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): March 9, 2011

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 March 9, 2011, the Company issued a press release announcing the filing of its Annual Report on Form 10-K for the year ended December 31, 2010 and issued the Fourth Quarter 2010 Quarterly Financial and Statistical Supplement for the latest five quarters. The press release also reported earnings for the year ended December 31, 2010. The press release and Quarterly Financial and Statistical Supplement are included as Exhibits 99.1 and 99.2 to this report.

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 March 9, 2011
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: March 9, 2011	By:	/s/  F. MORGAN GASIOR
		F. Morgan Gasior
		Chairman of the Board, Chief Executive
		Officer and President

3

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

BankFinancial Corporation Reports Financial Results

for the Fourth Quarter of 2010 and the Full Year of 2010

Burr Ridge, Illinois—(March 9, 2011) BankFinancial Corporation (Nasdaq – BFIN) (“BankFinancial”) reported a net loss of $5.5 million and basic loss per share of $0.28 for the three months ended December 31, 2010, compared to a net loss of $1.6 million and basic loss share of $0.08 for the three months ended December 31, 2009.

BankFinancial’s operating results for the fourth quarter of 2010 included an $8.1 million provision for loan losses and $4.7 million recorded in nonperforming asset expense and operations of other real estate owned (“OREO”) due to fourth quarter 2010 OREO expense accruals, OREO property write-downs to net realizable value, and final resolution of certain classified loans and assets. 2009 fourth quarter results included $4.2 million of provision for loan losses, partially offset by a $1.3 million gain recognized on the sale of our merchant processing operations.

For the year ended December 31, 2010, BankFinancial recorded a net loss of $4.3 million and basic loss per share of $0.22, compared to a net loss of $738,000 for 2009. The net loss in 2010 was due in substantial part to our recording a $12.1 million provision for loan losses, $7.3 million for nonperforming asset management expense and operations of OREO combined with a $1.8 million decrease in net interest income. The net loss in 2009 was due to the recording of an $8.8 million provision for loan losses, a $2.1 million increase in FDIC expense and $1.4 million in combined pre-tax losses that we recorded in connection with the impairment and subsequent sale of our Freddie Mac preferred stocks. The impact of these items was partially offset by a $1.3 million gain that we recognized on the sale of our merchant processing operations in 2009.

At December 31, 2010, BankFinancial had total assets of $1.531 billion, total loans of $1.051 billion, total deposits of $1.235 billion and stockholders’ equity of $253 million. Its wholly-owned subsidiary, BankFinancial, F.S.B., is considered well capitalized under applicable banking laws and regulations, with a total capital to risk-weighted assets ratio of 18.38%, a Tier 1 capital to risk-weighted assets ratio of 17.20%, and a Tier 1 capital to adjusted total assets ratio of 12.48% at December 31, 2010. The minimum capital requirements that must be met to be considered well capitalized are a total capital to risk weighted assets ratio of at least 10%, a Tier 1 capital to risk weighted assets ratio of at least 6%, and a Tier 1 capital to adjusted total assets ratio of at least 5%.

BankFinancial filed its Annual Report on Form 10-K for the year ended December 31, 2010 and a Quarterly Financial and Statistical Supplement on Form 8-K with the SEC today. Both reports will be available 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. The Quarterly Financial and Statistical Supplement includes comparative GAAP and non-GAAP performance data and financial measures for the most recent five quarters.

BankFinancial’s management will review fourth quarter and full year 2010 results in a conference call and webcast for stockholders and analysts on Friday, March 11, 2011 at 9:30 a.m. Chicago Time. The conference call may be accessed by calling (866) 783-2145 and using participant passcode 24315181. 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 on March 25, 2011 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 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

EX-99.2

Exhibit 99.2

BANKFINANCIAL CORPORATION

FOURTH QUARTER 2010

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)

