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 June 30, 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 August 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............................................3
Consolidated Statements of Financial Condition (unaudited)
at June 30, 2001 and September 30, 2000............................3
Consolidated Statements of Operations (unaudited)
for the nine months and three month ended
June 30, 2001 and 2000 ...........................................4
Consolidated Statements of Comprehensive Income
(unaudited) for the nine months and three month
ended June 30, 2001 and 2000......................................5
Consolidated Statements of Cash Flows (unaudited)
for the nine months ended June 30, 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...............................16
Signatures....................................................................17
2
WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
----------------------------------------------------------
June 30, September 30,
-------- -------------
2001 2000
---- ----
Assets
------
Cash $ 717,760 $ 1,720,707
Interest bearing deposits in other banks 724,547 509,570
Federal funds sold 1,787,000 3,764,000
Investments available for sale 20,709,596 19,439,212
Other investments held to maturity 14,850,000 15,650,000
Mortgage backed securities 14,797,522 16,451,148
Loans receivable - net 102,199,144 96,909,448
Accrued interest receivable - loans 444,381 446,343
- investments 558,711 773,864
- mortgage backed securities 79,534 88,548
Premises and equipment - net 1,407,063 1,253,765
Federal Home Loan Bank of Atlanta stock, at cost 1,450,000 1,450,000
Deferred income taxes 437,947 936,589
Prepaid and refundable income taxes 111,407 107,471
Other assets 780,560 415,037
------------ ------------
Total assets $161,055,172 $159,915,702
=========== ===========
Liabilities and Stockholders' Equity
------------------------------------
Liabilities
-----------
Deposits $125,735,716 $120,044,864
Checks outstanding in excess of bank balances 242,663 -
Borrowings 18,000,000 24,000,000
Advance payments by borrowers for taxes
and insurance 286,518 70,711
Income taxes payable 25,533 31,874
Other liabilities 235,144 317,623
----------- -----------
Total liabilities 144,525,574 144,465,072
Commitments and contingencies
Stockholders' Equity
- --------------------
Common stock .10 par value; authorized
1,620,062 shares; issued and outstanding
1,285,132 shares at June 30, 2001 and
1,285,609 shares at September 30, 2000 128,513 128,561
Additional paid-in capital 6,807,107 6,701,437
Retained earnings (substantially restricted) 10,341,437 10,301,365
Accumulated other comprehensive loss (298,053) (1,134,125)
Employee Stock Ownership Plan (449,406) (546,608)
------------ -----------
Total stockholders' equity 16,529,598 15,450,630
------------ -----------
Total liabilities and stockholders' equity $161,055,172 $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 Nine Months Ended For Three Months Ended
June 30, June 30,
----------------------- -----------------------
2001 2000 2001 2000
---- ---- ---- ----
Interest and fees on loans $5,709,017 $5,372,763 $1,928,312 $1,838,970
Interest on mortgage backed securities 756,007 842,524 242,057 274,647
Interest and dividends on investment
securities 1,923,156 1,922,096 636,686 643,249
Other interest income 314,534 198,779 57,793 67,996
---------- ---------- ---------- ----------
Total interest income 8,702,714 8,336,162 2,864,848 2,824,862
Interest on deposits 4,902,360 4,270,290 1,631,710 1,432,483
Interest on short-term borrowings 4,037 37,731 4,037 --
Interest on long term borrowings 935,664 902,472 276,261 353,995
---------- ---------- ---------- ----------
Total interest expense 5,842,061 5,210,493 1,912,008 1,786,478
---------- ---------- ---------- ----------
Net interest income 2,860,653 3,125,669 952,840 1,038,384
Provision for loan losses 30,000 90,000 -- 30,000
---------- ---------- ---------- ----------
Net interest income after provision for
loan losses 2,830,653 3,035,669 952,840 1,008,384
Non-Interest Income
- -------------------
Fees and charges on loans 21,115 25,260 10,465 7,763
