SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended December 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to
Commission File Number: 0-22997
WSB HOLDING COMPANY
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(Exact name of small business issuer as specified in its charter)
Pennsylvania 23-2908963
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
807 Middle Street
Pittsburgh, Pennsylvania 15212
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(Address of principal executive offices)
(412) 231-7297
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirement for the past 90 days.
Yes X No
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As of February 9, 2000 there were 302,684 shares outstanding of the issuer's
class of common stock.
Transitional small business disclosure format: Yes No X
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WSB HOLDING COMPANY
INDEX TO QUARTERLY REPORT ON FORM 10-QSB
Page
Reference
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Part I - Financial Information
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheet as of December 31,
2000 and June 30, 2000 3
Consolidated Statement of Income for the three
months ended December 31, 2000 and 1999 4
Consolidated Statement of Income for the six
months ended December 31, 2000 and 1999 5
Consolidated Statement of Changes in Stockholders'
Equity for the six months ended December 31, 2000 6
Consolidated Statement of Cash Flows for the six
months ended December 31, 2000 and 1999 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9 - 11
Part II - Other Information 12 & 13
Signatures 14
WSB HOLDING COMPANY
CONSOLIDATED BALANCE SHEET
December 31, June 30,
2000 2000
------------ ------------
ASSETS
Cash and due from banks $ 371,648 $ 301,724
Interest-bearing deposits in other banks 1,473,588 915,437
------------ ------------
Cash and cash equivalents 1,845,236 1,217,161
Investment securities available for sale 2,382,064 2,209,267
Investment securities held to maturity (market value of
$14,169,313 and $13,571,429) 14,394,877 14,894,110
Mortgage-backed securities available for sale 1,020,138 1,116,035
Mortgage-backed securities held to maturity (market
value of $294,180 and $388,392) 295,932 323,803
Loans receivable (net of allowance for loan losses of
$155,136 and $155,000) 18,227,956 18,866,204
Bank owned life insurance 1,244,988 1,214,106
Accrued interest receivable 346,095 351,453
Premises and equipment 879,078 916,305
Federal Home Loan Bank stock 200,000 200,000
Other assets 128,922 85,904
------------ ------------
TOTAL ASSETS $ 40,965,286 $ 41,394,348
============ ============
LIABILITIES
Deposits $ 35,589,958 $ 34,585,942
Advances by borrowers for taxes and insurance 213,399 247,127
Federal Home Loan Bank borrowings - 1,500,000
Accrued interest payable and other liabilities 186,342 128,353
------------ ------------
TOTAL LIABILITIES 35,989,699 36,461,422
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COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Preferred stock, par value $.10, 1,000,000 shares authorized;
none issued and outstanding - -
Common stock, par value $.10 per share; 4,000,000 shares
authorized; 330,600 issued 33,060 33,060
Additional paid-in capital 2,997,115 2,994,998
Retained earnings - substantially restricted 2,561,069 2,504,860
Accumulated other comprehensive loss (1,173) (689)
Unallocated shares held by Employee Stock Ownership
Plan (ESOP) (172,698) (189,538)
Unallocated shares held by Restricted Stock Plan (RSP) (130,044) (98,023)
Treasury stock (27,916 shares at cost) (311,742) (311,742)
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TOTAL STOCKHOLDERS' EQUITY 4,975,587 4,932,926
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 40,965,286 $ 41,394,348
============ ============
See accompanying notes to the consolidated financial statements.
3
WSB HOLDING COMPANY
CONSOLIDATED STATEMENT OF INCOME
Three Months Ended December 31,
2000 1999
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INTEREST INCOME
Loans receivable $ 356,619 $ 354,204
Interest-bearing deposits in other banks 25,039 29,134
Investment securities
Taxable 312,401 313,657
Exempt from federal income tax 11,403 11,403
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Total interest income 705,462 708,398
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INTEREST EXPENSE
Deposits 393,618 358,417
FHLB borrowings 12,423 18,464
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Total interest expense 406,041 376,881
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NET INTEREST INCOME 299,421 331,517
Provision for loan losses - -
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NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 299,421 331,517
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NONINTEREST INCOME
Service fees on deposit accounts 10,572 11,041
Investment securities gains, net - (2,132)
Other 31,183 31,155
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Total noninterest income 41,755 40,064
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NONINTEREST EXPENSE
Compensation and employee benefits 150,712 155,196
Occupancy and equipment 42,705 42,462
Federal insurance premium 5,317 8,547
Other 110,614 95,547
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Total noninterest expense 309,348 301,752
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Income before income taxes 31,828 69,829
Income tax expense 14,993 23,633
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NET INCOME $ 16,835 $ 46,196
========= =========
EARNINGS PER SHARE:
Basic $ 0.14 $ 0.17
Diluted $ 0.14 $ 0.17
See accompanying notes to the consolidated financial statements.
