SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 28, 2007
BANKFINANCIAL CORPORATION
(Exact Name of Registrant as Specified in Charter)
| Maryland | 0-51331 | 75-3199276 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File No.) | (I.R.S. Employer Identification No.) |
| 15W060 North Frontage Road, Burr Ridge, Illinois | 60527 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (800) 894-6900
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02. | Results of Operations and Financial Condition. |
On February 28, 2007, the Company issued a press release reporting earnings for the three months and the year ended December 31, 2006. The press release and Quarterly Financial and Statistical Supplement are included as Exhibits 99.1 and 99.2 to this report.
The information in the preceding paragraph, as well as Exhibits 99.1 and 99.2, is considered to be "furnished" under the Securities Exchange Act of 1934, and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.
| Item 7.01. | Regulation FD Disclosure |
On February 28, 2007, the Company announced that it would present at the Sandler O'Neill & Partners West Coast Financial Services Conference. BankFinancial’s Chairman and Chief Executive Officer, F. Morgan Gasior, is scheduled to participate on the Mid-West II Bank Panel at 2:20 p.m. Pacific Time (4:20 p.m. Central Time) on Tuesday, March 6, 2007.
This event can be accessed by logging on to www.sandleroneill.com. Once on this page, participants will be directed to the presentation. Participants should go to the website at lease fifteen minutes early to download and install any necessary audio software. Interested parties may also dial 1-877-711-4415 to listen to the presentation. For those unable to listen to the live broadcast, a replay will be available at www.sandleroneill.com for 30 days after the event beginning on March 7, 2007. There is no charge to access the presentation.
A copy of the press release announcing the investor conference participation and webcast is attached as Exhibit 99.3.
| Item 9.01. | Financial Statements and Exhibits. |
| (a) | Not Applicable. |
| (b) | Not Applicable. |
| (c) | Exhibits. |
| Exhibit No. |
Description | |
| 99.1 | Press Release dated February 28, 2007 reporting results of operation | |
| 99.2 | Quarterly Financial and Statistical Supplement | |
| 99.3 | Press Release dated February 28, 2007 reporting investor conference | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
| BANKFINANCIAL CORPORATION | ||||
| Date: February 28, 2007 | By: | /s/ F. Morgan Gasior | ||
| F. Morgan Gasior | ||||
| Chairman of the Board, Chief Executive Officer and President | ||||
3
Exhibit 99.1
FOR IMMEDIATE RELEASE
BankFinancial Corporation Reports Financial Results
for the Fourth Quarter of 2006 and the Full Year of 2006
Burr Ridge, Illinois - (February 28, 2007) BankFinancial Corporation (Nasdaq – BFIN) (“BankFinancial”) today reported net income of $1.2 million and basic earnings per share of $0.06 for the three months ended December 31, 2006, compared to net income of $2.9 million and basic earnings per share of $0.13 for the three months ended December 31, 2005.
For the year ended December 31, 2006, BankFinancial reported net income of $10.0 million and basic earnings per share of $0.45, compared to net income of $11.1 million and basic earnings per share of $0.29 for the year ended December 31, 2005. Earnings per share for the year ended December 31, 2005 only included the net income for the partial year following the completion of BankFinancial’s mutual-to-stock conversion on June 23, 2005.
Net income for the three months ended December 31, 2006 included $3.5 million in equity-based compensation and employee stock ownership plan (“ESOP”) expenses, compared to $348,000 for the three months ended December 31, 2005. Net income for the year ended December 31, 2006 included $5.4 million in equity-based compensation and ESOP expenses, compared to $717,000 for the year ended December 31, 2005.
Overview of Business Conditions
Business conditions remained relatively stable in the fourth quarter, 2006. Our growth in the multi-family, non-residential real estate, commercial loan and commercial lease portfolios modestly exceeded our expectations for the period, though we do not necessarily anticipate these annualized growth rates continuing into 2007 absent fundamental changes to market conditions. Construction loans remained essentially constant, with disbursements on existing projects slightly exceeding repayments on sold properties. Residential loans continued to decrease, with home equity loans declining somewhat more than expected due to continuing competition both as to price and underwriting standards.
Our non-accrual loans increased this quarter, principally related to a single borrower with two well-secured commercial real estate loans that have since been brought current through the borrower’s exercise of its statutory right to reinstate the loans during a foreclosure proceeding that we initiated. Overall trends in multi-family and commercial real estate portfolio quality remained stable. The healthcare loan portfolio continues to receive priority resolution attention with our exposure expected to continue to decline in 2007. One borrower entered into a formal forbearance agreement and part of this exposure was placed on non-accrual status in 2006 pending the borrower’s performance under the forbearance agreement. We also charged off a fully reserved commercial loan due to the conclusion of legal proceedings, thus inflating the charge-off ratio at December 31, 2006 beyond historical norms. We acquired this loan in our acquisition of Success Bancshares in 2001 and have been maintaining specific reserves against it since we closed that acquisition.
Our construction loan portfolio quality remains stable but we are monitoring the capability of certain borrowers to continue making debt service payments on their construction projects. In addition, we noted that there may be isolated instances where borrowers may not have the additional cash equity to contribute to fund increases in construction costs. As absorption periods lengthen or unbudgeted costs occur, it is possible that we may elect not to renew selected loans rather than accommodate requests to capitalize interest or extend credit for additional project costs, particularly in cases where these actions would not improve our position. Our overall residential and home equity portfolio quality remained strong.
Competition for deposits, especially in the rates paid on money market and certificate of deposit accounts, steadily intensified. As we remained in a solidly competitive position during the fourth quarter, these trends had only a limited effect in deposit retention and growth rates as of December 31, 2006, but a greater impact is likely in 2007 if conditions persist. Our concerns remain about the migration of long-term core deposits to higher-rate accounts and to out-of-market institutions. Our development of new small business sales is accelerating as we experienced a somewhat faster growth rate in new account openings and enrollments in business-related services such as merchant processing and cash management.
Though our net interest margin and net interest spread exhibited stable to positive behavior during the past quarter, we believe that narrowing commercial credit spreads, coupled with future deposit migration risk, make it likely that the Company will experience some future compression in these vital measurements. The principal drivers of any such compression will be the current pricing conditions for high-quality organic loan growth, together with actions needed to retain valuable commercial credit customers and deposit customers.
Non-interest income declined in the quarter, as fees related to deposit accounts were lower than historical seasonal averages due in part to higher average balances; the difference was partially offset by stronger sales of Wealth Management products. Based on our experience in 2006, we expect greater volatility in both categories as our historical data seems to be less reliably predictive and we respond to customer behavior and preferences as competitive and market conditions warrant.
Our core non-interest expense remained well-contained in the fourth quarter, 2006. We continue our operating reviews of products, services and functions to ensure that they are appropriate to current and anticipated business conditions as well as the core focus of the Company. Of primary importance is the ongoing targeting of resources to core customer service, internal controls and compliance and our outreach efforts for new customers within our communities. We believe that one of the principal ways to deliver results for stockholders in this difficult operating environment is to optimize the organization’s expenditures towards those customer segments that most closely align to the Company’s commercial community bank mission.
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Overview of Financial Condition and Operating Results
Financial Condition
Net loans receivable increased $17.8 million, or 1.4%, to $1.330 billion during the fourth quarter of 2006. Multi-family real estate loans increased $5.0 million, or 1.7%, to $297.1 million; nonresidential real estate loans increased $13.1 million, or 4.3%, to $320.7 million; commercial leases increased $4.1 million, or 3.1%, to $139.2 million; commercial loans increased $4.4 million, or 5.2%, to $89.3 million; and construction and land loans increased $1.7 million, or 2.0%, to $85.2 million. We reduced our holdings of one- to four-family residential real estate loans during the fourth quarter of 2006 by $11.7 million, or 2.9%, to $397.5 million. Future loan growth could be adversely affected by our unwillingness to compete for loans by relaxing our historical underwriting standards.
Securities available-for-sale decreased by $39.5 million, or 25.1%, to $117.9 million during the fourth quarter of 2006, as we continued to reduce our levels of investment securities and use the proceeds to repay Federal Home Loan Bank advances to mitigate the impact of the inverted yield curve environment. We initiated this balance sheet strategy in the second quarter of 2006 by liquidating substantially all of the securities that University National Bank held in its investment portfolio shortly after we closed the acquisition of this institution and using the proceeds to repay Federal Home Loan Bank advances.
Total deposits increased by $23.3 million, or 2.1%, during the fourth quarter of 2006. NOW accounts increased by $22.5 million, or 8.9%; money market accounts increased by $10.0 million, or 4.0%; and noninterest-bearing demand deposits increased by $3.6 million, or 2.8%. Savings accounts decreased by $4.0 million, or 3.4%, while certificates of deposit decreased by $8.7 million, or 2.5%. Federal Home Loan Bank advances decreased by $26.0 million, or 16.7%.
Asset Quality
Non-performing loans increased by $757,000 to $9.2 million during the fourth quarter, and represented 0.69% of loans. The increase was principally related to a single borrower with two well-secured commercial real estate loans that have since been brought current through the borrower’s exercise of its statutory right to reinstate the loans during a foreclosure proceeding that we initiated. As a result of the reinstatement of the loans and other factors, including the value of the underlying collateral, no specific reserves under Statement of Financial Accounting Standard (“SFAS”) No. 114 were allocated to this borrower’s loans at December 31, 2006.
The allowance for loan losses decreased by $1,302,000 between the third and fourth quarters of 2006 due principally to a $982,000 decrease in the portion of the allowance for loan losses that we allocate to impaired loans pursuant to SFAS No. 114, with the remaining $320,000 decrease in the portion of the allowance allocated to general loan and lease losses pursuant to SFAS No. 5. Of the $982,000 decrease in SFAS No. 114 allocated reserves, $704,000 resulted from a charge-off of a fully reserved commercial loan due to the conclusion of legal proceedings. We acquired this loan in our acquisition of Success Bancshares in 2001 and have been maintaining specific reserves against it since we closed that acquisition. The charge-off
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increased our net charge-off ratio for the quarter ended December 31, 2006 to 0.23%, compared to 0.03% for the quarter ended September 30, 2006 and a net recovery of 0.02% for the quarter ended December 31, 2005. As a result of this activity, we recorded a credit for loan losses of $537,000 for the fourth quarter of 2006.
As of December 31, 2006, the Company’s SFAS No. 114 allocation for impaired loans was $402,000. The specific reserves attributable to loans are strongly influenced by the market value of the underlying collateral for the loans. As changes in the market value of the underlying collateral occur, fluctuations in the specific reserves attributable to loans secured by the collateral should also be expected to occur, and any declines in the market value of collateral could result in new or additional provisions for specific reserves. Certain types of collateral, such as marketable securities, are particularly susceptible to sudden changes in market value.
Fourth Quarter of 2006 Operating Results
We had net income of $1.2 million for the fourth quarter of 2006, compared to net income of $2.9 million for the fourth quarter of 2005. Our operating results for the fourth quarter of 2006 included a $3.5 million expense for equity-based compensation and benefits, compared to a $348,000 expense for the fourth quarter of 2005. The additional expense primarily related to equity-based awards that were made pursuant to the Equity Incentive Plan that our stockholders approved in June of 2006, and additional expenses arising from the ESOP that we established in connection with our mutual-to-stock conversion in June of 2005. Equity-based compensation expenses totaled approximately $2.1 million, after-tax, or $0.10 per share, for the fourth quarter of 2006, compared to $210,000, after-tax, or $0.01 per share, for the fourth quarter of 2005.
