<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 MARCH 31, 1998
[ ] 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 Identification
Incorporation or Organization) Number)
623 West Main Street, Lebanon, TN 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: 1,422,585 shares at May 8, 1998
---------
<PAGE> 2
PART 1: FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited consolidated financial statements of the registrant and its
subsidiaries are as follows:
Consolidated Balance Sheets - March 31, 1998 and December 31,
1997.
Consolidated Statements of Earnings - For the three months ended
March 31, 1998 and 1997.
Consolidated Statements of Comprehensive Earnings - For the three
months ended March 31, 1998 and 1997.
Consolidated Statements of Cash Flows - For the three months
ended March 31, 1998 and 1997.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk
PART II: OTHER INFORMATION
Signatures
<PAGE> 3
WILSON BANK HOLDING COMPANY
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
March 31 December 31,
1998 1997
--------- --------
(In Thousands)
Assets
<S> <C> <C>
Loans $ 247,082 240,556
Less: Allowance for loan losses (3,057) (2,890)
--------- --------
Net loans 244,025 237,666
Securities:
Held to maturity, at cost (market value - $24,466,000 and $24,547,000, respectively) 24,134 24,251
Available-for-sale, at market (amortized cost - $45,979,000 and
$37,052,000, respectively) 46,114 37,246
--------- --------
Total securities 70,248 61,497
Loans held for sale 5,920 4,092
Federal funds sold 35,612 17,657
--------- --------
Total earning assets 355,805 320,912
Cash and due from banks 11,390 14,123
Bank premises and equipment, net 12,677 11,929
Accrued interest receivable 2,832 2,715
Organizational costs, net of accumulated amortization of $63,000 and $58,000, 73 78
respectively
Deferred income tax asset 710 695
Other real estate -- 63
Other assets 1,042 1,194
--------- --------
Total assets $ 384,529 351,709
========= ========
Liabilities and Stockholders' Equity
Deposits $ 346,863 316,641
Securities sold under repurchase agreements 5,901 4,560
Accrued interest and other liabilities 2,431 2,236
Minority interest 3,479 3,455
--------- --------
Total liabilities 358,674 326,892
--------- --------
Stockholders' equity:
Common stock, $2.00 par value; authorized 5,000,000 shares, issued 1,422,585 and
1,407,467 shares, respectively 2,845 2,815
Additional paid-in capital 7,999 7,527
Retained earnings 14,934 14,362
Accumulated other comprehensive earnings:
Net unrealized gains on available-for-sale securities, net of taxes of $51,000 and
$65,000, respectively 77 113
--------- --------
Total stockholders' equity 25,855 24,817
--------- --------
Total liabilities and stockholders' equity $ 384,529 351,709
========= ========
</TABLE>
See accompanying notes to consolidated financial statements (unaudited).
3
<PAGE> 4
WILSON BANK HOLDING COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
---------- ---------
(Dollars In Thousands
Except Per Share Amount)
<S> <C> <C>
Interest income:
Interest and fees on loans $ 5,805 4,717
Interest and dividends on securities:
Taxable securities 744 587
Exempt from Federal income taxes 280 279
Interest on loans held for sale 61 26
Interest on Federal funds sold 397 260
---------- ---------
Total interest income 7,287 5,869
---------- ---------
Interest expense:
Interest on negotiable order of withdrawal accounts 105 167
Interest on money market and savings accounts 912 541
Interest on certificates of deposit 2,642 2,045
Interest on securities sold under repurchase agreements 64 70
---------- ---------
Total interest expense 3,723 2,823
---------- ---------
Net interest income before provision for possible loan losses 3,564 3,046
Provision for possible loan losses 228 187
---------- ---------
Net interest income after provision for possible
loan losses 3,336 2,859
---------- ---------
Non-interest income:
Service charges on deposit accounts 367 333
Other fees and commissions 356 81
Gain on sale of loans 269 134
Gain on sale of fixed assets 6 --
Minority interest in net loss of subsidiaries -- 33
---------- ---------
998 581
---------- ---------
Non-interest expense:
Salaries and employee benefits 1,419 1,183
Occupancy expenses, net 196 153
Furniture and equipment expense 201 322
Data processing expense 109 139
Other operating expenses 644 441
Loss on sale of other real estate 2 --
Minority interest in net earnings of subsidiaries 32 11
---------- ---------
2,603 2,249
---------- ---------
Earnings before income taxes 1,731 1,191
Income taxes 596 387
---------- ---------
Net earnings $ 1,135 804
========== =========
Weighted average number of shares outstanding 1,417,546 1,387,479
========== =========
Net earnings per common share $ .80 .58
========== =========
Dividends per share $ .40 .35
========== =========
</TABLE>
See accompanying notes to consolidated financial statements (unaudited).
