SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 2001
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT
For the transition period from to
Commission File Number 0-22535
Sistersville Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Delaware 31-1516424
State or other jurisdiction of (IRS Employer Identification No.)
726 Wells Street, Sistersville, WV 26175
(Address of principal executive offices)
(304) 652-3671
(Registrant's telephone number, including area code)
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after distribution of
securities under a plan confirmed by a court. Yes X No
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date:
Class: Common Stock, par value $.10 per share
Outstanding at February 4, 2002: 460,623 shares
SISTERSVILLE BANCORP, INC.
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited) as of
December 31, 2001, and March 31, 2001 3
Consolidated Statements of Income (Unaudited)
for the Three Months ended December 31, 2001 and 2000 4
Consolidated Statements of Comprehensive Income (Unaudited)
for the Three Months ended December 31, 2001 and 2000 5
Consolidated Statements of Income (Unaudited)
for the Nine Months Ended December 31, 2001 and 2000 6
Consolidated Statements of Comprehensive Income (Unaudited)
for the Nine Months ended December 31, 2001 and 2000 7
Consolidated Statements of Cash Flows (Unaudited)
for the Nine Months ended December 31, 2001 and 2000 8
Notes to Unaudited Consolidated Financial Statements 9 - 10
Item 2. Management's Discussion and Analysis 10 - 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
SISTERSVILLE BANCORP, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
December 31, March 31,
2001 2001
ASSETS
Cash and Cash Equivalents:
Cash and amounts due from banks $ 276,124 $ 281,797
Interest-bearing deposits with other institutions 3,840,246 843,259
----------- -----------
Total cash and cash equivalents 4,116,370 1,125,056
----------- -----------
Investment Securities:
Securities held-to-maturity (fair value of
$119,138 and $176,924, respectively) 115,375 173,527
Securities available-for-sale 3,234,308 3,292,498
----------- -----------
Total investment securities 3,349,683 3,466,025
----------- -----------
Loans receivable, (net of allowance for loan losses
of $177,500 and $176,000, respectively) 30,183,384 26,996,408
Office properties and equipment, net 1,602,626 1,658,292
Accrued interest receivable (net of reserve for
uncollected interest of $-0- and $-0-, respectively) 196,951 197,518
Other assets 293,595 303,657
----------- -----------
TOTAL ASSETS $39,742,609 $33,746,956
=========== ===========
LIABILITIES
Deposits $29,177,231 $24,038,581
Federal Home Loan Bank advance 1,000,000 --
Deferred income taxes 422,795 419,201
Accrued interest payable and other liabilities 117,872 154,115
----------- -----------
TOTAL LIABILITIES 30,717,898 24,611,897
----------- -----------
STOCKHOLDERS' EQUITY
Preferred Stock, $.10 par value;
500,000 shares authorized, none issued -- --
Common Stock, $.10 par value;
2,000,000 shares authorized, 661,428 issued;
460,623 outstanding at December 31, 2001, and
476,166 at March 31, 2001 66,143 66,143
Additional paid-in capital 6,199,643 6,187,187
Treasury Stock, at cost (200,805 shares at
December 31, 2001, and 185,262 at March 31, 2001) (2,644,227) (2,433,425)
Retained Earnings-substantially restricted 5,046,569 5,026,672
Unearned Employee Stock Ownership Plan shares (ESOP) (274,095) (313,780)
Unearned Restricted Stock Plan shares (RSP) (154,914) (194,397)
Accumulated other comprehensive income 785,592 796,659
---------- -----------
TOTAL STOCKHOLDERS' EQUITY 9,024,711 9,135,059
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $39,742,609 $33,746,956
=========== ===========
See accompanying notes to the unaudited consolidated financial statements.
