1
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 September 30, 2000
[ ] 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.)
incorporation or organization)
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 November 3, 2000: 538,739 shares
2
SISTERSVILLE BANCORP, INC.
INDEX
Page
Number
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet (Unaudited) as of
September 30, 2000 and March 31, 2000 3
Consolidated Statement of Income (Unaudited)
for the Three Months ended September 30, 2000 and 1999 4
Consolidated Statement of Comprehensive Income (Unaudited)
for the Three Months ended September 30, 2000 and 1999 5
Consolidated Statement of Income (Unaudited)
for the Six Months ended September 30, 2000 and 1999 6
Consolidated Statement of Comprehensive Income (Unaudited)
for the Six Months ended September 30, 2000 and 1999 7
Consolidated Statement of Cash Flows (Unaudited)
for the Six Months ended September 30, 2000 and 1999 8
Notes to Unaudited Consolidated Financial Statements 9
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. Default Upon Senior Securities 14
Item 4. Submissions 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
3
SISTERSVILLE BANCORP, INC.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
September 30, March 31,
2000 2000
------------ ------------
ASSETS
Cash and Cash Equivalents:
Cash and amounts due from banks $ 285,699 $ 141,439
Interest-bearing deposits with other institutions 408,451 247,632
------------ ------------
Total cash and cash equivalents 694,150 389,071
Investment Securities:
Securities held to maturity (fair value of $205,397
and $239,716) 203,836 237,873
Securities available for sale 4,324,536 4,115,617
------------ ------------
Total investment securities 4,528,372 4,353,490
Loans receivable, (net of allowance for loan losses
of $175,400 and $174,550) 26,034,657 25,389,113
Office properties and equipment, net 1,699,874 1,368,620
Accrued interest receivable (net of reserve for
uncollected interest of $1,340-and $-0-) 207,470 215,451
Other assets 62,338 46,670
------------ ------------
TOTAL ASSETS $ 33,226,861 $ 31,762,415
============ ============
LIABILITIES
Deposits $ 22,434,250 $ 21,053,607
Federal Home Loan Bank advance 700,000 900,000
Deferred income taxes 287,955 199,796
Accrued interest payable and other liabilities 160,821 185,425
------------ ------------
TOTAL LIABILITIES 23,583,026 22,338,828
------------ ------------
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;
538,739 outstanding at September 30, 2000, and March 31, 2000 66,143 66,143
Additional paid - in capital 6,183,855 6,182,238
Treasury Stock, at cost (122,689 shares at September 30, 2000, and
at March 31, 2000) (1,649,297) (1,649,297)
Retained Earnings - substantially restricted 4,998,584 4,983,212
Unearned Employee Stock Ownership Plan shares (ESOP) (340,237) (366,694)
Unearned Restricted Stock Plan shares (RSP) (194,397) (212,365)
Accumulated other comprehensive income 579,184 420,350
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 9,643,835 9,423,587
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 33,226,861 $ 31,762,415
============ ============
See accompanying notes to the unaudited consolidated financial statements.
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4
SISTERSVILLE BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
Three Months Ended September 30,
2000 1999
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INTEREST AND DIVIDEND INCOME
Taxable interest on loans $508,180 $488,493
Taxable interest on investments 43,647 63,008
Nontaxable interest on loans 3,594 3,825
Nontaxable interest on investments 10,261 10,272
Dividends on Federal Home Loan Bank Stock 4,500 4,010
Dividends on Federal Home Loan Mortgage Corporation Stock 965 2,867
-------- --------
Total interest and dividend income 571,147 572,475
-------- --------
INTEREST EXPENSE
Deposits 238,828 223,665
Federal Home Loan Bank advance 16,677 13,161
-------- --------
Total interest expense 255,505 236,826
-------- --------
NET INTEREST INCOME 315,642 335,649
Provision for loan losses 300 1,050
-------- --------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 315,342 334,599
-------- --------
NONINTEREST INCOME
Service charges 10,782 7,759
Other income 861 588
-------- --------
Total noninterest income 11,643 8,347
-------- --------
NONINTEREST EXPENSE
Compensation and employee benefits 140,041 139,207
Occupancy 19,754 11,668
Furniture and equipment expense 11,911 9,883
Deposit insurance premiums 1,087 3,032
Supervisory examination, audit and legal fees 13,695 16,907
Advertising and public relations 4,998 7,454
Service bureau expense 21,144 18,187
Franchise, payroll and other taxes 14,477 15,237
Loss on sale of available for sale securities -- 22,581
Other expenses 22,273 20,088
-------- --------
Total noninterest expense 249,380 264,244
-------- --------
Income before income taxes 77,605 78,702
Income taxes 23,070 26,425
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NET INCOME $ 54,535 $ 52,277
======== ========
EARNINGS PER SHARE
Basic $ .11 $ .11
======== ========
Diluted $ .11 $ .11
======== ========
AVERAGE SHARES OUTSTANDING - BASIC 491,526 482,375
======== ========
AVERAGE SHARES OUTSTANDING - DILUTED 501,003 495,712
======== ========
See accompanying notes to the unaudited consolidated financial statements.
