GS Financial Corp. Announces Fourth Quarter and Year-End Results

  
    
  
  
    
      GS Financial Corp. (NASDAQ: GSLA) (the “Company”), 
      the holding company for Guaranty Savings Bank (the “Bank”), 
      announced earnings for the quarter ended December 31, 2006 of $85,000, 
      or $.07 per share, compared to a loss of $4.0 million, or $3.45 per 
      share, for the quarter ended December 31, 2005. For the year ended 
      December 31, 2006, earnings were $2.1 million, or $1.74 per share, 
      compared to a loss of $3.7 million, or $3.11 per share, for the year 
      ended December 31, 2005.
    
    
      “This has been an outstanding year for GS 
      Financial and Guaranty Savings Bank,” noted 
      President Stephen Wessel. “We have achieved 
      many of our goals in the past year with regards to increased loan 
      growth, enhanced product offerings, increased profitability and improved 
      credit quality. While it is currently a challenging rate environment for 
      all banks, I am very excited about 2007 as we are well positioned to 
      grow our institution through well-planned branch network expansion while 
      continuing to participate in the recovery of the Gulf Coast region.”
    
    
      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 
      Bank’s borrowers as a result of Hurricane 
      Katrina as well as wind and flood damage to the properties securing 
      loans. The net impact to earnings caused by this provision was a 
      reduction of $3.2 million to earnings in the fourth quarter of 2005. 
      While Katrina hit 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.
    
    
      In 2006, in addition to further information about the impact of Katrina, 
      the Bank has also seen substantial improvement in loan quality as 
      evidenced by substantial reductions in classified and past due loan 
      balances. Based on more current information on the loan portfolio, in 
      the third quarter of 2006 the Bank reversed $2.0 million of the 
      provision for loan losses, resulting in an increase to 2006 net income 
      of $1.3 million.
    
    
      Net interest income for the quarter ended December 31, 2006 was $1.4 
      million compared to $1.3 million for the same period in 2005. For the 
      year ended December 31, 2006 net interest income was $6.1 million 
      compared to $5.6 million for calendar 2005, excluding the loan loss 
      provision. The Company’s net interest margin 
      increased to 3.37% for the fourth quarter of 2006 from 3.10% for the 
      year earlier quarter and 3.58% for the year ended December 31, 2006 
      compared to 3.08% in 2005.
    
    
      Total assets of the Company at December 31, 2006 amounted to $ 168.4 
      million compared to $177.6 million at December 31, 2005. There was 
      significant growth in the Company’s loan 
      portfolio during 2006, which occurred in both the commercial real estate 
      and residential mortgage segments. Net loans at December 31, 2006 were 
      $94.0 million compared to $69.7 million at December 31, 2005. Loan 
      quality improved substantially in 2006, and as a result, in the third 
      quarter of 2006, the Bank recognized a reversal of $2.0 million in the 
      allowance for loan losses that had previously been booked in 2005.
    
    
      The Bank has been formally approved to sell residential mortgages in the 
      secondary market by both Freddie Mac and Fannie Mae. In the fourth 
      quarter of 2006, the Bank recognized $30,000 in gains on loans sold 
      which is included in non-interest income.
    
    
      FORWARD-LOOKING INFORMATION
    
    
      Statements contained in this news release which are not historical 
      facts may be forward-looking statements as that term is defined in the 
      Private Securities Litigation Reform Act of 1995. Such forward-looking 
      statements are subject to risks and uncertainties which could cause 
      actual results to differ materially from those currently anticipated due 
      to a number of factors. Factors which could result in material 
      variations include, but are not limited to, changes in interest rates 
      which could affect net interest margins and net interest income, 
      competitive factors which could affect net interest income and 
      noninterest income, changes in demand for loans, deposits and other 
      financial services in the Company's market area; changes in asset 
      quality, general economic conditions as well as other factors discussed 
      in documents filed by the Company with the Securities and Exchange 
      Commission from time to time. In addition to risks and uncertainties 
      described by the Company in prior filings with the SEC, other risks and 
      uncertainties potentially impacting the Company are those related to the 
      Company in its primary market area impacted by Hurricane Katrina, 
      including the continuing effect of the storm and its aftermath on the 
      Company's operating expenses and on the Company's borrowers and other 
      customers. The Company undertakes no obligation to update these 
      forward-looking statements to reflect events or circumstances that occur 
      after the date on which such statements were made.
    
    
      
        
          GS Financial Corp.
        
      
      
        
          Condensed Consolidated Statements of Financial Condition
        
      
      
        
          (Unaudited)
        
      
      
        
           
        
        
           
        
        
        
        
           
        
      
      
        
          ($ in thousands)
        
        
          December 31, 2006
        
        
        
        
          December 31, 2005
        
      
      
        
          ASSETS
        
        
        
        
        
        
        
      
      
        
          Cash & Due from Banks
        
        
          $ 1,892 
        
        
        
        
          $ 3,040 
        
      
      
        
          Interest Bearing Deposits
        
        
          6,544 
        
        
        
        
          4,515 
        
      
      
        
          Federal Funds Sold
        
        
          2,680 
        
        
        
        
          15,000 
        
      
      
        
          Securities Available-for-Sale, at Fair Value
        
        
          55,090 
        
        
        
        
          77,344 
        
      
      
        
          Loans, Net
        
        
          93,987 
        
        
        
        
          69,657 
        
      
      
        
          Accrued Interest Receivable
        
        
          2,004 
        
        
        
        
          1,627 
        
      
      
        
          Premises & Equipment, Net
        
        
          3,578 
        
        
        
        
          2,257 
        
      
      
        
          Stock in Federal Home Loan Bank, at Cost
        
        
          982 
        
        
        
