SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 10-QSB
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
|_| 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: 0-26577
Webster City Federal Bancorp
(Exact name of registrant as specified in its charter)
United States 42-1491186
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
820 Des Moines Street, Webster City, Iowa 50595-0638
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 515-832-3071
- --------------------------------------------------------------------------------
(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. |X| Yes |_| No
Transitional Small Business Disclosure Format: |_| Yes |X| No.
Indicate the number of shares outstanding for each of the issuer's classes
of common stock, as of the latest practicable date.
1,886,186 shares of common stock were outstanding at April 30, 2003.
Webster City Federal Bancorp and Subsidiaries
Index
Page
----
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
at March 31, 2003 and December 31, 2002 1
Consolidated Statements of Operations
for the three months ended March 31, 2003
and 2002 2
Consolidated Statements of Cash Flows
for the three months ended March 31, 2003
and 2002 3
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
Item 3. Controls and Procedures 8
Part II. Other Information
Other Information 9
Item 1
Webster City Federal Savings Bancorp and Subsidiaries
Consolidated Balance Sheets
March 31, December 31,
2003 2002
------------- -------------
Assets (Unaudited)
Cash and cash equivalents $ 8,200,403 $ 5,251,946
Time deposits in other financial institutions 10,591,000 10,892,000
Securities available-for-sale 10,665,520 7,697,110
Investment securities held-to-maturity (market value 3,218,522 3,553,789
of $3,315,323 and $3,646,401, as of March 31, 2003 and
Decemeber 31, 2002, respectively
Loans receivable, net 70,197,496 73,319,065
Federal Home Loan Bank stock, at cost 704,900 704,900
Office property and equipment, net 711,302 726,135
Deferred taxes on income 276,999 242,000
Accrued interest receivable 561,565 630,779
Prepaid expenses and other assets 508,056 536,457
------------- -------------
Total assets $ 105,635,763 $ 103,554,181
============= =============
Liabilities and Stockholders' Equity
Deposits $ 71,929,821 $ 70,216,797
Federal Home Loan Bank advances 9,700,000 9,700,000
Advance payments by borrowers for
taxes and insurance 118,745 306,386
Accrued interest payable 309,944 42,491
Current income taxes payable -- 83,374
Accrued expenses and other liabilities 1,151,111 886,331
------------- -------------
Total liabilities $ 83,209,621 $ 81,235,379
============= =============
Stockholders' Equity
Serial preferred stock, $0.10 par value -- --
Authorized 10,000,000 shares; issued none
Common stock, $.10 par value. 20,000,000 shares authorized: 215,061 215,061
2,150,614 issued and 1,888,376 outstanding at March 31, 2003
2,150,614 issued and 1,888,376 outstanding at December 31, 2002
Additional paid-in capital 9,467,295 9,467,295
Retained earnings, substantially restricted 16,577,371 16,456,391
Unrealized gain on securities available-for-sale 47,354 60,994
Treasury stock, 262,238 shares as of March 31, 2003 (3,880,939) (3,880,939)
and Deceember 31, 2002, respectively
Total stockholders' equity 22,426,142 22,318,802
------------- -------------
Total liabilities and stockholders' equity $ 105,635,763 $ 103,554,181
============= =============
See accompying notes to consolidated financial statements.
Webster City Federal Savings Bancorp and Subsidiaries
Consolidated Statements of Operations
For the Three Months
Ended March 31,
--------------------------
2003 2002
---------- -----------
(Unaudited)
Income
Interest income:
Loans receivable $1,297,025 $ 1,421,851
Mortgage-backed & related securities 35,786 65,045
Investment securities 106,296 154,479
Other interest-earning assets 122,608 43,649
---------- -----------
Total interest income 1,561,715 1,685,024
Interest expense:
Deposits 490,710 638,747
Federal Home Loan Bank advances 124,988 124,988
---------- -----------
Total interest expense 615,698 763,735
---------- -----------
Net interest income 946,017 921,289
Provision for losses on loans -- --
---------- -----------
Net interest income after
provision for losses on loans 946,017 921,289
---------- -----------
Non-interest income:
Fees and service charges 51,773 66,501
Other 30,819 41,923
---------- -----------
Total non-interest income 82,592 108,424
---------- -----------
Expense
Non-interest expense:
Compensation, payroll taxes
and employee benefits 302,314 267,830
Office property and equipment 37,796 28,753
Data processing services 54,679 45,678
Federal insurance premiums 2,839 3,129
Other real estate expenses (income), net 509 (650)
Advertising 8,981 5,321
Other 126,448 127,869
---------- -----------
Total non-interest expense 533,566 477,930
---------- -----------
Earnings before taxes on income 495,043 551,783
Taxes on income 189,472 201,642
---------- -----------
Net earnings $ 305,571 $ 350,141
========== ===========
Earnings per share - basic $ 0.16 $ 0.18
========== ===========
Earnings per share - diluted $ 0.16 $ 0.18
========== ===========
See accompanying notes to consolidated financial statements.
