<PAGE> 1
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
For the quarterly period ended SEPTEMBER 30, 1996
------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------- -------------
Commission File Number 0-20402
-------
WILSON BANK HOLDING COMPANY
---------------------------
(Exact Name of Registrant As Specified in Its Charter)
Tennessee 62-1497076
--------- ----------
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
623 West Main Street, Lebanon, Tennessee 37087
-----------------------------------------------
(Address of principal executive offices and Zip Code)
(615) 444-2265
--------------
(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
------- -------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Common stock outstanding: 1,378,074 shares at November 12, 1996.
1
<PAGE> 2
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited consolidated financial statements of the registrant and its
wholly-owned subsidiary Wilson Bank & Trust (the "Bank") and its subsidiary
DeKalb Community Bank ("DeKalb") of which there is also a minority interest
ownership are as follows:
Consolidated Balance Sheets - September 30, 1996 and December 31, 1995.
Consolidated Statements of Income - For the nine months ended
September 30, 1996 and 1995.
Consolidated Statements of Income - For the quarters ended
September 30, 1996 and 1995.
Consolidated Statements of Cash Flows - For the nine months ended
September 30, 1996 and 1995.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II: OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
Item 6. Exhibits and Reports on Form 8-K.
SIGNATURES
2
<PAGE> 3
WILSON BANK HOLDING COMPANY
Consolidated Balance Sheets
September 30, 1996 and December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
Sept. 30, December 31,
1996 1995
(In Thousands)
<S> <C> <C>
ASSETS
------
Loans (less allowance for possible loan
losses of $2,267,000 and $1,944,000
respectively) $174,902 $146,738
Securities:
Held-to-maturity, at cost (market
value of $26,956,000 and $22,558,000
respectively) 27,027 25,391
Available-for-sale, at market (amortized
cost $25,140,000 and $26,350,000,
respectively) 25,069 26,632
-------- --------
Total securities 52,096 52,023
-------- --------
Loans held for sale 1,537 1,715
Interest-bearing deposits in financial
institutions - 100
Federal funds sold 2,556 8,042
- ------------------------- -------- --------
Total earning assets 231,091 208,618
- ------------------------- -------- --------
Cash and due from banks 13,427 9,147
Bank premises and equipment, net 8,625 6,121
Accrued interest receivable 2,098 1,896
Deferred income tax asset 478 349
Other assets 679 558
-------- --------
TOTAL ASSETS $256,398 $226,689
======== ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE> 4
WILSON BANK HOLDING COMPANY
Consolidated Balance Sheets
September 30, 1996 and December 31, 1995
(Unaudited)
(Continued)
<TABLE>
<CAPTION>
Sept. 30, December 31,
1996 1995
(In Thousands)
<S> <C> C>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
LIABILITIES
-----------
Deposits $222,785 $200,037
Securities sold under agreement to
repurchase 9,916 6,693
Accrued interest 1,090 1,374
Other liabilities 266 187
-------- --------
Total liabilities 234,057 208,291
-------- --------
Minority interest in assets of subsidiary 1,736 -
-------- --------
STOCKHOLDERS' EQUITY
--------------------
Common stock, $2.00 par value per share;
authorized 5,000,000 shares; 1,363,838
and 1,378,074 issued and outstanding at
September 30, 1996 and December 31, 1995,
respectively 2,756 2,699
Additional paid-in capital 6,684 5,944
Retained earnings 11,209 9,580
Net unrealized appreciation (losses) on
available-for-sale securities, net of
tax benefit of $27,000 and taxes
of $107,000, respectively (44) 175
-------- --------
Total stockholders' equity 20,605 18,398
-------- --------
Commitments and contingencies
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $256,398 $226,689
======== ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
4
<PAGE> 5
WILSON BANK HOLDING COMPANY
Consolidated Statements of Earnings
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
Sept. 30,
(Dollars In Thousands
Except Per Share Amounts)
<S> <C> <C>
Interest income:
Interest and fees on loans $12,114 $ 9,630
Interest and dividends on securities:
Taxable securities 1,447 1,295
Exempt from Federal income taxes 848 758
