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, 2001
---------------
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________.
Commission File No. 0-27606
WHG Bancshares Corporation
--------------------------
(Exact name of small business issuer as specified in its charter)
Maryland 52-1953867
-------- ----------------
(State of incorporation (I.R.S. employer
or organization) identification no.)
1505 York Road, Lutherville, Maryland 21093
- -------------------------------------- ----------
(Address of principal executive offices) (zip code)
(410) 583-8700
--------------
Issuer's telephone number, including area code
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 requirements for the past 90 days.
YES X NO
------------ ------------
Number of shares of Common Stock outstanding as of May 1, 2001: 1,285,132
Transitional Small Business Disclosure Format (check one)
YES NO X
------------ -----------
WHG BANCSHARES CORPORATION AND SUBSIDIARY
Contents
--------
Pages
-----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.........................................................................................
Consolidated Statements of Financial Condition at March 31, 2001
(unaudited) and September 30, 2000...............................................................................3
Consolidated Statements of Operations (unaudited) for the six months and three month ended
March 31, 2001 and 2000 .........................................................................................4
Consolidated Statements of Comprehensive Income (unaudited) for the six months and three month ended
March 31, 2001 and 2000..........................................................................................5
Consolidated Statements of Cash Flows (unaudited) for the six months ended
March 31, 2001 and 2000........................................................................................6-7
Notes to Consolidated Financial Statements (unaudited)........................................................8-10
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....................11-14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings...........................................................................................15
Item 2. Changes in Securities.......................................................................................15
Item 3. Defaults upon Senior Securities.............................................................................15
Item 4. Submission of Matters to a Vote of Security-Holders.........................................................15
Item 5. Other Information...........................................................................................15
Item 6. Exhibits and Reports on Form 8-K............................................................................15
Signatures.................................................................................................................16
2
WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
----------------------------------------------
March 31, September 30,
--------- -------------
2001 2000
---- ----
(Unaudited)
Assets
------
Cash $ 1,249,632 $ 1,720,707
Interest bearing deposits in other banks 3,428,106 509,570
Federal funds sold 4,047,000 3,764,000
Investments available for sale 20,947,622 19,439,212
Other investments held to maturity 15,450,000 15,650,000
Mortgage backed securities 15,567,706 16,451,148
Loans receivable - net 97,761,283 96,909,448
Accrued interest receivable - loans 443,745 446,343
- investments 654,258 773,864
- mortgage backed securities 83,731 88,548
Premises and equipment - net 1,426,707 1,253,765
Federal Home Loan Bank of Atlanta stock, at cost 1,450,000 1,450,000
Deferred income taxes 378,496 936,589
Prepaid and refundable income taxes 136,936 107,471
Other assets 412,619 415,037
------------- -------------
Total assets $ 163,437,841 $ 159,915,702
============= =============
Liabilities and Stockholders' Equity
------------------------------------
Liabilities
- -----------
Deposits $ 125,046,028 $ 120,044,864
Checks outstanding in excess of bank balances 394,815 -
Borrowings 21,000,000 24,000,000
Advance payments by borrowers for taxes and insurance 197,103 70,711
Income taxes payable - 31,874
Other liabilities 275,559 317,623
------------- -------------
Total liabilities 146,913,505 144,465,072
Commitments and contingencies
Stockholders' Equity
- --------------------
Common stock .10 par value; authorized 1,620,062
shares; issued and outstanding 1,285,132 shares at
March 31, 2001 and 1,285,609 shares at September 30, 2000 128,513 128,561
Additional paid-in capital 6,762,906 6,701,437
Retained earnings (substantially restricted) 10,323,042 10,301,365
Accumulated other comprehensive loss (208,319) (1,134,125)
Employee Stock Ownership Plan (481,806) (546,608)
------------- -------------
Total stockholders' equity 16,524,336 15,450,630
------------- -------------
Total liabilities and stockholders' equity $ 163,437,841 $ 159,915,702
============= =============
The accompanying notes to consolidated financial statements
are an integral part of these statements.
