BFIN - Earnings call transcript Q2 2021

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the BankFinancial Corp Second Quarter 2021 Earnings Conference Call. At this time, all participant's lines are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today Mr. F. CEO. and Chairman Gasior, Morgan Please go ahead.

F. Morgan Gasior

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

Unidentified Company Representative

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

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

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

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

F. Morgan Gasior

Thank you.

questions are As are for all filings complete, ready we

Operator

from question Your Instructions] is first [ph]. [Operator Emmanuel

may sir. You go ahead,

Manuel Navas

think quarterly Should kind than settle we down understanding and Hey, a higher Expenses on and from line. good current expenses to run I the were this I wanted just start morning. Manuel trends of your off we with Davidson. from Its back with expectations. rate? DA bit here see own expected expense

F. Morgan Gasior

as quarter, to moment part but little not running We and telecommunications right this environment other expect expenses least expense to roll to that we're I a through parallel expect but that least better we second $XXX,XXX We voice and recur. classified communications there. data off. That Chicago Couple legal in We're about asset. bit XXX,XXX will expenses. we as did a was I other platform, probably That's at the recognition probably of probably some data And number our and running also we foreclosed transitioned right a off roll had continue had $XXX,XXX then assets some one-time think. that'll of roughly little expenses. at of resolution had the parallel at our things A more a quarter that there.

say would million I and So a on about range the million quarter $X.X higher $XX right the very would be end on end. a expenses for low now then

add But real to in equipment the multifamily and generation continue had commercial may capability we as saw loan asset we finance finance. you in generation We announcement. some commercial capability add estate additional capability

placement those producing. along as see expenses But come some So through, producers are the blips those way. you'll

reasonable it asset within So into period a of revenues strength translates generation in time.

Manuel Navas

well, steady yet? slowing this payoffs everyone slowing and you of And is Are of signs but you signs something there seen Is follow-up, trends. really as kind by trends really ebb flow of that have any driving A is origination you. growth pretty commercial seems it loan driven yet? any any pretty there has strong. Thank been that and seeing as seeing payoff are or the

F. Morgan Gasior

payoffs. it's to on focus Well, perceptive the

real at Let's look estate first. a take

$XX in million. of million, million, $XX quarter But past the multifamily settle to million, at You the generally it, big see speaking, the And $XX you a blip you'll $XX moment sales side. start we if $XX quarter. fourth the had look million, it around on see

million. So, let's look $XX at

on the is what rate our to quarter in portfolio to and $XX get side. million side run do that to to get low growth million $XX we high to need So on somewhere do a there the between

the real estate. of depth one the reasons that's to So we're

of rate July all so our originations. held of consecutive It's XQ get we and us and to our now in that fourth we're though not to or run year quarter if had pace, increasing to with producers target in your that's see so its to hard speak. So fully point, continue would July, our will we multifamily predict far to strongest sales. this month

to what We retroactive. happens at rate concerned If in assets now gains trying see could lower some legislation the more you somehow that capital the that gains depending half sales that off are we'll and bit see legislation people and with prospectively, Congress. rate it little table. a Right the in second in effect a some takes lock the it has changes take on

that's goes still time but is concern could I think rate, it that start and bit hold, think an ameliorate may a seeing unknown. that's the of as you're I out on. So Two, the rate that payoff a little one there bit not the interest also to

As rates if pretty to get a changes then than buildings were and important. relatively average get of rate acquired and years, generally the decline previous lower that recently, on rate that's from payoffs payoffs you you the

at the payoffs of better and up us. $XXX, XX only you a look at rate quarter average the quarter. for benefit basis in points If about that's it the previous was second XX points from mix up origination's basis were the the But

Obviously ticket and can we of The middle the mix quarter. say quarter finance we meaningfully the in second its side think payoffs had consecutive back better I'd growth. And loan has was get if at finance the -- in in current small growth. contributing, with fourth so the market I to equipment commercial keep equipment levels,

on another it but finance have is So fairly Equipment does steady, front. seasonality. positive that is that

typically have instead annual schedules. the or quarterly government example, products payment For monthly of

federal third scenario in get especially appropriations or government, or third So the a annual if you even a the quarter quarter are payments. fourth for quarter, third some quarter

even predict to one's to have So to hard communicate. out eye that. harder we on do keep an That

short the also bit we some in And based that equipment that see maturities -- you'll tend weighted portfolio. mix finance of higher again for those ratio schedules. in involving contributes software, and to things to keep average risk a exposures, faster to little fairly bumpiness So in pre-payment moderate term tend the the we on