Interest on loans held for sale 67 64
Interest on federal funds sold 398 476
Interest on interest-bearing deposits in
financial institutions 5 7
------- -------
Total interest income 14,879 12,230
------- -------
Interest expense:
Interest on negotiable order of
withdrawal accounts 374 360
Interest on money market and
savings accounts 1,405 1,065
Interest on certificates of deposit 5,086 4,471
Interest on securities sold under
agreement to repurchase 282 211
------ -------
Total interest expense 7,147 6,107
------ -------
Net interest income before provisions for
possible loan losses 7,732 6,123
Provision for possible loan losses 442 388
------ -------
Net interest income after provision for
possible loan losses 7,290 5,735
------ -------
Non-interest income:
Service charges on deposit accounts 929 719
Other fees and commissions 263 204
Gain on sale of loans 482 316
Gain on sale of fixed assets - 5
Minority interest in net loss of
subsidiary 14 -
----- -------
Total non-interest income 1,688 1,244
----- -------
</TABLE>
5
<PAGE> 6
WILSON BANK HOLDING COMPANY
Consolidated Statements of Earnings
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
(Continued)
<TABLE>
<S> <C> <C>
Non-interest expenses:
Salaries and employee benefits 2,943 2,338
Occupancy expenses, net 284 242
Furniture and equipment expense 638 552
Data processing expense 242 207
Other operating expenses 1,051 978
Security losses, available-for-sale - 4
Loss on sale of other real estate - 10
------- --------
Total non-interest expenses 5,158 4,331
------- --------
Net earnings before income taxes 3,820 2,648
Income taxes 1,241 785
------- --------
Net earnings $ 2,579 $ 1,863
======= ========
Weighted average number of shares of
common stock outstanding 1,366,333 1,332,033
Net earnings per share $ 1.89 1.40
Dividends per share $ 0.70 0.70
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
6
<PAGE> 7
WILSON BANK HOLDING COMPANY
Consolidated Statements of Earnings
For the Quarters Ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Quarters Ended
Sept. 30,
1996 1995
(Dollars In Thousands
Except Per Share Amounts)
<S> <C> <C>
Interest income:
Interest and fees on loans $ 4,328 $ 3,225
Interest and dividends on securities:
Taxable securities 496 416
Exempt from Federal income taxes 287 254
Interest on loans held for sale 24 26
Interest on federal funds sold 65 129
Interest on interest-bearing deposits in
financial institutions 0 2
------- -------
Total interest income 5,200 4,052
------- --------
Interest expense:
Interest on negotiable order of
withdrawal accounts 111 107
Interest on money market and
savings accounts 491 356
Interest on certificates of deposit 1,702 1,492
Interest on securities sold under
agreement to repurchase 120 64
------ --------
Total interest expense 2,424 2,019
------ --------
Net interest income before provisions for
possible loan losses 2,776 2,033
Provision for possible loan losses 165 115
------- --------
Net interest income after provision for
possible loan losses 2,611 1,918
------- --------
Non-interest income:
Service charges on deposit accounts 328 254
Other fees and commissions 123 76
Gain on sale of loans 160 138
Gain on sale of fixed assets - 5
-------- --------
Total non-interest income 611 473
-------- --------
</TABLE>
7
<PAGE> 8
WILSON BANK HOLDING COMPANY
Consolidated Statements of Earnings
For the Quarters Ended September 30, 1996 and 1995
(Unaudited)
(Continued)
<TABLE>
<S> <C> <C>
Non-interest expenses:
Salaries and employee benefits 1,041 802
Occupancy expenses, net 101 56
Furniture and equipment expense 229 219
Data processing expense 88 69
Other operating expenses 383 274
Minority interest in net earnings
of subsidiary 3 -
-------- --------
Total non-interest expenses 1,845 1,420
-------- --------
Net earnings before income taxes 1,377 1,020
Income taxes 443 309
-------- --------
Net earnings $ 934 $ 711
======== ========
Weighted average number of shares of
common stock outstanding 1,375,908 1,342,167
Net earnings per share $ 0.68 $ 0.53
Dividends per share $ 0.35 0.35
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
8
<PAGE> 9
WILSON BANK HOLDING COMPANY
Consolidated Statements of Cash Flows
For the Nine Months September 30, 1996 and 1995
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995
(In Thousands)
<S> <C> <C>
Cash flows from operating activities:
