BankFinancial Corporation (BFIN) Bundle
Understanding BankFinancial Corporation (BFIN) Revenue Streams
Understanding BankFinancial Corporation’s Revenue Streams
BankFinancial Corporation (BFIN) generates revenue primarily through net interest income and noninterest income. Below is a breakdown of these revenue sources:
Breakdown of Primary Revenue Sources
- Net Interest Income: For the nine months ended September 30, 2024, net interest income was $36.8 million, compared to $39.4 million for the same period in 2023.
- Noninterest Income: Noninterest income increased to $4.2 million for the nine months ended September 30, 2024, from $2.8 million in 2023.
Year-over-Year Revenue Growth Rate
The year-over-year growth rates for key revenue components are as follows:
| Revenue Source | 2024 (Nine Months Ended) | 2023 (Nine Months Ended) | Growth Rate (%) |
|---|---|---|---|
| Net Interest Income | $36.8 million | $39.4 million | -6.7% |
| Noninterest Income | $4.2 million | $2.8 million | 51.1% |
Contribution of Different Business Segments to Overall Revenue
The contributions from various segments to the overall revenue are detailed below:
- Interest Income: Total interest income was $39.9 million for the nine months ended September 30, 2024, compared to $38.6 million in 2023.
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Noninterest Income Segments:
- Deposit service charges and fees: $2.6 million
- Trust and insurance commissions: $1.2 million
Analysis of Significant Changes in Revenue Streams
Several noteworthy changes in revenue streams have occurred:
- Net interest income decreased by $2.6 million due to a 73 basis point increase in the weighted average cost of interest-bearing liabilities.
- Noninterest income saw a substantial increase of $1.4 million, primarily driven by an increase in deposit service charges and improved trust department income.
Overall, while net interest income faced challenges due to rising costs, noninterest income experienced robust growth, highlighting a shift in revenue dynamics for the company.
A Deep Dive into BankFinancial Corporation (BFIN) Profitability
A Deep Dive into BankFinancial Corporation's Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit margin was approximately 2.3%, down from 2.5% for the same period in 2023.
Operating Profit Margin: The operating profit margin for the nine months ended September 30, 2024, was 1.45%, compared to 1.78% for the nine months ended September 30, 2023.
Net Profit Margin: The net profit margin for the three months ended September 30, 2024, was 11.8%, down from 14.0% in the previous year for the same quarter.
Trends in Profitability Over Time
Net income for the nine months ended September 30, 2024, was $5.8 million, compared to $7.3 million for the same period in 2023. This indicates a decline of 20.5%.
Net interest income decreased to $36.8 million for the nine months ended September 30, 2024, down from $39.4 million for the same period in 2023, reflecting a decrease of 6.7%.
| Financial Metric | 2024 (9 months) | 2023 (9 months) | Change (%) |
|---|---|---|---|
| Net Income | $5.8 million | $7.3 million | -20.5% |
| Net Interest Income | $36.8 million | $39.4 million | -6.7% |
Comparison of Profitability Ratios with Industry Averages
The net profit margin of 11.8% for the three months ended September 30, 2024, is below the industry average of approximately 15%.
The operating profit margin of 1.45% also trails the industry average of 2.0% for similar-sized financial institutions.
Analysis of Operational Efficiency
The efficiency ratio, representing noninterest expense as a percentage of net interest income plus noninterest income, was reported at 73.5% for the nine months ended September 30, 2024, compared to 72.3% for the same period in 2023.
Noninterest expense for the nine months ended September 30, 2024, was $32.99 million, a slight increase from $32.30 million in 2023.
| Operational Metric | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Efficiency Ratio | 73.5% | 72.3% | 1.7% |
| Noninterest Expense | $32.99 million | $32.30 million | 2.1% |
Debt vs. Equity: How BankFinancial Corporation (BFIN) Finances Its Growth
Debt vs. Equity: How BankFinancial Corporation Finances Its Growth
At September 30, 2024, BankFinancial Corporation reported total liabilities of $1.259 billion, consisting of $20 million in borrowings and $18.726 million in subordinated notes. Total stockholders' equity stood at $159.1 million, resulting in a debt-to-equity ratio of approximately 7.91:1.
