<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
or
/x/ 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 0-20006
ANCHOR BANCORP WISCONSIN INC.
-----------------------------
(Exact name of registrant as specified in its charter)
Wisconsin 39-1726871
--------- ----------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
25 West Main Street
Madison, Wisconsin 53703
------------------- -----
(Address of principal executive office) (Zip Code)
(608) 252-8700
--------------
Registrant's telephone number, including area code
Not Applicable
--------------
(Former name, former address, and former fiscal year,
if changed since last report)
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.
Class: Common stock--$.10 Par Value
Number of shares outstanding as of January 31, 1998: 9,010,952
<PAGE>
ANCHOR BANCORP WISCONSIN INC.
INDEX--FORM 10-Q
<TABLE>
<CAPTION>
PART I--FINANCIAL INFORMATION PAGE #
------
<S> <C>
Item 1 Financial Statements (Unaudited)
Consolidated Balance Sheets as of December 31, 1997
and March 31, 1997 2
Consolidated Statements of Income for the Three and
Nine Months Ended December 31, 1997 and 1996 3
Consolidated Statements of Cash Flows for the Nine
Months Ended December 31, 1997 and 1996 4
Notes to Unaudited Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis
Results of Operations 10
Financial Condition 16
Asset Quality 17
Liquidity & Capital Resources 21
Asset/Liability Management 24
Part II--Other Information
Item 1 Legal Proceedings 26
Item 2 Changes in Securities 26
Item 3 Defaults Upon Senior Securities 26
Item 4 Submission of Matters to Vote of Security Holders 27
Item 5 Other Information 27
Item 6 Exhibits and Reports on Form 8-K 27
Signatures 28
</TABLE>
1
<PAGE>
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
December 31, March 31,
1997 1997
------------ ----------
(In Thousands)
<S> <C> <C>
Assets
Cash..................................................... $ 36,244 $ 31,482
Interest-bearing deposits................................ 6,369 6,543
---------- ----------
Cash and cash equivalents.............................. 42,613 38,025
Securities available for sale:
Investment securities.................................. 35,805 35,569
Mortgage-related securities............................ 73,047 80,300
Securities held to maturity:
Investment securities (fair value of $16.5 million
and $7.9 million, respectively)....................... 16,421 7,947
Mortgage-related securities (fair value of $136.6
million and $157.8 million, respectively)............. 136,054 160,101
Loans receivable, net:
Held for sale.......................................... 9,203 5,348
Held for investment.................................... 1,527,716 1,461,423
Foreclosed properties and repossessed assets, net........ 6,599 4,222
Real estate held for development and sale................ 17,402 23,706
Office properties and equipment.......................... 18,791 18,662
Federal Home Loan Bank stock--at cost.................... 21,971 18,981
Accrued interest on investments and loans................ 13,875 13,729
Prepaid expenses and other assets........................ 21,683 16,970
---------- ----------
Total assets........................................... $1,941,180 $1,884,983
---------- ----------
---------- ----------
Liabilities and Stockholders' Equity
Deposits................................................. $1,355,799 $1,312,445
Advance payments by borrowers for taxes and insurance.... 1,374 7,675
Federal Home Loan Bank and other borrowings.............. 439,834 392,204
Reverse repurchase agreements............................ -- 39,335
Other liabilities........................................ 15,167 15,437
---------- ----------
Total liabilities...................................... 1,812,174 1,767,096
---------- ----------
Preferred stock, $.10 par value, 5,000,000 shares
authorized, none outstanding............................ -- --
Common stock, $.10 par value, 20,000,000 shares
authorized 12,499,324 shares issued..................... 625 625
Additional paid-in-capital............................... 50,947 50,443
Retained earnings........................................ 122,303 110,735
Less: Treasury stock (3,447,472 shares and
3,336,630 shares respectively)................... (44,701) (41,937)
Common stock purchased by recognition plans....... (935) (1,246)
Net unrealized gain (loss) on securities
available for sale, net of tax................... 767 (733)
---------- ----------
Total stockholders' equity............................. 129,006 117,887
---------- ----------
Total liabilities and stockholders' equity............. $1,941,180 $1,884,983
---------- ----------
---------- ----------
</TABLE>
See accompanying Notes to Unaudited Consolidated Financial Statements.
2
<PAGE>
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
------------------- -----------------
1997 1996 1997 1996
-------- -------- -------- --------
(In Thousands, Except Per Share Data)
<S> <C> <C> <C> <C>
Interest income:
Loans............................................... $ 32,409 $ 30,140 $ 96,247 $ 89,481
Mortgage-related securities......................... 3,664 4,082 10,990 11,682
Investment securities............................... 1,391 1,269 3,685 3,341
Interest-bearing deposits........................... 265 328 551 644
-------- -------- -------- --------
Total interest income............................. 37,729 35,819 111,473 105,148
Interest expense:
Deposits............................................ 16,240 15,662 47,938 45,120
Notes payable and other borrowings.................. 6,854 6,154 20,114 18,161
Other............................................... 176 189 446 479
-------- -------- -------- --------
Total interest expense............................ 23,270 22,005 68,498 63,760
-------- -------- -------- --------
Net interest income............................... 14,459 13,814 42,975 41,388
Provision for loan losses............................. 110 -- 135 --
-------- -------- -------- --------
Net interest income after provision for
loan losses...................................... 14,349 13,814 42,840 41,388
Non-interest income:
Loan servicing income............................... 806 763 2,347 2,220
Service charges on deposits......................... 1,004 949 2,965 2,770
Insurance commissions............................... 283 329 833 1,066
Net gain on sale of loans........................... 903 447 2,010 856
Other............................................... 3,030 2,330 4,274 7,189
-------- -------- -------- --------
Total non-interest income......................... 6,026 4,818 12,429 14,101
Non-interest expenses:
Compensation........................................ 4,741 5,335 14,458 16,060
Occupancy........................................... 786 736 2,364 2,210
Federal insurance premiums.......................... 209 571 625 1,990
Federal insurance special assessment................ -- -- -- 7,663
Furniture and equipment............................. 714 749 2,208 2,174
Data processing..................................... 603 551 1,849 1,578
Marketing........................................... 574 528 1,706 1,579
Other............................................... 3,531 2,840 7,262 8,094
-------- -------- -------- --------
Total non-interest income......................... 11,158 11,310 30,472 41,348
-------- -------- -------- --------
Income before income taxes........................ 9,217 7,322 24,797 14,141
Income taxes........................................ 3,560 2,660 9,545 4,874
-------- -------- -------- --------
Net income........................................ $ 5,657 $ 4,662 $ 15,252 $ 9,267
-------- -------- -------- --------
-------- -------- -------- --------
Earnings per share:
Basic............................................. $ 0.62 $ 0.51 $ 1.68 $ 0.99
Diluted........................................... 0.58 0.48 1.58 0.94
</TABLE>
See accompanying Notes to Unaudited Consolidated Financial Statements.
