SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 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 No. 0-27606
WHG Bancshares Corporation
--------------------------
(Exact name of small business issuer as specified in its charter)
Maryland 52-1953867
-------- ----------
(State of incorporation (I.R.S. employer
or organization) identification no.)
1505 York Road, Lutherville, Maryland 21093
-------------------------------------- -----
(Address of principal executive offices) (zip code)
(410) 583-8700
--------------
Issuer's telephone number, including area code
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
------------ ------------
Number of shares of Common Stock outstanding as of August 10, 2000: 1,285,609
Transitional Small Business Disclosure Format (check one)
YES NO X
------------ ------------
<PAGE>
WHG BANCSHARES CORPORATION AND SUBSIDIARY
Contents
--------
<TABLE>
<CAPTION>
Pages
-----
<S> <C> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.........................................................................................
Consolidated Statements of Financial Condition at June 30, 2000
(unaudited) and September 30, 1999...............................................................................3
Consolidated Statements of Operations (unaudited) for the nine months and three months ended
June 30, 2000 and 1999 ..........................................................................................4
Consolidated Statements of Comprehensive Income (unaudited) for the nine months and three months ended
June 30, 2000 and 1999...........................................................................................5
Consolidated Statements of Cash Flows (unaudited) for the nine months ended
June 30, 2000 and 1999.........................................................................................6-7
Notes to Consolidated Financial Statements (unaudited).........................................................8-10
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....................11-14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings...........................................................................................15
Item 2. Changes in Securities.......................................................................................15
Item 3. Defaults upon Senior Securities.............................................................................15
Item 4. Submission of Matters to a Vote of Security-Holders.........................................................15
Item 5. Other Information...........................................................................................15
Item 6. Exhibits and Reports on Form 8-K............................................................................15
Signatures.................................................................................................................16
</TABLE>
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<PAGE>
WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
----------------------------------------------
<TABLE>
<CAPTION>
June 30, September 30,
-------- -------------
2000 1999
---- ----
(Unaudited)
<S> <C> <C>
Assets
Cash $ 947,856 $ 1,312,324
Interest bearing deposits in other banks 1,459,163 3,689,305
Federal funds sold 2,314,000 2,290,000
Investments available for sale 19,207,635 19,700,713
Other investments held to maturity 15,650,000 15,650,000
Mortgage backed securities 16,901,151 17,983,370
Loans receivable - net 95,877,255 89,931,326
Foreclosed real estate - 13,103
Accrued interest receivable - loans 411,222 389,587
- investments 571,446 647,790
- mortgage backed securities 90,998 96,914
Premises and equipment - net 1,086,759 838,527
Federal Home Loan Bank of Atlanta stock, at cost 1,450,000 1,200,000
Deferred income taxes 1,042,863 852,384
Prepaid and refundable income taxes 121,333 68,590
Other assets 314,353 258,632
------------ ------------
Total assets $157,446,034 $154,922,565
============ ============
Liabilities and Stockholders' Equity
Liabilities
Deposits $117,355,477 $115,302,487
Checks outstanding in excess of bank balance 382,937 -
Borrowings 24,000,000 24,000,000
Advance payments by borrowers for taxes and insurance 256,866 315,463
Income taxes payable 43,582 49,289
Other liabilities 274,760 338,661
------------ ------------
Total liabilities 142,313,622 140,005,900
Commitments and contingencies
Stockholders' Equity
Common stock .10 par value; authorized 1,620,062 shares; issued and
outstanding 1,285,609 shares at June
30, 2000 and 1,285,609 shares at September 30, 1999 128,561 128,561
Additional paid-in capital 6,666,166 6,561,355
Retained earnings (substantially restricted) 10,248,546 9,932,078
Accumulated other comprehensive income (1,276,239) (973,504)
Employee Stock Ownership Plan (634,622) (731,825)
------------ ------------
Total stockholders' equity 15,132,412 14,916,665
------------ ------------
