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 March 31, 2001
[ ] 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
-------------------------
(Exact name of small business issuer as specified in its charter)
Pennsylvania 23-2908963
- ---------------------------------------- ----------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
807 Middle Street
Pittsburgh, Pennsylvania 15212
- ----------------------------------------
(Address of principal executive offices)
(412) 231-7297
- ----------------------------------------
(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
------ ---------
As of May 9, 2001 there were 302,684 shares outstanding of the issuer's class of
common stock.
Transitional small business disclosure format: Yes No X
-------- ---------
WSB HOLDING COMPANY
INDEX TO QUARTERLY REPORT ON FORM 10-QSB
Page
Reference
---------
Part I - Financial Information
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheet as of March 31,
2001 and June 30, 2000 3
Consolidated Statement of Income for the three
months ended March 31, 2001 and 2000 4
Consolidated Statement of Income for the nine
months ended March 31, 2001 and 2000 5
Consolidated Statement of Changes in Stockholders'
Equity for the nine months ended March 31, 2001 6
Consolidated Statement of Cash Flows for the nine
months ended March 31, 2001 and 2000 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
March 31, June 30,
2001 2000
------------ ------------
ASSETS
Cash and due from banks $ 321,132 $ 301,724
Interest-bearing deposits in other banks 3,187,753 915,437
------------ ------------
Cash and cash equivalents 3,508,885 1,217,161
Investment securities available for sale 6,639,761 2,209,267
Investment securities held to maturity (market value of
$10,853,403 and $13,571,429) 10,869,708 14,894,110
Mortgage-backed securities available for sale 967,770 1,116,035
Mortgage-backed securities held to maturity (market
value of $283,129 and $388,392) 281,498 323,803
Loans receivable (net of allowance for loan losses of
$155,136 and $155,000) 17,941,211 18,866,204
Bank owned life insurance 1,260,429 1,214,106
Accrued interest receivable 296,127 351,453
Premises and equipment 861,098 916,305
Federal Home Loan Bank stock 200,000 200,000
Other assets 382,948 85,904
------------ ------------
TOTAL ASSETS $ 43,209,435 $ 41,394,348
============ ============
LIABILITIES
Deposits $ 37,985,321 $ 34,585,942
Advances by borrowers for taxes and insurance 42,634 247,127
Federal Home Loan Bank borrowings - 1,500,000
Accrued interest payable and other liabilities 172,277 128,353
------------ ------------
TOTAL LIABILITIES 38,200,232 36,461,422
------------ ------------
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 2,998,716 2,994,998
Retained earnings - substantially restricted 2,601,442 2,504,860
Accumulated other comprehensive loss (23,119) (689)
Unallocated shares held by Employee Stock Ownership
Plan (ESOP) (166,085) (189,538)
Unallocated shares held by Restricted Stock Plan (RSP) (123,069) (98,023)
Treasury stock (27,916 shares at cost) (311,742) (311,742)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 5,009,203 4,932,926
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 43,209,435 $ 41,394,348
============ ============
See accompanying notes to the consolidated financial statements.
3
WSB HOLDING COMPANY
CONSOLIDATED STATEMENT OF INCOME
Three Months Ended March 31,
2001 2000
-------- --------
INTEREST INCOME
Loans receivable $353,660 $373,712
Interest-bearing deposits in other banks 28,966 18,213
Investment securities
Taxable 319,250 283,533
Exempt from federal income tax 11,403 11,403
-------- --------
Total interest income 713,279 686,861
-------- --------
INTEREST EXPENSE
Deposits 416,488 356,001
FHLB borrowings -- 37,349
-------- --------
Total interest expense 416,488 393,350
-------- --------
NET INTEREST INCOME 296,791 293,511
Provision for loan losses - -
-------- --------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 296,791 293,511
-------- --------
NONINTEREST INCOME
Service fees on deposit accounts 10,698 10,851
Investment securities gains, net 5,819 -
Other 28,618 27,008
-------- --------
Total noninterest income 45,135 37,859
-------- --------
NONINTEREST EXPENSE
Compensation and employee benefits 125,452 150,631
Occupancy and equipment 40,761 41,120
Federal insurance premium 5,763 5,306
Other 112,926 91,984
-------- --------
Total noninterest expense 284,902 289,041
-------- --------
Income before income taxes 57,024 42,329
Income tax expense 16,651 13,589
-------- --------
NET INCOME $ 40,373 $ 28,740
======== ========
EARNINGS PER SHARE:
Basic $ 0.15 $ 0.11
Diluted $ 0.15 $ 0.11
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 277,423 272,565
Diluted 277,423 272,565
See accompanying notes to the consolidated financial statements.