Net interest income was $14.0 million, compared to net interest income of $13.6 million for the fourth quarter of 2005. Our net interest margin was 3.74% for the fourth quarter of 2006, compared to 3.60% for the fourth quarter of 2005. Average loans outstanding increased by $130.9 million, or 10.9%. To mitigate the adverse impact of the inverted yield curve environment, we reduced our portfolio of available for sale securities by $156.1 million, or 58.7%, to an average balance of $110.0 million during the fourth quarter of 2006, compared to an average balance of $266.2 million during the fourth quarter of 2005. Average noninterest-bearing deposits increased by $18.8 million during the fourth quarter of 2006, primarily due to the impact of our acquisition of University National Bank. Our net interest rate spread for the fourth quarter of 2006 was 2.91%, which was unchanged from the fourth quarter of 2005. Our net interest rate spread for the fourth quarter of 2005 included an accelerated purchase accounting adjustment that reduced our net interest rate spread by seven basis points.
Non-interest income for the fourth quarter of 2006 was $2.5 million, an increase of approximately $80,000, or 3.3%, from the fourth quarter of 2005. Deposit service charges and fees increased by $36,000, or 3.7%, and other fee income decreased by $6,000, or 1.2%. Insurance commissions and annuities income increased $136,000, or 56.2%. Gains on sale of loans increased from $27,000 in the fourth quarter of 2005 to $61,000 in the fourth quarter of 2006. We recorded a net of loss of $43,000 on the sale of investment securities during the fourth quarter of 2006, while no gains or losses on the sale of investment securities were recorded in the fourth quarter of 2005. Mortgage loan servicing fees decreased by $22,000, or 8.8%. We
Page 4
recorded a mortgage servicing rights valuation reserve recovery of $158,000 in the fourth quarter of 2005, while no such recoveries were recorded in the fourth quarter of 2006. Other income increased by $92,000, or 22.5%, to $500,000 for the fourth quarter of 2006. The increase included a $71,000, or 22.8%, increase in title insurance agency commissions and fees.
Non-interest expense for the fourth quarter of 2006 was $15.4 million, compared to $11.5 million for the fourth quarter of 2005, an increase of $3.9 million. The increase principally relates to equity-based awards that were made pursuant to our Equity Incentive Plan and additional expenses arising from our first full year of making contributions to our ESOP. In addition, the operation of the two former University National Bank facilities contributed approximately $430,000 to this increase in noninterest expense, including $102,000 in core deposit intangible amortization expense arising from that acquisition. Total core deposit intangible amortization expense increased by $84,000 in the fourth quarter of 2006, compared to the fourth quarter of 2005. Office occupancy and equipment expenses increased $39,000, or 2.8%. Advertising and public relations expenses increased $27,000, or 12.5%. Data processing expenses increased $41,000, or 5.0%. Supplies, telephone and postage expense increased $92,000, or 19.7%. Other expenses increased by $321,000, or 38.6%. The increase in other expenses included a $194,000 increase in auditing expenses relating to compliance with the Sarbanes Oxley Act of 2002, and a $168,000 reduction in the amount of other expenses that were capitalized as direct loan origination costs.
2006 Operating Results
We recorded net income of $10.0 million for the year ended December 31, 2006, compared to net income of $11.1 million for the year ended December 31, 2005. The principal factors affecting the change in net income from year to year included a $5.2 million, or 10.1%, increase in our net interest income; a $1.8 million, or 21.3%, increase in noninterest income; and a $654,000 decrease in our provision for loan losses. These increases were more than offset by an $8.2 million, or 18.5%, increase in noninterest expense, and a $548,000, or 12.8%, increase in income tax expense. Our net income for 2006 and for the last six months of 2005 was favorably impacted by the completion of our mutual-to-stock conversion on June 23, 2005, and reflected increased interest income and reduced interest expense on borrowings resulting from our deployment of the net proceeds from the subscription offering undertaken in connection with the mutual-to-stock conversion, which totaled $220.7 million (excluding the $19.6 million in stock purchased by our ESOP), to increase average interest earning assets and reduce average borrowings and wholesale deposits.
Our operating results for 2006 included $5.4 million in expenses for equity-based compensation and benefits, compared to $717,000 for 2005, relating to equity-based awards that were made during the third and fourth quarters of 2006 pursuant to our Equity Incentive Plan and additional expenses arising from our first full year of making contributions to our ESOP. Our 2005 net income included approximately $450,000 in pre-tax net interest income on stock subscription order receipts relating to our mutual-to-stock conversion; a tax recovery of $473,000; and $281,000 in pre-tax expense relating to the accelerated amortization of a purchase accounting adjustment resulting from the pre-payment of a loan that we acquired in our acquisition of Success Bancshares. In addition, our 2005 net income was negatively affected by a $388,000 yield adjustment amortization expense, pre-tax, relating to our restructuring of $170.0 million of Federal Home Loan Bank borrowings in July 2003. No yield adjustment amortization expense was recorded during 2006.
Page 5
Dividends
On January 31, 2007, our Board of Directors declared a cash dividend of $0.07 per share payable on Friday, March 2, 2007 to stockholders of record on Wednesday, February 14, 2007. This represents our first increase in the quarterly dividend rate since we commenced the payment of cash dividends in May of 2006. Total dividends paid in 2006 were $4.4 million.
Stock Repurchases
For the three months ended December 31, 2006, we repurchased 226,600 shares of our common stock at an aggregate cost of $3.9 million. As of December 31, 2006, we have purchased a total of 977,300 shares at an aggregate cost of $17.3 million under our August 30, 2006 authorization to purchase up to 2,446,625 shares.
Subsequent Event
We acquired a portfolio of highly-seasoned residential mortgage loans in 2006 with an approximate balance of $16.2 million from a loan servicing company. We also acquired a portfolio of commercial loans in 2005 with an approximate balance of $4.6 million from the same loan servicing company. The loan servicing company filed a Chapter 11 bankruptcy petition in late December, 2006, thus creating substantial doubt as to the value of its recourse obligation if we experience any losses in the acquired residential loan portfolio. The bankruptcy court appointed a bankruptcy trustee in late January, 2007. The bankruptcy trustee has suspended servicing remittances to all loan servicing clients of the debtor pending further direction from the bankruptcy court, and as a result, we have not received the monthly scheduled servicing remittances that were due in January, 2007 and February, 2007, which approximate $350,000 each month. The bankruptcy trustee recently reported that the loan servicing trust account has a current balance in excess of $4.6 million, but that the trust account is substantially out of balance and is insufficient to pay all of the debtor’s obligations to its servicing clients. We have engaged counsel to seek termination of the existing loan servicing agreements and a turnover of future servicing remittances and the past servicing remittances that have not been paid, and to defend against competing claims that have been asserted to the serviced loans or the servicing remittances. We have not yet established any specific reserves for these purchased loans pending the receipt of additional information and future developments in the bankruptcy proceeding, including the outcome of hearings scheduled for March, 2007.
Conference Call
BankFinancial’s executive management will hold a conference call to discuss the contents of this news release, as well as business and financial highlights, on Thursday, March 1, 2007, at 9:30 a.m. CST. The telephone number for the conference call is 866-277-1184 and the participant passcode is 85409459. The conference call will also be available by webcast within the Stockholder Information section of our web site: www.bankfinancial.com.
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About BankFinancial
BankFinancial Corporation is the holding company for BankFinancial F.S.B., a full-service, community-oriented bank providing financial services to individuals, families and businesses through our 18 full-service banking offices, located in Cook, DuPage, Lake and Will counties, Illinois. At December 31, 2006, BankFinancial Corporation had total assets of $1.613 billion, total loans of $1.330 billion, total deposits of $1.130 billion and stockholders’ equity of $326 million. BankFinancial Corporation’s common stock is listed on the Nasdaq Global Market under the symbol BFIN. Additional information may be found at the company’s web site, www.bankfinancial.com.
Safe Harbor
Certain statements made in this release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this release, the words “may,” “will,” “should,” “would,” “anticipate,” “estimate,” “expect,” “plan,” “believe,” “intend,” and similar expressions identify forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following without limitation: general, regional, and local economic conditions and their effect on interest rates, the company and its customers; credit risks and risks from concentrations (geographic and by industry) within the loan portfolio; changes in regulations or accounting policies affecting financial institutions; the costs and effects of litigation and of unexpected or adverse outcomes of such litigation; technological changes; acquisitions and integration of acquired business; the failure of assumptions underlying the establishment of resources for loan losses and estimations of values of collateral and various financial assets and liabilities; the outcome of efforts to manage interest rate or liquidity risk; competition; and acts of war or terrorism. The Company undertakes no obligation to release revisions to these forward-looking statements or to reflect events or conditions occurring after the date of this release.
