2018 Shareholder Information

Transcription

1 2018 Shareholder Information

2 Forward Looking Statements This Presentation contains, and the periodic and current reports we file with the SEC, 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, which involve significant risks and uncertainties. Forward-looking statements may include statements relating to our future plans, strategies and expectations, as well as our future revenues, 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, expect, estimate, intend, anticipate, project, plan, or similar expressions. 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, including the financial projections contained herein, 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. Forward looking statements speak only as of the date they are made. We do not undertake any obligation to update any forwardlooking statement in the future, or to reflect circumstances and events that occur after the date on which the forward-looking statement was made. 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) less than anticipated loan growth due to intense competition for high quality loans and leases, particularly in terms of pricing and credit underwriting, or a dearth of borrowers who meet our underwriting standards; (ii) the impact of re-pricing and competitors pricing initiatives on loan and deposit products; (iii) adverse economic conditions in general and in the Chicago metropolitan area in particular, including high or increasing unemployment levels; (iv) declines in real estate values that adversely impact the value of our loan collateral, OREO, asset dispositions and the level of borrower equity in their investments; (v) borrowers that experience legal or financial difficulties that we do not currently foresee; (vi) 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 loan losses or adversely change our loan classifications, write-down assets, reduce credit concentrations or maintain specific capital levels; (vii) interest rate movements and their impact on the economy, customer behavior and our net interest margin; (viii) changes, disruptions or illiquidity in national or global financial markets; (ix) the credit risks of lending activities; (x) monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board; (xi) factors affecting our ability to access deposits or cost-effective funding, and the impact of competitors' pricing initiatives on our deposit products; (xii) the impact of new legislation or regulatory changes, including the Dodd-Frank Act and Basel III, on our products, services, operations and operating expenses; (xiii) higher federal deposit insurance premiums; (xiv) higher than expected overhead, infrastructure and compliance costs; and (xv) changes in accounting principles, policies or guidelines. These risks and uncertainties, as well as the Risk Factors set forth in Item 1A of our Annual Report on Form 10-K, should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. 2

3 Corporate Overview 1 Focus on Low-Risk Commercial Lending Commercial-related Loans: 92% of total loan portfolio 2 Retail Deposit Base With Core Deposits: 73% of total deposits 3 National Bank Charter 4 NASDAQ Global Markets: BFIN 3

4 Consolidated Balance Sheet Information Total Assets Total Loans Total Deposits Total Capital Tier 1 Capital $1.626 billion $1.315 billion $1.340 billion $198 million $187 million Tier 1 Leverage Capital % 11.49% Common Tier 1 Risk-Based Capital % 16.33% Total Risk-Based Capital % 17.06% No outstanding preferred shares, debt or hybrid capital instruments All financial information as of December 31, 2017 unless indicated otherwise 4

5 Branch Network North Libertyville South Libertyville Lincolnshire Deerfield Northbrook 19 Banking Offices in Cook, Lake, DuPage, and Will Counties Schaumburg Lincolnwood Lincoln Park 8 Consecutive Outstanding CRA Ratings Naperville Burr Ridge Downers Grove Westmont Hyde Park Chicago Ridge Calumet Park Orland Park Calumet City Hazel Crest Joliet Olympia Fields 5

6 Loan Portfolio Composition 7.52% 11.54% 12.86% Commercial Loans ($153MM) Commercial Leases ($310MM) Multi-Family ($588MM) Non-Residential ($170MM) 44.52% 23.46% Residential/Consumer including HELOC's ($99MM) Targeted Organic Loan Origination on National, Regional, or Local Basis 1. Commercial & Industrial/Healthcare and Lessor Financing 2. Commercial Equipment Leases 3. Multi-Family Minimal Borrower Concentration Top 5 Loan Relationships represent less than 6% of Loan Portfolio Construction/Land Loans ($1MM) represent 0.10% of Total Loans All financial information as of December 31, 2017 unless indicated otherwise 6

