FORWARD LOOKING STATEMENTS
In the normal course of business, we, in an effort to help keep our shareholders
and the public informed about our operations, may from time to time issue or
make certain statements, either in writing or orally, that are or contain
forward-looking statements, as that term is defined in the U.S. federal
securities laws. Generally, these statements relate to business plans or
strategies, projected or anticipated benefits from acquisitions made by or to be
made by us, projections involving anticipated revenues, earnings, profitability
or other aspects of operating results or other future developments in our
affairs or the industry in which we conduct business. Forward-looking statements
may be identified by reference to a future period or periods or by the use of
forward-looking terminology such as "anticipated," "believe," "expect,"
"intend," "plan," "estimate" or similar expressions.
Although we believe that the anticipated results or other expectations reflected
in our forward-looking statements are based on reasonable assumptions, we can
give no assurance that those results or expectations will be attained.
Forward-looking statements involve risks, uncertainties and assumptions (some of
which are beyond our control), and as a result actual results may differ
materially from those expressed in forward-looking statements. Factors that
could cause actual results to differ from forward-looking statements include,
but are not limited to, the following, as well as those discussed elsewhere
herein:
• our investments in our businesses and in related technology could require
additional incremental spending, and might not produce expected deposit and
loan growth and anticipated contributions to our earnings;
• general economic or industry conditions could be less favorable than expected,
resulting in a deterioration in credit quality, a change in the allowance for
loan losses or a reduced demand for credit or fee-based products and services;
• the effects and extent of the coronavirus (COVID-19) pandemic on the global
economy, and its impact on the Company's operations and financial condition,
including the granting of various loan payment deferral and fee waivers, the
possibility of credit losses in our loan portfolios and increases in our
allowance for credit losses as well as possible impairments on the securities
we hold;
• changes in the interest rate environment could reduce net interest income and
could increase credit losses;
• the conditions of the securities markets could change, which could adversely
affect, among other things, the value or credit quality of our assets, the
availability and terms of funding necessary to meet our liquidity needs and
our ability to originate loans and leases;
• changes in the extensive laws, regulations and policies governing financial
holding companies and their subsidiaries could alter our business environment
or affect our operations;
• the potential need to adapt to industry changes in information technology
systems, on which we are highly dependent, could present operational issues or
require significant capital spending;
• competitive pressures could intensify and affect our profitability, including
as a result of continued industry consolidation, the increased availability of
financial services from non-banks, technological developments such as the
internet or bank regulatory reform; and
• acts or threats of terrorism and actions taken by the United States or other
governments as a result of such acts or threats, including possible military
action, could further adversely affect business and economic conditions in the
United States generally and in our principal markets, which could have an
adverse effect on our financial performance and that of our borrowers and on
the financial markets and the price of our common stock.
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You should not put undue reliance on any forward-looking statements.
Forward-looking statements speak only as of the date they are made, and we
undertake no obligation to update them in light of new or future events except
to the extent required by federal securities laws.
GENERAL
WVS Financial Corp. (the "Company") is the parent holding company of West View
Savings Bank ("West View" or the "Savings Bank"). The Company was organized in
July 1993 as a Pennsylvania-chartered unitary bank holding company and acquired
100% of the common stock of the Savings Bank in November 1993.
West View Savings Bank is a Pennsylvania-chartered, FDIC-insured stock savings
bank conducting business from five offices in the North Hills suburbs of
Pittsburgh. The Savings Bank converted from the mutual to the stock form of
ownership in November 1993. The Savings Bank had no subsidiaries at December 31,
2021.
The operating results of the Company depend primarily upon its net interest
income, which is determined by the difference between income on interest-earning
assets, principally loans, mortgage-backed securities and investment securities,
and interest expense on interest-bearing liabilities, which consist primarily of
deposits and borrowings. The Company's net income is also affected by its
provision for loan losses, as well as the level of its non-interest income,
including loan fees and service charges, and its non-interest expenses, such as
compensation and employee benefits, income taxes, deposit insurance and
occupancy costs.
