SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] Annual report pursuant to section 13 or 15 (d) of the Securities Exchange
Act of 1934 For the fiscal year 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
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Commission File No. 0-27606
WHG Bancshares Corporation
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(Name of Small Business Issuer in Its Charter)
Maryland 52-1953867
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1505 York Road, Lutherville, Maryland 21093
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(Address of Principal Executive Offices) (Zip Code)
Issuer's Telephone Number, Including Area Code: (410) 583-8700
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Securities registered under Section 12(b) of the Exchange Act: None
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Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $0.10 per share
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(Title of Class)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 .
--- ---
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $11,335,000.
The aggregate market value of the voting stock held by non-affiliates
of the registrant, based on the average bid and asked price of the registrant's
Common Stock on November 30, 2000, was $7.9 million.
As of November 30, 2000, there were issued and outstanding 1,285,609
shares of the registrant's Common Stock.
Transitional Small Business Disclosure Format (check one): YES NO X
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DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Annual Report to Stockholders for the Fiscal Year Ended
September 30, 2000. (Parts I and II)
2. Portions of the Proxy Statement for the Annual Meeting of Stockholders for
the Fiscal Year Ended September 30, 2000. (Part III)
<PAGE>
PART I
WHG Bancshares Corporation (the "Registrant" or "Company") may from
time to time make written or oral "forward-looking statements", including
statements contained in the Company's filings with the Securities and Exchange
Commission (including this annual report on Form 10-KSB and the exhibits
thereto), in its reports to stockholders and in other communications by the
Company, which are made in good faith by the Company pursuant to the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements involve risks and uncertainties, such
as statements of the Company's plans, objectives, expectations, estimates and
intentions, that are subject to change based on various important factors (some
of which are beyond the Company's control). The following factors, among others,
could cause the Company's financial performance to differ materially from the
plans, objectives, expectations, estimates and intentions expressed in such
forward-looking statements: the strength of the United States economy in general
and the strength of the local economies in which the Company conducts
operations; the effects of, and changes in, trade, monetary and fiscal policies
and laws, including interest rate policies of the board of governors of the
federal reserve system, inflation, interest rates, market and monetary
fluctuations; the timely development of and acceptance of new products and
services of the Company and the perceived overall value of these products and
services by users, including the features, pricing and quality compared to
competitors' products and services; the willingness of users to substitute
competitors' products and services for the Company's products and services; the
success of the Company in gaining regulatory approval of its products and
services, when required; the impact of changes in financial services' laws and
regulations (including laws concerning taxes, banking, securities and
insurance); technological changes; acquisitions; changes in consumer spending
and saving habits; and the success of the Company at managing the risks
resulting from these factors.
The Company cautions that the listed factors are not exclusive. The
Company does not undertake to update any forward-looking statement, whether
written or oral, that may be made from time to time by or on behalf of the
Company.
Item 1. Description of Business
--------------------------------
General
The Company is the holding company for Heritage Savings Bank, F.S.B.
(the "Bank") and as a unitary savings and loan holding company is generally not
restricted in the types of business activities in which it may engage provided
that the Bank retains a specified amount of its assets in housing-related
investments. The Company conducts no significant business or operations of its
own other than holding all of the outstanding stock of the Bank. As a result,
references to the Registrant or Company generally refer to the Bank unless the
context indicates otherwise.
The Bank is a federally chartered stock savings bank headquartered in
Lutherville, Maryland and is subject to examination and comprehensive regulation
by the Office of Thrift Supervision ("OTS") and its deposits have been federally
insured by the Savings Association Insurance Fund ("SAIF"). The Bank is a member
of and owns capital stock in the Federal Home Loan Bank ("FHLB") of Atlanta,
which is one of the 12 regional banks in the FHLB System.
1
<PAGE>
The Bank operates a traditional savings bank business, attracting
deposit accounts from the general public and using those deposits, together with
other funds, primarily to originate and invest in loans secured by single-family
residential real estate.
Competition
The Company is one of many financial institutions serving its market
area which consists of the Baltimore, Maryland metropolitan area that includes
Baltimore City and its five surrounding counties, Baltimore County, Harford
County, Howard County, Carroll County, and Anne Arundel County. The competition
for deposit products comes from other insured financial institutions such as
commercial banks, thrift institutions, credit unions, and multi-state regional
banks in the Company's market area. Deposit competition also includes a number
of insurance products sold by local agents and investment products such as
mutual funds and other securities sold by local and regional brokers. Loan
competition varies depending upon market conditions and comes from other insured
financial institutions such as commercial banks, thrift institutions, credit
unions, multi-state regional banks, and mortgage bankers.
Lending Activities
Loan Portfolio Data. The following table sets forth the composition of
the Registrant's loan portfolio in dollar amounts by type of loan and in percent
of the respective portfolios at the dates indicated:
<TABLE>
<CAPTION>
At September 30,
--------------------------------------------
2000 1999
--------------------- --------------------
$ % $ %
--- --- --- ---
(Dollars in thousands)
<S> <C> <C> <C> <C>
Mortgage loans:
Residential mortgage loans:
One-to four family .................................. 72,225 71.9 71,042 74.7
Multi-family ........................................ 3,832 3.8 2,352 2.5
Commercial ............................................ 9,916 9.9 6,772 7.1
Construction .......................................... 6,592 6.5 5,183 5.5
--------- --------- --------- ---------
Total mortgage loans ........................... 92,565 92.1 85,349 89.8
--------- --------- --------- ---------
Consumer and other loans:
Consumer ............................................ 5,961 5.9 7,298 7.7
Land/lot ............................................ 210 .2 833 .8
Commercial lines of credit .......................... 1,597 1.6 1,174 1.2
Commercial loans secured by lease
receivables ..................................... 171 .2 438 .5
--------- --------- --------- ---------
Total consumer and other loans ................. 7,939 7.9 9,743 10.2
--------- --------- --------- ---------
Total loans .............................. 100,504 100.0% 95,092 100.0%
========= =========
Less:
Undisbursed portion of loans in process ............. (2,125) (3,568)
Deferred loan origination fees ...................... (473) (520)
Allowance for loan losses ........................... (395) (345)
Unamortized discount ................................ (601) (725)
Other ............................................... (1) (2)
-------- ------
Total loans, net ...................................... $ 96,909 $89,932
======== ======
</TABLE>
2
<PAGE>
Loan Maturity Tables
The following table sets forth the estimated maturity of the Registrant's loan
portfolio at September 30, 2000. The table does not include prepayments or
scheduled principal repayments. Prepayments and scheduled principal repayments
on loans totaled $15.5 million for the year ended September 30, 2000.