Fees on transaction accounts 40,217 39,258 13,501 13,359
Gain on sale of investments 1,059 -- 1,059 --
Other income 49,116 43,554 17,152 17,478
---------- ---------- ---------- ----------
Total non-interest income 111,507 108,072 42,177 38,600
Non-Interest Expenses
- ---------------------
Salaries and related expenses 1,458,827 1,286,395 493,494 436,446
Occupancy 143,137 122,537 44,805 43,353
SAIF deposit insurance premium 17,776 28,908 5,961 6,106
Depreciation of equipment 88,558 73,863 28,268 25,744
Advertising 66,311 63,614 23,491 22,878
Data processing costs 86,029 83,235 29,767 28,767
Professional services 135,365 155,822 43,723 46,984
Loss on sale of foreclosed real estate -- 786 -- --
Loss on sale of repossessed assets 3,928 -- 3,928 --
Other expenses 326,054 288,924 108,108 92,071
---------- ---------- ---------- ----------
Total non-interest expenses 2,325,985 2,104,084 781,545 702,349
---------- ---------- ---------- ----------
Income before tax provision 616,175 1,039,657 213,472 344,635
Provision for income taxes 247,953 401,550 85,722 133,098
---------- ---------- ---------- ----------
Net income $ 368,222 $ 638,107 $ 127,750 $ 211,537
========== ========== ========== ==========
Basic earnings per share $ .31 $ .55 $ .11 $ .18
========== ========== ========== ==========
Diluted earnings per share $ .30 $ .55 $ .10 $ .18
========== ========== ========== ==========
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 Nine Months Ended
---------------------
June 30, June 30,
-------- --------
2001 2000
---- ----
Net income $ 368,222 $ 638,107
Unrealized holding gains (losses), net of tax of
$526,477 and ($190,479) for the nine month periods
ended June 30, 2001 and 2000, respectively 836,705 (302,735)
Reclassification adjustment for gains included in
net income, net of tax of $426 for the nine month
period ended June 30, 2001 (633) --
----------- ----------
Comprehensive income $ 1,204,294 $ 335,372
=========== ==========
For Three Months Ended
----------------------
June 30, June 30,
-------- --------
2001 2000
---- ----
Net income $ 127,750 $ 211,537
Unrealized holding losses net of tax of $56,035
and $72,112 for the three month periods ended
June 30, 2001 and 2000, respectively (89,101) (114,609)
Reclassification adjustment for gains included
in net income, net of tax of $426 for the three
month period ended June 30, 2001 (633) --
----------- -----------
Comprehensive income $ 38,016 $ 96,928
=========== ==========
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 Nine Months Ended
---------------------
June 30, June 30,
-------- --------
2001 2000
---- ----
Operating Activities
- --------------------
Net income $ 368,222 $ 638,107
Loss on disposal of equipment 1,001 --
Loss on sale of foreclosed real estate -- 786
Loss on sale of repossessed assets 3,928 --
Gain on sale of investments available for sale (1,059) --
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities
-------------------------------------
Net accretion/amortization of premiums and
discounts on mortgage backed securities 2,486 1,006
Amortization of deferred loan fees (48,696) (53,077)
Loan fees deferred 71,704 34,629
Decrease in discount on loans purchased (90,698) (94,694)
Amortization of discounts on investments available for sale (136) (137)
Provision for loan losses 30,000 90,000
Non-cash compensation under stock-based benefit plans 207,834 202,014
Decrease in accrued interest receivable 226,129 60,625
Provision for depreciation 119,695 102,340
Increase in deferred income tax (27,409) --
Increase in prepaid income taxes (3,936) (52,743)
Increase in other assets (372,839) (55,721)
Increase in accrued interest payable (297) (97)
Decrease in income taxes payable (6,341) (5,707)
Decrease in other liabilities (82,479) (63,901)
--------- ---------
Net cash provided by operating activities 397,109 803,430
Cash Flows from Investment Activities
-------------------------------------
Proceeds from maturing interest bearing deposits -- 95,000
Proceeds from sales and maturities of investments
available for sale 92,934 --
Proceeds from maturing investments held to maturity 800,000 --
Principal collected on mortgage backed securities - held
to maturity 1,651,139 1,081,213
