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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[mark one]
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-12784
WESTBANK CORPORATION
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Massachusetts 04-2830731
- ------------------------ ---------------------------------------
(State of Incorporation) (I.R.S. Employer Identification Number)
225 Park Avenue, West Springfield, Massachusetts 01090-0149
- ------------------------------------------------ ----------
(Address of principal executive office) (Zip Code)
(413) 747-1400
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(Telephone Number)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ------------------- -------------------
NONE NONE
Securities registered pursuant to Section 12(g) of the Act:
Common stock, $2.00 Par Value
Preferred stock, $5.00 Par Value
--------------------------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past ninety days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Based on the closing sales price on March 1, 2004, the aggregate market value of
the voting stock held by non-affiliates of the registrant was $101,686,176.
The number of shares outstanding of the registrant's common stock, $2.00 par
value, was 4,459,920 on March 1, 2004.
Portions of the Annual Report to Stockholders for the year ended December 31,
2003 are incorporated by reference into Parts I and II.
Portions of the Proxy Statement issued by the Corporation in connection with the
Annual Meeting to be held on April 21, 2004 are incorporated by reference into
Part III.
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WESTBANK CORPORATION
INDEX TO FORM 10-K
PART I
- ------
Item 1 Business I - 1
Item 2 Properties I - 2
Item 3 Legal Proceedings I - 2
Item 4 Submission of Matters to a Vote of Security Holders I - 2
PART II
- -------
Item 5 Market for the Corporation's Common Stock
and Related Stockholder Matters II - 1
Item 6 Selected Financial Data II - 1
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operations II - 1, 2
Item 7A Quantitative and Qualitative Disclosures About
Market Risk II - 1, 2
Item 8 Financial Statements and Supplementary Data II - 2
Item 9 Changes in and Disagreements with Accountant
on Accounting and Financial Disclosure II - 2
Item 9A Controls and Procedures II - 2
PART III
- --------
Item 10 Directors and Executive Officers of the Registrant III - 1
Item 11 Executive Compensation III - 1
Item 12 Security Ownership of Certain
Beneficial Owners and Management III - 1
Item 13 Certain Relationships and Related Transactions III - 1
Item 14 Principal Accounting Fees and Services III - 1
PART IV
- -------
Item 15 Exhibits, Financial Statement Schedules and
Reports on Form 8-K IV - 1
Signatures IV - 2
Exhibit Index IV - 3
WESTBANK CORPORATION, WEST SPRINGFIELD, MASSACHUSETTS
PART I
------
ITEM 1 BUSINESS
- ------ --------
Reference is made to Page 4 of the Corporation's Annual Report to Stockholders
for the year ended December 31, 2003, wherein this subject is covered.
Statistical Disclosure by Bank Holding Companies
- ------------------------------------------------
The following statistical tables and accompanying text provide required
financial data about the Corporation and should be read in conjunction with the
Consolidated financial statements and related notes, appearing in the 2003
Annual Report to Stockholders and is incorporated herein by reference thereto:
Page of
Annual Report
-------------
I. Distribution of Assets, Liabilities and Stockholders' Equity:
Interest Rates and Interest Differential 10 and 11
Rate/Volume Analysis of Interest Margin on Earning Assets 12
II. Investment Portfolio 13, 14, 30, 33, 34, 44 and 45
III. Loan Portfolio 14, 15, 32, 34, 35, 44 and 45
a. Types of Loans 15 and 34
b. Maturities and Sensitivities to Changes
in Interest Rates 9,10 and 14
c. Risk Elements 9, 15, 16, 17, 18, 34 and 35
IV. Summary of Loan Loss Experience 15, 16 and 34
V. Deposits 18, 36, 44 and 45
VI. Return on Equity and Assets 18
VII. Short Term Borrowings 18, 36, 37, 44 and 45
I-1
ITEM 2 PROPERTIES
- ------ ----------
The Corporation had one principal banking subsidiary, Westbank, which operates
seventeen banking offices located in Massachusetts and Connecticut, as follows:
=================================== ===== ====== =====
LOCATION OWNED LEASED TOTAL
