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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------
FORM 10-Q
---------
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30,2003
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______________ TO _______________
COMMISSION FILE NUMBER 1-14154
GA FINANCIAL,INC.
(Exact name of registrant as specified in its charter)
DELAWARE 25-1780835
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
4750 CLAIRTON BOULEVARD 15236
PITTSBURGH,PENNSYLVANIA (Zip Code)
(Address of principal executive offices)
(412) 882-9946
(Registrant's telephone number,including area code)
NOT APPLICABLE
(Former name,former address,and former fiscal year,if changed since last report)
-------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports),and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark whether the registrant is an accelerated filer (as
defined in rule 12b-2 of the Exchange Act).
Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
5,025,092 shares of common stock,par value $0.01 per share,were outstanding
at October 31,2003.
GA Financial, Inc.
Form 10-Q
September 30, 2003
Contents
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition .............................................1
Consolidated Statements of Income and Comprehensive Income .................................2
Consolidated Statement of Shareholders' Equity .............................................3
Consolidated Statements of Cash Flows ......................................................4
Notes to the Consolidated Financial Statements .............................................5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ......9
Item 3. Quantitative and Qualitative Disclosures About Market Risk ................................15
Item 4. Controls and Procedures ...................................................................16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings .........................................................................17
Item 2. Changes in Securities and Use of Proceeds .................................................17
Item 3. Defaults Upon Senior Securities ...........................................................17
Item 4. Submission of Matters to a Vote of Security Holders .......................................17
Item 5. Other Information .........................................................................17
Item 6. Exhibits and Reports on Form 8-K ..........................................................17
SIGNATURES ..........................................................................................18
1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition
GA Financial, Inc.
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------------
ASSETS
Cash (including interest-earning deposits of $16,779 and $16,415)....................... $ 20,660 $ 21,343
Held for trading securities, at fair value.............................................. -- 129
Available for sale securities, at fair value............................................ 311,877 311,725
Held to maturity securities, at cost.................................................... 2,981 2,951
- ---------------------------------------------------------------------------------------------------------------------------------
Total securities...................................................................... 314,858 314,805
Education loans held for sale........................................................... 806 14,795
Loans (net of deferred fees of $12 and $107)............................................ 502,862 469,273
- ---------------------------------------------------------------------------------------------------------------------------------
Total loans........................................................................... 503,668 484,068
Allowance for loan losses............................................................... (4,362) (3,896)
- ---------------------------------------------------------------------------------------------------------------------------------
Net loans............................................................................. 499,306 480,172
Accrued interest receivable on securities............................................... 1,976 2,323
Accrued interest receivable on loans.................................................... 2,386 3,125
Federal Home Loan Bank stock............................................................ 13,973 12,019
Premises and equipment, net............................................................. 5,975 6,289
Foreclosed assets....................................................................... 37 34
Securities sold, not settled............................................................ 272 992
Prepaid expenses and other assets....................................................... 23,519 16,933
- ---------------------------------------------------------------------------------------------------------------------------------
Total assets.......................................................................... $882,962 $858,035
=================================================================================================================================
LIABILITIES
Noninterest-bearing deposits............................................................ $ 33,507 $ 30,701
Interest-bearing deposits............................................................... 511,902 493,366
- ---------------------------------------------------------------------------------------------------------------------------------
Total deposits........................................................................ 545,409 524,067
Borrowed funds.......................................................................... 230,725 221,575
Advances from customers for taxes, insurance, and other................................. 2,169 2,372
Accrued interest payable................................................................ 5,022 1,620
Other liabilities....................................................................... 5,053 7,860
- ---------------------------------------------------------------------------------------------------------------------------------
Total liabilities..................................................................... 788,378 757,494
- ---------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Preferred stock ($0.01 par value); 1,000,000 shares authorized; 0 shares issued......... -- --
Common stock ($0.01 par value); 23,000,000 shares authorized; 8,900,000 shares issued... 89 89
Additional paid-in capital.............................................................. 86,878 87,209
Retained earnings, substantially restricted............................................. 72,699 70,370
Accumulated other comprehensive income, net of taxes.................................... 3,961 6,973
Unearned employee stock ownership plan (ESOP) shares.................................... (2,551) (2,551)
Unearned stock-based compensation plan (SCP) shares..................................... (305) (296)
Treasury stock, at cost (3,932,773 shares and 3,753,433 shares)......................... (66,187) (61,253)
- ---------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity............................................................ 94,584 100,541
- ---------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity............................................ $882,962 $858,035
=================================================================================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
1
Consolidated Statements of Income and Comprehensive Income
GA Financial, Inc.
(UNAUDITED) (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 2003 2002 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------------
INTEREST INCOME
Loans.................................................................. $ 7,677 $ 8,636 $23,243 $25,477
Securities:
Taxable interest..................................................... 2,997 3,116 9,345 9,499
Nontaxable interest.................................................. 548 659 1,752 2,020
Dividends............................................................ 209 212 659 1,041
Interest-bearing deposits.............................................. 22 116 156 354
- ---------------------------------------------------------------------------------------------------------------------------------
Total interest income................................................ 11,453 12,739 35,155 38,391
- ---------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest-bearing deposits.............................................. 2,945 4,252 10,063 13,192
Borrowed funds......................................................... 2,582 2,705 7,788 8,460
Other.................................................................. 12 8 32 24
- ---------------------------------------------------------------------------------------------------------------------------------
Total interest expense............................................... 5,539 6,965 17,883 21,676
- ---------------------------------------------------------------------------------------------------------------------------------
Net interest income.................................................. 5,914 5,774 17,272 16,715
Provision for loan losses.............................................. 442 135 865 690
- ---------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses.................. 5,472 5,639 16,407 16,025
- ---------------------------------------------------------------------------------------------------------------------------------
NONINTEREST INCOME
Service fees........................................................... 667 704 1,739 1,969
Net gain on sales of available for sale securities..................... 585 202 1,707 193
Writedown of securities................................................ -- -- -- (141)
Net loss on held for trading securities................................ (7) (28) -- (40)
Gain on sales of education loans held for sale......................... -- 47 123 85
Gain on sale of branch................................................. -- -- -- 905
Earnings on bank owned life insurance.................................. 171 147 456 429
Other.................................................................. 13 7 104 27
- ---------------------------------------------------------------------------------------------------------------------------------
Total noninterest income............................................. 1,429 1,079 4,129 3,427
- ---------------------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
Compensation and employee benefits..................................... 2,365 2,286 7,039 6,869
Occupancy.............................................................. 364 366 1,203 1,302
Furniture and equipment................................................ 443 372 1,317 1,100
Marketing.............................................................. 158 179 539 398
Deposit insurance premiums............................................. 16 23 59 70
Loss on closure of branch.............................................. -- -- -- 208
Other.................................................................. 1,171 1,051 3,417 3,263
- ---------------------------------------------------------------------------------------------------------------------------------
Total noninterest expense............................................ 4,517 4,277 13,574 13,210
- ---------------------------------------------------------------------------------------------------------------------------------
Income before provision for income taxes............................. 2,384 2,441 6,962 6,242
- ---------------------------------------------------------------------------------------------------------------------------------
Provision for income taxes........................................... 639 617 1,774 1,412
- ---------------------------------------------------------------------------------------------------------------------------------
Net income........................................................... $ 1,745 $ 1,824 $ 5,188 $ 4,830
=================================================================================================================================
OTHER COMPREHENSIVE INCOME
Unrealized holding (losses) gains on available for sale
securities, net of taxes $(2,166) $ 2,315 $(1,475) $ 4,891
Reclassification adjustment for net gains included in net income....... (632) (143) (1,537) (37)
- ---------------------------------------------------------------------------------------------------------------------------------
Other comprehensive (loss) gain...................................... (2,798) 2,172 (3,012) 4,854
- ---------------------------------------------------------------------------------------------------------------------------------
Comprehensive (loss) income.......................................... $(1,053) $ 3,996 $ 2,176 $ 9,684
=================================================================================================================================
EARNINGS PER SHARE
Basic..................................................................... $ 0.37 $ 0.37 $ 1.09 $ 0.96
Diluted................................................................... $ 0.36 $ 0.36 $ 1.05 $ 0.94
Average Shares Outstanding
Basic..................................................................... 4,716,850 4,974,992 4,754,610 5,018,741
Diluted................................................................... 4,888,942 5,106,847 4,918,066 5,134,512
=================================================================================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
2
Consolidated Statement of Shareholders' Equity (Unaudited)
GA Financial, Inc.