Interest received $ 14,683 $ 11,689
Fees and commissions received 995 923
Proceeds from sale of loans 24,956 17,483
Origination of loans held for sale (24,296) (17,439)
Interest paid (7,431) (5,653)
Cash paid to suppliers and employees (4,642) (4,102)
Income taxes paid (1,178) (665)
--------- --------
Net cash provided by operating
activities 3,087 2,236
--------- --------
Cash flows from investing activities:
Proceeds from maturities of
held-to-maturity securities 3,038 872
Proceeds from maturities of
available-for-sale securities 6,558 1,194
Proceeds from maturities of interest
bearing time deposits 100 -
Proceeds from sales of
available-for-sale securities - 2,461
Purchase of held-to-maturity
securities (4,668) (379)
Purchase of available-for-sale
securities (5,360) (12,299)
Loans made to customers,
net of repayments (28,606) (14,283)
Proceeds from sale of premises and
equipment 1 14
Proceeds from sale of other real
estate - 21
Purchase of premises and equipment (2,924) (850)
---------- --------
Net cash used in
investing activities (31,861) (23,249)
---------- --------
Cash flows from financing activities:
Net increase in non-interest bearing,
savings and NOW deposit accounts 8,591 3,801
Net increase in time deposits 14,157 15,880
</TABLE>
9
<PAGE> 10
WILSON BANK HOLDING COMPANY
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 1996 and 1995
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
(Continued)
<TABLE>
<S> <C> <C>
Increase in securities sold
under agreement to repurchase 3,223 2,634
Sale of minority owned commercial
bank subsidiary common stock 1,750 -
Dividends paid (950) (929)
Proceeds from reinvestment of dividends
- sale of common stock 797 769
-------- --------
Net cash provided by financing activities 27,568 22,155
-------- --------
Net increase (decrease) in cash and
cash equivalents (1,206) 1,142
Cash and cash equivalents at beginning of
period 17,189 17,175
-------- --------
Cash and cash equivalents at end of
period $ 15,983 $ 18,317
======== ========
Reconciliation of net earnings to net cash
provided by operating activities:
Net earnings $ 2,579 $ 1,863
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 460 403
Provision for loan losses 442 388
Loss on sale of investment securities -
available-for-sale - 4
Gain on sale of premises and equipment - (5)
Net loss of minority interest of
commercial bank subsidiary (14) -
Federal Home Loan Bank stock dividends (34) (27)
Decrease in refundable income taxes 80
Increase (decrease) in taxes payable (17) 8
Loss on sale of other real estate - 10
Decrease (increase) in other assets, net (201) (129)
Decrease (increase)in loans held for sale 178 (272)
Increase in interest receivable (202) (510)
Increase in deferred tax asset 4 -
Increase (decrease) in other liabilities 96 49
Increase in interest payable (284) 454
-------- --------
Total adjustments 508 373
-------- --------
Net cash provided by operating activities $ 3,087 $ 2,236
======== ========
</TABLE>
10
<PAGE> 11
WILSON BANK HOLDING COMPANY
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 1996 and 1995
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
(Continued)
<TABLE>
<S> <C> <C>
Supplemental schedule of noncash activities:
Unrealized gain (loss) in values of securities
available for sale, net of taxes of
$27,000 and $74,000 for the nine
months ended September 30, 1996 and
1995, respectively. $ (44) $ 121
====================
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
11
<PAGE> 12
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements
(Unaudited)
BASIS OF PRESENTATION
The unaudited consolidated financial statements include the accounts of Wilson
Bank Holding Company (the "Company") and its wholly-owned subsidiary, Wilson
Bank and Trust (the "Bank") along with DeKalb Community Bank ("DeKalb) of which
the Company owns 50% of the outstanding common stock. DeKalb opened for
business on April 18, 1996. The Bank also has a wholly-owned consolidated
subsidiary, Hometown Finance Company, which is a consumer finance company.
The accompanying consolidated financial statements have been prepared, without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. All financial information except per share data has been rounded
to the nearest thousand dollars for both the financial statements and
management's discussion and analysis of financial condition and results of
operations.
