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, 1998
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: 3,765,552 shares
outstanding as of April 30, 1998.
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION
Page
Financial Statements
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Income and
Comprehensive 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 Securities and Use of Proceeds 16
ITEM 3. Defaults upon Senior Securities 16
ITEM 4. Submission of Matters to a Vote of
Security Holders 16
ITEM 5. Other Information 16-17
ITEM 6. Exhibits and Reports on Form 8-K 17
Signatures 18
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollar amounts in thousands) March 31, 1998 December 31, 1997
- - ------------------------------------------------------------------------------
ASSETS
Cash and due from banks:
Non-interest bearing $ 11,242 $ 9,603
Interest bearing 22 79
Federal funds sold 179 3,678
- - ------------------------------------------------------------------------------
Total cash and cash equivalents 11,443 13,360
Investment securities available for sale 21,300 20,088
Investment securities held to maturity (approximate
market value of $38,598 in 1998 and
$34,655 in 1997) 38,484 34,503
- - ------------------------------------------------------------------------------
Total securities 59,784 54,591
- - ------------------------------------------------------------------------------
Loans $ 235,554 $ 231,012
Mortgage loans held-for-sale 3,757 4,251
Allowance for loan losses (2,852) (2,848)
- - ------------------------------------------------------------------------------
Net-loans 236,459 232,415
Bank premises and equipment 4,676 4,474
Other real estate owned - net of
allowance for losses of $200 in
1998 and $200 in 1997 379 149
Accrued interest receivable 1,764 1,968
Other assets 1,956 1,308
- - ------------------------------------------------------------------------------
TOTAL ASSETS $ 316,461 $ 308,265
==============================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing $ 46,306 $ 48,638
Interest bearing 230,464 222,922
- - ------------------------------------------------------------------------------
Total Deposits 276,770 271,560
Borrowed funds 12,717 11,884
Accrued interest payable 393 379
Other liabilities 1,266 691
- - ------------------------------------------------------------------------------
Total Liabilities 291,146 284,514
- - ------------------------------------------------------------------------------
Stockholders' Equity:
Common stock - $2 par value
Authorized - 9,000,000 shares
Issued - 3,747,797 shares in 1998 and
3,581,377 shares in 1997 7,496 7,163
Additional paid in capital 9,570 8,819
Retained earnings 8,174 7,708
Accumulated other comprehensive income 75 61
- - ------------------------------------------------------------------------------
Total Stockholders' Equity 25,315 23,751
- - ------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 316,461 $ 308,265
==============================================================================
See accompanying notes to condensed consolidated financial statements.
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited)
(Dollar amounts in thousands)
Three months ended March 31, 1998 1997
- - ---------------------------------------------------------------------
Income:
Interest and fees on loans $ 4,979 $ 4,643
Interest and dividend income
on ecurities 827 670
Interest on temporary investments 36 115
- - ---------------------------------------------------------------------
Total interest and dividend income 5,842 5,428
Interest expense 2,579 2,411
- - ---------------------------------------------------------------------
Net interest income 3,263 3,017
Provision for loan losses 19 150
- - ---------------------------------------------------------------------
Net interest income after provision
for loan losses 3,244 2,867
- - ---------------------------------------------------------------------
Non-interest income 608 506
- - ---------------------------------------------------------------------
Non-interest expenses:
Salaries and benefits 1,225 1,128
Other real estate expenses 22 8
Other non-interest expense 983 934
Occupancy - net 225 223
- - ---------------------------------------------------------------------
Total non-interest expense 2,455 2,293
- - ---------------------------------------------------------------------
Income before income taxes 1,397 1,080
Income taxes 558 443
- - ---------------------------------------------------------------------
Net Income $ 839 $ 637
=====================================================================
Net income per share
- Basic $ 0.22 $ 0.19
- Diluted $ 0.22 $ 0.18
Weighted average shares outstanding
- Basic 3,733,402 3,426,453
- Dilutive Option Shares 104,956 95,684
- Diluted 3,838,358 3,522,137
=====================================================================
Comprehensive Income:
Net Income $839 $637
Other comprehensive income:
Unrealized gain/(loss) on securities
available for sale 127 (389)
Tax effect (52) 162
=====================================================================
Total other comprehensive income 75 (227)
=====================================================================
Comprehensive Income $914 $410
=====================================================================
See accompanying notes to condensed consolidated financial statements.
