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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 June 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 August 2, 2000: 538,739 shares
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SISTERSVILLE BANCORP, INC.
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet (Unaudited) as of
June 30, 2000 and March 31, 2000 3
Consolidated Statement of Income (Unaudited)
for the Three Months ended June 30, 2000 and 1999 4
Consolidated Statement of Comprehensive Income (Unaudited)
for the Three Months ended June 30, 2000 and 1999 5
Consolidated Statement of Cash Flows (Unaudited)
for the Three Months ended June 30, 2000 and 1999 6
Notes to Unaudited Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis 8 - 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Default Upon Senior Securities 11
Item 4. Submissions of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
3
SISTERSVILLE BANCORP, INC.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
June 30, March 31,
2000 2000
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ASSETS
Cash and Cash Equivalents:
Cash and amounts due from banks $ 334,733 $ 141,439
Interest-bearing deposits with other institutions 90,994 247,632
----------- -----------
Total cash and cash equivalents 425,727 389,071
----------- -----------
Investment Securities:
Securities held to maturity (fair value of
$220,057 and $239,716) 219,221 237,873
Securities available for sale 4,047,081 4,115,617
----------- -----------
Total investment securities 4,266,302 4,353,490
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Loans receivable, (net of allowance for loan
losses of $175,100 and $174,550) 26,010,265 25,389,113
Office properties and equipment, net 1,677,397 1,368,620
Accrued interest receivable (net of reserve for
uncollected interest of $-0-and $-0-) 196,565 215,451
Other assets 36,899 46,670
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TOTAL ASSETS $32,613,155 $31,762,415
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LIABILITIES
Deposits $20,917,793 $21,053,607
Federal Home Loan Bank advance 1,950,000 900,000
Deferred income taxes 179,950 199,796
Accrued interest payable and other liabilities 183,484 185,425
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TOTAL LIABILITIES 23,231,227 22,338,828
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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 June 30, 2000,
and March 31, 2000 66,143 66,143
Additional paid - in capital 6,183,560 6,182,238
Treasury Stock, at cost (122,689 shares at
June 30, 2000, and at March 31, 2000) (1,649,297) (1,649,297)
Retained Earnings - substantially restricted 4,944,049 4,983,212
Unearned Employee Stock Ownership Plan shares (ESOP) (353,466) (366,694)
Unearned Restricted Stock Plan shares (RSP) (194,397) (212,365)
Accumulated other comprehensive income 385,336 420,350
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TOTAL STOCKHOLDERS' EQUITY 9,381,928 9,423,587
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $32,613,155 $31,762,415
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See accompanying notes to the unaudited consolidated financial statements.
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SISTERSVILLE BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
Three Months Ended June 30,
2000 1999
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INTEREST AND DIVIDEND INCOME
Taxable interest on loans $ 502,779 $ 482,911
Taxable interest on investments 44,071 69,204
Nontaxable interest on loans 3,767 3,757
Nontaxable interest on investments 10,293 10,279
Dividends on Federal Home Loan Bank Stock 4,284 3,818
Dividends on Federal Home Loan Mortgage
Corporation Stock 5,533 2,867
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Total interest and dividend income 570,727 572,836
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INTEREST EXPENSE
Deposits 215,900 221,473
Federal Home Loan Bank advance 21,876 13,018
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Total interest expense 237,776 234,491
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NET INTEREST INCOME 332,951 338,345
PROVISION FOR LOAN LOSSES 550 1,095
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NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 332,401 337,250
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NONINTEREST INCOME
Service charges 10,781 8,621
Other income 1,181 606
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Total noninterest income 11,962 9,227
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NONINTEREST EXPENSE
Compensation and employee benefits 154,710 128,256
Occupancy 12,902 11,375
Furniture and equipment expense 11,714 8,662
Deposit insurance premiums 1,093 3,100
Supervisory examination, audit, and legal fees 14,470 18,095
Advertising and public relations 9,566 7,226
Service bureau expense 20,687 17,610
Franchise, payroll and other taxes 17,617 14,162
Other expenses 24,416 15,887
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Total noninterest expense 267,175 224,373
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INCOME BEFORE INCOME TAXES 77,188 122,104
INCOME TAXES 22,064 37,917
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NET INCOME $ 55,124 $ 84,187
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EARNINGS PER SHARE
Basic $ .11 $ .17
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Diluted $ .11 $ .16
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AVERAGE SHARES OUTSTANDING - BASIC 489,817 508,283
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AVERAGE SHARES OUTSTANDING - DILUTED 499,680 522,778
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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 June 30,
2000 1999
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NET INCOME $ 55,124 $ 84,187
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Other comprehensive income, net of tax:
Unrealized gain (loss) on securities:
Unrealized holding gain (loss) arising
during the period (35,014) (72,382)
Reclassification adjustment for gains
included in net income - -
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Other comprehensive income (loss) (35,014) (72,382)
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COMPREHENSIVE INCOME $ 20,110 $ 11,805
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See accompanying notes to the unaudited consolidated financial statements.