3
<PAGE>
Consolidate Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
December 31,
-----------------------
1997 1996
--------- ---------
(In Thousands)
<S> <C> <C>
Operating Activities
Net income................................................. $ 15,252 $ 9,267
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for losses on loans and real estate............ 631 --
Provision for depreciation and amortization.............. 1,712 1,560
Loans originated for sale................................ (640,754) (574,706)
Proceeds from sales of loans held for sale............... 572,641 516,784
Net gain on sale of loans and securities................. (2,035) (872)
Increase in accrued interest receivable.................. (146) (1,342)
Increase in accrued interest payable..................... 432 3,307
Decrease in accounts payable............................. (379) (3,152)
Other.................................................... 1,957 (1,399)
--------- ---------
Net cash provided by operating activities................ (50,689) (50,553)
Investing Activities
Proceeds from sales of investment securities
available for sale........................................ 12,639 33,008
Proceeds from maturities of investment securities.......... 47,972 10,099
Proceeds from sales of mortgage-related securities
available for sale........................................ -- 5,617
Purchase of mortgage-related securities
available for sale........................................ (4,741) (2,057)
Purchase of investment securities available for sale....... (55,887) (42,407)
Purchase of investment securities held for maturity........ (12,013) (4,453)
Purchase of mortgage-related securities held to maturity... (4,171) (20,940)
Principal collected on mortgage-related securities......... 31,575 43,937
Net increase in loans receivable........................... (2,541) (56,062)
Office properties and equipment, net....................... (1,771) (1,411)
Sales of real estate....................................... 9,559 11,809
Acquisition and development of real estate held for sale... (3,789) (11,151)
--------- ---------
Net cash used by investing activities.................... 16,832 (34,011)
</TABLE>
4
<PAGE>
Consolidated Statements of Cash Flows (Cont'd)
<TABLE>
<CAPTION>
Nine Months Ended
December 31,
-----------------------
1997 1996
--------- ---------
(In Thousands)
<S> <C> <C>
Financing Activities
Increase in deposit accounts............................... $ 42,901 $ 62,295
Decrease in advance payments by borrowers for taxes
and insurance............................................. (6,301) (6,472)
Proceeds of notes payable to Federal Home Loan Bank........ 379,100 430,196
Repayment of notes payable to Federal Home Loan Bank....... (320,720) (375,900)
Increase (decrease) in securities sold under agreements
to repurchase............................................. (39,335) 3,722
Increase (Decrease) in other loans payable................. (10,750) 1,271
Treasury stock purchased................................... (4,860) (12,105)
Cash received from stock options exercised................. 499 297
Payments of cash dividends to stockholders................. (2,089) (1,668)
--------- ---------
Net cash provided by financing activities................ 38,445 101,636
--------- ---------
Increase in cash and cash equivalents...................... 4,588 17,072
Cash and cash equivalents at beginning of year............. 38,025 43,689
Cash and cash equivalents at end of year................. $ 42,613 $ 60,761
--------- ---------
--------- ---------
Supplementary cash flow information:
Interest paid (including amounts credited to
deposit accounts)......................................... $ 68,066 $ 60,453
Income taxes paid.......................................... 8,030 5,462
Non-cash transactions:
Mortgage loans transferred to loans held for sale........ 28,670 --
Loans transferred to foreclosed properties............... 2,406 1,108
Mortgage loans held for investment converted into
mortgage-backed securities held to maturity............. -- 54,938
Securities available for sale market value adjustment.... 7,768 790
</TABLE>
See accompanying Notes to Unaudited Consolidated Financial Statements.
5
<PAGE>
ANCHOR BANCORP WISCONSIN INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--PRINCIPLES OF CONSOLIDATION
The unaudited consolidated financial statements include the accounts and
results of operations of Anchor BanCorp Wisconsin Inc. (the "Corporation")
and its wholly-owned subsidiaries, AnchorBank, S.S.B. (the "Bank"),
Investment Directions, Inc. ("IDI") and Nevada Investment Directions, Inc.
("NIDI"). The Bank's statements include its wholly-owned subsidiaries, Anchor
Insurance Services, Inc. ("AIS"), ADPC Corporation ("ADPC"), Anchor
Investment Corporation ("AIC"), and ADPC II LLC ("ADPC II"). All significant
intercompany balances and transactions have been eliminated. Investments in
joint ventures and other less than 50% owned partnerships, which are not
material, are accounted for on the equity method. Partnerships with 50%
ownership or more are consolidated, with significant intercompany accounts
eliminated.
NOTE 2--BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles ("GAAP")
and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by GAAP for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
necessary for a fair presentation of the consolidated financial statements
have been included.
In preparing the consolidated financial statements in conformity with GAAP,
management is required to make estimates and assumptions that affect the
amounts reported in the consolidated financial statements and accompanying
notes. Actual results could differ from those estimates. The results of
operations and other data for the three and nine month periods ended December
31, 1997 are not necessarily indicative of results that may be expected for
any other interim period or the entire year ending March 31, 1998. The
unaudited consolidated financial statements presented herein should be read
in conjunction with the audited consolidated financial statements and related
notes thereto included in the Corporation's Annual Report for the year ended
March 31, 1997.
NOTE 3--STOCKHOLDERS' EQUITY
During the quarter ended December 31, 1997, options for 47,300 shares of
common stock were exercised at a weighted price of $4.37 per share. Treasury
shares were issued in exchange for the options using the last-in-first-out
method. The excess of the cost of treasury shares over the option price
($960,000) was charged to paid-in capital. During the quarter ended December
31, 1997, the Corporation repurchased 50,000 shares of common stock on the
open market for a weighted average price of $30.14. On November 15, 1997, the
Corporation paid out a cash dividend of $.08 per share, amounting to $727,000.