Proceeds from sale of foreclosed real estate -- 12,317
Proceeds from sale of repossessed assets 3,388 --
Net (increase) decrease in shorter term loans (110,498) 28,982
Longer term loans originated or acquired (11,015,145) (15,166,541)
Principal collected on longer term loans 5,873,637 9,214,773
Investment in premises and equipment (273,994) (350,572)
Purchase of stock in Federal Home Loan Bank of Atlanta -- (250,000)
----------- -----------
Net cash used by investment activities (2,978,539) (5,334,828)
6
WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
-------------------------------------------------
For Nine Months Ended
---------------------
June 30, June 30,
-------- --------
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 $ 5,718,084 $ (496,259)
Net increase in certificates of deposit 188,872 2,490,749
Increase in checks outstanding in excess of bank balance 242,663 382,937
Net decrease in borrowings (6,000,000) --
Dividends on stock (328,150) (321,639)
Stock repurchase (5,009) --
----------- -----------
Net cash (used by) provided by financing activities (183,540) 2,055,788
----------- -----------
Decrease in cash and cash equivalents (2,764,970) (2,475,610)
Cash and cash equivalents at beginning of period 5,994,277 7,196,629
----------- -----------
Cash and cash equivalents at end of period $ 3,229,307 $ 4,721,019
=========== ===========
The following is a Summary of Cash and Cash Equivalents:
- --------------------------------------------------------
Cash $ 717,760 $ 947,856
Interest bearing deposits in other banks 724,547 1,459,163
Federal funds sold 1,787,000 2,314,000
----------- -----------
Cash and cash equivalents reflected on the
Statement of Cash Flows $ 3,229,307 $ 4,721,019
=========== ===========
Supplemental Disclosure of Cash Flow Information:
- -------------------------------------------------
Cash paid during the year for:
Interest $ 5,918,301 $ 5,240,759
=========== ===========
Taxes $ 313,000 $ 480,000
=========== ===========
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 nine and
three months ended June 30, 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 - Investment 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
----------- ------------ ----------- -----------
June 30, 2001
- -------------
Equity investments $ 452,448 $ -- $ 82,148 $ 370,300
Federal Home Loan
Bank Bonds 17,493,572 -- 336,391 17,157,181
Federal Home Loan
Mortgage Corporation
Bonds 3,249,164 -- 67,049 3,182,115
----------- ----------- ----------- -----------
$21,195,184 $ -- $ 485,588 $20,709,596
=========== =========== =========== ===========
8
WHG BANCSHARES CORPORATION AND SUBSIDIARIES
- -------------------------------------------
Lutherville, Maryland
- ---------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- ------------------------------------------------------
Note 3 - Investment 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 nine and three month periods ended June 30, as
follows:
Nine Months Ended Nine Months Ended
----------------- -----------------
June 30, 2001 June 30, 2000
------------- -------------
Basic Diluted Basic Diluted
----- ------- ----- -------
Net income $ 368,222 $ 368,222 $ 638,107 $ 638,107
Weighted average shares
outstanding 1,199,730 1,199,730 1,168,186 1,168,186
Diluted securities:
MSBP shares -- 2,900 -- --
Options -- 17,454 -- --
---------- ---------- ---------- ----------
Adjusted weighted average
shares 1,199,730 1,220,084 1,168,186 1,168,186
Per share amount $ 0.31 $ 0.30 $ 0.55 $ 0.55
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
June 30, 2001 June 30, 2000
----------------------- -----------------------
Basic Diluted Basic Diluted
----- ------- ----- -------
Net income $ 127,750 $ 127,750 $ 211,537 $ 211,537
Weighted average shares
Outstanding 1,204,047 1,204,047 1,174,634 1,174,634
Diluted securities:
MSBP shares -- 5,356 -- --
Options -- 30,746 -- --
---------- ---------- ---------- ---------
Adjusted weighted average
shares 1,204,047 1,240,149 1,174,634 1,174,634
Per share amount $ 0.11 $ 0.10 $ 0.18 $ 0.18
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, year 2000 issues and general economic conditions.
Overview
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.
