<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 June 30, 1997.
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-19985
WESTCO BANCORP, INC.
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(Exact name of registrant as specified in its charter)
Delaware 36-3823760
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(State or other jurisdiction I.R.S. Employer
of incorporation or Identification
organization) Number
2121 South Mannheim Road, Westchester, Illinois 60154
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (708) 865-1100
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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 [_]
As of August 10, 1997, the Registrant had 2,493,353 shares of Common stock
issued and outstanding.
<PAGE>
WESTCO BANCORP, INC.
<TABLE>
<CAPTION>
Part I. FINANCIAL INFORMATION Page
<S> <C>
Item 1. Financial Statements
Consolidated Statements of Financial Condition
June 30, 1997 (Unaudited) and December 31, 1996 1
Consolidated Statements of Income, Three and Six Months
Ended June 30, 1997 and 1996 (Unaudited) 2
Consolidated Statements of Cash Flows, Six Months Ended
June 30, 1997 and 1996 (Unaudited) 3
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5 - 10
Part II. OTHER INFORMATION 11
SIGNATURES
EXHIBIT 11.0 - Computation of Earnings per Share
EXHIBIT 27.0 - Financial Data Table
</TABLE>
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<PAGE>
WESTCO BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------- ------------
(Unaudited)
<S> <C> <C>
Assets
- ------
Cash and amounts due from
depository institutions $ 3,209,452 3,511,480
Interest-bearing deposits 11,057,414 7,877,846
----------- -----------
Total cash and cash equivalents 14,266,866 11,389,326
Investment securities (market value of
$76,629,446 at June 30, 1997 and
$82,359,066 at December 31, 1996) 56,442,787 68,737,012
Investment securities held for trade 986,972 826,875
Loans receivable, net 233,084,517 223,898,424
Real estate owned 603,972 -
Stock in Federal Home Loan Bank of Chicago 1,997,000 1,876,000
Office properties and equipment, net 1,921,259 1,909,043
Accrued interest receivable 1,365,532 1,504,690
Prepaid expense and other assets 944,532 850,677
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Total assets 311,613,437 310,992,047
=========== ===========
Liabilities and Stockholders' Equity
- ----------- --- ------------- ------
Deposits 256,129,172 255,153,961
Advance payments by borrowers for taxes
and insurance 3,331,652 3,077,294
Other liabilities 4,654,457 4,928,016
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Total liabilities 264,115,281 263,159,271
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Stockholders' Equity:
Common stock 34,979 34,843
Additional paid-in capital 22,807,052 22,518,095
Retained earnings 39,897,659 38,420,579
Treasury stock (14,743,820) (12,393,283)
Common stock acquired by ESOP (497,714) (622,143)
Common stock awarded by Association
Recognition and Retention Plan - (125,315)
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Total stockholders' equity 47,498,156 47,832,776
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Total liabilities and stockholders'
equity $ 311,613,437 310,992,047
=========== ===========
</TABLE>
See notes to consolidated financial statements.
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<PAGE>
WESTCO BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------- ------------------
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Interest income:
Interest on loans $4,881,062 4,646,110 9,563,479 9,148,852
Interest on investments 861,870 1,067,915 1,812,707 2,113,127
Interest on interest-bearing
deposits 127,042 114,141 234,377 256,759
Dividends on securities
held for trade 1,528 2,410 4,258 3,864
Dividends on FHLB stock 33,300 31,591 64,433 61,693
---------- --------- ---------- ----------
Total interest income 5,904,802 5,862,167 11,679,254 11,584,295
---------- --------- ---------- ----------
Interest expense:
Interest on deposits 3,113,511 3,073,739 6,182,919 6,125,778
---------- --------- ---------- ----------
Total interest expense 3,113,511 3,073,739 6,182,919 6,125,778
---------- --------- ---------- ----------
Net interest income 2,791,291 2,788,428 5,496,335 5,458,517
---------- --------- ---------- ----------
Non-interest income:
Loan fees and service
charges 76,367 63,601 136,787 120,824
Commission income 67,261 77,481 136,630 137,802
Unrealized gain (loss) on
trading account securities 20,372 (30,392) 22,786 (32,692)
Gain on sale of trading
account securities 49,731 4,635 72,011 (32,041)
Other income 61,161 61,819 118,698 121,689
---------- --------- ---------- ----------
Total non-interest
income 274,892 177,144 486,912 315,582
---------- --------- ---------- ----------
Non-interest expense:
Staffing costs 820,556 796,787 1,630,994 1,576,428
Advertising 43,725 42,301 76,200 77,164
Occupancy & equipment
expense 125,123 119,472 251,082 239,069
Data processing 51,082 51,244 109,238 104,979
Federal deposit insurance
premiums 41,400 147,018 82,800 293,544
Other 167,286 163,789 327,184 334,070
---------- --------- ---------- ----------
Total non-interest
expense 1,249,172 1,320,611 2,477,498 2,625,254
---------- --------- ---------- ----------
Income before taxes 1,817,011 1,644,961 3,505,749 3,148,845
Provision (benefit) for
income taxes 664,000 586,750 1,274,100 1,121,400
---------- --------- ---------- ----------
Net Income $1,153,011 1,058,211 2,231,649 2,027,445
========== ========= ========== ==========
Earnings per share-primary $.43 .37 .82 .71
Earnings per share-fully
diluted $.43 .37 .81 .70
Dividends declared per common
share $.15 .12 .30 .24
</TABLE>
See notes to consolidated financial statements.