Adjustable-rate mortgage loans are shown as maturing based on contractual
maturities.
<TABLE>
<CAPTION>
Due after
Due within 1 through Due after
1 year 5 years 5 years Total
------ ------- ------- -----
(In thousands)
<S> <C> <C> <C> <C>
One-to-four family residential and
multi-family .............................. $ 10 $ 2,067 $73,980 $ 76,057
Commercial real estate loans and land/lot .... 137 1,754 8,235 10,126
Construction .................................. -- 290 6,302 6,592
Consumer ...................................... 581 1,595 3,785 5,961
Commercial lines of credit .................... 296 1,301 -- 1,597
Commercial loans secured by lease
finance receivables ......................... 63 108 -- 171
------- ------- ------ -------
$ 1,087 $ 7,115 $92,302 $100,504
======= ======= ====== =======
</TABLE>
The following table sets forth the dollar amount of all loans at
September 30, 2000 due after September 30, 2001, which have fixed interest rates
and floating or adjustable interest rates.
<TABLE>
<CAPTION>
Floating or
Fixed Rates Adjustable Rates Total
----------- ---------------- -----
(In thousands)
<S> <C> <C> <C>
One-to-four family residential and
multi-family .............................. $57,563 $18,484 $76,047
Commercial real estate loans and land/lot ..... 8,687 1,302 9,989
Construction .................................. 3,517 3,075 6,592
Consumer ...................................... 2,511 2,869 5,380
Commercial lines of credit and commercial loans
secured by lease finance receivables ...... 1,362 47 1,409
------ ------ ------
Total ..................................... $73,640 $25,777 $99,417
====== ====== ======
</TABLE>
One- to Four-Family Residential Loans. The Registrant's primary lending
activity consists of the origination of one- to four-family residential mortgage
loans secured by property located in the Registrant's primary market area. The
Registrant generally originates one- to four-family residential mortgage loans
in amounts up to 80% of the lesser of the appraised value or selling price of
the mortgaged property without requiring mortgage insurance. In certain
instances, the Registrant will originate a mortgage loan in an amount up to 95%
of the lesser of the appraised value or selling price of a mortgaged property,
however, mortgage insurance for the borrower is required. A mortgage loan
originated by the Registrant, whether fixed- or adjustable-rate, can have a term
of up to 30 years.
3
<PAGE>
The Registrant requires for all adjustable-rate mortgage loans that the
borrower qualify at the current fully indexed rate. The Registrant's
adjustable-rate mortgage loans provide for periodic interest rate adjustments of
plus or minus 2% with a maximum adjustment over the term of the loan to 12.75%
and a minimum adjustment to 6%, except during the first year following
origination. Adjustable-rate mortgage loans typically reprice every year, and
provide for terms of up to 30 years with most loans having terms of between 15
and 30 years. Mortgage loans originated and held by the Registrant in its
portfolio generally include due-on-sale clauses which provide the Registrant
with the contractual right to deem the loan immediately due and payable in the
event that the borrower transfers ownership of the property without the
Registrant consent.
The Registrant offers adjustable-rate mortgage loans using the weekly
average yield on U.S. Treasury securities adjusted to a constant maturity of one
year. Interest rates charged on mortgage loans are competitively priced based on
market conditions and the Registrant's cost of funds. Generally, the Company's
standard underwriting guidelines for mortgage loans conform to FHLMC guidelines.
It is the current policy of the Registrant to remain a portfolio lender. The
Registrant typically charges a 0% to1% origination or commitment fee.
Adjustable-rate mortgage loans decrease the risks associated with
changes in interest rates by more closely reflecting these changes, but involve
other risks because as interest rates increase, the underlying payments by the
borrower increase, thus increasing the potential for default. At the same time,
the marketability of the underlying collateral may be adversely affected by
higher interest rates. Upward adjustment of the contractual interest rate is
also limited by the adjustable-rate mortgage loan documents, thereby potentially
limiting their effectiveness during periods of rising interest rates. These
risks have not had an adverse effect on the Registrant.
Multi-Family Real Estate Loans. These loans are primarily secured by
apartment houses, located in the Registrant's primary market area. Loans secured
by multi-family property may be originated in amounts up to 75% of the appraised
value with either fixed or adjustable rates of interest. Fixed rate interest
loans have maturities generally of up to 25 years, with principal and interest
payments calculated on a 25 year amortization period. Adjustable rate loans
typically have a 5 to 25 year amortization period, with a fixed rate of interest
for the first five years, with repricing following every five years after that
initial fixed period.
Multi-family real estate lending entails significant additional risks
compared to residential property lending. These loans typically involve large
loan balances to single borrowers or groups of related borrowers. The repayment
of these loans typically is dependent on the successful operation of the real
estate project securing the loan. These risks can be significantly affected by
adverse conditions in the economy.
Commercial Real Estate Loans. Commercial loan portfolio consist
primarily of loans secured by real estate, such as church loans and small office
building loans. Loans secured by commercial property may be in amounts up to 75%
of the appraised value for a maximum term of 25 years. Commercial lending
entails significant additional risks when compared with one- to four-family
residential
4
<PAGE>
lending. For example, commercial loans typically involve larger loan balances to
single borrowers or groups of related borrowers, the payment experience on such
loans typically is dependent on the successful operation of the project and
these risks can be significantly impacted by the cash flow of the borrowers and
supply and demand conditions in the market for commercial office, retail and
warehouse space.
Construction Loans. Construction loans are made on a long term basis
and are classified as construction/permanent loans. Approximately 95% of the
Registrant's construction loan portfolio is for the construction of
single-family residential property to the individuals who will be the owners and
occupants upon completion of construction. These construction loans usually
require no principal payments during the first six months, after which the
payments are set at an amount that will amortize over the term of the permanent
loan. The terms, including interest rate, of single family residential
construction loans are the same as those for a loan to purchase or refinance a
previously constructed single family residence. The maximum loan to value for
other construction loans is dependent on the type of property that will be
constructed.