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1997 AND THREE MONTHS ENDED MARCH 31, 1998
(1998 Unaudited)
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK OTHER
ADDITIONAL COMPREHENSIVE
NUMBER OF PAR PAID IN RETAINED INCOME/
SHARES VALUE CAPITAL EARNINGS (LOSS) TOTAL
- - -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE-DECEMBER 31, 1996 3,346,802 $6,694 $7,633 $5,517 $(99) $19,745
Net income - - - 3,231 - 3,231
Cash dividends declared
($.30 per share) - - - (1,040) - (1,040)
Shares issued:
Stock Option Plan 88,156 176 94 - - 270
Dividend Reinvestment
and Stock Purchase Plan 146,419 293 1,092 - - 1,385
Unrealized gain
on securities
available for sale - - - - 160 160
- - -----------------------------------------------------------------------------------------
BALANCE-DECEMBER 31, 1997 3,581,377 7,163 8,819 7,708 61 23,751
Net income - - - 839 - 839
Cash Dividend Declared
($0.10 per share) - - - (373) - (373)
Shares issued:
Stock Option Plan 154,536 309 619 - - 928
Dividend Reinvestment
and Stock Purchase Plan 11,884 24 132 - - 156
Unrealized gain
on securities
available for sale - - - - 14 14
- - -----------------------------------------------------------------------------------------
BALANCE-MARCH 31, 1998 3,747,797 $ 7,496 $ 9,570 $ 8,174 $ 75 $ 25,315
=========================================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)
Three months ended March 31, 1998 1997
- - -------------------------------------------------------------------------------
Operating activities:
Net income $ 839 $ 637
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses 19 150
Depreciation and amortization 189 163
Provision for other real estate owned 17 0
Decrease (increase) in accrued interest receivable 229 (160)
Realized gain on sale of other real estate owned (30) 0
Increase in other assets (673) (284)
Increase in interest payable on deposits 14 28
Increase in other liabilities 575 631
- - -------------------------------------------------------------------------------
Net cash provided by operating activities 1,179 1,165
- - -------------------------------------------------------------------------------
Investing activities:
Investments and mortgage-backed securities:
Held to maturity:
Purchases (18,485) (11,481)
Proceeds from maturities and principal payments 14,504 3,091
Available for sale:
Purchases (4,584) (1,714)
Proceeds from sales 1,270 0
Proceeds from maturities and principal payments 2,102 30
Purchases of premises and equipment (391) (251)
Net (increase) decrease in loans (4,296) (2,886)
Proceeds from sale of other real estate owned 30 0
- - -------------------------------------------------------------------------------
Net cash used in investing activities (9,850) (13,211)
- - -------------------------------------------------------------------------------
Financing activities:
Net increase (decrease) in borrowings 833 (375)
Net increase (decrease) in deposits 5,210 8,626
Proceeds from exercise of stock options
and stock purchase plan 1,084 423
Dividends paid (373) (256)
- - -------------------------------------------------------------------------------
Net cash used by financing activities 6,754 8,418
- - -------------------------------------------------------------------------------
Decrease in cash and cash equivalents (1,917) (3,628)
Cash and cash equivalents at beginning of period 13,360 23,401
- - -------------------------------------------------------------------------------
Cash and cash equivalents at end of period $11,443 $19,773
===============================================================================
Cash paid:
Interest on deposits and other borrowings $2,565 $2,383
Income taxes 195 155
Transfers of loans to other real estate owned 247 66
See notes to consolidated financial statements.
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
NOTE A - GENERAL INFORMATION
Westbank Corporation (hereinafter sometimes referred to as
"Westbank" or the "Corporation") 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" or the "Bank") 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
The Corporation operates eleven banking offices located in Hampden
County and also operates a Trust Department providing services
normally associated with holding property in a fiduciary or agency
capacity. A full range of retail banking services are furnished to
individuals, businesses and non-profit organizations. The
Corporation's primary source of revenue is derived from providing
loans to customers, predominately located in Western Massachusetts.
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, 1998, 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.
NOTE C - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements for the first quarter ended March 31, 1998 and 1997 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, 1998, are not
necessarily indicative of the results that may be expected for the
year ending December 31, 1998.
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, 1997.