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<PAGE>
<TABLE>
<CAPTION>
WESTCO BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended June 30,
1997 1996
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,231,649 2,027,445
Adjustments to reconcile net income to net
cash from operating activities:
Depreciation 98,138 102,435
Amortization of premiums and discounts on
investment securities - net (71,032) (64,638)
Amortization of cost of stock benefit plans 249,744 249,769
(Gain) loss on sale of trading account securities (126,452) 32,041
Unrealized (gain)loss on trading account securities (22,786) 32,692
Proceeds from sales of trading account securities (2,247,574) (3,126,325)
Purchase of trading account securities 2,236,715 2,778,958
Decrease in deferred income on loans (153,506) (151,980)
Increase in current and deferred federal income tax 579,174 526,890
(Increase)decrease in interest receivable 139,158 (119,015)
Increase(decrease) in interest payable (20,287) 14,151
Change in prepaid and accrued items, net (636,042) (660,625)
----------- -----------
Net cash provided by operating activities 2,256,899 1,641,798
----------- -----------
Cash flows from investing activities:
Proceeds from maturities of investment securities 27,643,003 34,100,000
Purchase of investment securities (15,277,746) (32,300,523)
Purchase of Federal Home Loan Bank stock (121,000) (14,600)
Disbursements for loans (31,784,088) (26,831,055)
Loan repayments 22,069,529 21,080,278
Property and equipment expenditures (110,354) (37,253)
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Net cash provided for investing activities 2,419,344 (4,003,153)
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Cash flows from financing activities:
Proceeds from exercise of stock options 90,440 30,000
Deposit account receipts 134,999,279 124,097,608
Deposit account withdrawals (139,636,170) (123,923,323)
Interest credited to deposit accounts 5,612,102 5,526,388
Increase in advance payment by borrowers for taxes and insurance 254,358 144,567
Payment of dividends (768,175) (608,904)
Purchase of treasury stock (2,350,537) (1,527,124)
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Net cash provided by(for) financing activities (1,798,703) 3,739,212
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Net change in cash and cash equivalents 2,877,540 1,377,857
Cash and cash equivalents at beginning of period 11,389,326 8,390,071
----------- -----------
Cash and cash equivalents at end of period $ 14,266,866 9,767,928
=========== ===========
Cash paid during the period for:
Interest $ 6,203,206 6,111,627
Income taxes 962,600 1,109,922
Non-cash investing activities:
Transfer of loans to real estate owned $ 681,972 -
See notes to consolidated financial statements.
</TABLE>
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<PAGE>
WESTCO BANCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. However, in the opinion of management, all adjustments (which are
normal and recurring in nature) necessary for a fair presentation have been
included. The results of operations for the three months and six months ended
June 30, 1997 are not necessarily indicative of the results which may be
expected for the entire year.
Note B - Principles of Consolidation
The accompanying unaudited consolidated financial statements include the
accounts of Westco Bancorp, Inc. (the "Company"), its wholly-owned subsidiaries
First Federal Savings and Loan Association of Westchester (the "Association")
and Westco, Inc., the Association's wholly-owned subsidiary. All significant
intercompany accounts and transactions have been eliminated in consolidation.