-3-
SISTERSVILLE BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended
December 31,
2001 2000
INTEREST AND DIVIDEND INCOME
Taxable interest on loans $598,693 $519,173
Taxable interest on investments 30,058 46,866
Nontaxable interest on loans 5,030 4,619
Nontaxable interest on investments 10,275 10,288
Dividends on Federal Home Loan Bank Stock 3,609 4,500
Dividends on Federal Home Loan Mortgage
Corporation Stock 3,822 3,249
-------- --------
Total interest and dividend income 651,487 588,695
-------- --------
INTEREST EXPENSE
Deposits 269,771 261,047
Federal Home Loan Bank advance 12,854 3,860
-------- --------
Total interest expense 282,625 264,907
-------- --------
NET INTEREST INCOME 368,862 323,788
Provision for loan losses 900 300
-------- --------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 367,962 323,488
-------- --------
NONINTEREST INCOME
Service charges 12,793 9,767
Other income 402 584
-------- --------
Total noninterest income 13,195 10,351
-------- --------
NONINTEREST EXPENSE
Compensation and employee benefits 167,858 139,602
Occupancy 18,681 25,132
Furniture and equipment expense 14,970 12,780
Deposit insurance premiums 1,175 1,079
Supervisory examination, audit, and legal fees 13,195 10,945
Advertising and public relations 7,224 4,021
Service bureau expense 27,744 20,975
Franchise, payroll, and other taxes 14,921 14,957
Other expenses 16,982 20,168
-------- --------
Total noninterest expense 282,750 249,659
-------- --------
Income before income taxes 98,407 84,180
INCOME TAXES 32,490 19,284
-------- --------
NET INCOME $ 65,917 $ 64,896
======== ========
EARNINGS PER SHARE
Basic $ .16 $ .14
======== ========
Diluted $ .15 $ .13
======== ========
AVERAGE SHARES OUTSTANDING - BASIC 423,523 474,891
======== ========
AVERAGE SHARES OUTSTANDING - DILUTED 430,824 484,368
======== ========
See accompanying notes to the unaudited consolidated financial statements.
-4-
SISTERSVILLE BANCORP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
Three Months Ended December 31,
2001 2000
NET INCOME $ 65,917 $ 64,896
-------- --------
Other comprehensive income, net of tax:
Unrealized gain (loss) on securities:
Unrealized holding gain (loss)
arising during the period (14,137) 242,421
Reclassification adjustment for gains
included in net income -- --
-------- --------
Other comprehensive income (loss) (14,137) 242,421
-------- --------
COMPREHENSIVE INCOME $ 51,780 $307,317
======== ========
See accompanying notes to the unaudited consolidated financial statements.
-5-
SISTERSVILLE BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Nine Months Ended December 31,
2001 2000
INTEREST AND DIVIDEND INCOME
Taxable interest on loans $1,721,219 $1,530,133
Taxable interest on investments 95,780 134,584
Nontaxable interest on loans 11,913 11,980
Nontaxable interest on investments 30,805 30,842
Dividends on Federal Home Loan Bank Stock 12,032 13,283
Dividends on Federal Home Loan Mortgage
Corporation Stock 11,467 9,747
---------- ----------
Total interest and dividend income 1,883,216 1,730,569
---------- ----------
INTEREST EXPENSE
Deposits 822,532 715,775
Federal Home Loan Bank advance 24,032 42,413
---------- ----------
Total interest expense 846,564 758,188
---------- ----------
NET INTEREST INCOME 1,036,652 972,381
Provision for loan losses 1,500 1,150
---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,035,152 971,231
---------- ----------
NONINTEREST INCOME
Service charges 38,090 31,330
Other income 1,076 2,076
---------- ----------
Total noninterest income 39,166 33,406
---------- ----------
NONINTEREST EXPENSE
Compensation and employee benefits 465,264 434,015
Occupancy 57,716 57,788
Furniture and equipment expense 44,753 36,404
Deposit insurance premiums 3,429 3,259
Supervisory examination, audit, and legal fees 39,863 39,110
Advertising and public relations 24,892 18,586
Service bureau expense 86,428 62,806
Franchise, payroll, and other taxes 45,340 47,052
Other expenses 61,876 66,644
---------- ----------
Total noninterest expense 829,561 765,664
---------- ----------
Income before income taxes 244,757 238,973
INCOME TAXES 53,529 64,418
---------- ----------
NET INCOME $ 191,228 $ 174,555
========== ==========
EARNINGS PER SHARE
Basic $ .46 $ .36
========== ==========
Diluted $ .45 $ .35
========== ==========
AVERAGE SHARES OUTSTANDING - BASIC 420,136 485,412
========== ==========
AVERAGE SHARES OUTSTANDING - DILUTED 429,061 495,017
========== ==========
See accompanying notes to the unaudited consolidated financial statements.
