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 December 31, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT
For the transition period from ______________ to _______________
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 December 31, 1996: 646,672
<PAGE>
WESTWOOD FINANCIAL CORPORATION
INDEX TO FORM 10-QSB
Page
----
PART 1. FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
Consolidated statements of Financial Condition at December
31, 1996 (unaudited) and March 31, 1996 (audited) 2
Consolidated Statements of Income for the three and nine months
ended December 31, 1996 and 1995 (unaudited) 3
Consolidated Statements of Cash Flows for the three and nine
months ended December 31, 1996 and 1995 (unaudited) 4
Notes to Consolidated Financial Statements (unaudited) 5 & 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Default Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES
<PAGE>
WESTWOOD FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands)
<TABLE>
<CAPTION>
WESTWOOD FINANCIAL WESTWOOD
CORPORATION SAVINGS
CONSOLIDATED BANK(1)
DECEMBER 31, 1996 MARCH 31, 1996
------------------ --------------
(UNAUDITED)
ASSETS
------
<S> <C> <C>
Cash and cash equivalents $ 3,345 $ 5,208
Loans receivable, net 40,181 34,497
Interest receivable on loans 253 218
FHLB stock, at cost 500 440
Mortgage-backed securities held-to-maturity,
(market value of $19,673 and $13,266, respectively) 19,577 13,281
Investment securities held-to-maturity,
(market value of $37,286 and $25,586, respectively) 37,655 25,742
Investment securities available-for-sale,
(at market value) 936 4,422
Interest receivable on investments 671 488
Property and equipment, net 748 750
Goodwill 1,155 1,238
Prepaid expenses and other assets 74 280
--------- ---------
TOTAL ASSETS $ 105,095 $ 86,564
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Liabilities:
Demand deposits $ 13,451 $ 12,618
Savings deposits 71,664 67,622
Interest payable on deposits 142 116
Federal Home Loan Bank advances 10,000 0
Other liabilities 66 81
Dividends payable 32 0
--------- ---------
Total Liabilities 95,355 80,437
--------- ---------
Commitments and Contingencies -- --
Shareholders' equity:
Common stock 65 760
Paid in capital 3,264 4,414
Retained earnings 6,585 1,174
Unearned stock bonus plan shares (92) (128)
Unrealized gain/(loss) on securities available-for-sale (82) (93)
Total Shareholders' Equity 9,740 6,127
--------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 105,095 $ 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>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
-------------------------- -------------------------
1996 1995 1996 1995
------------- ---------- ---------- -----------
WESTWOOD WESTWOOD
FINANCIAL WESTWOOD FINANCIAL WESTWOOD
CORPORATION SAVINGS CORPORATION SAVINGS
CONSOLIDATED BANK CONSOLIDATED BANK
INTEREST INCOME
<S> <C> <C> <C> <C>
Loans receivable $ 773 $ 648 $ 2,213 $ 1,946
Mortgage-backed securities 352 212 801 639
Investment securities, including O/N deposits 614 545 1,772 1,509
Dividends on FHLB stock 8 7 22 24
======== ====== ======== ======
Total interest and dividend income 1,747 1,412 4,808 4,118
INTEREST EXPENSE
Deposits 922 856 2,638 2,456
Borrowings 66 0 66 0
-------- ------ -------- ------
Total interest expense 988 856 2,704 2,456
======== ====== ======== ======
Net interest income 759 556 2,104 1,662
Provision for loan losses 4 4 44 31
-------- ------ -------- ------
Net interest income after
provision for loan losses 755 552 2,060 1,631
NONINTEREST INCOME
Miscellaneous charges and fees 37 24 99 74
Late charges 2 1 5 5
-------- ------ -------- ------
Total noninterest income 39 25 104 79
NONINTEREST EXPENSE
Compensation and employee benefits 174 158 504 465
FDIC insurance and regulatory expenses 54 42 154 120
SAIF Special Assessment 0 0 454 0
Depreciation and amortization 34 39 115 115
Data Processing 40 30 109 87
Occupancy 36 28 93 85
Loss on sale of securities 0 0 17 0
Other 113 75 325 221
-------- ------ -------- ------
Total noninterest expense 451 372 1,771 1,093
-------- ------ -------- ------
INCOME (LOSS) BEFORE INCOME TAXES 343 205 393 617
INCOME TAX EXPENSE 128 70 159 220
