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Oconee Federal Financial Corp. Announces Three and Six Month Financial Results



  Oconee Federal Financial Corp. Announces Three and Six Month Financial
  Results

Business Wire

SENECA, S.C. -- January 31, 2013

Oconee Federal Financial Corp. (Nasdaq: OFED) (the “Company”), is the holding
company for Oconee Federal Savings and Loan Association (the “Association”),
today announced net income of $1.1 million or $0.18 per diluted share for the
three months ended December 31, 2012, compared to net income of $901,000, or
$0.15 per diluted share, for the three months ended December 31, 2011. The
Company had net income of $2.1 million, or $0.34 per diluted share, for the
six months ended December 31, 2012, compared to net income of $1.9 million, or
$0.31 per diluted share for the same period in 2011.

2013 Three and Six Months Ended Highlights:

  * Continued strong asset quality metrics such as low nonperforming loans to
    total loans and nonperforming assets to total assets
  * Decline of $379,000, or 44.4% of our real estate owned
  * Decline in our provision for real estate owned and other related expenses
    of $177,000 and $283,000 for the three and six months ended December 31,
    2012, respectively
  * Quarterly dividends of $.10 per share of common stock declared during both
    the three months ended September 30, 2012 and December 31, 2012
  * Repurchased 163,200 shares of common stock

“Despite the low interest rate environment, we continue to realize strong net
interest spreads and interest rate margins on our interest earning assets,”
stated T. Rhett Evatt, President and Chief Executive Officer. “Our business
continues to provide favorable results as we focus our lending efforts on
one-to-four family residential mortgages in our market areas. We work hard to
provide superior customer service and to build long-term customer
relationships, and we continue to adhere to our conservative underwriting
policies, which we believe are the primary reason for our solid asset quality
metrics.”

Interest income decreased to $3.5 million for the three months ended December
31, 2012 from $3.9 million for the three months ended December 31, 2011. The
decrease was primarily the result of a decrease in the average yield on
interest earning assets to 3.81% for the three months ended December 31, 2012
from 4.20% for the three months ended December 31, 2011, which offset the
increase in the balance of our average interest-earning to $366.9 million from
$364.9 for the same periods. Interest expense decreased to $568,000 for the
three months ended December 31, 2012 from $842,000 for the three months ended
December 31, 2011. The decrease reflected a decrease in the average rate paid
on deposits in the three months ended December 31, 2012 to 0.78% from 1.15% in
the three months ended December 31, 2011 and a decrease in the average
balances of deposits of $2.4 million, or 0.82%, to $287.1 million for the
three months ended December 31, 2012 from $289.4 million for the three months
ended December 31, 2011.

Net interest income was $2.9 million for the three months ended December 31,
2012 compared to $3.0 million for the same period 2011. Net interest margin
for second quarter 2012 was 3.20%, down 9 basis points from 3.29% for the
second quarter 2011. This decrease reflected both a 16 basis-point decrease in
the average yield earned on the loan portfolio and a 26 basis-point decrease
on the average yield earned on the investment portfolio. These decreases in
average yields on loans and investments were partially offset by a 37
basis-point decline in the average rate paid on interest bearing deposits. The
decrease in the net interest margin for the three months ended December 31,
2012 as compared to the same period in 2011 is due to the continuing low
interest rate environment.

Interest income decreased to $7.2 million for the six months ended December
31, 2012 from $7.7 million for the six months ended December 31, 2011. The
decrease was primarily the result of a decrease in the average yield on
interest earning assets to 3.87% for the six months ended December 31, 2012
from 4.21% for the six months ended December 31, 2011, which offset the
increase in the average balance of interest-earning assets to $367.7 million
from $364.4 million for the same periods. Interest expense decreased to $1.2
million for the six months ended December 31, 2012 from $1.8 million for the
six months ended December 31, 2011. The decrease reflected a decrease in the
average rate paid on deposits in the six months ended December 31, 2012 to
0.82% from 1.23% in the six months ended December 31, 2011 and a decrease in
the average balances of deposits of $440,000, or 0.15%, to $288.3 million for
the six months ended December 31, 2012 from $288.7 million for the six months
ended December 31, 2011.

Net interest income was $6.0 million for the six months ended December 31,
2012 compared to $5.9 million for the same period 2011. Net interest margin
for the six months ended December 31, 2012 was 3.23%, down 1 basis-point from
3.24% for the six months ended December 31, 2011. This result reflected both a
12 basis-point decrease in the average yield earned on the loan portfolio and
an 18 basis-point decrease on the average yield earned on the investment
portfolio. These decreases in average yields on loans and investments were
more than offset by a 41 basis-point decline in the average rate paid on
interest bearing deposits. The decrease in the net interest margin for the six
months ended December 31, 2012 as compared to the same period in 2011 is due
to the continuing low interest rate environment.