Manuel Navas

That forward Can one really just discuss I Can more or and color ratio Any just like there are you repurchases? of would leverage strategy price tier low go add to that one of you the that helpful. share on sensitive? helpful. be how get the was more kind go kind could you targeting

F. Morgan Gasior

shares think this think year. the their the done at of under there least another remaining things XXX,XXX Yeah, so And one to is few to execute to driving share repurchased that is continue far I repurchase. I have amount plan. We've a XXX,XXX resources are sufficient current we go repurchase

enough, to So the we're I notion blocks. execute us buying Interestingly of expect to open that.

haven't to available. We cash offer the but any yet, that us would seen have we accelerate obviously since that

now cash months really Worth using the book part the at we're ago the sub-debt value capital acquired the to of right would say per also noting, retire looking as So we share as $XX.XX. XX tangible shares. I plus excess was

$XX.XX. it's Now

certainly or shares. trade below in looking the we market So still helping. below above, are value slightly for purchases continue book to And actively the to we're book even slightly extent the value

Operator

next is with Your question Montgomery. Brian from Morgan Janney

Morgan. Hey, good now morning, Your line open. is

Brian Morgan

the bit you your impressive you it this half and just of you for could of just little by here? continued. just what's growth some next growth business quarter. Wonder pretty year people the obviously Can about finance run if I Especially a do kind talk about in of realistic about through, lines, what and kind you're into equipment hired know you and can expectations back just thinking talked just, how and the you've

F. Morgan Gasior

usage Well, in lines whether bit quarter, terms a credit. somebody one the right lessors with almost during lessor finance is quarter things Sure. the is of We a the how of their had it's or the us us of activity the are end XX%. in those else's and the that period up growth to discounted, make money. the it's transactions is at strong But of messes little

reductions. end period, see And so the volume right at some the of we'll

office little what doing. as off, and some the the also on Everybody hoped they would. quarter. they expect lessors. our quarter, done the probably generally $XX renewable books worth equipment getting stronger using so we the side the the slows bit. driven can installed quarter. out candidly, we're month start I supply on bit vacation of on were than we little now. So just or it. a increase we'll speaking looking, renewable ran things we strong a is down And the to we've we first a energy first in bit new of we the I just on usage transaction get $XX and as a further. also schedule. expanding hopeful, significant of think not and hope little million, We're in and and on utilization to bit. are people, out continue chain do time million focused We little a and in little of last in government I that bit a The But be came things We that finance had masks but opportunities soon pretty We're that going delivered sustain new add the originations started commitments think actually amount timing equipment new right worked of finance, we'd can through second first And more

because So look also companies are much reinvesting at side. the the mix obviously That good investment generation not as a be to to segment. that we're continue be are. quite to double strengthen yield seems we'll companies sector, looking the market. flowing on and and to going grade that money especially in those There's on cash risk And asset B equipment, of into corporate as sitting

thought quarter, had for tiny positive July. growth there we grow it's I bit side, continue the more in build finance it. continue I we doing to rates. keep some and to I Didn't and little but to I finance, expected a and grow earlier. in to closings The of we'd show can on we're Lessor equipment actually up to quarter. in of quite July multi-family did second just what we that So a be grow it if for and just seems that bit going get build in that on where expected if showed we say doable touched faster would the at on

So earlier, on I for at the the prices believe these getting sales. advantage Chicago, taking the deals there And and can't originations, the I'm increased coming if of million of everyone, I improved people closer look bit. outside the get said on multifamily still $XX X% there. taken to of to are you'll they're to million those values are are a run as values, and especially portfolio. quite X% looking out have $XX caution see saying, But we People about I can out growth rate sales those

So second a I about to originations increase powder to is there concerned one, the have get news out shown originations. not dry we half, has little but continued and still good some two, payoff in rate that higher up we've the

portfolio. do multifamily Commercial some about that. we can the to X% in I'd in we feel opportunities if good seeing So X% are that. estate,

You in think, especially it's have people taking purchases, to very looking looking assets vacancies, people there. We're office. seeing with at couple some properties, out level. just the be retail there at whether get into we a cash creative not a of wanting get to a trying are with certain refinances opportunities good out or to rate, where are of for careful enough, interestingly But actually

it's might the hopeful have close to view. If later And expect then could X%, So three can be that'll we contribute. side. to right on one again couple grow strong would X% the and this on that I be where accounts our to We transactions keep grow. the at. pipeline would even the try finance in next Lessor months. first will of We factoring commercial one over estate commercial continue week, in at we to side our receivable finance already close C&I that two or

down. funds a Healthcare, hopeful sitting it's it lessor in stronger on finance. special come to provider I'm and receivables stir back back on both some the but draws little needs there, some starting for bit. else, we right from finance pay We they liquidity that saw or So taxes, so see growth much anywhere like commercial once, they're

it's So right healthcare I in lagging, quarter, is going of start quarter, a be least just at on would but cash bit They're story. third a maybe the sitting still to now. stirring that little more think too fourth probably much 'XX

right So it, they they they it, then need pay borrow but it back.