Effects of COVID-19 Pandemic
The Company's business is dependent upon the willingness and ability of our
employees and clients to conduct banking and other financial transactions. The
persistance of the novel coronavirus (COVID-19) pandemic has negatively impacted
the global economy, disrupted global supply chains and increased unemployment
levels. While the full effects of the pandemic remain unknown, the Company is
committed to supporting its customers, employees and communities during this
difficult time. The Company has given hardship relief assistance to customers,
including the consideration of various loan payment deferral and fee waiver
options, and encourages customers to reach out for assistance to support their
individual circumstances. The pandemic could result in the recognition of credit
losses in our loan portfolios and increases in our allowance for credit losses,
particularly if businesses were to close once again, the impact on the global
economy worsens, or more customers draw on their lines of credit or seek
additional loans to help finance their businesses. Similarly, because of
changing economic and market conditions affecting issuers, we may be required to
recognize impairments on the securities we hold. The extent to which the
COVID-19 pandemic impacts our business, results of operations, and financial
condition, as well as our regulatory capital and liquidity ratios, will depend
on future developments, which are highly uncertain and cannot be predicted,
including the scope and duration of the pandemic and actions taken by
governmental authorities and other third parties in response to the pandemic.
The Company has responded to the circumstances surrounding the pandemic to
support the safety and well-being of the employees, customers and shareholders
by enacting the following measures:
• Modified branch business hours Monday through Thursday to close at 4:00 pm (no
change), Friday close at 5:00 pm (as opposed to 6:00 pm) and Saturday close at
12:00 pm (no change);
• Monitor federal, state and local COVID-19 websites and adopt guidance as
appropriate and feasible;
• Encourage customers to use our various on-line portals (e.g. internet banking,
online bill pay service), automated teller machines and night depositories to
redirect routine transactions away from our branch staff as much as possible;
and
• Non-branch banking services (e.g. lending, accounting, check and electronic
processing) continue to be offered consistent with COVID-19 guidelines.
Branch Closure
On December 17, 2021, the company closed its leased branch office
located at 572 Lincoln Avenue, Bellevue, PA (Bellevue Branch). Upon closing the
Bellevue Branch, associated deposits totaling approximately $11.9 million were
transfered to our West View Borough branch. Management anticipates that a
significant portion of the transferred deposits will remain with the West View
Borough branch.
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FINANCIAL CONDITION
The Company's assets totaled $355.6 million at December 31, 2021, as compared to
$346.1 million at June 30, 2021. The $9.5 million, or 2.7%, increase in total
assets was primarily due to a $30.3 million increase in floating rate U.S.
Government Agency mortgage-backed securities, which were partially offset by a
$13.8 million decrease in available-for-sale investment securities and a
$5.5 million decrease in held-to-maturity investment securities. The decrease in
investment securities available-for-sale was primarily the result of maturities
and early issuer redemptions of $26.9 million and $9.1 million, respectively,
partially offset by purchases of investment securities totaling $23.3 million.
The increase in mortgage-backed securities was due primarily to purchases of
floating rate U.S. Government Agency mortgage-backed securities totaling
approximately $50.8 million, partially offset by repayments of $20.4 million on
mortgage-backed securities.
The Company's total liabilities increased $9.7 million, or 3.1%, to
$317.3 million as of December 31, 2021 from $307.7 million as of June 30, 2021.
The increase in total liabilities was primarily comprised of a $35.5 million, or
31.4%, increase in FHLB short-term advances and a $4.2 million increase in
deposits, partially offset by a $30.0 million decrease in FHLB long-term
advances. The increase in total deposits was primarily attributable
to increases in certificates of deposit, non-interest bearing accounts, and NOW
accounts of $3.4 million, $1.5 million, and $1.0 million, respectively,
partially offset by decreases in money market accounts of $466 thousand, savings
accounts of $490 thousand and advance payments by borrowers for taxes and
insurance of $677 thousand. The increase in certificates of deposit was
primarily the result of a $4.4 million increase in brokered deposits, which more
than offset a $1.0 million decrease in retail time deposits. A significant
portion of retail time deposits were transferred into savings accounts. The
increase FHLB short-term borrowings and brokered deposits primarily funded
purchases of mortgage-backed securities and available-for-sale investment
securities. See also Quantitative and Qualitative Disclosures About Market Risk
"Asset and Liability Management".
Total stockholders' equity decreased $167 thousand, or 0.4%, to $38.2 million as
of December 31, 2021, from $38.4 million as of June 30, 2021. The decrease in
stockholders' equity was primarily attributable to a decrease in accumulated
other comprehensive income of $502 thousand and cash dividends paid totaling
$348 thousand, which were partially offset by net income totaling $602 thousand
and an increase in amortization of unallocated ESOP shares of $67 thousand. The
decrease in accumulated other comprehensive income was primarily the result of
an increase in the unrealized loss on the Company's available-for-sale
investment portfolio.