Webster City Federal Bancorp and Subsidiaries
Consolidated Statements of Cash Flows
For the Three Months
Ended March 31,
----------------------------
2003 2002
----------- -----------
(Unaudited)
Cash flows from operating activities
Net earnings $ 305,571 $ 350,141
----------- -----------
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation 14,833 31,263
Amortization of premiums and discounts, net 460 3,522
Change in:
Accrued interest receivable 69,214 (122,270)
Prepaid expenses and other assets 28,401 (39,301)
Accrued interest payable 267,453 374,277
Accrued expenses and other liabilities 264,780 260,598
Accrued taxes on income (83,374) (89,001)
Deferred taxes on income (16,527) --
----------- -----------
Total adjustments 545,240 419,088
----------- -----------
Net cash provided by operating activities 850,811 769,229
----------- -----------
Cash flows from investing activities
Proceeds from the maturity of interest bearing deposits 1,094,000 301,000
Purchase of investment securities (4,500,000) (1,947,369)
Purchase of interest bearing deposits (793,000) (2,093,000)
Purchase of FHLB stock -- (91,700)
Proceeds from sales of securities available-for-sale 1,500,000 --
Principal collected on mortgage-backed and related securities 333,838 366,476
Net change in loans receivable 3,122,019 182,138
----------- -----------
Net cash provided by (used in) investing activities 756,857 (3,282,455)
----------- -----------
Cash flows from financing activities
Net change in savings deposits 1,713,024 (1,122,103)
Net decrease in advance payments by borrowers
for taxes and insurance (187,641) (167,553)
Proceeds on stock options -- (156)
Dividends paid (184,594) (180,288)
----------- -----------
Net cash used in financing activities 1,340,789 (1,470,100)
----------- -----------
Net increase (decrease) in cash and cash equivalents 2,948,457 (3,983,326)
Cash and cash equivalents at beginning of period 5,251,946 9,183,215
----------- -----------
Cash and cash equivalents at end of period $ 8,200,403 $ 5,199,889
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 223,257 $ 264,470
Taxes on income -- --
=========== ===========
Transfer of loans to REO -- (42,305)
=========== ===========
See accompying notes to consolidated financial statements.
Webster City Federal Bancorp and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
1. DESCRIPTION OF BUSINESS
Webster City Federal Bancorp (the "Company") and its subsidiaries, Webster City
Federal Savings Bank, a federal stock savings bank (the "Bank") and Security
Title and Abstract, Inc., conduct operations in Webster City, Iowa, a community
of approximately 8,000 people. The Bank is primarily engaged in the business of
attracting deposits from the general public in its market area and investing
such deposits in mortgage loans secured by one-to-four family residential real
estate. The Bank's primary area of lending and other financial services consists
of Hamilton County, Iowa, and the surrounding contiguous counties. Security
Title and Abstract, Inc. is engaged in the business of providing abstracting and
title services for properties located in Hamilton County, Iowa.
Webster City Federal Bancorp was formed as the holding company for the Bank on
July 1, 1999 pursuant to a plan of reorganization adopted by the Bank and its
stockholders. Pursuant to the reorganization, each share of Webster City Federal
Savings Bank common stock held by existing stockholders of the Bank was
exchanged for a share of common stock of Webster City Federal Bancorp. The
reorganization had no financial statement impact and is reflected for all prior
periods presented. Approximately 60% of the Company's outstanding common stock
is owned by WCF Financial M.H.C., a mutual holding company (the "Holding
Company"). The remaining 40% of the Company's outstanding common stock is owned
by the general public including the Bank's Employee Stock Ownership Plan.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
The consolidated financial statements for the three-month periods ended March
31, 2003 and 2002 are unaudited. In the opinion of management of the Company,
these financial statements reflect all adjustments, consisting only of normal
recurring accruals necessary to present fairly these consolidated financial
statements. The results of operations for the interim periods are not
necessarily indicative of results that may be expected for an entire year.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted.