-------- ------ -------- ------
NET INCOME (LOSS) $ 215 $ 135 $ 234 $ 397
======== ====== ======== ======
Weighted Average Earnings Per Share $ 0.33 $ NM $ 0.40 $ NM
======== ====== ======== ======
Weighted Average Shares Outstanding 646,672 NM 581,701 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 NINE MONTHS ENDED
December 31, December 31,
------------------ ------------------
1996 1995 1996 1995
------ ------ ------ -------
INTEREST OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
NET INCOME $ 215 $ 135 $ 234 $ 397
======== ======== ========= ========
ADJUSTMENTS TO RECONCILE NET INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation 17 15 51 44
Amortization of good will 24 24 71 71
Amortization of stock bonus plan 12 12 36
Provision for loan losses 4 4 44 31
Loss on sale of securities -- -- 17 --
(INCREASE) DECREASE IN ASSETS:
Interest receivable (96) (18) (218) (106)
Prepaid income taxes 63 20 (18) 31
Prepaid expenses 60 (52) 247 (67)
INCREASE (DECREASE) IN LIABILITIES:
Interest payable 25 30 26 55
Accrued expenses (462) (2) (15) (50)
Taxes payable -- 49 (23) 60
-------- -------- ---------- --------
TOTAL ADJUSTMENTS 353 (82) 218 105
-------- -------- ---------- --------
NET CASH (USED BY) PROVIDED BY
OPERATING ACTIVITIES (138) 217 452 502
-------- -------- ---------- --------
INVESTING ACTIVITIES:
Loans made of net repayments (1,699) (382) (5,728) (905)
Purchase of investments - net of sales (11,549) (1,435) (14,789) (5,733)
Reduction of goodwill -- -- 12 --
Purchases of office property and equipment (7) (31) (49) (54)
-------- -------- ---------- --------
NET CASH USED BY INVESTING ACTIVITIES (13,255) (1,848) (20,554) (6,692)
-------- -------- ---------- --------
FINANCING ACTIVITIES:
Net increase in deposit accounts 1,690 2,596 4,875 8,790
Proceeds from sale of stock and reorganization,
net of conversion costs -- -- 3,428 --
Dividends paid (32) (16) (64) (48)
Loan proceeds received 10,000 -- 10,000 --
-------- -------- ---------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 11,658 2,580 18,239 8,742
-------- -------- ---------- --------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (1,735) 949 (1,863) 2,552
CASH AND CASH EQUIVALENTS - Beginning of period 5,080 6,658 5,208 5,055
-------- -------- ---------- --------
CASH AND CASH EQUIVALENTS - End of period $ 3,345 $ 7,607 $ 3,345 $ 7,607
======== ========= ========== ========
CASH PAID DURING THE PERIOD FOR:
Interest on deposits $ 963 $ 826 $ 2,678 $ 2,401
Income taxes $ 65 $ 0 $ 200 $ 128
</TABLE>
See notes to consolidated financial statements
4
<PAGE>
2
Notes to Unaudited Interim Consolidated Financial Statements
December 31, 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. At December 31, 1996,
the Corporation had 646,672 shares of Common Stock issued and outstanding. 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 periods ended December 31, 1995 and
December 31, 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 the 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 15d-2.
NOTE 2: EARNINGS PER SHARE
Earnings per share for the three and nine months ended December 31, 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 December 31, 1995 was not
meaningful due to the conversion and reorganization effective June 6, 1996.
5
<PAGE>
NOTE 3: SAIF SPECIAL ASSESSMENT
The FDIC has imposed a special assessment on the Savings Association Insurance
Fund members based on the Bank's deposits as of March 31, 1995. The Bank paid an
assessment of $454,000 on November 27, 1996 which was required to be accrued and
expensed for the quarter ended September 30, 1996.
NOTE 4: INCOME TAXES
The Small Business Job Protection Act of 1996 (1996 Act) repealed the
"percentage of income method" for accounting for the provision for bad debts.
The Bank has used this method consistently in developing their bad debt
provision and reserve for income tax purposes through March 31, 1996. The 1996
Act requires the Bank to recapture any addition to this reserve subsequent to
1987. As a result, the Bank has a deferred tax liability of $145,000 which will
be expensed in six annual installments beginning in tax year 1999.