4
WSB HOLDING COMPANY
CONSOLIDATED STATEMENT OF INCOME
Nine Months Ended March 31,
2001 2000
---------- ----------
INTEREST INCOME
Loans receivable $1,076,954 $1,079,883
Interest-bearing deposits in other banks 90,535 71,799
Investment securities
Taxable 934,881 894,647
Exempt from federal income tax 34,209 34,209
---------- ----------
Total interest income 2,136,579 2,080,538
---------- ----------
INTEREST EXPENSE
Deposits 1,195,092 1,091,208
FHLB borrowings 35,173 70,263
---------- ----------
Total interest expense 1,230,265 1,161,471
---------- ----------
NET INTEREST INCOME 906,314 919,067
Provision for loan losses - -
---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 906,314 919,067
---------- ----------
NONINTEREST INCOME
Service fees on deposit accounts 32,698 34,543
Investment securities gains, net 7,661 4,037
Other 85,494 84,361
---------- ----------
Total noninterest income 125,853 122,941
---------- ----------
NONINTEREST EXPENSE
Compensation and employee benefits 429,223 439,039
Occupancy and equipment 126,189 127,274
Federal insurance premium 16,417 22,163
Other 315,400 279,857
---------- ----------
Total noninterest expense 887,229 868,333
---------- ----------
Income before income taxes 144,938 173,675
Income tax expense 48,356 58,038
---------- ----------
NET INCOME $ 96,582 $ 115,637
========== ==========
EARNINGS PER SHARE:
Basic $ 0.35 $ 0.43
Diluted $ 0.35 $ 0.43
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 276,783 271,865
Diluted 276,783 271,865
See accompanying notes to the consolidated financial statements.
5
WSB HOLDING COMPANY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Accumulated Unallocated Unallocated Total
Additional Other Shares Shares Stock- Compre-
Common Paid-in Retained Comprehensive Held by Held by Treasury holders' hensive
Stock Capital Earnings (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 96,582 96,582 $96,582
Other
comprehensive
income:
Unrealized loss on
available for sale
securities, net of
reclassification
adjustment,
net of tax benefit
of $11,555 (22,430) (22,430) (22,430)
-------
Comprehensive income $74,152
=======
ESOP shares released 3,718 23,453 27,171
RSP shares activity (25,046) (25,046)
------- ---------- ---------- -------- --------- --------- --------- ----------
Balance, March 31, 2001 $33,060 $2,998,716 $2,601,442 $(23,119) $(166,085) $(123,069) $(311,742) $5,009,203
======= ========== ========== ======== ========= ========= ========= ==========
2001
Components of comprehensive loss:
Change in net unrealized loss on investment securities
available for sale $ (17,374)
Net realized gains included in net income,
net of taxes $2,605 (5,056)
---------
Total $ (22,430)
=========
See accompanying notes to the consolidated financial statements.
6
WSB HOLDING COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
Nine Months Ended March 31,
2001 2000
----------- -----------
OPERATING ACTIVITIES
Net income $ 96,582 $ 115,637
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 55,207 57,600
Amortization of premium and discount on investments (28,193) 539
Investment securities gains, net (7,661) (4,037)
Decrease (increase) in accrued interest receivable 55,326 (48,983)
Amortization of ESOP and RSP unearned compensation 27,171 51,722
Deferred income taxes (11,811) 5,538
Other, net (65,123) 1,022
----------- -----------
Net cash provided by operating activities 121,498 179,038
----------- -----------
INVESTING ACTIVITIES Investments available for sale:
Purchases (5,056,857) (302,157)
Proceeds from sales 186,434 375,252
Maturities and repayments 353,465 326,581
Investments held to maturity:
Purchases - (1,101,353)
Maturities and repayments 4,067,305 241,110
Net decrease (increase) in loans receivable 924,993 (2,283,598)
Purchase of Federal Home Loan Bank Stock (46,700)
Purchase of premises and equipment, net - (4,652)
----------- -----------
Net cash provided by (used for) investing activities 475,340 (2,795,517)
----------- -----------
FINANCING ACTIVITIES
Net increase (decrease) in deposits 3,399,379 (774,644)
Net decrease in advances by borrowers for taxes
and insurance (204,493) (93,107)
Net increase (decrease) in short-term FHLB borrowings (1,500,000) 2,000,000
Cash dividends paid - (24,923)
Purchase of treasury stock - (106,950)
----------- -----------
Net cash provided by financing activities 1,694,886 1,000,376
----------- -----------
Increase (decrease) in cash and cash equivalents 2,291,724 (1,616,103)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,217,161 3,412,184
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 3,508,885 $ 1,796,081
=========== ===========
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 nine months ended March 31, 2001 and
2000 was $74,152 and $135,628, respectively. Total comprehensive income for
the three months ended March 31, 2001 and 2000 was $18,427 and $68,614,
respectively.
