UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 | |||||||
FORM 10-Q | |||||||
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||
For the Quarterly period ended September 30, 2009 | Commission File Number: 0-22269 | ||||||
GS Financial Corp. | |||||||
(Exact Name of Registrant as Specified in its Charter) | |||||||
Louisiana | 72-1341014 | ||||||
(State of Incorporation) | (IRS Employer Identification No.) | ||||||
3798 Veterans Blvd. | |||||||
Metairie, LA 70002 | |||||||
(Address of Principal Executive Offices) | |||||||
(504) 457-6220 | |||||||
(Registrant’s Telephone Number, including area code) | |||||||
Not applicable | |||||||
(Former name, former address and former fiscal year, if changed since last report) | |||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No | |||||||
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ ] Yes [ ] No 0; | |||||||
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One): | |||||||
Large accelerated filer | [ ] | Accelerated filer | [ ] | ||||
Non-accelerated filer | [ ] | Smaller reporting company | [X] | ||||
(Do not check if a smaller reporting company) | |||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 160; Yes [ ] No [X] | |||||||
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. |
Class | Outstanding at November 13, 2009 | |
Common Stock, par value $.01 per share | 1,251,516 shares |
GS FINANCIAL CORP.
TABLE OF CONTENTS | |||||
Page | |||||
PART I – FINANCIAL INFORMATION | |||||
Item 1 | Financial Statements | ||||
Consolidated Statements of Financial Condition | 1 | ||||
Consolidated Statements of Income | 2 | ||||
Consolidated Statements of Changes in Stockholders’ Equity | 3 | ||||
Consolidated Statements of Cash Flows | 4 | ||||
Notes to Consolidated Financial Statements | 5 | ||||
Selected Consolidated Financial Data | 8 | ||||
Item 2 | Management's Discussion and Analysis of Financial Condition and Results of Operations | 9 | |||
Item 3 | Quantitative and Qualitative Disclosures about Market Risk | 23 | |||
Item 4 | Controls and Procedures | 23 |
PART II – OTHER INFORMATION | |||
Item 1 | Legal Proceedings | 23 | |
Item 1a | Risk Factors | 23 | |
Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 23 | |
Item 3 | Defaults Upon Senior Securities | 24 | |
Item 4 | Submission of Matters to a Vote of Security Holders | 24 | |
Item 5 | Other Information | 24 | |
Item 6 | Exhibits | 24 | |
SIGNATURES EXHIBIT INDEX |
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
GS FINANCIAL CORP. AND SUBSIDIARY | |||
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | |||
September 30, 2009 | December 31, 2008 | ||
(Unaudited) | (See Note 1) | ||
(In Thousands) | |||
ASSETS | |||
Cash and Cash Equivalents | |||
Cash and Amounts Due from Depository Institutions | $ 3,945 | $ 2,313 | |
Interest-Bearing Deposits in Other Banks | 14,966 | 569 | |
Federal Funds Sold | 4,679 | 323 | |
Total Cash and Cash Equivalents | 23,590 | 3,205 | |
Securities Available-for-Sale, at Fair Value | 50,185 | 47,617 | |
Loans, Net of Allowance for Loan Losses of $2,700 and $2,719, Respectively | 182,756 | 158,523 | |
Accrued Interest Receivable | 1,516 | 1,612 | |
Other Real Estate Owned | 1,841 | 461 | |
Premises and 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 | |||
Noninterest-Bearing | $ 10,773 | $ 7,970 | |
Interest-Bearing | 188,338 | 132,145 | |
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 | |||
Preferred Stock - $.01 Par Value; 5,000,000 Shares Authorized, None Issued | $ - | $ - | |
Common Stock - $.01 Par Value; 20,000,000 Shares Authorized, 3,438,500 Shares Issued | 34 | 34 | |
Additional Paid-in Capital | 34,550 | 34,546 | |
Unearned RRP Trust Stock | (132 | ) | (143) |
Treasury Stock (2,180,562 Shares at September 30, 2009 and 2,152,700 Shares at December 31, 2008) | (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 | |
The accompanying notes are an integral part of these financial statements. | |||
1
GS FINANCIAL CORP. AND SUBSIDIARY | ||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
(Unaudited) | ||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(In Thousands, Except Per Share Data) | ||||||||||||||||
INTEREST AND DIVIDEND INCOME | ||||||||||||||||
Loans, Including Fees | $ | 3,036 | $ | 2,501 | $ | 8,775 | $ | 7,049 | ||||||||
Investment Securities | 545 | 687 | 1,790 | 2,026 | ||||||||||||
Other Interest Income | 19 | 26 | 33 | 145 | ||||||||||||
Total Interest and Dividend Income | 3,600 | 3,214 | 10,598 | 9,220 | ||||||||||||
INTEREST EXPENSE | ||||||||||||||||
Deposits | 1,126 | 935 | 3,338 | 3,004 | ||||||||||||
Advances from Federal Home Loan Bank | 422 | 478 | 1,386 | 1,284 | ||||||||||||
Total 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 | ||||||||||||
NON-INTEREST INCOME | ||||||||||||||||
Gain (Loss) on Securities | 8 | (21 | ) | (3 | ) | (681 | ) | |||||||||
Gain on Sale of Loans | 188 | 34 | 881 | 221 | ||||||||||||
Other Income | 49 | 40 | 221 | 103 | ||||||||||||
Total Non-Interest Income (Loss) | 245 | 53 | 1,099 | (357 | ) | |||||||||||
NON-INTEREST EXPENSE | ||||||||||||||||
Salaries and Employee Benefits | 1,042 | 831 | 2,915 | 2,563 | ||||||||||||
Occupancy Expense | 220 | 215 | 623 | 616 | ||||||||||||
Ad Valorem Taxes | 58 | 75 | 175 | 225 | ||||||||||||
Other Expenses | 608 | 327 | 1,664 | 925 | ||||||||||||
Total Non-Interest Expense | 1,928 | 1,448 | 5,377 | 4,329 | ||||||||||||
INCOME BEFORE INCOME 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 | ||||||||
The accompanying notes are an integral part of these financial statements. |
2
GS FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
Accumulated | ||||||||||||||||||||||||||||
Other | Total | |||||||||||||||||||||||||||
Additional Paid- | Unearned RRP | Retained | Comprehensive | Stockholders' | ||||||||||||||||||||||||
(In Thousands) | Common Stock | in Capital | Treasury Stock | Trust Stock | Earnings | (Loss) Income | Equity | |||||||||||||||||||||
Balances At December 31, 2007 | $ 34 | $ 34,546 | $ (32,062 | ) | $ (158 | ) | $ 25,919 | $ (115 | ) | $ 28,164 | ||||||||||||||||||
Comprehensive Loss: | ||||||||||||||||||||||||||||
Net Income | - | - | - | - | 164 | - | 164 | |||||||||||||||||||||
Other Comprehensive Loss, Net of Applicable Deferred Income Taxes | - | - | - | - | - | (608 | ) | (608 | ) | |||||||||||||||||||
Total Comprehensive Loss | - | - | - | - | 164 | (608 | ) | (444 | ) | |||||||||||||||||||
Distribution of RRP Stock | - | - | - | 15 | - | - | 15 | |||||||||||||||||||||
Dividends Declared | - | - | - | - | (386 | ) | - | (386 | ) | |||||||||||||||||||
Balances at September 30, 2008 | $ 34 | $ | 34,546 | $ | (32,062 | ) | $ | (143 | ) | $ | 25,697 | $ | (723 | ) | $ | 27,349 | ||||||||||||
Balances At December 31, 2008 | $ 34 | $ | 34,546 | $ | (32,062 | ) | $ | (143 | ) | $ | 25,404 | $ | (221 | ) | $ | 27,558 | ||||||||||||
Comprehensive Income: | ||||||||||||||||||||||||||||
Net Income | - | - | - | - | 985 | - | 985 | |||||||||||||||||||||
Other Comprehensive Income, Net of Applicable Deferred Income Taxes | - | - | - | - | - | 537 | 537 | |||||||||||||||||||||
Total Comprehensive Income | - | - | - | - | 985 | 537 | 1,522 | |||||||||||||||||||||
Distribution of RRP Stock | - | 4 | - | 11 | - | - | 15 | |||||||||||||||||||||
Purchase of Treasury Stock | - | - | (387 | ) | - | - | - | (387 | ) | |||||||||||||||||||
Dividends Declared | - | - | - | - | (384 | ) | - | (384 | ) | |||||||||||||||||||
Balances at September 30, 2009 | $ 34 | $ | 34,550 | $ | (32,449 | ) | $ | (132 | ) | $ | 26,005 | $ | 316 | $ | 28,324 |
3
GS FINANCIAL CORP. AND SUBSIDIARY | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
For the Nine Months Ended | ||||||||
September 30, | ||||||||
2009 | 2008 | |||||||
(In Thousands) | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net Income | $ | 985 | $ | 164 | ||||
Adjustments to Reconcile Net Income to Net Cash | ||||||||
(Used in) Provided by Operating Activities: | ||||||||
Depreciation and Amortization | 210 | 216 | ||||||
Premium Amortization (Discount Accretion), Net | 96 | (138 | ) | |||||
Non-Cash Dividend - FHLB Stock | (5 | ) | (33 | ) | ||||
Provision for Loan Losses | 200 | - | ||||||
Loan Fees, Net | (427 | ) | (230 | ) | ||||
RRP Expense | 15 | 12 | ||||||
Gain on Sales of Loans | (881 | ) | (221 | ) | ||||
Gain on Sale of Property and Equipment | (134 | ) | (17 | ) | ||||
(Gain) Loss on Sale of Other Real Estate | (3 | ) | 1 | |||||
Impairment of Other Real Estate Owned | 61 | - | ||||||
