FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to _______________
Commission file number 0-25076
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Washington Bancorp
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(Exact name of small business issuer as specified in its charter)
Iowa 42-1446740
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
102 East Main Street, Washington, Iowa 52353
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (319)653-7256
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No [X]
State the number of shares outstanding of each of the issuers classes of common
equity, as of the latest practicable date.
Common Stock, $.01 par value 535,426 shares outstanding as of November 8, 2000
Transitional Small Business Disclosure Format (check one): Yes[ ] No[X]
<PAGE>
INDEX
Part I. Financial Information
Item 1. Consolidated Financial Statements
Consolidated Statements of Financial Condition
at September 30, 2000 and June 30, 2000
Consolidated Statements of Income for the
three months ended September 30, 2000 and 1999
Consolidated Statements of Comprehensive Income
for the three months ended September 30, 2000 and 1999
Consolidated Statements of Cash Flows for the three
months ended September 30, 2000 and 1999
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis
Part II. Other Information
Items 1 through 6
Signatures
Exhibits
<PAGE>
Item 1. Consolidated Financial Statements
Washington Bancorp and Subsidiaries
Consolidated Statements of Financial Condition
<TABLE>
September 30, June 30,
Assets 2000 2000
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<S> <C> <C>
Cash and cash equivalents
Interest-bearing .............................. $ 2,650,354 $ 1,859,278
Noninterest-bearing ........................... 1,030,787 990,107
Investment securities:
Held to maturity .............................. 774,080 774,629
Available- for- sale .......................... 21,479,281 21,602,351
Federal funds, sold ................................. 125,000 110,000
Loans receivable, net of allowance for loan losses
of $657,416 in September 2000 and $647,605
in June 2000 .................................. 84,775,512 83,988,473
Accrued interest receivable ......................... 1,646,722 1,463,838
Federal Home Loan Bank Stock ........................ 1,756,200 1,729,600
Foreclosed real estate .............................. 344,528 271,302
Premises and equipment, net ......................... 919,441 818,228
Goodwill ............................................ 1,162,323 1,185,964
Other assets ........................................ 506,447 628,668
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Total assets .................................. $ 117,170,675 $ 115,422,438
============= =============
Liabilities and Stockholders' Equity
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Deposits
Noninterest-bearing ........................... $ 3,678,739 $ 4,145,248
Interest -bearing ............................. 70,696,672 69,151,849
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Total deposits ........................... 74,375,411 73,297,097
Borrowed funds ...................................... 30,975,016 30,193,250
Advances from borrowers for taxes and insurance ..... 49,600 249,683
Accrued expenses and other liabilities .............. 710,931 632,003
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Total liabilities ........................ 106,110,958 104,372,033
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Redeemable common stock held by ESOP ................ 227,934 228,947
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Stockholders' Equity:
Common Stock
Common Stock ............................. 6,511 6,511
Additional Paid-in Capital ............... 6,174,092 6,169,796
Retained Earnings .............................. 7,341,100 7,333,909
Accumulated other comprehensive (loss) ....... (377,583) (447,899)
Cost of common shares acquired for the treasury (1,788,954) (1,658,017)
Deferred compensation ......................... (14,786) (21,060)
Maximum cash obligation related to ESOP shares . (227,934) (228,947)
Unearned ESOP shares ........................... (320,663) (332,835)
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Total stockholders' equity ............... 10,831,783 10,821,458
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Total liabilities and stockholder's equity $ 117,170,675 $ 115,422,438
============= =============
</TABLE>
See Notes to Financial Statements.
