<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------- ----------
WEST TOWN BANCORP, INC.
-----------------------
(Exact name of small business issuer as specified in its charter)
United States 36-3785272
------------- ----------
(State or other jurisdiction I.R.S. Employer
of incorporation or Identification
organization) Number
4852 WEST 30TH STREET, CICERO, ILLINOIS 60804
- --------------------------------------- ----------
(Address of Principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (708) 652-2000
---------------
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 issuer was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
--------- ---------
Transitional Small Business Disclosure Format
Yes No X
--------- ---------
As of August 1, 1997, the issuer had 229,303 shares of Common stock issued
and outstanding; see accompanying notes.
<PAGE>
WEST TOWN BANCORP, INC
Part I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Item 1. Financial Statements
Consolidated Statements of Financial Condition
June 30, 1997 (unaudited) and
March 31, 1997 3
Consolidated Statements of Income, Three
Months Ended June 30, 1997 and 1996
(unaudited) 4
Consolidated Statements of Cash Flows, Three
Months Ended June 30, 1997 and 1996
(unaudited) 5
Notes to Financial Statements 6-7
Item 2. Management's Discussion and Analysis or Plan of
Operation 8-10
Part II. OTHER INFORMATION 11
Signatures 12
Index to Exhibits 13
Earnings per Share Analysis (Exhibit 11) 14
</TABLE>
<PAGE>
WEST TOWN BANCORP, INC.
AND SUBSIDIARIES
----------------
Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
June 30, March 31,
------------ ----------
1997 1997
------------ ----------
Assets (unaudited)
- ------
<S> <C> <C>
Cash and amounts due from
depository institutions $ 747,790 718,157
Interest-bearing deposits 5,499,396 6,525,626
----------- ----------
Total cash and cash equivalents 6,247,186 7,243,783
U.S. Government and agency obligations
(fair value: June 30, 1997 - $690,000;
March 31, 1997 - $1,082,000) 699,958 1,100,315
Mortgage-backed securities
(fair value: June 30, 1997 - $2,425,000;
March 31, 1997 - $2,465,000) 2,426,752 2,494,292
Loans receivable (net of allowance for
loan losses: June 30, 1997 - $41,671;
March 31, 1997 - $40,171) 17,329,308 15,552,545
Stock in Federal Home Loan Bank of Chicago 177,400 121,000
Accrued interest receivable 130,821 110,380
Office properties and equipment - net 199,792 199,529
Prepaid expenses and other assets 416,629 176,939
----------- ----------
Total assets 27,627,846 26,998,783
=========== ==========
</TABLE>
Liabilities and Stockholders' Equity
- ------------------------------------
<TABLE>
<CAPTION>
Liabilities
- -----------
<S> <C> <C>
Deposits 23,362,119 22,816,474
Advance payments by borrowers for taxes
and insurance 99,401 41,914
Other liabilities 181,136 176,834
----------- ----------
Total liabilities 23,642,656 23,035,222
----------- ----------
Stockholders' Equity
- --------------------
Preferred stock, $.01 par value; authorized
100,000 shares; none outstanding - -
Common stock, $.01 par value; authorized
400,000 shares; 231,928 shares issued and
229,303 shares outstanding at June 30, 1997 and
231,928 shares outstanding at March 31, 1997 2,319 2,319
Additional paid-in capital 1,986,077 1,986,077
Retained earnings, substantially restricted 2,175,746 2,137,485
Treasury stock, at cost (2,625 shares at June 30, 1997) (26,906) -
Common stock acquired by Employee Stock Ownership Plan (149,717) (153,001)
Common stock awarded by Management Recognition Plan (2,329) (9,319)
----------- ----------
Total stockholders' equity 3,985,190 3,963,561
----------- ----------
</TABLE>
Total liabilities and stockholders' equity $27,627,846 26,998,783
=========== ==========
See accompanying notes to consolidated financial statements.
-3-
<PAGE>
WEST TOWN BANCORP, INC.