	2010												2009
PERFORMANCE MEASUREMENTS:	IVQ			IIIQ			IIQ			IQ			IVQ
Return on assets (ratio of net income (loss) to average total assets) (1)		(1.40)%			0.19%			(0.07)%			0.18%			(0.41)%
Return on equity (ratio of net income (loss) to average equity) (1)		(8.41)			1.13			(0.44)			1.08			(2.40)
Net interest rate spread (1)		3.41			3.25			3.30			3.48			3.38
Net interest margin (1)		3.57			3.45			3.53			3.73			3.67
Efficiency ratio		104.71			89.65			84.81			86.42			89.95
Noninterest expense to average total assets (1)		4.00			3.35			3.14			3.25			3.57
Average interest-earning assets to average interest-bearing liabilities		123.30			122.26			122.10			122.57			123.82
Number of full service offices		18			18			18			18			18
Employees (full time equivalents)		328			327			338			352			372
	2010												2009
SUMMARY STATEMENT OF OPERATIONS:	IVQ			IIIQ			IIQ			IQ			IVQ
Total interest income	$	15,448		$	15,892		$	16,451		$	17,145		$	17,980
Total interest expense		2,442			3,138			3,677			3,929			4,483
Net interest income before provision		13,006			12,754			12,774			13,216			13,497
Provision for loan losses		8,148			419			2,665			851			4,193
Net interest income		4,858			12,335			10,109			12,365			9,304
Noninterest income		1,903			1,958			1,812			1,455			2,135
Noninterest expense		15,611			13,190			12,370			12,678			14,061
Income (loss) before income tax		(8,850	)		1,103			(449	)		1,142			(2,622	)
Income tax expense (benefit)		(3,378	)		366			(161	)		426			(1,026	)
Net income (loss)	$	(5,472	)	$	737		$	(288	)	$	716		$	(1,596	)
Basic earnings (loss) per common share	$	(0.28	)	$	0.04		$	(0.01	)	$	0.04		$	(0.08	)
Diluted earnings (loss) per common share	$	(0.28	)	$	0.04		$	(0.01	)	$	0.04		$	(0.08	)
	2010												2009
NONINTEREST INCOME AND EXPENSE:	IVQ			IIIQ			IIQ			IQ			IVQ
Noninterest Income:
Deposit service charges and fees	$	679		$	776		$	792		$	773		$	869
Other fee income		452			482			500			434			450
Insurance commissions and annuities income		227			234			179			135			234
Gain on sales of loans, net		184			202			68			47			175
Gain (loss) on sales of securities		-			-			31			-			(988	)
Loss on disposition of premises and equipment		-			(2	)		(17	)		-			(35	)
Loan servicing fees		137			143			154			170			162
Amortization and impairment of servicing assets		(64	)		(90	)		(78	)		(243	)		(17	)
Earnings on bank owned life insurance		144			115			92			79			60
Other		144			98			91			60			1,225
Total noninterest income	$	1,903		$	1,958		$	1,812		$	1,455		$	2,135
Noninterest Expense:
Compensation and benefits	$	5,993		$	6,583		$	6,552		$	7,211		$	7,285
Office occupancy and equipment		1,247			1,723			1,609			1,801			1,845
Advertising and public relations		437			321			303			216			399
Information technology		958			893			961			921			915
Supplies, telephone, and postage		438			391			406			361			453
Amortization of intangibles		392			399			399			405			417
Loss on impairment of securities		-			-			-			-			-
Nonperforming asset management		1,898			821			355			268			471
Operations of other real estate owned		2,784			554			500			134			788
FDIC insurance premiums		519			520			532			555			461
Other		945			985			753			806			1,027
Total noninterest expenses	$	15,611		$	13,190		$	12,370		$	12,678		$	14,061

