<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, 2000
[ ] 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
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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: 2,005,958 shares at August 10, 2000.
---------
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PART 1: FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited consolidated financial statements of the Company and its
subsidiaries are as follows:
Consolidated Balance Sheets - June 30, 2000 and December 31,
1999.
Consolidated Statements of Earnings - For the three months and
six months ended June 30, 2000 and 1999.
Consolidated Statements of Comprehensive Earnings - For the
three months and six months ended June 30, 2000 and 1999.
Consolidated Statements of Cash Flows - For the six months
ended June 30, 2000 and 1999.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Disclosures required by Item 3 are incorporated by reference
to Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II: OTHER INFORMATION
Item 1. Legal proceedings.
Item 2. Changes in Securities and Use of Proceeds.
Item 3. Defaults upon Senior Securities.
Item 4. Submission of matters to a vote of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
Signatures
2
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WILSON BANK HOLDING COMPANY
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000 AND DECEMBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
--------- --------
(In Thousands)
<S> <C> <C>
Assets
Loans $ 398,256 358,605
Less: Allowance for loan losses (4,178) (3,847)
--------- --------
Net loans 394,078 354,758
Securities:
Held to maturity, at cost (market value $16,329,000 and
$16,475,000, respectively) 16,671 16,737
Available-for-sale, at market (amortized cost $72,047,000
and $69,931,000, respectively) 68,242 67,043
--------- --------
Total securities 84,913 83,780
Loans held for sale 1,353 1,835
Federal funds sold 8,687 13,928
--------- --------
Total earning assets 489,031 454,301
Cash and due from banks 19,119 16,721
Bank premises and equipment, net 15,878 16,259
Accrued interest receivable 4,253 3,894
Other real estate 15 221
Deferred income tax asset 2,426 2,077
Other assets 1,657 1,745
--------- --------
Total assets $ 532,379 495,218
========= ========
Liabilities and Stockholders' Equity
Deposits $ 479,478 447,792
Securities sold under repurchase agreements 9,292 8,543
Federal Home Loan Bank Advances 1,474 --
Accrued interest and other liabilities 3,962 2,965
Minority interest 3,826 3,668
--------- --------
Total liabilities 498,032 462,968
--------- --------
Stockholders' equity:
Common stock, $2.00 par value; authorized 5,000,000 shares, issued 1,985,242
at June 30, 2000 and 1,963,163 shares at
December 31, 1999, respectively 3,970 3,926
Additional paid-in capital 9,485 8,822
Retained earnings 23,022 21,118
Net unrealized losses on available-for-sale securities, net of income
tax benefit of $1,303,000 and $988,000, respectively (2,130) (1,616)
--------- --------
Total stockholders' equity 34,347 32,250
--------- --------
Total liabilities and stockholders' equity $ 532,379 495,218
========= ========
</TABLE>
See accompanying notes to consolidated financial statements (unaudited).
