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 March 31, 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 May 1, 2000: 1,285,609
-------------
Transitional Small Business Disclosure Format (check one)
YES NO X
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<PAGE>
WHG BANCSHARES CORPORATION AND SUBSIDIARY
Contents
--------
<TABLE>
<CAPTION>
Pages
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PART I - FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Consolidated Statements of Financial Condition at March 31, 2000
(unaudited) and September 30, 1999...............................................................................3
Consolidated Statements of Operations (unaudited) for the six months and three month ended
March 31, 2000 and 1999 .........................................................................................4
Consolidated Statements of Comprehensive Income (unaudited) for the six months and three month ended
March 31, 2000 and 1999..........................................................................................5
Consolidated Statements of Cash Flows (unaudited) for the six months ended
March 31, 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............................................................................16
Signatures.................................................................................................................17
</TABLE>
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<PAGE>
WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
----------------------------------------------
<TABLE>
<CAPTION>
March 31, September 30,
--------- -------------
2000 1999
---- ----
(Unaudited)
<S> <C> <C>
Assets
------
Cash $ 796,191 $ 1,312,324
Interest bearing deposits in other banks 3,358,152 3,689,305
Federal funds sold 2,653,000 2,290,000
Investments available for sale 19,394,312 19,700,713
Other investments held to maturity 15,650,000 15,650,000
Mortgage backed securities 17,293,654 17,983,370
Loans receivable - net 94,322,523 89,931,326
Foreclosed real estate - 13,103
Accrued interest receivable - loans 399,966 389,587
- investments 646,972 647,790
- mortgage backed securities 93,138 96,914
Premises and equipment - net 835,725 838,527
Federal Home Loan Bank of Atlanta stock, at cost 1,450,000 1,200,000
Deferred income taxes 970,751 852,384
Prepaid and refundable income taxes 98,722 68,590
Other assets 453,026 258,632
------------ ------------
Total assets $158,416,132 $154,922,565
============ ============
Liabilities and Stockholders' Equity
------------------------------------
Liabilities
- -----------
Deposits $116,720,516 $115,302,487
Borrowings 26,000,000 24,000,000
Advance payments by borrowers for taxes and insurance 175,361 315,463
Income taxes payable 170,373 49,289
Other liabilities 272,792 338,661
------------ ------------
Total liabilities 143,339,042 140,005,900
Commitments and contingencies
Stockholders' Equity
- --------------------
Common stock .10 par value; authorized 1,620,062
shares; issued and outstanding 1,285,609 shares at
March 31, 2000 and September 30,1999 128,561 128,561
Additional paid-in capital 6,632,959 6,561,355
Retained earnings (substantially restricted) 10,144,222 9,932,078
Accumulated other comprehensive loss (1,161,629) (973,504)
Employee Stock Ownership Plan (667,023) (731,825)
------------ ------------
Total stockholders' equity 15,077,090 14,916,665
------------ ------------
Total liabilities and stockholders' equity $158,416,132 $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 Six Months Ended For Three Months Ended
March 31, March 31,
---------------------------- -----------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest and fees on loans $3,533,793 $2,955,416 $1,761,513 $1,480,153
Interest and dividends on investment securities 1,278,847 1,108,616 640,553 579,351
Interest on mortgage backed securities 567,877 443,360 281,463 270,609
Other interest income 130,783 331,591 52,202 153,325
---------- ----------- ----------- -----------
Total interest income 5,511,300 4,838,983 2,735,731 2,483,438
Interest on deposits 2,837,807 2,428,916 1,407,018 1,265,524
Interest on short-term borrowings 37,731 216,125 13,027 87,541
Interest on long term borrowings 548,477 351,902 278,687 188,325
---------- ---------- ---------- -----------
Total interest expense 3,424,015 2,996,943 1,698,732 1,541,390
---------- ---------- --------- ----------
Net interest income 2,087,285 1,842,040 1,036,999 942,048
Provision for loan losses 60,000 30,000 30,000 15,000
---------- ---------- ----------- ------------
Net interest income after provision for
loan losses 2,027,285 1,812,040 1,006,999 927,048
Non-Interest Income
- -------------------
Fees and charges on loans 17,497 18,902 8,078 8,702
Fees on transaction accounts 25,899 27,974 12,389 14,339