Note C - Stock Conversion and Stock Split
On February 13, 1992 the Board of Directors of First Federal Savings and Loan
Association of Westchester approved a plan to convert from a federally chartered
mutual savings association to a federally chartered stock savings association.
The stock conversion plan included, as part of the conversion, the concurrent
formation of a Holding Company. The stock offering of the Association's parent,
Westco Bancorp, Inc. (the "Company") was closed on June 25, 1992 with the sale
of 2,300,000 shares at $10.00 per share. The Company purchased all the shares
of stock of the Association for $10,962,363 upon completion of its stock
offering. On May 17, 1996 a three for two stock split occurred with fractional
shares being paid in cash.
Note D - Stock Repurchase
Since the initial public offering, the Company's Board of Directors has approved
seven stock repurchase programs. As of August 10, 1997, 1,021,517 shares,
adjusted for the May, 1996 stock split, had been repurchased at an average price
of $14.43. The current stock repurchase program permits the repurchase of up to
200,000 shares; and, as of August 10, 1997, 95,740 shares remain to be
repurchased in the open market.
Note E - Earnings Per Share
Earnings per share of common stock have been determined by dividing net income
for the period by the weighted average number of shares of common stock and
common stock equivalents outstanding, after consideration of the 3 for 2 stock
split completed on May 17, 1996. Stock options are regarded as common stock
equivalents and are therefore considered in both primary and fully diluted
earnings per share calculations. Common stock equivalents are computed using
the treasury stock method.
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<PAGE>
Management's Discussions and Analysis
of Financial Condition and Results of Operations
Liquidity and Capital Resources:
- -------------------------------
The Company's primary sources of funds are deposits, proceeds from
principal and interest payments on loans and proceeds from the maturity of
investment securities. While maturities and scheduled amortization of loans and
investment securities are a predictable source of funds, deposit flows and
mortgage prepayments are greatly influenced by general interest rates, economic
conditions, and competition from various financial markets. The primary
business activity of the Company, that of making conventional mortgage loans on
residential housing, is likewise affected by economic conditions.
The Association is required to maintain minimum levels of liquid assets as
defined by OTS regulations. This requirement, which may be varied at the
direction of the OTS depending upon economic conditions and deposit flows, is
based upon a percentage of deposits and short-term borrowings. The required
ratio is currently 5.0%. The Association has historically maintained a high
level of liquid assets. At June 30, 1997, the Association's liquidity ratio was
27.6%.
The Company maintains a significant part of the assets in overnight
deposits and a portfolio of U.S. Treasury and Agency securities with "laddered"
maturities. This strategy results in a relatively short weighted average
maturity of these assets. At June 30, 1997, these investments totalled $67.5
million, or 21.7% of assets, with a weighted average life of approximately 7
months. At December 31, 1996, these investments totalled $76.6 million, or
24.6% of assets, with a weighted average life of approximately 10 months.
The Company's most liquid assets are cash and cash equivalents. The levels
of these assets are dependent on the Company's operating, financing, lending and
investing activities during any given period. At June 30, 1997, cash and cash
equivalents totalled $14.3 million.
The primary investing activity of the Company is the origination of
mortgage loans. During the six months ended June 30, 1997 and 1996, the Company
disbursed loans in the amounts of $31.8 million and $26.8 million, respectively.
Other investing activities include the purchase of investment securities, which
totalled $15.3 million for the six months ended June 30, 1997 and $32.3 million
for the six months ended June 30, 1996. These activities in 1997 were funded
primarily by principal repayments on loans totalling $22.1 million and
maturities of investment securities totalling $27.6 million. The six month
activity for 1996 was funded by principal repayments on loans and maturites of
investment securities in the amounts of $21.1 million and $34.1 million
respectively.
At June 30, 1997, the Company had outstanding loan commitments of $6.3
million. At that same date, there were no commitments to purchase loans or
investment securities. The Company anticipates that it will have sufficient
funds available to meet its current loan commitments. Certificates of deposit
which are scheduled to mature in one year or less from June 30, 1997 totalled
$80.9 million. Management believes that a significant portion of such deposits
will remain with the Company.
The regulatory standards of the Office of Thrift Supervision impose the
following capital requirements: a risk based capital standard expressed as a
percent of risk based assets, a leverage ratio of core capital to total adjusted
assets, and a tangible capital ratio expressed as a percent of total adjusted
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<PAGE>
assets. As of June 30, 1997, the Association exceeded all regulatory capital
standards.
