BankFinancial Corporation (NASDAQ:BFIN) Q4 2022 Earnings Call Transcript

Manuel Navas: Got it. Got it. I guess my last question before I step back into the queue. Just updated thoughts on your buyback, I know that you are a little bit concerned about the tax this year, but you did get some shares bought here in the fourth quarter, just kind of thoughts on that going forward?

F. Morgan Gasior: We put — the Board approved an increase to the share repurchase plan last week, and I would say that, given that the lower level of volume we have seen in the fourth quarter, we were able to do some volume. But I would say that it will probably slow down a little bit. I would probably use 50,000 a quarter as a baseline. It could be higher. I doubt it would be much lower. And so at that point, you would end up the year roughly around 12,500 million shares, plus or minus. So I would use a little bit lower baseline than we have historically. Hopefully, we trade-up a little bit in share price and it’s a little bit less accretive. But still, I think, 50,000 a quarter is a good baseline. If it’s better than its better, but I think that’s a reasonable place to start a minimum estimate.

Manuel Navas: Thank you. I will hop back into the queue.

Operator: Thank you. One moment, while we prepare for the next question. Next question is coming from Brian Martin of Janney. Your line is open. Please go ahead.

Brian Martin: Hey. Good morning, guys.

F. Morgan Gasior: Good morning.

Brian Martin: Hey, Morgan. Can you maybe just talk a little bit about or, I guess, the thought on just how you fund the loan growth this year, just kind of the size of the balance sheet. I know that the cash balance is obviously down pretty substantially, but you also talked about $600 million. It sounds like it’s re-pricing over the next 12 months. So just kind of in connection with maybe if you look at the 10% loan growth, you are talking about $120 million at the higher end. So just — kind of just trying to understand how you are thinking about funding it and just the balance sheet along with some of the deposit contraction you saw this quarter, so?

F. Morgan Gasior: Yeah. I think the simplest thing is, if you look at it, we will take $60 million out of the securities portfolio to fund the loan growth and we will need $60 million of new funding, plus or minus. And the new funding, probably, in the shorter run would be done through retail CDs and money markets, but especially retail CDs. The customers that we are working with seem to want to go in that direction right now and that seems to be working for us. And then as the year goes on, as I said earlier, we are going to try and focus some attention on commercial deposit marketing, whether it’s new commercial deposit, DDAs from new customers, commercial MMDAs and then some commercial CDs. We don’t have that much of it, but commercial would be the next component.

So let’s assume, for example, that we are able to take that $60 million of new funding requirement and do half in commercial and half in retail. That would be a good result for us, because it will come in at a lower cost of funds than the retail side would. And it would also mean we are growing our core banking franchise and our core commercial finance or commercial deposit franchise in a meaningful way.

Brian Martin: Got you. Okay. And as far as the contraction — a little bit of contraction in deposits and just kind of how you see that playing out with kind of managing the loan-to-deposit ratio. What do you see — do you see more contraction potentially on the — given where rates are in some of the deposit mix or is that — do you feel like it’s stabilizing here and…