UNITED STATES
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 September 30, 1998
or
[ ] 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: 0-22444
WVS Financial Corp.
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(Exact name of registrant as specified in its charter)
Pennsylvania 25-1710500
-------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
9001 Perry Highway
Pittsburgh, Pennsylvania 15237
------------------------ ----------
(Address of principal (Zip Code)
executive offices)
(412) 364-1911
-------------------------------
(Registrant's telephone number,
including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirement for the past 90 days. YES [ X ] NO [ ]
Shares outstanding as of November 6, 1998: 3,558,720 shares Common
Stock, $.01 par value.
<PAGE>
WVS FINANCIAL CORP. AND SUBSIDIARY
INDEX
PART I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Financial Condition
as of September 30, 1998 and June 30, 1998
(Unaudited)
Consolidated Statements of Income for the
Three Months Ended September 30, 1998
and 1997 (Unaudited)
Consolidated Statements of Cash Flows
for the Three Months Ended September 30,
1998 and 1997 (Unaudited)
Consolidated Statements of Changes in
Stockholders' Equity for the Three Months
Ended September 30, 1998 (Unaudited)
Notes to Unaudited Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
for the Three Months Ended September 30, 1998
Item 3. Quantitative and Qualitative Disclosures About
Market Risk for the Three Months Ended
September 30, 1998
PART II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE>
<TABLE>
<CAPTION>
WVS FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
(in thousands)
September 30, June 30,
1998 1998
--------- ---------
<S> <C> <C>
Assets
Cash and due from banks $ 684 $ 699
Interest-earning demand deposits 907 1,807
Investment securities available-for-sale
(amortized cost of $9,642 and $17,481) 9,625 17,519
Investment securities held-to-maturity
(market value of $88,248 and $63,996) 87,716 63,749
Mortgage-backed securities available-for-sale
(amortized cost of $15,750 and $18,842) 16,046 19,041
Mortgage-backed securities held-to-maturity
(market value of $32,820 and $27,777) 32,281 27,273
Federal Home Loan Bank stock, at cost 5,099 4,675
Net loans receivable 153,981 157,737
Accrued interest receivable 2,961 2,414
Real estate owned -- --
Premises and equipment 1,150 1,179
Deferred taxes and other assets 1,059 961
--------- ---------
TOTAL ASSETS $ 311,509 $ 297,054
========= =========
Liabilities and Stockholders' Equity
Liabilities:
Savings Deposits:
Non-interest-bearing accounts $ 7,467 $ 7,528
NOW accounts 14,609 15,347
Savings accounts 36,811 37,966
Money market accounts 11,356 13,259
Certificates of deposit 94,466 93,570
--------- ---------
Total savings deposits 164,709 167,670
Federal Home Loan Bank advances 91,500 88,857
Other borrowings 17,654 889
Advance payments by borrowers for taxes and insurance 955 3,312
Accrued interest payable 2,134 1,874
Other liabilities 1,568 1,474
--------- ---------
TOTAL LIABILITIES 278,520 264,076
--------- ---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WVS FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
(in thousands)
(continued)
September 30, June 30,
1998 1998
--------- ---------
<S> <C> <C>
Stockholders' equity:
Preferred stock:
5,000,000 shares, no par value per share, authorized; none -- --
outstanding
Common stock:
10,000,000 shares, $.01 par value per share, authorized;
3,663,120 and 3,617,120 shares issued and outstanding 37 36
Additional paid-in capital 18,658 18,386
Retained earnings, substantially restricted 15,557 15,143
Treasury stock: 48,400 shares at cost (749) --
Unallocated shares - Recognition and Retention Plans (406) (432)
Unallocated shares - Employee Stock Ownership Plan (292) (312)
--------- ---------
32,805 32,821
Unrealized gain on available-for-sale securities 184 157
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 32,989 32,978
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 311,509 $ 297,054
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
WVS FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in thousands)
Three Months Ended
September 30,
--------------------------
1998 1997
---------- ----------
<S> <C> <C>
INTEREST AND DIVIDEND INCOME:
Loans $ 3,189 $ 3,266
Investment securities 1,481 1,568
Mortgage-backed securities 788 641
Interest-earning deposits with other institutions 15 14
Federal Home Loan Bank stock 81 61
---------- ----------
Total interest and dividend income 5,554 5,550
---------- ----------
INTEREST EXPENSE:
Deposits 1,689 1,784
Borrowings 1,342 1,178
Advance payments by borrowers for taxes and insurance 7 7
---------- ----------
Total interest expense 3,038 2,969
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NET INTEREST INCOME 2,516 2,581
PROVISION FOR LOAN LOSSES -- --
---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 2,516 2,581
---------- ----------
NON-INTEREST INCOME:
Service charges on deposits 61 52
Investment securities gains -- --
Other 41 38
---------- ----------
Total non-interest income 102 90
---------- ----------
NON-INTEREST EXPENSE:
Salaries and employee benefits 691 757
Occupancy and equipment 94 102
Deposit insurance premium 26 27
Data processing 46 43
Correspondent bank service charges 29 31
Other 175 166
---------- ----------
Total non-interest expense 1,061 1,126
---------- ----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WVS FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in thousands)
(continued)
Three Months Ended
September 30,
--------------------------
1998 1997
---------- ----------
<S> <C> <C>
INCOME BEFORE INCOME TAXES 1,557 1,545
INCOME TAXES 607 610
---------- ----------
NET INCOME $ 950 $ 935
========== ==========
EARNINGS PER SHARE:
Basic $ 0.26 $ 0.27
Diluted $ 0.26 $ 0.26
AVERAGE SHARES OUTSTANDING:
Basic 3,596,067 3,407,641
Diluted 3,627,719 3,531,472
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
WVS FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
Three Months Ended
September 30,
-----------------------
1998 1997
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 950 $ 935
Adjustments to reconcile net income to cash provided by operating
activities:
Depreciation and amortization, net 29 33
Amortization of discounts, premiums and deferred loan fees (161) 11
Amortization of ESOP, RRP and deferred and unearned
compensation 88 161
(Increase) decrease in accrued interest receivable (547) 121
Increase in accrued interest payable 260 364
Decrease in accrued and deferred taxes 36 94
Other, net (43) (42)
-------- --------
Net cash provided by operating activities 612 1,677
-------- --------
INVESTING ACTIVITIES
Available-for-sale:
Purchases of investments and mortgage-backed securities (14,136) (2,838)
Proceeds from repayments of investments and mortgage-backed
securities 25,229 1,037
Held-to-maturity:
Purchases of investments and mortgage-backed securities (54,094) (15,571)
Proceeds from repayments of investments and mortgage-backed
securities 25,062 31,088
Decrease (increase) in net loans receivable 3,813 (2,377)
Sale of real estate owned -- --
(Increase) decrease in FHLB stock (424) 255
Purchases of premises and equipment -- (1)
-------- --------
Net cash (used for) provided by investing activities (14,550) 11,593
-------- --------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
WVS FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
Three Months Ended
September 30,
-----------------------
1998 1997
-------- --------
<S> <C> <C>
FINANCING ACTIVITIES
Net decrease in transaction and passbook accounts (3,857) (3,552)
Net increase (decrease) in certificates of deposit 896 (1,871)
Net increase (decrease) in FHLB borrowings 2,643 (9,025)
Net increase in other borrowings 16,764 2,998
Net decrease in advance payments by borrowers for taxes and
insurance (2,356) (2,425)
Net proceeds from issuance of common stock 230 9
Funds used for purchase of treasury stock (749) --
Cash dividends paid (548) (329)
-------- --------
Net cash provided by (used for) financing activities 13,023 (14,195)
-------- --------
Decrease in cash and cash equivalents (915) (925)
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 2,506 2,571
-------- --------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 1,591 $ 1,646
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest on deposits, escrows and borrowings $ 2,778 $ 2,605
Income taxes 585 625
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
WVS FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
(in thousands)
Accum.
Unallocated Other Retained
Additional Unallocated Shares Compre- Earnings-
Common Paid-in Treasury Shares Held Held hensive Substantially
Stock Capital Stock by ESOP by RRP Income Restricted Total
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1998 $ 36 $ 18,386 $ -- $ (312) $ (432) $ 157 $ 15,143 $ 32,978
Comprehensive income:
Net income 950 950
Other comprehensive
income:
Change in unrealized
holding gains on
securities net of income 27 27
tax of $14 --------
Comprehensive income 977
Purchase of shares for
treasury stock (749) (749)
Release of earned
Employee Stock Ownership
Plan (ESOP) shares 43 20 63
Accrued compensation
expense for Recognition and
Retention Plans (RRP) 26 26
Exercise of Stock Options 1 229 230
Cash dividends declared
($0.15 per share) (536) (536)
-------- -------- -------- -------- -------- -------- -------- --------
Balance at September 30, 1998 $ 37 $ 18,658 $ (749) $ (292) $ (406) $ 184 $ 15,557 $ 32,989
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
WVS FINANCIAL CORP. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions for Form 10-Q and
therefore do not include information or footnotes necessary for a
complete presentation of financial condition, results of operations,
and cash flows in conformity with generally accepted accounting
principles. However, all adjustments (consisting only of normal
recurring adjustments) which, in the opinion of management, are
necessary for a fair presentation have been included. The results of
operations for the three months ended September 30, 1998, are not
necessarily indicative of the results which may be expected for the
entire fiscal year.
2. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share.
<TABLE>
<CAPTION>
Three Months Ended September 30,
1998 1997
----------- -----------
<S> <C> <C>
Weighted average common shares outstanding 3,657,120 3,495,451
Average unearned ESOP shares (61,053) (87,810)
----------- -----------
Weighted average common shares and common stock equivalents used to
calculate basic earnings per share 3,596,067 3,407,641
Additional common stock equivalents (stock options) used to calculate
diluted earnings per share 31,652 123,831
----------- -----------
Weighted average common shares and common stock equivalents used to
calculate diluted earnings per share 3,627,719 3,531,472
=========== ===========
Net income $ 950,122 $ 934,692
=========== ===========
Earnings per share:
Basic $ 0.26 $ 0.27
Diluted $ 0.26 $ 0.26
</TABLE>
<PAGE>
3. REPURCHASE OF COMMON STOCK
On July 28, 1998, the Board of Directors authorized the repurchase of
up to 183,156 shares, or approximately five percent, of the Company's
outstanding common stock during the next twelve months. During the
quarter ended September 30, 1998, 48,400 shares of common stock were
repurchased. The repurchased shares will be held in treasury stock and
may be reserved for issuance pursuant to the Company's stock benefit
plans.
4. LITIGATION
The Company is involved with various legal actions arising in the
ordinary course of business. Management believes the outcome of these
matters will have no material effect on the consolidated operations or
consolidated financial condition of WVS.
5. RECENT ACCOUNTING PRONOUNCEMENTS
In July 1997 the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income". Statement No. 130 is effective for fiscal years beginning
after December 15, 1997. This statement establishes standards for
reporting and presentation of comprehensive income and its components
(revenues, expenses, gains and losses) in a full set of general purpose
financial statements. It requires that all items are required to be
recognized under accounting standards as components of comprehensive
income be reported in a financial statement that is presented with the
same prominence as other financial statements. Statement No. 130
requires that companies (i) classify items of other comprehensive
income by their nature in a financial statement and (ii) display the
accumulated balance of other comprehensive income separately from
retained earnings and additional paid-in capital in the equity section
of the statement of financial condition. Reclassification of financial
statements for earlier periods provided for comprehensive purposes is
required.
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities". The statement provides accounting
and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, by requiring the
recognition of those items as assets or liabilities in the statement of
financial position, recorded at fair value. Statement No. 133,
precludes a held-to-maturity security from being designated as a hedged
item, however, at the date of initial application of this statement, an
entity is permitted to transfer any held-to-maturity security into the
available-for-sale or trading categories. The unrealized holding gain
or loss on such transferred securities shall be reported consistent
with the requirements of Statement No. 115, "Accounting for Certain
Investments in Debt and Equity Securities". Such transfers do not raise
an issue regarding an entity's intent to hold other debt securities to
maturity in the future. This statement applies prospectively for all
fiscal quarters of all years beginning after June 15, 1999. Earlier
adoption is permitted for any fiscal quarter that begins after the
issue date of this statement.
<PAGE>
WVS FINANCIAL CORP. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998
GENERAL
WVS Financial Corp. ("WVS" or the "Company") is the parent holding
company of West View Savings Bank ("West View" or the "Savings Bank"). The
Company was organized in July 1993 as a Pennsylvania-chartered unitary bank
holding company and acquired 100% of the common stock of the Savings Bank in
November 1993.
West View Savings Bank is a Pennsylvania-chartered, SAIF-insured stock
savings bank conducting business from six offices in the North Hills suburbs of
Pittsburgh. Originally organized under Pennsylvania law in 1908 as West View
Building Loan Association, West View changed its name to West View Savings and
Loan Association in 1954. In June 1992, West View converted from a
Pennsylvania-chartered mutual savings and loan association to a
Pennsylvania-chartered mutual savings bank. The Savings Bank converted to the
stock form of ownership in November 1993. The Savings Bank had no subsidiaries
at September 30,1998.
The operating results of the Company depend primarily upon its net
interest income, which is determined by the difference between income on
interest-earning assets, principally loans, mortgage-backed securities and
investment securities, and expense on interest-bearing liabilities, which
consist primarily of deposits. The Company's net income is also affected by its
provision for loan losses, as well as the level of its non-interest income,
including loan fees and service charges, and its non-interest expenses, such as
compensation and employee benefits, income taxes, deposit insurance and
occupancy costs.
The Company's strategy focuses on traditional thrift lending,
maintaining asset quality and increasing core earnings.
FINANCIAL CONDITION
The Company's assets totaled $311.5 million at September 30, 1998 as
compared to $297.1 million at June 30, 1998. The $14.4 million or 4.87% increase
in total assets was primarily comprised of a $18.5 million or 14.0% increase in
investment and mortgage-backed securities, including Federal Home Loan Bank
("FHLB") stock, which was partially offset by a $3.8 million or 2.4% decrease in
net loans receivable.
The Company's total liabilities increased $14.4 million or 5.47% to
$287.5 million as of September 30, 1998 from $264.1 million as of June 30, 1998.