4
<PAGE> 5
WILSON BANK HOLDING COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
------- ------
(In Thousands)
<S> <C> <C>
Net earnings $ 1,135 804
------- ------
Other comprehensive losses, net of tax:
Unrealized losses on available-for-sale securities
arising during period, net of taxes of $22,000 and
$93,000, respectively (36) (137)
------- ------
Other comprehensive losses (36) (137)
------- ------
Comprehensive earnings $ 1,099 667
======= ======
</TABLE>
See accompanying notes to consolidated financial statements (unaudited).
5
<PAGE> 6
WILSON BANK HOLDING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
------- ------
(In Thousands)
<S> <C> <C>
Cash flows from operating activities:
Interest received $ 7,152 5,600
Fees and commissions received 723 405
Proceeds from sale of loans 19,136 9,510
Origination of loans held for sale (20,695) (7,894)
Interest paid (3,706) (2,586)
Cash paid to suppliers and employees (2,321) (2,138)
Income taxes paid (237) (187)
------- ------
Net cash provided by operating activities 52 2,710
------- ------
Cash flows from investing activities:
Proceeds from maturities of held-to-maturity securities 798 5,619
Purchase of held-to-maturity securities (681) (4,046)
Purchase of available-for-sale securities (19,571) (7,868)
Proceeds from maturities of available-for-sale securities 10,662 2,858
Proceeds from sales of available-for-sale securities -- 250
Proceeds from sale of fixed assets 27 --
Proceeds from sale of other real estate 61 --
Loans made to customers, net of repayments (6,587) (12,754)
Purchase of premise and equipment (1,041) (719)
------- ------
Net cash used in investing activities (16,332) (16,660)
------- ------
Cash flows from financing activities:
Net increase in non-interest bearing, savings and NOW
deposit accounts 15,450 12,608
Net increase in time deposits 14,772 14,497
Increase in securities sold under repurchase agreement 1,341 624
Dividends paid (563) (482)
Proceeds from sale of common stock 502 416
------- ------
Net cash provided by financing activities 31,502 27,663
------- ------
Net increase in cash and cash equivalents 15,222 13,713
Cash and cash equivalents at beginning of period 31,780 20,564
------- ------
Cash and cash equivalents at end of period $47,002 34,277
======= ======
</TABLE>
See accompanying notes to consolidated financial statements (unaudited).
6
<PAGE> 7
WILSON BANK HOLDING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
------- ------
(In Thousands)
<S> <C> <C>
Reconciliation of net earnings to net cash provided by operating activities:
Net earnings $ 1,135 804
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 274 250
Provision for loan losses 228 187
Net gains (losses) of minority interests of
commercial bank subsidiaries 32 (22)
Gain on sale of fixed assets (6) --
Loss on sale of other real estate 2 --
Decrease (increase) in loans held for sale (1,828) 1,482
Decrease in refundable income taxes 175 --
Increase in taxes payable 184 200
FHLB dividend reinvestment (15) (12)
Decrease (increase) in other assets, net (23) 61
Increase in deferred tax asset -- (70)
Decrease in other liabilities (6) (140)
Increase in interest receivable (117) (267)
Increase in interest payable 17 237
------- ------
Total adjustments (1,083) 1,906
------- ------
Net cash provided by operating activities $ 52 2,710
======= ======
Supplemental schedule of non-cash activities:
Unrealized loss in values of securities available-for- sale, net of income
tax benefit of $22,000 and $93,000 for the quarters ended March 31, 1998
and 1997,
respectively $ (36) (137)
======= ======
Non-cash transfers from loans to other real estate $ -- 244
======= ======
</TABLE>
See accompanying notes to consolidated financial statements (unaudited).
