<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, 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
-------
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: 1,985,242 shares at May 9, 2000
<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, 2000 and December 31,
1999.
Consolidated Statements of Earnings - For the three months ended
March 31, 2000 and 1999.
Consolidated Statements of Comprehensive Earnings - For the three
months ended March 31, 2000 and 1999.
Consolidated Statements of Cash Flows - For the three months
ended March 31, 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
PART II: OTHER INFORMATION
Signatures
2
<PAGE> 3
WILSON BANK HOLDING COMPANY
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 AND DECEMBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---------- ------------
(In Thousands)
<S> <C> <C>
Assets
Loans $ 374,972 358,605
Less: Allowance for loan losses (4,054) (3,847)
--------- --------
Net loans 370,918 354,758
Securities:
Held to maturity, at cost (market value - $16,963,000
and $16,475,000, respectively) 17,396 16,737
Available-for-sale, at market (amortized cost - $71,889,000
and $69,931,000, respectively) 68,222 67,043
--------- --------
Total securities 85,618 83,780
Loans held for sale 1,110 1,835
Federal funds sold 12,382 13,928
--------- --------
Total earning assets 470,028 454,301
Cash and due from banks 15,493 16,721
Bank premises and equipment, net 16,076 16,259
Accrued interest receivable 4,220 3,894
Deferred income tax asset 2,372 2,077
Other real estate 234 221
Other assets 1,735 1,745
--------- --------
Total assets $ 510,158 495,218
========= ========
Liabilities and stockholders' equity
Deposits $ 460,918 447,792
Securities sold under repurchase agreements 7,522 8,543
Federal home loan bank advances 1,500 --
Accrued interest and other liabilities 3,500 2,965
Minority interest 3,720 3,668
--------- --------
Total liabilities 477,160 462,968
--------- --------
Stockholders' equity:
Common stock, $2.00 par value; authorized 5,000,000
shares, issued 1,985,242 and 1,963,163 shares, respectively 3,970 3,926
Additional paid-in capital 9,485 8,822
Retained earnings 21,594 21,118
Accumulated other comprehensive earnings:
Net unrealized losses on available-for-sale securities,
net of income tax benefit of $1,255,000 and $988,000,
respectively (2,051) (1,616)
--------- --------
Total stockholders' equity 32,998 32,250
--------- --------
Total liabilities and stockholders' equity $ 510,158 495,218
========= ========
</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, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
---- ----
(Dollars In Thousands
Except Per Share Amount)
<S> <C> <C>
Interest income:
Interest and fees on loans $ 8,174 6,937
Interest and dividends on securities:
Taxable securities 1,186 998
Exempt from Federal income taxes 185 201
Interest on loans held for sale 14 42
Interest on Federal funds sold 255 360
---------- ---------
Total interest income 9,814 8,538
---------- ---------
Interest expense:
Interest on negotiable order of withdrawal accounts 133 93
Interest on money market and savings accounts 1,168 1,000
Interest on certificates of deposit 3,541 3,053
Interest on securities sold under repurchase agreements 87 71
Interest on Federal Home Loan Bank advances 1 --
--------- ---------
Total interest expense 4,930 4,217
---------- ---------
Net interest income before provision for possible loan losses 4,884 4,321
Provision for possible loan losses 272 332
---------- ---------
Net interest income after provision for
possible loan losses 4,612 3,989
---------- ---------
Non-interest income:
Service charges on deposit accounts 555 459
Other fees and commissions 480 333
Gain on sale of loans 126 211
Gain on sale of other real estate -- 3
---------- ---------
1,161 1,006
---------- ---------
Non-interest expense:
Salaries and employee benefits 2,101 1,791
Occupancy expenses, net 277 230
Furniture and equipment expense 289 268
Data processing expense 101 89
Other operating expenses 873 797
Loss on sale of other real estate 1 --
Minority interest in net earnings of subsidiaries 114 24
---------- ---------
3,756 3,199
---------- ---------
Earnings before income taxes 2,017 1,796
Income taxes 755 648
---------- ---------
Net earnings $ 1,262 1,148
========== =========
Weighted average number of shares outstanding 1,977,964 1,933,049
========== =========
Basic earnings per common share $ .64 .59
========== =========
Diluted earnings per common share $ .64 .59
========== =========
Dividends per share $ .40 .375
========== =========
</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, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