3
WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
-------------------------------------------------
For Six Months Ended For Three Months Ended
March 31, March 31,
2001 2000 2001 2000
---------- ---------- ---------- ----------
Interest and fees on loans $3,780,705 $3,533,793 $1,895,571 $1,761,513
Interest and dividends on investment securities 1,286,470 1,278,847 641,073 640,553
Interest on mortgage backed securities 513,950 567,877 253,076 281,463
Other interest income 256,741 130,783 104,810 52,202
---------- ---------- ---------- ----------
Total interest income 5,837,866 5,511,300 2,894,530 2,735,731
Interest on deposits 3,270,650 2,837,807 1,632,819 1,407,018
Interest on short-term borrowings - 37,731 - 13,027
Interest on long term borrowings 659,403 548,477 300,044 278,687
---------- ---------- ---------- ----------
Total interest expense 3,930,053 3,424,015 1,932,863 1,698,732
---------- ---------- ---------- ----------
Net interest income 1,907,813 2,087,285 961,667 1,036,999
Provision for loan losses 30,000 60,000 - 30,000
---------- ---------- ---------- ----------
Net interest income after provision
for loan losses 1,877,813 2,027,285 961,667 1,006,999
Non-Interest Income
- -------------------
Fees and charges on loans 10,650 17,497 5,488 8,078
Fees on transaction accounts 26,716 25,899 12,704 12,389
Other income 31,964 26,076 16,627 13,431
---------- ---------- ---------- ----------
Total non-interest income 69,330 69,472 34,819 33,898
Non-Interest Expenses
- ---------------------
Salaries and related expenses 965,333 849,949 491,049 428,989
Occupancy 98,332 79,184 49,264 44,683
FDIC deposit insurance premium 11,815 22,802 5,871 6,070
Depreciation of equipment 60,290 48,119 28,001 25,119
Advertising 42,820 40,736 21,093 19,136
Data processing costs 56,262 54,468 28,392 28,200
Professional services 91,642 108,838 47,132 54,411
Loss on sale of foreclosed real estate - 786 - -
Other expenses 217,946 196,853 99,034 101,762
---------- ---------- ---------- ----------
Total non-interest expenses 1,544,440 1,401,735 769,836 708,370
---------- ---------- ---------- ----------
Income before tax provision 402,703 695,022 226,650 332,527
Provision for income taxes 162,231 268,452 93,419 128,457
---------- ---------- ---------- ----------
Net income $ 240,472 $ 426,570 $ 133,231 $ 204,070
========== ========== ========== ==========
Basic earnings per share $ .20 $ .37 $ .11 $ .17
========== ========== ========== ==========
Diluted earnings per share $ .20 $ .37 $ .11 $ .17
========== ========== ========== ==========
The accompanying notes to consolidated financial statements
are an integral part of these statements.
4
WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
-----------------------------------------------------------
For Six Months Ended
March 31,
--------------------
2001 2000
---------- ----------
Net income $ 240,472 $ 426,570
Unrealized gains (losses), on available-for-sale securities,
net of tax of $582,513 and $128,376, for the six month
periods ended March 31, 2001 and 2000, respectively 925,806 (188,126)
---------- ----------
Comprehensive income $1,166,278 $ 238,444
========== ==========
For Three Months Ended
March 31,
2001 2000
-------- --------
Net income $133,231 $204,070
Unrealized gains, on available-for-sale securities,
net of tax of $213,461 and $146,181, for the three month
periods ended March 31, 2001 and 2000, respectively 339,258 232,329
-------- --------
Comprehensive income $472,489 $436,399
======== ========
The accompanying notes to consolidated financial statements
are an integral part of these statements.
