U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OF 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter period ended June 30, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT
For the transition period from to
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Commission File No. 0-28200
Westwood Financial Corporation
------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-3413572
---------- ----------
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
700-88 Broadway, Westwood, New Jersey 07675
-------------------------------------------
(Address of principal executive offices)
201-666-5002
------------
(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Sections
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
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date.
Class: Common Stock, par value $0.10 per share
Outstanding shares at August 5, 1996: 646,743
<PAGE>
WESTWOOD FINANCIAL CORPORATION
INDEX TO FORM 10-QSB
Page
----
PART 1. FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
Consolidated statements of Financial Condition at June
30, 1996 (unaudited) and March 31, 1995 2
Consolidated Statements of income for the three months
ended June 30, 1996 and 1995 (unaudited) 3
Consolidated Statements of Cash Flows for the three months
ended June 30, 1996 and 1995 (unaudited) 4
Notes to Consolidated Financial
Statements (unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
PART II.OTHER INFORMATION
-----------------
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Default Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES
Page 1 of 14
<PAGE>
WESTWOOD FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands)
<TABLE>
<CAPTION>
WESTWOOD FINANCIAL WESTWOOD
CORPORATION SAVINGS
CONSOLIDATED BANK(1)
JUNE 30, 1996 MARCH 31, 1996
------------- --------------
(UNAUDITED)
ASSETS
------
<S> <C> <C>
Cash and cash equivalents $ 6,409 $ 5,208
Loans receivable, net 36,863 34,497
Interest receivable on loans 232 218
FHLB stock, at cost 440 440
Mortgage-backed securities held-to-maturity,
(market value of $13,077 and $13,266, respectively) 13,247 13,281
Investment securities held-to-maturity,
(market value of $26,815 and $25,586, respectively) 27,245 25,742
Investment securities available-for-sale,
(at market value) 4,413 4,422
Interest receivable on investments 545 488
Property and equipment, net 765 750
Goodwill 1,214 1,238
Prepaid expenses and other assets 87 280
-------- --------
TOTAL ASSETS $ 91,460 $ 86,564
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Liabilities:
Demand deposits $ 13,878 $ 12,618
Savings deposits 67,449 67,622
Interest payable on deposits 128 116
Other liabilities 278 81
Dividends payable 32 0
-------- --------
Total Liabilities 81,765 80,437
-------- --------
Commitments and Contingencies -- --
Shareholders' equity:
Common stock 65 760
Paid in capital 3,264 4,414
Retained earnings 6,584 1,174
Unearned stock bonus plan shares (116) (128)
Unrealized gain/(loss) on securities available-for-sale (102) (93)
-------- --------
Total Shareholders' Equity 9,695 6,127
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 91,460 $ 86,564
======== ========
</TABLE>
(1) On June 6, 1996, Westwood Savings Bank became a wholly-owned subsidiary
of Westwood Financial Corporation. The consolidated balance sheet at
March 31, 1996 has been taken from the audited balance sheet at that
date.
See notes to consolidated financial statements.
2
<PAGE>
WESTWOOD FINANCIAL CORPORATION AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands)
<TABLE>
<CAPTION>
WESTWOOD FINANCIAL WESTWOOD
CORPORATION SAVINGS
CONSOLIDATED BANK
JUNE 30, 1996 JUNE 30, 1995
------------- -------------
INTEREST INCOME
<S> <C> <C>
Loans receivable $ 711 $ 641
Mortgage-backed securities 224 212
Investment securities, including O/N deposits 567 457
Dividends on FHLB stock 7 8
------ ------
Total interest income 1,509 1,318
INTEREST EXPENSE ON DEPOSITS 844 773
------ ------
Net interest income 665 545
Provision for loan losses 35 15
------ ------
Net interest income after
provision for loan losses 630 530
NONINTEREST INCOME
Miscellaneous charges and fees 28 24
Late charges 2 2
------ ------
Total noninterest income 30 26
NONINTEREST EXPENSE
Compensation and employee benefits 166 157
FDIC insurance and regulatory expenses 46 37
Depreciation and amortization 40 38
Data Processing 34 28
Occupancy 28 26
Other 88 70
------ ------
Total noninterest expense 402 356
------ ------
INCOME BEFORE INCOME TAXES 258 200
INCOME TAX EXPENSE 89 73
------ ------
NET INCOME $ 169 $ 127
====== ======
Weighted Average Earnings Per Share $ 0.37 $ NM
====== ======
</TABLE>
NM - Not meaningful due to conversion and reorganization effective June
6, 1996.