7
<PAGE> 8
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 (Company), its wholly-owned subsidiary, Wilson Bank and
Trust, Hometown Finance Company, a wholly-owned subsidiary of Wilson Bank and
Trust, DeKalb Community Bank, a 50% owned subsidiary, and Community Bank of
Smith County, a 50% owned subsidiary.
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.
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 March 31, 1998 and December 31, 1997, the results of
operations for the three months ended March 31, 1998 and 1997, comprehensive
earnings for the three months ended March 31, 1998 and 1997 and changes in cash
flows for the three months ended March 31, 1998 and 1997. 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 1997 Annual Report
to Stockholders. The results for interim periods are not necessarily indicative
of results to be expected for the complete fiscal year.
ALLOWANCE FOR LOAN LOSSES
Transactions in the allowance for loan losses were as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1998 1997
------- ------
(In Thousands)
<S> <C> <C>
Balance, January 1, 1998 and 1997, respectively $ 2,890 2,452
Add (deduct):
Losses charged to allowance (80) (42)
Recoveries credited to allowance 19 12
Provision for loan losses 228 187
------- ------
Balance, March 31, 1998 and 1997, respectively $ 3,057 2,609
======= ======
</TABLE>
8
<PAGE> 9
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 41.2% to $1,135,000 for the three months
ended March 31, 1998 from $804,000 in the first quarter of 1997. The increase in
net earnings was primarily due to a 17.0% increase in net interest income and a
71.8% increase in non-interest income which were partially offset by a 15.7%
increase in non-interest expenses.
NET INTEREST INCOME
Net interest income represents the amount by which interest earned
in 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 interest income, excluding tax equivalent
adjustments, increased $1,418,000 or 24.2% during the three months ended March
31, 1998 as compared to the first quarter 1997. The increase in 1998 was
primarily attributable to an increase in average earning assets. The ratio of
average earning assets to total average assets was 94.1% for the quarter ended
March 31, 1998 and 93.2% for the quarter ended March 31, 1997.
Interest expense increased by $900,000 for the three months ended
March 31, 1998 compared to an increase of $451,000 for the same period in 1997.
The increase for the quarters ended March 31, 1998 and 1997 was due to an
increase in average interest bearing liabilities and weighted average interest
rates.
The foregoing resulted in an increase in net interest income
before the provision for loan losses of $518,000 or 17.0% for the first three
months of 1998 as compared to the first quarter 1997.
PROVISION FOR POSSIBLE LOAN LOSSES
The provision for loan losses was $228,000 and $187,000,
respectively, for the first three months of 1998 and 1997. The provision for
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 identifying and monitoring its loan portfolio. The provision
for loan losses raised the allowance for possible loan losses (net of charge
offs and recoveries) to $3,057,000 an increase of 5.8% from $2,890,000 at
December 31, 1997. The allowance for possible loan losses was 1.2% of total
loans outstanding at March 31, 1998 and December 31, 1997, respectively.
9
<PAGE> 10
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
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 March 31, 1998 to be adequate.
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 fixed assets and minority interest in net losses of
subsidiaries. Total non-interest income for the three months ended March 31,
1998 increased by 71.8% to $998,000 from $581,000 for the same period in 1997.
This increase was due to an increase of $135,000 or 100.7% in gains on sale of
loans from $134,000 during the first quarter of 1997 to $269,000 for the same
period in 1998. Service charges on deposit accounts increased $34,000 or 10.2%
to $367,000, and other fees and commissions increased $275,000 or 339.5% to
$356,000 compared to the same quarter in 1997.
