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): November 3, 2008
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 8.01. | Other Events. |
On November 3, 2008, the Company issued a press release announcing the filing of its Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2008 and a Quarterly Financial and Statistical Supplement. The press release also reported earnings for the three and nine months ended September 30, 2008. 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 9.01. | Financial Statements and Exhibits. |
| (a) | Not Applicable. |
| (b) | Not Applicable. |
| (c) | Exhibits. |
| Exhibit No. |
Description | |
| 99.1 | Press Release dated November 3, 2008 | |
| 99.2 | Quarterly Financial and Statistical Supplement | |
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: November 3, 2008 | 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 Third Quarter
2008 Financial Results – Results Include Previously Announced
Freddie Mac Preferred Stock Impairment Charge that is Expected to
Produce $10.1 Million Tax Benefit in Fourth Quarter
Burr Ridge, Illinois—(November 3, 2008) BankFinancial Corporation (Nasdaq – BFIN) (“BankFinancial”) reported a net loss of $25.1 million for the third quarter of 2008. The $25.1 million net loss for the third quarter includes a $24.8 million, pre-tax impairment loss and the establishment of a temporary valuation allowance for deferred income taxes on the preferred stocks of Freddie Mac, a government sponsored entity, that BankFinancial holds in its investment portfolio. Our loss per share of common stock for the three months ended September 30, 2008 was $1.27 and $1.26 per basic and fully diluted share, respectively, compared to earnings of $0.11 per share for the three-month period ending September 30, 2007.
As previously announced, BankFinancial determined that the Freddie Mac preferred stocks were other-than-temporarily impaired in accordance with applicable Securities and Exchange Commission (“SEC”) guidance following a series of governmental actions on September 7, 2008 that resulted in the placing of Freddie Mac into conservatorship, the issuance of new shares of Freddie Mac preferred stock to the U.S. Department of Treasury that are senior to all previously issued shares of Freddie Mac preferred stock, and the suspension of dividends on all previously issued preferred shares of Freddie Mac preferred stock.
BankFinancial expects to recognize an approximate tax benefit of $10.1 million related to the September 30, 2008 Freddie Mac preferred stock impairment loss, but because the provisions of the Emergency Economic Stabilization Act of 2008 that allow the impairment loss to be deducted against ordinary income were not enacted until October 3, 2008, the tax benefit will be applied to BankFinancial’s results of operations for the fourth quarter of 2008.
At September 30, 2008, BankFinancial had total assets of $1.449 billion, total loans of $1.216 billion, total deposits of $1.046 billion and stockholders’ equity of $262 million. Its wholly-owned subsidiary, BankFinancial, F.S.B., is considered well capitalized under applicable banking laws and regulations, with a total capital to risk weighted assets ratio of 15.72%, a Tier 1 capital to risk weighted assets ratio of 14.87%, and a Tier 1 capital to adjusted total assets ratio of 13.17% at September 30, 2008. The minimum capital requirements that must be met to be considered well capitalized are a total capital to risk weighted assets ratio of at least 10%, a Tier 1 capital to risk weighted assets ratio of at least 6%, and a Tier 1 capital to adjusted total assets ratio of at least 5%.
During the nine months ended September 30, 2008, BankFinancial repurchased 432,000 shares of its common stock at an aggregate cost of approximately $6.5 million. The current share repurchase authorization is currently scheduled to expire on November 15, 2008.
BankFinancial filed its Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 and a Quarterly Financial and Statistical Supplement on Form 8-K with the SEC today. Both reports will be available on BankFinancial’s website, www.bankfinancial.com on the “Stockholder Information” page, and through the EDGAR database on the SEC’s website, www.sec.gov. The Quarterly Financial and Statistical Supplement includes comparative GAAP and non-GAAP performance data and financial measures for the most recent five quarters.
BankFinancial’s management will review third quarter 2008 results in a conference call and webcast for stockholders and analysts on Tuesday, November 4, 2008 at 9:30 a.m. Central Standard Time (CST). The conference call may be accessed by calling (800) 591-6923 and using participant passcode 93446060. The conference call will be simultaneously webcast at www.bankfinancial.com, on the Stockholder Information page. For those persons unable to participate in the conference call, the webcast will be archived through 5:00 p.m. CST on November 11, 2008 on BankFinancial’s website.
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. BankFinancial
Corporation became a publicly-traded company on June 24, 2005, and its common stock trades on the Nasdaq Global Select Market under the symbol BFIN. Additional information may be found at the company’s website.