Capital requirements, ratios and balances are as follows:
<TABLE>
<CAPTION>
Actual Required Actual Excess
Capital Capital Capital Capital Capital
Required Ratio Amount Amount Amount
-------- ------ -------- ------- -------
<S> <C> <C> <C> <C> <C>
At December 31, 1996:
Tangible 1.5% 13.1% $4,565 $39,751 $35,186
Core 3.0 13.1 9,130 39,751 30,621
Risk Based:
Tier I (core) 4.0 30.0 5,304 39,751 34,447
Total 8.0 30.5 10,608 40,459 29,851
At June 30, 1997:
Tangible 1.5% 12.9% $4,553 $39,208 $34,655
Core 3.0 12.9 9,106 39,208 30,102
Risk Based:
Tier I (core) 4.0 27.4 5,727 39,208 33,481
Total 8.0 27.9 11,453 39,916 28,463
</TABLE>
CHANGE IN FINANCIAL CONDITION OVER THE SIX MONTHS ENDED JUNE 30, 1997:
- ---------------------------------------------------------------------
Total assets remained stable during the period increasing $621,000, or
0.2%, to $311.6 million at June 30, 1997 from $311.0 million at December 31,
1996.
Loans receivable increased $9.2 million, or 4.1%, to $233.1 million from
$223.9 million at December 31, 1996. The increase is primarily a function of
loan disbursements of $31.8 million offset by amortization and prepayments of
$22.1 million. The growth in loans receivable is due primarily to continued
originations of construction loans on one- to four-family residences and on non-
residential property. Since the beginning of the year, the Association has
closed $2.0 million in non-residential construction loans, $4.5 million in
permanent loans on residential property of five or more dwelling units and $2.5
million in permanent loans on non-residential properties. During the same
period in 1996, the Association closed $3.6 million in construction loans and
$3.7 million in loans on properties having five or more dwelling units, and
$150,000 on non-residential property.
Investment securities decreased $12.3 million, or 17.9%, to $56.4 million
at June 30, 1997 as additional funds from maturing investment securities
continued to be allocated to meet loan demand. Cash and cash equivalents
totalled $14.3 million at June 30, 1997 compared to $11.4 million at December
31, 1996.
Savings deposits increased $975,000, or 0.4%, to $256.1 million at June 30,
1997 from $255.2 million at December 31, 1996. The Company experienced a net
deposit outflow of $4.6 million (before interest credited) for the six month
period ended June 30, 1997.
The balance of non-performing loans totalled $1.27 million at June 30,
1997, decreasing $295,000, or 18.8% from $1.57 million at December 31, 1996.
The decrease is due primarily to the foreclosure of loans on three properties
totalling approximately $600,000 partially offset by the net delinquency on
loans rising an additional $300,000. The ratio of non-performing loans to total
loans was 0.55% at June 30, 1997 compared to 0.70% at December 31, 1996.
Non-performing assets totalled $1.88 million at June 30, 1997 compared to
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<PAGE>
$1.57 million at December 31, 1997. The ratio of non-performing assets to total
assets was 0.60% and 0.50% at June 30, 1997 and December 31, 1996 respectively
The Company's allowance for loan losses totalled $882,800, or 69.4% of non-
performing loans, at June 30, 1997.
During 1992, the Association's ESOP borrowed $1,840,000 from an unrelated
third party to fund the Association's ESOP plan which was established in
connection with the conversion. During 1993, Westco Bancorp, Inc. refinanced
this loan on essentially the same terms as the original lender. The June 30,
1997 balance of $497,700 is eliminated in the consolidation of the Company's
financial statements. At December 31, 1996, the outstanding balance totalled
$622,000.
Retained earnings increased $1.5 million, or 3.8%, to $39.9 million as a
result of earnings for the six month period ended June 30, 1997 offset by the
declaration of dividend payments to stockholders during the same period.
Stockholders' equity totalled $47.5 million or 15.2% of total assets at June 30,
1997, and the book value per common share outstanding was $19.18.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 1997
- ------------------------------------------------------------------------
AND JUNE 30, 1996:
- -----------------
Net income for the quarter ended June 30, 1997 increased $95,000 to $1.15
million from $1.06 million for the quarter ended June 30, 1996. The increase in
quarterly earnings resulted primarily from a $98,000 increase in non-interest
income, including a $96,000 increase in realized and unrealized gains on
securities held for trading and a $13,000 increase in loan fees and service
charges. These increases were partially offset by a $10,000 decrease in
commissions on the sales of investment and insurance products.
