UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period ended March 31, 1997
Commission File Number 0-22034
WOOD BANCORP, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 34-1742860
- --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
124 East Court Street, Bowling Green, Ohio 43402
(Address of principal executive offices)
(419) 352-3502
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the issuer was required to file such reports) and (2)
has been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
Class: Outstanding at April 16, 1997
Common stock, $0.01 par value 1,411,186 common shares
Transitional Small Business Disclosure Format:
Yes [ X ] No [ ]
<PAGE>
WOOD BANCORP, INC.
FORM 10-QSB
Quarter Ended March 31, 1997
Part I - Financial Information
Interim Financial Information required by Rule 10-01 of Regulation S-X and Item
303 of Regulation S-B is included in this Form 10-QSB as referenced below:
ITEM 1 - FINANCIAL STATEMENTS
Consolidated Balance Sheets ..............................................
Consolidated Statements of Income ........................................
Consolidated Statements of Cash Flows ....................................
Notes to Consolidated Financial Statements ...............................
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.................................
Part II - Other Information
OTHER INFORMATION...............................................................
SIGNATURES .....................................................................
<PAGE>
<TABLE>
<CAPTION>
WOOD BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, June 30,
1997 1996
------------- -------------
<S> <C> <C>
ASSETS
Cash and due from banks ................................. $ 2,631,122 $ 2,622,396
Federal funds sold ...................................... 194,000 15,000
------------- -------------
Cash and cash equivalents ........................... 2,825,122 2,637,396
Interest-bearing deposits in other financial institutions 709,124 77,715
Repurchase agreement .................................... 2,500,000
Securities available for sale (Note 2) .................. 15,216,033 15,885,647
Mortgage-backed securities available for sale (Note 2) .. 9,074,751 9,648,337
Loans - net (Note 3) .................................... 131,413,931 111,456,292
Real estate owned ....................................... 30,000 30,000
Office properties and equipment, net .................... 1,644,189 1,359,034
Federal Home Loan Bank stock, at cost ................... 1,378,300 1,308,600
Accrued interest receivable ............................. 905,623 816,501
Other assets ............................................ 301,401 529,160
------------- -------------
Total assets ........................................ $ 163,498,474 $ 146,248,682
============= =============
LIABILITIES
Deposits $ .............................................. 117,922,660 $ 115,829,891
Advances from Federal Home Loan Bank .................... 23,619,688 9,315,945
Accrued interest payable ................................ 228,553 89,212
Other liabilities ....................................... 964,509 891,636
------------- -------------
Total liabilities ................................... 142,735,410 126,126,684
------------- -------------
SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value, 500,000 shares
authorized, no shares issued or outstanding
Common stock, $.01 par value, 2,500,000 shares
authorized, 1,657,347 shares issued at
March 31, 1997, and 1,655,847 shares
issued at June 30, 1996 ............................. 16,573 11,039
Additional paid-in capital .............................. 10,819,360 10,686,033
Retained earnings - substantially restricted ............ 12,363,007 11,688,467
Treasury stock, at cost; 164,711 shares at
March 31, 1997, and 158,211 shares
at June 30, 1996 .................................... (1,797,191) (1,671,491)
Obligation under employee stock ownership plan .......... (409,161) (409,161)
Unearned compensation ................................... (36,365) (42,561)
Unrealized losses on available for sale securities, net . (193,159) (140,328)
------------- -------------
Total shareholders' equity .......................... 20,763,064 20,121,998
------------- -------------
Total liabilities and shareholders' equity ..... $ 163,498,474 $ 146,248,682
============= =============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WOOD BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine months ended
March 31, March 31,
------------------------- -------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest income
Loans ....................... $2,767,925 $2,357,995 $7,932,364 $7,136,734
Securities .................. 269,916 150,485 822,504 440,937
Mortgage-backed and related
securities ................ 143,729 142,654 455,174 429,719
Other ....................... 38,941 119,287 113,948 285,017
---------- ---------- ---------- ----------
Total interest income ... 3,220,511 2,770,421 9,323,990 8,292,407
---------- ---------- ---------- ----------
Interest expense
Interest on deposits ........ 1,237,083 1,237,094 3,690,322 3,643,863
FHLB borrowings ............. 320,822 67,933 783,016 343,174
Other ....................... 2,470 1,274 4,916 5,003
---------- ---------- ---------- ----------
Total interest expense .. 1,560,375 1,306,301 4,478,254 3,992,040
---------- ---------- ---------- ----------
Net interest income .............. 1,660,136 1,464,120 4,845,736 4,300,367
Provision for loan losses (Note 3) 30,000 30,000 90,000 90,000
---------- ---------- ---------- ----------