(MASSACHUSETTS)
----------------------------------- ----- ------ -----
Agawam (Feeding Hills) 1 1
----------------------------------- ----- ------ -----
Chicopee 1 1
----------------------------------- ----- ------ -----
Chicopee - Supemarket 1 1
----------------------------------- ----- ------ -----
East Longmeadow 1 1
----------------------------------- ----- ------ -----
East Longmeadow - Supemarket 1 1
----------------------------------- ----- ------ -----
Holyoke 1 1
----------------------------------- ----- ------ -----
Ludlow 1 1
----------------------------------- ----- ------ -----
Southwick 1 1
----------------------------------- ----- ------ -----
Webster 1 1
----------------------------------- ----- ------ -----
West Springfield 2 1 3
----------------------------------- ----- ------ -----
Westfield 1 1
----------------------------------- ----- ------ -----
Westfield - Supermarket 1 1
----------------------------------- ----- ------ -----
(CONNECTICUT)
----------------------------------- ----- ------ -----
Putnam 1 1 2
----------------------------------- ----- ------ -----
Woodstock 1 1
----------------------------------- ----- ------ -----
Danielson 1 1
----------------------------------- ----- ------ -----
TOTALS 9 9 18
=================================== ===== ====== =====
All banking offices except the one in Holyoke, Massachusetts, and the
supermarket offices have drive-in facilities and twenty-four hour automated
teller machines.
Title to the properties described as owned in the foregoing table is held by
Westbank with warranty deed with no material encumbrances. Westbank owns, with
no material encumbrances, land adjacent to the main office which is available
for parking and, through a subsidiary, also owns one other property adjacent to
the main office consisting of land also used as a parking lot.
ITEM 3 LEGAL PROCEEDINGS
- ------ -----------------
Certain litigation is pending against the Corporation and the its subsidiaries.
Management, after consultation with legal counsel, does not anticipate that any
liability arising out of such litigation will have a material effect on the
Corporation's Financial Statements.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------ ---------------------------------------------------
No matters were submitted to a vote of security holders during the fourth
quarter of 2003.
I-2
PART II
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ITEM 5 MARKET FOR CORPORATION'S COMMON STOCK
- ------ AND RELATED STOCKHOLDER MATTERS
-------------------------------
Reference is made to the inside back cover of the Corporation's Annual Report to
Stockholders for the year ended December 31, 2003, wherein this subject is
covered.
ITEM 6 SELECTED FINANCIAL DATA
- ------ -----------------------
Reference is made to Page 5 of the Corporation's Annual Report to Stockholders
for the year ended December 31, 2003, wherein this subject is covered.
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- ------ FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Reference is made to Pages 6 through 22 of the Corporation's Annual Report to
Stockholders for the year ended December 31, 2003, wherein this subject is
covered.
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- ------- ----------------------------------------------------------
Reference is made to Pages 9 and 10 of the Corporation's Annual Report to
Stockholders for the year ended December 31, 2003, wherein the subject matter is
covered.
Information Concerning Forward-Looking Statements; Safe Harbor
- --------------------------------------------------------------
The following forward-looking statements are made in accordance with the Private
Securities Litigation Reform Act of 1995.
The Corporation has made, and may make in the future, forward-looking statements
concerning future performance, including, but not limited to, future earnings
and events or conditions that may affect such future performance. These
forward-looking statements are based upon management's expectations and belief
concerning possible future developments and the potential effect of such future
developments on the Corporation. There is no assurance that such future
developments will be in accordance with management's expectations and belief or
that the effect of any future developments on the Corporation will be those
anticipated by management.