This release includes “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. A variety of factors could cause BankFinancial’s actual results to differ from those expected at the time of this release. For a discussion of some of the factors that may cause actual results to differ from expectations, please refer to BankFinancial’s most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K as filed with the SEC. Investors are urged to review all information contained in these reports, including the risk factors discussed therein. Copies of these filings are available at no cost on the SEC’s website at http://www.sec.gov or on BankFinancial’s website at http://www.bankfinancial.com. Forward looking statements speak only as of the date they are made, and we do not undertake to update them to reflect changes.
| For Further Information Contact: | ||
| Shareholder, Analyst and Investor Inquiries: | Media Inquiries: | |
| Elizabeth A. Doolan, Senior Vice President – Controller BankFinancial Corporation Telephone: 630-242-7151 |
Gregg T. Adams, Executive Vice President – Marketing & Sales BankFinancial F.S.B. Telephone: 630-242-7234 | |
Exhibit 99.2
BANKFINANCIAL CORPORATION
THIRD QUARTER 2008
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 Financial and Statistical Data tables to conform with the current period’s presentation.
The information and statistical data contained herein have been prepared by BankFinancial Corporation and have been derived or calculated from selected quarterly and period-end historical financial statements prepared in accordance with accounting principles generally accepted in the United States. BankFinancial Corporation is under no obligation to update, keep current or continue to provide the information contained herein. This information is provided solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or establish any business relationships with BankFinancial Corporation or its subsidiary.
BANKFINANCIAL CORPORATION
SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA
Latest Five Quarters
(Dollars in thousands; except per share) – (Unaudited)
| PERFORMANCE MEASUREMENTS: |
| |||||||||||||||||||
| 2008 | 2007 | |||||||||||||||||||
| IIIQ | IIQ | IQ | IVQ | IIIQ | ||||||||||||||||
| Return on assets (ratio of net income (loss) to average total assets) (1) |
(6.93 | )% | (1.49 | )% | 0.87 | % | 0.25 | % | 0.59 | % | ||||||||||
| Return on equity (ratio of net income (loss) to average equity) (1) |
(35.24 | ) | (7.46 | ) | 4.37 | 1.23 | 2.90 | |||||||||||||
| Net interest rate spread (1) |
3.29 | 3.31 | 3.29 | 3.02 | 2.91 | |||||||||||||||
| Net interest margin (1) |
3.80 | 3.88 | 3.93 | 3.80 | 3.76 | |||||||||||||||
| Efficiency ratio |
253.46 | 160.33 | 73.57 | 92.05 | 77.38 | |||||||||||||||
| Noninterest expense to average total assets (1) |
10.32 | 6.39 | 3.60 | 3.86 | 3.26 | |||||||||||||||
| Average interest-earning assets to average interest-bearing liabilities |
128.92 | 129.40 | 128.96 | 130.01 | 130.11 | |||||||||||||||
| Offices |
18 | 18 | 18 | 18 | 18 | |||||||||||||||
| Employees (full time equivalents) |
395 | 397 | 404 | 425 | 416 | |||||||||||||||
| SUMMARY STATEMENT OF OPERATIONS: | ||||||||||||||||||||
| 2008 | 2007 | |||||||||||||||||||
| IIIQ | IIQ | IQ | IVQ | IIIQ | ||||||||||||||||
| Total interest income |
$ | 18,749 | $ | 19,387 | $ | 20,742 | $ | 21,925 | $ | 23,124 | ||||||||||
| Total interest expense |
5,983 | 6,405 | 7,469 | 8,880 | 9,899 | |||||||||||||||
| Net interest income before provision |
12,766 | 12,982 | 13,273 | 13,045 | 13,225 | |||||||||||||||
| Provision (credit) for loan losses |
1,406 | 250 | (51 | ) | 10 | 460 | ||||||||||||||
| Net interest income |
11,360 | 12,732 | 13,324 | 13,035 | 12,765 | |||||||||||||||
| Noninterest income |
1,968 | 1,521 | 4,706 | 2,502 | 2,777 | |||||||||||||||