AND SUBSIDIARIES
----------------
Consolidated Statements of Income
<TABLE>
<CAPTION>
Three Months Ended
June 30,
---------------------
1997 1996
--------- -------
(unaudited)
<S> <C> <C>
Interest income:
Loans $310,350 255,754
Mortgage-backed securities 38,617 45,210
Investment securities 14,609 14,908
Interest-bearing deposits 86,516 98,132
Dividends on FHLB stock 2,985 2,036
-------- -------
Total interest income 453,077 416,040
-------- -------
Interest expense:
Deposits 265,260 224,065
-------- -------
Net interest income before provision
for loan losses 187,817 191,975
Provision for loan losses 1,500 3,651
-------- -------
Net interest income after provision
for loan losses 186,317 188,324
-------- -------
Non-interest income:
Loan fees and service charges 833 1,295
Rental income 2,750 2,310
Deposit related fees and other income 3,638 3,149
-------- -------
Total non-interest income 7,221 6,754
-------- -------
Non-interest expense:
Staffing costs 78,866 67,572
Advertising 2,645 4,097
Occupancy and equipment expenses 17,790 20,913
Data processing 8,372 8,367
Federal deposit insurance premiums 3,646 11,063
Legal, audit, and examination services 11,432 8,075
Other 11,766 11,833
-------- -------
Total non-interest expense 134,517 131,920
-------- -------
Income before income taxes 59,021 63,158
Provision for income taxes 20,760 21,700
-------- -------
Net income $ 38,261 41,458
======== =======
Earnings per share - primary $ .18 .19
-------- -------
Earnings per share - fully diluted $ .18 .19
-------- -------
Dividends declared per common share $ - -
-------- -------
</TABLE>
See accompanying notes to consolidated financial statements.
-4-
<PAGE>
WEST TOWN BANCORP, INC.
AND SUBSIDIARIES
----------------
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Three Months Ended
June 30,
----------------------
1997 1996
---- ----
(unaudited)
Cash flows from operating activities:
<S> <C> <C>
Net income $ 38,261 41,458
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation 5,922 5,946
Amortization of cost of stock benefit plans 10,274 9,018
Amortization of investment premiums and discounts 357 357
Provision for loan losses 1,500 3,651
Increase in deferred income 3,124 19,581
Decrease in current and deferred income tax 20,192 10,514
Increase in accrued interest receivable (20,441) (10,265)
Increase in accrued interest payable 14,453 24,386
Change in prepaid and accrued items, net (270,033) 121,637
----------- ----------
Net cash provided by (for) operating activities (196,391) 226,283
----------- ----------
Cash flows from investing activities:
Proceeds from maturities of investment securities 400,000 -
Proceeds from repayments of mortgage-backed
securities 67,540 155,863
Purchase of Federal Home Loan Bank stock (56,400) -
Disbursements for loans originated or purchased (2,873,693) (589,790)
Loan repayments 1,092,306 479,779
Property and equipment expenditures (6,185) (5,575)
----------- ----------
Net cash provided by (for) investing activities (1,376,432) 40,277
----------- ----------
Cash flows from financing activities:
Deposit account receipts 2,662,612 2,304,766
Deposit account withdrawals (2,274,242) (2,472,210)
Interest credited to deposit accounts 157,275 137,444
Increase in advance payments by borrowers
for taxes and insurance 57,487 61,875
Purchase of treasury stock (26,906) -
----------- ----------
Net cash provided by financing activities 576,226 31,875
----------- -----------
Increase (decrease) in cash and cash equivalents (996,597) 298,435
Cash and cash equivalents at beginning of period 7,243,783 7,313,893
----------- -----------
Cash and cash equivalents at end of period $ 6,247,186 7,612,328
=========== ===========
Cash paid during the period for:
Interest $ 250,807 199,679
Income taxes 568 11,186
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
-5-
<PAGE>
WEST TOWN BANCORP, INC.
AND SUBSIDIARIES
Notes to Financial Statements
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with instructions to Form 10-QSB and,
therefore, do not include information or footnotes necessary for fair
presentation of financial condition, results of operations and changes
in financial position in conformity with generally accepted accounting
principles. However, in the opinion of management, all adjustments
(which are normal and recurring in nature) necessary for a fair
presentation have been included. The preparation of financial
statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates. The results of operations for the three month period ended
June 30, 1997, are not necessarily indicative of the results which may
be expected for the entire year.
Note B - Principles of Consolidation
The accompanying unaudited consolidated financial statements include
the accounts of West Town Bancorp, Inc. (the "Company") and its wholly
owned subsidiary West Town Savings Bank (the "Bank") and the Bank's
wholly owned subsidiary West Town Insurance Agency, Inc. All
significant intercompany accounts and transactions have been
eliminated in consolidation.
