Brooklyn Federal Bancorp Inc. (BFSB, Financial) filed Annual Report for the period ended 2011-09-30.
Brooklyn Federal Bancorp Inc. has a market cap of $10.92 million; its shares were traded at around $0.8486 with and P/S ratio of 0.53.
Dividends are payable at the sole discretion of the Company, and any dividends will depend, in part, upon receipt of dividends from the Bank, because the Company presently has no source of income other than dividends from the Bank, earnings from the investment of offering proceeds it retained and interest on the Company s loan to the employee stock ownership plan. During the 12 months ended September 30, 2011, no quarterly dividend was paid compared to $0.11 per common share of our stock during the first and second quarters of fiscal year 2010, $0.06 per common share during the third quarter and $0.01 per common share during the last quarter of fiscal year 2010. As discussed above under “Supervision and Regulation – Capital Distributions” relating to the Bank and Company, Federal Reserve and OCC regulations govern capital distributions by the Bank, which include cash dividends, stock repurchases and other transactions charged to the capital account, to the Company, as well as by the Company to its stockholders. As discussed further below in Part II. Item 7 in “Management s Discussion and Analysis of Financial Condition and Results of Operations – Business Strategy,” the OTS issued Cease and Desist Orders to the Bank, the Company and BFS Bancorp, MHC on March 31, 2011, which impose significant restrictions on the business and operations of the Bank and indirectly the Company and BFS Bancorp, MHC, including restrictions on asset growth and commercial real estate lending. The Orders also directly impose restrictions on the ability of the Bank and Company to make capital distributions, and prevent the Bank and Company from declaring or paying dividends or making any other capital distributions without the prior written approval of the OCC or Federal Reserve, respectively.
The significant downturn in the New York City economy and real estate market since 2008 has adversely affected our loan portfolio and our earnings. Our nonperforming loans have increased significantly since 2009, and totaled 40.9% of total loans at September 30, 2011 compared to 22.2% of total loans at September 30, 2010. Of these non-performing loans as of September 30, 2011 80.2% consisted of commercial real estate and construction and development loans. The collateral value of these loans decreased significantly and, as a result, we substantially increased our provision for loan losses during 2010, which has adversely affected our earnings and equity capital. During fiscal year 2010, we also agreed not to originate multi-family, commercial real estate, construction and development and land loans without prior OTS approval, now the OCC.
Net Interest Income Before Provision for Loan Losses. Net interest income before provision for loan losses decreased by $10.2 million, or 44.5%, to $12.7 million for fiscal year 2011 from $22.9 million for fiscal year 2010. This decrease was primarily due to the level of nonaccrual loans outstanding, which represented 40.9% of total loans at September 30, 2011 compared to 22.2% of total loans at September 30, 2010. For the fiscal year ended September 30, 2011, there was $7.9 million in interest income that would have been recorded had our non-accruing loans been current in accordance with their original terms. Also contributing to the decrease was the increased level of liquidity held by the Bank during fiscal year 2011 as the majority of proceeds from loan repayments and note sales were reinvested into lower-yielding securities.
As reported in the consolidated statements of cash flows, our cash flows are classified by source for financial reporting purposes as operating, investing or financing cash flows. Net cash (used in) provided by operating activities was $(2.8) million and $3.5 million for the years ended September 30, 2011 and 2010, respectively. These amounts differ from our net income because of a variety of cash receipts and disbursements that did not affect net income for the respective periods. In 2011, the most significant components were loan originations and proceeds from the sale of loans which totaled $4.4 million and $4.5 million, respectively. In 2010, the most significant components were the provision for loan losses and loss on other than temporary impairment, which totaled $42.7 million and $11.6 million, respectively. Net cash provided by investing activities was $36.1 million and $3.4 million in fiscal years 2011 and 2010, respectively, principally reflecting our loan and investment security activities in the respective periods. Investment securities net cash (purchases net of sales, principal repayments and maturities) provided by (used in) financing activities amounted to $(80.0) million and $(4.7) million in the years ended September 30, 2011 and 2010, respectively. In fiscal year 2011 and 2010, the cash flows from financing activities were utilized primarily for the repayment of deposits and borrowings after funding loan originations and investment security purchases. Net deposit outflow of $22.5 million, net repayments of Federal Home Loan Bank overnight and term advances of $0.8 million comprised most of our financing activities that resulted in net cash provided by financing activities of $(25.3) million in fiscal year 2011. Net deposit inflow of $21.3 million, net repayments of Federal Home Loan Bank overnight and term advances of $16.5 million and payment of dividends of $1.1 million comprised most of our financing activities that resulted in net cash provided by financing activities of $3.9 million in fiscal year 2010. The net effect of our operating, investing and financing activities was to increase our cash and cash equivalents from $8.0 million at the beginning of fiscal year 2011 to $22.2 million at the end of fiscal year 2011.
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Brooklyn Federal Bancorp Inc. has a market cap of $10.92 million; its shares were traded at around $0.8486 with and P/S ratio of 0.53.