Total liabilities and stockholders' equity $157,446,034 $154,922,565
============ ============
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
-3-
<PAGE>
WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
-------------------------------------------------
<TABLE>
<CAPTION>
For Nine Months Ended For Three Months Ended
June 30, June 30,
---------------------------- -----------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest and fees on loans $5,372,763 $4,620,548 $1,838,970 $1,665,132
Interest on mortgage backed securities 842,524 743,563 274,647 300,203
Interest and dividends on investment
securities 1,922,096 1,731,214 643,249 622,598
Other interest income 198,779 409,357 67,996 77,766
---------- ---------- ---------- ----------
Total interest income 8,336,162 7,504,682 2,824,862 2,665,699
Interest on deposits 4,270,290 3,780,062 1,432,483 1,351,146
Interest on short-term borrowings 37,731 288,651 - 72,526
Interest on long term borrowings 902,472 588,780 353,995 236,878
---------- ---------- ---------- ----------
Total interest expense 5,210,493 4,657,493 1,786,478 1,660,550
---------- ---------- ---------- ----------
Net interest income 3,125,669 2,847,189 1,038,384 1,005,149
Provision for loan losses 90,000 45,000 30,000 15,000
---------- ---------- ---------- ----------
Net interest income after provision for
loan losses 3,035,669 2,802,189 1,008,384 990,149
Non-Interest Income
Fees and charges on loans 25,260 29,163 7,763 10,261
Fees on transaction accounts 39,258 40,373 13,359 12,399
Gain on sale of investments - 4,371 - 4,371
Other commissions and fees - 81,975 - -
Other income 43,554 27,321 17,478 9,221
---------- ---------- ---------- ----------
Total non-interest income 108,072 183,203 38,600 36,252
Non-Interest Expenses
Salaries and related expenses 1,286,395 1,354,938 436,446 438,580
Occupancy 122,537 103,191 43,353 34,109
SAIF deposit insurance premium 28,908 42,356 6,106 14,736
Depreciation of equipment 73,863 64,193 25,744 22,006
Advertising 63,614 51,670 22,878 16,574
Data processing costs 83,235 77,798 28,767 27,743
Professional services 155,822 125,062 46,984 37,634
Loss on sale of foreclosed real estate 786 - - -
Other expenses 288,924 275,159 92,071 79,530
---------- ---------- ---------- ----------
Total non-interest expenses 2,104,084 2,094,367 702,349 670,912
---------- ---------- ---------- ----------
Income before tax provision 1,039,657 891,025 344,635 355,489
Provision for income taxes 401,550 352,489 133,098 128,177
---------- ---------- ---------- ----------
Net income $ 638,107 $ 538,536 $ 211,537 $ 227,312
=========== ============ =========== ============
Basic earnings per share $ .55 $ .44 $ .18 $ .18
=========== ============ =========== ============
Diluted earnings per share $ .55 $ .44 $ .18 $ .18
=========== ============ =========== ============
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
-4-
<PAGE>
WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
-----------------------------------------------------------
<TABLE>
<CAPTION>
For Nine Months Ended
-------------------------------
June 30, June 30,
-------- --------
2000 1999
---- ----
<S> <C> <C>
Net income $ 638,107 $ 538,536
Unrealized holding losses, net of tax of $190,479 and
$438,197 for the nine month periods ended June 30,
2000 and 1999, respectively (302,735) (686,848)
Reclassification adjustment for gains included in net
income, net of tax of $1,729 for the nine month period
ended June 30, 1999 - (2,642)
---------- ---------
Comprehensive income (loss) $ 335,372 $(150,954)
========== =========
</TABLE>
<TABLE>
<CAPTION>
For Three Months Ended
--------------------------------
June 30, June 30,
-------- --------
2000 1999
---- ----
<S> <C> <C>
Net income $ 211,537 $ 227,312
Unrealized holding losses net of tax of $72,112
and $218,161 for the three month periods ended June 30,
2000 and 1999, respectively (114,609) (337,137)
Reclassification adjustment for gains included in net
income, net of tax of $1,729 for the three month period
ended June 30, 1999 - (2,642)
---------- ---------
Comprehensive income (loss) $ 96,928 $(112,467)
=========== =========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
-5-
<PAGE>
WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
-------------------------------------------------
<TABLE>
<CAPTION>
For Nine Months Ended
-------------------------------
June 30, June 30,
-------- --------
2000 1999
---- ----
<S> <C> <C>
Operating Activities
Net income $ 638,107 $ 538,536
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities
-------------------------------------
Gain on sale of investment available for sale - (4,371)
Net accretion/amortization of premiums and
discounts on mortgage backed securities 1,006 4,787
Amortization of deferred loan fees (53,077) (136,077)
Loan fees deferred 34,629 131,236
Decrease in discount on loans purchased (94,694) (14,289)
Amortization of discounts on investments available for sale (137) (100)
Provision for loan losses 90,000 45,000