---- ----
(In Thousands)
<S> <C> <C>
Net earnings $ 1,262 1,148
------- ------
Other comprehensive losses, net of tax:
Unrealized losses on available-for-sale securities
arising during period, net of taxes of $267,000 and
$161,000, respectively (435) (260)
------- ------
Other comprehensive losses (435) (260)
------- ------
Comprehensive earnings $ 827 888
======= ======
</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, 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 $ 9,468 8,252
Fees and commissions received 1,035 792
Proceeds from sale of loans 6,390 11,444
Origination of loans held for sale (5,539) (9,145)
Interest paid (4,917) (4,181)
Cash paid to suppliers and employees (3,173) (2,861)
Income taxes paid (403) (253)
-------- -------
Net cash provided by operating activities 2,861 4,048
-------- -------
Cash flows from investing activities:
Proceeds from maturities of held-to-maturity securities 608 2,721
Purchase of held-to-maturity securities (1,269) (863)
Purchase of available-for-sale securities (2,290) (21,295)
Proceeds from maturities of available-for-sale securities 354 10,391
Proceeds from sale of other real estate 5 103
Loans made to customers, net of repayments (16,451) (11,586)
Purchase of premises and equipment (118) (502)
-------- -------
Net cash used in investing activities (19,161) (21,031)
-------- -------
Cash flows from financing activities:
Net increase in non-interest bearing, savings and NOW
deposit accounts 6,687 10,827
Net increase in time deposits 6,439 6,973
Increase (decrease) in securities sold under
repurchase agreements (1,021) 1,078
Increase in Federal Home Loan Bank advances 1,500 --
Dividends paid (785) (719)
Proceeds from sale of common stock 706 635
-------- -------
Net cash provided by financing activities 13,526 18,794
-------- -------
Net increase (decrease) in cash and cash equivalents (2,774) 1,811
Cash and cash equivalents at beginning of period 30,649 41,000
-------- -------
Cash and cash equivalents at end of period $ 27,875 42,811
======== =======
</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, 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 $ 1,262 1,148
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 289 317
Provision for loan losses 272 332
Minority interests in net earnings of commercial
bank subsidiaries 114 24
Loss (gain) on sale of other real estate 1 (3)
Decrease in loans held for sale 725 2,088
Decrease in refundable income taxes 26 347
Increase in taxes payable 326 48
FHLB dividend reinvestment (21) (18)
Increase in other assets, net (16) (153)
Increase in other liabilities 196 149
Increase in interest receivable (326) (267)
Increase in interest payable 13 36
------- ------
Total adjustments 1,599 2,900
------- ------
Net cash provided by operating activities $ 2,861 4,048
======= ======
Supplemental schedule of non-cash activities:
Unrealized loss in values of securities available-for-sale,
net of income tax benefit of $267,000 and $161,000 for
the quarters ended March 31, 2000 and 1999,
respectively $ (435) (260)
======= ======
Non-cash transfers from loans to other real estate $ 19 --
======= ======
</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, 2000 and December 31, 1999, the results of
operations for the three months ended March 31, 2000 and 1999, comprehensive
earnings for the three months ended March 31, 2000 and 1999 and changes in cash
flows for the three months ended March 31, 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>
Three Months Ended
March 31,
----------------------
2000 1999
---- ----
(In Thousands)
<S> <C> <C>
Balance, January 1, 2000 and 1999, respectively $ 3,847 3,244
Add (deduct):
Losses charged to allowance (87) (194)
Recoveries credited to allowance 22 19
Provision for loan losses 272 332
------- ------
Balance, March 31, 2000 and 1999, respectively $ 4,054 3,401
======= ======
</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
<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. 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 that could cause actual results to differ materially from
those projected in forward-looking statements.
RESULTS OF OPERATIONS
Net earnings increased 9.9% to $1,262,000 for the three months ended
March 31, 2000 from $1,148,000 in the first quarter of 1999. The increase in net
earnings was primarily due to a 13.0% increase in net interest income and a
15.4% increase in non-interest income which were partially offset by a 16.6%
increase in non-interest expenses. Non-interest expense included a $90,000
increase in minority interest in net earnings of subsidiaries.