ACCUMULATED
OTHER TOTAL
ADDITIONAL COMPRE- UNEARNED UNEARNED SHARE-
COMMON PAID- RETAINED HENSIVE ESOP SCP TREASURY HOLDERS'
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) STOCK IN CAPITAL EARNINGS INCOME SHARES SHARES STOCK EQUITY
- ---------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2002..................... $89 $87,209 $70,370 $6,973 $(2,551) $(296) $(61,253) $100,541
Net income ................................... -- -- 5,188 -- -- -- -- 5,188
Other comprehensive loss, net of tax(1)....... -- -- -- (3,012) -- -- -- (3,012)
Cash dividends paid ($0.60 per share)......... -- -- (2,859) -- -- -- -- (2,859)
Stock repurchased............................. -- -- -- -- -- -- (5,518) (5,518)
SCP, net of tax:
Stock options exercised..................... -- (387) -- -- -- -- 530 143
Stock awards granted........................ -- 56 -- -- -- (155) 101 2
Stock awards forfeited...................... -- -- -- -- -- 47 (47) --
Stock awards expensed....................... -- -- -- -- -- 99 -- 99
- ---------------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 2003.................... $89 $86,878 $72,699 $3,961 $(2,551) $(305) $(66,187) $94,584
=================================================================================================================================
(1) Other comprehensive loss for the nine months ended September 30, 2003 is
net of a tax benefit of $1,768.
The accompanying notes are an integral part of the consolidated financial
statements.
3
Consolidated Statements of Cash Flows
GA Financial, Inc.
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30,
(DOLLARS IN THOUSANDS) 2003 2002
- ----------------------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income................................................................................... $ 5,188 $ 4,830
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses................................................................. 865 690
Depreciation.............................................................................. 671 720
Net (gain) loss on disposal of premises and equipment..................................... (9) 189
Net premium amortization (discount accretion) on securities............................... 1,567 (86)
Amortization of net deferred loan fees.................................................... 95 36
Amortization of intangibles............................................................... 127 139
Net loss on held for trading securities................................................... -- 40
Net gain on sales of available for sale securities........................................ (1,707) (193)
Writedown of securities................................................................... -- 141
Gain on sales of education loans held for sale............................................ (123) (85)
Net gain on sales of foreclosed assets.................................................... (4) (70)
Expense recognition of ESOP shares........................................................ 972 700
Expense recognition of SCP shares......................................................... 99 94
Decrease (increase) in accrued interest receivable........................................ 1,086 (100)
Increase in bank owned life insurance..................................................... (456) (429)
(Increase) decrease in prepaid expenses and other assets.................................. (6,257) 162
Net (decrease) increase in other liabilities.............................................. (1,894) 268
Increase in accrued interest payable...................................................... 3,402 3,790
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities............................................... 3,622 10,836
- ----------------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Proceeds from sales of available for sale securities...................................... 79,434 82,145
Repayments and maturities of available for sale securities................................ 110,383 180,322
Purchases of available for sale securities................................................ (193,790) (213,630)
Proceeds from sales of education loans held for sale...................................... 16,356 6,446
Funding of education loans held for sale.................................................. (2,244) (5,837)
Purchases of loans........................................................................ (77,348) (38,152)
Net decrease in loans..................................................................... 43,191 6,707
Proceeds from sale of premises and equipment.............................................. 9 8
Purchases of premises and equipment....................................................... (357) (321)
Proceeds from sales of foreclosed assets.................................................. 75 496
(Purchase) redemption of FHLB stock....................................................... (1,954) 1,350
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by investing activities..................................... (26,245) 19,534
- ----------------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net increase in noninterest and interest-bearing deposits................................. 37,643 19,913
Net decrease in certificates of deposit................................................... (16,301) (27,900)
Payments on borrowed funds................................................................ (442,335) (158,000)
Proceeds from borrowed funds.............................................................. 451,485 150,000
Cash dividends paid....................................................................... (2,859) (2,702)
Net decrease in advances from customers for taxes, insurance, and other................... (203) (256)
Purchases of treasury stock............................................................... (5,518) (3,246)
Increase (decrease) in other stock transactions........................................... 28 (341)
- ----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities..................................... 21,940 (22,532)
- ----------------------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents......................................... (683) 7,838
- ----------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of period............................................. 21,343 29,859
- ----------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period................................................... $ 20,660 $ 37,697
==================================================================================================================================
The accompanying notes are an integral part of the consolidated financial
statements.
4
Notes to the Consolidated Financial Statements (Unaudited)
GA Financial, Inc.
NOTE 1. BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
GA Financial,Inc.(the "Company") and its subsidiaries, Great American Federal
(the "Bank") and New Eagle Capital,Inc.,and the Bank's wholly owned
subsidiaries,GA Financial Strategies,LLC, Steel City Investments,Inc.,and Great
American Financial Services,Inc. Intercompany accounts and transactions have
been eliminated in consolidation.
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of income and expenses during the reporting period.Actual
results could differ from those estimates.
In the opinion of the management of the Company,the accompanying
consolidated financial statements include all normal recurring adjustments
necessary for a fair presentation of the financial position and results of
operations for the periods presented.Certain information and note disclosures
normally included in financial statements presented in accordance with
accounting principles generally accepted in the United States of America have
been condensed or omitted.For comparative purposes, reclassifications have been
made to certain amounts previously reported to conform with the current period
presentation in the consolidated financial statements.It is suggested that the
accompanying consolidated financial statements be read in conjunction with the
Company's 2002 Annual Report to Shareholders and Annual Report on Form 10-K.
NOTE 2. SUBSIDIARY/SEGMENT REPORTING
The consolidated operating results of GA Financial,Inc.are presented as a
single financial services segment.GA Financial,Inc.is the parent company of
Great American Federal,a community bank and the Company's principal
subsidiary,New Eagle Capital,Inc.,an investment company,and the Bank's wholly
owned subsidiaries,GA Financial Strategies,LLC, which provides wealth management
services,Steel City Investments,Inc., established in December 2002 to hold and
manage investment securities, and Great American Financial
Services,Inc.,currently inactive.GA Financial,Inc.and New Eagle Capital,Inc.,and
the Bank's wholly owned subsidiary Steel City Investments,Inc.are incorporated
in the state of Delaware.Great American Federal,is a federally chartered savings
and loan institution while its wholly owned subsidiaries,GA Financial
Strategies,LLC, and Great American Financial Services,Inc.are incorporated in
the state of Pennsylvania.
The following table sets forth selected financial data for the Company's
subsidiaries,parent company,and consolidated results:
(DOLLARS IN THOUSANDS)
- ----------------------------------------------------------------------------------------------------------------------------------
GREAT
AMERICAN NEW EAGLE GA FINANCIAL, INC. NET
SEPTEMBER 30, 2003 FEDERAL CAPITAL, INC. (PARENT COMPANY) ELIMINATIONS CONSOLIDATED
- ----------------------------------------------------------------------------------------------------------------------------------
Assets............................................. $874,598 $45,796 $ 92,708 $(130,140) $882,962
Liabilities........................................ 787,707 2,581 (1,876) (34) 788,378
Shareholders' equity............................... 86,891 43,215 94,584 (130,106) 94,584
==================================================================================================================================
December 31, 2002
- ----------------------------------------------------------------------------------------------------------------------------------
Assets............................................. $842,594 $43,436 $129,297 $(157,292) $858,035
Liabilities........................................ 757,256 1,769 28,756 (30,287) 757,494
Shareholders' equity............................... 85,338 41,667 100,541 (127,005) 100,541
==================================================================================================================================
THREE MONTHS ENDED SEPTEMBER 30, 2003
- ----------------------------------------------------------------------------------------------------------------------------------
Interest income.................................... $ 11,361 $ 463 $ 67 $ (438) $ 11,453
Interest expense................................... 5,606 -- 371 (438) 5,539
Provision for loan losses.......................... 442 -- -- -- 442
Noninterest income................................. 1,404 17 8 -- 1,429
Noninterest expense................................ 4,255 12 250 -- 4,517
Provision (benefit) for income taxes............... 665 160 (186) -- 639
Net income (loss).................................. 1,797 308 (360) -- 1,745
==================================================================================================================================
NINE MONTHS ENDED SEPTEMBER 30, 2003
- ----------------------------------------------------------------------------------------------------------------------------------
Interest income.................................... $ 34,799 $ 1,400 $ 201 $ (1,245) $ 35,155
Interest expense................................... 18,084 -- 1,044 (1,245) 17,883
Provision for loan losses.......................... 865 -- -- -- 865
Noninterest income................................. 3,683 421 25 -- 4,129
Noninterest expense................................ 12,953 38 583 -- 13,574
Provision (benefit) for income taxes............... 1,646 606 (478) -- 1,774
Net income (loss).................................. 4,934 1,177 (923) -- 5,188
==================================================================================================================================
5
Notes to the Consolidated Financial Statements (Unaudited)
GA Financial, Inc.