NON-INTEREST EXPENSES
Non-interest expenses consist primarily of employee costs,
occupancy expenses, furniture and equipment expenses, data processing expenses,
loss on sale of other real estate, other operating expenses and minority
interest in net earnings of subsidiaries. Total non-interest expenses increased
$354,000 or 15.7% during the first three months of 1998 compared to same period
in 1997. The increases in non-interest expenses 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
includes the addition of a new branch office. The number of employees increased
from 159 at March 31, 1997 to 172 at March 31, 1998. Increases in occupancy and
furniture and equipment expenses were also due to the Company's expanded
operations. Other operating expenses for the three months ended March 31, 1998
increased to $644,000 from $441,000 for the three months ended March 31, 1997.
These expenses include Federal deposit insurance premiums, data processing,
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 $596,000 for the three months
ended March 31, 1998, an increase of $209,000 over the comparable period in
1997. The percentage of income tax expense to net income before taxes was 34.4%
and 32.5% for the periods ended March 31, 1998 and 1997, respectively. 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
3.8% at March 31, 1998 compared to 4.8% at March 31, 1997.
10
<PAGE> 11
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 9.3% to $384,529,000 during
the three months ended March 31, 1998 from $351,709,000 at December 31, 1997.
Loans, net of allowance for possible loan losses, totaled $244,025,000 at March
31, 1998, a 2.7% increase compared to $237,666,000 at December 31, 1997. This
increase was 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 loan underwriting
standards. Securities increased $8,751,000 or 14.2% to $70,248,000 at March 31,
1998. The increase in securities included a net unrealized loss of $59,000
during the quarter as a result of the decrease in unrealized gain on
available-for-sale securities. Federal funds sold increased $17,955,000 to
$35,612,000 at March 31, 1998 from $17,657,000 at December 31, 1997.
Total liabilities increased by 9.7% to $358,674,000 for the three
months ended March 31, 1998 compared to $326,892,000 at December 31, 1997. This
increase was composed primarily of a $30,222,000 increase in total deposits
(9.5% increase). Securities sold under repurchase agreements increased
$1,341,000 during the quarter ended March 31, 1998.
Effective January 1, 1995, the Company adopted on a prospective
basis Statement of Financial Accounting Standards ("SFAS") No. 114, "Accounting
by Creditors for Impairment of a Loan" and SFAS No. 118, "Accounting by
Creditors for Impairment of a Loan - Income Recognition and Disclosures". These
pronouncements apply to impaired loans except for large groups of
smaller-balance homogeneous loans that are collectively evaluated for impairment
including credit card, residential mortgage, and consumer installment loans.
A loan is impaired when it is probable that the Company will be
unable to collect the scheduled payments of principal and interest due under the
contractual terms of the loan agreement. Impaired loans are measured at the
present value of expected future cash flows discounted at the loan's effective
interest rate, at the loan's observable market price, or the fair value of the
collateral if the loan is collateral dependent. If the measure of the impaired
loan is less than the recorded investment in the loan, the Company shall
recognize an impairment by creating a valuation allowance with a corresponding
charge to the provision for loan losses or by adjusting an existing valuation
allowance for the impaired loan with a corresponding charge or credit to the
provision for loan losses.
The Company's first mortgage single family residential, consumer
and credit card loans which total approximately $98,653,000, $42,746,000 and
$1,169,000, respectively at March 31, 1998, are divided into various groups of
smaller-balance homogeneous loans that are collectively evaluated for impairment
and thus are not subject to the provisions of SFAS Nos. 114 and 118.
Substantially all other loans of the Company are evaluated for impairment under
the provisions of SFAS Nos. 114 and 118.
11
<PAGE> 12
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, CONTINUED
The Company considers all loans subject to the provisions of SFAS
114 and 118 that are on nonaccrual status to be impaired. Loans are placed on
nonaccrual status when doubt as to timely collection of principal or interest
exists, or when principal or interest is past due 90 days or more unless such
loans are well-secured and in the process of collection. Delays or shortfalls in
loan payments are evaluated with various other factors to determine if a loan is
impaired. Generally, delinquencies under 90 days are considered insignificant
unless certain other factors are present which indicate impairment is probable.
The decision to place a loan on nonaccrual status is also based on an evaluation
of the borrower's financial condition, collateral, liquidation value, and other
factors that affect the borrower's ability to pay.