Consumer Loans. Consumer loans includes home equity lines of credit.
Home equity lines of credit loans are primarily secured by one-to four family
residential mortgage loans. The loans generally have terms of 15 to 30 years,
some of which are at fixed rates and some of which have rates that adjust
periodically. Home equity lines of credit are subject to a 80% combined
loan-to-value limitation, including any outstanding mortgages or liens. At
September 30, 2000, home equity lines of credit totaled $2.9 million of the
consumer loan portfolio.
Other consumer loans primarily consist of automobile loans, boat loans,
and share loans. Loans secured by vehicles are financed for terms up to 60
months. Share loans are secured by deposits of the bank are granted in amounts
of up to 90% of the deposited amount.
Consumer loans may entail greater risk than residential mortgage loans,
particularly in the case of consumer loans that are unsecured or secured by
assets that depreciate rapidly. Repossessed collateral for a defaulted consumer
loan may not be sufficient for repayment of the outstanding loan, and the
remaining deficiency may not be collectible.
Loan Approval Authority and Underwriting. All loans must be approved by
the Registrant's loan committee and all loans over $500,000 must be approved by
the Registrant's Board of Directors. Upon receipt of a completed loan
application from a prospective borrower, a credit report is generally ordered,
income and certain other information is verified and, if necessary, additional
financial information is requested. An appraisal from an independent fee
appraiser of the real estate intended to be used as security for the proposed
loan is obtained. The Registrant makes construction/permanent loans on
individual properties. Funds advanced during the construction phase are held in
a loan-in-process account and disbursed based upon various stages of completion
in accordance with the results of inspection reports that are based upon
physical inspection of the construction by a loan officer. For real estate
loans, the Registrant requires title insurance. Borrowers must also obtain fire
and casualty insurance (for loans on property located in a flood zone, flood
insurance is required) prior to the closing of the loan.
5
<PAGE>
Loan Commitments. The Registrant issues written commitments to
prospective borrowers on all approved real estate loans. Generally, the
commitment requires acceptance within 15 days of the date of issuance. At
September 30, 2000, the Registrant had $.2 million of commitments to cover
originations and $2.1 million in undisbursed funds for loans in process.
Management believes that virtually all of the Registrant's commitments will be
funded.
Loans to One Borrower. SAIF-insured savings bank are subject to certain
lending limitations to a single borrower or group of borrowers. Under current
law, the Registrant's lending limits equals an amount equal to 15% of unimpaired
capital and unimpaired surplus on an unsecured basis and an additional amount
equal to 10% of unimpaired capital and unimpaired surplus if the loan is secured
by readily marketable collateral (generally financial instruments, not real
estate) or $500,000, whichever is greater. The Registrant's maximum loan to one
borrower limit was approximately $2.1 million at September 30, 2000.
Non-Performing and Problem Assets
Loan Delinquencies. If a loan continues in a delinquent status for 90
days past due and no repayment plan is in effect, the account is turned over to
an attorney for foreclosure. Management meets regularly to determine when
foreclosure proceedings should be initiated and the borrower is notified when
foreclosure has been commenced.
Loans are generally placed on a non-accrual status when the loan
becomes more than 90 days delinquent or when, in the opinion of management, the
collection of additional interest is doubtful. Interest accrued and unpaid at
the time a loan is placed on non-accrual status is charged against interest
income. Subsequent interest payments, if any, are either applied to the
outstanding principal and interest balance in accordance with the contractual
terms of the loan.
Non-Performing Assets. The following table sets forth information
regarding non-accrual loans, real estate owned, and certain other repossessed
assets and loans. As of the dates indicated, the Registrant had no loans
categorized as troubled debt restructuring or impaired loans.
6
<PAGE>
<TABLE>
<CAPTION>
At September 30
2000 1999
---- ----
(Dollars in thousands)
<S> <C> <C>
Loans accounted for on a non-accrual basis:
Mortgage loans:
One-to-four family real estate ................................................ $187 $ --
Home equity lines of credit ................................................... 15 45
Commercial .................................................................... -- 66
Non-mortgage loans:
Consumer ...................................................................... 42 19
Commercial loan secured by lease financed receivables ......................... -- 33
---- ----
Total non-accrual loans ......................................................... 244 163
Accruing loans which are contractually past due 90 days or more:
Mortgage loans:
Permanent loans secured by one-to-four family real estate ..................... -- --
Commercial .................................................................... 14 38
Non-mortgage loans:
Consumer ...................................................................... -- --
---- ----
Total accruing loans greater than 90 days past due .............................. 14 38
---- ----
Total non-performing loans ...................................................... $258 $201
==== ====
Foreclosed real estate .......................................................... -- 13
==== ====
Total non-performing assets ..................................................... $258 $214
==== ====
Total non-accrual and accrual loans to net loans ................................ .27% .22%
==== ====
Allowance for loan losses to total non-performing loans,
including loans contractually past due 90 days or more ........................ 153.10% 171.64%
====== ======
Total non-accrual and accruing loans greater than
90 days past due to total assets .............................................. .16% .13%
==== ====
Total non-performing assets to total assets ..................................... .16% .14%
==== ====
</TABLE>
Interest income that would have been recorded and collected on loans
accounted for on a non-accrual basis under the original terms of such loans was
$8,053 for the year ended September 30, 2000.
Classified Assets. OTS regulations provide for a classification system for
problem assets of insured institutions. Under this classification system,
problem assets of insured institutions are classified as "substandard,"
"doubtful," or "loss." An asset is considered substandard if it is inadequately
protected by the current net worth and paying capacity of the obligor or of the
collateral pledged, if any. Substandard assets include those characterized by
the "distinct possibility" that the insured institution will sustain "some loss"
if the deficiencies are not corrected. Assets classified as doubtful have all of
the weaknesses inherent in those classified substandard, with the added
characteristic that the weaknesses present make "collection or liquidation in
full," on the basis of currently existing facts, conditions, and values, "highly
questionable and improbable." Assets classified as loss are those considered
"uncollectible" and of such little value that their continuance as assets
without the establishment of a specific loss reserve is not warranted. Assets
may be designated "special mention" because of potential weakness that does not
currently warrant classification in one of the aforementioned categories.
