GS Financial Corp. Announces Fourth Quarter Results Including a Significant Provision for Loan Losses due to Hurricane Katrina
January 27 2006 - 5:52PM
Business Wire
GS Financial Corp. (NASDAQ:GSLA) (the "Company"), the holding
company for Guaranty Savings and Homestead Association (the
"Association"), announced a loss for the quarter ended December 31,
2005 of $4.1 million, or $3.45 per share, compared to a loss of
$246,000, or $.21 per share, for the quarter ended December 31,
2004. For the year ended December 31, 2005, the loss was $3.7
million, or $3.11 per share, compared to earnings of $199,000, or
$.17 per share, for the year ended December 31, 2004. Earnings for
the fourth quarter of 2005 were adversely affected by a $4.8
million provision for loan losses made in light of potential loan
losses caused by the impact of Hurricane Katrina. The provision for
loan losses was made upon management's consideration of the impact
of both the economic damage suffered by the Association's borrowers
as a result of Hurricane Katrina as well as wind and flood damage
to the properties securing loans. Stephen Wessel, President of the
Company and the Association, commented that "After a careful review
of our loan portfolio and the effects of Hurricane Katrina, we
determined that the prudent thing to do was to make a significant
provision for loan losses. We are continuing to work with our
borrowers and customers to help them rebuild their homes and
lives." Mr. Wessel went on to state that "Fortunately, the Company
continues to be very well capitalized, which will permit us to not
only absorb the losses from Hurricane Katrina but also will allow
us to redeploy our funds over time into higher earning assets."
While management believes the Company's allowance for loan losses
to be adequate following this provision, the Company will continue
to perform its regular evaluation of the loan portfolio and make
adjustments as necessary. The net after-tax impact to earnings
caused by this provision was a reduction of $3.2 million to
earnings in the fourth quarter of 2005. While Katrina struck in
August, 2005, it was not until the fourth quarter of 2005, when
borrowers were required to resume payments, that there was
sufficient data to make a reasonable estimate of losses in the
Company's loan portfolio. Also adversely impacting earnings in the
fourth quarter was a $1.3 million writedown of an investment in an
adjustable-rate mortgage mutual fund. As shares of this investment
have been selling below the Association's cost basis for an
extended period of time management has deemed this impairment to be
other-than-temporary and the losses have been recognized in the
income statement during the fourth quarter of 2005. Net interest
income for the quarter ended December 31, 2005 was $1.3 million
compared to $1.5 million for the same period in 2004 and $5.6
million for the year ended December 31, 2005, slightly exceeding
calendar 2004 net interest income. The Company's net interest
margin increased to 3.10% for the fourth quarter of 2005 from 3.06%
for the year earlier quarter and was 3.08% for the year ended
December 31, 2005 compared to 2.76% in 2004. Total assets of the
Company at December 31, 2005 amounted to $ 177.8 million compared
to $200.1 million at December 31, 2004. There was a significant
reduction in the Company's loan portfolio during 2005. Net loans at
December 31, 2005 were $69.9 million compared to $92.2 million at
December 31, 2004. Subsequent to Hurricane Katrina, there were
significant loan payoffs, primarily from insurance proceeds
received on significantly damaged properties. The loan payoffs
coupled with the $4.8 million provision for loan losses taken in
the fourth quarter were the primary reasons for the reduction in
the Company's net loan portfolio during 2005. The Association
recently hired several individuals with extensive commercial
lending experience at regional banks in order to position the
Association to be a more active commercial lender in 2006 and
thereafter. FORWARD-LOOKING INFORMATION Statements contained in
this news release which are not historical facts may be
forward-looking statements as that term is defined in the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements are subject to risks and uncertainties which could cause
actual results to differ materially from those currently
anticipated due to a number of factors. Factors which could result
in material variations include, but are not limited to, changes in
interest rates which could affect net interest margins and net
interest income, competitive factors which could affect net
interest income and noninterest income, changes in demand for
loans, deposits and other financial services in the Company's
market area; changes in asset quality, general economic conditions
as well as other factors discussed in documents filed by the