We X%. end and trying see during to have all the end did the growth better in did the $X.XX over million So balances period period, $XX weren't higher were quarter. said, we as of hit we much we're At balances, the but we a up second than told, at the higher we X% quarter. billion. the Period utilization May,

that X% we but fell the we So quarter way Equipment growth. the transaction back pipelines that in It's roughly the June over little activity that's quarter our bit, like just finance pipeline but little happened to of deals. lighter, across a is board. the have time a still of get little It's lighter. a a about for alone transactions to close, let new it there's we year

quarter pretty quarter we're at in that even outperform are quarter hopeful ones. I X%. and comfortable with fourth usually little that So then a we million $XX think third stronger I'm might a bit

but quarter second timing are still I that trends, third we fourth strong, quarter can't cards control. just the So payoffs some wild and originations go we the can make then the if from those into and the like the of quarter up ground

Brian Morgan

Got you.

And opportunistic, just you where versus you kind a people build do you kind Okay. certainly, added little looking kind kind be out as where believe of, add the up to kind you of where talk of to still as where is, the, but and far of That's kind looking I you'll guess the, staffed you've of helpful. the are pick you're understand talent who about then talent I product of just I can you you, bit set? to fully still

F. Morgan Gasior

in we and We, few news. the we're We that, contributing, a already we people and new and got -- pipeline. about good XX% just some are some in and commercial estate. also new are real leadership places in some real added seeing real which moved is estate multi-family We we they deals on opportunities estate, had around from

much good we and factoring out. in of those done. So as a outstanding which spending; spending and factoring pretty it, lending you finance and didn't that accounts front when receivable same, to, finance, added for news The stays huge contractors of based strong puts commercial increase, debt division the to us for so is XX% and both estate well some is as transactions, I of news to all tends the goes revenues. the which efficiency for asset think the usage amount real good see government talent built commercial Commercial is government days federal in totals for up about ABL obviously

grades to so at we two one one quickly underwriter have transactions the just underwriter we somebody, relatively a grows, we the up to key -- for now to it's right person. renewable for looking asset there. we like probably we're we element also so volumes said have mid-size may add, senior to government. able established, look sure important making as an opportunities market, that's fact, In but We'd energy. as couple a with because mid on to it we add have earlier for, see that, that are more the an are a I to -- keep but some once expenses. but as person, that's processed having now we equipment and two, we're there's said add add that's some firmly little generators that's strength we'll in have as important of there's a but reconfigure staff finance, can,

a in XX%, money us but So as some to quarter we do, finance maybe start probably the spend are to for additional XX% of in save goal little there is part we I XX% $XXX we get terms a producers, probably originations. we'll we'll million adding if would say equipment that's closer what some of leadership, but money,

again, we're, You be hit bit get Also XX close to XX I why government quarters time. to or getting the in so previous saw that's all us a think we're larger. closer little tend transactions

You're risks are convenience things less you worth termination risk about risk. that appropriations worried for and credit not about like

you challenge. to can credit of the point a sometimes that earlier payments, on but a with based annual deals, portfolio deals so have larger larger bit larger going you're, So is quality the go again, keeping

quarters money you to a think the this there. get said, So of couple and time a out we saved as places we a spent I infrastructure quite building of of ago, lot bit

inside and the are see as We red far starting now, coming as the spend, right to zone the through. we're results

Brian Morgan

you. Got

as, how going margin are a at about you far kind point as Okay. from just here, an of just but I about sounds thinking the how especially Positive. And picking we're as margin if think up I kind thinking perspective the how about maybe loan you're inflection forward? the growth is that. of It though guess

F. Morgan Gasior

Yep.