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 $1,276,000 or 14.9% during the three months ended March
31, 2000 as compared to the first quarter 1999. 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 92.6% for the quarters ended March 31, 2000 and March 31, 1999,
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
NET INTEREST INCOME, CONTINUED
Interest expense increased by $713,000 for the three months ended March
31, 2000 compared to an increase of $494,000 for the same period in 1999. The
increase for the quarters ended March 31, 2000 and 1999 was due primarily to an
increase in average interest bearing liabilities.
The foregoing resulted in an increase in net interest income, before the
provision for loan losses, of $563,000 or 13.0% for the first three months of
2000 as compared to the first quarter 1999.
PROVISION FOR POSSIBLE LOAN LOSSES
The provision for loan losses was $272,000 and $332,000, respectively,
for the first three months of 2000 and 1999. 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 $4,054,000, an increase of 5.4% from $3,847,000 at December 31,
1999. The allowance for possible loan losses was 1.1% of total loans outstanding
at March 31, 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 March 31, 2000 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
and gain on sale of fixed assets. Total non-interest income for the three months
ended March 31, 2000 increased by 15.4% to $1,161,000 from $1,006,000 for the
same period in 1999. This increase was due to an increase of $96,000 or 20.9% in
service charges on deposit accounts from $459,000 during the first quarter of
1999 to $555,000 for the same period in 2000. Other fees and commissions
increased $147,000 or 44.1% to $480,000, and gain on sale of loans decreased
$85,000 or 40.3% to $126,000 compared to the same quarter in 1999.
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
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 $532,000 or
16.6% during the first three months of 2000 compared to the same period in 1999.
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 operations. The number of employees
increased from 186 at March 31, 1999 to 208 at March 31, 2000. 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 office in
Hermitage, Tennessee since March 31, 1999. Other operating expenses for the
three months ended March 31, 2000 increased to $848,000 from $797,000 for the
three months ended March 31, 1999. These expenses include Federal deposit
insurance premiums, directors fees, 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 $755,000 for the three months ended
March 31, 2000, an increase of $132,000 over the comparable period in 1999. The
percentage of income tax expense to net income before taxes was 37.4% and 36.1%
for the periods ended March 31, 2000 and 1999, 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 1.9% at March 31, 2000
compared to 2.4% at March 31, 1999.
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.
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
EARNINGS PER SHARE, CONTINUED
The following is a summary of components comprising basic and diluted
earnings per share (EPS) for the three months ended March 31, 2000 and 1999:
<TABLE>
<CAPTION>
(In Thousands, except share amounts) 2000 1999
---- ----
<S> <C> <C>
Basic EPS Computation:
Numerator - Earnings available to common stockholders $ 1,262 1,148
---------- ---------
Denominator - Weighted average number of common
shares outstanding 1,977,964 1,933,049
---------- ---------
Basic earnings per common share $ .64 .59
========== =========
Diluted EPS Computation:
Numerator - Earnings available to common stockholders $ 1,262 1,148
---------- ---------
Denominator:
Weighted average number of common shares
outstanding 1,977,964 1,933,049
Dilutive effect of stock options (none exercisable at
March 31, 2000) -- --
---------- ---------
1,977,964 1,933,049
---------- ---------
Diluted earnings per common share $ .64 .59
========== =========
</TABLE>
FINANCIAL CONDITION
BALANCE SHEET SUMMARY
The Company's total assets increased 3.0% to $510,158,000 during the
three months ended March 31, 2000 from $495,218,000 at December 31, 1999. Loans,
net of allowance for possible loan losses, totaled $370,918,000 at March 31,
2000, a 4.6% increase compared to $354,758,000 at December 31, 1999. This
increase was primarily due to the Company's ability to increase its market share
of such loans while maintaining its loan underwriting standards. Securities
increased $1,838,000 or 2.2% to $85,618,000 at March 31, 2000. The increase in
securities included a net unrealized loss of $779,000 during the quarter as a
result of the increase in the unrealized loss on available-for-sale securities.
Federal funds sold decreased $1,546,000 to $12,382,000 at March 31, 2000 from
$13,928,000 at December 31, 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
BALANCE SHEET SUMMARY, CONTINUED
Total liabilities increased by 3.1% to $477,160,000 for the three months
ended March 31, 2000 compared to $462,968,000 at December 31, 1999. This
increase was composed primarily of a $13,126,000 increase in total deposits
(2.9% increase). Securities sold under repurchase agreements decreased
$1,021,000 during the quarter ended March 31, 2000 and Federal Home Loan Bank
advances increased $1,500,000 during the quarter ended March 31, 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.