6
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Comparison of Financial Condition at December 31 and March 31, 1996
- -------------------------------------------------------------------
Total assets at December 31, 1996 amounted to $105.0 million, an increase of
$18.5 million, or 21.41% over total assets of March 31, 1996. The increase in
assets includes a $5.7 million, or 16.48%, increase in loans receivable due to
increased loan originations, and a $18.2 million, or 46.66%, increase in
investment securities which includes a $10.0 million investment as part of a
leverage strategy, offset by the sale of $3.5 million of securities available
for sale. In November 1996, the Company purchased a $10.0 million U.S. Agency
security with a term of ten years and a two year call. The purchase was funded
with a two year advance from the Federal Home Loan Bank ("FHLB") of New York to
take advantage of the positive spread of 1.20%. The increase in assets was also
due to the receipt of $3.6 million in net proceeds received in connection with
the mutual-to-stock conversion of the Bank's mutual holding company and
simultaneous Stock Offering completed in June 1996 ("Stock Offering").
Total liabilities and shareholders' equity amounted to $105.0 million at
December 31, 1996, an increase of $18.5 million, or 21.41%, over total
liabilities and shareholders' equity at March 31, 1996. The increase in
liabilities was due primarily to a $4.9 million net increase in deposits and the
$10.0 million FHLB advance referred to above as an investment strategy. The net
increase in shareholder's equity of $3.6 million is the result of the proceeds
of the Stock Offering, as well as $234,000 net income for the nine months ended
December 31, 1996. See also "Item 5. Other Information."
The Bank had no non-performing loans at December 31, 1996 or at March 31, 1996.
7
<PAGE>
Comparison of Operating Results For the Three Months Ended September 30, 1996
- --------------------------------------------------------------------------------
and 1995
- --------
General. Net income for the three month period ended December 31, 1996 was
$215,000 compared to a net income of $135,000 for the three month period ended
December 31, 1995. This increase was due primarily to increased interest income
offset somewhat by interest and non-interest expenses.
Interest Income. Interest income increased $335,000, or 23.73%, from $1.4
million for the three month period ended December 31, 1995 to $1.7 million for
the three months ended December 31, 1996. Interest income from mortgage loans
increased $125,000 due to increased lending. Interest on security investments
and mortgaged-backed securities increased $209,000 due to increased average
balances of such investments funded by increased deposits as well as proceeds
from the Stock Offering and the $10.0 million investment from the leverage
strategy.
Interest Expense. Total interest expense increased from $856,000 for the three
month period ended December 31, 1995 to $988,000 for the three month period
ended December 31, 1996. This increase was due primarily to an increase in the
average balance of deposits from $78.6 million during the three months ended
December 31, 1995 to $85.1 million during the three months ended December 31,
1996 and $66,000 during the three months ended interest expense on the $10.0
million FHLB advance.
Net Interest Income. Net interest income increased $203,000, or 36.51%, for the
three months ended December 31, 1996 as compared to the same period ended
December 31, 1995. This was primarily due to increased revenue from the
additional interest-earning assets acquired through the investment of the Stock
Offering proceeds, the $10.0 million investment from the leverage strategy and
the increase in deposits. In addition, net interest margin (net yield) increased
from 2.75% for the quarter ended December 31, 1995 to 3.22% for the similar 1996
period.
Provision for Loan Losses. Provisions for the loan losses remained the same,
$4,000, for the periods ended December 31, 1995 and December 31, 1996.
Delinquencies remained relatively stable during these periods. 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.
Non-Interest Income. Non-interest income increased $14,000, or 56.00%, during
the period ended December 31, 1996, as compared to the same period ended
December 31, 1995. This increase was primarily due to increased fee income from
additional checking accounts and ATM fees.
Non-Interest Expense. Non-interest expense increased $79,000 from $372,000 for
the three months ended December 31, 1995 to $451,000 for the three months ended
December 31, 1996. Operating costs incurred as a public company including legal
and consulting fees and auditing expenses increased $14,000 during the period.
The increase was also due to additional costs of an added ATM facility,
increases in data processing fees, increased loan processing costs due to higher
loan volume, additional compensation due to increased staff and increased FDIC
premiums due to higher deposit balances.
Income Tax Expense. Income tax expenses increased $58,000 from $70,000 for the
three month period ended December 31, 1995 to $128,000 for the three month
period ended December 31, 1996 due to increased earnings.
8
<PAGE>
Results of Operations - Comparison of Nine Months Ended December 31, 1996 and
- --------------------------------------------------------------------------------
December 31, 1995
- -----------------
General. Net income for the nine month period ended December 31, 1996 was
$234,000 compared to $397,000 for the nine month period ended December 31, 1995.
