SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
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Annual
Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
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For the
fiscal year ended December 31, 2007
Commission
File Number: 0-22269
(Exact
Name of Registrant as Specified in its Charter)
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(State
of Incorporation)
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(IRS
Employer Identification No.)
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3798
Veterans Blvd., Metairie, Louisiana
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrant's
telephone number, including area code:
(504) 457-6220
Securities
registered pursuant to Section 12(b) of the Act:
Common
Stock, par value $.01 per share
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The
Nasdaq Stock Market, LLC
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Title
of Class
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Name
of each exchange on which
registered
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Securities
registered pursuant to Section 12(g) of the Act:
None
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Indicate
by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
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Yes
o
No
x
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Indicate
by check mark if the registrant is not required to file reports pursuant
to Section 13 or Section 15(d) of the Act.
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Yes
o
No
x
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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
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Yes
x
No
o
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Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
Yes
x
No
o
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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):
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Large
accelerated filer
o
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Accelerated
filer
o
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Non-accelerated
filer
o
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Smaller
reporting company
x
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(Do
not check if a smaller reporting company)
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Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act). Yes
o
No
x
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The
aggregate market value of the voting stock held by nonaffiliates of the
registrant as of June 30, 2007 (the last business day of GS Financial’s most
recently completed second fiscal quarter) was approximately $17.6
million.
As of
March 28, 2008, GS Financial Corp. had 1,285,800 shares of common stock
outstanding.
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Documents Incorporated
by Reference
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Part of 10-K in which
incorporated
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Proxy
Statement dated March 26, 2008
Annual
Report to Shareholders for the year ended December 31,
2007
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Part
III
Part
I, Part II
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GS
FINANCIAL CORP.
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TABLE
OF CONTENTS
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Page
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PART
I
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Item
1:
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Business
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1
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Item
1A
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Risk
Factors
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5
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Item
1B
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Unresolved
Staff Comments
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7
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Item
2:
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Properties
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7
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Item
3:
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Legal
Proceedings
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8
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Item
4:
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Submission
of Matters to a Vote of Security Holders
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8
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PART
II
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Item
5:
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Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
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8
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Item
6:
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Selected
Financial Data
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8
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Item
7:
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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8
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Item
7A:
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Quantitative
and Qualitative Disclosures about Market Risk
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9
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Item
8:
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Financial
Statements and Supplementary Data
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9
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Item
9:
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Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
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9
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Item
9A:
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Controls
and Procedures
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9
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Item
9B:
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Other
Information
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9
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PART
III
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Item
10:
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Directors,
Executive Officers, and Corporate Governance
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9
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Item
11:
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Executive
Compensation
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10
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Item
12:
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
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10
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Item
13:
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Certain
Relationships and Related Transactions, and Director
Independence
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10
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Item
14:
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Principal
Accountant Fees and Services
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10
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PART
IV
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Item
15:
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Exhibits
and Financial Statement Schedules
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10
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SIGNATURES
EXHIBIT
INDEX
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PART
I
FORWARD
LOOKING STATEMENTS
The
management of GS Financial Corp. has made forward-looking statements (as defined
in the Securities Exchange Act of 1934 and regulations thereunder) in this
Annual Report on Form 10-K. These forward-looking statements may be
subject to risks and uncertainties. Forward-looking statements include the
information concerning possible or assumed future results of operations of GS
Financial Corp. and its wholly-owned subsidiary, Guaranty Savings
Bank.
Shareholders
should note that many factors, some of which are discussed elsewhere in this
report, could affect the future financial results of GS Financial Corp. and its
subsidiary, both individually and collectively, and could cause those results to
differ materially from those expressed in this report. These risk factors
include the following:
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Operating,
legal and regulatory risks;
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Economic,
political and competitive forces impacting our various lines of
business;
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The
risk that our analysis of these risks and forces could be incorrect and/or
that the strategies developed to address them could be
unsuccessful;
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The
possibility that increased demand for GS Financial’s financial services
and products may not occur;
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Volatility
in interest rates; and/or
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Other
risks and uncertainties.
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GS
Financial undertakes no obligation to publicly revise or update these
forward-looking statements to reflect events or circumstances that arise after
the date of this report. Subsequent to the date hereof, readers
should also review other documents that GS Financial files periodically with the
Securities and Exchange Commission, including Quarterly Reports on Form 10-Q and
any Current Reports on Form 8-K.
ORGANIZATION
AND RECENT DEVELOPMENTS
GS
Financial Corp. (the “Company” or “GS Financial”) was incorporated under
Louisiana law on December 24, 1996 and registered with the Office of Thrift
Supervision as a savings and loan holding company. The Company
commenced operations on April 1, 1997 as the parent of Guaranty Savings Bank
(the “Bank” or “Guaranty”), which until June, 2006 was known as Guaranty Savings
and Homestead Association and has been in continuous operation in the greater
New Orleans area since 1937. The Bank is a Louisiana chartered
savings association.