NOTE 3 - RECLASSIFICAITON OF COMPARATIVE AMOUNTS
Certain comparative amounts for the prior periods have been reclassified to
conform to current period presentations. Such reclassifications had no
effect on net income or stockholders' equity.
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.
Financial Condition
Total consolidated assets at March 31, 2001 increased $1.8 million to $43.2
million or 4.4% from June 30, 2000. Increases in total consolidated assets at
March 31, 2001 were primarily due to increases in cash and cash equivalents and
investment securities available for sale, which were offset by declines in
investment securities held to maturity and loans receivable, net. Cash and cash
equivalents increased $2.3 million to $3.5 million as a result of retaining
overnight deposits due to the unfavorable interest rates for longer-term
products. Investment securities available for sale increased $4.4 million to
$6.6 million. Such increases represented $5.1 million in purchases offset by
sales, maturities, and repayments of $539,000. Investment securities held to
maturity declined $4.0 million to $10.9 million due to maturities and
repayments. Loans receivable decreased $925,000 to $17.9 million due to current
loan payoffs and a decline in new loan applications. Total consolidated
liabilities at March 31, 2001 increased $1.8 million to $38.3 million or 5.0%
from June 30, 2000. Deposits increased $3.4 million to $38.0 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 $1.5 million.
Results of Operations
For the three months ended March 31, 2001, net income increased $12,000 to
$40,000 from $29,000 for the same 2000 period. The primary component of this
increase was the result management's decision to sell investment securities
available for sale yielding realized gains of $6,000 for the 2001 period. There
were no similar sales in the 2000 period.
9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
For the nine months ended March 31, 2001, net income decreased $19,000 to
$97,000 from $116,000 for the same 2000 period. Due to continued rise in
short-term interest rates during July through December 2000, net income for the
current nine-month period was lower as compared to the same 2000 period. The
significant rise in short-term interest rates for this period 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 21 basis points during the nine-month period while the costs of
deposits increased 35 basis points and the cost of borrowing increased by 66
basis points. For the current nine-month period, net interest income declined
$13,000 as compared to the same 2000 period.
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 March 31, 2001, both the Company and the Bank
exceeded the minimum risk-based and leverage capital ratio requirements. The
Bank's total risk-based, Tier I risk-based, and Tier I leverage ratios are 19.7
percent, 19.0 percent, and 9.9 percent, respectively, at March 31, 2001.
10
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.
March 31, June 30,
2001 2000
-------- -------
(Dollars in thousands)
Loans on nonaccrual basis $ 310 $ 310
Loans past due 90 days or more and still accruing 49 -
-------- -------
Total nonperforming loans 359 310
-------- -------
Nonperforming loans as a percent of total loans 1.98% 1.63%
======== =======
Nonperforming assets as a percent of total assets .83% 0.75%
======== =======
Allowance for loan losses to nonperforming loans 43.21% 50.00%
======== =======
At March 31, 2001 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 March 31, 2001,
impaired loans had no material effect on the Company's financial position or
results of operations.
During the nine month period ended March 31, 2001, loans decreased $925,000
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
None
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 between the Bank and with Robert D. Neudorfer**
10.1 WSB Holding Company 1998 Stock Option Plan***
10.2 Workingmens Bank Restricted Stock Plan and Trust Agreement***
10.3 Form of Supplemental Benefit Agreement****
10.4 Form of Split Dollar Agreement****
99 Independents Accountants' Review Report
(b) On March 5, 2001, the registrant filed a Form 8-K (Item 5) to disclose the
correction of earnings per share in the December 31, 2000 Form 10-QSB.
- -------------------
* Incorporated by reference to the Form 8-A (0-22997) declared effective by
the SEC on August 21, 1997.
** Incorporated by reference to the registration statement on Form SB-2
(333-29389) declared effective by the SEC on July 15, 1997.
*** Incorporated by reference to the Proxy Statement for the Special Meeting of
Stockholders on March 16, 1998 and filed with the SEC on February 4, 1998.
**** Incorporated by reference to the June 30, 1999 Form 10-KSB filed with the
SEC on September 22, 1999.
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: May 14, 2001 By /s/ Robert D. Neudorfer, President
------------ ---------------------------------------------
Robert D. Neudorfer, President
(Principal Executive Officer)
Date: May 14, 2001 By /s/ Ronald W. Moreschi
------------ ---------------------------------------------
Ronald W. Moreschi
Executive Vice President and Treasurer
(Principal Accounting Officer)
14