Form 8-K

 

 

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): April 29, 2009

 

 

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 April 29, 2009, the Company issued a press release announcing the filing of its Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 and a Quarterly Financial and Statistical Supplement. The press release also reported earnings for the three months ended March 31, 2009. 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) Not Applicable.

 

  (d) Exhibits.

 

Exhibit No.

 

Description

99.1

  Press Release dated April 29, 2009

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: April 29, 2009     By:  

/s/ F. Morgan Gasior

      F. Morgan Gasior
      Chairman of the Board, Chief Executive Officer and President

 

3

Press Release

Exhibit 99.1

LOGO                    

FOR IMMEDIATE RELEASE

BankFinancial Corporation Reports First Quarter 2009 Earnings and

Filing of Quarterly Report on Form 10-Q

and Quarterly Financial and Statistical Supplement

with the Securities and Exchange Commission

Burr Ridge, Illinois - (April 29, 2009) BankFinancial Corporation (Nasdaq – BFIN) (“BankFinancial”) announced that it will file today its Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 and a Quarterly Financial and Statistical Supplement on Form 8-K with the U.S. Securities and Exchange Commission (the “SEC”). BankFinancial also reported net income of $172,000, or $0.01 per common share, for the three months ended March 31, 2009, compared to $3.2 million, or $0.16 per common share, for the three months ended March 31, 2008.

At March 31, 2009, BankFinancial had total assets of $1.558 billion, total loans of $1.284 billion, total deposits of $1.154 billion and stockholders’ equity of $266 million.

The Quarterly Report on Form 10-Q and the Quarterly Financial and Statistical Supplement will be available today 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.

BankFinancial’s management will review first quarter 2009 results in a conference call and webcast for stockholders and analysts on Friday, May 1, 2009 at 9:30 a.m. Central Daylight Time (CDT). The conference call may be accessed by calling (866) 578-5747 and using participant passcode 11870468. 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. CDT May 15, 2009 on our 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 web site at www.sec.gov or on BankFinancial’s web site at 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

Quarterly Financial and Statistical Supplement

Exhibit 99.2

BANKFINANCIAL CORPORATION

FIRST QUARTER 2009

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)

 

     2009     2008  
     IQ     IVQ     IIIQ     IIQ     IQ  
PERFORMANCE MEASUREMENTS:           

Return on assets (ratio of net income (loss) to average total assets) (1)

     0.04 %     2.14 %     (6.93 )%     (1.49 )%     0.87 %

Return on equity (ratio of net income (loss) to average equity) (1)

     0.26       11.81       (35.24 )     (7.46 )     4.37  

Net interest rate spread (1)

     3.36       3.49       3.29       3.31       3.29  

Net interest margin (1)

     3.74       3.90       3.80       3.88       3.93  

Efficiency ratio

     87.84       98.24       253.46       160.33       73.57  

Noninterest expense to average total assets (1)

     3.31       4.00       10.32       6.39       3.60  

Average interest-earning assets to average interest-bearing liabilities

     123.50       124.32       128.92       129.40       128.96  

Offices

     18       18       18       18       18  

Employees (full time equivalents)

     390       393       395       397       404  
     2009     2008  
     IQ     IVQ     IIIQ     IIQ     IQ  

SUMMARY STATEMENT OF OPERATIONS:

          

Total interest income

   $ 18,906     $ 19,082     $ 18,749     $ 19,387     $ 20,742  

Total interest expense

     5,736       5,810       5,983       6,405       7,469  
                                        

Net interest income before provision (credit)

     13,170       13,272       12,766       12,982       13,273  

Provision (credit) for loan losses

     1,344       3,487       1,406       250       (51 )
                                        

Net interest income

     11,826       9,785       11,360       12,732       13,324  

Noninterest income

     1,389       1,789       1,968       1,521       4,706  

Noninterest expense

     12,789       14,796       37,345       23,253       13,228  
                                        

Income (loss) before income tax

     426       (3,222 )     (24,017 )     (9,000 )     4,802  

Income tax expense (benefit)