Note C - Plan of Conversion
In April 1995, the Bank's Board of Directors approved a Plan of
Conversion, providing for the Bank's conversion from a state chartered
mutual savings bank to a state chartered stock savings bank with the
concurrent formation of a holding company. The Company issued 221,940
shares of $.01 par value common stock at $10.00 per share, for an
aggregate purchase price of $2,219,400. The Conversion and sale of
221,940 shares of common stock of the Company was completed on March
1, 1995. Net proceeds to the Company, after conversion expenses,
totaled approximately $1,889,000.
Note D - Earnings Per Share
Earnings per share for the periods ended June 30, 1997 and 1996 was
determined by dividing net income for the period by the weighted
average number of both primary and fully diluted shares of common
stock and common stock equivalents outstanding. Stock options are
regarded as common stock equivalents and are therefore considered in
both primary and fully diluted earnings per share calculations.
Common stock equivalents are computed using the treasury stock method.
ESOP shares not committed to be released to participants are not
considered outstanding for purposes of computing earnings per share
amounts.
-6-
<PAGE>
Notes to Financial Statements (continued)
Note E - Effect of New Accounting Standards
Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities. In December 1996, the FASB issued
Statement of Financial Accounting Standards No. 127 ("SFAS No. 127"),
"Deferral of the Effective Date of Certain Provisions of FASB
Statement No. 125". The statement delays for one year the
implementation of SFAS No. 125, as it relates to (1) secured
borrowings and collateral, and (2) for the transfers of financial
assets that are part of repurchase agreements, dollar-rolls,
securities lending and similar transactions. The Company has adopted
portions of SFAS No. 125 (those not deferred by SFAS No. 127)
effective January 1, 1997. Adoption of these portions did not have a
significant effect on the Company's consolidated financial condition
or results of operations. Based on its review of SFAS No. 125,
management does not believe that adoption of the portions of SFAS No.
125 which have been deferred by SFAS No. 127 will have a material
effect on the Company.
Accounting for Earnings per Share. In February 1997, the FASB issued
Statement of Financial Accounting Standards No. 128 ("SFAS No. 128"),
"Earnings Per Share". This statement is intended to simplify the
computation of earnings per share ("EPS") by replacing the
presentation of primary EPS with a presentation of basic EPS. Basic
EPS does not include potential dilution and is computed by dividing
income available to common stockholders by the average number of
common shares outstanding. Diluted EPS reflects the potential
dilution of securities that could share in the earnings of a company,
similar to the fully diluted EPS currently used. The statement
requires dual presentation of basic and diluted EPS by companies with
complex capital structures. SFAS 128 is effective for financial
statements issued for periods ending after December 15, 1997, and will
require restatement of all prior-period EPS data presented. The
Company does not anticipate that this statement will have a material
impact on its diluted earnings per share.
Disclosure of Information about Capital Structure. In February 1997,
the FASB issued Statement of Financial Accounting Standards No. 129,
"Disclosure of Information about Capital Structure" ("SFAS No. 129").
This statement establishes standards for disclosing information about
an entity's capital structure. It supersedes specific disclosure
requirements of APB Opinions No. 10, "Omnibus Opinion-1966," and No.
15, "Earnings Per Share," and SFAS No. 47, "Disclosure of Long-Term
Obligations," and consolidates them in this statement for ease of
retrieval and for greater visibility to nonpublic entities. This
statement is effective for financial statements for periods ending
after December 15, 1997. It contains no changes in disclosure
requirements for entities that were previously subject to the
requirements of Opinions No. 10 and No. 15 and SFAS No. 47 and,
therefore, is not expected to have a significant impact on the
consolidated financial condition or results of operations of the
Company.
The foregoing does not constitute a comprehensive summary of all
material changes or developments affecting the manner in which the
Company keeps its books and records and performs its financial
accounting responsibilities. It is intended only as a summary of some
of the recent pronouncements made by the FASB which are of particular
interest to financial institutions.
-7-
<PAGE>
WEST TOWN BANCORP, INC.
AND SUBSIDIARIES
Management's Discussions and Analysis
of Financial Condition and Results of Operations
Financial Condition
The assets of West Town Bancorp, Inc. (the "Company") increased
approximately $629,000, or 2.33%, for the three month period ended June 30,
1997. This increase was primarily the result of an increase in mortgage loans
receivable held by West Town Savings Bank (the "Bank"), which was primarily
funded by excess cash liquidity resulting from maturities of investment
securities and mortgage-backed securities and increased deposits during the
three month period ended June 30, 1997.