5
WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
-------------------------------------------------
For Six Months Ended
March 31,
2001 2000
----------- ------------
Operating Activities
Net income $ 240,472 $ 426,570
Loss on disposal of equipment 1,001 -
Loss on sale of foreclosed real estate - 786
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities
-------------------------------------
Net accretion/amortization of premiums and discounts
of mortgage backed securities 1,424 421
Amortization of discounts on investments available for sale (92) (91)
Amortization of deferred loan fees (13,134) (48,315)
Loan fees deferred 1,558 46,858
Decrease in discount on loans purchased (76,356) (168,620)
Provision for loan losses 30,000 60,000
Non-cash compensation under stock-based
benefit plans 131,232 136,405
Decrease (increase) in accrued interest receivable 127,021 (5,785)
Provision for depreciation 81,234 54,995
Decrease in deferred income tax assets (24,419) -
Increase in prepaid income taxes (29,465) (30,132)
Decrease (increase) in other assets 2,418 (194,394)
Increase in accrued interest payable 14 281
(Decrease) increase in income taxes payable (31,874) 121,084
Decrease in other liabilities (42,064) (65,869)
----------- ------------
Net cash provided by operating activities 398,970 334,194
Cash Flows from Investment Activities
- -------------------------------------
Proceeds from maturing interest-bearing deposits - 95,000
Proceeds from maturing other investments 200,000 -
Principal collected on mortgage backed securities 882,018 689,296
Proceeds from sale of foreclosed real estate - 12,317
Net increase in shorter term loans (24,549) (166,956)
Longer term loans originated or acquired (4,279,528) (11,459,450)
Principal collected on longer term loans 3,510,174 7,345,285
Investment in premises and equipment (255,177) (52,193)
Purchase of stock in Federal Home Loan Bank of Atlanta - (250,000)
----------- ------------
Net cash provided (used) by investment activities 32,938 (3,786,701)
6
WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
-------------------------------------------------
For Six Months Ended
March 31,
---------------------------
2001 2000
----------- ------------
Cash Flows from Financing Activities
- ------------------------------------
Net increase (decrease) in demand deposits, money
market, passbook accounts and advances by
borrowers for taxes and insurance $ 3,538,765 $ (491,116)
Net increase in certificates of deposit 1,588,777 1,768,763
Increase in checks outstanding in excess of bank balance 394,815 -
Net (decrease) increase in borrowings (3,000,000) 2,000,000
Dividends on stock (218,795) (214,426)
Stock repurchase (5,009) -
----------- -----------
Net cash provided by financing activities 2,298,553 3,063,221
----------- -----------
Increase (decrease) in cash and cash equivalents 2,730,461 (389,286)
Cash and cash equivalents at beginning of period 5,994,277 7,196,629
----------- -----------
Cash and cash equivalents at end of period $ 8,724,738 $ 6,807,343
=========== ===========
The following is a Summary of Cash and Cash Equivalents:
- --------------------------------------------------------
Cash $ 1,249,632 $ 796,191
Interest bearing deposits in other banks 3,428,106 3,358,152
Federal funds sold 4,047,000 2,653,000
----------- -----------
Cash and cash equivalents $ 8,724,738 $ 6,807,343
=========== ===========
Supplemental Disclosure of Cash Flow Information:
- -------------------------------------------------
Cash paid during the period for:
Interest $ 3,977,091 $ 3,429,143
=========== ===========
Taxes $ 266,000 $ 177,500
=========== ===========
The accompanying notes to consolidated financial statements
are an integral part of these statements.
7
WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
------------------------------------------------------
Note 1 - Basis of Presentation
---------------------
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and in accordance with the
instructions to Form 10-QSB. Accordingly, they do not include all of
the disclosures required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments necessary for a fair presentation of the results of
operations for the interim periods presented have been made. Such
adjustments were of a normal recurring nature. The results of
operations for the six and three months ended March 31, 2001 are not
necessarily indicative of the results that may be expected for the
fiscal year September 30, 2001 or any other interim period. The
consolidated financial statements should be read in conjunction with
the consolidated financial statements and related notes which are
incorporated by reference in the Company's Annual Report on Form
10-KSB for the year ended September 30, 2000.
