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): August 5, 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 August 5, 2009, the Company issued a press release announcing the filing of its Quarterly Report on Form 10-Q for the three and six months ended June 30, 2009 and a Quarterly Financial and Statistical Supplement. The press release also reported earnings for the three and six months ended June 30, 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 August 5, 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

(Registrant)

Date: August 5, 2009     By:   /s/ F. Morgan Gasior
       

F. Morgan Gasior

Chairman of the Board, Chief Executive

Officer and President

Press Release

Exhibit 99.1

LOGO

FOR IMMEDIATE RELEASE

BankFinancial Corporation Reports Second 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—(August 5, 2009) BankFinancial Corporation (Nasdaq – BFIN) (“BankFinancial”) announced that it filed its Quarterly Report on Form 10-Q for the three and six months ended June 30, 2009 and a Quarterly Financial and Statistical Supplement on Form 8-K with the U.S. Securities and Exchange Commission (the “SEC”) today.

BankFinancial reported a net loss of $665,000, or $0.03 per common share, for the three months ended June 30, 2009, compared to a net loss of $5.4 million, or $0.27 per common share, for the three months ended June 30, 2008. Net loss for the six months ended June 30, 2009 was $493,000, or $0.03 per common share, compared to a net loss of $2.2 million, or $0.11 per common share for the six months ended June 30, 2008.

At June 30, 2009, BankFinancial had total assets of $1.573 billion, total loans of $1.269 billion, total deposits of $1.212 billion and stockholders’ equity of $264 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 second quarter 2009 results in a conference call and webcast for stockholders and analysts on Friday, August 7, 2009 at 9:30 a.m. Chicago time. The conference call may be accessed by calling (866) 770-7129 and using participant passcode 41286832. 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. Chicago time August 21, 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

SECOND 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  
PERFORMANCE MEASUREMENTS:    IIQ     IQ     IVQ     IIIQ     IIQ  

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

     (0.17 )%      0.04     2.14     (6.93 )%      (1.49 )% 

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

     (1.00     0.26        11.81        (35.24     (7.46

Net interest rate spread (1)

     3.34        3.36        3.49        3.29        3.31   

Net interest margin (1)

     3.66        3.74        3.90        3.80        3.88   

Efficiency ratio

     86.82        87.84        98.24        253.46        160.33   

Noninterest expense to average total assets (1)

     3.27        3.31        4.00        10.32        6.39   

Average interest-earning assets to average interest-bearing liabilities

     121.15        123.50        124.32        128.92        129.40   

Number of full service offices

     18        18        18        18        18   

Employees (full time equivalents)

     379        390        393        395        397   
          
   
          
     2009     2008  
SUMMARY STATEMENT OF OPERATIONS:    IIQ     IQ     IVQ     IIIQ     IIQ  

Total interest income

   $ 18,713      $ 18,906      $ 19,082      $ 18,749      $ 19,387   

Total interest expense

     5,500        5,736        5,810        5,983        6,405   
                                        

Net interest income before provision

     13,213        13,170        13,272        12,766        12,982   

Provision for loan losses

     2,847        1,344        3,487        1,406        250   
                                        

Net interest income

     10,366        11,826        9,785        11,360        12,732   

Noninterest income

     1,719        1,389        1,789        1,968        1,521   

Noninterest expense

     12,964        12,789        14,796        37,345        23,253   
                                        

Income (loss) before income tax

     (879     426        (3,222     (24,017     (9,000

Income tax expense (benefit)

     (214     254        (11,130     1,065        (3,593
                                        

Net income (loss)

   $ (665   $ 172      $ 7,908      $ (25,082   $ (5,407
                                        

Basic earnings (loss) per common share

   $ (0.03   $ 0.01      $ 0.40      $ (1.27   $ (0.27
                                        

Diluted earnings (loss) per common share

   $ (0.03   $ 0.01      $ 0.40      $ (1.26   $ (0.27
                                        
          
   
          
     2009     2008  
NONINTEREST INCOME AND EXPENSE:    IIQ     IQ     IVQ     IIIQ     IIQ  

Noninterest Income:

          

Deposit service charges and fees

   $ 796      $ 794      $ 920      $ 989      $ 837   

Other fee income

     496        428        349        533        587   

Insurance commissions and annuities income

     111        177        188        158        202   

Gain on sales of loans, net

     180        256        32        —          17   

Loss on disposition of premises and equipment

     —          (4     —          —          (311

Loan servicing fees

     161        175        184        190        184   

Amortization and impairment of servicing assets

     (25     (222     84        (119     (178

Operations of real estate owned

     (83     (253     (121     (139     (163

Bank Owned Life Insurance income (loss)