Net interest income after
provision for loan losses ...... 1,630,136 1,434,120 4,755,736 4,210,367
---------- ---------- ---------- ----------
Noninterest income
Service charges ............. 67,462 54,022 207,399 168,037
Loan sale gains ............. 38,565 26,687 106,966 81,988
Other ....................... 25,186 27,243 75,494 97,715
---------- ---------- ---------- ----------
Total noninterest income 131,213 107,952 389,859 347,740
---------- ---------- ---------- ----------
Noninterest expense
Salaries and benefits ....... 485,999 446,210 1,467,499 1,339,264
Occupancy and equipment ..... 91,444 91,729 279,624 251,349
Data processing ............. 87,263 72,702 226,022 201,234
Insurance expense (Note 4) .. 27,817 71,414 834,943 210,716
Franchise taxes ............. 48,234 65,741 178,251 188,750
Advertising and promotional . 32,363 37,737 96,875 109,295
Other ....................... 93,812 100,877 359,744 302,495
---------- ---------- ---------- ----------
Total noninterest expense 866,932 886,410 3,442,958 2,603,103
---------- ---------- ---------- ----------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WOOD BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
------------------------- -------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Income before income tax .. $ 894,417 $ 655,662 $1,702,637 $1,955,004
Provision for income tax .. 317,830 252,193 617,630 725,676
---------- ---------- ---------- ----------
Net income ................ $ 576,587 $ 403,469 $1,085,007 $1,229,328
========== ========== ========== ==========
Primary and fully dilutive
earnings per common share $ .38 $ .26 $ .71 $ .80
========== ========== ========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WOOD BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
March 31,
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities
Net income ......................................... $ 1,085,007 $ 1,229,328
Adjustments to reconcile net income to net cash from
operating activities
Depreciation ................................... 92,045 77,867
Provision for loan losses ...................... 90,000 90,000
Net accretion .................................. (85,548) (20,777)
Security losses, net ........................... 461
Gain on loan sales ............................. (106,966) (81,988)
Proceeds from loans sold ....................... 6,535,012 13,831,920
Loans originated for sale ...................... (6,520,436) (13,831,920)
FHLB stock dividend ............................ (69,700) (65,400)
Amortization of unearned compensation .......... 29,446 49,147
ESOP Expense ................................... 110,092 61,106
Change in
Interest receivable ....................... (89,122) (23,864)
Other assets .............................. 321,535 23,032
Income taxes payable ...................... 65,148 99,394
Other liabilities ......................... 7,725 (122,811)
Interest payable .......................... 139,341 (19,308)
Deferred loan fees ........................ 12,342 (32,041)
------------ ------------
Net cash from operating activities .... 1,616,382 1,263,685
------------ ------------
Cash flows from investing activities
Net change in interest-bearing balances with banks . (631,409) (5,682,350)
Repurchase agreement, net .......................... 2,500,000 (2,500,000)
Investment and mortgage-backed securities available
for sale
Sales .......................................... 1,050,000
Purchases ...................................... (3,900,000) (2,782,602)
Proceeds from calls and maturities ............. 3,520,000 700,000
Proceeds from principal payments on mortgage-
backed securities ............................ 578,239 1,097,950
Investment and mortgage-backed securities held to
maturity
Purchases ...................................... (662,944)
Proceeds from calls and maturities ............. 500,000
Proceeds from principal payments on mortgage-
backed securities ............................ 174,342
Net increase in loans .............................. (20,034,151) 4,631,471
Properties and equipment expenditures .............. (377,200) (13,935)
------------ ------------
Net cash used in investing activities .......... (17,294,521) (4,538,068)
=========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WOOD BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
Nine Months Ended
March 31,
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from financing activities
Net increase in deposits .................... $ 2,092,769 $ 10,113,970
Proceeds from FHLB borrowings ............... 19,150,000 2,500,000
Repayment of FHLB borrowings ................ (4,846,257) (8,714,008)
Cash dividends paid ......................... (399,948) (250,083)
Proceeds from exercise of stock options ..... 16,675 4,260
Purchase of treasury stock .................. (147,375) (255,000)
------------ ------------
Net cash from financing activities ...... 15,865,864 3,399,139
------------ ------------
Net change in cash and cash equivalents .......... 187,726 124,756
Cash and cash equivalents at beginning of period . 2,637,396 2,820,583
------------ ------------
Cash and cash equivalents at end of period ....... $ 2,825,122 $ 2,945,339
============ ============
Supplemental disclosures of cash flow information
Cash paid during the period for
Interest ................................ $ 4,338,913 $ 4,011,348
============ ============
Income taxes ............................ 777,371 626,282
============ ============
Noncash activities
Transfer securities to available for sale 8,705,534
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
WOOD BANCORP, INC.