RESULTS OF OPERATIONS
General. WVS reported net income of $330 thousand, or $0.19 earnings per share
(basic and diluted), for the three months ended December 31, 2021 as compared to
$355 thousand, or $0.20 per share (basic and diluted), for the same period in
2020. The $25 thousand decrease in net income for the for the three months
ended December 31, 2021 was primarily attributable to a $41 thousand decrease in
net interest income and a $43 thousand increase in non-interest expense, which
were partially offset by a $10 thousand decrease in income tax expense, a
$35 thousand increase in non-interest income and a $14 thousand decrease in the
provision for loan losses, when compared to the same period in 2020.
Net income for the six months ended December 31, 2021 totaled $601 thousand, or
$0.35 per share (diluted and basic), as compared to $775 thousand, or $0.44 per
diluted share for the same period in 2020. The $174 thousand, or 22.5%,
decrease in net income during the six months ended December 31, 2021 was
primarily attributable to a $236 thousand decrease in net interest income and a
$95 thousand increase in non-interest expense, partially offset by a $66
thousand decline in income tax expense, a $62 thousand increase in non-interest
income and a $29 thousand reduction in provision for loan lossses, when compared
to the same period in 2020.
Net Interest Income. The Company's net interest income decreased by
$41 thousand, or 3.3%, for the three months ended December 31, 2021, when
compared to the same period in 2020. The decrease in net interest income is
attributable to a $112 thousand decrease in interest and dividend income, which
was partially offset by a $71 thousand decrease in interest expense. The
decrease in interest and dividend income during the three months ended December
31, 2021 was primarily attributable to lower yields earned on the Company's
investment and mortgage-backed securities and FHLB stock, and lower average
balances of net loans outstanding which were partially offset by higher average
balances of investment, mortgage-backed securities and FHLB stock outstanding in
addition to higher yields on the net loan portfolio, when compared to the same
period in 2020. The decrease in interest expense during the three months ended
December 31, 2021 was primarily attributable to lower market interest rates paid
on FHLB advances and time deposits, which were partially offset by higher levels
of average wholesale time deposits and FHLB short term borrowings, when compared
to the same period in 2020.
For the six months ended December 31, 2021, net interest income decreased $236
thousand, or 9.1%, when compared to the same period in 2020. The decrease in
net interest income was primarily attributable to a $459 thousand decrease in
interest and dividend income, which was partially offset by a $223 thousand
decrease in interest expense when compared to the same period in 2020. The
decrease in interest and dividend income for the six months ended December 31,
2021, was primarily the result of lower average yields on the Company's loan,
investment and mortgage-backed securities portfolios, and FHLB stock in addition
to lower outstanding balances of net loans, which were partially offset by
higher average balances on investment, mortgage-backed securities and FHLB stock
when compared to the same period in 2020. The decrease in interest expense for
the six months ended December 31, 2021 was primarily attributable to lower rates
paid on deposits and FHLB advances, lower FHLB advances outstanding which were
partially offset by higher wholesale time deposits outstanding when compared to
the same period in 2020.
Interest Income. Interest income on net loans receivable decreased $90 thousand,
or 11.2%, and $257 thousand, or 15.4%, for the three and six months ended
December 31, 2021, when compared to the same periods in 2020. The decrease for
the three and six months ended December 31, 2021 was primarily attributable to a
3 and 10 basis point decrease in the average portfolio yields and a
$11.0 million and $11.9 million decrease in the average balance of net loans
receivable, when compared to the same periods in 2020. The decrease in the
average balance of loans outstanding in both periods was primarily attributable
to decreased loan originations and purchases.
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Interest income on investment securities decreased $64 thousand or 16.1% and
$142 thousand or 17.0% for the three and six months ended December 31, 2021,
respectively, when compared to the same periods in 2020. The decrease for the
three months ended December 31, 2021 was primarily attributable to a 20 basis
point decrease in the weighted-average yield on the available-for-sale
portfolio, partially offset by a $1.1 million increase in the average balance of
these investment securities when compared to the same period in 2020. The
decrease for the six months ended December 31, 2021 was primarily attributable
to a 28 basis point decrease in weighted-average yield on the available-for-sale
portfolio, partially offset by a $10.1 million increase in the average balance
of these investment securities when compared to the same period in 2020.