See notes to consolidated financial statements.
3
<PAGE>
WESTWOOD FINANCIAL CORPORATION AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
WESTWOOD FINANCIAL WESTWOOD
CORPORATION SAVINGS
CONSOLIDATED BANK
THREE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, 1996 JUNE 30, 1995
------------- -------------
INTEREST OPERATING ACTIVITIES
<S> <C> <C>
NET INCOME $ 169 $ 127
======= =======
ADJUSTMENTS TO RECONCILE NET INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization 40 50
Provision for loan losses 35 15
(INCREASE) DECREASE IN ASSETS:
Prepaid expenses 193 74
INCREASE (DECREASE) IN LIABILITIES:
Interest payable 12 27
Corporate taxes payable 89 73
Accrued expenses 139 (100)
------- -------
TOTAL ADJUSTMENTS 508 139
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 677 266
------- -------
INVESTING ACTIVITIES:
Loans made of net repayments (2,401) (539)
Purchase of investments - net of sales (1,460) (2,454)
Purchases of office property and equipment (31) (14)
------- -------
NET CASH USED BY INVESTING ACTIVITIES (3,892) (3,007)
------- -------
FINANCING ACTIVITIES:
Net increase in demand accounts, passbook
savings accounts, certificates of deposit,
and individual retirement accounts 1,087 2,590
Proceeds from sale of stock, net of conversion costs 3,329 0
Dividends paid 0 (16)
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,416 2,574
------- -------
INCREASE (DECREASE) IN CASH EQUIVALENTS 1,201 (167)
CASH AND CASH EQUIVALENTS - Beginning of period 5,208 3,555
------- -------
CASH AND CASH EQUIVALENTS - End of period $ 6,409 $ 3,388
======= =======
SUPPLEMENTAL DISCLOSURES RELATED TO THE
CONSOLIDATED STATEMENT OF CASH FLOW
CASH PAID DURING THE PERIOD FOR:
Interest on deposits $ 716 $ 746
Income taxes $ 0 $ 0
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
Notes to Unaudited Interim Consolidated Financial Statements
June 30, 1996
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
The accompanying consolidated financial statements include the accounts of
Westwood Financial Corporation (the "Corporation") and Westwood Savings Bank, a
wholly-owned subsidiary of the Corporation. All significant intercompany
balances and transactions have been eliminated in consolidation.
The Corporation is a New Jersey stock corporation organized in December 1995 to
facilitate the conversion of the Bank's holding company (formerly Bergen North
Financial, M.H.C.) from the mutual to stock form of ownership and to acquire and
hold all of the capital stock of the Bank. In connection with the conversion,
Bergen North Financial, M.H.C., which had owned 58% of the Bank's common stock,
was merged with and into the Bank, and its shares of the Bank were canceled. On
June 6, 1996, the Corporation issued 261,488 shares of its common stock for all
of the remaining outstanding shares of the Bank, and issued and sold 385,255
shares of its common stock at a price of $10.00 per share. Since June 6, 1996,
the Corporation engaged in no significant business activity other than its
ownership of the Bank's common stock.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for fair presentations have been included. The
results of operations for the interim period ended June 30, 1995 and June 30,
1996 are not necessarily indicative of the results which may be expected for an
entire year or any other period. For further information, refer to consolidated
financial statements and footnotes thereto included in the Corporation's special
Report on Form 10-KSB for the year ended March 31, 1996 filed pursuant to rule
15(d)(2).
NOTE 2: EARNINGS PER SHARE
Earnings per share for the three months ended June 30, 1996 was calculated based
on the number of fully diluted shares at period end. Stock options are regarded
as common stock equivalents computed using the Treasury Stock method.
Earnings per share for the three months ended June 30, 1995 was not meaningful
due to the conversion and reorganization effective June 30, 1996.
5
<PAGE>
NOTE 3: RECENT ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1995, the Bank adopted FASB Statement Nos. 114, "Accounting
by Creditors for Impairment of a Loan" and 118, "Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures." The provision of
these statements are applicable to all loans, uncollateralized as well as
collateralized, except for large groups of smaller-balance homogeneous loans
that are collectively evaluated for impairment and loans that are measured at
fair value or at the lower of cost or fair value. Additionally, such provisions
apply to all loans that are renegotiated in trouble debt restructurings
involving a modification of terms.
