Add
WAYN to Portfolio
Set Alert
Email to a
Friend
| |||
|
|
Quotes & Info
|
| WAYN > SEC Filings for WAYN > Form 10-Q on 12-Feb-2009 | All Recent SEC Filings |
12-Feb-2009
Quarterly Report
Discussion of Financial Condition Changes from March 31, 2008 to December 31, 2008
At December 31, 2008, the Company had total assets of $405.4 million, an increase of $3.8 million, or .9%, from total assets at March 31, 2008.
Liquid assets, consisting of cash, federal funds sold, interest-bearing demand deposits and available for sale securities, decreased by $8.4 million, or 6.3%, to $124.8 million at December 31, 2008, due primarily to a reduction of $6.0 million, or 5.0%, in available for sale securities, coupled with a decrease in federal funds sold of $6.0 million. These decreases were partially offset by an increase in interest-bearing demand deposits of $2.0 million, or 39.7% and an increase in cash of $1.6 million, or 83.4%. The decrease in liquid assets was principally used to fund growth in the Company's loan portfolio as described below.
Total securities decreased by $6.0 million, or 5.0%, during the nine months ended December 31, 2008. This decrease was primarily due to principal repayments of $24.2 million, and an aggregate decrease in the market value of available for sale securities of $.4 million. This was partially offset by purchases of $18.5 million. Purchases were funded by principal repayments on loans, proceeds from maturities of investment securities and from the reduction of the federal funds sold balance.
At December 31, 2008, net loans receivable increased by $12.9 million, or 5.3%, compared to March 31, 2008, as the Bank originated and retained $29.0 million of loans and received payments of $15.1 million. The lending division has focused on the origination of shorter-term and adjustable-rate commercial and commercial real estate loans. The Company believes that investing in shorter-term and adjustable-rate commercial loans positions the Company more favorably from an interest rate risk management perspective, compared to the origination of long term fixed-rate residential mortgages. The composition of the loan portfolio has changed during the nine months ended December 31, 2008, mainly due to a net increase of $9.6 million in non-residential loans and an increase of $5.8 million in commercial business loans.
December 31, 2008 March 31, 2008
(Dollars in thousands)
Mortgage loans:
One- to four-family residential(1) $ 141,038 54.17 % $ 142,010 57.49 %
Residential construction loans 1,801 .69 1,636 .66
Multi-family residential 8,664 3.33 8,929 3.61
Non-residential real estate/land(2) 70,992 27.26 61,407 24.86
Total mortgage loans 222,495 85.45 213,982 86.62
Other loans:
Consumer loans(3) 5,210 2.00 6,183 2.50
Commercial business loans 32,679 12.55 26,873 10.88
Total other loans 37,889 14.55 33,056 13.38
Total loans before net items 260,384 100.00 % 247,038 100.00 %
Less:
Loans in process 3,065 2,616
Deferred loan origination fees 397 390
Allowance for loan losses 1,801 1,777
Total loans receivable, net $ 255,121 $ 242,255
Mortgage-backed securities, net(4) $ 87,781 $ 85,879
_______________________________
|
(2) Includes land loans of $215,000 and $175,000 as of December 31, 2008 and March 31, 2008, respectively.
(3) Includes second mortgage loans of $1.4 million and $1.7 million as of December 31, 2008 and March 31, 2008, respectively.
(4) Includes mortgage-backed securities designated as available for sale.
Non-performing loans amounted to $2.0 million and $1.9 million at December 31, 2008 and March 31, 2008, respectively. At December 31, 2008, non-performing loans consisted primarily of residential mortgage loans of approximately $1.4 million, two commercial real estate loans with a combined balance of $327,000, $89,000 in home equity lines of credit and two commercial loans totaling $189,000. At March 31, 2008, non-performing loans were comprised of $670,000 in residential loans, $1.0 million in commercial real estate loans, $120,000 in home equity lines of credit and one commercial loan of $42,000, which was paid off in June 2008. Real estate owned amounted to $735,000 at December 31, 2008 compared to $93,000 at March 31, 2008. The increase was due to the transfer of a $610,000 non-residential property from a non-performing loan status to real estate acquired through foreclosure. Total non-performing assets amounted to $2.8 million at December 31, 2008 compared to $2.0 million at March 31, 2008. The increase was mainly due to an increase in non-performing residential mortgage loans. The Company generally has not realized significant losses on non-performing loans secured by residential mortgages. The following table sets forth information regarding our past due, nonaccrual and impaired loans and real estate acquired through foreclosure as of December 31, 2008 and March 31, 2008.