Note 2 - Cash Flow Presentation
----------------------
For purposes of the statements of cash flows, cash and cash
equivalents include cash and amounts due from depository institutions,
investments in federal funds, and certificates of deposit with
original maturities of 90 days or less.
Note 3 - Investments Available for Sale
------------------------------
The amortized cost and fair values of investments available
for sale at are as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ----------- ----------- -----------
March 31, 2001
- --------------
Equity investments $ 544,323 $ - $ 106,948 $ 437,375
Federal Home Loan
Bank Bonds 17,493,543 813 190,049 17,304,307
Federal Home Loan
Mortgage Corporation
Bonds 3,249,148 - 43,208 3,205,940
----------- ----------- ----------- -----------
$21,287,014 $ 813 $ 340,205 $20,947,622
=========== =========== =========== ===========
8
WHG BANCSHARES CORPORATION AND SUBSIDIARIES
- -------------------------------------------
Lutherville, Maryland
- ---------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- ------------------------------------------------------
Note 3 - Investments Available for Sale - Continued
------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ----------- ----------- -----------
September 30, 2000
- ------------------
Equity investments $ 544,324 $ - $ 190,690 $ 353,634
Federal Home Loan
Bank Bonds 17,493,485 - 1,400,174 16,093,311
Federal Home Loan
Mortgage Corporation
Bonds 3,249,114 - 256,847 2,992,267
----------- --------- ----------- -----------
$21,286,923 $ - $ 1,847,711 $19,439,212
=========== ========= =========== ===========
Note 4 - Earnings Per Share
------------------
Basic EPS is computed by dividing net income by the weighted
average number of common shares outstanding for the appropriate
period. Unearned ESOP shares are not included in outstanding shares.
Diluted EPS is computed by dividing net income by the weighted average
shares outstanding as adjusted for the dilutive effect of stock
options and unvested stock awards based on the "treasury stock"
method. Information relating to the calculations of net income per
share of common stock is summarized for the six and three month
periods ended March 31, as follows:
Six Months Ended Six Months Ended
March 31, 2001 March 31, 2000
----------------------- -----------------------
Basic Diluted Basic Diluted
---------- ---------- ---------- ----------
Net income $ 240,472 $ 240,472 $ 426,570 $ 426,570
Weighted average shares
outstanding 1,197,572 1,197,572 1,165,003 1,165,003
Diluted securities:
MSBP shares - 1,895 - -
Options - 12,007 - -
---------- ---------- ---------- ----------
Adjusted weighted average
shares 1,197,572 1,211,474 1,165,003 1,165,003
Per share amount $ .20 $ .20 $ .37 $ .37
9
WHG BANCSHARES CORPORATION AND SUBSIDIARIES
- -------------------------------------------
Lutherville, Maryland
- ---------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- ------------------------------------------------------
Note 4 - Earnings Per Share - Continued
------------------
Three Months Ended Three Months Ended
March 31, 2001 March 31, 2000
----------------------- -----------------------
Basic Diluted Basic Diluted
---------- ---------- ---------- ----------
Net income $ 133,231 $ 133,231 $ 204,070 $ 204,070
Weighted average shares
outstanding 1,200,038 1,200,038 1,181,220 1,181,220
Diluted securities:
MSBP shares -- 3,174 -- --
Options -- 18,933 -- --
---------- ---------- ---------- ----------
Adjusted weighted average
shares 1,200,038 1,222,145 1,181,220 1,181,220
Per share amount $ .11 $ .11 $ .17 $ .17
Note 5 - Ratification of Stock Option Plan
---------------------------------
On January 16, 2001, the shareholders of WHG Bancshares
Corporation ratified the WHG Bancshares Corporation 2001 Stock Option
Plan (the "Plan") whereby up to 109,000 shares of common stock have
been reserved for issuance under the Plan. Options granted under the
Plan may be Incentive Stock Options within the meaning of Section 422
of the Internal Revenue Code of 1986 as amended or Non-Incentive Stock
Options. Options are exercisable in three annual installments at the
market price of common stock at the date of grant. The options must be
exercised within ten years of the date of grant. Upon stockholder
approval the Company granted to executive officers and directors
options to purchase 94,520 shares at a weighted average price of $8.25
per share.