<PAGE>
Washington Bancorp and Subsidiaries
Consolidated Statements of Income
Three months ended September 30, 2000 and 1999
<TABLE>
2000 1999
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<S> <C> <C>
Interest and dividend income:
Loans, including fees:
First mortgage loans ..................................................... $1,152,092 $1,024,093
Consumer and other loans ................................................. 690,352 562,173
Investment securities:
Taxable .................................................................. 352,449 322,167
Nontaxable ............................................................... 15,716 15,189
Federal Home Loan Bank stock ................................................. 29,680 14,052
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Total interest income ........................................... 2,240,289 1,937,674
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Interest expense:
Deposits ..................................................................... 845,524 844,717
Borrowed funds ............................................................... 511,560 241,398
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Total interest expense .......................................... 1,357,084 1,086,115
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Net interest income ............................................. 883,205 851,559
Provision for loan losses .......................................................... 34,000 21,500
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Net interest income after provision
for loan losses ............................................ 849,205 830,059
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Noninterest income:
Service charges and fees ..................................................... 113,321 89,527
Insurance commissions ........................................................ 15,193 10,988
Investment commissions ....................................................... 10,755
Other ........................................................................ 13,476 2,255
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Total noninterest income ........................................ 152,745 102,770
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Noninterest expense:
Compensation and benefits .................................................... 308,556 330,225
Occupancy and equipment ...................................................... 67,690 60,255
FDIC deposit insurance premium ............................................... 11,315 14,183
Data processing .............................................................. 20,619 28,066
Goodwill amortization ........................................................ 23,640 23,640
Other ........................................................................ 139,152 120,536
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Total noninterest expense ....................................... 570,972 576,905
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Income before taxes ............................................. 430,978 355,924
Income tax expense ................................................................. 171,630 133,160
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Net income ...................................................... $ 259,348 $ 222,764
========== ==========
Earnings per common share:
Basic ........................................................................ $ 0.51 $ 0.40
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Diluted ...................................................................... $ 0.50 $ 0.39
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Weighted average common shares for:
Basic earnings per share ..................................................... 508,693 561,812
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Diluted earnings per share ................................................... 516,159 571,813
========== ==========
Dividends declared per share ....................................................... $ 0.50 $ 0.12
========== ==========
</TABLE>
See Notes to Financial Statements
<PAGE>
Washington Bancorp and Subsidiaries
Consolidated Statements of Comprehensive Income
Three months ended September 30, 2000 and 1999
<TABLE>
2000 1999
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<S> <C> <C>
Net income ................................................................. $ 259,348 $ 222,764
Other comprehensive income (loss), net of income taxes:
Unrealized holding gains (losses) arising during
the period, net of income taxes ....................................... 110,316 (95,513)
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Comprehensive income ........................................ $ 369,664 $ 127,251
========= =========
</TABLE>
See Notes to Financial Statements
<PAGE>
Washington Bancorp and Subsidiaries
Consolidated Statements of Cash Flows
Three months ended September 30, 2000 and 1999
<TABLE>
2000 1999
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<S> <C> <C>
Cash Flows from Operating Activities
Net income ......................................................... $ 259,348 $ 222,764
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of premiums and discounts on
debt securities ............................................ 4,465 7,249
Amortization of goodwill ....................................... 23,641 23,641
Provision for loan losses ...................................... 34,000 21,500
Loss on sale of foreclosed real estate ......................... 20,743 0
Depreciation ................................................... 22,498 21,857
Compensation under stock awards ................................ 6,274 15,964
ESOP contribution expense ...................................... 16,469 16,377
(Increase) in accrued interest receivable ...................... (182,884) (120,432)
(Increase) decrease in other assets ............................ 51,691 10,869