Other commissions and fees - 81,975 - 16,640
Other income 26,076 18,100 13,431 9,037
----------- ----------- ----------- ------------
Total non-interest income 69,472 146,951 33,898 48,718
Non-Interest Expenses
- ---------------------
Salaries and related expenses 849,949 916,358 428,989 451,446
Occupancy 79,184 69,082 44,683 34,099
FDIC deposit insurance premium 22,802 27,620 6,070 14,406
Depreciation of equipment 48,119 42,187 25,119 20,973
Advertising 40,736 35,096 19,136 20,776
Data processing costs 54,468 50,055 28,200 26,762
Professional services 108,838 87,428 54,411 35,626
Loss on sale of foreclosed real estate 786 - - -
Other expenses 196,853 195,629 101,762 98,728
---------- ---------- ----------- ------------
Total non-interest expenses 1,401,735 1,423,455 708,370 702,816
--------- --------- ----------- -----------
Income before tax provision 695,022 535,536 332,527 272,950
Provision for income taxes 268,452 224,312 128,457 122,860
---------- ---------- ----------- -----------
Net income $ 426,570 $ 311,224 $ 204,070 $ 150,090
========== ========== =========== ===========
Basic earnings per share $ .37 $ .25 $ .17 $ .12
========== ========== =========== ===========
Diluted earnings per share $ .37 $ .24 $ .17 $ .12
========== ========== =========== ===========
</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 Six Months Ended
March 31,
-----------------------------
2000 1999
-------- --------
<S> <C> <C>
Net income $426,570 $311,224
Unrealized losses, on available-for-sale securities,
net of tax of $118,367 and $220,036, for the six month
periods ended March 31, 2000 and 1999, respectively (188,126) (349,711)
------- -------
Comprehensive income (loss) $238,444 $ (38,487)
======= =======
</TABLE>
<TABLE>
<CAPTION>
For Three Months Ended
March 31,
-----------------------------
2000 1999
---- ----
<S> <C> <C>
Net income $204,070 $150,090
Unrealized gains (losses), on available-for-sale securities,
net of tax of $146,181 and $64,583, for the three month
periods ended March 31, 2000 and 1999, respectively 232,329 (194,248)
------- -------
Comprehensive income (loss) $436,399 $ (44,158)
======== =========
</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 Six Months Ended
March 31,
-------------------------------------
2000 1999
---- ----
<S> <C> <C>
Operating Activities
- --------------------
Net income $ 426,570 $ 311,224
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities
-----------------------------------------------
Net accretion/amortization of premiums and discounts
of mortgage backed securities 421 4,061
Amortization of deferred loan fees (48,315) (107,658)
Loan fees deferred 46,858 77,616
Decrease in discount on loans purchased (168,620) (9,541)
Amortization of discounts on investments available for sale (91) (79)
Provision for loan losses 60,000 30,000
Loss on sale of foreclosed real estate 786 -
Non-cash compensation under stock-based
benefit plans 136,405 166,204
Increase in accrued interest receivable (5,785) (81,876)
Loans sold - 500,000
Loans originated for sale - (500,000)
Provision for depreciation 54,995 48,971
Decrease in deferred income tax assets - 15,180
Increase in prepaid income taxes (30,132) (44,620)
(Increase) decrease in other assets (194,394) 70,254
Increase in accrued interest payable 281 114
Increase in income taxes payable 121,084 27,737
Decrease in other liabilities (65,869) (30,926)
------------ ------------
Net cash provided by operating activities 334,194 476,661
Cash Flows from Investment Activities
Proceeds from maturing interest-bearing deposits 95,000 -
Purchases of interest-bearing deposits - (95,000)
Purchase of investments available for sale - (9,487,272)
Proceeds from maturing investments available for sale - 3,250,000
Purchase of other investments - (7,250,000)
Proceeds from maturing other investments - 7,250,000
Purchase of mortgage backed securities - (12,473,993)
Principal collected on mortgage backed securities 689,296 865,612
Proceeds from sale of foreclosed real estate 12,317 -
Net (increase) decrease in shorter term loans (166,956) 58,628
Loans purchased - (207,279)
Longer term loans originated or acquired (11,459,450) (10,077,415)
Principal collected on longer term loans 7,345,285 6,005,428
Investment in premises and equipment (52,193) (34,858)
Purchase of stock in Federal Home Loan Bank of Atlanta (250,000) -
Decrease in investment in and loans to joint ventures - 50,000
------------ ------------
Net cash used by investment activities (3,786,701) (22,146,149)
</TABLE>
-6-
<PAGE>
WHG BANCSHARES CORPORATION AND SUBSIDIARIES
-------------------------------------------
Lutherville, Maryland
---------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
-------------------------------------------------
<TABLE>
<CAPTION>
For Six Months Ended
March 31,