Loss on sale of foreclosed real estate 786 -
Non-cash compensation under stock-based benefit plans 202,014 263,782
Decrease (increase) in accrued interest receivable 60,625 (21,060)
Loans sold - 500,000
Loans originated for sale - (500,000)
Provision for depreciation 102,340 74,369
Decrease in deferred income tax - 6,022
Increase in prepaid income taxes (52,743) (18,106)
(Increase) decrease in other assets (55,721) 36,447
Increase (decrease) in accrued interest payable (97) 10
Decrease in income taxes payable (5,707) (16,780)
Decrease in other liabilities (63,901) (44,478)
------------ ------------
Net cash provided by operating activities 803,430 844,928
Cash Flows from Investment Activities
-------------------------------------
Proceeds from maturing interest bearing deposits 95,000 -
Purchases of interest bearing deposits - (95,000)
Purchase of securities available for sale - (9,487,272)
Proceeds from sales and maturities of investments
available for sale - 3,437,496
Proceeds from maturing investments held to maturity - 7,250,000
Purchase of investments held to maturity - (7,950,000)
Purchase of mortgage backed securities - held to maturity - (12,473,993)
Principal collected on mortgage backed securities - held
to maturity 1,081,213 1,297,732
Proceeds from sale of foreclosed real estate 12,317 -
Net decrease in shorter term loans 28,982 41,272
Loans purchased - (207,279)
Longer term loans originated or acquired (15,166,541) (14,302,155)
Principal collected on longer term loans 9,214,773 10,437,887
Acquisition of Bankers Affiliate, Inc., principally loans - (4,836,311)
Investment in premises and equipment (350,572) (54,672)
Purchase of stock in Federal Home Loan Bank of Atlanta (250,000) (150,000)
Decrease in investment in and loans to joint ventures - 75,000
------------ ------------
Net cash used by investment activities (5,334,828) (27,017,295)
</TABLE>
-6-
<PAGE>
WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
-------------------------------------------------
<TABLE>
<CAPTION>
For Nine Months Ended
-----------------------------------
June 30, June 30,
-------- --------
2000 1999
---- ----
<S> <C> <C>
Cash Flows from Financing Activities
------------------------------------
Net (decrease) increase in demand deposits, money
market, passbook accounts and advances by
borrowers for taxes and insurance $ (496,259) $ 2,300,757
Net increase in certificates of deposit 2,490,749 16,479,740
Increase in checks outstanding in excess of bank balance 382,937 40,564
Net increase in borrowings - 2,062,832
Dividends on stock (321,639) (338,613)
Stock repurchase - (409,496)
------------ -----------
Net cash provided by financing activities 2,055,788 20,135,784
------------ -----------
Decrease in cash and cash equivalents (2,475,610) (6,036,583)
Cash and cash equivalents at beginning of period 7,196,629 14,422,780
------------ -----------
Cash and cash equivalents at end of period $ 4,721,019 $ 8,386,197
============ ===========
The following is a Summary of Cash and Cash Equivalents:
Cash $ 947,856 $ 835,111
Interest bearing deposits in other banks 1,459,163 2,383,086
Federal funds sold 2,314,000 5,263,000
------------ -----------
Balance of cash items reflected on
Statement of Financial Condition 4,721,019 8,481,197
Less - certificates of deposit with original maturities of more than
three months that are included in interest
bearing deposits in other banks - 95,000
------------ -----------
Cash and cash equivalents reflected on the
Statement of Cash Flows $ 4,721,019 $ 8,386,197
============ ===========
Supplemental Disclosure of Cash Flow Information:
------------------------------------------------
Cash paid during the year for:
Interest $ 5,240,759 $ 4,620,854
============= =============
Taxes $ 480,000 $ 516,800
============= =============
Transfer from investment in and loans to joint ventures
to loans receivable $ - $ 2,500,000
============= =============
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
-7-
<PAGE>
WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
------------------------------------------------------
Note 1 - Basis of Presentation
---------------------
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and in accordance with the
instructions to Form 10-QSB. Accordingly, they do not include all of
the disclosures required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments necessary for a fair presentation of the results of
operations for the interim periods presented have been made. Such
adjustments were of a normal recurring nature. The results of
operations for the nine and three months ended June 30, 2000 are not
necessarily indicative of the results that may be expected for the
fiscal year September 30, 2000 or any other interim period. The
consolidated financial statements should be read in conjunction with
the consolidated financial statements and related notes which are
incorporated by reference in the Company's Annual Report on Form
10-KSB for the year ended September 30, 1999.
