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): October 27, 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 October 27, 2009, 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, 2009 and a Quarterly Financial and Statistical Supplement. The press release also reported earnings for the three and nine months ended September 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 October 27, 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: October 27, 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 Third 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 - (October 27, 2009) BankFinancial Corporation (Nasdaq – BFIN) (“BankFinancial”) announced that it filed its Quarterly Report on Form 10-Q for the three and nine months ended September 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 net income of $1.4 million, or $0.07 per common share, for the three months ended September 30, 2009, compared to a net loss of $25.1 million, or $1.27 per common share, for the three months ended September 30, 2008. Net income for the nine months ended September 30, 2009 was $858,000, or $0.04 per common share, compared to a net loss of $27.3 million, or $1.38 per common share for the nine months ended September 30, 2008.

At September 30, 2009, BankFinancial had total assets of $1.574 billion, total loans of $1.233 billion, total deposits of $1.212 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 third quarter 2009 results in a conference call and webcast for stockholders and analysts on Thursday, October 29, 2009 at 9:30 a.m. Chicago time. The conference call may be accessed by calling (866) 713-8565 and using participant passcode 13207362. 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 November 12, 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’s 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

THIRD 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:    IIIQ     IIQ     IQ     IVQ     IIIQ  

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

   0.35   (0.17 )%    0.04   2.14   (6.93 )% 

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

   2.02      (1.00   0.26      11.81      (35.24

Net interest rate spread (1)

   3.43      3.27      3.36      3.49      3.29   

Net interest margin (1)

   3.74      3.61      3.74      3.90      3.80   

Efficiency ratio

   81.88      86.82      87.84      98.24      253.46   

Noninterest expense to average total assets (1)

   3.18      3.27      3.31      4.00      10.32   

Average interest-earning assets to average interest-bearing liabilities

   123.69      122.73      123.50      124.32      128.92   

Number of full service offices

   18      18      18      18      18   

Employees (full time equivalents)

   374      379      390      393      395   

 

 

 

     2009    2008  
SUMMARY STATEMENT OF OPERATIONS:    IIIQ    IIQ     IQ    IVQ     IIIQ  

Total interest income

   $ 18,510    $ 18,713      $ 18,906    $ 19,082      $ 18,749   

Total interest expense

     4,838      5,500        5,736      5,810        5,983   
                                      

Net interest income before provision

     13,672      13,213        13,170      13,272        12,766   

Provision for loan losses

     427      2,847        1,344      3,487        1,406   
                                      

Net interest income

     13,245      10,366        11,826      9,785        11,360   

Noninterest income

     1,511      1,719        1,389      1,789        1,968   

Noninterest expense

     12,432      12,964        12,789      14,796        37,345   
                                      

Income (loss) before income tax

     2,324      (879     426      (3,222     (24,017

Income tax expense (benefit)

     973      (214     254      (11,130     1,065   
                                      

Net income (loss)

   $ 1,351    $ (665   $ 172    $ 7,908      $ (25,082
                                      

Basic earnings (loss) per common share

   $ 0.07    $ (0.03   $ 0.01    $ 0.40      $ (1.27
                                      

Diluted earnings (loss) per common share

   $ 0.07    $ (0.03   $ 0.01    $ 0.40      $ (1.26
                                      

 

 

 

     2009     2008  
NONINTEREST INCOME AND EXPENSE:    IIIQ     IIQ     IQ     IVQ     IIIQ  

Noninterest Income:

          

Deposit service charges and fees

   $ 904      $ 796      $ 794      $ 920      $ 989   

Other fee income

     442        496        428        349        533   

Insurance commissions and annuities income

     193        111        177        188        158   

Gain on sales of loans, net

     88        180        256        32        -   

Loss on disposition of premises and equipment

     (1     -        (4     -        -   

Loan servicing fees

     155        161        175        184        190   

Amortization and impairment of servicing assets

     (182     (25     (222     84        (119

Operations of real estate owned

     (149     (83     (253     (121     (139

Bank Owned Life Insurance income (loss)

     12        (33     (59     29        153   

Other

     49        116        97        124        203   
                                        

Total noninterest income

   $ 1,511      $ 1,719      $ 1,389      $ 1,789      $ 1,968   
                                        

Noninterest Expense:

          

Compensation and benefits

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

Office occupancy and equipment

     1,567        1,666        1,767        1,864        1,481   

Advertising and public relations

     239        317        366        515        373   

Information technology

     848        866        1,008        1,005        963   

Supplies, telephone, and postage

     483        459        424        506        545   

Amortization of intangibles

     422        422        429        440        446   

Loss on impairment of securities available-for-sale

     401        -        -        -        24,844   

Loss on early extinguishment of borrowings

     -        -        -        1,975        -   

FDIC insurance premium

     499        1,216        49        49        48   

Other

     1,025        1,070        881        1,177        1,101   
                                        

Total noninterest expenses

   $ 12,432      $ 12,964      $ 12,789      $ 14,796      $ 37,345   
                                        

 

 

(1) Annualized

 

Page 1


BANKFINANCIAL CORPORATION

SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA

Latest Five Quarters

(Dollars in thousands) – (Unaudited)

SUMMARY STATEMENT OF FINANCIAL CONDITION

 

     2009    2008
     IIIQ    IIQ    IQ    IVQ    IIIQ

ASSETS:

              

Cash and due from other financial institutions

   $ 16,617    $ 17,667    $ 20,155    $ 29,213    $ 21,258

Interest-bearing deposits in other financial institutions

     85,281      42,250      2,882      116      15,030

Securities available-for-sale, at fair value

     109,213      112,468      119,417      124,919      75,865

Loans held-for-sale

     1,812      2,194      1,729      872      1,264

Loans receivable, net

     1,233,060      1,268,571      1,283,996      1,267,968      1,216,185

Stock in Federal Home Loan Bank, at cost

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

Premises and equipment, net

     34,771      34,974      34,773      34,565      34,448

Intangible assets

     27,278      27,700      28,122      28,551      28,991

Bank Owned Life Insurance

     20,091      20,079      20,112      20,171      20,142

Other assets

     30,719      31,296      31,125      32,728      19,908
                                  

Total assets

   $ 1,574,440    $ 1,572,797    $ 1,557,909    $ 1,554,701    $ 1,448,689
                                  

LIABILITIES AND EQUITY:

              

Deposits

   $ 1,211,838    $ 1,211,756    $ 1,153,738    $ 1,069,855    $ 1,046,104

Borrowings

     74,648      78,819      123,995      200,350      101,935

Other liabilities

     21,660      17,946      14,529      17,705      39,023
                                  

Total liabilities

     1,308,146      1,308,521      1,292,262      1,287,910      1,187,062

Stockholders’ equity

     266,294      264,276      265,647      266,791      261,627
                                  

Total liabilities and stockholders’ equity

   $ 1,574,440    $ 1,572,797    $ 1,557,909    $ 1,554,701    $ 1,448,689
                                  

 

 

 

     2009    2008
DEPOSITS:    IIIQ    IIQ    IQ    IVQ    IIIQ

Noninterest-bearing demand

   $ 110,697    $ 107,649    $ 107,021    $ 109,056    $ 108,110

Savings

     96,372      98,327      97,531      94,802      96,489

Money market accounts

     296,824      271,982      246,443      205,768      196,050

Interest-bearing NOW accounts

     290,607      282,484      274,560      285,737      309,482

Certificates of deposit - Retail

     402,305      429,457      389,648      339,771      330,390

Certificates of deposit - Wholesale

     15,033      21,857      38,535      34,721      5,583
                                  

Total certificates of deposit

     417,338      451,314      428,183      374,492      335,973
                                  

Total deposits

   $ 1,211,838    $ 1,211,756    $ 1,153,738    $ 1,069,855    $ 1,046,104
                                  

 

Page 2


BANKFINANCIAL CORPORATION

SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA

Latest Five Quarters

(Dollars in thousands) – (Unaudited)

 