The $14.4 million increase in total liabilities was primarily comprised of a
$19.4 million or 21.6% increase in Federal Home Loan Bank advances and other
borrowings which was partially offset by a $3.0 million or 1.8% decrease in
deposits and a $2.4 million or 71.2% decrease in escrow deposits.
<PAGE>
Total stockholders' equity remained essentially unchanged at $33.0
million as of September 30, 1998 as compared to $33.0 million as of June 30,
1998. Capital expenditures for the Company's stock repurchase program and cash
dividends totaled $749 thousand and $536 thousand, respectively, which offset
Company comprehensive income and stock option proceeds of $977 thousand and $230
thousand, respectively, for the quarter ended September 30, 1998.
ASSET AND LIABILITY MANAGEMENT. The Company continued a strategy
designed to better match the interest rate sensitivity of its financial assets
to its financial liabilities. The primary elements of this strategy include: (1)
expanding the Company's investment growth program in order to enhance net
interest income; (2) maintaining the Company's level of short-term liquid
investments by funding loan commitments and purchasing longer-term investment
securities; (3) emphasizing the retention of lower-cost savings accounts and
other core deposits; and (4) pricing the Company's certificates of deposit and
loan products nearer to the market average rate as opposed to the upper range of
market offered rates.
The Company has continued its investment growth program, originally
initiated in the third quarter of fiscal 1994, in order to realize additional
net interest income. Under this strategy, a longer-term callable or noncallable
investment security, or mortgage-backed security, is purchased and funded
through the use of short-term non-deposit liabilities, such as FHLB advances and
short-term borrowings. With this strategy, the Company increases its net
interest income, but also faces the risk, during periods of rising market
interest rates, that it may experience a decline in net interest income if the
rate paid on its various borrowings rises above the rate earned on the
investment security purchased. In order to mitigate this exposure, the Board has
placed certain restrictions on the investment growth program, including: (1) the
average outstanding daily balance of total borrowings, computed quarterly, may
not exceed approximately $125.0 million; (2) suitable investments shall be
restricted to those meeting the credit quality criteria outlined in the
Company's investment policy; (3) each security purchased shall initially yield a
minimum of seventy-five basis points above the incremental rate paid on
short-term borrowings, at the time of purchase, and (4) the Company's total
borrowed funds position may not exceed $150.0 million. In most cases, the
initial yield spread earned on investment security purchases exceeded
approximately eighty to one hundred basis points.
During the quarter ended September 30, 1998, the Company increased its
mortgage-backed securities holdings by $2.0 million. At September 30, 1998, the
Company held $48.3 million of mortgage-backed securities with an approximate
yield of 6.9%. The mortgage-backed securities purchases were made in order to
mitigate the principal calls on the Company's callable bond portfolio and earn a
higher yield with an expected average life profile comparable to longer-term
callable agency bonds.
The Company has continued to purchase bonds with optional principal
redemption features ("callable bonds") in order to capture additional net
interest income. Callable bonds generally provide investors with higher rates of
return than noncallable bonds because the issuer has the option to redeem the
bonds before maturity. While this strategy affords WVS the current opportunity
to improve its net interest income, during a period of declining interest rates,
such as was experienced during the quarter ended September 30, 1998, the Company
would be exposed to the risk that the investment will be redeemed prior to its
final stated maturity. In order to mitigate this risk, the Company has funded a
significant portion of its purchases of callable bonds with FHLB advances and
short-term borrowings. Approximately $19.7 million of callable agency bonds with
<PAGE>
an estimated weighted average rate of 7.37% were called during the quarter ended
September 30, 1998. During the quarter ended September 30, 1998, the Company
purchased approximately $46.2 million of callable bonds with an approximate
weighted average yield to call and maturity of 6.43% and 7.09%, respectively.
The callable agency bond purchases, totaling $46.2 million, are summarized by
initial term to call as follows: $20.0 million within three months, $3.1 million
with greater than three months and within six months, $22.4 million with greater
than six months and within twelve months and $675 thousand within twenty-four
months.
During the quarter ended September 30, 1998, the Company repaid
approximately $10.4 million of FHLB advances and $665 thousand of other
short-term borrowings with weighted average rates of 5.35% and 4.45%,
respectively, and increased FHLB advances and other borrowings by approximately
$13.0 million and $17.4 million, respectively, with weighted average rates of
5.27% and 5.54%, respectively. Due to the continued decline in market interest
rates experienced during the quarter ended September 30, 1998, and the
associated increase in the amount of investment securities redeemed, the Company
shortened the maturity structure of its incremental borrowings to reduce its
cost of funds and to better match the maturities of its borrowings with the
possible early repayment of a portion of its investment portfolio.
The Company also makes available for origination residential mortgage
loans with interest rates which adjust pursuant to a designated index, although
customer acceptance has been somewhat limited in the Savings Bank's market area.
The Company will continue to selectively offer commercial real estate, land
acquisition and development and shorter-term construction loans, primarily on
residential properties, to partially increase its loan asset sensitivity. Due to
relatively low fifteen and thirty year mortgage loan yields, the Company intends
to emphasize higher yielding home equity and small business loans to existing
customers and seasoned prospective customers.
As of September 30, 1998, the implementation of these asset and
liability management initiatives resulted in the following: (1) an aggregate of
$51.6 million or 33.5% of the Company's net loan portfolio had adjustable
interest rates or maturities of less than 12 months; (2) $17.6 million or 36.5%
of the Company's portfolio of mortgage-backed securities (including
collateralized mortgage obligations - "CMOs") were secured by floating rate
securities; (3) $7.4 million or 7.63% of the Company's investment securities
portfolio had scheduled maturities of one year or less; and (4) $87.7 million or
90.1% of the Company's investment securities portfolio was comprised of callable
bonds.
The effect of interest rate changes on a financial institution's assets
and liabilities may be analyzed by examining the "interest rate sensitivity" of
the assets and liabilities and by monitoring an institution's interest rate
sensitivity "gap". An asset or liability is interest rate sensitive within a
specific time period if it will mature or reprice within a given time period. A
gap is considered positive when the amount of rate sensitive assets exceeds the
amount of rate sensitive liabilities. A gap is considered negative when the
amount of interest sensitive liabilities exceeds the amount of interest
sensitive assets. During a period of falling interest rates, a positive gap
would tend to adversely affect net interest income, while a negative gap would
tend to result in an increase in net interest income. During a period of rising
interest rates, a positive gap would tend to result in an increase in net
interest income, while a negative gap would tend to adversely affect net
interest income.
<PAGE>
The Company's one year cumulative interest rate sensitivity gap
amounted to a negative 13.8% of total assets at September 30, 1998, as compared
to a negative 24.6% at June 30, 1998, in each instance, based on certain
assumptions by management with respect to the repricing of certain assets and
liabilities. At September 30, 1998, the Company's interest-earning assets
maturing or repricing within one year totaled $150.7 million while the Company's
interest-bearing liabilities maturing or repricing within one year totaled
$193.6 million, providing a deficiency of interest-earning assets over
interest-bearing liabilities of $42.9 million. At September 30, 1998, the
percentage of the Company's assets to liabilities maturing or repricing within
one year was 0.78%.
RESULTS OF OPERATIONS
General. WVS reported net income of $950 thousand, or $0.26 per share
(basic and diluted), for the three months ended September 30, 1998, as compared
to $935 thousand or $0.27 basic and $0.26 diluted per share for the same period
in 1997. Net income increased $15 thousand or 1.60% for the three months ended
September 30, 1998, when compared to the same period in 1997. The increase was
primarily attributable to a $12 thousand increase in non-interest income and a
$3 thousand decrease in income tax expense, while a $65 thousand decrease in
non-interest expense offset a $65 thousand decrease in net interest income.
Net Interest Income. The Company's net interest income decreased by $65
thousand or 2.52% during the three months ended September 30, 1998, when
compared to the same period in 1997. The decrease resulted from a $69 thousand
or 2.32% increase in total interest expense which was partially offset by a $4
thousand or 0.07% increase in total interest income for the three months ended
September 30, 1998, when compared to the same period in the prior year.
Interest Income. Interest on net loans receivable decreased by $77
thousand or 2.36% for the three months ended September 30, 1998, when compared
with the same period in 1997. The decrease was attributable to a decrease of
$5.2 million in the average balance of loans receivable outstanding which was
partially offset by an increase in the weighted average yield earned on loans
receivable of 7 basis points for the three months ended September 30, 1998, when
compared to the same period in 1997. The decrease in the average loan balance
outstanding was attributable to an increased level of mortgage loan prepayments
due to the substantial decline of market interest rates. During this period, the
Company chose to emphasize the origination of home equity and commercial real
estate loans to seasoned borrowers in order to better balance the yield and
maturity profile of the loan portfolio.
Interest on mortgage-backed securities increased by $147 thousand or
22.93% for the three months ended September 30, 1998, when compared with the
same period in 1997. The increase was attributable to an increase of $10.0
million in the average balance of mortgage-backed securities outstanding which
was partially offset by a decrease of 22 basis points in weighted average yield
earned during the three months ended September 30, 1998, when compared to the
same period in 1997. The Company believes that this conservative approach has
contributed to the overall yield of the mortgage-backed securities portfolio.
Interest and dividend income on interest-bearing deposits with other
institutions, investment securities and FHLB stock ("other investment
securities") decreased $66 thousand or 4.02% for the three months ended
September 30, 1998, when compared to the same period in 1997. The decrease was
attributable to a decrease in the weighted average yield earned on other
<PAGE>
investment securities of 89 basis points which was partially offset by an
increase of $7.2 million in the average balance of other investment securities
outstanding for the three months ended September 30, 1998, when compared to the
same period in 1997. The increase in the average balance of other investment
securities was principally attributable to purchases of investment securities
under the Company's investment growth program. The decrease in the weighted
average yield earned was consistent with market conditions for the three months
ended September 30, 1998.
Interest Expense. Interest expense on deposits and escrows decreased by
$95 thousand or 5.33% for the three months ended September 30, 1998, when
compared with the same period in 1997. The decrease was principally attributable
to a decrease in the weighted average yield paid of 15 basis points and a
decrease of $3.2 million in the average balance of deposits and escrows
outstanding for the three months ended September 30, 1998, when compared to the
same period in 1997. The average yield paid on deposits decreased due to the
overall decline in market interest rates.
Interest expense on FHLB advances and other borrowings increased by
$164 thousand or 13.92% for the three months ended September 30, 1998, when
compared to the same period in 1997. The increase was primarily attributable to
a $14.9 million or 18.44% increase in the average balance of such borrowings
outstanding, partially offset by a 23 basis point decrease in the weighted
average rate paid. The increased amount of borrowings outstanding was used to
fund the Company's investment growth program and the decrease in the weighted
average rate paid was a result of the declining market rates.
Provision for Loan Losses. A provision for loan losses is charged to
earnings to maintain the total allowance at a level considered adequate by
management to absorb potential losses in the portfolio. Management's
determination of the adequacy of the allowance is based on periodic evaluation
of the loan portfolio considering past experience, current economic conditions,
volume, growth and composition of the loan portfolio and other relevant factors.
The Company did not record a provision for possible losses on loans for
the three months ended September 30, 1998, and September 30, 1997. The Company's
total allowance for loan losses at September 30, 1998, and June 30, 1998,
amounted to $1.9 million or 1.1% of the Company's total loan portfolio.
Non-Interest Income. Total non-interest income increased $12 thousand
or 13.33% during the three months ended September 30, 1998, when compared to the
same period in 1997, primarily due to a $9 thousand increase in the service
charges on deposits and a $3 thousand increase in other income including ATM fee
and loan late charge income.
Non-Interest Expense. Total non-interest expense decreased $65 thousand
or 5.77% during the three months ended September 30, 1998, when compared to the
same period in 1997.
Compensation and employee benefits decreased $66 thousand or 8.72%
during the quarter ended September 30, 1998, when compared to the same period in
1997. The decrease was primarily attributable to a $76 thousand decrease in
Employee Stock Ownership Plan ("ESOP") amortization and Recognition and
Retention Plan ("RRP") expense partially offset by a $13 thousand increase
relating to the Profit Sharing Plan.
<PAGE>
Other non-interest expense (e.g. director's compensation expense,
advertising, provision for loss on real estate owned, legal expense, transfer
agent expense, etc.) increased $9 thousand or 5.42% during the quarter ended
September 30, 1998, when compared to the same period in 1997.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities totaled $612 thousand during
the three months ended September 30, 1998. Net cash provided by operating
activities was primarily comprised of $950 thousand of net income, which was
partially offset by a $287 thousand net increase in accrued interest.
Funds used for investing activities totaled $14.6 million during the
three months ended September 30, 1998. Primary uses of funds during the three
months ended September 30, 1998 include $68.2 million used for purchases of
investment and mortgage-backed securities which was partially offset by $50.3
million of proceeds from repayments of investment and mortgage-backed securities
and a $3.8 million decrease in net loans receivable.
Funds provided by financing activities totaled $13.0 million for the
three months ended September 30, 1998. Primary financial sources include a $16.8
million increase in other borrowings and a $2.6 million increase in Federal Home
Loan Bank advances, which were partially offset by a $3.9 million decrease in
deposits and a $2.4 million decrease in advance payments by borrowers for taxes
and insurance. Financial institutions generally, including the Company, have
experienced a certain degree of depositor disintermediation to other investment
alternatives. Management believes that the degree of disintermediation
experienced by the Company has not had a material impact on overall liquidity.
As of September 30, 1998, $70.2 million or 42.6% of the Company's total deposits
consisted of core deposits. Management has determined that it currently is
maintaining adequate liquidity and is seeking to better match funding sources
with lending and investment opportunities.
The Company's primary sources of funds are deposits, amortization,
prepayments and maturities of existing loans, mortgage-backed securities and
investment securities, funds from operations, and funds obtained through
short-term borrowings. At September 30, 1998, the total approved loan
commitments outstanding amounted to $2.0 million. At the same date commitments
under unused lines of credit amounted to $8.0 million and the unadvanced portion
of construction loans approximated $13.1 million. Certificates of deposit
scheduled to mature in one year or less at September 30, 1998, totaled $65.3
million. Management believes that a significant portion of maturing deposits
will remain with the Company.