6
<PAGE>
NOTE 4--EARNINGS PER SHARE
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No.128, Earnings per Share. Statement 128
replaced the previously reported primary and fully diluted earnings per share
with basic and diluted earnings per share. Unlike primary earnings per share,
basic earnings per share excludes any dilutive effects of options, warrants,
and convertible securities. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. All earnings per share
amounts for all periods have been presented, and where necessary, restated to
conform to the Statement 128 requirements.
The weighted average number of shares of common stock and common stock
equivalents outstanding for December 31, 1996 have been adjusted to reflect
the two-for-one stock split distributed on August 15, 1997.
7
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended December 31,
-------------------------------
1997 1996
---------- -----------
<S> <C> <C>
Numerator:
Net income....................... $ 5,656,627 $ 4,661,526
----------- -----------
Numerator for basic and diluted
per share-income available to
common stockholders........... $ 5,656,627 $ 4,661,526
Denominator:
Denominator for basic earnings
per share-weighted-average
shares......................... 9,063,001 9,167,818
Effect of dilutive securities:
Employee stock options......... 653,043 455,922
Denominator for diluted earnings
per share-adjusted weighted-
average shares and assumed
conversions..................... 9,716,044 9,623,740
----------- -----------
Basic earnings per share.......... $ 0.62 $ 0.51
----------- -----------
Diluted earnings per share $ 0.58 $ 0.48
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended December 31,
-------------------------------
1997 1996
---------- -----------
<S> <C> <C>
Numerator:
Net income....................... $ 15,252,139 $ 9,266,800
------------ -----------
Numerator for basic and diluted
per share-income available to
common stockholders........... $ 15,252,139 $ 9,266,800
Denominator:
Denominator for basic earnings
per share-weighted-average
shares......................... 9,062,074 9,377,120
Effect of dilutive securities:
Employee stock options......... 585,709 468,740
Denominator for diluted earnings
per share-adjusted weighted-
average shares and assumed
conversions..................... 9,647,783 9,845,860
----------- -----------
Basic earnings per share.......... $ 1.68 $ 0.99
----------- -----------
Diluted earnings per share $ 1.58 $ 0.94
----------- -----------
</TABLE>
8
<PAGE>
NOTE 5--SUBSEQUENT EVENTS
On January 19, 1998, the Corporation declared a $.08 per share cash dividend
to be paid on February 16, 1998 to stockholders of record on January 31, 1998.
9
<PAGE>
ANCHOR BANCORP WISCONSIN INC.
ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
GENERAL. Net income for the three months ended December 31, 1997 increased
to $5.7 million as compared to $4.7 million for the same period in the prior
year. Net income for the nine month period ended December 31, 1997 increased
to $15.3 million as compared to $9.3 million for the same period in the prior
year. Exclusive of the after-tax effects of a $7.7 million one-time charge to
recapitalize the Savings Association Insurance Fund ("SAIF") in the nine
month period ended December 31, 1996, net income for the nine months
increased from $13.9 million as compared to $15.3 million for the same period
this year. The increase in net income for the three month period compared to
last year was due to (i) an increase in net interest income (after the
provision for loan losses) of $540,000, (ii) an increase in non-interest
income of $1.2 million and (iii) a decrease in non-interest expenses of
$150,000 which were partially offset by increase in income taxes of $900,000.
The increase in net income for the nine month period compared to last year
was due to an increase in net interest income (after the provision for loan
losses) of $1.5 million and a decrease in non-interest expenses of $3.2
million (exclusive of the $7.7 million charge to recapitalize the SAIF ).
These effects were partially offset by a decrease in non-interest income of
$1.7 million and an increase in income taxes of $4.7 million.
NET INTEREST INCOME. Net interest income increased $650,000 and $1.6 million
for the three and nine months ended December 31, 1997 compared to the same
periods in 1996. The net interest margin increased to 3.06% from 3.02% and
decreased to 3.08% from 3.11% for the three month and nine month periods,
respectively. The interest rate spread increased to 2.86% from 2.82% for the
respective three month periods and was unchanged from 2.90% for the
respective nine month periods.
Interest income on loans increased $2.3 million and $6.8 million for the
three and nine month periods ended December 31, 1997, respectively, as
compared to the same periods in the prior year. These increases were
primarily a result of the increase of $90.8 million and $88.9 million in the
average balance of loans for the respective three and nine month periods
ended December 31, 1997, as well as increases of 10 basis points and 11 basis
points in the overall yield on loan receivables for the same respective
periods. Interest income on mortgage-related securities decreased $420,000
and $690,000 for the same respective periods due primarily to the decrease of
$41.9 million and $21.7 million in the average balance of mortgage-related
securities, respectively.
Interest expense on deposits increased $580,000 and $2.8 million for the
three and nine month periods ended December 31, 1997, respectively, as
compared to the same respective periods in 1996. The increases were due
primarily to increases in the average balance of deposits of $45.4 million
and $60.7 million, respectively, as a result of various demand deposit and
certificate promotions. The average rate on deposits increased from 4.79% and
4.73%, respectively, to 4.80% and 4.80% during the three and nine months
ended December 31, 1996 and 1997,
10
<PAGE>
respectively, primarily as a result of the above-described deposit
promotions. Interest expense on notes payable and other borrowings increased
$700,000 and $2.0 million during the same respective periods. This was a
result of an increase of $17.4 million and $30.5 million in the average
balance of borrowings during the same respective periods. The average rate on
borrowings increased from 5.82% and 5.85%, respectively, to 6.23% and 6.03%
during the three and nine months ended December 31, 1996 and 1997,
respectively.
The following tables show the Corporation's average balances, interest,
average rates and the spread between the combined average rates earned on
interest-earning assets and average cost of interest-bearing liabilities for
the periods indicated. The average balances are derived from average daily
balances.
