SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] Annual report pursuant to section 13 or 15 (d) of the Securities Exchange
Act of 1934
For the fiscal year ended March 31, 2000
--------------
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from to .
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Commission File No. 0-22535
SISTERSVILLE BANCORP, INC.
----------------------------------------------------
(Name of Small Business Issuer in Its Charter)
Delaware 31-1516424
------------------------------------------ -------------------
(State or Other Jurisdiction of Incorporation I.R.S. Employer or
Identification No. Organization)
726 Wells Street, Sistersville, West Virginia 26175
-------------------------------------------------- -------------------
(Address of Principal Executive Offices (Zip Code)
Issuer's Telephone Number, Including Area Code: (304) 652-3671
--------------
Securities registered under to Section 12(b) of the Exchange Act: None
----
Securities registered under to Section 12(g) of the Exchange Act:
Common Stock, par value $0.10 per share
---------------------------------------
(Title of Class)
Check whether the issuer: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
YES X NO .
--- ---
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $2,284,159.
The aggregate market value of the voting stock held by non-affiliates
of the registrant, based on $11.00 per share sale price of the registrant's
Common Stock on April 30, 2000, was $4,562,173.
As of June 2, 2000, there were 538,739 outstanding shares of the
registrant's Common Stock.
Transition Small Business Disclosure Format (check one): YES NO X
--- ---
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Annual Report to Stockholders for the Fiscal Year
ended March 31, 2000 (the "Annual Report"). (Part II)
2. Portions of the Proxy Statement for the Annual Meeting of Stockholders
for the Fiscal Year ended March 31, 2000. (Part III)
<PAGE>
PART I
Item 1. Description of Business
-------------------------------
Forward Looking Statements
Sistersville Bancorp, Inc. (the "Company") may from time to time make
written or oral "forward-looking statements", including statements contained in
the Company's filings with the Securities and Exchange Commission (including
this Annual Report on Form 10-KSB and the exhibits thereto), in its reports to
stockholders and in other communications by the Company, which are made in good
faith by the Company pursuant to the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995.
These forward-looking statements involve risks and uncertainties, such
as statements of the Company's plans, objectives, expectations, estimates and
intentions, that are subject to change based on various important factors (some
of which are beyond the Company's control). The following factors, among others,
could cause the Company's financial performance to differ materially from the
plans, objectives, expectations, estimates and intentions expressed in such
forward-looking statements: the strength of the United States economy in general
and the strength of the local economies in which the Company conducts
operations; the effects of, and changes in, trade, monetary and fiscal policies
and laws, including interest rate policies of the Board of Governors of the
Federal Reserve System, inflation, interest rate, market and monetary
fluctuations; the timely development of and acceptance of new products and
services of the Company and the perceived overall value of these products and
services by users, including the features, pricing and quality compared to
competitors' products and services; the willingness of users to substitute
competitors' products and services for the Company's products and services; the
success of the Company in gaining regulatory approval of its products and
services, when required; the impact of changes in financial services' laws and
regulations (including laws concerning taxes, banking, securities and
insurance); technological changes, acquisitions; changes in consumer spending
and savings habits; and the success of the Company at managing the risks
involved in the foregoing.
The Company cautions that the foregoing list of important factors is
not exclusive. The Company does not undertake to update any forward-looking
statement, whether written or oral, that may be made from time to time by or on
behalf of the Company.
Business of the Company
The Company is a Delaware corporation organized in March 1997 at the
direction of First Federal Savings and Loan Association of Sistersville (the
"Association") to acquire all of the capital stock that the Association issued
in its conversion from the mutual to stock form of ownership (the "Conversion").
On June 25, 1997, the Conversion was completed and the Association became a
wholly owned subsidiary of the Company and changed its name to First Federal
Savings Bank (the "Bank"). The Company is a unitary savings and loan holding
company which, under existing laws, generally is not restricted in the types of
business activities in which it may engage provided that the Bank retains a
specified amount of its assets in housing-related investments. The Company
conducts no significant business or operations of its own other than holding all
of the outstanding stock of the Bank and investing the Company's portion of the
net proceeds obtained in the Conversion.
The Bank is a federally-chartered stock savings bank headquartered in
Sistersville, West Virginia. The Bank is subject to examination and
comprehensive regulation by the Office of Thrift Supervision ("OTS") and its
deposits are federally insured by the Savings Association Insurance Fund
("SAIF"). The
2
<PAGE>
Bank is a member of and owns capital stock in the FHLB of Pittsburgh, which is
one of the 12 regional banks in the FHLB System. Unless otherwise stated, the
term "Bank" refers to both the Bank's and Company's activities on a consolidated
basis.
The Bank operates a traditional savings bank business, attracting
deposit accounts from the general public and using those deposits, together with
other funds, primarily to originate and invest in loans secured by single-family
residential real estate.
Competition
The Bank is one of many financial institutions serving its market area
which consists of Tyler, Pleasants, Wetzel and Wood Counties in West Virginia.