December 31, March 31,
2008 2008
(Dollars in thousands)
Past due loans 30-89 days:
Mortgage loans:
One- to four-family residential $ 996 $ 812
Nonresidential 3,697 --
Non-mortgage loans:
Commercial business loans 160 --
Consumer loans 12 7
$ 4,865 $ 819
Non-performing loans:
Mortgage loans:
One- to four-family residential $ 1,517 $ 790
All other mortgage loans 327 1,038
Non-mortgage loans:
Commercial business loans 189 42
Consumer - 1
Total non-performing loans 2,033 1,871
Total real estate acquired through foreclosure 735 93
Total non-performing assets $ 2,768 $ 1,964
Total non-performing loans to net loans receivable 0.80 % 0.77 %
Total non-performing loans to total assets 0.50 % 0.47 %
Total non-performing assets to total assets 0.68 % 0.49 %
|
Wayne Savings Bancshares, Inc.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following table sets forth the analysis of the allowance for loan losses for
the periods indicated.
For the nine For the
months ended year ended
December 31, 2008 March 31, 2008
(Dollars in thousands)
Loans receivable, net $ 255,121 $ 242,255
Average loans receivable, net $ 248,842 $ 244,800
Allowance balance (at beginning of period) $ 1,777 $ 1,523
Provision for losses 346 234
Charge-offs:
Mortgage loans:
One- to four-family (24 ) (15 )
Non-residential real estate and land (1) (229 ) --
Other loans:
Consumer (4 ) (1 )
Commercial (74 ) --
Gross charge-offs (331 ) (16 )
Recoveries:
Mortgage loans:
One- to four-family -- 13
Other loans:
Consumer 9 23
Gross recoveries 9 36
Net (charge-offs) recoveries (322 ) 20
Allowance for loan losses balance (at end of period) $ 1,801 $ 1,777
Allowance for loan losses as a percent of loans receivable,
net at end of period 0.71 % 0.73 %
Net loans charged off (recovered) as a percent of average
loans receivable, net 0.13 % (0.01 )%
Ratio of allowance for loan losses to non-
performing loans at end of period 88.59 % 94.98 %
_______________________
|
Deposits totaled $310.8 million at December 31, 2008, a decrease of $6.9 million, or 2.2%, from $317.7 million at March 31, 2008. Certificates of deposit decreased by $5.9 million and savings and money market accounts decreased by $1.6 million, which were partially offset by an increase in NOW accounts of $2.6 million. Management exercised discipline during the period with regard to the pricing of retail certificates. In general, management attempts to benchmark retail certificate of deposit pricing to the cost of alternate sources of funds, including Federal Home Loan Bank advances and brokered deposits. Exceptions are made to defend customer relationships with significant value to the Bank while allowing rate sensitive certificate of deposit shoppers to move to other alternatives. The local deposit market has been negatively affected by national and online competitors offering higher rates to address liquidity concerns in national markets.
Other short-term borrowings totaled $11.6 million at December 31, 2008, an increase of $4.3 million, or 58.9%, as compared with $7.3 million at March 31, 2008. The interest rate paid on these borrowings is .40%, which over the past year has declined 280 basis points as the Federal Reserve lowered rates.
Advances from the Federal Home Loan Bank of Cincinnati totaled $44.5 million at December 31, 2008, an increase of $6.0 million, or 15.6%, compared with $38.5 million at March 31, 2008. The Company increased its borrowings to compensate for the loss of higher cost retail certificates of deposit as discussed above and to extend liability duration for interest rate risk management purposes.
Stockholders' equity decreased by $17,000, or .1%, during the nine months ended December 31, 2008, due primarily to a decrease in unrealized gains on available for sale securities of $276,000, dividends declared of $1.1 million, a $448,000 reduction due to the adoption of EITF Issue 06-4, which required the Company to record a liability for the postretirement cost of the split dollar life insurance agreements related to bank owned life insurance, and a stock repurchase of $49,000. These decreases were partially offset by net income of $1.7 million and a reduction in unallocated ESOP shares of $86,000 through the annual allocation process.
Comparison of Operating Results for the Nine Month Periods Ended December 31, 2008 and 2007
General
Net income for the nine months ended December 31, 2008 totaled $1.7 million, an increase of $200,000, or 13.2%, compared to net income for the nine months ended December 31, 2007. The increase in net income was primarily attributable to an increase in net interest income of $617,000, or 7.4%, partially offset by an increase in the provision for loan losses of $151,000, an increase in total non-interest expenses of $101,000, a decrease in non-interest income of $65,000 and an increase in the provision for federal income taxes of $100,000.
Average Balance Sheet
The following table sets forth certain information relating to the Company's
average balance sheet and reflects the average yield on assets and average cost
of liabilities for the periods indicated and the average yields earned and rates
paid. Such yields and costs are derived by dividing income or expense by the
average balance of assets or liabilities, respectively, for the periods
presented.
