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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
| x | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996]. |
For the fiscal year ended December 31, 2005
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]. |
For the transition period from to
Commission File Number 000-51331
| A. | Full title of the plan and the address of the plan, if different from that of the issuer named below: |
BankFinancial and Subsidiaries Associate Investment Plan
| B: | Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: |
BankFinancial Corporation
15W060 North Frontage Road
Burr Ridge, Illinois 60527
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BANKFINANCIAL AND SUBSIDIARIES
ASSOCIATE INVESTMENT PLAN
Burr Ridge, Illinois
FINANCIAL STATEMENTS
December 31, 2005 and 2004
CONTENTS
| 1 | ||
| FINANCIAL STATEMENTS |
||
| 2 | ||
| 3 | ||
| 4 | ||
| SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR) |
9 | |
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Plan Administrator
BankFinancial and Subsidiaries
Associate Investment Plan
Burr Ridge, Illinois
We have audited the accompanying statements of net assets available for benefits of BankFinancial and Subsidiaries Associate Investment Plan (“the Plan”) as of December 31, 2005 and 2004, and the related statement of changes in net assets available for benefits for the year ended December 31, 2005. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2005 and 2004, and the changes in net assets available for benefits for the year ended December 31, 2005 in conformity with U.S. generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets (held at end of year), is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic 2005 financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic 2005 financial statements taken as a whole.
| /s/ Crowe Chizek and Company LLC Crowe Chizek and Company LLC |
Oak Brook, Illinois
June 16, 2006
1.
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BANKFINANCIAL AND SUBSIDIARIES ASSOCIATE INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2005 and 2004
| 2005 | 2004 | |||||
| ASSETS | ||||||
| Investments (Note 4) |
$ | 16,430,167 | $ | 11,930,113 | ||
| NET ASSETS AVAILABLE FOR BENEFITS | $ | 16,430,167 | $ | 11,930,113 | ||
See accompanying notes to financial statements.
2.
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BANKFINANCIAL AND SUBSIDIARIES ASSOCIATE INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year ended December 31, 2005
| Additions to net assets attributed to: | |||
| Investment income (Note 4) |
|||
| Net appreciation in fair value of investments |
$ | 2,379,736 | |
| Interest and dividends |
104,596 | ||
| 2,484,332 | |||
| Contributions: |
|||
| Employer |
730,324 | ||
| Participant salary deferrals |
1,014,529 | ||
| Participant rollovers |
862,652 | ||
| 2,607,505 | |||
| Total additions |
5,091,837 | ||
| Deductions from net assets attributed to: | |||
| Benefits paid to participants |
588,083 | ||
| Administrative expenses |
3,700 | ||
| Total deductions |
591,783 | ||
| Net increase | 4,500,054 | ||
| Net assets available for benefits | |||
| Beginning of year |
11,930,113 | ||
| End of year |
$ | 16,430,167 | |
See accompanying notes to financial statements.
3.
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BANKFINANCIAL AND SUBSIDIARIES ASSOCIATE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2005 and 2004
NOTE 1 - DESCRIPTION OF PLAN
The following description of the BankFinancial and Subsidiaries Associate Investment Plan (“the Plan”) provides only general information. Participants should refer to the plan agreement for a more complete description of the Plan’s provisions.
General: The Plan is a defined contribution plan covering substantially all employees of BankFinancial, F.S.B. (“the Bank”) and its subsidiaries who are 21 years of age or older and have completed six months of service. This plan, as amended, was adopted by the Bank on July 1, 1993. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).
Eligibility: Employees become eligible to participate in the Plan on the first day of any quarter of any plan year coincident with or next following the date that they have met the eligibility requirements.
Contributions: The Plan is a contributory 401(k) savings plan funded by employee and employer contributions. Each participant may elect to contribute up to 50% of pretax compensation, subject to the limits established by the Internal Revenue Code. Employer contributions consist of a discretionary matching contribution subject to a limitation of 5% of the participant’s eligible compensation and a discretionary profit sharing contribution. The Bank provided a dollar-for-dollar match subject to the above-mentioned limitation for the plan year ended December 31, 2005. No additional discretionary contribution was made for the year ended December 31, 2005.
Administrative Expenses: Any expenses incurred for the administration and audit of the Plan not paid by the Bank may be paid out of the Plan’s assets.
Participant Accounts: Each participant’s account is credited with the participant’s contribution and an allocation of (a) the Bank’s matching and profit sharing contributions, (b) the Plan’s earnings, (c) forfeitures of terminated participants’ nonvested profit sharing contributions and charged with an allocation of administrative expenses. Allocations are based on participant earnings, contributions, or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
Retirement, Death, and Disability: A participant is entitled to 100% of his or her account balance upon retirement, death, or disability.
Investment Elections: Participants direct the investment of their account balance into various investment options offered by the Plan. The Plan currently offers ten funds as investment options for participants. Additionally, effective June 1, 2005, the Plan offered an investment in BankFinancial Corporation common stock as an option.
(Continued)
4.