NOTE D - 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, 1998 standby letters
of credit amounted to $595,000 and loan commitments were $29,818,000
and unused balances available on home equity lines of credit were
$8,247,000.
<PAGE>
Trust Assets - Property with a book value of $117,661,000 at March
31, 1998 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 E - STOCKHOLDERS' EQUITY
The FDIC imposes leverage capital ratio requirements for state
non-member Banks. The Bank's leverage capital ratio as of March 31,
1998 and December 31, 1997 was 7.54% and 7.04% respectively. In
addition, the FDIC has established risk-based capital requirements
for insured institutions for 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, 1998 for Tier 1 was 11.06% and total risk-based capital
was 12.31%, which meets the FDIC criteria for a well-capitalized
financial institution.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
Changes in Financial Condition -
Total consolidated assets amounted to $316,461,000 on March 31,
1998, compared to $308,265,000 on December 31, 1997. As of March
31, 1998 and March 31, 1997, earning assets amounted to,
respectively, $299,306,000 or 95% of total assets, and $277,289,000,
or 94% of total assets. Earning assets increased during the first
three months of 1998 as a result of increases in securities and
loans. Deposits originated throughout the Bank's branch system
provided the funds to support the increase in earning assets.
Changes in Results of Operations -
For the quarter ended March 31, 1998, net income totaled $839,000
compared to $637,000 for the three-month period ended March 31,
1997.
Non-interest income increased during the first quarter of 1998 by
$102,000 while non-interest expense increased by $162,000, primarily
the result of overall growth of the Corporation.
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 Losses and Non-Performing Assets - A decrease of
$131,000 has been reflected in the provision for loan losses in the
quarter with $19,000 being provided compared to $150,000 in 1997.
Loans written off against the allowance for loan losses after
recoveries amounted to $15,000 for the first three months of 1998
versus $207,000 for the same period of 1997.
After giving effect to the actions described above, the allowance
for loan losses at March 31, 1998 totaled $2,852,000 or 1.19% of
total loans, as compared to $2,848,000 or 1.21% at December 31,
1997.
Non-performing past due loans at March 31, 1998 aggregated $858,000
or 0.36% of total loans compared to $1,226,000 or 0.52% at December
31, 1997. The percentage of non-performing and past due loans
compared to total assets on those same dates, respectively, amounted
to 0.27% and 0.40%.
The change in non-performing loans was primarily the result of the
continued resolution of problem assets.
Other real estate owned increased during the most recent quarter by
$230,000 compared to 1997 and totals $379,000. The percentage of
other real estate owned to total assets as of March 31, 1998 and
December 31, 1997 amounted to 0.12% and 0.40%, respectively.
Management has made every effort to recognize all circumstances
known at this time which could affect the collectibility of loan and
has reflected these in deciding as to the provision for loan 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 and the balance in the allowance for loan
losses. Management deems that the provision for the quarter, and
the balance in the allowance for loan losses, are adequate based on
results provided by the grading system and circumstances known at
this time.
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.
<PAGE>
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.
(Dollar amounts in thousands)
Quarter ended March 31, 1998 1997
- - ------------------------------------------------------------------------------
Interest and divided income $5,842 $5,428
Interest expense 2,579 2,411
- - ------------------------------------------------------------------------------
Net interest income $3,263 $3,017
==============================================================================
INTEREST RATE SPREAD AND NET YIELD ON EARNING ASSETS
(Dollar amounts in thousands)
Quarter ended March 31, 1998 1997
- - ------------------------------------------------------------------------------
Average Average
Balance Rate Balance Rate
- - ------------------------------------------------------------------------------
Earning Assets $291,062 8.03% $271,129 8.01%
- - ------------------------------------------------------------------------------
Interest-bearing
liabilities 234,693 4.40% 222,621 4.33%
- - ------------------------------------------------------------------------------
Interest rate spread 3.63 3.68
- - ------------------------------------------------------------------------------
Interest-free
resources used to
fund earning assets 56,369 48,508
- - ------------------------------------------------------------------------------
Total Sources of Funds $291,062 3.54 $271,129 3.56
==============================================================================
Net Yield on Earning Assets 4.49% 4.45%
==============================================================================
<PAGE>
CHANGES IN NET INTEREST INCOME
(Dollar amounts in thousands)
QUARTER ENDED MARCH 31, 1998
0 V E R
QUARTER ENDED MARCH 31, 1997
- - ------------------------------------------------------------------------------
CHANGE DUE TO
VOLUME RATE TOTAL
- - ------------------------------------------------------------------------------
Interest Income:
Loans $315 21 $336
Securities 179 (22) 157
Federal funds (86) 7 (79)
- - ------------------------------------------------------------------------------
Total Interest Earned 408 6 414
Interest Expense:
Interest bearing deposits 106 39 145
Other Borrowed Funds 21 2 23
- - ------------------------------------------------------------------------------
Total Interest Expense 127 41 168
- - ------------------------------------------------------------------------------
Net Interest Income $281 $(35) $246
==============================================================================
Net interest earned increased to $3,263,000 in the first quarter of
1998, up $246,000 as compared with the comparable period of 1997.