Historically, the Company used its sources of funds primarily to meet
its ongoing commitments to pay maturing savings certificates and savings
withdrawals, fund loan commitments and maintain a substantial portfolio of
investment securities. The Company has been able to generate sufficient cash
through the retail deposit market, its traditional funding source, and through
FHLB advances and other borrowings, to provide the cash utilized in investing
activities. The Company has established a $15.0 million line of credit with the
FHLB, which is scheduled to mature on March 25,1999, and is subject to various
<PAGE>
conditions, including the pledging and delivery of acceptable collateral. The
primary purpose of the line of credit is to serve as a back-up liquidity
facility for the Company, however, the Company may from time to time utilize the
line of credit to purchase investment securities and fund other commitments. In
addition, the Company has access to the Federal Reserve Bank discount window.
Management believes that the Company currently has adequate liquidity available
to respond to liquidity demands.
On October 27, 1998, the Company's Board of Directors declared a cash
dividend of $0.16 per share payable November 19, 1998, to shareholders of record
at the close of business on November 9, 1998. Dividends are subject to
determination and declaration by the Board of Directors, which take into account
the Company's financial condition, statutory and regulatory restrictions,
general economic conditions and other factors. There can be no assurance that
future dividends will in fact be paid on the Common Stock or that, if paid, such
dividends will not be reduced or eliminated in future periods.
As of September 30, 1998, WVS Financial Corp. exceeded all regulatory
capital requirements and maintained Tier I and total risk-based capital equal to
$32.8 million or 21.5% and $34.7 million or 22.7%, respectively, of total
risk-weighted assets, and Tier I leverage capital of $32.8 million or 10.9% of
average quarterly assets.
Nonperforming assets consist of nonaccrual loans and real estate owned.
A loan is placed on nonaccrual status when, in the judgment of management, the
probability of collection of interest is deemed insufficient to warrant further
accrual. When a loan is placed on nonaccrual status, previously accrued but
uncollected interest is deducted from interest income. The Company normally does
not accrue interest on loans past due 90 days or more, however, interest may be
accrued if management believes that it will collect on the loan.
The Company's nonperforming assets at September 30, 1998, totaled
approximately $697 thousand or 0.22% of total assets as compared to $603
thousand or 0.21% of total assets as of June 30, 1998. Nonperforming assets at
September 30, 1998, consisted of $481 thousand in commercial real estate loans,
$144 thousand in single-family loans, and $72 thousand in consumer loans.
Approximately $6 thousand of additional interest income would have been recorded
during the three months ended September 30, 1998, if the Company's nonaccrual
and restructured loans had been current in accordance with their original loan
terms and outstanding throughout the quarter ended September 30, 1998.
YEAR 2000 COMPLIANCE
The Company outsources substantially all of its data processing
requirements and it is to a large extent dependent upon vendor cooperation for
systems used in its day-to-day business. The Company, in conjunction with its
vendors, is testing its computer systems and requiring representations from its
vendors that the products provided are or will be year 2000 compliant. The
Company has developed a plan of action to help ensure that its operational and
financial systems will not be adversely affected by year 2000 software/hardware
failures due to processing errors arising from calculations using the year 2000
date. All hardware and software products are expected to be compliant by the end
of calendar 1998. In the unlikely event that the systems tested do not, in fact,
operate properly when the year 2000 does arrive, all customer accounts, deposits
<PAGE>
and loans, as well as accounting systems, will be maintained manually to ensure
business continuation while systems are being corrected. The Company does not
expect material expenditures to be incurred to address the year 2000 issue.
Based upon current estimates, the Company does not expect to incur more than $75
thousand (pre-tax) in Year 2000 remediation expenses. Any year 2000 compliance
failures, which are currently unknown, could result in additional expenses or
business disruption to the Company.
FORWARD LOOKING STATEMENTS
When used in this Form 10-Q, or, in future filings by the Company with
the Securities and Exchange Commission, in the Company's press releases or other
public or shareholder communications, or in oral statements made with the
approval of an authorized executive officer, the words or phrases "will likely
result", "are expected to", "will continue", "is anticipated", "estimate",
"project" or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements are subject to certain risks and uncertainties
including changes in economic conditions in the Company's market area, changes
in policies by regulatory agencies, fluctuations in interest rates, demand for
loans in the Company's market area and competition that could cause actual
results to differ materially from historical earnings and those presently
anticipated or projected. The Company wishes to caution readers not to place
undue reliance on any such forward-looking statements, which speak only as of
the date made. The Company wishes to advise readers that the factors listed
above could affect the Company's financial performance and could cause the
Company's actual results for future periods to differ materially from any
opinions or statements expressed with respect to future periods in any current
statements.
The Company does not undertake, and specifically disclaims any
obligation, to publicly release the result of any revisions which may be made to
forward-looking statements to reflect events or circumstances after the date of
statements or to reflect the occurrence of anticipated or unanticipated events.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary market risk exposure is interest rate risk and,
to a lesser extent, liquidity risk. All of the Company's transactions are
denominated in U.S. dollars with no specific foreign exchange exposure. The
Savings Bank has no agricultural loan assets and therefore would not have a
specific exposure to changes in commodity prices. Any impacts that changes in
foreign exchange rates and commodity prices would have on interest rates are
assumed to be exogenous and will be analyzed on an ex post basis.
Interest rate risk ("IRR") is the exposure of a banking organization's
financial condition and net interest income to adverse movements in interest
rates. Accepting this risk can be an important source of profitability and
shareholder value, however excessive levels of IRR can pose a significant threat
to the Company's earnings and capital base. Accordingly, effective risk
management that maintains IRR at prudent levels is essential to the Company's
safety and soundness.
Evaluating a financial institution's exposure to changes in interest
rates includes assessing both the adequacy of the management process used to
control IRR and the organization's quantitative level of exposure. When
assessing the IRR management process, the Company seeks to ensure that
appropriate policies, procedures, management information systems and internal
controls are in place to maintain IRR at prudent levels with consistency and
continuity. Evaluating the quantitative level of IRR exposure requires the
Company to assess the existing and potential future effects of changes in
interest rates on its consolidated financial condition, including capital
adequacy, earnings, liquidity and, where appropriate, asset quality.
<PAGE>
The Federal Reserve Board, together with the Office of the Comptroller
of the Currency and the Federal Deposit Insurance Corporation, adopted a Joint
Agency Policy Statement on Interest-Rate Risk, effective June 26, 1996. The
policy statement provides guidance to examiners and bankers on sound practices
for managing interest rate risk, which will form the basis for ongoing
evaluation of the adequacy of interest-rate risk management at supervised
institutions. The policy statement also outlines fundamental elements of sound
management that have been identified in prior Federal Reserve guidance and
discusses the importance of these elements in the context of managing interest
rate risk. Specifically, the guidance emphasizes the need for active board of
director and senior management oversight and a comprehensive risk-management
process that effectively identifies, measures, and controls interest-rate risk.
Financial institutions derive their income primarily from the excess of interest
collected over interest paid. The rates of interest an institution earns on its
assets and owes on its liabilities generally are established contractually for a
period of time. Since market interest rates change over time, an institution is
exposed to lower profit margins (or losses) if it cannot adapt to interest rate
changes. For example, assume that an institution's assets carry intermediate- or
long-term fixed rates and that those assets were funded with short-term
liabilities. If market interest rates rise by the time the short-term
liabilities must be refinanced, the increase in the institution's interest
expense on its liabilities may not be sufficiently offset if assets continue to
earn at the long-term fixed rates. Accordingly, an institution's profits could
decrease on existing assets because the institution will either have lower net
interest income or, possibly, net interest expense. Similar risks exist when
assets are subject to contractual interest rate ceilings, or rate sensitive
assets are funded by longer-term, fixed-rate liabilities in a decreasing rate
environment.
Several techniques might be used by an institution to minimize interest
rate risk. One approach used by the Company is to periodically analyze its
assets and liabilities and make future financing and investment decisions based
on payment streams, interest rates, contractual maturities, and estimated
sensitivity to actual or potential changes in market interest rates. Such
activities fall under the broad definition of asset/liability management. The
Company's primary asset/liability management technique is the measurement of the
Company's asset/liability gap - that is, the difference between the cash flow
amounts of interest-sensitive assets and liabilities that will be refinanced (or
repriced) during a given period. For example, if the asset amount to be repriced
exceeds the corresponding liability amount for a certain day, month, year, or
longer period, the institution is in an asset-sensitive gap position. In this
situation, net interest income would increase if market interest rates rose or
decrease if market interest rates fell. If, alternatively, more liabilities than
assets will reprice, the institution is in a liability-sensitive position.
Accordingly, net interest income would decline when rates rose and increase when
rates fell. Also, these examples assume that interest rate changes for assets
and liabilities are of the same magnitude, whereas actual interest rate changes
generally differ in magnitude for assets and liabilities.
An institution could also manage interest rate risk by selling existing
assets, repaying certain liabilities or matching repricing periods for new
assets and liabilities (for example, by shortening terms of new loans or
investments). A large portion of an institution's liabilities may be short-term
or due on demand, while most of its assets may be invested in long-term loans or
investments. Accordingly, the Company seeks to have in place sources of cash to
meet short-term demands. These funds can be obtained by increasing deposits,
<PAGE>
borrowing, or selling assets. Also, FHLB advances and wholesale borrowings have
become increasingly important sources of liquidity for the Company. Financial
institutions are also subject to prepayment risk in falling rate environments.
For example, mortgage loans and other financial assets may be prepaid by a
debtor so that the debtor may refund its obligations at new, lower rates.
Prepayments of assets carrying higher rates reduce the Company's interest income
and overall asset yields. An institution might also invest in more complex
financial instruments intended to hedge, or otherwise change the interest rate
risk of existing assets, liabilities, or anticipated transactions. Interest rate
swaps, futures contracts, options on futures, and other such derivative
financial instruments often are used for this purpose. Because these instruments
are sensitive to interest rate changes, they require management expertise to be
effective. The Company has not purchased derivative financial instruments in the
past and does not presently intend to purchase such instruments in the near
future.
The following table provides information about the Company's financial
instruments that are sensitive to changes in interest rates as of September 30,
1998, based on the information and assumptions in the notes. The Company's
assumptions are based on statistical data provided by a federal regulatory
agency in the Company's market area, and are believed to be reasonable. The
Company had no derivative financial instruments or trading portfolio as of
September 30, 1998. The expected maturity date values for loans receivable,
mortgage-backed securities, and investment securities were calculated by
adjusting the instrument's contractual maturity date for expectations of
prepayments. Similarly, expected maturity date values for interest-bearing core
deposits were calculated based upon estimates of the period over which the
deposits would be outstanding. With respect to the Company's adjustable rate
instruments, expected maturity date values were measured by adjusting the
instrument's contractual maturity date for expectations of prepayments.
Substantially all of the Company's investment securities portfolio is comprised
of callable government agency securities. From a risk management perspective,
the Company believes that repricing dates, as opposed to expected maturity
dates, may be a more relevant metric in analyzing the value of such instruments.
Company borrowings were tabulated by contractual maturity dates and without
regard to any conversion or repricing dates.
<PAGE>
<TABLE>
<CAPTION>
EXPECTED MATURITY DATE-QUARTER ENDED SEPTEMBER 30,
There- Fair
1999 2000 2001 2002 2003 after Total Value
-------- ------- ------- ------- ------ ------- -------- --------
ON-BALANCE SHEET
FINANCIAL INSTRUMENTS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable (1)(2)(3)(4)
Fixed rate $ 31,004 $18,862 $13,391 $10,747 $7,697 $29,871 $111,572 $125,233
Average interest rate 8.25% 7.96% 7.85% 7.80% 7.69% 7.50%
Adjustable rate 14,553 9,677 6,668 4,769 3,535 5,164 44,366 49,575
Average interest rate(5) 7.93% 8.02% 8.13% 8.23% 8.33% 8.37%
Mortgage-backed securities
Fixed rate 1 210 0 166 2,088 27,970 30,435 30,877
Average interest rate 6.62% 6.40% 0% 7.21% 6.02% 7.01%
Adjustable rate 0 0 0 0 0 17,596 17,596 17,989
Average interest rate(6) 0% 0% 0% 0% 0% 6.84%
Investments(7) 61,411 0 0 0 1,009 40,037 102,457 102,972
Average interest rate 6.93% 0% 0% 0% 5.73% 6.31%
Interest-bearing deposits 907 0 0 0 0 0 907 907
Average interest rate 5.35% 0% 0% 0% 0% 0%
-------- ------- ------- ------- ------ ------- -------- --------
Total $107,876 $28,749 $20,059 $15,682 $14,329 $120,638 $307,333 $327,553
Interest-bearing liabilities:
Interest-bearing deposits
and escrows(8)(9)(10) $91,415 $19,387 $19,387 $7,144 $7,144 $21,187 $165,664 $166,405
Average interest rate 4.56% 3.93% 3.93% 3.51% 3.51% 2.34%
Borrowings 25,654 0 5,000 46,500 0 32,000 109,154 110,598
Average interest rate 5.61% 0% 5.87% 5.75% 0% 5.07%
-------- ------- ------- ------- ------ ------- -------- --------
Total $117,069 $19,387 $24,387 $53,644 $7,144 $53,187 $274,818 $277,003
</TABLE>
(1) Net of undisbursed loan proceeds and does not include net deferred loan fees
or the allowance for loan losses.
(2) For single-family residential loans, assumes annual amortization and
prepayment rate at 15% for adjustable rate loans, and 14% to 39% for fixed rate
loans. For multi-family residential loans and other loans, assumes amortization
and prepayment rate of 12%.
(3) For second mortgage loans, assumes annual amortization and prepayment rate
of 18%.
(4) Consumer loans assumes amortization and prepayment rate of 13%.
(5) Substantially all of the Company's adjustable rate loans reprice on an
annual basis based upon changes in the one-year constant maturity treasury index
with various market based annual and lifetime interest rate caps and floors.
(6) Substantially all of the Company's adjustable rate mortgage-backed
securities reprice on a monthly basis based upon changes in the one month LIBOR
index with various lifetime caps and floors.
<PAGE>
(7) Totals include the Company's investment in Federal Home Loan Bank stock.
Amounts adjusted to reflect investment securities called through October 31,
1998, totaling approximately $30.9 million and $23.0 million expected to be
called by December 31, 1998.
(8) For regular savings accounts, assumes an annual decay rate of 17% for three
years or less, 16% for more than three through five years and 14% for more than
five years.
(9) For NOW accounts, assumes an annual decay rate of 37% for one year or less,
32% for more than one through three years and 17% for more than three years.