10
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
The Private Securities Litigation Reform 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 which 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, and general economic conditions. WHG Bancshares Corporation
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 unanticipated
events.
Since we conduct no significant business other than owning all of the
common stock of Heritage Savings Bank, F.S.B. ("Heritage Savings"), references
in this discussion to "we," "us," and "our," refer collectively to WHG
Bancshares Corporation and Heritage Savings.
Overview
For the six months ended March 31, 2001, net earnings decreased
$187,000 to $240,000 or $.20 per diluted share, from $427,000, or $.37 per
diluted share, for the comparative fiscal 2000 period. For the three months
ended March 31, 2001, net earnings decreased $71,000 to $133,000, or $.11
diluted earnings per share, from $204,000, or $.17 diluted earnings per share,
for the comparative 2000 period. The decline in net income for the six and three
months ended March 31, 2001 as compared to the comparable 2000 periods, reflect
the decline in net interest income and the increase in non-interest expenses.
Net interest income continues to be squeezed by the rising interest rates paid
on certificates in 2000 and the lowering of yields earned on assets during 2001.
Our non-interest expenses for the current periods rose due to normal operating
expense increases and the improvements made to our branches at the Howard County
and York Road offices.
Financial Condition
Our total consolidated assets at March 31, 2001 increased $3,522,000 to
$163,438,000 from $159,916,000 at September 30, 2000. Our total consolidated
liabilities at March 31, 2001 increased $2,449,000 to $146,914,000 from
$144,465,000 at September 30, 2000. At March 31, 2001 we used approximately $5.0
million of our new deposits to repay $3.0 million of our long-term debt and to
increase our cash and cash equivalents in order to fund anticipated borrowing
repayments and loan commitments. Subsequent to March 31, 2001, we repaid an
additional $3.0 million of long-term borrowing.
11
At March 31, 2001, our net worth increased by $1,073,000 to $16,524,000
from $15,451,000 at September 30, 2000. The increase primarily reflects the
$426,000 decrease in accumulated other comprehensive loss. The decrease in
accumulated other comprehensive loss resulted from the fluctuation in market
value of our investment in available-for-sale securities. Because of interest
rate volatility, accumulated other comprehensive loss and stockholders' equity
could materially fluctuate for each interim period and year-end period.
Results of Operations
Net Interest Income
Net interest income for the six and three month periods ended March 31,
2001 was $1,908,000 and $962,000, compared to $2,087,000 and $1,037,000,
respectively, for the same periods in 2000. The interest rate spread, which is
the difference between the yield on average interest earning assets and the
percentage cost of average interest bearing liabilities, for the six and three
month periods ended March 31, 2001 were 2.00% and 2.02%, respectively, compared
to 2.43% and 2.39%, respectively, for the same periods in 2000. The decrease in
the interest rate spread for the current six and three month periods was
primarily the result of an increase in the rates paid on certificates of deposit
and long-term borrowings.
Interest Income
Total interest income for the six and three month periods ended March
31, 2001 was $5,838,000 and $2,895,000, compared to $5,511,000 and $2,736,000,
respectively, for the same periods in fiscal 2000. The total weighted average
interest rate yields for the six and three month periods ended March 31, 2001
were both 7.34%, compared to 7.32% and 7.24%, respectively, for the same periods
in fiscal 2000. The increase in total interest income resulted primarily from an
increase in the average balance of interest earning assets as more fully
described below.