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SISTERSVILLE BANCORP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Three Months Ended June 30,
2000 1999
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OPERATING ACTIVITIES
Net income $ 55,124 $ 84,187
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, amortization and accretion, net 11,643 13,833
Provision for loan losses 550 1,095
ESOP and RSP amortization 32,518 32,512
Decrease (increase) in accrued interest
receivable and other assets 28,657 (44,542)
Increase (decrease) in accrued interest
payable and other liabilities (1,942) (9,496)
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Net cash provided by operating activities 126,550 77,589
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INVESTING ACTIVITIES
Purchase of available for sale securities (11,200) (660,000)
Proceeds from maturity of available-for-sale
securities - 500,000
Principal collected on mortgage-backed securities 42,933 100,079
Net increase in loans (621,702) (240,980)
Purchases of office properties and equipment (319,825) (471,630)
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Net cash used for investing activities (909,794) (772,531)
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FINANCING ACTIVITIES
Net increase (decrease) in deposits (135,814) 531,205
Federal Home Loan Bank advance 1,050,000 -
Dividends paid (94,286) (88,941)
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Net cash provided by financing activities 819,900 442,264
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Change in cash and cash equivalents 36,656 (252,678)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 389,071 1,873,799
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 425,727 $ 1,621,121
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest on deposits and borrowings $ 238,493 $ 234,373
Income taxes 34,800 124,520
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 - CONVERSION TO STOCK FORM OF OWNERSHIP
AND FORMATION OF HOLDING COMPANY
On December 5, 1996, the Board of Directors of First Federal Savings and Loan
Association of Sistersville (the "Association") approved a plan of conversion
(the "Plan") providing for the conversion of the Association from a
federally chartered mutual savings and loan to a federally chartered stock
savings bank and the simultaneous issuance of all of its outstanding stock to
a newly formed holding company, Sistersville Bancorp, Inc. After approval by
the regulatory authorities and the Association's members, the Conversion was
completed on June 25, 1997. As a result of the conversion, the Company was
formed and the Bank became a wholly-owned subsidiary of the Company.
In connection with the completion of the Conversion on June 25, 1997, the
Company completed the sale of 661,428 shares of stock at $10.00 per share.
From the proceeds, $66,143 was allocated to common stock based on a par value
of $.10 per share and $6,127,984, which is net of conversion costs of
$420,153, was allocated to additional paid in capital.
NOTE 3 - 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. Management does not believe the adoption of SFAS No. 133 will 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 June 30, 2000 and March 31, 2000
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Total assets increased by $851,000 to $32,613,000 at June 30, 2000, from
$31,762,000 at March 31, 2000. Cash and cash equivalents increased by $37,000
to $426,000 at June 30, 2000, from $389,000 at March 31, 2000. The increase
represented the inflow of cash from Federal Home Loan Bank advances offset by
the outflow of cash from the increase in loan production, purchases of office
properties and equipment, net decrease in depositors' investment of funds, and
dividends paid. Investment securities decreased $87,000 from $4,353,000 at
March 31, 2000, to $4,266,000 at June 30, 2000. The decrease was a result of
principal collected on mortgage-backed-securities of $43,000, a decrease in
the market value of available-for-sale securities of $55,000, offset by the
increase of $11,000 in additional Federal Home Loan Bank stock. Net loans
receivable increased $621,000 to $26,010,000 at June 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 $308,000 to $1,677,000 at June 30, 2000, from $1,369,000
at March 31, 2000, which was a direct result of the construction costs of a
new branch office in Parkersburg, West Virginia, which began operation in May
2000.
Total liabilities increased $892,000 to $23,231,000 at June 30, 2000, from
$22,339,000 at March 31, 2000. The increase was a result of an increase in
the Federal Home Loan Bank advance of $1,050,000 to $1,950,000 at June 30,
2000, from $900,000 at March 31, 2000. The increase in the advance was the
result of the increase in loan production and the costs associated with
construction of the new branch. This increase was offset by a decrease in
deposits of $136,000, from $21,054,000 at March 31, 2000 to $20,918,000 at
June 30, 2000.
Stockholders' equity decreased by $42,000, from $9,424,000 at March 31, 2000,
to $9,382,000 at June 30, 2000. The decrease was attributable to the payment
of dividends of $94,000 and a $35,000 decrease in the market value of
available-for-sale securities, partially offset by net income of $55,000 and
amortization of the ESOP and RSP of $33,000.