(10) For money market deposit accounts, assumes an annual decay rate of 79% for
one year or less and 31% for more than one year.
The Company's investment securities increased from $85.9 million at
June 30, 1998, to $102.4 million at September 30, 1998. The $16.5 million or
19.2% increase was primarily attributable to investment security purchases of
$61.3 million, partially offset by $19.7 million of callable government agency
bonds called and $20.6 million of commercial paper maturities during the quarter
ended September 30, 1998. The Savings Bank's interest-bearing deposits and
escrows remained constant at $163.5 million at June 30, 1998, and September 30,
1998. Borrowings increased from $89.7 million at June 30, 1998, to $109.2
million at September 30, 1998. The $19.4 million or 21.63% increase was
primarily attributable to the purchase of securities through the use of
borrowings under the Company's investment growth program. The Company intends to
continue to pursue its investment growth program, as market conditions permit,
according to parameters discussed under "Asset and Liability Management".
The table below provides information about the Company's anticipated
transactions comprised of firm loan commitments and other commitments, including
undisbursed letters and lines of credit. The Company used no derivative
financial instruments to hedge such anticipated transactions as of September 30,
1998.
Anticipated Transactions
------------------------
Undisbursed construction and
Land development loans
Fixed rate $ 4,700
8.63%
Adjustable rate 8,364
9.45%
Undisbursed lines of credit
Adjustable rate 8,034
9.11%
Loan origination commitments
Fixed rate 1,589
8.83%
Adjustable rate 400
8.43%
Letters of credit
Adjustable rate 45
11.5%
----------
$ 23,132
The Company believes that there were no material changes to the
Company's anticipated transactions during the quarter ended September 30, 1998.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
The Company is involved with various legal actions arising in the
ordinary course of business. Management believes the outcome of
these matters will have no material effect on the consolidated
operations or consolidated financial condition of WVS.
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
(a) An annual meeting of stockholders was held on October 27,
1998.
(b) Not applicable.
(c) Two matters were voted upon at the annual stockholder meeting
held on October 27, 1998: Item 1: Proposal to elect three
directors for a four-year term or until their successors are
elected and qualified; Item 2: Proposal to ratify the
appointment by the Board of Directors of S. R. Snodgrass, A.C.
as the Company's independent auditors for the fiscal year
ending June 30, 1999.
Each of the two proposals received stockholder approval. The
voting record with respect to each item voted upon is
enumerated below:
Nominee
Item Number (If Applicable) FOR AGAINST ABSTAIN
----------- --------------- --- ------- -------
1 David L. Aeberli 3,037,743 256,244
John M. Seifarth 3,034,001 259,986
Margaret VonDerau 3,043,093 250,894
2 Election of Auditors 3,276,287 9,666 8,034
There were no broker non-votes cast with respect to any matter
voted upon.
(d) Not applicable.
ITEM 5. Other Information
The Company has previously reported that Robert C. Sinewe, the
former President and Chief Executive Officer of the Company and
the Savings Bank, had terminated his service with the Company and
the Savings Bank on June 19, 1998. The Company previously
<PAGE>
characterized Mr. Sinewe's termination as his retirement. However,
Mr. Sinewe has objected to this reference and has stated that his
resignation was at the request of the Board of Directors. The
Board requested Mr. Sinewe's resignation due to its
dissatisfaction with his job performance as well as the Board's
loss of confidence in his ability to lead the Company in the
future.
As previously disclosed, the Company and Mr. Sinewe negotiated and
entered into a Severance and Release Agreement, dated June 19,
1998, pursuant to which Mr. Sinewe resigned as an officer,
employee and director of the Company and the Savings Bank and the
Company agreed to pay Mr. Sinewe an aggregate of $556,200, payable
in a lump sum payment of $135,000 and $421,200, payable in 72
equal semi-monthly installments through June 30, 2001, in lieu of
any rights or benefits due Mr. Sinewe pursuant to his employment
agreement or otherwise as a result of his employment. The Company
recorded this entire expense during the year ended June 30, 1998.
A copy of the Severance and Release Agreement is attached as an
exhibit to this Form 10-Q.
ITEM 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this Form
10-Q, and this list includes the Exhibit Index.
Number Description
------ -----------
10.1 Employment Agreement between
WVS Financial Corp. and David J.
Bursic*
10.2 Employment Agreement between
WVS Financial Corp. and Margaret
VonDerau*
10.3 Employment Agreement between
WVS Financial Corp. and Edward M.
Wielgus*
10.4 Severance and Release Agreement
between WVS Financial Corp. and
Robert C. Sinewe*
27 Financial Data Schedule
*Management Contract or Compensatory Plan or Arrangement.
(b) The Company filed a Current Report on Form 8-K, dated July
29, 1998, reporting under Item 5 that the Company's Board
of Directors authorized the repurchase of up to 183,156
shares, or approximately five percent, of the Company's
outstanding common stock. Repurchases are authorized to be
made during the next twelve months as market conditions
warrant. All repurchased shares will be held as treasury
stock and may be reserved for issuance pursuant to the
Company's stock benefit plans.
<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.
WVS FINANCIAL CORP.
November 6, 1998 BY: /s/David J. Bursic
- ---------------- ------------------
Date David J. Bursic
President and Chief
Executive Officer
(Principal Executive and
Financial Officer)
Exhibit 10.1
AGREEMENT
AGREEMENT, dated this 1ST day of October 1998, between WVS Financial
Corp. (the "Corporation"), a Pennsylvania-chartered corporation, West View
Savings Bank (the "Savings Bank"), a Pennsylvania-chartered savings bank and a
wholly-owned subsidiary of the Corporation, and David J. Bursic (the
"Executive").
WITNESSETH
WHEREAS, the Executive is presently an officer of the Corporation
and/or the Savings Bank (together the "Employers"); and
WHEREAS, the Employers desire to be ensured of the Executive's
continued active participation in the business of the Employers; and
WHEREAS, in order to induce the Executive to remain in the employ of
the Employers and in consideration of the Executive's agreeing to remain in the
employ of the Employers, the parties desire to specify the severance benefits
which shall be due the Executive in the event that his employment with the
Employers is terminated under specified circumstances;
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereby agree as follows:
1. Definitions. The following words and terms shall have the meanings
set forth below for the purposes of this Agreement:
(a) Base Salary. "Base Salary" shall have the meaning set forth in
Section 3(a) hereof.
(b) Cause. Termination of the Executive's employment for "Cause" shall
mean termination because of personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule or
regulation (other than traffic violations or similar offenses) or final
cease-and-desist order or material breach of any provision of the Agreement. For
purposes of this paragraph, no act or failure to act on the Executive's part
shall be considered "willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that the Executive's
action or omission was in the best interest of the Employers.
(c) Change in Control of the Corporation. "Change in Control of the
Corporation" shall mean a change in control of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended ("Exchange
Act") or any successor thereto, whether or not the Corporation is registered
under Exchange Act; provided that, without limitation, such a change in control
shall be deemed to have occurred if (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing 25% or more of the
<PAGE>
combined voting power of the Corporation's then outstanding securities; or (ii)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the Board of Directors of the Corporation cease for any
reason to constitute at least a majority thereof unless the election, or the
nomination for election by stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
(d) Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(e) Date of Termination. "Date of Termination" shall mean (i) if the
Executive's employment is terminated for Cause or for Disability, the date
specified in the Notice of Termination, and (ii) if the Executive's employment
is terminated for any other reason, the date on which a Notice of Termination is
given or as specified in such Notice.
(f) Disability. Termination by the Employers of the Executive's
employment based on "Disability" shall mean termination because of any physical
or mental impairment which qualifies the Executive for disability benefits under
the applicable long-term disability plan maintained by the Employers or any
subsidiary or, if no such plan applies, which would qualify the Executive for
disability benefits under the Federal Social Security System.
(g) Good Reason. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the Executive following a
Change in Control of the Corporation based on:
(i) Without the Executive's express written consent, the
failure to elect or to re-elect or to appoint or to
re-appoint the Executive to the offices of President
and Chief Executive Officer of the Employers or a
material adverse change made by the Employers in the
Executive's functions, duties or responsibilities as
President and Chief Executive Officer of the
Employers immediately prior to a Change in Control of
the Corporation;
(ii) Without the Executive's express written consent, a
reduction by the Employers in the Executive's Base
Salary as the same may be increased from time to time
or, except to the extent permitted by Section 3(b)
hereof, a reduction in the package of fringe benefits
provided to the Executive, taken as a whole;
(iii) The principal executive office of the Employers is
relocated outside of the Pittsburgh, Pennsylvania
area or, without the Executive's express written
consent, the Employers require the Executive to be
based anywhere other than an area in which the
Employers' principal executive office is located,
except for required travel on business of the
Employers to an extent substantially consistent with
the Executive's present business travel obligations;
<PAGE>
(iv) Any purported termination of the Executive's
employment for Cause, Disability or Retirement which
is not effected pursuant to a Notice of Termination
satisfying the requirements of paragraph (j) below;
or
(v) The failure by the Employers to obtain the assumption
of and agreement to perform this Agreement by any
successor as contemplated in Section 9 hereof.
(h) IRS. IRS shall mean the Internal Revenue Service.
(i) Notice of Termination. Any purported termination of the Executive's
employment by the Employers for any reason, including without limitation for
Cause, Disability, or Retirement or by the Executive for any reason, including
without limitation for Good Reason, shall be communicated by written "Notice of
Termination" to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a dated notice which (i) indicates the
specific termination provision in the Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive's employment under the provision so indicated, (iii)
specifies a Date of Termination, which shall be not less than thirty (30) nor
more than ninety (90) days after such Notice of Termination is given, except in
the case of the Employers termination of Executive's employment for Cause; and
(iv) is given in the manner specified in Section 10 hereof.
(j) Parachute Payment. The term "Parachute Payment" has the meaning as
set forth in Section 280G of the Code and applicable Treasury regulations
(without regard to Section 280(b)(2)(A)(ii) of the Code and the Treasury
regulations thereunder).
(k) Retirement. Termination by the Employers of the Executive's
employment based on "Retirement" shall mean voluntary termination by the
Employee in accordance with the Employers' retirement policies, including early
retirement, generally applicable to their salaried employees.
2. Term of Employment.
(a) The Employers hereby employ the Executive as President and Chief
Executive Officer and Executive hereby accepts said employment and agrees to
render such services to the Employers on the terms and conditions set forth in
this Agreement. The term of employment under this Agreement shall be for three
years, commencing on the date of this Agreement and, subject to the requirements
of the succeeding sentence, shall be deemed automatically, without further
action, beginning on the day following the date of this Agreement and on each
day thereafter, to extend for a period of one day in addition to the
then-remaining term, such that at any time the remaining term of this Agreement
shall be three years. Prior to the first annual anniversary of the date of this
Agreement and each annual anniversary thereafter, the Board of Directors of the
Employers shall consider and review (with appropriate corporate documentation
thereof, and after taking into account all relevant factors, including the
Executive's performance hereunder) extension of the term under this Agreement,
and the term shall continue to extend in the manner set forth above unless
either the Board of Directors does not approve such extension and provides
written notice to the Executive of such event or the Executive gives written
notice to the Employers of the Executive's election not to extend the term, in
each case with such written notice to be given not less than thirty (30) days
prior to any such anniversary date. References herein to the term of this
Agreement shall refer both to the initial term and successive terms.
<PAGE>
(b) During the term of this Agreement, the Executive shall perform such
executive services for the Employers as may be consistent with his titles and
from time to time assigned to him by the Employers' Board of Directors.
3. Compensation and Benefits.
(a) The Employers shall compensate and pay Executive for his services
during the term of this Agreement at a minimum base salary of $120,000 per year
("Base Salary"), which may be increased from time to time in such amounts as may
be determined by the Board of Directors of the Employers and may not be
decreased without the Executive's express written consent. In addition to his
Base Salary, the Executive shall be entitled to receive during the term of this
Agreement such bonus payments as may be determined by the Board of Directors of
the Employers.
(b) As President and Chief Executive Officer, Executive shall be
entitled to participate in and receive the benefits of any pension or other
retirement benefit plan, profit sharing, stock option, employee stock ownership,
or other plans, benefits and privileges given to employees and executives of the
Employers, to the extent commensurate with his then duties and responsibilities,
as fixed by the Board of Directors of the Employers. The Employers shall not
make any changes in such plans, benefits or privileges which would adversely
affect Executive's rights or benefits thereunder, unless such change occurs
pursuant to a program applicable to all executive officers of the Employers and
does not result in a proportionately greater adverse change in the rights of or
benefits to Executive as compared with any other executive officer of the
Employers. Nothing paid to Executive under any plan or arrangement presently in
effect or made available in the future shall be deemed to be in lieu of the
salary payable to Executive pursuant to Section 3(a) hereof.
(c) During the term of this Agreement, Executive shall be entitled to
paid annual vacation in accordance with the policies as established from time to
time by the Board of Directors of the Employers, which shall in no event be less
than four weeks per annum. Executive shall not be entitled to receive any
additional compensation from the Employers for failure to take a vacation, nor
shall Executive be able to accumulate unused vacation time from one year to the
next, except to the extent authorized by the Board of Directors of the
Employers.
4. Expenses. The Employers shall reimburse Executive or otherwise
provide for or pay for all reasonable expenses incurred by Executive in
furtherance of, or in connection with the business of the Employers, including,
but not by way of limitation, automobile and traveling expenses, and all
reasonable entertainment expenses (whether incurred at the Executive's
residence, while traveling or otherwise), subject to such reasonable
documentation and other limitations as may be established by the Board of
Directors of the Employers. If such expenses are paid in the first instance by
Executive, the Employers shall reimburse the Executive therefor.
5. Termination.
(a) The Employers shall have the right, at any time upon prior Notice
of Termination, to terminate the Executive's employment hereunder for any
reason, including without limitation termination for Cause, Disability or
Retirement, and Executive shall have the right, upon prior Notice of
Termination, to terminate his employment hereunder for any reason.
<PAGE>
(b) In the event (i) Executive's employment is terminated by the
Employers for Cause, Disability or Retirement or in the event of the Executive's
death, or (ii) Executive terminates his employment hereunder other than for Good
Reason, Executive shall have no right pursuant to this Agreement to compensation
or other benefits for any period after the applicable Date of Termination.