| Noninterest expense |
37,345 | 23,253 | 13,228 | 14,311 | 12,383 | |||||||||||||||
| Income (loss) before income tax |
(24,017 | ) | (9,000 | ) | 4,802 | 1,226 | 3,159 | |||||||||||||
| Income tax expense (benefit) |
1,065 | (3,593 | ) | 1,610 | 297 | 922 | ||||||||||||||
| Net income (loss) |
$ | (25,082 | ) | $ | (5,407 | ) | $ | 3,192 | $ | 929 | $ | 2,237 | ||||||||
| Basic earnings (loss) per common share |
$ | (1.27 | ) | $ | (0.27 | ) | $ | 0.16 | $ | 0.05 | $ | 0.11 | ||||||||
| Diluted earnings (loss) per common share |
$ | (1.26 | ) | $ | (0.27 | ) | $ | 0.16 | $ | 0.05 | $ | 0.11 | ||||||||
| NONINTEREST INCOME AND EXPENSE: | ||||||||||||||||||||
| 2008 | 2007 | |||||||||||||||||||
| IIIQ | IIQ | IQ | IVQ | IIIQ | ||||||||||||||||
| Noninterest Income: |
||||||||||||||||||||
| Deposit service charges and fees |
$ | 989 | $ | 837 | $ | 825 | $ | 915 | $ | 938 | ||||||||||
| Other fee income |
533 | 587 | 475 | 484 | 495 | |||||||||||||||
| Insurance commissions and annuities income |
158 | 202 | 246 | 287 | 251 | |||||||||||||||
| Gain on sales of loans, net |
23 | 17 | 70 | 34 | 43 | |||||||||||||||
| Gain on sales of investment securities |
— | — | 1,385 | — | 399 | |||||||||||||||
| Gain on unredeemed VISA Stock |
— | — | 1,240 | — | — | |||||||||||||||
| Gain (loss) on disposition of premises and equipment |
— | (311 | ) | 9 | (4 | ) | — | |||||||||||||
| Loan servicing fee income |
190 | 184 | 213 | 204 | 182 | |||||||||||||||
| Amortization and impairment of servicing assets |
(119 | ) | (178 | ) | (311 | ) | (64 | ) | (131 | ) | ||||||||||
| REO operations |
(139 | ) | (163 | ) | (11 | ) | (13 | ) | (4 | ) | ||||||||||
| Earnings on bank-owned life insurance |
153 | 187 | 217 | 231 | 219 | |||||||||||||||
| Other |
180 | 159 | 348 | 428 | 385 | |||||||||||||||
| Total noninterest income |
$ | 1,968 | $ | 1,521 | $ | 4,706 | $ | 2,502 | $ | 2,777 | ||||||||||
| Noninterest Expense: |
||||||||||||||||||||
| Compensation and benefits |
$ | 7,544 | $ | 7,506 | $ | 8,220 | $ | 8,020 | $ | 7,773 | ||||||||||
| Office occupancy and equipment |
1,481 | 1,582 | 1,947 | 1,615 | 1,428 | |||||||||||||||
| Advertising |
373 | 309 | 164 | 320 | 409 | |||||||||||||||
| Data processing |
963 | 790 | 904 | 848 | 821 | |||||||||||||||
| Supplies, telephone and postage |
545 | 497 | 522 | 572 | 485 | |||||||||||||||
| Amortization of intangibles |
446 | 446 | 452 | 464 | 469 | |||||||||||||||
| Visa settlement |
— | — | — | 1,240 | — | |||||||||||||||
| Loss on impairment of securities available for sale |
24,844 | 11,075 | — | — | — | |||||||||||||||
| Other |
1,149 | 1,048 | 1,019 | 1,232 | 998 | |||||||||||||||
| Total noninterest expenses |
$ | 37,345 | $ | 23,253 | $ | 13,228 | $ | 14,311 | $ | 12,383 | ||||||||||
| (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: | ||||||||||||||||||||
| 2008 | 2007 | |||||||||||||||||||
| IIIQ | IIQ | IQ | IVQ | IIIQ | ||||||||||||||||
| ASSETS: |
||||||||||||||||||||
| Cash |
$ | 21,258 | $ | 27,915 | $ | 25,530 | $ | 28,279 | $ | 30,694 | ||||||||||
| Interest-bearing deposits and short-term investments |
15,030 | 6,297 | 3,611 | 669 | 14,003 | |||||||||||||||
| Securities available for sale, net |
75,865 | 78,030 | 73,545 | 77,049 | 67,686 | |||||||||||||||
| Loans held for sale |
1,264 | 702 | 1,786 | 173 | 2,031 | |||||||||||||||
| Loans receivable, net |
1,216,185 | 1,225,115 | 1,246,983 | 1,253,999 | 1,276,303 | |||||||||||||||
| Federal Home Loan Bank stock |
15,598 | 15,598 | 15,598 | 15,598 | 15,598 | |||||||||||||||
| Premises and equipment |
34,448 | 34,013 | 34,014 | 34,487 | 34,171 | |||||||||||||||
| Intangible assets |
28,991 | 29,437 | 29,883 | 30,335 | 30,799 | |||||||||||||||
| Investment in bank-owned life insurance |
20,142 | 19,989 | 19,802 | 19,585 | 19,354 | |||||||||||||||
| Other assets |