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SISTERSVILLE BANCORP, INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Three Months Ended September 30,
2000 1999
-------- --------
NET INCOME $ 54,535 $ 52,277
-------- --------
Other comprehensive income, net of tax:
Unrealized gain (loss) on securities:
Unrealized holding gain (loss) arising during the period 123,820 (92,432)
Reclassification adjustment for gains included in net income -- 14,807
-------- --------
Other comprehensive income (loss) 123,820 (77,625)
-------- --------
COMPREHENSIVE INCOME $178,355 $(25,348)
======== ========
See accompanying notes to the unaudited consolidated financial statements.
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SISTERSVILLE BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
Six Months Ended September 30,
2000 1999
---------- ----------
INTEREST AND DIVIDEND INCOME
Taxable interest on loans $1,010,959 $ 971,404
Taxable interest on investments 87,718 132,212
Nontaxable interest on loans 7,361 7,582
Nontaxable interest on investments 20,554 20,551
Dividends on Federal Home Loan Bank Stock 8,784 7,828
Dividends on Federal Home Loan Mortgage Corporation Stock 6,498 5,734
---------- ----------
Total interest and dividend income 1,141,874 1,145,311
---------- ----------
INTEREST EXPENSE
Deposits 454,728 445,138
Federal Home Loan Bank advance 38,553 26,179
---------- ----------
Total interest expense 493,281 471,317
---------- ----------
NET INTEREST INCOME 648,593 673,994
Provision for loan losses 850 2,145
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NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 647,743 671,849
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NONINTEREST INCOME
Service charges 21,563 16,380
Other income 2,042 1,194
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Total noninterest income 23,605 17,574
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NONINTEREST EXPENSE
Compensation and employee benefits 294,751 267,463
Occupancy 32,656 23,043
Furniture and equipment expense 23,625 18,545
Deposit insurance premiums 2,180 6,132
Supervisory examination, audit and legal fees 28,165 35,002
Advertising and public relations 14,564 14,680
Service bureau expense 41,831 35,797
Franchise, payroll and other taxes 32,094 29,399
Loss on sale of available for sale securities -- 22,581
Other expenses 46,689 35,975
---------- ----------
Total noninterest expense 516,555 488,617
---------- ----------
Income before income taxes 154,793 200,806
Income taxes 45,134 64,342
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NET INCOME $ 109,659 $ 136,464
========== ==========
EARNINGS PER SHARE
Basic $ .22 $ .28
========== ==========
Diluted $ .22 $ .27
========== ==========
AVERAGE SHARES OUTSTANDING - BASIC 490,672 495,329
========== ==========
AVERAGE SHARES OUTSTANDING - DILUTED 500,342 509,245
========== ==========
See accompanying notes to the unaudited consolidated financial statements.
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SISTERSVILLE BANCORP, INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Six Months Ended September 30,
2000 1999
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NET INCOME $ 109,659 $ 136,464
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Other comprehensive income, net of tax:
Unrealized gain (loss) on securities:
Unrealized holding gain (loss) arising during the period 158,834 (164,814)
Reclassification adjustment for gains included in net income -- 14,807
--------- ---------
Other comprehensive income (loss) 158,834 (150,007)
--------- ---------
COMPREHENSIVE INCOME $ 268,493 $ (13,543)
========= =========
See accompanying notes to the unaudited consolidated financial statements.