Principles of Consolidation
The consolidated financial statements include the accounts of Webster City
Federal Bancorp, Security Title and Abstract, Inc., Webster City Federal Savings
Bank and its wholly owned subsidiary, WCF Service Corporation, which is engaged
in the sales of mortgage life and credit life insurance to the Bank's loan
customers. All material inter-company accounts and transactions have been
eliminated in the consolidation.
The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the Unites States of America. In
preparing such financial statements, management is required to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities as of the date of the balance
sheet and revenues and expenses for the period. Actual results could differ
significantly from those estimates. Material estimates that are particularly
susceptible to significant change relate to the determination of the allowance
for loan losses.
3. EARNINGS PER SHARE COMPUTATIONS
2003
Earnings per share - basic is computed using the weighted average number of
common shares outstanding of 1,888,376 for the three months ended March 31,
2003, divided into the net earnings of $305,571 for the three months ended March
31, 2003, resulting in earnings per share of $.16 compared to $.18 for the three
months ended March 31, 2002.
Earnings per share - diluted is computed using the weighted average number of
common shares outstanding after giving effect to additional shares assumed to be
issued in relation to the Company's stock option plan using the average price
per share for the period. Such additional shares were 3,285 for the three months
ended March 31, 2003. Earnings for the three months ended March 31, 2003 were
$305,571, resulting in earnings per share of $.16 compared to $.18 for the three
months ended March 31, 2002.
2002
Earnings per share - basic is computed using the weighted average number of
common shares outstanding of 1,877,751 for the three months ended March 31,
2002, divided into the net earnings of $350,141 for the three months ended March
31, 2002, resulting in earnings per share of $.18 compared to $.15 for the three
months ended March 31, 2001.
Earnings per share - diluted is computed using the weighted average number of
common shares outstanding after giving effect to additional shares assumed to be
issued in relation to the Company's stock option plan using the average price
per share for the period. Such additional shares were 5,461 for the three months
ended March 31, 2002. Earnings for the three months ended March 31, 2002 were
$350,141, resulting in earnings per share of $.18 compared to $.15 for the three
months ended March 31, 2001.
4. DIVIDENDS
On January 15, 2003 the Company declared a cash dividend on its common stock
payable on February 19, 2003 to stockholders of record as of February 6, 2003,
equal to $.25 per share or approximately $472,094. Of this amount, the payment
of approximately $287,500 (representing the dividend payable on 1,150,000 shares
owned by WCF Financial, M.H.C., the Company's mutual holding company) was waived
by the mutual holding company, and $65,560 (representing the dividends payable
on treasury shares owned by the Company) was not distributed resulting in an
actual dividend distribution of $184,594.
5. INTANGIBLE ASSET
A Company subsidiary maintains an intangible asset relating to a customer list.
It has an estimated useful life of 15 years and is being amortized using the
straight-line method. At March 31, 2003, the gross carrying amount was $145,000
with accumulated amortization of $24,974. Amortization expense for the three
months ended March 31, 2003 and 2002 was $2,418, respectively.
The estimated amortization expense for the following five year period is as
follows:
December 31, 2003 $ 9,667.
December 31, 2004 9,667.
December 31, 2005 9,667.
December 31, 2006 9,667.
December 31, 2007 9,667.
6. STOCK - BASED COMPENSATION
SFAS No. 123, Accounting for Stock-Based Compensation, established accounting
and disclosure requirements using a fair-value-based method of accounting for
stock-based employee compensation plans. As allowed by SFAS No. 123, the Company
has elected to continue to apply the intrinsic-value-based method of accounting
described above, and has
adopted only the disclosure requirements of SFAS No. 123. The following table
illustrates the effect on net income if the fair-value-based method had been
applied to all outstanding and unvested awards in each period.