Statement No. 114 requires that impaired loans be measured based on the present
value of expected future cash flows discounted at the loan's effective interest
rate or, as a practical expedient, at the loan's observable market price or the
fair value of the collateral if the loan is collateral dependent, except that
loans renegotiated as part of a troubled debt restructuring subsequent to the
adoption of Statement Nos. 114 and 118 must be measured for impairment by
discounting the total expected cash flow under the renegotiated terms at each
loan's original effective interest rate.
A loan evaluated for impairment pursuant to Statement No. 114 is deemed to be
impaired when, based on current information and events, it is probable that the
Bank will be unable to collect all amounts due according to the contractual
terms of the loan agreement. An insignificant payment delay, which is defined by
the Bank as up to ninety days, will not cause a loan to be classified as
impaired. A loan is not impaired during the period of delay in payment if the
Bank expects to collect all amounts due, including interest accrued at the
contractual interest rate for the period of delay. Thus, a demand loan or other
loan with no stated maturity is not impaired if the Bank expects to collect all
amounts due, including interest accrued at the contractual interest rate, during
the period the loan is outstanding. All loans identified as impaired are
evaluated independently. The Bank does not aggregate such loans for evaluation
purposes.
The adoption of Statement Nos. 114 and 118 did not have a material adverse
impact on financial condition or operations.
Payments received on impaired loans are applied first to interest receivable and
then to principal.
6
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Westwood Financial Corporation, Inc. (the "Corporation") is a New Jersey
corporation organized in December 1995 at the direction of the Board of
Directors of the Westwood Savings Bank of New Jersey (the "Bank") to facilitate
the conversion of Bergen North Financial, M.H.C. (the "Mutual Holding company")
from the mutual to stock form of ownership and to acquire and hold all of the
capital stock of the Bank (collectively, the "Conversion and Reorganization").
Prior to the consummation of the Conversion and Reorganization, the Mutual
Holding Company was the majority stockholder of the Bank and upon consummation
of the Conversion and Reorganization, the Mutual Holding Company was merged with
and into the Bank. The Corporation acquired the Bank as a wholly-owned
subsidiary upon the consummation of the Conversion and Reorganization on June 6,
1996. In connection with the Conversion and Reorganization, the Company sold
385,255 shares of its common stock to the public in an initial public offering
("Offering") and issued 261,488 shares in exchange for the outstanding shares of
the Bank held by persons other than the Mutual Holding Company. Stockholders'
equity increased by 3.3 million as a result of the Conversion and
Reorganization.
The primary activity of the Corporation is holding the common stock of the Bank.
The Corporation has no significant assets other than all of the outstanding
shares of Bank Common Stock, and the portion of the net proceeds from the
Offering retained by the Corporation, which are currently invested in a 1.0
million loan to the Bank and in deposits in the Bank. All intercompany accounts
have been eliminated in the Corporation's consolidated financial statements.
Since the Conversion and Reorganization was completed on June 6, 1996, the
consolidate results of operations for the three month period ended June 30, 1996
are for the Corporation while the consolidated results of operations for the
three month period ended June 30, 1995 are for the Bank. Any references to the
consolidated results of operations will, by definition, incorporate that
distinction.
Comparison of Financial Condition at June 30 and March 31, 1996
- - ---------------------------------------------------------------
Total assets at June 30, 1996 amounted to $91.5 million, an increase of $4.9
million or 5.66% over total assets at March 31, 1996. This increase was due
primarily to a $1.1 million increase in deposits, the receipt of $3.3 million in
net proceeds from the public offering of the Company's common stock and net
income of $169,000 for the quarter ended June 30, 1996. The increase in assets
included a $2.3 million or 6.86% increase in loan receivables due to new loan
originations, a $1.2 million increase in cash and cash equivalents and a $1.5
million increase in investment securities.
Total liabilities and shareholders' equity amounted to $91.5 million at June 30
1996, an increase of $4.9 million or 5.66% over total liabilities and
shareholders' equity at March 31, 1996. The increase in liabilities is due
primarily to a $1.1 million net increase in deposits. The net increase in
shareholders' equity of $3.6 million is primarily the result of the proceeds of
the public offering, as well as $169,000 net income for the quarter ended June
30, 1996.
The Bank had no non-performing assets at June 30, 1996 or at March 31, 1996.