-------------------------------------
2000 1999
---- ----
<S> <C> <C>
Cash Flows from Financing Activities
- ------------------------------------
Net increase (decrease) in demand deposits, money
market, passbook accounts and advances by
borrowers for taxes and insurance $ (491,116) $ 2,322,740
Net increase in certificates of deposit 1,768,763 14,521,121
Decrease in checks outstanding in excess of bank balance - (11,077)
Net increase (decrease) in borrowings 2,000,000 (937,168)
Dividends on stock (214,426) (227,492)
Stock repurchase - (409,496)
----------- -----------
Net cash provided by financing activities 3,063,221 15,258,628
----------- -----------
Decrease in cash and cash equivalents (389,286) (6,410,860)
Cash and cash equivalents at beginning of period 7,196,629 14,422,780
----------- -----------
Cash and cash equivalents at end of period $ 6,807,343 $ 8,011,920
=========== ===========
The following is a Summary of Cash and Cash Equivalents:
- --------------------------------------------------------
Cash $ 796,191 $ 759,141
Interest bearing deposits in other banks 3,358,152 3,728,779
Federal funds sold 2,653,000 3,619,000
----------- -----------
Balance of cash items reflected on
statement of financial condition 6,807,343 8,106,920
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 $ 6,807,343 $ 8,011,920
=========== ===========
Supplemental Disclosure of Cash Flow Information:
- ------------------------------------------------
Cash paid during the period for:
Interest $ 3,429,143 $ 2,991,687
=========== ============
Taxes $ 177,500 $ 241,800
=========== ============
</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 six and three months ended March 31, 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.
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:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ----------- ----------- -----------
March 31, 2000
- --------------
Equity investments $ 544,324 $ - $ 237,261 $ 307,063
Federal Home Loan
Bank Bonds 17,493,428 2,042 1,356,817 16,138,653
Federal Home Loan
Mortgage Corporation
Bonds 3,249,081 - 300,485 2,948,596
----------- ----------- ----------- -----------
$21,286,833 $ 2,042 $ 1,894,563 $19,394,312
=========== =========== =========== ===========
-8-
<PAGE>
WHG BANCSHARES CORPORATION AND SUBSIDIARIES
- -------------------------------------------
Lutherville, Maryland
- ---------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 3 - Investment Available for Sale - Continued
-----------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- --------- ----------- -----------
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
=========== ========= =========== ===========
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 six and three month
periods ended March 31, as follows:
Six Months Ended Six Months Ended
March 31, 2000 March 31, 1999
----------------------- -----------------------
Basic Diluted Basic Diluted
---------- ---------- ---------- ----------
Net income $ 426,570 $ 426,570 $ 311,224 $ 311,224
Weighted average shares
outstanding 1,165,003 1,165,003 1,245,044 1,245,044
Diluted securities:
MSBP shares - - - 42,658
Options - - - -
---------- ---------- ---------- ----------
Adjusted weighted average
shares 1,165,003 1,165,003 1,245,044 1,287,702
Per share amount $ .37 $ .37 $ .25 $ .24
-9-
<PAGE>
WHG BANCSHARES CORPORATION AND SUBSIDIARIES
- -------------------------------------------
Lutherville, Maryland
- ---------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- ------------------------------------------------------
Note 4 - Earnings Per Share - Continued
------------------
Three Months Ended Three Months Ended
March 31, 2000 March 31, 1999
----------------------- -----------------------
Basic Diluted Basic Diluted
---------- ---------- ---------- ----------
Net income $ 204,070 $ 204,070 $ 150,090 $ 150,090
Weighted average shares
outstanding 1,181,220 1,181,220 1,244,016 1,244,016
Diluted securities:
MSBP shares - - - 42,658
Options - - - 247
---------- ---------- ---------- ----------
Adjusted weighted average
shares 1,181,220 1,181,220 1,244,016 1,286,921
Per share amount $ .17 $ .17 $ .12 $ .12
-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 six months ended March 31, 2000, net earnings increased
$116,000 to $427,000 or $.37 per diluted share, from $311,000, or $.24 per
diluted share, for the comparative fiscal 1999 period. For the three months
ended March 31, 2000, net earnings increased $54,000 to $204,000 or $.17 per
diluted share, from $150,000 or $.12 per diluted share, for the comparative
fiscal 1999 quarter. In general, higher net earnings for the current year six
and three month periods, was primarily the result of our continued efforts to
increase net interest income by investing in higher yielding interest earning
assets.