(DOLLARS IN THOUSANDS)
- ----------------------------------------------------------------------------------------------------------------------------------
GREAT
AMERICAN NEW EAGLE GA FINANCIAL, INC. NET
SEPTEMBER 30, 2002 FEDERAL CAPITAL, INC. (PARENT COMPANY) ELIMINATIONS CONSOLIDATED
- ----------------------------------------------------------------------------------------------------------------------------------
Assets............................................. $841,438 $42,910 $123,454 $(149,119) $858,683
Liabilities........................................ 757,989 1,587 22,934 (24,347) 758,163
Shareholders' equity............................... 83,449 41,323 100,520 (124,772) 100,520
==================================================================================================================================
THREE MONTHS ENDED SEPTEMBER 30, 2002
- ----------------------------------------------------------------------------------------------------------------------------------
Interest income.................................... $ 12,588 $ 447 $ 83 $ (379) $ 12,739
Interest expense................................... 7,048 -- 296 (379) 6,965
Provision for loan losses.......................... 135 -- -- -- 135
Noninterest income................................. 1,305 (235) 9 -- 1,079
Noninterest expense................................ 4,184 15 78 -- 4,277
Provision (benefit) for income taxes............... 646 63 (92) -- 617
Net income (loss).................................. 1,880 134 (190) -- 1,824
==================================================================================================================================
NINE MONTHS ENDED SEPTEMBER 30, 2002
- ----------------------------------------------------------------------------------------------------------------------------------
Interest income.................................... $ 37,938 $ 1,287 $ 248 $ (1,082) $ 38,391
Interest expense................................... 21,924 -- 834 (1,082) 21,676
Provision for loan losses.......................... 690 -- -- -- 690
Noninterest income................................. 3,705 (303) 25 -- 3,427
Noninterest expense................................ 12,771 49 390 -- 13,210
Provision (benefit) for income taxes............... 1,416 313 (317) -- 1,412
Net income (loss).................................. 4,842 622 (634) -- 4,830
==================================================================================================================================
NOTE 3. SECURITIES
The amortized cost and estimated fair value of available for sale and held
to maturity securities are as follows:
SEPTEMBER 30,
(DOLLARS IN THOUSANDS) 2003
- ----------------------------------------------------------------------------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAIN LOSS FAIR VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
Available for Sale Securities:
U.S. government and agency debt.................................. $ 33,053 $ 127 $ (293) $ 32,887
Mortgage-backed securities....................................... 196,133 2,578 (734) 197,977
Collateralized mortgage obligations.............................. 19,756 356 (152) 19,960
Municipal obligations............................................ 44,757 1,157 (137) 45,777
Corporate debt obligations....................................... 4,988 317 -- 5,305
Marketable equity securities..................................... 6,902 3,074 (5) 9,971
- ----------------------------------------------------------------------------------------------------------------------------------
Total available for sale securities............................ $305,589 $ 7,609 $ (1,321) $311,877
==================================================================================================================================
Held to Maturity Securities:
Corporate debt obligations....................................... $ 2,981 $ 94 $ -- $ 3,075
==================================================================================================================================
6
Notes to the Consolidated Financial Statements (Unaudited)
GA Financial, Inc.
DECEMBER 31,
(DOLLARS IN THOUSANDS) 2002
- ----------------------------------------------------------------------------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAIN LOSS FAIR VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
Available for Sale Securities:
U.S. government and agency debt.................................. $ 47,088 $ 1,395 $ -- $ 48,483
Mortgage-backed securities....................................... 161,657 5,084 -- 166,741
Collateralized mortgage obligations.............................. 8,638 495 -- 9,133
Municipal obligations............................................ 55,167 1,086 -- 56,253
Corporate debt obligations....................................... 20,587 390 -- 20,977
Marketable equity securities..................................... 7,520 2,793 (175) 10,138
- ----------------------------------------------------------------------------------------------------------------------------------
Total available for sale securities............................ $300,657 $ 11,243 $ (175) $311,725
==================================================================================================================================
Held to Maturity Securities:
Corporate debt obligations....................................... $ 2,951 $ 206 $ -- $ 3,157
==================================================================================================================================
NOTE 4. LOANS
Loans consist of the following:
SEPTEMBER 30, DECEMBER 31,
(DOLLARS IN THOUSANDS) 2003 2002
- ----------------------------------------------------------------
Loan Balances:
Mortgage Loans:
Residential........................ $207,155 $218,905
Multi-family....................... 16,868 10,629
Commercial real estate............. 112,783 100,376
Commercial and residential
construction and development(1).. 50,230 29,506
- ----------------------------------------------------------------
Total mortgage loans............. 387,036 359,416
Consumer Loans:
Home equity........................ 82,096 74,959
Unsecured personal................. 3,427 2,993
Loans on deposit accounts.......... 553 940
Automobile......................... 154 212
- ----------------------------------------------------------------
Total consumer loans............. 86,230 79,104
Commercial Business Loans:
Secured business................... 24,480 23,240
Unsecured business................. 5,128 7,620
- ----------------------------------------------------------------
Total commercial business loans.. 29,608 30,860
Education loans held for sale........ 806 14,795
Net deferred fees.................... (12) (107)
- ----------------------------------------------------------------
Total loans...................... 503,668 484,068
Less:
Allowance for loan losses.......... (4,362) (3,896)
- ----------------------------------------------------------------
Net loans........................ $499,306 $480,172
================================================================
(1) Amounts for September 30, 2003 and December 31, 2002 are net of available
funds for disbursement of $24.4 million and $21.6 million, respectively.
The Company purchased, from local correspondent lenders, approximately
$77.3 million and $38.2 million, for the nine months ended September 30, 2003
and 2002, respectively, of residential loans collateralized by single-family
properties located within its primary market area.
At September 30, 2003 and December 31, 2002, the Company had $2.6 million
and $1.5 million in loans which were not accruing interest. The increase in
nonperforming loans was due to the addition of an impaired commercial real
estate loan that was performing and classified as "special mention" at December
31, 2002. Based on subsequent information the loan was downgraded to
"substandard" and placed on nonaccrual status at March 31, 2003. The remaining
nonperforming loans at September 30, 2003, consistent with December 31, 2002
were comprised of residential mortgages and consumer home equity loans. In
addition, the Company had $37,000 and $34,000 of foreclosed assets at September
30, 2003 and December 31, 2002, respectively.
The following table sets forth the changes in the allowance for loan losses
for the nine months ended September 30, 2003:
(DOLLARS IN THOUSANDS)
- ----------------------------------------------------------------
Allowance for Loan Losses:
Balance at December 31, 2002.................. $3,896
Charge-offs................................. (440)
Recoveries.................................. 41
- ----------------------------------------------------------------
Net charge-offs........................... (399)
Provision for loan losses................... 865
- ----------------------------------------------------------------
Balance at September 30, 2003................. $4,362
================================================================
The following table presents information regarding the Company's
nonperforming assets for the dates indicated:
SEPTEMBER 30, DECEMBER 31,
(DOLLARS IN THOUSANDS) 2003 2002
- ----------------------------------------------------------------
Nonperforming Assets:
Nonperforming loans................. $2,625 $1,470
Foreclosed assets................... 37 34
- ----------------------------------------------------------------
Total nonperforming assets........ $2,662 $1,504
================================================================
Nonperforming loans to loans........... 0.52% 0.30%
Nonperforming assets to assets......... 0.30 0.18
Allowance for loan losses to loans..... 0.87 0.80
Allowance for loan losses to
nonperforming assets................ 163.86 259.04
================================================================
7
Notes to the Consolidated Financial Statements (Unaudited)
GA Financial, Inc.
