GS Financial Corp. (NASDAQ: GSLA) (the �Company�), the holding
company for Guaranty Savings Bank (the �Bank�), announced earnings
for the quarter ended December 31, 2006 of $85,000, or $.07 per
share, compared to a loss of $4.0 million, or $3.45 per share, for
the quarter ended December 31, 2005. For the year ended December
31, 2006, earnings were $2.1 million, or $1.74 per share, compared
to a loss of $3.7 million, or $3.11 per share, for the year ended
December 31, 2005. �This has been an outstanding year for GS
Financial and Guaranty Savings Bank,� noted President Stephen
Wessel. �We have achieved many of our goals in the past year with
regards to increased loan growth, enhanced product offerings,
increased profitability and improved credit quality. While it is
currently a challenging rate environment for all banks, I am very
excited about 2007 as we are well positioned to grow our
institution through well-planned branch network expansion while
continuing to participate in the recovery of the Gulf Coast
region.� Earnings for the fourth quarter of 2005 were adversely
affected by a $4.8 million provision for loan losses made in light
of potential loan losses caused by the impact of Hurricane Katrina.
The provision for loan losses was made upon management�s
consideration of the impact of both the economic damage suffered by
the Bank�s borrowers as a result of Hurricane Katrina as well as
wind and flood damage to the properties securing loans. The net
impact to earnings caused by this provision was a reduction of $3.2
million to earnings in the fourth quarter of 2005. While Katrina
hit in August, 2005, it was not until the fourth quarter of 2005,
when borrowers were required to resume payments, that there was
sufficient data to make a reasonable estimate of losses in the
Company�s loan portfolio. In 2006, in addition to further
information about the impact of Katrina, the Bank has also seen
substantial improvement in loan quality as evidenced by substantial
reductions in classified and past due loan balances. Based on more
current information on the loan portfolio, in the third quarter of
2006 the Bank reversed $2.0 million of the provision for loan
losses, resulting in an increase to 2006 net income of $1.3
million. Net interest income for the quarter ended December 31,
2006 was $1.4 million compared to $1.3 million for the same period
in 2005. For the year ended December 31, 2006 net interest income
was $6.1 million compared to $5.6 million for calendar 2005,
excluding the loan loss provision. The Company�s net interest
margin increased to 3.37% for the fourth quarter of 2006 from 3.10%
for the year earlier quarter and 3.58% for the year ended December
31, 2006 compared to 3.08% in 2005. Total assets of the Company at
December 31, 2006 amounted to $ 168.4 million compared to $177.6
million at December 31, 2005. There was significant growth in the
Company�s loan portfolio during 2006, which occurred in both the
commercial real estate and residential mortgage segments. Net loans
at December 31, 2006 were $94.0 million compared to $69.7 million
at December 31, 2005. Loan quality improved substantially in 2006,
and as a result, in the third quarter of 2006, the Bank recognized
a reversal of $2.0 million in the allowance for loan losses that
had previously been booked in 2005. The Bank has been formally
approved to sell residential mortgages in the secondary market by
both Freddie Mac and Fannie Mae. In the fourth quarter of 2006, the
Bank recognized $30,000 in gains on loans sold which is included in
non-interest income. FORWARD-LOOKING INFORMATION Statements
contained in this news release which are not historical facts may
be forward-looking statements as that term is defined in the
Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are subject to risks and uncertainties
which could cause actual results to differ materially from those
currently anticipated due to a number of factors. Factors which
could result in material variations include, but are not limited
to, changes in interest rates which could affect net interest
margins and net interest income, competitive factors which could
affect net interest income and noninterest income, changes in
demand for loans, deposits and other financial services in the
Company's market area; changes in asset quality, general economic
conditions as well as other factors discussed in documents filed by
the Company with the Securities and Exchange Commission from time
to time. In addition to risks and uncertainties described by the
Company in prior filings with the SEC, other risks and
uncertainties potentially impacting the Company are those related
to the Company in its primary market area impacted by Hurricane
Katrina, including the continuing effect of the storm and its
aftermath on the Company's operating expenses and on the Company's
borrowers and other customers. The Company undertakes no obligation
to update these forward-looking statements to reflect events or
circumstances that occur after the date on which such statements
were made. GS Financial Corp. Condensed Consolidated Statements of
Financial Condition (Unaudited) � � � ($ in thousands) December 31,
2006 December 31, 2005 ASSETS Cash & Due from Banks $ 1,892� $
3,040� Interest Bearing Deposits 6,544� 4,515� Federal Funds Sold
2,680� 15,000� Securities Available-for-Sale, at Fair Value 55,090�
77,344� Loans, Net 93,987� 69,657� Accrued Interest Receivable
2,004� 1,627� Premises & Equipment, Net 3,578� 2,257� Stock in
Federal Home Loan Bank, at Cost 982� 1,833� Real Estate
Held-for-Investment, Net 464� 478� Other Assets 1,161� 1,863� Total
Assets $ 168,382� $ 177,614� � LIABILITIES Interest Bearing
Deposits 119,599� 116,671� Non-Interest Bearing Deposits 3,390�
2,195� FHLB Advances 17,042� 32,106� Other Liabilities 1,064�
1,235� Total Liabilities $ 141,095� $ 152,207� � STOCKHOLDERS'
EQUITY Common Stock & Additional Paid in Capital 34,785�
34,599� Unearned ESOP Stock -� (239) Unearned RRP Trust Stock (573)
(698) Treasury Stock (32,493) (32,193) Retained Earnings 25,887�
24,136� Accumulated Other Comprehensive Loss (319) (198) Total
Stockholders' Equity $ 27,287� $ 25,407� Total Liabilities &
Stockholders' Equity $ 168,382� $ 177,614� � Selected Asset Quality
Data Total Non Performing Assets 191� 10,002� Non Performing Assets
to Total Assets 0.11% 5.61% Allowance for Loan Losses to Total
Loans 3.82% 7.58% GS Financial Corp. Condensed Consolidated
Statements of Income (Unaudited) � � For the three months ended
December 31, For the year ended December 31, ($ in thousands,
except per share data) 2006� 2005� 2006� 2005� Interest Income $
2,706� $ 2,486� $ 11,000� $ 10,466� Interest Expense 1,298� 1,182�
4,904� 4,856� � Net Interest Income 1,408� 1,304� 6,096� 5,610�
Provision for Loan Losses -� 4,793� (1,981) 4,793� Net Interest
Income (Loss) after Provision for Loan Losses 1,408� (3,489) 8,077�
817� � Noninterest Expense 1,346� 1,138� 4,926� 4,707� Net Income
(Loss) Before Non-Interest Income and Income Taxes 62� (4,627)
3,151� (3,890) � Noninterest Income (Loss) 65� (1,211) 50� (1,295)
Income (Loss) Before Tax Expense (Benefit) 127� (5,838) 3,201�
(5,185) � Income Tax Expense (Benefit) 42� (1,758) 1,088� (1,508)
Net Income (Loss) 85� (4,080) 2,113� (3,677) Net Income (Loss) Per
Common Share $ 0.07� $ (3.45) $ 1.74� $ (3.11) � Selected Operating
Data Weighted Average Shares Outstanding 1,209,180� 1,180,941�
1,212,173� 1,181,313� Return on Average Assets 1 0.20% -9.02% 1.21%
-1.96% Non Interest Expense/Average Assets 1 3.13% 2.52% 2.82%
2.51% Net Interest Margin 3.37% 3.10% 3.58% 3.08% 1 Annualized for
the three-month periods ended December 31, 2006 and 2005.
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