UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
Commission file number 0 - 12784
WESTBANK CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts 04 - 2830731
(State or other jurisdiction of inc. or org.) (I.R.S. Employer I.D. No.)
225 Park Avenue, West Springfield, Massachusetts 01090-0149
(Address of principal executive offices) (Zip Code)
(413) 747-1400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 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
Common stock, par value $2 per share: 3,267,349 shares
outstanding as of April 30, 1996.
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION
Page
Financial Statements
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Income 4
Condensed Consolidated Statements of Stockholders' Equity 5
Condensed Consolidated Statements of Cash Flows 6
Notes to Condensed Consolidated Financial Statements 7-8
Management's Discussion and Analysis of Financial Condition and
Results of Operations 9-15
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings 16
ITEM 2. Changes in Rights of Securities Holders 16
ITEM 3. Defaults by Company on its Senior Securities 16
ITEM 4. Results of Votes on Matters Submitted to a Vote
of Security Holders 16
ITEM 5. Other Information 16
ITEM 6. Exhibits and Reports on Form 8-K 16
Signatures 17
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
(Dollar amounts in thousands)
ASSETS March 31, 1996 December 31, 1995
Cash and due from banks: (Unaudited)
<S> <C> <C>
Non-interest bearing $ 9,729 $ 11,195
Interest bearing 582 509
Federal Funds sold 14,300 900
Total cash and cash equivalents 24,611 12,604
Investment securities available for sale 19,192 16,907
Investment securities held to maturity (approximate
market value of $16,490 in 1996 and
$18,402 in 1995) 16,446 18,209
Total securities 35,638 35,116
Loans $ 189,268 $ 192,145
Mortgage loans held-for-sale 6,040 8,826
Allowance for loan losses (3,916) (3,707)
Net-loans 191,392 197,264
Bank premises and equipment 4,053 3,643
Other real estate owned (OREO) - net of
allowance for losses of $187 in
1996 and $65 in 1995 1,858 1,300
Accrued interest receivable 1,634 1,658
Deferred income taxes 553 364
Other assets 1,469 1,828
TOTAL ASSETS $ 261,208 $ 253,777
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Non-interest bearing $ 42,960 $ 43,981
Interest bearing 190,809 183,981
Total Deposits 233,769 227,962
Borrowed funds 8,690 7,177
Accrued interest payable 325 309
Other liabilities 399 626
Total Liabilities 243,183 236,074
Stockholders' Equity:
Common stock - $2 par value
Authorized - 9,000,000 shares
Issued - 3,247,834 shares in 1996 and
3,221,603 shares in 1995 6,496 6,443
Additional paid in capital 7,254 7,141
Retained earnings 4,424 4,053
Net unrealized gain/(loss) on securities available
for sale (149) 66
Total Stockholders' Equity 18,025 17,703
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 261,208 $ 253,777
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Dollar amounts in thousands)
(Unaudited)
THREE MONTHS ENDED
03-31-96 03-31-95
Income:
Interest and fees on loans $ 4,335 $ 4,239
Interest and dividend income
on securities 536 495
Interest on temporary investments 81 32
Total interest and dividend income 4,952 4,766
Interest expense 2,071 1,926
Net interest income 2,881 2,840
Provision for loan losses 140 450
Net interest income after provision
for loan losses 2,741 2,390
Security gains 112 0
Other non-interest income 492 512
Total non-interest income 604 512
Non-interest expenses:
Salaries and benefits 1,044 956
Other real estate-provision for losses 131 10
-operating expenses 20 120
Other non-interest expense 940 839
Occupancy - net 217 187
Total non-interest expense 2,352 2,112
Income before income taxes 993 790
Income taxes (benefit) 429 (65)
Net Income $ 564 $ 855
Net income per share $ 0.17 $ 0.26
Weighted average shares of common
stock and common share
equivalents 3,351,437 3,234,625
See accompanying notes to condensed consolidated financial statements.