3
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WILSON BANK HOLDING COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------- ------------------
2000 1999 2000 1999
------- ----- ------- ------
(Dollars In (Dollars In
Thousands Thousands
Except Per Except Per
Share Amounts) Share Amounts)
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 8,757 7,225 $16,931 14,162
Interest and dividends on securities:
Taxable securities 1,225 1,129 2,411 2,127
Exempt from Federal income taxes 176 194 361 395
Interest on loans held for sale 30 36 44 78
Interest on Federal funds sold 160 276 415 636
------- ----- ------- ------
Total interest income 10,348 8,860 20,162 17,398
------- ----- ------- ------
Interest expense:
Interest on negotiable order of withdrawal accounts 153 96 286 189
Interest on money market and savings accounts 1,136 1,017 2,304 2,017
Interest on certificates of deposit 3,883 3,040 7,424 6,093
Interest on securities sold under repurchase agreements 106 96 193 167
Interest on Federal Home Loan Bank Advances 27 -- 28 --
Interest on Federal funds purchased 4 1 4 1
------- ----- ------- ------
Total interest expense 5,309 4,250 10,239 8,467
------- ----- ------- ------
Net interest income before provision for possible
loan losses 5,039 4,610 9,923 8,931
Provision for possible loan losses 294 259 566 591
------- ----- ------- ------
Net interest income after provision for possible
loan losses 4,745 4,351 9,357 8,340
------- ----- ------- ------
Non-interest income:
Service charges on deposit accounts 718 513 1,273 972
Other fees and commissions 509 463 989 796
Gain on sale of loans 228 251 354 462
Gain on sale of other real estate -- -- -- 3
------- ----- ------- ------
1,455 1,227 2,616 2,233
------- ----- ------- ------
Non-interest expenses:
Salaries and employee benefits 2,167 1,896 4,268 3,687
Occupancy expenses, net 293 302 570 532
Furniture and equipment expense 307 253 596 521
Data processing expense 102 97 203 186
Directors' fees 130 129 282 274
Other operating expenses 779 689 1,500 1,341
Loss on sale of other real estate 14 -- 15 --
Minority interest in net earnings of subsidiaries 112 76 226 100
------- ----- ------- ------
3,904 3,442 7,660 6,641
------- ----- ------- ------
Earnings before income taxes 2,296 2,136 4,313 3,932
Income taxes 868 769 1,623 1,417
------- ----- ------- ------
Net earnings $ 1,428 1,367 $ 2,690 2,515
======= ===== ======= ======
Basic earnings per common share $ .72 .70 $ 1.36 1.30
======= ===== ======= ======
Diluted earnings per common share $ .72 .70 $ 1.36 1.30
======= ===== ======= ======
Dividends per share $ -- -- $ .40 .375
======= ===== ======= ======
</TABLE>
See accompanying notes to consolidated financial statements (unaudited).
4
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WILSON BANK HOLDING COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------- -----------------
2000 1999 2000 1999
------- ------ ------- ------
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
Net earnings $ 1,428 1,367 $ 2,690 2,515
------- ------ ------- ------
Other comprehensive losses net of tax:
Unrealized losses on available-for-sale
securities arising during period, net
of tax benefits of $48,000, $507,000,
$315,000 and $666,000, respectively (79) (828) (514) (1,088)
------- ------ ------- ------
Other comprehensive losses (79) (828) (514) (1,088)
------- ------ ------- ------
Comprehensive earnings $ 1,349 539 $ 2,176 1,427
======= ====== ======= ======
</TABLE>
See accompanying notes to consolidated financial statements (unaudited).
5
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WILSON BANK HOLDING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
-------- -------
(In Thousands)
<S> <C> <C>
Cash flows from operating activities:
Interest received $ 19,762 17,192
Fees and commissions received 2,262 1,768
Proceeds from sale of loans 17,414 26,540
Origination of loans held for sale (16,578) (24,072)
Interest paid (9,935) (8,401)
Cash paid to suppliers and employees (5,995) (5,816)
Income taxes paid (1,671) (1,205)
-------- -------
Net cash provided by operating activities 5,259 6,006
-------- -------
Cash flows from investing activities:
Proceeds from maturities of held-to-maturity securities 1,532 3,794
Proceeds from maturities of available-for-sale securities 1,315 14,454
Purchase of held-to-maturity securities (1,470) (863)
Purchase of available-for-sale securities (3,386) (29,599)
Loans made to customers, net of repayments (39,901) (30,280)
Purchase of premises and equipment (228) (991)
Proceeds from sale of other real estate 206 185
-------- -------
Net cash used in investing activities (41,932) (43,300)
-------- -------
Cash flows from financing activities:
Net increase (decrease) in non-interest bearing, savings and
NOW deposit accounts 4,683 (7,589)
Net increase in time deposits 27,003 32,098
Increase in securities sold under repurchase agreements 749 3,084
Net increase in advances from Federal Home Loan Bank 1,474 --
Dividends paid (785) (719)
Proceeds from sale of common stock 706 635
Proceeds from advances from Federal funds purchased -- 2,265
Repayment of advances from Federal funds purchased -- (2,104)
-------- -------
Net cash provided by financing activities 33,830 27,670
-------- -------
Net decrease in cash and cash equivalents (2,843) (9,624)
Cash and cash equivalents at beginning of period 30,649 41,000
-------- -------
Cash and cash equivalents at end of period $ 27,806 31,376
======== =======
</TABLE>
See accompanying notes to consolidated financial statements (unaudited).