The competition for deposit products comes from other insured financial
institutions such as commercial banks, thrift institutions, credit unions, and
multi-state regional banks in the Bank's market area. Deposit competition also
includes a number of insurance products sold by local agents and investment
products such as mutual funds and other securities sold by local and regional
brokers. Loan competition varies depending upon market conditions and comes from
other insured financial institutions such as commercial banks, thrift
institutions, credit unions, multi-state regional banks, and mortgage companies.
Lending Activities
Analysis of Loan Portfolio. Set forth below is selected data relating
to the composition of the Company's loan portfolio by type of loan and type of
security on the dates indicated:
<TABLE>
<CAPTION>
At March 31,
---------------------------------------------------
2000 1999
-------------------------- -----------------------
$ % $ %
-------- --------- -------- ---------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Type of Loans:
-------------
Real Estate Loans:
Construction............................. $ 500 1.92% $ 119 0.48%
1-4 family............................... 24,540 94.44 23,682 95.16
Multi-family............................. -- 0.00 -- 0.00
Commercial............................... -- 0.00 -- 0.00
Consumer loans:
Automobiles.............................. 569 2.19 699 2.81
Savings accounts......................... 91 0.35 100 0.40
Other.................................... 10 0.04 18 0.07
Commercial................................. 276 1.06 269 1.08
------ ------ ------ -------
Total loans................................ 25,986 100.00% 24,887 100.00%
====== =======
Less:
Loans in process........................... (381) (343)
Deferred loan origination fees and costs... (41) (52)
Allowance for possible loan losses......... (175) (172)
------ ------
Total loans, net......................... $25,389 $24,320
====== ======
</TABLE>
3
<PAGE>
Loan Maturity Tables
The following table sets forth the maturity of the Bank's loan
portfolio at March 31, 2000. The table does not include prepayments or scheduled
principal repayments. Prepayments and scheduled principal repayments on loans
totaled $3.2 million and $5.0 million for the years ended March 31, 2000 and
1999, respectively. All mortgage loans are shown as maturing based on
contractual maturities.
<TABLE>
<CAPTION>
1-4 Family
Real Estate
Mortgage Construction Consumer Commercial Total
-------- ------------ -------- ---------- ----------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Non-performing $ -- $ -- $ -- $ -- $ --
Amounts Due:
Within 3 months................... -- -- 45 188 233
3 months to 1 Year................ 33 -- 39 -- 72
After 1 year:
1 to 3 years.................... 126 -- 223 -- 349
3 to 5 years.................... 190 -- 347 -- 537
5 to 10 years................... 3,607 -- 16 -- 3,623
10 to 20 years.................. 14,074 -- -- 88 14,162
Over 20 years................... 6,510 500 -- -- 7,010
------ ------- ------- ------ ------
Total amount due.................. $24,540 $ 500 $ 670 $ 276 $25,986
------ ------- ------- ------ ------
Less:
Allowance for loan loss........... 140 -- 35 -- 175
Loans in process.................. 348 33 -- -- 381
Deferred loan fees................ 41 -- -- -- 41
------ ------- ------ ------ ------
Loans receivable, net............. $24,011 $ 467 $ 635 $ 276 $25,389
====== ======= ====== ====== ======
</TABLE>
The following table sets forth the dollar amount of all loans due after
March 31, 2001, which have pre-determined interest rates and which have floating
or adjustable interest rates.
Floating or
Fixed Rates Adjustable Rates Total
----------- ---------------- ---------
(In Thousands)
1-4 family............ $24,507 $ -- $24,507
Commercial............ 88 -- 88
Construction.......... 500 -- 500
Consumer.............. 586 -- 586
------ ----------- ------
Total............... $25,681 $ -- $25,681
====== =========== ======
4
<PAGE>
The following table shows the total loan originations,
repayments, and sales activity by the Bank for the periods indicated:
Years Ended March 31,
------------------------------
2000 1999
---------- ----------
Total gross loans receivable
at beginning of period............. $24,887 $24,351
------ ------
Loans originated:
1-4 family residential.............. 2,844 4,329
Construction loans.................. 1,173 745
Consumer loans...................... 289 311
Commercial business loans........... 20 185
------- ------
Total loans originated................ 4,326 5,570
Loan principal repayments............. (3,225) (5,034)
Charge-offs........................... (2) -
------ ------
Net loan activity..................... 1,099 536
------ ------
Total gross loans receivable
at end of period................... $25,986 $24,887
======= =======
One- to Four-Family Residential Loans. The Bank's primary lending
activity consists of the origination of one- to four-family fixed-rate
residential mortgage loans secured by property located in the Bank's primary
market areas. The Bank also originates construction permanent loans on one- to
four-family residences. The Bank generally originates owner-occupied one- to
four-family residential mortgage loans in amounts up to 80% of the lesser of the
appraised value or selling price of the mortgaged property without requiring
mortgage insurance. The Bank may originate a mortgage loan in an amount up to
90% of the lesser of the appraised value or selling price of a mortgaged
property, however, mortgage insurance is required for the amount in excess of
80% of such value. The Bank generally retains all of the mortgage loans that it
originates. Fixed-rate loans can have maturities of up to 30 years depending on
the terms of the loan.