In the opinion of management, the consolidated financial statements contain all
adjustments and disclosures necessary to summarize fairly the financial
position of the Company as of September 30, 1996 and December 31, 1995, and the
results of operations for the nine months ended September 30, 1996 and 1995 and
the three months ended September 30, 1996 and 1995 and changes in cash flows
for the nine months ended September 30, 1996 and 1995. All significant
intercompany transactions have been eliminated. The interim consolidated
financial statements should be read in conjunction with the notes to the
consolidated financial statements presented in the Company's 1995 Annual Report
to Stockholders. The results for interim periods are not necessarily
indicative of results to be expected for the complete fiscal year.
12
<PAGE> 13
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The purpose of this discussion is to provide insight into the financial
condition and results of operations of the Company and its subsidiaries. This
discussion should be read in conjunction with the consolidated financial
statements and notes thereto.
RESULTS OF OPERATIONS
Net earnings increased 38.4% to $2,579,000 for the nine months ended September
30, 1996 from $1,863,000 in the first nine months of 1995. Net earnings were
$934,000 for the quarter ended September 30, 1996, an increase of $223,000 or
31.4% from $711,000 for the three months ended September 30, 1995 and an
increase of $123,000 or 15.1% from the quarter ended June 30, 1996. The
increase in net earnings during the nine months ended September 30, 1996 was
primarily due to a 26.3% increase in net interest income along with a 35.7%
increase in non-interest income as compared to a 19.1% increase in non-interest
expenses.
NET INTEREST INCOME
Net interest income represents the amount by which interest earned on various
earning assets exceeds interest paid on deposits and other interest-bearing
liabilities and is the most significant component of the Company's earnings.
The Company's total interest income, excluding tax equivalent adjustments,
increased $1,820,000 or 23.2% during the nine months ended September 30, 1996
as compared to the same period in 1995. The increase in total interest income
was $829,000 or 19.0% for the quarter ended September 30, 1996 as compared to
the quarter ended September 30, 1995 and $247,000 or 5.0% over the second three
months of 1996. The increase in 1996 was primarily attributable to an increase
in average earning assets, combined with an increase in weighted average
interest rates. The ratio of average earning assets to total average assets
was 93.3%, 94.3% and 94.9% for the quarters ended September 30, 1996, June 30,
1996 and March 31, 1996, respectively, and 94.6% and 93.5% for the nine months
ended September 30, 1996 and 1995, respectively.
Interest expense increased $1,040,000 or 17.0% for the nine months ended
September 30, 1996 as compared to the same period in 1995. The increase was
$156,000 or 6.9% for the three months ended September 30, 1996 as compared to
the same period in 1995. Interest expense increased $73,000 or 3.11% for the
quarter ended September 30, 1996 over the second three months of 1996. The
overall increase in total interest expense for the first nine months of 1996
was primarily attributable to an increase in weighted average interest-bearing
liabilities. The foregoing resulted in an increase in net interest income of
$1,609,000 or 26.3% for the first nine months of 1996 as compared to the same
13
<PAGE> 14
period in 1995. The increase in net interest income was $673,000 or 32.0% for
the quarter ended September 30, 1996 compared to the quarter ended September
30, 1995 and an increase of $47,000 or 1.8% when compared to the second quarter
of 1996.
PROVISION FOR POSSIBLE LOAN LOSSES
The provision for possible loan losses was $442,000 and $388,000, for the first
nine months of 1996 and 1995, respectively. The provision for loan losses
during the three month periods ended September 30, 1996 and 1995 was $165,000
and $136,000, respectively. The provision for possible loan losses is based on
past loan experience and other factors which, in management's judgment, deserve
current recognition in estimating possible loan losses. Such factors include
past loan loss experience, growth and composition of the loan portfolio, review
of specific problem loans, the relationship of the allowance for loan losses to
outstanding loans, and current economic conditions that may affect the
borrower's ability to repay. Management has in place a system designed for
monitoring its loan portfolio in an effort to identify potential problem loans.
The provision for possible loan losses raised the allowance for possible loan
losses to $2,241,000, an increase of 15.3% from $1,944,000 at December 31,
1995. The allowance for possible loan losses as a percentage of total
outstanding loans (excluding loans held for sale) was 1.27% at September 30,
1996 compared to 1.31% at December 31, 1995.