7
<PAGE>
Results of Operations - Comparison of Three Months Ended June 30, 1996 and June
- - --------------------------------------------------------------------------------
30, 1995
- - --------
General. Net income for the three month period ended June 30, 1996 was $169,000
compared to $127,000 for the three month period ended June 30, 1995. This
increase was due primarily to increased interest income offset somewhat by
increased interest and non-interest expenses.
Interest Income. Total interest income increased to $1.5 million for the three
months ended June 30, 1996 from $1.3 million for the three months ended June 30,
1995. This increase of $200,000 or 14.49% was due primarily to an increase of
$70,000 in interest earned on loans receivable due to increased residential
lending, and $130,000 in income on investments and mortgage-backed securities
due to higher yields and increased average balances of such investments funded
by increased deposits as well as the receipt of proceeds from the Offering.
Interest Expense. Total interest expense increased from $773,000 for the three
months ended June 30, 1995 to $844,000 for the three months ended June 30, 1996.
This increase was due primarily to an increase in the average balance of
deposits from $71.6 million at June 30, 1995 to $81.1 million at June 30, 1996.
Net Interest Income. Net interest income increased $120,000 or 22.0% for the
three months ended June 30, 1996 as compared to the same period ended June 30,
1995. The increase was due to the investment of 3.3 million received from the
Offering in loans, investment and mortgage-backed securities, as described
earlier. In addition, the net interest rate spread (the difference between the
rate earned on interest earning assets and the rate paid on interest bearing
liabilities) increased by 13 basis points for the three months ended June 30,
1996 as compared to the three months ended June 30, 1995, due to factors
described earlier. Furthermore, the ratio of average interest-earning assets to
average interest-bearing liabilities increased from 104.8% to 106.3% during
these periods.
Provision for Loan Losses. The Bank maintains a provision for losses on loans
based upon management's periodic evaluation of known and inherent risks in the
loan portfolio, the Bank's past loss experience, adverse situations that may
affect the borrower's ability to repay loans, estimated value of the underlying
collateral and current and expected market conditions. The provision for losses
on loans was increased to $35,000 for the three months ended June 30, 1996,
compared to $15,000 for the three months ended June 30, 1995, due to
management's decision to increase the provision due to the increased volume of
loan activity.
Management will continue to review its 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.
Non-Interest Income. Non-interest income increased $4,000 from $26,000 for the
three months ended June 30, 1995 to $30,000 for the three months ended June 30,
1996, primarily due to an increase in personal and business checking accounts
which resulted in increased fee income.
Non-Interest Expense. Non-interest expense increased $46,000 from $356,000 for
the three months ended June 30, 1995 to $402,000 for the three months ended June
30,1996. This increase was primarily due to the additional costs of an added ATM
facility, increased loan processing costs attributed to higher loan volume,
additional compensation due to increased staff and increased FDIC premiums due
to higher deposit balances.
Income Tax Expense. Income tax expense increased $16,000 from $73,000 for the
three month period ended June 30, 1995 to $89,000 for the three month period
ended June 30, 1996, due to increased earnings.
8
<PAGE>
Liquidity Resources
- - -------------------
The Bank's liquidity is a measure of its ability to fund loans, pay withdrawals
of deposits, and other cash outflows in an efficient, cost effective manner. The
Bank's primary sources of funds are deposits and scheduled amortization and
prepayment of loans and mortgage-backed securities. During the past several
years, the Bank has used such funds primarily to fund maturing time deposits,
pay savings withdrawals, fund lending commitments, purchase new investments, and
increase liquidity. The Bank is currently able to fund its operations
internally. Additionally, sources of funds include the ability to utilize
Federal Home Loan Bank of New York advances and the ability to borrow against
mortgage-backed and investment securities. As of June 30, 1996, the Bank had no
such borrowed funds. Loan payments, maturing investments and mortgage-backed
security prepayments are greatly influenced by general interest rates, economic
conditions and competition.
The Bank anticipates that it will have sufficient funds available to meet its
current commitments. As of June 30, 1996, the Bank had mortgage commitments to
fund loans of $3.2 million. Also, at June 30, 1996, there were commitments on
unused lines of credit relating to home equity loans of $1.8 million.
Certifcates of deposit scheduled to mature in one year or less at June 30, 1996
totaled $41.7 million. Based on historical deposit withdrawals and outflows, and
on internal monthly deposit reports monitored by management, management believes
that a majority of such deposits will remain with the Bank. As a result, no
adverse liquidity effects are expected.