-6-
SISTERSVILLE BANCORP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
Nine Months Ended December 31,
2001 2000
NET INCOME $ 191,228 $ 174,555
--------- ---------
Other comprehensive income, net of tax:
Unrealized gain (loss) on securities:
Unrealized holding gain (loss)
arising during the period (11,067) 401,255
Reclassification adjustment for gains
included in net income -- --
--------- ---------
Other comprehensive income (loss) (11,067) 401,255
--------- ---------
COMPREHENSIVE INCOME $ 180,161 $ 575,810
========= =========
See accompanying notes to the unaudited consolidated financial statements.
-7-
SISTERSVILLE BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended December 31,
2001 2000
OPERATING ACTIVITIES
Net income $ 191,228 $ 174,555
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, amortization, and accretion, net 63,603 54,910
Provision for loan losses 1,150 1,150
Deferred federal income taxes (5,000) (5,000)
ESOP and RSP amortization 91,624 60,169
Decrease (increase) in accrued interest receivable
and other assets 10,629 (35,937)
Increase (decrease) in accrued interest payable
and other liabilities (36,243) 12,440
----------- -----------
Net cash provided by operating activities 316,991 262,287
----------- -----------
INVESTING ACTIVITIES
Purchase of available-for-sale securities (500,000) (11,200)
Proceeds from the maturity or call of
available-for-sale securities 450,000 --
Principal collected on mortgage-backed securities 161,924 118,417
Net increase in loans (3,188,126) (855,648)
Purchases of office properties and equipment (5,992) (361,458)
----------- -----------
Net cash used for investing activities (3,082,194) (1,109,889)
----------- -----------
FINANCING ACTIVITIES
Net increase in deposits 5,138,650 2,163,203
Net Federal Home Loan Bank advance 1,000,000 (250,000)
Dividends paid (171,331) (184,092)
Purchase of Treasury Stock (210,802) (666,678)
----------- -----------
Net cash provided by financing activities 5,756,517 1,062,433
----------- -----------
Change in cash and cash equivalents 2,991,314 214,831
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 1,125,056 389,071
----------- -----------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 4,116,370 $ 603,902
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid during the period for:
Interest on deposits and borrowings $ 828,937 $ 757,266
Income taxes 55,400 104,400
See accompanying notes to the unaudited consolidated financial statements.
-8-
SISTERSVILLE BANCORP, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The consolidated financial statements of Sistersville Bancorp, Inc. (the
"Company"), include its wholly-owned subsidiary, First Federal Savings Bank (the
"Bank"). All significant intercompany balances and transactions have been
eliminated.
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-QSB and, therefore, do not
necessarily include all information that would be included in audited financial
statements. The information furnished reflects all adjustments, which are in the
opinion of management, necessary for a fair statement of the results of
operations. All such adjustments are of a normal recurring nature. The results
of operations for the interim periods are not necessarily indicative of the
results to be expected for the fiscal year ended March 31, 2002.
These statements should be read in conjunction with the consolidated statements
as of and for the fiscal year ended March 31, 2001, and related notes which are
included in the Company's Annual Report on Form 10-KSB (file no. 0-22535).
NOTE 2 - RECENT ACCOUNTING STANDARDS
The Financial Accounting Standards Board (the "FASB") issued SFAS No. 140,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities." SFAS No. 140 replaces SFAS No. 125 and revises the standards
for accounting for securitizations and other transfers of financial assets and
collateral and requires certain disclosures, but it carries over most of SFAS
No. 125's provisions without reconsideration. Under SFAS No. 140, after a
transfer of financial assets, an entity must recognize the financial and
servicing assets it controls and the liabilities it has incurred, and
derecognize financial assets when control has been surrendered, and derecognize
liabilities when extinguished. A transfer of financial assets in which the
transferor surrenders control over those assets is accounted for as a sale to
the extent that consideration other than beneficial interests in the transferred
assets is received in exchange. This statement is generally effective for
activity occurring after March 31, 2001. Earlier or retroactive application of
this statement is not permitted. The adoption of SFAS No. 140 did not have a
material impact on the Company.
