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

May 14, 2010 | About:
10qk

10qk

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WVS Financial Corp. (WVFC) filed Quarterly Report for the period ended 2010-03-31.

Wvs Financial Corp. has a market cap of $28.5 million; its shares were traded at around $13.95 with a P/E ratio of 32.1 and P/S ratio of 1.6. The dividend yield of Wvs Financial Corp. stocks is 4.6%. Wvs Financial Corp. had an annual average earning growth of 1.9% over the past 10 years.

Highlight of Business Operations:

The Companys assets totaled $377.2 million at March 31, 2010, as compared to $419.4 million at June 30, 2009. The $42.2 million or 10.1% decrease in total assets was primarily comprised of a $37.0 million or 21.3% decrease in mortgage-backed securities (MBS) held to maturity, a $15.4 million or 62.4% decrease in FDIC insured certificates of deposit, an $8.9 million or 40.6% decrease in cash and cash equivalents, and a $493 thousand or 100.0% decrease in investment securities available for sale, which were partially offset by a $17.4 million or 14.1% increase in investment securities held-to-maturity, a $1.6 million or 161.7% increase in deferred taxes and other assets, and a $669 thousand or 1.2% increase in net loans receivables. The decrease in mortgage-backed securities held to maturity was due to paydowns on the Companys mortgage-backed securities portfolio, which were partially offset by the purchase of $15.4 million of floating rate U.S. Government agency Collateralized Mortgage Obligations (CMOs). During the quarter ended March 31, 2010, overall replacement yields on floating rate MBS continued to improve. As a result, the Company chose to reinvest a portion of its cash flows into purchases of U.S. Government agency floating-rate MBSs. The decrease in FDIC insured certificates of deposit was primarily due to $25.2 million in redemptions of bank certificates of deposit which were partially offset by $9.8 million of purchases of bank certificates of deposit. The Company chose to reduce its overall investment in certificates of deposits due to a narrowing of spreads when compared to other investment sectors. The decrease in investment securities available for sale was the result of the sale of an investment with an amortized cost of $500 thousand, during the nine months ended March 31, 2010. The increase in investment securities held to maturity was primarily due to purchases of $33.7 million of fixed rate investment grade corporate bonds, $30.6 million of U.S. Government agency step-up bonds, $4.7 million of floating rate investment grade foreign bonds, $2.0 million of fixed to floating rate U.S. Government agency bonds, $1.0 million of short-term taxable municipal bonds, $1.0 million of floating rate investment grade corporate bonds, $900 thousand of tax-free municipal bonds, $760 thousand of callable fixed rate U.S. Government agency bonds and $418 thousand of floating rate investment grade foreign bonds, which were partially offset by $30.8 million of issuer redemptions prior to maturity (i.e. calls) of U.S. Government agency bonds, $18.1 million of maturities and calls of investment

The Companys total liabilities decreased $40.2 million or 10.4% to $348.1 million as of March 31, 2010 from $388.3 million as of June 30, 2009. The $40.2 million decrease in total liabilities was primarily comprised of a $53.9 million or 49.5% decrease in short-term Federal Reserve Bank borrowings, a $321 thousand decrease in other liabilities, and a $202 thousand decrease in accrued interest payable, which were partially offset by a $10.0 million increase in FHLB short-term advances and a $4.2 million increase in total savings deposits. The decrease in FRB short-term borrowings was funded primarily by a planned reduction of cash equivalents and investment cash flows received during the nine months ended March 31, 2010. The increase in short-term FHLB advances was primarily attributable to more attractive borrowing rates with the Federal Home Loan Bank of Pittsburgh. Certificates of deposit increased $2.4 million, savings accounts increased $2.0 million and demand deposits increased $829 thousand, while money market accounts decreased $756 thousand and advance payments by borrowers for taxes and insurance decreased $234 thousand. The increase in certificates of deposits is a result of certificates of deposit for a local government and school districts issued during the quarter. The increase in demand deposits and savings accounts may reflect a shift in consumer preference to more liquid savings options. Management believes that the changes in advance payments by borrowers for taxes and insurance were primarily attributable to seasonal payments of local, county and school real estate taxes.