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1995 AND THREE MONTHS ENDED MARCH 31, 1996
(1996 Unaudited)
<TABLE>
<CAPTION>
(Dollar amounts in thousands)
UNREALIZED
GAIN (LOSS)
COMMON STOCK ADDITIONAL ON SECURITIES
NUMBER OF PAR PAID IN RETAINED AVAILABLE
SHARES VALUE CAPITAL EARNINGS FOR SALE TOTAL
<S> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1994 3,138,167 $ 6,276 $ 6,877 $ 2,334 $ (143) $ 15,344
Net income - - - 2,353 - 2,353
Cash dividends declared
($.20 per share) - - - (634) - (634)
Shares issued:
Stock option plan 16,342 33 4 - - 37
Dividend reinvestment
and stock purchase plan 67,094 134 260 - - 394
Change in unrealized gain
(loss) on securities
available for sale - - - - 209 209
BALANCE-DECEMBER 31, 1995 3,221,603 6,443 7,141 4,053 66 17,703
Cash Dividend Declared:
Amount Declaration Record Paid
($0.06 per share) (193) (193)
Shares issued under Dividend
Reinvestment Plan 11,776 24 51 75
Shares issued under stock
purchase plan 14,455 29 62 91
Change in unrealized gain (loss)
on securities available
for sale (215) (215)
Net income 564 564
BALANCE-MARCH 31, 1996 3,247,834 $ 6,496 $ 7,254 $ 4,424 $ (149) $ 18,025
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
(Dollar amounts in thousands)
Three Months Ended
03-31-96 03-31-95
Operating activities:
Net income $ 564 $ 855
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses 140 450
Depreciation and amortization 140 120
Provision for other real estate owned 131 10
Decrease in accrued interest receivable 24 56
Realized gain on sale of securities (112) 0
Realized loss on sale of other real estate owned 10 4
Decrease (increase) in other assets 359 (20)
Increase in deferred taxes (31) (363)
Increase in interest payable on deposits 16 16
Increase (decrease) in other liabilities (227) 130
Net cash provided by operating activities 1,014 1,258
Investing activities:
Investments and mortgage-backed securities:
Held to maturity:
Purchases (1,497) 0
Proceeds from maturities and principal payments 3,260 39
Available for sale:
Purchases (1,990) (4,156)
Proceeds from sales 3,083 0
Proceeds from maturities 0 0
Purchases of premises and equipment (550) (250)
Net (increase) decrease in loans 1,292 (131)
Proceeds from sale of other real estate owned 102 70
Net cash provided by (used in) investing activities 3,700 (4,428)
Financing activities:
Net increase (decrease) in borrowings 1,513 (588)
Net increase (decrease) in deposits 5,807 4,114
Proceeds from exercise of stock options
and stock purchase plan 166 64
Dividends paid (193) (157)
Net cash used by financing activities 7,293 3,433
Increase (decrease) in cash and cash equivalents 12,007 263
Cash and cash equivalents at beginning of year 12,604 11,700
Cash and cash equivalents at end of year $24,611 $11,963
Cash paid during the year:
Interest on deposits and other borrowings 2,055 1,970
Income taxes 100 0
Transfers of loans to other real estate owned 864 205
Sales of other real estate owned financed by the bank 72 134
See notes to consolidated financial statements.
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - GENERAL INFORMATION
Westbank Corporation (hereinafter sometimes referred to as
"Westbank") is a registered Bank Holding Company organized to
facilitate the expansion and diversification of the business of Park
West Bank and Trust Company (hereinafter sometimes referred to as
"Park West") into additional financial services related to banking.
Substantially all operating income and net income of the Corporation
are presently accounted for by Park West.
