<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 JUNE 30, 1997
[ ] 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: 1,407,429 shares at August 5, 1997.
<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 ("WB&T" or Wilson") and its
subsidiaries DeKalb Community Bank ("DCB" or "DeKalb" ) and Community Bank of
Smith County ("CBSC" or "Smith") of which there is also a minority interest
ownership are as follows:
Consolidated Balance Sheets - June 30, 1997 and December 31, 1996.
Consolidated Statements of Income - For the six months ended June 30,
1997 and 1996.
Consolidated Statements of Income - For the quarters ended June 30,
1997 and 1996.
Consolidated Statements of Cash Flows - For the six months ended June
30, 1997 and 1996.
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
June 30, 1997 and December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
(In Thousands)
<S> <C> <C>
ASSETS
Loans (less allowance for possible loan
losses of $2,758,000 and $2,452,000
respectively) $ 215,276 $ 183,642
Securities:
Held-to-maturity, at cost (market
value of $26,188,000 and $26,702,000
respectively) 26,126 26,535
Available-for-sale, at market (amortized
cost $33,680,000 and $28,888,000,
respectively) 33,806 29,010
--------------------
Total securities 59,932 55,545
-------------------
Loans held for sale 1,527 2,219
Federal funds sold 15,330 10,626
--------------------
Total earning assets 292,065 252,032
--------------------
Cash and due from banks 8,669 9,938
Bank premises and equipment, net 10,958 9,614
Accrued interest receivable 2,489 2,063
Other real estate 228 -
Organizational costs 91 104
Deferred income tax asset 610 612
Other assets 1,240 941
---------------------
TOTAL ASSETS $ 316,350 $ 275,304
=====================
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE> 4
WILSON BANK HOLDING COMPANY
Consolidated Balance Sheets
June 30, 1997 and December 31, 1996
(Unaudited)
(Continued)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
(In Thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
LIABILITIES
Deposits $ 281,521 $ 243,250
Securities sold under agreement to
repurchase 6,592 5,616
Accrued interest 1,606 1,356
Other liabilities 228 405
Minority interest in assets of subsidiary 3,398 3,425
-------------------
Total liabilities 293,345 254,052
-------------------
STOCKHOLDERS' EQUITY
Common stock, $2.00 par value per share;
authorized 5,000,000 shares; 1,392,182
and 1,378,074 issued and outstanding at
June 30, 1997 and December 31, 1996,
respectively 2,784 2,756
Additional paid-in capital 7,072 6,684
Retained earnings 13,070 11,737
Net unrealized appreciation on available-
for-sale securities, net of tax
benefits of $48,000 and taxes
of $46,000, respectively 79 75
--------------------
Total stockholders' equity 23,005 21,252
--------------------
Commitments and contingencies
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 316,350 $ 275,304
====================
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
4
<PAGE> 5
WILSON BANK HOLDING COMPANY
Consolidated Statements of Earnings
For the Six Months Ended June 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1997 1996
(Dollars In Thousands
Except Per Share Amounts)
<S> <C> <C>
Interest income:
Interest and fees on loans $10,005 $ 7,786
Interest and dividends on securities:
Taxable securities 1,196 951
Exempt from Federal income taxes 561 561
Interest on loans held for sale 54 43
Interest on federal funds sold 439 333
Interest on interest-bearing deposits in
financial institutions 0 5
----------------
Total interest income 12,255 9,679
----------------
Interest expense:
Interest on negotiable order of
withdrawal accounts 299 263
Interest on money market and
savings accounts 1,154 914
Interest on certificates of deposit 4,224 3,384
Interest on securities sold under
agreement to repurchase 143 162
---------------
Total interest expense 5,820 4,723
---------------
Net interest income before provisions for
possible loan losses 6,435 4,956
Provision for possible loan losses 388 277
---------------
Net interest income after provision for
possible loan losses 6,047 4,679
---------------
Non-interest income:
Service charges on deposit accounts 698 601
Other fees and commissions 284 140
Gain on sale of loans 314 322
Minority interest in net loss of
subsidiaries 22 17
---------------
Total non-interest income 1,318 1,080
---------------
</TABLE>
5
<PAGE> 6
