GS Financial Corp. (Nasdaq:GSLA) (the "Company"), the holding
company for Guaranty Savings Bank ("Guaranty"), reported a net loss
for the quarter ended September 30, 2010 of $378,000, or ($0.30)
per share basic and diluted, compared with earnings of $104,000, or
$0.08 per share basic and diluted, for the same period in 2009. The
Company reported a net loss of $292,000 year-to-date through
September 30, 2010, or ($0.23) per share basic and diluted,
compared with earnings of $985,000, or $0.78 per share basic and
diluted, for the nine months ended September 30, 2009. The reported
loss was primarily a result of a $1.2 million provision for loan
losses during the quarter.
President Stephen E. Wessel commented, "This has been a
difficult year as nonperforming loans have continued to increase.
While we are disappointed in our results, we have taken significant
steps toward improving credit quality. These steps include, but are
not limited to: the further tightening of our credit criteria,
obtaining detailed third party reviews of our loan portfolio,
obtaining updated collateral values for impaired loans, and adding
$1.2 million to our loan loss provision this quarter. Our
regulatory capital ratios remain strong and core bank earnings
continue to improve."
Highlights of the third quarter and first nine-months of 2010
include:
- Noninterest-bearing deposit accounts increased by $4.6 million,
or 31.3%, from $14.8 million at December 31, 2009 to $19.4 million
at September 30, 2010.
- Advances from the Federal Home Loan Bank of Dallas were reduced
by $5.0 million, or 12.2%, during the first nine-months of 2010
from $40.5 million at December 31, 2009 to $35.6 million at
September 30, 2010.
- Net interest income for the third quarter of 2010 increased by
15.8% to $2.4 million from $2.1 million for the third quarter of
2009. Net interest income for the year-to-date period ended
September 30, 2010 increased by 18.0% to $6.9 million from $5.9
million for the same period in the prior year.
- Net interest margin increased by 56 basis points to 3.75%
during the third quarter of 2010 from 3.19% for the third quarter
of 2009. For the nine months ended September 30, 2010, net interest
margin increased by 40 basis points to 3.60% from 3.20% for the
nine months ended September 30, 2009.
Net interest income for the quarter ended September 30, 2010 was
$2.4 million, which represents an increase of $325,000 compared to
the quarter ended September 30, 2009. Net interest income increased
by $1.1 million to $6.9 million for the first nine-months of 2010
compared to $5.9 million for the first nine-months of 2009. The
increases in net interest income when comparing both the three and
nine-month periods ended September 30, 2010 to the same periods in
the prior year are primarily due to a decrease in the cost of
interest-bearing deposits combined with a significant increase in
the average balance of loans. This was partially offset by a
decrease in the average yield on interest-earning assets and an
increase in the average balance of interest-bearing deposits.
Interest and dividend income decreased by $185,000, or 5.1%, and
interest expense decreased by $510,000, or 32.9%, for the third
quarter of 2010 compared to the third quarter of 2009. For the
first nine-months of 2010, interest and dividend income was $10.4
million, a decrease of $210,000, or 2.0%, from $10.6 million for
the first nine-months of 2009. Interest expense for the
year-to-date period ended September 30, 2010 was $3.5 million,
which represents a decrease of $1.3 million, or 26.9%, when
compared to the same period in the prior year.
The net interest margin improved by 56 basis points from 3.19%
for the three months ended September 30, 2009 to 3.75% for the
three months ended September 30, 2010. The net interest margin for
the year-to-date period ended September 30, 2010 improved to 3.60%
from 3.20% for the same period in the prior year. The increase in
net interest margin for the quarter ended September 30, 2010
compared to the quarter ended September 30, 2009 was primarily
attributable to an 85 basis point decrease in the average cost of
interest-bearing deposits and a $6.7 million increase in the
average balance of loans. This was partially offset by a 41 basis
point decrease in the average yield on loans and a 111 basis point
decrease in the average yield on mortgage-backed securities. The 40
basis point improvement in the net interest margin when comparing
the first nine-months of 2009 to the same period in 2010 was
primarily due to a 95 basis point decrease in the average cost of
interest-bearing deposits and a $14.4 million increase in the
average balance of loans. This was partially offset by 41 and 114
basis point decreases in the average yields on loans and
mortgage-backed securities, respectively, and a $12.2 million
increase in the average balance of time deposits.
