.S. Treasury Bills and Notes and U.S. government-sponsored agency securities.
Operating Results for the Six Months Ended June 30, 2025 and 2024
Net Income. Net income was $1.7 million for the six months ended June 30, 2025, compared to $3.8 million for the six months ended June 30, 2024. Earnings per basic and fully diluted share of common stock were $0.14 for the six months ended June 30, 2025, compared to $0.31 for the six months ended June 30, 2024.
Net Interest Income. Net interest income was $22.8 million for the six months ended June 30, 2025, compared to $25.1 million for the six months ended June 30, 2024. The $2.3 million decrease in net interest income was primarily due to a $2.6 million decrease in interest income.
The decrease in interest income was due in substantial part to decreases in weighted average interest-earning assets and the yield on interest-earning assets. Total average interest-earning assets decreased $46.9 million, or 3.3%, to $1.360 billion for the six months ended June 30, 2025, from $1.407 billion for the same period in 2024. The yield on interest-earning assets decreased 19 basis points to 4.81% for the six months ended June 30, 2025, from 5.00% for the six months ended June 30, 2024. The weighted average cost of interest-bearing liabilities remained stable at 1.91% for the six months ended June 30, 2025 and 2024. Total average interest-bearing liabilities decreased $18.1 million, or 1.7%, to $1.023 billion for the six months ended June 30, 2025, from $1.041 billion for the same period in 2024. The decrease in interest-bearing liabilities is partially attributable to a $9.5 million decrease in average deposits. Our net interest rate spread decreased by 19 basis points to 2.90% for the six months ended June 30, 2025, from 3.09% for the same period in 2024, primarily due to a significant decrease in total average interest-earning assets. Our net interest margin, on a tax equivalent basis, decreased 17 basis points to 3.46% for the six months ended June 30, 2025, from 3.63% for the same period in 2024.
Average Balance Sheets
The following table sets forth average balance sheets, average yields and costs, and certain other information. Average balances are daily average balances. Nonaccrual loans are included in the computation of average balances, but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees and expenses and discounts and premiums that are amortized or accreted to interest income or expense; however, the Company believes that the effect of these inclusions is not material. The net interest margin is reported on a TEB. A tax equivalent adjustment is added to reflect interest earned on certain securities that are exempt from federal and state income tax.
| For the Six Months Ended June 30, |
||||||||||||||||||||||||
| 2025 |
2024 |
|||||||||||||||||||||||
| Average Outstanding Balance |
Interest |
Yield/Rate (1) |
Average Outstanding Balance |
Interest |
Yield/Rate (1) |
|||||||||||||||||||
| (Dollars in thousands) |
||||||||||||||||||||||||
| Interest-earning Assets: |
||||||||||||||||||||||||
| Loans |
$ | 848,318 | $ | 21,884 | 5.20 | % | $ | 1,020,631 | $ | 26,702 | 5.26 | % | ||||||||||||
| Securities |
376,721 | 7,444 | 3.98 | 214,621 | 3,553 | 3.33 | ||||||||||||||||||
| Stock in FHLB and FRB |
7,490 | 223 | 6.00 | 7,490 | 234 | 6.28 | ||||||||||||||||||
| Other |
127,796 | 2,890 | 4.56 | 164,442 | 4,511 | 5.52 | ||||||||||||||||||
| Total interest-earning assets |
1,360,325 | 32,441 | 4.81 | 1,407,184 | 35,000 | 5.00 | ||||||||||||||||||
| Noninterest-earning assets |
68,486 | 69,991 | ||||||||||||||||||||||
| Total assets |
$ | 1,428,811 | $ | 1,477,175 | ||||||||||||||||||||
| Interest-bearing Liabilities: |
||||||||||||||||||||||||
| Savings deposits |
$ | 162,172 | 144 | 0.18 | $ | 171,426 | 152 | 0.18 | ||||||||||||||||