Interest and fees on loans increased $247,000 and $134,000 for the
current six months and three month periods to $3,781,000 and $1,896,000, from
$3,534,000 and $1,762,000, respectively. The increases were the result of an
increase in the average dollar amount of loans outstanding coupled with a rise
in the weighted average interest rate yield. The average dollar amount of loans
outstanding for the current six and three month periods was $97,425,000 and
$97,696,000, respectively, as compared to $92,926,000 and $93,715,000,
respectively, for the comparable periods in the prior year. The origination of
higher yielding commercial and real estate investment loans resulted in the rise
of the weighted average interest rate yield to 7.76% for the current six and
three month periods, compared to 7.61% and 7.52%, respectively, for the same
periods in 2000.
Interest income on mortgage backed securities decreased $54,000 and
$28,000 for the current six and three month periods to $514,000 and $253,000
from $568,000 and $281,000, respectively. The decrease was the result of
$1,618,000 and $1,665,000 decreases in the average balance of mortgage backed
securities for the respective six and three month periods.
12
Other interest income increased $126,000 and $53,000 for the current
six and three month periods to $257,000 and $105,000, from $131,000 and $52,000,
respectively. The increase was predominantly the result of $4,170,000 and
$2,378,000 increases in the average balance of other interest earning assets as
compared to the same periods in the prior year. The average balance of other
interest bearing assets increased due to the accumulation of interest bearing
deposits in other banks and federal funds balances to fund current and
anticipated borrowing repayments and loan commitments. In addition, the weighted
average interest rate yield increased 138 basis points to 6.50% for the current
quarter as compared to 5.12% for the prior year's quarter.
Interest Expense
Total interest expense for the six and three month periods ended March
31, 2001 was $3,930,000 and $1,933,000, compared to $3,424,000 and $1,699,000,
respectively, for the same periods in fiscal 2000. The weighted average cost of
funds for total interest bearing liabilities for the current six and three month
periods increased 45 and 47 basis points, respectively, to 5.34% and 5.32%,
respectively. In general, the increase in interest expense for the current
respective periods resulted from increases in the cost of funds for certificates
of deposit and long-term borrowings, augmented by increases in the average
balances of certificates of deposits.
Interest expense on certificates of deposit for the six and three month
periods ended March 31, 2001 increased $397,000 and $201,000, respectively, as
compared to the fiscal 2000 respective periods. The weighted average rates paid
on certificates of deposit for the current six and three month periods rose 50
and 54 basis points, respectively to 5.95% and 6.00%, respectively. The weighted
average yield increase was the result of older lower-yielding deposits renewing
at higher rates and the successful targeted advertising campaign for new
certificates of deposit accounts with 18 and 25 month terms. As a result of the
certificate of deposit promotion that ended December, 2000, the average balances
of certificates of deposit for the current six and three month periods increased
$5,719,000 and $4,979,000, respectively.
Total interest expense on borrowings for the six and three month
periods ended March 31, 2001, increased $73,000 and $8,000, respectively, as
compared to the fiscal 2000 respective periods. The weighted average rates paid
on borrowings for the current six and three month periods each rose 55 basis
points to 5.83% and 5.67%, respectively. The rate-related expense increase for
the quarter ended March 31, 2001 was partially offset by the $1,644,000 decrease
in the total average borrowings from the comparable fiscal 2000 quarter.
Provision for Loan Losses
The provision for loan losses for the six month period ended March 31,
2001 was $30,000 compared to $60,000 for the same period in fiscal 2000. For the
quarter ended March 31, 2001, we had no provision for loan losses as compared to
a $30,000 provision for the comparable prior year's quarter. The provision for
loan losses reflect management's judgment of the current period cost associated
with credit risk inherent in our loan portfolio, specifically, the provision for
loan losses represent the amount charged against current period earnings to
achieve an allowance for loan losses that in management's judgment is adequate
to absorb losses inherent in our loan portfolio.
13
For the three months ended March 31, 2001, loans receivable, net
increased $377,000 from December 31, 2000 and net charge-offs for the three and
six months ended March 31, 2001 totalled for both periods $12,000. For the three
months ended March 31, 2000, loans receivable, net increased $1.4 million from
December 31, 1999. Net charge-offs for the six months ended March 31, 2000
totalled $72,000. There were no charge-offs during the three month period ended
March 31, 2000.