The FASB issued SFAS No. 141, "Business Combinations." SFAS No. 141 addresses
financial accounting and reporting for business combinations and supersedes APB
Opinion No. 16, "Business Combinations," and FASB Statement No. 38, "Accounting
for Pre-acquisition Contingencies of Purchased Enterprises," but it does carry
forward some guidance from those statements. This statement requires that all
business combinations be accounted for by the purchase method and that acquired
intangible assets be recognized as assets apart from goodwill if they meet one
of two criteria. The statement also sets forth additional disclosure
requirements as a result of a business combination. The provisions of this
statement apply to all business combinations initiated after June 30, 2001. This
statement also applies to all business combinations accounted for using the
purchase method for which the date of acquisition is July 1, 2001, or later. The
adoption of SFAS No. 141 did not have a material impact on the Company.
The FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets," which
addresses financial accounting and reporting for acquired goodwill and other
intangible assets and supersedes APB Opinion No. 17, "Intangible Assets," but it
does carry forward some guidance from that statement. This statement requires
that an intangible asset that is acquired either individually or with
a group of other assets (but not those acquired in a business combination) shall
be initially recognized and measured based on its fair value. Under SFAS No.
142, goodwill is not amortized and intangible assets with a finite useful life
are amortized and those intangible assets with an infinite life are not
amortized. This statement is generally effective for fiscal years beginning
after December 15, 2001, to all goodwill and other intangible assets recognized
in an entity's statement of financial position at the beginning of that fiscal
year, regardless of when those previously recognized assets were initially
recognized. The provisions of this statement shall be initially applied at the
beginning of a fiscal year; retroactive application is not permitted. Management
does not believe the adoption of SFAS No. 142 will have a material impact on the
Company.
-9-
The FASB recently issued SFAS No. 143, "Accounting for Asset Retirement
Obligations," which addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs. This statement requires an entity to recognize the fair
value of a liability for an asset retirement obligation in the period in which
it is incurred if a reasonable estimate of fair value can be made. This
statement is effective for financial statements issued for fiscal years
beginning after June 15, 2002. Initial application of this statement is as of
the beginning of an entity's fiscal year. Management does not believe the
adoption of SFAS No. 143 will have a material impact on the Company.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Comparison of Financial Condition at December 31, 2001, and March 31, 2001
- --------------------------------------------------------------------------
Total assets increased by $6.0 million to $39.7 million at December 31, 2001,
from $33.7 million at March 31, 2001. Cash and cash equivalents increased by
$3.0 million to $4.1 million at December 31, 2001, from $1.1 million at March
31, 2001. The increase represented the inflow of cash from customers' investment
of funds in deposit accounts, advance from the Federal Home Loan Bank, and
proceeds from the call of available-for-sale securities and principal collected
on mortgage-backed securities offset by the outflow of cash from the increase in
loan production, payment of dividends, and the purchase of available-for-sale
securities and shares for treasury. Investment securities decreased $116,000
from $3.4 million at March 31, 2001, to $3.3 million at December 31, 2001. The
decrease was the direct result of the call of U.S. agency obligations of
$450,000 and the principal collected on mortgage-backed securities of $162,000,
offset by the purchase of $500,000 in U.S. agency obligations. Net loans
receivable increased $3.2 million to $30.2 million at December 31, 2001, from
$27.0 million at March 31, 2001. The increase in loans was attributable to an
increase in one-to-four family residential mortgage loans. Such increases
primarily reflect the economic health of the Bank's market area and competitive
pricing of the Bank's loan products.
Total liabilities increased $6.1 million to $30.7 million at December 31, 2001,
from $24.6 million at March 31, 2001. The increase was the result of an advance
from the Federal Home Loan Bank in the amount of $1.0 million and an increase in
customer deposits of $5.1 million from $24.1 million at March 31, 2001, to $29.2
million at December 31, 2001. The increase in deposits is attributable to
deposit growth at the Parkersburg branch office, which opened in May, 2000.