NOTES TO FINANCIAL STATEMENTS
Quarter Ended March 31, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These interim financial statements are prepared without audit and reflect all
adjustments which, in the opinion of management, are necessary to present fairly
the financial position of Wood Bancorp, Inc. ("Company") and its sole
subsidiary, First Federal Bank (the "Bank") at March 31, 1997, and its results
of operations and cash flows for the periods presented. All such adjustments are
normal and recurring in nature. The accompanying financial statements do not
purport to contain all the necessary financial disclosures required by generally
accepted accounting principles that might otherwise be necessary in the
circumstances and should be read in conjunction with the 1996 consolidated
financial statements and notes thereto of the Company for the year ended June
30, 1996.
Consolidation Policy: The consolidated financial statements include the accounts
of the Company and the Bank. All significant intercompany transactions and
balances have been eliminated.
Industry Segment Information: The Company is engaged in the business of banking
with operations conducted through its main office and five branches located in
Bowling Green, Ohio, and neighboring communities. These communities are the
source of substantially all of the Company's deposit and loan activities. The
majority of the Company's income is derived from one- to four-family residential
real estate loans.
Use of Estimates in Preparation of Financial Statements: In preparing financial
statements, management must make estimates and assumptions. These estimates and
assumptions affect the amounts reported for assets, liabilities, revenues and
expenses as well as affecting the disclosures provided. Future results could
differ from current estimates.
Areas involving the use of management's estimates and assumptions primarily
include the allowance for loan losses, the realization of deferred tax assets,
fair value of certain securities and the determination and carrying value of
impaired loans.
Investment Securities: Securities are classified into held-to-maturity,
available-for-sale, and trading categories. Held-to-maturity securities are
those which the Company has the positive intent and ability to hold to maturity,
and are reported at amortized cost. Available-for-sale securities are those
which the Company may decide to sell if needed for liquidity, asset-liability
management, or other reasons. Available-for-sale securities are reported at fair
value, with unrealized gains or losses included as a separate component of
equity, net of tax.
Realized gains or losses on sales are determined based on the amortized cost of
the specific security sold. Amortization of premiums and accretion of discounts
are computed under the level-yield method and are recognized as adjustments to
interest income. Prepayment activity on mortgage-backed securities is affected
primarily by changes in interest rates. Yields on mortgage-backed securities are
adjusted as prepayments occur through changes to premium amortization or
discount accretion.
<PAGE>
WOOD BANCORP, INC.
NOTES TO FINANCIAL STATEMENTS
Quarter Ended March 31, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Loans: Interest income on loans is accrued over the term of the loans based upon
the principal outstanding. The accrual of interest on loans is suspended when,
in management's opinion, the collection of all or a portion of the loan
principal has become doubtful. When a loan is placed on nonaccrual status,
accrued and unpaid interest at risk is charged against income. The carrying
value of impaired loans is periodically adjusted to reflect cash payments,
revised estimates of future cash flows and increases in the present value of
expected cash flows due to the passage of time. Cash payments representing
interest income are reported as such and other cash payments are reported as
reductions in carrying value. Increases or decreases in carrying value due to
changes in estimates of future payments or the passage of time are reported as
reductions or increases in bad debt expense.
Mortgage loans originated by the Bank and intended for sale in the secondary
market are carried at the lower of cost or estimated market value in the
aggregate. Net unrealized losses are recognized in a valuation allowance by
charges to income. To mitigate the interest rate risk associated with loans held
for sale, management obtains fixed secondary market purchase commitments for
these loans.
The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
122, "Accounting for Mortgage Servicing Rights", effective July 1, 1996. The
adoption of SFAS No. 122 resulted in the Company recording an asset for
servicing rights of qualifying fixed rate mortgages sold to the secondary
mortgage market. The Company retains servicing rights and this asset relates
only to mortgage loans originated and sold since the adoption of SFAS No. 122.
The book value of the sold real estate loans is reduced for the amount assigned
to these servicing rights and the gain on the sale of these loans is increased
accordingly. The servicing rights are being amortized against future service fee
income based upon the anticipated life of each loan.
Loan fees, net of direct loan origination costs, are deferred and recognized
over the life of the loan as a yield adjustment.