| For Further Information Contact: | ||
| Shareholders, Analysts and Investors: | Media: | |
| Terence C. Wise | Gregg T. Adams | |
| Vice President – Investor Relations | Executive Vice President – Marketing and Sales | |
| BankFinancial Corporation | BankFinancial Corporation | |
| Telephone: 630-242-7151 | Telephone: 630-242-7226 | |
Page 7
BANKFINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
(Dollars in thousands; except per share) - (Unaudited)
| December 31, 2006 |
December 31, 2005 |
|||||||
| ASSETS |
||||||||
| Cash and due from other financial institutions |
$ | 38,286 | $ | 34,437 | ||||
| Interest-bearing deposits in other financial institutions |
29,051 | 3,589 | ||||||
| Cash and cash equivalents |
67,337 | 38,026 | ||||||
| Securities available-for-sale, at fair value |
117,853 | 248,238 | ||||||
| Loans held-for-sale |
298 | 375 | ||||||
| Loans receivable, net of allowance for loan losses: |
||||||||
| December 31, 2006, $10,622; and December 31, 2005, $11,514 |
1,329,915 | 1,231,891 | ||||||
| Stock in Federal Home Loan Bank, at cost |
15,598 | 25,434 | ||||||
| Premises and equipment, net |
35,005 | 32,819 | ||||||
| Accrued interest receivable |
7,869 | 6,598 | ||||||
| Goodwill |
22,579 | 10,865 | ||||||
| Core deposit intangible |
9,648 | 8,248 | ||||||
| Other assets |
7,020 | 11,942 | ||||||
| Total assets |
$ | 1,613,122 | $ | 1,614,436 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Liabilities |
||||||||
| Deposits |
1,129,585 | 1,067,874 | ||||||
| Borrowings |
138,148 | 191,388 | ||||||
| Advance payments by borrowers taxes and insurance |
8,285 | 7,969 | ||||||
| Accrued interest payable and other liabilities |
11,089 | 18,428 | ||||||
| Total liabilities |
1,287,107 | 1,285,659 | ||||||
| Commitments and contingent liabilities |
||||||||
| Stockholders’ equity |
||||||||
| Preferred Stock, $0.01 par value, 25,000,000 shares authorized, none issued or outstanding |
— | — | ||||||
| Common Stock, $0.01 par value, shares authorized: 100,000,000; shares issued at December 31, 2006, 24,304,950 and at December 31, 2005, 24,466,250 |
243 | 245 | ||||||
| Additional paid-in capital |
227,741 | 240,235 | ||||||
| Retained earnings, substantially restricted |
113,128 | 107,528 | ||||||
| Unearned Employee Stock Ownership Plan shares |
(18,105 | ) | (19,084 | ) | ||||
| Accumulated other comprehensive income (loss) |
3,008 | (147 | ) | |||||
| Total stockholders’ equity |
326,015 | 328,777 | ||||||
| Total liabilities and stockholders’ equity |
$ | 1,613,122 | $ | 1,614,436 | ||||
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BANKFINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands; except per share) - (Unaudited)
| Three Months Ended December 31, |
Year Ended December 31, |
||||||||||||||
| 2006 | 2005 | 2006 | 2005 | ||||||||||||
| Interest and dividend income |
|||||||||||||||
| Loans, including fees |
$ | 21,823 | $ | 18,178 | $ | 83,502 | $ | 66,618 | |||||||
| Securities |
1,507 | 2,659 | 9,184 | 11,640 | |||||||||||
| Other |
537 | 354 | 1,400 | 1,954 | |||||||||||
| Total interest income |
23,867 | 21,191 | 94,086 | 80,212 | |||||||||||
| Interest expense |
|||||||||||||||
| Deposits |
8,244 | 5,852 | 29,957 | 20,598 | |||||||||||
| Borrowings |
1,610 | 1,702 | 7,532 | 8,204 | |||||||||||
| Total interest expense |
9,854 | 7,554 | 37,489 | 28,802 | |||||||||||
| Net interest income |
14,013 | 13,637 | 56,597 | 51,410 | |||||||||||
| Provision (credit) for loan losses |
(537 | ) | 524 | (136 | ) | 518 | |||||||||
| Net interest income after provision (credit) for loan losses |
14,550 | 13,113 | 56,733 | 50,892 | |||||||||||
| Noninterest income |
|||||||||||||||
| Deposit service charges and fees |
1,022 | 986 | 4,198 | 3,888 | |||||||||||
| Other fee income |
507 | 513 | 1,916 | 1,852 | |||||||||||
| Insurance commissions and annuities income |
378 | 242 | 1,321 | 848 | |||||||||||
| Gain on sale of loans |
61 | 27 | 246 | 206 | |||||||||||
| Gain (loss) on sale of securities |
(43 | ) | — | 101 | — | ||||||||||
| Gain on disposition of premises and equipment |
1 | 10 | 395 | 21 | |||||||||||
| Loan servicing fees |
227 | 249 | 938 | 1,031 | |||||||||||
| Amortization and impairment of servicing assets |
(121 | ) | 18 | (448 | ) | (508 | ) | ||||||||
| Operations of real estate owned |
1 | — | (45 | ) | 4 | ||||||||||
| Other |
500 | 408 | 1,887 | 1,323 | |||||||||||
| Total noninterest income |
2,533 | 2,453 | 10,509 | 8,665 | |||||||||||
| Noninterest expense |
|||||||||||||||
| Compensation and benefits |
10,674 | 7,398 | 34,454 | 28,227 | |||||||||||
| Office occupancy and equipment |
1,416 | 1,377 | 5,602 | 5,058 | |||||||||||
| Advertising and public relations |
243 | 216 | 1,193 | 841 | |||||||||||
| Data processing |
855 | 814 | 3,341 | 2,967 | |||||||||||
| Supplies, telephone, and postage |
560 | 468 | 2,100 | 1,901 | |||||||||||
| Amortization of intangibles |
489 | 405 | 1,873 | 1,634 | |||||||||||
| Other |
1,153 | 832 | 3,807 | 3,578 | |||||||||||
| Total noninterest expense |
15,390 | 11,510 | 52,370 | 44,206 | |||||||||||
| Income before income taxes |
1,693 | 4,056 | 14,872 | 15,351 | |||||||||||
| Income tax expense |
486 | 1,137 | 4,826 | 4,278 | |||||||||||
| Net income |
$ | 1,207 | $ | 2,919 | $ | 10,046 | $ | 11,073 | |||||||
| Basic earnings per common share |
$ | 0.06 | $ | 0.13 | $ | 0.45 | $ | 0.29 | |||||||
| Diluted earnings per common share |
$ | 0.06 | $ | 0.13 | $ | 0.45 | $ | 0.29 | |||||||
| Weighted average common shares outstanding |
21,827,482 | 22,546,098 | 22,368,032 | 22,539,693 | |||||||||||
| Diluted weighted average common shares outstanding |
21,840,476 | 22,546,098 | 22,372,228 | 22,539,693 | |||||||||||
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BANKFINANCIAL CORPORATION
AVERAGE BALANCE SHEET AND NET INTEREST MARGIN
Three Months Ended December 31, 2006 and 2005
(Dollars in thousands) – (Unaudited)
| Three months ended December 31, 2006 | Three months ended December 31, 2005 | |||||||||||||||||||
| Average Outstanding Balance |
Interest | Yield/Rate (1) | Average Outstanding Balance |
Interest | Yield/Rate (1) | |||||||||||||||
| Interest-earning assets: |
||||||||||||||||||||
| Loans |
$ | 1,328,482 | $ | 21,823 | 6.52 | % | $ | 1,197,545 | $ | 18,178 | 6.02 | % | ||||||||
| Securities available-for-sale |
110,033 | 1,507 | 5.43 | 266,167 | 2,659 | 3.96 | ||||||||||||||
| Stock in FHLB |
18,299 | 148 | 3.21 | 25,311 | 237 | 3.71 | ||||||||||||||
| Other earning assets |
29,219 | 389 | 5.28 | 12,182 | 117 | 3.81 | ||||||||||||||
| Total interest-earning assets |
1,486,033 | 23,867 | 6.37 | 1,501,205 | 21,191 | 5.60 | ||||||||||||||
| Noninterest-earning assets |
125,656 | 72,662 | ||||||||||||||||||
| Total assets |
$ | 1,611,689 | $ | 1,573,867 | ||||||||||||||||
| Interest-bearing liabilities: |
||||||||||||||||||||
| Savings deposits |
$ | 115,933 | 238 | 0.81 | $ | 120,373 | 239 | 0.79 | ||||||||||||
| Money market deposits |
258,870 | 2,781 | 4.26 | 246,569 | 2,123 | 3.42 | ||||||||||||||
| NOW deposits |
257,143 | 1,333 | 2.06 | 216,246 | 653 | 1.20 | ||||||||||||||
| Certificates of deposit |
348,825 | 3,892 | 4.43 | 348,707 | 2,837 | 3.23 | ||||||||||||||
| Total deposits |
980,771 | 8,244 | 3.33 | 931,895 | 5,852 | 2.49 | ||||||||||||||
| Borrowings |
149,001 | 1,610 | 4.29 | 182,613 | 1,702 | 3.70 | ||||||||||||||
| Total interest-bearing liabilities |
1,129,772 | 9,854 | 3.46 | 1,114,508 | 7,554 | 2.69 | ||||||||||||||
| Noninterest-bearing deposits |
129,540 | 110,729 | ||||||||||||||||||
| Other liabilities |
26,367 | 22,081 | ||||||||||||||||||
| Total liabilities |
1,285,679 | 1,247,318 | ||||||||||||||||||
| Equity |
326,010 | 326,549 | ||||||||||||||||||
| Total liabilities and equity |
$ | 1,611,689 | $ | 1,573,867 | ||||||||||||||||
| Net interest income |
$ | 14,013 | $ | 13,637 | ||||||||||||||||
| Net interest rate spread (2) |
2.91 | % | 2.91 | % | ||||||||||||||||
| Net interest-earning assets (3) |
$ | 356,261 | $ | 386,697 | ||||||||||||||||
| Net interest margin (4) |
3.74 | % | 3.60 | % | ||||||||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities |
131.53 | % | 134.70 | % | ||||||||||||||||
| (1) | Annualized. |
| (2) | Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. |
| (3) | Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities. |
| (4) | Net interest margin represents net interest income divided by average total interest-earning assets. |
Page 10
BANKFINANCIAL CORPORATION
AVERAGE BALANCE SHEET AND NET INTEREST MARGIN
Years Ended December 31, 2006 and 2005
(Dollars in thousands) – (Unaudited)
| Year ended December 31, 2006 | Year ended December 31, 2005 | |||||||||||||||||||
| Average Outstanding Balance |
Interest | Yield/Rate | Average Outstanding Balance |
Interest | Yield/Rate | |||||||||||||||
| Interest-earning assets: |
||||||||||||||||||||
| Loans |
$ | 1,299,597 | $ | 83,502 | 6.43 | % | $ | 1,131,374 | $ | 66,618 | 5.89 | % | ||||||||
| Securities available-for-sale |
203,900 | 9,184 | 4.50 | 315,379 | 11,640 | 3.69 | ||||||||||||||
| Stock in FHLB |
21,813 | 724 | 3.32 | 24,870 | 1,208 | 4.86 | ||||||||||||||
| Other earning assets |
12,713 | 676 | 5.32 | 24,219 | 746 | 3.08 | ||||||||||||||
| Total interest-earning assets |
1,538,023 | 94,086 | 6.12 | 1,495,842 | 80,212 | 5.36 | ||||||||||||||
| Noninterest-earning assets |
102,220 | 88,837 | ||||||||||||||||||
| Total assets |
$ | 1,640,243 | $ | 1,584,679 | ||||||||||||||||
| Interest-bearing liabilities: |
||||||||||||||||||||
| Savings deposits |
$ | 123,413 | 1,019 | 0.83 | $ | 128,867 | 1,005 | 0.78 | ||||||||||||
| Money market deposits |
252,109 | 10,096 | 4.00 | 223,334 | 6,350 | 2.84 | ||||||||||||||
| NOW deposits |
241,378 | 4,128 | 1.71 | 268,404 | 2,290 | 0.85 | ||||||||||||||