NOTE B - CURRENT OPERATING ENVIRONMENT
Since December 1994, Park West has been operating under a Memorandum
of Understanding (the "Memorandum") with the Federal Deposit
Insurance Corporation (the "FDIC") and the Commissioner of Banks for
the Commonwealth of Massachusetts (the "Commissioner"). On December
11, 1995 the Memorandum was revised. The Memorandum is an informal
agreement with the FDIC and the Commissioner requiring Park West,
among other things, to maintain a leverage capital ratio of at least
6%, to develop a written plan of action to lessen its risk exposure
to certain borrowers and to refrain from extending or renewing
credit to any borrower who has a loan or extension of credit with
Park West that has been charged off or classified, without first
obtaining majority approval of Park West's Board of Directors. Park
West must maintain the allowance for losses at a level commensurate
to the risk in the loan portfolio and correct other deficiencies
noted in the exam. The Memorandum requires Park West to obtain
approval from the FDIC and the Commissioner prior to paying or
declaring a dividend. Finally, Park West is required to make
quarterly reports to the FDIC and the Commissioner detailing the
form and manner of action taken to secure compliance with the
Memorandum.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") imposes significant regulatory restrictions and
requirements on banking institutions insured by the FDIC and their
holding companies. FDICIA established capital categories into which
financial institutions are placed based on capital level. Each
capital category establishes different degrees of regulatory
restrictions which can apply to a financial institution. As of
March 31, 1996, Park West's capital was at a level that placed the
Bank in the "well capitalized" category as defined by FDICIA.
FDICIA imposes a variety of other restrictions and requirements on
insured banks. These include significant regulatory reporting
requirements such as insuring that a system of risk-based deposit
insurance premiums and civil money penalties for inaccurate deposit
assessment reports exists. In addition, FDICIA imposes a system of
regulatory standards for bank and bank holding company operations,
detailed truth in savings disclosure requirements, and restrictions
on activities authorized by state law but not authorized for
national banks.
The weak economy and real estate market continues to impair the
financial results of the Corporation. Despite these weaknesses the
Corporation has managed significant improvements in earnings and
asset quality. As a result of the continued aggressive management
of problem loans, the Board of Directors and management believe the
Corporation is positioned to comply with the Memorandum as well as
the requirements of FDICIA.
<PAGE>
NOTE C - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements for the first quarter ended March 31, 1996 and 1995 have
been prepared in accordance with generally accepted accounting
principles for interim information and with instructions for Form
10-Q. Accordingly, they do not include all of the information and
notes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating
results for the three month period ended March 31, 1996, are not
necessarily indicative of the results that may be expected for the
year ended December 31, 1996.
For further information, please refer to the Consolidated Financial
Statements and footnotes thereto included in the Westbank
Corporation's Annual Report on Form 10-K for the year ended December
31, 1995.
NOTE D - CHANGES IN ACCOUNTING PRINCIPLES
On January 1, 1996 the Bank adopted Statement of Financial
Accounting Standards No. 122, "Accounting for Mortgage Servicing
Rights". This statement requires allocation of the total cost of
mortgage loans to the mortgage servicing rights and the loans
(without the mortgage servicing rights) based on their relative fair
values. The adoption of this statement did not have a material
effect on the Bank's financial condition or results of its
operations.
The Bank has elected to adopt Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation," in
1996 through disclosure only.
NOTE E - NET INCOME PER SHARE
Earnings per share were computed by dividing net income by the
weighted average number of shares of common stock outstanding and
common stock equivalent shares arising from unexercised stock
options. The weighted average of common and common stock
equivalents for the period ended March 31, 1996 and 1995, amounted
to 3,351,437 and 3,234,625 shares, respectively.
NOTE F - COMMITMENTS AND CONTINGENT LIABILITIES
In the normal course of business, there are outstanding commitments
and contingent liabilities, such as, standby letters of credit and
commitments to extend credit. As of March 31, 1996 standby letters
of credit amounted to $927,000 and loan commitments were $29,703,000
and unused balances available on home equity lines of credit were
$7,790,000.
Trust Assets - Property with a book value of $107,417,000 at March
31, 1996 held for customers in a fiduciary or agency capacity, is
not included in the accompanying Balance Sheet since such items are
not assets of the Bank.
NOTE G - STOCKHOLDERS' EQUITY
The FDIC imposes leverage capital ratio requirements for state
non-member Banks. The Bank's leverage capital ratio as of March 31,
1996 and December 31, 1995 was 6.99% and 6.87% respectively.