     (33     (59     29        153        187   

Other

     116        97        124        203        159   
                                        

Total noninterest income

   $ 1,719      $ 1,389      $ 1,789      $ 1,968      $ 1,521   
                                        

Noninterest Expense:

          

Compensation and benefits

   $ 6,948      $ 7,865      $ 7,265      $ 7,544      $ 7,506   

Office occupancy and equipment

     1,666        1,767        1,864        1,481        1,582   

Advertising and public relations

     317        366        515        373        309   

Information technology

     866        1,008        1,005        963        790   

Supplies, telephone, and postage

     459        424        506        545        497   

Amortization of intangibles

     422        429        440        446        446   

Loss on impairment of securities available-for-sale

     —          —          —          24,844        11,075   

Loss on early extinguishment of borrowings

     —          —          1,975        —          —     

FDIC insurance premium

     1,216        49        49        48        32   

Other

     1,070        881        1,177        1,101        1,016   
                                        

Total noninterest expenses

   $ 12,964      $ 12,789      $ 14,796      $ 37,345      $ 23,253   
                                        
          
   
(1) Annualized

 

Page 1


BANKFINANCIAL CORPORATION

SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA

Latest Five Quarters

(Dollars in thousands) – (Unaudited)

 

SUMMARY BALANCE SHEET    2009    2008
     IIQ    IQ    IVQ    IIIQ    IIQ

ASSETS:

              

Cash and due from other financial institutions

   $ 17,667    $ 20,155    $ 29,213    $ 21,258    $ 27,915

Interest-bearing deposits in other financial institutions

     42,250      2,882      116      15,030      6,297

Securities available-for-sale, at fair value

     112,468      119,417      124,919      75,865      78,030

Loans held-for-sale

     2,194      1,729      872      1,264      702

Loans receivable, net

     1,268,571      1,283,996      1,267,968      1,216,185      1,225,115

Stock in Federal Home Loan Bank, at cost

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

Premises and equipment, net

     34,974      34,773      34,565      34,448      34,013

Intangible assets

     27,700      28,122      28,551      28,991      29,437

Bank Owned Life Insurance

     20,079      20,112      20,171      20,142      19,989

Other assets

     31,296      31,125      32,728      19,908      19,716
                                  

Total assets

   $ 1,572,797    $ 1,557,909    $ 1,554,701    $ 1,448,689    $ 1,456,812
                                  

LIABILITIES AND EQUITY:

              

Deposits

   $ 1,211,756    $ 1,153,738    $ 1,069,855    $ 1,046,104    $ 1,080,986

Borrowings

     78,819      123,995      200,350      101,935      70,633

Other liabilities

     17,946      14,529      17,705      39,023      17,030
                                  

Total liabilities

     1,308,521      1,292,262      1,287,910      1,187,062      1,168,649

Stockholders’ equity

     264,276      265,647      266,791      261,627      288,163
                                  

Total liabilities and stockholders’ equity

   $ 1,572,797    $ 1,557,909    $ 1,554,701    $ 1,448,689    $ 1,456,812
                                  
              
 
              
     2009         2008
DEPOSITS:    IIQ    IQ    IVQ    IIIQ    IIQ

Noninterest-bearing demand

   $ 107,649    $ 107,021    $ 109,056    $ 108,110    $ 108,530

Savings

     98,327      97,531      94,802      96,489      101,532

Money market accounts

     271,982      246,443      205,768      196,050      183,180

Interest-bearing NOW accounts

     282,484      274,560      285,737      309,482      364,106

Certificates of deposit—Retail

     429,457      389,648      339,771      330,390      316,761

Certificates of deposit—Wholesale

     21,857      38,535      34,721      5,583      6,877
                                  

Total certificates of deposit

     451,314      428,183      374,492      335,973      323,638
                                  

Total deposits

   $ 1,211,756    $ 1,153,738    $ 1,069,855    $ 1,046,104    $ 1,080,986
                                  

 

Page 2


BANKFINANCIAL CORPORATION

SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA

Latest Five Quarters

(Dollars in thousands) – (Unaudited)

 