| Certificates of deposit |
359,119 | 14,714 | 4.10 | 391,883 | 10,953 | 2.79 | ||||||||||||||
| Total deposits |
976,019 | 29,957 | 3.07 | 1,012,488 | 20,598 | 2.03 | ||||||||||||||
| Borrowings |
183,286 | 7,532 | 4.11 | 229,355 | 8,204 | 3.58 | ||||||||||||||
| Total interest-bearing liabilities |
1,159,305 | 37,489 | 3.23 | 1,241,843 | 28,802 | 2.32 | ||||||||||||||
| Noninterest-bearing deposits |
123,614 | 108,947 | ||||||||||||||||||
| Other liabilities |
25,110 | 20,257 | ||||||||||||||||||
| Total liabilities |
1,308,029 | 1,371,047 | ||||||||||||||||||
| Equity |
332,214 | 213,632 | ||||||||||||||||||
| Total liabilities and equity |
$ | 1,640,243 | $ | 1,584,679 | ||||||||||||||||
| Net interest income |
$ | 56,597 | $ | 51,410 | ||||||||||||||||
| Net interest rate spread (1) |
2.89 | % | 3.04 | % | ||||||||||||||||
| Net interest-earning assets (2) |
$ | 378,718 | $ | 253,999 | ||||||||||||||||
| Net interest margin (3) |
3.68 | % | 3.44 | % | ||||||||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities |
132.67 | % | 120.45 | % | ||||||||||||||||
| (1) | Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. |
| (2) | Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities. |
| (3) | Net interest margin represents net interest income divided by average total interest-earning assets. |
Page 11
BANKFINANCIAL CORPORATION
SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA
Latest Five Quarters
(Dollars in thousands; except per share) – (Unaudited)
| PERFORMANCE MEASUREMENTS: |
2006 | 2005 | ||||||||||||||||||
| IVQ | IIIQ | IIQ | IQ | IVQ | ||||||||||||||||
| Return on assets (ratio of net income to average total assets) (1) |
0.30 | % | 0.68 | % | 0.69 | % | 0.78 | % | 0.74 | % | ||||||||||
| Return on equity (ratio of net income to average equity) (1) |
1.48 | 3.34 | 3.43 | 3.82 | 3.58 | |||||||||||||||
| Net interest rate spread (1) |
2.91 | 2.86 | 2.84 | 2.92 | 2.91 | |||||||||||||||
| Net interest margin (1) |
3.74 | 3.71 | 3.62 | 3.65 | 3.60 | |||||||||||||||
| Efficiency ratio |
93.01 | 75.37 | 73.68 | 70.29 | 71.54 | |||||||||||||||
| Noninterest expense to average total assets (1) |
3.82 | 3.14 | 2.95 | 2.87 | 2.93 | |||||||||||||||
| Average interest-earning assets to average interest-bearing liabilities |
131.53 | 133.87 | 132.60 | 132.66 | 134.70 | |||||||||||||||
| Offices |
18 | 18 | 18 | 16 | 16 | |||||||||||||||
| Employees (full time equivalents) |
438 | 452 | 468 | 443 | 451 | |||||||||||||||
|
SUMMARY INCOME STATEMENT: |
2006 | 2005 | ||||||||||||||||||
| IVQ | IIIQ | IIQ | IQ | IVQ | ||||||||||||||||
| Total interest income |
$ | 23,867 | $ | 24,244 | $ | 23,683 | $ | 22,292 | $ | 21,191 | ||||||||||
| Total interest expense |
9,854 | 9,792 | 9,363 | 8,480 | 7,554 | |||||||||||||||
| Net interest income before provision |
14,013 | 14,452 | 14,320 | 13,812 | 13,637 | |||||||||||||||
| Provision (credit) for loan losses |
(537 | ) | 49 | 156 | 196 | 524 | ||||||||||||||
| Net interest income |
14,550 | 14,403 | 14,164 | 13,616 | 13,113 | |||||||||||||||
| Noninterest income |
2,533 | 2,658 | 2,587 | 2,731 | 2,453 | |||||||||||||||
| Noninterest expense |
15,390 | 12,895 | 12,457 | 11,628 | 11,510 | |||||||||||||||
| Income before income tax |
1,693 | 4,166 | 4,294 | 4,719 | 4,056 | |||||||||||||||
| Income tax expense |
486 | 1,371 | 1,390 | 1,579 | 1,137 | |||||||||||||||
| Net income |
$ | 1,207 | $ | 2,795 | $ | 2,904 | $ | 3,140 | $ | 2,919 | ||||||||||
| Basic earnings per common share |
$ | 0.06 | $ | 0.12 | $ | 0.13 | $ | 0.14 | $ | 0.13 | ||||||||||
| Diluted earnings per common share |
$ | 0.06 | $ | 0.12 | $ | 0.13 | $ | 0.14 | $ | 0.13 | ||||||||||
|
NONINTEREST INCOME AND EXPENSE: |
2006 | 2005 | ||||||||||||||||||
| IVQ | IIIQ | IIQ | IQ | IVQ | ||||||||||||||||
| Noninterest Income: |
||||||||||||||||||||
| Deposit service charges and fees |
$ | 1,022 | $ | 1,142 | $ | 1,117 | $ | 917 | $ | 986 | ||||||||||
| Other fee income |
507 | 466 | 482 | 461 | 513 | |||||||||||||||
| Insurance commissions and annuities income |
378 | 363 | 352 | 228 | 242 | |||||||||||||||
| Gain on sales of loans |
61 | 95 | 53 | 37 | 27 | |||||||||||||||
| Gain (loss) on sales of investment securities |
(43 | ) | 89 | 55 | — | — | ||||||||||||||
| Gain on disposition of premises and equipment |
1 | — | 1 | 393 | 10 | |||||||||||||||
| Loan servicing fee income |
227 | 230 | 237 | 244 | 249 | |||||||||||||||
| Amortization and impairment of servicing assets |
(121 | ) | (120 | ) | (146 | ) | (61 | ) | 18 | |||||||||||
| REO operations |
1 | (15 | ) | (26 | ) | (5 | ) | — | ||||||||||||
| Other |
500 | 408 | 462 | 517 | 408 | |||||||||||||||
| Total noninterest income |
$ | 2,533 | $ | 2,658 | $ | 2,587 | $ | 2,731 | $ | 2,453 | ||||||||||
| Noninterest Expense: |
||||||||||||||||||||
| Compensation and benefits |
$ | 10,674 | $ | 8,241 | $ | 7,881 | $ | 7,673 | $ | 7,398 | ||||||||||
| Office occupancy |
1,416 | 1,530 | 1,340 | 1,316 | 1,377 | |||||||||||||||
| Advertising |
243 | 396 | 389 | 165 | 216 | |||||||||||||||
| Data processing |
855 | 873 | 825 | 788 | 814 | |||||||||||||||
| Supplies, telephone and postage |
560 | 583 | 450 | 507 | 468 | |||||||||||||||
| Amortization of intangibles |
489 | 496 | 495 | 393 | 405 | |||||||||||||||
| Other general & administrative |
1,153 | 776 | 1,077 | 786 | 832 | |||||||||||||||
| Total noninterest expenses |
$ | 15,390 | $ | 12,895 | $ | 12,457 | $ | 11,628 | $ | 11,510 | ||||||||||
| (1) | Annualized |
Page 12
BANKFINANCIAL CORPORATION
SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA
Latest Five Quarters
(Dollars in thousands; except per share) – (Unaudited)
| SUMMARY BALANCE SHEET: |
2006 | 2005 | ||||||||||||||||||
| IVQ | IIIQ | IIQ | IQ | IVQ | ||||||||||||||||
| ASSETS: |
||||||||||||||||||||
| Cash |
$ | 38,286 | $ | 34,515 | $ | 31,475 | $ | 31,059 | $ | 34,437 | ||||||||||
| Interest-bearing deposits and short-term investments |
29,051 | 2,964 | 1,566 | 11,129 | 3,589 | |||||||||||||||
| Securities available for sale, net |
117,853 | 157,396 | 251,927 | 245,641 | 248,238 | |||||||||||||||
| Loans held for sale |
298 | 605 | 1,882 | 86 | 375 | |||||||||||||||
| Loans receivable, net |
1,329,915 | 1,312,114 | 1,280,365 | 1,261,820 | 1,231,891 | |||||||||||||||
| Federal Home Loan Bank stock |
15,598 | 18,911 | 18,911 | 25,434 | 25,434 | |||||||||||||||
| Premises and equipment |
35,005 | 35,069 | 35,206 | 32,182 | 32,819 | |||||||||||||||
| Intangible assets |
32,227 | 32,727 | 33,387 | 18,720 | 19,113 | |||||||||||||||
| Other assets |
14,889 | 15,676 | 16,911 | 17,050 | 18,540 | |||||||||||||||
| Total assets |
$ | 1,613,122 | $ | 1,609,977 | $ | 1,671,630 | $ | 1,643,121 | $ | 1,614,436 | ||||||||||
| LIABILITIES AND EQUITY: |
||||||||||||||||||||
| Deposits |
$ | 1,129,585 | $ | 1,106,249 | $ | 1,137,664 | $ | 1,053,411 | $ | 1,067,874 | ||||||||||
| Borrowings |
138,148 | 165,082 | 175,349 | 236,251 | 191,388 | |||||||||||||||
| Other liabilities |
19,374 | 12,763 | 23,901 | 20,331 | 26,397 | |||||||||||||||
| Total liabilities |
1,287,107 | 1,284,094 | 1,336,914 | 1,309,993 | 1,285,659 | |||||||||||||||
| Stockholders’ equity |
326,015 | 325,883 | 334,716 | 333,128 | 328,777 | |||||||||||||||
| Total liabilities and stockholders’ equity |
$ | 1,613,122 | $ | 1,609,977 | $ | 1,671,630 | $ | 1,643,121 | $ | 1,614,436 | ||||||||||
|
CAPITAL RATIOS: |
2006 | 2005 | ||||||||||||||||||
| IVQ | IIIQ | IIQ | IQ | IVQ | ||||||||||||||||
| BankFinancial Corporation: |
||||||||||||||||||||
| Equity to total assets (end of period) |
20.21 | % | 20.24 | % | 20.02 | % | 20.27 | % | 20.36 | % | ||||||||||
| Tangible equity to tangible total assets (end of period) |
18.58 | 18.59 | 18.39 | 19.36 | 19.41 | |||||||||||||||
| BankFinancial FSB: |
||||||||||||||||||||
| Risk-based total capital ratio |
20.09 | 19.91 | 19.70 | 18.56 | 19.01 | |||||||||||||||
| Risk-based tier 1 capital ratio |
19.26 | 19.05 | 18.88 | 17.77 | 18.21 | |||||||||||||||
| Tier 1 leverage ratio |
15.05 | 14.95 | 14.33 | 13.83 | 13.82 | |||||||||||||||
| Stock repurchases - $ (000’s) |
$ | 3,960 | $ | 13,330 | — | — | — | |||||||||||||
| Stock repurchases - shares |
226,600 | 750,700 | — | — | — | |||||||||||||||
|
COMMON STOCK AND DIVIDENDS: |
2006 | 2005 | ||||||||||||||||||
| IVQ | IIIQ | IIQ | IQ | IVQ | ||||||||||||||||
| Stock Prices: |
||||||||||||||||||||
| Close |
$ | 17.81 | $ | 17.49 | $ | 17.30 | $ | 15.92 | $ | 14.68 | ||||||||||
| High |
18.50 | 18.11 | 17.30 | 16.41 | 14.91 | |||||||||||||||
| Low |
17.23 | 16.31 | 15.15 | 14.55 | 12.99 | |||||||||||||||
| Cash dividends paid |
$ | 0.06 | $ | 0.06 | $ | 0.06 | — | — | ||||||||||||
|
DEPOSITS: |
2006 | 2005 | ||||||||||||||||||
| IVQ | IIIQ | IIQ | IQ | IVQ | ||||||||||||||||
| Non-interest-bearing demand |
$ | 134,097 | $ | 130,491 | $ | 136,046 | $ | 105,251 | $ | 117,443 | ||||||||||
| Interest-bearing NOW |
274,391 | 251,938 | 244,173 | 224,732 | 227,893 | |||||||||||||||
| Money market |
260,796 | 250,767 | 249,133 | 244,916 | 248,871 | |||||||||||||||
| Savings |
114,851 | 118,898 | 129,482 | 121,016 | 123,260 | |||||||||||||||
| Certificates of deposit - Retail |
323,957 | 330,794 | 333,389 | 303,362 | 310,371 | |||||||||||||||
| Certificates of deposit - Wholesale |
21,493 | 23,361 | 45,441 | 54,134 | 40,036 | |||||||||||||||
| Total certificates of deposit |
345,450 | 354,155 | 378,830 | 357,496 | 350,407 | |||||||||||||||
| Total deposits |
$ | 1,129,585 | $ | 1,106,249 | $ | 1,137,664 | $ | 1,053,411 | $ | 1,067,874 | ||||||||||
Page 13
BANKFINANCIAL CORPORATION
SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA
Latest Five Quarters
(Dollars in thousands; except per share) – (Unaudited)
| 2006 | 2005 | |||||||||||||||||||
| IVQ | IIIQ | IIQ | IQ | IVQ | ||||||||||||||||
| LOANS: |
||||||||||||||||||||
| One- to four-family residential real estate |
$ | 397,545 | $ | 409,288 | $ | 402,097 | $ | 408,206 | $ | 404,196 | ||||||||||
| Multi-family mortgage loans |
297,131 | 292,100 | 291,005 | 289,364 | 280,238 | |||||||||||||||
| Nonresidential real estate |
320,729 | 307,619 | 303,901 | 282,496 | 275,418 | |||||||||||||||
| Construction and land loans |
85,222 | 83,526 | 78,900 | 85,761 | 80,705 | |||||||||||||||
| Commercial loans |