  (1) Annualized

Page 2

BANKFINANCIAL CORPORATION

SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA

Latest Five Quarters

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

	2010								2009
	IVQ		IIIQ		IIQ		IQ		IVQ
SUMMARY STATEMENT OF FINANCIAL CONDITION
ASSETS:
Cash and due from other financial institutions	$	18,097	$	12,855	$	13,618	$	13,934	$	20,355
Interest-bearing deposits in other financial institutions		202,713		248,857		205,666		161,897		87,843
Securities, at fair value		120,747		78,272		84,688		94,447		102,126
Loans held-for-sale		2,716		3,051		212		-		-
Loans receivable, net		1,050,766		1,098,505		1,123,949		1,152,385		1,218,540
Other real estate owned and other real estate owned in process		14,622		11,158		8,929		6,882		4,084
Stock in Federal Home Loan Bank, at cost		15,598		15,598		15,598		15,598		15,598
Premises and equipment, net		32,495		32,934		33,575		34,305		34,614
Intangible assets		25,266		25,658		26,057		26,456		26,861
Bank owned life insurance		20,581		20,437		20,322		20,230		20,151
FDIC prepaid expense		4,845		5,315		5,785		6,268		6,777
Income tax receivable		1,749		515		9,057		9,108		11,729
Deferred taxes, net		9,333		6,726		6,735		6,160		6,561
Other assets		11,127		10,539		11,448		10,984		11,724
Total assets	$	1,530,655	$	1,570,420	$	1,565,639	$	1,558,654	$	1,566,963
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Deposits	$	1,235,377	$	1,260,694	$	1,253,259	$	1,231,971	$	1,233,395
Borrowings		23,749		29,275		35,566		48,092		50,784
Other liabilities		18,244		20,906		17,417		14,882		19,181
Total liabilities		1,277,370		1,310,875		1,306,242		1,294,945		1,303,360
Stockholders’ equity		253,285		259,545		259,397		263,709		263,603
Total liabilities and stockholders’ equity	$	1,530,655	$	1,570,420	$	1,565,639	$	1,558,654	$	1,566,963
	2010								2009
DEPOSITS:	IVQ		IIIQ		IIQ		IQ		IVQ
Non-interest-bearing demand	$	112,549	$	99,648	$	103,602	$	101,284	$	108,308
Savings deposits		98,894		97,757		97,907		99,107		96,107
Money market accounts		341,048		357,557		357,078		336,089		322,126
Interest-bearing NOW accounts		302,812		296,537		294,157		290,929		303,219
Certificates of deposit – Retail		379,975		405,999		390,635		390,587		388,871
Certificates of deposit – Wholesale		99		3,196		9,880		13,975		14,764
Total certificates of deposit		380,074		409,195		400,515		404,562		403,635
Total deposits	$	1,235,377	$	1,260,694	$	1,253,259	$	1,231,971	$	1,233,395

Page 3

BANKFINANCIAL CORPORATION

SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA

Latest Five Quarters

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

	2010																2009
LOANS:	IVQ				IIIQ				IIQ				IQ				IVQ
One-to-four family residential real estate loans		$	256,300			$	267,800			$	276,440			$	283,556			$	289,623
Multi-family mortgage loans			296,916				306,509				305,519				308,268				329,227
Nonresidential real estate loans			281,987				293,197				306,993				307,816				316,607
Construction and land loans			18,398				17,583				18,477				26,186				32,577
Commercial loans			64,679				74,621				72,716				70,420				88,067
Commercial leases			151,107				154,254				158,990				169,633				176,821
Consumer loans			2,182				2,484				2,263				2,394				2,539
Total loans			1,071,569				1,116,448				1,141,398				1,168,273				1,235,461
Net deferred loan origination costs			1,377				1,474				1,520				1,628				1,701
Allowance for loan losses			(22,180	)			(19,417	)			(18,969	)			(17,516	)			(18,622	)
Loans, net		$	1,050,766			$	1,098,505			$	1,123,949			$	1,152,385			$	1,218,540
	2010																2009
CREDIT QUALITY RATIOS:	IVQ				IIIQ				IIQ				IQ				IVQ
Nonperforming Assets:
Nonaccrual loans:
One-to-four family residential real estate loans		$	10,059			$	9,180			$	10,788			$	9,064			$	11,453
Multi-family mortgage loans			13,228				18,287				16,405				13,033				13,961
Nonresidential real estate loans			12,428				9,858				9,511				10,810				11,074
Construction and land loans			6,139				6,139				6,948				6,948				8,841
Commercial loans			3,766				4,715				4,508				4,110				4,160
Commercial leases			72				72				-				-				-
Consumer loans			3				3				3				-				-
Nonaccrual loans			45,695				48,254				48,163				43,965				49,489
Other real estate owned:
One-to-four family residential real estate			2,770				2,571				1,462				1,254				601
Multi-family real estate			2,486				1,418				2,649				1,958				976
Nonresidential real estate			5,835				1,590				1,815				2,056				1,416
Land			1,745				1,405				1,583				1,614				1,091
Other real estate owned			12,836				6,984				7,509				6,882				4,084
Other real estate owned in process:
One-to-four family residential real estate			245				1,105				117				-				-
Multi-family real estate			-				615				-				-				-
Nonresidential real estate			1,541				1,573				1,303				-				-
Land			-				881				-				-				-
Other real estate owned in process			1,786				4,174				1,420				-				-
Nonperforming assets		$	60,317			$	59,412			$	57,092			$	50,847			$	53,573
Asset Quality Ratios:
Nonperforming assets to total assets			3.94%				3.78%				3.65%				3.26%				3.42%
Nonaccrual loans to total loans			4.26				4.32				4.22				3.76				4.01
Allowance for loan losses to nonaccrual loans			48.54				40.24				39.39				39.84				37.63
Allowance for loan losses to total loans			2.07				1.74				1.66				1.50				1.51
Net charge-off ratio (1)			1.96				(0.01)				0.42				0.66				0.80
(1)  Annualized