WILSON BANK HOLDING COMPANY
Consolidated Statements of Earnings
For the Six Months Ended June 30, 1997 and 1996
(Unaudited)
(Continued)
<TABLE>
<S> <C> <C>
Non-interest expenses:
Salaries and employee benefits 2,491 1,902
Occupancy expenses, net 293 183
Furniture and equipment expense 680 409
Data processing expense 289 154
Other operating expenses 905 668
---------------
Total non-interest expenses 4,658 3,316
---------------
Earnings before income taxes 2,707 2,443
Income taxes 893 798
-----------------
Net earnings $ 1,814 $ 1,645
=================
Weighted average number of shares of
common stock outstanding 1,389,844 1,361,494
Net earnings per share $ 1.31 1.21
Dividends per share $ .35 .35
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
6
<PAGE> 7
WILSON BANK HOLDING COMPANY
Consolidated Statements of Earnings
For the Quarters Ended June 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Quarters Ended
June 30,
1997 1996
(Dollars In Thousands
Except Per Share Amounts)
<S> <C> <C>
Interest income:
Interest and fees on loans $ 5,288 $ 4,017
Interest and dividends on securities:
Taxable securities 609 487
Exempt from Federal income taxes 282 278
Interest on loans held for sale 28 20
Interest on federal funds sold 179 148
Interest on interest-bearing deposits in
financial institutions - 3
------------------
Total interest income 6,386 4,953
------------------
Interest expense:
Interest on negotiable order of
withdrawal accounts 132 114
Interest on money market and
savings accounts 613 450
Interest on certificates of deposit 2,179 1,695
Interest on securities sold under
agreement to repurchase 73 92
------------------
Total interest expense 2,997 2,351
------------------
Net interest income before provisions for
possible loan losses 3,389 2,602
Provision for possible loan losses 201 146
------------------
Net interest income after provision for
possible loan losses 3,188 2,456
------------------
Non-interest income:
Service charges on deposit accounts 365 311
Other fees and commissions 150 24
Gain on sale of loans 180 164
Minority interest in net loss of
subsidiaries 3 17
------------------
Total non-interest income 698 516
------------------
</TABLE>
7
<PAGE> 8
WILSON BANK HOLDING COMPANY
Consolidated Statements of Earnings
For the Quarters Ended June 30, 1997 and 1996
(Unaudited)
(Continued)
<TABLE>
<S> <C> <C>
Non-interest expenses:
Salaries and employee benefits 1,308 1,025
Occupancy expenses, net 140 96
Furniture and equipment expense 358 213
Data processing expense 150 81
Other operating expenses 414 338
------------------
Total non-interest expenses 2,370 1,753
------------------
Net earnings before income taxes 1,516 1,219
Income taxes 506 402
------------------
Net earnings $ 1,010 $ 817
==================
Weighted average number of shares of
common stock outstanding 1,392,182 1,363,838
Net earnings per share $ .73 $ .60
Dividends per share $ - -
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
8
<PAGE> 9
WILSON BANK HOLDING COMPANY
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1997 and 1996
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1997 1996
(In Thousands)
<S> <C> <C>
Cash flows from operating activities:
Interest received $ 11,811 $ 9,579
Fees and commissions received 679 848
Proceeds from sale of loans 18,974 13,848
Origination of loans held for sale (17,968) (14,087)
Interest paid (5,570) (4,642)
Cash paid to suppliers and employees (4,299) (3,093)
Income taxes paid (939) (647)
--------------------
Net cash provided by operating
activities 2,688 1,806
--------------------
Cash flows from investing activities:
Proceeds from maturities of
held-to-maturity securities 4,450 1,984
Proceeds from maturities of
available-for-sale securities 5,312 6,013
Purchase of held-to-maturity
securities (4,046) (4,368)
Purchase of available-for-sale
securities (10,080) (5,110)
Loans made to customers,
net of repayments (32,250) (18,751)
Purchase of premises and equipment (1,821) (1,608)
--------------------
Net cash used in
investing activities (38,435) (21,840)
--------------------
Cash flows from financing activities:
Net increase in non-interest bearing,
savings and NOW deposit accounts 21,319 8,651
Net increase in time deposits 16,952 8,084
Increase in securities sold
under agreement to repurchase 976 1,529
Sale of minority owned commercial
bank subsidiary common stock - 1,750
Dividends paid (481) (472)
</TABLE>