NOTE 5. SUPPLEMENTARY CASH FLOW INFORMATION
Cash paid for the nine months ended September 30, for interest and income
taxes, was approximately $14.5 million and $2.3 million, respectively in 2003,
and $17.9 million and $1.3 million, respectively in 2002.
Noncash investing activities consisted of $272,000 of securities sold, not
settled, and $129,000 related to the transfer of the Company's only held for
trading security to the available for sale portfolio, for the nine months ended
September 30, 2003. Additionally, there were $74,000 and $304,000 of loans
transferred to foreclosed assets during the nine months ended September 30, 2003
and 2002, respectively.
NOTE 6. EARNINGS PER SHARE
Basic earnings per share ("EPS") is computed by dividing income available
to common shareholders by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in the earnings of the Company.
The calculation of basic and diluted earnings per share follows:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 2003 2002 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------------
Basic Earnings Per Share:
Net income............................................................. $1,745 $1,824 $5,188 $4,830
Basic average shares outstanding....................................... 4,716,850 4,974,992 4,754,610 5,018,741
- ---------------------------------------------------------------------------------------------------------------------------------
Basic earnings per share............................................. $ 0.37 $ 0.37 $ 1.09 $ 0.96
=================================================================================================================================
Diluted Earnings Per Share:
Net income............................................................. $1,745 $1,824 $5,188 $4,830
Basic average shares outstanding....................................... 4,716,850 4,974,992 4,754,610 5,018,741
Effect of dilutive securities:
Shares issuable upon exercise of outstanding stock options
and stock awards................................................... 172,092 131,855 163,456 115,771
Diluted average shares outstanding..................................... 4,888,942 5,106,847 4,918,066 5,134,512
- ---------------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share........................................... $ 0.36 $ 0.36 $ 1.05 $ 0.94
=================================================================================================================================
NOTE 7. STOCK-BASED COMPENSATION
The Company has elected to follow Accounting Principles Board Opinion No.
25, "Accounting For Stock Issued to Employees" ("APB 25") and related
interpretations in accounting for its stock options. Because the Company
accounts for stock options using APB 25, no compensation expense has been
recorded in the financial statements. Had compensation cost for these stock
options been determined based on the fair value at the grant date consistent
with the method of Statement of Financial Accounting Standards ("SFAS") No. 123
"Accounting for Stock-Based Compensation," the Company's net income and earnings
per share would have been reduced to the pro forma amounts indicated below:
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 2003 2002 2003 2002
- ---------------------------------------------------------------------------------------------------------------------------------
Net income As reported.......... $1,745 $1,824 $5,188 $4,830
Expense related to options granted, net of tax Pro forma............ (55) (54) (147) (120)
Net income Pro forma............ 1,690 1,770 5,041 4,710
- ---------------------------------------------------------------------------------------------------------------------------------
Basic earnings per share As reported.......... $ 0.37 $ 0.37 $ 1.09 $ 0.96
Pro forma............ 0.36 0.36 1.06 0.94
- ---------------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share As reported.......... $ 0.36 $ 0.36 $ 1.05 $ 0.94
Pro forma............ 0.35 0.35 1.03 0.92
=================================================================================================================================
NOTE 8. GUARANTEES
The Company issues standby letters of credit in the normal course of
business. Standby letters of credit are conditional commitments issued to
guarantee the performance of a customer to a third party. Standby letters of
credit generally are contingent upon the failure of the customer to perform
according to the terms of the underlying contract with the third party. The
Company is required to perform under a standby letter of credit when drawn upon
by the guaranteed third party in the case of nonperformance by the Company's
customer. The credit risk associated with standby letters of credit is
essentially the same as that involved in extending loans to customers and is
subject to normal credit policies. Collateral may be obtained based on
management's credit assessment of the customer. The maximum potential amount of
future payments the Company could be required to make under these standby
letters of credit at September 30, 2003 was $2.6 million. No liability has been
recognized by the Company for these obligations. There are no recourse
provisions that would enable the Company to recover any amounts from third
parties.
NOTE 9. SUBSEQUENT EVENTS
On October 29, 2003, the Board of Directors declared a cash dividend of
$0.20 per share to shareholders of record on November 11, 2003, payable on
November 21, 2003.
8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Unaudited)
GA Financial, Inc.
THIS DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED FINANCIAL
STATEMENTS, NOTES, AND TABLES INCLUDED IN THIS REPORT.
OVERVIEW
GA Financial, Inc. (the "Company") was incorporated in December 1995, and
is the holding company for Great American Federal (the "Bank"), a community bank
and the Company's principal subsidiary, New Eagle Capital, Inc., an investment
company, and the Bank's wholly owned subsidiaries, GA Financial Strategies, LLC,
which provides wealth management services, Steel City Investments, Inc.
established in December 2002 to hold and manage investment securities, and Great
American Financial Services, Inc., currently inactive.
In 1996, the Bank completed its conversion from a federally chartered
mutual savings and loan association to a stock form of ownership and,
simultaneously, the Company issued 8,900,000 shares of common stock, utilizing a
portion of the net proceeds to acquire all of the outstanding stock of the Bank.
The Company currently transacts banking activities through Great American
Federal. The Bank, serving customers for over 85 years, operates its
administrative office in Whitehall, Pennsylvania and 12 community offices in
Allegheny County located in southwestern Pennsylvania. Through these office
locations, the Bank offers a broad array of consumer and commercial loan,
deposit, and wealth management products and services. In addition to conducting
community banking activities, the Bank invests in various marketable securities.
New Eagle Capital, Inc., the Company's other subsidiary, operating as an
investment company in Wilmington, Delaware, also invests in various marketable
securities as well as marketable equity securities.
The Company's results of operations are dependent primarily on net interest
income, which is the difference between the interest income earned on
interest-earning assets, such as loans and securities, and the interest expense
incurred on interest-bearing liabilities, such as deposits and borrowed funds.
The Company also generates noninterest income, such as service fees, gains on
the sale of securities and education loans, earnings on bank owned life
insurance, wealth management fees, and other miscellaneous noninterest income.
The Company's operating expenses consist primarily of compensation and employee
benefits, occupancy, furniture and equipment, marketing, and other general and
administrative expenses. The Company's results of operations are also
significantly affected by general economic and competitive conditions,
particularly changes in market interest rates, government policies, and actions
of regulatory agencies.
Certain critical accounting policies affect the more significant judgments
and estimates used in the preparation of the consolidated financial statements.
The Company's most critical accounting policy relates to the Company's allowance
for loan losses, which reflects the estimated losses resulting from the
inability of the Company's borrowers to make required loan payments. If the
financial condition of the Company's borrowers were to deteriorate, resulting in
an impairment of their ability to make payments, the Company's estimates would
be updated, and additional provisions for loan losses may be required.
Further discussion of the estimates used in determining the allowance for
loan losses appears under "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Allowance for Loan Losses" on page 17 and
"Notes to the Consolidated Financial Statements -- Note 1. Accounting Policies
- -- Allowance For Loan Losses" on pages 30 and 31 of the Company's 2002 Annual
Report to Shareholders.
AVAILABLE INFORMATION
The Company makes available free of charge copies of its annual reports on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any
amendments to those reports filed or furnished pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable
after the Company electronically files such material with, or furnishes it to,
the Securities and Exchange Commission. This information is available without
charge via the Company's Internet website at www.greatamericanfederal.com.
REVIEW OF CONSOLIDATED FINANCIAL CONDITION AT SEPTEMBER 30, 2003 AND DECEMBER
31, 2002
ASSETS
The Company's total assets were $883.0 million at September 30, 2003, an
increase of $24.9 million or 2.9% compared to total assets of $858.0 million at
December 31, 2002.
Total loans increased $19.6 million or 4.0% to $503.7 million at September
30, 2003 primarily due to increases in commercial and residential construction
and development, commercial real estate, consumer, and multi-family loans. This
increase was partially offset by the sale of a substantial portion of the
education loan portfolio, and a decrease in residential loans due to refinance
activity. The change in loan composition is consistent with the Company's
strategy to grow the commercial loan portfolio.
Prepaid expenses and other assets increased $6.6 million or 38.9% to $23.5
million at September 30, 2003 primarily due to the purchase of $5.2 million of
bank owned life insurance policies on key officers.