Interest income on mortgage-backed securities increased $34 thousand or 16.7%
for the three months ended December 31, 2021, when compared to the same period
in 2020. The increase for the three months ended December 31, 2021 was primarily
attributable to an increase of $36.5 million in average balances of U.S.
Government agency mortgage-backed securities partially offset by a decrease of
29 basis points in the weighted-average yield earned on U.S. Government agency
mortgage-backed securities when compared to the same period in 2020. The
increase in the average balances of U.S. Government agency mortgage-backed
securities during the three months ended December 31, 2021 was attributable to
purchases of $50.8 million of floating rate U.S. Government agency
mortgage-backed securities, partially offset by principal paydowns of $20.4
million, when compared to the same period in 2020. The $20.4 million in
principal paydowns was used in part to reduce the level of FHLB short-term
advances and purchase floating rate U.S. Government agency mortgage-backed
securities. Interest income on mortgage-backed securities decreased $35
thousand or 7.4% for the six months ended December 31, 2021, when compared to
the same period in 2020. The decrease for the six months ended December 31,
2021 was primarily attributable to a decrease of 29 basis points in the
weighted-average yield earned on U.S. Government agency mortgage-backed
securities, partially offset by a $17.5 million increase in such average
balances, when compared to the same period in 2020.
Interest income on bank certificates of deposit decreased $2 thousand and
$6 thousand for the three and six months ended December 31, 2021 when compared
to the same periods in 2020. The decrease for the three and six months ended
December 31, 2021 was attributable to a $645 thousand and $938 thousand decrease
in the average balances of bank time deposits, which were partially offset by a
68 and 74 basis point increase in average yield earned on bank time deposits
when compared to the same periods in 2020.
Dividend income on FHLB stock increased $10 thousand or 21.3% for the three
months ended December 31, 2021 when compared to the same period in 2020. The
increase for the three months ended December 31, 2021 was primarily attributable
to a $1.8 million increase in the average balance of FHLB stock held, partially
offset by 145 basis point decrease in the weighted-average yield earned. For
the six months ended December 31, 2021, dividend income on FHLB stock decreased
$19 thousand or 14.0%, when compared to the same period in 2020. The decrease
for the six months ended December 31, 2021 was primarily attributable to a 119
basis point decrease in the weighted -average yield earned, partially offset by
a $289 thousand increase in the average balance of FHLB stock held.
Interest Expense. Interest paid on FHLB short-term advances increased
$43 thousand or 159.3% for the three months ended December 31, 2021, when
compared to the same period in 2020. The increase for the three months ended
December 31, 2021 was primarily attributable to a $79.6 million increase in the
average balance of FHLB short-term advances outstanding, partially offset by a
10 basis point decrease in the weighted-average rate paid on FHLB short-term
balances outstanding. Interest paid on FHLB short-term advances increased $55
thousand or 91.7% for the six months ended December 31, 2021, when compared to
the same period in 2020. The increase for the six months ended December 31,
2021 was primarily attributable to a $58.3 million increase in the average
balance of FHLB short-term advances outstanding, partially offset by a 12 basis
point decrease in the weighted-average rate paid on FHLB short-term balances
outstanding. The decrease in rates paid on FHLB short-term borrowings were
consistent with decreases in short-term market interest rates.
Interest paid on FHLB long-term fixed rate advances decreased $38 thousand for
the three months ended December 31, 2021, when compared to the same period in
2020. The decrease for the three months ended December 31, 2021 was primarily
attributable to a $5.0 million decrease in the average balance of FHLB long-term
fixed rate advances partially offset by an 8 basis point increase in the
weighted average rate paid on FHLB long-term fixed rate advances, when compared
to the same period in 2020. The decrease for the six months ended December 31,
2021 as primarily attributable to a $5.0 million decrease in the average balance
on FHLB long-term fixed rate advances partially offset by a 6 basis point
increase in the weighted average rate paid on such advances. The decrease in
average balances of FHLB long-term fixed rate advances outstanding was due to
better rates and terms in FHLB short-term advances and wholesale time deposits.