In addition, the FDIC has established risk-based capital
requirements for insured institutions of, Tier 1 risk-based capital
of 4.00% and total risk-based capital of 8.00%. The Bank's
risk-based capital at March 31, 1996, for Tier 1 was 10.02% and
total risk-based capital was 11.28%.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Changes in Financial Condition -
Total consolidated assets amounted to $261,208,000 on March 31,
1996, compared to $253,777,000 on December 31, 1995. As of March
31, 1996 and March 31, 1995, earning assets amounted to,
respectively, $245,818,000 or 94% of total assets, and $230,500,000,
or 93% of total assets. Earning assets increased during the first
three months of 1996 as a result of increases in securities loans
and temporary funds. Deposits originated from two newly opened
supermarket branches provided the funds to support the increase in
earning assets.
During the first three months of 1996, the Corporation securitized
approximately $3.6 million of residential mortgages into
mortgage-backed securities, which were placed into the Corporation's
securities available-for-sale account. During the quarter, the
Corporation also sold approximately $3 million of mortgage-backed
securities resulting in a gain of $112,000.
Changes in Results of Operations - For the quarter ended March 31,
1996, net income totaled $564,000 compared to $855,000 for the
three-month period ended March 31, 1995. Included in the results of
the 1995 quarter is a tax benefit of $400,000, which is the result
of a decrease in the valuation reserve pertaining to deferred tax
assets.
An overall increase in interest income and interest expense reflects
an increase in volume and interest rates on earning assets and
interest-bearing deposits. Further analysis is provided in sections
on net interest revenue and supporting schedules.
Allowance for Loan/Lease Losses and Non-Performing Assets - A
decrease has been reflected in the provision for loan losses in the
quarter with $140,000 being provided compared to $450,000 in 1995.
Loans and leases written off against the allowance for loan/lease
losses after recoveries amounted to ($69,000) for the first three
months of 1996 versus $1,035,000 for the same period of 1995.
After giving effect to the actions described above, the allowance
for loan/lease losses at March 31, 1996 totalled $3,916,000 or 2.01%
of total loans/leases, as compared to $3,707,000 or 1.84% at
December 31, 1995.
Non-performing past due loans/leases at March 31, 1996 aggregated
$5,103,000 or 2.61% of total loans/leases compared to $6,896,000 or
3.43% at December 31, 1995. The percentage of non-performing and
past due loans/leases compared to total assets on those same dates,
respectively, amounted to 1.95% and 2.71%.
The change in non-performing loans was primarily the result of the
resolution of one large real estate loan totaling approximately
$2,300,000 which resulted in a recovery of $280,000, and the
transfer to non-performing status of one commercial loan totaling
$730,000.
Other real estate owned increased during the most recent quarter by
$318,000 compared to the same period of 1995 and totals $1,858,000.
Included in this amount is one property totaling $290,000 which the
Corporation holds for investment purposes. The percentage of other
real estate owned to total assets as of March 31, 1996 and March 31,
1995 amounted to .71% and .62%, respectively.
Management has made every effort to recognize all circumstances
known at this time which could affect the collectibility of
loan/leases and has reflected these in deciding as to the provision
for loan/lease losses, the writing down of other real estate owned
and impaired loans to fair value and other loans (watch list)
monitored by management, the charge-off of loans/leases and the
balance in the allowance for loan/lease losses. Management deems
that the provision for the quarter, and the balance in the allowance
for loan/lease losses, are adequate based on results provided by the
grading system and circumstances known at this time.
<PAGE>
NET INTEREST INCOME
The Corporation's earning assets include a diverse portfolio of
earning instruments ranging from the Corporation's core business of
loan extensions to interest-bearing securities issued by federal,
state and municipal authorities. These earning assets are financed
through a combination of interest-bearing and interest-free sources.
Net interest income, the most significant component of earnings, is
the amount by which the interest generated by assets exceeds the
interest expense on liabilities. For analytical purposes, the
interest earned on tax exempt assets is adjusted to a "tax
equivalent" basis to recognize the income tax savings which
facilitates comparison between taxable and tax exempt assets.