The level of the allowance and the amount of the provision involve evaluation
of uncertainties and matters of judgment. Management believes the allowance
for possible loan losses at September 30, 1996 to be adequate. Transactions
related to the allowance for possible loan losses were as follows:
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995
(In Thousands)
<S> <C> <C>
Balance, January 1, 1996 and 1995, respectively $ 1,944 $ 1,556
Add (deduct):
Losses charged to allowance (128) (45)
Recoveries credited to allowance 9 23
Provision for loan losses 442 252
------- ------
Balance, September 30, 1996 and 1995,
respectively $ 2,267 $1,786
======= ======
</TABLE>
NON-INTEREST INCOME
The components of the Company's non-interest income include service charges on
deposit accounts, other fees and commissions, gain on sale of loans, gain on
sale of investment securities and the offsetting effect of third party
interests in the results of operations of DeKalb. Total non-interest income
for the nine months ended September 30, 1996 increased by 35.7% to $1,688,000
14
<PAGE> 15
from $1,244,000 for the same period in 1995. The increase was $138,000 or
29.2% during the quarter ended September 30, 1996 compared to the third quarter
in 1995 and there was a decrease of $95,000 or 18.4% compared to the first
three months of 1996. The increase during the first nine months of 1996 was
due primarily to increases in service charges on deposit accounts as well as an
increase in gains on sale of loans. Service charges on deposit accounts
increased $210,000 or 29.2% to $929,000 during the nine months ended September
30, 1996. Service charges on deposit accounts increased $74,000 or 29.1%
during the quarter ended September 30, 1996 compared to the same quarter in
1995. Gains on sales of loans totaled $482,000 and $316,000 during the nine
months ended September 30, 1996 and 1995, respectively, which represented an
increase of 52.5%, and $160,000 and $138,000 during the quarters ended
September 30, 1996 and 1995, respectively, which reflected a 15.9% increase in
1996 over the corresponding period in 1995.
NON-INTEREST EXPENSES
Non-interest expense consists primarily of employee salaries and benefits,
occupancy, furniture and equipment expense and other operating expenses. Total
non-interest expense increased $827,000 or 19.1% during the first nine months
of 1996 compared to the same period in 1995. The increase for the quarter
ended September 30, 1996 was $425,000 or 29.7% as compared to the comparable
quarter in 1995 and $92,000 or 5.2% as compared to the second three months of
1996. The increases in non-interest expense are attributable primarily to
increases in employee salaries and benefits associated with an increase in the
number of employees necessary to support the Company's expanded operations,
which included the opening of a new branch in 1995. The number of full-time
equivalent employees increased to 137 at September 30, 1996, an increase from
111 at September 30, 1995. This included 130 at the Bank and 7 at DeKalb.
Increases in occupancy and furniture and equipment expenses were also due to
the Company's expanded operations. Other operating expenses for the nine
months ended September 30, 1996 increased 7.4% to $1,051,000 from $978,000 for
the comparable period in 1995. Other operating expenses increased $109,000 or
39.8% during the quarter ended September 30, 1996 as compared to the same
period in 1995 and decreased $109,000 or 32.5% as compared to the second three
months of 1996.
These other operating expenses include Federal Deposit Insurance Corporation
premiums assessed on deposits, supplies and general operating costs which
increased as a result of continued growth of the Company. During 1995 the
Bank's FDIC assessment rate was 0.23% of eligible deposits. The FDIC has
changed the risk-based range of assessments (which had ranged from 0.23% to
0.31% of eligible deposits) to range from 0.04% to 0.31%. The Bank is
currently assessed a maximum of 0.04% and the annual expense for 1996 should be
approximately $2,000. The Bank received a rebate on the premiums paid in early
1995 late last year.
15
<PAGE> 16
INCOME TAXES
The Company's income tax expense was $1,241,000 for the nine months ended
September 30, 1996, an increase of $456,000 over the comparable period in 1995.
Income tax expense was $443,000 for the quarter ended September 30, 1996, an
increase of $134,000 over the same period in 1995. The percentage of income
tax expense to net income before taxes was 32.5% and 29.7% for the nine months
ended September 30, 1996 and 1995, respectively and 32.1% and 30.3% for the
quarters ended September 30, 1996 and 1995, respectively. The percentage of
income tax expense to net income before taxes was 33.0% for the second three
months of 1996. The increase in the percentage is due to a decrease in the
amount of tax exempt interest income as a percentage of total interest income.
This percentage was 5.7% for the nine months ended September 30, 1996 compared
to 6.2% for the nine months ended September 30, 1995.