The Company's first mortgage single family residential, consumer and
credit card loans which total approximately $176,049,000, $52,381,000 and
$1,737,000, respectively at March 31, 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.
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
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, 2000, the Company had nonaccrual loans totaling $171,000 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 March 31, 2000, 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,
2000 and December 31, 1999 were as follows:
<TABLE>
<CAPTION>
March 31, 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 three months
ended March 31, 2000 and March 31, 1999 was insignificant. There was no interest
income recognized on these loans during 1999.
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 following schedule details selected information as to non-performing
loans of the Company at March 31, 2000:
<TABLE>
<CAPTION>
Past Due
90 Days Non-Accrual
------- -----------
(In Thousands)
<S> <C> <C>
Real estate loans $ 209 27
Installment loans 372 144
Commercial -- --
--------- --------
$ 581 171
========= ========
Renegotiated loans $ -- --
========= ========
</TABLE>
Non-performing loans, which included non-accrual loans and loans 90 days
past due, at March 31, 2000 totaled $752,000 as compared to $506,000 at December
31, 1999.
At March 31, 2000, loans totaling $1,135,000 (including the above past
due and non-accrual loans) were included in the Company's internal classified
loan list. Of these loans $529,000 are real estate and $606,000 are personal.
The collateral values securing these loans total approximately $1,296,000,
($682,000 related to real property and $614,000 related to personal loans).
Internally classified loans increased $397,000 or 53.8% from $738,000 at
December 31, 1999. Internally classified real estate loans increased $141,000
and personal loans increased $256,000 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 March 31, 2000, the
Company's liquid assets totaled $47,479,000.
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
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 $4.6 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, 2000 loans totaling approximately $250.8 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 $75.5 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, 2000, total stockholders' equity was $32,998,000
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
three months ended March 31, 2000 results from the Company's net income of
$1,262,000, the net effect of a $435,000 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.
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
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, 2000 the
Company's total risk-based capital ratio was 11.9% and its Tier I risk-based
capital ratio was 10.8%. At December 31, 1999, the Company's total risk-based
capital ratio was 12.0% and its Tier I risk-based capital ratio was 10.9%. At
March 31, 2000 and December 31, 1999, the Company had a leverage ratio of 7.7%.
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.
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.
17
<PAGE> 18
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK, CONTINUED
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, 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
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,
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 March 31, 2000.
(b) No reports on Form 8-K have been filed during the quarter for which
this report is filed.
19
<PAGE> 20
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 9, 2000 /s/ Randall Clemons
------------------------- -------------------------------------
Randall Clemons
President and Chief Executive Officer
DATE: May 9, 2000 /s/ Becky Taylor
------------------------- -------------------------------------
Becky Taylor
Sr. Vice President & Cashier
20
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 15,493
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 12,382
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 68,222
<INVESTMENTS-CARRYING> 17,396
<INVESTMENTS-MARKET> 16,963
<LOANS> 374,972
<ALLOWANCE> 4,054
<TOTAL-ASSETS> 510,158
<DEPOSITS> 460,918
<SHORT-TERM> 9,022
<LIABILITIES-OTHER> 7,220
<LONG-TERM> 0
0
0
<COMMON> 3,970
<OTHER-SE> 29,028
<TOTAL-LIABILITIES-AND-EQUITY> 510,158
<INTEREST-LOAN> 8,174
<INTEREST-INVEST> 1,371
<INTEREST-OTHER> 269
<INTEREST-TOTAL> 9,814
<INTEREST-DEPOSIT> 4,842
<INTEREST-EXPENSE> 4,930
<INTEREST-INCOME-NET> 4,884
<LOAN-LOSSES> 272
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,756
<INCOME-PRETAX> 2,017
<INCOME-PRE-EXTRAORDINARY> 2,017
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,262
<EPS-BASIC> .64
<EPS-DILUTED> .64
<YIELD-ACTUAL> 0
<LOANS-NON> 171
<LOANS-PAST> 581
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 752
<ALLOWANCE-OPEN> 3,847
<CHARGE-OFFS> 87
<RECOVERIES> 22
<ALLOWANCE-CLOSE> 4,054
<ALLOWANCE-DOMESTIC> 4,054
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