Investment Impairment and Realized Losses, Net | 3 | 669 | ||||||
Changes in Operating Assets and Liabilities: | ||||||||
Accrued Interest Receivable and Other Assets | (375 | ) | 57 | |||||
Accrued Interest Payable and Other Liabilities | 77 | (164 | ) | |||||
Net Cash (Used in) Provided by Operating Activities | (178 | ) | 316 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Proceeds from Maturities of Investment Securities | 17,015 | 16,112 | ||||||
Proceeds from Sales of Investment Securities | 2,020 | 5,003 | ||||||
Purchases of Investment Securities | (21,638 | ) | (23,875 | ) | ||||
Redemption of Mutual Funds, Net | 750 | 750 | ||||||
Loan Originations and Principal Collections, Net | (73,955 | ) | (44,594 | ) | ||||
Proceeds from Sales of Loans | 49,369 | 13,259 | ||||||
Proceeds from Sale of Premises and Equipment | 191 | 142 | ||||||
Purchase of Premises and Equipment | (330 | ) | (171 | ) | ||||
Purchase of Federal Home Loan Bank Stock | (48 | ) | (1,037 | ) | ||||
Proceeds from Sales of Other Real Estate | 23 | 85 | ||||||
Net Cash Used in Investing Activities | (26,603 | ) | (34,326 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Purchase of Treasury Stock | (387 | ) | - | |||||
(Decrease) Increase in Federal Home Loan Bank Advances | (11,376 | ) | 22,934 | |||||
Payment of Cash Stock Dividends | (384 | ) | (386 | ) | ||||
Increase in Deposits | 58,996 | 8,645 | ||||||
Increase (Decrease) in Deposits for Escrows | 317 | (105 | ) | |||||
Net Cash Provided by Financing Activities | 47,166 | 31,088 | ||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 20,385 | (2,922 | ) | |||||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 3,205 | 9,462 | ||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 23,590 | $ | 6,540 | ||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||||||||
Cash Paid During the Period for Interest | $ | 4,747 | $ | 4,289 | ||||
Cash Paid During the Period for Income Taxes | 289 | - | ||||||
Loans Transferred to Other Real Estate During the Period | 1,461 | 929 | ||||||
The accompanying notes are an integral part of these statements. |
4
GS FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – BASIS OF PRESENTATION
The consolidated financial statements include the accounts of GS Financial Corp. (the “Company”) and its subsidiary, Guaranty Savings Bank (the “Bank”), which prior to June 2006 was known as Guaranty Savings and Homestead Association. All significant intercompany balances and transactions have been eliminated. Certain financial information for prior periods has been reclassified to conform to the current presentation.
In preparing the consolidated financial statements, the Company is required to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. The consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the financial condition, results of operations, changes in stockholders’ equity, and cash flows for the interim periods presented. These adjustments are of a normal recurring nature and include appropriate estimated provisions.
Pursuant to rules and regulations of the Securities and Exchange Commission, certain financial information and disclosures have been condensed or omitted in preparing the consolidated financial statements presented in this quarterly report on Form 10-Q. The results of operations for the three and nine months ended September 30, 2009 are not necessarily indicative of the results to be expected for the year ending December 31, 2009.
The consolidated statement of financial condition at December 31, 2008 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. These unaudited financial statements should be read in conjunction with the Company’s 2008 Annual Report on Form 10-K.
NOTE 2 – EARNINGS PER SHARE
Earnings per share are computed using the weighted average number of shares outstanding as prescribed in FASB ASC Topic 260. For the three and nine month periods ended September 30, 2009 and 2008, the Company did not have any potentially dilutive securities.
For the Three Months Ended | For the Nine Months Ended | ||||||
September 30, | September 30, | ||||||
($ in thousands, except per share data) | 2009 | 2008 | 2009 | 2008 | |||
Numerator: | |||||||
Net Income | $ 104 | $ 270 | $ 985 | $ 164 | |||
Effect of Dilutive Securities | - | - | - | - | |||
Numerator for Diluted Earnings Per Share | $ 104 | $ 270 | $ 985 | $ 164 | |||
Denominator | |||||||
Weighted Average Shares Outstanding | 1,257,286 | 1,278,466 | 1,266,884 | 1,278,231 | |||
and Contingently Issuable Shares | - | - | - | - | |||
Shares | 1,257,286 | 1,278,466 | 1,266,884 | 1,278,231 | |||
Earnings Per Share | |||||||
Basic | $ 0.08 | $ 0.21 | $ 0.78 | $ 0.13 | |||
Diluted | $ 0.08 | $ 0.21 | $ 0.78 | $ 0.13 | |||
Cash Dividends Per Share | $ 0.10 | $ 0.10 | $ 0.30 | $ 0.30 | |||
NOTE 3 – FAIR VALUE DISCLOSURES
Under FASB ASC Topic 820, the Company must determine the appropriate level in the fair value hierarchy for each fair value measurement in the financial statements. To increase consistency and comparability in fair value measurements, FASB ASC Topic 820 established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels. It gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The level in the fair value hierarchy within which a fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
5
The levels are as follows
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs.
Fair Value of Assets Measured on a Recurring Basis
Available-for-Sale Securities - Estimated fair value of securities is based on quoted market prices where available. If quoted market prices are not available, estimated fair values are based on market prices of comparable instruments. The Bank’s available-for-sale securities are valued primarily based upon readily observable market parameters and are classified as Level 2 fair values.
Fair Value of Assets Measured on a Nonrecurring Basis
Certain assets and liabilities are measured at fair value on a non-recurring basis. In accordance with the provisions of FASB ASC Topic 310, the Bank records loans considered impaired at their fair value. A loan is considered impaired if it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the loan agreement. Fair value is measured at the fair value of the collateral for collateral-dependent loans. Impaired loans and other real estate owned are level 2 assets measured using appraisals of the collateral prepared by external parties less any prior liens.
The following table summarizes the valuation methodologies used for the Bank’s financial instruments measured at fair value as well as the general classification of such instruments at September 30, 2009 and December 31, 2008 pursuant to the valuation hierarchy.
September 30, 2009 | December 31, 2008 | ||||||||||||
Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||
(In Thousands) | (In Thousands) | ||||||||||||
Available for Sale Securities:1 | |||||||||||||
U.S. Agency Securities | $ - | $ 6,305 | $ - | $ - | $ 10,070 | $ - | |||||||
Mortgage Backed Securities | - | 32,400 | - | - | 26,100 | - | |||||||
Collateralized Mortgage Obligations | - | 5,114 | - | - | 8,039 | - | |||||||
Municipal Securities | - | 3,722 | - | - | - | - | |||||||
Mutual Funds | - | 2,644 | - | - | 3,408 | - | |||||||
Loans2 | - | 3,271 | - | - | 2,410 | - | |||||||
Other Real Estate3 | - | 1,841 | - | - | 461 | - | |||||||
1 Securities are measured at fair value on a recurring basis, generally monthly. | |||||||||||||
2 Includes impaired loans that have been measured for impairment at the fair value of the loan's collateral. | |||||||||||||
3 Other real estate is transferred from loans to real estate owned at the lower of carrying value or market value. |
6
NOTE 4 – EMPLOYEE STOCK OWNERSHIP PLAN
The GS Financial Employee Stock Ownership Plan (“ESOP”) purchased 275,080 shares of the Company’s common stock on April 1, 1997 financed by a loan from the Company. The loan was secured by those shares not yet allocated to plan participants and was paid in full as of December 31, 2006. Effective January 1, 2007, the Company amended and restated its ESOP, added a 401(k) feature, and renamed the plan the “Guaranty Savings Bank 401(k) Plan” (the “401(k) Plan”). Compensation expense related to the 401(k) plan was $28,000 and $80,000 for the three and nine month periods ended September 30, 2009, respectively, compared to $29,000 and $87,000 for the same time periods ended September 30, 2008.