Company with the Securities and Exchange Commission from time to
time. In addition to risks and uncertainties described by the
Company in prior filings with the SEC, other risks and
uncertainties potentially impacting the Company are those related
to the Company in its primary market area impacted by Hurricane
Katrina, including the continuing effect of the storm and its
aftermath on the Company's operating expenses and on the Company's
borrowers and other customers. The Company undertakes no obligation
to update these forward-looking statements to reflect events or
circumstances that occur after the date on which such statements
were made. -0- *T GS Financial Corp. Condensed Consolidated
Statements of Financial Condition (Unaudited)
----------------------------------------------------------------------
($ in thousands) December 31, 2005 December 31, 2004
----------------------------------------------------------------------
ASSETS Cash & Due from Banks $ 3,040 $ 1,613 Interest Bearing
Deposits 4,515 3,761 Federal Funds Sold 15,000 1,650 Securities
Available-for-Sale, at Fair Value 77,344 94,557 Loans, Net 69,897
92,158 Accrued Interest Receivable 1,620 596 Premises &
Equipment, Net 2,257 2,508 Stock in Federal Home Loan Bank, at Cost
1,833 2,445 Foreclosed Assets - - Real Estate Held-for-Investment,
Net 478 493 Other Assets 1,862 285
----------------------------------------------------------------------
Total Assets $ 177,846 $ 200,066
----------------------------------------------------------------------
LIABILITIES Interest Bearing Deposits $ 116,798 $ 129,758
Non-Interest Bearing Deposits 2,195 965 FHLB Advances 32,106 39,689
Other Liabilities 1,376 710
----------------------------------------------------------------------
Total Liabilities 152,475 171,122
----------------------------------------------------------------------
STOCKHOLDERS' EQUITY Common Stock & Additional Paid in Capital
$ 34,563 $ 34,459 Unearned ESOP Stock (239) (521) Unearned RRP
Trust Stock (698) (865) Treasury Stock (32,193) (32,119) Retained
Earnings 24,136 28,286 Accumulated Other Comprehensive Income (198)
(296)
----------------------------------------------------------------------
Total Stockholders' Equity 25,371 28,944
----------------------------------------------------------------------
Total Liabilities & Stockholders' Equity $ 177,846 $ 200,066
----------------------------------------------------------------------
Selected Asset Quality Data Total Non Performing Assets $ 10,002 $
894 Non Performing Assets to Total Assets 5.62% 0.45% Allowance for
Loan Losses to Non Performing Assets 57.12% 102.90%
----------------------------------------------------------------------
GS Financial Corp. Condensed Consolidated Statements of Income
(Unaudited) For the three months ended For the year ended December
31, December 31,
----------------------------------------------------------------------
($ in thousands, except per share data) 2005 2004 2005 2004
----------------------------------------------------------------------
Interest Income $ 2,486 $ 2,796 $ 10,466 $ 10,989 Interest Expense
1,182 1,297 4,856 5,436
----------------------------------------------------------------------
Net Interest Income 1,304 1,499 5,610 5,553 Provision for Loan
Losses 4,793 310 4,793 343
----------------------------------------------------------------------
Net Interest Income (Loss) after Provision for Loan Losses (3,489)
1,189 817 5,210
----------------------------------------------------------------------
Noninterest Expense 1,138 1,091 4,707 4,483
----------------------------------------------------------------------
Net Income (Loss) Before Non-Interest Income and Income Taxes
(4,627) 98 (3,890) 727
----------------------------------------------------------------------
Noninterest Income (Loss) (1,211) (510) (1,295) (691)
----------------------------------------------------------------------
Income (Loss) Before Tax Expense (Benefit) (5,838) (412) (5,185) 36
----------------------------------------------------------------------
Income Tax Expense (Benefit) (1,758) (166) (1,508) (163)
----------------------------------------------------------------------
Net Income (Loss) $ (4,080) $ (246) $ (3,677) $ 199
----------------------------------------------------------------------
Net Income (Loss) Per Common Share $ (3.45) $ (0.21) $ (3.11) $
0.17
----------------------------------------------------------------------
Selected Operating Data Weighted Average Shares Outstanding
1,180,941 1,156,537 1,181,313 1,156,441 Return on Average Assets
(1) -9.02% -0.48% -1.96% 0.09% Non Interest Expense/Average Assets
(1) 2.52% 2.14% 2.51% 2.12% Net Interest Margin 3.10% 3.06% 3.08%
2.76%
----------------------------------------------------------------------
(1) Annualized for the three-month periods ended December 31, 2005
and 2004. *T
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