The
Company, through the Bank, engages in community banking, serving a market area
that covers the southeast corner of Louisiana through the Bank’s five
offices. The Bank serves commercial, small business and retail
customers, offering a variety of transaction and savings deposit products and
secured loan products. Guaranty offers very few unsecured loans and
does not provide trust or investment management services. As of
December 31, 2007, the Company had assets of approximately $186.5 million and
deposits of approximately $129.5 million. As of December 31, 2007,
the assets of the Bank constituted virtually all of the assets of GS
Financial.
COMPETITION
There is
significant competition within the financial services industry in general as
well as with respect to the particular financial services offered by the Company
and the Bank. Within its market, the Bank competes directly with
other small community financial institutions as well as major banking
institutions of larger size and greater resources and national “nonbank”
competitors, including mortgage and finance companies. Competition is
based on a number of factors, including prices, interest rates, services, and
availability of products.
The
growth of electronic communication and commerce over the Internet influences the
Company’s competitive environment in several ways. Entities have been
formed which deliver financial services and access to financial products and
transactions exclusively through the Internet. Internet-based
services have been and are being developed that are designed to enhance the
value of traditional financial products. The Internet also has made
it easier for consumers to obtain comparative information on financial products
and, over time, could lead to changes in consumer preferences for financial
products. Guaranty operates a website to provide information about
the Company and to market the Bank’s products and services. During
2004, the Bank began offering online banking services and expects to expand
these features in the future as part of its overall market
strategy.
SUPERVISION
AND REGULATION
The
banking industry is extensively regulated under both federal and state
law. The following discussion addresses the regulatory framework
applicable to savings and loan holding companies and their subsidiaries and
provides certain specific information relevant to the Company. The
regulation and ongoing supervision of financial institutions is intended
primarily for the protection of depositors, the deposit insurance fund of the
Federal Deposit Insurance Corporation (“FDIC”), and the banking system as a
whole, and generally is not intended for the protection of the institution’s
shareholders.
General
The
Company, as a savings and loan holding company within the meaning of the Home
Owners’ Loan Act, as amended (“HOLA”), is registered with and subject to OTS
regulations, examinations, supervision and reporting. As a subsidiary
of a savings and loan holding company, Guaranty Savings Bank is subject to
certain restrictions in its dealings with the Company and any affiliates
thereof.
The
Company’s primary regulator is the Office of Thrift Supervision (“OTS”) which
provides ongoing supervision through regular examinations and other
means. The Bank, by virtue of its state charter is also subject to
the rules and regulations of the Louisiana Office of Financial Institutions
(“OFI”). The regulation of savings banks focuses on evaluating
management’s ability to identify, assess and control risk in all areas of the
institution’s operations in a safe and sound manner. Regulators
have a wide range of enforcement actions available to deal with institutions
with unacceptable levels of risk. These actions could have a material
impact on the Bank's financial results and could impose additional limits on the
Bank’s ability to pay dividends to the Company.
Payment
of Dividends
GS
Financial is a legal entity separate and distinct from its
subsidiary. The principal source of cash flow for GS Financial,
including cash flow to pay dividends on its capital stock, is dividends from the
Bank. There are statutory and regulatory limitations of the payment
of dividends by the Bank to the Company. The payment of dividends by
the Bank may be affected by other factors, such as the requirement to maintain
capital at or above regulatory guidelines. See “Capital Adequacy and
Related Matters” below.
Capital
Adequacy and Related Matters
Federally
insured savings institutions are required to maintain minimum levels of
regulatory capital. The OTS has established capital standards
applicable to all savings institutions. The OTS also is authorized to
impose capital requirements in excess of these standards on individual
institutions on a case-by-case basis.
Current
OTS capital standards require savings institutions to satisfy three different
capital requirements. Under these standards, savings institutions
must maintain tangible capital of 1.5 percent, core capital of 3.0 percent, and
risk based capital of 8.0 percent. Core capital includes generally
recognized capital such as common stockholders’ equity and retained earnings
plus other items such as qualifying goodwill. Tangible capital is
essentially the same but does not include qualifying supervisory
goodwill. At December 31, 2007, the Bank had no goodwill or other
intangible assets which would be deducted in computing its tangible
capital. At December 31, 2007, Guaranty Savings Bank exceeded all of
its regulatory capital requirements, with tangible, core and risk- based capital
ratios of 14.76 percent, 14.76 percent and 27.56 percent
respectively.
Holding
Company Structure
There are
generally no restrictions on the activities of a savings and loan holding
company which holds only one subsidiary savings institution. However,
if the Director of the OTS determines that there is reasonable cause to
believe
that the continuation by a savings and loan holding company of an activity
constitutes a serious risk to the financial safety, soundness or stability of
its subsidiary savings institution, the Director may impose such restrictions as
deemed necessary to address such risk, including limiting (i) payment of
dividends by the savings institution; (ii) transactions between the savings
institution and its affiliates; and (iii) any activities of the savings
institution that might create a serious risk that the liabilities of the holding
company and its affiliates may be imposed on the savings
institution.