Increase (decrease) in accrued expenses and
other liabilities .......................................... 78,928 (50,341)
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Net cash provided by operating activities .............. 335,173 169,448
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Cash Flows from Investing Activities
Held-to-maturity securities:
Purchases ...................................................... -- (60,000)
Available-for-sale securities:
Maturities and calls ........................................... 300,000 850,000
Purchases ...................................................... -- (950,000)
Federal funds sold, net ............................................ (15,000) 575,000
Purchase of Federal Home Loan Bank stock ........................... (26,600) (140,700)
Loans made to customers, net ....................................... (915,008) (3,569,421)
Purchase of premises and equipment ................................. (123,711) (11,850)
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Net cash (used in) investing activities ................ (780,319) (3,306,971)
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Cash Flows from Financing Activities
Net increase (decrease) in deposits ................................ 1,078,314 2,015,413
Proceeds from Federal Home Loan Bank advances ...................... 180,800,000 26,500,000
Principal payments on Federal Home Loan Bank advances .............. (180,018,234) (22,664,304)
Net increase in advances from borrowers for taxes
and insurance .................................................. (200,083) (123,710)
Acquisition of common stock for treasury ........................... (130,937) (40,875)
Dividends paid ..................................................... (252,158) (67,197)
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Net cash provided by financing activities .............. 1,276,902 5,619,327
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Net increase(decrease) in cash and
cash equivalents .................................. 831,756 2,481,804
Cash and cash equivalents:
Beginning .......................................................... 2,849,385 2,557,430
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Ending ............................................................. $ 3,681,141 $ 5,039,234
============= =============
</TABLE>
<PAGE>
Washington Bancorp and Subsidiaries
Consolidated Statements of Cash Flows (continued)
Three months ended September 30, 2000 and 1999
2000 1999
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Supplemental Disclosures of Cash Flow Information
Cash payments for:
Interest paid to depositors .................. $367,685 $461,291
Interest paid on other obligations ........... $490,379 $241,398
Income taxes, net of refunds ................. $193,400 $143,400
Supplemental Schedule of Noncash Investing and
Financing Activities
Transfers from loans to foreclosed real estate ... $133,969 $ 65,563
Contract sales of foreclosed real estate ......... $ 40,000 $ --
See Notes to Consolidated Financial Statements.
<PAGE>
Washington Bancorp and Subsidiary
Notes to Consolidated Financial Statements
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Principles of consolidation. The accompanying consolidated financial statements
include the accounts of Washington Bancorp, Washington Federal Savings
Bank("Washington Federal"), WFSB's wholly-owned subsidiary Washington Financial
Services, Inc., which is a discount brokerage firm, and Rubio Savings Bank of
Brighton, Iowa ("Rubio Savings Bank" ). All significant intercompany balances
and transactions have been eliminated in consolidation.
Basis of presentation. Interim Financial Information (unaudited): The financial
statements and notes related thereto for the three month period ended September
30, 2000, are unaudited, but in the opinion of management include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the financial position and results of operations. The
operating results for the interim periods are not indicative of the operating
results to be expected for a full year or for other interim periods. Not all
disclosures required by generally accepted accounting principles necessary for a
complete presentation have been included. It is recommended that these
consolidated condensed financial statements be read in conjunction with the
Annual Report on Form 10-KSB for the year ended June 30, 2000 and all related
amendments and exhibits (including all financial statements and notes therein),
filed by the Company with the Securities and Exchange Commission.
Goodwill. Goodwill resulting from the Company's acquisition of Rubio Savings
Bank is being amortized by the straight-line method over 15 years. Goodwill is
periodically reviewed for impairment based upon an assessment of future
operations to ensure that it is appropriately valued.
Foreclosed real estate. Real estate properties acquired through loan foreclosure
are initially recorded at the lower of cost or fair value less estimated selling
expenses at the date of foreclosure. Costs relating to development and
improvement of property are capitalized, whereas costs relating to holding
property are expensed.
Redeemable common stock held by ESOP. The Company's maximum cash obligation
related to these shares is classified outside stockholders' equity because the
shares are not readily traded and could be put to the Company for cash. The
maximum cash obligation represents the approximate market value of the allocated
ESOP shares at the end of the reporting period.
Regulatory capital requirements. Pursuant to the Financial Information Reform,
Recovery and Enforcement Act of 1989 ("FIRREA"), savings institutions must meet
three separate minimum capital-to-asset requirements. The following table
summarizes, as of September 30, 2000 the capital requirements of Washington
Federal under FIRREA and its actual capital ratios. As of September 30, 2000
Washington Federal exceeded all current regulatory capital requirement
standards.