19,908 | 19,716 | 24,316 | 20,370 | 14,157 | |||||||||||||||
| Total assets |
$ | 1,448,689 | $ | 1,456,812 | $ | 1,475,068 | $ | 1,480,544 | $ | 1,504,796 | ||||||||||
| LIABILITIES AND EQUITY: |
||||||||||||||||||||
| Deposits |
$ | 1,046,104 | $ | 1,080,986 | $ | 1,057,613 | $ | 1,073,650 | $ | 1,098,541 | ||||||||||
| Borrowings |
101,935 | 70,633 | 112,020 | 96,433 | 81,138 | |||||||||||||||
| Other liabilities |
39,023 | 17,030 | 15,850 | 19,324 | 21,496 | |||||||||||||||
| Total liabilities |
1,187,062 | 1,168,649 | 1,185,483 | 1,189,407 | 1,201,175 | |||||||||||||||
| Stockholders’ equity |
261,627 | 288,163 | 289,585 | 291,137 | 303,621 | |||||||||||||||
| Total liabilities and stockholders’ equity |
$ | 1,448,689 | $ | 1,456,812 | $ | 1,475,068 | $ | 1,480,544 | $ | 1,504,796 | ||||||||||
| CAPITAL RATIOS: | ||||||||||||||||||||
| 2008 | 2007 | |||||||||||||||||||
| IIIQ | IIQ | IQ | IVQ | IIIQ | ||||||||||||||||
| BankFinancial Corporation: |
||||||||||||||||||||
| Equity to total assets (end of period) |
18.06 | % | 19.78 | % | 19.63 | % | 19.66 | % | 20.18 | % | ||||||||||
| Tangible equity to tangible total assets (end of period) |
16.47 | 17.99 | 18.11 | 17.95 | 18.51 | |||||||||||||||
| BankFinancial FSB: |
||||||||||||||||||||
| Risk-based total capital ratio |
15.72 | 16.59 | 16.55 | 16.54 | 19.07 | |||||||||||||||
| Risk-based tier 1 capital ratio |
14.87 | 15.79 | 15.77 | 15.74 | 18.22 | |||||||||||||||
| Tier 1 leverage ratio |
13.17 | 14.13 | 14.20 | 13.95 | 15.16 | |||||||||||||||
| Stock repurchases - $ (000’s) |
$ | 1,404 | $ | 1,162 | $ | 3,899 | $ | 5,273 | $ | 5,643 | ||||||||||
| Stock repurchases - shares |
101,200 | 76,000 | 254,800 | 335,900 | 377,406 | |||||||||||||||
| COMMON STOCK AND DIVIDENDS: | ||||||||||||||||||||
| 2008 | 2007 | |||||||||||||||||||
| IIIQ | IIQ | IQ | IVQ | IIIQ | ||||||||||||||||
| Stock Prices: |
||||||||||||||||||||
| Close |
$ | 14.68 | $ | 13.01 | $ | 15.91 | $ | 15.82 | $ | 15.82 | ||||||||||
| High |
15.98 | 16.16 | 16.44 | 16.67 | 16.39 | |||||||||||||||
| Low |
12.70 | 13.00 | 13.66 | 14.54 | 13.01 | |||||||||||||||
| Cash dividends paid |
$ | 0.07 | $ | 0.07 | $ | 0.07 | $ | 0.07 | $ | 0.07 | ||||||||||
| DEPOSITS: | ||||||||||||||||||||
| 2008 | 2007 | |||||||||||||||||||
| IIIQ | IIQ | IQ | IVQ | IIIQ | ||||||||||||||||
| Non-interest-bearing demand |
$ | 108,110 | $ | 108,530 | $ | 112,557 | $ | 111,554 | $ | 111,772 | ||||||||||
| Savings |
96,489 | 101,532 | 99,718 | 97,280 | 101,176 | |||||||||||||||
| Money market |
196,050 | 183,180 | 224,078 | 250,682 | 266,737 | |||||||||||||||
| Interest-bearing NOW |
309,482 | 364,106 | 318,355 | 306,517 | 297,589 | |||||||||||||||
| Certificates of deposit - Retail |
330,390 | 316,761 | 301,990 | 305,610 | 314,450 | |||||||||||||||
| Certificates of deposit - Wholesale |
5,583 | 6,877 | 915 | 2,007 | 6,817 | |||||||||||||||
| Total certificates of deposit |
335,973 | 323,638 | 302,905 | 307,617 | 321,267 | |||||||||||||||
| Total deposits |
$ | 1,046,104 | $ | 1,080,986 | $ | 1,057,613 | $ | 1,073,650 | $ | 1,098,541 | ||||||||||
Page 3
BANKFINANCIAL CORPORATION
SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA
Latest Five Quarters
(Dollars in thousands; except per share) – (Unaudited)
| 2008 | 2007 | |||||||||||||||||||
| IIIQ | IIQ | IQ | IVQ | IIIQ | ||||||||||||||||
| LOANS: |
||||||||||||||||||||
| One- to four-family residential real estate |
$ | 323,897 | $ | 329,575 | $ | 340,439 | $ | 345,245 | $ | 373,830 | ||||||||||
| Multi-family mortgage loans |
303,516 | 306,209 | 301,957 | 291,395 | 288,883 | |||||||||||||||
| Nonresidential real estate |
331,629 | 323,555 | 327,542 | 325,885 | 326,368 | |||||||||||||||
| Construction and land loans |
45,728 | 52,785 | 60,020 | 64,483 | 61,482 | |||||||||||||||
| Commercial loans |
70,129 | 68,168 | 76,164 | 83,233 | 80,358 | |||||||||||||||