     254       (11,130 )     1,065       (3,593 )     1,610  
                                        

Net income (loss)

   $ 172     $ 7,908     $ (25,082 )   $ (5,407 )   $ 3,192  
                                        

Basic earnings (loss) per common share

   $ 0.01     $ 0.40     $ (1.27 )   $ (0.27 )   $ 0.16  
                                        

Diluted earnings (loss) per common share

   $ 0.01     $ 0.40     $ (1.26 )   $ (0.27 )   $ 0.16  
                                        
     2009     2008  
     IQ     IVQ     IIIQ     IIQ     IQ  

NONINTEREST INCOME AND EXPENSE:

          

Noninterest Income:

          

Deposit service charges and fees

   $ 794     $ 920     $ 989     $ 837     $ 825  

Other fee income

     428       349       533       587       475  

Insurance commissions and annuities income

     177       188       158       202       246  

Gain on sales of loans, net

     256       8       23       17       70  

Gain on sales of securities

     —         —         —         —         1,385  

Gain on unredeemed VISA stock

     —         —         —         —         1,240  

Gain (loss) on disposition of premises and equipment

     (4 )     —         —         (311 )     9  

Loan servicing fees

     175       184       190       184       213  

Amortization and impairment of servicing assets

     (222 )     84       (119 )     (178 )     (311 )

Operations of real estate owned

     (253 )     (121 )     (139 )     (163 )     (11 )

Bank Owned Life Insurance income (loss)

     (59 )     29       153       187       217  

Other

     97       148       180       159       348  
                                        

Total noninterest income

   $ 1,389     $ 1,789     $ 1,968     $ 1,521     $ 4,706  
                                        

Noninterest Expense:

          

Compensation and benefits

   $ 7,865     $ 7,265     $ 7,544     $ 7,506     $ 8,220  

Office occupancy and equipment

     1,767       1,864       1,481       1,582       1,947  

Advertising and public relations

     366       515       373       309       164  

Information technology

     1,008       1,005       963       790       904  

Supplies, telephone and postage

     424       506       545       497       522  

Amortization of intangibles

     429       440       446       446       452  

Loss on impairment of securities available for sale

     —         —         24,844       11,075       —    

Loss on early extinguishment of borrowings

     —         1,975       —         —         —    

Other

     930       1,226       1,149       1,048       1,019  
                                        

Total noninterest expenses

   $ 12,789     $ 14,796     $ 37,345     $ 23,253     $ 13,228  
                                        

 

(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

 

     2009    2008
     IQ    IVQ    IIIQ    IIQ    IQ

ASSETS:

              

Cash and due from other financial institutions

   $ 20,155    $ 29,213    $ 21,258    $ 27,915    $ 25,530

Interest-bearing deposits in other financial institutions

     2,882      116      15,030      6,297      3,611

Securities available-for-sale, at fair value

     119,417      124,919      75,865      78,030      73,545

Loans held-for-sale

     1,729      872      1,264      702      1,786

Loans receivable, net

     1,283,996      1,267,968      1,216,185      1,225,115      1,246,983

Stock in Federal Home Loan Bank, at cost

     15,598      15,598      15,598      15,598      15,598

Premises and equipment, net

     34,773      34,565      34,448      34,013      34,014

Intangible assets

     28,122      28,551      28,991      29,437      29,883

Bank Owned Life Insurance

     20,112      20,171      20,142      19,989      19,802

Other assets

     31,125      32,728      19,908      19,716      24,316
                                  

Total assets

   $ 1,557,909    $ 1,554,701    $ 1,448,689    $ 1,456,812    $ 1,475,068
                                  

LIABILITIES AND EQUITY:

              