(c) (i) In the event that (i) Executive's employment is terminated
by the Employers for other than Cause, Disability, Retirement
or the Executive's death or (ii) such employment is terminated
by the Executive (a) due to a material breach of this
Agreement by the Employers, which breach has not been cured
within fifteen (15) days after a written notice of
non-compliance has been given by the Executive to the
Employers, or (b) for Good Reason, and prior to the
Executive's Date of Termination there has been a Change in
Control of the Corporation or a written agreement which
contemplates a Change in Control of the Corporation and which
still is in effect has been entered into by the Corporation,
then the Employers shall, subject to the provisions of Section
6 hereof, if applicable
(A) pay to the Executive, in thirty-six (36) equal
monthly installments beginning with the first
business day of the month following the Date of
Termination, a cash severance amount equal to three
(3) times the Executive's Base Salary, and
(B) maintain and provide for a period ending at the
earlier of (i) the expiration of the remaining term
of employment pursuant hereto prior to the Notice of
Termination or (ii) the date of the Executive's
full-time employment by another employer (provided
that the Executive is entitled under the terms of
such employment to benefits substantially similar to
those described in this subparagraph (B)), at no cost
to the Executive, the Executive's continued
participation in all group insurance, life insurance,
health and accident, disability and other employee
benefit plans, programs and arrangements in which the
Executive was entitled to participate immediately
prior to the Date of Termination (other than stock
option and restricted stock plans of the Employers),
provided that in the event that the Executive's
participation in any plan, program or arrangement as
provided in this subparagraph (B) is barred, or
during such period any such plan, program or
arrangement is discontinued or the benefits
thereunder are materially reduced, the Employers
shall arrange to provide the Executive with benefits
substantially similar to those which the Executive
was entitled to receive under such plans, programs
and arrangements immediately prior to the Date of
Termination.
<PAGE>
(ii) In the event that (i) Executive's employment is terminated by
the Corporation for other than Cause, Disability, Retirement
or the Executive's death or (ii) such employment is terminated
by the Executive due to a material breach of this Agreement by
the Employer, which has not been cured within fifteen (15)
days after a written notice of non-compliance has been given
by the Executive to the Employers, and as of the Executive's
Date of Termination no Change of Control of the Corporation
has occurred and no written agreement which contemplates a
Change in Control of the Corporation and which still is in
effect has been entered into by the Corporation, then the
Corporation shall, subject to provisions of Section 6 hereof,
if applicable:
(A) pay to the Executive, in eighteen (18) equal monthly
installments beginning with the first business day of the
month following the Date of Termination, a cash severance
amount equal to two (2) times the Executive's Base Salary,
and
(B) the expiration of eighteen (18) months from the
Executive's Date of Termination or (ii) the date of the
Executive's full-time employment by another employer
(provided that the Executive is entitled under the terms
of such employment to benefits substantially similar to
those described in this subparagraph (B)), at no cost
maintain and provide for a period ending at the earlier of
(i) to the Executive, the Executive's continued
participation in all group health insurance plans offered
by the Corporation in which the Executive was entitled to
participate immediately prior to the Date of Termination.
The Executive shall not be entitled to participate in any
other employee benefit plan, program or arrangement of the
Employers subsequent to his Date of Termination.
(d) If the Executive becomes liable, in any taxable year, for the
payment of an excise tax under Section 4999 of the Code on account of any
payments to the Executive pursuant to this Section 5, and the Employers chose
not to contest the liability or have exhausted all administrative and judicial
appeals contesting the liability, the Employers shall pay the Executive (i) an
amount equal to the excise tax for which the Executive is liable under Section
4999 of the Code, (ii) the federal, state, and local income taxes, and interest
if any, for which the Executive is liable on account of the payments pursuant to
item (i), and (ii) any additional excise tax under Section 4999 of the Code and
any federal, state and local income taxes, for which the Executive is liable on
account of payments made pursuant to items (i) and (ii).
(e) This subsection 5(e) applies if the amount of payments to the
Executive under subsection 5(d) has not been determined with finality by the
exhaustion of administrative and judicial appeals. In such circumstances, the
Employers and the Executive shall, as soon as practicable after the event or
series of events has occurred giving rise to the imposition of the excise tax,
cooperate in determining the amount of the Executive's excise tax liability for
purposes of paying the estimated tax. The Executive shall thereafter furnish to
the Employers or their successors a copy of each tax return which reflects a
liability for an excise tax under Section 4999 of the Code at least 20 days
before the date on which such return is required to be filed with the IRS. The
liability reflected on such return shall be dispositive for the purposes hereof
<PAGE>
unless, within 15 days after such notice is given, the Employers furnish the
Executive with a letter of the auditors or tax advisor selected by the Employers
indicating a different liability or that the matter is not free from doubt under
the applicable laws and regulations and the Executive may, in such auditor's or
advisor's opinion, cogently take a different position, which shall be set forth
in the letter with respect to the payments in question. Such letter shall be
addressed to the Executive and state that he is entitled to rely thereon. If the
Employers furnish such a letter to the Executive, the position reflected in such
letter shall be dispositive for purposes of this Agreement, except as provided
in subsection 5(f) below.
(f) Notwithstanding anything in this Agreement to the contrary, if the
Executive's liability for the excise tax under Section 4999 of the Code for a
taxable year is subsequently determined to be less than the amount paid by the
Employers pursuant to subsection 5(e), the Executive shall repay the Employers
at the time that the amount of such excise tax liability is finally determined,
the portion of such income and excise tax payments attributable to the reduction
(plus interest on the amount of such repayment at the rate provided on Section
1274(b)(2)(B) of the Code and if the Executive's liability for the excise tax
under Section 4999 of the Code for a taxable year is subsequently determined to
exceed the amount paid by the Employers pursuant to Section 5, the Employers
shall make an additional payment of income and excise taxes in the amount of
such excess, as well as the amount of any penalty and interest assessed with
respect thereto at the time that the amount of such excess and any penalty and
interest is finally determined.
6. Mitigation; Exclusivity of Benefits.
(a) The Executive shall not be required to mitigate the amount of any
benefits hereunder by seeking other employment or otherwise, nor shall the
amount of any such benefits be reduced by any compensation earned by the
Executive as a result of employment by another employer after the Date of
Termination or otherwise.
(b) The specific arrangements referred to herein are not intended to
exclude any other benefits which may be available to the Executive upon a
termination of employment with the Employers pursuant to employee benefit plans
of the Employers or otherwise.
7. Withholding. All payments required to be made by the Employers
hereunder to the Executive shall be subject to the withholding of such amounts,
if any, relating to tax and other payroll deductions as the Employers may
reasonably determine should be withheld pursuant to any applicable law or
regulation.
8. Assignability. The Employers may assign this Agreement and its
rights and obligations hereunder in whole, but not in part, to any corporation,
bank or other entity with or into which the Employers may hereafter merge or
consolidate or to which the Employers may transfer all or substantially all of
its assets, if in any such case said corporation, bank or other entity shall by
operation of law or expressly in writing assume all obligations of the Employers
hereunder as fully as if it had been originally made a party hereto, but may not
otherwise assign this Agreement or its rights and obligations hereunder. The
Executive may not assign or transfer this Agreement or any rights or obligations
hereunder.
<PAGE>
9. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:
To the Employers: WVS Financial Corp.
West View Savings Bank
9001 Perry Highway
Pittsburgh, Pennsylvania 15237
To the Executive: David J. Bursic
304 Wagon Wheel Trail
Wexford, Pennsylvania 15090
10. Amendment; Waiver. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and such officer or officers as may be
specifically designated by the Board of Directors of the Employers to sign on
its behalf. No waiver by any party hereto at any time of any breach by any other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
11. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the Commonwealth of
Pennsylvania.
12. Nature of Obligations. Nothing contained herein shall create or
require the Employers to create a trust of any kind to fund any benefits which
may be payable hereunder, and to the extent that the Executive acquires a right
to receive benefits from the Employers hereunder, such right shall be no greater
than the right of any unsecured general creditor of the Employers.
13. Headings. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
16. Regulatory Prohibition. Notwithstanding any other provision of this
Agreement to the contrary, any payments made to the Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with Section 18(k) of the FDIA (12 U.S.C.ss.1828(k)) and any regulations
promulgated thereunder.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
Attest: WVS FINANCIAL CORP. INC.
/s/William J. Hoegel By: /s/James S. McKain, Jr.
- -------------------- ------------------------
James S. McKain, Jr.
Chairman of the Board
Attest: West View Savings Bank
/s/William J. Hoegel By: /s/James S. McKain, Jr.
- -------------------- ----------------------
James S. McKain, Jr.
Chairman of the Board
By: /s/David J. Bursic
------------------
David J. Bursic
EXHIBIT 10.2
AGREEMENT
AGREEMENT, dated this 1st day of October 1998, between WVS Financial
Corp. (the "Corporation"), a Pennsylvania-chartered corporation, West View
Savings Bank (the "Savings Bank"), a Pennsylvania-chartered savings bank and a
wholly-owned subsidiary of the Corporation, and Margaret VonDerau (the
"Executive").
WITNESSETH
WHEREAS, the Executive is presently an officer of the Corporation
and/or the Savings Bank (together the "Employers"); and
WHEREAS, the Employers desire to be ensured of the Executive's
continued active participation in the business of the Employers; and
WHEREAS, in order to induce the Executive to remain in the employ of
the Employers and in consideration of the Executive's agreeing to remain in the
employ of the Employers, the parties desire to specify the severance benefits
which shall be due the Executive in the event that his employment with the
Employers is terminated under specified circumstances;
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereby agree as follows:
1. Definitions. The following words and terms shall have the meanings
set forth below for the purposes of this Agreement:
(a) Base Salary. "Base Salary" shall have the meaning set forth in
Section 3(a) hereof.
(b) Cause. Termination of the Executive's employment for "Cause" shall
mean termination because of personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule or
regulation (other than traffic violations or similar offenses) or final
cease-and-desist order or material breach of any provision of the Agreement. For
purposes of this paragraph, no act or failure to act on the Executive's part
shall be considered "willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that the Executive's
action or omission was in the best interest of the Employers.
(c) Change in Control of the Corporation. "Change in Control of the
Corporation" shall mean a change in control of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended ("Exchange
Act") or any successor thereto, whether or not the Corporation is registered
under Exchange Act; provided that, without limitation, such a change in control
shall be deemed to have occurred if (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing 25% or more of the
combined voting power of the Corporation's then outstanding securities; or (ii)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the Board of Directors of the Corporation cease for any
reason to constitute at least a majority thereof unless the election, or the
nomination for election by stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
<PAGE>
(d) Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(e) Date of Termination. "Date of Termination" shall mean (i) if the
Executive's employment is terminated for Cause or for Disability, the date
specified in the Notice of Termination, and (ii) if the Executive's employment
is terminated for any other reason, the date on which a Notice of Termination is
given or as specified in such Notice.
(f) Disability. Termination by the Employers of the Executive's
employment based on "Disability" shall mean termination because of any physical
or mental impairment which qualifies the Executive for disability benefits under
the applicable long-term disability plan maintained by the Employers or any
subsidiary or, if no such plan applies, which would qualify the Executive for
disability benefits under the Federal Social Security System.
(g) Good Reason. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the Executive following a
Change in Control of the Corporation based on:
(i) Without the Executive's express written consent, the
failure to elect or to re-elect or to appoint or to
re-appoint the Executive to the offices of Senior
Vice President, Treasurer and Corporate Secretary of
the Employers or a material adverse change made by
the Employers in the Executive's functions, duties or
responsibilities as Senior Vice President, Treasurer
and Corporate Secretary of the Employers immediately
prior to a Change in Control of the Corporation;
(ii) Without the Executive's express written consent, a
reduction by the Employers in the Executive's Base
Salary as the same may be increased from time to time
or, except to the extent permitted by Section 3(b)
hereof, a reduction in the package of fringe benefits
provided to the Executive, taken as a whole;
(iii) The principal executive office of the Employers is
relocated outside of the Pittsburgh, Pennsylvania
area or, without the Executive's express written
consent, the Employers require the Executive to be
based anywhere other than an area in which the
Employers' principal executive office is located,
except for required travel on business of the
Employers to an extent substantially consistent with
the Executive's present business travel obligations;
(iv) Any purported termination of the Executive's
employment for Cause, Disability or Retirement which
is not effected pursuant to a Notice of Termination
satisfying the requirements of paragraph (j) below;
or
(v) The failure by the Employers to obtain the assumption
of and agreement to perform this Agreement by any
successor as contemplated in Section 9 hereof.
(h) IRS. IRS shall mean the Internal Revenue Service.
<PAGE>
(i) Notice of Termination. Any purported termination of the Executive's
employment by the Employers for any reason, including without limitation for
Cause, Disability, or Retirement or by the Executive for any reason, including
without limitation for Good Reason, shall be communicated by written "Notice of
Termination" to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a dated notice which (i) indicates the
specific termination provision in the Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive's employment under the provision so indicated, (iii)
specifies a Date of Termination, which shall be not less than thirty (30) nor
more than ninety (90) days after such Notice of Termination is given, except in
the case of the Employers termination of Executive's employment for Cause; and
(iv) is given in the manner specified in Section 10 hereof.
(j) Parachute Payment. The term "Parachute Payment" has the meaning as
set forth in Section 280G of the Code and applicable Treasury regulations
(without regard to Section 280(b)(2)(A)(ii) of the Code and the Treasury
regulations thereunder).
(k) Retirement. Termination by the Employers of the Executive's
employment based on "Retirement" shall mean voluntary termination by the
Employee in accordance with the Employers' retirement policies, including early
retirement, generally applicable to their salaried employees.
2. Term of Employment.
(a) The Employers hereby employ the Executive as Senior Vice President,
Treasurer and Corporate Secretary and Executive hereby accepts said employment
and agrees to render such services to the Employers on the terms and conditions
set forth in this Agreement. The term of employment under this Agreement shall
be for three years, commencing on the date of this Agreement and, subject to the
requirements of the succeeding sentence, shall be deemed automatically, without
further action, beginning on the day following the date of this Agreement and on
each day thereafter, to extend for a period of one day in addition to the
then-remaining term, such that at any time the remaining term of this Agreement
shall be three years. Prior to the first annual anniversary of the date of this
Agreement and each annual anniversary thereafter, the Board of Directors of the
Employers shall consider and review (with appropriate corporate documentation
thereof, and after taking into account all relevant factors, including the
Executive's performance hereunder) extension of the term under this Agreement,
and the term shall continue to extend in the manner set forth above unless
either the Board of Directors does not approve such extension and provides
written notice to the Executive of such event or the Executive gives written
notice to the Employers of the Executive's election not to extend the term, in
each case with such written notice to be given not less than thirty (30) days
prior to any such anniversary date. References herein to the term of this
Agreement shall refer both to the initial term and successive terms.