Certain prior years' amounts have been reclassified to
conform to the current year's method of presentation.
Note 2 - Cash Flow Presentation
----------------------
For purposes of the statements of cash flows, cash and cash
equivalents include cash and amounts due from depository
institutions, investments in federal funds, and certificates of
deposit with original maturities of 90 days or less.
Note 3 - Investment Available for Sale
-----------------------------
The amortized cost and fair values of investments available
for sale at are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
June 30, 2000
-------------
Equity investments $ 544,324 $ - $ 215,071 $ 329,253
Federal Home Loan
Bank Bonds 17,493,456 - 1,572,645 15,920,811
Federal Home Loan
Mortgage Corporation
Bonds 3,249,098 - 291,527 2,957,571
----------- ----------- ----------- -------------
$21,286,878 $ - $ 2,079,243 $ 19,207,635
=========== =========== =========== =============
</TABLE>
-8-
<PAGE>
WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
------------------------------------------------------
Note 3 - Investment Available for Sale - Continued
-----------------------------
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
September 30, 1999
------------------
Equity investments $ 544,324 $ - $ 192,136 $ 352,188
Federal Home Loan
Bank Bonds 17,493,370 - 1,171,721 16,321,649
Federal Home Loan
Mortgage Corporation
Bonds 3,249,047 - 222,171 3,026,876
------------- ------------- ----------- -------------
$ 21,286,741 $ - $ 1,586,028 $ 19,700,713
============= ============= =========== =============
</TABLE>
Note 4 - Earnings Per Share
------------------
Basic EPS is computed by dividing net income by the weighted
average number of common shares outstanding for the appropriate
period. Unearned ESOP shares are not included in outstanding shares.
Diluted EPS is computed by dividing net income by the weighted
average shares outstanding as adjusted for the dilutive effect of
stock options and unvested stock awards based on the "treasury stock"
method. Information relating to the calculations of net income per
share of common stock is summarized for the nine and three month
periods ended June 30, as follows:
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
June 30, 2000 June 30, 1999
----------------------------- ------------------------------
Basic Diluted Basic Diluted
----------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Net income $ 638,107 $ 638,107 $ 538,536 $ 538,536
Weighted average shares
outstanding 1,168,186 1,168,186 1,238,004 1,238,004
Diluted securities:
MSBP shares - - - -
Options - - - -
----------- ----------- ---------- -----------
Adjusted weighted average
shares 1,168,186 1,168,186 1,238,004 1,238,004
Per share amount $ 0.55 $ 0.55 $ 0.44 $ 0.44
=========== =========== ========== ===========
</TABLE>
-9-
<PAGE>
WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
------------------------------------------------------
Note 4 - Earnings Per Share - Continued
------------------
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
June 30, 2000 June 30, 1999
----------------------------- -------------------------------
Basic Diluted Basic Diluted
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Net income $ 211,537 $ 211,537 $ 227,312 $ 227,312
Weighted average shares
Outstanding 1,174,634 1,174,634 1,237,398 1,237,398
Diluted securities:
MSBP shares - - - -
Options - - - -
----------- ----------- ----------- -----------
Adjusted weighted average
shares 1,174,634 1,174,634 1,237,398 1,237,398
Per share amount $ 0.18 $ 0.18 $ 0.18 $ 0.18
=========== =========== =========== ===========
</TABLE>
-10-
<PAGE>
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 contains safe
harbor provisions regarding forward-looking statements. When used in this
discussion, the words "believes", "anticipates", "contemplates", "expects", and
similar expressions are intended to identify forward-looking statements. Such
statements are subject to certain risks and uncertainties which could cause
actual results to differ materially from those projected. Those risks and
uncertainties include changes in interest rates, the ability to control costs
and expenses, year 2000 issues and general economic conditions. WHG Bancshares
Corporation undertakes no obligation to publicly release the results of any
revisions to those forward-looking statements which may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
Since we conduct no significant business other than owning all of the
common stock of Heritage Savings Bank, F.S.B. ("Heritage Savings"), references
in this discussion to "we," "us," and "our," refer collectively to WHG
Bancshares Corporation and Heritage Savings.
Overview
For the nine months ended June 30, 2000, net earnings increased $99,000
to $638,000 or $.55 per diluted share, from $539,000, or $.44 per diluted share,
for the comparative fiscal 1999 period. In general, higher net earnings for the
current nine month period was primarily the result of our continued efforts to
increase net interest income by investing in higher yielding interest earning
assets.
