<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Mark One
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1996
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( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _______ to ________
Commission File Number: 33-78046
Westside Financial Corporation
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(Exact name of small business issuer as specified in its charter)
Georgia 58-2104977
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
Post Office Box 2147, Marietta, Georgia 30061
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(Address of principal executive officers)
770-499-2265
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(Issuer's Telephone Number)
N/A
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
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APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of March 31, 1996 586,300
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<PAGE>
WESTSIDE FINANCIAL CORPORATION
INDEX
Page No.
Part I. Financial Information
Consolidated Balance Sheet March 31, 1996 3
Consolidated Statements of Income
Three Months Ended March 31, 1996 and 1995 4
Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1996 and 1995 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-8
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 10
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<PAGE>
PART I - FINANCIAL INFORMATION
WESTSIDE FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
MARCH 31, 1996
(Unaudited)
ASSETS
Cash and due from banks $ 2,766,755
Interest-bearing deposit in banks --
Investment securities:
Held to maturity --
Available for sale, at estimated market value 12,228,821
Federal funds sold 2,700,000
Loans 41,163,187
Less allowance for loan losses 588,505
Loans, net 40,574,682
Premises and equipment, net 1,990,356
Other assets 619,927
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Total assets $60,880,541
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LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand $ 7,838,448
Interest-bearing demand 14,961,352
Savings 1,645,546
Certificates of deposit 28,641,006
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Total deposits $53,086,352
Accrued expenses 349,921
Total liabilities $53,436,273
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Stockholders' equity
Common stock, 10,000,000 shares authorized;
586,300 shares issued and outstanding 3,056,500
Surplus 3,057,110
Retained earnings 1,732,481
Unrealized gain on investment securities, net of tax 13,177
Less cost of 25,000 shares of treasury stock (415,000)
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Total stockholders' equity $ 7,444,268
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Total liabilities and stockholders equity $60,880,541
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<PAGE>
WESTSIDE FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31, 1996 and 1995
(Unaudited)
Three months ended
March 31,
1996 1995
Interest income
Interest and fees on loans $ 1,048,456 $ 866,778
Interest on investment securities:
Taxable 172,581 142,660
Nontaxable 20,842 9,822
Interest on Federal funds sold 65,762 83,935
Interest on securities purchased under
agreement to resell 1,089 583
Interest on interest-bearing deposits -- --
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Total interest income $ 1,308,730 $ 1,103,778
Interest expense on deposits
Interest on deposits $ 543,685 $ 430,780
Interest on Federal funds purchased -- --
Interest on securities sold under -- --
agreement to purchase -- --
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Total interest expense $ 543,685 $ 430,780
Net interest income $ 765,045 $ 672,998
Provision for loan losses 24,000 18,000
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Net interest income after
provision for loan losses $ 741,045 $ 654,998
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Other operating income
Service charges on deposit accounts $ 39,669 $ 53,655
Other income 13,974 13,460
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$ 53,643 $ 67,115
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Other operating expenses
Salaries and other employee benefits $ 243,369 $ 214,526
Occupancy and equipment expenses 56,333 47,864
Stationery and supplies 6,911 9,810
FDIC assessments 500 25,386
Audit and accounting 9,579 10,830
Directors fees 24,925 15,125
Other operating expense 106,203 101,638
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Total operating expenses $ 447,820 $ 425,179
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Income before income taxes $ 346,868 $ 296,934
Applicable income taxes $ 117,856 $ 109,782
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Net Income $ 229,012 $ 187,152
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Per share of common stock based on the
average number of shares outstanding
during the period
Net Income $ 0.39 $ 0.31
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Average shares outstanding 586,300 610,800
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Cash dividends per share of common stock $ 0.06 0.15
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<PAGE>
WESTSIDE FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 1996 and 1995
(Unaudited)