NOTE 5 – RECOGNITION AND RETENTION PLAN
On October 15, 1997 the Company established the Recognition and Retention Plan and Trust (“RRP” or the “Plan”) as an incentive to retain personnel of experience and ability in key positions. Stockholders approved a total of 137,540 shares of stock to be granted pursuant to the RRP. The Company acquired a total of 137,500 shares of common stock for issuance under the RRP.
The Plan generally provides that, Plan share awards are earned by recipients at a rate of 20% of the aggregate number of shares covered by the Plan over five years. Pursuant to agreements with the Plan participants, all outstanding Plan share awards are being earned by recipients at a rate of 10% of the aggregate number of shares covered by the Plan over ten years. If the employment of an employee or service as a non-employee director is terminated prior to the tenth anniversary of the grant date of the Plan share award for any reason (except for death, disability, or a change in control), the recipient would forfeit the right to any shares subject to the awards which had not been earned. As of September 30, 2009, of the 134,159 shares awarded, 6,627 shares have been forfeited due to termination of employment or service as a director and 121,110 have been earned and issued. No further shares are available for award under the RRP. Compensation expense related to the RRP was $4,000 and $14,000 for the three and nine months, respectively, for both periods ended September 30, 2009 and 2008.
NOTE 6 – SUBSEQUENT EVENTS
In accordance with the subsequent events topic of the ASC, the Company evaluates events and transactions that occur after the balance sheet date for potential recognition in the financial statements. The effect of all subsequent events that provide additional evidence of conditions that existed at the balance sheet date are recognized in the financial statements as of September 30, 2009. In preparing these financial statements, the Company evaluated the events and transactions that occurred from September 30, 2009 through November 13, 2009, the date these financial statements were issued.
7
GS FINANCIAL CORP. | ||||||
SELECTED CONSOLIDATED FINANCIAL DATA | ||||||
(Unaudited) | ||||||
At or For the Three Months Ended | For the Nine Months Ended | |||||
($ in thousands, except per share data) | September 30, 2009 | June 30, 2009 | September 30, 2008 | September 30, 2009 | September 30, 2008 | |
BALANCE SHEET DATA | ||||||
Total Assets | $ 270,927 | $ 264,734 | $ 216,979 | |||
Cash and Cash Equivalents | 23,590 | 18,778 | 6,540 | |||
Loans Receivable, Net | 182,756 | 179,005 | 149,333 | |||
Investment Securities | 50,185 | 52,781 | 48,618 | |||
Deposit Accounts | 199,111 | 189,622 | 138,155 | |||
Borrowings | 40,626 | 44,490 | 49,920 | |||
Stockholders' Equity | 28,324 | 28,138 | 27,349 | |||
INCOME STATEMENT DATA | ||||||
Interest and Dividend Income | $ 3,600 | $ 3,610 | $ 3,214 | $ 10,598 | $ 9,220 | |
Interest Expense | 1,548 | 1,663 | 1,413 | 4,724 | 4,288 | |
Net Interest Income | 2,052 | 1,947 | 1,801 | 5,874 | 4,932 | |
Provision for Loan Losses | 200 | - | - | 200 | - | |
Net Interest Income After Provision for Loan Losses | 1,852 | 1,947 | 1,801 | 5,674 | 4,932 | |
Non-Interest Income (Loss) | 245 | 481 | 53 | 1,099 | (357) | |
Non-Interest Expense | 1,928 | 1,773 | 1,448 | 5,377 | 4,329 | |
Net Income Before Taxes | 169 | 655 | 406 | 1,396 | 246 | |
Income Tax Expense | 65 | 152 | 136 | 411 | 82 | |
Net Income | 104 | 503 | 270 | 985 | 164 | |
KEY RATIOS1 | ||||||
Return on Average Assets | 0.15% | 0.76% | 0.50% | 0.51% | 0.11% | |
Return on Average Stockholders' Equity | 1.48% | 7.10% | 3.93% | 4.66% | 0.78% | |
Net Interest Margin | 3.19% | 3.10% | 3.52% | 3.20% | 3.38% | |
Average Loans to Average Deposits | 92.44% | 95.86% | 108.78% | 98.38% | 102.93% | |
Average Interest-Earning Assets to Average Interest-Bearing Liabilities | 112.07% | 113.33% | 116.09% | 113.21% | 117.45% | |
Efficiency Ratio | 83.91% | 73.01% | 78.10% | 77.10% | 94.62% | |
Non-Interest Expense to Average Assets | 2.84% | 2.69% | 2.70% | 2.80% | 2.83% | |
Allowance for Loan Losses to Total Loans | 1.46% | 1.46% | 1.85% | |||
Stockholders' Equity to Total Assets | 10.45% | 10.63% | 12.60% | |||
COMMON SHARE DATA | ||||||
Earnings Per Share | ||||||
Basic | $ 0.08 | $ 0.40 | $ 0.21 | $ 0.78 | $ 0.13 | |
Diluted | 0.08 | 0.40 | 0.21 | 0.78 | 0.13 | |
Dividends Paid Per Share | 0.10 | 0.10 | 0.10 | 0.30 | 0.30 | |
Book Value Per Share | 22.53 | ��22.18 | 21.39 | |||
Average Shares Outstanding | ||||||
Basic | 1,257,286 | 1,268,579 | 1,278,466 | 1,266,884 | 1,278,231 | |
Diluted | 1,257,286 | 1,268,579 | 1,278,466 | 1,266,884 | 1,278,231 | |
1 Amounts are annualized where appropriate. |
8
ITEM 2 - | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The purpose of this discussion and analysis is to provide information necessary to gain an understanding of the financial condition, changes in financial condition, and results of operations of GS Financial Corp. (“GS Financial” or the “Company”), and its subsidiary during the first three quarters of 2009 and 2008. Virtually all of the Company’s operations are dependent on the operations of its subsidiary, Guaranty Savings Bank (“Guaranty” or the “Bank”). Prior to June 15, 2006 the subsidiary was known as Guaranty Savings and Homestead Association. Effective December 31, 2008, the Bank converted its charter from a Louisiana state savings and loan association to a Federally-chartered savings bank. As a result of the charter conversion, the Bank’s primary regulator became the Office of Thrift Supervision. This discussion is presented to highlight and supplement information presented elsewhere in this quarterly report on Form 10-Q, particularly the consolidated financial statements and related notes in Item 1. This discussion and analysis should be read in conjunction with accompanying tables and the Company’s 2008 Annual Report on Form 10-K.
FORWARD-LOOKING STATEMENTS
In addition to the historical information, this quarterly report includes certain forward-looking statements as that term is defined by the Private Securities Litigation Reform Act of 1995. Such statements include, but may not be limited to comments regarding (a) the potential for earnings volatility from, among other factors, changes in the estimated allowance for loan losses over time, (b) the expected growth rate of the loan portfolio, (c) future changes in the mix of deposits, (d) the results of net interest income simulations run by the Company to measure interest rate sensitivity, (e) the performance of Guaranty’s net interest income and net interest margin assuming certain future conditions, (f) the future prospects of metropolitan New Orleans, and (g) changes or trends in certain expense levels.
Forward-looking statements are based on numerous assumptions, which may be referred to specifically in connection with a particular statement. Some of the more important assumptions include:
· | expectations about the overall economy in the Company’s market area, |
· | expectations about the ability of the Bank’s borrowers to make payments on outstanding loans and the sufficiency of the allowance for loan losses, |
· | expectations about the current values of collateral securing the Bank’s outstanding loans, |
· | expectations about the movement of interest rates, including actions that may be taken by the Federal Reserve Board in response to changing economic conditions, |
· | reliance on existing or anticipated changes in laws or regulations affecting the activities of the banking industry and other financial service providers, and |
· | expectations regarding the nature and level of competition, changes in customer behavior and preferences, and the Company’s ability to execute its plans to respond effectively. |
Because it is uncertain whether future conditions and events will confirm these assumptions, there is a risk that the Company’s future results will differ materially from what is stated or implied by such forward-looking statements. The Company cautions the reader to consider this risk.
The Company undertakes no obligation to update any forward-looking statement included in this quarterly report, whether as a result of new information, future events or developments, or for any other reason.
OVERVIEW
The Company reported net income of $104,000 for the quarter ended September 30, 2009, compared with $270,000 for the quarter ended September 30, 2008. Basic and diluted earnings per share were $0.08 and $0.21 for the quarters ended September 30, 2009 and 2008, respectively. Basic and diluted earnings for the first nine months of 2009 were $985,000, or $0.78 per share, up from $164,000, or $0.13 per share, for the first nine months of 2008. The recordation of a $200,000 provision for loan losses and the increased cost of deposit insurance premiums in addition to a non-cash impairment charge recognized on other real estate owned were the primary reasons for the decrease in earnings from the third quarter of 2008 to the third quarter of 2009. The increase in earnings during the first nine months of 2009 compared to the same period in 2008 was largely due to a significant increase in the average balance of loans and additional secondary marketing activities which resulted in $881,000 of loan sale income. The improvements in net interest income from 2008 to 2009 for the reported periods reflects the results of the Bank’s execution of its strategic plan to expand products and services as part of its transition from a traditional thrift institution to a full service community bank.
