BankFinancial Net Income Rises Q3, Merger with First Financial Pending

TL;DR

**BankFinancial's Q3 net income uptick is overshadowed by a significant nine-month decline and an impending merger with First Financial, making it a speculative hold until merger details solidify.**

AI Summary

BankFinancial Corporation reported a net income of $2.359 million for the three months ended September 30, 2025, an increase of 18.4% from $1.993 million in the same period of 2024. However, net income for the nine months ended September 30, 2025, decreased to $4.081 million from $5.837 million in the prior year, representing a 30.1% decline. Total assets increased to $1.454 billion at September 30, 2025, from $1.434 billion at December 31, 2024. A significant strategic development is the proposed merger with First Financial Bancorp., unanimously approved by both boards, pending regulatory and BankFinancial stockholder approvals. The company experienced a substantial increase in securities, at fair value, to $537.503 million from $360.530 million, while loans receivable, net, decreased to $759.832 million from $887.586 million. Total deposits grew to $1.242 billion from $1.217 billion, driven by an increase in interest-bearing deposits. The company also recorded a recovery of provision for credit losses of $265 thousand for the three months ended September 30, 2025, compared to a provision of $485 thousand in the prior year.

Why It Matters

This 10-Q reveals BankFinancial's strategic pivot towards a merger with First Financial Bancorp., a critical event for investors as it will transform the company's future. The decline in nine-month net income by 30.1% to $4.081 million, despite a Q3 recovery, highlights underlying operational challenges that the merger aims to address. For employees and customers, the merger could mean changes in services, branch networks, and corporate culture, potentially impacting job security and banking relationships. In the competitive landscape, this acquisition allows First Financial to expand its market presence, while BankFinancial shareholders will need to evaluate the merger terms against the company's standalone performance and future prospects.

Risk Assessment

Risk Level: medium — The proposed merger with First Financial Bancorp. introduces significant execution risk, as it is subject to customary closing conditions, regulatory approvals, and BankFinancial's stockholder approval. While the company reported a recovery of provision for credit losses of $265 thousand in Q3 2025, the nine-month provision for credit losses was $1.691 million, indicating ongoing credit quality management. The decrease in loans receivable by $127.754 million from December 31, 2024, to September 30, 2025, also suggests a contraction in lending activities.

Analyst Insight

Investors should closely monitor the progress of the merger with First Financial Bancorp., as its success will dictate the future value of BankFinancial shares. Given the mixed financial performance—Q3 net income up, but nine-month net income down significantly—investors should hold off on new positions until merger terms are finalized and the combined entity's strategic direction is clearer. Existing shareholders should evaluate the proposed exchange ratio and consider the potential for regulatory hurdles or shareholder dissent.

Financial Highlights

debt To Equity

N/A

revenue

$N/A

operating Margin

N/A

total Assets

$1.454B

total Debt

$N/A

net Income

$2.359M

eps

$0.19

gross Margin

N/A

cash Position

$N/A

revenue Growth

N/A

Key Numbers

• $2.359M — Net Income (Q3 2025) (Increased 18.4% from $1.993M in Q3 2024)
• $4.081M — Net Income (9M 2025) (Decreased 30.1% from $5.837M in 9M 2024)
• $1.454B — Total Assets (Increased from $1.434B at Dec 31, 2024)
• $537.503M — Securities, at fair value (Increased from $360.530M at Dec 31, 2024)
• $759.832M — Loans receivable, net (Decreased from $887.586M at Dec 31, 2024)
• $1.242B — Total Deposits (Increased from $1.217B at Dec 31, 2024)
• $0.19 — Basic and Diluted EPS (Q3 2025) (Increased from $0.16 in Q3 2024)
• $0.33 — Basic and Diluted EPS (9M 2025) (Decreased from $0.47 in 9M 2024)
• $265K — Recovery of Provision for Credit Losses (Q3 2025) (Compared to a $485K provision in Q3 2024)
• 12,460,678 — Common Shares Outstanding (Consistent at September 30, 2025 and December 31, 2024)

Key Players & Entities

• BankFinancial Corporation (company) — Registrant and target in merger
• First Financial Bancorp. (company) — Acquirer in proposed merger
• First Financial Bank (company) — Surviving bank in Bank Merger
• SEC (regulator) — Securities and Exchange Commission
• NASDAQ Stock Market LLC (company) — Exchange where BFIN is registered
• $2.359 million (dollar_amount) — Net income for Q3 2025
• $4.081 million (dollar_amount) — Net income for nine months ended Sept 30, 2025
• $1.454 billion (dollar_amount) — Total assets at September 30, 2025
• $537.503 million (dollar_amount) — Securities, at fair value, at September 30, 2025
• $759.832 million (dollar_amount) — Loans receivable, net, at September 30, 2025