Allowance for Losses on Loans: Because some loans may not be repaid in full, an
allowance for losses on loans is maintained. Increases to the allowance are
recorded by a provision for loan losses charged to expense. Estimating the risk
of the loss and the amount of loss on any loan is necessarily subjective.
Accordingly, the allowance is maintained by management at a level considered
adequate to cover losses that are currently anticipated based on past loss
experience, general economic conditions, information about specific borrower
situations including their financial position and collateral values, and other
factors and estimates which are subject to change over time. While management
may periodically allocate portions of the allowance for specific problem loan
situations, the whole allowance is available for any loan charge-offs that
occur. A loan is charged-off against the allowance by management when deemed
uncollectible, although collection efforts continue and future recoveries may
occur.
<PAGE>
WOOD BANCORP, INC.
NOTES TO FINANCIAL STATEMENTS
Quarter Ended March 31, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Effective July 1, 1995, the Company adopted SFAS No. 114, "Accounting by
Creditors for Impairment of a Loan." SFAS No. 114 requires that the carrying
values of impaired loans be determined by calculating the present value of
estimated future cash flows, discounted using the loan's effective interest
yield. A loan is impaired when it is probable that the creditor will be unable
to collect all amounts due according to the contractual terms of the loan
agreement. SFAS No. 118 was issued in October 1994 and amends SFAS No. 114 to
allow a creditor to use existing methods to recognize income on impaired loans.
SFAS No. 114 and SFAS No. 118 did not materially impact the Company's financial
condition or results of operations.
Real Estate Owned: Real estate owned, other than that which is used in the
normal course of business, is recorded at fair value less estimated costs to
sell. For real estate acquired through foreclosure, any initial loss is recorded
as a charge to the allowance for losses on loans prior to being transferred to
real estate owned. Any subsequent reduction in fair value is recognized in a
valuation allowance by charges to income.
Office Properties and Equipment: Office properties and equipment are stated at
cost less accumulated depreciation. Depreciation is computed based on both the
straight-line method and the accelerated method over the estimated useful lives
of the respective properties and equipment. Maintenance and repairs are expensed
and major improvements are capitalized.
Income Taxes: The Company records income tax expense based upon the amount of
tax due on its tax return plus deferred taxes computed based upon the expected
future tax consequences of temporary differences between the carrying amounts
and tax bases of assets and liabilities, using enacted tax rates.
The provision for income taxes is based upon the effective tax rate expected to
be applicable for the entire year.
Statement of Cash Flows: For purposes of this statement, cash and cash
equivalents are defined to include the Company's cash on hand, due from banks
and federal funds sold. The Company reports net cash flows for customer loan
transactions, deposit transactions, and interest-bearing deposits made with
other financial institutions.
Earnings Per Share: Primary and fully dilutive earnings per common share were
computed by dividing net income by the weighted average number of shares
outstanding for the period after considering the dilutive effect of common stock
equivalents. On June 18, 1996, the Board of Directors declared a 50% stock
dividend paid on July 29, 1996, which is accounted for similar to a 3 for 2
stock split. All earnings and dividends per share disclosures have been restated
to reflect the stock dividend.
Financial Statement Presentation: Certain items in the 1996 interim financial
statements have been reclassified to correspond with the 1997 presentation.
<PAGE>
WOOD BANCORP, INC.
NOTES TO FINANCIAL STATEMENTS
Quarter Ended March 31, 1997
NOTE 2 - SECURITIES
The amortized cost, gross unrealized gains and losses and estimated fair values
of securities at March 31, 1997 and June 30, 1996 are as follows:
<TABLE>
<CAPTION>
March 31, 1997
-----------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Available for sale
U.S. Treasury securities ....... $ 525,378 $ 138,644 $ $ 664,022
U.S. government agencies ....... 11,070,183 2,144 233,515 10,838,812
U.S. government agency
step-up bonds ................ 1,000,000 16,313 983,687
Mutual funds and equity
investments ................. 2,763,029 73,517 2,689,512
Other .......................... 40,000 40,000
----------- ----------- ----------- -----------
Total investment securities 15,398,590 140,788 323,345 15,216,033
Mortgage-backed securities
CMOs and REMICs ............ 4,657,046 9,359 43,330 4,623,075
Other mortgage-backed
securities ............... 4,527,814 39,377 115,515 4,451,676
----------- ----------- ----------- -----------
Total mortgage-
backed securities ... 9,184,860 48,736 158,845 9,074,751
----------- ----------- ----------- -----------
Total investment and
mortgage-backed securities
available for sale ........... $24,583,450 $ 189,524 $ 482,190 $24,290,784
=========== =========== =========== ===========
</TABLE>
Securities with a carrying value of $273,187 at March 31, 1997 were pledged to
secure public deposits and for other purposes as required or permitted by law.