At September 30, 2000
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Amount Percent
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(Dollars in thousands)
Tangible Capital:
Capital Level ....................... $7,489 7.94%
Requirement ......................... 1,415 1.50%
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Excess .............................. $6,074 6.44%
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Core Capital:
Capital Level ....................... $7,489 7.94%
Requirement ......................... 3,774 4.00%
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Excess .............................. $3,715 3.94%
====== ======
Risk-Based Capital:
Capital Level ....................... $7,955 12.36%
Requirement ......................... 5,150 8.00%
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Excess .............................. $2,805 4.36%
====== ======
<PAGE>
The following table summarizes the capital requirements of Rubio Savings Bank of
Brighton. As of September 30, 2000 Rubio exceeded all current regulatory capital
requirement standards.
At September 30, 2000
----------------------
Amount Percent
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(Dollars in thousands)
Tier 1 or Leverage Capital:
Capital Level ......................... $2,498 11.13%
Requirement ........................... 673 3.00%
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Excess ................................ $1,825 8.13%
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Tier 1 Risk-based Capital:
Capital Level ......................... $2,498 15.81%
Requirement ........................... 632 4.00%
------ ======
Excess ................................ $1,866 11.81%
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Risk-Based Capital:
Capital Level ......................... $2,669 16.89%
Requirement ........................... 1,264 8.00%
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Excess ................................ $1,405 8.89%
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<PAGE>
Item 2. Management's Discussion and Analysis
Forward-Looking Statements
When used in this Form 10-QSB or future filings by the Company with the
Securities and Exchange Commission, in the Company's press releases or other
public or shareholder communications, or in oral statements made with the
approval of an authorized executive officer, the words or phrases "will likely
result," "are expected to," "will continue," "is anticipated," "estimate,"
"project," "believe" or similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. The Company wishes to caution readers not to
place undue reliance on any such forward-looking statements, which speak only as
of the date made, and to advise readers that various factors, including regional
and national economic conditions , changes in levels of market interest rates,
credit risks of lending activities, and competitive and regulatory factors,
could affect the Company's financial performance and could cause the Company's
actual results for future periods to differ materially from those anticipated or
projected.
The Company does not undertake, and specifically disclaims any obligations, to
revise any forward-looking statements to reflect the occurrence of anticipated
or unanticipated events or circumstances after the date of such statements.
General
Washington Bancorp is an Iowa corporation which was organized in
October 1995 by Washington Federal Savings Bank for the purpose of becoming a
savings and loan holding company. Washington Federal is a federally chartered
savings bank headquartered in Washington, Iowa. Originally chartered in 1934,
Washington Federal converted to a federal savings bank in 1994. Its deposits are
insured up to the applicable limits by the Federal Deposit Insurance Corporation
("FDIC").
In March 1996, Washington Federal converted to the stock form of
organization through the sale and issuance of its common stock to the Company.
On June 24, 1997, Washington entered into a merger agreement to acquire Rubio
Savings Bank of Brighton, Iowa. Rubio Savings Bank is held as a separate
subsidiary of Washington Bancorp. In January 1998, Washington Bancorp became a
bank holding company upon the completion of its acquisition of Rubio Savings
Bank. In December 1998, Washington Federal opened a branch office, Wellman
Federal Savings, in Wellman, Iowa. In September 2000, Washington Federal opened
a branch office, Richland Federal Savings, in Richland, Iowa. The principal
assets of Washington Bancorp are Washington Federal and Rubio Savings Bank
(collectively, the "Banks"). Washington Bancorp presently has no separate
operations and its business consists primarily of the business of the Banks. All
references to Washington Bancorp, unless otherwise indicated at or before March
11, 1996, refer to Washington Federal.
Washington Bancorp is investigating the possibility of de-registering
with the SEC in an effort to reduce expenses. De-registering will result in
de-listing with Nasdaq. In order to de-register, Washington Bancorp must first
have fewer than 300 record holders. Washington Bancorp's shares trade
infrequently and are widely held in the local area of Washington, Iowa.