Overview of the Company's Debt Levels
The company's long-term debt included $18.726 million in subordinated notes, while total short-term debt was $20 million. As of September 30, 2024, total deposits decreased to $1.199 billion from $1.262 billion at the end of 2023, reflecting a 4.9% decline.
Debt-to-Equity Ratio and Comparison to Industry Standards
With a debt-to-equity ratio of 7.91, BankFinancial Corporation's leverage is significantly higher than the industry average, which typically ranges between 1.0 and 3.0 for community banks. This indicates a heavier reliance on debt financing compared to equity.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In March 2024, the company repurchased $1 million of its subordinated notes, realizing a gain of $107,000 on the repurchase. As of September 30, 2024, the company's Tier 1 leverage ratio was reported at 11.11%, reflecting a robust capital position.
How the Company Balances Between Debt Financing and Equity Funding
BankFinancial Corporation's strategy involves maintaining a balance between debt and equity to support its growth initiatives. As of September 30, 2024, core deposits represented 81% of total deposits, indicating a solid foundation for funding growth through customer deposits rather than solely relying on external debt.
| Financial Metric | Value |
|---|---|
| Total Assets | $1.418 billion |
| Total Liabilities | $1.259 billion |
| Total Equity | $159.1 million |
| Debt-to-Equity Ratio | 7.91:1 |
| Subordinated Notes | $18.726 million |
| Borrowings | $20 million |
| Core Deposits Percentage | 81% |
Assessing BankFinancial Corporation (BFIN) Liquidity
Assessing BankFinancial Corporation's Liquidity
Current Ratio: As of September 30, 2024, the current ratio was calculated to be 1.12, reflecting the company's ability to meet short-term liabilities with its short-term assets.
Quick Ratio: The quick ratio stood at 0.98, indicating a solid liquidity position without relying on inventory.
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, was reported at $38.7 million as of September 30, 2024, a decrease from $55.2 million at December 31, 2023. This decline suggests tighter liquidity conditions in the short term.
| Period | Current Assets (in $ million) | Current Liabilities (in $ million) | Working Capital (in $ million) |
|---|---|---|---|
| September 30, 2024 | 158.3 | 119.6 | 38.7 |
| December 31, 2023 | 174.5 | 119.3 | 55.2 |
Cash Flow Statements Overview
The cash flow from operating activities for the nine months ended September 30, 2024, was $3.3 million, compared to $5.2 million for the same period in 2023. The decrease indicates a reduction in cash generated from core operations.
Cash flows from investing activities showed a net outflow of $125.9 million in 2024, primarily due to a significant increase in securities purchases totaling $274.0 million.
Cash flows from financing activities indicated a net outflow of $1.2 million in 2024, driven by cash dividends declared totaling $1.2 million.
| Cash Flow Component | 2024 (in $ million) | 2023 (in $ million) |
|---|---|---|
| Operating Cash Flow | 3.3 | 5.2 |
| Investing Cash Flow | (125.9) | (118.3) |
| Financing Cash Flow | (1.2) | (0.3) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, cash and cash equivalents amounted to $138.3 million, down from $178.5 million at December 31, 2023. This decline raises potential liquidity concerns as it may limit the company's flexibility in responding to unforeseen cash needs.
The total liabilities decreased by $73.4 million from December 31, 2023, to $1.259 billion at September 30, 2024, indicating a reduction in financial obligations that could enhance liquidity. However, the increase in nonperforming assets, which stood at 1.71% of total assets, may pose a risk to liquidity if unresolved.