The Corporation analyzes its performance by utilizing the concepts
of interest rate spread and net yield on earning assets. The
interest rate spread represents the difference between the yield on
earning assets and interest paid on interest-bearing liabilities.
The net yield on earning assets is the difference between the rate
of interest on earning assets and the effective rate paid on all
funds - interest-bearing liabilities, as well as, interest-free
sources (primarily demand deposits and shareholders' equity).
The balances and rates derived for the analysis of net interest
income presented on the following pages reflect the consolidated
assets and liabilities of the Corporation's principal earning
subsidiary, Park West Bank and Trust Company.
QUARTER ENDED
(Dollar amounts in thousands) 03-31-96 03-31-95
Interest and divided income $ 4,952 $ 4,766
Interest expense 2,071 1,926
Net interest income 2,881 2,840
Tax equivalent adjustment 4 8
Net interest income
(taxable equivalent) $ 2,885 $ 2,848
INTEREST RATE SPREAD AND NET YIELD ON EARNING ASSETS
(Dollar amounts in thousands)
QUARTER ENDED
03-31-96 03-31-95
(Taxable Equivalent) Average Average
Balance Rate Balance Rate
Earning Assets $238,565 8.31% $228,952 8.34%
Interest-bearing
liabilities $192,091 4.31% $190,707 4.04%
Interest rate spread 4.00 4.30
Interest-free
resources used to
fund earning assets 46,474 38,245
Total Sources of Funds $238,565 3.47 $228,952 3.36
Net Yield on Earning Assets 4.84% 4.98%
<PAGE>
CHANGES IN NET INTEREST INCOME
(Dollar amounts in thousands)
QUARTER ENDED MARCH 31, 1996
(Taxable Equivalent) O V E R
QUARTER ENDED MARCH 31, 1995
CHANGE DUE TO
VOLUME RATE TOTAL
Interest Income:
Loans/Leases $ 68 $ 24 $ 92
Securities 36 5 41
Federal funds 54 (5) 49
Total Interest Earned 158 24 182
Interest Expense:
Interest bearing deposits 18 161 179
Other Borrowed Funds (5) (29) (34)
Total Interest Expense $ 13 $ 132 $145
Net Interest Income $145 $(108) $ 37
Net interest earned on a taxable equivalent basis increased to
$2,885,000 in the first quarter of 1996, up $37,000 as compared with
the comparable period of 1995.
Average earning assets increased by $9,613,000 during the first
quarter of 1996. The average earning base was $238,565,000 compared
to $228,952,000 in the same period last year.
OPERATING EXPENSES
The components of total operating expenses for the periods and their
percentage of gross income are as follows:
(Dollar amounts in thousands)
QUARTER ENDED
3-31-96 3-31-95
Amount Percent Amount Percent
Salaries and benefits $1,044 18.79% $ 956 18.11%
Other real estate - expense 151 2.72 130 2.46
Other non-interest expense 940 16.92 839 15.90
Occupancy - net 217 3.90 187 3.55
Total Operating Expenses $2,352 42.33% $2,112 40.02%
COMPONENTS RATIOS
Ratio of "Tier 1" leverage capital
to total assets at end of period 6.90% 6.98%
Regulatory risk-based capital requirements take into account the
different risk categories of banking organizations by assigning risk
weights to assets and the credit equivalent amounts of off-balance
sheet exposures.
In addition, capital is divided into two tiers. For this
Corporation, Tier 1 includes the common stockholders' equity; Tier
2, or supplementary capital, includes not only the equity, but also,
a portion of the allowance for loan losses, net unrealized
gain/(losses) on securities available for sale are not permitted to
be included for regulatory capital purposes.
<PAGE>
The following are the Corporation's risk-based capital ratios at
March 31, 1996:
Tier 1 Capital (minimum required 4.00%) 10.20%
Tier 2 Capital (minimum required 8.00%) 11.46%
INTEREST RATE SENSITIVITY
The following table sets forth the distribution of the repricing of
the Corporation's earning assets and interest bearing liabilities as
of March 31, 1996.