Average earning assets increased by $19,933,000 during the first
quarter of 1998. The average earning base was $291,062,000 compared
to $271,129,000 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
- - ------------------------------------------------------------------------------
3-31-98 3-31-97
Amount Percent Amount Percent
- - ------------------------------------------------------------------------------
Salaries and benefits $1,225 18.99% $1,128 19.01%
Other real estate expense 22 0.34 8 0.13
Other non-interest expense 983 15.24 934 15.74
Occupancy - net 225 3.49 223 3.76
- - ------------------------------------------------------------------------------
Total Operating Expenses $2,455 38.06% $2,293 38.64%
==============================================================================
<PAGE>
CAPITAL RATIOS
3-31-98 12-31-97
- - ------------------------------------------------------------------------------
Ratio of "Tier 1" leverage capital
to total assets at end of period 8.00% 7.70%
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.
The following are the Corporation's risk-based capital ratios at
March 31, 1998:
Tier 1 Capital (minimum required 4.00%) 12.15%
Tier 2 Capital (minimum required 8.00%) 13.40%
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, 1998:
(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 $57,036 $37,052 $95,392 $109,826 $299,306
Interest Bearing
Liabilities 89,065 67,499 86,617 243,181
- - -------------------------------------------------------------------------------
Interest Rate
Sensitivity Gap $(32,029) $(30,447) $8,775 $109,826 $ 56,125
===============================================================================
Cumulative Interest
Rate
Sensitivity Gap $(32,029) $(62,476) $(53,701) $56,125
Interest Rate
Sensitivity
Gap Ratio (10.70)% (10.17)% 2.93% 36.69%
Cumulative Interest
Rate Sensitivity
Gap Ratio (10.70)% (20.87)% (17.94)% 18.75%
<PAGE>
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, 1998, the
Corporation's ratio of such assets to total deposits and borrowed
funds was 25.90%.
PROVISION AND ALLOWANCE FOR LOAN LOSSES
(Dollar amounts in thousands)
Quarter ended March 31, 1998 1997
- - ------------------------------------------------------------------------------
Balance at beginning of period $ 2,848 $ 2,481
Provision charged to expense 19 150
- - ------------------------------------------------------------------------------
2,867 2,631
- - ------------------------------------------------------------------------------
Less Charge-offs:
Loans secured by real estate 40 84
Commercial and industrial loans 7 131
Consumer loans 11 14
- - ------------------------------------------------------------------------------
58 229
- - ------------------------------------------------------------------------------
Add-Recoveries:
Loans secured by real estate 25 19
Commercial and industrial loans 15 1
Consumer loans 3 2
- - ------------------------------------------------------------------------------
43 22
- - ------------------------------------------------------------------------------
Net charge-offs (recoveries) 15 207
- - ------------------------------------------------------------------------------
Balance at end of period $ 2,852 $ 2,424
==============================================================================
Net Charge-offs (recoveries) to:
Average loans .01% .09%
Loans at end of period .01% .09%
Allowance for loan losses .53% 8.54%
Allowance for loan losses
as a percentage of:
Average loans 1.20% 1.09%
Loans at end of period 1.19% 1.09%
The approach the Corporation uses in determining the adequacy of the
allowance for loan 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)
03-31-98 12-31-97 09-30-97 06-30-97 03-31-97
- - -------------------------------------------------------------------------------
Non-accrual loans:
Loans secured by real estate $595 $983 $897 $1,143 $1,377
Construction/Land development 2 3 0 33 78
Commercial and Industrial Loans 37 37 6 240 238
Consumer Loans 1 19 9 5 14
- - -------------------------------------------------------------------------------
$635 $1,042 $912 1,421 1,707
- - -------------------------------------------------------------------------------
Loans contractually
past due 90 days or more
still accruing:
Loans secured by real estate $193 $170 $198 $15 $70
Commercial and Industrial Loans 24 0 18 0 76
Consumer Loans 6 14 54 10 14
- - -------------------------------------------------------------------------------
$223 $184 $270 25 160