9
<PAGE> 10
WILSON BANK HOLDING COMPANY
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1997 and 1996
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
(Continued)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1997 1996
(In Thousands)
<S> <C> <C>
Proceeds from reinvestment of dividends
- sale of common stock 416 391
----------------------
Net cash provided by financing
activities 39,182 19,933
----------------------
Net increase (decrease) in cash and
cash equivalents 3,435 (101)
----------------------
Cash and cash equivalents at beginning of
period 20,564 17,189
----------------------
Cash and cash equivalents at end of
period $ 23,999 $ 17,088
======================
Reconciliation of net earnings to net cash
provided by operating activities:
Net earnings $ 1,814 $ 1,645
Adjustments to reconcile net
earnings to net cash
provided by operating
activities:
Depreciation and amortization 497 305
Provision for loan losses 388 277
Net loss of minority interest of
commercial bank subsidiary (22) (17)
FHLB stock dividends reinvested (25) (33)
Decrease in refundable income taxes - 80
Increase (decrease) in taxes payable (50) 68
Decrease (increase) in other assets, net (299) 110
Decrease (increase)in loans held for sale 692 (561)
Increase in interest receivable (426) (93)
Increase in other liabilities (131) (56)
Increase in interest payable 250 81
---------------------
Total adjustments 874 161
---------------------
Net cash provided by operating activities $ 2,688 $ 1,806
=====================
</TABLE>
10
<PAGE> 11
WILSON BANK HOLDING COMPANY
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1997 and 1996
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
$2,000 and $169,000 for the six
months ended June 30, 1997 and 1996,
respectively. $ 4 $ (276)
=====================
Transfer of loans to other real estate $ 288 $ -
=====================
</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 ("WB&T") along with DeKalb Community Bank ("DCB"), a 50% owned
subsidiary, and Community Bank of Smith County ("CBSC"), a 50% owned subsidiary.
DCB opened for business on April 18, 1996 and CBSC opened for business on
December 16, 1996. WB&T 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 of 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 June 30, 1997 and December 31, 1996, and the results of
operations for the six months ended June 30, 1997 and 1996 and the three months
ended June 30, 1997 and 1996 and changes in cash flows for the six months ended
June 30, 1997 and 1996. 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 1996 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
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
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.
RESULTS OF OPERATIONS
Net earnings increased 10.3% to $1,814,000 for the six months ended June 30,
1997 from $1,645,000 in the first six months of 1996. Net earnings were
$1,010,000 for the quarter ended June 30, 1997, an increase of $193,000 or 23.6%
from $817,000 for the three months ended June 30, 1996 and an increase of
$206,000 or 25.6% from the quarter ended March 31, 1997. The increase in net
earnings during the six months ended June 30, 1997 was primarily due to a 29.8%
increase in net interest income along with a 22.0% increase in non-interest
income as compared to a 40.5% 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
$2,576,000 or 26.6% during the six months ended June 30, 1997 as compared to the
same period in 1996. The increase in total interest income was $1,433,000 or
28.9% for the quarter ended June 30, 1997 as compared to the quarter ended June
30, 1996 and $517,000 or 8.8% over the first three months of 1997. The increase
in 1996 was primarily attributable to an increase in average earning assets,
combined with an increase in weighted average interest rates. The addition of
CBSC and growth of DCB added to the increase of the average earning assets. The
ratio of average earning assets to total average assets was 92.9% and 93.2% for
the quarters ended June 30, 1997 and March 31, 1997, respectively, and 92.2% and
94.6% for the six months ended June 30, 1997 and 1996, respectively.
Interest expense increased $1,097,000 or 23.2% for the six months ended June 30,
1997 as compared to the same period in 1996. The increase was $646,000 or 27.5%
for the three months ended June 30, 1997 as compared to the same period in 1996.