Overall, while the current and quick ratios suggest adequate liquidity, declining cash reserves and increased nonperforming assets could present challenges ahead.
Is BankFinancial Corporation (BFIN) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze key financial ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio is calculated as the stock price divided by earnings per share (EPS). As of September 30, 2024, the EPS was $0.16 for the third quarter, and the stock price was approximately $12.77, leading to a P/E ratio of:
P/E Ratio = Stock Price / EPS = $12.77 / $0.16 = 79.81
Price-to-Book (P/B) Ratio
The P/B ratio is calculated as the stock price divided by the book value per share. The book value per share can be derived from total stockholders' equity of $159.1 million and total shares outstanding of 12.46 million.
Book Value per Share = Total Stockholders' Equity / Total Shares Outstanding = $159,108,000 / 12,460,678 = $12.77
P/B Ratio = Stock Price / Book Value per Share = $12.77 / $12.77 = 1.00
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
To calculate this ratio, we need to compute the enterprise value (EV) and EBITDA. The EV is calculated as:
EV = Market Capitalization + Total Debt - Cash and Cash Equivalents
Market capitalization can be calculated as Stock Price x Total Shares Outstanding = $12.77 x 12,460,678 = $159.1 million.
As of September 30, 2024, total debt was $0 (no specific debt reported), and cash and cash equivalents totaled $138.3 million.
EV = $159,108,000 + $0 - $138,300,000 = $20,808,000
Assuming an EBITDA of $36.8 million for the nine months ended September 30, 2024:
EV/EBITDA = $20,808,000 / $36,800,000 = 0.56
Stock Price Trends
Over the last 12 months, the stock price has shown fluctuations, starting at $12.00 and reaching a high of $13.50 before stabilizing around $12.77 as of September 30, 2024.
Dividend Yield and Payout Ratios
The company declared dividends of $0.10 per share for the three months ended September 30, 2024. The dividend yield can be calculated as:
Dividend Yield = Annual Dividend / Stock Price = $0.40 / $12.77 = 3.13%
The dividend payout ratio is:
Dividend Payout Ratio = Dividends Declared / Net Income = $3.7 million / $5.8 million = 63.79%
Analyst Consensus on Stock Valuation
As of the latest reports, analysts have a consensus rating of Hold on the stock, reflecting cautious optimism about its current valuation relative to its financial health and market conditions.
| Metric | Value |
|---|---|
| P/E Ratio | 79.81 |
| P/B Ratio | 1.00 |
| EV/EBITDA Ratio | 0.56 |
| Stock Price (as of Sept 30, 2024) | $12.77 |
| Dividend Yield | 3.13% |
| Dividend Payout Ratio | 63.79% |
| Analyst Consensus | Hold |
Key Risks Facing BankFinancial Corporation (BFIN)
Key Risks Facing BankFinancial Corporation
Industry Competition: The financial services industry is highly competitive, with numerous banks and non-bank financial institutions vying for market share. This competition can lead to pressure on interest margins and fees, impacting profitability. As of September 30, 2024, the net interest margin decreased to 3.47% from 3.57% in the prior year.
Regulatory Changes: The banking sector is subject to extensive regulation, which can change frequently. Compliance with these regulations can result in increased operational costs. The company’s Tier 1 leverage ratio remained strong at 11.11% as of September 30, 2024, indicating compliance with capital requirements.
Market Conditions: Economic downturns can lead to higher default rates on loans. The allowance for credit losses increased to 0.85% of total loans at September 30, 2024, compared to 0.82% at June 30, 2024. Furthermore, the ratio of nonperforming assets to total assets increased to 1.71% from 1.54%.
Operational Risks
Credit Risk: The company faces risks related to borrowers' ability to repay loans. The provision for credit losses for the nine months ended September 30, 2024, was $435,000, a significant increase from $85,000 in the previous year. Net charge-offs were $881,000 for the nine months ended September 30, 2024.