6
<PAGE> 7
WILSON BANK HOLDING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
------- ------
(In Thousands)
<S> <C> <C>
Reconciliation of net earnings to net cash provided by
operating activities:
Net earnings $ 2,690 2,515
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 596 613
Provision for loan losses 566 591
Minority interests in net earnings of commercial bank
subsidiaries 226 100
FHLB dividend reinvestment (41) (36)
Loss (gain) on sale of other real estate 15 (3)
Decrease in loans held for sale 482 2,006
Decrease in refundable income taxes 26 347
Increase in deferred tax asset (1) (8)
Decrease (increase) in other assets, net 62 (217)
Decrease in taxes payable (73) (127)
Increase in interest receivable (359) (162)
Increase in other liabilities 766 321
Increase in interest payable 304 66
------- ------
Total adjustments 2,569 3,491
------- ------
Net cash provided by operating activities $ 5,259 6,006
======= ======
Supplemental schedule of non-cash activities:
Unrealized loss in values of securities available-for-sale,
net of income tax benefit of $315,000 and $666,000 for the
six months ended June 30, 2000 and 1999, respectively $ (514) (1,088)
======= ======
Non-cash transfers from loans to other real estate $ 15 205
======= ======
</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 June 30, 2000 and December 31, 1999, and the results of
operations for the three months and six months ended June 30, 2000 and 1999,
comprehensive earnings for the three months and six months ended June 30, 2000
and 1999 and changes in cash flows for the six months ended June 30, 2000 and
1999. 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 1999
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>
Six Months Ended
June 30,
-----------------
2000 1999
------- ------
(In Thousands)
<S> <C> <C>
Balance, January 1, 2000 and 1999, respectively $ 3,847 3,244
Add (deduct):
Losses charged to allowance (288) (327)
Recoveries credited to allowance 53 43
Provision for loan losses 566 591
------- ------
Balance, June 30, 2000 and 1999, respectively $ 4,178 3,551
======= ======
</TABLE>
STOCK SPLIT
The Company's Board of Directors voted a 4 for 3 stock split for stockholders of
record as of September 30, 1999. Each stockholder received one (1) additional
share for each three (3) shares owned with no allowance for fractional shares.
Per share data for 1999 included in these financial statements has been restated
to give effect to the stock split.
8
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WILSON BANK HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
EARNINGS PER SHARE
The computation of basic earnings per share is based on the weighted average
number of common shares outstanding during the period. The computation of
diluted earnings per share for the Company begins with the basic earnings per
share plus the effect of common shares contingently issuable from stock options.
The following is a summary of components comprising basic and diluted earnings
per share (EPS) for the three and six months ended June 30, 2000 and 1999:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ---------------------
(In Thousands, except share amounts) 2000 1999 2000 1999
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Basic EPS Computation:
Numerator - earnings available to common
shareholders $ 1,428 1,367 2,690 2,515
---------- --------- --------- ---------
Denominator - weighted average number
of common shares outstanding 1,985,242 1,940,385 1,981,602 1,936,737
---------- --------- --------- ---------
Basic earnings per common share $ .72 .70 1.36 1.30
========== ========= ========= =========
Diluted EPS Computation:
Numerator - earnings available to common
shareholders $ 1,428 1,367 2,690 2,515
---------- --------- --------- ---------
Denominator:
Weighted average number of common
shares outstanding 1,985,242 1,940,385 1,981,602 1,936,737
Dilutive effect of stock options (none
exercisable at June 30, 2000) -- -- -- --
---------- --------- --------- ---------
1,985,242 1,940,385 1,981,602 1,936,737
---------- --------- --------- ---------
Diluted earnings per common share $ .72 .70 1.36 1.30
========== ========= ========= =========
</TABLE>
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
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. Reference should also be made to the
Company's Annual Report on Form 10-K for the year ended December 31, 1999 for a
more complete discussion of factors that impact liquidity, capital and the
results of operations.