7
<PAGE>
When an insured institution classifies problem assets as either
substandard or doubtful, it may establish general allowances for loan losses in
an amount deemed prudent by management. General allowances represent loss
allowances which have been established to recognize the inherent risk associated
with lending activities, but which, unlike specific allowances, have not been
allocated to particular problem assets. When an insured institution classifies
problem assets as loss, it is required either to establish a specific allowance
for losses equal to 100% of that portion of the asset so classified or to charge
off such amount. An institution's determination as to the classification of its
assets and the amount of its valuation allowances is subject to review by the
OTS, which may order the establishment of additional general or specific loss
allowances. A portion of general loss allowances established to cover possible
losses related to assets classified as substandard or doubtful may be included
in determining an institution's regulatory capital, while specific valuation
allowances for loan losses generally do not qualify as regulatory capital.
The following table sets forth the Registrant's classified assets in
accordance with its classification system.
At September 30, 2000
---------------------
(In Thousands)
Special Mention $1,347
Substandard 229
Doubtful -
Loss -
-----
$1,576
=====
Allowances for Loan Losses. It is management's policy to provide for
losses on unidentified loans in its loan portfolio. A provision for loan losses
is charged to operations based on management's evaluation of the losses that may
be incurred in the Registrant's loan portfolio. Such evaluation, which includes
a review of all loans of which full collectibility of interest and principal may
not be reasonably assured, considers the Registrant's past loan loss experience,
known and inherent risks in the portfolio, adverse situations that may affect
the borrower's ability to repay, estimated value of any underlying collateral,
any existing guarantees, past performance of the loan, available documentation
for the loan, legal impediments to collection, financial condition of the
borrower, and current economic conditions.
Management will continue to review the entire loan portfolio to
determine the extent, if any, to which further additional loss provisions may be
deemed necessary. There can be no assurance that the allowance for losses will
be adequate to cover losses which may in fact be realized in the future and that
additional provisions for losses will not be required.
8
<PAGE>
The following table sets forth information with respect to the
Registrant's allowance for loan losses at the dates indicated:
At September 30,
-------------------------
2000 1999
-------------------------
(Dollars in Thousands)
Total loans outstanding .............................. $ 96,909 $ 89,931
======== ========
Average loans outstanding ............................ $ 94,549 $ 83,094
======== ========
Allowance balances (at beginning of period) .......... $ 345 $ 301
Provision (credit):
Residential ........................................ 76 30
Commercial real estate ............................. 44 --
Consumer ........................................... -- 40
Net (charge-offs) recoveries:
Residential ........................................ (68) (11)
Commercial real estate ............................. -- --
Consumer ........................................... (2) (15)
------- -------
Allowance balance (at end of period) ................. $ 395 $ 345
======= =======
Allowance for loan losses as a percent
of total loans outstanding ......................... .41% .38%
=== ===
Net loans charged off as a percent of
average loans outstanding .......................... .07% .03%
=== ===
Analysis of the Allowance for Loan Losses
The following table sets forth the allocation of the allowance by
category, which management believes can be allocated only on an approximate
basis. The allocation of the allowance to each category is not necessarily
indicative of future loss and does not restrict the use of the allowance to
absorb losses in any category.
<TABLE>
<CAPTION>
At September 30,
------------------------------------------------
2000 1999
-------------------- -----------------------
% of Loans in % of Loans in
Each Category Each Category
Amount To Total Loans Amount To Total Loans
------ -------------- ------ --------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Real estate:
Residential mortgage ................... $ 187 75.7% $ 176 77.2%
Commercial real estate ................. 99 9.9 61 7.1
Construction ........................... 65 6.5 68 5.5
Commercial lines of credit ............. 16 1.6 4 1.2
Land/lot ............................... 2 .2 1 .8
Consumer ............................... 23 5.9 25 7.7
Commercial loans secured by lease
finance receivables .................. 3 .2 10 .5
---- ------ ---- ------
$ 395 100.00% $ 345 100.00%
==== ====== ==== ======
</TABLE>
9
<PAGE>
Investment Activities
The Registrant is required under federal regulations to maintain a
minimum amount of liquid assets which may be invested in specified short-term
securities and certain other investments. The level of liquid assets varies
depending upon several factors, including: (i) the yields on investment
alternatives, (ii) management's judgment as to the attractiveness of the yields
then available in relation to other opportunities, (iii) expectation of future
yield levels, and (iv) management's projections as to the short-term demand for
funds to be used in loan origination and other activities. Investment
securities, including mortgage-backed securities, are classified at the time of
purchase, based upon management's intentions and abilities, as securities held
to maturity or securities available for sale. Debt securities acquired with the
intent and ability to hold to maturity are classified as held to maturity and
are stated at cost and adjusted for amortization of premium and accretion of
discount, which are computed using the level yield method and recognized as
adjustments of interest income. All other debt securities are classified as
available for sale to serve principally as a source of liquidity.
Current regulatory and accounting guidelines regarding investment
securities (including mortgage backed securities) require the Registrant to
categorize securities as "held to maturity," "available for sale" or "trading."
As of September 30, 2000, Registrant had securities classified as "held to
maturity" and "available for sale" in the amount of $32,101 and $19,439,
respectively, and had no securities classified as "trading." Securities
classified as "available for sale" are reported for financial reporting purposes
at the fair market value with net changes in the market value from period to
period included as a separate component of stockholders' equity, net of income
taxes. At September 30, 2000, the Registrant's securities available for sale had
an amortized cost of $21,287 and market value of $19,439 (unrealized loss of
$1,848). Changes in the market value of securities available for sale do not
affect Company's income. In addition, changes in the market value of securities
available for sale do not affect the Bank's regulatory capital requirements or
its loan-to-one borrower limit.
At September 30, 2000, our investment portfolio policy allowed
investments in instruments such as: (i) U.S. Treasury obligations, (ii) U.S.
federal agency or federally sponsored agency obligations, (iii) local municipal
obligations, (iv) mortgage-backed securities, (v) banker's acceptances, (vi)
certificates of deposit, and (vii) investment grade corporate bonds, and
commercial paper. The Board of Directors may authorize additional investments.