Therefore the negative impact for the liquidity of the shares is expected to be
minimal.
Washington Federal attracts deposits from the general public in its
local market area and uses such deposits primarily to invest in one- to
four-family residential loans secured by owner occupied properties and
non-residential properties, as well as construction loans on such properties.
Washington Federal also invests in federal agency bonds, corporate bonds,
agricultural loans, commercial loans, consumer loans, and automobile loans.
Rubio attracts deposits from the general public in its local market
area and the businesses in the Brighton area. The deposits are primarily
invested in federal agency bonds, agricultural operating loans, commercial
loans, one- to- four family residential real estate loans, and farm real estate
loans. Rubio also makes commercial real estate loans, automobile loans and
consumer loans.
The executive office of the Company is located at 102 East Main Street,
Washington, Iowa 52353, telephone (319)653-7256.
Financial Condition
Total assets. Total consolidated assets increased $1.7 million from $115.4
million at June 30, 2000 to $117.1 million at September 30, 2000. The increase
was primarily due to a $832,000 increase in cash and cash equivalents, a
$787,000 increase in loans receivable, net, a $183,000 increase in accrued
interest receivable, and a $101,000 increase in premises and equipment,
partially offset by a $123,000 decrease in available- for- sale investment
securities and a $122,000 decrease in other assets.
<PAGE>
Loans receivable. Loans receivable, net increased $787,000 from $84.0 million at
June 30, 2000 to $84.8 million at September 30, 2000. This increase is primarily
due to increased loan demand in the Company's market area. The Company's
non-performing assets were $876,000 or 0.75 % of total assets at September 30,
2000 as compared to $648,000 or 0.57% of total assets at June 30, 2000.
Non-performing assets have increased primarily due to the acquisition of one
real estate property which was voluntarily deeded back to the Company. The
Company is in the process of liquidating the asset and no losses are expected.
Investment securities. Available- for- sale investment securities decreased
$123,000 from $21.6 million at June 30, 2000 to $21.5 at September 30, 2000. The
portfolio of available- for- sale securities is comprised primarily of
investment securities carrying fixed interest rates. The fair value of these
securities was less on September 30, 2000 than their carrying value due to an
increase in market rates of interest since the purchase date of the securities.
Therefore, the total balance of available- for- sale securities includes the
gross effect of the unrealized loss.
Deposits. Deposits increased $1.1 million from $73.3 million at June 30, 2000 to
$74.4 million at September 30, 2000. The increase is primarily due to the
seasonal fluctuation in the cash position of a local governmental agency.
Transaction and savings deposits increased as a percentage of total deposits
from $26.6 million or 36.3% at June 30, 2000 to $27.6 million or 37.1% at
September 30, 2000. Certificates of deposit decreased as a percentage of total
deposits from $46.7 million or 63.7% at June 30, 2000 to $46.8 million or 62.9%
at September 30, 2000.
Total stockholders' equity. Total stockholders' equity increased $10,000 from
$10.8 million at June 30, 2000 to $10.8 million at September 30, 2000. The
increase is primarily due to net income of $259,000, the net unrealized gain in
the available for sale securities of $110,000, the allocation of ESOP shares of
$17,000, and the amortization of deferred compensation of $6,000 partially
offset by dividends paid to shareholders of $252,000 and the $131,000 in
payments for the repurchase of 9,600 shares of the Company's common stock.
Results of Operations - Three Months Ended September 30, 2000 As Compared To The
Three Months Ended September 30, 1999
Performance summary. Net earnings increased $36,000 to $259,000 for the three
months ended September 30, 2000 from $223,000 for the three months ended
September 30, 1999. The increase is primarily due to an increase in interest
income of $303,000, an increase in noninterest income of $50,000, and a decrease
in noninterest expense of $6,000 partially offset by an increase in interest
expense of $271,000, an increase in income tax expense of $38,000, and an
increase in provision for loan loss of $13,000. For the three months September
30, 2000 the annualized return on average assets was 0.89% compared to 0.86% for
the three months ended September 30, 1999, while the annualized return on
average equity was 9.58% for the three months ended September 30, 2000 compared
to 8.34% for the three months ended September 30, 1999.