For the nine months ended June 30, 2001, net earnings decreased
$270,000 to $368,000 or $.30 per diluted share, from $638,000, or $.55 per
diluted share, for the comparative fiscal 2000 period. For the three months
ended June 30, 2001, net earnings decreased $84,000 to $128,000, or $.10 diluted
earnings per share, from $212,000, or $.18 diluted earnings per share, for the
comparative 2000 period. The decline in net income for the nine and three months
ended June 30, 2001 as compared to the same 2000 periods was primarily due to
net interest income. For the nine and three months ended June 30, 2001, net
interest income compression continued due to the reduction during the current
period of short term interest rates by the Federal Reserve and the continued
effect of higher interest rates paid on certificates of deposits originated
during the 2000 periods. Additionally, our balance sheet structure includes a
high percentage of short term interest-earning assets. Accordingly, the
continued decline in short term interest rates have resulted in lower yields
earned in 2001 on interest earning assets.
Financial Condition
Our total consolidated assets at June 30, 2001 increased $1,139,000 to
$161,055,000 from $159,916,000 at September 30, 2000. Our total consolidated
liabilities at June 30, 2001 increased $61,000 to $144,526,000 from $144,465,000
at September 30, 2000. At June 30, 2001, in order to repay $6.0 million of our
long-term debt and fund loan originations of $5,290,000, we used approximately
$5,691,000 of our new deposits, liquidated $1,977,000 of our federal funds sold
investments, used $1,653,000 from principal collected on mortgage backed
securities repayments and used $1,003,000 in cash.
11
At June 30, 2001, our net worth increased by $1,079,000 to $16,530,000
from $15,451,000 at September 30, 2000. The increase primarily reflects the
$836,000 decrease in accumulated other comprehensive loss and the reduction of
stock-based benefit plan obligations. 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 gain 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 nine and three month periods ended June 30,
2001 was $2,861,000 and $953,000, compared to $3,126,000 and $1,038,000,
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 nine and three
month periods ended June 30, 2001 were both 2.00%, compared to 2.40% and 2.34%,
respectively, for the same periods in 2000. See "Overview".
Interest Income
Total interest income for the nine and three month periods ended June
30, 2001 was $8,703,000 and $2,865,000, compared to $8,336,000 and $2,825,000,
respectively, for the same periods in fiscal 2000. Total average interest rate
yields for the nine months and three month periods ended June 30, 2001 were
7.33% and 7.30%, respectively, compared to 7.34% and 7.37%, respectively, for
the same periods in fiscal 2000. The increase in total interest income was
primarily related to the increase in the total average balance of loans
receivable, offset, slightly, by a decline in the total average balance of
mortgage backed securities. In addition, higher average balances of interest
bearing deposits in other banks and federal funds sold investments contributed
to the increase in total interest income for the nine month period ended June
30, 2001.
Interest and fees on loans increased $336,000 and $89,000 for the
current nine months and three month periods to $5,709,000 and $1,928,000,
respectively. Such increases for the current year periods were due to average
net loan originations of approximately $4.5 million for each respective period.
For the current nine and three month periods, the average interest rate yield
was 7.73% and 7.68%, respectively, compared to 7.63% and 7.66%, respectively,
for the same periods in 2000.
Interest income on mortgage backed securities decreased $87,000 and
$33,000 for the current nine month and three month periods to $756,000 and
$242,000, respectively. The decrease was the result of $1,733,000 and $1,964,000
decreases in the average balance of mortgage backed securities for the
respective nine and three month periods.
12
Other interest income increased $116,000 for the current nine month
period to $315,000, as the result of a $2,787,000 increase in the average
balance of interest bearing deposits in other banks and federal funds sold
investments. Other interest income decreased $10,000 to $58,000 for the current
three month period, predominantly because of lower yields earned on invested
balances. The average interest rate yield was 5.61% compared to 6.64% for the
same quarter in fiscal 2000.