As a source of liquidity and to supplement our lending activities, we
have invested in residential mortgage-backed securities. Mortgage-backed
securities can serve as collateral for borrowings and, through repayments, as a
source of liquidity. Mortgage-backed securities represent a participation
interest in a pool of single-family or other type of mortgages. Principal and
interest payments are passed from the mortgage originators, through
intermediaries (generally quasi-governmental agencies) that pool and repackage
the participation interests in the form of securities, to investors, like us.
The quasi-governmental agencies guarantee the payment of principal and interest
to investors and include the Federal Home Loan Mortgage Corporation ("FHLMC"),
Government National Mortgage Association ("GNMA"), and Federal National Mortgage
Association ("FNMA").
10
<PAGE>
Mortgage-backed securities typically are issued with stated principal
amounts. The securities are backed by pools of mortgages that have loans with
interest rates that are within a set range and have varying maturities. The
underlying pool of mortgages can be composed of either fixed rate or adjustable
rate mortgage loans. Mortgage-backed securities are generally referred to as
mortgage participation certificates or pass-through certificates. The interest
rate risk characteristics of the underlying pool of mortgages (i.e., fixed rate
or adjustable rate) and the prepayment risk, are passed on to the certificate
holder. The life of a mortgage-backed pass-through security is equal to the life
of the underlying mortgages. Expected maturities will differ from contractual
maturities due to scheduled repayments and because borrowers may have the right
to call or prepay obligations with or without prepayment penalties.
Mortgage-backed securities issued by FHLMC, GNMA, and FNMA make up a majority of
the pass-through certificates market.
Investment Portfolio. The following table sets forth the carrying value
of the Registrant's investment securities portfolio, short term investments,
FHLB stock and mortgage-backed securities at the dates indicated.
<TABLE>
<CAPTION>
At September 30,
--------------------
2000 1999
---- ----
(In thousands)
<S> <C> <C>
Investment Securities Available For Sale:
Equity investments .............................................. $ 354 $ 352
FHLB bonds ...................................................... 16,093 16,322
FHLMC bonds ..................................................... 2,992 3,027
------ ------
Total Investment Securities Available For Sale ............... 19,439 19,701
------ ------
Investment Securities Held to Maturity:
FNMA bonds ...................................................... $ 2,750 $ 2,750
FHLB bonds ...................................................... 11,300 11,300
FHLMC bonds ..................................................... 1,600 1,600
------ ------
Total Investment Securities Held To Maturity ................. 15,650 15,650
------ ------
Interest-bearing deposits in other banks ........................ $ 510 $ 3,689
Federal funds sold .............................................. 3,764 2,290
Mortgage-backed securities held to maturity ..................... 16,451 17,983
FHLB stock ...................................................... 1,450 1,200
------ ------
22,175 25,162
------ ------
$ 57,264 $ 60,513
====== ======
</TABLE>
11
<PAGE>
The following table sets forth information regarding the scheduled
maturities, carrying values, market value and weighted average yields for the
Registrant's investment securities portfolio at September 30, 2000. The
following table does not take into consideration the effects of scheduled
repayments or the effects of possible prepayments.
<TABLE>
<CAPTION>
More than One to More than Five to More than Total Investment
One Year or Less Five Years Ten Years Ten Years Securities
--------------- ----------------- -------------- ---------------- -------------------------
Carrying Average Carrying Average Carrying Average Carrying Average Carrying Average Market
Value Yield Value Yield Value Yield Value Yield Value Yield Value
----- ----- ----- ----- ----- ----- ------ ----- ------ ----- -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Securities Available
For Sale:
Equity investments............ $ -- --% $ -- --% $ -- --% $ 354 2.66% $ 354 2.66% $ 354
FHLB bonds.................... -- -- -- -- -- -- 16,093 7.37 16,093 7.37 16,093
FHLMC bonds................... -- -- -- -- -- -- 2,992 7.19 2,992 7.19 2,992
Investment Securities Held to
Maturity:
FNMA bonds.................... -- -- -- -- -- -- 2,750 6.78 2,750 6.78 2,551
FHLB bonds.................... -- -- -- -- 250 7.25 11,050 6.77 11,300 6.78 10,465
FHLMC bonds................... -- -- -- -- 100 7.00 1,500 6.59 1,600 6.62 1,471
Interest-bearing deposits in
other banks 510 6.51 -- -- -- -- -- -- 510 6.51 510
Federal funds sold.............. 3,764 6.59 -- -- -- -- -- -- 3,764 6.59 3,764
Mortgage-backed securities
held to maturity.............. -- -- 15 7.33 164 7.63 16,272 6.45 16,451 7.07 15,814
FHLB stock...................... -- -- -- -- -- -- 1,450 7.79 1,450 7.79 1,450
----- ---- --- ---- ---- ---- ------ ---- ------ ----- ------
Total......................... $4,274 6.58% $ 15 7.33% $ 514 7.32% $52,461 6.87% $57,264 7.03% $55,464
===== ==== === ==== ==== ==== ====== ==== ====== ===== ======
</TABLE>
12
<PAGE>
Sources of Funds
General. Deposits are the major external source of the Registrant's
funds for lending and other investment purposes. The Registrant derives funds
from amortization and prepayment of loans and, to a much lesser extent,
maturities of investment securities, borrowings, mortgage-backed securities and
operations. Scheduled loan principal repayments are a relatively stable source
of funds, while deposit inflows and outflows and loan prepayments are
significantly influenced by general interest rates and market conditions.
Deposits. Consumer and commercial deposits are attracted principally
from within the Registrant's's primary market area through the offering of a
selection of deposit instruments including regular savings accounts, money
market accounts, and term certificate accounts. The Registrant also offers IRA
accounts. Deposit account terms vary according to the minimum balance required,
the time period the funds must remain on deposit, and the interest rate, among
other factors. At September 30, 2000, the Registrant had no brokered accounts.
Certificates of Deposit. The following table indicates the amount of
the Registrant's certificates of deposit of $100,000 or more by time remaining
until maturity as of September 30, 2000.
