Osage Bancshares Inc. (OSBK) filed Quarterly Report for the period ended 2009-09-30.
Osage Bancshares Inc. has a market cap of $27.6 million; its shares were traded at around $7.41 with a P/E ratio of 25.2. The dividend yield of Osage Bancshares Inc. stocks is 4%.
Highlight of Business Operations:
Our total assets increased by $1.9 million to $160.2 million at September 30, 2009 from $158.3 million at June 30, 2009, reflecting an increase in held-to-maturity securities, partially offset by decreases in cash and cash equivalents and loans. Cash and cash equivalents decreased $3.3 million, or 22.4% to $11.2 million at September 30, 2009 from $14.5 million at June 30, 2009. The decrease was in interest-earning federal funds sold balances and interest bearing deposits with banks. This decrease was primarily a result of using these short-term, low-yielding funds to purchase mortgage-backed and municipal securities. Loans receivable, net decreased $1.9 million or 1.9% in the same time period. Loans receivable, net decreased to $98.7 million at September 30, 2009 from $100.6 million at June 30, 2009. This decrease in loans receivable, net primarily resulted from a $1.3 million, or 17.5% decrease in construction loans, a $496,000 or 2.6% decrease in nonresidential mortgage loans, and a $424,000, or .7% decrease in one- to-four family loans. We have seen a slight decrease in loan demand, and refinancing activity has slowed down. Loans held for sale at September 30, 2009 were $292,000 compared to $357,000 at June 30, 2009. Total securities increased to $41.2 million at September 30, 2009 from $34.2 million at June 30, 2009, as a result of $8.4 million of purchases, partially offset by normal paydowns.
Our total liabilities increased $1.6 million, or 1.2% mainly due to an increase in deposits. Deposits were $110.5 million at September 30, 2009, a $933,000, or .9% increase from $109.6 million at June 30, 2009. Transaction accounts decreased $3.1 million, from $24.9 million at June 30, 2009 to $21.8 million at September 30, 2009. Excluding the Bank’s own checking accounts, balances actually increased slightly, by $245,000. The Bank’s internal accounts, through which various disbursements are made, decreased $3.4 million. Certificates of deposit increased $3.7 million, due in large part to
Stockholders’ equity increased $361,000 to $25.2 million at September 30, 2009 from $24.8 million at June 30, 2009. This increase in stockholders’ equity was primarily due to net income of $273,000 and a $240,000 increase in the carrying value of available-for-sale securities, net of taxes. This increase in the carrying value was due to a slight improvement in market values of some of our available-for-sale mortgage-backed securities. In addition, amortization of awards under the stock option plan and restricted stock plan increased stockholders’ equity by $56,000 and $22,000, respectively. The Company paid regular cash dividends of $230,000 (net of restricted stock dividends of $7,000), in the quarter ending September 30, 2009.
General. Net income for the three months ended September 30, 2009 was $273,000 ($0.11 per diluted share), a $1.1 million increase compared to a net loss of $(818,000) ($(0.29) per diluted share) for the three months ended September 30, 2008. Excluding the $1.1 million pre-tax and after-tax other-than-temporary impairment charge on the AMF Ultra-Short Mortgage Fund in the prior period, net income in the prior period would have been $264,000 ($0.09 per diluted share). The increase in net income resulted mainly from an increase in noninterest income and a reduction in noninterest expense, partially offset by a decrease in net interest income.
Noninterest Expense. Noninterest expense was $1.0 million for the three months ended September 30, 2009. Excluding the OTTI charge, noninterest expense in the prior year quarter was $1.1 million. This $33,000, or 3.1%, decrease from the prior year quarter is mainly due to expense controls. Salaries and benefits were level with the same quarter last year, with reductions in insurance and travel offsetting salary increases. The Company anticipates some moderation of compensation expense after November 17, 2009 when the final installment of option and restricted stock awards made in 2004 vests. The Company currently recognizes approximately $34,000 in expense per quarter related to the vesting of these awards. Occupancy expense decreased $16,000 primarily as a result of lower computer and other equipment maintenance, as well as lower utility costs. FDIC insurance premiums increased $29,000, reflecting the expiration of a credit received by many financial institutions in the prior year, as well as a higher general assessment rate. The FDIC increased the assessment rate for the most highly rated institutions to between 12 and 14 basis points for the first quarter of 2009 and set the rate between 12 and 16 basis points thereafter. Assessment rates could be further increased if an institution’s secured liabilities, including FHLB advances, exceed 25% of deposits. The FDIC has also established a program under which it fully guarantees all non-interest bearing transaction accounts and senior unsecured debt of a bank or its holding company. Institutions that did not opt out of the program by December 5, 2008 will be assessed ten basis points for non-interest bearing transaction account balances in excess of $250,000 and 75 basis points of the amount of debt issued. The Company chose not to participate in this program. The FDIC will require the prepayment of three years of assessments in lieu of additional special assessments. This will not affect earnings, but will result in a large non-earning asset, which in turn will reduce the amount of funds we can invest in interest-earning assets.
Liquidity management is both a daily and long-term function of business management. Excess liquidity is generally invested in short-term investments such as overnight deposits, and collateralized mortgage obligations. On a longer term basis, we maintain a strategy of investing in various loan products. We use our sources of funds primarily to meet our ongoing commitments, to pay maturing certificates of deposit and savings withdrawals, to fund loan commitments and to maintain our portfolio of mortgage-backed securities and investment securities. At September 30, 2009, the total approved loan origination commitments outstanding amounted to $3.8 million. At the same date, construction loans in process were $2.0 million. We also had $1.1 million of unfunded commitments on lines of credit on that date. We had $1.3 million of commitments to sell loans to Freddie Mac, and $897,000 of commitments to purchase municipal securities. These securities are reflected in the balance sheet. Certificates of deposit scheduled to mature in one year or less at September 30, 2009, totaled $62.5 million. Management’s policy is to maintain deposit rates at levels that are competitive with other local financial institutions. Based on the competitive rates and on historical experience, management believes that a significant portion of maturing deposits will remain with Osage Federal. In addition, at September 30, 2009, our total collateralized borrowing limit was $53.6 million of which we had $20.7 million in FHLB advances outstanding. We are also party to letters of credit with the FHLB in the amount of $17.0 million. These letters of credit are used to collateralize the deposits of certain governmental agencies to replace excess deposit insurance that is no longer available. In turn, they reduce the amount we may borrow from the FHLB by the same amount, giving us the ability at September 30, 2009 to borrow an additional $15.9 million from the FHLB of Topeka as a funding source to meet commitments and for liquidity purposes.
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