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SISTERSVILLE BANCORP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Six Months Ended September 30,
2000 1999
----------- -----------
OPERATING ACTIVITIES
Net income $ 109,659 $ 136,464
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, amortization and accretion, net 31,349 26,875
Loss (gain) on sale of available for sale securities -- 22,581
Provision for loan losses 850 2,145
ESOP and RSP amortization 46,042 65,313
Decrease (increase) in accrued interest receivable
and other assets (7,687) (106,140)
Increase (decrease) in accrued interest payable
and other liabilities (24,604) (22,433)
----------- -----------
Net cash provided by operating activities 155,609 124,805
----------- -----------
INVESTING ACTIVITIES
Purchase of available for sale securities (11,200) (1,060,000)
Proceeds from maturity of available for sale securities -- 500,000
Proceeds from sale of available for sale securities -- 382,892
Principal collected on mortgage - backed securities 82,166 152,531
Net increase in loans (646,394) (784,190)
Purchases of office properties and equipment (361,459) (474,013)
----------- -----------
Net cash used for investing activities (936,887) (1,282,780)
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FINANCING ACTIVITIES
Net increase (decrease) in deposits 1,380,643 221,867
Net Federal Home Loan Bank advance (200,000) --
Purchase of Treasury Stock -- (322,527)
Dividends paid (94,286) (86,841)
----------- -----------
Net cash provided by financing activities 1,086,357 (187,501)
----------- -----------
Change in cash and cash equivalents 305,079 (1,345,476)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 389,071 1,873,799
----------- -----------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 694,150 $ 528,323
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest on deposits and borrowings $ 494,906 $ 470,927
Income taxes 69,600 186,780
See accompanying notes to the unaudited consolidated financial statements.
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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, 2001.
These statements should be read in conjunction with the consolidated statements
as of and for the fiscal year ended March 31, 2000, 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
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 provides accounting and
reporting standards for derivatives instruments, including certain derivative
instruments embedded in other contracts, by requiring the recognition of those
items as assets or liabilities in the statement of financial position, recorded
at fair value. SFAS No. 133 precludes a held-to-maturity security from being
designated as a hedge item. However, at the date of initial application of SFAS
No. 133, an entity is permitted to transfer any held-to-maturity security into
the available-for-sale or trading categories. The unrealized holding gain or
loss on such transferred securities shall be reported consistent with the
requirements of SFAS No. 115, "Accounting for Certain Investment in Debt and
Equity Securities." Such transfers do not raise an issue regarding an entity's
intent to hold other debt securities to maturity in the future. SFAS No. 133
applies prospectively for all fiscal quarters of all years beginning after June
15, 1999. Earlier adoption is permitted for any fiscal quarter that begins after
the issue date of SFAS No. 133. The adoption of SFAS No. 133 did not have a
material impact on the Company.
In October 1998, the FASB issued SFAS No. 134, "Accounting for Mortgage-Backed
Securities Retained after the Securitization of Mortgage Loans Held for Sale by
a Mortgage Banking Enterprise." SFAS No. 134 amends SFAS No. 65, "Accounting for
Certain Mortgage Banking Activities" and SFAS No. 115 "Accounting for Certain
Investments in Debt and Equity Securities" to require that after the
securitization of mortgage loans held for sale, an entity engaged in mortgage
banking activities classify the resulting mortgage-backed securities or other
retained interests based on its ability and intent to sell or hold those
investments. The statement is effective for the first fiscal quarter beginning
after December 15, 1998. The adoption of SFAS No. 134 did not have a material
impact on the Company.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30 AND MARCH 31, 2000
Total assets increased by $1,465,000 to $33,227,000 at September 30, 2000, from
$31,762,000 at March 31, 2000. Cash and cash equivalents increased by $305,000
to $694,000 at September 30, 2000, from $389,000 at March 31, 2000. The increase
represented the inflow of cash from depositors' investment of funds and cash
provided by operating activities offset by the outflow of cash from the increase
in loan production, purchases of office properties and equipment, net principal
payments on the Federal Home Loan Bank advance, and dividends paid. Investment
securities increased $175,000 to $4,528,000 at September 30, 2000, from
$4,353,000 at March 31, 2000. The increase was a result of an increase of
$11,000 in additional Federal Home Loan Bank stock , an increase in the market
value of available-for-sale securities of $246,000 offset by $82,000 in
principal collected on mortgage-backed securities. Net loans receivable
increased by $646,000 to $26,035,000 at September 30, 2000, from $25,389,000 at
March 31, 2000. The increase in loans was attributable to an increase in the
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. Office property and equipment increased by $331,000 to
$1,700,000 at September 30, 2000 from $1,369,000 at March 31, 2000, which was a
direct result of construction costs of a new branch office in Parkersburg, West
Virginia, which began operation in May of this year.