89,346 | 84,947 | 76,070 | 69,702 | 68,988 | |||||||||||||||
| Commercial leases |
139,164 | 135,019 | 127,971 | 128,062 | 121,898 | |||||||||||||||
| Consumer loans |
3,869 | 3,989 | 4,019 | 2,041 | 2,022 | |||||||||||||||
| Other loans (including municipal) |
4,959 | 4,959 | 4,959 | 5,159 | 5,219 | |||||||||||||||
| Total loans |
1,337,965 | 1,321,447 | 1,288,922 | 1,270,791 | 1,238,684 | |||||||||||||||
| Loans in process |
148 | 113 | 934 | 174 | 2,180 | |||||||||||||||
| Net deferred loan origination costs |
2,424 | 2,478 | 2,478 | 2,563 | 2,541 | |||||||||||||||
| Allowance for loan losses |
(10,622 | ) | (11,924 | ) | (11,969 | ) | (11,708 | ) | (11,514 | ) | ||||||||||
| Loans, net |
$ | 1,329,915 | $ | 1,312,114 | $ | 1,280,365 | $ | 1,261,820 | $ | 1,231,891 | ||||||||||
|
CREDIT QUALITY RATIOS: |
2006 | 2005 | ||||||||||||||||||
| IVQ | IIIQ | IIQ | IQ | IVQ | ||||||||||||||||
| Nonperforming Loans and Assets: |
||||||||||||||||||||
| Nonperforming loans |
$ | 9,226 | $ | 8,469 | $ | 6,440 | $ | 3,192 | $ | 5,723 | ||||||||||
| Real estate owned |
— | — | 30 | 56 | 153 | |||||||||||||||
| Nonperforming assets |
$ | 9,226 | $ | 8,469 | $ | 6,470 | $ | 3,248 | $ | 5,876 | ||||||||||
| Asset Quality Ratios: |
||||||||||||||||||||
| Nonperforming assets to total assets |
0.57 | % | 0.53 | % | 0.39 | % | 0.20 | % | 0.36 | % | ||||||||||
| Nonperforming loans to total loans |
0.69 | 0.64 | 0.50 | 0.25 | 0.46 | |||||||||||||||
| Allowance for loan losses to nonperforming loans |
115.13 | 140.80 | 185.85 | 366.79 | 201.19 | |||||||||||||||
| Allowance for loan losses to total loans |
0.79 | 0.90 | 0.93 | 0.92 | 0.93 | |||||||||||||||
| Net charge-off ratio (1) |
0.23 | 0.03 | 0.03 | 0.00 | (0.02 | ) | ||||||||||||||
|
ALLOWANCE FOR LOAN LOSSES: |
2006 | 2005 | ||||||||||||||||||
| IVQ | IIIQ | IIQ | IQ | IVQ | ||||||||||||||||
| Beginning balance |
$ | 11,924 | $ | 11,969 | $ | 11,708 | $ | 11,514 | $ | 10,931 | ||||||||||
| Allowance of acquired bank |
— | — | 212 | — | — | |||||||||||||||
| Provision (credit) for loan losses |
(537 | ) | 49 | 156 | 196 | 524 | ||||||||||||||
| Loans charged off |
(767 | ) | (96 | ) | (107 | ) | (2 | ) | (29 | ) | ||||||||||
| Recoveries |
2 | 2 | — | — | 88 | |||||||||||||||
| Ending balance |
$ | 10,622 | $ | 11,924 | $ | 11,969 | $ | 11,708 | $ | 11,514 | ||||||||||
| (1) | Annualized |
Page 14
BANKFINANCIAL CORPORATION
SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA
Latest Five Quarters
(Dollars in thousands; except per share) – (Unaudited)
| SELECTED AVERAGE BALANCES: |
2006 | 2005 | ||||||||||||||||||
| IVQ | IIIQ | IIQ | IQ | IVQ | ||||||||||||||||
| Average total assets |
$ | 1,611,689 | $ | 1,644,304 | $ | 1,688,410 | $ | 1,618,258 | $ | 1,573,867 | ||||||||||
| Average earning assets |
1,486,033 | 1,544,356 | 1,588,219 | 1,533,951 | 1,501,205 | |||||||||||||||
| Average total loans |
1,328,482 | 1,320,016 | 1,288,063 | 1,260,870 | 1,197,545 | |||||||||||||||
| Average investment securities |
110,033 | 193,081 | 268,584 | 245,510 | 266,167 | |||||||||||||||
| Average FHLB stock |
18,299 | 18,911 | 24,717 | 25,434 | 25,311 | |||||||||||||||
| Average other earning assets |
29,219 | 12,348 | 6,855 | 2,137 | 12,182 | |||||||||||||||
| Average interest-bearing deposits |
980,771 | 982,859 | 1,006,818 | 932,918 | 931,895 | |||||||||||||||
| Average total borrowings |
149,001 | 170,804 | 190,935 | 223,359 | 182,613 | |||||||||||||||
| Average interest-bearing liabilities |
1,129,772 | 1,153,663 | 1,197,753 | 1,156,277 | 1,114,508 | |||||||||||||||
| Average total stockholders’ equity |
326,010 | 335,015 | 339,050 | 328,652 | 326,549 | |||||||||||||||
|
SELECTED YIELDS AND COST OF |
2006 | 2005 | ||||||||||||||||||
| FUNDS (1): |
IVQ | IIIQ | IIQ | IQ | IVQ | |||||||||||||||
| Average earning assets |
6.37 | % | 6.23 | % | 5.98 | % | 5.89 | % | 5.60 | % | ||||||||||
| Average total loans |
6.52 | 6.50 | 6.38 | 6.30 | 6.02 | |||||||||||||||
| Average investment securities |
5.43 | 4.62 | 4.38 | 4.12 | 3.96 | |||||||||||||||
| Average FHLB stock |
3.21 | 3.99 | 3.15 | 3.06 | 3.71 | |||||||||||||||
| Average other earning assets |
5.28 | 5.75 | 5.03 | 4.18 | 3.81 | |||||||||||||||
| Average interest-bearing deposits |
3.33 | 3.22 | 2.97 | 2.73 | 2.49 | |||||||||||||||
| Average total borrowings |
4.29 | 4.19 | 4.01 | 4.01 | 3.70 | |||||||||||||||
| Average interest-bearing liabilities |
3.46 | 3.37 | 3.14 | 2.97 | 2.69 | |||||||||||||||
| Interest rate spread |
2.91 | 2.86 | 2.84 | 2.92 | 2.91 | |||||||||||||||
| Net interest margin |
3.74 | 3.71 | 3.62 | 3.65 | 3.60 | |||||||||||||||
|
EARNINGS PER SHARE |
2006 | 2005 | ||||||||||||||||||
| COMPUTATIONS: |
IVQ | IIIQ | IIQ | IQ | IVQ | |||||||||||||||
| Net income |
$ | 1,207 | $ | 2,795 | $ | 2,904 | $ | 3,140 | $ | 2,919 | ||||||||||
| Average common shares outstanding |
24,384,369 | 24,556,236 | 24,466,250 | 24,466,250 | 24,466,250 | |||||||||||||||
| Less: Unearned ESOP shares |
(1,826,679 | ) | (1,851,346 | ) | (1,871,668 | ) | (1,896,134 | ) | (1,920,152 | ) | ||||||||||
| Less: Unvested restricted stock |
(730,208 | ) | (210,082 | ) | — | — | — | |||||||||||||
| Weighted average common shares outstanding |
21,827,482 | 22,494,808 | 22,594,582 | 22,570,116 | 22,546,098 | |||||||||||||||
| Plus: Dilutive common shares equivalents |
12,994 | 12,294 | — | — | — | |||||||||||||||
| Weighted average dilutive shares outstanding |
21,840,476 | 22,507,102 | 22,594,582 | 22,570,116 | 22,546,098 | |||||||||||||||
| Number of antidilutive stock options excluded from the diluted earnings per share calculation |
1,301,000 | 1,140,000 | N.A. | N.A. | N.A. | |||||||||||||||
| Weighted average exercise price of anti-dilutive option shares |
$ | 17.63 | $ | 17.62 | N.A. | N.A. | N.A. | |||||||||||||
| Earnings per basic share |
$ | 0.06 | $ | 0.12 | $ | 0.13 | $ | 0.14 | $ | 0.13 | ||||||||||
| Earnings per diluted share |
$ | 0.06 | $ | 0.12 | $ | 0.13 | $ | 0.14 | $ | 0.13 | ||||||||||
| N.A. = Not Applicable |
||||||||||||||||||||
| (1) | Annualized |
Page 15
BANKFINANCIAL CORPORATION
NON-GAAP FINANCIAL MEASURES
The Company utilizes a number of different financial measures, both GAAP and non-GAAP, in making operating, budgeting and planning decisions for future periods. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States of America, or GAAP. The Company believes that the use of the non-GAAP financial measures described below provides the Board of Directors and management, and may provide some investors, with a more complete understanding the Company’s operating results and trends, and facilitate comparisons to historical and peer performance. The Company’s non-GAAP financial measures should be considered supplemental in nature and should not be considered in isolation, or as superior to or a substitute for, financial measures that are prepared in accordance with GAAP. In addition, the Company’s non-GAAP financial measures may differ from similar non-GAAP financial measures that are used by other companies, thus limiting their usefulness as a comparative tool.
Amortization of Intangibles Expense. The Company believes that the exclusion from its net income of expense for the amortization of the core deposit intangible assets resulting from its acquisition of Success Bancshares and University National Bank facilitates the comparison of the Company’s operating results to the Company’s historical performance and to the performance of other financial institutions with different acquisition histories. In addition, the level of amortization of core deposit intangible assets arising from an acquisition can vary significantly depending on the valuation methodology used and the interest rate environment that existed at the time of the acquisition.
Equity-based Compensation. The Company believes that the exclusion of equity-based compensation expense from its net income facilitates the comparison of the Company’s operating results to the Company’s historical performance, including the prior periods in which it operated as a mutual institution and had no stock outstanding. In addition, the Company believes that this non-GAAP measure facilitates the comparison of the Company’s performance to the performance of other financial institutions that have different or more seasoned equity-based compensation plans, including plans pursuant to which stock option awards vested prior to the effective date of SFAS No. 123R.
Core Return on Assets. The Company believes that adjusting the calculation of its return on assets to exclude the equity-based compensation expense and the amortization of intangibles expense described above furthers the purposes described above. Thus, the Company calculates core return on assets by dividing net income for a period, adjusted to exclude these expenses, by its average assets for the period.
Core Return on Equity. The Company believes that adjusting the calculation of its return on equity to exclude the equity-based compensation expense and the amortization of intangibles expenses described above furthers the purposes described above. Thus, the Company calculates core return on equity by dividing average stockholders’ equity for a period by net income, adjusted to exclude these expenses, for the period.
Core Efficiency Ratio. The Company believes that adjusting the calculation of its efficiency ratio to exclude the equity-based compensation expense and the amortization of intangibles expense described above furthers the purposes described above. Thus, the Company calculates core efficiency ratio by dividing noninterest expense, adjusted to exclude these expenses, by the sum of net interest income and noninterest income.
There are inherent limitations associated with the use of each of the above non-GAAP financial measures as an analytical tool. In particular, these non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and reflect the exclusion of items that are recurring and will be reflected in the Company’s financial results in the future. The Company has further highlighted these and the other limitations described above by providing a reconciliation of the GAAP amounts that have been excluded from these non-GAAP financial measures.