Interest paid on FHLB long-term variable rate advances decreased $19 thousand
for the three months ended December 31, 2021, when compared to the same period
in 2020. The decrease for the three months ended December 31, 2021 was primarily
attributable to a $25.0 million decrease in the average balance of FHLB
long-term variable rate advances and an 30 basis point decrease in the
weighted-average rate paid on FHLB long-term variable rate advances. Interest
paid on FHLB long-term variable rate advances decreased $57 thousand for the six
months ended December 31, 2021, when compared to the same period in 2020. The
decrease for the six months ended December 31, 2021 was primarily attributable
to a $43.2 million decrease in the average balance of FHLB long-term variable
rate advances and an 11 basis point decrease in the weighted-average rate paid
in FHLB long-term variable rate advances.
Interest expense on deposits decreased $57 thousand, or 62.0%, for the three
months ended December 31, 2021, when compared to the same period in 2020. The
decrease in interest expense on deposits for the three months ended December 31,
2021 was primarily attributable to a decrease of $66.5 million in the average
balance of time deposit, partially offset by a 1 basis point increase in the
weighted-average rate paid on time deposits when compared the same period in the
prior year. Interest expense on deposits decreased $124 thousand or 63.3% for
the six months ended December 31, 2021, when compared to the same period in
2020. The decrease in interest expense on deposits for the six months ended
December 31, 2021 was primarily attributable to a decrease of 71 basis point
decrease in the weighted-average rate paid on time deposits partially offset
$28.5 million in the average balance of time deposits, when compared the same
period in the prior year.
Provision for Loan Losses. A provision for loan losses is charged to earnings
(while a credit provision for loan losses is accretive to earnings) to maintain
the total allowance at a level considered adequate by management to absorb
potential losses in the portfolio. Management's determination of the adequacy of
the allowance is based on an evaluation of the portfolio considering past
experience, current economic conditions, volume, growth and composition of the
loan portfolio, and other relevant factors.
Provisions for loan losses decreased $14 thousand and $29 thousand for the three
and six months ended December 31, 2021, when compared to the same period in
2020. The decrease in the provision for loan losses for the three and six months
ended December 31, 2021 was primarily due to decreased reserve factors related
to the economic uncertainty as a result of the COVID-19 pandemic totaling $22
thousand, which were partially offset by changes in average balance of net loans
outstanding, when compared to the same periods in 2020. At December 31, 2021,
the Company's total allowance for loan losses amounted to $528 thousand or 0.68%
of the Company's total loan portfolio, as compared to $565 thousand and 0.70% at
June 30, 2021. At December 31, 2021 and June 30, 2021, the Company had no
non-performing loans or any loans in COVID-19 deferral status.
The Company anticipates continuing to reverse the COVID-19 portion of the
allowance for loan and leases throughout fiscal 2022 assuming continued
favorable trends in th COVID-19 pandemic, which totaled $44.9 thousand at
December 31, 2021.
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Non-Interest Income. For the three and six months ended December 31, 2021,
non-interest income increased $35 thousand or 34.0% and $62 thousand or 29.0%
compared to the same periods in 2020, respectively. For the quarter ended
December 31, 2021, the increase was attributable to a $28 thousand increase in
gains on investments, and a $7 thousand increase in service charges on
deposits. For the six months ended December 31, 2021, the increase was
attributable to a $38 thousand increase in gains on investments, a $13 thousand
decrease in other than temporary impairment losses, $7 thousand in service
charges on deposits, and a $2 thousand increase in automated teller machine and
debit card fee income.
Non-Interest Expense. Non-interest expense increased $43 thousand or 4.9% and
$95 thousand or 5.4% for the three and six months ended December 31, 2021, when
compared to the same period in 2020. The increase for the three months ended
December 31, 2021, was primarily due to a $26 thousand increase in occupancy and
equipment expenses, a $12 thousand increase in employee compensation and
benefits expenses, and a $11 thousand increase in the provision for off-balance
sheet commitments (primarily unfunded loan commitments), which were partially
offset by a $3 thousand decrease in data processing expense, and a $3 thousand
decrease in the federal deposit insurance premium, when compared to the same
period of 2020. The increase for the six months ended December 31, 2021, was
primarily due to a $49 thousand increase in salaries and employee benefits, a
$32 thousand increase in provision for losses on off balance sheet commitments,
and a $26 thousand increase in occupancy and equipment, partially offset by an
$8 thousand decrease in federal deposit insurance premium and a $1 thousand
decrease in ATM network expense, when compared to the same period of 2020.