FINANCIAL CONDITION
BALANCE SHEET SUMMARY
The Company's total assets increased 13.1% to $256,398,000 during the nine
months ended September 30, 1996 from $226,689,000 at December 31, 1995. Total
assets increased $8,331,000 or 3.4% and $14,762,000 or 6.5% during the
three-month period ended September 30, 1996. Loans, net of allowance for
possible loan losses ("Net Loans"), totaled $174,902,000 at September 30, 1996
or a 12.6% increase compared to $146,738,000 at December 31, 1995. Net Loans
increased $9,690,000 or 5.9% during the quarter ended September 30, 1996.
These increases were primarily due to the continued favorable interest rate
environment which motivated the refinancing of mortgages and the Company's
ability to increase its market share of such loans while maintaining its
underwriting standards. Investment securities increased $73,000 or 0.14% to
$52,096,000 at September 30, 1996 from $52,023,000 at December 31, 1995.
Investment securities increased $473,000 or 0.90% during the three months ended
September 30, 1996. The increase in securities was reduced by an increase in
the net unrealized loss by $353,000 during the nine month period ending
September 30, 1996. Federal funds sold decreased $5,486,000 to $2,556,000 at
September 30, 1996 from $8,042,000 at December 31, 1995 due to increased loan
demand during the year.
Total liabilities increased by 8.8% to $226,648,000 at September 30, 1996
compared to $208,291,000 at December 31, 1995. The increase by quarter totaled
$5,951,000 or 2.7% and $12,406,000 or 6.0% during the quarters ended September
30, 1996 and March 31, 1996, respectively. These increases were composed
primarily of a $16,735,000 or 8.4% increase in total deposits and an increase
of $1,529,000 or 22.8% in securities sold under repurchase agreements during
the nine months ended September 30, 1996.
16
<PAGE> 17
The following schedule details selected information as to non-performing loans
of the Company at September 30, 1996 and December 31, 1995:
<TABLE>
<CAPTION>
September 30, 1996
---------------------------
Past due
90 days
or more Non-accrual
--------- -----------
(In Thousands)
<S> <C> <C>
Real estate loans $ 85 $ 13
Installment loans 114 195
Credit cards 15 -
Commercial, financial
and agricultural loans 18 6
------ --------
Total 90 days or more past due and
non-accrual loans $ 232 $ 214
========= ========
Total 90 days or more past due
and non-accrual loans $ 446
Renegotiated loans -
---------
Total 90 days or more past due, non-
accrual and renegotiated loans $ 446
=========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995
-------------------------
Past due
90 days
or more Non-accrual
-------- -----------
(In Thousands)
<S> <C> <C>
Real estate loans $ - -
Installment loans 154 113
Credit cards 9 -
Commercial, financial
and agricultural loans 8 4
------ -------
Total 90 days or more past due and
non-accrual loans $ 171 $ 117
====== =======
Total 90 days or more past due
and non-accrual loans $ 288
Renegotiated loans -
--------
Total 90 days or more past due, non-
accrual and renegotiated loans $ 288
========
</TABLE>
Non-performing loans at September 30, 1996 totaled $446,000, an increase of
69.3% from $288,000 at December 31, 1995. During the three months ended
September 30, 1996, non-performing loans increased $52,000 or 13.2% from
$394,000 at June 30, 1996. The increase in non-performing loans in the first
nine months of 1996 is due primarily to an increase in the installment loans 90
or more days past due.
At September 30, 1996, loans totaling $516,000 (including the above
17
<PAGE> 18
past due and non-accrual loans) were included in the Company's internal
classified loan list. Of these loans $134,000 are secured by real estate,
$204,000 are commercial and $178,000 are installment loans. The collateral
values securing these loans total approximately $334,000 ($142,000 secured by
real property, $115,000 relating to commercial loans and $77,000 related to
installment loans). The internally classified loans have declined from
$1,631,000 at December 31, 1995, to $514,000 at September 30, 1996. This
decrease is represented by a decrease of $1,079,000 in loans secured by real
estate and a decrease of $36,000 of other various types of loans. Loans are
listed as classified when information obtained about possible credit problems
of the borrower has prompted management to question the ability of the borrower
to comply with the repayment terms of the loan agreement. The loan
classifications do not represent or result from trends or uncertainties which
management expects will materially impact future operating results, liquidity
or capital resources.