Notwithstanding
the above rules as to permissible business activities of unitary savings and
loan holding companies, if the savings institution subsidiary of such a holding
company fails to meet the qualified thrift lender (“QTL”) test, as discussed
under “Qualified Thrift Lender Test,” then such unitary holding company also
shall become subject to the activities restrictions applicable to multiple
savings and loan holding companies and, unless the savings institution
re-qualifies as a QTL within one year thereafter, shall register as, and become
subject to the restrictions applicable to, a bank holding company.
If the
Company were to acquire control of another savings institution, other than
through merger or other business combination with Guaranty Savings Bank, the
Company would thereupon become a multiple savings and loan holding company.
Except where such acquisition is pursuant to the authority to approve emergency
thrift acquisitions and where each subsidiary savings institution meets the QTL
test, as set forth below, the activities of the Company and any of its
subsidiaries (other than Guaranty Savings or other subsidiary savings
institutions) would thereafter be subject to further restrictions. Among other
things, no multiple savings and loan holding company or subsidiary thereof which
is not a savings institution shall commence or continue for a limited period of
time after becoming a multiple savings and loan holding company or subsidiary
thereof any business activity, other than: (i) furnishing or performing
management services for a subsidiary savings institution; (ii) conducting an
insurance agency or escrow business; (iii) holding, managing, or liquidating
assets owned by or acquired from a subsidiary savings institution; (iv) holding
or managing properties used or occupied by a subsidiary savings institution; (v)
acting as trustee under deeds of trust; (vi) those activities authorized by
regulation as of March 5, 1987 to be engaged in by multiple savings and loan
holding companies; or (vii) unless the Director of the OTS by regulation
prohibits or limits such activities for savings and loan holding companies.
Those activities described in clause (vii) above also must be approved by the
Director of the OTS prior to being engaged in by a multiple savings and loan
holding company.
Limitations
on Transactions with Affiliates
Transactions
between savings institutions and any affiliate are governed by Sections 23A and
23B of the Federal Reserve Act. An affiliate of a savings institution
is any company or entity which controls, is controlled by or is under common
control with the savings institution. In a holding company context,
the parent holding company of a savings institution (such as the Company) and
any companies which are controlled by such parent holding company are affiliates
of the savings institution. Generally, Sections 23A and 23B (i) limit
the extent to which the savings institution or its subsidiaries may engage in
“covered transactions” with any one affiliate to an amount equal to 10% of such
institution’s capital stock and surplus, and contain an aggregate limit on all
such transactions with all affiliates to an amount equal to 20% of such capital
stock and surplus and (ii) require that all such transactions be on terms
substantially the same, or at least as favorable, to the institution or
subsidiary as those provided to a non-affiliate. The term “covered
transaction” includes the making of loans, purchase of assets, issuance of
guarantee and other similar transactions. In addition to the
restrictions imposed by Sections 23A and 23B, no savings institution may (i)
loan or otherwise extend credit to an affiliate, except for any affiliate which
engages only in activities which are permissible for bank holding companies, or
(ii) purchase or invest in any stocks, bonds, debentures, notes or similar
obligations of any affiliate, except for affiliates which are subsidiaries of
the savings institution.
In
addition, Sections 22(h) and (g) of the Federal Reserve Act place restrictions
on loans to executive officers, directors and principal
stockholders. Under Section 22(h), secured loans to a director, an
executive officer and to a greater than 10% stockholder of a savings
institution, and certain affiliated interests of either, may not exceed,
together with all other outstanding loans to such person and affiliated
interests, the savings institution’s loans to one borrower limit (generally
equal to 15% of the institution’s unimpaired capital and
surplus). Section 22(h) also requires that loans to directors,
executive officers and principal stockholders be made on terms substantially the
same as offered in comparable transactions to other persons unless the loans are
made pursuant to a benefit or compensation program that (i) is widely
available to employees of the institution and (ii) does not give preference to
any director, executive officer or principal stockholder, or certain affiliated
interests of either, over other employees
of the
savings institution. Section 22(h) also requires prior Board approval
for certain loans. In addition, the aggregate amount of extensions of
credit by a savings institution to all insiders cannot exceed the institution’s
unimpaired capital and surplus. Furthermore, Section 22(g) places
additional restrictions on loans to executive officers. At December
31, 2007 Guaranty Savings Bank was in compliance with the above
restrictions.
Restrictions
on Acquisitions
Except
under limited circumstances, savings and loan holding companies are prohibited
from acquiring, without prior approval of the Director of the OTS, (i) control
of any other savings institution or savings and loan holding company or
substantially all the assets thereof or (ii) more than 5% of the voting shares
of a savings institution or holding company thereof which is not a
subsidiary. Except with the prior approval of the Director of the
OTS, no director or officer of a savings and loan holding company or person
owning or controlling by proxy or otherwise more than 25% of such company’s
stock, may acquire control of any savings institution, other than a subsidiary
savings institution, or of any other savings and loan holding
company.
