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
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
Commission file number 0 - 12784
WESTBANK CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts 04 - 2830731
(State or other jurisdiction
of incorporation or organization) (I.R.S. Employer I.D. No.)
225 Park Avenue, West Springfield, Massachusetts 01090-0149
(Address of principal executive offices) (Zip Code)
(413) 747-1400
(Registrant's telephone number, including area code)
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
Common stock, par value $2 per share: 3,160,768 shares
outstanding as of April 30, 1995.
WESTBANK CORPORATION AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION
Page
Financial Statements
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Income 4
Condensed Consolidated Statements of Stockholders' Equity 5
Condensed Consolidated Statements of Cash Flows 6
Notes to Condensed Consolidated Financial Statements 7-9
Management's Discussion and Analysis of Financial Condition and
Results of Operations 9-15
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings 16
ITEM 2. Changes in Rights of Securities Holders 16
ITEM 3. Defaults by Company on its Senior Securities 16
ITEM 4. Results of Votes on Matters Submitted to a Vote
of Security Holders 16
ITEM 5. Other Information 16
ITEM 6. Exhibits and Reports on Form 8-K 16
Signatures 17
WESTBANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1995 AND DECEMBER 31, 1994
(Dollar amounts in thousands)
ASSETS March 31, 1995 December 31, 1994
Cash and due from banks: (Unaudited)
Non-interest bearing $ 10,461 $ 10,425
Interest bearing 302 275
Federal Funds sold 1,200 1,000
Securities available for sale
(Amortized cost of $12,121 in 1995 and
$8,001 in 1994) 11,957 7,753
Securities held to maturity (approximate
market value of $20,896 in 1995 and
$20,631 in 1994) 21,436 21,463
Mortgage-backed securities (approximate
market value of $323 in 1995 and
$327 in 1994) 319 331
Loans $ 195,026 $ 196,002
Allowance for loan losses (2,740) (3,325)
Net-loans 192,286 192,677
Bank premises and equipment 3,547 3,417
Other real estate owned (OREO) - net of
allowance for losses of $231 in
1995 and $231 in 1994 1,540 1,552
Accrued interest receivable 1,612 1,668
Deferred income tax receivable 1,608 1,245
Refundable income tax 0 103
Other assets 1,527 1,404
TOTAL ASSETS $ 247,795 $ 243,313
LIABILITIES STOCKHOLDERS' AND EQUITY
Deposits
Non-interest bearing $ 37,102 $ 40,399
Interest bearing 185,575 178,164
Total Deposits 222,677 218,563
Borrowed funds 8,037 8,625
Accrued interest payable 256 240
Other liabilities 671 541
Total Liabilities 231,641 227,969
Stockholders' Equity:
Preferred stock - $5 par value 0 0
Authorized - 100,000 shares
Issued - none
Common stock - $2 par value
Authorized - 9,000,000 shares
Issued - 3,156,908 shares in 1995 and
3,138,167 shares in 1994 6,314 6,276
Additional paid in capital 6,903 6,877
Retained earnings 3,032 2,334
Net unrealized loss on securities
available for sale (95) (143)
Total Stockholders' Equity 16,154 15,344
TOTAL LIABILITIES AND EQUITY $ 247,795 $ 243,313
See accompanying notes to condensed consolidated financial statements.
WESTBANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(Dollar amounts in thousands)
(Unaudited)
THREE MONTHS ENDED
03-31-95 03-31-94
Income:
Interest and fees on loans $ 4,239 $ 3,516
Interest on temporary investments 32 14
Interest and dividends on securities 495 483
Total interest and dividend income 4,766 4,013
Interest expense 1,926 1,406
Net interest income 2,840 2,607
Provision for loan losses 450 347
Interest income after provision for loan losses 2,390 2,260
Security gains 0 150
Other non-interest income 512 596
Income before operating expenses 2,902 3,006
Operating Expenses:
Salaries and benefits 956 908
Other real estate-provision for losses 10 241
-operating expense 120 104
Other non-interest expense 839 832
Occupancy - net 187 185
Total operating expenses 2,112 2,270
Income before income taxes 790 736
Income taxes (benefit) (65) (180)
Net Income $ 855 $ 916
Net income per share $ .26 $ .29
Weighted average of common and
common share equivalents 3,234,625 3,195,513
See accompanying notes to condensed consolidated financial statements.
WESTBANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1994 AND THREE MONTHS ENDED MARCH 31, 1995
(1995 Unaudited)
(Dollar amounts in thousands)
NET UNREALIZED
GAIN (LOSS) ON
COMMON STOCK ADDITIONAL SECURITIES
NUMBER OF PAR PAID IN RETAINED AVAILABLE
SHARES VALUE CAPITAL EARNINGS FOR SALE TOTAL
DECEMBER 31, 1993 3,125,506 $ 6,251 $ 6,861 $ 159 $ - $ 13,271
Net income - - - 2,175 - 2,175
Shares issued under stock
option plan 7,864 16 - - - 16
Shares issued under stock
purchase plan 4,797 9 16 - - 25
Cumulative effect of implementing
accounting standard for investments
as of January 1, 1994 - - - - 233 233
Unrealized loss on securities
available for sale for
the year - - - - (376) (376)
Balance, December 31, 1994 3,138,167 $6,276 $6,877 $2,334 $(143) $15,344
Cash Dividend Declared:
Amount Declaration Record Paid
$0.05 1/10/95 1/20/95 1/25/95 (157) (157)
Shares issued under Dividend
Reinvestment Plan 6,403 13 18 31
Shares issued under stock
option plan 10,342 21 2 23
Shares issued under stock
purchase plan 1,996 4 6 10
(Increase)/decrease in
unrealized loss on
Securities available
for sale 48 48
Interim income for three months
ended March 31, 1995 855 855
BALANCE - MARCH 31, 1995 3,156,908 $6,314 $6,903 $3,032 $(95) $16,154
See accompanying notes to condensed consolidated financial statements.
WESTBANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(Unaudited)
(Dollar amounts in thousands)
03-31-95 03-31-94
Operating activities:
Net income $ 855 $ 916
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses 450 347
Depreciation and amortization 120 156
Provision for other real estate owned 10 241
Decrease in interest payable on deposits 16 (77)
(Increase) decrease in accrued interest receivable 56 (68)
Realized gain on sale of securities 0 (150)
Realized (gain) loss on sale of other real estate owned 4 0
Realized loss on sale of premises and equipment 0 0
Decrease (increase) in other assets (123) (248)
Increase (decrease) in other liabilities 130 254
Decrease (increase) in income taxes refundable 103 10
Increase in deferred taxes (363) (400)
Net cash provided by operating activities 1,258 981
Investing activities:
Investments and mortgage-backed securities:
Held to maturity:
Purchases 0 (500)
Proceeds from maturities 39 637
Available for sale:
Purchases (4,156) 0
Proceeds from sales 0 4,936
Proceeds from maturities 0 0
Purchases of premises and equipment (250) (64)
Net (increase) decrease in loans (131) (3,193)
Proceeds from sale of other real estate owned 70 971
Net cash provided by (used in) investing activities (4,428) 2,787
Financing activities:
Net increase (decrease) in borrowings (588) (5,039)
Net increase (decrease) in deposits 4,114 2,133
Proceeds from exercise of stock options and
stock purchase plan 64 7
Dividends paid (157) 0
Net cash used by financing activities 3,433 (2,899)
Increase (decrease) in cash and cash equivalents 263 869
Cash and cash equivalents at beginning of year 11,700 12,974
Cash and cash equivalents at end of year $11,963 $13,843
Cash paid during the year:
Interest on deposits and other borrowings 1,970 533
Income taxes 0 210
Transfers of loans to other real estate owned 205 223
Sales of other real estate owned financed by the bank 134 630
See notes to consolidated financial statements.
WESTBANK CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - GENERAL INFORMATION
Westbank Corporation (hereinafter sometimes referred to as
"Westbank") is a registered Bank Holding Company organized to
facilitate the expansion and diversification of the business of Park
West Bank and Trust Company (hereinafter sometimes referred to as
"Park West") into additional financial services related to banking
which are permitted by the Federal Bank Holding Company Act of 1956,
as amended. Westbank became the owner of all of Park West's
outstanding capital stock effective July 2, 1984.