In the quarter ended June 30, 1997 net interest income remained the same
at $2.79 million. Interest income increased $43,000 while interest expense
increased $40,000. The Company's interest rate spread averaged 2.95% during the
1997 second quarter, compared to 2.92% during the 1996 second quarter. The
Company's net interest margin averaged 3.70% for the quarter ended June 30, 1997
compared to 3.69% for the quarter ended June 30, 1996. During the first quarter
of 1997, the Company's net interest rate spread averaged 2.81% and its net
interest margin averaged 3.58%.
During the three months ended June 30, 1997 and June 30, 1996 no
additional provision for loan losses was made based upon (1) the absence of any
specific asset quality problems, (2) the current level of general loan loss
reserves, and (3) management's assessment of the inherent risk in the Company's
mortgage portfolio and possible prospective economic and regulatory conditions.
Non-interest income for the second quarter of 1997 increased $98,000 over
the same quarter in 1996 due primarily to a $96,000 increase in realized and
unrealized gains on investments held for trading and a $13,000 increase in loan
fees and service charges. These increases were partially offset by a $10,000
decrease in commissions on sales of investment and insurance products.
Non-interest expense decreased by $71,000 for the three months ended June
30, 1997 from the level for the three months ended June 30, 1996. This decrease
resulted primarily from the expected $106,000 decrease in FDIC deposit insurance
premiums. That decrease was partially offset by an increase in staffing costs
of $27,000 and small increases in advertising, occupancy and equipment expenses
and miscellaneous operating costs.
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<PAGE>
Income tax for the second quarter of 1997 increased $77,000 as a result of
all of the above.
COMPARISON OF OPERATING RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 1997
- ----------------------------------------------------------------------
AND JUNE 30, 1996:
- -----------------
Net income for the six months ended June 30, 1997 increased $204,000 to
$2.23 million from $2.03 million for the six months ended June 30, 1996. This
increase primarily resulted from a $211,000 decrease in FDIC deposit insurance
premiums.
Also, during the six months ended June 30, 1997, interest income increased
$95,000 from the year earlier while interest expense increased $57,000 resulting
in a stable net interest margin. The Company's net interest margin averaged
3.64% for the six months ended June 30 in both 1997 and 1996. The Company's
interest rate spread averaged 2.88% during the six months ended June 30, 1997,
compared to 2.87% during the same period in 1996.
During the six months ended June 30, 1997 and 1996 no additional provision
for loan losses was made based upon the absence of any specific asset quality
problems, the current level of general loan loss reserves and management's
assessment of the inherent risk in the Company's mortgage portfolio and possible
prospective economic and regulatory conditions.
Non-interest income for the six months of 1997 increased $171,000 over the
same period in 1996, due to an increase of $160,000 in the net results of
realized and urealized gains and losses on investments held for trading, and an
increase in loan fees and service charges of $16,000, due in part to increased
lending volume, which were partially offset by decreases in commissions on sales
of insurance and investment products and other income of $1,000 and $3,000
respectively.
Non-interest expense decreased $148,000 for the six months ended June 30,
1997 from the level for the six months ended June 30, 1996 primarily as a result
of the $211,000 reduction in FDIC deposit insurance premiums and an $8,000
decrease in advertising and general operating costs. Those decreases were
offset by increases in staffing costs, occupancy and equipment costs and data
processing expense in the amounts of $55,000, $12,000 and $4,000 respectively.
The provision for income taxes increased $53,000 as a result of the
increased earnings before income taxes. The effective tax rate for the six
months ended June 30, 1997 and 1996 was 36.3% and 35.6% respectively. Because
less earnings are being derived from Treasury securities, the Company's
effective tax rate for state income taxes is increasing.