The
Director of the OTS may only approve acquisitions resulting in the formation of
a multiple savings and loan holding company which controls savings institutions
in more than one state if (i) the multiple savings and loan holding company
involved controls a savings institution which operated a home or branch office
located in the state of the institution to be acquired as of March 5, 1987; (ii)
the acquirer is authorized to acquire control of the savings institution
pursuant to the emergency acquisition provisions of the Federal Deposit
Insurance Act (“FDIA”); or (iii) the statutes of the state in which the
institution to be acquired is located specifically permit institutions to be
acquired by the state-chartered institutions or savings and loan holding
companies located in the state where the acquiring entity is located (or by a
holding company that controls such state-chartered savings
institutions).
Under the
Bank Holding Company Act of 1956, the Federal Reserve Bank (“FRB”) is authorized
to approve an application by a bank holding company to acquire control of a
savings institution. In addition, a bank holding company that controls a savings
institution may merge or consolidate the assets and liabilities of the savings
institution with, or transfer assets and liabilities to, any subsidiary bank
which is a member of the Bank Insurance fund with the approval of the
appropriate federal banking agency and the FRB.
Insurance
of Accounts
The
deposits of Guaranty Savings Bank are insured to the maximum permitted by the
Deposit Insurance Fund, which is administered by the FDIC, and are backed by the
full faith and credit of the U.S. Government. As insurer, the FDIC is
authorized to conduct examinations of, and to require reporting by, FDIC-insured
institutions. It also may prohibit any FDIC-insured institution from
engaging in any activity the FDIC determines by regulation or order to pose a
serious threat to the FDIC. The FDIC also has the authority to
initiate enforcement actions against savings institutions, after giving the OTS
an opportunity to take such action.
The FDIC
may terminate the deposit insurance of any insured depository institution,
including Guaranty Savings Bank, if it determines after a hearing that the
institution has engaged or is engaging in unsafe or unsound practices, is in an
unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, order or any condition imposed by an agreement with
the FDIC. It also may suspend deposit insurance temporarily during
the hearing process for the permanent termination of insurance, if the
institution has no tangible capital. If insurance of accounts is
terminated, the accounts at the institution at the time of the termination, less
subsequent withdrawals, shall continue to be insured for a period of six months
to two years, as determined by the FDIC. Management is aware of no
existing circumstances which would result in termination of the Bank’s deposit
insurance.
Qualified
Thrift Lender Test
The
Qualified Thrift Lender (“QTL”) Test measures the Bank’s level of qualified
thrift investments compared to its total portfolio assets (total assets less
intangibles, property used by a savings association in its business and
liquidity investments in an amount not to exceed 20% of
assets). Generally, qualified thrift investments (“QTI’s”) are
residential housing related assets. The Internal Revenue Service
(IRS) requires a savings institution to have at least 65% of its assets in QTI’s
to qualify for tax treatment as a building and loan association. At
December 31, 2007, 82.67% of the Bank’s assets were invested in QTI’s which
exceeds the 65% required to qualify the Bank under the QTL test. The
tax benefits for savings associations relative to banks are now
minimal.
EMPLOYEES
As of
December 31, 2007, the Company and the Bank employed a total of 46 employees,
all of which are on a full-time basis. The Company affords its
employees a variety of competitive benefit programs including retirement plans
and group health, life and other insurance programs. The Company also
supports training and educational programs designed to ensure that employees
have the types and levels of skills needed to perform at their best in their
current positions and to help them prepare for positions of increased
responsibility.
AVAILABLE
INFORMATION
The
Company’s filings with the Securities and Exchange Commission, including annual
reports on Form 10-K, quarterly reports on Form 10-Q and Form 10-QSB during
2007, current reports on Form 8-K, and amendments to those reports, are
available on the Company’s website as soon as reasonably practicable after the
Company files such reports with the SEC. Copies can be obtained free
of charge by link to the SEC’s website in the “SEC Company Reports”
section of the Company’s website at www.gsfinancialcorp.com.
In
analyzing whether to make or to continue an investment in our securities,
investors should consider, among other factors, the following risk
factors.
Hurricane
Katrina severely impacted our market area and there still are many uncertainties
regarding recovery.
The
Bank’s primary market area is Metairie, Louisiana and the greater New Orleans
metropolitan area, an area which is susceptible to hurricanes and tropical
storms.
Hurricane
Katrina hit the greater New Orleans area in August 2005. The
hurricane caused widespread property damage, required the relocation of an
unprecedented number of residents and business operations, and severely
disrupted normal economic activity in the impacted areas. Prior to
Hurricane Katrina, the New Orleans SMSA was estimated to have a population of
approximately 1.34 million, of which approximately 458,000 persons were
estimated to live in the City of New Orleans. Post Katrina, the
population for metropolitan New Orleans in December 2007 is estimated at
approximately 1.17 million, a decline of approximately 170,000
residents. The population of the City of New Orleans was estimated at
300,000 people for December 2007, or a decline of about 35% from its pre-Katrina
size. While rebuilding efforts are underway, there is a great deal of
uncertainty as to the economic climate for the New Orleans metropolitan area
given the need to address the multitude of interdependent problems, such as the
full scale return of tourism and its job promotion and the return of population
to fill those jobs, combined with the need to address the housing shortage,
uncertainty as to the availability of homeowner’s insurance, the full
restoration of basic services, such as water, gas and electricity, health care
and the transportation network, as well as the flood prevention
system. There can be no assurance that the repairs and improvements
made in the wake of Hurricane Katrina will withstand another hurricane or
tropical storm.
