SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number: 0-22997
WSB HOLDING COMPANY
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(Exact name of small business issuer as specified in its charter)
Pennsylvania 23-2908963
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
807 Middle Street
Pittsburgh, Pennsylvania 15212
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(Address of principal executive offices)
(412)231-7297
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirement for the past 90 days.
Yes X No
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As of November 9, 2000 there were 302,684 shares outstanding of the issuer's
class of common stock.
Transitional small business disclosure format: Yes No X
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WSB HOLDING COMPANY
INDEX TO QUARTERLY REPORT ON FORM 10-QSB
Page
Reference
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Part I - Financial Information
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheet as of September 30,
2000 and June 30, 2000 3
Consolidated Statement of Income for the three
months ended September 30, 2000 and 1999 4
Consolidated Statement of Changes in Stockholders'
Equity for the three months ended September 30, 2000 5
Consolidated Statement of Cash Flows for the three
months ended September 30, 2000 and 1999 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-11
Part II Other Information 12
Signatures 13
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WSB HOLDING COMPANY
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
September 30, June 30,
2000 2000
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<S> <C> <C>
ASSETS
Cash and due from banks $ 326,731 $ 301,724
Interest-bearing deposits in other banks 1,605,079 915,437
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Cash and cash equivalents 1,931,810 1,217,161
Investment securities available for sale 2,140,417 2,209,267
Investment securities held to maturity (market
value of $14,212,217 and $14,033,582) 14,891,512 14,894,110
Mortgage-backed securities available for sale 1,082,840 1,116,035
Mortgage-backed securities held to maturity (market
value of $302,618 and $313,838) 309,369 323,803
Loans receivable (net of allowance for loan losses
of $155,000 and $155,000) 18,161,952 18,866,204
Bank owned life insurance 1,229,547 1,214,106
Accrued interest receivable 336,493 351,453
Premises and equipment 897,273 916,305
Federal Home Loan Bank stock 200,000 200,000
Other assets 129,003 85,904
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TOTAL ASSETS $ 41,310,215 $ 41,394,348
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LIABILITIES
Deposits $ 35,046,309 $ 34,585,942
Advances by borrowers for taxes and insurance 114,136 247,127
Federal Home Loan Bank borrowings 1,000,000 1,500,000
Accrued interest payable and other liabilities 143,607 128,353
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TOTAL LIABILITIES 36,304,052 36,461,422
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COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Preferred stock, par value $.10, 1,000,000 shares
authorized; none issued and outstanding - -
Common stock, par value $.10 per share; 4,000,000
shares authorized; 330,600 issued 33,060 33,060
Additional paid-in capital 2,995,934 2,994,998
Retained earnings - substantially restricted 2,544,235 2,504,860
Accumulated other comprehensive income (loss) 17,415 (689)
Unallocated shares held by Employee Stock
Ownership Plan (ESOP) (185,130) (189,538)
Unallocated shares held by Restricted Stock Plan (RSP) (87,609) (98,023)
Treasury stock (27,916 shares at cost) (311,742) (311,742)
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TOTAL STOCKHOLDERS' EQUITY 5,006,163 4,932,926
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 41,310,215 $ 41,394,348
============ ============
</TABLE>
See accompanying notes to the consolidated financial statements.
3
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WSB HOLDING COMPANY
CONSOLIDATED STATEMENT OF INCOME
Three Months Ended September 30,
2000 1999
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INTEREST INCOME
Loans receivable $366,675 $351,967
Interest-bearing deposits in other banks 36,530 46,859
Investment securities
Taxable 303,230 285,901
Exempt from federal income tax 11,404 22,959
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Total interest income 717,839 707,686
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INTEREST EXPENSE
Deposits 384,986 376,790
FHLB borrowings 22,750 14,450
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Total interest expense 407,736 391,240
NET INTEREST INCOME 310,103 316,446
Provision for loan losses - -
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NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 310,103 316,446
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NONINTEREST INCOME
Service fees on deposit accounts 11,428 10,942
Investment securities gains, net 1,842 6,169
Other 25,693 27,907
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Total noninterest income 38,963 45,018
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NONINTEREST EXPENSE
Compensation and employee benefits 153,059 155,619
Occupancy and equipment 42,723 43,692
Federal insurance premium 5,337 8,311
Other 91,861 92,326
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Total noninterest expense 292,980 299,948
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Income before income taxes 56,086 61,516
Income tax expense 16,712 20,816
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NET INCOME $ 39,374 $ 40,700
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EARNINGS PER SHARE:
Basic $ 0.14 $ 0.15
Diluted $ 0.14 $ 0.15
See accompanying notes to the consolidated financial statements.