Quarter Ended Quarter Ended
March 31, 2003 March 31, 2002
-------------- --------------
Net income, as reported $305,571 $350,141
Add stock -based employee
compensation expense included in
reported net income, net of tax _ _
Deduct total stock-based employee
compensation expense determined
under fair-value-based method for
all rewards, net of tax _ _
Pro forma $305,571 $350,141
Earnings per share
As reported:
Basic .16 .18
Diluted .16 .18
Pro forma:
Basic .16 .18
Diluted .16 .18
Item 2
Webster City Federal Bancorp and Subsidiaries
Management's Discussion and Analysis of Financial Condition and
Results of Operations
FINANCIAL CONDITION
Total assets increased by $2.1 million, or 2.0%, from December 31, 2002 to March
31, 2003. Cash and cash equivalents increased $2.9 million or 56.1%, due to the
Company investing some excess funds in time deposits in other financial
institutions. Securities available for sale increased by $3.0 million or 38.9%,
when funds from loan payoffs were reinvested in investment securities and Loans
receivable decreased $3.1 million, or 4.3% during the same period. At March 31,
2003, the Company had no real estate owned. During the three-month period
deposits increased $1.7 million, or 2.4%.
Total stockholders' equity increased by $107,300 to $22.4 million at March 31,
2003 from $22.3 at December 31, 2002, as earnings of $305,600 were partially
offset by quarterly dividends paid totaling $184,600.
CAPITAL
The Company's total stockholders' equity increased by $107,300, to $22.4 million
at March 31, 2003 from $22.3 million at December 31, 2002. The Office of Thrift
Supervision (OTS) requires that the Bank meet certain minimum capital
requirements. As of March 31, 2003 the Bank was in compliance with all
regulatory capital requirements. The Bank's required, actual and excess capital
levels as of March 31, 2003 were as follows:
Required % of Actual % of Excess
Amount Assets Amount Assets Capital
------ ------ ------ ------ -------
(Dollars in thousands)
Tier 1 (Core) Capital $4,204 4.0% $21,471 20.43% $17,267
Risk-based Capital $4,079 8.0% $21,714 42.59% $17,635
RESULTS OF OPERATIONS
Interest Income. Interest income decreased by $123,300 for the three months
ended March 31, 2003 compared to the three months ended March 31, 2002. The
decrease was due to a decrease in the average yield on interest-earning assets
to 6.20% for the three months ended March 31, 2003 compared to 6.81% for the
three months ended March 31, 2002 offset by an increase in the average balance
of interest earning assets of $1.9 million or 1.9% to $100.7 million for the
three months ended March 31, 2003 from $98.8 million for the corresponding
period ended March 31, 2002.
Interest on loans for the three months ended March 31, 2003 decreased by
$124,900 or 8.8% compared to the three months ended March 31, 2002. The decrease
resulted primarily from a decrease in total loans outstanding during the period,
and a decrease in the yields on loans receivable from 7.66% for the three months
ended March 31, 2002 to 7.27% for the three months ended March 31, 2003. The
decrease in the yields on loans receivable was primarily due to lower market
rates and a number of adjustable rate loans repricing at a lower rate based on
the lagging index used by the Bank.
Interest on mortgage-backed securities decreased by $29,300 or 45.0% for the
three-month period ended March 31, 2003 as compared to the same period ended
March 31, 2002. The decline resulted from a decrease of $1.4 million or 56.0% in
the average balance of mortgage-backed securities to $2.5 million for the three
months ended March 31, 2003 compared to $3.9 million for the three months ended
March 31, 2002, and a decrease of 79 basis points in the average yield on
mortgage-backed securities to 5.83% for the three months ended March 31, 2003
from 6.62% for the three months ended March 31, 2002, as remaining adjustable
rate loans repriced at a lower rate.
Interest Expense. Interest expense decreased by $148,000, or 19.4%, from
$763,700 for the three months ended March 31, 2002 to $615,700 for the three
months ended March 31, 2003. The decrease in interest expense was due to the
average cost of deposits decreasing by 93 basis points from 3.71% for the three
months ended March 31, 2002 to 2.78% for the three months ended March 31, 2003,
partially offset by an increase in average deposits outstanding of $1.6 million
from $68.9 million for the three months ended March 31, 2002 to $70.5 million
for the three months ended March 31, 2003. Interest expense on FHLB advances
remained unchanged at $125,000 for the three months ended March 31, 2002 and for
the three months ended March 31, 2003.