Highlight of Business Operations:
As a result, our net loss available to common shareholders for the year ended September 30, 2011 was $5.6 million or $0.44 per common diluted share, as compared with net loss available to common shareholders of $38.9 million or $3.08 per common diluted share for the year ended September 30, 2010. The net loss for the year ended September 30, 2011 was primarily attributable to an increase in non-performing assets. Our net interest margin and net interest income declined during 2011 as a result of increasing non-performing assets. Our net interest margin declined to 2.71% in 2011 compared to 4.50% in 2010, and our net interest income decreased $10.2 million for the year ended September 30, 2011 as compared to the same period in 2010. This trend may continue and could adversely impact our ability to become profitable. In light of the current economic environment, significant additional provisions for loan losses also may be necessary to supplement the allowance for loan losses in the future. As a result, we may continue to incur significant credit costs in the future, which would continue to adversely impact our financial condition and results of operations and the value of our common stock.Dividends are payable at the sole discretion of the Company, and any dividends will depend, in part, upon receipt of dividends from the Bank, because the Company presently has no source of income other than dividends from the Bank, earnings from the investment of offering proceeds it retained and interest on the Company s loan to the employee stock ownership plan. During the 12 months ended September 30, 2011, no quarterly dividend was paid compared to $0.11 per common share of our stock during the first and second quarters of fiscal year 2010, $0.06 per common share during the third quarter and $0.01 per common share during the last quarter of fiscal year 2010. As discussed above under “Supervision and Regulation – Capital Distributions” relating to the Bank and Company, Federal Reserve and OCC regulations govern capital distributions by the Bank, which include cash dividends, stock repurchases and other transactions charged to the capital account, to the Company, as well as by the Company to its stockholders. As discussed further below in Part II. Item 7 in “Management s Discussion and Analysis of Financial Condition and Results of Operations – Business Strategy,” the OTS issued Cease and Desist Orders to the Bank, the Company and BFS Bancorp, MHC on March 31, 2011, which impose significant restrictions on the business and operations of the Bank and indirectly the Company and BFS Bancorp, MHC, including restrictions on asset growth and commercial real estate lending. The Orders also directly impose restrictions on the ability of the Bank and Company to make capital distributions, and prevent the Bank and Company from declaring or paying dividends or making any other capital distributions without the prior written approval of the OCC or Federal Reserve, respectively.
The significant downturn in the New York City economy and real estate market since 2008 has adversely affected our loan portfolio and our earnings. Our nonperforming loans have increased significantly since 2009, and totaled 40.9% of total loans at September 30, 2011 compared to 22.2% of total loans at September 30, 2010. Of these non-performing loans as of September 30, 2011 80.2% consisted of commercial real estate and construction and development loans. The collateral value of these loans decreased significantly and, as a result, we substantially increased our provision for loan losses during 2010, which has adversely affected our earnings and equity capital. During fiscal year 2010, we also agreed not to originate multi-family, commercial real estate, construction and development and land loans without prior OTS approval, now the OCC.
Net Interest Income Before Provision for Loan Losses. Net interest income before provision for loan losses decreased by $10.2 million, or 44.5%, to $12.7 million for fiscal year 2011 from $22.9 million for fiscal year 2010. This decrease was primarily due to the level of nonaccrual loans outstanding, which represented 40.9% of total loans at September 30, 2011 compared to 22.2% of total loans at September 30, 2010. For the fiscal year ended September 30, 2011, there was $7.9 million in interest income that would have been recorded had our non-accruing loans been current in accordance with their original terms. Also contributing to the decrease was the increased level of liquidity held by the Bank during fiscal year 2011 as the majority of proceeds from loan repayments and note sales were reinvested into lower-yielding securities.
As reported in the consolidated statements of cash flows, our cash flows are classified by source for financial reporting purposes as operating, investing or financing cash flows. Net cash (used in) provided by operating activities was $(2.8) million and $3.5 million for the years ended September 30, 2011 and 2010, respectively. These amounts differ from our net income because of a variety of cash receipts and disbursements that did not affect net income for the respective periods. In 2011, the most significant components were loan originations and proceeds from the sale of loans which totaled $4.4 million and $4.5 million, respectively. In 2010, the most significant components were the provision for loan losses and loss on other than temporary impairment, which totaled $42.7 million and $11.6 million, respectively. Net cash provided by investing activities was $36.1 million and $3.4 million in fiscal years 2011 and 2010, respectively, principally reflecting our loan and investment security activities in the respective periods. Investment securities net cash (purchases net of sales, principal repayments and maturities) provided by (used in) financing activities amounted to $(80.0) million and $(4.7) million in the years ended September 30, 2011 and 2010, respectively. In fiscal year 2011 and 2010, the cash flows from financing activities were utilized primarily for the repayment of deposits and borrowings after funding loan originations and investment security purchases. Net deposit outflow of $22.5 million, net repayments of Federal Home Loan Bank overnight and term advances of $0.8 million comprised most of our financing activities that resulted in net cash provided by financing activities of $(25.3) million in fiscal year 2011. Net deposit inflow of $21.3 million, net repayments of Federal Home Loan Bank overnight and term advances of $16.5 million and payment of dividends of $1.1 million comprised most of our financing activities that resulted in net cash provided by financing activities of $3.9 million in fiscal year 2010. The net effect of our operating, investing and financing activities was to increase our cash and cash equivalents from $8.0 million at the beginning of fiscal year 2011 to $22.2 million at the end of fiscal year 2011.
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