At June 30, 1996, the Bank's total liquidity was 57.84%.
Capital Compliance
- - ------------------
The following table sets forth the institution's capital position at June 30,
1996 as compared to the minimum regulatory capital requirements imposed on the
institution by the FDIC at that date. The Bank also met the capital requirements
of the New Jersey Department of Banking.
<TABLE>
<CAPTION>
At June 30, 1996
----------------
Percentage
Amount of Assets
<S> <C> <C>
GAAP Capital: $ 8,063 8.88%
======== =======
Leverage Capital:(1)(2)
Actual Leverage Capital $ 6,724 7.72%
Leverage Capital Requirement 2,615 3.00%
-------- -------
Excess $ 4,109 4.72%
======== =======
Tier 1 Capital: (1)(3)
Actual Tier 1 Capital $ 6,724 16.96%
Tier 1 Capital Requirement 1,585 4.00%
-------- --------
Excess $ 5,139 12.96%
======= ========
Total Risk-Based Capital:(1)(3)
Actual Risk-Based Capital $ 6,928 17.48%
Risk-Based Capital Requirement 3,171 8.00%
-------- --------
Excess $ 3,757 9.48%
======== ========
</TABLE>
(1) Regulatory capital reflects modifications from GAAP capital due to
identifiable intangible assets and constraints on allowance for loan and
lease losses.
(2) Leverage Capital is computed as a percentage of Average Total Assets of
$87,153.
(3) Tier 1 Capital and Total Risk-Based Capital are computed as a percentage of
Total Risk-Weighted Assets of $39,636.
9
<PAGE>
Impact of Inflation and Changing Prices
- - ---------------------------------------
The consolidated financial statements of the Corporation and notes thereto,
presented elsewhere herein, have been prepared in accordance with GAAP, which
require the measurement of financial position and operating results in terms of
historical dollars without considering the change in the relative purchasing
power of money over time due to inflation. The impact of inflation is reflected
in the increased cost of the Corporation's operations. Unlike most industrial
companies, nearly all of the assets and liabilities of the Corporation are
financial. As a result, interest rates have a greater impact on the
Corporation's performance than do the effects of general levels of inflation.
Interest rates do not necessarily move in the same direction or to the same
extent as the prices of goods and services.
Potential One-Time Assessment
- - -----------------------------
The FDIC charges an annual assessment for the insurance of deposits based on
the risk that a particular institution poses to its deposit insurance fund.
Under this risk-based system, a thrift, such as the Bank, pays within a range of
23 cents to 31 cents per $100 of domestic deposits, depending upon the
institution's risk classification. This risk classification is based on an
institution's capital group and supervisory subgroup assignment as determined by
the FDIC. In addition, the FDIC is authorized to increase such deposit insurance
rates, on a semi-annual basis, if it determines that such action is necessary to
cause the balance in the SAIF to reach the designated reserve of 1.25% of
SAIF-insured deposits within a reasonable period of time. Pending legislation
would impose an assessment of approximately 85 basis points on all SAIF-insured
deposits as of March 31, 1995, in order to recapitalize the SAIF Fund to the
designated reserve ratio of 1.25% of its insured deposits. This assessment, if
enacted, would cost the Bank approximately $568,632 (before taxes). In addition,
under the FDICIA, the FDIC may impose special assessments on SAIF members to
repay amounts borrowed from the U.S. Treasury or for any other reason deemed
necessary by the FDIC. Furthermore, due to the disparity between deposit
insurance premiums paid by members of the SAIF (such as the Bank), and members
of the Bank Insurance Fund ("BIF") (e.g., most commercial banks), the Bank may
be at a competitive disadvantage as a result of it being required to pay higher
premiums as a member of the SAIF. The Bank's federal deposit insurance premium
expense for the three months ended June 30, 1996 and June 30, 1995 amounted to
approximately $44,758 and $36,647, respectively.
Recent Legislation - Recapture of Post-1987 Bad-Debt Reserves
- - -------------------------------------------------------------
On August 2, 1996, both the U.S. House of Representatives and the U.S. Senate
passed the Small Business Job Protection Act of 1996. This bill will, if signed
by the President, among other things, equalize the taxation of thrifts and
banks. Previously, thrifts had been able to deduct a portion of their bad-debt
reserves set aside to cover potential loan losses ("bad-debt reserves").