For the three months ended June 30, 2000, net earnings decreased
$15,000 to $212,000, or $.18 diluted earnings per share, from $227,000, or $.18
diluted earnings per share, for the comparative 1999 period. Our earnings
decreased primarily due to an increase in non-interest expenses.
As previously disclosed, in order to accommodate the growth of our
Ellicott City branch, we plan to relocate this branch location to a larger
building with a drive-thru facility on August 28, 2000. The new location is in
close proximity to our current location. We currently estimate that we will
spend approximately $600,000 to renovate this new branch location, which such
expenditures will primarily be capitalized.
Results of Operations
Net Interest Income
Net interest income for the nine and three month periods ended June 30,
2000 was $3,126,000 and $1,038,000, compared to $2,847,000 and $1,005,000,
respectively, for the same periods in 1999. The interest rate spread, which is
the difference between the yield on average interest earning assets and the
percentage cost of average interest bearing liabilities, for the nine and three
month periods ended June 30, 2000 were 2.40% and 2.34%, respectively, compared
to 2.24% and 2.30%, respectively, for the same periods in 1999. The increase in
interest rate spread for the current nine and three month period was primarily
the result of an increase in the average yield on loans receivable and
investment securities.
-11-
<PAGE>
Interest Income
Total interest income for the nine and three month periods ended June
30, 2000 was $8,336,000 and $2,825,00, compared to $7,505,000 and $2,666,000,
respectively, for the same periods in fiscal 1999. Total average interest rate
yields for the nine months and three month periods ended June 30, 2000 were
7.34% and 7.37%, respectively, compared to 7.08% and 7.14%, respectively, for
the same periods in fiscal 1999. The increase in total interest income was
primarily related to the increase in the total average balance of loans
receivable, increased average balances and higher average interest rate yields
paid on investments and mortgage backed securities, offset by a decline in the
total average balance of interest bearing deposits in other banks.
Interest and fees on loans increased $752,000 and $174,000 for the
current nine months and three month periods to $5,373,000 and $1,839,000,
respectively. Such increases for the current year periods were due to average
net loan originations of $12,861,000 and $8,421,000, respectively. For the
current nine and three month periods , the average interest rate yield was 7.63%
and 7.66%, respectively, compared to 7.60% and 7.61%, respectively, for the same
periods in 1999.
Interest and dividend income on investment securities increased
$191,000 and $20,000 for the current nine and three month periods to $1,922,000
and $643,000, respectively. Such increases for the current year periods were due
to respective increases in average investment balances at amortized cost of
$3,187,000 and $590,000, respectively. In addition, the nine and three month
periods interest rate yields rose 11 and 4 basis points, respectively, to 6.71%
and 6.70%, respectively, from 6.60% and 6.66%, respectively, for the same
periods in 1999.
Interest income on mortgage backed securities increased $100,000 for
the current nine months period to $843,000. Such increase was the result of a
$1,185,000 increase in the average balance and a 35 basis point increase in the
interest rate yield to 6.46% from 6.11% in the comparable period in 1999.
Interest income on mortgage backed securities decreased $25,000 to $275,000 for
the current three month period as a result of a $1,565,000 decrease in the
average balance of mortgaged backed securities.
Other interest income decreased $210,000 and $10,000 for the current
nine and three month periods to $199,000 and $68,000, respectively, as the
result of a $5,426,000 and $2,620,000 decrease in the average balance of
interest bearing deposits in other banks. Such declines were due to the use of
these funds to invest in higher yielding mortgaged-backed and investment
securities.
-12-
<PAGE>
Interest Expense
Total interest expense for the nine and three month periods ended June
30, 2000 was $5,210,000 and $1,786,000, compared to $4,657,000 and $1,661,000,
respectively, for the same periods in fiscal 1999. The increase in interest
expense for the current respective periods were primarily related to increases
in the average balances of certificates of deposits for the current nine and
three month periods totaling $11,757,000 and $5,386,000, respectively. Average
costs of funds for certificates of deposit for the current year periods remained
relatively constant compared to the same periods in 1999. Interest expense on
certificates of deposit for the nine and three month periods ended June 30, 2000
increased $485,000 and $83,000, respectively, as compared to the 1999 respective
periods. In addition, cost of funds for the current three month period increased
59 basis points to 5.84% from 5.04% for the comparable 1999 quarter. Average
costs of funds for total interest bearing liabilities for the current year
periods were 4.94% and 5.04%, respectively, compared to 4.84% for each of the
same periods in 1999.