Interest expense increased $174,000 or 6.2% for the quarter ended June 30, 1997
over the quarter ended March 31, 1997. The overall increase in total
13
<PAGE> 14
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
interest expense for the first six months of 1997 was primarily attributable to
an increase in weighted average interest-bearing liabilities. The foregoing
resulted in an increase in net interest income of $1,479,000 or 29.8% for the
first six months of 1997 as compared to the same period in 1996. The increase in
net interest income was $787,000 or 30.3% for the quarter ended June 30, 1997
compared to the quarter ended June 30, 1996 and an increase of $343,000 or 11.3%
when compared to the first quarter of 1997.
PROVISION FOR POSSIBLE LOAN LOSSES
The provision for possible loan losses was $388,000 and $277,000, for the first
six months of 1997 and 1996, respectively. The provision for loan losses during
the three month periods ended June 30, 1997 and 1996 was $201,000 and $146,000,
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 $2,758,000, an increase of 12.5% from $2,452,000 at December 31, 1996.
The allowance for possible loan losses as a percentage of total outstanding
loans (excluding loans held for sale) was 1.26% at June 30, 1997 compared to
1.32% at December 31, 1996.
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 June 30, 1997 to be adequate. Transactions related to
the allowance for possible loan losses were as follows:
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1997 1996
(In Thousands)
<S> <C> <C>
Balance, January 1, 1997 and 1996, respectively $ 2,452 $ 1,944
Add (deduct):
Losses charged to allowance (108) (55)
Recoveries credited to allowance 26 6
Provision for loan losses 388 277
-------------------
Balance, June 30, 1997 and 1996, respectively $ 2,758 $ 2,172
===================
</TABLE>
<PAGE> 15
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
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 the subsidiary banks. Total non-interest income
for the six months ended June 30, 1997 increased by 22.0% to $1,318,000 from
$1,080,000 for the same period in 1996. The increase was $182,000 or 35.2%
during the quarter ended June 30, 1997 compared to the second quarter in 1996
and there was an increase of $78,000 or 12.6% compared to the first three months
of 1997. The increase during the first six months of 1997 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 $97,000 or 16.1%
to $698,000 during the six months ended June 30, 1997. Service charges on
deposit accounts increased $54,000 or 17.4% during the quarter ended June 30,
1997 compared to the same quarter in 1996. Gains on sales of loans totaled
$314,000 and $322,000 during the six months ended June 30, 1997 and 1996,
respectively, which represented a decrease of 2.5%, and $180,000 and $164,000
during the quarters ended June 30, 1997 and 1996, respectively, which reflected
a 9.8% increase in 1997 over the corresponding period in 1996.
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 $1,342,000 or 40.5% during the first six months
of 1997 compared to the same period in 1996. The increase for the quarter ended
June 30, 1997 was $617,000 or 35.2% as compared to the comparable quarter in
1996 and $82,000 or 3.6% as compared to the first 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 1997. The number of full-time equivalent
employees increased to 159 at June 30, 1997, an increase from 133 at June 30,
1996. This number of employees includes 143 at the Bank, 10 at DCB and 6 at
CBSC. Salaries and employee benefits increased $589,000, or 31.0% during the
first six months of 1997 as compared to the corresponding period in 1996 and
$283,000, or 27.6%
15
<PAGE> 16
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
during the second quarter of 1997 as compared to the second quarter of 1996.
Increases in net occupancy expenses ($110,000 or 60.1% during the first six
months of 1997 and $44,000 or 45.8% during the second quarter of 1997) and
furniture and equipment expenses ($271,000 or 66.3% during the first six months
of 1997 and $145,000 or 68.1% during the second quarter of 1997) were also due
to the Company's expanded operations. Other operating expenses for the six
months ended June 30, 1997 increased 35.5% to $905,000 from $668,000 for the
comparable period in 1996 and increased 22.5% from $338,000 to $414,000 for the
second quarter of 1997.
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.
INCOME TAXES
The Company's income tax expense was $893,000 for the six months ended June 30,
1997, an increase of $95,000, or 11.9%, over the comparable period in 1996.
