GS Financial Corp. Announces Third Quarter Results

  
    
  
  
    
      GS Financial Corp. (the “Company”), 
      (NASDAQ:GSLA), the holding company of Guaranty Savings Bank (www.guarantysb.com), 
      announced quarterly earnings of $270,000 for the quarter ended September 
      30, 2008, up $201,000 or 291.3% from the same period in 2007. Earnings 
      per share for the third quarter of 2008 were $.21, up from $.06 for the 
      third quarter of 2007. The increase in earnings for the quarter ended 
      September 30, 2008 was primarily due to an increase in interest and 
      dividend income due to loan growth and improvement in our net interest 
      margin.
    
    
      President Stephen E. Wessel noted, “We have 
      been focused on reducing our cost of funds and the attainment of revenue 
      enhancements which resulted in an increase of $388,000 in net interest 
      income for the third quarter of 2008 as compared to the same period in 
      2007. During this time of financial crisis, many of our customers have 
      come to see us as a refuge of trust and consistency which has helped us 
      to increase both our loan and deposit balances. Since 1937, we have been 
      focused on keeping things simple. Our reputation in the community is 
      based upon offering sensible, competitive, easy to use accounts and 
      services combined with personal attention to our customer’s 
      financial goals.”
    
    
      For the first nine months of 2008, net income totaled $164,000, down 
      64.2% from $458,000 in the same period of 2007. Earnings per share for 
      the first nine months of 2008 were $.13, down 65.8% or $.25 over the 
      same time period in 2007. The decrease in earnings for the first nine 
      months of 2008 was primarily a result of the recognition of a non-cash 
      impairment charge of $651,000 (pre-tax) and $430,000 (after-tax) related 
      to the Company’s investment in two mutual 
      funds that hold mortgage-backed securities. In addition, the earnings 
      for the first nine months of 2007 included the reversal of a provision 
      for loan losses of $300,000 compared with no provision or reversal in 
      the same period of 2008.
    
    
      President Wessel commented, “There continues 
      to be challenges in our industry, however, our third quarter results 
      reflect continued progress in the attainment of our strategic goals. We 
      have experienced growth in our core business of loans and deposits while 
      maintaining good credit quality resulting in increased interest and 
      dividend income while flattening our expense growth in the third quarter 
      of 2008.”
    
    
      Net interest income for the quarter ended September 30, 2008 was $1.8 
      million, up 27.5% from $1.4 million in the third quarter of 2007, and up 
      9.9% or $162,000 from the second quarter of 2008. The third quarter 2008 
      net interest margin was 3.52%, up 10 basis points from 3.42% for the 
      third quarter of 2007, and up 7 basis points from 3.45% in the second 
      quarter of 2008.
    
    
      Net interest income for the first nine months of 2008 was $4.9 million, 
      up 18.2% from $4.2 million during the same period in 2007. The increase 
      in net interest income was primarily the result of a decrease in deposit 
      costs and the use of lower cost Federal Home Loan Bank advances to fund 
      loan growth. In addition, the Company has successfully grown the amount 
      of non-interest bearing deposits which is one of our strategic 
      initiatives. The net interest margin for the first nine months of 2008 
      was 3.38%, down 9 basis points from 3.47% for the same time period in 
      2007.
    
    
      Total assets at September 30, 2008 were $217.0 million compared to 
      $186.5 million at December 31, 2007, an increase of approximately $30.5 
      million or 16.4%. Net loans increased $30.8 million or 26.0% from $118.5 
      million at year end 2007 to $149.3 at September 30, 2008. Deposit 
      accounts increased approximately $8.7 million or 6.7% from $129.5 
      million at December 31, 2007 to $138.2 million at September 30, 2008. 
      Borrowings from the Federal Home Loan Bank increased from $27.0 million 
      at December 31, 2007 to $49.9 million at September 30, 2008. Stockholders’ 
      equity was 12.6% of total assets at September 30, 2008 down from 15.1% 
      at December 31, 2007.
    