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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, with the majority of the growth in residential real estate secured loans and construction loans. Total deposits increased by $59.0 million, or 42.1%, from $140.1 million at December 31, 2008 to $199.1 million at September 30, 2009. Included in this was $2.8 million, or 35.2%, of growth in noninterest-bearing deposits. Noninterest expense as a percentage of average assets was 2.80% for the first nine months of 2009 compared to 2.83% for the same period in the prior year.
FINANCIAL CONDITION
LOANS AND ALLOWANCE FOR LOAN LOSSES
The outstanding balance of total loans increased $24.2 million, or 15.0%, from $161.2 million at December 31, 2008 to $185.5 million at September 30, 2009. The average balance of our outstanding loans for the third quarter of 2009 was $183.3 million, up $35.3 million, or 23.9%, compared to $147.9 million for the same period in 2008. Table 1, which is based on regulatory reporting codes, shows loan balances at quarter-end for the most recent five quarters and the average balance of loans outstanding during each quarter.
TABLE 1. COMPOSITION OF LOAN PORTFOLIO | |||||
2009 | 2008 | ||||
($ in thousands) | September 30 | June 30 | March 31 | December 31 | September 30 |
Real estate loans - residential | $ 90,178 | $ 89,379 | $ 88,544 | $ 76,429 | $ 77,448 |
Real estate loans - commercial and other | 71,151 | 70,980 | 66,407 | 67,751 | 61,450 |
Real estate loans - construction | 17,305 | 14,578 | 11,408 | 10,542 | 6,727 |
Consumer loans | 1,518 | 1,266 | 1,287 | 1,713 | 1,992 |
Commercial business loans | 5,304 | 5,445 | 5,411 | 4,807 | 4,534 |
Total loans | $ 185,456 | $ 181,648 | $ 173,057 | $ 161,242 | $ 152,151 |
Average balance of loans during three month period | $ 183,256 | $ 176,633 | $ 166,926 | $ 155,609 | $ 147,934 |
The Company’s investment in residential real estate loans, which includes those loans secured by one-to four-family dwellings (also referred to as “single-family”), increased $13.7 million, or 18.0%, from December 31, 2008 to September 30, 2009. Residential real estate loans increased primarily due to the efforts of the Bank’s three new residential loan originators, who were hired in the first quarter of 2009, and the relatively low level of market rates of interest during the first nine months of 2009. In addition, the expansion of loan product offerings and enhanced marketing activities have contributed to the growth in this segment of the loan portfolio. Commercial and other real estate loans, which includes those secured by nonresidential and multi-family properties, increased by $3.4 million, or 5.0%, from $67.8 million at December 31, 2008 to $71.2 million at September 30, 2009. The increase in commercial and other real estate loans is attributable to the Bank’s experienced team of commercial lenders and primarily consisted of owner-occupied nonresidential properties. Construction loans, which include those secured by one-to four-family, multi-family, and nonresidential real estate, increased by $6.8 million, or 64.2%, from $10.5 million at December 31, 2008 to $17.3 million at September 30, 2009. Construction loans secured by one-to four-family dwellings constitute the large majority of this segment of the portfolio. This growth is attributed to continued rehabilitation of damaged housing and new construction in areas severely impacted by the effects of Hurricane Katrina.
All loans carry a certain degree of credit risk. Management’s evaluation of this risk is ultimately reflected in the estimate of probable loan losses that is reported in the Company’s financial statements as the allowance for loan losses. As a result of this ongoing evaluation, any additions to the allowance for loan losses are reflected in the provision for loan losses and charged to operating expense. At September 30, 2009, the allowance for loan losses was $2.7 million, or 1.5% of total loans. Table 2 presents an analysis of the activity in the allowance for loan losses for the past five quarters.
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TABLE 2. SUMMARY OF ACTIVITY IN THE ALLOWANCE FOR LOAN LOSSES | |||||||
2009 | 2008 | ||||||
($ in thousands) | Third Quarter | Second Quarter | First Quarter | Fourth Quarter | Third Quarter | ||
Beginning balance | $ 2,643 | $ 2,693 | $ 2,719 | $ 2,818 | $ 3,238 | ||
Provision for loan losses | 200 | - | - | - | - | ||
Loans charged off | 156 | 50 | 28 | 99 | 420 | ||
Recoveries of loans previously charged-off | 13 | - | 2 | - | - | ||
Ending balance | $ 2,700 | $ 2,643 | $ 2,693 | $ 2,719 | $ 2,818 | ||
Ratios | |||||||
Charge-offs to average loans | 0.09% | 0.03% | 0.02% | 0.06% | 0.28% | ||
Provision for loan losses to charge-offs | 128.21% | n/a | n/a | n/a | n/a | ||
Allowance for loan losses to charge-offs (annualized) | 432.69% | 1321.50% | 2404.46% | 686.62% | 167.74% | ||
Allowance for loan losses to ending loans | 1.46% | 1.46% | 1.56% | 1.69% | 1.85% | ||
An additional provision for loan losses of $200,000 was recorded during the third quarter of 2009 based on the Company’s assessment of its credit risk while considering the overall increased level of loan delinquencies and adversely classified loans. The allowance was reduced by $156,000 during the third quarter of 2009 due to the foreclosure of a $227,000 renovation loan secured by one-to four-family residential real estate with an appraised value of $80,000 based on the “as is”, incomplete, condition.
Table 3 summarizes the Company’s delinquent loans at September 30, 2009 and at the end of the preceding four quarters. The balances presented reflect the total principal balances outstanding on the loans rather than the amount of principal past due.
TABLE 3. DELINQUENT LOANS | ||||||
2009 | 2008 | |||||
($ in thousands) | September 30 | June 30 | March 31 | December 31 | September 30 | |
30-89 Days | $ 2,979 | $ 1,960 | $ 3,214 | $ 5,231 | $ 749 | |
90+ Days | 4,145 | 3,092 | 2,359 | 2,011 | 2,075 | |
Total | $ 7,124 | $ 5,052 | $ 5,573 | $ 7,242 | $ 2,824 | |
Ratios | ||||||
Loans delinquent 90+ days to total loans | 2.24% | 1.70% | 1.36% | 1.25% | 1.36% | |
Total delinquent loans to total loans | 3.84% | 2.78% | 3.22% | 4.50% | 1.86% | |
Allowance for loan losses to 90+ day delinquent loans | 65.14% | 85.48% | 114.16% | 135.21% | 135.81% | |
Allowance for loan losses to total delinquent loans | 37.90% | 52.32% | 48.32% | 37.54% | 99.79% | |
The increase in loans greater than 90 days delinquent was primarily due to three loans with an aggregate net book value of $976,000, including a reserve of $743,000 from the allowance for loan and lease losses, at September 30, 2009 to a commercial borrower that are secured by two non-owner-occupied, residential properties located in New Orleans, Louisiana, and one non-owner-occupied, commercial property located in Algiers, Louisiana. These properties, two of which are under varying stages of renovation, had an aggregate appraised value of $1.2 million in August of 2009 based on their “as is” condition and are currently in the process of foreclosure.
Nonperforming assets consists of loans on non-accrual status and foreclosed assets. Table 4 sets forth the Company’s nonperforming assets at the dates indicated. The Company did not have loans greater than 90 days delinquent and accruing interest or troubled debt restructurings at the dates indicated.
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TABLE 4. NONPERFORMING ASSETS | ||||||
2009 | 2008 | |||||
($ in thousands) | September 30 | June 30 | March 31 | December 31 | September 30 | |
Loans accounted for on a non-accrual basis | $ 4,145 | $ 2,885 | $ 2,210 | $ 2,011 | $ 2,075 | |
Foreclosed assets | 1,841 | 1,847 | 461 | 461 | 844 | |
Total nonperforming assets | $ 5,986 | $ 4,732 | $ 2,671 | $ 2,472 | $ 2,919 | |
Loans greater than 90 days past due and accruing interest | - | 207 | 149 | - | - | |
Troubled debt restructurings | - | - | - | - | - | |
Ratios | ||||||
Nonperforming assets to loans plus foreclosed assets | 3.20% | 2.58% | 1.52% | 1.53% | 1.91% | |
Nonperforming assets to total assets | 2.21% | 1.79% | 1.06% | 1.11% | 1.35% | |
Allowance for loan losses to nonperforming loans | 65.14% | 91.61% | 121.86% | 135.21% | 135.81% | |
Foreclosed assets as of September 30, 2009 include a multi-family dwelling located in the historic district of the French Quarter in New Orleans, Louisiana. The foreclosure proceedings on the property, which was under renovation, were completed in April 2009. The appraised value of the property was $1.6 million based on the “as is”, incomplete, condition. The Company has been marketing this property for sale since May 2009 and lowered the sale price to $1.3 million in the third quarter of 2009 which resulted in a $61,000 non-cash impairment charge on other real estate.