        
          1,833 
        
      
      
        
          Real Estate Held-for-Investment, Net
        
        
          464 
        
        
        
        
          478 
        
      
      
        
          Other Assets
        
        
          1,161 
        
        
        
        
          1,863 
        
      
      
        
          Total Assets
        
        
          $ 168,382 
        
        
        
        
          $ 177,614 
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          LIABILITIES
        
        
        
        
        
        
        
      
      
        
          Interest Bearing Deposits
        
        
          119,599 
        
        
        
        
          116,671 
        
      
      
        
          Non-Interest Bearing Deposits
        
        
          3,390 
        
        
        
        
          2,195 
        
      
      
        
          FHLB Advances
        
        
          17,042 
        
        
        
        
          32,106 
        
      
      
        
          Other Liabilities
        
        
          1,064 
        
        
        
        
          1,235 
        
      
      
        
          Total Liabilities
        
        
          $ 141,095 
        
        
        
        
          $ 152,207 
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          STOCKHOLDERS' EQUITY
        
        
        
        
        
        
        
      
      
        
          Common Stock & Additional Paid in Capital
        
        
          34,785 
        
        
        
        
          34,599 
        
      
      
        
          Unearned ESOP Stock
        
        
          - 
        
        
        
        
          (239)
        
      
      
        
          Unearned RRP Trust Stock
        
        
          (573)
        
        
        
        
          (698)
        
      
      
        
          Treasury Stock
        
        
          (32,493)
        
        
        
        
          (32,193)
        
      
      
        
          Retained Earnings
        
        
          25,887 
        
        
        
        
          24,136 
        
      
      
        
          Accumulated Other Comprehensive Loss
        
        
          (319)
        
        
        
        
          (198)
        
      
      
        
          Total Stockholders' Equity
        
        
          $ 27,287 
        
        
        
        
          $ 25,407 
        
      
      
        
          Total Liabilities & Stockholders' Equity
        
        
          $ 168,382 
        
        
        
        
          $ 177,614 
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
          Selected Asset Quality Data
        
        
        
        
        
        
        
      
      
        
          Total Non Performing Assets
        
        
          191 
        
        
        
        
          10,002 
        
      
      
        
          Non Performing Assets to Total Assets
        
        
          0.11%
        
        
        
        
          5.61%
        
      
      
        
          Allowance for Loan Losses to Total Loans
        
        
          3.82%
        
        
        
        
          7.58%
        
      
    
    
    
    
      
        
          GS Financial Corp.
        
      
      
        
          Condensed Consolidated Statements of Income
        
      
      
        
          (Unaudited)
        
      
      
        
           
        
      
      
        
           
        
        
          For the three months ended December 31,
        
        
        
        
          For the year ended 

          
            December 31,
          
        
      
      
        
          ($ in thousands, except per share data)
        
        
          2006 
        
        
          2005 
        
        
        
        
          2006 
        
        
          2005 
        
      
      
        
          Interest Income
        
        
          $ 2,706 
        
        
          $ 2,486 
        
        
        
        
          $ 11,000 
        
        
          $ 10,466 
        
      
      
        
          Interest Expense
        
        
          1,298 
        
        
          1,182 
        
        
        
        
          4,904 
        
        
          4,856 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net Interest Income
        
        
          1,408 
        
        
          1,304 
        
        
        
        
          6,096 
        
        
          5,610 
        
      
      
        
          Provision for Loan Losses
        
        
          - 
        
        
          4,793 
        
        
        
        
          (1,981)
        
        
          4,793 
        
      
      
        
          Net Interest Income (Loss) after Provision for Loan Losses
        
        
          1,408 
        
        
          (3,489)
        
        
        
        
          8,077 
        
        
          817 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Noninterest Expense
        
        
          1,346 
        
        
          1,138 
        
        
        
        
          4,926 
        
        
          4,707 
        
      
      
        
          Net Income (Loss) Before Non-Interest Income and Income Taxes
        
        
          62 
        
        
          (4,627)
        
        
        
        
          3,151 
        
        
          (3,890)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Noninterest Income (Loss)
        
        
          65 
        
        
          (1,211)
        
        
        
        
          50 
        
        
          (1,295)
        
      
      
        
          Income (Loss) Before Tax Expense (Benefit)
        
        
          127 
        
        
          (5,838)
        
        
        
        
          3,201 
        
        
          (5,185)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Income Tax Expense (Benefit)
        
        
          42 
        
        
          (1,758)
        
        
        
        
          1,088 
        
        
          (1,508)
        
      
      
        
          Net Income (Loss)
        
        
          85 
        
        
          (4,080)
        
        
        
        
          2,113 
        
        
          (3,677)
        
      
      
        
          Net Income (Loss) Per Common Share
        
        
          $ 0.07 
        
        
          $ (3.45)
        
        
        
        
          $ 1.74 
        
        
          $ (3.11)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Selected Operating Data
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Weighted Average Shares Outstanding
        
        
          1,209,180 
        
        
          1,180,941 
        
        
        
        
          1,212,173 
        
        
          1,181,313 
        
      
      
        
          Return on Average Assets 1
        
        
          0.20%
        
        
          -9.02%
        
        
        
        
          1.21%
        
        
          -1.96%
        
      
      
        
          Non Interest Expense/Average Assets 1
        
        
          3.13%
        
        
          2.52%
        
        
        
        
          2.82%
        
        
          2.51%
        
      
      
        
          Net Interest Margin
        
        
          3.37%
        
        
          3.10%
        
        
        
        
          3.58%
        
        
          3.08%
        
      
      
        
          1 Annualized for the three-month 
          periods ended December 31, 2006 and 2005.