BREMERTON, Wash., Oct. 23, 2007 (PRIME NEWSWIRE) -- WSB Financial Group (Nasdaq:WSFG), the parent company of Westsound Bank, today reported preliminary third quarter 2007 earnings of $1.3 million, compared to $1.1 million in the third quarter a year ago, and year-to-date net income grew to $3.8 million, compared to $3.1 million a year ago. Earnings per diluted share totaled $0.21 per diluted share, compared to the pre-IPO EPS of $0.36 per diluted share, a year ago. Year-to-date, EPS was $0.64 per diluted share, compared to $0.99 per diluted share in the first nine months of 2006. WSB Financial issued 2.6 million shares in its initial public offering in August 2006.
"Inadvertently, our preliminary financial results for the bank were filed with the FDIC and became publicly available this week. As a result, we are providing preliminary financial results for the company. While the results discussed in this release are accurate as of last Friday, they may change prior to the filing of our 10-Q in November," said David K. Johnson, President and CEO. "In fact, due to the recommendations of our bank regulators, it is likely that we will be adding to our reserves.
"In addition, I am saddened to report that Mark Freeman, our Chief Financial Officer, has requested and been granted a leave of absence due to health concerns. Mark is a valued member of our management team, and we wish him a speedy recovery," said Johnson. "In the meantime, we are seeking an interim Chief Financial Officer."
Third quarter preliminary results show that 38% loan growth and 30% deposit growth fueled a 24% increase in net interest income before provision for loan losses and a 15% increase in revenues compared to a year ago. Net interest margin, while still healthy, fell to 4.83% in the third quarter compared to 5.06% in the second quarter and 5.71% a year ago. Year-to-date net interest margin dropped 82 basis points to 4.98% from 5.80% a year ago. Asset quality declined during the quarter with non-performing loans growing to 0.63% of total loans and non-performing assets increasing to 0.94% of total assets at September 30, 2007.
"In coordination with our regulatory review, we have initiated a thorough review of our loan portfolio and decided to downsize our mortgage operation," Johnson said. "In the course of these reviews, certain deficiencies in our origination, administration and servicing of certain lending products were identified. We expect the regulators to follow up with further regulatory actions. Until the finalization of the regulatory exam, however, we are not able to quantify the requirements they may have.
We have also identified a number of loans that fall into the 30 to 89 day past due category, and placed some of these loans on nonaccrual status and boosted our reserves for loan losses. Based on the preliminary results, the allowance for loan losses grew 34% to $5.0 million at September 30, 2007, from $3.7 million a year ago. The allowance for loan losses represents 186% of non-performing loans and 1.17% of total loans as of the end of the third quarter.
WSB Financial remains well capitalized with equity to assets of 13.8% at September 30, 2007.
WSB Financial expects to report final results for the third quarter of 2007 on November 14, 2007.
ABOUT WSB FINANCIAL GROUP, INC.
WSB Financial Group, Inc., based out of Bremerton, Washington, is the holding company for Westsound Bank and Mortgage. The company was founded in 1999, and currently operates nine full service offices located within 6 contiguous counties within Western Washington. Our website is http://www.westsoundbank.com.
This news release may contains "forward-looking statements" that are subject to risks and uncertainties. These forward-looking statements describe management's expectations regarding future events and developments such as future operating results, growth in loans and deposits, maintenance of the net interest margin, credit quality and loan losses, the efficiency ratio and continued success of the Company's business plan. Readers should not place undue reliance on forward-looking statements, which reflect management's views only as of the date hereof. The words "should," "anticipate," "expect," "will," "believe," and words of similar meaning are intended, in part, to help identify forward-looking statements. Future events are difficult to predict, and the expectations described above are subject to risk and uncertainty that may cause actual results to differ materially. In addition to discussions about risks and uncertainties set forth from time to time in the Company's filing with the Securities and Exchange Commission, factors that may cause actual results to differ materially from those contemplated in these forward-looking statements include, among others: (1) local and national general and economic condition; (2) changes in interest rates and their impact on net interest margin; (3) competition among financial institutions; (4) legislation or regulatory requirements; and (5) success of the Company's expansion efforts. WSB Financial Group, Inc. does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made. Any such statements are made in reliance on the safe harbor protections provided under the Securities Exchange Act of 1934, as amended.