The Company had $272,000 of securities sold, not settled at September 30,
2003, as compared to $992,000 of securities sold, not settled at December 31,
2002.
The held for trading securities portfolio decreased by $129,000 at
September 30, 2003 due to the reclassification of the held for trading
portfolio, which consisted of one FNMA equity security, to the available for
sale securities portfolio.
LIABILITIES
Total liabilities were $788.4 million at September 30, 2003, an increase of
$30.9 million or 4.1% compared to total liabilities of $757.5 million at
December 31, 2002.
Total deposits increased $21.3 million or 4.1% to $545.4 million. The
increase was primarily from strong growth in money market deposit
9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Unaudited)
GA Financial, Inc.
accounts and modest growth in noninterest-bearing checking accounts. This
increase was partially offset by a decline in certificates of deposit and
savings accounts. This activity is consistent with the Company's strategic focus
on restructuring the deposit mix from time deposits to lower cost transaction
deposits, which was further evidenced by the introduction of a new free checking
account product in September 2003.
Borrowed funds increased $9.2 million or 4.1% to $230.7 million. The
increase was primarily related to short-term borrowings, which were utilized to
fund loans and purchase securities. Although the Company did pay-off maturing
FHLB advances during the period, these borrowings were renewed as short-term
borrowings and continue to be evaluated based on the needs of the Company.
Additionally in August 2003, the Company restructured, without penalty, a $17
million FHLB fixed-rate advance with a cost of 528 basis points and a maturity
date of February 2004. This restructuring reduced the borrowing cost to 294
basis points and extended the maturity date to August 2005.
Accrued interest payable increased $3.4 million or 210.0% to $5.0 million
at September 30, 2003 primarily due to the timing of accrued interest payable on
deposit accounts and borrowed funds.
Other liabilities decreased $2.8 million or 35.7% to $5.1 million. This
decrease was primarily the result of a $1.8 million decline in the deferred tax
liability recorded due to the Company's lower net unrealized gain on the
available for sale security portfolio.
SHAREHOLDERS' EQUITY
Shareholders' equity decreased $6.0 million or 5.9% to $94.6 million at
September 30, 2003. This was due primarily to the repurchase of 214,900 shares
of common stock totaling $5.5 million (under the Company's 5% repurchase
program, 42,163 shares remain to be purchased at September 30, 2003), a decrease
in accumulated comprehensive income of $3.0 million, and the payment of
dividends of $2.9 million. This decrease was partially offset by net income of
$5.2 million.
THREE MONTHS ENDED
SEPTEMBER 30,
(DOLLARS IN THOUSANDS) 2003 2002
- ----------------------------------------------------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST BALANCE INTEREST COST
- ----------------------------------------------------------------------------------------------------------------------------------
ASSETS
Interest-Earning Assets:
Deposits....................................................... $ 13,606 $ 22 0.65% $ 32,913 $ 116 1.41%
Securities(1,2)................................................ 345,158 4,006 4.64 298,530 4,283 5.74
Loans, net(3).................................................. 477,250 7,677 6.43 484,365 8,636 7.13
FHLB stock..................................................... 13,824 70 2.03 11,079 91 3.29
- ----------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets................................ 849,838 11,775 5.54 826,887 13,126 6.35
Noninterest-earning assets..................................... 40,242 31,085
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets................................................. $890,080 $857,972
==================================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-Bearing Liabilities:
Checking accounts.............................................. $ 39,356 $ 30 0.30% $ 39,503 $ 52 0.53%
Money market deposit accounts.................................. 123,497 522 1.69 65,986 388 2.35
Savings accounts............................................... 136,612 290 0.85 144,519 864 2.39
Certificates of deposit........................................ 219,744 2,103 3.83 242,353 2,948 4.87
- ----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits.............................. 519,209 2,945 2.27 492,361 4,252 3.45
Borrowed funds................................................. 229,411 2,582 4.50 221,575 2,705 4.88
Other.......................................................... 2,411 12 1.99 1,885 8 1.70
- ----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities........................... 751,031 5,539 2.95 715,821 6,965 3.89
Noninterest-bearing deposits................................... 34,172 32,030
All other noninterest-bearing liabilities...................... 11,809 7,827
Total noninterest-bearing liabilities.......................... 45,981 39,857
Shareholders' equity........................................... 93,068 102,294
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
shareholders' equity...................................... $890,080 $857,972
- ----------------------------------------------------------------------------------------------------------------------------------
Net interest income................................................. $ 6,236 $ 6,161
Interest rate spread(4)............................................. 2.59% 2.46%
Net interest margin(5).............................................. 2.94% 2.98%
==================================================================================================================================
(1) Includes unamortized discounts and premiums.
(2) Includes municipal obligations; yield and interest are stated on a taxable
equivalent basis.
(3) Amount is net of deferred costs (fees), undisbursed funds, discounts and
premiums, estimated allowance for loan losses, and includes education loans
held for sale, and nonperforming loans.
(4) Interest rate spread represents the difference between the yield on
interest-earning assets and the cost of interest-bearing liabilities on a
taxable equivalent basis.
(5) Net interest margin represents net interest income on a taxable equivalent
basis divided by average interest-earning assets.
10
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (Unaudited)
GA Financial, Inc.
NINE MONTHS ENDED
SEPTEMBER 30,
(DOLLARS IN THOUSANDS) 2003 2002
- ----------------------------------------------------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST BALANCE INTEREST COST
- ----------------------------------------------------------------------------------------------------------------------------------
ASSETS
Interest-Earning Assets:
Deposits....................................................... $ 21,265 $ 156 0.98% $ 31,345 $ 354 1.51%
Securities(1,2)................................................ 338,115 12,547 4.95 314,242 13,436 5.70
Loans, net(3).................................................. 467,312 23,243 6.63 473,403 25,477 7.18
FHLB stock..................................................... 12,870 238 2.47 11,310 311 3.67
- ----------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets................................ 839,562 36,184 5.75 830,300 39,578 6.36
Noninterest-earning assets..................................... 37,737 31,613
- ----------------------------------------------------------------------------------------------------------------------------------
Total assets................................................. $877,299 $861,913
==================================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-Bearing Liabilities:
Checking accounts.............................................. $ 39,552 $ 120 0.40% $ 40,396 $ 177 0.58%
Money market deposit accounts.................................. 99,636 1,519 2.03 66,381 1,154 2.32
Savings accounts............................................... 145,893 1,670 1.53 139,618 2,477 2.37
Certificates of deposit........................................ 224,512 6,754 4.01 251,496 9,384 4.98
- ----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits.............................. 509,593 10,063 2.63 497,891 13,192 3.53
Borrowed funds................................................. 224,615 7,788 4.62 223,011 8,460 5.06
Other.......................................................... 2,372 32 1.80 2,129 24 1.50
- ----------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities........................... 736,580 17,883 3.24 723,031 21,676 4.00
Noninterest-bearing deposits................................... 33,365 32,832
All other noninterest-bearing liabilities...................... 10,573 6,680
Total noninterest-bearing liabilities.......................... 43,938 39,512
Shareholders' equity........................................... 96,781 99,370
- ----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
shareholders' equity...................................... $877,299 $861,913
- ----------------------------------------------------------------------------------------------------------------------------------
Net interest income................................................. $18,301 $17,902
Interest rate spread(4)............................................. 2.51% 2.36%
Net interest margin(5).............................................. 2.91% 2.87%
==================================================================================================================================
(1) Includes unamortized discounts and premiums.
(2) Includes municipal obligations; yield and interest are stated on a taxable
equivalent basis.
(3) Amount is net of deferred costs (fees), undisbursed funds, discounts and
premiums, estimated allowance for loan losses, and includes education loans
held for sale, and nonperforming loans.
(4) Interest rate spread represents the difference between the yield on
interest-earning assets and the cost of interest-bearing liabilities on a
taxable equivalent basis.
(5) Net interest margin represents net interest income on a taxable equivalent
basis divided by average interest-earning assets.
11
Management's Discussion and Analysis of Financial Condition and Results
of Operations (Unaudited)
GA Financial, Inc.
REVIEW OF THE CONSOLIDATED RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 2003 AND 2002
NET INCOME
Net income for the three months ended September 30, 2003 decreased $79,000
or 4.3% as compared to the three months ended September 30, 2002. Changes in the
components of net income are discussed herein.