Stockholders' equity decreased by $110,000, from $9.1 million at March 31, 2001,
to $9.0 million at December 31, 2001. The decrease was attributable to the
payment of dividends of $171,000, purchase of shares for treasury of $211,000,
and the decrease of $11,000 in the accumulated other comprehensive income,
offset by net income of $191,000, and amortization of the ESOP and RSP of
$92,000.
Comparison of the Results of Operations for the Three Months ended December 31,
- -------------------------------------------------------------------------------
2001 and 2000
- -------------
Net income increased by $1,000, or 1.6%, from net income of $65,000 for the
three months ended December 31, 2000, to net income for the three months ended
December 31, 2001, of $66,000.
Interest and dividend income increased $63,000, from $589,000 at December 31,
2000, to $652,000 at December 31, 2001. The increase is attributed to the
increase in interest on loans of $80,000, or 15.3%, offset by the decrease in
interest on investments of $17,000, or 29.7%. The increase in interest on loans
is attributed to the average balance on loans increasing by $3.9 million
to $30.0 million for the three-month period ended December 31, 2001, from $26.1
million for the same period in 2000. The decrease in interest on investments was
due to the decrease in the average yield of 2.17 basis points offset by the
increase in the average investments of $1.4 million, from $4.6 million for the
three-month period ended December 31, 2000, to $6.0 million for the three-month
period ended December 31, 2001.
Interest expense increased by $18,000, or 6.7%, for the three months ended
December 31, 2001, to $283,000, from $265,000 at December 31, 2000. The increase
is due to an increase in interest expense on deposits of $9,000, or 3.3%, for
the three months ended December 31, 2001, to $270,000, from $261,000 for the
same period in 2000, and an increase in interest expense on the Federal Home
Loan Bank advance of $9,000. The increase in interest expense on deposits was
the direct result of an increase in the average balance of deposits of $3.6
million, from $23.1 million for the three-month period ended December 31, 2000,
to $26.7 million for the same period in 2001.
-10-
The increase in interest expense on the Federal Home Loan Bank advance from
$4,000 for the three month period ended December 31, 2000, to $13,000 for the
same period in 2001 was the result of an increase in the average balance of
$612,000 for the period ended December 30, 2001.
Management regularly performs an analysis to identify the inherent risk of loss
in its loan portfolio. This analysis includes evaluation of concentrations of
credit, past loss experience, current economic conditions, amount and
composition of the loan portfolio (including loans being specifically monitored
by management), estimated fair value of underlying collateral, loan commitments
outstanding, delinquencies, and other factors. Based on this analysis,
management established an allowance for loan losses. The allowance for loan
losses is adjusted periodically by a provision for loan losses, which is charged
to operations based on management's evaluation of the losses that may be
incurred in the Bank's portfolio. The provision for loan losses increased by
$600 for the three months ended December 31, 2001, as compared to the same three
months ended December 31, 2000.
The Bank will continue to monitor its allowance for loan losses and make future
additions to the allowance through the provision for loan losses as economic
conditions dictate. Although the Bank 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. In addition, the Bank's determination as to
the amount of its allowance for loan losses is subject to review by its primary
federal regulator, the Office of Thrift Supervision ("OTS"), as part of its
examination process, which may result in the establishment of an additional
allowance based on the judgment of the OTS after a review of the information
available at the time of the OTS examination.
Noninterest income increased by $3,000, or 27.5%, to $13,000 for the three-month
period ended December 31, 2001, from $10,000 for the same period in 2000.
Noninterest expense increased by $33,000, or 13.3%, to $283,000 for the three
months ended December 31, 2001, from $250,000 for the same period in 2000.
Compensation and employee benefits increased by $28,000, or 20.2%, to $168,000
for the three months ended December 31, 2001, from $140,000 for the same period
in 2000. The increase was attributable to the increase in compensation costs of
$27,000 associated with the RSP. The increase in RSP costs was the direct result
of participants electing to defer vesting of RSP shares for the period of July
1, 2000, to July 1, 2001. As a result, RSP compensation expense would not have
been recognized during the three-month period ending December 31, 2000. Service
bureau expense increased $7,000, or 32.3%, from $21,000 for the period ended
December 31, 2001, to $28,000 for the period ended December 31, 2001, due to the
increase in activity from the opening of the new branch office and the related
service bureau's charges on a per customer account basis.