For the nine months ended December 31,
2008 2007
Average Average Average Average
Balance Interest Rate Balance Interest Rate
(Dollars in thousands)
Interest-earning assets:
Loans receivable, net1 $ 248,842 $ 11,608 6.22 % $ 244,546 $ 12,518 6.83 %
Investment securities2 118,256 4,428 4.99 120,066 4,426 4.92
Interest-earning deposits3 11,343 236 2.77 11,148 374 4.47
Total interest-earning
assets 378,441 16,272 5.73 375,760 17,318 6.15
Non-interest-earning assets 21,570 21,768
Total assets $ 400,011 $ 397,528
Interest-bearing
liabilities:
Deposits $ 313,050 5,788 2.47 $ 317,997 7,445 3.12
Other short-term borrowings 8,895 57 .85 6,021 179 5.95
Borrowings 41,115 1,414 4.59 35,530 1,298 4.87
Total interest-bearing
liabilities 363,060 7,259 2.67 359,548 8,922 3.31
Non-interest
bearing liabilities 3,909 3,651
Total liabilities 366,969 363,199
Stockholders' equity 33,042 34,329
Total liabilities and
stockholders' equity $ 400,011 $ 397,528
Net interest income $ 9,013 $ 8,396
Interest rate spread4 3.06 % 2.84 %
Net yield on interest-
earning assets5 3.18 % 2.98 %
Ratio of average interest-
earning assets to
average interest-bearing
liabilities 104.24 % 104.51 %
_________________________________________
|
Interest Income
Interest income decreased by $1.0 million or 6.0%, to $16.3 million for the nine months ended December 31, 2008, compared to the same period in 2007. This decrease was mainly due to a decrease in the weighted-average yield on interest-earning assets to 5.73% in the 2008 period from 6.15% for the nine month period ended December 31, 2007. The yield decrease was primarily due to the Federal Reserve's interest rate cuts of 400 basis points from December 31, 2007 to December 31, 2008.
Interest income on loans decreased by $910,000, or 7.3%, for the nine months ended December 31, 2008, compared to the same period in 2007, due primarily to a reduction in weighted-average rate on loans of 61 basis points from 6.83% for the period ended December 31, 2007 to 6.22% for the December 31, 2008 period. As discussed earlier, this was mainly due to a decrease in rates of 400 basis points implemented by the Federal Reserve over the past year and the corresponding impact on adjustable rate loans and new originations. This decrease was partially offset by an increase in the average balance of loans outstanding period to period of $4.3 million, or 1.8%, to $248.8 million for the 2008 period.
Interest income on securities increased by $2,000, or 0.1%, during the nine months ended December 31, 2008, compared to the same period in 2007. This increase was primarily due to an increase in the weighted-average yield to 4.99% for the period ended December 31, 2008 from 4.92% for the period ended December 31, 2007.
Dividends on Federal Home Loan Bank stock and other income decreased by $138,000, or 36.9%, for the nine months ended December 31, 2008, compared to the same period in 2007, due primarily to a decrease in the weighted-average yield of 170 basis points resulting from reductions in short term market interest rates, to 2.77% for the 2008 period from 4.47% for the nine months ended December 31, 2007.
Interest Expense
Interest expense totaled $7.3 million for the nine months ended December 31, 2008, a decrease of $1.7 million, or 18.6%, compared to the nine months ended December 31, 2007. The decrease resulted from a 64 basis point decrease in the weighted-average cost of funds to 2.67% for the 2008 period, partially offset by an increase of $3.5 million in the average balance of deposits and borrowings outstanding, from $359.5 million to $363.1 million for the nine month period ended December 31, 2008.
Interest expense on deposits totaled $5.8 million for the nine months ended December 31, 2008, a decrease of $1.7 million, or 22.3%, compared to the nine months ended December 31, 2007, as a result of a 65 basis point decrease in the weighted-average cost of deposits to 2.47% for the 2008 period coupled with a decrease in the average balance outstanding of $4.9 million, or 1.6%, to $313.1 million for the 2008 period. The decrease in the rate was due to the Federal Reserve rate decreases discussed above.
Interest expense on other short-term borrowings totaled $57,000 for the nine months ended December 31, 2008, a decrease of $122,000, from the 2007 period, primarily due to a decrease in the weighted-average cost of 510 basis points, to .85% for the nine months ended December 31, 2008 due to the Federal Reserve rate decreases. This was partially offset by an increase in the average balance of short-term borrowings of $2.9 million.
Interest expense on Federal Home Loan Bank advances totaled $1.4 million for the nine months ended December 31, 2008, an increase of $116,000, over the 2007 period, primarily due to an increase in the average balance of $5.6 million, or 15.7%, as the Company replaced the loss of higher cost retail certificates of deposit with lower cost Federal Home Loan Bank advances.