Non-Interest Expense
Total non-interest expense for the six and three months periods ended
March 31, 2001 was $1,544,000 and $770,000 compared to $1,402,000 and $708,000,
respectively, for the same periods in fiscal 2000. For the six month period
ended March 31, 2001, salaries and related expenses increased $115,000 to
$965,000 from $850,000 for the comparable 2000 period. For the three months
ended March 31, 2001, salaries and related expenses increased $62,000 to
$491,000 from $429,000 for the comparable 2000 period. The increase in salaries
and related expenses for the current six and three month periods was primarily
due to the addition in fiscal 2001 of an additional lending officer, accounting
personnel, annual staff merit increases and an increased ESOP expense due to the
appreciation of the Company's stock. For the current year six month period,
occupancy expense increased $19,000 to $98,000 from $79,000 due to the lease
commencement in January 2000 of the new Ellicott City branch location and
non-recurring branch maintenance expense for the new branch location in the
first quarter of fiscal 2001. Depreciation of equipment expense increased
$12,000 and $5,000, respectively, for the current six and three month periods
primarily due to the addition in the first quarter of fiscal 2001 of new
equipment for the Ellicott City branch. Offsetting total non-interest expense
for the six month period ended March 31, 2001, was an $11,000 decrease in FDIC
deposit insurance premium and a $19,000 decrease in professional fees.
Offsetting total non-interest expense for the three month period ended March 31,
2001, was a $7,000 decrease in professional fees. Effective January 1, 2000,
FDIC assessments were lowered for SAIF insured institutions. Included in
professional fees for the six and three month periods in fiscal 2000 were costs
incurred for business development planning.
14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The registrant is not engaged in any legal proceedings at the
present time. From time to time, the Bank is a party to legal
proceedings within the normal course of business wherein it
enforces its security interest in loans made by it, and other
matters of a like kind.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of the Company was held on
January 16, 2001 and the following matters were voted upon:
Proposal I- Election of directors with terms to expire in
2004.
FOR WITHHELD
--- --------
Herbert A. Davis 907,672 323,202
D. Edward Lauterbach, Jr. 907,672 323,202
Proposal II - Ratification of the 2001 Stock Option Plan
FOR AGAINST ABSTAINED
--- ------- ---------
540,510 403,584 1,297
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
3(i) Articles of Incorporation of WHG Bancshares Corporation *
3(ii) Amended Bylaws of WHG Bancshares Corporation
10.1 Form of Amended and Restated Employment Agreement with Peggy J. Stewart ****
10.2 Form of Amended and Restated Change in Control Agreements for three executive
officers ****
10.3 Amendment to the 1996 Stock Option Plan **
10.4 Amendment to Management Stock Bonus Plan and Trust Agreement **
10.5 Form of Directors Change In Control Severance Plan ***
10.6 2001 Stock Option Plan *****
(b) None.
---------------------
* Incorporated by reference to the registration statement on Form S-1
(File No. 33-80487) declared effective by the SEC on February 7, 1996.
** Incorporated by reference to the proxy statement for the annual
meeting of stockholders filed with the SEC on or about December 19,
1997.
*** Incorporated by reference to the Form 10-KSB for the year ended
September 30, 1999.
**** Incorporated by reference to the Form 10-KSB for the year ended
September 30, 2000.
*****Incorporated by reference to the proxy statement for the annual
meeting of stockholders filed with the SEC on December 18, 2000.
15
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.
WHG Bancshares Corporation
Date: May 15, 2001 By: /s/Peggy J. Stewart
------------------------------------------
Peggy J. Stewart
President and Chief Executive Officer
(duly authorized officer)
Date: May 15, 2001 By: /s/Robin L. Taylor
------------------------------------------
Robin L. Taylor
Controller (chief accounting officer)
16