Fixed assets net of depreciation increased $2,504,000 during the first nine
months of 1996 to $8,625,000. Of this increase. $665,000 can be attributed to
the addition of DeKalb and $1,148,000 was the result of a new addition to the
main office of the Bank. The remainder is attributed to additional furniture,
fixtures and equipment for the locations as well as additions to the computer
system. Construction was completed in October 1996.
LIQUIDITY AND ASSET MANAGEMENT
The Company's management seeks to maximize net interest income by managing the
Company's assets and liabilities within appropriate constraints on capital,
liquidity and interest rate risk.
Liquidity is the ability to maintain sufficient cash levels necessary to fund
operations, meet the requirements of depositors and borrowers and fund
attractive investment opportunities. Higher levels of liquidity bear
corresponding costs, measured in terms of lower yields on short-term, more
liquid earning assets and higher interest expense involved in extending
liability maturities.
Liquid assets include cash and cash equivalents and securities and
money market instruments that will mature within one year. At September 30,
1996, the Company's liquid assets totaled $26,285,000.
The Company's primary source of liquidity is a stable core deposit base. In
addition short-term investments, loan payments and investment security
maturities provide a secondary source.
Interest rate risk (sensitivity) focuses on the earnings risk associated with
changing interest rates. Management seeks to maintain profitability in both
immediate and long term earnings through funds management/interest rate risk
management. The
18
<PAGE> 19
Company's rate sensitivity position has an important impact on earnings.
Senior management of the Company meets monthly to analyze the rate sensitivity
position of the Bank. These meetings focus on the spread between the Company's
cost of funds and interest yields generated primarily through loans and
investments.
The Company's securities portfolio consists of earning assets that provide
interest income. For those securities classified as held-to-maturity the
Company has the ability and intent to hold these securities to maturity or on a
long-term basis. Securities classified as available-for-sale include
securities intended to be used as part of the Company's asset/liability
strategy and/or securities that may be sold in response to changes in interest
rate, prepayment risk, the need or desire to increase capital and similar
economic factors. Securities totaling approximately $19,653,000 mature or will
be subject to rate adjustments within the next twelve months.
A secondary source of liquidity is the Bank's loan portfolio. At September 30,
1996 loans of approximately $112,777,000 either will become due or will be
subject to rate adjustments within twelve months from the respective date.
Continued emphasis will be placed on structuring adjustable rate loans.
As for liabilities, certificates of deposit of $100,000 or greater of
approximately $26,867,000 will become due during the next twelve months.
Historically, there has been no significant reduction in immediately
withdrawable accounts such as negotiable order of withdrawal accounts, money
market demand accounts, demand deposit and regular savings. Management does
not anticipate that there will be significant withdrawals from these accounts
in the next twelve months.
Management believes that with present maturities, the anticipated
growth in deposit base, and the efforts of management in its asset/liability
program, management is positioned to effectively manage its liquidity in the
near term.
CAPITAL POSITION AND DIVIDENDS
At September 30, 1996, total stockholders' equity was $20,605,000 or 8.0% of
total assets, which compares with $18,398,000 or 8.1% of total assets at
December 31, 1995. The dollar increase in stockholders' equity during the nine
months ended September 30, 1996 results from the Company's net income of
$2,579,000 less the net effect of a $219,000 increase in the net unrealized
loss on investment securities net of applicable income taxes and cash dividends
declared of $950,000 (of which $740,000 was reinvested under the Company's
dividend reinvestment plan.)
The Company's principal regulators have established minimum
19
<PAGE> 20
risk-based capital requirements and leverage capital requirements for the
Company, the Bank and DeKalb. These guidelines classify capital into two
categories of Tier I and Tier II capital. Total capital consists of Tier I (or
core) capital (essentially common equity less intangible assets) and Tier II
capital (essentially qualifying long-term debt, of which the Company, Bank and
DeKalb have none, and a part of the allowance for possible loans losses). In
determining risk-based capital requirements, assets are assigned risk-weights
of 0% to 100%, depending on regulatory assigned levels of credit risk
associated with such assets. The risk-based capital guidelines require the
Company, Bank and DeKalb to have a total risk-based capital ratio of 8.0% and a
Tier I risk-based capital ratio of 4.0%.