4
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WSB HOLDING COMPANY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Unallo- Unallo-
Accumulated cated cated Total
Additional Other Shares Shares Stock-
Common Paid-in Retained Comprehensive Held by Held by Treasury holders'
Stock Capital Earnings Income (Loss) ESOP RSP Stock Equity
----- ------- -------- ------------- ---- --- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, June 30, 2000 $33,060 $2,994,998 $2,504,860 $ (689) $(189,538) $(98,023) $(311,742) $4,932,926
Net income 39,375 39,375
Other comprehensive income:
Unrealized loss on available
for sale securities, net of
reclassification adjustment,
net of tax benefit of $9,326 18,104 18,104
ESOP shares released 936 4,408 5,344
RSP shares released 10,414 10,414
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Balance, September 30, 2000 $33,060 $2,995,934 $2,544,235 $ 17,415 $(185,130) $(87,609) $(311,742) $5,006,163
======= ========== ========== ========= ========= ======== ========= ==========
2000
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Components of comprehensive income:
Change in net unrealized gain (loss)
on investment securities available for sale $19,320
Net realized gains included in net income,
net of taxes $626 and $2,097 (1,216)
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Total $18,104
=======
</TABLE>
See accompanying notes to the consolidated financial statements.
5
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WSB HOLDING COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended September 30,
2000 1999
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<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 39,375 $ 40,700
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 19,032 19,199
Amortization of premium and discount on investments (110) 473
Investment securities gains, net (1,842) (6,169)
Deferred income taxes - (7,154)
Increase in accrued interest receivable 14,960 (37,614)
Amortization of ESOP and RSP unearned compensation 15,758 17,367
Other, net (58,561) 25,858
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Net cash provided by operating activities 28,612 52,660
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INVESTING ACTIVITIES Investments available for sale:
Purchases (11,446) (66,739)
Proceeds from sales 99,459 82,699
Maturities and repayments 49,254 239,816
Investment held to maturity:
Purchases - (1,101,353)
Maturities and repayments 17,142 58,600
Net increase in loans receivable 704,252 (1,187,032)
Purchase of premises and equipment, net - (4,094)
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Net cash used for investing activities 858,661 (1,978,103)
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FINANCING ACTIVITIES
Net increase (decrease) in deposits 460,367 (12,876)
Net increase in advances by borrowers
for taxes and insurance (132,991) (101,621)
Net increase in short-term FHLB borrowings (500,000) -
Purchase of treasury stock - (106,950)
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Net cash provided by (used for) financing activities (172,624) (221,447)
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Decrease in cash and cash equivalents 714,649 (2,146,890)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,217,161 3,412,184
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CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,931,810 $ 1,265,294
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</TABLE>
See accompanying notes to the consolidated financial statements.
6
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WSB HOLDING COMPANY.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with instructions to Form 10-QSB and, therefore, do not
necessarily include all information which would be included in audited financial
statements. The information furnished reflects all normal recurring adjustments
which are, in the opinion of management, necessary for the fair statement of the
results of the period. The results of operations for the interim periods are not
necessarily indicative of the results to be expected for the full year.
NOTE 2 COMPREHENSIVE INCOME
Total comprehensive income for the three months ended September 30, 2000 and
1999 was $57,479 and $26,693, respectively.
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WSB HOLDING COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Private Securities Litigation Act of 1995 contains safe harbor
provisions regarding forward-looking statements. When used in this discussion,
the words "believes," "anticipates," "contemplates," "expects," and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties that could cause actual results
to differ materially from those projected. Those risks and uncertainties include
changes in interest rates, the ability to control costs and expenses, general
economic conditions, government policies and action of regulatory authorities.
The Company undertakes no obligation to publicly release the results of any
revisions to those forward looking statements which may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
WSB Holding Company is a savings and loan holding company headquartered
in Pittsburgh, Pennsylvania, which provides a broad range of deposits and loan
products through its wholly owned subsidiary, Workingmens Bank (collectively,
the "Company").
RESULTS OF OPERATIONS
Net income decreased $1,300 for the three months ended September 30,
2000 to $39,400 from net income of $40,700 for the same period ended 1999.
Net interest income decreased $6,000 to $310,000 for the three-month
period ended September 30, 2000 from $316,000 for the same period in 1999. The
interest rate spread for the three-month period ended September 30, 2000
declined as a result on normal market fluctuations and management desire to
remain competitive with the local market.
Total interest income increased $10,000 to $718,000 for the three-month
period ended September 30, 2000 from $708,000 for the same period in 1999. Total
average assets remained relatively unchanged and the increase can be almost
totally attributed to the increase in interest rate yield to 7.48% for the
current year compared to 7.20% for the same period in 1999.
Interest income on interest-bearing deposits and tax-exempt securities
declined primarily as a result of declines in volumes during the periods.
Interest expense on deposits and borrowings both increased $8,000 for
the three month period ended September 30, 2000 from 1999. The cost of funds on
deposit increased 20 basis points for the current year three month period to
4.48% from 4.28% for the same period in 1999. The cost of funds on borrowings
increased 104 basis points to 6.82% in 2000 compared to 5.78% in 1999. The
average volume of interest bearing liabilities declined by approximately
$100,000 to $36.1 million for the current year.