Based on the Company's assessment of its credit risk and the
continued increase in the level of loan delinquencies and adversely
classified loans, a provision for loan losses of $1.2 million was
recorded during the third quarter of 2010. The provision primarily
reflected updated collateral values received on impaired loans.
Through the first nine-months of 2010, the Company has recorded
$2.3 million in provisions for loan losses. The Company recorded a
total of $500,000 in additional loan loss provisions during 2009,
$200,000 of which was recorded during the first nine-months of
2009. As of September 30, 2010, the Company's allowance for losses
was $4.1 million, or 36.1% of nonperforming loans and 2.2% of total
loans, compared to $2.4 million or 57.2% of nonperforming loans and
1.3% of total loans, at December 31, 2009. The Company believes
that the allowance for loan losses recorded as of September 30,
2010 is sufficient to cover the potential losses in its loan
portfolio.
Nonperforming assets consists of loans on nonaccrual status and
foreclosed assets. The following table sets forth the Company's
nonperforming assets at the dates indicated. The Company did not
have loans greater than 90 days delinquent and accruing interest at
the dates indicated.
NONPERFORMING
ASSETS |
|
2010 |
2009 |
($ in thousands) |
September 30 |
June 30 |
December 31 |
Loans Accounted for on a Nonaccrual
Basis |
$ 11,171 |
$ 9,701 |
$ 4,164 |
Foreclosed Assets |
1,408 |
1,542 |
2,489 |
Total Nonperforming Assets |
$ 12,579 |
$ 11,243 |
$ 6,653 |
Troubled Debt Restructurings |
2,754 |
590 |
-- |
Select Asset Quality Ratios: |
|
|
|
Nonperforming Assets to Total Assets |
4.71% |
4.10% |
2.45% |
Nonperforming Loans to Total Loans |
5.86% |
5.10% |
2.22% |
Total Delinquent Loans to Total
Loans |
6.00% |
6.40% |
4.04% |
Allowance for Loans Losses to Total
Delinquent Loans |
35.92% |
28.24% |
31.46% |
Allowance for Loans Losses to
Nonperforming Loans |
36.78% |
35.46% |
57.16% |
Allowance for Loans
Losses to Ending Loans |
2.16% |
1.81% |
1.27% |
Nonperforming assets increased $5.9 million, or 89.1%, from $6.7
million at December 31, 2009 to $12.6 million at September 30,
2010. The majority of the increase in nonperforming loans is
attributable to delinquencies on smaller balance loans secured by
one-to-four family, residential real estate located in New Orleans,
Louisiana, and its neighboring parishes. However, the increase in
nonperforming assets from December 31, 2009 to September 30, 2010
is also due to the following significant loan relationships which
were placed on nonaccrual status during the first nine-months of
2010: a $1.4 million loan secured by a non-owner-occupied,
commercial warehouse located in New Orleans, Louisiana; a $758,000
loan secured by non-owner-occupied, commercial real estate, located
in New Orleans, Louisiana; two loans aggregating $744,000 to the
same commercial borrower which are secured by one parcel of vacant
land located in Mandeville, Louisiana, and one parcel of vacant
land located in Covington, Louisiana; and a $495,000 loan secured
by vacant land located in New Orleans.
Real estate owned decreased by $1.1 million from $2.5 million at
December 31, 2009 to $1.4 million September 30, 2010. This is
primarily due to the sale of a multifamily dwelling located in a
historic district of New Orleans, Louisiana, which had a cost basis
of $756,000 and the sale of a one-to-four family dwelling located
in New Orleans, Louisiana, which had a cost basis of $563,000. The
Company has realized losses on the sale of real estate owned
aggregating $87,000 for the year-to-date period ended September 30,
2010. For the nine month period ended September 30, 2009, the
Company realized a net gain of $2,000 on the sale of real estate
owned.
As of September 30, 2010 real estate owned included two
properties that were previously under renovation totaling $315,000.
These properties were obtained through foreclosure proceedings
completed in December 2009 and are secured by residential real
estate located in New Orleans, Louisiana, and in Algiers,
Louisiana. The Company recognized impairment losses aggregating
$221,000 on these two properties during the third quarter of 2010.