INVESTMENT IN SECURITIES
At September 30, 2009, the Company’s total securities available-for-sale were $50.2 million, compared to $47.6 million at December 31, 2008, which represents an increase of $2.6 million, or 5.4%.
In 2008, the Company recognized a non-cash impairment charge of $1.3 million for other-than-temporary impairments of its investment in two mutual funds, the AMF Ultra Short Mortgage (ticker: ASARX) and the AMF Intermediate Mortgage (ticker: ASCPX). Prior to 2008, these investments were redeemable immediately at their current market value. In 2008, the fund managers, Shay Assets Management, Inc., imposed a restriction on these mutual funds which limits redemptions for cash to $250,000 per quarter based on the current market price at the time of redemption. Approximately $764,000 of the holdings in the AMF Ultra Short Mortgage fund, the remaining mutual fund in the Company’s securities portfolio, were redeemed for cash during the first nine months of 2009 at a loss of $14,000. As of September 30, 2009, the Bank’s remaining investment in the AMF Ultra Short Mortgage Fund had an amortized cost and market value of $2.6 million.
At September 30, 2009, the net unrealized gain on the Company’s entire securities portfolio was $479,000, or 1.0% of amortized cost, compared to the net unrealized loss of $320,000, or 0.7% of amortized cost at December 31, 2008. The gains in the securities portfolio consist primarily of increases in the market value of mortgage-backed securities issued by government agencies. The losses in the security portfolio are attributable to the reduced values of certain private-label collateralized mortgage obligations as a result of concerns with the overall mortgage market. Management believes that these losses are temporary in nature and will reverse themselves when market conditions become more favorable for those types of investments.
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TABLE 5. COMPOSITION OF INVESTMENT SECURITIES PORTFOLIO | |||||||
September 30, 2009 | December 31, 2008 | September 30, 2008 | |||||
($ in thousands) | Amortized Cost | Market Value | Amortized Cost | Market Value | Amortized Cost | Market Value | |
U.S. Agency securities | $ 6,306 | $ 6,305 | $ 10,010 | $ 10,070 | $ 10,010 | $ 9,778 | |
Mortgage-backed securities | 31,506 | 32,400 | 25,484 | 26,100 | 21,773 | 21,805 | |
Collateralized mortgage obligations | 5,566 | 5,114 | 9,035 | 8,039 | 13,540 | 12,909 | |
Municipal securities | 3,684 | 3,722 | - | - | - | - | |
Mutual funds | 2,644 | 2,644 | 3,408 | 3,408 | 4,393 | 4,126 | |
Total investment securities | $ 49,706 | $ 50,185 | $ 47,937 | $ 47,617 | $ 49,716 | $ 48,618 | |
DEPOSITS
At September 30, 2009, deposits totaled $199.1 million, an increase of $59.0 million, or 42.1%, from $140.1 million at December 31, 2008. Average deposits for the third quarter of 2009 increased by $14.0 million, or 7.6%, from the prior quarter. Average certificates of deposit (or “time deposits”) totaled $101.3 million, or 51.1%, of average total deposits for the quarter ended September 30, 2009, up $7.2 million, or 7.6%, compared to the second quarter of 2009. Average savings deposits made up 6.7% of total average deposits, down from 7.5% in the prior quarter. During the third quarter of 2009, the average balance of NOW accounts, which includes money market deposit accounts, increased from 35.7% to 37.2% of average total deposits from the second quarter of 2009. The average balance of noninterest-bearing demand deposits decreased during the third quarter of 2009 by $620,000, or 5.9%, from $10.4 million in the prior quarter.
Table 6 presents the composition of average deposits for the quarters ended September 30, 2009, June 30, 2009, and September 30, 2008.
TABLE 6. DEPOSIT COMPOSITION | ||||||
Third Quarter 2009 | Second Quarter 2009 | Third Quarter 2008 | ||||
($ in thousands) | Average Balances | % of Deposits | Average Balances | % of Deposits | Average Balances | % of Deposits |
Noninterest-bearing demand deposits | $ 9,825 | 5.0% | $ 10,445 | 5.7% | $ 9,101 | 6.7% |
NOW and MMDA account deposits | 73,791 | 37.2% | 65,839 | 35.7% | 25,841 | 19.0% |
Savings deposits | 13,310 | 6.7% | 13,841 | 7.5% | 16,519 | 12.2% |
Time deposits | 101,313 | 51.1% | 94,127 | 51.1% | 84,530 | 62.1% |
Total | $ 198,239 | 100.0% | $ 184,252 | 100.0% | $ 135,991 | 100.0% |
The increase in deposits is due to a combination of factors including: the offering of competitive interest rates on money market and certain transactional accounts in order to attract new customers and the expanded branch network due to the opening of new banking locations which occurred in the latter half of 2007. In addition, the Bank’s participation in a wholesale, Internet-based, time deposit marketing program allowed it to attract deposits on a nationwide basis that totaled $13.7 million at September 30, 2009. The Company had no deposits that were obtained through outside deposit brokers at September 30, 2009.
BORROWINGS
The Bank is a member of the Federal Home Loan Bank of Dallas (“FHLB”). This membership provides access to a variety of Federal Home Loan Bank advance products as an alternative source of funds. At September 30, 2009 and December 31, 2008, the Company’s borrowings from the Federal Home Loan Bank were $40.6 million and $52.0 million, respectively, which represents a decrease of $11.4 million, or 21.9%. Average advances for the third quarter of 2009 were $41.6 million, a decrease of $6.4 million, or 13.3%, from the second quarter of 2009. The decrease in FHLB borrowings during the first nine months of 2009 was primarily due to the non-renewal of $11.0 million in maturing advances.
The Company is constantly evaluating its funding options to determine the most cost-effective means of funding its growth while actively managing the ratio of average loans to average deposits. The Company’s utilization of borrowings continues to be within the parameters determined by management to be prudent in terms of liquidity and interest rate sensitivity. In addition, the Company has significant remaining borrowing capacity should borrowing needs arise.
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STOCKHOLDERS’ EQUITY AND CAPITAL ADEQUACY
At September 30, 2009, stockholders’ equity totaled $28.3 million, compared to $27.6 million at December 31, 2008. This increase of $766,000, or 2.8%, was primarily due to net income of $985,000 and an increase in unrealized gains, net of tax, on investment securities of $537,000, partially offset by cash dividends paid of $384,000 and purchases of treasury stock of $387,000 for the nine months ended September 30, 2009.
Since 1998, the Company has repurchased shares of its common stock when shares have been available at prices and amounts deemed prudent by management. The Company announced a stock repurchase program in October 2008 of up to 64,250 shares, or approximately 5.0%, of GS Financial Corp.’s outstanding common stock through open market or privately negotiated transactions. Table 7 summarizes the repurchase of the shares of its common stock by year. All of the purchases were open market transactions, other than the 15,614 shares purchased in the quarter ended September 30, 2009, and most were at a discount to book value.
TABLE 7. SUMMARY OF STOCK REPURCHASES | |||
Year Ended December 31, | Shares | Cost ($000) | Average Price Per Share |
1998 | 491,054 | $ 8,324 | $ 16.95 |
1999 | 299,000 | 3,653 | 12.22 |
2000 | 679,600 | 8,590 | 12.64 |
2001 | 305,684 | 4,612 | 15.09 |
2002 | 142,201 | 2,516 | 17.69 |
2003 | 216,181 | 4,109 | 19.00 |
2004 | 16,842 | 315 | 18.71 |
2005 | 3,907 | 74 | 19.06 |
2006 | 17,763 | 300 | 16.87 |
2007 | 10,468 | 188 | 18.00 |
2008 | - | - | - |
Nine months ended September 30, 2009 | 27,862 | 387 | 13.87 |
Total stock repurchases | 2,210,562 | $ 33,068 | $ 14.96 |
The ratios in Table 8 indicate that the Bank remained well capitalized for regulatory purposes as of September 30, 2009. During 2008 and 2009, the Bank has reduced its overcapitalized position as it has increased its holdings of loans. Risk-based capital ratios declined in the third quarter of 2009 as there was a $20.1 million increase in risk-weighted assets, attributable primarily to growth in the loan portfolio. The regulatory capital ratios of Guaranty Savings Bank continue to exceed the minimum required ratios, and the Bank has been categorized as “well-capitalized” in the most recent report received from its primary regulatory agency.