    
      Financial highlights of the third quarter of 2008 include:
    
    
      
        Gross loans increased by $30.0 million (24.6%) during the first nine 
        months of 2008 to $151.9 million at September 30, 2008, with the 
        majority of the growth in the real estate secured loans, both 
        residential and non-residential.
      
      
        Deposits increased in the first nine months of 2008 by $8.7 million 
        (6.7%) to $138.2 million at September 30, 2008, including $4.1 million 
        of growth in non-interest bearing deposits.
      
      
        Interest and dividend income increased by $972,000 (11.8%) to $9.2 
        million for the nine months ended September 30, 2008 compared to the 
        same prior year period.
      
      
        Non-interest expense as a percentage of average assets fell from 3.18% 
        for the first nine months of 2007 to 2.83% for the first nine months 
        of 2008 as the $298,000 or 7.4% increase in non-interest expense was 
        offset by growth in the Company’s assets 
        during that period.
      
    
    
      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
        
      
      
        
           
        
        
           
        
        
           
        
        
           
        
        
           
        
      
      
        
        
        
        
        
          September 30, 2008
        
        
        
        
          December 31, 2007
        
      
      
        
          ($ in thousands)
        
        
           
        
        
          (Unaudited)
        
        
           
        
        
          (Audited)
        
      
      
        
          ASSETS
        
        
        
        
        
        
        
        
        
      
      
        
          Cash & Amounts Due from Depository Institutions
        
        
        
        
          $
        
        
          2,994
        
        
        
        
        
        
          $
        
        
          2,485
        
        
        
      
      
        
          Interest-Bearing Deposits in Other Banks
        
        
        
        
        
        
          2,950
        
        
        
        
        
        
        
        
          6,008
        
        
        
      
      
        
          Federal Funds Sold
        
        
        
        
        
        
          596
        
        
        
        
        
        
        
        
          969
        
        
        
      
      
        
          Securities Available-for-Sale, at Fair Value
        
        
        
        
        
        
          48,618
        
        
        
        
        
        
        
        
          47,747
        
        
        
      
      
        
          Loans, Net
        
        
        
        
        
        
          149,333
        
        
        
        
        
        
        
        
          118,477
        
        
        
      
      
        
          Accrued Interest Receivable
        
        
        
        
        
        
          1,549
        
        
        
        
        
        
        
        
          1,828
        
        
        
      
      
        
          Premises & Equipment, Net
        
        
        
        
        
        
          5,715
        
        
        
        
        
        
        
        
          5,874
        
        
        
      
      
        
          Stock in Federal Home Loan Bank, at Cost
        
        
        
        
        
        
          2,290
        
        
        
        
        
        
        
        
          1,220
        
        
        
      
      
        
          Other Real Estate
        
        
        
        
        
        
          844
        
        
        
        
        
        
        
        
          -
        
        
        
      
      
        
          Real Estate Held-for-Investment, Net
        
        
        
        
        
        
          439
        
        
        
        
        
        
        
        
          450
        
        
        
      
      
        
          Other Assets
        
        
           
        
        
           
        
        
          1,651
        
        
           
        
        
           
        
        
           
        
        
          1,429
        
        
           
        
      
      
        
          Total Assets
        
        
           
        
        
          $
        
        
          216,979
        
        
           
        
        
           
        
        
          $
        
        
          186,487
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          LIABILITIES
        
        
        
        
        
        
        
        
        
      
      
        
          Deposits
        
        
        
        
        
        
        
        
        
      
      
        
          Interest-Bearing Deposits
        
        
        
        
          $
        
        
          128,392
        
        
        
        
        
        
          $
        
        
          123,825
        
        
        
      
      
        
          Noninterest-Bearing Deposits
        
        
           
        
        
           
        
        
          9,763
        
        
           
        
        
           
        
        
           
        
        
          5,685
        
        
           
        
      
      
        
          Total Deposits
        
        
           
        
        
           
        
        
          138,155
        
        
           
        
        
           
        
        
           
        
        
          129,510
        
        
           
        
      
      
        
          FHLB Advances
        
        
        
        
        
        
          49,920
        
        
        
        
        
        
        
        
          26,986
        
        
        
      
      
        
          Other Liabilities
        
        
           
