GS Financial Corp. (NASDAQ Global Market: GSLA) (the “Company”),
the holding company for Guaranty Savings Bank (“Guaranty”),
reported earnings for the quarter ended September 30, 2009 of
$104,000, or $0.08 per share diluted, compared with earnings of
$270,000, or $0.21 per share diluted, for the same period in 2008.
Earnings for the year to date period ended September 30, 2009 were
$985,000, or $0.78 per share diluted, up from earnings of $164,000,
or $0.13 per share diluted, for the same period in 2008. Our
results of operations were impacted by an increase in deposit
insurance premiums, including a special assessment, which totaled
$62,000 and $247,000 for the three and nine months ended September
30, 2009, compared to $13,000 and $21,000 for the respective prior
year periods.
President Stephen E. Wessel commented, “We are pleased that we
continue to increase our net interest income. Our business
development initiatives emphasize growth in low cost deposits and
risk adjusted loan pricing. On October 5, 2009, we opened a full
service branch in the Elmwood Business Park. This new branch is
reflective of our commitment to build our customer base and expand
customer relationships.”
Highlights of the third quarter and first nine months of 2009
include:
- Total assets at September 30,
2009 were $270.9 million, up approximately $49.1 million, or 22.1%,
from December 31, 2008.
- Average loans increased by $38.3
million, or 27.9%, during the first nine months of 2009 from $137.4
million at September 30, 2008 to $175.7 million at September 30,
2009, with the majority of the growth in both residential and
nonresidential real estate secured loans.
- Deposits increased during the
first nine months of 2009 by $59.0 million, or 42.1%, from $140.1
million at December 31, 2008 to $199.1 million at September 30,
2009. This includes $2.8 million, or 35.2%, of growth in
noninterest-bearing deposits.
- Federal Home Loan Bank advances
decreased by $11.4 million from $52.0 million at December 31, 2008
to $40.6 million at September 30, 2009.
- Noninterest expense as a
percentage of average assets was 2.80% for the first nine months of
2009 as compared to 3.29% for the same period in the prior
year.
Net interest income for the quarter ended September 30, 2009 was
$2.1 million, which represents an increase of $251,000, or 13.9%,
from $1.8 million for the same period in 2008. Net interest income
for the first nine months of 2009 was $5.9 million, up $942,000, or
19.1%, from $4.9 million during the same period in 2008. The
increase in net interest income when comparing the three and nine
periods ended September 30, 2009 to the same periods in the prior
year was primarily due to a significant increase in the average
balance of loans and a decrease in the overall cost of
interest-bearing deposits which was partially offset by a decrease
in the yield on investments including overnight funds and an
increase in the average balance of interest-bearing deposits. Mr.
Wessel continued, “We expect further reductions in the cost of
funds as higher cost certificates of deposit continue to mature and
renew into certificates carrying lower rates of interest.”
Net interest margin was 3.19% for the third quarter of 2009,
down 33 basis points from 3.52% for the third quarter of 2008. Net
interest margin for the nine months ended September 30, 2009 was
3.20% compared with 3.38% for the same period in the prior year.
The decreases in net interest margin when comparing the three and
nine month periods ended September 30, 2009 to the same periods in
prior year are primarily due to a slight decrease in the average
interest rate spread coupled with strong growth in both the average
balance of loans and deposits.
Non-performing assets increased by $3.5 million, or 142.2%, from
$2.5 million at December 31, 2008 to $6.0 million at September 30,
2009. The increase in non-performing assets is primarily due to two
renovation loans totaling $1.6 million to a commercial borrower
that are secured by non-owner occupied, residential real estate
located in uptown New Orleans, Louisiana, and non-owner occupied,
commercial real estate located in Algiers, Louisiana. These
properties are currently in the process of foreclosure. In
addition, other real estate owned as of September 30, 2009 includes
a $1.4 million multifamily dwelling that was previously under
renovation which is located in the historic district of the French
Quarter in New Orleans, Louisiana. The foreclosure proceedings for
this property were completed in April 2009, and the Company has
been marketing it for sale since May 2009.
An additional provision for loan losses of $200,000 was recorded
during the third quarter of 2009 based on refinements to the
existing reserve methodology as well as the Company’s assessment of
its credit risk while considering the overall level of loan
delinquencies and adversely classified loans. The Company believes
that the recorded allowance for loan losses is sufficient to cover
the potential losses in its loan portfolio.
Noninterest income increased by $192,000, or 362.3%, from
$53,000 in the third quarter of 2008 to $245,000 for the third
quarter of 2009. For the first nine months of 2009, noninterest
income was $1.1 million as compared to a loss of $357,000 for the
same period in 2008. The significant increase in noninterest income
was primarily due to strong sales of residential loans in the
secondary market during the first nine months of 2009 and the
recognition of a non-cash impairment charge of $651,000 (pre-tax)
and $430,000 (after-tax) related to the Company’s investment in
mutual funds that hold mortgage-backed securities during the same
period in 2008.