7 Loan Portfolio Trends TARGETED LOAN TYPES 12/31/17 (000 s) 12/31/12 (000 s) 2017 vs CAGR% Commercial Loans $152,552 $61, % Commercial Leases $310,076 $139, % Multi-Family $588,383 $352, % SUBTOTAL $1,051,011 $553, % OTHER LOAN TYPES Non-Residential Real Estate $169,971 $264,672 (8.5%) 1 4 Family & Consumer $99,411 $221,341 (14.8%) Construction and Land $1,358 $8,552 (30.8%) SUBTOTAL $270,740 $494,565 (11.4%) TOTAL $1,321,751 $1,047, % 7

8 Multi-Family Loan Portfolio Focus on Stabilized Class B & C Apartment Buildings No construction or Class A building exposure 17% Maximize 50% Risk-Based Capital Eligibility 7% 6% 48% 62% of Total Portfolio / 75% of Seasoned Portfolio 48% CAGR in 50% RBC Eligible Loans since 2012 Geographic Diversification in Selected High-Performing Markets Risk assessments & concentration of credit limits maintained for all markets 12% 10% Chicago ($281MM) Denver, CO ($56MM) Dallas, TX ($73MM) Austin - San Antonio, TX ($36MM) Tampa - Orlando, FL ($42MM) Other Markets ($100MM) Direct Loan Originations Supported by Independent Underwriting Commercial Bankers located in all targeted geographic markets Loan-level stress parameters: NOI, Debt Service & Valuation Independent credit analysis & collateral inspection practices Strong Asset Quality Targeted MSA s: 0.00% Past Due; 0.00% Nonaccrual at 12/31/17 Chicago MSA: 0.19% Past Due; 0.13% Nonaccrual at 12/31/17 All financial information as of December 31, 2017 unless indicated otherwise 8

9 Commercial & Industrial Loan Portfolio Chicago MSA Commercial Banking Focus on companies $2MM to $10MM in sales Working capital, equipment, and owner-occupied CRE $62 million in total commitments with 63% utilization at 12/31/17 26% 25% National Healthcare Lending Working capital, equipment, acquisition & HUD bridge financing $135 million in total commitments with 55% utilization at 12/31/17 No highly leveraged acquisition financing exposure No going concern real estate loan exposure 48% Chicago Regional Banking ($39MM) National Healthcare Lending ($74MM) National Commercial Leasing - Direct Lessor Finance ($40MM) National Commercial Leasing: Direct Lessor Finance Bridge/warehouse, working capital, residual equity loan/equity pool credit products $80 million in total commitments with 50% utilization at 12/31/17 Strong Asset Quality 0.00% Past Due; 0.00% Nonaccrual at 12/31/17 All financial information as of December 31, 2017 unless indicated otherwise 9

10 National Commercial Leasing Portfolio Direct origination relationships with independent lessors throughout US, including several ELFA Top 25 Independent Lessors 33% Typical structure is hell or high water, fully amortizing commercial equipment lease 67% Lease terms range from 24 months to 84 months, depending on lessee credit and equipment type Support both Fair Market Value and Capital Lease structures Equipment types are predominantly Information Technology & Material Handling No material exposure to Construction or Energy equipment Investment Grade ($207MM) Other ($103MM) Strong Asset Quality Lessee distribution governed by concentration of credit limits Direct Lease Bankers with independent disbursement and collection controls 0.42% Past Due; 0.00% Nonaccrual at 12/31/17 All financial information as of December 31, 2017 unless indicated otherwise 10

11 Non-Residential Real Estate Loan Portfolio Top Three Portfolios Non-Owner Occupied 23% Retail - $60MM Office Building - $22MM Mixed Use Building - $21MM Concentrated in Chicago MSA 77% No Significant Tenant Concentrations No Big Box/Anchor Exposure Minimal Single Tenant Exposures Largest Exposure is Less Than 5% of Capital and ALLL Non-Owner Occupied ($131MM) Owner Occupied ($39MM) Average Loan Size - $742,000 Strong Asset Quality 0.36% Past Due; 0.00% Nonaccrual at 12/31/17 All financial information as of December 31, 2017 unless indicated otherwise 11