8
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Total noninterest income decreased $6,000 to $39,000 for the three
month period ended September 30, 2000 from $45,000 for the same period in 1999.
The prior year period included gains relating to the sale of available for sale
securities amounting to $6,000. Only $2,000 of such gains were recognized in
2000.
Total noninterest expense decreased $7,000 to $293,000 for the three
months ended September 30, 2000 from $300,000 for the same period in 1999. The
were no significant fluctuations in individual noninterest expense categories,
however all categories experienced modest declines.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity may be adversely affected by unexpected deposit outflows,
excessive interest rates paid by competitors, adverse publicity relating to the
savings and loan industry and similar matters. Management monitors projected
liquidity needs and determines the level desirable based in part on the Bank's
commitments to make loans and management's assessment of the Bank's ability to
generate funds.
Management monitors both the Company's and the Bank's total risk-based,
Tier I risk-based and Tier I leverage capital ratios in order to assess
compliance with regulatory guidelines. At September 30, 2000, both the Company
and the Bank exceeded the minimum risk-based and leverage capital ratios
requirements. The Bank's total risk-based, Tier I risk-based and Tier I leverage
ratios are 23.8%, 23.0%, and 10.2, respectively at September 30, 2000.
9
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RISK ELEMENT
The table below presents information concerning nonperforming assets
including nonaccrual loans, renegotiated loans, loans 90 days or more past due,
other real estate loans, and repossessed assets. A loan is classified as
nonaccrual when, in the opinion of management, there are serious doubts about
collectibility of interest and principal. At the time the accrual of interest is
discontinued, future income is recognized only when cash is received.
Renegotiated loans are those loans which terms have been renegotiated to provide
a reduction or deferral of principal or interest as a result of the
deterioration of the borrower.
September 30, June 30,
2000 2000
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(Dollars i n thousands)
Loans on nonaccrual basis $ 310 $ 310
Loans past due 90 days or more and still accruing - -
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Total nonperforming loans 310 310
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Nonperforming loans as a percent of total loans 1.69% 1.63%
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Nonperforming assets as a percent of total assets .75% 0.75%
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Allowance for loan losses to nonperforming loans 50.00% 50.00%
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At September 30, 2000 and June 30, 2000, no real estate or other assets
were held as foreclosed or repossessed property.
Management monitors impaired loans on a continual basis. As of
September 30, 2000, impaired loans had no material effect on the Company's
financial position or results of operations.
During the three month period ended September 30, 2000, loans decreased
$704,000 while nonperforming loans remained the same. During the current year
period, there was no change in the allowance for loan losses. Nonperforming
loans are primarily made up of one to four family residential mortgages. The
collateral requirements on such loans reduce the risk of potential losses to an
acceptable level in management's opinion.
10
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Management continually evaluates the adequacy of the allowance for loan
losses, which encompasses the overall risk characteristics of the various
portfolio segments, past experience with losses, the impact of economic
conditions on borrowers and other relevant factors which may come to the
attention of management. Although the Company maintains its allowance for loan
losses at a level that it considers to be adequate to provide for the inherent
risk of loss in its loan portfolio, there can be no assurance that future losses
will not exceed estimated amounts or that additional provisions for loan losses
will not be required in future periods.
11
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WSB HOLDING COMPANY
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
None
ITEM 2. Changes in Securities
None
ITEM 3. Defaults upon Senior Securities
None
ITEM 4. Submission of Matters to a Vote of Security Holders
None
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are included in this Report or incorporated
herein by reference:
3(i) Restated Articles of Incorporation of WSB Holding Company*
3(ii) Bylaws of WSB Holding Company**
4 Specimen Stock Certificate of WSB Holding Company **
10 Employment Agreement with Robert Neudorfer***
10.1 WSB Holding Company 1999 Stock Option Plan****
10.2 Workingmens Bank Restricted Stock Plan and Trust Agreement****
27 Financial Data Schedule (electronic filing only)
99 Independent's Accountant Review Report
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* Incorporated by reference to the registration statement on Form 8-A
(0-22997).
** Incorporated by reference to the registration statement on Form SB-2
(333-29389).
*** Incorporated by reference to the Form 10QSB for December 31, 1998
(0-22997).
**** Incorporated by reference to the Definitive Proxy Statement filed
February 6, 1999 (0-22997).
(b) No reports on Form 8-K were filed during the quarter covered by this
report.
12
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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.
WSB Holding Company
Date: November 13, 2000 By /s/ Robert D. Neudorfer
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Robert D. Neudorfer, President
(Principal Financial Officer)
Date: November 13, 2000 By /s/ Ronald W. Moreschi
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Ronald W. Moreschi
Executive Vice President and Treasurer
(Principal Accounting Officer)
13