General. WVS reported net income of $74 thousand or $0.04 earnings per share (basic and diluted) and $378 thousand or $0.18 earnings per share (basic and diluted) for the three and nine months ended March 31, 2010, respectively. Net income decreased by $508 thousand or 87.3% and earnings per share (basic and diluted) decreased $0.24 or 85.7% for the three months ended March 31, 2010, when compared for the same period in 2009. The decrease in net income was primarily attributable to a $686 thousand decrease in net interest income, a $102 thousand decrease in non-interest income, and a $48 thousand increase in non-interest expense, which were partially offset by a $310 thousand decrease in income tax expense, and a $18 thousand decrease in provisions for loan losses. For the nine months ended March 31, 2010, net income decreased $2.0 million or 83.9% and earnings per share (basic and diluted) decreased $0.91 or 83.5% when compared to the same period in 2009. The decrease in net income was primarily attributable to a $3.0 million decrease in net interest income and a $139 thousand decrease in non-interest income, which were partially offset by a $1.0 million decrease in income tax expense, a $50 thousand decrease in non-interest expense and a $45 thousand decrease in provision for loan losses.

Non-Interest Expense. Non-interest expense increased $48 thousand or 5.8% and decreased $50 thousand or 1.8% for the three and nine months ended March 31, 2010, respectively, when compared to the same periods in 2009. The increase for the three months ended March 31, 2010 was principally attributable to a $76 thousand increase in Federal Deposit Insurance expense, which was partially offset by an $18 thousand decrease in ATM network expenses, a $5 thousand decrease in correspondent bank service charges and a $4 thousand decrease in employee related expenses when compared to the same period in 2009. The decrease for the nine months ended March 31, 2010 was primarily attributable to $109 thousand decrease in charitable contributions eligible for PA tax credits, a $98 thousand decrease in employee related expenses, a $43 thousand decrease in ATM network expenses, and an $11 thousand decrease in occupancy and equipment expenses, which were partially offset by a $215 thousand increase in Federal Deposit Insurance expense.

Funds provided by investing activities totaled $31.5 million during the nine months ended March 31, 2010. Primary sources of funds during the nine months ended March 31, 2010, included maturities, sales and repayments of investment securities, mortgage-backed securities and certificates of deposit totaling $57.4 million, $50.4 million and $25.2 million, respectively, which were partially offset by purchases of investments, mortgage-backed securities and certificates of deposit totaling $75.4 million, $15.5 million and $9.8 million, respectively, a $725 thousand increase in net loans receivable and an $80 thousand increase for acquisitions of equipment.

Funds used for financing activities totaled $41.1 million for the nine months ended March 31, 2010. The primary uses included a $53.9 million decrease in short-term FRB borrowings, $992 thousand in cash dividends paid on the Companys common stock, and $124 thousand in treasury stock purchases, which were partially offset by a $10.0 million increase in FHLB short-term advances and a $3.9 million increase in total deposits. The decrease in FRB short-term borrowings reflects paydowns on the borrowings through investment and financing and a planned reduction of cash equivalent balances. The increase in FHLB short-term advances is a result of more favorable short-term borrowing rates offered by the FHLB. The $3.9 million increase in total deposits consisted of a $2.4 million increase in time deposits, a $2.0 million increase in passbook accounts, and a $829 thousand increase in demand deposits, which were partially offset by a $756 thousand decrease in money market accounts, and a $234 thousand decrease in mortgage escrow accounts. The increase in time deposits is primarily attributable to certificates opened by local government units and school districts. The changes in passbook savings, may reflect lower market rates on certificates and a shift in consumer preferences to more liquid savings options. The decreases in escrow accounts were 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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