Noninterest income for the three month and six months ended December 31, 2012
decreased by $9,000 and $16,000, respectively. The decrease for the three
month period was primarily related to a decrease in the gain on sales of real
estate owned of $25,000 from the same period in 2011, which is the result of
the decreased level of foreclosed real estate properties. This decrease was
partially offset by an increase of $14,000 on gains on sales of securities
compared to the same period in 2011. The $16,000 decrease for the six months
ended December 31, 2012 was primarily attributed to a decrease of $53,000 in
gain on sales of securities from the same period in 2011, which was partially
offset by an increase in gain on sales of real estate owned.

Non-interest expense for the three and six months ended December 31, 2012
decreased by $202,000 and $296,000, respectively. The decreases are primarily
reflective of the decrease in our provision for real estate owned and related
expenses of $177,000 and $283,000 for the three and six months ended December
31, 2012, respectively, over the same periods in 2011. The decrease in these
expenses is a reflection of the continued decline in foreclosed real estate
assets due to improving credit quality in our loan portfolio and slight
improvements in residential real estate values. With a decline in the level of
our foreclosed properties, our costs to maintain those properties have
declined. We also experienced decreases in data processing, professional and
supervisory, and office expenses for both the three and six months ended
December 31, 2012 from the same period in 2011.

We recorded a negative provision for loan losses of $64,000 for the three
months ended December 31, 2012, compared to a provision of $114,000 for the
three months ended December 31, 2011. Net charge-offs for the three months
ended December 31, 2012 were $0 compared to $101,000 for the three months
ended December 31, 2011. The provision for loan losses for the six months
ended December 31, 2012 was $76,000 compared to a provision of $142,000 for
the six months ended December 31, 2011. Net charge-offs for the six months
ended December 31, 2012 were $67,000 compared to $155,000 for the six months
ended December 31, 2011. The decrease in our provision and net charge offs is
reflective of the continued improvement of our loan portfolio and the overall
decline in gross loans. Total gross loans have decreased to $235.4 million at
December 31, 2012 from $252.2 million at June 30, 2012 and $260.0 million at
December 31, 2011.

Our asset quality metrics remain strong. Non-performing loans as a percent of
total loans increased slightly to 1.15% at December 31, 2012 from 0.91% at
June 30, 2012. Our allowance for loan losses as a percentage of total loans
was 0.37% at December 31, 2012 compared to 0.34% at June 30, 2012, and our
allowance for loan losses as a percentage of nonperforming loans at December
31, 2012 was 32.1% compared to 37.23% at June 30, 2012.

Our total assets decreased $2.8 million, or 0.75%, to $374.9 million at
December 31, 2012 from $377.8 million at June 30, 2012. A substantial portion
of this decrease was related to a decrease in net loans of $16.6 million, or
6.7%, offset partially by an increase in securities available-for-sale of
$12.3 million, or 19.1%, and an increase in total cash and cash equivalents of
$2.5 million, or 5.2%. Funds from loan repayments and payoffs were used, to
some extent, to purchase high-quality investment securities, which we have
classified as available-for-sale. The continued decline in outstanding loans
is the result of the continued decline of loan demand in our market area. The
decline in total assets is also reflective of a decline in total deposits of
$1.9 million, or 0.66% and the repurchase of 163,200 shares of common stock
for $2.5 million. Total equity equaled $81.8 million at December 31, 2012,
compared to $83.0 million at June 30, 2012. The decrease of $1.2 million was
primarily related to the repurchase of common shares for $2.5 million and the
payment of dividends of $1.2 million, offset partially by net income of $2.1
million and other comprehensive income of $201,000.

Cash Dividend Declared

The Company’s Board of Directors declared $0.10 per share cash dividends on
its common stock on July 26 and October 25, 2012. Dividends were paid to
stockholders of record as of August 9 and November 8, 2012, respectively.
Dividend payments totaling $825,000 were also made to Oconee Federal, MHC,
which owned 4,127,040 of the shares outstanding at each of those dates. Total
dividends paid for the six months ended December 31, 2012 were $1.2 million.