<PAGE>
WOOD BANCORP, INC.
NOTES TO FINANCIAL STATEMENTS
Quarter Ended March 31, 1997
NOTE 2 - SECURITIES (Continued)
<TABLE>
<CAPTION>
June 30, 1996
-----------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Available for sale
U.S. Treasury security ........ $ 681,998 $ 156,673 $ $ 838,671
U.S. Government agencies ...... 11,022,712 11,037 150,593 10,883,156
U.S. Government agency
step-up bonds .............. 1,517,639 7,024 25,802 1,498,861
Mutual funds and equity
investments ................ 2,712,148 87,189 2,624,959
Other ......................... 40,000 40,000
----------- ----------- ----------- -----------
Total investment securities 15,974,497 174,734 263,584 15,885,647
Mortgage-backed securities
CMOs and REMICs ........... 4,681,972 3,922 77,890 4,608,004
Other mortgage-backed
securities ............. 5,090,133 62,723 112,523 5,040,333
----------- ----------- ----------- -----------
Total mortgage-
backed securities . 9,772,105 66,645 190,413 9,648,337
----------- ----------- ----------- -----------
Total investment and
mortgage-backed securities
available for sale ........ $25,746,602 $ 241,379 $ 453,997 $25,533,984
=========== =========== =========== ===========
</TABLE>
A security with a carrying value of $276,468 as of June 30, 1996 was pledged to
secure public deposits and for other purposes as required or permitted by law.
To provide additional flexibility to meet liquidity and asset/liability needs,
the Company reclassified securities with an amortized cost of $8,705,534 from
held to maturity to available for sale. The securities were transferred in
December, 1995 as allowed by the SFAS No. 115 implementation guide issued by the
Financial Accounting Standards Board, with the related unrealized loss of
$69,977 recorded net of tax as an decrease in shareholders' equity.
<PAGE>
WOOD BANCORP, INC.
NOTES TO FINANCIAL STATEMENTS
Quarter Ended March 31, 1997
NOTE 2 - SECURITIES (Continued)
The amortized cost and estimated market value of debt securities at March 31,
1997, by contractual maturity, are shown below. Expected maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Amortized Estimated
Cost Fair Value
<S> <C> <C>
Available for sale
Due in one year or less .................. $ 1,148,090 $ 1,141,702
Due after one year through five years .... 3,399,327 3,345,422
Due after five years through ten years ... 8,048,144 7,999,397
----------- -----------
12,595,561 12,486,521
CMOs and REMICs .......................... 4,657,046 4,623,075
Other mortgage-backed securities ......... 4,527,814 4,451,676
----------- -----------
Total debt securities ................ 9,184,860 9,074,751
Mutual funds and equity investments ...... 2,763,029 2,689,512
Other .................................... 40,000 40,000
----------- -----------
$24,583,450 $24,290,784
=========== ===========
</TABLE>
Proceeds from the sale of securities available for sale totaled $1,050,000 for
the nine-month period ended March 31, 1997, resulting in gross losses of $2,410.
Gross gains on securities called totaled $1,949 for the nine-month period ended
March 31, 1997. No securities were sold during the three- and nine-month periods
ended March 31, 1996.
<PAGE>
WOOD BANCORP, INC.
NOTES TO FINANCIAL STATEMENTS
Quarter Ended March 31, 1997
NOTE 3 - LOANS RECEIVABLE
Loans receivable are summarized below:
<TABLE>
<CAPTION>
March 31, June 30,
1997 1996
------------ ------------
<S> <C> <C>
Real estate mortgage loans (principally conventional)
Principal balances
Secured by one-to-four family residences ... $ 96,113,372 $ 85,387,205
Secured by other properties ................ 6,446,899 4,812,944
Construction loans ......................... 5,612,106 6,397,279
Home equity ................................ 7,208,435 4,111,607
------------ ------------
115,380,812 100,709,035
Less:
Loans in process ........................... 2,286,918 4,104,299
Net deferred loan origination fees ......... 221,076 208,733
------------ ------------
Total first mortgage loans ............. 112,872,818 96,396,003
------------ ------------
Consumer and other loans
Principal balances
Automobile ................................. 7,691,422 7,013,451
Commercial ................................. 6,679,400 4,098,055
Other ...................................... 4,714,265 4,462,150
------------ ------------
Total consumer and other loans ......... 19,085,087 15,573,656
------------ ------------
131,957,905 111,969,659
Allowance for losses on loans ....................... 543,974 513,367
------------ ------------
Loans, net .................................... $131,413,931 $111,456,292
============ ============
</TABLE>
Nonaccrual loans totaled $-0- at March 31, 1997 and $28,479 at June 30, 1996.