     2009     2008  
LOANS:    IIQ     IQ     IVQ     IIIQ     IIQ  

One-to-four family residential real estate loans

   $ 301,167      $ 308,710      $ 312,390      $ 318,934      $ 323,056   

Multi-family mortgage loans

     331,258        320,480        305,318        303,516        306,209   

Nonresidential real estate loans

     338,050        344,877        342,583        332,047        324,280   

Construction and land loans

     42,384        44,346        50,687        46,793        53,450   

Commercial loans

     88,853        99,497        92,679        78,742        78,312   

Commercial leases

     179,804        176,344        174,644        143,843        146,033   

Consumer loans

     2,495        2,605        2,655        2,757        2,809   
                                        

Total loans

     1,284,011        1,296,859        1,280,956        1,226,632        1,234,149   

Loans in process

     (200     (217     (154     (139     (165

Net deferred loan origination costs

     1,898        1,912        1,912        1,957        2,031   

Allowance for loan losses

     (17,138     (14,558     (14,746     (12,265     (10,900
                                        

Loans, net

   $ 1,268,571      $ 1,283,996      $ 1,267,968      $ 1,216,185      $ 1,225,115   
                                        
          
   
          
CREDIT QUALITY RATIOS:    2009     2008  
     IIQ     IQ     IVQ     IIIQ     IIQ  

Nonperforming Loans and Assets:

          

One-to-four family residential real estate loans

   $ 4,984      $ 2,329      $ 2,205      $ 2,526      $ 2,520   

Multi-family mortgage loans

     9,085        1,495        2,101        940        1,575   

Nonresidential real estate loans

     8,955        6,750        2,961        2,954        3,421   

Construction and land loans

     12,726        10,733        5,145        4,941        2,173   

Commercial loans

     2,963        1,323        1,141        1,021        1,437   

Commercial leases

     105        105        105        105        122   

Consumer loans

     8        8        —          10        —     
                                        

Nonperforming loans

     38,826        22,736        13,658        12,497        11,248   

One-to-four family residential real estate loans

     845        931        588        798        391   

Multi-family mortgage loans

     133        133        133        133        546   

Construction and land loans

     —          157        234        —          —     

Commercial loans

     —          —          —          —          —     
                                        

Real estate owned

     978        1,221        955        931        937   
                                        

Nonperforming assets

   $ 39,804      $ 23,957      $ 14,613      $ 13,428      $ 12,185   
                                        

Asset Quality Ratios:

          

Nonperforming assets to total assets

     2.53     1.54     0.94     0.93     0.84

Nonperforming loans to total loans

     3.02        1.75        1.07        1.02        0.91   

Allowance for loan losses to nonperforming loans

     44.14        64.03        107.97        98.14        96.91   

Allowance for loan losses to total loans

     1.33        1.12        1.15        1.00        0.88   

Net charge-off ratio (1)

     0.08        0.48        0.32        0.01        0.06   
          
   
          
     2009     2008  
ALLOWANCE FOR LOAN LOSSES:    IIQ     IQ     IVQ     IIIQ     IIQ  

Beginning balance

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

Provision for loan losses

     2,847        1,344        3,487        1,406        250   

Loans charged off

     (296     (1,536     (1,016     (42     (182

Recoveries

     29        4        10        1        2   
                                        

Ending balance

   $ 17,138      $ 14,558      $ 14,746      $ 12,265      $ 10,900   
                                        
          
   
(1) Annualized

 

Page 3


BANKFINANCIAL CORPORATION

SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA

Latest Five Quarters

(Dollars in thousands) – (Unaudited)

 

     2009     2008  
SELECTED AVERAGE BALANCES:    IIQ     IQ     IVQ     IIIQ     IIQ  

Average total assets

   $ 1,584,397      $ 1,544,395      $ 1,478,893      $ 1,447,499      $ 1,454,496   

Average interest-earning assets

     1,449,040        1,426,864        1,354,221        1,337,304        1,346,496   

Average total loans

     1,286,698        1,285,125        1,251,180        1,224,472        1,233,586   

Average securities available-for-sale

     115,667        123,278        83,352        94,459        86,855   

Average Stock in FHLB

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

Average other interest-earning assets

     31,077        2,863        4,091        2,775        10,457   

Average interest-bearing deposits

     1,079,094        1,008,329        933,207        945,892        958,071   

Average borrowings

     116,935        147,068        156,107        91,452        82,502   

Average interest-bearing liabilities

     1,196,029        1,155,397        1,089,314        1,037,344        1,040,573   

Average total stockholders’ equity

     266,647        268,064        267,862        284,695        289,988   
          
   
          