Deposits

   $ 1,153,738    $ 1,069,855    $ 1,046,104    $ 1,080,986    $ 1,057,613

Borrowings

     123,995      200,350      101,935      70,633      112,020

Other liabilities

     14,529      17,705      39,023      17,030      15,850
                                  

Total liabilities

     1,292,262      1,287,910      1,187,062      1,168,649      1,185,483

Stockholders’ equity

     265,647      266,791      261,627      288,163      289,585
                                  

Total liabilities and stockholders’ equity

   $ 1,557,909    $ 1,554,701    $ 1,448,689    $ 1,456,812    $ 1,475,068
                                  
     2009    2008
     IQ    IVQ    IIIQ    IIQ    IQ

DEPOSITS:

              

Noninterest-bearing demand

   $ 107,021    $ 109,056    $ 108,110    $ 108,530    $ 112,557

Savings

     97,531      94,802      96,489      101,532      99,718

Money market accounts

     246,443      205,768      196,050      183,180      224,078

Interest-bearing NOW accounts

     274,560      285,737      309,482      364,106      318,355

Certificates of deposit - Retail

     389,648      339,771      330,390      316,761      301,990

Certificates of deposit - Wholesale

     38,535      34,721      5,583      6,877      915
                                  

Total certificates of deposit

     428,183      374,492      335,973      323,638      302,905
                                  

Total deposits

   $ 1,153,738    $ 1,069,855    $ 1,046,104    $ 1,080,986    $ 1,057,613
                                  

 

Page 3


BANKFINANCIAL CORPORATION

SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA

Latest Five Quarters

(Dollars in thousands; except per share) – (Unaudited)

 

     2009     2008  
     IQ     IVQ     IIIQ     IIQ     IQ  

LOANS:

          

One- to four-family residential real estate loans

   $ 326,678     $ 323,713     $ 323,897     $ 329,575     $ 340,439  

Multi-family mortgage loans

     320,480       305,318       303,516       306,209       301,957  

Nonresidential real estate loans

     341,898       342,276       331,629       323,555       327,542  

Construction and land loans

     45,967       49,511       45,728       52,785       60,020  

Commercial loans

     80,249       81,679       74,249       72,502       80,498  

Commercial leases

     178,982       175,804       144,856       146,714       142,069  

Consumer loans

     2,605       2,655       2,757       2,809       3,408  
                                        

Total loans

     1,296,859       1,280,956       1,226,632       1,234,149       1,255,933  

Loans in process

     (217 )     (154 )     (139 )     (165 )     (161 )

Net deferred loan origination costs

     1,912       1,912       1,957       2,031       2,041  

Allowance for loan losses

     (14,558 )     (14,746 )     (12,265 )     (10,900 )     (10,830 )
                                        

Loans, net

   $ 1,283,996     $ 1,267,968     $ 1,216,185     $ 1,225,115     $ 1,246,983  
                                        
     2009     2008  
     IQ     IVQ     IIIQ     IIQ     IQ  

CREDIT QUALITY RATIOS:

          

Nonperforming Loans and Assets:

          

Nonperforming loans

   $ 22,736     $ 13,658     $ 12,497     $ 11,248     $ 8,737  

Real estate owned

     1,221       955       931       937       899  
                                        

Nonperforming assets

   $ 23,957     $ 14,613     $ 13,428     $ 12,185     $ 9,636  
                                        

Asset Quality Ratios:

          

Nonperforming assets to total assets

     1.54 %     0.94 %     0.93 %     0.84 %     0.65 %

Nonperforming loans to total loans

     1.75       1.07       1.02       0.91       0.70  

Allowance for loan losses to nonperforming loans

     64.03       107.97       98.14       96.91       123.96  

Allowance for loan losses to total loans

     1.12       1.15       1.00       0.89       0.86  

Net charge-off ratio (1)

     0.48       0.32       0.01       0.06       0.05  
     2009     2008  
     IQ     IVQ     IIIQ     IIQ     IQ  

ALLOWANCE FOR LOAN LOSSES:

          

Beginning balance

   $ 14,746     $ 12,265     $ 10,900     $ 10,830     $ 11,051  

Provision (credit) for loan losses

     1,344       3,487       1,406       250       (51 )

Loans charged off

     (1,536 )     (1,016 )     (42 )     (182 )     (173 )

Recoveries

     4       10       1       2       3  
                                        

Ending balance

   $ 14,558     $ 14,746     $ 12,265     $ 10,900     $ 10,830  
                                        

 

(1) Annualized

 

Page 4


BANKFINANCIAL CORPORATION

SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA

Latest Five Quarters

(Dollars in thousands; except per share) – (Unaudited)

 

     2009     2008  
     IQ     IVQ     IIIQ     IIQ     IQ  

SELECTED AVERAGE BALANCES:

          

Average total assets

   $ 1,544,395     $ 1,478,893     $ 1,447,499     $ 1,454,496     $ 1,471,387  

Average interest-earning assets

     1,426,864       1,354,221       1,337,304       1,346,496       1,358,390  

Average total loans

     1,285,125       1,251,180       1,224,472       1,233,586       1,257,089  

Average securities available-for-sale

     123,278       83,352       94,459       86,855       83,536  

Average Stock in FHLB

     15,598       15,598       15,598       15,598       15,598  

Average other interest-earning assets

     2,863       4,091       2,775       10,457       2,167  

Average interest-bearing deposits

     1,008,329       933,207       945,892       958,071       943,549  

Average borrowings

     147,068       156,107       91,452       82,502       109,791  

Average interest-bearing liabilities

     1,155,397       1,089,314       1,037,344       1,040,573       1,053,340  

Average total stockholders’ equity

     268,064       267,862       284,695       289,988       292,353  
     2009     2008  
     IQ     IVQ     IIIQ     IIQ     IQ  

SELECTED YIELDS AND COST OF FUNDS (1):

          

Average interest-earning assets

     5.37 %     5.61 %     5.58 %     5.79 %     6.14 %

Average total loans

     5.54       5.74       5.86       5.98       6.26  

Average securities available-for-sale

     4.42       4.96       2.97       4.64       5.52  

Average other interest-earning assets

     —         —         2.01       2.01       3.34  

Average interest-bearing deposits

     2.06       2.13       2.15       2.36       2.69  

Average borrowings

     1.67       2.06       3.79       3.86       4.25  

Average interest-bearing liabilities

     2.01       2.12       2.29       2.48       2.85  

Net interest rate spread

     3.36       3.49       3.29       3.31       3.29  

Net interest margin

     3.74       3.90       3.80       3.88       3.93  

 

(1) Annualized

 

Page 5


BANKFINANCIAL CORPORATION

SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA

Latest Five Quarters

(Dollars in thousands; except per share) – (Unaudited)

 

     2009     2008  
     IQ     IVQ     IIIQ     IIQ     IQ  

CAPITAL RATIOS:

          

BankFinancial Corporation:

          

Equity to total assets (end of period)

     17.05 %     17.16 %     18.06 %     19.78 %     19.63 %

Tangible equity to tangible total assets (end of period)

     15.39       15.48       16.47       17.99       18.11  

Risk-based total capital ratio

     18.96       18.57       20.06       21.12       21.19  

Risk-based tier 1 capital ratio

     18.00       17.67       19.21       20.33       20.41  

Tier 1 leverage ratio

     15.38       15.48       17.02       18.19       18.38  

BankFinancial FSB:

          

Risk-based total capital ratio

     15.23       14.69       15.72       16.59       16.55  

Risk-based tier 1 capital ratio

     14.27       13.79       14.87       15.79       15.77  

Tier 1 leverage ratio

     12.20       12.08       13.17       14.13       14.20  

Stock repurchases

   $ 1,800     $ 1,272     $ 1,404     $ 1,162     $ 3,899  

Stock repurchases - shares

     207,800       117,700       101,200       76,000       254,800  
     2009     2008  
     IQ     IVQ     IIIQ     IIQ     IQ  