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BANKFINANCIAL AND SUBSIDIARIES ASSOCIATE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2005 and 2004
NOTE 1 - DESCRIPTION OF PLAN (Continued)
Vesting: Participants are immediately vested in their voluntary and rollover contributions plus actual earnings thereon. Vesting in the remainder of their account plus earnings thereon is based on years of continuous service. A participant is 100% vested after five years of credited service as follows:
| Years |
Vested Percent | |
| 1 |
0 | |
| 2 |
25 | |
| 3 |
50 | |
| 4 |
75 | |
| 5 |
100 |
Forfeitures: Forfeitures attributable to employer matching contributions are used to reduce future Employer matching contributions. Forfeitures attributable to employer profit sharing contributions are added to any employer discretionary profit sharing contributions and are allocated to participants in the same manner as the employer discretionary profit sharing contribution. As of December 31, 2005 and 2004, there was $73,839 and $52,588 respectively, in forfeited nonvested accounts.
Payment of Benefits: Participants are not eligible to receive benefit payments until employment is terminated or they attain the age 59 1/2. When the participant’s vested balance is $5,000 or less, the benefit is distributed in a lump-sum payment. Participants with a balance in excess of this figure may postpone the lump-sum payment of benefits until reaching the age of 70 1/2.
Loan Provisions: The Plan provides that participants can borrow funds against their account balances limited to the lesser of $50,000 or 50% of their vested account balance, subject to a minimum loan of $1,000.
Hardship Withdrawals: The Plan provides that participants can withdraw rollover contributions and earnings thereon and salary deferral contributions, but not the earnings thereon, for reasons of financial hardship, as defined. Individual salary deferral contributions are prohibited for a six-month period after such hardship withdrawal.
NOTE 2 - SUMMARY OF ACCOUNTING POLICIES
The policies and principles which significantly affect the determination of net assets and changes in net assets are summarized below.
Accounting Method: The accompanying financial statements of the Plan have been prepared on the accrual basis of accounting in accordance with US generally accepted accounting principles.
(Continued)
5.
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BANKFINANCIAL AND SUBSIDIARIES ASSOCIATE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2005 and 2004
NOTE 2 - SUMMARY OF ACCOUNTING POLICIES (Continued)
Use of Estimates: The preparation of financial statements in conformity with US generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
Investment Valuation and Income Recognition: The Plan’s investments are stated at fair value. Investments traded on a national securities exchange are valued at the last reported sales price on the last business day of the plan year. Interests in pooled separate accounts are valued at the net asset value of shares held by the Plan at year end. In 1995, the Plan entered into a non-benefit-responsive investment contract with Aetna Life Insurance and Annuity Company, which has since been acquired by ING Life Insurance and Annuity Company (“ING”). Transfers or surrenders out of the contract prior to the maturity date are subject to a market value adjustment. Non-benefit responsive contracts are included in the financial statements at estimated fair value. Participant loans are stated at cost, which approximates fair value.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
Risks and Uncertainties: The Plan provides for certain investment options including pooled separate accounts, employer stock and a guaranteed investment contract. The underlying investment securities are exposed to various risks, such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statement of net assets available for benefits and participants’ individual account balances. As of December 31, 2005, 41.02% of the Plan’s net assets were invested in shares of BankFinancial Corporation Common Stock.
Payment of Benefits: Benefits are recorded when paid.
NOTE 3 - PLAN TERMINATION
Although it has not expressed any intent to do so, the Bank has the right under the Plan to discontinue its contributions at any time and to terminate the Plan, subject to the provisions of ERISA. In the event of the Plan’s termination, participants will become 100% vested in their accounts.
(Continued)
6.
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BANKFINANCIAL AND SUBSIDIARIES ASSOCIATE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2005 and 2004
NOTE 4 - INVESTMENTS
The following presents investments that represent 5% or more of the fair value of the Plan’s net assets:
| December 31, | ||||||
| 2005 | 2004 | |||||
| BankFinancial Corporation Common Stock |
$ | 6,739,500 | $ | — | ||
| Interest in pooled separate accounts |
||||||
| ING Van Kampen Equity and Income Account |
* | 693,321 | ||||
| ING T. Rowe Price Dividend Mid Cap Growth Account |
* | 819,005 | ||||
| ING VP Growth and Income Account |
922,811 | 1,233,546 | ||||
| ING VP Money Market Account |
1,362,377 | 2,481,289 | ||||
| ING VP Bond Account |
* | 974,568 | ||||
| ING UBS US Large Cap Equity Account |
* | 737,589 | ||||
| Fidelity VIP Growth Account |
1,059,039 | 1,264,569 | ||||
| AIM VI Core Equity Account |
* | 622,417 | ||||
| Investment contract with insurance company |
||||||
| ING Fixed Account with ING Life Insurance and Annuity Company |
$ | 2,656,761 | $ | 2,461,140 | ||
| * | Did not exceed 5% threshold. |
During the year ended December 31, 2005, the Plan’s investments (including investments bought and sold, as well as held, during the period) appreciated in value as follows:
| BankFinancial Corporation Common stock |
$ | 2,123,216 | |
| Pooled separate accounts |
256,520 | ||
| $ | 2,379,736 | ||
During the year ended December 31, 2005, the Plan’s investment contract with ING and participant loans generated interest income of $104,596.