This decrease reflects a $291,000 net charge for a special assessment by the
FDIC for the SAIF. A loss of $17,000 on the sale of a mutual fund also
contributed to the decrease in net income. The mutual fund sale proceeds were
reinvested in higher yielding adjustable mortgage-backed securities.
Interest Income. Total interest income increased to $4.8 million for the nine
months ended December 31, 1996 from $4.1 million for the nine months ended
December 31, 1995. This increase of $700,000, or 16.76%, was due primarily to an
increase of $267,000 in interest earned on loans receivable due to increased
lending, and and increase of $423,000 in interest earned on security investments
and mortgage-backed securities due to higher yields and increased average
balances of such investments funded by increased deposits, receipts from the
Stock Offering, as well as, the $10.0 million investment mentioned previously.
Interest Expense. Total interest expense increased from $2.5 million for the
nine months ended September 30, 1995 to $2.7 million for the nine months ended
December 31, 1996. This increase was due primarily to an increase in the average
balance of deposits from $78.6 million during the nine months December 31, 1995
to $85.1 million during the nine months ended December 31, 1996.
Net Interest Income. Net interest income increased $442,000, or 26.59%, for the
nine months ended December 31, 1996 as compared to the same period ended
December 31, 1995. This was due to the increased revenue from interest earned on
the additional interest earning assets acquired through the investment of the
proceeds of the Stock Offering, the increase in deposits and the $10.0 million
investment.
Provision for Loan Losses. The provision for losses on loans was increased to
$44,000 for the nine months ended December 31, 1996, compared to $31,000 for the
nine months ended December 31, 1995, due to management's decision to increase
the provision due to the increased volume of loan activity.
Delinquencies remained relatively stable during these periods.
Non-Interest Income. Non-interest income increased $25,000 from $79,000 for the
nine months ended December 31, 1995 to $104,000 for the nine months ended
December 31, 1996, primarily due to ATM fees and an increase in personal and
business checking accounts which resulted in increased fee income.
Non-Interest Expense. Non-interest expense increased $700,000 from $1.1 to $1.8
million during the comparable periods ending December 31, 1995 and 1996,
respectively. This increase was primarily due to the one-time SAIF special
assessment of $454,000 (before taxes). Non-interest expense also increased due
to a $17,000 loss on the sale of a mutual fund. Increased loan processing costs
attributed to higher loan volume and additional compensation due to additional
staff. The Corporation also experienced additional costs from an added ATM
facility and increased advertising and promotional activities. Other
non-interest expenses, including legal, consulting, stock registrar, and
auditing expenses, increased $45,000, due to the added costs of being a public
company.
Income Tax Expense. Income tax expense decreased $61,000 from $220,000 for the
nine month period ended December 31, 1995 to $159,000 for the nine month period
ended December 31, 1996 due to decreased earnings.
9
<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 December 31, 1996, the Bank had
$10.0 million in borrowed funds from the FHLB. 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 December 31, 1996, the Bank had mortgage commitments
to fund loans of $900,000. Also, at December 31, 1996, there were commitments on
unused lines of credit relating to home equity loans of $1.8 million.
Certificates of deposit scheduled to mature in one year or less at December 31,
1996 totaled $47.9 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 December 31, 1996, the Bank's total liquidity was 69.81%.
Capital Compliance
- ------------------
The following table sets forth the institution's capital position at December
31, 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.
At December 31, 1996
Amount % of Assets
GAAP Capital: $ 9,740 9.27%
======== ====
Leverage Capital:(1)(2)
Actual Leverage Capital $ 6,851 6.96%
Leverage Capital Requirement 2,954 3.00%
-------- ----
Excess $ 3,897 3.96%
======== ====
Tier 1 Capital: (1)(3)
Actual Tier 1 Capital $ 6,851 17.04%
Tier 1 Capital Requirement 1,608 4.00%
-------- ----
Excess $ 5,243 13.04%
======== =====
Total Risk-Based Capital:(1)(3)
Actual Risk-Based Capital $ 7,065 17.57%
Risk-Based Capital Requirement 3,216 8.00%
-------- ----
Excess $ 3,849 9.57%
======== ====
(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
$98,450.
(3) Tier 1 Capital and Total Risk-Based Capital are computed as a percentage of
Total Risk-Weighted Assets of $40,201.
10
<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.