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
in September 2000. The new location is in close proximity to our current
location. In January 2000, we commenced the lease on this new location in order
to begin building renovations. We currently estimate that we will spend
approximately $500,000 to renovate this new branch location, which such
expenditures will primarily be capitalized.
-11-
<PAGE>
Results of Operations
Net Interest Income
Net interest income for the six months and three month periods ended
March 31, 2000 amounted to $2,087,000 and $1,037,000, respectively, compared to
$1,842,000 and $942,000 for the respective periods in 1999. The interest rate
spread, which is the difference between the yield on average interest earning
assets less the cost of funds on average interest bearing liabilities, for the
six months and three month periods ended ended March 31, 2000 was 2.44% and
2.43%, respectively, as compared to 2.21 % and 2.20%, respectively, for the same
periods in 1999. The improved interest rate spreads for the current year periods
were primarily the results of our continued strategy to invest in higher
yielding interest earning assets.
Interest Income
Total interest income for the six months and three month periods ended
March 31, 2000 was $5,511,000 and $2,736,000, compared to $4,837,000 and
$2,483,000, respectively, for the same periods in 1999. Total average interest
rate yields for the six months and three month periods ended March 31, 2000 was
7.33% and 7.24%, respectively compared to 7.05% and 6.96%, respectively, for the
same periods in 1999. The increase in total interest income was primarily
related to the increase in the total average balance of loans receivable, higher
average interest rate yields earned on mortgaged-backed and investment
securities offset by a decline in the total average balance of interest bearing
deposits in other banks.
Interest income on loans receivable increased $579,000 and $282,000 for
the current year six and three month periods to $3,534,000 and $1,762,000,
respectively. Such increases for the the current year periods were due to
average net loan originations of $15,080,000 and $14,539,000, respectively. For
the current year six and three month periods, the average interest rate yield
was 7.61% and 7.52, respectively, compared to 7.59% and 7.48%, respectively, for
the same periods in 1999.
Interest and dividend income on investment securities increased
$170,000 and $62,000 for the current year six and three month periods to
$1,279,000 and $641,000, respectively. Such increases for the current year
periods were due to the respective increases of 46 and 44 basis points in the
average interest rate yields. For the current year six and three month periods,
the average interest rate yield was 7.10% and 7.13% , respectively, compared to
6.64% and 6.69%, respectively, for the same periods in 1999.
Interest income on mortgaged-backed securities increased $125,000 and
$11,000 for the current year six and three month periods to $568,000 and
$281,000, respectively. Such increases for the current year periods were due to
the respective increases of 56 and 36 basis points in the average interest rate
yields. For the current year six and three month periods, the average interest
rate yield was 6.46% and 6.47% , respectively, compared to 5.90% and 6.11%,
respectively, for the same periods in 1999.
Other Interest income declined approximately $201,000 and $101,000 for
the current six and three month periods to $131,000 and $52,000, respectively.
Lower interest income for the current year periods was primarily due to declines
in the average balance of interest bearing deposits in other banks of $6,830,000
and $7,150,000, respectively. Such declines were due to use of these funds to
invest in higher yielding mortgaged-backed and investment securities.