Income tax expense was $506,000 for the quarter ended June 30, 1997, an increase
of $104,000, or 25.9%, over the same period in 1996. The percentage of income
tax expense to net income before taxes was 33.0% and 32.7% for the six months
ended June 30, 1997 and 1996, respectively and 33.4% and 33.0% for the quarters
ended June 30, 1997 and 1996, respectively. The percentage of income tax expense
to net income before taxes was 32.5% for the first three months of 1997. 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
4.6% for the six months ended June 30, 1997 compared to 5.8% for the six months
ended June 30, 1996.
16
<PAGE> 17
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
FINANCIAL CONDITION
BALANCE SHEET SUMMARY
The Company's total assets increased 14.9% to $316,374,000 during the six months
ended June 30, 1997 from $275,304,000 at December 31, 1996. Total assets
increased $12,490,000 or 4.1% and $28,580,000 or 10.4% during the three-month
periods ended June 30, 1997 and March 31, 1997, respectively. Loans, (net of
allowance for possible loan losses, unearned interest and excluding loans held
for sale - "Net Loans"), totaled $215,276,000 at June 30, 1997 and increased
17.2% from to $183,642,000 at December 31, 1996. Net Loans increased $19,323,000
or 9.9% and $12,323,000 or 6.7% during the quarters ended June 30, 1997 and
March 31, 1997, respectively. 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 as well as the growth of DCB and
CBSC. Investment securities increased $4,387,000 or 7.9% to $59,932,000 at June
30, 1997 from $55,545,000 at December 31, 1996. Investment securities increased
$1,411,000 or 2.4% during the three months ended June 30, 1997 and increased
$2,976,000 or 5.4% during the quarter ended March 31, 1997. The increase in
securities included a net unrealized gain on securities available for sale of
$127,000 during at June 30, 1997 as compared to $121,000 at December 31, 1996.
Federal funds sold increased $4,704,000, or 44.3%, to $15,330,000 at June 30,
1997 from $10,626,000 at December 31, 1996. Federal funds decreased 40.3% during
the second quarter of 1997 from a balance of approximately $25,697,000 at March
31, 1997.
Total liabilities increased by 15.5% to $293,345,000 at June 30, 1997 compared
to $254,052,000 at December 31, 1996. The increase by quarter totaled
$11,339,000 or 4.5% and $27,979,000 or 10.5% during the quarters ended June 30,
1997 and March 31, 1997, respectively. This increase during the six months ended
June 30, 1997 was composed primarily of a $38,271,000 or 15.7% increase in total
deposits and an increase of $976,000 or 17.4% in securities sold under
repurchase agreements. Deposits increased $11,166,000 and $27,105,000 during the
second and first quarters of 1997, respectively.
17
<PAGE> 18
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
The following schedule details selected information as to non-performing loans
of the Company at June 30, 1997 and December 31, 1996:
<TABLE>
<CAPTION>
June 30, 1997
-------------
Past due
90 days
or more Non-accrual
------- -----------
(In Thousands)
<S> <C> <C>
Real estate loans $ 144 -
Installment loans 292 147
Credit cards 10 -
Commercial, financial
and agricultural loans 134 39
-------------------
Total 90 days or more past due and
non-accrual loans $ 580 186
===================
Total 90 days or more past due
and non-accrual loans $ 766
Renegotiated loans -
--------------
Total 90 days or more past due, non-
accrual and renegotiated loans $ 766
===============
</TABLE>
<TABLE>
<CAPTION>
December 31, 1996
-----------------
Past due
90 days
or more Non-accrual
------- -----------
(In Thousands)
<S> <C> <C>
Real estate loans $ 344 59
Installment loans 370 177
Credit cards - -
Commercial, financial
and agricultural loans 80 24
-------------------
Total 90 days or more past due and
non-accrual loans $ 794 260
===================
Total 90 days or more past due
and non-accrual loans $ 1,054
Renegotiated loans -
--------------
Total 90 days or more past due, non-
accrual and renegotiated loans $ 1,054
==============
</TABLE>
Non-performing loans at June 30, 1997 totaled $766,000, a decrease
18
<PAGE> 19
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
of 27.3% from $1,054,000 at December 31, 1996. During the three months ended
June 30, 1997, non-performing loans decreased $224,000 or 22.6% from $990,000 at
March 31, 1997. The decrease in non-performing loans in the first six months of
1997 is due primarily to a decrease in loans 90 or more days past due by
approximately $214,000 (which includes a decrease in real estate mortgage loans
by $200,000.)