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(Unaudited) Quarter Ended Nine Months Ended
(in thousands ------------- -----------------
except share Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
data) 2007 2007 2006 2007 2006
----------------------------------------------- ---------------------
Interest Income
Interest and
fees on
loans $ 9,826 $ 9,324 $ 7,542 $ 27,493 $ 19,539
Taxable
investment
securities 88 71 68 232 199
Tax exempt
securities 18 19 19 56 57
Federal funds
sold 171 257 48 584 229
Other interest
income 39 44 11 133 67
----------------------------------------------- ---------------------
Total interest
income 10,142 9,715 7,688 28,498 20,091
Interest Expense
Deposits 4,514 4,182 3,107 12,358 7,650
Other borrowings -- -- 5 1 31
Junior
subordinated
debentures 152 150 149 448 417
----------------------------------------------- ---------------------
Total interest
expense 4,666 4,332 3,261 12,807 8,098
Net Interest
Income 5,476 5,383 4,427 15,691 11,993
Provision for
loan losses 497 326 464 1,314 1,267
----------------------------------------------- ---------------------
Net interest
income after
provision for
loan losses 4,979 5,057 3,963 14,377 10,726
Noninterest Income
Service charges
on deposit
accounts 95 96 67 275 181
Other customer
fees 198 233 215 677 612
Net gain on sale
of loans 737 886 941 2,602 2,699
Other income (5) 16 1 47 52
----------------------------------------------- ---------------------
Total
noninterest
income 1,025 1,231 1,224 3,601 3,544
Noninterest
Expense
Salaries and
employee
benefits 2,510 2,576 2,260 7,753 6,246
Premises lease 80 82 87 252 249
Depreciation
expense 206 204 156 603 429
Occupancy and
equipment 150 141 114 459 368
Data and item
processing 167 172 130 490 375
Advertising
expense 59 42 73 155 174
Printing,
stationary and
supplies 38 45 58 143 159
Telephone
expense 26 28 32 83 84
Postage and
courier 43 43 33 125 98
Legal fees 34 71 8 143 33
Director fees 70 66 69 193 231
Business and
occupation taxes 83 84 70 240 204
Other expenses 610 596 356 1,646 952
----------------------------------------------- ---------------------
Total
noninterest
expense 4,076 4,150 3,446 12,285 9,602
Income before
provision for
income taxes 1,928 2,138 1,741 5,693 4,668
Provision for
income taxes 666 708 581 1,919 1,561
----------------------------------------------- ---------------------
Net Income $ 1,262 $ 1,430 $ 1,160 $ 3,774 $ 3,107
=============================================== =====================
Basic Earnings
per Common
Share $ 0.23 $ 0.26 $ 0.42 $ 0.68 $ 1.13
Diluted
Earnings
per Common
Share $ 0.21 $ 0.24 $ 0.36 $ 0.64 $ 0.99
=============================================== =====================
Average Number
of Common
Shares
Outstanding 5,573,089 5,563,887 2,752,163 5,561,844 2,738,775
Fully Diluted
Average Common
Shares
Outstanding 5,885,411 5,926,369 3,203,347 5,933,747 3,149,552
CONSOLIDATED BALANCE SHEETS
---------------------------
(Unaudited) Sept. 30, Dec. 31, Sept. 30,
(in thousands except share data) 2007 2006 2006
---------------------------------------------------------------------
ASSETS
Cash and due from banks $ 8,538 $ 9,048 $ 8,310
Fed funds sold 21,825 17,150 5,500
---------------------------------------------------------------------
Total cash and cash equivalents 30,363 26,198 13,810
Investment securities available
for sale, at fair value 8,700 8,244 8,238
Federal Home Loan Bank stock,
at cost 319 234 234
Loans held for sale 6,650 11,007 5,947
Loans receivable 419,023 333,173 303,834
Less: allowance for loan losses (4,987) (3,972) (3,725)
---------------------------------------------------------------------
Loans, net 414,036 329,201 300,109
Premises and equipment, net 9,496 7,846 6,604
Accrued interest receivable 2,537 1,980 1,638
Other assets 4,096 2,044 1,500
---------------------------------------------------------------------