| Money market accounts |
304,792 | 3,516 | 2.33 | 309,562 | 3,904 | 2.54 | ||||||||||||||||||
| NOW accounts |
278,756 | 1,095 | 0.79 | 293,594 | 1,151 | 0.79 | ||||||||||||||||||
| Certificates of deposit |
241,746 | 4,192 | 3.50 | 222,356 | 3,753 | 3.39 | ||||||||||||||||||
| Total deposits |
987,466 | 8,947 | 1.83 | 996,938 | 8,960 | 1.81 | ||||||||||||||||||
| Borrowings and Subordinated notes |
35,514 | 734 | 4.17 | 44,172 | 937 | 4.27 | ||||||||||||||||||
| Total interest-bearing liabilities |
1,022,980 | 9,681 | 1.91 | 1,041,110 | 9,897 | 1.91 | ||||||||||||||||||
| Noninterest-bearing deposits |
226,539 | 253,612 | ||||||||||||||||||||||
| Noninterest-bearing liabilities |
22,046 | 26,001 | ||||||||||||||||||||||
| Total liabilities |
1,271,565 | 1,320,723 | ||||||||||||||||||||||
| Equity |
157,246 | 156,452 | ||||||||||||||||||||||
| Total liabilities and equity |
$ | 1,428,811 | $ | 1,477,175 | ||||||||||||||||||||
| Net interest income/Net interest margin (2) |
$ | 22,760 | 3.37 | % | $ | 25,103 | 3.59 | % | ||||||||||||||||
| Tax equivalent adjustment (3) |
601 | 0.09 | 283 | 0.04 | ||||||||||||||||||||
| Net interest income (TEB) / Net interest margin (TEB) (2) (3) |
$ | 23,361 | 3.46 | % | $ | 25,386 | 3.63 | % | ||||||||||||||||
| Net interest rate spread (4) |
2.90 | % | 3.09 | % | ||||||||||||||||||||
| Net interest-earning assets (5) |
$ | 337,345 | $ | 366,074 | ||||||||||||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities |
132.98 | % | 135.16 | % | ||||||||||||||||||||
| (1) |
Annualized. |
| (2) | Net interest margin represents net interest income divided by average total interest-earning assets. |
| (3) | Calculated on a TEB assuming a federal income tax rate of 21% and an average state income tax rate of 9.5%. |
| (4) |
Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. |
| (5) |
Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities. |
Allowance and Provision for Credit Losses
The ACL is a significant estimate in our unaudited consolidated financial statements, affecting both earnings and capital. The ACL is recorded in accordance with US GAAP to provide an adequate reserve for expected credit losses that is reflective of management’s best estimate of what is expected to be collected. The methodology adopted influences, and is influenced by, the Bank’s overall credit risk management processes. All estimates of credit losses should be based on careful consideration of all significant factors affecting the collectability as of the evaluation date. The ACL is established through the provision for credit loss expense charged to income.
The provision for credit losses – loans for the six months ended June 30, 2025 was $2.0 million, inclusive of a $2.1 million specific reserve established for a $8.4 million U.S. Government equipment finance transaction compared to a recovery of credit losses – loans of $37,000 recorded for the six months ended June 30, 2024. The provision for, or recovery of, credit losses – loans varies based on, among other things, forecasted unemployment rates, loan growth, net charge-offs, collateral values associated with collateral dependent loans and qualitative factors.
There was a $2.1 million specific reserve established for loans individually evaluated at June 30, 2025, compared to no reserves established at December 31, 2024. Net charge-offs were $455,000 for the six months ended June 30, 2025, compared to $166,000 for the six months ended June 30, 2024. The $2.1 million specific reserve related to our discounted cash flow valuation of our remaining $8.4 million U.S. Government equipment finance exposure, inclusive of the expected time for litigation and costs related to the litigation process.
The allowance for credit losses as a percentage of nonperforming loans was 79.65% at June 30, 2025, compared to 44.71% at December 31, 2024.