Substantially all operating income and net income of the Corporation
are presently accounted for by Park West.
NOTE B - CURRENT OPERATING ENVIRONMENT
From March, 1992 until December 22, 1994 Park West had been
operating under a Formal Order (the "Formal Order") with the Federal
Deposit Insurance Corporation and the Commissioner of Banks for the
Commonwealth of Massachusetts. On December 22, 1994, as a result of
the improved financial condition of the Bank, the Formal Order was
released. The Formal Order was replaced with a Memorandum of
Understanding (the "Memorandum"). The Memorandum is an informal
agreement with the Federal Deposit Insurance Corporation (the
"FDIC") and the Commissioner of Banks for the Commonwealth of
Massachusetts (the "Commissioner") requiring Park West, among other
things, to maintain a leverage capital ratio of at least 6%, to
develop a written plan of action to lessen its risk exposure to
certain borrowers and to refrain from extending or renewing credit
to any borrower who has a loan or extension of credit with Park West
that has been charged off or classified, without first obtaining
majority approval of Park West's Board of Directors. Park West must
maintain the allowance for loan losses at a level commensurate to
the risk in the loan portfolio. The Memorandum requires Park West
to obtain approval from the FDIC and the Commissioner prior to
paying or declaring a dividend. Finally, Park West is required to
make quarterly reports to the FDIC and the Commissioner detailing
the form and manner of action taken to secure compliance with the
Memorandum.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") was enacted into law on December 19, 1991 and imposes
significant new regulatory restrictions and requirements on banking
institutions insured by the FDIC and their holding companies.
Effective December 19, 1992, FDICIA established five capital
categories into which financial institutions are placed based on
capital level. The capital categories established by FDICIA are:
well capitalized; adequately capitalized; undercapitalized;
significantly undercapitalized; and critically under- capitalized.
Each capital category establishes different degrees of regulatory
restrictions which can apply to a financial institution. As of
March 31, 1995, Park West's capital was at a level that placed the
Bank in the well capitalized category.
FDICIA imposes a variety of other restrictions and requirements on
insured banks. These include significant new regulatory reporting
requirements for fiscal years commencing after December 31, 1992, a
system of risk-based deposit insurance premiums and civil money
penalties for inaccurate deposit assessment reports. In addition, a
system of regulatory standards for bank and bank holding company
operations, detailed new truth in savings disclosure requirements,
and restrictions on activities authorized by state law but not
authorized for national banks.
The weak economy and real estate market continues to impair the
financial results of the Corporation. Despite these weaknesses the
Corporation has managed significant improvements in the level of
non-performing assets. As a result of the continued aggressive
management of problem loans and an on-going expense reduction
program, the Board of Directors and management believe the
Corporation is positioned to sustain compliance with the Memorandum
as well as the requirements of FDICIA.
NOTE C - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements for the first quarter ended March 31, 1995 and 1994 have
been prepared in accordance with generally accepted accounting
principles for interim information and with instructions for Form
10-Q. Accordingly, they do not include all of the information and
notes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating
results for the three month period ended March 31, 1995, are not
necessarily indicative of the results that may be expected for the
year ended December 31, 1995.
For further information, please refer to the Consolidated Financial
Statements and footnotes thereto included in the Westbank
Corporation's Annual Report on Form 10-K for the year ended December
31, 1994.
NOTE D - CHANGE IN ACCOUNTING
The Bank adopted Statement of Financial Accounting Standards No.
114, "Accounting by Creditors for Impairment of a Loan" (SFAS No.
114) on January 1, 1995. This statement addresses the accounting by
creditors for impairment of certain loans. It is applicable to all
creditors and to all loans, uncollateralized as well as
collateralized except large groups of smaller balance homogeneous
loans that are collectively evaluated for impairment, loans that are
measured at fair value or at the lower of cost or fair value, leases
and debt securities. It applies to all loans that are restructured
in a troubled debt restructuring involving a modification of terms.
SFAS No. 114 requires that impaired loans that are within the scope
of the statement be measured based on the present value of expected
future cash flows discounted at the loan's effective interest rate
or, as a practical expedient, at the loan's observable market price
or the fair value of the collateral if the loan is collateral
dependent.