Income Tax Expense. Income tax expense decreased $10 thousand and $66 thousand
for the three and six months ended December 31, 2021, when compared to the same
periods in 2020. The decrease for the three and six months ended December 31,
2021 was primarily due to lower levels of taxable income, when compared to the
same periods in 2020.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities totaled $1.2 million during the
six months ended December 31, 2021. Net cash provided by operating activities
was primarily attributable to $601 thousand of Company net income, and
$601 thousand of amortization of discounts, premiums and deferred loan fees.
Net cash used for investing activities totaled $10.2 million for the six months
ended December 31, 2021. Primary uses of funds for investing activities during
the six months ended December 31, 2021 included purchases of investment
securities available-for-sale totaling $23.3 million, purchases of
mortgage-backed securities and loans totaling $50.8 million and 1.6 million,
respectively. Primary sources of funds from investing activities during the
six months ended December 31, 2021 included proceeds from repayments of
investment securities of $26.9 million, proceeds from early issuer redemptions
of investment securities of $9.1 million, $20.4 million of repayments of
mortgage-backed securities, $5.5 million of proceeds from repayments of
held-to-maturity investment securities, a decrease in loans receivable of $3.8
million.
Funds provided by financing activities totaled $9.4 million for the six months
ended December 31, 2021. Primary sources of funds from financing activities
were increases in certificates of deposits transaction and savings account and
FHLB short-term advances of $3.4 million, $1.5 million and $35.5 million,
respectively. Primary uses of funds by financing activities were decreases in
FHLB long-term advances totaling $30.0 million, advance payments by borrowers
for taxes and insurance of $677 thousand and $348 thousand of cash dividends
paid.
The decrease in advance payments by borrowers for taxes and insurance were
primarily attributable to seasonal withdrawals for the payment of local real
estate taxes. The increase in certificates of deposit at December 31, 2021 was
due principally to a $4.4 million increase in brokered deposits, which was
partially offset by a $1.0 million decrease in retail time deposits. The
increase in transaction and savings accounts were primarily attributable to
normal calendar year end fluctuations of transaction account balances and
transfers of maturing time deposits into savings accounts due to the small yield
differential in rates paid on time versus savings deposits. Management has
determined that it currently is maintaining adequate liquidity and continues to
match funding sources with lending and investment opportunities.
The Company's primary sources of funds are deposits, amortization, repayments
and maturities of existing loans, mortgage-backed securities and investment
securities, funds from operations, and funds obtained through FHLB advances and
other borrowings. Certificates of deposit scheduled to mature in one year or
less at December 31, 2021 totaled $29.4 million.
Historically, the Company used its sources of funds primarily to meet its
ongoing commitments to pay maturing savings certificates and savings
withdrawals, fund loan commitments and maintain a substantial portfolio of
investment securities. At ent portfolio totaled $137.8 million at December 31,
2021. In addition, the Company had $350 thousand of certificates of deposit and
$2.9 million of cash and cash equivalents at December 31, 2021. Management
believes that the Company currently has adequate liquidity available to respond
to liquidity demands.
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On January 24, 2022, the Company's Board of Directors declared a quarterly cash
dividend of $0.10 per share, on the common stock payable on February 17, 2022,
to shareholders of record at the close of business on February 7,
2022. Dividends are subject to determination and declaration by the Board of
Directors, which take into account the Company's financial condition, statutory
and regulatory restrictions, general economic conditions and other factors.
There can be no assurance that dividends will in fact be paid on the common
stock in future periods or that, if paid, such dividends will not be reduced or
eliminated.
As of December 31, 2021, WVS Financial Corp. exceeded all regulatory capital
requirements and maintained Common Equity Tier I Capital, Tier I, and total
risk-based capital equal to $38.2 million or 19.66%, $38.2 million or 19.66%,
and $38.8 million or 19.95%, respectively, of total risk-weighted assets, and
Tier I leverage capital of $38.2 million or 10.85% of average quarterly assets.
Nonperforming assets consist of nonaccrual loans and real estate owned. A loan
is placed on nonaccrual status when, in the judgment of management, the
probability of collection of interest is deemed insufficient to warrant further
accrual. When a loan is placed on nonaccrual status, previously accrued but
uncollected interest is deducted from interest income. The Company normally does
not accrue interest on loans past due 90 days or more, however, interest may be
accrued if management believes that it will collect on the loan.
The Company had no non-performing assets at December 31, 2021 or on June 30,
2021 .
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