Noninterest Income
| Six Months Ended |
||||||||||||
| June 30, |
||||||||||||
| 2025 |
2024 |
Change |
||||||||||
| (Dollars in thousands) |
||||||||||||
| Deposit service charges and fees |
$ | 1,856 | $ | 1,643 | $ | 213 | ||||||
| Loan servicing fees |
263 | 253 | 10 | |||||||||
| Trust and insurance commissions and annuities income |
831 | 799 | 32 | |||||||||
| Loss on disposal of premises and equipment |
(9 | ) | (84 | ) | 75 | |||||||
| Loss on bank-owned life insurance |
(1 | ) | (178 | ) | 177 | |||||||
| Bank-owned life insurance death benefit |
417 | — | 417 | |||||||||
| Gain on repurchase of Subordinated notes |
42 | 107 | (65 | ) | ||||||||
| Other |
194 | 197 | (3 | ) | ||||||||
| Total noninterest income |
$ | 3,593 | $ | 2,737 | $ | 856 | ||||||
Noninterest income increased $856,000, or 31.3%, to $3.6 million, for the six months ended June 30, 2025, compared to $2.7 million for the same period in 2024, due in part to increases in deposit service charges and fees, earnings on bank-owned life insurance, and a bank-owned life insurance death benefit. Deposit services charges and fees increased $213,000, or 13.0%, to $1.9 million for the six months ended June 30, 2025, compared to $1.6 million for the six months ended June 30, 2024. In March 2025, we repurchased $500,000 of our Notes and recorded a $42,000 gain on repurchase, compared to a $1.0 million repurchase of our Notes in the first quarter of 2024 at a gain of $107,000. In the second quarter of 2025, the Bank recorded income from a death benefit on a bank-owned life insurance policy in the amount of $417,000 as a result of the death of a former Bank officer.
Noninterest Expense
| Six Months Ended |
||||||||||||
| June 30, |
||||||||||||
| 2025 |
2024 |
Change |
||||||||||
| (Dollars in thousands) |
||||||||||||
| Compensation and benefits |
$ | 11,269 | $ | 11,995 | $ | (726 | ) | |||||
| Office occupancy and equipment |
3,837 | 4,102 | (265 | ) | ||||||||
| Advertising and public relations |
362 | 202 | 160 | |||||||||
| Information technology |
2,000 | 2,051 | (51 | ) | ||||||||
| Professional fees |
1,175 | 836 | 339 | |||||||||
| Supplies, telephone and postage |
573 | 578 | (5 | ) | ||||||||
| FDIC insurance premiums |
314 | 305 | 9 | |||||||||
| Other |
3,230 | 2,832 | 398 | |||||||||
| Total noninterest expense |
$ | 22,760 | $ | 22,901 | $ | (141 | ) | |||||
Noninterest expense decreased $141,000, or 0.6%, to $22.8 million, for the six months ended June 30, 2025, compared to $22.9 million for the same period in 2024, primarily due to decreases in expenses for compensation and benefits, office occupancy and equipment, and information technology, partially offset by increases in advertising, professional fees, and other expenses. Compensation and benefits expense decreased $726,000, or 6.1%, to $11.3 million for the six months ended June 30, 2025, compared to $12.0 million in 2024. The decrease is primarily due to reduced staffing; full time equivalents were 190 at June 30, 2025, compared to 206 at June 30, 2024. Office occupancy and equipment expense decreased by $265,000, or 6.5%, to $3.8 million for the six months ended June 30, 2025, from $4.1 million for the same period in 2024, primarily due to decreases in real estate taxes and rent expenses. Professional fees increased $339,000, to $1.2 million for the six months ended June 30, 2025, from $836,000 for the same period in 2024, primarily due to increases in audit fees, legal fees, annual meeting expenses and general corporate consulting expenses. Other expenses increased by $398,000, or 14.1%, to $3.2 million for the six months ended June 30, 2025, from $2.8 million for the same period in 2024, primarily due to a $635,000 write-down of foreclosed assets recorded in the second quarter of 2025.
Income Taxes
We recorded an income tax benefit of $85,000 for the six months ended June 30, 2025, compared to income tax expense of $1.2 million for the six months ended June 30, 2024. Our combined state and federal effective tax rate for the six months ended June 30, 2025 was (5.19)%, compared to 23.9% for the six months ended June 30, 2024. The tax rates are the result of a favorable impact of the state tax benefit of interest earned on U.S. Treasury Bills and Notes and U.S. government-sponsored agency securities.