Hurricane
Katrina affected our loan portfolios by damaging properties pledged as
collateral and by impairing certain borrowers’ abilities to repay their
loans. As a result of the hurricane, we made a $4.8 million provision
for loan losses in 2005. During 2007 and 2006 we reversed
approximately $300,000 and $2.0 million of such provisions. The after
effects of the hurricane may continue to affect our loan quality, loan
originations into the future and could also adversely impact our deposit
base.
More
generally, our ability to compete effectively in the banking business in the
future, especially with financial institutions whose operations are not
concentrated in the affected area or which have greater resources than we do,
will depend primarily on our ability to continue normal business operations and
grow despite the impact of the hurricane. The severity and duration
of these effects will depend on a variety of factors that are beyond our
control, including the amount and timing of government, private and
philanthropic investment (including deposits) in the region, the pace of
rebuilding and economic recovery in the region generally and the extent to which
the hurricane’s property damage is covered by insurance.
None of
the effects described above can be accurately predicted or quantified at this
time. As a result, some uncertainty remains regarding the impact
Hurricane Katrina will have on the business, financial condition and results of
operations of the Bank. Further, the area in which we operate may
experience hurricanes and other storms in the future, and some of those
hurricanes and storms may have effects similar to those caused by Hurricane
Katrina.
Our
results of operations are significantly dependent on economic conditions and
related uncertainties.
The
operations of savings associations are affected, directly and indirectly, by
domestic and international economic and political conditions and by governmental
monetary and fiscal policies. Conditions such as inflation,
recession, unemployment, volatile interest rates, real estate values, government
monetary policy, international conflicts, the actions of terrorists and other
factors beyond our control may adversely affect our results of
operations. Changes in interest rates, in particular, could adversely
affect our net interest income and have a number of other adverse effects on our
operations, as discussed in the risk factor below. Adverse economic
conditions also could result in an increase in loan delinquencies, foreclosures
and nonperforming assets and a decrease in the value of the property or other
collateral which secures our loans, all of which could adversely affect our
results of operations. We are particularly sensitive to changes in
economic conditions and related uncertainties in the metropolitan New Orleans
area because we derive substantially all of our loans, deposits and other
business from this area. Accordingly, we remain subject to the risks
associated with prolonged declines in our local economy.
Changes
in interest rates could have a material adverse effect on our
operations.
The
operations of financial institutions such as us are dependent to a large extent
on net interest income, which is the difference between the interest income
earned on interest-earning assets such as loans and investment securities and
the interest expense paid on interest-bearing liabilities such as deposits and
borrowings. Changes in the general level of interest rates can affect
our net interest income by affecting the difference between the weighted average
yield earned on our interest-earning assets and the weighted average rate paid
on our interest-bearing liabilities, or interest rate spread, and the average
life of our interest-earning assets and interest-bearing
liabilities. Changes in interest rates also can affect our ability to
originate loans; the value of our interest-earning assets and our ability to
realize gains from the sale of such assets; our ability to obtain and retain
deposits in competition with other available investment alternatives; the
ability of our borrowers to repay adjustable or variable rate loans;
and the fair value of the derivatives carried on our balance sheet,
derivative hedge effectiveness testing and the amount of ineffectiveness
recognized in our earnings. Interest rates are highly sensitive to
many factors, including governmental monetary policies, domestic and
international economic and political conditions and other factors beyond our
control. Although we believe that the estimated maturities of our
interest-earning assets currently are well balanced in relation to the estimated
maturities of our interest-bearing liabilities (which involves various estimates
as to how changes in the general level of interest rates will impact these
assets and liabilities), there can be no assurance that our profitability would
not be adversely affected during any period of changes in interest
rates.
There
are increased risks involved with commercial real estate and construction
lending activities.
Our
lending activities include loans secured by commercial real
estate. In addition, we originate loans for the construction of
residential and commercial use properties. Commercial real estate and
construction lending generally is considered to involve a higher degree of risk
than single-family residential lending due to a variety of factors, including
generally larger loan balances, the dependency on successful completion or
operation of the project for repayment, the difficulties in estimating
construction costs and loan terms which often do not require full amortization
of the loan over its term and, instead, provide for a balloon payment at stated
maturity. Our lending activities also include commercial business
loans to small to medium size businesses, which generally are secured by various
equipment, machinery and other corporate assets, and a wide variety of consumer
loans, including home improvement loans, home equity loans, education loans and
loans secured by automobiles, boats, mobile homes, recreational vehicles and
other personal property. Although commercial business loans and
consumer loans generally have shorter terms and higher interests rates than
mortgage loans, they generally involve more risk than mortgage loans because of
the nature of, or in certain cases the absence of, the collateral which secures
such loans.