Income tax expense increased by $13,000, or 68.5%, from $19,000 for the three
months ended December 31, 2000, to $32,000 for the three months ended December
31, 2001.
Comparison of the Results of Operations for the Nine Months ended December 31,
- ------------------------------------------------------------------------------
2001 and 2000
- -------------
Net income increased by $17,000, or 9.6%, from net income of $174,000 for the
nine months ended December 31, 2000, to net income for the nine months ended
December 31, 2001, of $191,000.
Interest and dividend income increased $153,000, or 8.8%, from $1.7 million at
December 31, 2000, to $1.9 million at December 31, 2001. The increase is
attributed to the increase in interest on loans of $191,000, or 12.4%, offset by
the decrease in interest on investments of $39,000, or 23.6%. The increase in
interest on loans is attributed to the average balance on loans increasing by
$2.8 million to $28.7 million for the nine-month period ended December 31, 2001,
from $25.9 million for the same period in 2000. The decrease in interest on
investments was due to the decrease in the average yield of 1.65 basis points
offset by the increase in the average investments of $903,000, from $4.2 million
for the nine-month period ended December 31, 2000, to $5.1 million for the nine
month-period ended December 31, 2001.
Interest expense increased by $89,000, or 11.7%, for the nine months ended
December 31, 2001, to $847,000, from $758,000 at December 31, 2000. The increase
is due to an increase in interest expense on deposits of $107,000, or 14.9%, for
the nine months ended December 31, 2001, to $823,000, from $716,000 for the same
period in 2000, offset by the decrease in interest expense on the Federal Home
Loan Bank advance of $18,000, or 43.3%, for the nine months ended December 31,
2001, to $24,000, from $42,000 for the same period in 2000.
-11-
The increase in interest expense on deposits was the direct result of an
increase in the average balance of deposits of $3.2 million, from $21.9 million
for the nine-month period ended December 31, 2000, to $25.1 million for the same
period in 2001. The decrease in interest expense on the Federal Home Loan Bank
advance was the result of a decrease in the cost of funds of .82 basis points
and the decrease in the average balance of $310,000, from $910,000 for the
nine-month period ended December 31, 2000, to $600,000 for the same period in
2001.
Management regularly performs an analysis to identify the inherent risk of loss
in its loan portfolio. This analysis includes evaluation of concentrations of
credit, past loss experience, current economic conditions, amount and
composition of the loan portfolio (including loans being specifically monitored
by management), estimated fair value of underlying collateral, loan commitments
outstanding, delinquencies, and other factors. Based on this analysis,
management established an allowance for loan losses. The allowance for loan
losses is adjusted periodically by a provision for loan losses, which is charged
to operations based on management's evaluation of the losses that may be
incurred in the Bank's portfolio. The provision for loan losses increased $350
to $1,500 for the nine months ended December 31, 2001, from $1,150 for the nine
months ended December 31, 2000.
The Bank will continue to monitor its allowance for loan losses and make future
additions to the allowance through the provision for loan losses as economic
conditions dictate. Although the Bank 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. In addition, the Bank's determination as to
the amount of its allowance for loan losses is subject to review by its primary
federal regulator, the Office of Thrift Supervision ("OTS"), as part of its
examination process, which may result in the establishment of an additional
allowance based on the judgment of the OTS after a review of the information
available at the time of the OTS examination.
Noninterest income increased by $6,000, or 17.2%, to $39,000 for the nine-month
period ended December 31, 2001, from $33,000 for the same period in 2000.
Noninterest expense increased $64,000, or 8.4%, to $830,000 for the nine months
ended December 31, 2001, from $766,000 for the same period in 2000. Compensation
and employee benefits increased by $31,000, or 7.2%, to $465,000 for the nine
months ended December 31, 2001, from $434,000 for the same period in 2000. The
increase was attributable to the increase in compensation costs of $11,000
associated with the RSP and $14,000 associated with the ESOP. The increase in
RSP costs was the direct result of participants electing to defer vesting of RSP
shares for the period of July 1, 2000, to July 1, 2001. ESOP costs are allocated
monthly and recognized at the fair value of Company stock. The increase in ESOP
costs was the result of an increase in the fair value of Company stock for the
nine months ended December 31, 2001, when compared to the same period in 2000.