Comparison of the Results of Operations for the Three Months ended June 30,
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2000 and 1999
- -------------
Net Income decreased by $29,000, or 34.5%, from net income of $84,000 for the
three months ended June 30, 1999, to net income for the three months ended
June 30, 2000, of $55,000.
Interest and dividend income decreased $2,000, from $573,000 at June 30, 1999,
to $571,000 at June 30, 2000. The decrease is attributed to the decrease in
interest on investments of $25,000, or 31.5%, while interest on loans
increased by $20,000, or 4.2%, and dividends on Federal Home Loan Mortgage
Stock increased by $3,000. The decrease in interest on investments was due to
the decrease in average investments of $2,812,000, from $7,138,000 for the
three month period ended June 30, 1999, to $4,326,000 for the three month
period ended June 30, 2000. The increase in interest on loans is attributed
to the average balance on loans increasing by $1,130,000 to $25,615,000 for
the three month period ended June 30, 2000, from $24,485,000 for the same
period in 1999.
Interest expense increased by $3,000, or 1.4%, for the three months ended June
30, 2000, to $238,000, from $235,000 at June 30, 1999. The increase is due
to an increase in the short term borrowing at the Federal Home Loan Bank
during the three months ended June 30, 2000, which resulted in increased
interest expense of $9,000, over the same period in 1999. This increase in
interest expense on the Federal Home Loan Bank advance was offset by a
decrease in interest expense on deposits. Interest expense on deposits
decreased $6,000, or 2.5%, for the three months ended June 30, 2000, to
$216,000, from $222,000 for the same period in 1999. The decrease was the
direct result of a decrease in the average balance of deposits of $260,000,
from $21,187,000 for the three month period ended June 30, 1999, to
$20,927,000 for the same period in 2000.
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 $545, to $550, for the three months ended June 30, 2000,
compared to $1,095 for the same period in 1999.
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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 29.6%, to $12,000 for the three
month period ending June 30, 2000, from $9,000 for the same period in 1999.
The increase is attributed to the increase in service fees of approximately
$2,000, from $9,000 for the three months ended June 30, 1999, to $11,000 for
the same period ended June 30, 2000.
Noninterest expense increased by $43,000, or 19.1%, to $267,000 for the three
months ended June 30, 2000, from $224,000 for the same period in 1999.
Compensation and employee benefits increased by $26,000, or 20.6%, to $155,000
for the three months ended June 30, 2000, from $129,000 for the same period in
1999. The increase was the result of the addition of seven (7) new employees
at the Parkersburg branch. The remaining increase in noninterest expense of
$17,000 for the three months ended June 30, 2000, compared to the same period
in 1999, is directly attributable to other start-up expenses related to the
opening of the new branch in Parkersburg, West Virginia.
Income tax expense decreased by $16,000, or 41.8%, from $38,000 for the three
months ended June 30, 1999, to $22,000 for the three months ended June 30,
2000, attributable to a decrease in pre-tax income.
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. 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 $20.8 million. As of June 30,
2000, the Bank had $2.0 in outstanding advances from the FHLB.
As of June 30, 2000, the Bank had $694,000 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 June 30, 2000, the
Bank exceeded the minimum capital ratios requirements imposed by the OTS.
At June 30, 2000, the Bank's capital ratios were as follows:
Bank
Requirement Actual
Tangible capital 1.50% 25.96%
Core capital 4.00% 25.96%
Risk-based capital 8.00% 50.56%
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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.
June 30, March 31,
2000 2000
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(dollars in thousands)
Loans on nonaccrual basis $ - $ -
Loans past due 90 days or more 1 -
Renegotiated loans - -
------- ---------
Total nonperforming loans 1 -
------- ---------
Other real estate - -
Repossessed assets - -
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Total nonperforming assets $ 1 $ -
======= =========
Nonperforming loans as a percent of total loans .004% -
======= =========
Nonperforming assets as a percent of total assets .003% -
======= =========
Allowance for loan losses to nonperforming loans 17,510% -
======= =========
Management monitors impaired loans on a continual basis. As of June 30, 2000,
the Company had no impaired loans.
During the three months ended June 30, 2000, loans increased $621,000 and
nonperforming loans increased $1,000 while the allowance for loan losses
increased $550 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.
11
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
NONE
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
12
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: August 7, 2000 By: /s/ Stanley M. Kiser
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Stanley M. Kiser
President and Chief Executive Officer
(Duly Authorized Officer)
Date: August 7, 2000 By: /s/ Stanley M. Kiser
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Stanley M. Kiser
President and Chief Executive Officer
(Principal Executive and Financial Officer)