FORWARD-LOOKING STATEMENTS
This form 10-Q contains certain forward-looking statements
regarding, among other things, the anticipated financial and operating results
of the Company. Investors are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The Company
undertakes no obligation to publicly release any modifications or revisions to
these forward-looking statements to reflect events or circumstances occurring
after the date hereof or to reflect the occurrence of unanticipated events.
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company cautions investors that
future financial and operating results may differ materially from those
projected in forward-looking statements made by, or on behalf of, the Company.
Such forward-looking statements involve known and unknown risks and
uncertainties, including, but not limited to, sudden adverse interest rate
changes, inadequate allowance for loan losses and loss of key personnel. These
risks and uncertainties may cause the actual results or performance of the
Company to be materially different from any future results or performance
expressed or implied by such forward-looking statements. The Company's future
operating results depend on a number of factors which were derived utilizing
numerous assumptions and other important factors that could cause actual results
to differ materially from those projected in forward-looking statements.
RESULTS OF OPERATIONS
Net earnings increased 7.0% to $2,690,000 for the six months ended
June 30, 2000 from $2,515,000 in the first six months of 1999. Net earnings were
$1,428,000 for the quarter ended June 30, 2000, an increase of $61,000 or 4.5%
from $1,367,000 for the three months ended June 30, 1999 and an increase of
$166,000 or 13.2% over the quarter ended March 31, 2000. The increase in net
earnings during the six months ended June 30, 2000 was primarily due to a 11.1%
increase in net interest income and a 17.2% increase in non-interest income
which was partially offset by a 15.3% increase in non-interest expenses.
10
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WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
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 $2,764,000 or 15.9% during the six months
ended June 30, 2000 as compared to the same period in 1999. The increase in
total interest income was $1,488,000 or 16.8% for the quarter ended June 30,
2000 as compared to the quarter ended June 30, 1999 and $534,000 or 5.4% over
the first three months of 2000. The increase in 2000 was primarily attributable
to an increase in average earning assets and an increase in interest rates. The
ratio of average earning assets to total average assets was 93.7% and 91.1% for
the six months ended June 30, 2000 and 1999, respectively.
Interest expense increased $1,772,000 or 20.9% for the six months
ended June 30, 2000 as compared to the same period in 1999. The increase was
$1,059,000 or 24.9% for the three months ended June 30, 2000 as compared to the
same period in 1999. Interest expense increased $379,000 or 7.7% for the quarter
ended June 30, 2000 over the first three months of 2000. The overall increase in
total interest expense for the first six months of 2000 was primarily
attributable to an increase in weighted average interest-bearing liabilities.
The foregoing resulted in an increase in net interest income,
before the provision for possible loan losses, of $992,000 or 11.1% for the
first six months of 2000 as compared to the same period in 1999. The increase
was $429,000 or 9.3% for the quarter ended June 30, 2000 compared to the quarter
ended June 30, 1999 and an increase of $155,000 or 3.2% when compared to the
first quarter of 2000.
PROVISION FOR POSSIBLE LOAN LOSSES
The provision for possible loan losses was $566,000 and $591,000,
for the first six months of 2000 and 1999, respectively. The provision for loan
losses during the three month periods ended June 30, 2000 and 1999 was $294,000
and $259,000, 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 $4,178,000, an increase of 8.6% from $3,847,000 at December 31, 1999.
The allowance for possible loan losses as a percentage of total outstanding
loans was 1.0% and 1.1% at June 30, 2000 and December 31, 1999, respectively.
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, 2000 to be adequate.