| Commercial leases |
144,856 | 146,714 | 142,069 | 144,841 | 145,761 | |||||||||||||||
| Consumer loans |
2,757 | 2,809 | 3,408 | 3,506 | 4,009 | |||||||||||||||
| Other loans (including municipal) |
4,120 | 4,334 | 4,334 | 4,544 | 4,544 | |||||||||||||||
| Total loans |
1,226,632 | 1,234,149 | 1,255,933 | 1,263,132 | 1,285,235 | |||||||||||||||
| Loans in process |
(139 | ) | (165 | ) | (161 | ) | (168 | ) | (63 | ) | ||||||||||
| Net deferred loan origination costs |
1,957 | 2,031 | 2,041 | 2,086 | 2,211 | |||||||||||||||
| Allowance for loan losses |
(12,265 | ) | (10,900 | ) | (10,830 | ) | (11,051 | ) | (11,080 | ) | ||||||||||
| Loans, net |
$ | 1,216,185 | $ | 1,225,115 | $ | 1,246,983 | $ | 1,253,999 | $ | 1,276,303 | ||||||||||
| CREDIT QUALITY RATIOS: | ||||||||||||||||||||
| 2008 | 2007 | |||||||||||||||||||
| IIIQ | IIQ | IQ | IVQ | IIIQ | ||||||||||||||||
| Nonperforming Loans and Assets: |
||||||||||||||||||||
| Nonperforming loans |
$ | 12,497 | $ | 11,248 | $ | 8,737 | $ | 12,058 | $ | 9,557 | ||||||||||
| Real estate owned |
931 | 937 | 899 | 820 | 252 | |||||||||||||||
| Nonperforming assets |
$ | 13,428 | $ | 12,185 | $ | 9,636 | $ | 12,878 | $ | 9,809 | ||||||||||
| Asset Quality Ratios: |
||||||||||||||||||||
| Nonperforming assets to total assets |
0.93 | % | 0.84 | % | 0.65 | % | 0.87 | % | 0.65 | % | ||||||||||
| Nonperforming loans to total loans |
1.02 | 0.91 | 0.70 | 0.95 | 0.74 | |||||||||||||||
| Allowance for loan losses to nonperforming loans |
98.14 | 96.91 | 123.96 | 91.65 | 115.94 | |||||||||||||||
| Allowance for loan losses to total loans |
1.00 | 0.89 | 0.86 | 0.87 | 0.86 | |||||||||||||||
| Net charge-off ratio (1) |
0.01 | 0.06 | 0.05 | 0.01 | 0.05 | |||||||||||||||
| ALLOWANCE FOR LOAN LOSSES: | ||||||||||||||||||||
| 2008 | 2007 | |||||||||||||||||||
| IIIQ | IIQ | IQ | IVQ | IIIQ | ||||||||||||||||
| Beginning balance |
$ | 10,900 | $ | 10,830 | $ | 11,051 | $ | 11,080 | $ | 10,779 | ||||||||||
| Provision (credit) for loan losses |
1,406 | 250 | (51 | ) | 10 | 460 | ||||||||||||||
| Loans charged off |
(42 | ) | (182 | ) | (173 | ) | (46 | ) | (159 | ) | ||||||||||
| Recoveries |
1 | 2 | 3 | 7 | — | |||||||||||||||
| Ending balance |
$ | 12,265 | $ | 10,900 | $ | 10,830 | $ | 11,051 | $ | 11,080 | ||||||||||
| (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: | ||||||||||||||||||||
| 2008 | 2007 | |||||||||||||||||||
| IIIQ | IIQ | IQ | IVQ | IIIQ | ||||||||||||||||
| Average total assets |
$ | 1,447,499 | $ | 1,454,496 | $ | 1,471,387 | $ | 1,484,541 | $ | 1,518,670 | ||||||||||
| Average earning assets |
1,337,304 | 1,346,496 | 1,358,390 | 1,362,890 | 1,397,286 | |||||||||||||||
| Average total loans |
1,224,472 | 1,233,586 | 1,257,089 | 1,277,238 | 1,291,593 | |||||||||||||||
| Average investment securities |
94,459 | 86,855 | 83,536 | 64,097 | 73,370 | |||||||||||||||
| Average FHLB stock |
15,598 | 15,598 | 15,598 | 15,598 | 15,598 | |||||||||||||||
| Average other earning assets |
2,775 | 10,457 | 2,167 | 5,957 | 16,725 | |||||||||||||||
| Average interest-bearing deposits |
945,892 | 958,071 | 943,549 | 966,082 | 986,113 | |||||||||||||||
| Average total borrowings |
91,452 | 82,502 | 109,791 | 82,220 | 87,782 | |||||||||||||||
| Average interest-bearing liabilities |
1,037,344 | 1,040,573 | 1,053,340 | 1,048,302 | 1,073,895 | |||||||||||||||
| Average total stockholders’ equity |
284,695 | 289,988 | 292,353 | 301,911 | 308,041 | |||||||||||||||
| SELECTED YIELDS AND COST OF FUNDS (1): | ||||||||||||||||||||
| 2008 | 2007 | |||||||||||||||||||
| IIIQ | IIQ | IQ | IVQ | IIIQ | ||||||||||||||||
| Average earning assets |
5.58 | % | 5.79 | % | 6.14 | % | 6.38 | % | 6.57 | % | ||||||||||
| Average total loans |
5.86 | 5.98 | 6.26 | 6.46 | 6.67 | |||||||||||||||
| Average investment securities |