1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 229,012 $ 187,152
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Adjustments to reconcile net income to net
provided by operating activities:
Depreciation and amortization 25,615 39,826
Provision for loan losses 24,000 18,000
(Increase) decrease in interest receivable 6,291 1,924
Increase (decrease) in interest payable 12,420 (21,290)
Other prepaids, deferrals and accruals, net (302,546) (115,230)
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Total adjustments $ (234,220) $ (76,770)
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Net cash provided by operating activities $ (5,208) $ 110,382
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CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investment securities $ -- $ --
Proceeds from maturities of
investment securities 2,997,296 65,691
Purchase of investment securities (1,862,481) (898,750)
Net (increase) decrease in Federal funds sold 6,300,000 (700,000)
Net increase in loans (2,722,331) (1,714,086)
Acquisitions of other real estate -- --
Capital expenditures (333,713) 15,957
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Net cash used in investing activities $ 4,378,771 $(3,231,188)
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CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits $(4,644,005) $ 2,298,782
Dividend payments (35,178) (91,620)
Sale of common stock -- --
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Net cash provided by financing activities $(4,679,183) $ 2,207,162
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Net increase (decrease) in cash and
due from banks $ (305,620) $ (913,644)
Cash and due from banks at beginning of year 3,072,375 3,843,832
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Cash and due from banks at end of period $ 2,766,755 $ 2,930,188
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<PAGE>
WESTSIDE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal
recurring adjustments) which are, in the opinion of management,
necessary for a fair statement of results for the interim periods.
The results of operations for the three month period ended March 31,
1996 are not necessarily indicative of the results to be expected for
the full year.
Note 2. On January 1, 1995, the Company adopted Statement of Financial
Standard ("SFAS") No. 114, "Accounting by Creditors for Impairment of
a Loan" and No. 118, "Accounting by Creditors for Impairment of a
Loan - Income Recognition and Disclosures". The adoption of these
statements had no material effect on the consolidated financial
conditions or earnings of the Company.
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<PAGE>
WESTSIDE FINANCIAL CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results during the periods included in the accompanying consolidated financial
statements.
FINANCIAL CONDITION
The Company's balance sheet shrunk $4,422,800 or 6.77% from December 31,
1995. This decline was expected and is totally attributable to a seasonal
deposit account in which the balance declined $6,623,535 from December 31,
1995. Core deposit growth was approximately 4% in the first quarter. Total
loans increased $2,717,965 or 6.60% in the first quarter.
The Company's subsidiary, Westside Bank & Trust will open its first branch in
the second quarter of 1996. The branch is located in an area surrounded by
established residential neighborhoods, as well as new and older strip centers
targeting the needs of individuals living nearby. The branch is expected to
be a deposit generator with only moderate loan demand. Therefore, management
made the decision in the first quarter to concentrate on loan growth at the
main office in an effort to help defray the drain on earnings a new branch
typically creates and anticipating strong core deposit growth with the new
branch. This approach should help to sustain a 75-80% loan to deposit ratio
in 1996. Although management has made the decision to concentrate on loan
growth, primary emphasis continues to be on credit quality and core earnings.
LIQUIDITY
The Bank's liquidity ratio at March 31, 1996 was 28.3% well within the target
ratio of 25%. The Bank's primary sources of funds are increases in deposits,
loan repayments, sales and maturities of investment securities and net
income. In addition, the Bank joined the Federal Home Loan Bank in the first
quarter providing an alternative source of funding and maintains
relationships with correspondent banks which could provide short term
funding, if needed.
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<PAGE>
CAPITAL
The minimum capital requirements for banks and bank holding companies require
a leverage capital to total assets ratio of at least 4%, core capital to
risk-weighted assets ratio of at least 4% and total capital to risk-weighted
assets of 8%. The following table reflects the Company's compliance with
regulatory capital requirements at March 31, 1996:
Leverage capital ratio: 11.78%
Risk-based capital ratios:
Core capital 15.20%
Total capital 16.42%
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
Net interest income increased $92,047 or 13.7% over the same period in 1995.
Average interest bearing liabilities increased $7,465,921 or 18.8%, related
interest expense increased $112,905 or 26.2% over the same period in 1995.