     2009     2008  
LOANS:    IIIQ     IIQ     IQ     IVQ     IIIQ  

One-to-four family residential real estate loans

   $ 293,927      $ 301,167      $ 308,710      $ 312,390      $ 318,934   

Multi-family mortgage loans

     329,934        331,258        320,480        305,318        303,516   

Nonresidential real estate loans

     324,428        338,050        344,877        342,583        332,047   

Construction and land loans

     39,042        42,384        44,346        50,687        46,793   

Commercial loans

     74,567        88,853        99,497        92,679        78,742   

Commercial leases

     183,841        179,804        176,344        174,644        143,843   

Consumer loans

     2,565        2,495        2,605        2,655        2,757   
                                        

Total loans

     1,248,304        1,284,011        1,296,859        1,280,956        1,226,632   

Loans in process

     (139     (200     (217     (154     (139

Net deferred loan origination costs

     1,818        1,898        1,912        1,912        1,957   

Allowance for loan losses

     (16,923     (17,138     (14,558     (14,746     (12,265
                                        

Loans, net

   $ 1,233,060      $ 1,268,571      $ 1,283,996      $ 1,267,968      $ 1,216,185   
                                        

 

 

 

     2009     2008  
CREDIT QUALITY RATIOS:    IIIQ     IIQ     IQ     IVQ     IIIQ  

Nonperforming Loans and Assets:

          

One-to-four family residential real estate loans

   $ 9,248      $ 4,984      $ 2,329      $ 2,205      $ 2,526   

Multi-family mortgage loans

     8,196        9,085        1,495        2,101        940   

Nonresidential real estate loans

     9,172        8,955        6,750        2,961        2,954   

Construction and land loans

     11,082        12,726        10,733        5,145        4,941   

Commercial loans

     2,340        2,963        1,323        1,141        1,021   

Commercial leases

     -        105        105        105        105   

Consumer loans

     -        8        1        -        10   
                                        

Nonaccrual loans

     40,038        38,826        22,736        13,658        12,497   

One-to-four family residential real estate loans

     816        845        931        588        798   

Multi-family mortgage loans

     45        133        133        133        133   

Nonresidential real estate loans

     600        -        -        -        -   

Construction and land loans

     295        -        157        234        -   
                                        

Real estate owned

     1,756        978        1,221        955        931   
                                        

Nonperforming assets

   $ 41,794      $ 39,804      $ 23,957      $ 14,613      $ 13,428   
                                        

Asset Quality Ratios:

          

Nonperforming assets to total assets

     2.65     2.53     1.54     0.94     0.93

Nonaccrual loans to total loans

     3.21        3.02        1.75        1.07        1.02   

Allowance for loan losses to nonaccrual loans

     42.27        44.14        64.03        107.97        98.14   

Allowance for loan losses to total loans

     1.36        1.33        1.12        1.15        1.00   

Net charge-off ratio (1)

     0.20        0.08        0.48        0.32        0.01   

 

 

 

     2009     2008  
ALLOWANCE FOR LOAN LOSSES:    IIIQ     IIQ     IQ     IVQ     IIIQ  

Beginning balance

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

Provision for loan losses

     427        2,847        1,344        3,487        1,406   

Loans charged off

     (660     (296     (1,536     (1,016     (42

Recoveries

     18        29        4        10        1   
                                        

Ending balance

   $ 16,923      $ 17,138      $ 14,558      $ 14,746      $ 12,265   
                                        

 

 

 

(1) Annualized

 

Page 3


BANKFINANCIAL CORPORATION

SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA

Latest Five Quarters

(Dollars in thousands) – (Unaudited)

 

     2009    2008
SELECTED AVERAGE BALANCES:    IIIQ    IIQ    IQ    IVQ    IIIQ

Average total assets

   $ 1,566,127    $ 1,584,397    $ 1,544,395    $ 1,478,893    $ 1,447,499

Average interest-earning assets

     1,452,054      1,467,900      1,426,864      1,354,221      1,337,304

Average total loans

     1,267,148      1,286,698      1,285,125      1,251,180      1,224,472

Average securities available-for-sale

     108,759      115,667      123,278      83,352      80,459

Average Stock in FHLB

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

Average other interest-earning assets

     60,549      31,077      2,863      4,091      16,775

Average interest-bearing deposits

     1,097,285      1,079,094      1,008,329      933,207      945,892

Average borrowings

     76,685      116,935      147,068      156,107      91,452

Average interest-bearing liabilities

     1,173,970      1,196,029      1,155,397      1,089,314      1,037,344

Average total stockholders’ equity

     267,166      266,647      268,064      267,862      284,695

 

 

 