Our
allowance for losses on loans and leases may not be adequate to cover probable
losses.
We have
established an allowance for loan losses which we believe is adequate to offset
probable losses on our existing loans and leases. There can be no
assurance that any future declines in real estate market conditions, general
economic conditions or changes in regulatory policies will not require us to
increase our allowance for loan and lease losses, which would adversely affect
our results of operations.
We
are subject to extensive regulation which could adversely affect our business
and operations.
We and
our subsidiary are subject to extensive federal and state governmental
supervision and regulation, which are intended primarily for the protection of
depositors. In addition, we and our subsidiary are subject to changes
in federal and state laws, as well as changes in regulations, governmental
policies and accounting principles. The effects of any such potential
changes cannot be predicted but could adversely affect the business and our
operations in the future.
We
face strong competition which may adversely affect our
profitability.
We are
subject to vigorous competition in all aspects and areas of our business from
banks and other financial institutions, including savings and loan associations,
savings banks, finance companies, credit unions and other providers of financial
services, such as money market mutual funds, brokerage firms, consumer finance
companies and insurance companies. We also compete with non-financial
institutions, including retail stores that maintain their own credit programs
and governmental agencies that make available low cost or guaranteed loans to
certain borrowers. Certain of our competitors are larger financial
institutions with substantially greater resources, lending limits, larger branch
systems and a wider array of commercial banking services. Competition
from both bank and non-bank organizations will continue.
Our
ability to successfully compete may be reduced if we are unable to make
technological advances.
The
banking industry is experiencing rapid changes in technology. In
addition to improving customer services, effective use of technology increases
efficiency and enables financial institutions to reduce costs. As a
result, our future success will depend in part on our ability to address our
customers’ needs by using technology. We cannot assure you that we
will be able to effectively develop new technology-driven products and services
or be successful in marketing these products to our customers. Many
of our competitors have far greater resources than we have to invest in
technology.
|
ITEM
1B:
|
UNRESOLVED
STAFF COMMENTS
|
Not
applicable.
The
Company owns one building in Metairie, Louisiana. A portion of this
building is leased to Guaranty Savings Bank and serves as a branch
location. The Company’s executive offices are located in Metairie,
Louisiana in the main office facility owned by the Bank. In addition
to these properties, the Bank also owns three branch facilities, one each in New
Orleans, Mandeville and Harvey, Louisiana. The facility in New
Orleans was closed in 2005 subsequent to Hurricane Katrina but re-opened for
business in August, 2007. The remaining location, in Ponchatoula,
Louisiana is subject to a lease which management considers to be reasonable and
appropriate to its location. In 2006 the Bank also acquired land for
future development of a bank location in Covington, Louisiana. The
Company and the Bank make portions of its property available for lease to third
parties, although such leasing activity is not material to the Company’s overall
operations. Management makes sure that all locations, whether owned
or leased, are maintained in suitable condition. Management also
evaluates its banking facilities on an ongoing basis to identify possible
under-utilization and to determine the need for functional improvements,
relocations or possible sales.
The Bank,
from time to time, may acquire property interests in settlement of
loans. No such property was held by the Bank at December 31,
2007.
|
Item
3:
|
LEGAL
PROCEEDINGS
|
There are
no pending legal proceedings, other than routine litigation incidental to the
business, to which the Company or its subsidiary is a party or to which any of
their property is subject.
|
Item
4:
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS
|
There
were no matters brought to a vote of security holders during the fourth quarter
of 2007.
PART
II
|
Item5:
|
MARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER
PURCHASES OF EQUITY
SECURITIES
|
|
(a)
|
The
Company’s stock is traded on The Nasdaq Global Market under the symbol
GSLA. Shareholders of record, quarterly high and low sales
prices of, and cash dividends declared on, GS Financial common stock and
performance graph are set forth in the Common Stock and Market Prices and
Dividend and GS Financial Corp. Stock Performance sections of the Annual
Report to Shareholders for the year ended December 31, 2007, included in
Exhibit 13.0 hereto and which is incorporated herein by
reference. Equity Compensation Plan information is incorporated
herein by reference to Item 12 hereof.
|
|
|
|
|
(b)
|
Not
applicable.
|
|
|
|
|
(c)
|
The
following table sets forth information with respect to purchases made by
or on behalf of the Company of shares of common stock of the Company
during the indicated periods.
|
|
ISSUER
PURCHASES OF EQUITY SECURITIES
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Month
1 (October 1, 2007 – October 31, 2007)
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
Month
2 (November 1, 2007 – November 30, 2007)
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
Month
3 (December 1, 2007 – December 31, 2007)
|
|
|
10,468
|
|
|
|
18.00
|
|
|
|
--
|
|
|
|
--
|
|
|
Total
|
|
|
10,468
|
|
|
$
|
18.00
|
|
|
|
--
|
|
|
|
--
|
|
Item
6:
SELECTED FINANCIAL
DATA
The
information required by this section is included in the section titled “Selected
Consolidated Financial Data” of GS Financial’s 2007 Annual Report to
Shareholders and is hereby incorporated herein by reference from Exhibit 13.0
hereto.