Certificates
of Deposits
-----------
Maturity Period (In thousands)
---------------
Within three months.............. $ 605
Three through six months......... 2,015
Six through twelve months........ 1,000
Over twelve months............... 6,519
------
$10,139
======
Borrowings
The Registrant may obtain advances from the FHLB of Atlanta to
supplement its supply of lendable funds. Advances from the FHLB of Atlanta are
typically secured by a pledge of the Registrant's stock in the FHLB of Atlanta
and a portion of the Registrant's first mortgage loans and certain other assets.
Each FHLB credit program has its own interest rate, which may be fixed or
variable, and range of maturities. The Registrant, if the need arises, may also
access the Federal Reserve Registrant discount window to supplement its supply
of lendable funds and to meet deposit withdrawal requirements. The following
table sets forth the maximum month-end balance and the average balance of
short-term FHLB advances for the periods indicated.
13
<PAGE>
<TABLE>
<CAPTION>
During the Year Ended
September 30,
------------------------
2000 1999
------------------------
(In thousands)
<S> <C> <C>
Maximum amount of short-term borrowings outstanding at any month end:
Advances from Federal Home Loan Bank .............................. $2,500 $9,000
Approximate average short-term borrowings outstanding with respect
to:
Advances from Federal Home Loan Bank .............................. $ 542 $6,250
Approximate weighted average rate paid on:
Advances from Federal Home Loan Bank .............................. 7.02% 5.43%
</TABLE>
Employees
At September 30, 2000, the Registrant had 28 full-time and 7 part-time
employees. None of the Registrant 's employees are represented by a collective
bargaining group. The Registrant believes that its relationship with its
employees is good.
Regulation
Set forth below is a brief description of certain laws which related to
the regulation of the Company and the Bank. The description does not purport to
be complete and is qualified in its entirety by reference to applicable laws and
regulations.
Recent Regulation
The Gramm-Leach-Bliley Financial Services Modernization Act of 1999
(the "Act") authorized qualifying bank holding companies to become financial
holding companies and thereby affiliate with securities firms and insurance
companies and engage in other activities that are financial in nature. The Act
defines "financial in nature" to include securities underwriting, dealing and
market making; sponsoring mutual funds and investment companies; insurance
underwriting and agency; merchant banking activities; and activities that the
Board has determined to be closely related to banking. A qualifying national
bank also may engage, subject to limitations on investment, in activities that
are financial in nature, other than insurance underwriting, insurance company
portfolio investment, real estate development, and real estate investment,
through a financial subsidiary of the bank.
The Act also prohibits new unitary thrift holding companies from
engaging in nonfinancial activities or from affiliating with an nonfinancial
entity. The Company, however, as a grandfathered unitary thrift holding company
under the Act, will retain its authority to engage in nonfinancial activities.
In addition, the GLB Act imposes significant new financial privacy
obligations and reporting requirements on all financial institutions, including
federal savings associations. Specifically, the statute, among other things,
will require financial institutions (a) to establish privacy policies and
disclose them to customers both at the commencement of a customer relationship
and on an annual basis and (b) to permit
14
<PAGE>
customers to opt out of a financial institution's disclosure of financial
information to nonaffiliated third parties. The federal financial regulators
have promulgated final regulations implementing these provisions, which will
become effective July 1, 2001.
Regulation of the Company
General. The Company is a unitary savings and loan holding company
subject to regulatory oversight by the OTS. As such, the Company is required to
register and file reports with the OTS and is subject to regulation and
examination by the OTS. In addition, the OTS has enforcement authority over the
Company and its non-savings association subsidiaries, should such subsidiaries
be formed, which also permits the OTS to restrict or prohibit activities that
are determined to be a serious risk to the subsidiary savings association. This
regulation and oversight is intended primarily for the protection of the
depositors of the Bank and not for the benefit of stockholders of the Company.
As a unitary savings and loan holding company, the Company generally is
not subject to activity restrictions, provided the Bank satisfies the Qualified
Thrift Lender ("QTL") test. The Act terminated the "unitary thrift holding
company exemption" for all companies that applied to acquire savings
associations after May 4, 1999. Since the Company is grandfathered under this
provision of the Act, its unitary holding company powers and authorities were
not affected. However, if the Company were to acquire control of an additional
savings association, its business activities would be subject to restriction
under the Home Owners' Loan Act. Furthermore, if the Company were in the future
to sell control of the Bank to any other company, such company would not succeed
to the Company's grandfathered status under the Act and would be subject to the
same business activity restrictions. See "- Regulation of the Bank - Qualified
Thrift Lender Test."
Regulation of the Bank
General. Set forth below is a brief description of certain laws that
relate to the regulation of the Bank. The description does not purport to be
complete and is qualified in its entirety by reference to applicable laws and
regulations. As a federally chartered, SAIF-insured savings association, the
Bank is subject to extensive regulation by the OTS and the FDIC. Lending
activities and other investments must comply with various federal statutory and
regulatory requirements. The Bank is also subject to certain reserve
requirements promulgated by the Federal Reserve Board.
The OTS regularly examines the Bank and prepares reports for the
consideration of the Bank's Board of Directors on any deficiencies that are
found in the Bank's operations. The Bank's relationship with its depositors and
borrowers is also regulated to a great extent by federal and state law,
especially in such matters as the ownership of savings accounts and the form and
content of the Bank's mortgage documents.
The Bank must file reports with the OTS concerning its activities and
financial condition, in addition to obtaining regulatory approvals prior to
entering into certain transactions such as mergers with or acquisitions of other
savings institutions. This regulation and supervision establishes a
comprehensive framework of activities in which an institution can engage and is
intended primarily for the protection of
15
<PAGE>
the SAIF and depositors. The regulatory structure also gives the regulatory
authorities extensive discretion in connection with their supervisory and
enforcement activities and examination policies, including policies with respect
to the classification of assets and the establishment of adequate loan loss
reserves for regulatory purposes.
Insurance of Deposit Accounts. The deposit accounts held by the Bank
are insured by the SAIF to a maximum of $100,000 for each insured member (as
defined by law and regulation). Insurance of deposits may be terminated by the
FDIC upon a finding that the institution has engaged in unsafe or unsound
practices, is in an unsafe or unsound condition to continue operations or has
violated any applicable law, regulation, rule, order or condition imposed by the
FDIC or the institution's primary regulator.