11
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended December 31,
---------------------------------------------------------------------------------------------
1997 1996
---------------------------------------------- --------------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost (1) Balance Interest Cost(1)
------------- --------------- --------------- ------------- ----------- ----------
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS
Mortgage loans(2)............ $ 1,180,925 $ 23,879 8.09% $ 1,139,091 $ 22,565 7.92%
Consumer loans(2)............ 341,729 7,752 9.07 297,023 6,792 9.15
Commercial business
loans(2).................. 30,312 778 10.27 26,011 783 12.04
----------- ------- ----------- --------
Total loans
receivable(2)......... 1,552,966 32,409 8.35 1,462,125 30,140 8.25
Mortgage-related securities.. 211,644 3,664 6.92 253,592 4,082 6.44
Investment securities 83,726 1,003 4.79 67,756 935 5.52
Interest-bearing deposits.... 18,709 265 5.67 24,454 328 5.37
Federal Home Loan Bank
stock..................... 21,963 388 7.07 18,979 334 7.04
----------- ------- ----------- --------
Total interest-earning
assets............... 1,889,008 37,729 7.99 1,826,905 35,819 7.84
------ -----
Non-interest-earning assets.. 77,936 65,208
----------- -----------
Total assets.............. $ 1,966,944 $ 1,892,113
----------- -----------
----------- -----------
INTEREST-BEARING LIABILITIES
Demand deposits.............. $ 344,109 2,481 2.88 $ 291,608 1,879 2.58
Regular passbood savings..... 99,103 569 2.30 101,146 585 2.31
Certificates of deposit...... 911,245 13,190 5.79 916,282 13,198 5.76
----------- ------- ----------- --------
Total deposits............ 1,354,457 16,240 4.80 1,309,036 15,662 4.79
Notes payable and other
borrowings............... 440,035 6,854 6.23 422,658 6,154 5.82
Other........................ 18,732 176 3.76 20,201 189 3.74
----------- ------- ----------- --------
Total interest-bearing
liabilities............... 1,813,224 23,270 5.13 1,751,895 22,005 5.02
------- ----- -------- -----
Non-interest-bearing
liabilities............... 23,945 23,998
----------- -----------
Total liabilities......... 1,837,169 1,775,893
Stockholders' equity......... 129,775 116,220
----------- -----------
Total liabilities and
stockholders' equity.. $ 1,966,944 $ 1,892,113
----------- -----------
----------- -----------
Net interest income/interest
rate spread................ $ 14,459 2.86% $ 13,814 2.82
-------- ----- -------- -----
-------- ----- -------- -----
Net interest-earning assets.. $ 75,784 $ 75,010
----------- ----------
----------- ----------
Net interest margin.......... 3.06% 3.02%
----- -----
----- -----
Ratio of average interest-
earning assets to average
interest-bearing
liabilities................ 1.04 1.04
---- ----
---- ----
</TABLE>
- ----------------
(1) Annualized
(2) The average balances of loans include non-performing loans, interest of
which is recognized on a cash basis.
12
<PAGE>
<TABLE>
NINE MONTHS ENDED DECEMBER 31.
-------------------------------------------------------------------------
1997 1996
--------------------------------- --------------------------------
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD
BALANCE INTEREST COST(1) BALANCE INTEREST COST(1)
---------- -------- -------- ---------- -------- --------
(Dollars In Thousands)
<S> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS
Mortgage loans (2).............................. $1,165,373 $ 71,261 8.15% $1,137,674 $ 67,512 7.91%
Consumer loans (2).............................. 336,796 22,663 8.97 277,073 19,773 9.52
Commercial business loans (2)................... 29,120 2,323 10.64 27,684 2,196 10.58
---------- -------- ---------- --------
Total loans receivable (2).................... 1,531,289 96,247 8.38 1,442,431 89,481 8.27
Mortgage-related securities (2)................. 221,463 10,990 6.62 243,146 11,682 6.41
Investment securities........................... 73,699 2,611 4.72 56,718 2,409 5.66
Interest-bearing deposits....................... 13,042 551 5.63 15,599 644 5.50
Federal Home Loan Bank stock.................... 20,848 1,074 6.87 18,103 932 6.86
---------- -------- ---------- --------
Total interest-earning assets................. 1,860,341 111,473 7.99 1,775,997 105,148 7.89
Non-interest-earning assets..................... 78,231 64,117
---------- ----------
Total assets.................................... $1,938,572 $1,840,114
---------- ----------
---------- ----------
INTEREST-BEARING LIABILITIES
Demand deposits................................. $ 328,455 7,101 2.88 $ 287,229 5,566 2.58
Regular passbook savings........................ 100,234 1,720 2.29 103,832 1,793 2.30
Certificates of deposit......................... 903,299 39,117 5.77 880,196 37,761 5.72
---------- -------- ---------- --------
Total deposits................................ 1,331,988 47,938 4.80 1,271,257 45,120 4.73
Notes payable and other borrowings.............. 444,718 20,114 6.03 414,201 18,161 5.85
Other........................................... 16,125 446 3.69 17,192 479 3.71
---------- -------- ---------- --------
Total interest-bearing liabilities............ 1,792,831 68,498 5.09 1,702,650 63,760 4.99
-------- ---- -------- ----
Non-interest-bearing liabilities................ 20,500 20,016
--------- ---------
Total liabilities............................. 1,813,331 1,722,666
Stockholders' equity............................ 125,241 117,448
---------- ----------
Total liabilities and stockholders' equity.... $1,938,572 $1,840,114
---------- ----------
---------- ----------
Net interest income/interest rate spread...... $ 42,975 2.90% $ 41,388 2.90%
-------- ---- -------- ----
Net interest-earning assets................... $ 67,510 $ 73,347
---------- ----------
Net interest margin........................... 3.08% 3.11%
---- ----
Ratio of average interest-earning assets to
average interest-bearing liabilities......... 1.04 1.04
---- ----
</TABLE>
- ---------------------------------
(1) Annualized
(2) The average balances of loans include non-performing loans, interest of
which is recognized on a cash basis.
13
<PAGE>
Provision for Loan Losses. Provision for loan losses increased $110,000 and
$135,000 for the current three and nine month periods, respectively, as
compared to the same respective periods in 1996. See "Asset Quality" for
further discussion.
Non-Interest Income. Non-interest income increased $1.2 million and
decreased $1.7 million during the three and nine months ended December 31,
1997, respectively, as compared to the same periods in the prior year. The
increase in the three-month period was largely as a result of increases of
$460,000 in the net gain on sale of loans and $700,000 in the category of
other income. The increase in other income was attributable to increased
income in the partnership investments of IDI and NIDI. The decrease in
non-interest income in the nine months ended December 31, 1997 was
attributable to a decrease in the category of other income of $2.9 million,
which was partially offset by an increase in the net gain on sale of loans of
$1.2 million. The decrease in other income for the nine month period was
largely due to a $2.8 million decrease in partnership income from IDI and
NIDI.