(b) During the term of this Agreement, the Executive shall perform such
executive services for the Employers as may be consistent with his titles and
from time to time assigned to him by the Employers' Board of Directors.
3. Compensation and Benefits.
(a) The Employers shall compensate and pay Executive for his services
during the term of this Agreement at a minimum base salary of $110,400 per year
("Base Salary"), which may be increased from time to time in such amounts as may
<PAGE>
be determined by the Board of Directors of the Employers and may not be
decreased without the Executive's express written consent. In addition to his
Base Salary, the Executive shall be entitled to receive during the term of this
Agreement such bonus payments as may be determined by the Board of Directors of
the Employers.
(b) As Senior Vice President, Treasurer and Corporate Secretary,
Executive shall be entitled to participate in and receive the benefits of any
pension or other retirement benefit plan, profit sharing, stock option, employee
stock ownership, or other plans, benefits and privileges given to employees and
executives of the Employers, to the extent commensurate with his then duties and
responsibilities, as fixed by the Board of Directors of the Employers. The
Employers shall not make any changes in such plans, benefits or privileges which
would adversely affect Executive's rights or benefits thereunder, unless such
change occurs pursuant to a program applicable to all executive officers of the
Employers and does not result in a proportionately greater adverse change in the
rights of or benefits to Executive as compared with any other executive officer
of the Employers. Nothing paid to Executive under any plan or arrangement
presently in effect or made available in the future shall be deemed to be in
lieu of the salary payable to Executive pursuant to Section 3(a) hereof.
(c) During the term of this Agreement, Executive shall be entitled to
paid annual vacation in accordance with the policies as established from time to
time by the Board of Directors of the Employers, which shall in no event be less
than four weeks per annum. Executive shall not be entitled to receive any
additional compensation from the Employers for failure to take a vacation, nor
shall Executive be able to accumulate unused vacation time from one year to the
next, except to the extent authorized by the Board of Directors of the
Employers.
4. Expenses. The Employers shall reimburse Executive or otherwise
provide for or pay for all reasonable expenses incurred by Executive in
furtherance of, or in connection with the business of the Employers, including,
but not by way of limitation, automobile and traveling expenses, and all
reasonable entertainment expenses (whether incurred at the Executive's
residence, while traveling or otherwise), subject to such reasonable
documentation and other limitations as may be established by the Board of
Directors of the Employers. If such expenses are paid in the first instance by
Executive, the Employers shall reimburse the Executive therefor.
5. Termination.
(a) The Employers shall have the right, at any time upon prior Notice
of Termination, to terminate the Executive's employment hereunder for any
reason, including without limitation termination for Cause, Disability or
Retirement, and Executive shall have the right, upon prior Notice of
Termination, to terminate his employment hereunder for any reason.
(b) In the event (i) Executive's employment is terminated by the
Employers for Cause, Disability or Retirement or in the event of the Executive's
death, or (ii) Executive terminates his employment hereunder other than for Good
Reason, Executive shall have no right pursuant to this Agreement to compensation
or other benefits for any period after the applicable Date of Termination.
(c) (i) In the event that (i) Executive's employment is terminated
by the Employers for other than Cause, Disability, Retirement
or the Executive's death or (ii) such employment is terminated
by the Executive (a) due to a material breach of this
Agreement by the Employers, which breach has not been cured
<PAGE>
within fifteen (15) days after a written notice of
non-compliance has been given by the Executive to the
Employers, or (b) for Good Reason, and prior to the
Executive's Date of Termination there has been a Change in
Control of the Corporation or a written agreement which
contemplates a Change in Control of the Corporation and which
still is in effect has been entered into by the Corporation,
then the Employers shall, subject to the provisions of Section
6 hereof, if applicable
(A) pay to the Executive, in thirty-six (36) equal
monthly installments beginning with the first
business day of the month following the Date of
Termination, a cash severance amount equal to three
(3) times the Executive's Base Salary, and
(B) maintain and provide for a period ending at the
earlier of (i) the expiration of the remaining term
of employment pursuant hereto prior to the Notice of
Termination or (ii) the date of the Executive's
full-time employment by another employer (provided
that the Executive is entitled under the terms of
such employment to benefits substantially similar to
those described in this subparagraph (B)), at no cost
to the Executive, the Executive's continued
participation in all group insurance, life insurance,
health and accident, disability and other employee
benefit plans, programs and arrangements in which the
Executive was entitled to participate immediately
prior to the Date of Termination (other than stock
option and restricted stock plans of the Employers),
provided that in the event that the Executive's
participation in any plan, program or arrangement as
provided in this subparagraph (B) is barred, or
during such period any such plan, program or
arrangement is discontinued or the benefits
thereunder are materially reduced, the Employers
shall arrange to provide the Executive with benefits
substantially similar to those which the Executive
was entitled to receive under such plans, programs
and arrangements immediately prior to the Date of
Termination.
(ii) In the event that (i) Executive's employment is terminated by
the Corporation for other than Cause, Disability, Retirement
or the Executive's death or (ii) such employment is terminated
by the Executive due to a material breach of this Agreement by
the Employer, which has not been cured within fifteen (15)
days after a written notice of non-compliance has been given
by the Executive to the Employers, and as of the Executive's
Date of Termination no Change of Control of the Corporation
has occurred and no written agreement which contemplates a
Change in Control of the Corporation and which still is in
effect has been entered into by the Corporation, then the
Corporation shall, subject to provisions of Section 6 hereof,
if applicable:
<PAGE>
(A) pay to the Executive, in eighteen (18) equal monthly
installments beginning with the first business day of the
month following the Date of Termination, a cash severance
amount equal to two (2) times the Executive's Base Salary,
and
(B) the expiration of eighteen (18) months from the
Executive's Date of Termination or (ii) the date of the
Executive's full-time employment by another employer
(provided that the Executive is entitled under the terms
of such employment to benefits substantially similar to
those described in this subparagraph (B)), at no cost
maintain and provide for a period ending at the earlier of
(i) to the Executive, the Executive's continued
participation in all group health insurance plans offered
by the Corporation in which the Executive was entitled to
participate immediately prior to the Date of Termination.
The Executive shall not be entitled to participate in any
other employee benefit plan, program or arrangement of the
Employers subsequent to his Date of Termination.
(d) If the Executive becomes liable, in any taxable year, for the
payment of an excise tax under Section 4999 of the Code on account of any
payments to the Executive pursuant to this Section 5, and the Employers chose
not to contest the liability or have exhausted all administrative and judicial
appeals contesting the liability, the Employers shall pay the Executive (i) an
amount equal to the excise tax for which the Executive is liable under Section
4999 of the Code, (ii) the federal, state, and local income taxes, and interest
if any, for which the Executive is liable on account of the payments pursuant to
item (i), and (ii) any additional excise tax under Section 4999 of the Code and
any federal, state and local income taxes, for which the Executive is liable on
account of payments made pursuant to items (i) and (ii).
(e) This subsection 5(e) applies if the amount of payments to the
Executive under subsection 5(d) has not been determined with finality by the
exhaustion of administrative and judicial appeals. In such circumstances, the
Employers and the Executive shall, as soon as practicable after the event or
series of events has occurred giving rise to the imposition of the excise tax,
cooperate in determining the amount of the Executive's excise tax liability for
purposes of paying the estimated tax. The Executive shall thereafter furnish to
the Employers or their successors a copy of each tax return which reflects a
liability for an excise tax under Section 4999 of the Code at least 20 days
before the date on which such return is required to be filed with the IRS. The
liability reflected on such return shall be dispositive for the purposes hereof
unless, within 15 days after such notice is given, the Employers furnish the
Executive with a letter of the auditors or tax advisor selected by the Employers
indicating a different liability or that the matter is not free from doubt under
the applicable laws and regulations and the Executive may, in such auditor's or
advisor's opinion, cogently take a different position, which shall be set forth
in the letter with respect to the payments in question. Such letter shall be
addressed to the Executive and state that he is entitled to rely thereon. If the
Employers furnish such a letter to the Executive, the position reflected in such
letter shall be dispositive for purposes of this Agreement, except as provided
in subsection 5(f) below.
<PAGE>
(f) Notwithstanding anything in this Agreement to the contrary, if the
Executive's liability for the excise tax under Section 4999 of the Code for a
taxable year is subsequently determined to be less than the amount paid by the
Employers pursuant to subsection 5(e), the Executive shall repay the Employers
at the time that the amount of such excise tax liability is finally determined,
the portion of such income and excise tax payments attributable to the reduction
(plus interest on the amount of such repayment at the rate provided on Section
1274(b)(2)(B) of the Code and if the Executive's liability for the excise tax
under Section 4999 of the Code for a taxable year is subsequently determined to
exceed the amount paid by the Employers pursuant to Section 5, the Employers
shall make an additional payment of income and excise taxes in the amount of
such excess, as well as the amount of any penalty and interest assessed with
respect thereto at the time that the amount of such excess and any penalty and
interest is finally determined.
6. Mitigation; Exclusivity of Benefits.
(a) The Executive shall not be required to mitigate the amount of any
benefits hereunder by seeking other employment or otherwise, nor shall the
amount of any such benefits be reduced by any compensation earned by the
Executive as a result of employment by another employer after the Date of
Termination or otherwise.
(b) The specific arrangements referred to herein are not intended to
exclude any other benefits which may be available to the Executive upon a
termination of employment with the Employers pursuant to employee benefit plans
of the Employers or otherwise.
7. Withholding. All payments required to be made by the Employers
hereunder to the Executive shall be subject to the withholding of such amounts,
if any, relating to tax and other payroll deductions as the Employers may
reasonably determine should be withheld pursuant to any applicable law or
regulation.
8. Assignability. The Employers may assign this Agreement and its
rights and obligations hereunder in whole, but not in part, to any corporation,
bank or other entity with or into which the Employers may hereafter merge or
consolidate or to which the Employers may transfer all or substantially all of
its assets, if in any such case said corporation, bank or other entity shall by
operation of law or expressly in writing assume all obligations of the Employers
hereunder as fully as if it had been originally made a party hereto, but may not
otherwise assign this Agreement or its rights and obligations hereunder. The
Executive may not assign or transfer this Agreement or any rights or obligations
hereunder.
9. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:
To the Employers: WVS Financial Corp.
West View Savings Bank
9001 Perry Highway
Pittsburgh, Pennsylvania 15237
To the Executive: Margaret VonDerau
202 Greenbriar Drive
Cranberry Township, Pennsylvania 16066
<PAGE>
10. Amendment; Waiver. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and such officer or officers as may be
specifically designated by the Board of Directors of the Employers to sign on
its behalf. No waiver by any party hereto at any time of any breach by any other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
11. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the Commonwealth of
Pennsylvania.
12. Nature of Obligations. Nothing contained herein shall create or
require the Employers to create a trust of any kind to fund any benefits which
may be payable hereunder, and to the extent that the Executive acquires a right
to receive benefits from the Employers hereunder, such right shall be no greater
than the right of any unsecured general creditor of the Employers.
13. Headings. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
16. Regulatory Prohibition. Notwithstanding any other provision of this
Agreement to the contrary, any payments made to the Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with Section 18(k) of the FDIA (12 U.S.C.ss.1828(k)) and any regulations
promulgated thereunder.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
Attest: WVS FINANCIAL CORP. INC.
/s/William J. Hoegel By: /s/David J. Bursic
- -------------------- ------------------
David J. Bursic
President
and Chief Executive Officer
Attest: West View Savings Bank
/s/William J. Hoegel By: /s/David J. Bursic
- -------------------- ------------------
David J. Bursic
President
and Chief Executive Officer
By: /s/Margaret VonDerau
--------------------
Margaret VonDerau
EXHIBIT 10.3
AGREEMENT
AGREEMENT, dated this 1st day of October 1998, between WVS Financial
Corp. (the "Corporation"), a Pennsylvania-chartered corporation, West View
Savings Bank (the "Savings Bank"), a Pennsylvania-chartered savings bank and a
wholly-owned subsidiary of the Corporation, and Edward M. Wielgus (the
"Executive").
WITNESSETH
WHEREAS, the Executive is presently an officer of the Corporation
and/or the Savings Bank (together the "Employers"); and
WHEREAS, the Employers desire to be ensured of the Executive's
continued active participation in the business of the Employers; and
WHEREAS, in order to induce the Executive to remain in the employ of
the Employers and in consideration of the Executive's agreeing to remain in the
employ of the Employers, the parties desire to specify the severance benefits
which shall be due the Executive in the event that his employment with the
Employers is terminated under specified circumstances;
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereby agree as follows:
1. Definitions. The following words and terms shall have the meanings
set forth below for the purposes of this Agreement:
(a) Base Salary. "Base Salary" shall have the meaning set forth in
Section 3(a) hereof.
(b) Cause. Termination of the Executive's employment for "Cause" shall
mean termination because of personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule or
regulation (other than traffic violations or similar offenses) or final
cease-and-desist order or material breach of any provision of the Agreement. For
purposes of this paragraph, no act or failure to act on the Executive's part
shall be considered "willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that the Executive's
action or omission was in the best interest of the Employers.
(c) Change in Control of the Corporation. "Change in Control of the
Corporation" shall mean a change in control of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended ("Exchange
Act") or any successor thereto, whether or not the Corporation is registered
under Exchange Act; provided that, without limitation, such a change in control
shall be deemed to have occurred if (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing 25% or more of the
combined voting power of the Corporation's then outstanding securities; or (ii)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the Board of Directors of the Corporation cease for any
reason to constitute at least a majority thereof unless the election, or the
nomination for election by stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
<PAGE>
(d) Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(e) Date of Termination. "Date of Termination" shall mean (i) if the
Executive's employment is terminated for Cause or for Disability, the date
specified in the Notice of Termination, and (ii) if the Executive's employment
is terminated for any other reason, the date on which a Notice of Termination is
given or as specified in such Notice.