- - -------------------------------------------------------------------------------
Total non-accrual, past
due and restructured
loans $858 $1,226 $1,182 $1,446 $1,867
===============================================================================
Non-accrual, past due and
restructured loans
as a percentage of total
loans 0.36% 0.52% 0.49% 0.62% 0.84%
===============================================================================
Allowance for loan
losses as a percentage of
non accrual, past due and
restructured loans 332.40% 232.30% 233.08% 177.04% 129.83%
===============================================================================
OTHER REAL ESTATE
Other real estate owned - net $379 $149 $277 $323 $403
===============================================================================
Total non-performing assets $1,237 $1,375 $1,459 $1,769 $2,270
===============================================================================
Non-performing assets as a
percentage of total assets 0.39% 0.45% 0.45% 0.57% 0.77%
===============================================================================
<PAGE>
WESTBANK CORPORATION AND SUBSIDIARIES
QUARTER TO DATE AVERAGE BALANCES
INTEREST EARNED - INTEREST EXPENSE
<TABLE>
<CAPTION>
(Dollar amounts in thousands)
Three months ended March 31, 1998 1997
Balance Interest Rate Balance Interest Rate
- - --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Federal Funds sold and
temporary investments $2,570 $36 5.60% $8,712 $115 5.28%
Securities 51,701 827 6.40 40,619 670 6.60
Loans 236,791 4,979 8.41 221,798 4,643 8.37
- - --------------------------------------------------------------------------------------------
Total earning assets 291,062 $5,842 8.03 271,129 $5,428 8.01
- - --------------------------------------------------------------------------------------------
Loan loss allowance (2,923) (2,537)
All other assets 17,640 17,493
- - --------------------------------------------------------------------------------------------
TOTAL ASSETS $305,779 $286,085
============================================================================================
LIABILITIES AND EQUITY
Interest bearing deposits $224,416 $2,499 4.45 $215,071 $2,354 4.38
Borrowed funds 10,277 80 3.12 7,550 57 3.02
- - --------------------------------------------------------------------------------------------
Total interest bearing
liabilities 234,693 $2,579 4.40 222,621 $2,411 4.33
- - --------------------------------------------------------------------------------------------
Interest rate spread 3.63% 3.68%
Demand deposits 45,302 41,877
Other liabilities 1,031 1,358
Shareholders' equity 24,753 20,229
- - --------------------------------------------------------------------------------------------
TOTAL LIABILITIES
AND EQUITY $305,779 $286,085
============================================================================================
Net Interest Income $3,263 $3,017
Interest Earned/Earning Assets 8.03% 8.01%
Interest Expense/Earning Assets 3.54 3.56
- - --------------------------------------------------------------------------------------------
Net Yield on Earning Assets 4.49% 4.45%
============================================================================================
</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
a. 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 its 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.
b. Registration on Form S-3
On June 19, 1997 the Corporation filed a registration
statement on Form S-3, which is hereby incorporated by
reference.
<PAGE>
c. Registration of Form S-8
On June 19, 1997, the Corporation filed a registration
statement on Form S-8, which is hereby incorporated by
reference.
ITEM 6. Exhibits and Reports on Form 8-K - None
a. Exhibits
EXHIBIT INDEX
Page No.
3. Articles of Organization, as amended **
(a) Articles of Organization, as amended *
(b) By-Laws, as amended *
27. Financial Data Schedule To be included
* Incorporated by reference to identically numbered exhibits
contained in Registrant's Annual Report on Form 10-K for the
year ended December 31, 1988
** Incorporated by reference to identically numbered exhibits
contained in Registrant's Annual Report on Form 10-K for the
year ended December 31, 1987
b. Reports on Form 8-K - 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 12, 1998 /s/ Donald R. Chase
Donald R. Chase
President and Chief
Executive Officer
Date: May 12, 1998 /s/ John M. Lilly
John M. Lilly
Treasurer and Chief
Financial Officer
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