FAQ

Risk Factors

• Merger Integration and Execution Risk [high — financial]: The proposed merger with First Financial Bancorp. introduces significant execution risk. The successful integration of operations, systems, and cultures is critical for realizing projected synergies and avoiding disruptions. Failure to manage this integration effectively could lead to increased costs, decreased efficiency, and a negative impact on financial performance.
• Regulatory Approval Uncertainty [high — regulatory]: The merger is subject to approval from various regulatory bodies and BankFinancial stockholders. Delays or denial of these approvals could jeopardize the transaction, leading to significant costs incurred in pursuit of the merger and potential reputational damage. The current regulatory environment for bank mergers can be stringent.
• Interest Rate Sensitivity [medium — market]: As a financial institution, BankFinancial is exposed to interest rate risk. Changes in interest rates can impact net interest income, the fair value of securities, and loan demand. The significant increase in securities available-for-sale to $537.503 million from $360.530 million makes the company more sensitive to fluctuations in market interest rates.
• Loan Portfolio Concentration and Decline [medium — financial]: The company has experienced a notable decrease in loans receivable, net, from $887.586 million at December 31, 2024, to $759.832 million at September 30, 2025. This 14.4% decline, particularly in commercial loans and leases (down from $248.595M to $169.335M), could indicate a shift in lending strategy or market demand, potentially impacting future revenue generation from interest income.
• Credit Loss Provision Dynamics [medium — financial]: While the company recorded a recovery of provision for credit losses of $265 thousand for Q3 2025, compared to a provision of $485 thousand in Q3 2024, the overall nine-month net income decline of 30.1% suggests underlying pressures. The allowance for credit losses on loans stood at $8.814 million at September 30, 2025, and any deterioration in loan quality could necessitate increased provisions.
• Dependence on Key Personnel and Integration Challenges [medium — operational]: The success of the merger and ongoing operations relies heavily on the expertise of key management and personnel. Any departure of critical individuals, especially during the integration phase, could disrupt operations and hinder strategic objectives.
• Economic Downturn Impact [medium — market]: A broader economic slowdown or recession could negatively affect the company's borrowers, leading to increased loan defaults, higher credit losses, and reduced demand for banking services. This risk is amplified by the concentration in multi-family and nonresidential real estate loans.
• Compliance and Cybersecurity Risks [low — regulatory]: Like all financial institutions, BankFinancial faces ongoing risks related to regulatory compliance, data privacy, and cybersecurity threats. Breaches or failures in compliance could result in significant fines, legal actions, and reputational damage.

Industry Context

The banking industry is currently navigating a complex environment characterized by evolving interest rate policies, increased regulatory scrutiny, and ongoing consolidation. Competition remains intense, with traditional banks facing pressure from fintech companies and a shifting customer preference towards digital services. Deposit growth is crucial, but managing funding costs in a potentially rising rate environment is a key challenge.

Regulatory Implications

The proposed merger with First Financial Bancorp. is subject to significant regulatory review, including antitrust considerations and approvals from banking authorities. Any delays or conditions imposed by regulators could impact the deal's timeline and ultimate success. Ongoing compliance with capital requirements, lending regulations, and data security standards remains paramount.

What Investors Should Do

1. Monitor Merger Progress
2. Analyze Loan Portfolio Trends
3. Evaluate Securities Portfolio Performance
4. Scrutinize Nine-Month Performance
5. Assess Integration Risks Post-Merger

Key Dates

• 2025-08-11: Agreement and Plan of Merger signed with First Financial Bancorp. — Marks a significant strategic shift towards consolidation, pending regulatory and shareholder approvals.
• 2025-09-30: Quarterly and Year-to-Date Financial Results reported. — Provides a snapshot of financial performance, highlighting mixed results with strong quarterly net income but a year-to-date decline.
• 2025-07-04: President signed H.R. 1, the 'One Big Beautiful Bill Act' into law. — Introduced changes to federal tax law potentially impacting business expenses, though not expected to materially affect the company.

Glossary

Allowance for Credit Losses (ACL)

An estimate of the amount of loan principal that a financial institution expects it will not be able to collect. (The ACL activity shows a net recovery of $210 thousand for Q3 2025, contributing positively to earnings, but the overall balance remains significant at $8.814 million.)

Securities, at fair value

Investments in debt or equity instruments that are recorded on the balance sheet at their current market price. (A substantial increase in these securities to $537.503 million from $360.530 million indicates a strategic shift in asset allocation, potentially increasing interest rate sensitivity.)