        
        
           
        
        
          1,555
        
        
           
        
        
           
        
        
           
        
        
          1,827
        
        
           
        
      
      
        
          Total Liabilities
        
        
           
        
        
           
        
        
          189,630
        
        
           
        
        
           
        
        
           
        
        
          158,323
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          STOCKHOLDERS' EQUITY
        
        
        
        
        
        
        
        
        
      
      
        
          Common Stock - $.01 Par Value
        
        
        
        
          $
        
        
          34
        
        
        
        
        
        
          $
        
        
          34
        
        
        
      
      
        
          Additional Paid-in Capital
        
        
        
        
        
        
          34,546
        
        
        
        
        
        
        
        
          34,546
        
        
        
      
      
        
          Unearned RRP Trust Stock
        
        
        
        
        
        
          (143
        
        
          )
        
        
        
        
        
        
          (158
        
        
          )
        
      
      
        
          Treasury Stock
        
        
        
        
        
        
          (32,062
        
        
          )
        
        
        
        
        
        
          (32,062
        
        
          )
        
      
      
        
          Retained Earnings
        
        
        
        
        
        
          25,697
        
        
        
        
        
        
        
        
          25,919
        
        
        
      
      
        
          Accumulated Other Comprehensive Loss
        
        
           
        
        
           
        
        
          (723
        
        
          )
        
        
           
        
        
           
        
        
          (115
        
        
          )
        
      
      
        
          Total Stockholders' Equity
        
        
           
        
        
           
        
        
          27,349
        
        
           
        
        
           
        
        
           
        
        
          28,164
        
        
           
        
      
      
        
          Total Liabilities & Stockholders' Equity
        
        
        
        
          $
        
        
          216,979
        
        
        
        
        
        
          $
        
        
          186,487
        
        
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Selected Asset Quality Data
        
        
        
        
        
        
        
        
        
      
      
        
          Total Non Performing Assets
        
        
        
        
          $
        
        
          2,919
        
        
        
        
        
        
          $
        
        
          1,438
        
        
        
      
      
        
          Non Performing Assets to Total Assets
        
        
        
        
        
        
          1.35
        
        
          %
        
        
        
        
        
        
          0.77
        
        
          %
        
      
    
    
      
        
        
        
           
        
        
        
        
           
        
        
        
        
           
        
        
        
        
           
        
        
        
      
      
        
          GS Financial Corp.
        
      
      
        
          Condensed Consolidated Statements of Income
        
      
      
        
          (Unaudited)
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          For the Three Months
        
        
        
        
          For the Nine Months
        
      
      
        
           
        
        
           
        
        
          Ended September 30,
        
        
           
        
        
          Ended September 30,
        
      
      
        
          ($ in thousands, except per share data)
        
        
           
        
        
           
        
        
          2008
        
        
           
        
        
           
        
        
           
        
        
          2007
        
        
           
        
        
           
        
        
           
        
        
          2008
        
        
           
        
        
           
        
        
           
        
        
          2007
        
        
           
        
      
      
        
          Interest and Dividend Income
        
        
        
        
          $
        
        
          3,214
        
        
        
        
        
        
          $
        
        
          2,861
        
        
        
        
        
        
          $
        
        
          9,220
        
        
        
        
        
        
          $
        
        
          8,248
        
        
        
      
      
        
          Interest Expense
        
        
           
        
        
           
        
        
          1,413
        
        
           
        
        
           
        
        
           
        
        
          1,448
        
        
           
        
        
           
        
        
           
        
        
          4,288
        
        
           
        
        
           
        
        
           
        
        
          4,075
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net Interest Income
        
        
        
        
        
        
          1,801
        
        
        
        
        
        
        
        
          1,413
        
        
        
        
        
        
        
        
          4,932
        
        
        
        
        
        
        
        
          4,173
        
        
        
      
      
        
          Provision (Reversal) for Loan Losses
        
        
           
        
        
           
        
        
          -
        
        
           
        
        
           
        
        
           
        
        
          -
        
        
           
        
        
           
        
        
           
        
        
          -
        
        
           