Net Interest Income. Net interest income before provision for losses on loans
increased by $24,800 or 2.69% from $921,300 for the three months ended March 31,
2002 to $946,000 for the three months ended March 31, 2003. The Company's
interest rate spread for the three months ended March 31, 2003 improved by 20
basis points to 3.13% from 2.93% for the three months ended March 31, 2002, due
to declines in average loan rates being offset by a larger decline in average
deposit interest rates.
Non-interest Income. Non-interest income decreased by $25,800 or 23.8% for the
three-month period ended March 31, 2003 as compared to the same period ended
March 31, 2002. The decrease was due to a decline in loan fees and service
charges collected partially offset by an increase in additional fees received
from the abstracting company.
Non-interest Expense. Non-interest expense increased by $55,600 or 11.6% for the
three-month period ended March 31, 2003 compared to the same period ended March
31, 2002. Compensation and benefit costs increased $34,500 or 12.9% from
$267,800 for the three months ended March 31, 2002 to $302,300 for the
three-month period ended March 31, 2003. The increase was due primarily to
increased expenses related to the Company's retirement plan.
Provision for Losses on Loans. There were no provisions for losses on loans for
the three months ended March 31, 2003 or March 31, 2002. The Company had
$247,900 in non-performing loans as of March 31, 2003 compared to $632,900 for
the same period ended March 31, 2002. The Company had $33,900 in charge-offs
during the first quarter of 2003, and total charge-offs of $7,800 during the
first quarter of 2002. The allowance for losses on loans is based on
management's periodic evaluation of the loan portfolio and reflects an amount
that, in management's opinion, is adequate to absorb losses in the existing
portfolio. In evaluating the portfolio, management takes into consideration
numerous factors, including current economic conditions, prior loan loss
experience, the composition of the loan portfolio, and management's estimate of
anticipated credit losses.
Taxes on Income. Income taxes for the three months ended March 31, 2003, were
$189,500 compared to $201,600 for the same period ended March 31, 2002. The
effective income tax rate for the three months of 2003 was 38.3% compared to
36.5% for the first three months of 2002.
Net Earnings. Net earnings of the Company totaled $305,600 for the three months
ended March 31, 2003 compared to $350,100 for the three months ended March 31,
2002.
Impact of New Accounting Standards
In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations (SFAS No. 143). SFAS No. 143 requires the Company to record the fair
value of an asset retirement obligation as a liability in the period in which it
incurs a legal obligation associated with the retirement of tangible long-lived
assets that result from the acquisition, construction, development, and/or
normal use of the assets. The Company also records a corresponding asset which
is depreciated over the life of the asset. The Company is required to adopt SFAS
No. 143 on January 1, 2003. The adoption of SFAS No. 143 was not material.
In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.
SFAS No. 145 amends existing guidance on reporting gains and losses on the
extinguishment of debt to prohibit the classification of the gain or loss as
extraordinary, as the use of such extinguishments have become part of the risk
management strategy of many companies. SFAS No. 145 also amends SFAS No. 13 to
require sale-leaseback accounting for certain lease modifications that have
economic effects similar to sale-leaseback transactions. The provisions of the
Statement related to the rescission of the Statement No. 4 are applied in fiscal
years beginning after May 15, 2002. Earlier application of these provisions is
encouraged. The provisions of the Statement related to Statement No. 13 were
effective for transactions occurring after May 15, 2002, with early application
encouraged. The impact of adopting of SFAS No. 145 on the Company's financial
statements was not material.
In June 2002, the FASB issued 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 (EITF) 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 this
Statement are effective for exit and disposal activities that are initiated
after December 31, 2002. The effect of this Statement on the Company's financial
statements was not material.
In October 2002, the FASB Statement No. 147 (FAS 147), Acquisitions of Certain
Financial Institutions, which amends Statement No. 72 (FAS 72), Accounting for
Certain Acquisitions of Banking or Thrift Institutions and no longer requires
the separate recognition and subsequent amortization of goodwill that was
originally required by FAS 72. FAS 147 also amend Statement No. 144 (FAS 144),
Accounting for the Impairment or Disposal of Long-Lived Assets, to include in
its scope long-term customer-relationship intangible assets (such as core
deposit intangibles). The effects of implementation on the Company's financial
statements were not material.