At June 30, 1997, loans totaling $541,000 (including the above past due and
non-accrual loans) were included in the Company's internal classified loan list.
Of these loans $320,000 are secured by real estate, $31,000 are commercial and
$190,000 are installment loans. The collateral values securing these loans total
approximately $402,000 ($362,000 secured by real property, $7,000 relating to
commercial loans and $33,000 related to installment loans). The internally
classified loans have declined from $561,000 at December 31, 1996, to $541,000
at June 30, 1997. This decrease is represented by a decrease of $155,000 in
commercial loans and a decrease of $17,000 of installment loans along with an
increase of $180,000 in loans secured by real estate. The increase in loans
secured by real estate and decrease in commercial loans was the result of
additional real estate collateral being obtained on a loan previously classified
as commercial. 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 $1,344,000 during the first six
months of 1997 to $10,958,000. An increase of approximately $459,000 can be
attributed to the construction in progress of the branch in Hartsville; an
increase of approximately $210,000 can be attributed to additions to two
branches in Lebanon and an increase of approximately $308,000 relates to the
addition of CBSC.
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.
19
<PAGE> 20
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
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, securities and money market
instruments that will mature within one year. At June 30, 1997, the Company's
liquid assets totaled $23,987,000.
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 secondary sources.
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 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 banks. 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 $12.1 million 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 June 30, 1997
loans of approximately $67.5 million 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
20
<PAGE> 21
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
of approximately $40.8 million 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 June 30, 1997, total stockholders' equity was $23,005,000 or 7.3% of total
assets, which compares with $21,252,000 or 7.7% of total assets at December 31,
1996. The dollar increase in stockholders' equity during the six months ended
June 30, 1997 results from the Company's net income of $1,814,000 less the net
effect of a $4,000 increase in the net unrealized gain on investment securities
net of applicable income taxes and cash dividends declared of $482,000 (of which
$417,000 was reinvested under the Company's dividend reinvestment plan.)
The Company's principal regulators have established minimum risk-based capital
requirements and leverage capital requirements for the Company, WB&T, DCB and
CBSC. 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 there is 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, WB&T, DCB and CBSC to have a total risk-based
capital ratio of 8.0% and a Tier I risk-based capital ratio of 4.0%.
The Company experienced loan growth in excess of 17% (approximately $31,000,000)
during the first six months of 1997 while stockholder's equity grew by 8%
(approximately $2,000,000). As a result, the risk-weighted assets increased
significantly and caused
21
<PAGE> 22
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
a decrease in the risk-based capital ratios of the Company and WB&T. Despite the
slight decrease, the Company and its subsidiaries are still "well capitalized"
by FDIC definitions.
At June 30, 1997 the Company's total risk-based capital ratio was 12.2% and
its Tier I risk-based capital ratio was approximately 10.9% compared to ratios
of 15.0% and 13.7%, respectively at December 31, 1996.
At June 30, 1997 WB&T's total risk-based capital ratio was 11.5% and its Tier I
risk-based capital ratio was approximately 10.2% compared to ratios of 11.7% and
10.4%, respectively at December 31, 1996.
At June 30, 1997 DCB's total risk-based capital ratio was 27.3% and its Tier I
risk-based capital ratio was approximately 26.2% compared to ratios of 33.8% and
32.6%, respectively at December 31, 1996.
At June 30, 1997 CBSC's total risk-based capital ratio was 51.8% and its Tier I
risk-based capital ratio was approximately 50.7% compared to ratios of 256.9%
and 256.9%, respectively at December 31, 1996.
The required leverage capital ratio (Tier I capital to average assets for the
most recent quarter) for the Company, WB&T, DCB and CBSC is 4.0%. At June 30,
1997 the Company had a leverage ratio of 7.6%, compared to 9.2% at December 31,
1996. At June 30, 1997 WB&T had a leverage ratio of 7.2%, compared to 7.1% at
December 31, 1996. At June 30, 1997 DCB had a leverage ratio of 17.1% compared
to 24.6% at December 31, 1996. At June 30, 1997 CBSC had a leverage ratio of
30.7% compared to 125.0% at December 31, 1996.