Item
7:
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The
section entitled “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” of GS Financial’s 2007 Annual Report to Shareholders
is hereby incorporated herein by reference from Exhibit 13.0
hereto.
|
Item
7A:
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
Not
applicable.
|
Item
8:
|
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
|
The
Consolidated Financial Statements of GS Financial Corp. and Subsidiary, the
accompanying Notes to Consolidated Financial Statements and the Report of
Independent Registered Public Accounting Firm contained in GS Financial’s 2007
Annual Report to Shareholders are hereby incorporated herein by reference from
Exhibit 13.0 hereto.
|
Item9:
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
None.
|
Item9A:
|
CONTROLS
AND PROCEDURES
|
|
|
(a)
|
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 Rule 13a-15(e) and 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.
|
|
|
(b)
|
Management's
Report on Internal Control Over Financial Reporting is incorporated herein
by reference from Exhibit 13.0
hereto.
|
|
|
(c)
|
No
change in the Company's internal control over financial reporting (as
defined in rules 13a-15(f) and 15d-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 materially affect, its
internal control over financial
reporting.
|
|
Item9B:
|
OTHER
INFORMATION
|
On August
21, 2007, the Company's Board of Directors amended Sections 3.1 and 3.2 of the
Company's Bylaws (the "Amendments"). The purpose of the Amendments is
to permit shares of the Company's common stock and other equity securities to be
represented by uncertificated shares through a direct registration program, as
required by NASDAQ Marketplace Rule 4350(1). The Company has no
current plans to actually utilize uncertificated shares.
The
Amended and Restated Bylaws which are attached to this Annual Report on Form
10-K as Exhibit 3.2 are incorporated into this Item 9B by this
reference. The description of the Amendments is qualified in its
entirety by reference to Exhibit 3.2 hereto.
PART
III
|
Item10:
|
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
|
Information about Directors and
Executive Officers.
Information about the directors, director
nominees and executive officers of GS Financial Corp., compliance with Section
16(a) of the Exchange Act and information concerning GS Financial’s audit
committee is included in the sections captioned, "Information with Respect to
Nominees for Director, Continuing Directors and Executive Officers,"— Committees
and Meetings of the Board of
Directors"
and "Beneficial Ownership of Common Stock by Certain Beneficial Owners and
Management – Section 16(a) Beneficial Ownership Reporting Compliance" included
in GS Financial’s Proxy Statement for the Annual Meeting of Shareholders to be
held on April 22, 2008 (the “Proxy Statement”) on Definitive Schedule 14A filed
with the SEC and is hereby incorporated herein by reference.
Code of Ethics.
We
have adopted a code of conduct and ethics applicable to our directors
and all employees. The text of this code of conduct and ethics may be found on
our website at www.gsfinancialcorp.com. We intend to file information
regarding any waiver from any provision of our code of ethics on Form 8-K, as
required by the listing standards of the Nasdaq Stock
Market. Amendments to the code of ethics will be posted on our
website at www.gsfinancial.com.
|
Item11:
|
EXECUTIVE
COMPENSATION
|
Information
regarding compensation of directors and executive officers is included in the
sections captioned "Information with Respect to Nominees for Director,
Continuing Directors and Executive Officers – Director Compensation" and
"Executive Compensation" of the Proxy Statement is hereby incorporated herein by
reference.
|
Item12:
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
|
The
information required herein by Item 403 of Regulation S-K is incorporated by
reference from the section captioned "Beneficial Ownership of Common Stock by
Certain Beneficial Owners and Management" of the Registrant’s Proxy
Statement.
Equity Compensation Plan
Information.
As of December 31, 2007 the Company had no equity
compensation plans in place requiring disclosure under Item 201(d) of Regulation
S-K.
|
Item13:
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
|
The
information required herein is incorporated by reference from the sections
captioned "Transactions with Certain Related Persons" and "Information with
Respect to Nominees for Director, Continuing Directors and Executive Officers"
of the Registrant’s Proxy Statement.
|
Item14:
|
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
|
The
information required herein is incorporated by reference from the section
captioned "Ratification and Appointment of Independent Registered Public
Accounting Firm – Audit Fees" of the Registrant’s Proxy Statement.