Interest Rate Risk: The increase in the weighted average cost of interest-bearing liabilities to 1.95% for the nine months ended September 30, 2024, from 1.22% in the prior year may impact net interest income. Total average interest-earning assets decreased by $74.5 million, or 5.1%.
Strategic Risks
Loan Portfolio Composition: The company’s loan portfolio declined by $63.8 million in the third quarter of 2024, with commercial finance balances decreasing by 23.5%. This decline could affect future revenue generation.
Market Demand: Demand for new equipment finance transactions remained stagnant, and the equipment finance pipeline duration extended due to delays. This stagnation may hinder growth opportunities in the commercial lending sector.
Mitigation Strategies
The company has implemented measures to manage operational and financial risks, including increasing marketing efforts to small- and medium-sized businesses, which has shown modest improvements in new credit facility opportunities. Additionally, the focus on maintaining a strong capital position with a Tier 1 leverage ratio above regulatory requirements assists in mitigating financial risks.
| Risk Factor | Current Status | Previous Status | Change |
|---|---|---|---|
| Net Interest Margin | 3.47% | 3.57% | -0.10% |
| Provision for Credit Losses | $435,000 | $85,000 | + $350,000 |
| Net Charge-Offs | $881,000 | $1.6 million | - $719,000 |
| Ratio of Nonperforming Assets | 1.71% | 1.54% | +0.17% |
| Loan Portfolio Decline | $63.8 million | N/A | N/A |
Future Growth Prospects for BankFinancial Corporation (BFIN)
Future Growth Prospects for BankFinancial Corporation
Analysis of Key Growth Drivers
BankFinancial Corporation is poised for growth through several key drivers, including:
- Product Innovations: The company has been focusing on enhancing its digital banking services, which have shown an increase in user engagement by 15% year-over-year as of September 2024.
- Market Expansions: The geographical diversification strategy, particularly in Florida and Texas, contributed to a 13.5% and 13.0% share, respectively, of the multi-family residential real estate loans.
- Acquisitions: Potential acquisitions in the fintech space are under consideration to bolster the product offering and customer base.
Future Revenue Growth Projections and Earnings Estimates
Revenue growth projections for the upcoming years indicate a steady increase. Analysts forecast an annual revenue growth rate of approximately 5.4% for 2025, driven by improved operational efficiencies and increased loan origination.
Earnings estimates suggest that net income could rebound to $7.5 million in 2025, reflecting a recovery from the $5.8 million reported for the nine months ended September 30, 2024.
Strategic Initiatives or Partnerships
The company has initiated partnerships with local businesses to enhance its commercial lending portfolio. Additionally, strategic investments in technology are expected to yield a 10% reduction in operational costs by mid-2025.
Competitive Advantages
BankFinancial Corporation's competitive advantages include:
- Strong Capital Position: As of September 30, 2024, the Tier 1 leverage ratio stood at 11.11%, indicating a robust capital base.
- Core Deposits: Core deposits represented 81% of total deposits, providing a stable funding source.
- Experienced Management Team: The management’s extensive experience in regional banking positions the company to capitalize on market opportunities effectively.
Financial Data Overview
| Financial Metric | 2024 (Q3) | 2023 (Q3) | Change |
|---|---|---|---|
| Total Assets | $1.418 billion | $1.487 billion | $(69.7 million) |
| Total Loans | $923.9 million | $1.050 billion | $(126.8 million) |
| Total Deposits | $1.199 billion | $1.262 billion | $(62.2 million) |
| Net Income | $5.8 million | $7.3 million | $(1.5 million) |
| Noninterest Income | $4.2 million | $2.8 million | $1.4 million |
BankFinancial Corporation (BFIN) DCF Excel Template
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Updated on 16 Nov 2024
Resources:
- BankFinancial Corporation (BFIN) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of BankFinancial Corporation (BFIN)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View BankFinancial Corporation (BFIN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.