Consumer Loans. The Bank offers consumer loans in order to provide a
wider range of financial services to its customers. Federal savings associations
are permitted to make secured and unsecured consumer loans up to 35% of their
assets. In addition, savings associations have lending authority above the 35%
limitation for certain consumer loans, such as home improvement, credit card,
education, automobile, and savings account or passbook loans. Consumer loans
secured by deposit accounts are made at an interest rate that is 2% above the
rate paid on the securing deposit account. Consumer and other loans totalled
$670,000, or 2.61% of the Bank's total loans, of which loans secured by
automobiles totalled $569,000 or 2.2% of the Bank's total loans at March 31,
2000. The Bank originates automobile loans with terms of up to six years for
both new and used automobiles. Most of these automobile loans are originated
directly by the Bank.
Commercial Loans. The Bank had two commercial loan participations as of
March 31, 2000, totaling $276,000. These loans were made to a local fire
department and a local municipality for a commercial line of credit.
5
<PAGE>
Construction Lending. The Bank makes construction loans primarily for
the construction of single-family dwellings. The Bank will permit owner-built
construction loans. The aggregate outstanding balance of such loans on March 31,
2000, was $500,000, representing 1.9% of the Bank's total loan portfolio. All of
these loans were made to persons who are constructing properties for the purpose
of occupying them. Loans made to individual property owners are
"construction-permanent" loans which generally provide for the payment of
interest only during a construction period, after which the loans convert to a
permanent loan at original contractual rates.
Loan Underwriting Risks. While consumer or other loans provide benefits
to the Bank's asset/liability management program by reducing the Bank's exposure
to interest rate changes, due to their generally shorter terms, and producing
higher yields, such loans may entail significant additional credit risks
compared to owner-occupied residential mortgage lending. However, the Bank
believes that the higher yields and shorter terms compensate the Bank for the
increased credit risk associated with such loans.
In addition, due to the type and nature of the collateral, and, in some
cases the absence of collateral, consumer lending generally involves more credit
risk when compared with one- to four-family residential lending. Consumer
lending collections are typically dependent on the borrower's continuing
financial stability, and thus, are more likely to be adversely effected by job
loss, divorce, illness, and personal bankruptcy. In most cases, any repossessed
collateral for a defaulted consumer loan will not provide an adequate source of
repayment of the outstanding loan balance.
Construction lending is generally considered to involve a higher level
of credit risk than one- to four-family residential lending since the risk of
loss on construction loans is dependent largely upon the accuracy of the initial
estimate of the individual property's value upon completion of the project and
the estimated cost (including interest) of the project. If the cost estimate
proves to be inaccurate, the Bank may be required to advance funds beyond the
amount originally committed to permit completion of the project.
Loan Approval Authority and Underwriting. The Bank has established
various lending limits for its officers and maintains a Loan Committee. All
mortgage loan applications are reviewed and approved by the Board of Directors,
which meets twice per month. The Loan Committee may approve mortgage loans but
such action must be ratified at a subsequent Board meeting. The President and
Vice President of the Bank each have the authority to approve all applications
for consumer loans up to $25,000 for non-real estate secured loans and up to
$2,000 for unsecured loans.
Loan Commitments. At March 31, 2000, the Bank had $397,000 in
outstanding commitments to originate loans and $381,000 in undisbursed funds
related to construction loans. Management believes that less than 1% of loan
commitments expire.
Loans to One Borrower. Regulations limit loans to one borrower or
affiliated group of borrowers in an amount equal to 15% of unimpaired capital
and unimpaired surplus of the Bank. The Bank is authorized to lend up to an
additional 10% of unimpaired capital and unimpaired surplus if the loan is fully
secured by readily marketable collateral. At March 31, 2000, the Bank's lending
limit for loans to one borrower was approximately $1.2 million.
At March 31, 2000, the largest loan of the Bank was a $257,000 loan
that was secured by the borrower's residence.
6
<PAGE>
Non-Performing and Problem Assets
Loan Delinquencies. Loans are reviewed on a monthly basis and are
placed on non-accrual status when considered doubtful of collection by
management. Generally, loans past due 90 days or more as to principal or
interest are placed on non-accrual status. Interest accrued and unpaid at the
time a loan is placed on non-accrual status is charged against interest income.
Subsequent cash payments are generally applied to interest income unless, in the
opinion of management, the collection of principal and interest is doubtful. In
those cases, subsequent cash payments would be applied to principal. At March
31, 2000, there were no nonaccrual loans or loans past due greater than 90 days.
Non-performing Assets
The following table sets forth information regarding non-accrual loans,
real estate owned, and certain other repossessed assets and loans. As of the
dates indicated, the Bank had no loans categorized as troubled debt
restructuring within the meaning of SFAS 15.