Criticized and Classified Assets
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, including current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. Risk ratings are updated any time the situation warrants. The following table sets forth the criticized and classified loans:
| June 30, 2025 |
March 31, 2025 |
December 31, 2024 |
Quarter Change |
Six-Month Change |
||||||||||||||||
| (Dollars in thousands) |
||||||||||||||||||||
| Criticized - Special Mention: |
||||||||||||||||||||
| Multi-family residential real estate |
$ | — | $ | — | $ | 3,858 | $ | — | $ | (3,858 | ) | |||||||||
| Nonresidential real estate |
1,475 | 425 | 428 | 1,050 | 1,047 | |||||||||||||||
| Commercial loans and leases |
— | 66 | 3,156 | (66 | ) | (3,156 | ) | |||||||||||||
| Consumer |
5 | 2 | 4 | 3 | 1 | |||||||||||||||
| $ | 1,480 | $ | 493 | $ | 7,446 | $ | 987 | $ | (5,966 | ) | ||||||||||
| Classified - Performing Substandard: |
||||||||||||||||||||
| One-to-four family residential real estate |
$ | 217 | $ | 175 | $ | 218 | $ | 42 | $ | (1 | ) | |||||||||
| Multi-family residential real estate |
8,492 | 9,000 | 1,168 | (508 | ) | 7,324 | ||||||||||||||
| Nonresidential real estate |
420 | 433 | 441 | (13 | ) | (21 | ) | |||||||||||||
| Commercial loans and leases |
2,184 | 2,230 | 2,628 | (46 | ) | (444 | ) | |||||||||||||
| Consumer |
4 | 3 | 4 | 1 | — | |||||||||||||||
| $ | 11,317 | $ | 11,841 | $ | 4,459 | $ | (524 | ) | $ | 6,858 | ||||||||||
Nonperforming Loans and Assets
We review loans on a regular basis and generally place loans on nonaccrual status when either principal or interest is 90 days or more past due. In addition, we place loans on nonaccrual status when we do not expect to receive full payment of interest or principal. Interest accrued and unpaid at the time a loan is placed on nonaccrual status is reversed from interest income. Interest payments received on nonaccrual loans are recognized in accordance with our significant accounting policies. Once a loan is placed on nonaccrual status, the borrower must generally demonstrate at least six consecutive months of contractual payment performance before the loan is eligible to return to accrual status. We may have loans classified as 90 days or more delinquent and still accruing. Generally, we do not utilize this category of loan classification unless: (1) the loan is repaid in full shortly after the period end date; (2) the loan is well secured and there are no asserted or pending legal barriers to its collection; or (3) the borrower has remitted all scheduled payments and is otherwise in substantial compliance with the terms of the loan, but the processing of loan payments actually received or the renewal of the loan has not occurred for administrative reasons. At June 30, 2025, we have three loans in this category.
The following table sets forth the amounts and categories of our nonperforming loans and nonperforming assets:
| June 30, 2025 |
March 31, 2025 |
December 31, 2024 |
Quarter Change |
Six-Month Change |
||||||||||||||||
| (Dollars in thousands) |
||||||||||||||||||||
| Nonaccrual loans: |
||||||||||||||||||||
| One-to-four family residential real estate |
$ | 13 | $ | 107 | $ | 126 | $ | (94 | ) | $ | (113 | ) | ||||||||
| Multi-family residential real estate |
— | 1,395 | 1,453 | (1,395 | ) | (1,453 | ) | |||||||||||||
| Nonresidential real estate |
— | — | 393 | — | (393 | ) | ||||||||||||||
| Commercial loans and leases |
9,206 | 14,911 | $ | 14,960 | (5,705 | ) | (5,754 | ) | ||||||||||||
| Consumer |
— | — | 2 | — | (2 | ) | ||||||||||||||
| 9,219 | 16,413 | 16,934 | (7,194 | ) | (7,715 | ) | ||||||||||||||
| Loans past due over 90 days, still accruing |
2,226 | 1 | — | 2,225 | 2,226 | |||||||||||||||
| Other foreclosed assets |
738 | 1,337 | 1,391 | (599 | ) | (653 | ) | |||||||||||||
| Total nonperforming assets |
$ | 12,183 | $ | 17,751 | $ | 18,325 | $ | (5,568 | ) | $ | (6,142 | ) | ||||||||
| Ratios: |
||||||||||||||||||||
| Allowance for credit losses to total loans |
1.13 | % | 0.86 | % | 0.85 | % | ||||||||||||||
| Allowance for credit losses to nonperforming loans |
79.65 | 44.35 | 44.71 | |||||||||||||||||
| Nonperforming loans to total loans |
1.42 | 1.93 | 1.89 | |||||||||||||||||
| Nonperforming assets to total assets |
0.85 | 1.23 | 1.28 | |||||||||||||||||
| Nonaccrual loans to total loans |
1.15 | 1.93 | 1.89 | |||||||||||||||||
| Nonaccrual loans to total assets |
0.65 | 1.14 | 1.18 | |||||||||||||||||
Nonperforming Assets
Nonperforming assets decreased $5.6 million during the second quarter, to $12.2 million at June 30, 2025, compared to $17.8 million at March 31, 2025, and compared to $18.3 million at December 31, 2024. The decrease was primarily due to the $5.6 million payment received in the second quarter of 2025 from the U.S. Government settlement, as described below. The Company’s ratio of nonperforming assets to total assets was 0.85% as of June 30, 2025 compared to 1.23% as of March 31, 2025, and compared to 1.28% as of December 31, 2024.