The Bank is required to pay insurance premiums based on a percentage of
its insured deposits to the FDIC for insurance of its deposits by the SAIF. The
FDIC also maintains another insurance fund, the Bank Insurance Fund ("BIF"),
which primarily insures commercial bank deposits. The FDIC has set the deposit
insurance assessment rates for SAIF-member institutions for 2000 at 0% to .027%
of insured deposits on an annualized basis, with the assessment rate for most
savings institutions set at 0%.
In addition, all FDIC-insured institutions are required to pay
assessments to the FDIC at an annual rate of approximately .0212% of insured
deposits to fund interest payments on bonds issued by the Financing Corporation
("FICO"), an agency of the Federal government established to recapitalize the
predecessor to the SAIF. These assessments will continue until the FICO bonds
mature in 2017.
Regulatory Capital Requirements. OTS capital regulations require
savings institutions to meet three capital standards: (1) tangible capital equal
to 1.5% of total adjusted assets, (2) "Tier 1" or "core" capital equal to at
least 4% (3% if the institution has received the highest rating, "composite 1
CAMELS," on its most recent examination) of total adjusted assets, and (3)
risk-based capital equal to 8% of total risk-weighted assets.
Dividend and Other Capital Distribution Limitations. The OTS imposes
various restrictions or requirements on the ability of savings institutions to
make capital distributions, including cash dividends.
A savings association that is a subsidiary of a savings and loan
holding company, such as the Bank must file an application or a notice with the
OTS at least 30 days before making a capital distribution. Savings associations
are not required to file an application for permission to make a capital
distribution and need only file a notice if the following conditions are met:
(1) they are eligible for expedited treatment under OTS regulations, (2) they
would remain adequately capitalized after the distribution, (3) the aggregate
annual amount of capital distributions does not exceed net income for that year
to date added to retained net income for the two preceding years, and (4) the
capital distribution would not violate any agreements between the OTS and the
savings association or any OTS regulations. Any other situation would require an
application to the OTS.
The OTS may disapprove an application or notice if the proposed capital
distribution would: (i) make the savings association undercapitalized,
significantly undercapitalized, or critically undercapitalized;
16
<PAGE>
(ii) raise safety or soundness concerns; or (iii) violate a statue, regulation,
or agreement with the OTS (or with the FDIC), or a condition imposed in an
OTS-approved application or notice. Further, a federal savings association, like
the Bank, cannot distribute regulatory capital that is needed for its
liquidation account.
Qualified Thrift Lender Test. Federal savings institutions must meet
one of two Qualified Thrift Lender ("QTL") tests. To qualify as a QTL, a savings
institution must either (i) be deemed a "domestic building and loan association"
under the Internal Revenue Code by maintaining at least 60% of its total assets
in specified types of assets, including cash, certain government securities,
loans secured by and other assets related to residential real property,
educational loans and investments in premises of the institution or (ii) satisfy
the statutory QTL test set forth in the Home Owner's Loan Act by maintaining at
least 65% of its "portfolio assets" in certain"Qualified Thrift Investments"
(defined to include residential mortgages and related equity investments,
certain mortgage-related securities, small business loans, student loans and
credit card loans, and 50% of certain community development loans). For purposes
of the statutory QTL test, portfolio assets are defined as total assets minus
intangible assets, property used by the institution in conducting its business,
and liquid assets equal to 10% of total assets. A savings institution must
maintain its status as a QTL on a monthly basis in at least nine out of every 12
months. A failure to qualify as a QTL results in a number of sanctions,
including the imposition of certain operating restrictions and a restriction on
obtaining additional advances from its FHLB. At September 30, 2000, the Bank was
in compliance with its QTL requirement.
Federal Home Loan Bank System. The Bank is a member of the FHLB of
Atlanta, which is one of 12 regional FHLBs that administers the home financing
credit function of savings associations. Each FHLB serves as a reserve or
central bank for its members within its assigned region. It is funded primarily
from proceeds derived from the sale of consolidated obligations of the FHLB
System. It makes loans to members (i.e., advances) in accordance with policies
and procedures established by the Board of Directors of the FHLB.
As a member, the Bank is required to purchase and maintain stock in the
FHLB of Atlanta in an amount equal to at least 1% of its aggregate unpaid
residential mortgage loans, home purchase contracts or similar obligations at
the beginning of each year.
Liquidity Requirements. All savings associations are required to
maintain an average daily balance of liquid assets equal to a certain percentage
of the sum of its average daily balance of net withdrawable deposit accounts and
borrowings payable in one year or less. The liquidity requirement may vary from
time to time (between 4% and 10%) depending upon economic conditions and savings
flows of all savings associations.
Federal Reserve System. The Federal Reserve Board requires all
depository institutions to maintain non-interest bearing reserves at specified
levels against their transaction accounts (primarily checking, NOW, and Super
NOW checking accounts) and non-personal time deposits. The balances maintained
to meet the reserve requirements imposed by the Federal Reserve Board may be
used to satisfy the liquidity requirements that are imposed by the OTS. At
September 30, 2000, the Bank was in compliance with these Federal Reserve Board
requirements.
17
<PAGE>
Item 2. Description of Property
-------------------------------
(a) Properties.
The Registrant operates from its main office and four branch offices.
Location Leased or Owned
-------- ---------------
MAIN OFFICE:
1505 York Road
Lutherville, Maryland 21093 Owned
HAMILTON OFFICE:
4228 Harford Road
Baltimore, Maryland 21214 Owned
WOODLAWN OFFICE:
Gwynn Oak Avenue and
Windsor Mill Road Leased until
Baltimore, Maryland 21207 January 2002
ELLICOTT CITY OFFICE:
9416 Baltimore National Pike Leased until
Ellicott City, Maryland 21042 August 2020
GOLDEN RING OFFICE:
8767 K Philadelphia Road Leased until
Baltimore, Maryland 21237 May 2001
(b) Investment Policies. See "Item 1. Business" above for a general
description of the Registrant's investment policies and any regulatory or Board
of Directors' percentage of assets limitations regarding certain investments.
The Registrant's's investments are primarily acquired to produce income, and to
a lesser extent, possible capital gain.