March 31,
----------------
2000 1999
------ ------
(Dollars in Thousands)
Loans accounted for on a non-accrual basis:
Mortgage loans:
One- to four-family................................ $ -- $ --
Multi-family....................................... -- --
Commercial......................................... -- --
Construction....................................... -- --
Consumer............................................. -- 2
Commercial........................................... -- --
---- ----
Total non-accrual loans.............................. -- 2
---- ----
Accruing loans greater than 90 days past due:
Mortgage loans:
One- to four-family................................ -- --
Multi-family....................................... -- --
Commercial......................................... -- --
Construction....................................... -- --
Consumer............................................. -- --
Commercial........................................... -- --
---- ----
Total accruing loans greater than 90 days past due... -- --
---- ----
Total non-performing loans........................... -- 2
Real estate acquired in settlement of loans.......... -- --
---- ----
Other non-performing assets.......................... -- 2
==== ====
Total non-performing loans to total loans............ --% 0.01%
==== ====
Total non-performing loans to total assets........... --% 0.01%
==== ====
Total non-performing assets to total assets.......... --% 0.01%
==== ====
7
<PAGE>
Interest income that would have been recorded on loans accounted for on
a non-accrual basis under the original terms of such loans was $-0- for the year
ended March 31, 2000, and $-0- was collected and included in the Bank's interest
income from non-accrual loans for the year ended March 31, 2000.
Classified Assets
OTS Regulations provided for a classification system for problem assets
of insured institutions. Under this classification system, problem assets of
insured institutions are classified as "substandard," "doubtful," or "loss." An
asset is considered substandard if it is inadvertently protected by the current
equity and paying capacity of the obligor or of the collateral pledged, if any.
Substandard assets include those characterized by the "distinct possibility"
that the insured institution will sustain "some loss" if the deficiencies are
not corrected. Assets classified as doubtful have all the weaknesses inherent in
those classified as substandard, with the added characteristics that the
weaknesses present make "collection or liquidation in full," on the basis of
currently existing facts, conditions, and values, "highly questionable and
improbable." Assets classified as loss are those considered "uncollectible" and
of such little value that their continuance as assets without the establishment
of a specific loss reserve is not warranted. Assets may be designated "special
mention" because a weakness that does not currently warrant classification in
one of the aforementioned categories.
When an insured institution classifies problem assets as either
substandard or doubtful, it may establish general allowances for loan losses in
an amount deemed prudent by management. General allowances represent loss
allowances which have been established to recognize the inherent risk associated
with lending activities, but which, unlike specific allowances, have not been
allocated to particular problem assets. When an insured institution classifies
problem assets as loss, it is required either to establish a specific allowance
for losses equal to 100% of that portion of the asset and the amount of its
valuation allowances is subject to review by the OTS, which may order the
establishment of additional general or specific loss allowances. A portion of
general loss allowances established to cover possible losses related to assets
classified as substandard or doubtful may be included in determining an
institutions' regulatory capital, while specific valuation allowances for loan
losses generally do not qualify as regulatory capital.
On the basis of management's review of its assets, at March 31, 2000,
the Bank had not classified any of its assets as substandard, doubtful, loss or
special mention.
8
<PAGE>
Analysis of Allowance for Loan Losses
The following table sets forth information with respect to the Bank's
allowance for loan losses at the dates indicated:
At March 31,
------------------------
2000 1999
------- --------
Total gross loans outstanding....................... $25,986 $24,887
====== ======
Average gross loans outstanding..................... $25,580 $24,810
====== ======
Allowance balances (at beginning of period)......... $ 172 $ 169
Provision (credit):
Residential....................................... 2 2
Commercial real estate............................ -- --
Consumer.......................................... 2 1
Charge-offs
Residential....................................... -- --
Consumer.......................................... 1 --
Commercial........................................ -- --
Recoveries:
Residential....................................... -- --
Commercial real estate............................ -- --
Consumer.......................................... -- --
---- ----
Allowance balance (at end of period) 175 172
=== ===
Allowance for loan losses as
a percentage of total loans outstanding........... 0.67% 0.69%
Net loans charged off as a percentage
of average loans outstanding...................... 0.00% 0.00%
--------------------
(1) Non-performing assets include non-accrual loans, accruing loans more than
90 days past due and real estate acquired in settlement of loans.
Allocation of the Allowance for Loan Losses
The following table sets forth the allocation of the allowance for loan
losses by category as prepared by the Bank. In management's opinion, the
allocation has, at best, a limited utility. It is based on management's
assessment as of a given point in time of the risk characteristics of each of
the component parts of the total loan portfolio and is subject to changes as and
when the risk factors of each such component part change. The allocation is not
indicative of either the specific amounts or the loan categories in which future
charge-offs may be taken, nor should it be taken as an indicator of future loss
trends. In addition, by presenting the allocation, management does not mean to
imply that the allocation is exact or that the allowance has been precisely
determined from the allocation. The allocation of the allowance to each category
is not necessarily indicative of future loss in any particular category and does
not restrict the use of the allowance to absorb losses in any category.