Accruing loans which are contractually past due 90 days or more totaled $127,000
at March 31, 1997 compared to $186,000 at June 30, 1996. Interest not recognized
on nonaccrual loans totaled approximately $-0- and $603 for the three-month
periods ended March 31, 1997 and 1996, respectively, and $1,320 and $1,809 for
the nine-month periods ended March 31, 1997 and 1996, respectively.
<PAGE>
WOOD BANCORP, INC.
NOTES TO FINANCIAL STATEMENTS
Quarter Ended March 31, 1997
NOTE 3 - LOANS RECEIVABLE (Continued)
Activity in the allowance for losses on loans for the three- and nine-month
periods ended March 31, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
Three months ended Nine months ended
March 31, March 31,
------------------------ ------------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Balance at beginning of period $ 500,921 $ 465,551 $ 513,367 $ 409,706
Provision for loan losses .... 30,000 30,000 90,000 90,000
Recoveries ................... 30,445 742 30,612 742
Charge-offs .................. (17,392) (1,941) (90,005) (6,096)
--------- --------- --------- ---------
Balance at end of period ..... $ 543,974 $ 494,352 $ 543,974 $ 494,352
========= ========= ========= =========
</TABLE>
NOTE 4 - FDIC INSURANCE
The deposits of savings associations such as the Bank are presently insured by
the Savings Association Insurance Fund (the "SAIF"), which, along with the Bank
Insurance Fund (the "BIF"), is one of the two insurance funds administered by
the FDIC. Financial institutions which are members of the BIF were experiencing
substantially lower deposit insurance premiums because the BIF had achieved its
required level of reserves, while the SAIF had not yet achieved its required
reserves. On September 30, 1996, President Clinton signed into law the Omnibus
Bill which included provisions designed to recapitalize the SAIF and to mitigate
the BIF/SAIF premium disparity. The omnibus Bill required the FDIC to impose a
special assessment on SAIF-insured deposits. The FDIC announced that the special
assessment rate will be set at 65.7 cents per $100 of SAIF insured deposits at
March 31, 1995. The assessment was paid on November 27, 1996 from working
capital of the Bank. Since the SAIF reached its required reserve ratio following
the assessment, the FDIC reduced the annual assessment rates for SAIF insured
institutions to bring them in line with BIF assessment rates. The Company's
special assessment totaled $442,611, after taxes.
The Bank, however, will continue to be subject to an assessment to fund the
repayment of the FICO obligations. It is anticipated that the FICO assessment
for SAIF insured institutions will be approximately 6.5 cents per $100 of
deposits while BIF insured institutions will pay approximately 1.5 cents per
$100 of deposits until the year 2000 when the assessment will be imposed at the
same rate on all FDIC insured institutions.
<PAGE>
WOOD BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion compares the financial condition of Wood Bancorp, Inc.
("Company") and its sole subsidiary First Federal Bank ("First Federal" or the
"Bank") at March 31, 1997 to June 30, 1996 and the results of operations for the
three months and nine months ended March 31, 1997 and 1996. This discussion
should be read in conjunction with the interim financial statements and
footnotes included herein.
FINANCIAL CONDITION
Total assets grew $17,249,792, or 11.8%, from $146,248,682 at June 30, 1996 to
$163,498,474 at March 31, 1997. The growth is attributable to increases in
loans, partially offset by the maturity of a repurchase agreement. The increase
was primarily funded by increases in advances from the Federal Home Loan Bank
("FHLB") of Cincinnati.
Cash and cash equivalents remained relatively constant at March 31, 1997,
compared to June 30, 1996. Interest-bearing deposits with banks increased
$631,409 from $77,715 at June 30, 1996, to $709,124 at March 31, 1997.
In July, 1996, a $2,500,000 repurchase agreement secured by one- to four-family
residential real estate loans matured and the Bank used the proceeds to
partially fund loan growth. The Company has also used the sale of an investment
security, investment security maturities and mortgage backed securities
paydowns, as well as FHLB advances, to fund the loan growth.
At March 31, 1997, the Company's mortgage-backed securities portfolio which is
classified as available for sale was comprised primarily of agency issued
adjustable rate securities. The net unrealized losses on these securities
totaled $110,109 at March 31, 1997. The Company does not anticipate the need to
sell these securities. Management's strategy emphasizes investment in securities
guaranteed by the U.S. government and its agencies in order to minimize credit
risk. The investment strategy also includes purchasing variable rate
mortgage-backed security products with monthly and annually adjusting interest
rates. These securities provide the Company a continued cash flow through
principal paydowns and help protect the Company against interest rate risk. See
also Note 2 in the interim financial statements.