The remaining components of other real estate owned as of September
30, 2010 included: two parcels of vacant land located in New
Orleans, Louisiana, and one parcel of vacant land located in Abita
Springs, Louisiana; a one-to-four family dwelling located in
Westwego, Louisiana, and a one-to-four family dwelling located in
New Orleans, Louisiana; two multifamily dwelling located in New
Orleans, Louisiana; and a commercial property located in Chalmette,
Louisiana.
Noninterest income for the third quarter of 2010 was $254,000,
an increase of $9,000, or 3.7%, from $245,000 from the third
quarter of 2009. The increase in noninterest income for the three
months ended September 30, 2010 compared to the three months ended
September 30, 2009 is due to a slight increase in the gains
recognized on residential loan sales in the secondary market. For
the first nine-months of 2010, noninterest income decreased by
$205,000 to $894,000 from $1.1 million for the same period in the
prior year. The decrease in noninterest income for the year-to-date
period ended September 30, 2010 when compared to the same period in
the prior year was due to a combination of factors, including: a
$359,000 decrease in the gains recognized on residential loan sales
in the secondary market during 2010, the recognition of $87,000 in
losses on the sales of real estate owned in 2010, and a $134,000
gain recorded on the sale of real estate held for investment in
2009. This year-to-date decrease in net interest income through
September 30, 2010 when compared to the same period ended September
30, 2009 was mitigated by $317,000 in gains recognized on the sales
of investment securities in 2010. The investments sold were
primarily US Agency and mortgage-backed securities with longer
durations.
Noninterest expense for the third quarter of 2010 was $2.1
million, up approximately $157,000, or 8.1%, from $1.9 million for
the third quarter of 2009. Noninterest expense for the nine months
ended September 30, 2010 increased by $691,000, or 12.9%, to $6.1
million from $5.4 million for the same period in the prior year.
Noninterest expense for both the three and nine-month periods ended
September 30, 2010 was negatively impacted by increases in
compensation and occupancy costs primarily associated with the
opening of our Elmwood branch during the fourth quarter of 2009,
consulting fees paid in conjunction with the modification of $24.6
million of the Company's outstanding FHLB advances, legal costs
associated with additional collection activity, and taxes and
insurance on foreclosed assets. Noninterest expense for the quarter
ended September 30, 2010 included $228,000 in impairment losses on
real estate owned. For the year-to-date period ended September 30,
2010, the Bank has recorded aggregate impairment losses of $423,000
on real estate owned, which represents an increase of $362,000 when
compared to the same period in prior year.
FORWARD-LOOKING INFORMATION
Statements contained in this news release which are not
historical facts may be forward-looking statements as that term is
defined in the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements are subject to risks and
uncertainties which could cause actual results to differ materially
from those currently anticipated due to a number of factors.
Factors which could result in material variations include, but are
not limited to, changes in interest rates which could affect net
interest margins and net interest income, competitive factors which
could affect net interest income and noninterest income, changes in
demand for loans, deposits and other financial services in the
Company's market area, changes in asset quality, adverse effects in
the Company's market area as a result of the recent oil spill in
the Gulf of Mexico, general economic conditions as well as other
factors discussed in documents filed by the Company with the
Securities and Exchange Commission from time to time. The Company
undertakes no obligation to update these forward-looking statements
to reflect events or circumstances that occur after the date on
which such statements were made.