Total liabilities increased by $1,244,000 to $23,583,000 at September 30, 2000,
from $ 22,339,000 at March 31, 2000. This increase was attributable to the
increase in deposits of $1,380,000, to $22,434,000 at September 30, 2000, from
$21,054,000 at March 31, 2000, which was a direct result of the opening of the
new branch office in Parkersburg, West Virginia in May of this year. Deferred
income taxes increased $88,000 to $288,000 at September 30, 2000 from $200,000
at March 31, 2000 as a direct result of the increase in market value of
available-for-sale securities. The Federal Home Loan Bank advance decreased by
$200,000, from $900,000 at March 31, 2000, compared to $700,000 at September 30,
2000, which was a result of increased funds from customer deposit accounts used
to make principal payments on the advance.
Stockholders' equity increased by $220,000, to $9,644,000 at September 30, 2000,
from $9,424,000 at March 31, 2000. The increase was attributable to net income
of $109,000 for the period, unrealized gains on available-for-sale securities of
$159,000, and amortization of RSP and ESOP shares of $46,000, offset by
dividends paid to stockholders of $94,000.
COMPARISON OF THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30,
2000 AND 1999
Net income increased by $2,000, or 4.3%, to net income of $54,000 for the three
month period ended September 30, 2000, compared to net income of $52,000 for the
three months ended September 30, 1999.
Interest and dividend income decreased by $1,000, from $572,000 for the three
months ended September 30, 1999, compared to $571,000 for the same period in
2000. The decrease is attributed to the decrease in interest on investments of
$19,000, or 26.4%, from $73,000 for the three months ended September 30, 1999,
compared to $54,000, for the three months ended September 30, 2000, offset by an
increase in interest on loans of $19,000, or 3.9%, to $512,000 for the three
month period ended September 30, 2000 compared to $493,000 for the same period
in 1999. The decrease in interest on investments was due to the decrease in
average investments of $1,623,000, from $6,162,000 for the three month period
ended September 30, 1999, to $4,539,000 for the three month period ended
September 30, 2000. The increase in interest on loans is attributed to the
average balance on loans increasing by $1,136,000, to $25,984,000 for the period
ended September 30, 2000, compared to $24,848,000 for the period ended September
30, 1999.
Interest expense increased by $19,000, or 7.9%, to $ 256,000 for the three month
period ended September 30, 2000, compared to $237,000 for the same three month
period in 1999. The increase was due to an increase in the average short term
borrowing at the Federal Home Loan Bank during the three months ended September
30, 2000, which resulted in increased interest expense of $4,000 over the same
period in 1999. Average short term borrowing with the Federal Home Loan Bank
increased $113,000, to $1,113,000, for the three month period ended September
30, 2000, compared to $1,000,000 for the same three month period in 1999.
Interest expense on deposits increased by $15,000, or 6.7%, to $239,000 for the
three month period ended September 30, 2000, compared to $224,000, for the same
period in 1999. The increase in interest on deposits is attributed to the
increase in average deposits of $475,000, to $21,751,000 for the three month
period ended September 30, 2000 compared to $21,276,000 for the three month
period ended September 30, 1999, and due to higher interest rates paid on
deposits during the period ended September 30, 2000.
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11
Management regularly performs an analysis to identify the inherent risk of loss
in its loan portfolio. This analysis included 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 decreased by
$750, to $300, for the three months ended September 30, 2000, compared to $1,050
for the same period in 1999.