4
WSB HOLDING COMPANY
CONSOLIDATED STATEMENT OF INCOME
Six Months Ended December 31,
2000 1999
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INTEREST INCOME
Loans receivable $ 723,294 $ 706,171
Interest-bearing deposits in other banks 61,569 75,993
Investment securities
Taxable 615,631 611,114
Exempt from federal income tax 22,806 22,806
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Total interest income 1,423,300 1,416,084
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INTEREST EXPENSE
Deposits 778,604 735,207
FHLB borrowings 35,173 32,914
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Total interest expense 813,777 768,121
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NET INTEREST INCOME 609,523 647,963
Provision for loan losses - -
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NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 609,523 647,963
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NONINTEREST INCOME
Service fees on deposit accounts 22,000 24,120
Investment securities gains, net 1,842 4,037
Other 56,876 56,925
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Total noninterest income 80,718 85,082
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NONINTEREST EXPENSE
Compensation and employee benefits 303,771 310,815
Occupancy and equipment 85,428 86,154
Federal insurance premium 10,654 16,857
Other 202,474 187,873
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Total noninterest expense 602,327 601,699
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Income before income taxes 87,914 131,346
Income tax expense 31,705 44,449
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NET INCOME $ 56,209 $ 86,897
========== ==========
EARNINGS PER SHARE:
Basic $ 0.20 $ 0.32
Diluted $ 0.20 $ 0.32
See accompanying notes to the consolidated financial statements.
5
WSB HOLDING COMPANY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Accumulated Unallocated Unallocated
Additional Other Shares Shares Total Compre-
Common Paid-in Retained Comprehensive Held by Held by Treasury Stockholders' hensive
Stock Capital Earnings Income (Loss) ESOP RSP Stock Equity Income
------ ---------- ---------- ------------- --------- --------- ---------- ------------- ---------
Balance, June 30, 2000 $33,060 $2,994,998 $2,504,860 $ (689) $(189,538) $ (98,023) $ (311,742) $4,932,926
Net income 56,209 56,209 $56,209
Other comprehensive
income:
Unrealized loss on
available for
sale securities,
net of
reclassification
adjustment, net
of tax benefit
of $249 (484) (484) (484)
-------
Comprehensive income $55,725
=======
ESOP shares released 2,117 16,840 18,957
RSP shares acquired (32,021) (32,021)
------- ---------- ---------- ---------- --------- --------- ---------- ----------
Balance, December 31,
2000 $33,060 $2,997,115 $2,561,069 $ (1,173) $(172,698) $(130,044) $ (311,742) $4,975,587
======= ========== ========== ========== ========= ========= ========== ==========
2000
Components of comprehensive loss:
Change in net unrealized gain on investment securities available for sale $ 732
Net realized gains included in net income,
net of taxes $626 (1,216)
---------
Total $ (484)
=========
See accompanying notes to the consolidated financial statements.
6
WSB HOLDING COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended December 31,
2000 1999
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OPERATING ACTIVITIES
Net income $ 56,209 $ 86,897
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 37,227 38,399
Amortization of premium and discount on investments (748) 104
Investment securities gains, net (1,842) (4,037)
Decrease (increase) in accrued interest receivable 5,358 (53,494)
Amortization of ESOP and RSP unearned compensation 18,957 34,421
Other, net (49,119) (14,404)
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Net cash provided by operating activities 66,042 87,886
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INVESTING ACTIVITIES
Investments available for sale:
Purchases (296,226) (240,054)
Proceeds from sales 104,607 375,252
Maturities and repayments 117,264 294,260
Investments held to maturity:
Purchases - (1,101,353)
Maturities and repayments 527,852 188,478
Net decrease (increase) in loans receivable 638,248 (2,025,064)
Purchase of premises and equipment, net - (4,094)
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Net cash provided by (used for) investing activities 1,091,745 (2,512,575)
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FINANCING ACTIVITIES
Net increase (decrease) in deposits 1,004,016 (895,910)
Net increase (decrease) in advances by borrowers for taxes
and insurance (33,728) 36,143
Net increase (decrease) in short-term FHLB borrowings (1,500,000) 1,000,000
Cash dividends paid - (24,923)
Purchase of treasury stock - (106,950)
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Net cash provided by (used for) financing activities (529,712) 8,360
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Increase (decrease) in cash and cash equivalents 628,075 (2,416,329)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,217,161 3,412,184
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CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,845,236 $ 995,855
=========== ===========
See accompanying notes to the consolidated financial statements.