Stock Repurchase Program

During the three months ended December 31, 2012, the Company repurchased
163,200 shares of its common stock at a purchase price of $15.54 per share
pursuant to the Company’s authorized stock repurchase program, approved by the
Board of Directors on December 20, 2012. Under this program, the Company
intends to purchase up to $1,000,000 of shares of its issued and outstanding
common stock. The timing of the purchases will depend on certain factors,
including but not limited to, market conditions and prices, available funds
and alternative uses of capital.

In connection with the December 20, 2012 stock repurchase program, the Board
of Directors of the Company terminated the Company’s existing stock repurchase
program, which had authorized the Company to purchase up to 125,000 shares of
its issued and outstanding common stock. The Company had previously purchased
a total of 124,649 shares of its common stock at a weighted average price of
$15.24 per share under the existing stock repurchase program.

About Oconee Federal

Oconee Federal Financial Corp. (NASDAQ Capital Market: OFED) is the holding
company of Oconee Federal Savings and Loan Association. Oconee Federal Savings
and Loan Association is a federally chartered savings and loan association
founded in 1924 and headquartered in Seneca, South Carolina. Oconee Federal
Savings and Loan Association is a community oriented financial institution
operating four full-service branch locations in Oconee County, South Carolina.
The Association had total assets of $374.2 million and total deposits of
$299.1 million as of December 31, 2012.

Safe-Harbor

This release contains certain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 that are based on current
expectations, estimates and projections about the Company’s and the
Association’s industry, and management’s beliefs and assumptions. Words such
as anticipates, expects, intends, plans, believes, estimates and variations of
such words and expressions are intended to identify forward-looking
statements. Such statements are not guarantees of future performance and are
subject to certain risks, uncertainties and assumptions that are difficult to
forecast. Therefore, actual results may differ materially from those expressed
or forecast in such forward-looking statements. The Company and Association
undertake no obligation to update publicly any forward-looking statements,
whether as a result of new information or otherwise.

Oconee Federal Financial Corp.
Selected Financial Information
 
 
                                                December 31,   June 30,
                                                    2012       2012
                                                (Dollars in thousands)
                                                                              
Financial condition data:                       (Unaudited)
Total assets                                    $   374,921    $     377,753
Investment securities                               85,181           73,273
Loans receivable, net                               233,184          249,832
Deposits                                            291,418          293,368
Total equity                                        81,830           82,984
                                                                              
Condition ratios:                               (Unaudited)
Total equity to total assets                        21.83    %       21.97   %
Total capital to risk weighted assets               43.98    %       45.25   %
Tier I capital to risk weighted assets              44.44            44.74
Tier I capital to adjusted total assets             18.89            19.94
Total nonperforming loans to total                  1.15     %       0.91    %
loans
Total nonperforming assets to total                 0.85             0.84
assets
Total nonperforming assets to loans and             1.35             1.25
real estate owned
Allowance for loan losses as a                      0.37             0.34
percentage of total loans
Allowance for loan losses as a                      32.10            37.23
percentage of nonperforming loans

                     For the Three Months Ended    For the Six Months Ended
                     December 31,   December 31,   December 31,   December 31,
                     2012           2011           2012           2011
                     (Dollars in thousands, except per share amounts)
                                                                             
Operating data:      (Unaudited)
Interest and         $  3,527       $    3,867     $    7,182     $  7,738
dividend income
Interest expense        568              842            1,193        1,788   
Net interest income     2,959            3,025          5,989        5,950
Provision for loan      (64    )         114            76           142     
losses
Non-interest income     52               61             136          152
Non-interest            1,312            1,514          2,601        2,897
expenses
Income before income    1,763            1,458          3,448        3,063   
taxes
Income taxes            656              557            1,326        1,187   
Net income           $  1,107       $    901       $    2,122     $  1,876   
                                                                             
Basic net income per $  0.18        $    0.15      $    0.35      $  0.31
share
Diluted net income   $  0.18        $    0.15      $    0.34      $  0.31
per share
Dividends declared   $  0.10        $    0.10      $    0.20      $  0.10
per share
                                                                             
Performance ratios:  (Unaudited)
Return on average       1.17      %      0.95    %      1.12    %    0.99   %
assets
Return on average       5.33             4.39           5.10         4.61
equity
Interest rate spread    3.03             3.05           3.05         2.98
Net interest margin     3.20             3.29           3.23         3.24
Average
interest-earning
assets to
average
interest-bearing        1.28      x      1.26    x      1.28    x    1.26   x
liabilities

Contact:

Oconee Federal Financial Corp.
Investor/Media Contact:
Curtis T. Evatt, 864-882-2765
Chief Financial Officer
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