INTEREST INCOME
Total interest income decreased $1.3 million ($1.4 million on a taxable
equivalent basis) or 10.1% to $11.5 million for the three months ended September
30, 2003. This was primarily the result of a decrease of 81 basis points in the
average yield on average interest-earning assets, which was partially offset by
an increase of $23.0 million in average interest-earning assets. Interest income
on loans decreased $959,000 or 11.1% due to a decrease in the average yield of
70 basis points and a decrease in the average balance of $7.1 million. Taxable
equivalent interest on securities decreased $277,000 or 6.5% due to a decrease
in the average yield of 110 basis points, which was partially offset by an
increase in the average balance of $46.6 million. Interest income on
interest-earning deposits decreased $94,000 or 81.0% due to a decrease in the
average yield of 76 basis points and a decrease in the average balance of $19.3
million. The decrease in interest-earning deposits was primarily due to the
movement of these funds into higher yielding loans and securities.
INTEREST EXPENSE
Total interest expense decreased $1.4 million or 20.5% to $5.5 million for
the three months ended September 30, 2003. This was primarily the result of a
decrease of 94 basis points in the average cost on average interest-bearing
liabilities, which was partially offset by an increase of $35.2 million in the
average balance. The interest expense on interest-bearing deposits decreased
$1.3 million or 30.7%. This was the result of a decrease in the average cost of
118 basis points, which was partially offset by an increase in the average
balance of $26.8 million. This activity is consistent with the Company's
strategic focus on restructuring deposit accounts from time deposits to lower
cost transaction deposits. Interest expense on borrowed funds decreased $123,000
or 4.5% due primarily to a decrease in the average cost of 38 basis points,
which was partially offset by an increase in the average balance of $7.8
million. In August 2003, the Company restructured, without penalty, a $17
million FHLB fixed-rate advance with a cost of 528 basis points and a maturity
date of February 2004. This restructuring reduced the borrowing cost to 294
basis points and extended the maturity date to August 2005. The restructuring
resulted in cost savings of $66,000 for the three months ended September 30,
2003.
PROVISION FOR LOAN LOSSES
The provision for loan losses for the three months ended September 30, 2003
was $442,000 as compared to $135,000 for the three months ended September 30,
2002. The allowance for loan losses to loans and nonperforming assets was 0.87%
and 164%, respectively at September 30, 2003, as compared to 0.80% and 259%,
respectively at December 31, 2002 and 0.78% and 245%, respectively at September
30, 2002. The current quarter provision was primarily influenced by strong loan
growth specifically in commercial real estate, multi-family, and commercial and
residential construction and development loans. Based on the current risk
ratings and increase in outstandings, the Company recorded additional provision
to maintain an appropriate level of coverage. Nonperforming loans at September
30, 2003 were $2.6 million as compared to $1.5 million for the respective
periods ended December 31, 2002 and September 30, 2002. The increase in
nonperforming loans was primarily due to the addition of a commercial real
estate loan with a balance of $1.0 million, which was downgraded from "special
mention" to "substandard" at March 31, 2003. The remaining balance of
nonperforming loans were comprised of residential mortgages and consumer home
equity loans. The nonperforming loans for December 31, 2002 and September 30,
2002, were comprised primarily of residential mortgages and consumer home equity
loans. The Company monitors all nonperforming loans which could impact the
provision for loan losses. The allowance for loan losses is maintained at an
amount management considers appropriate to cover estimated losses on loans which
are deemed probable based on information currently known to management. While
management believes the Company's allowance for loan losses is sufficient to
cover losses in its loan portfolio at this time, no assurances can be given that
the Company's level of allowance for loan losses will be sufficient to cover
future loan losses incurred by the Company, or that future adjustments to the
allowance for loan losses will not be necessary if economic and other conditions
differ substantially from the economic and other conditions analyzed by
management to determine the current level of the allowance for loan losses.
NONINTEREST INCOME
Total noninterest income increased $350,000 or 32.4% for the three months
ended September 30, 2003. This increase was primarily from the recognition of an
additional $383,000 of net gains on the sale of available for sale securities.
Additionally, there was an increase of $24,000 of earnings on bank owned life
insurance due to the purchase of additional policies on key officers in July
2003 and a $21,000 decrease in the net loss position of the held for trading
security which was transferred to the available for sale portfolio in August
2003. This increase was partially offset by decreases of $47,000 of gains on the
sale of education loans and $37,000 in service fees.
NONINTEREST EXPENSE
Total noninterest expense increased $240,000 or 5.6% for the three months
ended September 30, 2003. This increase was primarily related to $123,000 of
other noninterest expense recorded in connection with the contested election of
Directors at the Company's 2003 Annual Meeting of Shareholders and related
subsequent litigation. There was also an increase of $84,000 of compensation and
employee benefits expense related to the Company's Employee Stock Ownership Plan
for which expense is recorded based on the average fair value of the Company's
stock and the number of shares earned and committed to be released.
Additionally, there was an increase of $71,000 in furniture and equipment, which
was primarily related to the Company's first quarter 2003 conversion to its new
core operating system whereby licensing fees and depreciation on related
equipment were recorded. The overall increase for the current three months ended
is net of $173,000 in compensation expense recorded in the three months ended
September 30, 2002, due to changes in the Company's management structure.
PROVISION FOR INCOME TAXES
The provision for income taxes increased $22,000 or 3.6% to $639,000 for
the three months ended September 30, 2003. The effective tax rate for the three
months ended September 30, 2003 was 26.8% as compared to 25.3% for the three
months ended September 30, 2002. The increase in the effective tax rate was the
result of higher levels of taxable income.
12
Management's Discussion and Analysis of Financial Condition and Results
of Operations (Unaudited)
GA Financial, Inc.
REVIEW OF CONSOLIDATED RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2003 AND 2002
NET INCOME
Net income for the nine months ended September 30, 2003 increased $358,000
or 7.4% as compared to the nine months ended September 30, 2002. Changes in the
components of net income are discussed herein.
INTEREST INCOME
Total interest income decreased $3.2 million ($3.4 million on a taxable
equivalent basis) or 8.4% to $35.2 million for the nine months ended September
30, 2003. This was primarily the result of a decrease of 61 basis points in the
average yield on average interest-earning assets, which was partially offset by
an increase of $9.3 million in average interest-earning assets. Interest income
on loans decreased $2.2 million or 8.8% due to a decrease in the average yield
of 55 basis points and a decrease in the average balance of $6.1 million.
Taxable equivalent interest on securities decreased $889,000 or 6.6% due to a
decrease in the average yield of 75 basis points, which was partially offset by
an increase in the average balance of $23.9 million. Interest income on
interest-earning deposits decreased $198,000 or 55.9% due to a decrease in the
average yield of 53 basis points and a decrease in the average balance of $10.1
million. The decrease in interest-earning deposits was primarily due to the
movement of these funds into higher yielding loans and securities.
INTEREST EXPENSE
Total interest expense decreased $3.8 million or 17.5% to $17.9 million for
the nine months ended September 30, 2003. This was primarily the result of a
decrease of 76 basis points in the average cost on average interest-bearing
liabilities, which was partially offset by an increase of $13.5 million in the
average balance. The interest expense on interest-bearing deposits decreased
$3.1 million or 23.7%. This was the result of a decrease in the average cost of
90 basis points, which was partially offset by an increase in the average
balance of $11.7 million. This activity is consistent with the Company's
strategic focus on restructuring deposit accounts from time deposits to lower
cost transaction deposits. Interest expense on borrowed funds decreased $672,000
or 7.9% due primarily to a decrease in the average cost of 44 basis points,
which was partially offset by an increase in the average balance of $1.6
million. In August 2003, the Company restructured, without penalty, a $17
million FHLB fixed-rate advance with a cost of 528 basis points and a maturity
date of February 2004. This restructuring reduced borrowing cost to 294 basis
points and extended the maturity date to August 2005. The restructuring resulted
in cost savings of $66,000 for nine months ended September 30, 2003.