The adoption of this Statement did not have a material impact on the
Bank's financial condition or results of its operations; however,
certain amounts in the 1994 financial statements were reclassified
to conform to the 1995 presentation.
NOTE E - NET INCOME PER SHARE
Earnings per share were computed by dividing net income by the
weighted average number of shares of common stock outstanding and
common stock equivalent shares arising from unexercised stock
options. The weighted average of common and common stock
equivalents for the periods ended March 31, 1995 and 1994, amounted
to 3,234,625 and 3,195,513 shares, respectively.
NOTE F - COMMITMENTS AND CONTINGENT LIABILITIES
In the normal course of business, there are outstanding commitments
and contingent liabilities, such as, standby letters of credit and
commitments to extend credit. As of March 31, 1995 standby letters
of credit amounted to $961,000 and loan commitments were $23,072,000
and unused balances available on home equity lines of credit were
$7,876,000.
Trust Assets - Property with a book value of $92,158,000 at March
31, 1995 held for customers by a subsidiary in a fiduciary or agency
capacity, is not included in the accompanying Balance Sheet since
such items are not assets of the Bank.
NOTE G - STOCKHOLDERS' EQUITY
The FDIC imposes leverage capital ratio requirements for state
non-member Banks. The Bank's leverage capital ratio as of March 31,
1995 and December 31, 1994 was 6.54% and 6.36%, respectively.
In addition, the FDIC has established risk-based capital
requirements for insured institutions of, Tier 1 risk-based capital
of 4.00% and total risk-based capital of 8.00%. The Bank's
risk-based capital at March 31, 1995, for Tier 1 was 8.98% and total
risk-based capital was 10.23%.
As discussed in NOTE B, on December 22, 1994, in conjunction with an
examination by the Commissioner the Formal Order was eliminated and
replaced with a Memorandum of Understanding. The Memorandum
requires, among other items: park West's Tier 1 capital to total
asset ratio remain at or above 6%; Park West to submit written plans
to further reduce classified assets; the Bank to review and/or
revise its Asset/Liability Management Policy; and not declare or pay
any dividends without prior approval by FDIC and the Commissioner.
Park West management believes that the Bank will be able to comply
with all of the terms of the Memorandum.
Under the Memorandum, the Corporation is prohibited from paying
dividends without the prior approval of the FDIC and the
Massachusetts Commissioner of Banks.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Total consolidated assets amounted to $247,795,000 on March 31,
1995, compared to $243,313,000 on December 31, 1994. As of March
31, 1995 and March 31, 1994 earning assets amounted to,
respectively, $230,500,000, or 93% of total assets, and
$209,669,000, or 92% of total assets.
For the quarter ended March 31, 1995, net income totaled $855,000
compared to $916,000 for the three month period ended March 31,
1994. Included in the results of the current quarter is a $65,000
tax benefit which is the result of a decrease in the valuation
reserve pertaining to deferred tax assets, offset by the provision
for current taxes.
Net income for the quarter ended March 31, 1994 reflects a tax
benefit of $180,000 as a result of a decrease in the valuation
reserve pertaining to deferred tax assets, offset by the provision
for current taxes.
An overall increase in interest income and interest expense reflects
an increase in volume and interest rates on earning assets, and
interest bearing deposits. Further analysis is provided in sections
on net interest revenue and supporting schedules. An increase has
been reflected in the provision for loan losses in the current
quarter with $450,000 being provided compared to $347,000 in the
1994 quarter. Decreases are noted in other real estate provisions
and operating expenses. This expense totalled $130,000 for the
current quarter compared with $345,000 a year ago, a decrease of
$215,000.
Loans and leases written-off against the allowance for loan/lease
losses after recoveries amounted to $1,035,000 in the current
quarter compared to $386,000 during the quarter ended December 31,
1994.
After giving effect to the actions described above, the allowance
for loan/lease losses at March 31, 1995, totalled $2,740,000 or
1.40% of total loans/leases as compared to $3,325,000 or 1.70% at
December 31, 1994.