Non-Interest Expense. Non-interest expenses decreased $150,000 and $10.9
million, during the three and nine month periods ended December 31, 1997,
respectively, as compared to the same periods in 1996, as a result of several
factors. The majority of the nine month decrease was due to the one-time
charge during the prior period of $7.7 million associated with the
recapitalization of the SAIF. Exclusive of the charge, non interest expenses
decreased $3.2 million during the nine month period ended December 31, 1997,
as compared to the same period in 1996. Compensation expense decreased
$590,000 and $1.6 million during the three and nine months ended December 31,
1997, repectively, due primarily to the elimination of the cost associated
with the Employee Stock Ownership Plan. These decreases were accompanied by
the reduction of the federal insurance premium of $360,000 and $1.4 million
during the three and nine months ended December 31, 1997, respectively,
stemming from the one-time charge associated with the recapitalization of the
SAIF in the prior nine month period ended December 31, 1996. Other expenses
increased by $690,000 and decreased by $830,000 for the respective three and
nine month periods ended December 31, 1997, as compared to the same periods
in 1996. The respective increase and decrease in other expenses were largely
caused by the associated increase and decrease in costs associated with
partnership investments at IDI and NIDI for the three and nine month periods
as compared to the same periods in the prior year. The increase in other
expenses for the three month period ended December 31, 1997 was accompanied
by increases in several other areas of expenses. Occupancy, data processing
and marketing expenses all increased by a total of $150,000 (which was offset
slightly by a $35,000 decrease in furniture), as compared to those expenses
in the prior period. The decrease in other expenses for the nine month
period ended December 31, 1997 was partially offset by increases in
occupancy, data processing and marketing expenses of $150,000, $270,000 and
$130,000, respectively, as compared to those expenses in the prior period.
Income Taxes. Income tax expense increased $900,000 and $4.7 million during
the three and nine months ended December 31, 1997, respectively, as compared
to the same respective period in 1996. Approximately $3.1 million of the
increase in the nine month period was attributable to the tax effect of the
one-time charge associated with the SAIF recapitalization, which reduced
income before income taxes, and thus income tax expense, in the nine month
period ended December 31, 1996. Exclusive of the effects of the SAIF charge,
the increase in income tax expense during the nine months ended December 31,
1997 was $1.6 million. The effective tax rates were 38.62%
14
<PAGE>
and 38.49%, as compared to 36.33% and 34.47%, respectively, for the three and
nine month periods. Exclusive of the one-time charge to recapitalize the
SAIF and related tax effect in the prior year, the effective tax rate was
36.46% for the nine months ended December 31, 1996.
15
<PAGE>
FINANCIAL CONDITION
During the nine months ended December 31, 1997, the Corporation increased its
assets $56.2 million from $1.88 billion to $1.94 billion. The majority of
this increase was attributable to an increase in loans.
Investment securities (both available for sale and held to maturity)
increased $8.7 million as a result of (i) purchases of $67.9 million of U.S.
Government and agency securities and (ii) market value and other adjustments
of $1.4 million, which were partially offset by sales and maturities of
$60.6 million.
Mortgage-related securities (both available for sale and held to maturity)
decreased $31.3 million as a result of (i) purchases of $8.9 million,
(ii)sales and maturities of $31.6 million and market value and other
adjustments of $8.6 million. Mortgage-related securities consisted of $182.0
million of mortgage-backed securities and $27.1 million of
mortgage-derivative securities at December 31, 1997.
The Corporation's investments in mortgage-derivative securities are limited
to federal agency issued REMICs which represent an interest in
mortgage-backed securities. These investments are deemed to have limited
credit risk. The investments do have interest rate risk due to, among other
things, actual prepayments being more or less than those estimated at the
time of purchase. The Corporation invests only in short-term tranches in
order to limit the reinvestment risk associated with greater than anticipated
prepayments, as well as changes in value resulting from changes in interest
rates.
Total loans (including loans held for sale) increased $70.1 million during
the nine months ended December 31, 1997. Activity for the period included
(i) originations and purchases of $640.8 million, (ii) sales of $237.8
million, and (iii) principal repayments and other adjustments of $332.9
million.
Deposits increased $43.4 million during the nine months ended December 31,
1997. The increase was due primarily to various product promotions. Brokered
deposits have been used in the past and may be used in the future as the need
for funds requires it. Brokered deposits totaled $53.4 million at December
31, 1997 and generally mature in one year. FHLB advances and other
borrowings increased $58.4 million and decreased $10.8 million, respectively,
during the nine months ended December 31, 1997. Reverse repurchase
agreements decreased $39.3 million during the nine months ended December 31,
1997. Advance payments by borrowers for taxes and insurance decreased $6.3
million as a result of annual payouts for taxes.
Stockholders' equity increased $11.1 million during the nine months ended
December 31, 1997 as a net result of (i) net income of $15.3 million, (ii)
stock options exercised of $470,000, (iii) management recognition plan shares
earned and related tax adjustments totalling $770,000, and (iv) a $1.5
million change in net unrealized loss of available-for-sale securities, all
of which more than offset (v) treasury stock repurchased of $4.8 million, and
(vi) cash dividends of $2.1 million.
16
<PAGE>
ASSET QUALITY
Loans are placed on non-accrual status when, in the judgment of management,
the probability of collection of interest is deemed to be insufficient to
warrant further accrual. When a loan is placed on non-accrual status,
previously accrued but unpaid interest is deducted from interest income. As
a matter of policy, the Corporation does not accrue interest on loans past
due 90 days or more.
Non-performing assets (consisting of non-accrual loans, certain real estate
held for development and sale, foreclosed properties and repossessed assets)
increased to $15.6 million at December 31, 1997 from $13.8 million at March
31, 1997 and increased as a percentage of total assets to 0.80% from 0.73%
at such dates, respectively.