Page 16
BANKFINANCIAL CORPORATION
NON-GAAP FINANCIAL MEASURES
(Dollars in thousands; except per share) – (Unaudited)
| FOR THE QUARTERS AND YEARS ENDED DECEMBER 31, 2006 AND 2005 |
|
Three months ended December 31, |
|
|
Year ended December 31, |
| ||||||||||||||
| 2006 | 2005 | 2006 | 2005 | |||||||||||||||||
| Core Operating Income: |
||||||||||||||||||||
| Net Income |
$ | 1,207 | $ | 2,919 | $ | 10,046 | $ | 11,073 | ||||||||||||
| Adjustments: |
||||||||||||||||||||
| Equity-based compensation and benefits |
3,542 | 348 | 5,377 | 718 | ||||||||||||||||
| Amortization of core deposit intangible |
489 | 405 | 1,873 | 1,634 | ||||||||||||||||
| Tax effect on adjustments assuming 39.745% tax rate |
(1,602 | ) | (299 | ) | (2,882 | ) | (935 | ) | ||||||||||||
| Core Operating Income |
$ | 3,636 | $ | 3,373 | $ | 14,414 | $ | 12,490 | ||||||||||||
| Return on assets (ratio of net income to average total assets) (1) |
0.30 | % | 0.74 | % | 0.61 | % | 0.70 | % | ||||||||||||
| Core return on assets (ratio of core operating income to average total assets) (1) |
0.90 | % | 0.86 | % | 0.88 | % | 0.79 | % | ||||||||||||
| Return on equity (ratio of net income to average equity) (1) |
1.48 | % | 3.58 | % | 3.02 | % | 5.18 | % | ||||||||||||
| Core return on equity (ratio of core operating income to average equity) (1) |
4.46 | % | 4.13 | % | 4.34 | % | 5.85 | % | ||||||||||||
| Core Noninterest Expenses: |
||||||||||||||||||||
| Noninterest Expenses |
$ | 15,390 | $ | 11,510 | $ | 52,370 | $ | 44,206 | ||||||||||||
| Adjustments: |
||||||||||||||||||||
| Equity-based compensation and benefits |
(3,542 | ) | (348 | ) | (5,377 | ) | (718 | ) | ||||||||||||
| Amortization of core deposit intangible |
(489 | ) | (405 | ) | (1,873 | ) | (1,634 | ) | ||||||||||||
| Core Noninterest Expenses |
$ | 11,359 | $ | 10,757 | $ | 45,120 | $ | 41,854 | ||||||||||||
| Efficiency ratio (ratio of noninterest expense to net interest income plus noninterest income) |
93.01 | % | 71.54 | % | 78.04 | % | 73.58 | % | ||||||||||||
| Core efficiency ratio (ratio of core noninterest expense to net interest income plus noninterest income) |
68.65 | % | 66.86 | % | 67.24 | % | 69.67 | % | ||||||||||||
| FOR THE LATEST FIVE QUARTERS | 2006 | 2005 | ||||||||||||||||||
| IVQ | IIIQ | IIQ | IQ | IVQ | ||||||||||||||||
| Core Operating Income: |
||||||||||||||||||||
| Net Income |
$ | 1,207 | $ | 2,795 | $ | 2,904 | $ | 3,140 | $ | 2,919 | ||||||||||
| Adjustments: |
||||||||||||||||||||
| Equity-based compensation and benefits |
3,542 | 996 | 455 | 384 | 348 | |||||||||||||||
| Amortization of core deposit intangible |
489 | 496 | 495 | 393 | 405 | |||||||||||||||
| Tax effect on adjustments assuming 39.745% tax rate |
(1,602 | ) | (593 | ) | (378 | ) | (309 | ) | (299 | ) | ||||||||||
| Core Operating Income |
$ | 3,636 | $ | 3,694 | $ | 3,476 | $ | 3,608 | $ | 3,373 | ||||||||||
| Return on assets (ratio of net income to average total assets) (1) |
0.30 | % | 0.68 | % | 0.69 | % | 0.78 | % | 0.74 | % | ||||||||||
| Core return on assets (ratio of core operating income to average total assets) (1) |
0.90 | % | 0.90 | % | 0.82 | % | 0.89 | % | 0.86 | % | ||||||||||
| Return on equity (ratio of net income to average equity) (1) |
1.48 | % | 3.34 | % | 3.43 | % | 3.82 | % | 3.58 | % | ||||||||||
| Core return on equity (ratio of core operating income to average equity) (1) |
4.46 | % | 4.41 | % | 4.10 | % | 4.39 | % | 4.13 | % | ||||||||||
| Core Operating Expenses: |
||||||||||||||||||||
| Noninterest Expenses |
$ | 15,390 | $ | 12,895 | $ | 12,457 | $ | 11,628 | $ | 11,510 | ||||||||||
| Adjustments: |
||||||||||||||||||||
| Equity-based compensation and benefits |
(3,542 | ) | (996 | ) | (455 | ) | (384 | ) | (348 | ) | ||||||||||
| Amortization of core deposit intangible |
(489 | ) | (496 | ) | (495 | ) | (393 | ) | (405 | ) | ||||||||||
| Core Noninterest Expenses |
$ | 11,359 | $ | 11,403 | $ | 11,507 | $ | 10,851 | $ | 10,757 | ||||||||||
| Efficiency ratio (ratio of noninterest expense to net interest income plus noninterest income) |
93.01 | % | 75.37 | % | 73.68 | % | 70.29 | % | 71.54 | % | ||||||||||
| Core efficiency ratio (ratio of core noninterest expense to net interest income plus noninterest income) |
68.65 | % | 66.65 | % | 68.06 | % | 65.59 | % | 66.86 | % | ||||||||||
| (1) | Annualized |
Page 17
Exhibit 99.2
BANKFINANCIAL CORPORATION
FOURTH QUARTER 2006
QUARTERLY FINANCIAL AND STATISTICAL SUPPLEMENT
FOR THE LATEST FIVE QUARTERS
| Note: Certain reclassifications have been made in the prior period’s financial statements and reflected in the Selected
Quarterly
The information and statistical data contained herein have been prepared by BankFinancial Corporation and have been derived or |
BANKFINANCIAL CORPORATION
SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA
Latest Five Quarters
(Dollars in thousands; except per share) – (Unaudited)
| PERFORMANCE MEASUREMENTS: | 2006 | 2005 | ||||||||||||||||||
| IVQ | IIIQ | IIQ | IQ | IVQ | ||||||||||||||||
| Return on assets (ratio of net income to average total assets) (1) |
0.30 | % | 0.68 | % | 0.69 | % | 0.78 | % | 0.74 | % | ||||||||||
| Return on equity (ratio of net income to average equity) (1) |
1.48 | 3.34 | 3.43 | 3.82 | 3.58 | |||||||||||||||
| Net interest rate spread (1) |
2.91 | 2.86 | 2.84 | 2.92 | 2.91 | |||||||||||||||
| Net interest margin (1) |
3.74 | 3.71 | 3.62 | 3.65 | 3.60 | |||||||||||||||
| Efficiency ratio |
93.01 | 75.37 | 73.68 | 70.29 | 71.54 | |||||||||||||||
| Noninterest expense to average total assets (1) |
3.82 | 3.14 | 2.95 | 2.87 | 2.93 | |||||||||||||||
| Average interest-earning assets to average interest-bearing liabilities |
131.53 | 133.87 | 132.60 | 132.66 | 134.70 | |||||||||||||||
| Offices |
18 | 18 | 18 | 16 | 16 | |||||||||||||||
| Employees (full time equivalents) |
438 | 452 | 468 | 443 | 451 | |||||||||||||||
| SUMMARY INCOME STATEMENT: | 2006 | 2005 | ||||||||||||||||||
| IVQ | IIIQ | IIQ | IQ | IVQ | ||||||||||||||||
| Total interest income |
$ | 23,867 | $ | 24,244 | $ | 23,683 | $ | 22,292 | $ | 21,191 | ||||||||||
| Total interest expense |
9,854 | 9,792 | 9,363 | 8,480 | 7,554 | |||||||||||||||
| Net interest income before provision |
14,013 | 14,452 | 14,320 | 13,812 | 13,637 | |||||||||||||||
| Provision (credit) for loan losses |
(537 | ) | 49 | 156 | 196 | 524 | ||||||||||||||
| Net interest income |
14,550 | 14,403 | 14,164 | 13,616 | 13,113 | |||||||||||||||
| Noninterest income |
2,533 | 2,658 | 2,587 | 2,731 | 2,453 | |||||||||||||||
| Noninterest expense |
15,390 | 12,895 | 12,457 | 11,628 | 11,510 | |||||||||||||||
| Income before income tax |
1,693 | 4,166 | 4,294 | 4,719 | 4,056 | |||||||||||||||
| Income tax expense |
486 | 1,371 | 1,390 | 1,579 | 1,137 | |||||||||||||||
| Net income |
$ | 1,207 | $ | 2,795 | $ | 2,904 | $ | 3,140 | $ | 2,919 | ||||||||||
| Basic earnings per common share |
$ | 0.06 | $ | 0.12 | $ | 0.13 | $ | 0.14 | $ | 0.13 | ||||||||||
| Diluted earnings per common share |
$ | 0.06 | $ | 0.12 | $ | 0.13 | $ | 0.14 | $ | 0.13 | ||||||||||
| NONINTEREST INCOME AND EXPENSE: | 2006 | 2005 | ||||||||||||||||||
| IVQ | IIIQ | IIQ | IQ | IVQ | ||||||||||||||||
| Noninterest Income: |
||||||||||||||||||||
| Deposit service charges and fees |
$ | 1,022 | $ | 1,142 | $ | 1,117 | $ | 917 | $ | 986 | ||||||||||
| Other fee income |
507 | 466 | 482 | 461 | 513 | |||||||||||||||
| Insurance commissions and annuities income |
378 | 363 | 352 | 228 | 242 | |||||||||||||||
| Gain on sales of loans |
61 | 95 | 53 | 37 | 27 | |||||||||||||||
| Gain (loss) on sales of investment securities |
(43 | ) | 89 | 55 | — | — | ||||||||||||||
| Gain on disposition of premises and equipment |
1 | — | 1 | 393 | 10 | |||||||||||||||
| Loan servicing fee income |
227 | 230 | 237 | 244 | 249 | |||||||||||||||
| Amortization and impairment of servicing assets |
(121 | ) | (120 | ) | (146 | ) | (61 | ) | 18 | |||||||||||
| REO operations |
1 | (15 | ) | (26 | ) | (5 | ) | — | ||||||||||||
| Other |
500 | 408 | 462 | 517 | 408 | |||||||||||||||
| Total noninterest income |
$ | 2,533 | $ | 2,658 | $ | 2,587 | $ | 2,731 | $ | 2,453 | ||||||||||
| Noninterest Expense: |
||||||||||||||||||||
| Compensation and benefits |
$ | 10,674 | $ | 8,241 | $ | 7,881 | $ | 7,673 | $ | 7,398 | ||||||||||
| Office occupancy |
1,416 | 1,530 | 1,340 | 1,316 | 1,377 | |||||||||||||||
| Advertising |
243 | 396 | 389 | 165 | 216 | |||||||||||||||
| Data processing |
855 | 873 | 825 | 788 | 814 | |||||||||||||||
| Supplies, telephone and postage |
560 | 583 | 450 | 507 | 468 | |||||||||||||||
| Amortization of intangibles |
489 | 496 | 495 | 393 | 405 | |||||||||||||||
| Other general & administrative |
1,153 | 776 | 1,077 | 786 | 832 | |||||||||||||||
| Total noninterest expenses |
$ | 15,390 | $ | 12,895 | $ | 12,457 | $ | 11,628 | $ | 11,510 | ||||||||||
| (1) | Annualized |
Page 2
BANKFINANCIAL CORPORATION
SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA
Latest Five Quarters
(Dollars in thousands; except per share) – (Unaudited)
| SUMMARY BALANCE SHEET: |
2006 | 2005 | ||||||||||||||||||
| IVQ | IIIQ | IIQ | IQ | IVQ | ||||||||||||||||
| ASSETS: |
||||||||||||||||||||
| Cash |
$ | 38,286 | $ | 34,515 | $ | 31,475 | $ | 31,059 | $ | 34,437 | ||||||||||
| Interest-bearing deposits and short-term investments |
29,051 | 2,964 | 1,566 | 11,129 | 3,589 | |||||||||||||||
| Securities available for sale, net |
117,853 | 157,396 | 251,927 | 245,641 | 248,238 | |||||||||||||||
| Loans held for sale |
298 | 605 | 1,882 | 86 | 375 | |||||||||||||||
| Loans receivable, net |
1,329,915 | 1,312,114 | 1,280,365 | 1,261,820 | 1,231,891 | |||||||||||||||
| Federal Home Loan Bank stock |
15,598 | 18,911 | 18,911 | 25,434 | 25,434 | |||||||||||||||
| Premises and equipment |
35,005 | 35,069 | 35,206 | 32,182 | 32,819 | |||||||||||||||
| Intangible assets |
32,227 | 32,727 | 33,387 | 18,720 | 19,113 | |||||||||||||||
| Other assets |
14,889 | 15,676 | 16,911 | 17,050 | 18,540 | |||||||||||||||
| Total assets |
$ | 1,613,122 | $ | 1,609,977 | $ | 1,671,630 | $ | 1,643,121 | $ | 1,614,436 | ||||||||||
| LIABILITIES AND EQUITY: |
||||||||||||||||||||
| Deposits |
$ | 1,129,585 | $ | 1,106,249 | $ | 1,137,664 | $ | 1,053,411 | $ | 1,067,874 | ||||||||||
| Borrowings |
138,148 | 165,082 | 175,349 | 236,251 | 191,388 | |||||||||||||||