2.97 | 4.64 | 5.52 | 6.47 | 5.90 | |||||||||||||||
| Average FHLB stock |
— | — | — | — | 2.77 | |||||||||||||||
| Average other earning assets |
2.01 | 2.01 | 3.34 | 4.66 | 5.08 | |||||||||||||||
| Average interest-bearing deposits |
2.15 | 2.36 | 2.69 | 3.22 | 3.55 | |||||||||||||||
| Average total borrowings |
3.79 | 3.86 | 4.25 | 5.04 | 4.81 | |||||||||||||||
| Average interest-bearing liabilities |
2.29 | 2.48 | 2.85 | 3.36 | 3.66 | |||||||||||||||
| Interest rate spread |
3.29 | 3.31 | 3.29 | 3.02 | 2.91 | |||||||||||||||
| Net interest margin |
3.80 | 3.88 | 3.93 | 3.80 | 3.76 | |||||||||||||||
| EARNINGS PER SHARE COMPUTATIONS: | ||||||||||||||||||||
| 2008 | 2007 | |||||||||||||||||||
| IIIQ | IIQ | IQ | IVQ | IIIQ | ||||||||||||||||
| Net income (loss) |
$ | (25,082 | ) | $ | (5,407 | ) | $ | 3,192 | $ | 929 | $ | 2,237 | ||||||||
| Average common shares outstanding |
21,829,118 | 21,952,967 | 22,101,410 | 22,429,477 | 22,692,613 | |||||||||||||||
| Less: Unearned ESOP shares |
(1,647,532 | ) | (1,679,927 | ) | (1,704,262 | ) | (1,728,813 | ) | (1,753,480 | ) | ||||||||||
| Less: Unvested restricted stock |
(434,550 | ) | (434,550 | ) | (434,801 | ) | (575,800 | ) | (619,385 | ) | ||||||||||
| Weighted average common shares outstanding |
19,747,036 | 19,838,490 | 19,962,347 | 20,124,864 | 20,319,748 | |||||||||||||||
| Plus: Dilutive common shares equivalents |
101,318 | 61,010 | 5,657 | — | 97,765 | |||||||||||||||
| Weighted average dilutive shares outstanding |
19,848,354 | 19,899,500 | 19,968,004 | 20,124,864 | 20,417,513 | |||||||||||||||
| Number of antidilutive stock options excluded from the diluted earnings per share calculation |
2,336,803 | 2,336,803 | 2,336,803 | 1,597,400 | 1,576,200 | |||||||||||||||
| Weighted average exercise price of anti-dilutive option shares |
$ | 16.51 | $ | 16.51 | $ | 16.51 | $ | 17.40 | $ | 17.34 | ||||||||||
| Earnings (loss) per basic share |
$ | (1.27 | ) | $ | (0.27 | ) | $ | 0.16 | $ | 0.05 | $ | 0.11 | ||||||||
| Earnings (loss) per diluted share |
$ | (1.26 | ) | $ | (0.27 | ) | $ | 0.16 | $ | 0.05 | $ | 0.11 | ||||||||
N.A. = Not Applicable
| (1) | Annualized |
Page 5
BANKFINANCIAL CORPORATION
NON-GAAP FINANCIAL MEASURES
BankFinancial Corporation, a Maryland corporation (“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 of 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.
Equity-based Compensation. The Company believes that the exclusion of equity-based compensation expense from its net income (loss) 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.
Amortization of Intangibles Expense. The Company believes that the exclusion from its net income (loss) 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.
Gain on sale of Visa stock and Gain on unredeemed Visa stock. The Company believes that the exclusion of these gains, related to the completion of Visa’s IPO in March of 2008, from its net income (loss) facilitates the comparison of the Company’s operating results to the Company’s historical performance.
Visa Settlement. The Company believes that the exclusion of this litigation expense due to our proportionate share of Visa litigation charges from its net income (loss) facilitates the comparison of the Company’s operating results to the Company’s historical performance.
Loss on Impairment of Securities. The Company believes that the exclusion from its net income (loss) of the impairment loss on our Freddie Mac preferred stocks, based on our determination that the unrealized loss that existed with respect to these securities constituted an other-than-temporary impairment, facilitates the comparison of the Company’s operating results to the Company’s historical performance. Any deferred tax valuation reserve related to the loss on impairment will also be excluded from net income (loss).