     2009     2008  
SELECTED YIELDS AND COST OF FUNDS (1):    IIQ     IQ     IVQ     IIIQ     IIQ  

Average interest-earning assets

     5.18     5.37     5.61     5.58     5.79

Average total loans

     5.44        5.54        5.74        5.86        5.98   

Average securities available-for-sale

     4.29        4.42        4.96        2.97        4.64   

Average other interest-earning assets

     0.36        —          —          2.01        2.01   

Average interest-bearing deposits

     1.83        2.06        2.13        2.15        2.36   

Average borrowings

     1.93        1.67        2.06        3.79        3.86   

Average interest-bearing liabilities

     1.84        2.01        2.12        2.29        2.48   

Net interest rate spread

     3.34        3.36        3.49        3.29        3.31   

Net interest margin

     3.66        3.74        3.90        3.80        3.88   
          
   

 

(1) Annualized

 

Page 4


BANKFINANCIAL CORPORATION

SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA

Latest Five Quarters

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

 

CAPITAL RATIOS:    2009     2008  
     IIQ     IQ     IVQ     IIIQ     IIQ  

BankFinancial Corporation:

          

Equity to total assets (end of period)

     16.80     17.05     17.16     18.06     19.78

Tangible equity to tangible total assets (end of period)

     16.47        15.39        15.48        16.47        17.99   

Risk-based total capital ratio

     19.07        18.60        18.57        20.06        21.12   

Risk-based tier 1 capital ratio

     18.07        17.66        17.67        19.21        20.33   

Tier 1 leverage ratio

     15.14        15.38        15.48        17.02        18.19   

BankFinancial FSB:

          

Risk-based total capital ratio

     15.48        14.95        14.69        15.72        16.59   

Risk-based tier 1 capital ratio

     14.48        14.01        13.79        14.87        15.79   

Tier 1 leverage ratio

     12.12        12.20        12.08        13.17        14.13   
          
   
          
COMMON STOCK AND DIVIDENDS:    2009     2008  
     IIQ     IQ     IVQ     IIIQ     IIQ  

Stock Prices:

          

Close

   $ 8.86      $ 9.97      $ 10.19      $ 14.68      $ 13.01   

High

     11.10        11.10        14.99        15.98        16.16   

Low

     8.07        7.19        9.07        12.70        13.00   

Book value per share

   $ 12.34      $ 12.36      $ 12.30      $ 12.00      $ 13.15   

Tangible book value per share

   $ 11.05      $ 11.05      $ 10.98      $ 10.67      $ 11.81   

Cash dividends declared and paid on common stock

   $ 0.07      $ 0.07      $ 0.07      $ 0.07      $ 0.07   

Stock repurchases

   $ 691      $ 1,800      $ 1,272      $ 1,404      $ 1,162   

Stock repurchases – shares

     70,000        207,800        117,700        101,200        76,000   
          
   
          
EARNINGS PER SHARE COMPUTATIONS:    2009     2008  
     IIQ     IQ     IVQ     IIIQ     IIQ  

Net income (loss)

   $ (665   $ 172      $ 7,908      $ (25,082   $ (5,407
                                        

Average common shares outstanding

     21,437,970        21,617,158        21,736,312        21,829,118        21,952,967   

Less: Unearned ESOP shares

     (1,574,268     (1,598,497     (1,622,932     (1,647,532     (1,679,927

         Unvested restricted stock shares

     (220,652     (239,100     (387,837     (434,550     (434,550
                                        

Weighted average common shares outstanding

     19,643,050        19,779,561        19,725,543        19,747,036        19,838,490   

Plus: Dilutive common shares equivalents

     —          —          —          101,318        61,010   
                                        

Weighted average dilutive common shares outstanding

     19,643,050        19,779,561        19,725,543        19,848,354        19,899,500   
                                        

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

     2,322,603        2,334,803        2,334,803        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

   $ (0.03   $ 0.01      $ 0.40      $ (1.27   $ (0.27
                                        

Diluted earnings (loss) per common share

   $ (0.03   $ 0.01      $ 0.40      $ (1.26   $ (0.27
                                        
          
   
          

 

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.

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).

FDIC Special Assessment. The Company believes that the exclusion from its net income (loss) of the FDIC special assessment facilitates the comparison of the Company’s operating results to the Company’s historical performance.

 

Page 6


BANKFINANCIAL CORPORATION

NON-GAAP FINANCIAL MEASURES

(continued)

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, the loss on impairment, and the FDIC special assessment 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, the loss on impairment, and the FDIC special assessment 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.