Net interest income. Net interest income increased $19,000 to $849,000 for the
three months ended September 30, 2000 from $830,000 for the three months ended
September 30, 1999. The increase is primarily due to the increase of $303,000 in
interest income to $2.2 million for the three months ended September 30, 2000
from $1.9 million for the three months ended September 30, 1999 offset by an
increase in interest expense of $271,000 to $1.4 million for the three months
ended September 30, 2000 from $1.1 million for the three months ended September
30, 1999.
For the three months ended September 30, 2000 the average yield on
interest-earning assets was 8.13% compared to 7.88% for the three months ended
September 30, 1999. The average cost of interest-bearing liabilities was 5.41%
for the three months ended September 30, 2000 compared to 4.88% for the three
months ended September 30, 1999. The average balance of interest earning assets
increased $11.9 million to $110.2 million for the three months ended September
30, 2000 from $98.3 million for the three months ended September 30, 1999.
During this same period, the average balance of interest-bearing liabilities
increased $11.4 million to $100.4 million for the three months ended September
30, 2000 from $89.0 million for the three months ended September 30, 1999.
Due to an increase in rates paid on the interest-bearing liabilities to remain
competitive locally, the average interest rate spread was 2.73% for the three
months ended September 30, 2000 compared to 3.00% for the three months ended
September 30, 1999. The average net interest margin was 3.21% for the three
months ended September 30, 2000 compared to 3.46% for the three months ended
September 30, 1999.
<PAGE>
Provision for loan loss. Provision for loan loss increased $13,000 to $34,000
for the three months ended September 30, 2000 from $22,000 for the three months
ended September 30, 1999. The primary reason for the increase in the provision
was the increased size of the loan portfolio, particularly in nonresidential
real estate, commercial, and agriculture loans which are considered to carry a
higher risk of default than residential loans. Despite this increase, the
Company's loan portfolio remains primarily residential mortgage loans and has
experienced a minimal amount of charge-offs in the past three years. The
allowance for loan losses of $657,000 or 0.78% of loans receivable, net at
September 30, 2000 compares to $495,000 or 0.65% of loans receivable, net at
September 30, 1999. The allowance for loan loss as a percentage of
non-performing assets was 75.05% at September 30, 2000, compared to 149.17% at
September 30, 1999.
Noninterest income. Noninterest income increased $50,000 to $153,000 for the
three months ended September 30, 2000 from $103,000 for the three months ended
September 30, 1999. The increase is primarily due an increase in service charges
and fees of $24,000, an increase in other noninterest income of $11,000, an
increase in investment commissions of $11,000 and an increase in insurance
commissions of $4,000.
Service charges and fees increased $24,000 to $113,000 for the three months
ended September 30, 2000 from $89,000 for the three months ended September 30,
1999 primarily due to a $17,000 increase in overdraft fee income, a $4,000
increase in checking account service charges and stop payments, and a $3,000
increase in late charges on loan payments. Other noninterest income increased
$11,000 to $13,000 for the three months ended September 30, 2000 from $2,000 for
the three months ended September 30, 1999 primarily due to gains realized in the
sale of foreclosed property and an increase in the penalty for early withdrawal
of a certificate of deposit. The investment center generated $11,000 for the
three months ended September 30, 2000. Insurance commissions increased $4,000 to
$15,000 for the three months ended September 30, 2000 from $2,000 for the three
months ended September 30, 1999 primarily due to an increase in the volume of
credit life and disability sales.
Noninterest expense. Noninterest expense decreased $6,000 to $571,000 for the
three months ended September 30, 2000 from $577,000 for the three months ended
September 30, 1999. The decrease is primarily due to a $22,000 decrease in
compensation and benefits, a $7,000 decrease in data processing, and a $3,000
decrease in FDIC insurance premium partially offset by a $19,000 increase in
other noninterest expense, and a $7,000 increase in occupancy and equipment.