At September 30, 1996 the Company's total risk-based capital ratio was 14.7%
and their Tier I risk-based capital ratio was approximately 13.4% compared to
ratios of 13.8% and 12.6%, respectively at December 31, 1995.
At September 30, 1996 the Bank's total risk-based capital ratio was 13.0% and
its Tier I risk-based capital ratio was approximately 11.7% compared to ratios
of 13.8% and 12.5%, respectively at December 31, 1995.
At September 30, 1996 DeKalb's total risk-based capital ratio was 52.8% and its
Tier I risk-based capital ratio was approximately 52.8%.
The required leverage capital ratio (Tier I capital to average assets for the
most recent quarter) for the Company, Bank and DeKalb is 4.0%. At September
30, 1996 the Company had a leverage ratio of 9.0%, compared to 8.2% at December
31, 1995. At September 30, 1996 the Bank had a leverage ratio of 7.9%,
compared to 8.1% at December 31, 1995. At September 30, 1996 DeKalb had a
leverage ratio of 120.7%. Dividends of $950,000 and $740,000 were declared by
the Company during the first nine months ended September 30, 1996 and 1995,
respectively.
IMPACT OF INFLATION
Although interest rates are significantly affected by inflation, the inflation
rate has not materially impacted the Company's results of operations.
20
<PAGE> 21
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
During September 1996 the Company filed applications with the
Tennessee Department of Financial Institutions, the Federal Deposit Insurance
Corporation and the Board of Governors of the Federal Reserve System for the
authorization to establish a new bank subsidiary under the name "Community Bank
of Smith County" in Carthage, Tennessee ("Smith County Bank"). As stated in
those applications, as part of the organization of Smith County Bank, Smith
County Bank will sell 50% (175,000 shares) of its Common Stock to persons
who reside in or own businesses in Smith County, Tennessee. The Company will
purchase the other 50% (175,000 shares) of Smith County Bank's Common Stock.
Each of the shares sold to members of the public and the Company will be sold
for $10.00 per share and Smith County Bank will be initially capitalized with
$3,500,000 (less organizational expenses estimated at approximately $100,000).
The Company intends to open the Smith County Bank for operation in late
December of 1996.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(27) Financial Data Schedule (for SEC use only)
(b) No reports on Form 8-K have been filed during the quarter for which this
report is filed.
21
<PAGE> 22
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.
WILSON BANK HOLDING COMPANY
(Registrant)
DATE: November 14, 1996 /s/ Randall Clemons
----------------- -------------------------------------------
Randall Clemons, President and
Chief Executive Officer
DATE: November 14, 1996 /s/ Becky Taylor
----------------- -------------------------------------------
Becky Taylor, Vice President, Cashier
and Principal Accounting Officer
22
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF WILSON BANK AND TRUST FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 13,427
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 2,556
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 25,069
<INVESTMENTS-CARRYING> 27,027
<INVESTMENTS-MARKET> 26,956
<LOANS> 177,169
<ALLOWANCE> 2,267
<TOTAL-ASSETS> 256,398
<DEPOSITS> 222,785
<SHORT-TERM> 9,916
<LIABILITIES-OTHER> 1,090
<LONG-TERM> 0
0
0
<COMMON> 2,756
<OTHER-SE> 17,849
<TOTAL-LIABILITIES-AND-EQUITY> 256,398
<INTEREST-LOAN> 12,181
<INTEREST-INVEST> 2,295
<INTEREST-OTHER> 403
<INTEREST-TOTAL> 14,879
<INTEREST-DEPOSIT> 6,685
<INTEREST-EXPENSE> 7,147
<INTEREST-INCOME-NET> 7,732
<LOAN-LOSSES> 442
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 5,518
<INCOME-PRETAX> 3,820
<INCOME-PRE-EXTRAORDINARY> 3,820
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,579
<EPS-PRIMARY> 1.89
<EPS-DILUTED> 1.89
<YIELD-ACTUAL> 4.57
<LOANS-NON> 214
<LOANS-PAST> 232
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 416
<ALLOWANCE-OPEN> 1,944
<CHARGE-OFFS> 127
<RECOVERIES> 9
<ALLOWANCE-CLOSE> 2,267
<ALLOWANCE-DOMESTIC> 2,267
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,751
</TABLE>