9
<PAGE>
At March 31,
--------------------------------------------------------
2000 1999
---------------------------- ---------------------------
Percent of Percent of
Loans in Each Loans in Each
Category Category
Amount to Total Loans Amount to Total Loans
------ -------------- ------ --------------
(Dollars in Thousands)
Mortgages:
One- to four-family $140 94.44% $138 95.16%
Construction -- 1.92 -- 0.48
Consumer 35 2.58 34 3.28
Commercial -- 1.06 -- 1.08
--- ------- --- -------
Total $175 100.00% $172 100.00%
=== ======= === =======
Investment Activities
Investment Securities. The Bank is required under federal regulations
to maintain a minimum amount of liquid assets which may be invested in specified
short term securities and certain other investments. The Bank classifies its
investments as securities available for sale or investments securities held to
maturity in accordance with SFAS No. 115.
The Bank's securities available for sale and investment securities held
to maturity portfolios at March 31, 2000 did not contain securities of any
issuer with an aggregate book value in excess of 10% of the Bank's equity,
excluding those issued by the United States Government or its agencies. As of
March 31, 2000, the Bank's investment portfolio was comprised of FHLB stock,
FHLMC stock, municipal securities, U.S. federal agency securities and
mortgage-backed securities with market value of $4.4 million.
Mortgage-Backed Securities. To supplement lending activities, the Bank
has invested in residential mortgage-backed securities. Mortgage-backed
securities can serve as collateral for borrowings and, through repayments, as a
source of liquidity. Mortgage-backed securities represent a participation
interest in a pool of single-family or other type of mortgages, the principal
and interest payments on which are passed from the mortgage originators, through
intermediaries (generally quasi-governmental agencies) that pool and repackage
the participation interests in the form of securities, to investors such as the
Bank. These quasi-governmental agencies guarantee the payment of principal and
interest to investors.
The Bank's mortgage-backed securities were classified as held to
maturity and available for sale at March 31, 2000, and were issued by the
Government National Mortgage Bank ("GNMA") and Federal Home Loan Mortgage
Corporation ("FHLMC"), representing participating interests in direct
pass-through pools of long-term mortgage loans originated and serviced by the
issuers of the securities. Expected maturities will differ from contractual
maturities due to scheduled repayments and because borrowers may have the right
to call or prepay obligations with or without prepayment penalties.
At March 31, 2000, the Bank held mortgage-backed securities in its
investment securities held to maturity portfolio with an amortized cost of
$238,000 and in its available for sale portfolio with an amortized cost of
$321,000. The average yield on mortgage-backed securities at March 31, 2000, was
6.99%.
10
<PAGE>
Investment Portfolio. The following table sets forth the carrying value
of the Bank's investments.
At March 31,
-------------------
2000 1999
-------- -------
(Dollars in Thousands)
Investment Securities:
U.S.Agency Obligations ........................ $1,911 $2,237
Municipal Securities .......................... 810 886
FHLMC Stock ................................... 837 1,101
------ ------
Total Investment Securities .................. 3,558 4,224
Interest-bearing Deposits ....................... 248 1,844
FHLB Stock ...................................... 236 226
Mortgage-backed Securities ...................... 238 351
Mortgage-backed Securities Held For Sale ........ 321 458
------ ------
Total Investments ............................ $4,601 $7,103
====== ======
<PAGE>
The following table sets forth information regarding the carrying
values, and weighted average yields and maturities of the Bank's investment
securities portfolio at March 31, 2000. The following table does not take into
consideration the effects of scheduled repayments or the effects of possible
prepayments.
<TABLE>
<CAPTION>
As of March 31, 2000
------------------------------------------------------------------------------------------------
One to Five to More than
One Year or Less Five Years Ten Years Ten Years Total Investment Securities
---------------- ---------------- ---------------- ----------------- ---------------------------
Carrying Average Carrying Average Carrying Average Carrying Average Carrying Average Market
Value Yield Value Yield Value Yield Value Yield Value Yield Value
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Securities:
U.S.agency securities
available for sale(1)........... $ -- --% $861 6.21% $573 6.66% $ 476 7.77% $1,910 6.73% $1,910
Municipal securities(1)(4)........ -- -- -- -- -- -- 811 7.19 811 7.19 811
FHLMC Stock(1).................... 838 1.38 -- -- -- -- -- -- 838 1.38 838
Interest-bearing deposits in
other financial institutions(2). 248 6.20 -- -- -- -- -- -- 248 6.20 248
FHLB Stock(2)..................... 236 6.69 -- -- -- -- -- -- 236 6.69 236
----- ---- --- ---- --- ---- ---- ---- ---- ---- -----
$1,322 3.24% $861 6.21% $573 6.66% $1,287 7.40% $4,043 5.68% $4,043
Mortgage-backed securities(3)..... 4 9.05 52 8.30 10 8.54 492 6.80 558 6.99 561
----- ---- --- ---- --- ---- ---- ---- ----- ---- -----
Total........................... $1,326 3.54% $913 6.33% $583 7.98% $1,779 7.23% $4,601 5.84% $4,604
====== ==== ==== ==== ==== ==== ====== ==== ====== ==== ======
</TABLE>
--------------------
(1) Recorded at market value.