In November 2002, the FASB issued Interpretation No. 45, Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness to Others, an interpretation of FASB Statements No. 5, 57,
and 107 and a rescission of FASB Interpretation No. 34. This Interpretation
elaborates on the disclosures to be made by a guarantor in its interim and
annual financial statements about its obligations under guarantees issued. The
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. The initial recognition and measurement provisions of the
Interpretation are applicable to guarantees issued or modified after December
31, 2002,.and are not expected to have a material effect on the Company's
financial statements. The disclosure requirements are effective for financial
statements of interim and annual periods ending after December 15, 2002.
In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation - Transition and Disclosure, an amendment of FASB Statement No.
123. This Statement amends FASB Statement No. 123, Accounting for Stock-Based
Compensation, to provide alternative methods of transition for a voluntary
change to the fair value method of accounting for stock-based employee
compensation. In addition, this Statement amends the disclosure requirements of
Statement No. 123 to require prominent disclosures of both annual and interim
financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. Certain of
the disclosure modifications are required for fiscal years ending after December
15, 2002 and are included in the notes to these consolidated financial
statements.
In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities (FIN 46). FIN 46 addresses consolidation by business
enterprises of variable interest entities that have certain characteristics. It
requires a business enterprise that has a controlling interest in a variable
interest entity (as defined by FIN 46) to include the assets, liabilities and
results of the activities of the variable interest entity of the consolidated
financial statements of the business enterprise. FIN 46 applies immediately to
variable interest entities created after January 31, 2003, and to variable
interest entities in which an enterprise obtains an interest after that date.
For variable interest acquired before February 1, 2003, it applies in the first
fiscal year or interim period beginning after June 15, 2003. The impact of
adopting FIN 46 will not be material as the Company does not presently have any
variable interest entities.
Safe Harbor Statement
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 Reform Act of
1995, and is including this statement for the 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 identifiable 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 and future prospects of the Company and its subsidiaries include, but
are not limited to, changes in: interest rates, general economic conditions,
legislative/regulatory changes, monetary and fiscal polices of the U.S.
Government, including polices 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 Bancorp's market area and accounting principles, polices and guidelines.
These risks and uncertainties should be considered in evaluating forward-looking
statements and undue reliance should not be placed on such statements.
Item 3
Controls and Procedures
(a) Evaluation of disclosure controls and procedures.
Under the supervision and with participation of our management, including the
Company's Chief Executive Officer and Chief Financial Officer, the Company
evaluated the effectiveness of the design and operation of the Company's
disclosure controls and procedures (as defined in Rule 13a-14(c) under the
Securities Exchange Act of 1934) as of a date (the "Evaluation Date") within 90
days prior to the filing date of this report. Based upon that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that, as of the
Evaluation Date, the Company's disclosure
controls and procedures were effective in timely alerting them to the material
information relating to the Company's (or its consolidated subsidiaries)
required to be included in its periodic SEC filings.
(b) Changes in internal controls.
There were no significant changes made in the Company's internal controls during
the period covered by this report or, to its knowledge, in other factors that
could significantly affect these controls subsequent to the date of their
evaluation.
Webster City Federal Bancorp and Subsidiaries
PART II. Other Information
Item 1. Legal Proceedings
There are various claims and lawsuits in which the Company is periodically
involved incidental to the Company's business. In the opinion of management, no
material loss is expected from any of such pending claims or lawsuits.
Item 2. Changes in Securities
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:
None
(b) No form 8-K reports were filed during the quarter ended March 31,
2003.
Webster City Federal Bancorp and Subsidiaries
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
WEBSTER CITY FEDERAL BANCORP
Date: May 13, 2003 By:
------------- -------------------------------------
Phyllis A. Murphy
President and Chief Executive Officer
Date: May 13, 2003 By:
------------- -------------------------------------
Stephen L. Mourlam
Executive Vice President/Chief
Financial Officer
Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Phyllis A. Murphy, President and Chief Executive Officer, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Webster City
Federal Bancorp;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect
to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented
in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether there were significant changes in
internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
- ------------------------- ---------------------------------------
Date Phyllis A. Murphy
President and Chief Executive Officer
Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Stephen L. Mourlam, Executive Vice President and Chief Financial Officer,
certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Webster City
Federal Bancorp;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect
to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented
in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
a. designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent functions):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether there were significant changes in
internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
- ------------------------- ---------------------------------------
Date Stephen L. Mourlam
Executive Vice President and Chief
Financial Officer