COMMON STOCK AND DIVIDENDS:

          

Stock Prices:

          

Close

   $ 9.97     $ 10.19     $ 14.68     $ 13.01     $ 15.91  

High

     11.10       14.99       15.98       16.16       16.44  

Low

     7.19       9.07       12.70       13.00       13.66  

Book value per share

   $ 12.36     $ 12.30     $ 12.00     $ 13.15     $ 13.17  

Tangible book value per share

   $ 11.06     $ 10.98     $ 10.67     $ 11.81     $ 11.81  

Cash dividends declared and paid on common stock

   $ 0.07     $ 0.07     $ 0.07     $ 0.07     $ 0.07  
     2009     2008  
     IQ     IVQ     IIIQ     IIQ     IQ  

EARNINGS PER SHARE COMPUTATIONS:

          

Net income (loss)

   $ 172     $ 7,908     $ (25,082 )   $ (5,407 )   $ 3,192  
                                        

Average common shares outstanding

     21,617,158       21,736,312       21,829,118       21,952,967       22,101,410  

Less:     Unearned ESOP shares

     (1,598,497 )     (1,622,932 )     (1,647,532 )     (1,679,927 )     (1,704,262 )

    Unvested restricted stock shares

     (239,100 )     (387,837 )     (434,550 )     (434,550 )     (434,801 )
                                        

Weighted average common shares outstanding

     19,779,561       19,725,543       19,747,036       19,838,490       19,962,347  

Plus:     Dilutive common shares equivalents

     —         —         101,318       61,010       5,657  
                                        

Weighted average dilutive common shares

outstanding

     19,779,561       19,725,543       19,848,354       19,899,500       19,968,004  
                                        

Number of anti-dilutive stock options excluded from the diluted earnings per share calculation

     2,334,803       2,334,803       2,336,803       2,336,803       2,336,803  

Weighted average exercise price of anti-dilutive option shares

   $ 16.51     $ 16.51     $ 16.51     $ 16.51     $ 16.51  

Basic earnings (loss) per common share

   $ 0.01     $ 0.40     $ (1.27 )   $ (0.27 )   $ 0.16  
                                        

Diluted earnings (loss) per common share

   $ 0.01     $ 0.40     $ (1.26 )   $ (0.27 )   $ 0.16  
                                        

 

Page 6


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.

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 7


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 8


BANKFINANCIAL CORPORATION

NON-GAAP FINANCIAL MEASURES

(Dollars in thousands; except per share) – (Unaudited)

 

     Three months ended
March 31,
 
     2009     2008  

FOR THE QUARTERS ENDED

    

March 31, 2009 AND 2008

    

Core operating income:

    

Net income

   $ 172     $ 3,192  

Adjustments:

    

Equity-based compensation and benefits

     1,060       1,249  

Amortization of core deposit intangible

     429       452  

Gain on sale of VISA stock

     —         (1,385 )

Gain on unredeemed Visa stock

     —         (1,240 )

Tax effect on adjustments assuming 39.745% tax rate

     (592 )     367  
                

Core operating income

   $ 1,069     $ 2,635  
                

Return on assets (ratio of net income to average total assets) (1)

     0.04 %     0.87 %

Core return on assets (ratio of core operating income to average total assets) (1)

     0.28 %     0.72 %

Return on equity (ratio of net income to average equity) (1)

     0.26 %     4.37 %

Core return on equity (ratio of core operating income to average equity) (1)

     1.60 %     3.61 %

Diluted earnings per common share

   $ 0.01     $ 0.16  

Core dilutive earnings per common share

   $ 0.05     $ 0.13  

Core noninterest expense:

    

Noninterest expenses

   $ 12,789     $ 13,228  

Adjustments:

    

Equity-based compensation and benefits

     (1,060 )     (1,249 )

Amortization of core deposit intangible

     (429 )     (452 )
                

Core noninterest expense

   $ 11,300     $ 11,527  
                

Noninterest expense to average total assets (1)

     3.31 %     3.60 %

Core noninterest expense to average total assets (1)

     2.93 %     3.13 %

Efficiency ratio (ratio of noninterest expense to net interest income plus noninterest income)

     87.84 %     73.57 %

Core efficiency ratio (ratio of core noninterest expense to net interest income plus core noninterest income)

     77.61 %     75.08 %

 

(1) Annualized for the three-month periods.