Core Return on Assets. The Company believes that adjusting the calculation of its return on assets to exclude the equity-based compensation expense, the amortization of intangibles expenses, the Visa gains and settlement expense, and the loss on impairment furthers the purposes described above. Thus, the Company calculates core return on assets by dividing net income (loss) for a period, adjusted to exclude these items, 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, the amortization of intangibles expenses, the Visa gains and settlement expense, and the loss on impairment furthers the purposes described above. Thus, the Company calculates core return on equity by dividing average stockholders’ equity for a period by net income (loss), adjusted to exclude these items, for the period.
Page 6
Core Dilutive Earnings per Share. The Company believes that adjusting the calculation of its dilutive earnings per share to exclude the equity-based compensation expense, the amortization of intangibles expenses, the Visa gains and settlement expense, and the loss on impairment furthers the purposes described above. Thus, the Company calculates core dilutive earnings per share by net income (loss), adjusted to exclude these items, for the period by the weighted average dilutive common shares outstanding, for the period.
Core Noninterest Expense to Average Total Assets. The Company believes that adjusting the calculation of its noninterest expense to average total assets to exclude the equity-based compensation expense, the amortization of intangibles expenses, the Visa settlement expense, and the loss on impairment furthers the purposes described above. Thus, the Company calculates noninterest expense to average total assets by dividing noninterest expense, adjusted to exclude these expenses, by average total assets for the period.
Core Efficiency Ratio. The Company believes that adjusting the calculation of its efficiency ratio to exclude the equity-based compensation expense, the amortization of intangibles expenses, the Visa gains and settlement expense, and the loss on impairment 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, adjusted to exclude these gains.
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 7
BANKFINANCIAL CORPORATION
NON-GAAP FINANCIAL MEASURES
(Dollars in thousands; except per share) – (Unaudited)
FOR THE QUARTERS AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2008 AND 2007
| Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
| Core Operating Income: |
||||||||||||||||
| Net Income (Loss) |
$ | (25,082 | ) | $ | 2,237 | $ | (27,297 | ) | $ | 6,226 | ||||||
| Adjustments: |
||||||||||||||||
| Equity-based compensation and benefits |
1,350 | 1,311 | 3,777 | 3,866 | ||||||||||||
| Amortization of core deposit intangible |
446 | 469 | 1,344 | 1,415 | ||||||||||||
| Gain on sale of Visa stock |
— | — | (1,385 | ) | — | |||||||||||
| Gain on unredeemed Visa stock |
— | — | (1,240 | ) | — | |||||||||||
| Loss on impairment of securities |
24,844 | — | 35,919 | — | ||||||||||||
| Tax effect on adjustments assuming 39.745% tax rate |
(10,588 | ) | (707 | ) | (15,268 | ) | (2,099 | ) | ||||||||
| Deferred tax valuation reserve on loss on impairment of securities |
10,087 | — | 10,087 | — | ||||||||||||
| Core Operating Income |
$ | 1,057 | $ | 3,310 | $ | 5,937 | $ | 9,408 | ||||||||
| Return on assets (ratio of net income (loss) to average total assets) (1) |
(6.93 | )% | 0.59 | % | (2.50 | )% | 0.54 | % | ||||||||
| Core return on assets (ratio of core operating income to average total assets) (1) |
0.29 | % | 0.87 | % | 0.54 | % | 0.81 | % | ||||||||
| Return on equity (ratio of net income (loss) to average equity) (1) |
(35.24 | )% | 2.90 | % | (12.59 | )% | 2.64 | % | ||||||||
| Core return on equity (ratio of core operating income to average equity) (1) |
1.48 | % | 4.30 | % | 2.74 | % | 3.99 | % | ||||||||
| Diluted earnings (loss) per common share |
$ | (1.26 | ) | $ | 0.11 | $ | (1.37 | ) | $ | 0.30 | ||||||
| Core dilutive earnings per common share |
$ | 0.05 | $ | 0.16 | $ | 0.30 | $ | 0.45 | ||||||||
| Core Noninterest Expenses: |
||||||||||||||||
| Noninterest Expenses |
$ | 37,345 | $ | 12,383 | $ | 73,826 | $ | 38,171 | ||||||||