On January 3, 2025, the U.S. Government offered to settle a $10.5 million U.S. Government Contract Disputes Act claim submitted in February 2024. Following negotiations with the U.S. Government during the month of January 2025, we agreed to settle the claim for $5.6 million in cash. The $5.6 million payment was received in the second quarter of 2025.
With respect to the remaining U.S. Government equipment finance exposure of $8.4 million, we submitted a claim pursuant to the Contract Disputes Act to the prime contractor for certification and submission to the U.S. Government. On May 29, 2025, we received a response from the U.S. Government on the claim, including a settlement offer, which we deemed inadequate based on the merits of the claim. Accordingly, we are preparing a complaint to be filed with the Court of Federal Claims. Pursuant to ASC 310, we recorded a $2.1 million specific reserve associated with this claim in the second quarter of 2025 reflecting our discounted cash flow valuation of the claim, inclusive of the expected time for litigation and the costs related to the litigation process.
A multi-family residential real estate exposure with a total recorded investment of $1.1 million was transferred to OREO in the second quarter of 2025 and then immediately thereafter sold. Machinery and commercial vehicles with recorded balances of $88,000 were transferred to foreclosed assets during the six months ended June 30, 2025.
Liquidity and Capital Resources
Liquidity. The overall objective of our liquidity management is to ensure the availability of sufficient cash funds to meet all financial commitments and to take advantage of investment opportunities. We manage liquidity in order to meet deposit withdrawals on demand or at contractual maturity, to repay borrowings as they mature, and to fund new loans and investments as opportunities arise.
Our primary sources of funds are deposits, principal and interest payments on loans and securities, and, to a lesser extent, wholesale borrowings, the proceeds from maturing securities and short-term investments, the sales of loans and securities and lease payments. The scheduled amortization of loans and securities, as well as proceeds from borrowings, are predictable sources of funds. Other funding sources, however, such as deposit inflows, mortgage prepayments and mortgage loan sales are greatly influenced by market interest rates, economic conditions and competition. We anticipate that we will have sufficient funds available to meet current loan commitments and lines of credit and maturing certificates of deposit that are not renewed or extended. We generally remain fully invested and utilize FHLB advances as an additional source of funds. We had $15.0 million of FHLB advances outstanding at June 30, 2025 and $20.0 million at December 31, 2024.
The Company is a separate legal entity from BankFinancial, NA. The Company must provide for its own liquidity to pay any dividends to its stockholders and to repurchase shares of its common stock, and for other corporate purposes. The Company's primary source of liquidity is dividend payments it receives from the Bank. The Bank's ability to pay dividends to the Company is subject to regulatory limitations. The Company completed the issuance of $20.0 million of subordinated notes in 2021, at a rate of 3.75% maturing on May 15, 2031. In March 2025, the Company repurchased $500,000 of these subordinated notes and recorded a gain of $42,000 and in March 2024, the Company repurchased $1.0 million of these subordinated notes and recorded a gain of $107,000. At June 30, 2025, the Company (on an unconsolidated, stand-alone basis) had liquid assets of $9.2 million. In 2020, the Company obtained a $5.0 million unsecured line of credit with a correspondent bank to provide a secondary source of liquidity. Interest was payable at a rate of Prime rate minus 0.50%. The line of credit was not renewed in 2025.
As of June 30, 2025, we were not aware of any known trends, events or uncertainties that had or were reasonably likely to have a material adverse impact on our liquidity. As of June 30, 2025, we had no other material commitments for capital expenditures.