Net loans receivable increased $1.8 million, or 11.43%, for the three
months ended June 30, 1997. During that period, the Bank originated or purchased
approximately $1.7 million in loans which exceeded repayments of $1.1 million
during the same period.
The Bank experienced an increase in savings deposits for the three month
period of approximately $546,000, or 2.39%. It is management's belief that part
of the deposit activity for the three months ended June 30, 1997 can be
attributed to new deposit products.
Stockholders' equity increased approximately $22,000, or .55%, for the
three month period ended June 30, 1997. This increase was primarily the result
of the amortization of the cost of the Company's stock benefit plans of $10,000,
and net income for the three months of $38,000, partially offset by the purchase
of treasury stock at a cost of $27,000. As of June 30, 1997, the book value per
common share outstanding was $17.38.
Analysis of Operations
A net profit of $38,000 was recognized for the three months ended June 30,
1997 as compared to net income of $41,000 for the same period in 1996. This
$3,000 decrease in net income was due primarily to a decrease in net interest
income of $4,000, and an increase in non-interest expense of $3,000, partially
offset by a $2,000 decrease in the provision for loan losses, and a decrease in
income taxes of $1,000.
Interest income increased by $37,000 for the three months ended June 30,
1997, as compared to the three months ended June 30, 1996. This was the result
of an increase in the average balance of interest-earning assets as well as an
increase in the average yield on average interest-earning assets. The average
balance of those assets increased from approximately $24.1 million to $25.8
million for the three months ended June 30, 1996 and 1997, respectively. The
average yield on average interest-earning assets increased from 6.92% for the
three months ended June 30, 1996 to 7.03% for the three months ended June 30,
1997.
Interest expense increased from $224,000 to $265,000 for the three months
ended June 30, 1996 compared to the same period in 1997. This increase was
attributable to an increase in the average balance of interest-bearing
liabilities and in the average yield on those liabilities. The average balance
increased approximately $1.7 million for the three months ended June 30, 1997 as
compared to the average balance at June 30, 1996. The average yield on average
interest-bearing liabilities increased from 4.23% for the three months ended
June 30, 1996 to 4.63% for the three months ended June 30, 1997.
-8-
<PAGE>
Analysis of Operations (continued)
The Bank calculates any allowance for loan losses based upon its ongoing
evaluation of pertinent factors underlying the types and quality of its loans,
including the risk inherent in its loan portfolio, and other factors such as the
current regulatory and economic environment. Based upon this evaluation, loan
loss provisions are recorded. Provisions of $1,500 and $3,651 were made for the
three month periods ended June 30, 1997 and 1996 respectively. Management
believes that additions to its provision for loan losses have been appropriate,
given the risks inherent in its loan portfolio, and the current regulatory and
economic environment. Although the Bank believes its allowance for loan losses
is at a level which it considers to be adequate to provide for potential losses,
there can be no assurance that such losses will not exceed the estimated
amounts.
Non-interest income increased by $500 for the three months ended June 30,
1997 as compared to the same period in 1996. This increase was primarily
attributable to an increase in rental income, partially offset by a decline in
loan related fee income.
Non-interest expense increased to $135,000 from $132,000 for the three
months ended June 30, 1997 from the three months ended June 30, 1996. The
increase was attributable to an increase in compensation and related expenses of
$11,000 and an increase in professional fees of $3,000, partially offset by
decreases in occupancy and equipment expenses of $3,000, federal deposit
insurance premiums of $7,000, and advertising of $1,000.
The provision for income taxes decreased $1,000 for the three months ended
June 30, 1997 as compared to the same period in 1996. This decrease is the
direct result of the decrease in pre-tax income between the comparable periods.
-9-
<PAGE>
Liquidity and Capital Resources
- -------------------------------
At June 30, 1997, the Bank continued to comply with its liquidity
requirements, with an overall liquid asset ratio of 23.53% and a short-term
liquid asset ratio of 22.73%. Management's objectives and strategies for the
Bank have consistently maintained liquidity levels in excess of regulatory
requirements. It is management's intent to continue its efforts to deploy excess
liquidity into mortgage loans and mortgage-backed securities; however, the
success of lending efforts is dependent upon the availability of favorable loan
opportunities and the competition therefor. At June 30, 1997, the Bank had no
outstanding commitments to fund loans, and no commitments to purchase mortgage-
backed securities or other investment securities.