All assumptions that form the basis of any forward-looking statements regarding
future performance, as well as events or conditions that may affect such future
performance, are based on factors that are beyond the Corporation's ability to
control or predict with precision, including future market conditions and the
behavior of other market participants. Among the factors that could cause actual
results to differ materially from such forward-looking statements are the
following:
1. The status of the economy in general, as well as in the Corporation's
primary market areas of western Massachusetts and northeastern Connecticut;
2. The real estate market in western Massachusetts and northeastern
Connecticut;
3. Competition in the Corporation's primary market area from other banks,
especially in light of continued consolidation in the New England banking
industry;
4. Any changes in federal and state bank regulatory requirements;
5. Changes in interest rates;
6. The cost and other effects of unanticipated legal and administrative cases
and proceedings, settlements and investigations;
7. Unanticipated changes in laws and regulations, including federal and state
banking laws and regulations, to which the Corporation and its subsidiaries
are subject;
II-1
PART II (CONTINUED)
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8. Changes in accounting policies and practices, as may be adopted by the
Financial Accounting Standards Board or any regulatory agency having
authority over the Corporation and/or its subsidiaries; and
9. Disruption in general economic conditions due to military or terrorist
activity.
Forward-looking statements speak only as of the date they were made. While the
Corporation periodically reassesses material trends and uncertainties affecting
the Corporation's performance in connection with its preparation of management's
discussion and analysis of results of operations and financial condition
contained in its quarterly and annual reports, the Corporation does not intend
to review or revise any particular forward-looking statement.
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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Reference is made to Pages 23 through 48 of the Corporation's Annual Report to
Stockholders for the year ended December 31, 2003, wherein this subject is
covered.
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
- ------ ON ACCOUNTING AND FINANCIAL DISCLOSURE
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NONE
ITEM 9A CONTROLS AND PROCEDURES
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Within 90 days prior to the filing date of this report, the Corporation carried
out an evaluation, under the supervision and with the participation of the
Corporation's management, including the Corporation's Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the design and operation of
the Corporation's disclosure controls and procedures. Based on that evaluation,
the Chief Executive Officer and Chief Financial Officer concluded that the
Corporation's disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Corporation in the reports that it
files or submits under the securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms.
There were no significant changes in the Corporation's internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of their evaluations.
II-2
PART III
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ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------- --------------------------------------------------
Reference is made to Pages 4 through 9 of the Corporation's Proxy Statement to
Stockholders for the 2004 Annual Meeting scheduled for April 21, 2004, wherein
this subject is covered.
The Board of Directors has determined that George R. Sullivan, a member of the
Board of Directors and the Audit Committee, is qualified as an Audit Committee
Financial Expert within the meaning of SEC regulations.
ITEM 11 EXECUTIVE COMPENSATION
- ------- ----------------------
References is made to Pages 12 through 17 of the Corporation's Proxy Statement
to Stockholders for the 2004 Annual Meeting scheduled for April 21, 2004,
wherein this subject is covered.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------- --------------------------------------------------------------
Reference is made to Pages 10 and 11 of the Corporation's Proxy Statement to
Stockholders for the 2004 Annual Meeting scheduled for April 21, 2004, wherein
this subject is covered.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- ------- ----------------------------------------------
Reference is made to Pages 10 through 20, of the Corporation's Proxy Statement
to Stockholders for the 2004 Annual Meeting scheduled for April 21, 2004,
wherein this subject is covered under the caption "Beneficial Ownership of Stock
and Executive Compensation - Miscellaneous".
ITEM 14 PRINCIPAL ACCOUNTING FEES AND SERVICES
- ------- --------------------------------------
Reference is made to Page 8 of the Corporation's Proxy Statement for
stockholders for the 2004 Annual Meeting scheduled for April 21, 2004 wherein
this subject is covered.