Noninterest expense for the third quarter of 2009 was $1.9
million, up approximately $480,000, or 33.1%, from $1.4 million for
the third quarter of 2008. Noninterest expense for the year to date
period ended September 30, 2009 was $5.4 million, which represents
an increase of $1.0 million, or 24.2%, from $4.3 million for the
same period in the prior year. The increase in noninterest expense
is primarily due to additional mortgage originator commissions,
FDIC deposit insurance premiums, and legal expenses associated with
an agreement we entered into with certain shareholders.
Albert J. Zahn, Jr., Chairman of the Board of Directors of GS
Financial Corp. announced that the Board of Directors, at its
meeting on October 22, 2009, declared a quarterly cash dividend of
$0.10 per share. The dividend is payable to shareholders of record
as of November 2, 2009 and will be paid on November 18, 2009.
FORWARD-LOOKING INFORMATION
Statements contained in this news release which are not
historical facts may be forward-looking statements as that term is
defined in the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements are subject to risks and
uncertainties which could cause actual results to differ materially
from those currently anticipated due to a number of factors.
Factors which could result in material variations include, but are
not limited to, changes in interest rates which could affect net
interest margins and net interest income, competitive factors which
could affect net interest income and noninterest income, changes in
demand for loans, deposits and other financial services in the
Company's market area; changes in asset quality, general economic
conditions as well as other factors discussed in documents filed by
the Company with the Securities and Exchange Commission from time
to time. In addition to risks and uncertainties described by the
Company in prior filings with the SEC, other risks and
uncertainties potentially impacting the Company are those related
to the Company in its primary market area impacted by Hurricane
Katrina, including the continuing effect of the storm and its
aftermath on the Company's operating expenses and on the Company's
borrowers and other customers. The Company undertakes no obligation
to update these forward-looking statements to reflect events or
circumstances that occur after the date on which such statements
were made.
GS Financial Corp. Condensed Consolidated
Statements of Financial Condition
September 30, 2009 December 31, 2008 ($ in thousands)
(Unaudited) (Audited) ASSETS Cash &
Amounts Due from Depository Institutions
$ 3,945 $
2,313 Interest-Bearing Deposits in Other Banks
14,966 569
Federal Funds Sold
4,679 323 Securities Available-for-Sale,
at Fair Value
50,185 47,617 Loans, Net
182,756
158,523 Accrued Interest Receivable
1,516 1,612 Other Real
Estate
1,841 461 Premises & Equipment, Net
5,825
5,756 Stock in Federal Home Loan Bank, at Cost
2,353 2,300
Real Estate Held-for-Investment, Net
430 436 Other Assets
2,431 1,960 Total
Assets
$ 270,927 $ 221,870
LIABILITIES Deposits Interest-Bearing Deposits
$ 188,338 $ 132,145 Noninterest-Bearing Deposits
10,773 7,970 Total
Deposits
199,111 140,115
Advance Payments by Borrowers for Taxes and Insurance
484 167 FHLB Advances
40,626 52,002 Other Liabilities
2,382 2,028 Total
Liabilities
242,603
194,312 STOCKHOLDERS' EQUITY Common Stock - $.01 Par
Value
$ 34 $ 34 Additional Paid-in Capital
34,550 34,546 Unearned RRP Trust Stock
(132 )
(143 ) Treasury Stock
(32,449 ) (32,062 ) Retained
Earnings
26,005 25,404 Accumulated Other Comprehensive
Income (Loss)
316 (221 )
Total Stockholders' Equity
28,324
27,558 Total Liabilities & Stockholders'
Equity
$ 270,927 $ 221,870
Selected Asset Quality Data Total Non-Performing
Assets
$ 5,986 $ 2,472 Non-Performing Assets to Total
Assets
2.21 % 1.11 %
GS Financial
Corp. Condensed Consolidated Statements of Income
(Unaudited) For the Three Months Ended
For the Nine Months Ended September 30, September 30,
($ in thousands, except per share data)
2009
2008
2009 2008 Interest and Dividend Income
$
3,600 $ 3,214
$ 10,598 $ 9,220
Interest Expense
1,548
1,413
4,724 4,288
Net Interest Income
2,052 1,801
5,874 4,932
Provision for Loan Losses
200
-
200 -
Net Interest Income after Provision for Loan Losses
1,852 1,801
5,674 4,932 Noninterest
Income (Loss)
245 53
1,099 (357 ) Noninterest Expense
1,928 1,448
5,377 4,329 Income Before
Tax Expense
169 406
1,396 246 Income Tax
Expense
65 136
411 82 Net Income
$ 104 $ 270
$ 985
$ 164 Earnings Per Share - Basic
$ 0.08 $ 0.21
$
0.78 $ 0.13 Earnings Per Share -
Diluted
$ 0.08 $ 0.21
$ 0.78 $ 0.13 Selected
Operating Data Weighted Average Shares Outstanding
1,257,286
1,278,466
1,266,884 1,278,231 Return on Average Assets1
0.15 % 0.50 %
0.51 % 0.16 % Noninterest
Expense/Average Assets1
2.84 % 2.70 %
2.80
% 3.29 % Net Interest Margin1
3.19
% 3.52 %
3.20 %
3.38 % 1Annualized
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