PROVISION FOR LOAN LOSSES
The provision for loan losses for the nine months ended September 30, 2003
was $865,000 as compared to $690,000 for the nine months ended September 30,
2002. The allowance for loan losses to loans and nonperforming assets was 0.87%
and 164%, respectively at September 30, 2003, as compared to 0.80% and 259%,
respectively at December 31, 2002 and 0.78% and 245%, respectively at September
30, 2002. The current year provision was primarily influenced by strong loan
growth specifically in commercial real estate, multi-family, and commercial and
residential construction/development loans. Based on the current risk ratings
and increase in outstandings, the Company recorded additional provision to
maintain an appropriate level of coverage. In addition, the provision was
influenced by a charge-off of $221,000 against the allowance for loan losses for
the three months ended March 31, 2003. This charge-off was the result of certain
information obtained by the Company relating to a $1.3 million commercial real
estate loan, which was performing and classified as "special mention" at
December 31, 2002. Based on subsequent information, the loan was downgraded to
"substandard" and placed on nonaccrual status at March 31, 2003. Nonperforming
loans at September 30, 2003 were $2.6 million as compared to $1.5 million for
the respective periods ended December 31, 2002 and September 30, 2002. The
increase in nonperforming loans was primarily due to the addition of the
commercial real estate loan with a balance of $1.0 million, which was previously
noted. The remaining balance of nonperforming loans were comprised of
residential mortgages and consumer home equity loans. The nonperforming loans
for December 31, 2002 and September 30, 2002, were comprised primarily of
residential mortgages and consumer home equity loans. The Company monitors all
nonperforming loans which could impact the provision for loan losses. The
allowance for loan losses is maintained at an amount management considers
appropriate to cover estimated losses on loans which are deemed probable based
on information currently known to management. While management believes the
Company's allowance for loan losses is sufficient to cover losses in its loan
portfolio at this time, no assurances can be given that the Company's level of
allowance for loan losses will be sufficient to cover future loan losses
incurred by the Company, or that future adjustments to the allowance for loan
losses will not be necessary if economic and other conditions differ
substantially from the economic and other conditions analyzed by management to
determine the current level of the allowance for loan losses.
NONINTEREST INCOME
Total noninterest income increased $702,000 or 20.5% for the nine months
ended September 30, 2003. This increase was primarily from the recognition of an
additional $1.5 million of net gains on the sale of available for sale
securities. There were also increases of $77,000 in other noninterest income,
$38,000 of gains on the sale of education loans in the first quarter of 2003,
$27,000 in earnings on bank owned life insurance due to the purchase of
additional policies on key officers in July 2003, and a decrease of $40,000 in
the net loss position of the held for trading security, which was transferred to
the available for sale portfolio in August 2003. This increase was offset by a
decline of $230,000 in service fees, and several significant items that occurred
in the nine months ended September 30, 2002. In that period, the Company
recorded a $905,000 gain on the sale of its North Huntingdon community branch
office, which was offset by a $141,000 charge to record an other-than-temporary
decline in the valuation of certain investment securities.
NONINTEREST EXPENSE
Total noninterest expense increased $364,000 or 2.8% for the nine months
ended September 30, 2003. The increase was primarily related to $272,000 of
compensation and employee benefits expense related to the Company's Employee
Stock Ownership Plan for which compensation expense is recorded based on the
average fair value of the Company's stock and the number of shares earned and
committed to be released. Also, the Company incurred $308,000 of charges
included in marketing and other noninterest expense recorded in connection with
the contested
13
Management's Discussion and Analysis of Financial Condition and Results
of Operations (Unaudited)
GA Financial, Inc.
election of Directors at the Company's 2003 Annual Meeting of Shareholders and
the related subsequent litigation. Additionally, the increase of $217,000 in
furniture and equipment was primarily related to the Company's first quarter
2003 conversion to its new core operating system whereby licensing fees and
depreciation on related equipment were recorded. The overall increase for the
current nine months ended is net of several significant items that were recorded
for the nine months ended September 30, 2002. In that period, the Company
recorded a $208,000 loss on the closure of the Company's North Versailles
Wal-Mart based satellite branch office, $141,000 of compensation expense related
to branch system staffing reductions, and $173,000 of compensation expense due
to changes in the Company's management structure.
PROVISION FOR INCOME TAXES
The provision for income taxes increased $362,000 or 25.6% to $1.8 million
for the nine months ended September 30, 2003. The effective tax rate for the
nine months ended September 30, 2003 was 25.5% as compared to 22.6% for the nine
months ended September 30, 2002. The increase in the effective tax rate was the
result of a combination of higher pre-tax and taxable income.
OTHER MATTERS
LIQUIDITY RESOURCES
The Company's primary sources of funds are deposits, repayments of loans
and securities, sales, calls and maturities of securities, advances from the
FHLB, and other borrowed funds. While scheduled maturities of securities and the
amortization of loans are predictable sources of funds, deposit flows and
prepayments on mortgages, and mortgage-backed and related securities are greatly
influenced by market interest rates, economic conditions, and competition.
Liquidity can be analyzed by utilizing the Consolidated Statements of Cash
Flows. Net cash provided by operating activities was $3.6 million. Net cash used
in investing activities was $26.2 million. Net cash provided by financing
activities was $21.9 million. Overall, cash and cash equivalents decreased
$683,000 for the nine months ended September 30, 2003.
Management believes the Company has sufficient liquidity to meet current
obligations to borrowers, depositors, debt holders, and others.
CAPITAL RESOURCES
The Company is not required to maintain any minimum level of capital;
however, the Bank is subject to various regulatory capital requirements
administered by the Office of Thrift Supervision ("OTS").
At September 30, 2003, the Bank had exceeded the OTS requirements for tier
I core (leverage), tier I risk-based, total risk-based, and tangible capital.
The OTS requires the Bank to maintain a minimum 4.00% tier I core (leverage)
capital ratio (expressed as a percentage of adjusted total assets), a minimum
tier I risk-based capital ratio of 4.00%, total risk-based capital ratio of
8.00% (both expressed as a percentage of risk-weighted assets, which includes
off-balance sheet items), and a minimum tangible capital ratio of 1.50% of
tangible assets, as defined by the OTS. The well-capitalized requirement for
tier I core (leverage), tier I risk-based, and total risk-based ratios is 5.00%,
6.00%, and 10.00%, respectively. The Bank has consistently maintained all
regulatory capital ratios at or above the well capitalized standards with tier I
core (leverage) at 9.62%, tier I risk-based at 16.99%, total risk-based at
18.06%, and tangible at 9.62% at September 30, 2003.
OTHER
The Company announced in the first quarter of 2002 that it selected
Kirchman Bankway(TM) as its core operating system solution. The Company made
this investment to support its longer term profitability goals, enhance its
speed to market in developing and introducing new competitive products, and
improve its already high level of customer service. The conversion to the new
system was completed in the first quarter of 2003.
NEW ACCOUNTING PRONOUNCEMENTS
In June 2002, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 146, "Accounting for
Costs Associated with Exit or Disposal Activities." This statement addresses
financial accounting and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)." The provisions
of SFAS No. 146 are effective for exit and disposal activities that are
initiated after December 31, 2002. The adoption of SFAS No. 146 did not have a
material effect on the financial position, results of operations, or liquidity
of the Company.
In November 2002, the FASB issued Interpretation No. 45, ("FIN 45"),
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others." This interpretation elaborates
on the existing disclosures to be made by a guarantor in its financial
statements about its obligations under certain guarantees that it has issued.
This interpretation also clarifies that a guarantor is required to recognize, at
inception of a guarantee, a liability for the fair value of the obligation
undertaken in issuing the guarantee. The initial recognition and initial
measurement provisions of FIN 45 are applicable on a prospective basis to
guarantees issued or modified after December 31, 2002. The disclosure
requirements in FIN 45 are effective for financial statements of interim and
annual periods ending after December 15, 2002. The adoption of FIN 45 did not
have a material effect on the financial position, results of operations, or
liquidity of the Company.
In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure," an amendment of SFAS No.123. This
statement amends SFAS No. 123 to provide alternative methods of transition for
voluntary change to the fair value based method of accounting for stock-based
employee compensation. SFAS No. 148 also amends the disclosure requirements of
SFAS No. 123 to require prominent disclosure on both annual and interim
financial statements about the method of accounting for stock-based compensation
and the effect of the method used on reported results. The transition
alternatives of SFAS No. 148 are available for fiscal years ending after
December 15, 2002. The adoption of SFAS No. 148 did not have a material effect
on the financial position, results of operations, or liquidity of the Company.