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 it 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 39.5%, to $12,000 for the three month
period ended September 30, 2000, compared to $9,000, for the same period in
1999. The increase is attributed to the increase in service fees of $3,000, from
$8,000 for the three months ended September 30, 1999, to $11,000, for the three
month period ended September 30, 2000.
Noninterest expense decreased by $15,000, or 5.7%, to $249,000 for the three
month period ended September 30, 2000, compared to $264,000 for the three month
period ended September 30, 1999. The decrease is attributed to the loss on sale
of available-for-sale securities of $23,000 during the three month period ended
September 30, 1999, offset by net increases in other noninterest expenses of
$8,000 for the 2000 period, that are directly attributed to the increases
related to the opening of the new branch in Parkersburg, West Virginia.
Income tax expense decreased by $3,000, or 12.7% , from $26,000 for the three
month period ended September 30, 1999, compared to $23,000 for the three month
period ended September 30, 2000, attributed to a decrease in pre-tax income.
COMPARISON OF THE RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED SEPTEMBER 30,
2000 AND 1999
Net income decreased by $26,000, or 19.6%, to net income of $110,000 for the six
month period ended September 30, 2000, compared to net income of $136,000 for
the six months ended September 30, 1999.
Interest and dividend income decreased by $3,000, from $1,145,000 for the six
months ended September 30, 1999, compared to $1,142,000 for the same period in
2000. The decrease is attributed to the decrease in interest on investments of
$45,000, or 29.1%, from $153,000 for the six months ended September 30, 1999,
compared to $108,000, for the six months ended September 30, 2000, offset by an
increase in interest on loans of $39,000, or 4.0%, to $1,018,000 for the six
month period ended September 30, 2000, compared to $979,000 for the same period
in 1999. The decrease in interest on investments was due to the decrease in
average investments of $2,123,000, from $6,648,000 for the six month period
ended September 30, 2000, to $4,525,000 for the six month period ended September
30, 2000 which was offset by an increase of 44 basis points in the average yield
on investments. The increase in interest on loans is attributed to the average
balance on loans increasing by $1,148,000, to $25,830,000 for the period ended
September 30, 2000, compared to $24,682,000 for the period ended September 30,
1999.
Interest expense increased by $22,000, or 4.7%, to $493,000 for the six month
period ended September 30, 2000, compared to $471,000 for the same six month
period in 1999. The increase was due to an increase in short term borrowing at
the Federal Home Loan Bank and an increase in deposits during the six months
ended September 30, 2000. Interest expense on the Federal Home Loan Bank advance
increased $12,000 for the period ended September 30, 2000 as compared to the
same period in 1999. Average short term borrowing with the Federal Home Loan
Bank increased by $179,000, to $1,179,000, for the six month period ended
September 30, 2000, compared to $1,000,000 for the same period in 1999. Interest
expense on deposits increased by $10,000, or 2.2%, to $455,000 for the six month
period ended September 30, 2000, compared to $445,000 for the same period in
1999. The increase in interest on deposits is attributed to the increase in
average deposits of $160,000, to $21,364,000 for the six month period ended
September 30, 2000 compared to $21,204,000 for the six month period ended
September 30, 1999, and due to higher interest rates paid on deposits during the
period ended September 30, 2000.
11
12
Management regularly performs an analysis to identify the inherent risk of loss
in its loan portfolio. This analysis included 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 decreased by
$1,295, to $850, for the six months ended September 30, 2000, compared to $2,145
for the same period in 1999.
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 it 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 34.3%, to $24,000 for the six month
period ended September 30, 2000, compared to $18,000, for the same period in
1999. The increase is primarily attributed to the increase in service fees of
$5,000, from $16,000 for the six months ended September 30, 1999, to $21,000,
for the six month period ended September 30, 2000.
Noninterest expense increased by $28,000, or 5.7%, to $517,000 for the six month
period ended September 30, 2000, compared to $489,000 for the six month period
ended September 30, 1999. The increase is attributed to the increase in salaries
and benefits of $27,000, or 10.2% to $294,000 for the six month period ended
September 30, 2000 from $267,000 for the same six month period in 1999,
attributable to the addition of five (5) new employees at the Parkersburg branch
office. This was partially offset by the loss on sale of available-for-sale
securities of $23,000 during the six month period ended September 30, 1999. The
remaining increase of $24,000 for the six month period ended September 30, 2000,
compared to the same six month period in 1999, is directly attributed to the
increases related to the opening of the new branch in Parkersburg, West
Virginia.
