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WVS Financial Corp. Reports Operating Results (10-Q)

May 11, 2009 | About:

WVS Financial Corp. (WVFC) filed Quarterly Report for the period ended 2009-03-31.

WVS FINANCIAL is a Pennsylvania-chartered unitary bank holding company of West View Savings Bank. WVS Financial Corp. has a market cap of $31.33 million; its shares were traded at around $14.8 with a P/E ratio of 10.35 and P/S ratio of 1.29. The dividend yield of WVS Financial Corp. stocks is 4.32%. WVS Financial Corp. had an annual average earning growth of 6.8% over the past 10 years.

Highlight of Business Operations:

The Companys assets totaled $444.0 million at March 31, 2009, as compared to $423.1 million at June 30, 2008. The $20.9 million or 4.9% increase in total assets was primarily comprised of a $18.1 million or 193.1% increase in FDIC insured certificates of deposit, an $18.0 million or 14.9% increase in investment securities held to maturity, a $3.9 million or 56.9% increase in Federal Home Loan Bank (FHLB) stock, and a $2.5 million or 4.4% increase in net loans receivable, which were partially offset by a $14.1 million or 6.6% decrease in mortgage-backed securities held to maturity, a $7.5 million or 93.8% decrease in investment securities available for sale, a $229 thousand or 12.5% decrease in cash and cash equivalents, and a $142 thousand or 12.3% decrease in deferred taxes and other assets. The increase in FDIC insured certificates of deposit was attributable to an increase of $27.1 million in bank certificates of deposit which was partially offset by $8.9 million in maturities and early redemptions of FDIC insured certificates of deposit. The increase in investment securities held to maturity was primarily attributable to purchases of $89.1 million of short-term investment grade commercial paper, $41.8 million of fixed-rate U.S. Government agency bonds, $17.9 million of investment grade fixed-rate corporate bonds, $13.1 million of investment grade utility first mortgage bonds, and $11.5 million of investment grade floating-rate corporate bonds, which were partially offset by $83.4 million of maturities of short-term investment grade commercial paper, $61.4 million of issuer redemptions prior to maturity (i.e. calls) of fixed-rate U.S. Government agency bonds, and $10.9 million of maturities of investment grade corporate bonds. The increase in FHLB stock was attributable to higher levels of FHLB borrowings during the nine months ended March 31, 2009, and associated FHLB stock purchase requirements. The decrease in investment securities available for sale was attributable to $7.5 million of maturities of short-term investment grade commercial paper, while the decrease in mortgage-backed securities held to maturity was attributable primarily to principal payments received. See Asset and Liability Management.

The Companys total liabilities increased $21.9 million or 5.6% to $412.9 million as of March 31, 2009 from $391.0 million as of June 30, 2008. The $21.9 million increase in total liabilities was primarily comprised of a $47.1 million or 58.4% increase in Federal Reserve Bank short-term borrowings, which was partially offset by a $15.1 million or 75.5% decrease in other short-term borrowings, a $5.5 million or 4.1% decrease in FHLB long-term advances, a $3.4 million or 2.3% decrease in total savings deposits, a $727 thousand or 23.4% decrease in other liabilities, and a $358 thousand or 23.3% decrease in accrued interest payable. The

Total stockholders equity decreased $1.1 million or 3.4% to $31.0 million as of March 31, 2009, from approximately $32.1 million as of June 30, 2008. Capital expenditures for the Companys stock repurchase program and cash dividends totaled $2.4 million and $1.0 million, respectively, which were partially offset by net income of $2.4 million for the nine months ended March 31, 2009. Book value per share increased to $14.94 at March 31, 2009 from $14.44 at June 30, 2008.

General. WVS reported net income of $582 thousand or $0.28 earnings per share (basic and diluted) and $2.4 million or $1.09 earnings per share (basic and diluted) for the three and nine months ended March 31, 2009, respectively. Net income decreased by $380 thousand or 39.5% and earnings per share (basic and diluted) decreased $0.15 or 34.9% for the three months ended March 31, 2009, when compared to the same period in 2008. The decrease in net income was primarily attributable to a $513 thousand decrease in net interest income and a $71 thousand increase in the provision for loan losses, which were partially offset by a $185 thousand decrease in income tax expense, a $16 thousand decrease in non-interest expense, and a $3 thousand increase in non-interest income. For the nine months ended March 31, 2009, net income decreased $683 thousand or 22.6% when compared to the same period in 2008. The decrease in net income was primarily attributable to a $954 thousand decrease in net interest income, a $99 thousand increase in the provision for loan losses, and a $20 thousand increase in non-interest expense, which were partially offset by a $366 thousand decrease in income tax expense and a $24 thousand increase in non-interest income.

Funds used for investing activities totaled $20.3 million during the nine months ended March 31, 2009. Primary uses of funds during the nine months ended March 31, 2009, included purchases of investments, certificates of deposit and FHLB stock totaling $173.3 million, $27.1 million and $13.2 million, respectively, and a $2.5 million increase in net loans receivable, which were partially offset by maturities and repayments of investment securities, mortgage-backed securities, FHLB stock and certificates of deposit totaling $163.2 million, $14.5 million, $9.3 million, and $8.9 million, respectively. Short-term investment grade commercial paper purchases, included in investment securities purchases, totaled $85.1 million; and maturities of short-term commercial paper totaled $90.9 million. Fixed rate U.S. Government agency bonds purchased during the period totaled $41.8 million, while early redemptions by issuers of fixed-rate callable U.S. Government agency bonds during the nine months totaled $61.4 million.

Funds provided by financing activities totaled $19.5 million for the nine months ended March 31, 2009. The primary sources included a $47.1 million increase in FRB short-term borrowings which was partially offset by a $15.1 million decrease in other short-term borrowings, a $5.5 million decrease in FHLB long-term advances, a $3.6 million decrease in deposits, $2.4 million in treasury stock purchases and $1.0 million in cash dividends paid on the Companys common stock. The increase in FRB short-term borrowings reflects lower short-term rates available through the FRB compared to other short-term funding sources. The $3.6 million decrease in total deposits consisted of a $5.4 million decrease in time deposits, and a $239 thousand decrease in mortgage escrow accounts, which were partially offset by a $1.4 million increase in money market deposits, a $551 thousand increase in demand deposits and a $255 thousand increase in passbook accounts. The decrease in time deposits may be attributable to customer transfers into money market accounts and to possible other financial alternatives. The increase in money market balances may be attributable to lower market yields on certificates of deposits and increased liquidity preferences by depositors in response to unsettled financial markets. The decrease in escrow accounts was due primarily to the payments of local property taxes by and for customers. Management believes that it currently is maintaining adequate liquidity and continues to match funding sources with lending and investment opportunities.

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