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, the loss on impairment, and the FDIC special assessment 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, and the FDIC special assessment 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, the loss on impairment, and the FDIC special assessment 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, 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 SIX MONTH PERIODS    Three months ended     Six months ended  
ENDED JUNE 30, 2009 AND 2008    June 30,     June 30,  
     2009     2008     2009     2008  

Core operating income (loss):

        

Net loss

   $ (665   $ (5,407   $ (493   $ (2,215

Adjustments:

        

Equity-based compensation and benefits

     604        1,179        1,664        2,427   

Amortization of core deposit intangible

     422        446        851        898   

Gain on sales of investment securities

     —          —          —          (1,385

Gain on unredeemed Visa stock

     —          —          —          (1,240

Loss on impairment of securities

     —          11,075        —          11,075   

FDIC special assessment

     700        —          700        —     

Tax effect on adjustments assuming 39.745% tax rate

     (686     (5,047     (1,278     (4,680
                                

Core operating income

   $ 375      $ 2,246      $ 1,444      $ 4,880   
                                

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

     (0.17 )%      (1.49 )%      (0.06 )%      (0.30 )% 

Core return on assets (ratio of core operating income to

average total assets) (1)

     0.09     0.62     0.18     0.67

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

     (1.00 )%      (7.46 )%      (0.37 )%      (1.52 )% 

Core return on equity (ratio of core operating income to

average equity) (1)

     0.56     3.10     1.08     3.35

Diluted loss per common share

   $ (0.03   $ (0.27   $ (0.03   $ (0.11

Core dilutive earnings per common share

   $ 0.02      $ 0.11      $ 0.07      $ 0.24   

Core noninterest expenses:

        

Noninterest expenses

   $ 12,964      $ 23,253      $ 25,753      $ 36,481   

Adjustments:

        

Equity-based compensation and benefits

     (604     (1,179     (1,664     (2,427

Amortization of core deposit intangible

     (422     (446     (851     (898

Loss on impairment of securities

     —          (11,075     —          (11,075

FDIC special assessment

     (700     —          (700     —     
                                

Core noninterest expenses

   $ 11,238      $ 10,553      $ 22,538      $ 22,081   
                                

Noninterest expense to average total assets (1)

     3.27     6.39     3.29     4.99

Core noninterest expense to average total assets (1)

     2.84     2.90     2.88     3.02

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

     86.82     160.33     87.32     112.31

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

     75.26     72.77     76.42     73.95
        
   
(1) Annualized for the three-month periods.

 

Page 8


BANKFINANCIAL CORPORATION

NON-GAAP FINANCIAL MEASURES

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

 

           
          
FOR THE LATEST FIVE QUARTERS    2009     2008  
     IIQ     IQ     IVQ     IIIQ     IIQ  

Core operating income (loss)

          

Net income (loss)

   $ (665   $ 172      $ 7,908      $ (25,082   $ (5,407

Adjustments:

          

Equity-based compensation and benefits

     604        1,060        824        1,350        1,179   

Amortization of core deposit intangible

     422        429        440        446        446   

Loss on impairment of securities

     —          —          —          24,844        11,075   

FDIC special assessment

     700        —          —          —          —     

Tax effect on adjustments assuming 39.745% tax rate

     (686     (592     (502     (10,588     (5,047

Deferred tax valuation reserve on loss on impairment of securities

     —          —          (10,087     10,087        —     
                                        

Core operating income (loss)

   $ 375      $ 1,069      $ (1,417   $ 1,057      $ 2,246   
                                        

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

     (0.17 )%      0.04     2.14     (6.93 )%      (1.49 )% 

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

     0.09     0.28     (0.38 )%      0.29     0.62

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

     (1.00 )%      0.26     11.81     (35.24 )%      (7.46 )% 

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

     0.56     1.60     (2.12 )%      1.48     3.10

Diluted earnings (loss) per common share

   $ (0.03   $ 0.01      $ 0.40      $ (1.26   $ (0.27

Core diluted earnings (loss) per common share

   $ 0.02      $ 0.05      $ (0.07   $ 0.05      $ 0.11   

Core operating expense:

          

Noninterest expense

   $ 12,964      $ 12,789      $ 14,796      $ 37,345      $ 23,253   

Adjustments:

          

Equity-based compensation and benefits

     (604     (1,060     (824     (1,350     (1,179

Amortization of core deposit intangible

     (422     (429     (440     (446     (446

Loss on impairment of securities

     —          —          —          (24,844     (11,075

FDIC special assessment

     (700     —          —          —          —     
                                        

Core noninterest expense

   $ 11,238      $ 11,300      $ 13,532      $ 10,705      $ 10,553   
                                        

Noninterest expense to average total assets (1)

     3.27     3.31     4.00     10.32     6.39

Core noninterest expense to average total assets (1)

     2.84     2.93     3.66     2.96     2.90

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

     86.82     87.84     98.24     253.46  

 

160.33

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

     75.26     77.61     89.85     72.66     72.77
          
   
(1) Annualized for the three-month periods.

 

Page 9