Non-performing assets are summarized as follows at the dates indicated:
<TABLE>
<CAPTION>
At March 31,
At December 31, --------------------------------
1997 1997 1996 1995
--------------- --------- --------- --------
(Dollars In Thousands)
<S> <C> <C> <C> <C>
Non-accrual loans:
Single-family residential............................. $ 1,503 $ 1,712 $ 629 $ 833
Multi-family residential.............................. 2,369 3,199 - -
Commercial real estate................................ 656 778 470 624
Construction and land................................. - 58 81 81
Consumer.............................................. 749 438 202 219
Commercial business................................... 879 610 508 736
------- ------- ------- -------
Total non-accrual loans.............................. 6,156 6,795 1,890 2,493
Real estate held for development and sale............... 2,913 2,736 2,319 857
Foreclosed properties and repossesed assets, net........ 6,514 4,222 6,077 7,116
------- ------- ------- -------
Total non-performing assets........................... $15,583 $13,753 $ 10,286 $10,466
------- ------- ------- -------
------- ------- ------- -------
Performing troubled debt-restructurings................. $ 3,241 $ 329 332 335
------- ------- ------- -------
------- ------- ------- -------
Total non-accrual loans to total loans.................. 0.38% 0.44% 0.13% 0.19%
Total non-performing assets to total assets............. 0.80 0.73 0.59 0.69
Allowance for loan losses to total loans................ 1.38 1.48 1.59 1.75
Allowance for loan losses to total non-accrual loans.... 358.92 334.81 1,206.72 899.68
Allowance for loan and foreclosure losses to total
non-performing assets.................................. 147.60 173.26 228.70 221.82
</TABLE>
Non-accrual loans decreased $640,000 during the nine months ended December
31, 1997. Non-performing real estate held for development and sale
increased $180,000 for the same period. Foreclosed properties and
repossessed assets increased $2.3 million during the same period.
17
<PAGE>
At December 31, 1997, there was one non-accrual loan with a carrying value of
greater than $1.0 million. The loan, which had a total carrying value of
$1.9 million, represented a 26% participation secured by a 48-unit
condominium project in Bloomington, Minnesota. Foreclosure of the property
is being sought by the participants and the project is under the control of a
receiver.
Foreclosed properties and repossessed assets include three properties each
with a carrying value of greater than $ 1.0 million. The first property is
an apartment complex in Elm Grove, Wisconsin, with a net carrying value of
$1.6 million at December 31, 1997. Foreclosure proceedings were halted as
environmental studies indicated contamination located on a portion of the
project. The Bank has applied for and received approval to be substantially
reimbursed by the Petroleum Environmental Cleanup Fund ("PECFA") for the
cleanup. The Bank also is currently pursuing reimbursement from an adjacent
landowner believed to be liable for a portion of the contamination.
Foreclosure proceedings have resumed as of this date. The second is a
12-unit condominium building and associated land in Monona, Wisconsin. The
Corporation's net carrying value of this property totaled $1.5 million at
December 31, 1997. ADPC is presently in the process of selling individual
units. The third property consists of several condominium units related to,
but not a part of, those units that were discussed in the aforementioned
non-accrual loan for the condominium project in Bloomington, Minnesota. The
units were purchased in July 1997, at auction, in an effort to solidify the
Bank's position with regard to the original 48 units. Because the state of
Minnesota has a six-month redemption period, the Bank is essentially
prohibited from doing anything with the units until after January 1998. The
net carrying value of these units was $1.9 million at December 31, 1997.
Performing troubled debt restructurings consist primarily of a $3.2 million
hotel and office building located in Garden Grove, California. This loan was
previously removed from foreclosed properties and repossessed assets, in
fiscal 1997, due to a repayment plan from the bankruptcy settlement.
At December 31, 1997, assets that the Bank has classified, as "substandard",
net of reserves, consisted of $21.7 million of loans and foreclosed
properties. As of March 31, 1997, the substandard assets amounted to $16.5
million. The increase was primarily due to the classification of a 93%
participation loan to the Foxhills Resort Limited Partnership located in
Mishicot, Wisconsin totaling $4.8 million and a loan secured by a senior
housing project in Madison, Wisconsin totaling $1.2 million. Payments are
current on both loans.
18
<PAGE>
The following table sets forth information relating to the Corporation's
loans that are less than 90 days delinquent at the dates indicated.
<TABLE>
<CAPTION>
At March 31,
At December 31, ---------------------------
1997 1997 1996 1995
-------------- -------- -------- -------
(In Thousands)
<S> <C> <C> <C> <C>
30 to 59 days..................... $3,174 $3,144 $5,776 $2,696
60 to 89 days..................... 733 909 789 1,099
------ ------ ------ ------
Total.......................... $3,907 $4,053 $6,565 $3,795
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
The Corporation's loan portfolio, foreclosed properties and repossessed
assets are evaluated on a continuing basis to determine the necessity for
additions to the allowances for losses and the related balance in the
allowances. These evaluations consider several factors, including, but not
limited to, general economic conditions, loan portfolio composition, loan
delinquencies, prior loss experience, collateral value, anticipated loss of
interest and management's estimation of future potential losses. The
evaluation of the allowance for loan losses includes a review of known loan
problems as well as potential problems based upon historical trends and
ratios. Foreclosed properties are recorded at the lower of carrying value or
fair value with charge-offs, if any, charged to the allowance for loan losses
prior to transfer to foreclosed property. The fair value is primarily based
on appraisals, discounted cash flow analysis (the majority of which are based
on current occupancy and lease rates) and pending offers.
19
<PAGE>
A summary of the activity in the allowance for losses on loans follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
-------------------- --------------------
1997 1996 1997 1996
-------- ------- -------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Allowance at beginning of period................. $22,195 $22,480 $22,750 $22,807
Charge-offs:
Mortgage........................................ (103) (17) (132) (146)
Consumer........................................ (135) (146) (788) (271)
Commercial business............................. - (4) (8) (185)
------- ------- ------- -------
Total charge-offs.............................. (238) (167) (928) (602)
Recoveries:
Mortgage........................................ 4 229 55 247
Consumer........................................ 15 1 37 4
Commercial business............................. 9 55 46 142
------- ------- ------- -------
Total recoveries............................... 28 285 138 393
------- ------- ------- -------
Net recoveries (charge-offs)................... (210) 118 (790) (209)
Provision........................................ 110 - 135 -
------- ------- ------- -------
Allowance at end of period...................... $22,095 $22,598 $22,095 $22,598
------- ------- ------- -------
------- ------- ------- -------
Net recoveries (charge-offs) to average loans.... (0.05)% 0.03% (0.07)% (0.02)%
---- ---- ---- ----
---- ---- ---- ----
</TABLE>
Although management believes that the December 31, 1997 allowance for loan
losses is adequate based upon the current evaluation of loan delinquencies,
non-accrual loans, charge-off trends, economic conditions and other factors,
there can be no assurance that future adjustments to the allowance, which
could adversely affect the Corporation's results of operations, will not be
necessary. Management also continues to pursue all practical and legal
methods of collection, repossession and disposal, as well as adhering to high
underwriting standards in the origination process, in order to maintain
strong asset quality.