Non-performing past due loans/leases at March 31, 1995, aggregated
$4,364,000 or 2.24% of total loan/leases compared to $5,883,000 or
3.00% at December 31, 1994. The percentage of non-performing and
past due loan/leases compared to total assets on those same dates,
respectively amounted to 1.76%, and 2.42%.
Other real estate owned-net, amounted to $1,540,000 at March 31,
1995, compared to $1,552,000 at December 31, 1994. The percentage
as compared to total assets on those same dates respectively
amounted to 0.62%, and 0.64%.
Management has made every effort to recognize all circumstances
known at this time which could affect the collectibility of
loan/leases and has reflected these in deciding as to the provision
for loan/lease losses, the writing down of other real estate owned
and impaired loans to fair value, the charge-off of loans/leases and
the balance in the allowance for losses. Management deems that the
provision for the quarter, and the balance in the allowance for
loan/lease losses, are adequate based on results provided by the
grading system and circumstances known at this time.
NET INTEREST INCOME
The Corporation's earning assets include a diverse portfolio of
earning instruments ranging from the Corporation's core business of
loan extensions to interest-bearing securities issued by federal,
state and municipal authorities. These earning assets are financed
through a combination of interest-bearing and interest-free sources.
Net interest income, the most significant component of earnings, is
the amount by which the interest generated by assets exceeds the
interest expense on liabilities. For analytical purposes, the
interest earned on tax exempt assets is adjusted to a "tax
equivalent" basis to recognize the income tax savings which
facilitates comparison between taxable and tax exempt assets.
The Corporation analyzes its performance by utilizing the concepts
of interest rate spread and net yield on earning assets. The
interest rate spread represents the difference between the yield on
earning assets and interest paid on interest-bearing liabilities.
The net yield on earning assets is the difference between the rate
of interest on earning assets and the effective rate paid on all
funds - interest-bearing liabilities, as well as, interest-free
sources (primarily demand deposits and shareholders' equity).
The balances and rates derived for the analysis of net interest
income presented on the following pages reflect the consolidated
assets and liabilities of the Corporation's principal earning
subsidiary, Park West Bank and Trust Company.
QUARTER ENDED
(Dollar amounts in thousands) 03-31-95 03-31-94
Interest revenue $ 4,766 $ 4,013
Interest expense 1,926 1,406
Net interest income 2,840 2,607
Tax equivalent adjustment 8 6
Net interest income (taxable equivalent) $ 2,848 $ 2,613
INTEREST RATE SPREAD AND NET YIELD ON EARNING ASSETS
(Dollar amounts in thousands) QUARTER ENDED
03-31-95 03-31-94
(Taxable Equivalent) Average Average
Balance Rate Balance Rate
Earning Assets $228,952 8.34% $208,399 7.72%
Interest-bearing
liabilities 190,707 4.04 176,329 3.19
Interest rate spread 4.30 4.53
Interest-free
resources used to
fund earning assets 38,245 32,070
Total Sources of Funds $228,952 3.36 $208,399 2.70
Net Yield on Earning Assets 4.98% 5.02%
CHANGES IN NET INTEREST EARNED
(Dollar amounts in thousands)
QUARTER ENDED 03-31-95
(Taxable Equivalent) O V E R
QUARTER ENDED 03-31-94
CHANGE DUE TO
Interest Earned VOLUME RATE TOTAL
Loans/leases $ 415 $ 310 $ 725
Securities 11 1 12
Federal funds 2 16 18
Total Interest Earned 428 327 755
Interest Expense
Interest bearing deposits 132 352 484
Other borrowed funds (7) 43 36
Total Interest Expense 125 395 520
Net Interest Earned $ 303 $ (68) $ 235
Net interest earned on a taxable equivalent basis increased to
$2,848,000 in the first quarter of 1995, up $235,000 as compared
with the comparable period of 1994, or 9%.
Average earning assets increased by $20,553,000 during the first
quarter of 1995. The average earning base was $228,952,000 compared
to $208,399,000 in the same period last year.