(f) Disability. Termination by the Employers of the Executive's
employment based on "Disability" shall mean termination because of any physical
or mental impairment which qualifies the Executive for disability benefits under
the applicable long-term disability plan maintained by the Employers or any
subsidiary or, if no such plan applies, which would qualify the Executive for
disability benefits under the Federal Social Security System.
(g) Good Reason. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the Executive following a
Change in Control of the Corporation based on:
(i) Without the Executive's express written consent, the
failure to elect or to re-elect or to appoint or to
re-appoint the Executive to the offices of Senior
Vice President and Chief Lending Officer of the
Employers or a material adverse change made by the
Employers in the Executive's functions, duties or
responsibilities as Senior Vice President and Chief
Lending Officer of the Employers immediately prior to
a Change in Control of the Corporation;
(ii) Without the Executive's express written consent, a
reduction by the Employers in the Executive's Base
Salary as the same may be increased from time to time
or, except to the extent permitted by Section 3(b)
hereof, a reduction in the package of fringe benefits
provided to the Executive, taken as a whole;
(iii) The principal executive office of the Employers is
relocated outside of the Pittsburgh, Pennsylvania
area or, without the Executive's express written
consent, the Employers require the Executive to be
based anywhere other than an area in which the
Employers' principal executive office is located,
except for required travel on business of the
Employers to an extent substantially consistent with
the Executive's present business travel obligations;
(iv) Any purported termination of the Executive's
employment for Cause, Disability or Retirement which
is not effected pursuant to a Notice of Termination
satisfying the requirements of paragraph (j) below;
or
(v) The failure by the Employers to obtain the assumption
of and agreement to perform this Agreement by any
successor as contemplated in Section 9 hereof.
(h) IRS. IRS shall mean the Internal Revenue Service.
<PAGE>
(i) Notice of Termination. Any purported termination of the Executive's
employment by the Employers for any reason, including without limitation for
Cause, Disability, or Retirement or by the Executive for any reason, including
without limitation for Good Reason, shall be communicated by written "Notice of
Termination" to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a dated notice which (i) indicates the
specific termination provision in the Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive's employment under the provision so indicated, (iii)
specifies a Date of Termination, which shall be not less than thirty (30) nor
more than ninety (90) days after such Notice of Termination is given, except in
the case of the Employers termination of Executive's employment for Cause; and
(iv) is given in the manner specified in Section 10 hereof.
(j) Parachute Payment. The term "Parachute Payment" has the meaning as
set forth in Section 280G of the Code and applicable Treasury regulations
(without regard to Section 280(b)(2)(A)(ii) of the Code and the Treasury
regulations thereunder).
(k) Retirement. Termination by the Employers of the Executive's
employment based on "Retirement" shall mean voluntary termination by the
Employee in accordance with the Employers' retirement policies, including early
retirement, generally applicable to their salaried employees.
2. Term of Employment.
(a) The Employers hereby employ the Executive as Senior Vice President
and Chief Lending Officer and Executive hereby accepts said employment and
agrees to render such services to the Employers on the terms and conditions set
forth in this Agreement. The term of employment under this Agreement shall be
for three years, commencing on the date of this Agreement and, subject to the
requirements of the succeeding sentence, shall be deemed automatically, without
further action, beginning on the day following the date of this Agreement and on
each day thereafter, to extend for a period of one day in addition to the
then-remaining term, such that at any time the remaining term of this Agreement
shall be three years. Prior to the first annual anniversary of the date of this
Agreement and each annual anniversary thereafter, the Board of Directors of the
Employers shall consider and review (with appropriate corporate documentation
thereof, and after taking into account all relevant factors, including the
Executive's performance hereunder) extension of the term under this Agreement,
and the term shall continue to extend in the manner set forth above unless
either the Board of Directors does not approve such extension and provides
written notice to the Executive of such event or the Executive gives written
notice to the Employers of the Executive's election not to extend the term, in
each case with such written notice to be given not less than thirty (30) days
prior to any such anniversary date. References herein to the term of this
Agreement shall refer both to the initial term and successive terms.
(b) During the term of this Agreement, the Executive shall perform such
executive services for the Employers as may be consistent with his titles and
from time to time assigned to him by the Employers' Board of Directors.
3. Compensation and Benefits.
(a) The Employers shall compensate and pay Executive for his services
during the term of this Agreement at a minimum base salary of $86,400 per year
("Base Salary"), which may be increased from time to time in such amounts as may
be determined by the Board of Directors of the Employers and may not be
<PAGE>
decreased without the Executive's express written consent. In addition to his
Base Salary, the Executive shall be entitled to receive during the term of this
Agreement such bonus payments as may be determined by the Board of Directors of
the Employers.
(b) As Senior Vice President and Chief Lending Officer, Executive shall
be entitled to participate in and receive the benefits of any pension or other
retirement benefit plan, profit sharing, stock option, employee stock ownership,
or other plans, benefits and privileges given to employees and executives of the
Employers, to the extent commensurate with his then duties and responsibilities,
as fixed by the Board of Directors of the Employers. The Employers shall not
make any changes in such plans, benefits or privileges which would adversely
affect Executive's rights or benefits thereunder, unless such change occurs
pursuant to a program applicable to all executive officers of the Employers and
does not result in a proportionately greater adverse change in the rights of or
benefits to Executive as compared with any other executive officer of the
Employers. Nothing paid to Executive under any plan or arrangement presently in
effect or made available in the future shall be deemed to be in lieu of the
salary payable to Executive pursuant to Section 3(a) hereof.
(c) During the term of this Agreement, Executive shall be entitled to
paid annual vacation in accordance with the policies as established from time to
time by the Board of Directors of the Employers, which shall in no event be less
than four weeks per annum. Executive shall not be entitled to receive any
additional compensation from the Employers for failure to take a vacation, nor
shall Executive be able to accumulate unused vacation time from one year to the
next, except to the extent authorized by the Board of Directors of the
Employers.
4. Expenses. The Employers shall reimburse Executive or otherwise
provide for or pay for all reasonable expenses incurred by Executive in
furtherance of, or in connection with the business of the Employers, including,
but not by way of limitation, automobile and traveling expenses, and all
reasonable entertainment expenses (whether incurred at the Executive's
residence, while traveling or otherwise), subject to such reasonable
documentation and other limitations as may be established by the Board of
Directors of the Employers. If such expenses are paid in the first instance by
Executive, the Employers shall reimburse the Executive therefor.
5. Termination.
(a) The Employers shall have the right, at any time upon prior Notice
of Termination, to terminate the Executive's employment hereunder for any
reason, including without limitation termination for Cause, Disability or
Retirement, and Executive shall have the right, upon prior Notice of
Termination, to terminate his employment hereunder for any reason.
(b) In the event (i) Executive's employment is terminated by the
Employers for Cause, Disability or Retirement or in the event of the Executive's
death, or (ii) Executive terminates his employment hereunder other than for Good
Reason, Executive shall have no right pursuant to this Agreement to compensation
or other benefits for any period after the applicable Date of Termination.
(c) (i) In the event that (i) Executive's employment is terminated
by the Employers for other than Cause, Disability, Retirement
or the Executive's death or (ii) such employment is terminated
by the Executive (a) due to a material breach of this
Agreement by the Employers, which breach has not been cured
within fifteen (15) days after a written notice of
<PAGE>
non-compliance has been given by the Executive to the
Employers, or (b) for Good Reason, and prior to the
Executive's Date of Termination there has been a Change in
Control of the Corporation or a written agreement which
contemplates a Change in Control of the Corporation and which
still is in effect has been entered into by the Corporation,
then the Employers shall, subject to the provisions of Section
6 hereof, if applicable
(A) pay to the Executive, in thirty-six (36) equal
monthly installments beginning with the first
business day of the month following the Date of
Termination, a cash severance amount equal to three
(3) times the Executive's Base Salary, and
(B) maintain and provide for a period ending at the
earlier of (i) the expiration of the remaining term
of employment pursuant hereto prior to the Notice of
Termination or (ii) the date of the Executive's
full-time employment by another employer (provided
that the Executive is entitled under the terms of
such employment to benefits substantially similar to
those described in this subparagraph (B)), at no cost
to the Executive, the Executive's continued
participation in all group insurance, life insurance,
health and accident, disability and other employee
benefit plans, programs and arrangements in which the
Executive was entitled to participate immediately
prior to the Date of Termination (other than stock
option and restricted stock plans of the Employers),
provided that in the event that the Executive's
participation in any plan, program or arrangement as
provided in this subparagraph (B) is barred, or
during such period any such plan, program or
arrangement is discontinued or the benefits
thereunder are materially reduced, the Employers
shall arrange to provide the Executive with benefits
substantially similar to those which the Executive
was entitled to receive under such plans, programs
and arrangements immediately prior to the Date of
Termination.
(ii) In the event that (i) Executive's employment is terminated by
the Corporation for other than Cause, Disability, Retirement
or the Executive's death or (ii) such employment is terminated
by the Executive due to a material breach of this Agreement by
the Employer, which has not been cured within fifteen (15)
days after a written notice of non-compliance has been given
by the Executive to the Employers, and as of the Executive's
Date of Termination no Change of Control of the Corporation
has occurred and no written agreement which contemplates a
Change in Control of the Corporation and which still is in
effect has been entered into by the Corporation, then the
Corporation shall, subject to provisions of Section 6 hereof,
if applicable:
<PAGE>
(A) pay to the Executive, in eighteen (18) equal monthly
installments beginning with the first business day of the
month following the Date of Termination, a cash severance
amount equal to two (2) times the Executive's Base Salary,
and
(B) the expiration of eighteen (18) months from the
Executive's Date of Termination or (ii) the date of the
Executive's full-time employment by another employer
(provided that the Executive is entitled under the terms
of such employment to benefits substantially similar to
those described in this subparagraph (B)), at no cost
maintain and provide for a period ending at the earlier of
(i) to the Executive, the Executive's continued
participation in all group health insurance plans offered
by the Corporation in which the Executive was entitled to
participate immediately prior to the Date of Termination.
The Executive shall not be entitled to participate in any
other employee benefit plan, program or arrangement of the
Employers subsequent to his Date of Termination.
(d) If the Executive becomes liable, in any taxable year, for the
payment of an excise tax under Section 4999 of the Code on account of any
payments to the Executive pursuant to this Section 5, and the Employers chose
not to contest the liability or have exhausted all administrative and judicial
appeals contesting the liability, the Employers shall pay the Executive (i) an
amount equal to the excise tax for which the Executive is liable under Section
4999 of the Code, (ii) the federal, state, and local income taxes, and interest
if any, for which the Executive is liable on account of the payments pursuant to
item (i), and (ii) any additional excise tax under Section 4999 of the Code and
any federal, state and local income taxes, for which the Executive is liable on
account of payments made pursuant to items (i) and (ii).
(e) This subsection 5(e) applies if the amount of payments to the
Executive under subsection 5(d) has not been determined with finality by the
exhaustion of administrative and judicial appeals. In such circumstances, the
Employers and the Executive shall, as soon as practicable after the event or
series of events has occurred giving rise to the imposition of the excise tax,
cooperate in determining the amount of the Executive's excise tax liability for
purposes of paying the estimated tax. The Executive shall thereafter furnish to
the Employers or their successors a copy of each tax return which reflects a
liability for an excise tax under Section 4999 of the Code at least 20 days
before the date on which such return is required to be filed with the IRS. The
liability reflected on such return shall be dispositive for the purposes hereof
unless, within 15 days after such notice is given, the Employers furnish the
Executive with a letter of the auditors or tax advisor selected by the Employers
indicating a different liability or that the matter is not free from doubt under
the applicable laws and regulations and the Executive may, in such auditor's or
advisor's opinion, cogently take a different position, which shall be set forth
in the letter with respect to the payments in question. Such letter shall be
addressed to the Executive and state that he is entitled to rely thereon. If the
Employers furnish such a letter to the Executive, the position reflected in such
letter shall be dispositive for purposes of this Agreement, except as provided
in subsection 5(f) below.
<PAGE>
(f) Notwithstanding anything in this Agreement to the contrary, if the
Executive's liability for the excise tax under Section 4999 of the Code for a
taxable year is subsequently determined to be less than the amount paid by the
Employers pursuant to subsection 5(e), the Executive shall repay the Employers
at the time that the amount of such excise tax liability is finally determined,
the portion of such income and excise tax payments attributable to the reduction
(plus interest on the amount of such repayment at the rate provided on Section
1274(b)(2)(B) of the Code and if the Executive's liability for the excise tax
under Section 4999 of the Code for a taxable year is subsequently determined to
exceed the amount paid by the Employers pursuant to Section 5, the Employers
shall make an additional payment of income and excise taxes in the amount of
such excess, as well as the amount of any penalty and interest assessed with
respect thereto at the time that the amount of such excess and any penalty and
interest is finally determined.
6. Mitigation; Exclusivity of Benefits.
(a) The Executive shall not be required to mitigate the amount of any
benefits hereunder by seeking other employment or otherwise, nor shall the
amount of any such benefits be reduced by any compensation earned by the
Executive as a result of employment by another employer after the Date of
Termination or otherwise.
(b) The specific arrangements referred to herein are not intended to
exclude any other benefits which may be available to the Executive upon a
termination of employment with the Employers pursuant to employee benefit plans
of the Employers or otherwise.
7. Withholding. All payments required to be made by the Employers
hereunder to the Executive shall be subject to the withholding of such amounts,
if any, relating to tax and other payroll deductions as the Employers may
reasonably determine should be withheld pursuant to any applicable law or
regulation.
8. Assignability. The Employers may assign this Agreement and its
rights and obligations hereunder in whole, but not in part, to any corporation,
bank or other entity with or into which the Employers may hereafter merge or
consolidate or to which the Employers may transfer all or substantially all of
its assets, if in any such case said corporation, bank or other entity shall by
operation of law or expressly in writing assume all obligations of the Employers
hereunder as fully as if it had been originally made a party hereto, but may not
otherwise assign this Agreement or its rights and obligations hereunder. The
Executive may not assign or transfer this Agreement or any rights or obligations
hereunder.
9. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:
To the Employers: WVS Financial Corp.
West View Savings Bank
9001 Perry Highway
Pittsburgh, Pennsylvania 15237
To the Executive: Edward M. Wielgus
150 Richmond Circle
Pittsburgh, Pennsylvania 15237
<PAGE>
10. Amendment; Waiver. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and such officer or officers as may be
specifically designated by the Board of Directors of the Employers to sign on
its behalf. No waiver by any party hereto at any time of any breach by any other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
11. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the Commonwealth of
Pennsylvania.