7
WSB HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with instructions to Form 10-QSB and, therefore, do
not necessarily include all information which would be included in audited
financial statements. The information furnished reflects all normal
recurring adjustments which are, in the opinion of management, necessary
for the fair statement of the results of the period. The results of
operations for the interim periods are not necessarily indicative of the
results to be expected for the full year or any other interim period.
NOTE 2 - COMPREHENSIVE INCOME
Total comprehensive income for the six months ended December 31, 2000 and
1999 was $55,725 and $67,014, respectively. Total comprehensive income for
the three months ended December 31, 2000 and 1999 was $35,423 and $95,707,
respectively.
8
WSB HOLDING COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Private Securities Litigation Act of 1995 contains safe harbor provisions
regarding forward-looking statements. When used in this discussion, the words
"believes," "anticipates," "contemplates," "expects," and similar expressions
are intended to identify forward-looking statements. Such statements are subject
to certain risks and uncertainties that could cause actual results to differ
materially from those projected. Those risks and uncertainties include changes
in interest rates, the ability to control costs and expenses, general economic
conditions, government policies and action of regulatory authorities. The
Company undertakes no obligation to publicly release the results of any
revisions to those forward looking statements which may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
WSB Holding Company is a savings and loan holding company headquartered in
Pittsburgh, Pennsylvania, which provides a broad range of deposits and loan
products through its wholly owned subsidiary, Workingmens Bank. References to
the Company refer collectively to WSB Holding Company and Workingmens Bank,
unless the context indicates otherwise.
COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 1999 AND 1998
Financial Condition
Total consolidated assets and liabilities at December 31, 2000 remained
relatively unchanged from June 30, 2000. While total consolidated assets and
liabilities did not significantly change, cash and cash equivalents increased
$628,000 to $1.8 million, as a result of retaining overnight deposits, due to
the unfavorable interest rates for longer term products. In January 2001, the
Company invested approximately $3 million in available for sale investment
securities yielding an average rate of 6.50 percent. Deposits increased $1.0
million to $35.6 million due to the growth in time deposits, which was
attributed to the increase in market rates paid on these products. Offsetting
the increase in deposits, the Company paid off the remaining Federal Home Loan
Bank borrowings of $1.0 million.
Results of Operations
For the three months ended December 31, 2000, net income decreased $29,000 to
$17,000 from $46,000 for the same 1999 period. For the six months ended December
31, 2000, net income decreased $31,000 to $56,000 from $87,000 for the same 1999
period. Due to continued rise in short-term interest rates during July through
December 2000, net income for the current three and six-month periods were lower
as compared to the same 1999 periods. The significant rise in short-term
interest rates for these current periods affected net interest income, causing
the Company to reprice customer deposits, primarily time deposits, at much
higher costs. The yield on interest-earning assets increased by 12 basis points
during the six-month periods while the costs of deposits increased 59 basis
points and the cost of borrowing increased by 104 basis points. For the current
three and six-month periods, net interest income decreased $32,000 and $46,000,
respectively, as compared to the same 1999 periods.
9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
Noninterest income and noninterest expense remained relatively unchanged for the
current periods as compared to the same 1999 periods.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity may be adversely affected by unexpected deposit outflows, excessive
interest rates paid by competitors, adverse publicity relating to the savings
and loan industry and similar matters. Manage-ment monitors projected liquidity
needs and determines the level desirable based in part on the Bank's commitments
to make loans and management's assessment of the Bank's ability to generate
funds.
Management monitors both the Company's and the Bank's total risk-based, Tier I
risk-based, and Tier I leverage capital ratios in order to assess compliance
with regulatory guidelines. At December 31, 2000, both the Company and the Bank
exceeded the minimum risk-based and leverage capital ratios requirements. The
Bank's total risk-based, Tier I risk-based, and Tier I leverage ratios are 23.7
percent, 22.8 percent, and 10.4 percent, respectively, at December 31, 2000.