(Dollar amounts in thousands)
Three Over Three Over One Over
Months Months to Year to Five
or Less One Year Five Years Years Total
Earning Assets $73,749 $ 42,236 $ 69,206 $60,627 $245,818
Interest Bearing
Liabilities 75,894 51,454 72,151 199,499
Interest Rate
Sensitivity Gap $(2,145) $ (9,218) $ (2,945) $60,627 $ 46,319
Cumulative Interest
Rate
Sensitivity Gap $ 2,145 $(11,363) $(14,308) $46,319
Interest Rate
Sensitivity
Gap Ratio (0.87)% (3.75)% (1.20)% 24.66%
Cumulative Interest
Rate Sensitivity
Gap Ratio (0.87)% (4.62)% (5.82)% 18.84%
LIQUIDITY
Cash and due from banks, federal funds sold, investment securities,
mortgage-backed securities and loans available for sale, as compared
to deposits and short term liabilities, are used by the Corporation
to compute its liquidity on a daily basis. At March 31, 1996, the
Corporation's ratio of such assets to total deposits and borrowed
funds was 18.12%.
<PAGE>
PROVISION AND ALLOWANCE FOR LOAN/LEASE LOSSES
(Dollar amounts in thousands)
QUARTER ENDED
3-31-96 3-31-95
Balance at beginning of period $ 3,707 $ 3,325
Provision charged to expense 140 450
$ 3,847 $ 3,775
Less Charge-offs:
Loans secured by real estate 182 791
Commercial and industrial loans 14 204
Consumer loans 27 57
$ 223 $ 1,052
Add-Recoveries:
Loans secured by real estate 283 0
Commercial and industrial loans 1 2
Consumer loans 7 13
Lease financing receivables 1 2
292 17
Net charge-offs (recoveries) (69) 1,035
Balance at end of period $ 3,916 $ 2,740
Net Charge-offs (recoveries) to:
Average loans/leases (.03)% .53%
Loans/leases at end of period (.04)% .53%
Allowance for loan/lease losses (1.76)% 37.77%
Allowance for loan/lease losses
as a percentage of:
Average loans/leases 1.97% 1.40%
Loans/leases at end of period 2.01% 1.40%
The approach the Corporation uses in determining the adequacy of the
Allowance for Loan/Lease Losses is the combination of a target
reserve and a general reserve allocation. Quarterly, based on an
internal review of the Loan Portfolio, the Corporation identifies
required reserve allocations targeted to recognized problem loans
that, in the opinion of management, have potential loss exposure or
questions relative to the depth of the collateral on these same
loans. In addition, the Corporation allocates a general reserve
against the remainder of the Loan Portfolio.
<PAGE>
NON-ACCRUAL, PAST DUE AND RESTRUCTURED LOANS
(Dollar amounts in thousands)
Non-Accrual Loans: 03-31-96 12-31-95 09-30-95 06-30-95 03-31-95
Loans secured by real estate$ 3,172 $ 5,450 $ 2,124 $ 2,745 $ 3,302
Construction/Land development 464 353 361 52 58
Commercial and Industrial Loans 838 373 302 299 357
Consumer Loans 7 4 13 16 24
4,481 6,180 2,800 3,112 3,741
Loans Contractually
past due 90 days or more
still accruing:
Loans secured by real estate 145 128 271 201 117
Commercial and Industrial Loans 20 135 118 50 0
Consumer Loans 20 14 16 14 8
185 277 405 265 125
Restructured Loans 437 439 442 496 498
Total non-accrual, past
due and restructured
loans $ 5,103 $ 6,896 $ 3,647 $ 3,873 $ 4,364
Non-accrual, past due and
restructured loans
as a percentage of total
loans 2.61% 3.43% 1.80% 1.98% 2.24%
Allowance for loan
losses as a percentage of
non accrual, past due and
restructured loans 76.74% 53.76% 105.18% 77.59% 62.79%
OTHER REAL ESTATE
Other real estate owned - net$ 1,858 $ 1,300 $ 1,237 $ 1,775 $ 1,540
Total non-performing assets $ 6,961 $ 8,196 $ 4,884 $ 5,648 $ 5,904
Non-performing assets as a
percentage of total assets 2.66% 3.23% 1.86% 2.19% 2.38%
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
QUARTER TO DATE AVERAGE BALANCES
INTEREST EARNED - INTEREST EXPENSE
(RATES ON A TAX EQUIVALENT BASIS)
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
March 31, 1996 March 31, 1995
Balance Interest Rate Balance Interest Rate