20
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
On an unconsolidated basis, the Corporation's sources of funds include
dividends from its subsidiaries, including the Bank, interest on its
investments and returns on its real estate held for sale. The Bank's primary
sources of funds are payments on loans and mortgage-related securities,
deposits from retail and wholesale sources, advances and other borrowings.
At December 31, 1997, the Corporation had outstanding commitments to
originate loans of $42.5 million, commitments to extend funds to, or on
behalf of, customers pursuant to lines and letters of credit of $75.4 million
and loans sold with recourse to the Corporation in the event of default by
the borrower of $1.9 million. Scheduled maturities of certificates of
deposit during the twelve months following December 31, 1997 amounted to
$737.5 million and scheduled maturities of FHLB advances during the same
period totaled $352.5 million. At December 31, 1997, the Corporation had no
reverse repurchase agreements. Management believes adequate capital and
borrowings are available from various sources to fund all commitments to the
extent required.
The Bank is required by the Office of Thrift Supervision ("OTS") to maintain
specified levels of liquid investments in qualifying types of U.S. Government
and agency securities and other investments. This requirement, which may be
varied by the OTS, is based upon a percentage of deposits and short-term
borrowings. The required percentage is currently 5.0%, which has been
proposed by the OTS to be reduced to 4%. During the quarter ended December
31, 1997, the Bank's average liquidity ratio was 12.56%.
Under federal law and regulation, the Bank is required to meet certain
tangible, core and risk-based capital requirements. Tangible capital
generally consists of stockholders' equity minus certain intangible assets.
Core capital generally consists of tangible capital plus qualifying
intangible assets. The risk-based capital requirements presently address
credit risk related to both recorded and off-balance sheet commitments and
obligations. As a state-chartered savings institution, the Bank is also
subject to the minimum regulatory capital requirement of the State of
Wisconsin which, is 6% of total assets. The Bank's capital ratio for this
measurement is 6.98% as of December 31, 1997.
21
<PAGE>
The following summarizes the Bank's capital levels and ratios and the levels
and ratios required by the OTS at December 31, 1997 and December 31, 1996.
<TABLE>
<CAPTION>
Minimum Required
Minimum Required to be Well
For Capital Capitalized Under
Actual Adequacy Purposes OTS Requirements
------------------- ----------------- ------------------
Amount Ratio Amount Ratio Amount Ratio
--------- -------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1997:
Tier 1 capital
(to adjusted tangible assets).............. $111,009 5.79% $57,538 3.00% $ 95,897 5.00%
Risk-based capital
(to risk-based assets)..................... 126,063 10.51 95,916 8.00 119,895 10.00
Tangible capital
(to tangible assets)...................... 111,009 5.79 28,769 1.50 N/A N/A
As of December 31, 1996
Tier 1 capital
(to adjusted tangible assets)............... 106,405 5.74 55,660 3.00 92,766 5.00
Risk-based capital
(to risk-based assets)...................... 120,179 10.92 88,069 8.00 110,087 10.00
Tangible capital
(to tangible assets)........................ 106,405 5.74 27,830 1.50 N/A N/A
</TABLE>
22
<PAGE>
The OTS has proposed to increase the core capital ratio from the current
3.00% to a range of 4.00% to 5.00% for all but the most healthy financial
institutions. The OTS has added an interest rate risk calculation such that an
institution with a measured interest rate risk exposure, as defined, greater
than specified levels must deduct an interest rate risk component when
calculating the OTS risk-based capital. Final implementation of this rule was
pending at December 31, 1997. Management does not believe these rules will
significantly impact the Bank's ability to meet the capital requirements.
23
<PAGE>
ASSET/LIABILITY MANAGEMENT
The primary function of asset and liability management is to provide
liquidity and maintain an appropriate balance between interest-earning assets
and interest-bearing liabilities within specified maturities and/or repricing
dates. Interest rate risk is the imbalance between interest-earning assets and
interest-bearing liabilities at a given maturity or repricing date, and is
commonly referred to as the interest rate gap (the "gap"). A positive gap exists
when there are more assets than liabilities maturing or repricing within the
same time frame. A negative gap occurs when there are more liabilities than
assets maturing or repricing within the same time frame. During a period of
rising interest rates, a negative gap over a particular period would tend to
adversely affect net interest income over such period, while a positive gap over
a particular period would tend to result in an increase in net interest income
over such period.
The Corporation's strategy for asset and liability management is to maintain
an interest rate gap that minimizes the impact of interest rate movements on the
net interest margin. As part of this strategy, the Corporation sells
substantially all new originations of long-term, fixed-rate, single-family
residential mortgage loans in the secondary market, invests in adjustable-rate
or medium-term, fixed-rate, single-family residential mortgage loans, invests in
medium-term mortgage-related securities and invests in consumer loans which
generally have shorter terms to maturity and higher and/or adjustable interest
rates.
The Corporation also originates multi-family residential and commercial real
estate loans, which generally have adjustable or floating interest rates and/or
shorter terms to maturity than conventional single-family residential loans.
Long-term, fixed-rate, single-family residential mortgage loans originated for
sale in the secondary market are generally committed for sale at the time the
interest rate is locked with the borrower. As such, these loans involve little
interest rate risk to the Corporation.
The Corporation's cumulative net gap position at December 31, 1997 for one
year or less was a negative 0.12% of total assets. The calculation of a gap
position requires management to make a number of assumptions as to when an asset
or liability will reprice or mature. Management believes that its assumptions
approximate actual experience and considers them reasonable, although the actual
amortization and repayment of assets and liabilities may vary substantially.
24
<PAGE>
The following table summarizes the Corporation's interest rate sensitivity
gap position as of December 31, 1997.