Loans receivable increased $19,957,639, or 17.9%, from $111,456,292 at June 30,
1996 to $131,413,931 at March 31, 1997. The increase was primarily due to
increased demand for adjustable rate loans in the Bank's market area. Fixed rate
loan originations continue to be sold on the secondary market, which corresponds
to the Bank's policy of selling virtually all fixed rate loan originations in
the secondary market, while maintaining variable rate loans in the Bank's
portfolio. Increases in loans receivable were funded primarily by additional
FHLB advances, as well as proceeds from the matured repurchase agreement.
<PAGE>
WOOD BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION (Continued)
Other assets decreased $227,759 from June 30, 1996 to March 31, 1997, primarily
due to decreases in miscellaneous receivables of $148,919, prepaid franchise
taxes of $103,581 and prepaid deposit insurance of $46,114, partially offset by
a $66,560 increase in mortgage servicing rights.
Deposits increased from $115,829,891 at June 30, 1996 to $117,922,660 at March
31, 1997. The Bank offset the period's slow deposit growth and funded the
period's loan growth by taking additional advances from the FHLB. FHLB advances
were increased by $14,303,743 during the period, bringing the total balance from
$9,315,945 at June 30, 1996 to $23,619,688 at March 31, 1997. Accrued interest
payable increased from $89,212 at June 30, 1996 to $228,553 at March 31, 1997,
primarily due to increases in FHLB advances.
RESULTS OF OPERATIONS
Net income increased $173,118, or 42.9%, from $403,469 for the quarter ended
March 31, 1996 to $576,587 for the same period in 1997. The increase was
primarily due to an increase in net interest income for the 1997 quarter of
$196,016 over the comparable period in 1996.
Net income decreased $144,321 from $1,229,328 for the nine-month period ended
March 31, 1996 to $1,085,007 for the same period in 1997. The 1997 decrease was
due to the $442,611 (net of tax) special assessment charge resulting from
legislation passed on September 30, 1996, to recapitalize the SAIF. See also
Note 4 in the interim financial statements. Excluding the SAIF assessment, the
Company would have reported net income of $1,527,618 for the period ended March
31, 1997, an increase of $298,290, or 24.3%, over the same period in 1996. The
increase was primarily due to increases in net interest income, partially offset
by increases in noninterest expense, excluding the SAIF assessment.
Net interest income increased $196,016, or 13.4%, during the three-month period
and $545,369, or 12.7%, during the nine-month period ended March 31, 1997, as
compared to the same periods in 1997. The increases were primarily due to
increases in average loans and investment securities during the 1997 periods as
compared to the 1996 periods.
The provision for loan losses was $30,000 for the three-month periods and
$90,000 for the nine-month periods ended March 31, 1997 and 1996. The provision
is based on management's assessment of risk factors affecting the loan
portfolio. The allowance for loan losses was approximately .41% of loans, net of
unearned and deferred income, as of March 31, 1997, compared to .46% at March
31, 1996. Management believes the allowance for loan losses is adequate to
absorb potential losses; however, future additions to the allowance may be
necessary based on changes in economic conditions.
<PAGE>
WOOD BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (Continued)
Noninterest income increased $23,261 and $42,119 for the three months ended
March 31, 1997, as compared to the same periods ending March 31, 1996. The
increase was primarily due to increases in deposit account service charges and
increases in loan sale gains from the adoption of SFAS No. 122. See Note 1 in
the notes to interim financial statements. The increase for the nine-month
period was partially offset by a $34,197 decrease in service charges related to
life, accident and health insurance sales.
Noninterest expense decreased $19,478 for the three-month period ended March 31,
1997, as compared to the same period in 1996. The decrease was primarily due to
decreases in FDIC insurance premiums and franchise taxes, partially offset by
increases in salaries and benefits expenses.
Noninterest expense increased $165,855 for the nine-month period ended March 31,
1997, as compared to the same period in 1996. The increase consisted primarily
of increased salaries and benefits expense and other expenses. Additional
personnel added for loan production and annual salary reviews combined to
increase salaries and benefits by $128,235, or 9.6%, for the period. Other
expenses increased primarily due to additional administrative, printing,
professional, and postage expenses related to operating as a publicly-owned
company.