11
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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 and gain on sale of other real estate. Total non-interest income for the
six months ended June 30, 2000 increased by 17.2% to $2,616,000 from $2,233,000
for the same period in 1999. The increase was $228,000 or 18.6% during the
quarter ended June 30, 2000 compared to the second quarter in 1999 and was
$294,000 or 25.3% over the first three months of 2000. The increases were due
primarily to increases in service charges on deposit accounts and other fees and
commissions. Service charges on deposit accounts increased $301,000 or 31.0%
during the six months ended June 30, 2000. Service charges on deposit accounts
increased $205,000 or 40.0% during the quarter ended June 30, 2000, compared to
the same quarter in 1999. Other fees and commissions totaled $989,000 and
$796,000 during the six months ended June 30, 2000 and 1999, respectively, an
increase of $193,000 or 24.2% and $509,000 and $463,000 during the quarters
ended June 30, 2000 and 1999, respectively, an increase of $46,000 or 9.9%.
NON-INTEREST EXPENSES
Non-interest expense consists primarily of salaries and employee
benefits, occupancy expenses, furniture and equipment expenses, data processing
expenses, directors' fees, other operating expenses, and minority interest in
net earnings of subsidiaries. Total non-interest expense increased $1,019,000 or
15.3% during the first six months of 2000 compared to the same period in 1999.
The increase for the quarter ended June 30, 2000 was $462,000 or 13.4% as
compared to the comparable quarter in 1999 and $148,000 or 3.9% as compared to
the first three months of 2000. The increases in non-interest expenses are
attributable primarily to increases in salaries and employee benefits associated
with an increase in the number of employees necessary to support the Company's
operations. The number of employees increased to 213 at June 30, 2000, an
increase from 198 at June 30, 1999. Increases in occupancy and furniture and
equipment expenses were also due to the Company's growth, specifically as a
result of the opening of a new branch in Hermitage, Tennessee since June 30,
1999. Other operating expenses for the six months ended June 30, 2000 increased
to $1,500,000 from $1,341,000 for the comparable period in 1999. Other operating
expenses increased $90,000 or 13.1% during the quarter ended June 30, 2000 as
compared to the same period in 1999 and $58,000 or 8.0% as compared to the first
three months of 2000. These expenses include Federal deposit insurance premiums,
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 $1,623,000 for the six months
ended June 30, 2000, an increase of $206,000 over the comparable period in 1999.
Income tax expense was $868,000 for the quarter ended June 30, 2000, an increase
of $99,000 over the same period in 1999. The percentage of income tax expense to
net income before taxes was 37.6% and 36.0% for the six months ended June 30,
2000 and 1999, respectively and 37.8% and 36.0% for the quarters ended June 30,
2000 and 1999, respectively. The percentage of income tax expense to net income
before taxes was 37.4% for the first three months of 2000. 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 1.8% for the six months
ended June 30, 2000 compared to 2.3% for the six months ended June 30, 1999.
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
FINANCIAL CONDITION
BALANCE SHEET SUMMARY
The Company's total assets increased 7.5% to $532,379,000 during
the six months ended June 30, 2000 from $495,218,000 at December 31, 1999. Total
assets increased $22,221,000 or 4.4% and $14,940,000 or 3.0% during the
three-month periods ended June 30, 2000 and March 31, 2000, respectively. Loans,
net of allowance for possible loan losses, totaled $394,078,000 at June 30, 2000
or a 11.1% increase compared to $354,758,000 at December 31, 1999. Net loans
increased $23,160,000 or 6.2% and $16,160,000 or 4.6% during the quarters ended
June 30, 2000 and March 31, 2000, respectively. These increases were primarily
due to the Company's ability to increase its market share of such loans while
maintaining its loan underwriting standards. Securities increased $1,133,000 or
1.4% to $84,913,000 at June 30, 2000 from $83,780,000 at December 31, 1999.
Securities decreased $705,000 or 0.8% during the three months ended June 30,
2000. The increase in securities included a net unrealized loss of $917,000
during the six month period ending June 30, 2000 as a result of the increase in
the unrealized loss on available-for-sale securities. Federal funds sold
decreased $5,241,000 to $8,687,000 at June 30, 2000 from $13,928,000 at December
31, 1999.