TOTAL ASSETS $476,197 $386,754 $338,080
=====================================================================
LIABILITIES
Deposits:
Noninterest-bearing $ 27,658 $ 26,864 $ 26,542
Interest-bearing 372,152 288,158 281,524
---------------------------------------------------------------------
Total deposits 399,810 315,022 308,066
Accrued interest payable 1,764 1,109 989
Other liabilities 777 718 562
Junior subordinated debentures 8,248 8,248 8,248
---------------------------------------------------------------------
TOTAL LIABILITIES 410,599 325,097 317,865
STOCKHOLDERS' EQUITY
Common Stock, $1 par value;
15,357,250 shares authorized;
5,574,853 shares issued and
outstanding September 30, 2007,
5,545,673 and 2,884,026 shares
issued and outstanding at
December 31, 2006 and
September 30, 2006, respectively 5,575 5,546 2,884
Additional paid-in capital 48,217 48,089 9,974
Retained earnings 11,828 8,054 7,401
Accumulated other comprehensive loss (22) (32) (44)
---------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 65,598 61,657 20,215
---------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $476,197 $386,754 $338,080
=====================================================================
Financial Statistics
-------------------- Quarter Ended Nine Months Ended
(Unaudited) ------------- -----------------
(in thousands Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
except share data) 2007 2007 2006 2007 2006
-------------------------------------------------- ------------------
Revenues
(Net interest income
plus non-interest
income) $ 6,501 $ 6,614 $ 5,651 $ 19,292 $ 15,537
Averages
Total Assets $464,602 $441,352 $319,347 $435,427 $287,741
Loans and Loans
Held for Sale $424,407 $395,639 $294,759 $394,448 $259,774
Interest Earning
Assets $449,343 $427,049 $307,655 $421,274 $276,318
Deposits $388,079 $366,568 $290,712 $360,866 $259,636
Shareholders'
Equity $ 65,319 $ 63,779 $ 18,872 $ 63,798 $ 17,668
Financial Ratios
-------------------------------------------------- ------------------
Return on Average
Assets 1.08% 1.30% 1.44% 1.16% 1.44%
Return on Average
Equity 7.67% 8.99% 24.40% 7.91% 23.50%
Net Interest Margin 4.83% 5.06% 5.71% 4.98% 5.80%
Efficiency Ratio 62.7% 62.7% 61.0% 63.7% 62.1%
Non-performing
Assets to Total
Assets 0.94% 0.40% 0.00% 0.94% 0.00%
Asset Quality
-------------------- Quarter Ended Nine Months Ended
(Unaudited) ------------- -----------------
(dollars in Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
thousands) 2007 2007 2006 2007 2006
-------------------------------------------------- ------------------
Allowance for Loan
Losses Activity:
Balance of
Beginning of
Period $ 4,492 $ 4,407 $ 3,289 $ 3,972 $ 2,520
Charge-offs (15) (234) (5) (299) (20)
Recoveries -- -- -- -- --
-------------------------------------------------- ------------------
Net Loan Charge-offs (15) (234) (5) (299) (20)
Reclassification of
unfunded credit
commitments 13 (7) (23) -- (42)
Provision for Loan
Losses 497 326 464 1,314 1,267
-------------------------------------------------- ------------------
Balance at End of
Period $ 4,987 $ 4,492 $ 3,725 $ 4,987 $ 3,725
================================================== ==================
Selected Ratios:
Net Charge-offs to
average loans 0.00% 0.06% 0.00% 0.08% 0.01%
Provision for loan
losses to average
loans 0.12% 0.08% 0.16% 0.33% 0.49%
Allowance for loan
losses to total
loans 1.17% 1.10% 1.20% 1.17% 1.20%
Nonperforming Assets:
Non-Accrual loans $ 2,395 $ 201 $ --
Accruing Loans
past due 90 days
or more 282 -- --
-------------------------------------------------
Total
non-performing
loans (NPLs) $ 2,677 $ 201 $ --
Other real estate
owned 1,795 1,605 --
-------------------------------------------------
Total
non-performing
assets (NPAs) $ 4,472 $ 1,806 $ --
Selected Ratios:
NPLs to total
loans 0.63% 0.05% 0.00%
NPAs to total
assets 0.94% 0.40% 0.00%