Total average earning assets increased 19.0% resulting in increased interest
income of $204,952 or 18.7% The banks net interest margin for the first
quarter declined from 5.65% in 1995 to 5.34% in 1996. The prime rate
reductions in late December and early February had an immediate impact on
earning assets while deposit rates have been slower to react and some deposit
products have yet to adjust the full 50 basis points. The bank is located
in metro Atlanta, a highly competitive deposit and loan market. Management
reviews competitors rates on a weekly basis and sets rates according to
market competition as well as the banks current needs.
The provision for loan losses increased $6,000 or 33% over the same period in
1995. Management did not identify any specific problem loans during the
first quarter nor have any loans been charged off in 1996. However, in
connection with the proposed merger of Eastside Holding Corporation it is
necessary that we maintain the same loan loss reserve ratio as was present at
October 31, 1995 and with the growth experienced in the first quarter in the
loan portfolio an additional provision was necessary. After the merger it is
likely we will reduce the provision for the remainder of 1996, that is
assuming we do not see any deterioration in the portfolio.
Service charge and other miscellaneous income is down $13,472 or 20% from the
same period in 1995. While regular service charges are up slightly, analysis
charges and insufficient check charges are down significantly. Over
sixty-five percent of the reduction in analysis charges can be traced to one
customer who has maintained higher average balances in 1996 and thus avoided
paying analysis charges. The decline in insufficient charges is not related
to one or even several accounts but more an overall decline in insufficient
check writing. The anticipated consumer traffic from the branch should help
to increase the banks other income. Historically, the bank has attracted
more high dollar, low volume accounts creating little in the way of service
charge and/or other income.
Salaries and employee benefits have increased approximately 13% over the same
period in 1995. The major contributing factor being a 117% increase in the
bonus accrual. The accrual was increased based on the 1995 total bonus
expense. Salary expense has increased approximately 9% over the same period
in 1995.
Directors fees have increased 65% over the same period in 1995. Fees were
increased in 1996 based on a competitive market survey of other community
banks in the area and taking into account the banks performance and the
directors contributions to the success of the institution.
Other operating expenses have increased commensurate with the bank's growth
and the increased cost of supplies and services.
Pre-tax income for the period ending March 31, 1996 increased 16.8%, net
income increased 22.4%. The increase in earnings is attributable to the
Bank's continued growth and the increase in earning assets. Management does
expect the net interest margin to continue to narrow somewhat and additional
expenses related to a computer conversion, the opening of a new branch, and
the proposed merger will have an impact on 1996 earnings. The long term
effect of these actions is expected to benefit our customers, our staff, the
community and most importantly our shareholders.
-8-
<PAGE>
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the Company during the
quarter ended March 31, 1996.
There are no exhibits to this report.
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<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
WESTSIDE FINANCIAL CORPORATION
DATE: 05/10/96 BY: /s/ Edward C. Milligan, President
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Edward C. Milligan, President
DATE: 05/10/96 BY: /s/ Barbara J. Bond, Treasurer
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Barbara J. Bond, Treasurer
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL DATA EXHIBIT FOR PERIOD ENDING MARCH 31, 1996 AND IS
QUALIFIFED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,766,755
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 2,700,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 12,228,821
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 41,163,187
<ALLOWANCE> 588,505
<TOTAL-ASSETS> 60,880,541
<DEPOSITS> 53,086,352
<SHORT-TERM> 0
<LIABILITIES-OTHER> 349,921
<LONG-TERM> 0
0
0
<COMMON> 3,056,500
<OTHER-SE> 4,387,768
<TOTAL-LIABILITIES-AND-EQUITY> 60,880,541
<INTEREST-LOAN> 1,048,456
<INTEREST-INVEST> 193,423
<INTEREST-OTHER> 66,851
<INTEREST-TOTAL> 1,308,730
<INTEREST-DEPOSIT> 543,685
<INTEREST-EXPENSE> 543,685
<INTEREST-INCOME-NET> 765,045
<LOAN-LOSSES> 24,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 447,820
<INCOME-PRETAX> 346,868
<INCOME-PRE-EXTRAORDINARY> 346,868
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 229,012
<EPS-PRIMARY> .39
<EPS-DILUTED> 0
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