Page 4

BANKFINANCIAL CORPORATION

SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA

Latest Five Quarters

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

	2010												2009
ALLOWANCE FOR LOAN LOSSES:	IVQ			IIIQ			IIQ			IQ			IVQ
Beginning balance	$	19,417		$	18,969		$	17,516		$	18,622		$	16,923
Provision for loan losses		8,148			419			2,665			851			4,193
Loans charged off		(5,504	)		(570	)		(1,241	)		(1,974	)		(2,573	)
Recoveries		119			599			29			17			79
Ending balance	$	22,180		$	19,417		$	18,969		$	17,516		$	18,622
	2010												2009
SELECTED AVERAGE BALANCES:	IVQ			IIIQ			IIQ			IQ			IVQ
Total average assets	$	1,559,424		$	1,576,186		$	1,574,013		$	1,559,221		$	1,573,800
Total average interest-earning assets		1,446,151			1,468,442			1,452,835			1,437,236			1,458,026
Average loans		1,099,919			1,116,574			1,153,960			1,194,313			1,245,601
Average securities		80,837			78,751			88,017			96,778			103,141
Average stock in FHLB		15,598			15,598			15,598			15,598			15,598
Average other interest-earning assets		249,797			257,519			195,260			130,547			93,686
Total average interest-bearing liabilities		1,172,904			1,201,045			1,189,847			1,172,612			1,177,492
Average interest-bearing deposits		1,146,141			1,170,022			1,146,869			1,122,434			1,109,892
Average borrowings		26,763			31,023			42,978			50,178			67,600
Average stockholders’ equity		260,192			260,073			264,043			264,739			266,542
	2010												2009
SELECTED YIELDS AND COST OF FUNDS (1):	IVQ			IIIQ			IIQ			IQ			IVQ
Total average interest-earning assets		4.24%			4.29%			4.54%			4.84%			4.89%
Average loans		5.24			5.30			5.36			5.45			5.36
Average securities		3.73			4.08			4.15			4.22			4.22
Average other interest-earning assets		0.25			0.25			0.25			0.25			0.25
Total average interest-bearing liabilities		0.83			1.04			1.24			1.36			1.51
Average interest-bearing deposits		0.80			1.00			1.20			1.31			1.46
Average borrowings		1.94			2.29			2.27			2.42			2.41
Net interest rate spread		3.41			3.25			3.30			3.48			3.38
Net interest margin		3.57			3.45			3.53			3.73			3.67