12 1 4 Family and Consumer Loan Portfolio 2% Concentrated in Chicago MSA 21% Legacy Portfolio Status 55% decline in loan portfolio balances since % 89% of the 1 4 Family Loans are 1st Liens 1 4 Family - Owner Occupied ($76MM) 1 4 Family Non-Owner Occupied ($21MM) Asset Quality 2.07% Past Due; 2.05% Nonaccrual at 12/31/17 Consumer ($2MM) All financial information as of December 31, 2017 unless indicated otherwise 12

13 Loan Origination Priorities 1 Commercial & Industrial/Healthcare Chicago MSA commercial lending to small and lower-middle market companies Direct finance to National Commercial Leasing lessors Direct finance to selected hospitals, ambulatory/surgical centers, residential care and medical suppliers, and home health care on national basis based on specific market underwriting 2 National Commercial Leasing Focus on publicly-traded/rated and upper middle-market lessees 13

14 Asset Quality Metrics NPA to Assets December 31, 2017 December 31, 2016 Non-Accrual Loans to Loans December 31, 2017 December 31, % 0.40% 0.30% 0.29% 0.44% 0.30% 0.20% 0.18% 0.25% 0.20% 0.10% 0.10% 0.00% 0.00% 400% 300% 200% ALLL to Non-Accrual Loans December 31, 2017 December 31, % 247% 6.00% 4.00% Classified Assets as a % of Tier 1 Capital + ALLL December 31, 2017 December 31, % 3.92% 100% 2.00% 0% 0.00% 14

15 Funding Composition 4.35% 9.78% DDA - Retail ($137MM) 9.42% 15.99% 6.92% DDA - Commercial ($97MM) Interest Bearing NOW ($290MM) Savings ($161MM) Money Market - Retail ($261MM) 2.71% Money Market - Commercial ($38MM) CDs - Retail ($224MM) CDs - Wholesale ($132MM) 18.63% 11.49% 20.70% Other Borrowings ($61MM) 88% of Deposits are from Local Customers 91% of Direct Customer Transactions via Online/Mobile Stable Funding Composition Other Borrowings ($61MM) represent less than 5% of Total Fundings All financial information as of December 31, 2017 unless indicated otherwise 15

16 Operating Performance $20.0 $18.0 Pre-Tax, Pre-Provision Earnings from Adjusted Operations (in millions) $18.4 Net Interest Margin Stability reflects low-risk asset generation and strong asset quality Neutral Interest Rate Risk posture $16.0 $14.0 $13.3 $14.2 Non-Interest Income $12.0 $10.8 No reliance on residential mortgage banking $10.0 Improvement reflects movement to electronic/mobile banking $8.0 $6.0 $5.5 Developing additional capabilities in commercial mortgage banking, residual commercial equipment investment, and Lifeline small business and retail deposit products $4.0 $2.0 $ Non-Interest Expense Increased efficiency by reducing Non-Interest Expense by 31% since

17 2018 Priorities Continue growth & diversification of loan portfolio Expansion of capabilities and capacity in Multi-Family, National Commercial Leasing, and National Healthcare Lending now enable additional yield support/enhancement Continue progress towards goal of 50% Commercial & Industrial / 50% Multi-Family and CRE balanced portfolios Maximize contribution of deposit infrastructure to support loan growth & stronger non-interest income Further improvements to operating efficiency (deposit balances and non-interest income) from existing branch and other depositfocused channels Maintain Asset Quality Continue utilization of shareholder return capabilities Target Forward Quarterly EPS $ $0.26/share by 12/31/18 $ $0.30/share by 12/31/19 17

18 Total Shareholder Return Policy Elements Quarterly Dividends Current quarterly dividend - $0.08 per share 2.07% yield based on $15.49 average per share price in 2018 Seek to maintain 50% to 60% dividend payout ratio Share Repurchases Board has authorized the repurchase of up to 2,830,755 shares of current outstanding shares; 2,587,779 shares have been repurchased as of December 31, 2017 Current shares outstanding at December 31, ,958,723 shares Seek to Repurchase 3% to 5% annually Holding Company Liquidity: 01/31/18 - $9.2 million Mergers and Acquisitions Considered if 1) no asset quality issues and 2) meaningful commercial loan generation capacity, core deposit franchise, or sustainable non-interest income operations 18