Generally, at the time a loan is placed on nonaccrual status, all
interest accrued on the loan in the current fiscal year is reversed from income,
and all interest accrued and uncollected from the prior year is charged off
against the allowance for loan losses. Thereafter, interest on nonaccrual loans
is recognized as interest income only to the extent that cash is received and
future collection of principal is not in doubt. If the collectibility of
outstanding principal is doubtful, such interest received is applied as a
reduction of principal. A nonaccrual loan may be restored to accruing status
when principal and interest are no longer past due and unpaid and future
collection of principal and interest on a timely basis is not in doubt. At March
31, 1998, the Company had nonaccrual loans totaling $252,000 as compared to
$160,000 at December 31, 1997.
Loans not on nonaccrual status are classified as impaired in
certain cases where there is inadequate protection by the current net worth and
financial capacity of the borrower or of the collateral pledged, if any. In
those cases, such loans have a well-defined weakness or weaknesses that
jeopardize the liquidation of the debt, and if such deficiencies are not
corrected, there is a probability that the Company will sustain some loss. In
such cases, interest income continues to accrue as long as the loan does not
meet the Company's criteria for nonaccrual status.
Generally the Company also classifies as impaired any loans the
terms of which have been modified in a troubled debt restructuring after January
1, 1995. Interest is accrued on such loans that continue to meet the modified
terms of their loan agreements. At March 31, 1998, the Company had no loans that
have had the terms modified in a troubled debt restructuring.
The Company's charge-off policy for impaired loans is similar to
its charge-off policy for all loans in that loans are charged-off in the month
when they are considered uncollectible.
Impaired loans and related allowance for loan loss amounts at
March 31, 1998 and December 31, 1997 were as follows:
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
----------------------- ------------------------
Allowance Allowance
Recorded for Recorded for
(In Thousands) Investment Loan Loss Investment Loan Loss
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Impaired loans with allowance for
loan loss $ -- -- 1,025 227
Impaired loans with no allowance
for loan loss -- -- -- --
------ ------ ----- ---
$ -- $ -- 1,025 227
====== ====== ===== ===
</TABLE>
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, CONTINUED
The allowance for loan loss related to impaired loans was measured
based upon the estimated fair value of related collateral.
The average recorded investment in impaired loans for the year
ended December 31, 1997 was $543,000. The related amount of interest income
recognized on the accrual method for the period that such loans were impaired
was approximately $23,000.
The following schedule details selected information as to
non-performing loans of the Company at March 31, 1998:
<TABLE>
<CAPTION>
Past Due
90 Days Non-Accrual
------- -----------
(In Thousands)
<S> <C> <C>
Real estate loans $315 45
Installment loans 342 162
Commercial 3 45
---- ---
$660 252
==== ===
Renegotiated loans $ -- --
==== ===
</TABLE>
Non-performing loans, which included non-accrual loans and loans
90 days past due, at March 31, 1998 totaled $912,000 a decrease from $1,379,000
at December 31, 1997.
At March 31, 1998, loans totaling $1,864,000 (including the above
past due and non-accrual loans) were included in the Company's internal
classified loan list. Of these loans $1,536,000 are real estate and $328,000 are
personal. The collateral values securing these loans total approximately
$1,569,000, ($1,431,000 related to real property and $138,000 related to
personal loans). Internally classified loans increased $702,000 or 60.4% from
$1,162,000 at December 31, 1997. Internally classified real estate loans
increased $1,230,000 and personal loans decreased $528,000. 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.
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.
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
Liquid assets include cash and cash equivalents and securities and
money market instruments that will mature within one year. At March 31, 1998,
the Company's liquid assets totaled $48,252,000.
The Company's primary source of liquidity is a stable core deposit
base. In addition loan payments 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 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 subsidiary 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 $9 million mature or will be subject to rate
adjustments within the next twelve months.
A secondary source of liquidity is the Company's loan portfolio.
At March 31, 1998 loans totaling approximately $165 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
totaling approximately $54 million will become due or reprice 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 anticipates that there will be no significant withdrawals from these
accounts in the future.
Management believes that with present maturities, the anticipated
growth in deposit base, and the efforts of management in its asset/liability
management program, liquidity will not pose a problem in the near term future.