  (1) Annualized

Page 5

BANKFINANCIAL CORPORATION

SELECTED QUARTERLY FINANCIAL AND STATISTICAL DATA

Latest Five Quarters

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

	2010												2009
CAPITAL RATIOS:	IVQ			IIIQ			IIQ			IQ			IVQ
BankFinancial Corporation:
Equity to total assets (end of period)		16.55%			16.53%			16.57%			16.92%			16.82%
Tangible equity to tangible total assets (end of period)		14.74			15.01			15.15			15.40			15.26
Risk-based total capital ratio		21.51			21.71			21.44			21.10			20.06
Risk-based tier 1 capital ratio		20.33			20.54			20.31			20.00			18.97
Tier 1 leverage ratio		14.73			15.01			15.16			15.41			15.27
BankFinancial FSB:
Risk-based total capital ratio		18.38			18.56			18.06			17.41			16.40
Risk-based tier 1 capital ratio		17.20			17.39			16.94			16.32			15.31
Tier 1 leverage ratio		12.48			12.70			12.74			12.67			12.44
	2010												2009
COMMON STOCK AND DIVIDENDS:	IVQ			IIIQ			IIQ			IQ			IVQ
Stock Prices:
Close	$	9.75		$	9.17		$	8.31		$	9.17		$	9.90
High		9.90			9.38			9.99			10.16			10.40
Low		9.06			8.12			8.28			9.01			9.07
Book value per share	$	12.02		$	12.32		$	12.32		$	12.31		$	12.31
Tangible book value per share	$	10.82		$	11.11		$	11.08		$	11.08		$	11.05
Cash dividends declared and paid on common stock	$	0.07		$	0.07		$	0.07		$	0.07		$	0.07
Stock repurchases	$	-		$	-		$	3,124		$	-		$	-
Stock repurchases – shares		-			-			356,411			-			-
	2010												2009
EARNINGS PER SHARE COMPUTATIONS:	IVQ			IIIQ			IIQ			IQ			IVQ
Net income (loss)	$	(5,472	)	$	737		$	(288	)	$	716		$	(1,596	)
Average common shares outstanding		21,062,368			21,059,966			21,301,212			21,416,377			21,416,377
Less: Unearned ESOP shares		(1,399,056	)		(1,423,724	)		(1,457,047	)		(1,488,018	)		(1,512,499	)
Unvested restricted stock shares		(89,131	)		(106,850	)		(106,850	)		(108,650	)		(197,672	)
Weighted average common shares outstanding		19,574,181			19,529,392			19,737,315			19,819,709			19,706,206
Plus: Dilutive common shares equivalents		-			57,542			-			-			-
Weighted average dilutive common shares outstanding		19,574,181			19,586,934			19,737,315			19,819,709			19,706,206
Number of anti-dilutive stock options excluded from the diluted earnings per share calculation		2,287,553			2,298,603			2,320,803			2,322,603			2,322,603
Weighted average exercise price of anti-dilutive options	$	16.52		$	16.51		$	16.51		$	16.51		$	16.51
Basic earnings (loss) per common share	$	(0.28)		$	0.04		$	(0.01)		$	0.04		$	(0.08)
Diluted earnings (loss) per common share	$	(0.28)		$	0.04		$	(0.01)		$	0.04		$	(0.08)

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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, 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.

These measures include core return on assets, core return on equity, core dilutive earnings (loss) per share, core operating expense to average total assets, and core efficiency ratio. Management also believes that by excluding equity-based compensation expense, amortization of intangibles expenses, loss on sale of our Freddie Mac preferred stocks, loss on impairment of securities, gain on sale of merchant processing operations, and the FDIC special assessment from other noninterest income and expense, these ratios and earnings (loss) per share better reflect our core operating performance.