Capital Management - Bank. The overall objectives of our capital management are to ensure the availability of sufficient capital to support loan, deposit and other asset and liability growth opportunities and to maintain sufficient capital to absorb unforeseen losses or write-downs that are inherent in the business risks associated with the banking industry. We seek to balance the need for higher capital levels to address such unforeseen risks and the goal to achieve an adequate return on the capital invested by our stockholders.
The Bank is subject to regulatory capital requirements administered by the federal banking agencies. The capital adequacy guidelines and prompt corrective action regulation, involve the quantitative measurement of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. The failure to meet minimum capital requirements can result in regulatory actions. The net unrealized gain or loss on available-for-sale securities is not included in computing regulatory capital.
The federal banking agencies have developed a “Community Bank Leverage Ratio” (the ratio of a bank’s tangible equity capital to average total consolidated assets) for financial institutions with assets of less than $10 billion. A “qualifying community bank” that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes. The federal banking agencies may consider a financial institution’s risk profile when evaluating whether it qualifies as a community bank for purposes of the capital ratio requirement. The federal banking agencies must set the minimum capital for the new Community Bank Leverage Ratio at not less than 8% and not more than 10%. Beginning January 1, 2022, banking organizations that had a leverage ratio of 9% or greater and met certain other criteria could elect to use the Community Bank Leverage Ratio framework. A financial institution can elect to be subject to this new definition, and opt-out of this new definition, at any time. As a qualifying community bank, we elected to be subject to this definition beginning in the second quarter of 2020. As of June 30, 2025, the Bank's Community Bank Leverage Ratio was 11.44%.
Prompt corrective action regulations provide five classifications: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If only adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required.
The Company and the Bank have each adopted Regulatory Capital Policies that target a Tier 1 leverage ratio of at least 7.5% and a total risk-based capital ratio of at least 10.5% at the Bank. The minimum capital ratios set forth in the Regulatory Capital Policies will be increased and other minimum capital requirements will be established if and as necessary. In accordance with the Regulatory Capital Policies, the Bank will not pursue any acquisition or growth opportunity, declare any dividend or conduct any stock repurchase that would cause the Bank's total risk-based capital ratio and/or its Tier 1 leverage ratio to fall below the targeted minimum capital levels or the capital levels required for capital adequacy plus the capital conservation buffer (“CCB”). The minimum CCB is 2.5%. As of June 30, 2025, the Bank was well-capitalized under the regulatory framework for prompt corrective action. There are no conditions or events that management believes have changed the Bank’s prompt corrective action capitalization category.
The Bank is subject to regulatory restrictions on the amount of dividends it may declare and pay to the Company without prior regulatory approval, and to regulatory notification requirements for dividends that do not require prior regulatory approval.
Actual and required capital amounts and ratios for the Bank were:
| Actual |
Required for Capital Adequacy Purposes |
|||||||||||||||
| Amount |
Ratio |
Amount |
Ratio |
|||||||||||||
| (Dollars in thousands) |
||||||||||||||||
| June 30, 2025 |
||||||||||||||||
| Community Bank Leverage Ratio |
$ | 161,946 | 11.44 | % | $ | 127,379 | 9.00 | % | ||||||||
| December 31, 2024 |
||||||||||||||||
| Community Bank Leverage Ratio |
$ | 159,779 | 11.23 | % | $ | 128,017 | 9.00 | % | ||||||||
Quarterly Cash Dividends. The Company declared cash dividends of $0.20 per share for each of the six months ended June 30, 2025 and June 30, 2024.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Qualitative Analysis. A significant form of market risk is interest rate risk. Interest rate risk results from timing differences in the maturity or repricing of our assets, liabilities and off-balance sheet contracts (i.e., forward loan commitments), the effect of loan prepayments and deposit withdrawals, the difference in the behavior of lending and funding rates arising from the use of different indices and “yield curve risk” arising from changing rate relationships across the spectrum of maturities for constant or variable credit risk investments. In addition to directly affecting net interest income, changes in market interest rates can also affect the amount of new loan originations, the ability of borrowers to repay variable rate loans, the volume of loan prepayments and refinancings, the carrying value of investment securities classified as available-for-sale and the flow and mix of deposits.