-- what it in I the the did certainly hoped the do think second think I would quarter. mix we

As I XX picked originations up points. said earlier,

think I that trend increasing towards level. stabilization that an is at showing

So transactions, the commercial finance to sevens. the sixes if four range Obviously, feasible. seems those you average had and in XXX

So a plus apartment half a dollar of commercial local lending that of lending. is worth $X or prime

powerful. it stuff a are on or us pays a Obviously The So is at some down wild and loans can is we yield, real the will are a four what the, are estate the they'll have years reset they'll but lower corporate old, rates payoffs? as card the come be sell. that the still rate lower off properties is, to three, what

still origination's payoff it's mix is maybe you of rate somewhat see the quarters by rates up XX can right? The points. the could where couple rate that, there's went by but think only you to outweigh in on elevated starting a change see So starting the I that XX. to, up payoffs, the We,

actually And really real to, even help. also to portfolio the break that estate fact the on that's close So to, narrowing. a got is

the maybe income's gets and it we originator, exceeding the on it originations the flipped is sooner them, rate the growing. time even the year, end So flipped as interest I'm to by we The hopeful put starting we're floor under if goes the interest you a setting then all margin, well. for start margin to shortly some expansion and main do if we're and could thereafter, able to payoffs of the that, up

Brian Morgan

you. Got

guess, just quality the recoveries perfect. I how kind think maybe out just growth? about is one Okay, this Is classifieds his credit Yeah, numbers going forward? non-performing quarter, showing that new should loan with are or reserving of last reduction guess, two putting is, mix you're you a excellent. I Then how, and about talk you the you on how the on just the in can

F. Morgan Gasior

at it The, look let's government at let's, appropriations low based government whether to moderate keeping Well mean, lower government, termination convenience. be government finance for the asset lending it's factoring originations it's, risk. in track to the from I risk end, equipment regulations, it's of not program right? ought

those our estate to the stable. to same middle higher market are originations and equipment is middle-market of lower do a ratios, growing. reserve those thing tend on ratios has and small ticket good been those So be Real and amount and that tend end, still reserve corporate have very

We point. have at zero this portfolio deferrals in that

a double XX of middle-market, one, is, I holding like think where factors see So I'm can't net- originations, of of And holds still originations really points try a stay estate, last together. release because and the next be all in the even to be one off ticket. sitting a reserve should little release. quarter, we won't from real a and net little would that were short-run. I'm still a being Illinois August. if new provision again, required a But the need it which It think the putting on see at those this would But year. just if a multifamily take we points the month we in will because hopefully fact lot, oversee, the would of are it surprised basis bit. production. will on justify about I away point, stabilize the prevent mean, you'll we lot, to in least we'd overcome reserves that based it finance the still The I have recovery I provisional at provisional and are couple commercial of But see It some then small come on so nationally at, to in off, originations rolling reserves bit under we to The recovery little to corporate we're at reserve higher mix. provisional. where that provision about mix the on points reserve maybe the that And at grow. net- And some now, grow still I a any rolls moratoria economic of a, that end national local of quarters. even not reserves think XX the recovery given the end it particularly I require hopeful of XX-XX bit could depending a lot on

Brian Morgan

Got you.

And recently how are you some capabilities expanding you just, of Okay. trust I going and guess, department, about I the treasury the things helpful. of about That's management can how, guess talk kind just, talked there?

F. Morgan Gasior

capability, They assets has been are capabilities, going officers well forward so market in some under also pretty services trust fronts. both new previous smaller, added added well added department bring We that said, management. for will million capability and to to technology work to do a group to range, unfortunately to is have needs more those competitors. family in the sales a interesting more for as trust to a product may We're held quarters, continues take essential. but in. not the that an $XX and we've The process expand as the in businesses planning the to us closely good of now. somewhere some it's competitors place us business is and ability always but on trust held a that this the tax million tools, compared of And owns families for continues closely focusing $X There's many on asset we right so away Treasury generators this moving change it or in be still between well. plan. but take likely environment those families administration, it Obviously the makes few to the owners even I

to to launch and months. customers one the launch new start treasury both the several three the up the in testing next that have operations customers technology wrapping will We're of here And We services. excited just pick a off get very up to customers launch bat, know fee income. from in, going. the the in And that very, about are first XX,XXX I right we'll year

very to for customers on the investment. us And other So break amount revenues. many that a drives even take obviously it won't considerable also a, of

at is us of the financial. customers only separate woman services so the platform will launch for for of have need with commercial but those they a purposes. And we're with the money a different tie credit is be They'll one going just equipment services move there. accounts helpful. day So business, customer segment to end treasury the with the not platform, a as owned different it facilities together and bank launch finance not the your to four treasury the ability but they things have across very the operating all principle penetrating It's

good and finance the income generation, that been feel Delta of out get does the customers not seeing are commercial We credit we good the need and in start the product about will both deposit year. event business the but conferences pipelines. to it about the treasury a the some get the selling haven't we to cross wait and finance, equipment hope the, to then will in contributions over us take book, feel products. out the services we conferences of We we and thing because optimistic. So But we can't