Net Interest Income
Net interest income totaled $9.0 million for the nine months ended December 31, 2008, an increase of $617,000, or 7.4%, compared to the nine month period ended December 31, 2007. The average interest rate spread increased to 3.07% for the nine months ended December 31, 2008 from 2.84% for the nine months ended December 31, 2007, due to management's strategy not to compete with national and online competitors offering higher rates on deposits in the national markets. The increase in the average interest rate spread was also due to a shift in asset composition from lower yielding investment securities and deposits to higher yielding loans and mortgage-backed securities and a shift in composition of liabilities from higher cost retail certificates of deposit to lower cost Federal Home Loan Bank advances. The net interest margin increased to 3.18% for the nine months ended December 31, 2008 from 2.98% for the nine months ended December 31, 2007.
Provision for Loan Losses
Management recorded a $346,000 provision for loan losses for the nine month period ended December 31, 2008, an increase of $151,000 compared to the provision for the same period in 2007, primarily due to the increase in non-performing loans and charge-offs during the period. To the best of management's knowledge, all known and inherent losses that are probable and which can be reasonably estimated have been recorded as of December 31, 2008.
Non-interest Income
Non-interest income, consisting primarily of the earnings on bank-owned life insurance, trust income, service fees and charges on deposit accounts, decreased by $65,000, or 4.7%, for the nine months ended December 31, 2008, compared to the nine months ended December 31, 2007. The decrease was primarily due to a decrease in service fees, charges and other operating income of $32,000, or 3.1% coupled with a decrease in gain on disposal of foreclosed assets of $21,000, or 67.7%, in the nine months ended December 31, 2008 compared to the same period ended December 31, 2007.
Non-interest Expense
Non-interest expense increased by $101,000, or 1.3%, to $7.7 million for the nine months ended December 31, 2008, compared to the nine months ended December 31, 2007. The increase was mainly due to an increase in franchise tax of $58,000, or 19.9%, to $349,000 for the nine months ended December 31, 2008, compared to the nine months ended December 31, 2007. The increase was due primarily to refund claims filed in the 2007 period relating to prior years amended returns. Occupancy and equipment expense increased $45,000, or 3.0%, mainly due to an increase in real estate tax expense and additional maintenance costs. Compensation expense increased by $31,000, or 0.7%, during the 2008 period due primarily to an increase in accrued compensation year to year.
Federal Income Taxes
Federal income tax expense was $593,000 for the nine months ended December 31, 2008, an increase of $100,000, or 20.3%, compared to the same period in 2007. The increase was primarily due to the increase in income before taxes of $300,000, or 14.9%, compared to the same period in 2007. The effective tax rates were 25.7% and 24.5% for the nine month periods ended December 31, 2008 and 2007, respectively.
Comparison of Operating Results for the Three Month Periods Ended December 31, 2008 and 2007
General
Net income totaled $584,000 for the three months ended December 31, 2008, an increase of $138,000, or 30.9%, compared to net income of $446,000 for the three months ended December 31, 2007. The increase in net income was primarily attributable to an increase in net interest income of $322,000, or 11.5%, offset by an increase in the provision for loan losses of $45,000, an increase in total non-interest expenses of $25,000, an increase in the provision for federal income taxes of $77,000 and a decrease in non-interest income of $37,000.
Average Balance Sheet
The following table sets forth certain information relating to the Company's average balance sheet and reflects the average yield on assets and average cost of liabilities for the periods indicated and the average yields earned and rates paid. Such yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods presented.
Wayne Savings Bancshares, Inc.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
For the three months ended December 31,
2008 2007
Average Average Average Average
Balance Interest Rate Balance Interest Rate
(Dollars in thousands)
Interest-earning assets:
Loans receivable, net1 $ 256,409 $ 3,927 6.13 % $ 247,985 $ 4,204 6.78 %
Investment securities2 111,905 1,416 5.06 121,366 1,514 4.99
Interest-earning deposits3 10,130 65 2.57 9,931 108 4.35
Total interest-earning
assets 378,444 5,408 5.72 379,282 5,826 6.14
Non-interest-earning assets 21,619 21,650
Total assets $ 400,063 $ 400,932
Interest-bearing
liabilities:
Deposits $ 311,315 1,798 2.31 $ 316,761 2,493 3.15
Other short-term borrowings 9,531 13 .55 7,164 62 3.46
Borrowings 42,609 479 4.50 38,426 475 4.94
Total interest-bearing
liabilities 363,455 2,290 2.52 362,351 3,030 3.34
. . .
|
|
|