OPERATING EXPENSES
The components of total operating expenses for the periods and their
percentage of gross income are as follows:
QUARTER ENDED
(Dollar amounts in thousands) 03-31-95 03-31-94
Amount Percent Amount Percent
Salaries and benefits $ 956 18.11% $ 908 19.08%
Other Real Estate - expenses 130 2.46 345 7.25
Other non-interest expense 839 15.90 832 17.48
Occupancy - net 187 3.55 185 3.89
Total Operating Expenses $2,112 40.02% $2,270 47.70%
COMPONENTS OF CAPITAL
(Dollar amounts in thousands)
March 31, 1995 December 31, 1994
Stockholders' Equity:
Common Stock $ 6,314 $ 6,276
Additional paid-in capital 6,903 6,877
Retained earnings 3,032 2,334
Net unrealized gain/(loss) on securities
available for sale (95) (143)
Total Stockholders' Equity $16,154 $15,344
Ratio of "Tier 1" leverage capital
to total assets at end of period 6.52% 6.31%
Regulatory risk-based capital requirements, which became effective
on December 31, 1990, take into account the different risk
categories of banking organizations by assigning risk weights to
assets and the credit equivalent amounts of off-balance sheet
exposures.
In addition, capital is divided into two tiers. For this
Corporation, Tier 1 includes the common stockholders' equity; Tier
2, or supplementary capital, includes not only the equity, but also,
a portion of the allowance for loan losses, net unrealized
gain/(losses) on securities available for sale are not permitted to
be included for regulatory capital purposes.
The following are the Corporation's risk-based capital ratios at
March 31, 1995:
Tier 1 Capital (minimum required 4.00%) 8.90%
Tier 2 Capital (minimum required 8.00%) 10.15%
Under the Memorandum, the Corporation is prohibited from paying
dividends without the prior approval of the FDIC and the
Massachusetts Commissioner of Banks.
INTEREST RATE SENSITIVITY
The following table sets forth the distribution of the repricing of
the Corporation's earning assets and interest bearing liabilities as
of March 31, 1995.
(Dollar amounts in thousands)
Over Three Over One
Three Months Months to Year to Over
or Less One Year Five Years Five Years Total
Earning Assets $ 68,654 $ 48,979 $ 73,805 $ 38,802 $230,240
Interest Bearing
Liabilities 69,487 55,919 68,199 37,109 230,714
Interest Rate
Sensitivity Gap $ (833) $ (6,940) $ 5,606 $ 1,693 $ (474)
Cumulative Interest
Rate
Sensitivity Gap $ (833) $ (7,773) $ (2,167) $ (474)
Interest Rate
Sensitivity
Gap Ratio (0.36)% (3.01)% 2.43% 0.74%
Cumulative Interest
Rate Sensitivity
Gap Ratio (0.36)% (3.37)% 0.94% (0.20)%
LIQUIDITY
Cash and due from banks, federal funds sold, investment securities,
mortgage- backed securities and loans available for sale, as
compared to deposits and short term liabilities, are used by the
Corporation to compute its liquidity on a daily basis. At March 31,
1995, the Corporation's ratio of such assets to total deposits and
borrowed funds was 26.16%.
PROVISION AND ALLOWANCE FOR LOAN/LEASE LOSSES
(Dollar amounts in thousands) QUARTER ENDED
03-31-95 03-31-94
Balance at beginning of period $ 3,325 $ 3,472
Provision charged to expense 450 347
3,775 3,819
Less-Charge-offs:
Loans secured by real estate 791 267
Construction/land development 0 0
Commercial and industrial loans 204 128
Consumer loans 57 8
1,052 403
Add-Recoveries:
Loans secured by real estate 0 0
Construction/land developing 0 0
Commercial and industrial loans 2 42
Consumer loans 13 4
Lease financing receivables 2 1
17 47
Net charge-offs 1,035 356
Balance at end of period $ 2,740 $ 3,463
Net Charge-offs to:
Average loan/leases .53% .20%
Loans/leases at end of period .53% .20%
Allowance for loan/lease losses 31.64% 10.25%
Allowance for loan/lease losses
as a percentage of:
Average loan/leases 1.40% 1.97%
Loan/leases at end of period 1.40% 1.92%
The approach the Corporation uses in determining the adequacy of the
Allowance for Loan/Lease Losses is the combination of a target
reserve and a general reserve allocation. Quarterly, based on an
internal review of the Loan Portfolio, the Corporation identifies
required reserve allocations targeted to recognized problem loans
that, in the opinion of management, have potential loss exposure or
questions relative to the depth of the collateral on these same
loans. In addition, the Corporation allocates a general reserve
against the remainder of the Loan Portfolio.