(2) Recorded at cost.
(3) Recorded at cost, except for $321,000 in available for sale securities with
a maturity of more than ten years which are recorded at market value.
(4) Average yield is calculated on the tax equivalent yield.
12
<PAGE>
Sources of Funds
General. Deposits are the major source of the Bank's funds for lending
and other investment purposes. The Bank also derives funds from the amortization
and prepayment of loans, sales, maturities, and calls of securities, and
operations. Scheduled loan principal repayments are a relatively stable source
of funds, while deposit inflows and outflows and loan prepayments are
significantly influenced by general interest rates and market conditions.
Deposits. Consumer and commercial deposits are attracted principally
from within the Bank's primary market areas through the offering of a selection
of deposit instruments including savings accounts, NOW accounts, money market
accounts, and time deposits or certificate of deposit accounts.
Borrowings
The Bank has obtained an advance from the FHLB of Pittsburgh to
supplement its supply of lendable funds. The advance from the FHLB of Pittsburgh
is secured by a pledge of the Bank's various assets in the amount of $20.7
million. The borrowing is a variable interest obligation. The advance matures on
September 22, 2000, while interest payments are payable monthly on the
outstanding principal balance. At March 31, 2000, the Bank had $900,000 in
borrowings outstanding from the FHLB of Pittsburgh.
Personnel
At March 31, 2000, the Bank had 11 full-time and 3 part-time employees.
None of the Bank's employees are represented by a collective bargaining group.
The Bank believes that its relationship with its employees is good.
Regulation
Set forth below is a brief description of laws that relate to the
regulation of the Bank and the Company. The description is not complete and is
qualified in its entirety by reference to applicable laws and regulations.
Company Regulation
General. The Company is required to register and file reports with the
OTS and is subject to regulation and examination by the OTS. In addition, the
OTS has enforcement authority over the Company and its non-savings association
subsidiaries, should such subsidiaries be formed, which permits the OTS to
restrict or prohibit activities that are determined to be a serious risk to the
Bank. This regulation and oversight is intended primarily for the protection of
the depositors of the Bank and not for the benefit of stockholders of the
Company.
On November 12, 1999, President Clinton signed into law the
Gramm-Leach-Bliley Act (the "Act") which, effective March 11, 2000, permits
qualifying bank holding companies to become financial holding companies and
thereby affiliate with securities firms and insurance companies and engage in
other activities that are financial in nature. The Act defines "financial in
nature" to include securities underwriting, dealing and market making;
sponsoring mutual funds and investment companies; insurance underwriting and
agency; merchant banking activities; and activities that the Federal Reserve
Board has determined to be closely related to banking. A qualifying national
bank also may engage, subject to limitations on investment, in activities that
are financial in nature, other than insurance underwriting, insurance company
portfolio
13
<PAGE>
investment, real estate development, and real estate investment, through a
financial subsidiary of the bank.
The Act also prohibits new unitary thrift holding companies from
engaging in nonfinancial activities or from affiliating with an nonfinancial
entity. As a grandfathered unitary thrift holding company, the Company retains
its authority to engage in nonfinancial activities.
Qualified Thrift Lender ("QTL") Test. As a unitary savings and loan
holding company, the Company generally is not subject to activity restrictions,
provided the Bank satisfies the QTL test. If the Company acquired control of
another savings institution as a separate subsidiary, it would lose the ability
to diversity its operations into nonbanking related activities unless the other
savings institutions each also qualify as a QTL or were acquired in a supervised
acquisition. See "Bank Regulation - Qualified Thrift Lender Test."
Restrictions or Acquisitions. The Company must obtain approval from the
OTS before acquiring control of any other SAIF-insured savings institution. No
person may acquire control of a federally insured savings institution without
providing at least 60 days written notice to the OTS and giving the OTS an
opportunity to disapprove the proposed acquisition.
Bank Regulation
General. As a federally chartered, SAIF-insured savings association,
the Bank is subject to extensive regulation by the OTS and the Federal Deposit
Insurance Corporation (the "FDIC"). Lending activities and other investments
must comply with various federal and state statutory and regulatory
requirements. The Bank is also subject to certain reserve requirements
promulgated by the Board of Governors of the Federal Reserve System ("Federal
Reserve System").
Insurance of Deposit Accounts. The Bank's deposit accounts are insured
by the SAIF to a maximum of $100,000 for each insured member (as defined by law
and regulation). Insurance of deposits may be terminated by the FDIC upon a
finding that the institution has engaged in unsafe or unsound practices, is in
an unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, rule, order or condition imposed by the FDIC or the
institution's primary regulator. As a member of the SAIF, the Bank pays an
insurance premium on its deposits to the FDIC. The FDIC also maintains another
insurance fund, the Bank Insurance Fund ("BIF"), which primarily insures
commercial bank deposits. It is expected that these continuing assessments for
both SAIF and BIF members will be used to repay outstanding Financing
Corporation bond obligations.