Income tax expense decreased by $19,000 or 29.9% , from $64,000 for the six
month period ended September 30, 1999, compared to $45,000 for the six month
period ended September 30, 2000, attributed to a decrease in pre-tax income.
LIQUIDITY AND CAPITAL RESOURCES
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. In addition, the Bank invests
excess funds in overnight deposits which provide liquidity to meet lending
requirements.
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 $21.2 million. As of September 30,
2000, the Bank had $700,000 in outstanding advances from the FHLB.
As of September 30, 2000, the Bank had $977,000 in outstanding mortgage and
construction loan commitments. Management believes that it has adequate sources
to meet the actual funding requirements.
Management monitors the Bank's tangible, core, and risk-based capital ratios in
order to assess compliance with OTS regulations. At September 30, 2000, the Bank
exceeded the minimum capital ratios requirements imposed by the OTS.
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At September 30, 2000, the Bank's capital ratios were as follows:
Bank
Requirement Actual
----------- ------
Tangible capital 1.50% 25.75%
Core capital 4.00% 25.75%
Risk-based capital 8.00% 49.52%
RISK ELEMENTS
The table below presents information concerning nonperforming assets including
nonaccrual loans, renegotiated loans, loans 90 days or more past due, other real
estate loans, and repossessed assets. A loan is classified as nonaccrual when,
in the opinion of management, there are serious doubts about collectibility of
interest and principal. At the time the accrual of interest is discontinued,
future income is recognized only when cash is received. Renegotiated loans are
those loans which terms have been renegotiated to provide a reduction or
deferral of principal or interest as a result of the deterioration of the
borrower.
September 30, March 31,
2000 2000
------------ ------------
(dollars in thousands)
Loans on nonaccrual basis $ -- $ --
Loans past due 90 days or more 48 --
Renegotiated loans -- --
------------ ------------
Total nonperforming loans 48 --
------------ ------------
Other real estate -- --
Repossessed assets -- --
------------ ------------
Total nonperforming assets $ 48 $ --
============ ============
Nonperforming loans as a percent of total loans .18% --
============ ============
Nonperforming assets as a percent of total assets .15% --
============ ============
Allowance for loan losses to nonperforming loans 365.41% --
============ ============
Management monitors impaired loans on a continual basis. As of September 30,
2000, the Company had no impaired loans.
During the six months ended September 30, 2000, loans increased $646,000 and
nonperforming loans increased $48,000 while the allowance for loan losses
increased $850 for the same period. The percentage of allowance for loan losses
to loans outstanding remained .7% 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
The Annual Meeting of Shareholders of Sistersville Bancorp, Inc. was held
on July 21, 2000. The following are the votes cast on each matter presented to
the shareholders:
1. The election of directors for terms expiring in 2003:
For Withheld
--- --------
Charles P. LaRue 313,662 130,525
Stanley M. Kiser 314,662 129,525
ITEM 5. OTHER INFORMATION
Any proposals of shareholders intended to be included in the Company's
proxy statement and proxy card for the 2001 Annual Meeting of Shareholders
should be sent to the Company by certified mail and must be received by the
Company not later than May 21, 2001. In addition, if a shareholder intends to
present a proposal at the 2001 Annual Meeting without including the proposal in
the proxy materials related to that meeting and, if the proposal is not received
by May 21, 2001 then the proxies designated by the Board of Directors of the
Company for the 2001 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:
27. Financial Data Schedule (Electronic Filing Only)
99.1 Independent Accountant's Report
(b) 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: November 3, 2000 By: /s/ Stanley M. Kiser
------------------------------------------
Stanley M. Kiser
President and Chief Executive Officer
(Duly Authorized Officer)
Date: November 3, 2000 By: /s/ Stanley M. Kiser
------------------------------------------
Stanley M. Kiser
President and Chief Executive Officer
(Principal Executive and Financial Officer)
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