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BANKFINANCIAL CORPORATION

NON-GAAP FINANCIAL MEASURES

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

FOR THE QUARTERS AND YEARS MONTH PREIODS

ENDED DECEMBER 31, 2010 AND 2009

	Three months  ended December 31,						Year ended ended December 31,
	2010			2009			2010			2009
Core operating income: (loss)
Net loss	$	(5,472	)	$	(1,596	)	$	(4,307	)	$	(738	)
Adjustments:
Equity-based compensation		735			682			2,650			3,038
Amortization of intangibles		392			417			1,595			1,690
Loss (gain) on sales of securities		-			988			-			988
Loss on impairment of securities		-			-			-			401
Gain on sale of merchant processing operations		-			(1,300	)		-			(1,300	)
FDIC special assessment		-			-			-			700
Tax effect on adjustments assuming 39.745% tax rate		(448	)		(313	)		(1,687	)		(2,193	)
Core operating income (loss)	$	(4,793	)	$	(1,122	)	$	(1,749	)	$	2,586
Return on assets (ratio of net income to average total assets) (1)		(1.41)%			(0.41)%			(0.28)%			(0.05)%
Core return on assets (ratio of core operating income to average total assets) (1)		(1.23)%			(0.29)%			(0.11)%			0.17%
Return on equity (ratio of net income (loss) to average equity) (1)		(8.41)%			(2.40)%			(1.64)%			(0.28)%
Core return on equity (ratio of core operating income (loss) to average equity)(1)		(7.37)%			(1.68)%			(0.67)%			0.97%
Diluted earnings (loss) per common share	$	(0.28)		$	(0.08)		$	(0.22)		$	(0.04)
Core dilutive earnings (loss) per common share	$	(0.24)		$	(0.06)		$	(0.09)		$	0.13
Core operating expenses:
Noninterest expenses	$	15,611		$	14,061		$	53,849		$	52,731
Adjustments:
Equity-based compensation		(735)			(682)			(2,650)			(3,038)
Amortization of intangibles		(392)			(417)			(1,595)			(1,690)
Loss on impairment of securities		-			-			-			(401)
FDIC special assessment		-			-			-			(700)
Core operating expenses	$	14,484		$	12,962		$	49,604		$	46,902
Noninterest expense to average total assets (1)		4.00%			3.57%			3.45%			3.36%
Core operating expense to average total assets (1)		3.72%			3.30%			3.17%			2.99%
Efficiency ratio (ratio of noninterest expense to net interest income plus noninterest income)		104.71%			89.95%			91.46%			86.74%
Core efficiency ratio (ratio of core operating expense to net interest income plus core noninterest income)		97.15%			84.61%			84.25%			77.55%
(1)  Annualized for the three-month periods.

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BANKFINANCIAL CORPORATION

NON-GAAP FINANCIAL MEASURES

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

	2010												2009
FOR THE LATEST FIVE QUARTERS	IVQ			IIIQ			IIQ			IQ			IVQ
Core operating income (loss)
Net income (loss)	$	(5,472	)	$	737		$	(288	)	$	716		$	(1,596	)
Adjustments:
Equity-based compensation		735			688			595			632			682
Amortization of intangibles		392			399			399			405			417
Loss on sales of Freddie Mac preferred stocks		-			-			-			-			988
Loss on impairment of securities		-			-			-			-			-
Gain on sale of merchant processing operations		-			-			-			-			(1,300	)
Tax effect on adjustments assuming 39.745% tax rate		(448	)		(432	)		(395	)		(412	)		(313	)
Core operating income (loss)	$	(4,793	)	$	1,392		$	311		$	1,341		$	(1,122	)
Return on assets (ratio of net income (loss) to average total assets) (1)		(1.41)%			0.19%			(0.07)%			0.18%			(0.41)%
Core return on assets (ratio of core operating income (loss) to average total assets) (1)		(1.23)%			0.35%			0.08%			0.34%			(0.29)%
Return on equity (ratio of net income (loss) to average equity)(1)		(8.41)%			1.13%			(0.44)%			1.08%			(2.40)%
Core return on equity (ratio of core operating income (loss) to average equity) (1)		(7.37)%			2.14%			0.47%			2.03%			(1.68)%
Diluted earnings (loss) per common share	$	(0.28	)	$	0.04		$	(0.01	)	$	0.04		$	(0.08	)
Core diluted earnings (loss) per common share	$	(0.24	)	$	0.07		$	0.02		$	0.07		$	(0.06	)
Core operating expense:
Noninterest expense	$	15,611		$	13,190		$	12,370		$	12,678		$	14,061
Adjustments:
Equity-based compensation		(735	)		(688	)		(595	)		(632	)		(682	)
Amortization of intangibles		(392	)		(399	)		(399	)		(405	)		(417	)
Core operating expense	$	14,484		$	12,103		$	11,376		$	11,641		$	12,962
Noninterest expense to average total assets (1)		4.00%			3.35%			3.14%			3.25%			3.57%
Core operating expense to average total assets (1)		3.72%			3.07%			2.89%			2.99%			3.30%
Efficiency ratio (ratio of noninterest expense to net interest income plus noninterest income)		104.71%			89.65%			84.81%			86.42%			89.95%
Core efficiency ratio (ratio of core operating expense to net interest income plus core noninterest income)		97.15%			82.27%			77.99%			79.35%			84.61%

  (1) Annualized for the three-month periods.

Page 9