Regulatory Capital Requirements. OTS capital regulations require
savings institutions to meet three capital standards: (1) tangible capital equal
to 1.5% of total adjusted assets, (2) a leverage ratio (core capital) equal to
at least 4% of total adjusted assets, and (3) risk-based capital equal to 8% of
total risk-weighted assets. At March 31, 2000, the Bank was in compliance with
these regulatory capital requirements.
Dividend and Other Capital Distribution Limitations. A savings
association that is a subsidiary of a savings and loan holding company, such as
the Bank, must file an application or a notice with the OTS at least 30 days
before making a capital distribution, including cash dividends. Savings
associations are not required to file an application for permission to make a
capital distribution if the following conditions are met: (1) they are eligible
for expedited treatment under OTS regulations, (2) they would remain adequately
capitalized after the distribution, (3) the annual amount of capital
distribution does not exceed net income for that year to date added to retained
net income for the two preceding years, and (4) the capital distribution
14
<PAGE>
would not violate any agreements between OTS and the savings association or any
OTS regulations. Any other distribution would require a notice to the OTS.
In addition, the OTS could prohibit a proposed capital distribution by
any institution, which would otherwise be permitted by the regulation, if the
OTS determines that the distribution would constitute an unsafe or unsound
practice.
A federal savings institution is prohibited from making a capital
distribution if, after making the distribution, the savings institution would be
unable to meet any one of its minimum regulatory capital requirements. Further,
a federal savings institution cannot distribute regulatory capital that is
needed for its liquidation account.
Qualified Thrift Lender Test. Savings institutions must meet a
qualified thrift lender ("QTL") test. If the Bank maintains an appropriate level
of qualified thrift investments ("QTIs") (primarily residential mortgages and
related investments, including certain mortgage-related securities) and
otherwise qualifies as a QTL, it will continue to enjoy full borrowing
privileges from the FHLB of Pittsburgh. The required percentage of QTIs is 65%
of portfolio assets (defined as all assets minus goodwill and other intangible
assets, property used by the institution in conducting its business and liquid
assets in an amount not exceeding 20% of total assets). In addition, savings
associations may include shares of stock of the FHLBs, FNMA, and FHLMC as QTIs.
Compliance with the QTL test is determined on a monthly basis in nine out of
every 12 months. As of March 31, 2000, the Bank was in compliance with its QTL
requirement.
Federal Reserve System. The Federal Reserve System requires all
depository institutions to maintain non-interest bearing reserves at specified
levels against their transaction accounts (primarily checking, NOW and Super NOW
checking accounts) and non-personal time deposits. The balances maintained to
meet the reserve requirements imposed by the Federal Reserve System may be used
to satisfy the liquidity requirements that are imposed by the OTS. At March 31,
2000, the Bank was in compliance with these Federal Reserve Board requirements.
Item 2. Description of Property
--------------------------------
(a) Properties.
Currently, the Company does not own real property but utilizes the
offices of the Bank. The Bank operates from its office located at 726 Wells
Street, Sistersville, West Virginia. The Bank owns this office facility. The
Bank owns land at 2904 Pike Street, Parkersburg, West Virginia, on which a
branch office has been constructed. The opening of the new branch office
occurred in May 2000.
(b) Investment Policies.
See "Item 1. Description of Business" above for a general description
of the Bank's investment policies and any regulatory or Board of Directors'
percentage of assets limitations regarding certain investments. The Bank's
investments are primarily acquired to produce income, and to a lesser extent,
possible capital gain.
(1) Investments in Real Estate or Interests in Real Estate. See "Item
1. Description of Business - Lending Activities," "Item 1. Description of
Business - Bank Regulation," and "Item 2. Description of Property (a)
Properties" above.
15
<PAGE>
(2) Investments in Real Estate Mortgages. See "Item 1. Description of
Business - Lending Activities" and "Item 1. Description of Business - Bank
Regulation."
(3) Securities of or Interests in Persons Primarily Engaged in Real
Estate Activities. See "Item 1. Description of Business - Lending Activities,"
"Item 1. Description of Business - Bank Regulation."
(c) Description of Real Estate and Operating Data.
Not Applicable.
Item 3. Legal Proceedings
--------------------------
There are various claims and lawsuits in which the Company or the Bank
are periodically involved, such as claims to enforce liens, condemnation
proceedings on properties in which the Bank holds security interests, claims
involving the making and servicing of real property loans, and other issues
incident to the Bank's business. In the opinion of management, no material loss
is expected from any of such pending claims or lawsuits.
Item 4. Submission of Matters to a Vote of Security Holders
-------------------------------------------------------------
No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
------------------------------------------------------------------
The information contained under the section captioned "Corporate
Profile" and "Stock Market Information" of the Company's Annual Report to
Stockholders for the fiscal year ended March 31, 2000 (the "Annual Report") is
incorporated herein by reference.
Item 6. Management's Discussion and Analysis or Plan of Operation
-------------------------------------------------------------------
The information contained in the section captioned "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Annual Report is incorporated herein by reference.