     2009     2008  
SELECTED YIELDS AND COST OF FUNDS (1):    IIIQ     IIQ     IQ     IVQ     IIIQ  

Average interest-earning assets

   5.06   5.11   5.37   5.61   5.58

Average total loans

   5.43      5.44      5.54      5.74      5.86   

Average securities available-for-sale

   4.15      4.29      4.42      4.96      3.34   

Average other interest-earning assets

   0.24      0.22      -      -      1.07   

Average interest-bearing deposits

   1.58      1.83      2.06      2.13      2.15   

Average borrowings

   2.46      1.93      1.67      2.06      3.79   

Average interest-bearing liabilities

   1.63      1.84      2.01      2.12      2.29   

Net interest rate spread

   3.43      3.27      3.36      3.49      3.29   

Net interest margin

   3.74      3.61      3.74      3.90      3.80   

 

 

 

(1) Annualized

 

Page 4


BANKFINANCIAL CORPORATION

SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA

Latest Five Quarters

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

 

      2009     2008  
CAPITAL RATIOS:    IIIQ     IIQ     IQ     IVQ     IIIQ  

BankFinancial Corporation:

          

Equity to total assets (end of period)

   16.91   16.80   17.05   17.16   18.06

Tangible equity to tangible total assets (end of period)

   15.56      15.43      15.39      15.48      16.47   

Risk-based total capital ratio

   19.55      19.07      18.60      18.57      20.06   

Risk-based tier 1 capital ratio

   18.57      18.07      17.66      17.67      19.21   

Tier 1 leverage ratio

   15.17      15.14      15.38      15.48      17.02   

BankFinancial FSB:

          

Risk-based total capital ratio

   15.98      15.48      14.95      14.69      15.72   

Risk-based tier 1 capital ratio

   15.00      14.48      14.01      13.79      14.87   

Tier 1 leverage ratio

   12.25      12.12      12.20      12.08      13.17   

 

 

 

     2009    2008
COMMON STOCK AND DIVIDENDS:    IIIQ    IIQ    IQ    IVQ    IIIQ

Stock Prices:

              

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   $ 9.60    $ 8.86    $ 9.97    $ 10.19    $ 14.68

High

     11.04      11.10      11.10      14.99      15.98

Low

     8.75      8.07      7.19      9.07      12.70

Book value per share

   $ 12.43    $ 12.34    $ 12.36    $ 12.30    $ 12.00

Tangible book value per share

   $ 11.16    $ 11.05    $ 11.05    $ 10.98    $ 10.67

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

Stock repurchases – shares

     -      70,000      207,800      117,700      101,200

 

 

 

     2009     2008  
EARNINGS PER SHARE COMPUTATIONS:    IIIQ     IIQ     IQ     IVQ     IIIQ  

Net income (loss)

   $ 1,351      $ (665   $ 172      $ 7,908      $ (25,082
                                        

Average common shares outstanding

     21,416,377        21,437,970        21,617,158        21,736,312        21,829,118   

Less: Unearned ESOP shares

     (1,549,780     (1,574,268     (1,598,497     (1,622,932     (1,647,532

Unvested restricted stock shares

     (217,850     (220,652     (239,100     (387,837     (434,550
                                        

Weighted average common shares outstanding

     19,648,747        19,643,050        19,779,561        19,725,543        19,747,036   

Plus: Dilutive common shares equivalents

     -        -        -        -        101,318   
                                        

Weighted average dilutive common shares outstanding

     19,648,747        19,643,050        19,779,561        19,725,543        19,848,354   
                                        

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

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

   $ 0.07      $ (0.03   $ 0.01      $ 0.40      $ (1.27
                                        

Diluted earnings (loss) per common share

   $ 0.07      $ (0.03   $ 0.01      $ 0.40      $ (1.26
                                        

 

 

 

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 NINE MONTH PERIODS

ENDED SEPTEMBER 30, 2009 AND 2008

   Three months ended
September 30,
    Nine months ended
September 30,
 
   2009     2008     2009     2008  

Core operating income:

        

Net income (loss)

   $ 1,351      $ (25,082   $ 858      $ (27,297

Adjustments:

        