Brian Morgan

I recent in here, the the as a then buyback, really Chicago right activity plate direction okay, from capital the you, as the kind sounds mean, It just M&A you last talked and one I deployment know just like far organic perfect is of, on about the just got the standpoint. front, in but an That's you. for on something goes here you've M&A lot moving still? Got

guess this conversations M&A that's at discussed being is some? something So actively slowed or has had I kind point still it of is those

F. Morgan Gasior

that but us interesting. could really for real estate say activities new little that. given is out I in and and thing priorities if well, just will income an just at if greater look they factor, would aggressive were their a but more still to Chicago still not and it were get of we deposit doing something things that us. to And The the But well thing. wasn't would we of at something's surprise something interested. recently It But if filled and markets Like on size up. brings running right to that the surprised eye that But we're we happen, commercial around something with get mix come involved or were was there, was a out now, probably a in the we looked and not make but we'll smaller not equipment for say footprint meaningful it have things not we call originator. having us us. And, what I say our in I us, evaluate like at around fee to something estate is filled integrated diversity getting little real asset ex construction, our a integrate we're a always We're not, something trying did a is have, would I grow see most that And important the ability short could also Now locations to location. as we table would the would right on. the footprint, also we it. of then we assets look company the but keep saw a something in company in likely brought a bit or for presence state

side accounts director a year level this last company monitoring on function. at to a sales, factoring the in is strong in the have did both finance, One We approach we run of finance. both provide we to the leadership and receivable for then bank added way oversight passing commercial on reasons operation company holding leadership for the technology state-of-the-art both and holding to originations portfolio and commercial the we operational the that in through the level team put

capabilities. So the and it's clearly both and critical a oversight board across commitment

So what capability. we're us, if complimentary, investment where small mostly I that company made commercial position would a be say saw that originations in we now is come at a having would finance

excess could a interesting together. community cost could a You over we're we somebody the liquidity. save diluting to liquidity, existing get earnings the and leverage that still our the because little a platform. then probably That to got of get wouldn't actually small be earnings you more not a We bank has to out lot that us has more than operations because assets. of community acquiring of And out earnings. grow And in would bank much lot really residential have contribute can interested

So seen the a here you'd we've amount on huge some transactions liquidity. of interesting, but be are around of taken

diluted didn't be You earn it. on to with shareholders and uncertain would at an the we we saw we think prefer acquisitions course foremost. And well I, certainly first I on if stay non-bank opportunistic and we're the back. a that have look a bank on acquisitions would take

Brian Morgan

of relative then benefit Paul don't kind of the that the, you is that's on a, still if the one still Got second kind and the rate run I it sounds, if have I just expectations on like talk about toward guess I Morgan, guess are mentioned to low just you sounds of have of And the you you. earnings, year? that just half this it's twenties was getting you about would it you've where know from that talked my maybe guess kind the guys the of PPP I you And guys. last your assumption think remains to intact tracking I or type but and

F. Morgan Gasior

get talk will Yeah, share. Certainly per I about there. ratios buyback us help let the think earnings me

the will also and to quietly off a as that that origination it reducing one-time our some bit, also am I will these you'll we hopeful You're denominator. well. goals get expenses contribute as of little help rolling

still and go So primary quarter. better the it's our focus by goal the through quarter yeah, our we as sooner that's

status. me the Let Paul address have PPP

Unidentified Company Representative

thousand the We the flow-through Brian. a had from hundred little PPP Yes, quarter. income over second in forgiveness a

the processes, when just and next question least. going of We're seeing few would We that request the at us SBA for more continue I expect that to forgiveness couple the continue quarters, expect to for run a forgiveness. It's quarters. but in rate for money, a sends a paramount the

F. Morgan Gasior

that that And their we're help a set it and and them. some the borrowers PPP on can income with anything, going of if recognition concierge them and have businesses. a delegation would only their helps SBA, we of borrower we on forgiveness can off behind if us so the the desks us. the the the if so PPP they process what they to up take borrower absolutely to. that and, They're and with actually through done of we PPP put helps need behalf focus work authority, can bothered It And the program accelerate their get

core continue give be Can of million million idea you on that the can a the half an So to we PPP. how much focus from business bucks. to collected $XX left?

Brian Morgan

Okay, perfect.

questions. Okay, perfect. taking for Thank the guys you

Operator

So telephone. once to would you on ask your star again, questions, press like if please one

F. Morgan Gasior

late back healthy interest and everyone in we after questions, wish Well, safe touch the are no And as a be for fall. quarter. summer We'll thank financial. bank in and your you third there further

Operator

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

disconnect. now may You

Bankfinancial (BFIN) 2 Aug 212021 Q2 Earnings call transcript