 

Page 9


BANKFINANCIAL CORPORATION

NON-GAAP FINANCIAL MEASURES

(Dollars in thousands; except per share) – (Unaudited)

 

    2009     2008  
    IQ     IVQ     IIIQ     IIQ     IQ  

FOR THE LATEST FIVE QUARTERS

         

Core operating income:

         

Net income (loss)

  $ 172     $ 7,908     $ (25,082 )   $ (5,407 )   $ 3,192  

Adjustments:

         

Equity-based compensation and benefits

    1,060       833       1,350       1,179       1,249  

Amortization of core deposit intangible

    429       440       446       446       452  

Gain on sale of VISA stock

    —         —         —         —         (1,385 )

Gain on unredeemed Visa stock

    —         —         —         —         (1,240 )

Loss on impairment of securities

    —         —         24,844       11,075       —    

Tax effect on adjustments assuming 39.745% tax rate

    (592 )     (506 )     (10,588 )     (5,047 )     367  

Deferred tax valuation reserve on loss on impairment of securities

    —         (10,087 )     10,087       —         —    
                                       

Core Operating Income (Loss)

  $ 1,069     $ (1,412 )   $ 1,057     $ 2,246     $ 2,635  
                                       

Return on assets (ratio of net income (loss) to average total assets) (1)

    0.04 %     2.14 %     (6.93 )%     (1.49 )%     0.87 %

Core return on assets (ratio of core operating income to average total assets) (1)

    0.28 %     (0.38 )%     0.29 %     0.62 %     0.72 %

Return on equity (ratio of net income (loss) to average equity)(1)

    0.26 %     11.81 %     (35.24 )%     (7.46 )%     4.37 %

Core return on equity (ratio of core operating income to average equity) (1)

    1.60 %     (2.11 )%     1.48 %     3.10 %     3.61 %

Diluted earnings (loss) per common share

  $ 0.01     $ 0.40     $ (1.26 )   $ (0.27 )   $ 0.16  

Core diluted earnings (loss) per common share

  $ 0.05     $ (0.07 )   $ 0.05     $ 0.11     $ 0.13  

Core operating expense:

         

Noninterest expense

  $ 12,789     $ 14,796     $ 37,345     $ 23,253     $ 13,228  

Adjustments:

         

Equity-based compensation and benefits

    (1,060 )     (833 )     (1,350 )     (1,179 )     (1,249 )

Amortization of core deposit intangible

    (429 )     (440 )     (446 )     (446 )     (452 )

Loss on impairment of securities

    —         —         (24,844 )     (11,075 )     —    
                                       

Core noninterest expense

  $ 11,300     $ 13,523     $ 10,705     $ 10,553     $ 11,527  
                                       

Noninterest expense to average total assets (1)

    3.31 %     4.00 %     10.32 %     6.39 %     3.60 %

Core noninterest expense to average total assets (1)

    2.93 %     3.66 %     2.96 %     2.90 %     3.13 %

Efficiency ratio (ratio of noninterest expense to net interest income plus noninterest income)

    87.84 %     98.24 %     253.46 %     160.33 %     73.57 %

Core efficiency ratio (ratio of core noninterest expense to net interest income plus core noninterest income)

    77.61 %     89.79 %     72.66 %     72.77 %     75.08 %

 

(1) Annualized for the three-month periods.

 

Page 10