Furthermore, the bill will repeal current law mandating recapture of thrifts'
bad debt reserves if they convert to banks. Bad debt reserves set aside through
1987 will not be taxed, however, any reserves taken since January 1, 1988 will
be taxed over a six year period beginning in 1997. Institutions can delay these
taxes for two years if they meet a residential-lending test. The Bank has
$391,666 of post 1987 bad-debt reserves subject to taxation. Any recapture of
the Bank's bad-debt reserves will have an adverse effect on net income.
10
<PAGE>
Key Operating Ratios
- - --------------------
THE TABLE BELOW SETS FORTH CERTAIN PERFORMANCE RATIOS OF THE BANK FOR THE
PERIODS INDICATED.
<TABLE>
<CAPTION>
FOR THE THREE FOR THE THREE
MONTHS ENDED MONTHS ENDED
JUNE 30, 1996 JUNE 30, 1995
------------- -------------
RETURN ON AVERAGE ASSETS (net income
<S> <C> <C>
divided by average total assets) (1) 0.76% 0.66%
RETURN ON AVERAGE EQUITY (net income
divided by average equity) (1) 9.16% 9.00%
AVERAGE EQUITY TO AVERAGE ASSETS
(average equity divided by average total assets) 8.28% 7.28%
EQUITY TO ASSETS AT PERIOD END 10.60% 7.27%
INTEREST RATE SPREAD (1) (2) 2.84% 2.71%
NET INTEREST MARGIN (net yield on average
interest-earning assets) 3.09% 2.90%
NON-PERFORMING ASSETS TO TOTAL ASSETS N/A N/A
AVERAGE INTEREST-EARNING ASSETS TO
AVERAGE INTEREST-BEARING LIABILITIES 106.26% 104.80%
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES TO NON-INTEREST EXPENSE 128.33% 123.51%
NON-INTEREST EXPENSE TO AVERAGE ASSETS (1) 2.36% 2.29%
</TABLE>
(1) ANNUALIZED.
(2) INTEREST RATE SPREAD REPRESENTS THE DIFFERENCE BETWEEN THE WEIGHTED AVERAGE
YIELD ON INTEREST-EARNING ASSETS AND THE WEIGHTED AVERAGE RATE ON
INTEREST-BEARING LIABILITIES. COMPUTED ON THE BASIS OF AVERAGE MONTHLY
VALUES.
11
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
The Corporation is not involved in any material legal
proceedings at June 30, 1996. The Bank, from time to time,
is a party to litigation, which arises in the ordinary
course of business, such as claims to enforce liens,
claims involving the making and servicing of loans, claims
relating to the hiring or termination of employees, and
other issues incident to the business of the Bank. In the
opinion of management, the resolution of these lawsuits
would not have a material adverse effect on the financial
condition or results of operations of the Bank or the
Corporation.
Item 2. Changes in Securities
---------------------
Not applicable.
Item 3. Defaults Upon Senior Securities
-------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The Annual Meeting of Stockholders of Westwood Financial
Corporation was held on May 14, 1996. The entire Board of
Directors was unanimously elected. Directors Joanne Miller
and John Caruso were elected for a term of one year.
Directors William J. Woods and Paul Becker were elected
for a two year term. Sidney Hagan and William Durgin were
elected as Directors for a three year term.
RD Hunter & Company, LLP was appointed as auditors for the
Company for the fiscal year ending March 31, 1997.
Item 5. Other Information
-----------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
Exhibit 11: Statement regarding computation of
earnings per share.
(b) Reports on Form 8-K - None
12
<PAGE>
WESTWOOD FINANCIAL CORPORATION
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.
Westwood Financial Corporation
Date: By: /s/William J. Woods
------------------ William J. Woods
Chief Executive Officer
(Principal Executive Officer)
Date: By: /s/George E. Niemczyk
------------------ George E. Niemczyk
Controller
(Principal Accounting and Financial Officer)
14
EXHIBIT 11
WESTWOOD FINANCIAL CORPORATION
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
Three Months Ended
June 30, 1996
-------------
Net Income......................... $169,000
========
Primary and fully diluted
Average shares outstanding......... 450,350
========
Per share amount................... $0.37
=====
Earnings per share of common stock for the three months ended June 30, 1995 and
1996 have been determined by dividing net income for the three month period by
the weighted average number of shares of common stock outstanding.
13
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<PERIOD-END> JUN-30-1996
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