<S> <C> <C> <C> <C> <C> <C>
Federal Funds sold and
temporary investments $ 6,556 $ 81 4.94% $ 2,266 $ 32 5.65%
Securities 33,242 536 6.45 31,037 495 6.38
Loans/leases 198,767 4,339 8.73 195,649 4,247 8.68
Total earning assets 238,565 $ 4,956 8.31 278,952 $ 4,774 8.34
Loan/lease loss allowance (3,809) (3,260)
All other assets 18,837 18,813
TOTAL ASSETS $253,593 $244,505
LIABILITIES AND EQUITY
Interest bearing deposits $183,733 $ 2,008 4.37 $181,897 $ 1,829 4.02
Borrowed funds 8,358 63 3.02 8,810 97 4.40
Total interest bearing
liabilities 192,091 $ 2,071 4.31 190,707 $ 1,926 4.04
Interest rate spread 4.00% 4.30%
Demand deposits 42,526 37,040
Other liabilities 1,053 806
Shareholders' equity 17,923 15,952
TOTAL LIABILITIES
AND EQUITY $253,593 $244,505
Net Interest Income $ 2,885 $ 2,848
Interest Earned/Earning Assets 8.31% 8.34%
Interest Expense/Earning Assets 3.47 3.36
Net Yield on Earning Assets 4.84% 4.98%
Deduct - Tax Equivalent Adjustment 4 8
NET INTEREST INCOME $ 2,881 $ 2,840
</TABLE>
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings - None
ITEM 2. Changes in Rights of Securities Holders - None
ITEM 3. Defaults by Company on its Senior Securities - None
ITEM 4. Results of Votes on Matters Submitted
to a Vote of Security Holders - None
ITEM 5. Other Events
Information Concerning Forward-Looking Statements.
Westbank has made and may make in the future forward looking
statements concerning future performance, including but not limited
to future earnings, and events or conditions which may affect such
future performance. These forward looking statements are based upon
management's expectations and belief concerning possible future
developments and the potential effect of such future developments on
Westbank. There is no assurance that such future developments will
be in accordance with management's expectations and belief or that
the effect of any future developments on Westbank will be those
anticipated by Westbank management.
All assumptions that form the basis of any forward looking
statements regarding future performance, as well as events or
conditions which may affect such future performance, are based on
factors that are beyond Westbank's ability to control or predict
with precision, including future market conditions and the behavior
of other market participants. Among the factors that could cause
actual results to differ materially from such forward looking
statements are the following:
1. The status of the economy in general, as well as in Westbank's prime
market area, Western Massachusetts;
2. The recovery of the real estate market in Western Massachusetts;
3. Competition in Westbank's prime market area from other banks,
especially in light of continued consolidation in the New England
banking industry.
4. Any changes in federal and state bank regulatory requirements;
5. Changes in interest rates; and
6. The cost and other effects of unanticipated legal and administrative
cases and proceedings, settlements and investigations.
While Westbank periodically reassesses material trends and
uncertainties affecting the Corporation's performance in connection
with is preparation of management's discussion and analysis of
results of operations and financial condition contained in its
quarterly and annual reports, Westbank does not intend to review or
revise any particular forward looking statement in light of future
events.
ITEM 6. Exhibits and Reports on Form 8 - None
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Quarterly Report to be signed on
its behalf by the undersigned thereunto duly authorized.
WESTBANK CORPORATION
Date: May 10, 1996
Donald R. Chase,
President and
Chief Executive Officer
Date: May 10, 1996
John M. Lilly,
Treasurer and
Chief Financial Officer
<PAGE>
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