At the present time there are no known trends or any known commitments, demands,
events or uncertainties that will result in or that are reasonably likely to
result in the Company's liquidity changing in a materially adverse way.
CAPITAL POSITION AND DIVIDENDS
Capital. At March 31, 1998, total stockholders' equity was
$25,855,000 or 6.7% of total assets, which compares with $24,817,000 or 7.1% of
total assets at December 31, 1997. The dollar increase in stockholders' equity
during the three months ended March 31, 1998 results from the Company's net
income of $1,135,000, the net effect of a $36,000 unrealized loss on investment
securities net of applicable income taxes, and cash dividends declared of
$563,000 of which $502,000 was reinvested under the Company's dividend
reinvestment plan.
14
<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
The Company's principal regulators have established minimum
risk-based capital requirements and leverage capital requirements for the
Company and its subsidiary banks. These guidelines classify capital into two
categories of Tier I and total risk-based capital. Total risk-based 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 and subsidiary banks have none, and a part of the allowance for possible
loan 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 subsidiary banks and the Company to have a total risk-based capital
ratio of 8.0% and a Tier I risk-based capital ratio of 4.0%. At March 31, 1998
the Company's total risk-based capital ratio was 13.0% and its Tier I risk-based
capital ratio was 11.8%. At December 31, 1997, the Company's total risk-based
capital ratio was 13.4% and its Tier I risk-based capital ratio was 12.2%. At
March 31, 1998, the Company had a leverage ratio of 8.0% compared to 8.2% at
December 31, 1997. The required Tier I leverage capital ratio (Tier I capital to
average assets for the most recent quarter) for the Company is 4.0%.
IMPACT OF INFLATION
Although interest rates are significantly affected by inflation,
the inflation rate is immaterial when reviewing the Company's results of
operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary component of market risk is interest rate
volatility. Fluctuations in interest rates will ultimately impact both the level
of income and expense recorded on a large portion of the Company's assets and
liabilities, and the market value of all interest-earning assets and
interest-bearing liabilities, other than those which possess a short term to
maturity. Based upon the nature of the Company's operations, the Company is not
subject to foreign currency exchange or commodity price risk.
Interest rate risk (sensitivity) management 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. These meetings focus the
spread between the cost of funds and interest yields generated primarily through
loans and investments.
There have been no material changes in reported market risks
during the three months ended March 31, 1998.
15
<PAGE> 16
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27 Financial Data Schedule (for SEC use only) - This
schedule contains summary financial information extracted from
the consolidated financial statements of the Company at March
31, 1998 (unaudited) and is qualified in its entirety by
reference to such financial statements as set forth in the
Company's quarterly report on Form 10-Q for the period ending
March 31, 1998.
(b) No reports on Form 8-K have been filed during the quarter for
which this report is filed.
16
<PAGE> 17
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: May 8, 1998 /s/ Randall Clemons
--------------------- -------------------------------------
Randall Clemons
President and Chief Executive Officer
DATE: May 8, 1998 /s/ Becky Taylor
--------------------- -------------------------------------
Becky Taylor
Sr. Vice President & Cashier
17
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF WILSON BANK & TRUST FOR THE THREE MONTHS ENDED MARCH 31,
1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 11,390
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 35,612
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 46,114
<INVESTMENTS-CARRYING> 24,134
<INVESTMENTS-MARKET> 24,466
<LOANS> 247,082
<ALLOWANCE> 3,057
<TOTAL-ASSETS> 384,529
<DEPOSITS> 346,863
<SHORT-TERM> 5,901
<LIABILITIES-OTHER> 5,910
<LONG-TERM> 0
0
0
<COMMON> 2,845
<OTHER-SE> 23,010
<TOTAL-LIABILITIES-AND-EQUITY> 384,529
<INTEREST-LOAN> 5,805
<INTEREST-INVEST> 1,024
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<INTEREST-TOTAL> 7,287
<INTEREST-DEPOSIT> 3,659
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<EXTRAORDINARY> 0
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<NET-INCOME> 1,135
<EPS-PRIMARY> .80
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<LOANS-NON> 252
<LOANS-PAST> 660
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