(1) Investments in Real Estate or Interests in Real Estate. See "Item
1. Business - Lending Activities and - Regulation," and "Item 2. Description of
Property."
(2) Investments in Real Estate Mortgages. See "Item 1. Business -
Lending Activities and - Regulation."
(3) Investments in Securities of or Interests in Persons Primarily
Engaged in Real Estate Activities. See "Item 1. Business - Lending Activities
and - Regulation."
(c) Description of Real Estate and Operating Data. Not applicable.
18
<PAGE>
Item 3. Legal Proceedings
--------------------------
There are various claims and lawsuits in which the Company or the Bank
are periodically involved, such as claims to enforce liens, condemnation
proceedings on properties in which the Bank holds security interests, claims
involving the making and servicing of real property loans, and other issues
incident to the Bank's business. In the opinion of management, no material loss
is expected from any of such pending claims or lawsuits.
Item 4. Submission of Matters to a Vote of Security Holders
-------------------------------------------------------------
No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
------------------------------------------------------------------
The information contained under the section captioned "Market Price of
the Common Stock" of the Company's Annual Report to Stockholders for the fiscal
year ended September 30, 2000 (the "Annual Report"), is incorporated herein by
reference.
Item 6. Management's Discussion and Analysis or Plan of Operation
-------------------------------------------------------------------
The information contained in the section captioned "Management's
Discussion and Analysis of Financial Condition and Results of Operations" of the
Annual Report is incorporated herein by reference.
Item 7. Financial Statements
------------------------------
The Registrant's financial statements listed under Item 13 are
incorporated herein by reference.
Item 8. Changes in and Disagreements with Accountants On Accounting and
--------------------------------------------------------------------------------
Financial Disclosure.
--------------------
Not applicable.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons: Compliance
--------------------------------------------------------------------------------
with Section 16(a) of the Exchange Act.
---------------------------------------
The information required under this item is incorporated herein by
reference to the Proxy Statement for the 2001 Annual Meeting (the "Proxy
Statement") contained under the sections captioned "Section 16(a) Beneficial
Ownership Reporting Compliance," "Proposal I - Election of Directors," and "-
Biographical Information."
19
<PAGE>
Item 10. Executive Compensation
--------------------------------
The information required by this item is incorporated by reference to
the Proxy Statement contained under the section captioned "Director and
Executive Officer Compensation."
Item 11. Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------
(a) Security Ownership of Certain Beneficial Owners
(b) Security Ownership of Management
The information required by items (a) and (b) is incorporated
herein by reference to the Proxy Statement contained under the
sections captioned "Principal Holders" and "Proposal I -
Election of Directors."
(c) Management of the Company knows of no arrangements, including
any pledge by any person of securities of the Company, the
operation of which may at a subsequent date result in a change
in control of the Company.
Item 12. Certain Relationships and Related Transactions
--------------------------------------------------------
The information required by this item is incorporated herein by
reference to the Proxy Statement contained under the section captioned "Certain
Relationships and Related Transactions".
Item 13. Exhibits, List, and Reports on Form 8-K
-------------------------------------------------
(a) Listed below are all financial statements and exhibits filed as
part of this Report.
1. The consolidated statements of financial condition of WHG Bancshares
Corporation as of September 30, 2000 and 1999 and the related consolidated
statements of operations, changes in stockholders' equity and cash flows for
each of the years in the two year period ended September 30, 2000, together with
the related notes and the independent auditors' report of Anderson Associates,
LLP independent certified public accountants.
2. Schedules omitted as they are not applicable.
3. The following exhibits are included in this Report or incorporated
herein by reference:
(a) List of Exhibits:
3(i) Articles of Incorporation of WHG Bancshares Corporation *
3(ii) Amended Bylaws of WHG Bancshares Corporation **
10.1 Form of Amended and Restated Employment Agreement with Peggy
J. Stewart
10.2 Form of Amended and Restated Change in Control Severance
20
<PAGE>
Agreements for three executive officers
10.3 Amendment to the 1996 Stock Option Plan ***
10.4 Amendment to Management Stock Bonus Plan and Trust
Agreement ***
10.5 Form of Directors Change In Control Severance Plan **
13 Portions of Annual Report to Stockholders for the fiscal
year ended September 30, 2000
21 Subsidiaries of the Registrant (See Item 1 - Description of
Business)
23 Consent of Anderson Associates, LLP
27 Financial Data Schedule (electronic filing only)
-----------------------------------------
* Incorporated by reference to the registration statement on Form S-1 (File
No. 33-80487) declared effective by the SEC on February 7, 1996.
** Incorporated by reference to the September 30, 1999 Form 10-KSB filed with
the SEC on December 21, 1999.
*** Incorporated by reference to the proxy statement for the annual meeting of
stockholders filed with the SEC on or about December 19, 1997.
(b) Not applicable
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized as of
December 18, 2000.
WHG BANCSHARES CORPORATION
By: /s/Peggy J. Stewart
-------------------------------------------------
Peggy J. Stewart
President, Chief Executive Officer and Director
(Duly Authorized Representative)
Pursuant to the requirement of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the registrant and in the capacities indicated as of December 18, 2000.
<TABLE>
<CAPTION>
<S> <C>
/s/Peggy J. Stewart /s/John E. Lufburrow
----------------------------------------------- --------------------------
Peggy J. Stewart John E. Lufburrow
President, Chief Executive Officer and Director Chairman of the Board
(Principal Executive Officer)
/s/Daniel J. Gallagher /s/Robin L. Taylor
----------------------------------------------- --------------------------
Daniel J. Gallagher Robin L. Taylor
Vice President and Chief Financial Officer Controller
(Principal Accounting and Financial Officer)
/s/Philip W. Chase, Jr.
----------------------------------------------- ---------------------------
Philip W. Chase, Jr. Herbert A. Davis
Director Director
/s/Urban P. Francis, Jr. /s/D. Edward Lauterbach, Jr.
----------------------------------------------- ---------------------------
Urban P. Francis, Jr. D. Edward Lauterbach, Jr.
Director Director
/s/Hugh P. McCormick /s/Edwin C. Murphy, Jr.
----------------------------------------------- ---------------------------
Hugh P. McCormick Edwin C. Muhly, Jr.
Director Director
</TABLE>