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<PAGE>
IMPACT OF NEW ACCOUNTING STANDARDS
- ----------------------------------
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 125 ("SFAS 125"), "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities." This statement applies a
"financial-components approach" in recognizing assets and liabilities that
focuses on control to recognize financial assets and liabilities. Under SFAS
125, an entity recognizes the financial and servicing assets it controls and the
liabilities it has incurred. An entity ceases to recognize assets when control
has been surrendered, and it ceases to recognize liabilities when they are
extinguished. SFAS 125 establishes standards to distinguish between transfers
of financial assets that are sales and transfers of financial assets that are
secured borrowings. SFAS 125 is effective for transfers and servicing of
financial assets and extinguishments of liabilities occurring after December 31,
1997. The Company does not expect this pronouncement to have a significant
impact on its consolidated financial condition or results of operations.
In December 1996, the FASB issued Statement of Financial Accounting
Standards No. 127 ("SFAS 127"), "Deferral of the Effective Date of Certain
Provisions of FASB Statement No. 125." The statement delays for one year the
implementation of SFAS 125, as it relates to (1) secured borrowings and
collateral, and (2) for the transfers of financial assets that are part of
repurchase agreements, dollar-rolls, securities lending and similar
transactions. The Company has adopted portions of SFAS 125 (those not deferred
by SFAS 127) effective January 1, 1997, and adoption of these portions did not
have a significant effect on the Company's financial condition or the results of
operations. Based on its review of SFAS 125, management does not believe that
the eventual adoption of the portions of SFAS 125 which have been deferred by
SFAS 127 will have a material affect on the Company.
In February 1997, the FASB issued Statement of Financial Accounting
Standards No. 128 ("SFAS 128"), "Earnings Per Share." This statement is
intended to simplify the computation of earnings per share ("EPS") by replacing
the presentation of primary EPS with a presentation of basic EPS. Basic EPS
does not include potential dilution and is computed by dividing income available
to common stockholders by an average number of common shares outstanding.
Diluted EPS reflects the potential dilution of securities that could share
in the earnings of a company, similar to the fully diluted EPS currently used.
The statement requires dual presentation of basic and diluted EPS by companies
with complex capital structures. SFAS 128 is effective for financial statements
issued for periods ending after December 15, 1997. The Company does not
anticipate that this statement will have an impact on its consolidated financial
condition or results of operations.
In February 1997, the FASB issued Statement of Financial Accounting
Standards No. 129 (SFAS 129"), "Disclosure of Information about Capital
Structure." This statement establishes standards for disclosing information
about an entity's capital structure. It supersedes specific disclosure
requirements of APB Opinions No. 10, "Omnibus Opinion - 1968," and No. 15,
"Earnings Per Share," and SFAS No. 47, "Disclosure of Long-Term Obligations,"
and consolidates them in this statement for ease of retrieval and for greater
visibility to nonpublic entities. This statement is effective for financial
statements for period ending after December 15, 1997. It contains no changes in
disclosure requirements for entities that were previously subject to the
requirements of Opinions No. 10 and No. 15 and SFAS No. 47, and, therefore, it
is not expected to have a significant impact on the consolidated financial
condition or results of operations of the Company.
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<PAGE>
The foregoing does not constitute a comprehensive summary of all material
changes or developments affecting the manner in which the Company keeps its
books and records and performs its financial accounting responsibilities. It is
intended only as a summary of some of the recent pronouncements made by the FASB
which are of particular interest to financial institutions.
-10-
<PAGE>
PART II - OTHER INFORMATION
WESTCO BANCORP, INC.
Item 1. LEGAL PROCEEDINGS
-----------------
From time to time, the Association is a party to legal proceedings in the
ordinary course of business, wherein it enforces its security interest. The
Company and the Association are not engaged in any legal proceedings of a
material nature at the present time.
Item 2. CHANGES IN SECURITIES - Not applicable
---------------------
Item 3. DEFAULTS UPON SENIOR SECURITIES - Not applicable
-------------------------------
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - Not applicable
---------------------------------------------------
Item 5. OTHER INFORMATION
-----------------
STOCK OPTIONS
In accordance with the provisions of the Westco Bancorp, Inc. 1992
Incentive Stock Option Plan, which was approved by a vote of the shareholders on
June 29, 1992, Executive Vice President Gregg P. Goossens, Vice President
Kenneth J. Kaczmarek and Vice President/Secretary Mary S. Suffi exercised
options on 1,500, 11,000 and 5,000 shares of Common Stock granted to each
respectively. The dates of exercise were May 30, June 3 and July 31
respectively.