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TABLE 8. REGULATORY CAPITAL AND CAPITAL RATIOS | |||
2009 | 2008 | ||
($ in thousands) | September 30 | December 31 | September 30 |
Tier 1 regulatory capital | $ 26,621 | $ 25,611 | $ 27,329 |
Tier 2 regulatory capital | 1,517 | 1,772 | 1,689 |
Total regulatory capital | $ 28,138 | $ 27,383 | $ 29,018 |
Adjusted total assets | $ 269,753 | $ 221,614 | $ 217,380 |
Risk-weighted assets | $ 161,875 | $ 141,772 | $ 135,118 |
Ratios | |||
Tier 1 capital to adjusted total assets | 9.87% | 11.56% | 12.57% |
Tier 1 capital to risk-weighted assets | 16.45% | 18.06% | 20.23% |
Total capital to risk-weighted assets | 17.38% | 19.31% | 21.48% |
LIQUIDITY AND CAPITAL RESOURCES
The objective of liquidity management is to ensure that funds are available to meet the cash flow requirements of depositors and borrowers, while at the same time meeting the operating, capital, and strategic cash flow needs of the Company and the Bank, in the most cost-effective manner possible. The Company develops its liquidity management strategies and measures and monitors liquidity risk as part of its overall asset/liability management process by making use of quantitative modeling tools to project cash flows under a variety of possible scenarios.
On the liability side, liquidity management focuses on growing the base of more stable core deposits at competitive rates, while at the same time ensuring access to economical wholesale funding sources. The sections above on deposits and borrowings discuss changes in these liability-funding sources during the first nine months of 2009.
Liquidity management on the asset side primarily addresses the composition and maturity structure of the loan and investment securities portfolios and their impact on the Company’s ability to generate cash flows from scheduled payments, contractual maturities and prepayments, their use as collateral for borrowings, and possible outright sales in the secondary market.
Cash generated from operations is an important source of funds to meet liquidity needs. The consolidated statements of cash flows present operating cash flows and summarize all significant sources and uses of funds for the first nine months of 2009 and 2008. The Company reported net income of $985,000 for the nine months ended September 30, 2009, and had net cash of $178,000 used in operating activities. Certain adjustments are made to net income to reach the level of cash provided by operating activities, including non-cash expenses (depreciation, employee compensation made in the form of stock, deferred tax provisions, etc.) and revenues (accretion of discounts, dividends received in the form of stock, etc.).
In addition, management monitors its liquidity position by tracking certain financial data. Table 9 illustrates some of the factors that the Company uses to measure liquidity.
TABLE 9. KEY LIQUIDITY INDICATORS | |||
2009 | 2008 | ||
($ in thousands) | September 30 | December 31 | September 30 |
Cash and cash equivalents | $ 23,590 | $ 3,205 | $ 6,540 |
Total loans | 185,456 | 161,242 | 152,151 |
Total deposits | 199,111 | 140,115 | 138,155 |
Deposits $100,000 and over | 93,139 | 54,620 | 51,011 |
Ratios | |||
Total loans to total deposits | 93.14% | 115.08% | 110.13% |
Deposits $100,000 and over to total deposits | 46.78% | 38.98% | 36.92% |
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The Company remains highly liquid, as additional liquidity has been obtained through its deposit account offerings that were developed, in part, to increase the Company’s deposit balances and, thereby, reduce the Bank’s loan to deposit ratio. However, liquidity is being used to fund loan growth and payoff maturing FHLB advances when appropriate.
RESULTS OF OPERATIONS
NET INTEREST INCOME
Net interest income for the third quarter of 2009 increased by $105,000, or 5.4%, from the second quarter of 2009 due to a $6.6 million, or 3.7%, increase in the average balance of loans and a 31 basis point reduction in the average costs of funds. This was partially offset by a $14.6 million, or 8.4%, increase in the average balance of interest-bearing deposits and a 16 basis point reduction in the average yield on interest-earning assets. Third quarter net interest income for 2009 increased by $251,000, or 13.9%, from $1.8 million during the same period in prior year due to a $53.3 million, or 26.1%, increase in average interest-earnings assets and a 52 basis point reduction in the average cost of funds, which was negatively impacted by a 70 basis point reduction in the average yield on interest-earning assets and a $61.5 million, or 48.5%, increase in the average balance of interest-bearing deposits.
Interest income decreased slightly during the third quarter of 2009 by $10,000, or 0.3%, compared to the second quarter of 2009 as the average yield on interest-earning assets decreased from 5.75% to 5.59%. This was substantially offset by the increase in the average balance of loans from $176.6 million during the second quarter of 2009 to $183.3 million during the third quarter of 2009. Interest income increased by $386,000, or 12.0%, from the third quarter of 2008 to the third quarter of 2009. The increase in the average balance of loans from $147.9 million during the third quarter of 2008 to $183.3 million during the third quarter of 2009 was largely responsible for the increase in interest income when comparing these time periods. In addition, the $11.1 million, or 52.4%, increase in the average balance of mortgage-backed securities from the third quarter of 2008 to the third quarter of 2009 positively impacted interest income. However, there was a 13 basis point reduction in the average yield on loans and a 111 basis point reduction in the average yield on investment securities from the third quarter of 2008 to the third quarter of 2009 which negatively impacted net interest income.
During the third quarter of 2009, interest expense decreased by $115,000, or 6.9%, from $1.7 million in the second quarter of 2009. This was primarily due to the 22 basis point decrease in the average cost of time deposits and the 64 basis point decrease in the average cost of NOW and MMDA accounts from second quarter of 2009 to the third quarter of 2009. This was substantially offset by the increase in the average balance of interest bearing liabilities from $173.8 million during the second quarter of 2009 to $188.4 million during the third quarter of 2009. Interest expense increased to $1.5 million during the third quarter of 2009 from $1.4 million in the third quarter of 2008 largely due to the $61.5 million, or 48.5%, increase in the average balance of interest-bearing deposits that was partially offset by the 56 basis point decrease in the average cost of interest bearing deposits from 3.21% in the third quarter of 2008 to 2.69% in the third quarter of 2009.
Net interest income for the nine months ended September 30, 2009 increased by $942,000, or 19.1%, from the same period in the prior year. This was primarily due to an increase in the average balance of loans from $137.4 million to $175.7 million for the year-to-date periods ended September 30, 2008 and September 30, 2009, respectively, and an 85 basis point reduction in the average cost of time deposits from 3.98% to 3.13% when comparing these same time periods. Net interest income was negatively impacted by a $43.9 million, or 35.2%, increase in the average balance of interest-bearing deposits and a $6.3 million, or 15.5%, increase in the average balance of FHLB advances from the nine month period ended September 30, 2008 to the same period in 2009.
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TABLE 10. SUMMARY OF AVERAGE BALANCE SHEETS, NET INTEREST INCOME AND INTEREST RATES | |||||||||
Third Quarter 2009 | Second Quarter 2009 | Third Quarter 2008 | |||||||
($ in thousands) | Average Balance | Interest | Average Yield/ Cost | Average Balance | Interest | Average Yield/ Cost | Average Balance | Interest | Average Yield/ Cost |
ASSETS | |||||||||
INTEREST-EARNING ASSETS | |||||||||
Loans | $ 183,256 | $ 3,036 | 6.63% | $ 176,633 | $ 2,992 | 6.78% | $ 147,934 | $ 2,501 | 6.76% |
U.S. Agency securities | 8,313 | 78 | 3.75 | 11,241 | 122 | 4.34 | 12,220 | 179 | 5.86 |
Mortgage-backed securities | 32,239 | 340 | 4.22 | 30,088 | 349 | 4.64 | 21,151 | 303 | 5.73 |
Collateralized mortgage obligations | 5,621 | 82 | 5.84 | 7,070 | 101 | 5.71 | 12,895 | 155 | 4.81 |
Municipal securities | 1,840 | 17 | 3.70 | 494 | 5 | 4.05 | - | - | - |
Mutual funds | 2,731 | 28 | 4.10 | 2,930 | 32 | 4.37 | 4,571 | 50 | 4.38 |
Total investment in securities | 50,744 | 545 | 4.30 | 51,823 | 609 | 4.70 | 50,837 | 687 | 5.41 |
FHLB stock | 2,352 | 1 | 0.17 | 2,351 | 1 | 0.17 | 2,158 | 9 | 1.67 |