-12-
<PAGE>
Interest Expense
Total interest expense for the six months and three months period ended
March 31, 2000 was $3,424,000 and $1,699,000, compared to $2,997,000 and
$1,541,000 for the respective 1999 periods. The increases in interest expense
for the respective periods were primarily related to an increases in the average
balance of certificate of deposit for the current year six and three month
periods totaling $14,942,000 and $9,145,000, respectively. Average cost of funds
for certificate of deposits for the current year periods remained relatively
constant as compared to the same periods in 1999. Interest expense on
certificates of deposits for the six and three month period ended March 31, 2000
increased $402,000 and $130,000, respectively as compared to the 1999 respective
periods. Average costs of funds for total interest-bearing liabilities for the
six months and three month periods ended March 31, 2000 was 4.89% and 4.85%,
respectively, compared to 4.84% and 4.76%, respectively, for the same periods in
1999.
Provision for Loan Losses
The provision for loan losses for the six and three months period ended
March 31, 2000 were $60,000 and $30,000, respectively, compared to $30,000 and
$15,000 for the same periods in 1999. 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
Total non-interest income for the six months and three month periods
ended March 31, 2000 totaled $69,000 and $34,000, respectively compared to
$147,000 and 49,000, respectively, for the same periods in 1999. Included in the
six months and three month periods in 1999 were other commissions and fees of
$82,000 and $17,000, respectively, from Mapleleaf Mortgage Corporation ("MMC")
which closed in March 1999. Excluding other commission and fees, total
non-interest income for the prior year six months and three month periods
totaled $65,000 and $32,000, respectively.
Non-interest Expense
Total non-interest expense income for the six months and three month
periods ended March 31, 2000 totaled $1,402,000 and $708,000, respectively
compared to $1,423,000 and $703,000, respectively, for the same periods in 1999.
Included in salaries and related benefits in the prior year six months and three
month periods were salary and related expenses from MMC. Additionally, beginning
in January 2000, the FDIC reduced deposit insurance premiums assessments for all
SAIF insured banks. While virtually all operating expenses increased for the
current year periods, occupancy expense and professional fees were the most
significant.
-13-
<PAGE>
For the current year six months and three month periods, occupancy expense
increased $10,000 and $11,000, respectively, due to the lease commencement in
January 2000 of the new Ellicott City branch location. Professional services
increased $21,000 and $19,000, respectively, for the current year periods, due
to the incurrence in this quarter of business development planning.
Income Taxes
Total income tax expense for the six months period and three month
period ended March 31, 2000 was $268,000 and $122,000 as compared to $224,000
and $123,000 for the same periods in 1999. Such increases for the 2000 periods
were the result of higher levels of income offset slightly by a decline in the
effective tax rates. The effective tax rates for the six months and three month
period was 38.6%, respectively, as compared to 41.9% and 45.0%,respectively, for
the periods in 1999. The effective tax rates for the respective periods in 1999
reflected the write-off of the deferred income tax asset of MMC and the
non-recognition of income tax benefit from the net operating loss of MMC.
-14-
<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 The
Annual Meeting of Shareholders of the Company was held on
January 18, 2000 and the following matter was voted upon:
Proposal I- Election of directors with terms to expire in
2003.
FOR WITHHELD
--------- --------
Urban B. Francis, Jr. 1,017,553 135,388
John E. Lufburrow 1,017,553 135,388
Hugh P. McCormick 1,017,553 135,388
Item 5. Other Information
Not applicable.
-15-
<PAGE>
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.
-16-
<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: May 15, 2000 By: /s/Peggy J. Stewart
-------------------------------------
Peggy J. Stewart
President and Chief Executive Officer
(duly authorized officer)
Date: May 15, 2000 By: /s/Robin L. Taylor
-------------------------------------
Robin L. Taylor
Controller (chief accounting officer)
-17-
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
QUARTERLY REPORT ON FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL INFORMATION.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 796
<INT-BEARING-DEPOSITS> 3,358
<FED-FUNDS-SOLD> 2,653
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 19,394
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<LOANS> 94,323
<ALLOWANCE> 331
<TOTAL-ASSETS> 158,416
<DEPOSITS> 116,721
<SHORT-TERM> 0
<LIABILITIES-OTHER> 619
<LONG-TERM> 26,000
0
0
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