III-1
PART IV
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ITEM 15 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
- ------- ---------------------------------------------------------------
The following documents are filed as a part of this report:
1. Financial Statements
The following financial statements are incorporated in this
Annual Report on Form 10-K by reference to the Corporation's
Annual Report to Stockholders for the year ended December 31,
2003:
WESTBANK CORPORATION
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Page of
Annual
Report
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Independent Auditors' Reports ......................... 49 and 50
Consolidated Balance Sheets at December 31, 2003
and 2002 .......................................... 23
Consolidated Statements of Income for the years
ended December 31, 2003, 2002 and 2001 ............ 24
Consolidated Statement of Stockholders' Equity
from January 1, 2001, to December 31, 2003 ........ 25
Consolidated Statements of Comprehensive Income
for the years ended December 31, 2003, 2002
and 2001 .......................................... 25
Consolidated Statements of Cash Flows for the
years ended December 31, 2003, 2002 and 2001 ...... 26
Notes to Consolidated Financial Statements ............ 27 - 48
Reports on Form 8-K:
On April 4, 2003, the Corporation filed Form 8-K announcing a
change in certifying accountants.
On July 17, 2003, the Corporation filed Form 8-K announcing
the financial results for the quarter ended June 30, 2003.
On October 17, 2003, the Corporation filed Form 8-K
announcing the financial results for the quarter ended
September 30, 2003.
On February 3, 2004, the Corporation filed Form 8-K
announcing the financial results for the quarter ended
December 31, 2003.
2. Financial Statement Schedules
Financial Statement Schedules are omitted because they are
inapplicable or not required.
3. Exhibits
See accompanying Exhibit Index.
IV-1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WESTBANK CORPORATION
By: /s/ Donald R. Chase
-------------------------------------
Donald R. Chase
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons in the capacities and on the
dates indicated.
SIGNATURE TITLE DATE
- --------------------------------------------------------------------------------
/s/ Donald R. Chase PRESIDENT AND March 4, 2004
- --------------------------- CHIEF EXECUTIVE OFFICER
Donald R. Chase AND DIRECTOR
/s/ Ernest N. Laflamme, Jr. CHAIRMAN OF THE BOARD March 4, 2004
- --------------------------- AND DIRECTOR
Ernest N. Laflamme, Jr.
/s/ John M. Lilly TREASURER AND March 4, 2004
- --------------------------- CHIEF FINANCIAL OFFICER
John M. Lilly
/s/ Roland O. Archambault DIRECTOR March 4, 2004
- ---------------------------
Roland O. Archambault
/s/ Mark A. Beauregard DIRECTOR March 4, 2004
- ---------------------------
Mark A. Beauregard
/s/ David R. Chamberland DIRECTOR March 4, 2004
- ---------------------------
David R. Chamberland
/s/ G. Wayne McCary DIRECTOR March 4, 2004
- ---------------------------
G. Wayne McCary
/s/ Robert J. Perlak CORPORATE CLERK March 4, 2004
- --------------------------- AND DIRECTOR
Robert J. Perlak
/s/ George R. Sullivan DIRECTOR March 4, 2004
- ---------------------------
George R. Sullivan
/s/ James E. Tremble DIRECTOR March 4, 2004
- ---------------------------
James E. Tremble
IV-2
EXHIBIT INDEX
Page No.
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3. Articles of Organization and By-Laws, as amended **
(a) Articles of Organization, as amended *
(b) By-Laws, as amended *
10.1 Employment Agreement
10.2 Form of Change of Control Agreements
21. Subsidiaries of Registrant TO BE INCLUDED
31.1 Certification of Chief Executive Officer, pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer, pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification of Treasurer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.2 Portions of the Corporation's Annual Report to Stockholders
for year-end 2003 incorporated by reference into this annual
report on Form 10-K
* Incorporated by reference to identically numbered exhibits contained in
Registrant's Annual Report on Form 10-K for the year ended December 31,
1988.
** Incorporated by reference to identically numbered exhibits contained in
Registrant's Annual Report on Form 10-K for the year ended December 31,
1987.
IV-3