PART
IV.
|
Item15:
|
EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES
|
|
(a)(1)
|
The
following consolidated financial statements of the Company and its
subsidiary are included in Part II of this Form
10-K.
|
|
|
Report
of Independent Registered Public Accounting
Firm
|
|
|
Consolidated
Balance Sheets – December 31, 2007 and
2006
|
|
|
Consolidated
Statements of Income(Loss) – Years Ended December 31, 2007, 2006 and
2005
|
|
|
Consolidated
Statements of Comprehensive Income(Loss) – Years Ended December 31, 2007,
2006 and 2005
|
|
|
Consolidated
Statements of Changes in Stockholders’ Equity – Years Ended December 31,
2007, 2006 and 2005
|
|
|
Consolidated
Statements of Cash Flows – Years Ended December 31, 2007, 2006 and
2005
|
|
|
Notes
to Consolidated Financial
Statements
|
|
(a)(2)
|
All
schedules for which provision is made in the applicable accounting
regulation of the SEC are omitted because of the absence of conditions
under which they are required or because the required information is
included in the consolidated financial statements and related notes
thereto.
|
|
No.
|
|
Description
|
|
Location
|
|
3.1
|
|
Articles
of Incorporation of GS Financial Corp.
|
|
(1)
|
|
3.2
|
|
Bylaws
of GS Financial Corp.
|
|
Included
herewith
|
|
4.1
|
|
Stock
Certificate of GS Financial Corp.
|
|
(1)
|
|
10.2
|
|
GS
Financial Corp. Recognition and Retention Plan and Trust Agreement for
Employees and Non-Employee Directors*
|
|
(2)
|
|
10.3
|
|
Early
Retirement and Consulting Agreement by and among GS Financial Corp.,
Guaranty Savings and Homestead Association and Donald C. Scott Dated
January 7, 2005*
|
|
(3)
|
|
10.4
|
|
Letter
Agreement, dated as of December 8, 2005, by and between Guaranty Savings
and Homestead Association and Stephen E. Wessel*
|
|
(4)
|
|
10.5
|
|
Letter
Agreement, signature dated and accepted as of February 29, 2008, by and
between Guaranty Savings Bank and Stephen E. Wessel*
|
|
(5)
|
|
13.0
|
|
2007
Annual Report to Stockholders
|
|
Included
herewith
|
|
21.0
|
|
Subsidiaries
of the Registrant - Information reported in Item
1
|
|
Included
herewith
|
|
23.0
|
|
Consent
of LaPorte, Sehrt, Romig & Hand
|
|
Included
herewith
|
|
31.1
|
|
Rule
13a-14(a) Certification of Chief Executive Officer
|
|
Included
herewith
|
|
31.2
|
|
Rule
13a-14(a) Certification of Chief Financial Officer
|
|
Included
herewith
|
|
32.0
|
|
Certification
pursuant to 18 U.S.C. Section 1350
|
|
Included
herewith
|
|
|
*
|
Denotes
management compensation plan or
arrangement.
|
|
|
(1)
|
Incorporated
herein by reference from the Registration Statement on Form SB-2
(Registration number 333-18841) filed by the Registrant with the SEC on
December 26, 1996, as subsequently
amended.
|
|
|
(2)
|
Incorporated
herein by reference from the definitive proxy statement, dated September
16, 1997, filed by the Registrant with the SEC (Commission File No.
000-22269).
|
|
|
(3)
|
Incorporated
herein by reference from the current report on Form 8-K, dated January 7,
2005 filed by the registrant with the SEC (Commission File No.
000-22269).
|
|
|
(4)
|
Incorporated
herein by reference from the current report on Form 8-K, dated December 8,
2005 filed by the registrant with the SEC (Commission File No.
000-22269).
|
|
|
(5)
|
Incorporated
herein by reference from the current report on Form 8-K, dated February
29, 2008 filed by the registrant with the SEC (Commission File No.
000-22269).
|
|
(b)
|
The
exhibits listed under (a)(3) of this Item 15 are filed
herewith.
|
|
(c)
|
Reference
is made to (a)(2) of this Item 15.
|
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.
|
Dated:
March 28, 2008
|
|
|
By:
|
/s/
Stephen E. Wessel
|
|
|
|
|
|
Stephen E. Wessel
President and Chief Executive
Officer
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
|
|
|
|
|
|
|
|
|
Chairman
of the Board and Director
|
|
March
28, 2008
|
|
Albert
J. Zahn, Jr.
|
|
|
|
|
|
|
President
and Chief Executive Officer
|
|
March
28, 2008
|
|
Stephen
E. Wessel
|
|
|
|
|
|
|
Executive
Vice President and Director
|
|
March
28, 2008
|
|
Bruce
A. Scott
|
|
|
|
|
Chief
Financial Officer
|
|
March
28, 2008
|
|
J.
Andrew Bower
|
|
|
|
|
Director
|
|
March
28, 2008
|
|
Edward
J. Bourgeois
|
|
|
|
|
Director
|
|
March
28, 2008
|
|
Stephen
L. Cory
|
|
|
|
|
Director
|
|
March
28, 2008
|
|
Bradford
A. Glazer
|
|
|
/s/Hayden
W. Wren, III
|
|
Director
|
|
March
28, 2008
|
|
Hayden
W. Wren, III
|
|
12
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