Service bureau expense increased $23,000, or 37.6%, from $63,000 for the period
ended December 31, 2000, to $86,000 for the period ended December 31, 2001, due
to the increase in activity from the opening of the new branch office and the
related service bureau's charges on a per customer account basis. Furniture and
equipment expense increased $9,000, or 22.9%, from $36,000 for the period ended
December 31, 2000, to $45,000 for the period ended December 31, 2001, due to
depreciation of furniture and equipment at the new branch office.
Income tax expense decreased by $10,000, or 16.9%, from $64,000 for the nine
months ended December 31, 2000, to $54,000 for the nine months ended December
31, 2001.
Liquidity and Capital Resources
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The Bank's primary sources of funds are deposits, amortization and prepayment of
loans, maturities of investment securities, and funds provided from operations.
While scheduled loan repayments are a relatively predictable source of funds,
deposit flows and loan prepayments are greatly influenced by general interest
rates, economic conditions, and competition.
The Bank has other sources of liquidity if a need for additional funds arises.
Additional sources of liquidity include funds available from the Federal Home
Loan Bank ("FHLB") of Pittsburgh amounting to $22.7 million. As of December 31,
2001, the Bank had $1.0 million in outstanding advances from the FHLB.
As of December 31, 2001, the Bank had $1.4 million in outstanding mortgage and
construction loan commitments. Management believes that it has adequate sources
to meet the actual funding requirements.
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Management monitors the Bank's tangible, core, and risk-based capital ratios in
order to assess compliance with OTS regulations. At December 31, 2001, the Bank
exceeded the minimum capital ratios requirements imposed by the OTS. At December
31, 2001, the Bank's capital ratios were as follows:
Bank
Requirement Actual
Tangible capital 1.50% 20.15%
Core capital 4.00% 20.15%
Risk-based capital 8.00% 40.62%
Risk Elements
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A loan is classified as non-accrual 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 for which terms have been
renegotiated to provide a reduction or deferral of principal or interest as a
result of the deterioration of the borrower's ability to pay. There were no
nonperforming assets outstanding as of December 31, 2001.
Management monitors impaired loans on a continual basis. As of December 31,
2001, the Company had no impaired loans. During the nine months ended December
31, 2001, loans increased $3.2 million and non-performing loans did not change
and remained at -0-, while the allowance for loan losses increased $1,500 for
the same period. The percentage of allowance for loan losses to loans
outstanding remained .6% during this time period. The collateral requirements on
such loans reduce the risk of potential losses to an acceptable level in
management's opinion.
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PART II. OTHER INFORMATION
Item 1. Legal proceedings
The registrant was not engaged in any material pending legal proceedings as
of the date of this Report. 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
NONE
Item 4. Submission of matters to a vote of security holders
NONE
Item 5. Other information
Any proposals of shareholders intended to be included in the Company's
proxy statement and proxy card for the 2002 Annual Meeting of Shareholders
should be sent to the Company by certified mail and must be received by the
Company not later than February 6, 2002. In addition, if a shareholder intends
to present a proposal at the 2002 Annual Meeting without including the proposal
in the proxy materials related to that meeting and, if the proposal is not
received by May 13, 2002, then the proxies designated by the Board of Directors
of the Company for the 2002 Annual Meeting of Shareholders of the Company may
vote in their discretion on any such proposal, any shares for which they have
been appointed proxies without mention of such matter in the proxy statement or
on the proxy card for such meeting.
Item 6. Exhibits and Reports on Form 8-K
(a) List of Exhibits:
99.1 Independent Accountant's Report
(b) Report on Form 8-K
NONE
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused the report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SISTERSVILLE BANCORP, INC.
Date: February 4, 2002 By:/s/ Stanley M. Kiser
------------------------------------
Stanley M. Kiser
President and Chief Executive Officer
(Duly Authorized Officer)
Date: February 4, 2002 By:/s/ Stanley M. Kiser
------------------------------------
Stanley M. Kiser
President and Chief Executive Officer
(Principal Executive and Financial Officer)
-15-