Provision for Loan Losses
The provision for loan losses for the nine and three month periods
ended June 30, 2000 was $90,000 and $30,000, compared to $45,000 and $15,000,
respectively, for the same periods in fiscal 1999. The increase was primarily
due to the overall increase in the loan portfolio and the mix of the loan
portfolio. We continually evaluate the adequacy of the allowance for loan
losses, which encompasses the overall risk characteristics of the various
portfolio segments, past experience with losses, the impact of economic
conditions on borrowers and other relevant conditions. Management continues to
offer a wider variety of loan products coupled with the continued success of
changing the mix of the products offered in the loan portfolio - from lower
yielding loans (i.e., one-to four family loans) to higher yielding loans (i.e.,
multi-family, non-residential commercial, construction, and consumer loans).
Based upon the additions to the allowance for loan losses, management believes
the allowance for loan losses is adequate. However, there can be no assurance
that the allowance for loan losses will be adequate to cover significant losses,
if any, that we might incur in the future due to the higher degree of risk which
might result from the change in the mix of the loan portfolio.
Non-Interest Income
Non-interest income for the nine and three month periods ended June 30,
2000 was $108,000 and $39,000, compared to $183,000 and $36,000, respectively,
for the same periods in fiscal 1999. Included in the nine month period in fiscal
1999 were other commissions and fees of $82,000 from Mapleleaf Mortgage
Corporation ("MMC") which closed in March 1999.
For the current nine and three month periods, fees and charges on loans
decreased $3,900 and $2,500, respectively. Additionally other income increased
$16,000 and $8,300, respectively. The increase for the nine and three month
periods were primarily due to an $8,000 and $3,000 increase in ATM fee income
and proceeds of $5,000 from the mutual to stock conversion of the Company's life
insurance policy provider.
Non-Interest Expense
Total non-interest expense for the nine and three month periods ended
June 30, 2000 was $2,104,000 and $702,000 compared to $2,094,000 and $671,000,
respectively, for the same periods in fiscal 1999. For the current three month
period, professional services increased $9,300 due to the Company's continuance
of business planning development. Occupancy expense increased $19,000 and $9,244
for the current nine and three month periods, respectively, due to the lease
commencement in January 2000 of the new Ellicott City
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<PAGE>
branch location. Other expenses increased $14,000 and $12,000, respectively, for
the current nine and three month periods, primarily due to an increase in ATM
expense and computer repairs and software cost.
Provision for Income Taxes
The provision for income taxes for the nine months and three month
periods ended June 30, 2000 was $402,000 and $133,000, compared to $352,000 and
$128,000, respectively, for the same periods in fiscal 1999. The increases for
the current period were the result of increases in net income. The effective tax
rate for the current respective periods were 38.6% as compared to 36.5% and
36.0%, respectively, for the comparative periods in fiscal 1999. The effective
tax rate for the nine and three month periods in 1999 reflected the write-off of
the deferred tax asset of MMC and the non-recognition of income tax benefit from
the net operating loss of MMC.
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<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The registrant is not engaged in any legal proceedings at the
present time. From time to time, the Bank is a party to legal
proceedings within the normal course of business wherein it
enforces its security interest in loans made by it, and other
matters of a like kind.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
3(i) Articles of Incorporation of WHG Bancshares Corporation *
3(ii) Amended Bylaws of WHG Bancshares Corporation ****
10.1 Amendment to Employment Agreement with Peggy J. Stewart **
10.2 Restated Severance Agreement with Robin L. Taylor **
10.3 Restated Severance Agreement with Diana Rohrback **
10.4 Amendment to the 1996 Stock Option Plan ***
10.5 Amendment to Management Stock Bonus Plan and Trust
Agreement ***
10.6 Form of Directors Change In Control Severance Plan****
27 Financial Data Schedule (electronic filing only)
(b) None.
---------------------
* 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 June 30, 1998 Form
10-QSB filed.
*** Incorporated by reference to the proxy statement for
the annual meeting of stockholders filed with the SEC
on or about December 19, 1997.
**** Incorporated by reference to the Form 10-KSB for the
year ended September 30, 1999.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WHG Bancshares Corporation
Date: August 11, 2000 By: /s/Peggy J. Stewart
-------------------------------------
Peggy J. Stewart
President and Chief Executive Officer
(duly authorized officer)
Date: August 11, 2000 By: /s/Robin L. Taylor
-------------------------------------
Robin L. Taylor
Controller (chief accounting officer)
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