Item 7. Financial Statements
------------------------------
The Registrant's financial statements listed under Item 13 are
incorporated herein by reference.
Item 8. Changes in and Disagreements with Accountants On Accounting and
--------------------------------------------------------------------------------
Financial Disclosure
--------------------
There were no changes in or disagreements with accountants on
accounting and financial disclosure during the last fiscal year.
16
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PART III
Item 9. Directors Executive Officers, Promoters and Control Persons: Compliance
--------------------------------------------------------------------------------
with Section 16(a) of the Exchange Act.
---------------------------------------
The information contained under the sections captioned "Section 16(a)
Beneficial Ownership Reporting Compliance" and "Proposal I - Election of
Directors" in the Company's proxy statement for the Annual Meeting of
Stockholders to be held on July 21, 2000 (the "Proxy Statement") is incorporated
herein by reference.
Item 10. Executive Compensation
--------------------------------
The information contained in the section captioned "Director and
Executive Officer Compensation" in the Proxy Statement is incorporated herein by
reference.
Item 11. Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------
(a) Security Ownership of Certain Beneficial Owners
Information required by this item is incorporated herein by
reference to the section captioned "Security Ownership of
Certain Beneficial Owners" in the Proxy Statement.
(b) Security Ownership of Management
Information required by this item is incorporated herein by
reference to the section captioned "Security Ownership of
Certain Beneficial Owners" and to the first table in the
section captioned "Proposal I - Election of Directors" in the
Proxy Statement.
(c) Management of the Registrant knows of no arrangements,
including any pledge by any person of securities of the
Registrant, the operation of which may at a subsequent date
result in a change in control of the Registrant.
Item 12. Certain Relationships and Related Transactions
--------------------------------------------------------
The information required by this item is incorporated herein by
reference to the section captioned "Certain Relationships and Related
Transactions" in the Proxy Statement.
Item 13. Exhibits, List and Reports on Form 8-K
-----------------------------------------------
(a) The following documents are filed as a part of this report:
1. The following financial statements and the report of
independent accountants of the Registrant included in the Annual Report for the
fiscal year ended March 31, 2000, are incorporated herein by reference and also
in Item 7 of this report.
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<PAGE>
Report of Independent Auditors
Consolidated Balance Sheet at March 31, 2000 and 1999.
Consolidated Statements of Income for the Years Ended March 31, 2000
and 1999.
Consolidated Statements of Comprehensive Income for the Years Ended
March 31, 2000 and 1999.
Consolidated Statements of Stockholders' Equity for the Years Ended
March 31, 2000 and 1999.
Consolidated Statements of Cash Flows for the Years Ended March 31,
2000 and 1999.
Notes to Consolidated Financial Statements.
2. Except for Exhibits 11 and 27 below, Financial Statement
Schedules for which provision is made in the applicable accounting regulations
of the SEC are not required under the related instructions or are inapplicable
and therefore have been omitted.
<TABLE>
<CAPTION>
<S> <C>
3. The following exhibits are included in this Report or incorporated herein by reference:
(a) List of Exhibits:
3(i) Certificate of Incorporation of Sistersville Bancorp, Inc.*
3(ii) Bylaws of Sistersville Bancorp, Inc.*
10.1 Employment Agreement with Stanley M. Kiser*
10.2 1998 Stock Option Plan of Sistersville Bancorp, Inc.**
10.3 First Federal Savings Bank Restricted Stock Plan and Trust Agreement**
11 Statement regarding computation of earnings per share
13 Annual Report to Stockholders for the Fiscal Year Ended March 31, 2000
21 Subsidiaries of the Registrant
23 Consent of S.R. Snodgrass, A.C.
27 Financial Data Schedule***
</TABLE>
(b) The Registrant did not file any Current Reports on Form
8-K during the quarter ended March 31, 2000.
18
<PAGE>
---------------------
* Incorporated by reference to the registration statement on Form S-1 (File
No. 333-23147) declared effective by the SEC on May 12, 1997.
** Incorporated by reference to the exhibits to the proxy statement for the
1998 Annual Meeting of Stockholders held on July 16, 1998 and filed with
the SEC on June 2, 1998 (File No. 0-22535).
*** Filed in electronic format only.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 as of June 14, 2000.
SISTERSVILLE BANCORP, INC.
By: /s/ Stanley M. Kiser
--------------------------------------
Stanley M. Kiser
President, Chief Executive
Officer, and Director (Duly
Authorized Representative)
Pursuant to the requirement of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated as of June 14, 2000.
/s/Stanley M. Kiser /s/Lester C. Doak
------------------------------------ ------------------------------------
Stanley M. Kiser Lester C. Doak
President, Chief Executive Officer, Chairman of the Board
and Director (Principal Executive
Officer)
/s/ Ellen E. Thistle /s/Michael A. Melrose
------------------------------------ ------------------------------------
Ellen E. Thistle Michael A. Melrose
Director Director
/s/David W. Miller /s/Charles P. LaRue
------------------------------------ ------------------------------------
David W. Miller Charles P. LaRue
Director Director