Compensation and benefits decreased $22,000 to $309,000 for the three months
ended September 30, 2000 from $330,000 for the three months ended September 30,
1999 primarily due to the reduction in salaries paid to the investment center
and the retirement of an executive officer. Data processing decreased $7,000 to
$21,000 for the three months ended September 30, 2000 from $28,000 for the three
months ended September 30, 1999 primarily due to a reduction in the usage of
data-center produced reports. FDIC insurance premiums decreased $3,000 to
$11,000 for the three months ended September 30, 2000 from $14,000 for the three
months ended September 30, 1999 primarily due to the decrease in Washington
Federal's regulatory premium rate.
Other noninterest expense increased $19,000 to $139,000 for the three months
ended September 30, 2000 from $120,000 for the three months ended September 30,
1999 primarily due to the increased cost of operating a new branch office since
the opening of Richland Federal Savings in September 2000. Occupancy and
equipment expense increased $7,000 to $67,000 for the three months ended
September 30, 2000 from $60,000 for the three months ended September 30, 1999
primarily due to the increased cost of a new branch office building since the
opening of Richland Federal Savings in September 2000.
Liquidity and capital resources. The Banks' principal sources of funds are
deposits, amortization and prepayment of loan principal, borrowings, and the
sale and maturity of investment securities. While scheduled loan repayments and
maturing investments are relatively predictable, deposit flows and early loan
repayments are more influenced by interest rates, general economic conditions,
and competition, and, most recently, the restructuring of the thrift industry.
The Banks generally manage the pricing of the deposits to maintain a steady
deposit balance, but has from time to time decided not to pay deposit rates that
are as high as those of the competition, and when necessary, to supplement
deposits with alternative sources of funds.
<PAGE>
Federal regulations historically have required Washington Federal to maintain
minimum levels of liquid assets. The required percentage has varied from time to
time based upon economic conditions and savings flows and is currently 4% of net
withdrawable savings deposits and borrowings payable upon demand or in one year
or less during the proceeding calendar month. Liquid assets for the purpose of
this ratio include cash, certain time deposits, U.S. Government, government
agency, and corporate securities and other obligations generally having
remaining maturities of less than five years. Washington Federal has
historically maintained its liquidity ratio at levels in excess of those
required. At September 30, 2000, the Washington Federal's liquidity ratio was
14.55%.
Liquidity management is both a daily and long-term responsibility of management.
The Bank adjusts its investments in liquid assets based upon management's
assessment of (i) expected loan demand, (ii) expected deposit flows, (iii)
yields available on interest-bearing deposits, and (iv) the objective of its
asset/liability management program. Excess liquidity is invested generally in
interest-bearing overnight deposits and other short-term government and agency
obligations. If the Bank requires funds beyond its ability to generate them
internally, it has additional borrowing capacity with the FHLB of Des Moines and
collateral eligible for reverse repurchase agreements.
The Banks anticipate that it will have sufficient funds available to meet
current loan commitments. At September 30, 2000, Washington Federal had
outstanding commitments to extend credit which amounted to $4.2 million and
Rubio Savings Bank had outstanding commitments to extend credit which amounted
to $1.1 million.
<PAGE>
Part II - Other Information
Item 1. Legal Proceedings.
None
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) Exhibits (listed by numbers corresponding to
the Exhibit Table of Item 601 on Regulation S-B)
11 Computation of Earnings Per Share
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports in Form 8-K have been filed during the quarter for
which this report was filed.
<PAGE>
Signatures
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Washington Bancorp
(Registrant)
Date November 9, 2000 /s/ Stan Carlson
---------------- ---------------------------------------
Stan Carlson, President and Chief
Executive Officer
Date November 9, 2000 /s/ Leisha A. Linge
---------------- ---------------------------------------
Leisha A. Linge,Controller
