Dear Friends of OBA Bank:
The OBA Bank staff has received and will continue to receive inquiries from our customers concerning the financial health of OBA Bank. We understand and appreciate your ongoing interest in your bank. We are pleased to advise you that OBA Bank is in excellent financial health. Needless to say; it has been a challenging twelve-month period. Depending on which economist you listen to, the economy is either in or is not in Recession. To the average family, it probably seems like we are closer to a Depression than a Recession.
The high prices of food and fuel continue to erode consumer purchasing power with price increases starting to creep into many other consumer and business products and services. Meanwhile, home values continue to decline and job security is becoming more elusive. From a banking perspective, the financial services industry’s past credit excesses has come back to impact earnings, capital levels and credit quality at many financial institutions. The result has been a predictable tightening of credit standards. Tighter credit exacerbates already weak economic fundamentals.
Despite the problems of the past year, you should not be surprised to know that your Bank continued to prosper because with challenges come opportunities. Individuals and businesses that recognize and prudently take advantage of these opportunities can continue to thrive in a hostile economic environment. OBA Bank has been in continuous operation since 1861. During that 147-year period we have survived the Great Depression, numerous recessions, and many other short-term financial crises. We have been able to accomplish this feat because we have not strayed from our core business values of maintaining a stable and predictable local institution dedicated to helping our customers meet their financial goals. We have just closed the books on our Fiscal Year ending June 30. Within this context we would like to discuss the financial highlights of last year’s operations.
Just as four legs provides stability to a well-made chair, the following four attributes provides stability to a financial institution:
1. Capital: The amount of capital as a percentage of total assets is arguably the single most important measurement of the general health of a financial institution. During the past year OBA continued to increase its capital base through retention of earnings from profitable operations. As of year-end our total capital was $38,955,000 or 11% of Total Assets. Our primary Federal Regulator – The Office of Thrift Supervision, regards us as “Well-Capitalized”.
2. Credit Quality: Poor credit quality is the fastest way to erode capital. Financial institutions generally look at problem credits as a percentage of total capital and loans past due 30 days or longer as a percent of total loans to measure credit quality. As of June 30, the level of problem credits at OBA was less than 5% of capital. Past due loans were 0.49% of total business loans and 0.17% of total residential/retail loans respectively. These percentages are exceptional in any instance let alone current economic conditions.
3. Liquidity: Liquidity measures an institution's ability to react to unexpected cash needs, typically funding loan requests or deposit withdrawal requests. Short-term assets such as cash and overnight investments provide liquidity. OBA’s liquidity position as of year-end was $16,000,000. This amount was basically unchanged from FY2007.
4. Profitability: OBA earned $897,615.00 during the past year. Actual profitability significantly exceeded budget expectation of $511,000.00.
OBA Bank’s “Four Legs of Stability” provides a strong foundation for our financial future as well as that of our customers.
Predictability as to how a financial institution or more importantly, the institution’s management, will react to market challenges and opportunities is important because it creates the level of comfort a bank customer or bank employee needs that the institution will continue to operate in a prudent manner; the so-called “Safety and Soundness” factor.
OBA Bank is in the business of providing high quality basic financial products and services to existing and future customers living and working in our local markets, both individuals and small businesses. We do not espouse the financial supermarket approach to banking. Nor do we chase the latest fad product or service, such as sub-prime or “no-documentation needed” residential mortgages. We prefer to do fewer things but do them well. OBA wants to be the financial services provider of choice for our customers. We know that entails a responsibility on our part to be there for our customers in good times and bad times. We are committed to being a reliable financial partner to our customers.
We are pleased with our results for the past year. We have continued to implement the goals and objectives of our Long Range Strategic Plan. We have operated in a safe and sound manner and pledge to continue to do so. We remain committed to our customers and staff.
Thank you for your continuing support.
Sincerely,
Charles E. Weller
President & CEO