GS Financial
Corp. |
Condensed Consolidated
Statements of Financial Condition |
|
|
|
($ in thousands) |
September 30, 2010
(Unaudited) |
December 31, 2009 (Audited) |
ASSETS |
|
|
Cash & Amounts Due from Depository
Institutions |
$ 6,408 |
$ 7,158 |
Interest-Bearing Deposits in Other
Banks |
4,001 |
9,293 |
Federal Funds Sold |
861 |
3,284 |
Securities Available-for-Sale, at Fair
Value |
52,457 |
50,455 |
Loans, Net |
186,492 |
185,500 |
Accrued Interest Receivable |
1,474 |
1,518 |
Other Real Estate |
1,408 |
2,489 |
Premises & Equipment, Net |
6,615 |
5,934 |
Stock in Federal Home Loan Bank, at
Cost |
2,360 |
2,354 |
Real Estate Held-for-Investment, Net |
421 |
427 |
Other Assets |
4,549 |
3,192 |
Total Assets |
$ 267,046 |
$ 271,604 |
|
|
|
LIABILITIES |
|
|
Deposits |
|
|
Noninterest-Bearing |
$ 19,443 |
$ 14,812 |
Interest-Bearing |
181,021 |
186,681 |
Total Deposits |
200,464 |
201,493 |
Advance Payments by Borrowers for Taxes
and Insurance |
499 |
249 |
FHLB Advances |
35,561 |
40,512 |
Other Liabilities |
2,361 |
1,329 |
Total Liabilities |
238,885 |
243,583 |
|
|
|
STOCKHOLDERS' EQUITY |
|
|
Common Stock -- $.01 Par Value |
$ 34 |
$ 34 |
Additional Paid-in Capital |
34,541 |
34,550 |
Unearned RRP Trust Stock |
(105) |
(132) |
Treasury Stock |
(32,449) |
(32,449) |
Retained Earnings |
25,112 |
25,780 |
Accumulated Other
Comprehensive Income |
1,028 |
238 |
Total Stockholders'
Equity |
28,161 |
28,021 |
Total Liabilities &
Stockholders' Equity |
$ 267,046 |
$ 271,604 |
|
|
GS Financial
Corp. |
Condensed Consolidated
Statements of Income |
(Unaudited) |
|
|
|
|
|
|
|
For the Three Months
Ended September 30, |
|
For the Nine Months Ended
September 30, |
($ in thousands, except per share
data) |
2010 |
2009 |
|
2010 |
2009 |
Interest and Dividend Income |
$ 3,415 |
$ 3,600 |
|
$ 10,388 |
$ 10,598 |
Interest Expense |
1,038 |
1,548 |
|
3,455 |
4,724 |
|
|
|
|
|
|
Net Interest Income |
2,377 |
2,052 |
|
6,933 |
5,874 |
Provision for Loan Losses |
1,150 |
200 |
|
2,300 |
200 |
|
|
|
|
|
|
Net Interest Income after Provision for
Loan Losses |
1,227 |
1,852 |
|
4,633 |
5,674 |
|
|
|
|
|
|
Noninterest Income |
254 |
245 |
|
894 |
1,099 |
Noninterest Expense |
2,085 |
1,928 |
|
6,068 |
5,377 |
|
|
|
|
|
|
(Loss) Income Before Income Tax Expense |
(604) |
169 |
|
(541) |
1,396 |
|
|
|
|
|
|
Income Tax (Benefit) Expense |
(226) |
65 |
|
(249) |
411 |
Net (Loss) Income |
$ (378) |
$ 104 |
|
$ (292) |
$ 985 |
(Loss) Earnings Per Share - Basic |
$ (0.30) |
$ 0.08 |
|
$ (0.23) |
$ 0.78 |
(Loss) Earnings Per Share -
Diluted |
$ (0.30) |
$ 0.08 |
|
$ (0.23) |
$ 0.78 |
|
|
|
|
|
|
Key Ratios: |
|
|
|
|
|
Return on Average Assets(1) |
-0.56% |
0.15% |
|
-0.14% |
0.51% |
Return on Average Stockholders'
Equity(1) |
-5.24% |
1.48% |
|
-1.36% |
4.66% |
Net Interest Margin(1) |
3.75% |
3.19% |
|
3.60% |
3.20% |
Average Loans to Average Deposits |
95.31% |
92.44% |
|
93.91% |
98.38% |
Average Interest-Earning Assets to |
|
|
|
|
|
Average Interest-Bearing Liabilities |
115.25% |
112.07% |
|
112.81% |
113.21% |
Efficiency Ratio |
79.21% |
83.91% |
|
77.51% |
77.10% |
Noninterest Expense to Average
Assets(1) |
3.11% |
2.84% |
|
2.97% |
2.80% |
Stockholders'
Equity to Total Assets |
10.55% |
10.45% |
|
10.55% |
10.45% |
(1)Annualized |
|
|
|
|
|
CONTACT: GS Financial Corp.
Stephen F. Theriot, Chief Financial Officer
(504) 883-5528
GS Financial Corp. (MM) (NASDAQ:GSLA)
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