The Company's federal income tax expense was $317,830 and $252,193 for the
three-month periods ended March 31, 1997 and 1996, respectively, and $617,630
and $725,676 for the nine-month periods. The increase for the three-month period
was primarily due to the increases in pre-tax income, while the decrease for the
nine-month period was related to the SAIF assessment.
LIQUIDITY
Federally insured banks are required to maintain minimum levels of liquid
assets. First Federal is currently required to maintain an average daily balance
in liquid assets of at least 5% of the sum of its average daily balance of net
withdrawable deposit accounts and borrowings payable in one year or less. At
March 31, 1997, First Federal was in compliance with this requirement with a
liquidity ratio of 6.69%. Management considers this liquidity position adequate
to meet its expected needs.
<PAGE>
WOOD BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CAPITAL RESOURCES
Savings institutions insured by the Federal Deposit Insurance Corporation are
required by federal law to meet three regulatory capital requirements. The
following table presents the Bank's compliance with its capital requirements at
March 31, 1997:
<TABLE>
<CAPTION>
Risk
Tangible Core Based
Capital Capital Capital
------- ------- -------
Amount % Amount % Amount %
------ - ------ - ------ -
<S> <C> <C> <C> <C> <C> <C>
Actual ...... $13,327 8.29 $13,327 8.29 $13,840 14.77
Required .... 2,411 1.50 4,822 3.00 7,498 8.00
------- ---- ------- ---- ------- -----
Excess ...... $10,916 6.79% $ 8,505 5.29% $ 6,342 6.77%
======= ==== ======= ==== ======= =====
</TABLE>
The Bank's tangible capital consists solely of shareholders' equity. Core
capital consists of tangible capital plus, through 1997, certain intangible
assets, of which First Federal has none. Risk based capital consists of core
capital plus general loan loss allowances less certain assets required to be
deducted.
<PAGE>
WOOD BANCORP, INC.
FORM 10-QSB
Quarter ended March 31, 1997
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings:
There are no matters required to be reported under this item.
Item 2 - Changes in Securities:
There are no matters required to be reported under this item.
Item 3 - Defaults Upon Senior Securities:
There are no matters required to be reported under this item.
Item 4 - Submission of Matters to a Vote of Security Holders: There
are no matters required to be reported under this item.
Item 5 - Other Information:
As a subsequent event, on April 8, 1997, the Company completed
its earlier announced repurchase program, purchasing 81,450
shares of its common stock at an average cost of $16.50 per
share.
Item 6 - Exhibits and Reports on Form 8-K:
(a) Exhibit 27 - Financial Data Schedule.
(b) No current reports on Form 8-K were filed by the Company
during the quarter ended March 31, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirement 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.
WOOD BANCORP INC.
(Registrant)
Date: May 15, 1997 /s/Richard L. Gordley
---------------------
Richard L. Gordley
President and Chief Executive Officer
(Principal Executive Officer)
Date: May 15, 1997 /s/David L. Nagel
-----------------
David L. Nagel
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
The schedule contains summary financial information quarterly report on Form
10-QSB for the fiscal quarter and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,631,122
<INT-BEARING-DEPOSITS> 709,124
<FED-FUNDS-SOLD> 194,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 24,290,784
<INVESTMENTS-CARRYING> 24,290,784
<INVESTMENTS-MARKET> 24,290,784
<LOANS> 131,957,905
<ALLOWANCE> 543,974
<TOTAL-ASSETS> 163,498,474
<DEPOSITS> 117,922,660
<SHORT-TERM> 11,445,629
<LIABILITIES-OTHER> 1,193,062
<LONG-TERM> 12,174,059
0
0
<COMMON> 16,573
<OTHER-SE> 20,746,491
<TOTAL-LIABILITIES-AND-EQUITY> 163,498,474
<INTEREST-LOAN> 7,932,364
<INTEREST-INVEST> 1,277,678
<INTEREST-OTHER> 113,948
<INTEREST-TOTAL> 9,323,990
<INTEREST-DEPOSIT> 3,690,322
<INTEREST-EXPENSE> 4,478,254
<INTEREST-INCOME-NET> 4,845,736
<LOAN-LOSSES> 90,000
<SECURITIES-GAINS> 461
<EXPENSE-OTHER> 3,442,958
<INCOME-PRETAX> 1,702,637
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,085,007
<EPS-PRIMARY> .71
<EPS-DILUTED> .71
<YIELD-ACTUAL> 4.32
<LOANS-NON> 0
<LOANS-PAST> 127,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 513,367
<CHARGE-OFFS> 90,005
<RECOVERIES> 30,612
<ALLOWANCE-CLOSE> 543,974
<ALLOWANCE-DOMESTIC> 543,974
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