Loans receivable, net

The total amount of money lent by the bank, minus any allowance for potential loan losses. (The decrease to $759.832 million from $887.586 million signifies a reduction in the bank's core lending business, impacting interest income potential.)

Provision for (recovery of) credit losses

The amount set aside or released by a financial institution to cover potential losses on loans and other credit exposures. (A recovery of $265 thousand in Q3 2025 is a positive sign, but the trend over nine months needs careful monitoring in conjunction with loan portfolio performance.)

Available-for-Sale Securities

Securities that are not classified as held-to-maturity or trading securities, and whose unrealized gains and losses are reported in other comprehensive income. (The majority of the company's securities portfolio ($537.503 million) falls into this category, highlighting the impact of market fluctuations on equity.)

Merger Agreement

A legally binding contract between two companies outlining the terms and conditions of a proposed merger. (This agreement with First Financial Bancorp. is the most significant strategic event, driving future outlook and introducing integration risks.)

Year-Over-Year Comparison

Compared to the prior year, BankFinancial Corporation shows a mixed performance. While Q3 2025 net income increased by 18.4% to $2.359 million and EPS rose to $0.19 from $0.16, the nine-month performance reveals a significant 30.1% decline in net income to $4.081 million and a drop in EPS to $0.33 from $0.47. Total assets saw a modest increase to $1.454 billion, driven by a substantial rise in securities available-for-sale to $537.503 million, while loans receivable net decreased notably to $759.832 million. New risks related to the proposed merger with First Financial Bancorp. are now prominent, alongside the ongoing market risks associated with interest rate fluctuations impacting the larger securities portfolio.

Key Financial Figures

• $0.01 — ch registered Common Stock, par value $0.01 per share BFIN The NASDAQ Stock Mar
• $6.7 million — hese receivables were $ 4.2 million and $6.7 million at September 30, 2025 and December 31,
• $1.5 million — factored receivables were $ 836,000 and $1.5 million at September 30, 2025 and December 31,

Filing Documents

• bfin20250930_10q.htm (10-Q) — 3259KB
• ex_852366.htm (EX-31.1) — 15KB
• ex_852367.htm (EX-31.2) — 13KB
• ex_852368.htm (EX-32) — 13KB
• 0001437749-25-032279.txt ( ) — 13620KB
• bfin-20250930.xsd (EX-101.SCH) — 66KB
• bfin-20250930_cal.xml (EX-101.CAL) — 53KB
• bfin-20250930_def.xml (EX-101.DEF) — 414KB
• bfin-20250930_lab.xml (EX-101.LAB) — 382KB
• bfin-20250930_pre.xml (EX-101.PRE) — 442KB
• bfin20250930_10q_htm.xml (XML) — 3866KB

Financial Statements

Financial Statements 2 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

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

Controls and Procedures 36 PART II Item 1.

Legal Proceedings

Legal Proceedings 37 Item 1A.

Risk Factors

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

Signatures

Signatures 39 Table of Contents BANKFINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In thousands, except share and per share data) - Unaudited September 30, 2025 December 31, 2024 Assets Cash and due from other financial institutions $ 17,293 $ 20,647 Interest-bearing deposits in other financial institutions 65,449 64,182 Cash and cash equivalents 82,742 84,829 Interest-bearing time deposits in other financial institutions 11,844 34,156 Securities, at fair value 537,503 360,530 Loans receivable, net of allowance for credit losses: September 30, 2025, $ 8,814 and December 31, 2024, $ 7,571 759,832 887,586 Foreclosed assets, net 45 1,391 Stock in Federal Home Loan Bank ("FHLB") and Federal Reserve Bank ("FRB"), at cost 7,490 7,490 Premises and equipment, net 22,129 22,889 Accrued interest receivable 4,514 6,401 Bank-owned life insurance 17,757 18,301 Deferred taxes 4,364 3,761 Other assets 6,318 7,480 Total assets $ 1,454,538 $ 1,434,814 Liabilities Deposits Noninterest-bearing $ 237,431 $ 238,826 Interest-bearing 1,004,650 978,715 Total deposits 1,242,081 1,217,541 Borrowings 10,000 20,000 Subordinated notes, net of unamortized issuance costs 18,274 18,736 Advance payments by borrowers for taxes and insurance 14,385 9,051 Accrued interest payable and other liabilities 12,443 13,109 Total liabilities 1,297,183 1,278,437 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 September 30, 2025 and December 31, 2024 125 125 Additional paid-in capital 83,301 83,301 Retained earnings 73,856 73,513 Accumulated other comprehensive income (loss) 73 ( 562 ) Total stockholders' equity 157,355 156,377 Total liabilities and stockholders' equity $ 1,454,538 $ 1,434,814 See accompanying notes to the c