Federal funds sold and | |||||||||
interest-bearing deposits in other banks | 21,374 | 18 | 0.34 | 20,498 | 8 | 0.16 | 3,533 | 17 | 1.92 |
Total interest-earning assets | 257,726 | 3,600 | 5.59% | 251,305 | 3,610 | 5.75% | 204,462 | 3,214 | 6.29% |
NONINTEREST-EARNING ASSETS | |||||||||
Other assets | 15,890 | 14,541 | 12,715 | ||||||
Allowance for loan losses | (2,639) | (2,663) | (2,953) | ||||||
Total assets | $ 270,977 | $ 263,183 | $ 214,224 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
INTEREST-BEARING LIABILITIES | |||||||||
NOW and MMDA account deposits | $ 73,791 | $ 363 | 1.97% | $ 65,839 | $ 429 | 2.61% | $ 25,841 | $ 141 | 2.18% |
Savings deposits | 13,310 | 17 | 0.51 | 13,841 | 17 | 0.49 | 16,519 | 31 | 0.75 |
Time deposits | 101,313 | �� 746 | 2.95 | 94,127 | 746 | 3.17 | 84,530 | 763 | 3.61 |
Total interest-bearing deposits | 188,414 | 1,126 | 2.39 | 173,807 | 1,192 | 2.74 | 126,890 | 935 | 2.95 |
Borrowings | 41,554 | 422 | 4.06 | 47,947 | 471 | 3.93 | 49,241 | 478 | 3.88 |
Total interest-bearing liabilities | 229,968 | 1,548 | 2.69% | 221,754 | 1,663 | 3.00% | 176,131 | 1,413 | 3.21% |
NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
Demand deposits | 9,825 | 10,445 | 9,101 | ||||||
Other liabilities | 2,854 | 2,621 | 1,513 | ||||||
Stockholders' equity | 28,330 | 28,363 | 27,479 | ||||||
Total liabilities and stockholders' equity | $ 270,977 | $ 263,183 | $ 214,224 | ||||||
Net interest income and margin | $ 2,052 | 3.19% | $ 1,947 | 3.10% | $ 1,801 | 3.52% | |||
Net interest-earning assets and spread | $ 27,758 | 2.90% | $ 29,551 | 2.75% | $ 28,331 | 3.08% | |||
Cost of funding interest-earning assets | 2.40% | 2.65% | 2.76% | ||||||
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TABLE 11. SUMMARY OF CHANGES IN NET INTEREST MARGIN | ||||||
Third Quarter 2009 Compared to: | ||||||
Second Quarter of 2009 | Third Quarter of 2008 | |||||
Due to Change in | Total Increase (Decrease) | Due to Change in | Total Increase (Decrease) | |||
($ in thousands) | Volume | Rate | Volume | Rate | ||
INTEREST INCOME | ||||||
Loans | 112 | (68) | 44 | 597 | (62) | 535 |
U.S. Agency securities | (32) | (12) | (44) | (57) | (44) | (101) |
Mortgage-backed securities | 25 | (34) | (9) | 159 | (122) | 37 |
Collateralized mortgage obligations | (21) | 2 | (19) | (87) | 14 | (73) |
Municipal securities | 14 | (2) | 12 | 17 | - | 17 |
Mutual funds | (2) | (2) | (4) | (20) | (2) | (22) |
Total investment in securities | (16) | (48) | (64) | 12 | (154) | (142) |
FHLB stock | - | - | - | 1 | (9) | (8) |
Federal funds sold and interest bearing deposits in other banks | - | 10 | 10 | 86 | (85) | 1 |
Total interest income | 96 | (106) | (10) | 696 | (310) | 386 |
INTEREST EXPENSE | ||||||
NOW account deposits | 52 | (118) | (66) | 262 | (40) | 222 |
Savings deposits | (1) | 1 | - | (6) | (8) | (14) |
Time deposits | 57 | (57) | - | 151 | (168) | (17) |
Total interest-bearing deposits | 108 | (174) | (66) | 407 | (216) | 191 |
Borrowings | (63) | 14 | (49) | (75) | 19 | (56) |
Total interest expense | 45 | (160) | (115) | 332 | (197) | 135 |
Change in net interest income | 51 | 54 | 105 | 364 | (113) | 251 |
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TABLE 12. SUMMARY OF AVERAGE BALANCE SHEETS, NET INTEREST INCOME AND INTEREST RATES
Nine Months Ended | Nine Months Ended | |||||
September 30, 2009 | September 30, 2008 | |||||
Average | Average | Average | Average | |||
($ in thousands) | Balance | Interest | Yield/ Cost | Balance | Interest | Yield/ Cost |
ASSETS | ||||||
INTEREST-EARNING ASSETS | ||||||
Loans | $ 175,655 | $ 8,775 | 6.66% | $ 137,376 | $ 7,049 | 6.84% |
U.S. Agency securities | 9,896 | 338 | 4.55 | 16,879 | 750 | 5.92 |
Mortgage-backed securities | 29,392 | 1,028 | 4.66 | 13,718 | 537 | 5.22 |
Collateralized mortgage obligations | 6,896 | 308 | 5.96 | 13,677 | 561 | 5.47 |
Municipal securities | 780 | 22 | 3.76 | - | - | - |
Mutual funds | 2,975 | 94 | 4.21 | 5,266 | 178 | 4.51 |
Total investment in securities | 49,939 | 1,790 | 4.78 | 49,540 | 2,026 | 5.45 |
FHLB stock | 2,349 | 5 | 0.28 | 1,811 | 33 | 2.43 |
Federal funds sold and | ||||||
interest-bearing deposits in other banks | 16,522 | 28 | 0.23 | 5,898 | 112 | 2.53 |
Total interest-earning assets | 244,465 | 10,598 | 5.78% | 194,625 | 9,220 | 6.32% |
NONINTEREST-EARNING ASSETS | ||||||
Other assets | 14,609 | 12,390 | ||||
Allowance for loan losses | (2,673 | ) | (3,227 | ) | ||
Total assets | $ 256,401 | $ 203,788 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
INTEREST-BEARING LIABILITIES | ||||||
NOW and MMDA account deposits | $ 60,697 | $ 1,071 | 2.35% | $ 24,556 | $ 428 | 2.32% |
Savings deposits | 13,938 | 52 | 0.50 | 17,524 | 101 | 0.77 |
Time deposits | 94,252 | 2,215 | 3.13 | 82,893 | 2,475 | 3.98 |
Total interest-bearing deposits | 168,887 | 3,338 | 2.64 | 124,973 | 3,004 | 3.20 |
Borrowings | 47,045 | 1,386 | 3.93 | 40,738 | 1,284 | 4.20 |
Total interest-bearing liabilities | 215,932 | 4,724 | 2.92% | 165,711 | 4,288 | 3.45% |
NONINTEREST-BEARING LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Demand deposits | 9,669 | 8,497 | ||||
Other liabilities | 2,613 | 1,618 | ||||
Stockholders' equity | 28,187 | 27,962 | ||||
Total liabilities and stockholders' equity | $ 256,401 | $ 203,788 | ||||
Net interest income and margin | $ 5,874 | 3.20% | $ 4,932 | 3.38% | ||
Net interest-earning assets and spread | $ 28,533 | 2.86% | $ 28,914 | 2.87% | ||
Cost of funding interest-earning assets | 2.58% | 2.94% | ||||
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TABLE 13. SUMMARY OF CHANGES IN NET INTEREST MARGIN | |||
First Nine Months of 2009 Compared to | |||
First Nine Months of 2008 | |||
Due to Change in | Total Increase | ||
($ in thousands) | Volume | Rate | (Decrease) |
INTEREST INCOME | |||
Loans | 1,964 | (238) | 1,726 |
U.S. Agency securities | (310) | (102) | (412) |
Mortgage-backed securities | 614 | (123) | 491 |
Collateralized mortgage obligations | (278) | 25 | (253) |
Municipal Securities | 22 | - | 22 |
Mutual funds | (77) | (7) | (84) |
Total investment in securities | (29) | (207) | (236) |
FHLB stock | 10 | (38) | (28) |
Federal funds sold and Interest Bearing Deposit in Other Banks | 202 | (286) | (84) |
Total interest income | 2,147 | (769) | 1,378 |
INTEREST EXPENSE | |||
NOW and MMDA account deposits | 630 | 13 | 643 |
Savings deposits | (21) | (28) | (49) |
Time deposits | 339 | (599) | (260) |
Total interest-bearing deposits | 948 | (614) | 334 |
Borrowings | 199 | (97) | 102 |
Total interest expense | 1,147 | (711) | 436 |
Change in net interest income | 1,000 | (58) | 942 |
PROVISION FOR LOAN LOSSES
The Company recorded a $200,000 provision for loan losses during the third quarter of 2009, which represents the only provision recorded during the first nine months of 2009. There was no provision for loan losses recorded during the first nine months of 2008. The local market area remains in a state of uncertainty regarding the level of recovery from Hurricane Katrina and has also been impacted by the national recession. The Bank’s asset quality committee will continue to meet quarterly to review the risk elements of its loan portfolio, including: impaired loans, non-performing loans, and potential non-performing and impaired loans, and adjust the allowance for loan losses accordingly based on the best information available at the time.
For a more detailed discussion of the changes in the allowance for loan losses, nonperforming assets, and general credit quality, see the earlier section on Loans and Allowance for Loan Losses. The future level of the allowance and provisions for loan losses will reflect management’s ongoing evaluation of credit risk, based on established internal policies and practices.
NON-INTEREST INCOME
Non-interest income increased by $192,000 during the third quarter of 2009 compared to the same period in 2008 and increased by $1.5 million for the first nine months of 2009 compared to the first nine months of 2008. These increases were primarily due to the recognition of a non-cash impairment charge of $660,000 during the second quarter of 2008 related to the Company’s investment in mutual funds. The previous discussion in this Form 10-Q regarding the Company’s investment in securities provides additional information regarding these charges. In addition, there was a $660,000 increase in the gain on sales of mortgage loans in the secondary market during the first nine months of 2009 compared to the same period in prior year. The increase in mortgage loan sales in the secondary market was largely due to favorable mortgage loan interest rates. As a result of the increased activity, the Bank has expanded its mortgage lending operations by hiring additional mortgage originators.
