BankFinancial Corporation (BFIN)

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BankFinancial Corporation (BFIN)

Q3 2008 Earnings Call

November 4, 2008 10:30 am ET


F. Morgan Gasior – Chairman of the Board, President & Chief Financial Officer

Valerie Ostapa-Kontos – Assistant Corporate Secretary


Bill Jacobs – Jacobs Investment Management

[Tim Loso]



Welcome to the third quarter 2008 BankFinancial Corp earnings conference call. My name is [Latrice], I will be your coordinator today. At this time all participants are in listen only mode. We will be facilitating a question and answer session towards the end of this call. (Operator Instructions) At this time I would like to hand the presentation over to your host for today’s call F. Morgan Gasior, Chairman and CEO of BankFinancial Corp.

F. Morgan Gasior

Welcome to the third quarter 2008 BankFinancial conference call. At this time I’d like Assistant Corporate Secretary Kontos to read the forward-looking statement.

Valerie Ostapa-Kontos

This conference call may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 concerning BankFinancial Corporation’s future operations and financial results. Such statements are based on management’s views and expectations as of today based on information presently available to management. These statements are subject to numerous risks and uncertainties as described in our annual reports on Form 10K for the year ended December 31, 2007 and other filings with the Securities & Exchange Commission.

As a consequence, actual results may differ materially from those anticipated by the forward-looking statements. BankFinancial undertakes no duties to update forward-looking statements.

F. Morgan Gasior

We are complete with all filings and we have no new information to add since the time of our filings so we’ll be happy to open it up to any questions anyone has.

Question-and-Answer Session


(Operator Instructions) Our first question comes from [Bill Jacobs – Jacobs Investment Management].

Bill Jacobs – Jacobs Investment Management

Could you talk about potential acquisitions? I know that’s something you’ve been interested in and are you starting to see more realistic pricing on assets out there? I guess the other part of that is do you still have the same sort of appetite for acquisitions or do you sort of feel like you want to see how the recession plays out before you start committing a lot of capital to those?

F. Morgan Gasior

That’s a very good question especially given recent developments. We have seen some opportunities recently. Some of them have been branch purchases, some of them have been whole bank purchases but your sense of caution is accurate. We’ve passed on a couple of whole bank deals solely because when we looked at the assets and the composition of the assets not only did they present some present asset quality resolution issues but even more so it didn’t appear that the bank was built to last.

Heavy concentrations in construction lending, even if those cases are successfully paid off the earning stream of that institution’s future was in question and then when you turned around and looked at the funding base of the institution, heavy broker deposits, heavy CD reliance [inaudible] premium rate basis, it wasn’t at all clear that you were buying much of a future earnings stream at all even if the premium was modest. Almost to the point you’re buying a branch location and you’d have to almost start from scratch in terms of building your core deposit base and we know how successful people have been or not been as the case may be doing that.

So, we are seeing some additional opportunities. We actually passed on one and then we saw a local bank group jump in and it looks they’re going to be taking some sort of a significant stake whether it’s a majority stake isn’t exactly clear to us and we were fine letting it go. Going forward I think that the real question is going to be how TARP and the capital participation plan factors in to people’s thinking. You can see any number of outcomes, one is institutions that could have needed capital, maybe not a lot of capital but some and they would have been open to a deal will no longer feel the need to put themselves on the market because they’ll get just enough capital from the CPP program to bridge that gap and remain independent.

I think that’s actually a fairly likely outcome and it will take a certain amount of potential acquisitions off the market. Institutions that you could have worked with, containable problems, pluggable hole from a capital perspective but this will help them remain independent at least for a while longer while they figure out what they need to do to replace the CPP capital. You will probably therefore also see fewer institutions fail although, maybe the bid list will be about the same as it always was if the doctrine of camel four, camel five is such that they’re going to go through the resolution process anyways.

To me that doesn’t change the outcome and we certainly would be interested in participating on those types of opportunities so far though none have really materialized in Chicago yet but we’ve been in touch with all appropriate regulatory agencies and we remain ready, willing and able to participate. Finally, the bigger opportunity hasn’t necessarily manifested itself. We would be very cautious about such a thing but if it was the right opportunity we certainly would take a hard look at it, it just has not shown up yet that we thought it was a viable option for either side.

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