NON-ACCRUAL, PAST DUE AND RESTRUCTURED LOANS
(Dollar amounts in thousands)
Non-Accrual Loans: 03-31-95 12-31-94 09-30-94 06-30-94 03-31-94
Loans secured by real estate $ 3,302 $ 4,173 $ 4,977 $ 5,200 $ 2,304
Construction/Land development 58 68 0 84 91
Commercial and Industrial Loans 357 570 1,132 483 466
Consumer Loans 24 79 53 19 7
3,741 4,890 6,162 5,786 2,868
Loans Contractually
past due 90 days or more
still accruing:
Loans secured by real estate 117 260 81 229 921
Construction/Land development 0 0 0 0 22
Commercial and Industrial Loans 0 216 5 49 16
Consumer Loans 8 16 36 23 18
Lease financing receivables 0 0 0 0 7
125 492 122 301 984
Restructured Loans 498 501 452 456 614
Total non-accrual, past
due and restructured
loans $ 4,364 $ 5,883 $ 6,736 $ 6,543 $ 4,469
Non-accrual, past due and
restructured loans
as a percentage of total
loans 2.24% 3.00% 3.65% 3.55% 2.48%
Allowance for loan
losses as a percentage of
non accrual, past due and
restructured loans 62.79% 56.52% 47.04% 60.43% 77.49%
OTHER REAL ESTATE
Other real estate owned - net $ 1,540 $ 1,552 $ 1,659 $ 2,107 $ 2,360
WESTBANK CORPORATION AND SUBSIDIARIES
QUARTER TO DATE AVERAGE BALANCES
INTEREST EARNED - INTEREST EXPENSE
(RATES ON A TAX EQUIVALENT BASIS)
(Dollar amounts in thousands)
THREE MONTHS ENDED THREE MONTHS ENDED
March 31, 1995 March 31, 1994
Balance Interest Rate Balance Interest Rate
Federal Funds sold and
temporary investments $ 2,266 $ 32 5.65% $ 2,067 $ 14 2.71%
Securities 31,037 495 6.38 30,439 483 6.35
Loans/leases 195,649 4,247 8.68 175,893 3,522 8.01
Total earning assets 228,952 $ 4,774 8.34 208,399 $ 4,019 7.72
Loan/lease loss allowance (3,260) (3,469)
All other assets 18,813 19,342
TOTAL ASSETS $244,505 $224,272
LIABILITIES AND EQUITY
Interest bearing deposits $181,897 $ 1,829 4.02 $166,627 $ 1,345 3.23
Borrowed funds 8,810 97 4.40 9,702 61 2.51
Total interest bearing
liabilities 190,707 $ 1,926 4.04 176,329 $ 1,406 3.19
Interest rate spread 4.30% 4.53%
Demand deposits 37,040 33,290
Other liabilities 806 713
Shareholders' equity 15,952 13,940
TOTAL LIABILITIES
AND EQUITY $244,505 $224,272
Net Interest Income $ 2,848 $ 2,613
Interest Earned/Earning Assets 8.34% 7.72%
Interest Expense/Earning Assets 3.36 2.70
Net Yield on Earning Assets 4.98% 5.02%
Deduct - Tax Equivalent Adjustment 8 6
NET INTEREST INCOME $ 2,840 $ 2,607
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
None
ITEM 2. Changes in Rights of Securities Holders
None
ITEM 3. Defaults by Company on its Senior Securities
None
ITEM 4. Results of Votes on Matters Submitted to a Vote of Security Holders
None
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports on Form 8
The Corporation filed a report on Form 8-K on March 31, 1995
reporting the discovery of an alleged defalcation by a former
employee of the Corporation.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Quarterly Report to be signed on
its behalf by the undersigned thereunto duly authorized.
WESTBANK CORPORATION
Date: May 8, 1995 Donald R. Chase
President and Chief Executive Officer
Date: May 8, 1995 John M. Lilly, Treasurer and
Chief Financial Officer