| Adjustments: |
||||||||||||||||
| Equity-based compensation and benefits |
(1,350 | ) | (1,311 | ) | (3,777 | ) | (3,866 | ) | ||||||||
| Amortization of core deposit intangible |
(446 | ) | (469 | ) | (1,344 | ) | (1,415 | ) | ||||||||
| Loss on impairment of securities |
(24,844 | ) | — | (35,919 | ) | — | ||||||||||
| Core Noninterest Expenses |
$ | 10,705 | $ | 10,603 | $ | 32,786 | $ | 32,890 | ||||||||
| Noninterest expense to average total assets (1) |
10.32 | % | 3.26 | % | 6.75 | % | 3.29 | % | ||||||||
| Core noninterest expense to average total assets (1) |
2.96 | % | 2.79 | % | 3.00 | % | 2.83 | % | ||||||||
| Efficiency ratio (ratio of noninterest expense to net interest income plus noninterest income) |
253.46 | % | 77.38 | % | 156.36 | % | 79.94 | % | ||||||||
| Core efficiency ratio (ratio of core noninterest expense to net interest income plus core noninterest income) |
72.66 | % | 66.26 | % | 73.53 | % | 68.88 | % | ||||||||
| (1) | Annualized for the three-month periods. |
Page 8
FOR THE LATEST FIVE QUARTERS
| 2008 | 2007 | |||||||||||||||||||
| IIIQ | IIQ | IQ | IVQ | IIIQ | ||||||||||||||||
| Core Operating Income: |
||||||||||||||||||||
| Net Income (Loss) |
$ | (25,082 | ) | $ | (5,407 | ) | $ | 3,192 | $ | 929 | $ | 2,237 | ||||||||
| Adjustments: |
||||||||||||||||||||
| Equity-based compensation and benefits |
1,350 | 1,179 | 1,249 | 1,219 | 1,311 | |||||||||||||||
| Amortization of core deposit intangible |
446 | 446 | 452 | 464 | 469 | |||||||||||||||
| Gain on sale of Visa stock |
— | — | (1,385 | ) | — | — | ||||||||||||||
| Gain on unredeemed Visa stock |
— | — | (1,240 | ) | 1,240 | — | ||||||||||||||
| Loss on impairment of securities |
24,844 | 11,075 | — | — | — | |||||||||||||||
| Tax effect on adjustments assuming 39.745% tax rate |
(10,588 | ) | (5,047 | ) | 367 | (1,162 | ) | (707 | ) | |||||||||||
| Deferred tax valuation reserve on loss on impairment of securities |
10,087 | — | — | — | — | |||||||||||||||
| Core Operating Income |
$ | 1,057 | $ | 2,246 | $ | 2,635 | $ | 2,690 | $ | 3,310 | ||||||||||
| Return on assets (ratio of net income (loss) to average total assets) (1) |
(6.93 | )% | (1.49 | )% | 0.87 | % | 0.25 | % | 0.59 | % | ||||||||||
| Core return on assets (ratio of core operating income to average total assets) (1) |
0.29 | % | 0.62 | % | 0.72 | % | 0.72 | % | 0.87 | % | ||||||||||
| Return on equity (ratio of net income (loss) to average equity) (1) |
(35.24 | )% | (7.46 | )% | 4.37 | % | 1.23 | % | 2.90 | % | ||||||||||
| Core return on equity (ratio of core operating income to average equity) (1) |
1.48 | % | 3.10 | % | 3.61 | % | 3.56 | % | 4.30 | % | ||||||||||
| Diluted earnings (loss) per common share |
$ | (1.26 | ) | $ | (0.27 | ) | $ | 0.16 | $ | 0.05 | $ | 0.11 | ||||||||
| Core dilutive earnings per common share |
$ | 0.05 | $ | 0.11 | $ | 0.13 | $ | 0.13 | $ | 0.16 | ||||||||||
| Core Operating Expenses: |
||||||||||||||||||||
| Noninterest Expenses |
$ | 37,345 | $ | 23,253 | $ | 13,228 | $ | 14,311 | $ | 12,383 | ||||||||||
| Adjustments: |
||||||||||||||||||||
| Equity-based compensation and benefits |
(1,350 | ) | (1,179 | ) | (1,249 | ) | (1,219 | ) | (1,311 | ) | ||||||||||
| Amortization of core deposit intangible |
(446 | ) | (446 | ) | (452 | ) | (464 | ) | (469 | ) | ||||||||||
| Visa settlement |
— | — | — | (1,240 | ) | — | ||||||||||||||
| Loss on impairment of securities |
(24,844 | ) | (11,075 | ) | — | — | — | |||||||||||||
| Core Noninterest Expenses |
$ | 10,705 | $ | 10,553 | $ | 11,527 | $ | 11,388 | $ | 10,603 | ||||||||||
| Noninterest expense to average total assets (1) |
10.32 | % | 6.39 | % | 3.60 | % | 3.86 | % | 3.26 | % | ||||||||||
| Core noninterest expense to average total assets (1) |
2.96 | % | 2.90 | % | 3.13 | % | 3.07 | % | 2.79 | % | ||||||||||
| Efficiency ratio (ratio of noninterest expense to net interest income plus noninterest income) |
253.46 | % | 160.33 | % | 73.57 | % | 92.05 | % | 77.38 | % | ||||||||||
| Core efficiency ratio (ratio of core noninterest expense to net interest income plus core noninterest income) |
72.66 | % | 72.77 | % | 75.08 | % | 73.25 | % | 66.26 | % | ||||||||||
| (1) | Annualized for the three-month periods. |
Page 9