Dividends of $482,000 and $462,000 were declared and paid by the Company during
the six months ended June 30, 1997 and 1996, respectively. Of these amounts
paid, $417,000 and $391,000 were reinvested in the Company's common stock during
the six months ended June 30, 1997 and 1996, respectively.
IMPACT OF INFLATION
Although interest rates are significantly affected by inflation, the inflation
rate is immaterial when reviewing the Company's results of operations.
22
<PAGE> 23
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Stockholders was held April 15, 1997.
(b) Each of the persons named in the Proxy Statement as a nominee for director
was elected and the selection of Maggart & Associates, P.C. as independent
auditors for the Company for 1997 was ratified. The following are the voting
results on each of the matters:
(1) Election of the entire board of directors who are as follows:
<TABLE>
<CAPTION>
Total Number of Shares Voting:
Shares Broker
Voting For Against Withheld Non-Votes
----------------------------------------------
<S> <C> <C> <C> <C> <C>
Charles Bell 792,929 790,219 0 2,710 0
Jack Bell 792,929 790,219 0 2,710 0
Mackey Bentley 792,929 790,219 0 2,710 0
Randall Clemons 792,929 790,219 0 2,710 0
Jimmy Comer 792,929 790,219 0 2,710 0
Jerry Franklin 792,929 790,219 0 2,710 0
John Freeman 792,929 790,219 0 2,710 0
Marshall Griffith 792,929 790,219 0 2,710 0
Harold Patton 792,929 790,219 0 2,710 0
James Patton 792,929 790,219 0 2,710 0
John Trice 792,929 788,309 0 4,620 0
Bob VanHooser 792,929 790,219 0 2,710 0
</TABLE>
(2) The election of Maggart & Associates, P.C. as independent
auditors for the Company was as follows:
<TABLE>
<CAPTION>
Total Number of Shares Voting:
Shares Broker
Voting For Against Abstain Non-Votes
------------------------------------------------------
<S> <C> <C> <C> <C>
792,929 783,230 223 9,476 0
</TABLE>
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.
23
<PAGE> 24
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
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: August 12, 1997 /s/ Randall Clemons
------------------ -----------------------------------
Randall Clemons, President and
Chief Executive Officer
DATE: August 12, 1997 /s/ Becky Taylor
------------------ -------------------------------------
Becky Taylor, Vice President, Cashier
and Principal Accounting Officer
24
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 8,669
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 15,330
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 33,806
<INVESTMENTS-CARRYING> 26,126
<INVESTMENTS-MARKET> 26,188
<LOANS> 218,034
<ALLOWANCE> 2,758
<TOTAL-ASSETS> 316,350
<DEPOSITS> 281,521
<SHORT-TERM> 6,592
<LIABILITIES-OTHER> 5,232
<LONG-TERM> 0
0
0
<COMMON> 2,784
<OTHER-SE> 20,221
<TOTAL-LIABILITIES-AND-EQUITY> 316,350
<INTEREST-LOAN> 10,059
<INTEREST-INVEST> 1,757
<INTEREST-OTHER> 439
<INTEREST-TOTAL> 12,255
<INTEREST-DEPOSIT> 5,677
<INTEREST-EXPENSE> 5,820
<INTEREST-INCOME-NET> 6,435
<LOAN-LOSSES> 388
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 4,658
<INCOME-PRETAX> 2,707
<INCOME-PRE-EXTRAORDINARY> 2,707
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,814
<EPS-PRIMARY> 1.31
<EPS-DILUTED> 1.31
<YIELD-ACTUAL> 0
<LOANS-NON> 186
<LOANS-PAST> 580
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 766
<ALLOWANCE-OPEN> 2,452
<CHARGE-OFFS> 108
<RECOVERIES> 26
<ALLOWANCE-CLOSE> 2,758
<ALLOWANCE-DOMESTIC> 2,758
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