Key Operating Ratios
- --------------------
THE TABLE BELOW SETS FORTH CERTAIN PERFORMANCE RATIOS OF THE CORPORATION OR THE
BANK FOR THE PERIODS INDICATED.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
-------------------- --------------------
1996 1995 1996 1995
---- ---- ---- ----
RETURN ON AVERAGE ASSETS (net income
<S> <C> <C> <C> <C>
divided by average total assets) (1) 0.84% 0.64% 0.33%(3) 0.65%
RETURN ON AVERAGE EQUITY (net income
divided by average equity) (1) 8.91% 9.10% 3.51%(3) 9.16%
AVERAGE EQUITY TO AVERAGE ASSETS 9.50% 7.08% 9.43% 7.16%
(average equity divided by average total assets)
EQUITY TO ASSETS AT PERIOD END 9.27% 7.05% 9.27% 7.05%
INTEREST RATE SPREAD (1) (2) 2.61% 2.57% 2.76% 2.66%
NET INTEREST MARGIN (net yield on average
interest-earning assets) 3.22% 2.75% 3.17% 2.84%
NON-PERFORMING ASSETS TO TOTAL ASSETS N/A N/A N/A N/A
AVERAGE INTEREST-EARNING ASSETS TO
AVERAGE INTEREST-BEARING LIABILITIES 116.40% 104.43% 110.55% 104.40%
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES TO NON-INTEREST EXPENSE 130.39% 124.88% 106.73%(3) 124.22%
NON-INTEREST EXPENSE TO AVERAGE ASSETS (1) 1.77% 1.77% 2.50%(3) 1.80%
</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.
(3) INCLUDES EFFECT OF ONE-TIME SPECIAL ASSESSMENT TO RECAPITALIZE THE SAIF.
11
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Corporation was not involved in any material legal
proceedings at December 31, 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
Not applicable.
Item 5. Other Information
On January 10, 1997, the Company completed a "Modified Dutch
Auction" self-tender offering which commenced on November
25, 1996. A total of 1,431 shares were purchased at a price
of $15.00 per share. The aggregate purchase price and cost
associated with the offering will reduce total stockholders'
equity by approximately $ 47,000 during the quarter ending
March 31, 1997.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11: Statement regarding computation of earnings
per share.
Exhibit 27: Financial Data Schedule (included with
electronic filing only)
(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: February 14, 1997 By: /s/ William J. Woods
------------------- --------------------------------
William J. Woods
Chief Executive Officer
(Principal Executive Officer)
Date: February 14, 1997 By: /s/ George E. Niemczyk
------------------- --------------------------------
George E. Niemczyk
Controller
(Principal Accounting and Financial
Officer)
EXHIBIT 11
WESTWOOD FINANCIAL CORPORATION
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
Three Months Ended Nine Months Ended
December 31, 1996 December 31, 1996
Net Income.................... $215,000 $234,000
======== ========
Primary and fully diluted
Average shares outstanding.... 646,672 581,701
======== ========
Per share amount.............. $0.33 $0.40
======== =======
Earnings per share of common stock for the three and nine months ended December
31, 1996 have been determined by dividing net income for the nine month period
by the weighted average number of shares of common stock outstanding.
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> DEC-31-1996
<CASH> 342
<INT-BEARING-DEPOSITS> 3,003
<FED-FUNDS-SOLD> 1,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 936
<INVESTMENTS-CARRYING> 57,232
<INVESTMENTS-MARKET> 56,959
<LOANS> 40,525
<ALLOWANCE> 213
<TOTAL-ASSETS> 105,095
<DEPOSITS> 85,115
<SHORT-TERM> 0
<LIABILITIES-OTHER> 10,240
<LONG-TERM> 0
0
0
<COMMON> 65
<OTHER-SE> 9,849
<TOTAL-LIABILITIES-AND-EQUITY> 105,095
<INTEREST-LOAN> 2,213
<INTEREST-INVEST> 2,595
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 4,808
<INTEREST-DEPOSIT> 2,638
<INTEREST-EXPENSE> 66
<INTEREST-INCOME-NET> 2,104
<LOAN-LOSSES> 44
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,771
<INCOME-PRETAX> 393
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 234
<EPS-PRIMARY> 0.40
<EPS-DILUTED> 0.40
<YIELD-ACTUAL> 2.83
<LOANS-NON> 0
<LOANS-PAST> 134
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 213
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 213
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