<TABLE>
<CAPTION>
MORE THAN MORE THAN
WITHIN ONE TO THREE TO MORE THAN
ONE YEAR THREE YEARS FIVE YEARS FIVE YEARS TOTAL
------------ ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
(Dollars in Thousands)
Interest-earning assets:
Mortgage loans (1) (2):
Fixed......................................... $ 114,830 $ 68,366 $ 20,193 $ 11,314 $ 214,704
Variable...................................... 684,516 268,212 11,264 -- 963,993
Consumer loans (1)............................. 272,638 59,384 9,503 2,579 344,104
Commercial business loans (1).................. 27,995 1,219 102 99 29,415
Mortgage-related securities (3)................ 111,587 73,555 19,835 4,124 209,101
Investment securities and other interest-earning
assets (3).................................... 47,831 8,996 23,738 -- 80,566
------------ ----------- ---------- ---------- ------------
Total........................................ $ 1,259,397 $ 479,734 $ 84,635 $ 18,116 $ 1,841,882
------------ ----------- ---------- ---------- ------------
------------ ----------- ---------- ---------- ------------
Interest-bearing liabilities:
Deposits (4)................................... $ 909,321 $ 264,712 $ 58,148 $ 43,761 $ 1,275,942
Borrowings..................................... 352,450 73,827 13,557 -- 439,834
------------ ----------- ---------- ---------- ------------
Total........................................ $ 1,261,771 $ 338,539 $ 71,705 $ 43,761 $ 1,715,776
------------ ----------- ---------- ---------- ------------
------------ ----------- ---------- ---------- ------------
Interest sensitivity gap........................ $ (2,374) $ 141,194 $ 12,930 $ (25,644) $ 126,106
------------ ----------- ---------- ---------- ------------
------------ ----------- ---------- ---------- ------------
Cummulative interest sensitivity gap............ $ (2,374) $ 138,820 $ 151,750 $ 126,106
------------ ----------- ---------- ----------
------------ ----------- ---------- ----------
Cummulative interest sensitivity gap as a
percent of total assets....................... (0.12)% 7.15% 7.82% 6.50%
</TABLE>
(1) Balances have been reduced for (i) undisbursed loan proceeds, which
aggregated $51.8 million, and (ii) non-accrual loans, which amounted
to $6.2 million.
(2) Includes $9.2 million of loans held for sale spread throughout the periods.
(3) Includes $73.0 million of securities available for sale spread throughout
the periods.
(4) Does not include $71.7 million of demand accounts because they are non-
interest-bearing. Also does not include accrued interest payable, which
amounted to $8.2 million. Projected decay rates for demand deposits and
passbook savings were provided by the OTS.
25
<PAGE>
PART II--OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS.
The Bank is involved in litigation relating to alleged structural
deficiencies of a property located in Vero Beach, Florida. The Bank contracted
for the completion of this property after is was acquired by foreclosure and
converted it into a condominium complex. In January 1993, the Bank and the
Homeowners Association, which represents the condominium owners, entered into a
settlement agreement covering various repairs totaling $500,000 which the
Corporation accrued in September 1992 and paid in January 1993. This also
covered repairs related to the post-tension cable system, an estimated amount of
which was accrued by the Corporation in September 1993 but has not yet been
paid. Three lawsuits have been filed against the Bank in connection with the
foregoing by various owners of condominiums in the complex and the Homeowners
Association. During fiscal 1996, one trial involving an individual homeowner was
finished, the result of which relieved the Bank of any claim for punitive and/or
general damages, but provided the owner with recission (return of the unit to
the Bank). The Bank has appealed the verdict and remains receptive to a
negotiated settlement. During fiscal 1997, the lawsuit by the Homeowners
Association was settled for $1.2 million, the amount of which represents a full
and complete settlement of any and all alleged structural deficiencies. Based on
the outcome of the above described cases and the evaluation of the accruals by
the Corporation to date, management does not believe that the remaining
litigation will have a material adverse effect on the financial condition or
operations of the Corporation.
ITEM 2 CHANGES IN SECURITIES.
Not applicable.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
26
<PAGE>
ITEM 4 SUBMISSION OF MATTER TO VOTE OF SECURITIES HOLDERS.
Not applicable.
ITEM 5 OTHER INFORMATION.
None.
ITEM 6 EXHIBITS AND REPORTS.
None.
27
<PAGE>
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.
ANCHOR BANCORP WISCONSIN INC.
<TABLE>
<S> <C>
Date: January 31, 1998 By: /s/ Douglas J. Timmerman
---------------- --------------------------------------------
Douglas J. Timmerman, Chairman of the
Board, President and Chief Executive Officer
Date: January 31, 1998 By: /s/ Michael W. Helser
---------------- --------------------------------------------
Michael W. Helser, Treasurer and
Chief Financial Officer
</TABLE>
28
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<CASH> 36,244
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 6,369
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 108,852
<INVESTMENTS-CARRYING> 152,475
<INVESTMENTS-MARKET> 153,080
<LOANS> 1,606,229
<ALLOWANCE> 22,095
<TOTAL-ASSETS> 1,941,180
<DEPOSITS> 1,355,799
<SHORT-TERM> 352,450
<LIABILITIES-OTHER> 16,541
<LONG-TERM> 80,095
0
0
<COMMON> 51,572
<OTHER-SE> 77,434
<TOTAL-LIABILITIES-AND-EQUITY> 1,941,180
<INTEREST-LOAN> 96,247
<INTEREST-INVEST> 14,675
<INTEREST-OTHER> 551
<INTEREST-TOTAL> 111,473
<INTEREST-DEPOSIT> 47,938
<INTEREST-EXPENSE> 68,498
<INTEREST-INCOME-NET> 42,975
<LOAN-LOSSES> 135
<SECURITIES-GAINS> 25
<EXPENSE-OTHER> 30,472
<INCOME-PRETAX> 24,797
<INCOME-PRE-EXTRAORDINARY> 24,797
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,252
<EPS-PRIMARY> 1.68
<EPS-DILUTED> 1.58
<YIELD-ACTUAL> 7.99
<LOANS-NON> 6,156
<LOANS-PAST> 0
<LOANS-TROUBLED> 3,241
<LOANS-PROBLEM> 13,955
<ALLOWANCE-OPEN> 22,750
<CHARGE-OFFS> 928
<RECOVERIES> 138
<ALLOWANCE-CLOSE> 22,095
<ALLOWANCE-DOMESTIC> 22,095
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 20,487
</TABLE>