In accordance with the provisions of the Westco Bancorp, Inc. 1992 Stock
Option Plan for Outside Directors, which was approved by a vote of the
shareholders on June 29, 1992, Directors Edward A. Matuga and Thomas J. Nowicki
exercised options on 4,000 and 2,000 shares of Common Stock granted to each
respectively. The dates of exercise were July 8 and July 31 respectively.
STOCK REPURCHASE PROGRAM
The Company began its current common stock repurchase plan in February,
1997. As of August 10, 1997, 95,740 shares remain to be repurchased.
COMMON STOCK SHARES OUTSTANDING
As a result of the exercise of options and shares repurchased in accordance
with the repurchase plan previously described, the number of common shares out-
standing on August 10, 1997 totalled 2,493,353 shares.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) The following exhibits are filed as part of this report:
3.1 Certificate of Incorporation of Westco Bancorp, Inc.*
3.2 Bylaws of Westco Bancorp, Inc.*
4.0 Stock Certificte of Westco Bancorp, Inc.*
11.0 Computation of earnings per share (filed herewith)
27.0 Financial Data Schedule (filed herewith)
* Incorporated herein by reference in this document from the
Exhibits to Form S-1, Registration Statement, filed on March 23,
1992 and any amendments thereto, Registration No. 33-46441.
(b) No reports on Form 8-K were filed this quarter.
-11-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
WESTCO BANCORP, INC.
--------------------
Registrant
DATE: August 12, 1997 BY: (s) /s/ David C. Burba
----------------------------------
David C. Burba
President and
Chief Executive Officer
DATE: August 12, 1997 BY: (s) /s/ Richard A. Brechlin
----------------------------------
Richard A. Brechlin
Executive Vice President and
Chief Financial Officer
DATE: August 12, 1997 BY: (s) /s/ Kenneth J. Kaczmarek
----------------------------------
Kenneth J. Kaczmarek
Vice President and
Chief Accounting Officer
<PAGE>
EXHIBIT 11.0 - Computation of Earnings Per Share
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
6/30/97 6/30/97
------------ ----------
<S> <C> <C>
Net Income $1,153,011 $2,231,649
========== ==========
Weighted average shares outstanding 2,474,391 2,520,152
Common stock equivalents due to
dilutive effect of stock options 210,555 206,769
---------- ----------
Total weighted average common shares
and equivalents outstanding 2,684,946 2,726,921
========== ==========
Primary earnings per share $ 0.43 $ 0.82
========== ==========
Total weighted average common shares
and equivalents outstanding for
primary computation 2,684,946 2,726,921
Additional dilutive shares using the
end of period market value versus
the average market value when
applying the treasury stock method 9,827 * 13,613 *
---------- ----------
Total weighted average common shares
and equivalents outstanding for
fully diluted computation 2,694,773 2,740,534
========== ==========
Fully diluted earnings per share $ 0.43 $ 0.81
========== ==========
</TABLE>
* If average share price is greater than ending price, the average price for
both primary and fully diluted is used for the calculation.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM
10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 3,209,452
<INT-BEARING-DEPOSITS> 11,057,414
<FED-FUNDS-SOLD> 3,600,000
<TRADING-ASSETS> 986,972
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 56,442,787
<INVESTMENTS-MARKET> 56,408,382
<LOANS> 233,967,317
<ALLOWANCE> 882,800
<TOTAL-ASSETS> 311,613,437
<DEPOSITS> 256,129,172
<SHORT-TERM> 0
<LIABILITIES-OTHER> 7,986,109
<LONG-TERM> 0
0
0
<COMMON> 34,979
<OTHER-SE> 47,463,177
<TOTAL-LIABILITIES-AND-EQUITY> 311,613,437
<INTEREST-LOAN> 9,563,479
<INTEREST-INVEST> 2,047,084
<INTEREST-OTHER> 68,691
<INTEREST-TOTAL> 11,679,254
<INTEREST-DEPOSIT> 6,182,919
<INTEREST-EXPENSE> 0
<INTEREST-INCOME-NET> 5,496,335
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 94,797
<EXPENSE-OTHER> 2,477,498
<INCOME-PRETAX> 3,505,749
<INCOME-PRE-EXTRAORDINARY> 3,505,749
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,231,649
<EPS-PRIMARY> 0.82
<EPS-DILUTED> 0.81
<YIELD-ACTUAL> 3.64
<LOANS-NON> 1,272,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 882,800
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 882,800
<ALLOWANCE-DOMESTIC> 175,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 707,800
</TABLE>