Equity-based compensation and benefits

     691        1,350        2,356        3,777   

Amortization of core deposit intangible

     422        446        1,273        1,344   

Gain on sales of investment securities

     -        -        -        (1,385

Gain on unredeemed Visa stock

     -        -        -        (1,240

Loss on impairment of securities

     401        24,844        401        35,919   

FDIC special assessment

     -        -        700        -   

Tax effect on adjustments assuming 39.745% tax rate

     (602     (10,588     (1,880     (15,268

Deferred tax valuation reserve on loss on impairment of securities

     -        10,087        -        10,087   
                                

Core operating income

   $ 2,263      $ 1,057      $ 3,708      $ 5,937   
                                

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

     0.35     (6.93 )%      0.07     (2.50 )% 

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

     0.58     0.29     0.32     0.54

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

     2.02     (35.24 )%      0.43     (12.59 )% 

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

     3.39     1.48     1.85     2.74

Diluted earnings (loss) per common share

   $ 0.07      $ (1.26   $ 0.04      $ (1.37

Core dilutive earnings per common share

   $ 0.12      $ 0.05      $ 0.19      $ 0.30   

Core noninterest expenses:

        

Noninterest expenses

   $ 12,432      $ 37,345      $ 38,185      $ 73,826   

Adjustments:

        

Equity-based compensation and benefits

     (691     (1,350     (2,356     (3,777

Amortization of core deposit intangible

     (422     (446     (1,273     (1,344

Loss on impairment of securities

     (401     (24,844     (401     (35,919

FDIC special assessment

     -        -        (700     -   
                                

Core noninterest expenses

   $ 10,918      $ 10,705      $ 33,455      $ 32,786   
                                

Noninterest expense to average total assets (1)

     3.18     10.32     3.25     6.75

Core noninterest expense to average total assets (1)

     2.79     2.96     2.85     3.00

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

     81.88     253.46     85.47     156.36

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

     71.91     72.66     74.89     73.53

 

 

 

(1) Annualized for the three-month periods.

 

Page 8


BANKFINANCIAL CORPORATION

NON-GAAP FINANCIAL MEASURES

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

 

 

 

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

Core operating income (loss)

          

Net income (loss)

   $ 1,351      $ (665   $ 172      $ 7,908      $ (25,082

Adjustments:

          

Equity-based compensation and benefits

     691        604        1,060        824        1,350   

Amortization of core deposit intangible

     422        422        429        440        446   

Loss on impairment of securities

     401        -        -        -        24,844   

FDIC special assessment

     -        700        -        -        -   

Tax effect on adjustments assuming 39.745% tax rate

     (602     (686     (592     (502     (10,588

Deferred tax valuation reserve on loss on impairment of securities

     -        -        -        (10,087     10,087   
                                        

Core operating income (loss)

   $ 2,263      $ 375      $ 1,069      $ (1,417   $ 1,057   
                                        

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

     0.35     (0.17 )%      0.04     2.14     (6.93 )% 

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

     0.58     0.09     0.28     (0.38 )%      0.29

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

     2.02     (1.00 )%      0.26     11.81     (35.24 )% 

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

     3.39     0.56     1.60     (2.12 )%      1.48

Diluted earnings (loss) per common share

   $ 0.07      $ (0.03   $ 0.01      $ 0.40      $ (1.26

Core diluted earnings (loss) per common share

   $ 0.12      $ 0.02      $ 0.05      $ (0.07   $ 0.05   

Core operating expense:

          

Noninterest expense

   $ 12,432      $ 12,964      $ 12,789      $ 14,796      $ 37,345   

Adjustments:

          

Equity-based compensation and benefits

     (691     (604     (1,060     (824     (1,350

Amortization of core deposit intangible

     (422     (422     (429     (440     (446

Loss on impairment of securities

     (401     -        -        -        (24,844

FDIC special assessment

     -        (700     -        -        -   
                                        

Core noninterest expense

   $ 10,918      $ 11,238      $ 11,300      $ 13,532      $ 10,705   
                                        

Noninterest expense to average total assets (1)

     3.18     3.27     3.31     4.00     10.32

Core noninterest expense to average total assets (1)

     2.79     2.84     2.93     3.66     2.96

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

     81.88     86.82     87.84     98.24     253.46

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

     71.91     75.26     77.61     89.85     72.66

 

 

 

(1) Annualized for the three-month periods.

 

Page 9