Interest Expense
Total interest expense for the nine and three month periods ended June
30, 2001 was $5,842,000 and $1,912,000, compared to $5,210,000 and $1,786,000,
respectively, for the same periods in fiscal 2000. The increase in interest
expense for the current respective periods were primarily related to increases
in the average cost of funds for certificates of deposits, supplemented by
increases in the average balances of certificates of deposit. Average costs of
funds for total interest bearing liabilities for the current nine month and
three month periods were 5.33% and 5.30%, respectively, compared to 4.94% and
5.04% for each of the same periods in 2000.
Interest expense on certificates of deposit for the nine and three
month periods ended June 30, 2001 increased $548,000 and $150,000, respectively,
as compared to the fiscal 2000 respective periods. The average rates paid on
certificates of deposit for the current nine and three month periods rose 48 and
46 basis points, respectively to 5.96% and 5.99%, respectively. The increase in
average cost of funds for certificates of deposit 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 in
December, 2000, the average balances of certificates of deposits for the current
nine and three month periods increased $4,834,000 and $3,064,000, respectively.
Total interest expense on borrowings for the nine and three month
periods ended June 30, 2001, decreased $1,000 and $74,000, respectively, as
compared to the fiscal 2000 respective periods. The decrease for the nine months
and three months ended June 30, 2001 was the result of a $1,693,000 and
$5,964,000 decrease in the total average borrowings from the comparable fiscal
2000 periods. The balance-related expense decrease was offset by an increase in
the borrowing rates. The rates paid on borrowings for the current nine and three
month periods each rose 44 and 30 basis points to 5.92% and 6.14%, respectively.
13
Provision for Loan Losses
The provision for loan losses for the nine month period ended June 30,
2001 was $30,000 compared to $90,000 for the same period in fiscal 2000. For the
three month ended June 30, 2001, we had no provision for loan losses as compared
to a $30,000 provision for the same period in fiscal 2000. For the nine months
ended June 30, 2001, net charge-offs were $13,000 as compared to $73,000 for the
same 2000 period. We incurred no material charge offs for the three month ended
June 30, 2001 and 2000. The provision for loan losses reflects 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.
Non-Interest Expense
Total non-interest expense for the nine and three month periods ended
June 30, 2001 was $2,326,000 and $782,000 compared to $2,104,000 and $702,000,
respectively, for the same periods in fiscal 2000. For the current nine and
three month periods, salaries and related expenses increased $173,000 and
$57,000, respectively, as the result of an additional lending officer and
accounting personnel during the second quarter of fiscal 2001, annual staff
merit increases and increased stock-based compensation following the
appreciation of WHG Bancshares stock. Occupancy expense increased $21,000 during
the current nine month period reflecting the lease commencement in January, 2000
of the relocated Ellicott City branch and non-recurring branch maintenance
expenses during the second quarter of fiscal 2001. During the current nine month
period depreciation of equipment rose $15,000 as a result of purchased equipment
for the relocated Ellicott City branch. Other expenses increased $37,000 and
$16,000, respectively, for the current nine and three month periods, due to
increased stationary, printing and postage expense for customer privacy
disclosure incurred during the current quarter, increased ATM expenses, a $7,000
robbery loss in June, 2001 at one of the branch offices and increased corporate
insurance expenses. Offsetting total non-interest expense for the nine month
period ended June 30, 2001, was a $20,000 decrease in professional fees and an
$11,000 decrease in FDIC deposit insurance premium. Included in professional
services for the nine month period in fiscal 2000 were costs incurred for
business development planning. Effective January 31, 2000, FDIC assessments were
lowered for SAIF insured institutions.
Provision for Income Taxes
The provision for income taxes for the nine months and three month
periods ended June 30, 2001 was $248,000 and $86,000, compared to $402,000 and
$133,000, respectively, for the same periods in fiscal 2000. The decreases for
the current period were the result of decreases in net income.
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
Not applicable.
Item 5. Other Information
Not applicable.
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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.
****** Incorporated by reference to the March 31, 2001 Form 10-QSB.
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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: August 13, 2001 By: /s/ Peggy J. Stewart
---------------------------------------------
Peggy J. Stewart
President and Chief Executive Officer
(duly authorized officer)
Date: August 13, 2001 By: /s/ Robin L. Taylor
---------------------------------------------
Robin L. Taylor
Controller (chief accounting officer)
17