| Other liabilities |
19,374 | 12,763 | 23,901 | 20,331 | 26,397 | |||||||||||||||
| Total liabilities |
1,287,107 | 1,284,094 | 1,336,914 | 1,309,993 | 1,285,659 | |||||||||||||||
| Stockholders’ equity |
326,015 | 325,883 | 334,716 | 333,128 | 328,777 | |||||||||||||||
| Total liabilities and stockholders’ equity |
$ | 1,613,122 | $ | 1,609,977 | $ | 1,671,630 | $ | 1,643,121 | $ | 1,614,436 | ||||||||||
| CAPITAL RATIOS: |
2006 | 2005 | ||||||||||||||||||
| IVQ | IIIQ | IIQ | IQ | IVQ | ||||||||||||||||
| BankFinancial Corporation: |
||||||||||||||||||||
| Equity to total assets (end of period) |
20.21 | % | 20.24 | % | 20.02 | % | 20.27 | % | 20.36 | % | ||||||||||
| Tangible equity to tangible total assets (end of period) |
18.58 | 18.59 | 18.39 | 19.36 | 19.41 | |||||||||||||||
| BankFinancial FSB: |
||||||||||||||||||||
| Risk-based total capital ratio |
20.09 | 19.91 | 19.70 | 18.56 | 19.01 | |||||||||||||||
| Risk-based tier 1 capital ratio |
19.26 | 19.05 | 18.88 | 17.77 | 18.21 | |||||||||||||||
| Tier 1 leverage ratio |
15.05 | 14.95 | 14.33 | 13.83 | 13.82 | |||||||||||||||
| Stock repurchases - $ (000’s) |
$ | 3,960 | $ | 13,330 | — | — | — | |||||||||||||
| Stock repurchases - shares |
226,600 | 750,700 | — | — | — | |||||||||||||||
| COMMON STOCK AND DIVIDENDS: |
2006 | 2005 | ||||||||||||||||||
| IVQ | IIIQ | IIQ | IQ | IVQ | ||||||||||||||||
| Stock Prices: |
||||||||||||||||||||
| Close |
$ | 17.81 | $ | 17.49 | $ | 17.30 | $ | 15.92 | $ | 14.68 | ||||||||||
| High |
18.50 | 18.11 | 17.30 | 16.41 | 14.91 | |||||||||||||||
| Low |
17.23 | 16.31 | 15.15 | 14.55 | 12.99 | |||||||||||||||
| Cash dividends paid |
$ | 0.06 | $ | 0.06 | $ | 0.06 | — | — | ||||||||||||
| DEPOSITS: |
2006 | 2005 | ||||||||||||||||||
| IVQ | IIIQ | IIQ | IQ | IVQ | ||||||||||||||||
| Non-interest-bearing demand |
$ | 134,097 | $ | 130,491 | $ | 136,046 | $ | 105,251 | $ | 117,443 | ||||||||||
| Interest-bearing NOW |
274,391 | 251,938 | 244,173 | 224,732 | 227,893 | |||||||||||||||
| Money market |
260,796 | 250,767 | 249,133 | 244,916 | 248,871 | |||||||||||||||
| Savings |
114,851 | 118,898 | 129,482 | 121,016 | 123,260 | |||||||||||||||
| Certificates of deposit - Retail |
323,957 | 330,794 | 333,389 | 303,362 | 310,371 | |||||||||||||||
| Certificates of deposit - Wholesale |
21,493 | 23,361 | 45,441 | 54,134 | 40,036 | |||||||||||||||
| Total certificates of deposit |
345,450 | 354,155 | 378,830 | 357,496 | 350,407 | |||||||||||||||
| Total deposits |
$ | 1,129,585 | $ | 1,106,249 | $ | 1,137,664 | $ | 1,053,411 | $ | 1,067,874 | ||||||||||
Page 3
BANKFINANCIAL CORPORATION
SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA
Latest Five Quarters
(Dollars in thousands; except per share) – (Unaudited)
| 2006 | 2005 | |||||||||||||||||||
| IVQ | IIIQ | IIQ | IQ | IVQ | ||||||||||||||||
| LOANS: |
||||||||||||||||||||
| One- to four-family residential real estate |
$ | 397,545 | $ | 409,288 | $ | 402,097 | $ | 408,206 | $ | 404,196 | ||||||||||
| Multi-family mortgage loans |
297,131 | 292,100 | 291,005 | 289,364 | 280,238 | |||||||||||||||
| Nonresidential real estate |
320,729 | 307,619 | 303,901 | 282,496 | 275,418 | |||||||||||||||
| Construction and land loans |
85,222 | 83,526 | 78,900 | 85,761 | 80,705 | |||||||||||||||
| Commercial loans |
89,346 | 84,947 | 76,070 | 69,702 | 68,988 | |||||||||||||||
| Commercial leases |
139,164 | 135,019 | 127,971 | 128,062 | 121,898 | |||||||||||||||
| Consumer loans |
3,869 | 3,989 | 4,019 | 2,041 | 2,022 | |||||||||||||||
| Other loans (including municipal) |
4,959 | 4,959 | 4,959 | 5,159 | 5,219 | |||||||||||||||
| Total loans |
1,337,965 | 1,321,447 | 1,288,922 | 1,270,791 | 1,238,684 | |||||||||||||||
| Loans in process |
148 | 113 | 934 | 174 | 2,180 | |||||||||||||||
| Net deferred loan origination costs |
2,424 | 2,478 | 2,478 | 2,563 | 2,541 | |||||||||||||||
| Allowance for loan losses |
(10,622 | ) | (11,924 | ) | (11,969 | ) | (11,708 | ) | (11,514 | ) | ||||||||||
| Loans, net |
$ | 1,329,915 | $ | 1,312,114 | $ | 1,280,365 | $ | 1,261,820 | $ | 1,231,891 | ||||||||||
| CREDIT QUALITY RATIOS: | 2006 | 2005 | ||||||||||||||||||
| IVQ | IIIQ | IIQ | IQ | IVQ | ||||||||||||||||
| Nonperforming Loans and Assets: |
||||||||||||||||||||
| Nonperforming loans |
$ | 9,226 | $ | 8,469 | $ | 6,440 | $ | 3,192 | $ | 5,723 | ||||||||||
| Real estate owned |
— | — | 30 | 56 | 153 | |||||||||||||||
| Nonperforming assets |
$ | 9,226 | $ | 8,469 | $ | 6,470 | $ | 3,248 | $ | 5,876 | ||||||||||
| Asset Quality Ratios: |
||||||||||||||||||||
| Nonperforming assets to total assets |
0.57 | % | 0.53 | % | 0.39 | % | 0.20 | % | 0.36 | % | ||||||||||
| Nonperforming loans to total loans |
0.69 | 0.64 | 0.50 | 0.25 | 0.46 | |||||||||||||||
| Allowance for loan losses to nonperforming loans |
115.13 | 140.80 | 185.85 | 366.79 | 201.19 | |||||||||||||||
| Allowance for loan losses to total loans |
0.79 | 0.90 | 0.93 | 0.92 | 0.93 | |||||||||||||||
| Net charge-off ratio (1) |
0.23 | 0.03 | 0.03 | 0.00 | (0.02 | ) | ||||||||||||||
| ALLOWANCE FOR LOAN LOSSES: | 2006 | 2005 | ||||||||||||||||||
| IVQ | IIIQ | IIQ | IQ | IVQ | ||||||||||||||||
| Beginning balance |
$ | 11,924 | $ | 11,969 | $ | 11,708 | $ | 11,514 | $ | 10,931 | ||||||||||
| Allowance of acquired bank |
— | — | 212 | — | — | |||||||||||||||
| Provision (credit) for loan losses |
(537 | ) | 49 | 156 | 196 | 524 | ||||||||||||||
| Loans charged off |
(767 | ) | (96 | ) | (107 | ) | (2 | ) | (29 | ) | ||||||||||
| Recoveries |
2 | 2 | — | — | 88 | |||||||||||||||
| Ending balance |
$ | 10,622 | $ | 11,924 | $ | 11,969 | $ | 11,708 | $ | 11,514 | ||||||||||
| (1) | Annualized |
Page 4
BANKFINANCIAL CORPORATION
SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA
Latest Five Quarters
(Dollars in thousands; except per share) – (Unaudited)
| SELECTED AVERAGE BALANCES: |
2006 | 2005 | ||||||||||||||||||
| IVQ | IIIQ | IIQ | IQ | IVQ | ||||||||||||||||
| Average total assets |
$ | 1,611,689 | $ | 1,644,304 | $ | 1,688,410 | $ | 1,618,258 | $ | 1,573,867 | ||||||||||
| Average earning assets |
1,486,033 | 1,544,356 | 1,588,219 | 1,533,951 | 1,501,205 | |||||||||||||||
| Average total loans |
1,328,482 | 1,320,016 | 1,288,063 | 1,260,870 | 1,197,545 | |||||||||||||||
| Average investment securities |
110,033 | 193,081 | 268,584 | 245,510 | 266,167 | |||||||||||||||
| Average FHLB stock |
18,299 | 18,911 | 24,717 | 25,434 | 25,311 | |||||||||||||||
| Average other earning assets |
29,219 | 12,348 | 6,855 | 2,137 | 12,182 | |||||||||||||||
| Average interest-bearing deposits |
980,771 | 982,859 | 1,006,818 | 932,918 | 931,895 | |||||||||||||||
| Average total borrowings |
149,001 | 170,804 | 190,935 | 223,359 | 182,613 | |||||||||||||||
| Average interest-bearing liabilities |
1,129,772 | 1,153,663 | 1,197,753 | 1,156,277 | 1,114,508 | |||||||||||||||
| Average total stockholders’ equity |
326,010 | 335,015 | 339,050 | 328,652 | 326,549 | |||||||||||||||
| SELECTED YIELDS AND COST OF |
2006 | 2005 | ||||||||||||||||||
| FUNDS (1): |
IVQ | IIIQ | IIQ | IQ | IVQ | |||||||||||||||
| Average earning assets |
6.37 | % | 6.23 | % | 5.98 | % | 5.89 | % | 5.60 | % | ||||||||||
| Average total loans |
6.52 | 6.50 | 6.38 | 6.30 | 6.02 | |||||||||||||||
| Average investment securities |
5.43 | 4.62 | 4.38 | 4.12 | 3.96 | |||||||||||||||
| Average FHLB stock |
3.21 | 3.99 | 3.15 | 3.06 | 3.71 | |||||||||||||||
| Average other earning assets |
5.28 | 5.75 | 5.03 | 4.18 | 3.81 | |||||||||||||||
| Average interest-bearing deposits |
3.33 | 3.22 | 2.97 | 2.73 | 2.49 | |||||||||||||||
| Average total borrowings |
4.29 | 4.19 | 4.01 | 4.01 | 3.70 | |||||||||||||||
| Average interest-bearing liabilities |
3.46 | 3.37 | 3.14 | 2.97 | 2.69 | |||||||||||||||
| Interest rate spread |
2.91 | 2.86 | 2.84 | 2.92 | 2.91 | |||||||||||||||
| Net interest margin |
3.74 | 3.71 | 3.62 | 3.65 | 3.60 | |||||||||||||||
| EARNINGS PER SHARE |
2006 | 2005 | ||||||||||||||||||
| COMPUTATIONS: |
IVQ | IIIQ | IIQ | IQ | IVQ | |||||||||||||||
| Net income |
$ | 1,207 | $ | 2,795 | $ | 2,904 | $ | 3,140 | $ | 2,919 | ||||||||||
| Average common shares outstanding |
24,384,369 | 24,556,236 | 24,466,250 | 24,466,250 | 24,466,250 | |||||||||||||||
| Less: Unearned ESOP shares |
(1,826,679 | ) | (1,851,346 | ) | (1,871,668 | ) | (1,896,134 | ) | (1,920,152 | ) | ||||||||||
| Less: Unvested restricted stock |
(730,208 | ) | (210,082 | ) | — | — | — | |||||||||||||
| Weighted average common shares outstanding |
21,827,482 | 22,494,808 | 22,594,582 | 22,570,116 | 22,546,098 | |||||||||||||||
| Plus: Dilutive common shares equivalents |
12,994 | 12,294 | — | — | — | |||||||||||||||
| Weighted average dilutive shares outstanding |
21,840,476 | 22,507,102 | 22,594,582 | 22,570,116 | 22,546,098 | |||||||||||||||
| Number of antidilutive stock options excluded from the diluted earnings per share calculation |
1,301,000 | 1,140,000 | N.A. | N.A. | N.A. | |||||||||||||||
| Weighted average exercise price of anti-dilutive option shares |
$ | 17.63 | $ | 17.62 | N.A. | N.A. | N.A. | |||||||||||||
| Earnings per basic share |
$ | 0.06 | $ | 0.12 | $ | 0.13 | $ | 0.14 | $ | 0.13 | ||||||||||
| Earnings per diluted share |
$ | 0.06 | $ | 0.12 | $ | 0.13 | $ | 0.14 | $ | 0.13 | ||||||||||
| N.A. = Not Applicable |
||||||||||||||||||||
| (1) | Annualized |
Page 5
BANKFINANCIAL CORPORATION
NON-GAAP FINANCIAL MEASURES
The Company utilizes a number of different financial measures, both GAAP and non-GAAP, in making operating, budgeting and planning decisions for future periods. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States of America, or GAAP. The Company believes that the use of the non-GAAP financial measures described below provides the Board of Directors and management, and may provide some investors, with a more complete understanding the Company’s operating results and trends, and facilitate comparisons to historical and peer performance. The Company’s non-GAAP financial measures should be considered supplemental in nature and should not be considered in isolation, or as superior to or a substitute for, financial measures that are prepared in accordance with GAAP. In addition, the Company’s non-GAAP financial measures may differ from similar non-GAAP financial measures that are used by other companies, thus limiting their usefulness as a comparative tool.
