BankFinancial Corporation (BFIN)

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BankFinancial Corporation (BFIN)

Q4 2008 Earnings Call

February 24, 2009 10:30 AM ET


F. Morgan Gasior - Chairman and Chief Executive Officer

Valerie Ostapa-Kontos - Assistant Corporate Secretary

Elizabeth A. Zoolan - Senior Vice President, Controller


Mark Zahorik - Keeley Asset Management

Gregory Lapin - Decade



Good day ladies and gentlemen and welcome to the Fourth Quarter 2008 BankFinancial Corporation Earnings Conference Call. My name is Camishia and I will be your operator for today. At this time all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions). As a reminder this conference is being recorded for replay purposes.

I would now like to turn the call over to your host for toady's call Mr. F. Morgan Gasior, Chairman of the Board and CEO. Please proceed sir.

F. Morgan Gasior

Good morning, welcome everyone. At this time I'd like to introduce, Assistant Corporate Secretary Valerie Ostapa-Kontos who will read our 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 report, on Form 10-K for the year ended December 31, 2008, and other filings with the Securities & Exchange Commission. And 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

Thank you, Valerie. All filings are complete, but we do have one announcement concerning an upcoming Investor Conference. So I'd like to introduce Senior Vice President, Elizabeth Doolan with that information.

Elizabeth A. Zoolan

We will be attending the Sandler O'Neill West Coast Investor Conference on March 2nd and 3rd. For further information please contact our Investor Relations department.

F. Morgan Gasior

Thank you Elizabeth. All filings are complete and we have nothing new to add. So we'll be happy to open it up for questions at this time.

Question-and-Answer Session


(Operator Instructions). And your first question comes from the line of Mark Zahorik of Keeley Asset Management. Please proceed.

Mark Zahorik - Keeley Asset Management

Good morning. I noticed that over the course of the year, that you bought back, it looks like about 4.5% little bit less than that of the stock outstanding, and continued to buyback stock in the fourth quarter. Just was wondering what your intention was going forward with the excess capital, if you could give me -- give a little bit of color on that?

F. Morgan Gasior

Well, as we've said in previous calls, two things; one, the Board expanded the share repurchase program late last year and setup a structure for a few of us that we continue to observe... I would anticipate that given market conditions, share repurchases will be of increasing interest, given the current trading levels of the stock. As excess capital, share repurchases are one possible use of excess capital. Obviously, acquisitions and organic growth are two others, and we want to make sure at all times that we have plenty of capital to run the business especially in very turbulent times, both at the holding company and at the bank. Two, and we want to make sure that we have capital available for growth opportunity. So, while share repurchases are an important component to capital management, they are not the exclusive component.

Mark Zahorik - Keeley Asset Management

Alright, thank you. If I could just ask a follow-on question there, you mentioned acquisitions I am just wondering, there is probably opportunities in this kind of a market right now through the FDIC, or just others that are approaching you, because you do have a healthy level of excess capital. I'm just wondering, would you lean more towards that as of way of deploying this capital or would you prefer just to buyback stock?

F. Morgan Gasior

It's a very good question. Actually, a couple of different elements to that question that I can address for you. First; regulatory source deals, the FDIC is an example, we are principally interested in transactions that would be probably best represented by a clean purchase and assumption type transaction. To date, in Illinois we really haven't seen that opportunity up. The FDIC seems to be down the payout of doing either loss sharing deals or hold bank deals. And truthfully we're not particularly interested in taking on somebody else's problems particularly in an environment where it seems that the exit strategies are diminished and could take quite a long time to do. And it just directs us from doing what we want to do with the core franchise.

It's not to say we would never do one, we just haven't seen the right opportunity. And the reason some of these institutions are failing are because of accepted exposures to either residential assets or construction assets. And in either case those markets are extremely difficult to work your way through in any kind of foreseeable timeframe.

So the clean purchase on assumption is the favor transaction. I think both management and particularly the Board of Directors would look at anything else with an extremely critical eye before they pull the trigger on it.

Other deals on a privately negotiated basis, again there is at least an element of a GAAP and expectations from where institutions are trading now and where the market values as opposed to sellers expectations. And therefore there are not as many opportunities as you might think. But we do think there will be some over the course of time for any number of reasons and we continue to remain active within the markets talking to different people making sure we're in the loop as far as what's possible. And it could be something as simple as an organization that has had some issues, they resolve them but they are low on capital, they don't necessarily want to participate in TARP, or the successors of TARP because of it's various limitations and I think perhaps the combination where the two organizations come together and there is role for the current management and they very well might be with an organization makes more sense.

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