12. Nature of Obligations. Nothing contained herein shall create or
require the Employers to create a trust of any kind to fund any benefits which
may be payable hereunder, and to the extent that the Executive acquires a right
to receive benefits from the Employers hereunder, such right shall be no greater
than the right of any unsecured general creditor of the Employers.
13. Headings. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
16. Regulatory Prohibition. Notwithstanding any other provision of this
Agreement to the contrary, any payments made to the Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with Section 18(k) of the FDIA (12 U.S.C.ss.1828(k)) and any regulations
promulgated thereunder.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
Attest: WVS FINANCIAL CORP. INC.
/s/William J. Hoegel By: /s/David J. Bursic
- -------------------- ------------------
David J. Bursic
President
and Chief Executive Officer
Attest: West View Savings Bank
/s/William J. Hoegel By: /s/David J. Bursic
- -------------------- ------------------
David J. Bursic
President
and Chief Executive Officer
By: /s/Edward M. Wielgus
--------------------
Edward M. Wielgus
Exhibit 10.4
SEVERANCE AND RELEASE AGREEMENT
THIS SEVERANCE AND RELEASE AGREEMENT (the "Agreement") is made this
19th day of June 1998 by and between Robert C. Sinewe (the "Employee"), WVS
Financial Corp., a Pennsylvania corporation (the "Company") and West View
Savings Bank, a Pennsylvania-chartered savings bank and wholly-owned subsidiary
of the Company (the "Bank"). The Company and the Bank are sometimes collectively
referred to herein as the Employers.
WITNESSETH:
WHEREAS, the Employee currently serves as President and Chief Executive
Officer of the Company and the Bank and as a director of the Company and the
Bank;
WHEREAS, the Employers and Employee have had discussions prior to the
date hereof with respect to the termination of Employee's employment and the
payments the Employers would agree to make pursuant to such termination; and
WHEREAS, the Employers and the Employee have previously entered into an
employment agreement dated July 1, 1997 (the "Employment Agreement");
NOW, THEREFORE, in consideration of the mutual premises and covenants
contained herein, and intending to be legally bound, the parties agree as
follows:
1. Termination of Employment and Directorship. With the execution of
this Agreement, the Employee shall no longer be an officer,
director or employee of the Company or the Bank and shall deemed
to have resigned as an officer and employee of the Company and the
Bank and as a member of the Board of Directors of the Company and
of the Bank.
2. Payments and Benefits to the Employee.
(a) The Employers agree to make a lump-sum payment of $135,000 to
Employee payable as of July 31, 1998. In addition, the Employers
agree to pay to the Employee an aggregate of $421,200, such amount
to be paid in seventy-two (72) equal semi-monthly installments of
$5,850 due the fifteenth day and the last day of each month with
the first payment to be paid on July 15, 1998 and the last payment
to be made on June 30, 2001 (as W-2 wages). From the date hereof
through June 30, 1998, you will be paid your current salary and
will continue to participate in the Employers' group health and
tax-qualified retirement plans. The Employer shall have no
obligation to make contributions for service subsequent to June
30, 1998 to its tax qualified retirement plans on behalf of
Employee and Employee shall have no right to participate for
service subsequent to June 30, 1998.
(b) The Employee shall be entitled to participate in the
Employer's Health Assurance Medical Plan and other group health
plans (including the Employer's Cancer Plan and Dental Plan) and
the Employee's wife shall be entitled to participate in the
Employer's Health Assurance Medical Plan, each for a period of
thirty-six (36) months from July 1, 1998 through June 30, 2001 at
no cost to the Employee or his wife.
<PAGE>
(c) The Employers will pay the Employee a monthly cash allowance
of $400 for a twelve (12) month period commencing on July 1, 1998
and ending on June 30, 1999. Subsequent to July 1, 1998, Employee
shall have no right to the continued use of the automobile
currently provided by the Employer.
(d) All of Employee's accrued and vested benefits as of June 30,
1998 held under the Employers' tax qualified retirement plans
shall be available for distribution which shall be made in the
ordinary course of business in accordance with such plan terms and
past practice of the Employers.
3. Stock Incentive and Recognition Plans. It is acknowledged that no
additional arrangements are being provided by the Employers to the
Employee under the Employer's 1993 Stock Incentive Plan or the
Recognition and Retention Plan and Trust for Officers, and that
awards previously made by the Employers to the Employee which have
not as yet vested under each of such plans shall not accelerate
and are intended to terminate in accordance with the terms of such
plans. All stock options vested as of June 30, 1998 shall remain
exercisable through September 30, 1998.
4. Indemnification. The Employers agree to indemnify the Employee
against any judicial or administrative proceeding, or threatened
proceeding, whether civil or criminal, against the Employee
arising out of the Employee's position as an employee, officer
and/or director of the Employers to the fullest extent authorized
by the Employer's charter, bylaws or other governing instrument
and applicable law and regulations, including the payment of legal
fees and documented out-of-pocket expenses in defending against
claims, actions or proceedings. If Employee wishes to claim
indemnification under this Section 4 he shall upon learning of
such claim, action or proceeding promptly notify Employers
thereof. Employers shall have the right to assume the defense
thereof and shall not be liable to Employee for any legal expenses
of other counsel subsequently incurred by Employee in connection
with the defense thereof, except if Employer elects not to assume
such defense.
5. Use of Customer Lists, etc. The Employee acknowledges that, except
as required by law or in his own good faith use in any proceeding,
he has no right personally to use or disclose to any person, firm
or corporation, information concerning any customer list, business
secrets or confidential financial information of the Employers
that he knew was intended by the Employers to be confidential and
that he did not have reason to believe had been made public
(collectively, "Confidential Information"). Accordingly, the
Employee covenants and agrees that he shall not use or permit the
use of any Confidential Information, and shall not divulge any
Confidential Information to any person, firm or corporation,
except as may be required by applicable law arising out of his
employment with or participation in the affairs of the Employers.
<PAGE>
6. Release of the Employers and Related Parties.
(a) For, and in consideration of the commitments made herein by
the Employers, including specifically the release in Section 7
below, the Employee, for himself and for his heirs, successors and
assigns, does hereby release completely and forever discharge the
Employers and their respective subsidiaries, affiliates,
stockholders, attorneys, officers, directors, agents, employees,
successors and assigns, and any other party associated with the
Employers (the "Released Parties"), to the fullest extent
permitted by applicable law, from any and all claims, rights,
demands, actions, liabilities, obligations, causes of action of
any and all kinds, nature and character whatsoever, known or
unknown, in any way connected with his employment by the Employers
or termination thereof; provided that no such waiver shall be
effective with respect to Employee's rights related to COBRA,
ERISA or the Employer's Cancer Policy and Term Life Insurance
Policy. It is expressly understood that to the extent that the
Employee has any right to convert the Cancer Policy or Term Life
Insurance Policy to a personal policy, such conversion shall be at
no expense to the Employer.
(b) The Employee hereby specifically and unconditionally releases
the Released Parties from any and all claims which the Employee
may have against any of them and which arose on or before the date
of this Agreement under the Age Discrimination in Employment Act
(the "ADEA"), including, but not limited to, any claim
attributable to the Employers' solicitation of the Employee's
consent to the terms of this Agreement, and further acknowledges
and represents that
(i) the Employee waives the Employee's claims under ADEA
knowingly and voluntarily in exchange for the commitments
made herein by the Employers, and that the benefits
provided thereby constitute consideration of value to
which the Employee would not otherwise have been entitled;
(ii) the Employee has been advised in writing by the
Employers to consult an attorney in connection with this
Agreement;
(iii) the Employee has been given a period of 2l days
within which to consider the terms hereof;
(iv) the Employee may revoke the waiver of ADEA claims set
forth in this paragraph 6 for a period of seven (7) days
following the execution of this Agreement and the
Employee's waiver of ADEA claims hereunder shall not
become effective until the revocation period has expired;
(v) if the Employee revokes the waiver of ADEA claims in
accordance with subparagraph (iv) above, the Employee
shall cease to receive the payments and benefits specified
in paragraph 2 hereof, but such revocation shall not be
effective with respect to the remainder of this Agreement
and the consideration received by the Employee prior to
the revocation shall be valid and adequate consideration
with respect to the remainder of this Agreement; and
<PAGE>
(vi) this Agreement complies in all respects with Section
7(f) of ADEA, the waiver provisions of the Older Worker
Benefit Protection Act.
(c) Notwithstanding the foregoing, the Employee does not release
the Employers from claims arising out of any breach of this
Agreement.
7. General Release of the Employee. For, and in consideration of the
commitments made herein by the Employee, including specifically the
release in Section 6 above, the Employers, for themselves, and for
their respective successors and assigns do hereby release completely
and forever discharge the Employee and his heirs, successors and
assigns, to the fullest extent permitted by applicable law, from any
and all claims, rights, demands, actions, liabilities, obligations,
causes of action of any kinds, nature and character whatsoever, known
or unknown, in any way connected with the Employee's position as an
employee, officer or director of the Employers. Notwithstanding
anything in the foregoing to the contrary, the Employers do not release
the Employee from claims arising out of any breach of this Agreement.
8. Representation. The Employers and the Employee represent that they have
reviewed this Agreement, and that each of them is fully aware of the
content of this Agreement and of its legal effect, and acknowledge that
this is a legally valid and binding obligation of the parties.
9. Withholding. The Employers may make such provisions as they deem
appropriate for the withholding pursuant to federal or state income tax
laws of such amounts as the Employers determine they are required to
withhold in connection with the payments to be made pursuant to this
Agreement.
10. Amendment and Waiver. The terms of this Agreement may not be modified
other than in a writing signed by the parties. No term or condition of
this Agreement shall be deemed to have been waived, nor shall there be
any estoppel against enforcement of any provision of this Agreement,
except by written instrument of the party charged with such waiver or
estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate
only as to the specific term or condition for the future or as to any
act other than that specifically waived.
11. Notices. All notices, demands, consents or other communication required
or permitted hereunder shall be in writing and shall be deemed to have
been given when: (i) personally delivered, or (ii) sent postage prepaid
by registered or certified mail, return receipt requested, such receipt
showing delivery to have been made, or (iii) sent overnight by prepaid
receipt courier addressed as follows:
If to the Employee: Robert C. Sinewe
800 Academy Place
Sewickley, Pennsylvania 15143
If to the Employers: WVS Financial Corp.
West View Savings Bank
McCandless Office
9001 Perry Highway
Pittsburgh, Pennsylvania 15237
<PAGE>
12. Entire Agreement. This Agreement incorporates the entire understanding
among the parties relating to the subject matter hereof, recites the
sole consideration for the promises exchanged and supercedes any prior
agreements between the Employers and the Employee with respect to the
subject matter hereof, including without limitation, as of the date
hereof, the Employment Agreement. In reaching this Agreement, no party
has relied upon any representation or promise except those set forth
herein.
13. Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws
effective during the term of this Agreement, such provision shall be
fully severable and this Agreement shall be construed and enforced as
if such illegal, invalid or unenforceable provision had never
compromised a part of this Agreement, and the remaining provisions of
this Agreement shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its
severance from this Agreement.
14. Bind and Inure. This Agreement shall be binding upon and inure to the
benefit of the Employee and the Employers and their respective heirs
and/or successors and permitted assigns.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, except to
the extent that applicable federal law preempts the laws of
Commonwealth of Pennsylvania.
16. Confidentiality. No disclosure of the contents of this Agreement shall
be made by either party to this Agreement without the prior written
consent of the other party; provided that such disclosure (including
disclosures contained in Company press releases and regulatory filings)
may be made as required in accordance with federal securities law and
regulations. The Employer will provide the Employee with a copy of the
proposed press release to be issued in connection with this Agreement
for review and comment.
<PAGE>
IN WITNESS WHEREOF, the Company and the Bank have caused this Agreement
to be executed by their duly authorized representatives and the Employee has
executed this Agreement, all as of the day and year first above written.
WITNESSES:
WVS FINANCIAL CORP.
/s/ James H. Ritchie By: /s/ James S. McKain, Jr.
- -------------------- ------------------------
Title: Chairman of the Board
WEST VIEW SAVINGS BANK
/s/ James H. Ritchie By: /s/ James S. McKain, Jr.
- -------------------- ------------------------
Title: Chairman of the Board
WVS FINANCIAL CORP.
/s/ Donald E. Hook By: /s/ David J. Bursic
- ------------------ -------------------
Title: President and Chief Executive Officer
WEST VIEW SAVINGS BANK
/s/ Donald E. Hook By: /s/ David J. Bursic
- ------------------ -------------------
Title: President and Chief Executive Officer
ROBERT C. SINEWE
/s/ James H. Ritchie /s/ Robert C. Sinewe
- -------------------- ----------------------
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION, INCOME, CHANGES IN STOCKHOLDERS'
EQUITY AND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT, OR FOR THE THREE
MONTHS ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 684
<INT-BEARING-DEPOSITS> 907
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 25,671
<INVESTMENTS-CARRYING> 119,997
<INVESTMENTS-MARKET> 121,068
<LOANS> 153,981
<ALLOWANCE> 1,856
<TOTAL-ASSETS> 311,509
<DEPOSITS> 164,709
<SHORT-TERM> 25,654
<LIABILITIES-OTHER> 3,702
<LONG-TERM> 83,500
0
0
<COMMON> 37
<OTHER-SE> 32,952
<TOTAL-LIABILITIES-AND-EQUITY> 311,509
<INTEREST-LOAN> 3,189
<INTEREST-INVEST> 2,350
<INTEREST-OTHER> 15
<INTEREST-TOTAL> 5,554
<INTEREST-DEPOSIT> 1,689
<INTEREST-EXPENSE> 3,038
<INTEREST-INCOME-NET> 2,516
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,061
<INCOME-PRETAX> 1,557
<INCOME-PRE-EXTRAORDINARY> 1,557
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 950
<EPS-PRIMARY> 0.26
<EPS-DILUTED> 0.26
<YIELD-ACTUAL> 3.29
<LOANS-NON> 697
<LOANS-PAST> 0
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<ALLOWANCE-OPEN> 1,860
<CHARGE-OFFS> 5
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</TABLE>