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 nine -month periods ended September 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"). On August 11, 2025, the Company and First Financial Bancorp. ("First Financial"), the parent company of First Financial Bank, entered into an Agreement and Plan of Merger. The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, BankFinancial would merge with and into First Financial (the "Merger"), with First Financial continuing as the surviving

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Table amounts in thousands, except share and per share data) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continuted) 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. We do not expect this to have a material impact on the Company's financial position or results of operations. NOTE 2 - EARNINGS PER SHARE Amounts reported in earnings per share reflect 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 Nine Months Ended September 30, September 30, 2025 2024 2025 2024 Net income available to common stockholders $ 2,359 $ 1,993 $ 4,081 $ 5,837 Basic and diluted weighted average common shares outstanding 12,460,678 12,460,678 12,460,678 12,463,127 Basic and diluted earnings per common share $ 0.19 $ 0.16 $ 0.33 $ 0.47 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 September 30, 2025 Municipal securities $ 702 $ 5 $ — $ 707 U.S. Treasury Bills and Notes 533,241 214 ( 101 ) 533,354 Mortgage-backed securities - residential 2,692 37 ( 48 ) 2,681 Collateralized mortgage obligations - residential 770 — ( 9 ) 761 $ 537,405 $ 256 $ ( 158 ) $ 537,503 December 31, 2024 Municipal

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 September 30, 2025 U.S. Treasury Bills and Notes — $ — $ — 16 $ 5,884 $ ( 101 ) 16 $ 5,884 $ ( 101 ) Mortgage-backed securities - residential — — — 5 1,141 ( 48 ) 5 1,141 ( 48 ) Collateralized mortgage obligations - residential — — — 5 761 ( 9 ) 5 761 ( 9 ) — $ — $ — 26 $ 7,786 $ ( 158 ) 26 $ 7,786 $ ( 158 ) December 31, 2024 U.S. Treasury Bills and Notes — $ — $ — 73 $ 48,609 $ ( 689 ) 73 $ 48,609 $ ( 689 ) U.S. government-sponsored agencies 10 79,872 ( 128 ) — — — 10 79,872 ( 128 ) Mortgage-backed securities - residential — — — 7 1,364 ( 69 ) 7 1,364 ( 69 ) Collateralized mortgage obligations - residential — — — 5 850 ( 12 ) 5 850 ( 12 ) 10 $ 79,872 $ ( 128 ) 85 $ 50,823 $ ( 770 ) 95 $ 130,695 $ ( 898 ) 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 September 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 q uality, 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 unrealize

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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: September 30, 2025 December 31, 2024 One-to-four family residential real estate $ 12,859 $ 14,829 Multi-family residential real estate 486,050 521,957 Nonresidential real estate 98,804 108,153 Commercial loans and leases 169,335 248,595 Consumer 1,598 1,623 768,646 895,157 Allowance for credit losses ( 8,814 ) ( 7,571 ) Loans, net $ 759,832 $ 887,586 Net deferred loan origination costs included in the table above were $ 1.2 million as of September 30, 2025 and December 31, 2024 . 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 September 30, 2025 One-to-four family residential real estate: Home equity and junior liens $ 47 $ ( 2 ) $ — $ — $ 45 One-to-four family first liens 193 ( 15 ) — 3 181 Multi-family residential real estate: Senior notes 4,295 ( 99 ) — 3 4,199 Junior notes 432 ( 25 ) — — 407 Nonresidential real estate: 181 ( 12 ) — — 169 Non-owner occupied 1,052 ( 68 ) — — 984 Commercial loans and leases: Commercial 657 14 ( 90 ) 4 585 Equipment finance - Government 2,107 ( 9 ) — — 2,098 Equipment finance - Corporate Investment-grade 108 ( 2 ) — — 106 Consumer 44 8 ( 12 ) — 40 $ 9,116 $ ( 210 ) $ ( 102 ) $ 10 $ 8,814 September 30, 2024 One-to-four family residential real estate: Home equity and junior liens $ 61 $ ( 5 ) $ — $ — $ 56 One-to-four family first liens 263 ( 47 ) — 22 238 Multi-family residential real estate: Senior notes 4,402 ( 54 ) — 6 4,354 Junior notes 441 10 — — 451 Nonresidential real estate: 173

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 nine months ended September 30, 2025 One-to-four family residential real estate: Home equity and junior liens $ 54 $ ( 9 ) $ — $ — $ 45 One-to-four family first liens 217 ( 44 ) —

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