The favorable mortgage loan interest rates have also increased the level of repayment activity on loans serviced by the Bank for other investors including Fannie Mae and Freddie Mac. As a result, mortgage servicing fees, net of related costs and amortization, decreased by $8,000 and $40,000, respectively, for the three and nine month periods ended September 30, 2009 compared to the same time periods in the prior year.
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The Company sold vacant land located in Metairie, Louisiana, from its holdings of premises and equipment, during the second quarter of 2009 for net proceeds of approximately $191,000. As a result, the Company recorded a $134,000 gain on the sale of this land during the nine months ended September 30, 2009.
Service charges on deposit accounts were $17,000 and $47,000, respectively, for the three and nine month periods ended September 30, 2009, up from $10,000 and $26,000 for the same time periods in 2008. The Company continues to develop new deposit products and pricing strategies to increase transaction accounts and the related fee income. The major categories of non-interest income for the three and nine months ended September 30, 2009 and 2008 are presented in Table 14.
TABLE 14. NON-INTEREST INCOME | ||||||
Three Months Ended | Nine Months Ended | |||||
($ in thousands) | September 30, 2009 | September 30, 2008 | Percentage Increase (Decrease) | September 30, 2009 | September 30, 2008 | Percentage Increase (Decrease) |
Service charges on deposit accounts | $ 17 | $ 10 | 70.0% | $ 47 | $ 26 | 80.8% |
ATM fees | 5 | 4 | 25.0 | 16 | 11 | 45.5 |
Early closing penalties | 4 | 3 | 33.3 | 9 | 5 | 80.0 |
Income from real estate held for investment | 14 | 14 | - | 42 | 42 | - |
Gain on sales of mortgage loans | 188 | 34 | 452.9 | 881 | 221 | 298.6 |
Gain on sales of premises and equipment | - | - | - | 134 | 17 | 688.2 |
Gain (loss) on sale of other real estate | - | (1) | (a) | 3 | (1) | (a) |
Mortgage servicing fees, net | 1 | 9 | (88.9) | (38) | 2 | (2,000.0) |
Miscellaneous | 8 | 1 | 700.0 | 8 | 1 | 700.0 |
Total non-interest income before securities transactions | 237 | 74 | 220.3% | 1,102 | 324 | 240.1% |
Securities impairments and losses, net of gains from sales | 8 | (21) | (a) | (3) | (681) | (a) |
Total non-interest income | $ 245 | $ 53 | 362.3% | $ 1,099 | $ (357) | (a) |
(a) Not meaningful |
NON-INTEREST EXPENSE
Non-interest expense for the third quarter of 2009 totaled $1.9 million, a $480,000, or 33.1%, increase from $1.4 million in the third quarter of 2008. Non-interest expense for the three and nine months ended September 30, 2009 and 2008 are presented in Table 15 below.
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TABLE 15. NON-INTEREST EXPENSE
Three Months Ended | Nine Months Ended | |||||
($ in thousands) | September 30, 2009 | September 30, 2008 | Percentage Increase (Decrease) | September 30, 2009 | September 30, 2008 | Percentage Increase (Decrease) |
Employee compensation and benefits | $ 1,042 | $ 831 | 25.4% | $ 2,915 | $ 2,563 | 13.7% |
Net occupancy expense | 220 | 215 | 2.3 | 623 | 616 | 1.1 |
Ad Valorem taxes | 58 | 75 | (22.7) | 175 | 225 | (22.2) |
Data processing costs | 107 | 105 | 1.9 | 289 | 250 | 15.6 |
Advertising | 17 | 10 | 70.0 | 57 | 35 | 62.9 |
ATM server expenses | 13 | 8 | 62.5 | 39 | 27 | 44.4 |
Professional fees | 155 | 49 | 216.3 | 454 | 161 | 182.0 |
Deposit insurance and supervisory fees | 83 | 40 | 107.5 | 305 | 98 | 211.2 |
Printing and office supplies | 25 | 23 | 8.7 | 93 | 77 | 20.8 |
Telephone | 19 | 14 | 35.7 | 46 | 35 | 31.4 |
Security expense | 10 | 8 | 25.0 | 33 | 24 | 37.5 |
Dues and subscriptions | 23 | 24 | (4.2) | 61 | 72 | (15.3) |
Impairment of other real estate owned | 61 | - | (a) | 61 | - | (a) |
Other operating expenses | 95 | 46 | 106.5 | 226 | 146 | 54.8 |
Total non-interest expense | $ 1,928 | $ 1,448 | 33.1% | $ 5,377 | $ 4,329 | 24.2% |
Efficiency ratio | 83.91% | 78.10% | 77.10% | 94.62% | ||
(a) Not meaningful |
Employee compensation and benefits, which represent the largest component of non-interest expense, increased $211,000, or 25.4%, to $1.0 million in the third quarter of 2009 compared to $831,000 in the third quarter of 2008 and increased $352,000, or 13.7%, to $2.9 million during the first nine months of 2009 compared to $2.6 million for the same period in the prior year. The increase in personnel costs during 2009 was primarily due to an increase in mortgage originator commissions in response to the increase in mortgage loan origination activity.
Professional fees were $155,000 and $454,000 for the three and nine month periods ended September 30, 2009, which represent increases of $106,000 and $293,000, respectively, when compared to $49,000 and $161,000 for the same time periods ended September 30, 2008. The increase in professional fees was primarily due to the legal costs associated with agreements the Company entered into with certain stockholders. In addition, the Bank increased its utilization of the services of attorneys to assist with loan collection activity and various consultants to provide assessments of its internal processes and procedures.
Deposit insurance and supervisory fees increased by $43,000, or 107.5%, to $83,000 for the quarter ended September 30, 2009 from $40,000 for the quarter ended September 30, 2008 and increased by $207,000, or 211.2%, to $305,000 for the year-to-date period ended September 30, 2009 from $98,000 for the same time period in the prior year. The increase in deposit insurance premiums was largely due to the special assessment levied by the FDIC on May 22, 2009, which was equal to 5 basis points of the Company’s total assets at June 30, 2009 less Tier 1 capital, that was paid during the third quarter of 2009, as well as an increase in the regular assessment amount due to the increased level of deposits.
As previously discussed, the Company recorded a non-cash impairment charge of $61,000 on other real estate during the third quarter of 2009. There was no impairment charge recorded on other real estate during 2008. See the section above on nonperforming assets for additional information regarding this impairment charge.
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Item 3 – Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Item 4 - Controls and Procedures
Our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and regulations and are operating in an effective manner.
No change in our internal control over financial reporting (as defined in Rules 13a–15(f) or 15(d)-15(f) under the Securities Exchange Act of 1934) occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to affect, our internal control over financial reporting.
Part II - Other Information
Item 1 - Legal Proceedings
There are no matters required to be reported under this item.
Item 1a. - Risk Factors
Not applicable.
Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds
(a) Not applicable
(b) Not applicable
(c) Purchases of Equity Securities
The Company’s repurchases of its common stock made during the quarter ended September 30, 2009 are set forth in the table below:
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1) | ||||||||||||
July 1, 2009 – July 31, 2009 | - | $ | - | - | 52,002 | |||||||||||
August 1, 2009 – August 31, 2009 | 15,614 | 15.00 | 15,614 | 36,388 | ||||||||||||
September 1, 2009 – September 30, 2009 | - | - | - | 36,388 | ||||||||||||
Total | 15,614 | $ | 15.00 | 15,614 | 36,388 |
Notes to this table:
(1) | On October 22, 2008 the Company announced by press release a stock repurchase program to repurchase 64,250 shares, or 5.0% of its outstanding common stock over a one year period, or such longer amount of time as may be necessary to complete the repurchase plan. The program became effective November 6, 2008. |
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Item 3 - Defaults Upon Senior Securities
There are no matters required to be reported under this item.
Item 4 - Submission of Matters to a Vote of Security Holders
There are no matters required to be reported under this item.
Item 5 - Other Information
There are no matters required to be reported under this item.
Item 6 - Exhibits
31.1 | Rule 13a-14(a) Certification of Chief Executive Officer |
31.2 | Rule 13a-14(a) Certification of Chief Financial Officer |
32.0 | Certification pursuant to 18 U.S.C. Section 1350 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
GS FINANCIAL CORP.
Date: | November 13, 2009 | By: | /s/ Stephen E. Wessel | |
Stephen E. Wessel President and Chief Executive Officer | ||||
Date: | November 13, 2009 | By: | /s/ Stephen F. Theriot | |
Stephen F. Theriot Chief Financial Officer |
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