In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities." This Statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities under FASB Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This Statement is generally effective
14
Management's Discussion and Analysis of Financial Condition and Results
of Operations (Unaudited)
GA Financial, Inc.
for contracts entered into or modified after June 30, 2003. The adoption of SFAS
149 did not have a material effect on the financial position, results of
operations, or liquidity of the Company.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity." This
Statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. It requires that an issuer classify a financial instrument that is
within its scope as a liability (or an asset in some circumstances). Many of
those instruments were previously classified as equity. Some of the provisions
of this Statement are consistent with the current definition of liabilities in
FASB Concepts Statement No. 6, "Elements of Financial Statements." The remaining
provisions of this Statement are consistent with the Board's proposal to revise
that definition to encompass certain obligations that a reporting entity can or
must settle by issuing its own equity shares, depending on the nature of the
relationship established between the holder and the issuer. This Statement is
effective for financial instruments entered into or modified after May 31, 2003
and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003. The adoption of SFAS No. 150 did not have a
material effect on the financial position, results of operations, or liquidity
of the Company.
FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Company intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995, and is including this statement for purposes of these safe harbor
provisions. Forward-looking statements, which are based on certain assumptions
and describe future plans, strategies and expectations of the Company, are
generally identified by use of the words "believe," "expect," "intend,"
"anticipate," "estimate," "project," or similar expressions. The Company's
ability to predict results or the actual effect of future plans or strategies is
inherently uncertain. Factors which could have a material adverse effect on the
operations of the Company include, but are not limited to: changes in interest
rates, general economic conditions, legislative/regulatory changes, monetary and
fiscal policies of the U.S. Government, including policies of the U.S. Treasury
and the Federal Reserve Board, the quality or composition of the loan or
investment portfolios, demand for loan products, deposit flows, competition,
demand for financial services in the Company's market area, and accounting
principles and guidelines. These risks and uncertainties should be considered in
evaluating forward-looking statements and undue reliance should not be placed on
such statements.
Except as required by applicable law and regulation, the Company does not
undertake--and specifically disclaims any obligation--to publicly release the
result of any revisions which may be made to any forward-looking statements to
reflect events or circumstances after the date of such statements or to reflect
the occurrence of anticipated or unanticipated events.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
GA Financial, Inc.
Management is responsible for monitoring and limiting the Company's
exposure to interest rate risk within established guidelines while maximizing
net interest income. The Company will continue to monitor its interest rate
sensitivity with the primary objective to prudently structure the balance sheet
so that movements of interest rates on assets and liabilities are highly
correlated and produce a reasonable net interest margin even in periods of
volatile interest rates.
The principal objective of the Company's interest rate risk management
function is to evaluate the interest rate risk included in certain balance sheet
accounts, determine the appropriate level of risk given the Company's business
strategy, operating environment, capital and liquidity requirements and
performance objectives, and manage the risk consistent with Board of Director
approved guidelines. Through such management, the Company monitors its interest
rate risk and seeks to reduce the vulnerability of its operations to changes in
interest rates. The Company's Board of Directors has established an
Asset/Liability Management Committee, which is responsible for reviewing its
asset/liability policies, interest rate risk position, liquidity and meets at
least on a quarterly basis. The Asset/Liability Management Committee reviews
trends in interest rates, the financial position of the Company, the Company's
actual performance to budgeted performance, the Company's interest rate position
as measured by changes in its net income and net portfolio value under certain
interest rate scenarios, and the projected impact of such interest rate
scenarios on its earnings and capital.The extent of the movement of interest
rates is an uncertainty that could have a negative impact on the earnings of the
Company.
In recent years, the Company has utilized the following strategies to
manage interest rate risk: (1) purchasing adjustable interest rate and shorter
term fixed-rate mortgage-backed and related securities; (2) investing in shorter
term fixed-rate corporate debt and government agency bonds or in such types of
bonds with adjustable interest rates; (3) originating shorter term and
adjustable interest rate commercial, residential mortgage, and consumer loan
products; and (4) emphasizing transaction and longer term time deposits. To
manage the interest rate risk of the Company, the Board of Directors has also
established parameters relating to the types of loans the Company may
originate/purchase and securities in which the Company may invest and parameters
relating to the types of deposits which may be offered by the Company and rates
which may be paid on such deposits.
Market risk is the risk of losses resulting from adverse changes in market
pricing and rates. The Company's market risk is primarily its interest rate risk
associated with its investing, lending, deposit, and borrowing activities.
Interest rate risk arises when interest rates on assets change in a different
time period or in a different proportion from that of liabilities. Management
actively monitors its interest rate sensitivity position with the primary
objective to prudently structure the balance sheet so that movements of interest
rates on assets and liabilities are highly correlated and produce a reasonable
net interest margin even in periods of volatile interest rates. Interest rate
risk is considered by management to be the Company's most significant market
risk that could materially impact the Company's financial position or results of
operations.
15
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Unaudited)
GA Financial, Inc.
Item 4. Controls and Procedures
GA Financial, Inc.
The Company's management,including the Company's principal executive
officer and principal financial officer,have evaluated the effectiveness of the
Company's "disclosure controls and procedures," as such term is defined in Rule
13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended,
("Exchange Act"). Based upon their evaluation, the principal executive officer
and principal financial officer concluded that, as of the end of the period
covered by this report, the Company's disclosure controls and procedures were
effective for the purpose of ensuring that the information required to be
disclosed in the reports that the Company files or submits under the Exchange
Act with the Securities and Exchange Commission ("SEC") (1) is recorded,
processed,summarized and reported within the time periods specified in the SEC's
rules and forms, and (2) is accumulated and communicated to the Company's
management, including its principal executive and principal financial officers,
as appropriate to allow timely decisions regarding required disclosure. In
addition, based on that evaluation, no change in the Company's internal control
over financial reporting occurred during the three months ended September
30, 2003 that has materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial reporting.
16
PART II. OTHER INFORMATION
GA Financial, Inc.
Item 1. Legal Proceedings
The Company and John M. Kish, the Chairman of the Board and Chief Executive
Officer, were named as Defendants in a lawsuit filed in the Court of Chancery of
the State of Delaware in and for New Castle County on June 12, 2003. The lawsuit
was filed by Seidman & Associates, LLC and Lawerence B. Seidman, the Plaintiffs.
The basis of the lawsuit was to overturn the certified results of the Company's
April 23, 2003 Annual Meeting of Shareholders. The independent inspector of
election for the meeting certified that John M. Kish and Darrell J. Hess were
elected as Directors to serve three-year terms expiring in 2006. Mr. Seidman,
the nominee of the Plaintiffs was not elected. The lawsuit asked the court to
declare Mr. Seidman elected a director in place of Mr. Kish. On October 7, 2003,
the Court of Chancery, following a trial on the merits, dismissed with prejudice
the lawsuit. In dismissing the Complaint with prejudice, the Court rejected all
of Seidman's claims and confirmed that Mr. Kish was properly elected director at
the Annual Meeting.
The Company is not involved in any other pending legal proceedings other
than routine legal proceedings in the ordinary course of business. Such routine
legal proceedings, in the aggregate, are believed by management to be immaterial
to the Company's financial condition, results of operations, and cash flows.
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
3.1 Certificate of Incorporation of GA Financial, Inc.(1)
3.2 Amended Bylaws of GA Financial, Inc.(2)
4.0 Stock Certificates of GA Financial, Inc.(1)
11.0 Computation of Earnings per Share. This is incorporated
by reference to Note 6 of the Notes to the Consolidated Financial
Statements.
31.1 Rule 13a-14(a)/15d-14(a) Chief Executive Officer Certification.
31.2 Rule 13a-14(a)/15d-14(a) Chief Financial Officer Certification.
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K:
During the third quarter of 2003, the Company filed or furnished the
following Current Report on Form 8-K.
(1) A report filed August 4, 2003, which included, under Items 7 and 12,
the Company's press release announcing financial results for the
quarter ended June 30, 2003.
(1) Incorporated by reference into this document from the Exhibits to Form S-1.
Registration Statement, filed on December 21, 1995, as amended,
Registration No. 33-80715.
(2) Incorporated by reference into this document from the Company's Form 10-Q
filed on November 15, 1999.
17
SIGNATURES
GA Financial, Inc.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date November 14, 2003
-----------------------------------------------------------
GA Financial, Inc.
-----------------------------------------------------------
(Registrant)
By /s/ John M. Kish
-----------------------------------------------------------
John M. Kish
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
By /s/ James V. Dionise
-----------------------------------------------------------
James V. Dionise
Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer)
18