        
        
           
        
        
           
        
        
          (300
        
        
          )
        
      
      
        
          Net Interest Income after Provision (Reversal) for Loan Losses
        
        
           
        
        
           
        
        
          1,801
        
        
           
        
        
           
        
        
           
        
        
          1,413
        
        
           
        
        
           
        
        
           
        
        
          4,932
        
        
           
        
        
           
        
        
           
        
        
          4,473
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Non-interest Expense
        
        
           
        
        
           
        
        
          1,448
        
        
           
        
        
           
        
        
           
        
        
          1,441
        
        
           
        
        
           
        
        
           
        
        
          4,329
        
        
           
        
        
           
        
        
           
        
        
          4,031
        
        
           
        
      
      
        
          Net Income before Non-interest Income and Income Taxes
        
        
           
        
        
           
        
        
          353
        
        
           
        
        
           
        
        
           
        
        
          (28
        
        
          )
        
        
           
        
        
           
        
        
          603
        
        
           
        
        
           
        
        
           
        
        
          442
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Non-interest Income
        
        
           
        
        
           
        
        
          53
        
        
           
        
        
           
        
        
           
        
        
          109
        
        
           
        
        
           
        
        
           
        
        
          (357
        
        
          )
        
        
           
        
        
           
        
        
          181
        
        
           
        
      
      
        
          Income Before Tax Expense
        
        
           
        
        
           
        
        
          406
        
        
           
        
        
           
        
        
           
        
        
          81
        
        
           
        
        
           
        
        
           
        
        
          246
        
        
           
        
        
           
        
        
           
        
        
          623
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Income Tax Expense
        
        
           
        
        
           
        
        
          136
        
        
           
        
        
           
        
        
           
        
        
          12
        
        
           
        
        
           
        
        
           
        
        
          82
        
        
           
        
        
           
        
        
           
        
        
          165
        
        
           
        
      
      
        
          Net Income
        
        
           
        
        
          $
        
        
          270
        
        
           
        
        
           
        
        
          $
        
        
          69
        
        
           
        
        
           
        
        
          $
        
        
          164
        
        
           
        
        
           
        
        
          $
        
        
          458
        
        
           
        
      
      
        
          Earnings Per Share - Basic
        
        
           
        
        
          $
        
        
          0.21
        
        
           
        
        
           
        
        
          $
        
        
          0.06
        
        
           
        
        
           
        
        
          $
        
        
          0.13
        
        
           
        
        
           
        
        
          $
        
        
          0.38
        
        
           
        
      
      
        
          Earnings Per Share - Diluted
        
        
           
        
        
          $
        
        
          0.21
        
        
           
        
        
           
        
        
          $
        
        
          0.06
        
        
           
        
        
           
        
        
          $
        
        
          0.13
        
        
           
        
        
           
        
        
          $
        
        
          0.38
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Selected Operating Data
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
          Weighted Average Shares Outstanding
        
        
        
        
        
        
          1,278,466
        
        
        
        
        
        
        
        
          1,234,453
        
        
        
        
        
        
        
        
          1,278,231
        
        
        
        
        
        
        
        
          1,234,453
        
        
        
      
      
        
          Return on Average Assets1
        
        
        
        
        
        
          0.50
        
        
          %
        
        
        
        
        
        
          0.17
        
        
          %
        
        
        
        
        
        
          0.11
        
        
          %
        
        
        
        
        
        
          0.31
        
        
          %
        
      
      
        
          Non-interest Expense/Average Assets1
        
        
        
        
        
        
          2.70
        
        
          %
        
        
        
        
        
        
          3.29
        
        
          %
        
        
        
        
        
        
          2.83
        
        
          %
        
        
        
        
        
        
          3.18
        
        
          %
        
      
      
        
          Net Interest Margin1
        
        
           
        
        
           
        
        
          3.52
        
        
          %
        
        
           
        
        
           
        
        
          3.42
        
        
          %
        
        
           
        
        
           
        
        
          3.38
        
        
          %
        
        
           
        
        
           
        
        
          3.47
        
        
          %
        
      
      
        
          1Annualized