The Bank was in compliance with regulatory capital requirements at June 30,
1997. Capital requirements, ratios, and balances are as follows:
<TABLE>
<CAPTION>
Percent of
Amount Assets (2) Requirement Excess
------ ---------- ----------- -------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Regulatory Capital
Ratios at
June 30, 1997: (1)
Core....................... $2,968 11.09% $803 $2,165
Risk-based................. 3,009 26.23 918 2,091
- -----------------
</TABLE>
(1) Current capital requirements as of June 30, 1997 consist of a core
capital ratio of 3.00% and a risk-based capital ratio of 8.00%.
(2) Core capital levels are shown as a percentage of total adjusted
assets; risk-based capital levels are shown as a percentage of risk-
weighted assets.
-10-
<PAGE>
PART II - OTHER INFORMATION
WEST TOWN BANCORP INC.
AND SUBSIDIARIES
Item 1. LEGAL PROCEEDINGS
From time to time, the Company and Bank are parties to legal
proceedings in the ordinary course of business, wherein they enforce
their security interest. The Company and Bank are not engaged in any
legal proceedings of a material nature at the present time.
Item 2. CHANGES IN SECURITIES
Not applicable
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
Item 5. OTHER INFORMATION
Not applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Computation of earnings per share (Exhibit 11 filed herewith)
(b) No reports on Form 8-K were filed during the quarter ended June
30, 1997.
-11-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
WEST TOWN BANCORP, INC.
-----------------------
Registrant
DATE: August 1, 1997
BY: /s/ Dennis B. Kosobucki
------------------------------------------
Dennis B. Kosobucki
Chairman of the Board,
President and Chief Executive Officer
(Duly Authorized Representative and
Principal Executive Officer)
BY: /s/ Jeffrey P. Kosobucki
------------------------------------------
Jeffrey P. Kosobucki
Vice President and Chief Financial Officer
(Principal Financial Officer)
-12-
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Page No.
- ----------- --------
11 Statement regarding Computation of Earnings Per Share
27 Financial data schedule
-13-
<PAGE>
EXHIBIT 11
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Quarter Ended
June 30, 1997
-------------
<S> <C>
Net Income $ 38,261
========
Weighted average shares outstanding 231,041
Reduction for common shares not yet released by
Employee Stock Ownership Plan 15,136
Common stock equivalents due to dilutive
effect of stock options *
--------
Total weighted average common shares and
equivalents outstanding for primary computation 215,905
========
Primary earnings per share $ .18
========
Total weighted average common shares and
equivalents outstanding for primary computation 215,905
Additional dilutive shares using the end
of period market value versus the average
market value when applying the treasury
stock method **
--------
Total weighted average common shares and
equivalents outstanding for fully diluted
computation 215,905
========
Fully diluted earnings per share $ .18
========
</TABLE>
* Note: The fair value of the stock at June 30, 1997 was $10.00, the same as
the stock option exercise price; therefore no common stock
equivalents are computed.
** Note: If average share price is greater than ending price, use average
price for both primary and fully diluted calculation. This
adjustment does not apply because the average price and the ending
price at June 30, 1997 were the same as the stock option exercise
price of $10.00 per share.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 747,790
<INT-BEARING-DEPOSITS> 5,499,396
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 3,126,710
<INVESTMENTS-MARKET> 3,115,000
<LOANS> 17,329,308
<ALLOWANCE> (41,671)
<TOTAL-ASSETS> 27,627,846
<DEPOSITS> 23,362,119
<SHORT-TERM> 0
<LIABILITIES-OTHER> 181,136
<LONG-TERM> 0
<COMMON> 2,319
0
0
<OTHER-SE> 3,982,871
<TOTAL-LIABILITIES-AND-EQUITY> 27,627,846
<INTEREST-LOAN> 310,350
<INTEREST-INVEST> 56,211
<INTEREST-OTHER> 86,516
<INTEREST-TOTAL> 453,077
<INTEREST-DEPOSIT> 265,260
<INTEREST-EXPENSE> 265,260
<INTEREST-INCOME-NET> 187,817
<LOAN-LOSSES> 1,500
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 134,517
<INCOME-PRETAX> 59,021
<INCOME-PRE-EXTRAORDINARY> 38,261
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,261
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
<YIELD-ACTUAL> 2.91
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 40,171
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 41,671
<ALLOWANCE-DOMESTIC> 41,671
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