The general objective of our interest rate risk management is to determine the appropriate level of risk given our business strategy and then manage that risk in a manner that is consistent with our policy to reduce, to the extent possible, the exposure of our net interest income to changes in market interest rates. Our Asset/Liability Management Committee (“ALCO”), which consists of certain members of senior management, evaluates the interest rate risk inherent in certain assets and liabilities, our operating environment and capital and liquidity requirements, and modifies our lending, investing and deposit gathering strategies accordingly. The Board of Directors then reviews the ALCO’s activities and strategies, the effect of those strategies on our net interest margin, and the effect that changes in market interest rates would have on the economic value of our loan and securities portfolios as well as the intrinsic value of our deposits and borrowings, and reports to the full Board of Directors.
We actively evaluate interest rate risk in connection with our lending, investing and deposit activities. In an effort to better manage interest rate risk, we have de-emphasized the origination of residential mortgage loans, and have increased our emphasis on the origination of nonresidential real estate loans, multi-family residential real estate loans, and commercial loans and commercial leases. In addition, depending on market interest rates and our capital and liquidity position, we generally sell all or a portion of our longer-term, fixed-rate residential loans, and usually on a servicing-retained basis. Further, we primarily invest in shorter-duration securities, which generally have lower yields compared to longer-term investments. Shortening the average maturity of our interest-earning assets by increasing our investments in shorter-term loans and securities, as well as loans with variable rates of interest, helps to better match the maturities and interest rates of our assets and liabilities, thereby reducing the exposure of our net interest income to changes in market interest rates. Finally, we have classified all of our investment portfolio as available-for-sale so as to provide flexibility in liquidity management.
We utilize a combination of analyses to monitor the Bank’s exposure to changes in interest rates. The economic value of equity analysis is a model that estimates the change in net portfolio value (“NPV”) over a range of interest rate scenarios. NPV is the discounted present value of expected cash flows from assets, liabilities and off-balance-sheet contracts. In calculating changes in NPV, we assume estimated loan prepayment rates, reinvestment rates and deposit decay rates that seem most likely based on historical experience during prior interest rate changes.
Our net interest income analysis utilizes the data derived from the dynamic GAP analysis, described below, and applies several additional elements, including actual interest rate indices and margins, contractual limitations such as interest rate floors and caps and the U.S. Treasury yield curve as of the balance sheet date. In addition, we apply consistent parallel yield curve shifts (in both directions) to determine possible changes in net interest income if the theoretical yield curve shifts occurred instantaneously. Net interest income analysis also adjusts the dynamic GAP repricing analysis based on changes in prepayment rates resulting from the parallel yield curve shifts.
Our dynamic GAP analysis determines the relative balance between the repricing of assets and liabilities over multiple periods of time (ranging from overnight to five years). Dynamic GAP analysis includes expected cash flows from loans and mortgage-backed securities, applying prepayment rates based on the differential between the current interest rate and the market interest rate for each loan and security type. This analysis identifies mismatches in the timing of asset and liability repricing but does not necessarily provide an accurate indicator of interest rate risk because it omits the factors incorporated into the net interest income analysis.
Quantitative Analysis. The following table sets forth, as of June 30, 2025, the estimated changes in the Bank’s NPV and net interest income that would result from the designated instantaneous parallel shift in the U.S. Treasury yield curve. Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions including relative levels of market interest rates, loan prepayments and deposit decay, and should not be relied upon as indicative of actual results.