Total liabilities increased by 7.6% to $498,032,000 at June 30,
2000 compared to $462,968,000 at December 31, 1999. The increase by quarter
totaled $20,872,000 or 4.4% and $14,192,000 or 3.1% during the quarters ended
June 30, 2000 and March 31, 2000, respectively. These increases were composed
primarily of a $31,686,000 or 7.1% increase in total deposits and an increase of
$749,000 or 8.8% in securities sold under repurchase agreements during the six
months ended June 30, 2000. Federal Home Loan Bank Advances increased $1,474,000
during the six months ended June 30, 2000.
The Company follows the provisions of 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.
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
The Company's first mortgage single family residential, consumer
and credit card loans which total approximately $188,248,000, $52,913,000 and
$1,938,000, respectively at June 30, 2000, 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.
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 June
30, 2000, the Company had nonaccrual loans totaling $155,000 as compared to
$84,000 at December 31, 1999.
Other loans may be classified as impaired when the current net
worth and financial capacity of the borrower or of the collateral pledged, if
any, is viewed as inadequate. 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 June 30, 2000, the Company had no loans that
have had the terms modified in a troubled debt restructuring.
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 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 June
30, 2000 and December 31, 1999 were as follows:
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
------------------------- -----------------------
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 $ -- -- 84 30
Impaired loans with no allowance for
loan loss -- -- -- --
------------ ------ ----- -----
$ -- -- 84 30
============ ====== ===== =====
</TABLE>
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 six
months ended June 30, 2000 and June 30, 1999 was insignificant. There was no
interest income recognized on these loans during 1999.
The following schedule details selected information as to
non-performing loans of the Company at June 30, 2000:
<TABLE>
<CAPTION>
Past Due
90 Days Non-Accrual
------- -----------
(In Thousands)
<S> <C> <C>
Real estate loans $381 33
Installment loans 273 120
Commercial, financial and agricultural 2 2
---- ---
$656 155
==== ===
Renegotiated loans $ -- --
==== ===
</TABLE>
Non-performing loans, which included non-accrual loans and loans
90 days past due, at June 30, 2000 totaled $811,000, an increase from $506,000
at December 31, 1999. During the three months ended June 30, 2000,
non-performing loans increased $59,000 from $752,000 at March 31, 2000.
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
At June 30, 2000, loans totaling $990,000 (including the above
past due and non-accrual loans) were included in the Company's internal
classified loan list. Of these loans $570,000 are real estate and $420,000 are
personal. The collateral values securing these loans, based on estimates
received by management, total approximately $970,000 ($715,000 related to real
property and $255,000 related to personal loans). The internally classified
loans have increased $252,000 or 34.1% from $738,000 at December 31, 1999.
Internally classified real estate loans increased $182,000 and personal loans
increased $70,000 from December 31, 1999 amounts. 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.
Liquid assets include cash and cash equivalents and securities and
money market instruments that will mature within one year. At June 30, 2000, the
Company's liquid assets totaled $44,834,000.
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 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 approximately $3.5 million mature or will be subject to rate
adjustments within the next twelve months.
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
A secondary source of liquidity is the Company's loan portfolio.
At June 30, 2000 loans of approximately $278.8 million either will become due or
will be subject to rate adjustments within twelve months from the respective
date. The Company intends to place emphasis on structuring adjustable rate
loans.
As for liabilities, certificates of deposit of $100,000 or greater
of approximately $89.1 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
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 June 30, 2000, total stockholders' equity was
$34,347,000 or 6.5% of total assets, which compares with $32,250,000 or 6.5% of
total assets at December 31, 1999. The dollar increase in stockholders' equity
during the six months ended June 30, 2000 results from the Company's net income
of $2,690,000, the net effect of a $514,000 unrealized loss on investment
securities net of applicable income taxes, and cash dividends declared of
$785,000 of which $706,000 was reinvested under the Company's dividend
reinvestment plan. The unrealized loss on investment securities for the six
months ended June 30, 2000 was due primarily to an overall downturn in the bond
market. Management, however, intends to hold the investment securities and not
sell them at the present time unless there is a substantial change in the
interest rate environment which would necessitate selling the securities for
liquidity purposes.