Amortization of Intangibles Expense. The Company believes that the exclusion from its net income of expense for the amortization of the core deposit intangible assets resulting from its acquisition of Success Bancshares and University National Bank facilitates the comparison of the Company’s operating results to the Company’s historical performance and to the performance of other financial institutions with different acquisition histories. In addition, the level of amortization of core deposit intangible assets arising from an acquisition can vary significantly depending on the valuation methodology used and the interest rate environment that existed at the time of the acquisition.
Equity-based Compensation. The Company believes that the exclusion of equity-based compensation expense from its net income facilitates the comparison of the Company’s operating results to the Company’s historical performance, including the prior periods in which it operated as a mutual institution and had no stock outstanding. In addition, the Company believes that this non-GAAP measure facilitates the comparison of the Company’s performance to the performance of other financial institutions that have different or more seasoned equity-based compensation plans, including plans pursuant to which stock option awards vested prior to the effective date of SFAS No. 123R.
Core Return on Assets. The Company believes that adjusting the calculation of its return on assets to exclude the equity-based compensation expense and the amortization of intangibles expense described above furthers the purposes described above. Thus, the Company calculates core return on assets by dividing net income for a period, adjusted to exclude these expenses, by its average assets for the period.
Core Return on Equity. The Company believes that adjusting the calculation of its return on equity to exclude the equity-based compensation expense and the amortization of intangibles expenses described above furthers the purposes described above. Thus, the Company calculates core return on equity by dividing average stockholders’ equity for a period by net income, adjusted to exclude these expenses, for the period.
Core Efficiency Ratio. The Company believes that adjusting the calculation of its efficiency ratio to exclude the equity-based compensation expense and the amortization of intangibles expense described above furthers the purposes described above. Thus, the Company calculates core efficiency ratio by dividing noninterest expense, adjusted to exclude these expenses, by the sum of net interest income and noninterest income.
There are inherent limitations associated with the use of each of the above non-GAAP financial measures as an analytical tool. In particular, these non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and reflect the exclusion of items that are recurring and will be reflected in the Company’s financial results in the future. The Company has further highlighted these and the other limitations described above by providing a reconciliation of the GAAP amounts that have been excluded from these non-GAAP financial measures.
Page 6
BANKFINANCIAL CORPORATION
NON-GAAP FINANCIAL MEASURES
(Dollars in thousands; except per share) – (Unaudited)
| FOR THE QUARTERS AND YEARS ENDED DECEMBER 31, 2006 AND 2005 |
|
Three months ended December 31, |
|
|
Year ended December 31, |
| ||||||||||
| 2006 | 2005 | 2006 | 2005 | |||||||||||||
| Core Operating Income: |
||||||||||||||||
| Net Income |
$ | 1,207 | $ | 2,919 | $ | 10,046 | $ | 11,073 | ||||||||
| Adjustments: |
||||||||||||||||
| Equity-based compensation and benefits |
3,542 | 348 | 5,377 | 718 | ||||||||||||
| Amortization of core deposit intangible |
489 | 405 | 1,873 | 1,634 | ||||||||||||
| Tax effect on adjustments assuming 39.745% tax rate |
(1,602 | ) | (299 | ) | (2,882 | ) | (935 | ) | ||||||||
| Core Operating Income |
$ | 3,636 | $ | 3,373 | $ | 14,414 | $ | 12,490 | ||||||||
| Return on assets (ratio of net income to average total assets) (1) |
0.30 | % | 0.74 | % | 0.61 | % | 0.70 | % | ||||||||
| Core return on assets (ratio of core operating income to average total assets) (1) |
0.90 | % | 0.86 | % | 0.88 | % | 0.79 | % | ||||||||
| Return on equity (ratio of net income to average equity) (1) |
1.48 | % | 3.58 | % | 3.02 | % | 5.18 | % | ||||||||
| Core return on equity (ratio of core operating income to average equity) (1) |
4.46 | % | 4.13 | % | 4.34 | % | 5.85 | % | ||||||||
| Core Noninterest Expenses: |
||||||||||||||||
| Noninterest Expenses |
$ | 15,390 | $ | 11,510 | $ | 52,370 | $ | 44,206 | ||||||||
| Adjustments: |
||||||||||||||||
| Equity-based compensation and benefits |
(3,542 | ) | (348 | ) | (5,377 | ) | (718 | ) | ||||||||
| Amortization of core deposit intangible |
(489 | ) | (405 | ) | (1,873 | ) | (1,634 | ) | ||||||||
| Core Noninterest Expenses |
$ | 11,359 | $ | 10,757 | $ | 45,120 | $ | 41,854 | ||||||||
| Efficiency ratio (ratio of noninterest expense to net interest income plus noninterest income) |
93.01 | % | 71.54 | % | 78.04 | % | 73.58 | % | ||||||||
| Core efficiency ratio (ratio of core noninterest expense to net interest income plus noninterest income) |
68.65 | % | 66.86 | % | 67.24 | % | 69.67 | % | ||||||||
| FOR THE LATEST FIVE QUARTERS |
2006 | 2005 | ||||||||||||||||||
| IVQ | IIIQ | IIQ | IQ | IVQ | ||||||||||||||||
| Core Operating Income: |
||||||||||||||||||||
| Net Income |
$ | 1,207 | $ | 2,795 | $ | 2,904 | $ | 3,140 | $ | 2,919 | ||||||||||
| Adjustments: |
||||||||||||||||||||
| Equity-based compensation and benefits |
3,542 | 996 | 455 | 384 | 348 | |||||||||||||||
| Amortization of core deposit intangible |
489 | 496 | 495 | 393 | 405 | |||||||||||||||
| Tax effect on adjustments assuming 39.745% tax rate |
(1,602 | ) | (593 | ) | (378 | ) | (309 | ) | (299 | ) | ||||||||||
| Core Operating Income |
$ | 3,636 | $ | 3,694 | $ | 3,476 | $ | 3,608 | $ | 3,373 | ||||||||||
| Return on assets (ratio of net income to average total assets) (1) |
0.30 | % | 0.68 | % | 0.69 | % | 0.78 | % | 0.74 | % | ||||||||||
| Core return on assets (ratio of core operating income to average total assets) (1) |
0.90 | % | 0.90 | % | 0.82 | % | 0.89 | % | 0.86 | % | ||||||||||
| Return on equity (ratio of net income to average equity) (1) |
1.48 | % | 3.34 | % | 3.43 | % | 3.82 | % | 3.58 | % | ||||||||||
| Core return on equity (ratio of core operating income to average equity) (1) |
4.46 | % | 4.41 | % | 4.10 | % | 4.39 | % | 4.13 | % | ||||||||||
| Core Operating Expenses: |
||||||||||||||||||||
| Noninterest Expenses |
$ | 15,390 | $ | 12,895 | $ | 12,457 | $ | 11,628 | $ | 11,510 | ||||||||||
| Adjustments: |
||||||||||||||||||||
| Equity-based compensation and benefits |
(3,542 | ) | (996 | ) | (455 | ) | (384 | ) | (348 | ) | ||||||||||
| Amortization of core deposit intangible |
(489 | ) | (496 | ) | (495 | ) | (393 | ) | (405 | ) | ||||||||||
| Core Noninterest Expenses |
$ | 11,359 | $ | 11,403 | $ | 11,507 | $ | 10,851 | $ | 10,757 | ||||||||||
| Efficiency ratio (ratio of noninterest expense to net interest income plus noninterest income) |
93.01 | % | 75.37 | % | 73.68 | % | 70.29 | % | 71.54 | % | ||||||||||
| Core efficiency ratio (ratio of core noninterest expense to net interest income plus noninterest income) |
68.65 | % | 66.65 | % | 68.06 | % | 65.59 | % | 66.86 | % | ||||||||||
| (1) | Annualized |
Page 7
Exhibit 99.3
FOR IMMEDIATE RELEASE
BankFinancial Corporation to Present at the Sandler O’Neill & Partners, L.P. West Coast Financial Services Conference
Burr Ridge, Illinois – (February 28, 2007) BankFinancial Corporation (Nasdaq – BFIN) announced that it will participate in the Sandler O’Neill & Partners West Coast Financial Services Conference. BankFinancial’s Chairman and Chief Executive Officer, F. Morgan Gasior, is scheduled to participate on the Mid-West II Bank Panel at 2:20 p.m. Pacific Time (4:20 p.m. Central Time) on Tuesday, March 6, 2007.
This event can be accessed by logging on to www.sandleroneill.com. Once on this page, participants will be directed to the presentation. Interested parties may also dial 1-877-711-4415 to listen to the presentation. For those unable to listen to the live broadcast, a replay will be available at www.sandleroneill.com for 30 days after the event beginning on March 7, 2007. There is no charge to access the presentation.
BankFinancial Corporation is the holding company for BankFinancial, F.S.B., a full-service, community-oriented bank providing financial services to individuals, families and businesses through 18 full-service banking offices, located in Cook, DuPage, Lake and Will Counties, Illinois. At December 31, 2006, BankFinancial Corporation had total assets of $1.613 billion, total loans of $1.330 billion, total deposits of $1.130 billion and stockholders’ equity of $326 million. The company’s common stock trades on the Nasdaq Global Market under the symbol BFIN.
| For Further Information | ||||
| Contact: | Shareholder, Analyst and Investor Inquiries: | Media Inquiries: | ||
| Terence C. Wise Vice President – Investor Relations BankFinancial Corporation Telephone: 630-242-7151 |
Gregg T. Adams Executive Vice President – Marketing & Sales BankFinancial Corporation Telephone: 630-242-7234 | |||