| Estimated Increase (Decrease) in NPV |
Increase (Decrease) in Estimated Net Interest Income |
||||||||||||||||
| Change in Interest Rates (basis points) |
Amount |
Percent |
Amount |
Percent |
|||||||||||||
| (Dollars in thousands) |
|||||||||||||||||
| +400 |
$ | (26,771 | ) | (11.57 | )% | $ | 4,569 | 9.59 | % | ||||||||
| +300 |
(11,568 | ) | (5.00 | ) | 3,547 | 7.44 | |||||||||||
| +200 |
(3,798 | ) | (1.64 | ) | 2,504 | 5.25 | |||||||||||
| +100 |
(140 | ) | (0.06 | ) | 1,310 | 2.75 | |||||||||||
| -100 | 5,321 | 2.30 | 460 | 0.97 | |||||||||||||
| -200 | (4,271 | ) | (1.85 | ) | (2,159 | ) | (4.53 | ) | |||||||||
| -300 | (15,552 | ) | (6.72 | ) | (5,092 | ) | (10.69 | ) | |||||||||
| -400 | (19,977 | ) | (8.64 | ) | (9,475 | ) | (19.88 | ) | |||||||||
The table set forth above indicates that at June 30, 2025, in the event of an immediate 200 basis point decrease in interest rates, the Bank would be expected to experience a 1.85% decrease in NPV and a $2.2 million decrease in net interest income. In the event of an immediate 200 basis point increase in interest rates, the Bank would be expected to experience a 1.64% decrease in NPV and a $2.5 million increase in net interest income. This data does not reflect any actions that we may undertake in response to changes in interest rates, such as changes in rates paid on certain deposit accounts based on local competitive factors, which could reduce the actual impact on NPV and net interest income, if any.
Certain shortcomings are inherent in the methodology used in the above interest rate risk measurements. Modeling changes in NPV and net interest income requires that we make certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. The NPV and net interest income table presented above assumes that the composition of our interest-rate-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and, accordingly, the data does not reflect any actions that we may undertake in response to changes in interest rates, such as changes in rates paid on certain deposit accounts based on local competitive factors. The table also assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration to maturity or the repricing characteristics of specific assets and liabilities. Because of the shortcomings mentioned above, management considers many additional factors such as projected changes in loan and deposit balances and various projected forward interest rate scenarios when evaluating strategies for managing interest rate risk. Accordingly, although the NPV and net interest income table provides an indication of our sensitivity to interest rate changes at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our net interest income and will differ from actual results.
| ITEM 4. |
CONTROLS AND PROCEDURES |
An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chairman, Chief Executive Officer and President and the Executive Vice President and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of June 30, 2025. Based on that evaluation, the Company’s management, including the Chairman, Chief Executive Officer, and President and the Executive Vice President and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective.
During the quarter ended June 30, 2025, there have been no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II
| ITEM 1. |
LEGAL PROCEEDINGS
The Company and its subsidiaries are subject to various legal actions arising in the normal course of business. In the opinion of management, based on currently available information, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s financial condition or results of operations. |
| ITEM 1A. |
RISK FACTORS |
There have been no material changes to the risk factors previously disclosed in the Company's filings with the Securities and Exchange Commission.
| ITEM 2. |
UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES |
| (a) |
Unregistered Sale of Equity Securities. Not applicable. |
| (b) |
Use of Proceeds. Not applicable. |
| (c) |
Repurchases of Equity Securities. |
There we no purchases of our common stock made by, or on behalf of us, during the second quarter of 2025.
As of June 30, 2025, the Company had repurchased 8,085,578 shares of its common stock authorized under the latest share repurchase authorization, as amended and extended from time to time. The current repurchase authorization plan expired on June 16, 2025.
| ITEM 3. |
DEFAULT UPON SENIOR SECURITIES |
None.
| ITEM 4. |
MINE SAFETY DISCLOSURES |
Not applicable.
| ITEM 5. | OTHER INFORMATION |
During the three months ended June 30, 2025, no directors or executive officers of the Company adopted or terminated any contract, instruction or written plan for the purchase or sale of the Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) and/or any “Rule 10b5-1 trading arrangement.”
| ITEM 6. |
EXHIBITS |
| Exhibit Number |
|
Exhibit Description |
| 31.1 |
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 31.2 |
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 32 |
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* |
| 101 |
|
The following financial statements from the BankFinancial Corporation Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, formatted in Inline Extensive Business Reporting Language (iXBRL): (i) consolidated statements of financial condition, (ii) consolidated statements of operations, (iii) consolidated statements of comprehensive income, (iv) consolidated statements of changes in stockholders' equity, (v) consolidated statements of cash flows and (vi) the notes to consolidated financial statements. |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
| * |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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BANKFINANCIAL CORPORATION |
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| Dated: |
August 6, 2025 | By: |
/s/ F. Morgan Gasior |
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F. Morgan Gasior |
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Chairman of the Board, Chief Executive Officer and President |
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/s/ Paul A. Cloutier |
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Paul A. Cloutier |
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Executive Vice President and Chief Financial Officer |
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