Shares of BankFinancial Corp. BFIN gained 1.2% to close at $13.14 on Tuesday, after the company’s board of directors approved a new share repurchase program. The approval authorizes the company to buy back up to 1.06 million shares, or nearly 5% of the total common stock outstanding.
As per the announcement, BankFinancial will repurchase in the open market or through negotiated transactions at management’s discretion, subject to stock price and volumes. Further, the company’s working capital, inclusive of $16.7 million worth of dividend received from its banking subsidiary on Mar 27, 2015, will be used to fund the buyback.
While there are no restrictions on the number, price or timing of the share repurchase, the program can be modified, suspended or discontinued any time. Moreover, the execution is subject to the company’s internal limitations as well as Rule 10b5-1 and 10b-18 of the Securities and Exchange Commission (‘SEC’), apart from other regulatory requisites.
Notably, BankFinancial restricts internal trading of its shares. As a result, repurchase activity will likely commence three business days after the company files form 10Q with the SEC for the current quarter. Unless otherwise extended by the board, the program is scheduled to expire on Dec 31, 2015.
Reportedly, the company repurchased 4.2 million shares under the previous program (authorization of 5.05 million shares) which expired in Nov 2012. Subsequently, the company conducted no buybacks during 2014. However, it enhanced shareholders’ value by paying $1.7 million as cash dividends. The latest announcement seems to have boosted investor’s confidence in the stock, as evident from the surge in the stock’s price.
As of Dec 31, 2014, BankFinancial remained well-capitalized with $9.7 million of cash and cash equivalents. Such healthy capital and liquidity balances are expected to support steady capital deployment activities, going forward.
Currently, BankFinancial carries a Zacks Rank #2 (Buy). Investors interested in the Finance-Savings and Loans space can consider Mutualfirst Financial Inc. MFSF, Riverview Bancorp Inc. RVSB and Dime Community Bancshares Inc. DCOM. All these stocks sport a Zacks Rank #1 (Strong Buy).
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