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 June 30, 2000
the Company's total risk-based capital ratio was 11.7% and its Tier I risk-based
capital ratio was approximately 10.6% compared to ratios of 12.0% and 10.9%,
respectively at December 31, 1999. The required Tier I leverage capital ratio
(Tier I capital to average assets for the most recent quarter) for the Company
is 4.0%. At June 30, 2000 the Company had a leverage ratio of 7.8%, compared to
7.7% at December 31, 1999.
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
IMPACT OF INFLATION
Although interest rates are significantly affected by inflation,
the inflation rate is immaterial when reviewing the Company's results of
operations.
YEAR 2000 ISSUES
The term "Year 2000 issue" refers to the necessity of converting
computer information systems so that such systems recognize more than two digits
to identify a year in any given date field, and are thereby able to
differentiate between years in the twentieth and twenty-first centuries ending
with the same two digits (e.g., 1900 and 2000). The Company experienced no
significant problems upon the change to Year 2000.
Management is not aware of any of the Company's customers that
have experienced significant problems related to the Year 2000 issue.
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 six months ended June 30, 2000.
18
<PAGE> 19
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
(a) The annual meeting of stockholders was held April 11, 2000.
(b) Election of the entire board of directors.
(c) (1) Each director was elected by the following tabulation:
<TABLE>
<CAPTION>
Number
of Shares Broker
Voting For Against Abstain Non-Votes
------ --- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Charles Bell 1,171,642 1,167,940 0 3,702 0
Jack Bell 1,171,642 1,167,940 0 3,702 0
Mackey Bentley 1,171,642 1,167,940 0 3,702 0
Randall Clemons 1,171,642 1,167,940 0 3,702 0
Jimmy Comer 1,171,642 1,161,859 6,081 3,702 0
Jerry Franklin 1,171,642 1,167,940 0 3,702 0
John Freeman 1,171,642 1,167,940 0 3,702 0
Marshall Griffith 1,171,642 1,167,940 0 3,702 0
Harold Patton 1,171,642 1,167,940 0 3,702 0
James Patton 1,171,642 1,167,940 0 3,702 0
John Trice 1,171,642 1,167,940 0 3,702 0
Bob Van Hooser 1,171,642 1,167,940 0 3,702 0
</TABLE>
(2) The election of Maggart & Associates, P.C. as independent
auditors for the Company was as follows:
<TABLE>
<CAPTION>
Number
of Shares Broker
Voting For Against Abstain Non-Votes
------ --- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
1,171,642 1,160,650 6,353 4,639 0
</TABLE>
(d) Not Applicable.
19
<PAGE> 20
PART II. OTHER INFORMATION, CONTINUED
ITEM 5. OTHER INFORMATION
Shareholders intending to submit proposals for presentation at
the next Annual Meeting and inclusion in the Proxy Statement and form of proxy
for such meeting should forward such proposals to J. Randall Clemons, Wilson
Bank Holding Company, 623 West Main Street, Lebanon, Tennessee 37087. Proposals
must be in writing and must be received by the Company prior to November 16,
2000 in order to be included in the Company's Proxy Statement and form of proxy
relating to the 2001 Annual Meeting of Shareholders. Proposals should be sent to
the Company by certified mail, return receipt requested, and must comply with
Rule 14a-8 of Regulation 14A of the proxy rules of the SEC.
For any other shareholder proposals to be timely (but not considered
for inclusion in the Company's Proxy Statement), a shareholder must forward such
proposal to Mr. Clemons at the Company's main office (listed above) prior to
January 29, 2001.
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 June 30,
2000 (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 June 30, 2000.
(b) No reports on Form 8-K have been filed during the quarter for
which this report is filed.
20
<PAGE> 21
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 10, 2000 /s/ Randall Clemons
--------------- --------------------------------------------
Randall Clemons, President and
Chief Executive Officer
DATE: August 10, 2000 /s/ Becky Taylor
--------------- --------------------------------------------
Becky Taylor
Sr. Vice President & Cashier
21