RISK ELEMENTS
The table below presents information concerning nonperforming assets including
nonaccrual loans, renegotiated loans, loans 90 days or more past due, other real
estate loans, and repossessed assets. A loan is classified as nonaccrual when,
in the opinion of management, there are serious doubts about collectibility of
interest and principal. At the time the accrual of interest is discontinued,
future income is recognized only when cash is received. Renegotiated loans are
those loans which terms have been renegotiated to provide a reduction or
deferral of principal or interest as a result of the deterioration of the
borrower.
December 31, June 30,
2000 2000
---- ----
(Dollars in thousands)
Loans on nonaccrual basis $ 311 $ 310
Loans past due 90 days or more and still accruing 49 -
------------ ------------
Total nonperforming loans 360 310
------------ ------------
Nonperforming loans as a percent of total loans 1.95% 1.63%
============== =============
Nonperforming assets as a percent of total assets .88% 0.75%
============== =============
Allowance for loan losses to nonperforming loans 43.18% 50.00%
============== =============
10
RISK ELEMENTS (Continued)
At December 31, 2000 and June 30, 2000, no real estate or other assets were held
as foreclosed or repossessed property.
Management monitors impaired loans on a continual basis. As of December 31,
2000, impaired loans had no material effect on the Company's financial position
or results of operations.
During the six month period ended December 31, 2000, loans decreased $638,000
while nonperforming loans increased by $49,000. During the current year period,
there was no change in the allowance for loan losses. Nonperforming loans are
primarily made up of one to four family residential mortgages. The collateral
requirements on such loans reduce the risk of potential losses to an acceptable
level in management's opinion.
Management continually evaluates the adequacy of the allowance for loan losses,
which encompasses the overall risk characteristics of the various portfolio
segments, past experience with losses, the impact of economic conditions on
borrowers and other relevant factors which may come to the attention of
management. Although the Company maintains its allowance for loan losses at a
level that it considers to be adequate to provide for the inherent risk of loss
in its loan portfolio, there can be no assurance that future losses will not
exceed estimated amounts or that additional provisions for loan losses will not
be required in future periods.
11
WSB HOLDING COMPANY
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
None
ITEM 2. Changes in Securities
None
ITEM 3. Defaults upon Senior Securities
None
ITEM 4. Submission of Matters to a Vote of Security Holders
The annual meeting of the stockholders of the Company
was held on October 16, 2000, and the following matters
were voted upon.
Proposal I. Election of Directors:
The following directors were elected with terms to
expire October 2004:
For Withhold Authority
Robert D. Neudorfer 244,917 1,850
Ronald W. Moreschi 245,917 850
Proposal II. S.R. Snodgrass was elected as the Company's
Independent Auditors for the year ending June 30, 2001
by the following vote:
For 244,417
Against 1,850
Abstain 500
ITEM 5. Other Information
None
12
WSB HOLDING COMPANY
PART II - OTHER INFORMATION (Continued)
ITEM 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are included in this Report or incorporated herein
by reference:
3(i) Restated Articles of Incorporation of WSB Holding Company*
3(ii) Bylaws of WSB Holding Company**
4 Specimen Stock Certificate of WSB Holding Company **
10 Employment Agreement with Robert Neudorfer***
10.1 WSB Holding Company 1999 Stock Option Plan****
10.2 Workingmens Bank Restricted Stock Plan and Trust Agreement****
99 Independents Accountants' Review Report
- -------------------
* Incorporated by reference to the registration statement on Form 8-A
(0-22997).
** Incorporated by reference to the registration statement on Form SB-2
(333-29389).
*** Incorporated by reference to the Form 10-QSB for December 31, 1998
(0-22997).
**** Incorporated by reference to the Definitive Proxy Statement filed February
6, 1999 (0-22997).
(b) No reports on Form 8-K were filed during the quarter covered by this
report.
13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WSB Holding Company
Date: February 13, 2001 By /s/Robert D. Neudorfer
------------------------------
Robert D. Neudorfer, President
(Principal Financial Officer)
Date: February 13, 2001 By /s/Ronald W. Moreschi
------------------------------
Ronald W. Moreschi
Vice President and Treasurer
(Principal Accounting Officer)
14