(Continued)
7.
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BANKFINANCIAL AND SUBSIDIARIES ASSOCIATE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2005 and 2004
NOTE 5 - PARTY-IN-INTEREST TRANSACTIONS
Parties in interest are defined under Department of Labor regulations as any fiduciary of the Plan, any party rendering services to the Plan, the employer, and certain others. Certain plan investments are units of pooled separate accounts and general accounts issued by ING. ING is the custodian of the Plan, and therefore, these investments qualify as party-in-interest investments. The Plan also held party-in-interest investments in the form of participant loans.
At December 31, 2005, the plan held 459,094 shares of BankFinancial Corporation common stock in the BankFinancial Corporation Common Stock Fund. There were no dividends received on these shares in 2005.
NOTE 6 - TAX STATUS
The Plan is relying on a favorable opinion letter dated September 4, 2001 issued to Sun Guard Corbel, Inc., the plan document sponsor. The Plan is not required to file for an individual determination letter because of the opinion letter received from the Internal Revenue Service. Although the Plan has been amended since receiving favorable opinion, the plan administrator believes that the Plan is designed and is being operated in accordance with the applicable requirements of the Internal Revenue Code.
NOTE 7 - SUBSEQUENT EVENTS
Effective March 15, 2006, the Board of Directors of BankFinancial, FSB unanimously consented to remove ING National Trust and appoint Principal Life Insurance Company as the Plan’s trustee and custodian. As a result, certain investment options have changed accordingly.
Effective April 5, 2006, BankFinancial Corporation completed its acquisition of University National Bank. As a result, the Plan has been amended to allow employees of University National Bank to participate in the Plan immediately.
8.
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BANKFINANCIAL AND SUBSIDIARIES ASSOCIATE INVESTMENT PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2005
Name of Plan Sponsor: BankFinancial, F.S.B.
Employer Identification Number: 36-1570375
Three-Digit Plan Number: 003
| (b) Identity of Issue, Borrower, Lessor or Similar Party |
(c) Description of Investment Including Maturity Date, Rate of Interest, Collateral, Par or Maturity Value |
(d) Cost |
Current Value | ||||
| * BankFinancial Corporation |
Common Stock |
# | $ | 6,739,500 | |||
| Insurance company pooled separate accounts: |
|||||||
| * ING Life Insurance and Annuity Company |
ING VP Money Market Account |
# | 1,362,377 | ||||
| * ING Life Insurance and Annuity Company |
ING VP Bond Account |
# | 724,472 | ||||
| * ING Life Insurance and Annuity Company |
UBS US Large Cap Equity Account |
# | 662,217 | ||||
| * ING Life Insurance and Annuity Company |
AIM VI Premier Equity Account |
# | 291,199 | ||||
| * ING Life Insurance and Annuity Company |
AIM VI Core Equity Account |
# | 394,021 | ||||
| * ING Life Insurance and Annuity Company |
ING VP Growth and Income Account |
# | 922,811 | ||||
| * ING Life Insurance and Annuity Company |
Fidelity VIP Growth Account |
# | 1,059,039 | ||||
| * ING Life Insurance and Annuity Company |
ING Van Kampen Equity and Income Account |
# | 638,085 | ||||
| * ING Life Insurance and Annuity Company |
ING T. Rowe Price Dividend Mid Cap Growth Account |
# | 598,515 | ||||
| Funds held in insurance company general accounts: |
|||||||
| * ING Life Insurance and Annuity Company |
ING Fixed Account |
# | 2,656,761 | ||||
| Other: |
|||||||
| * ING Life Insurance and Annuity Company |
Cash equivalents |
# | 67,841 | ||||
| * Participant loans |
Interest rates ranging from 4.00% to 9.50% and maturities ranging from January 2006 to April 2016 |
313,329 | |||||
| $ | 16,430,167 | ||||||
| * | Party-in-interest investment. |
| # | Investment is participant directed; therefore, historical cost is not required. |
9.
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SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
| BANKFINANCIAL AND SUBSIDIARIES | ||||
| ASSOCIATE INVESTMENT PLAN | ||||
| Date: June 27, 2006 | By: | /s/ Patricia M. Smith | ||
| Name: | Patricia M. Smith | |||
| Title: | Executive Vice President, Human Resources Division, BankFinancial, F.S.B. | |||
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INDEX TO EXHIBITS
| Exhibit Number |
Description | |
| 23.1 | Consent of Crowe Chizek and Company |
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statement No. 333-127737 on Form S-8 of BankFinancial Corporation, of our report dated June 16, 2006, appearing in this Annual Report on Form 11-K of the BankFinancial and Subsidiaries Associate Investment Plan for the year ended December 31, 2005.
| /s/ Crowe Chizek and Company LLC |
| Crowe Chizek and Company LLC |
Oak Brook, Illinois
June 27, 2006