<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 September 30, 1999
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 November 3, 1999, the issuer had 210,462 shares of common stock
issued and outstanding; see accompanying notes.
<PAGE>
WEST TOWN BANCORP, INC.
AND SUBSIDIARIES
----------------
<TABLE>
<CAPTION>
Part I. FINANCIAL INFORMATION
PAGE
----
<S> <C> <C>
Item 1. Financial Statements
Consolidated Statements of Financial Condition
September 30, 1999 (unaudited) and March 31, 1999 3
Consolidated Statements of Income, Three and
Six Months Ended September 30, 1999 and 1998 (unaudited) 4
Consolidated Statements of Stockholders' Equity,
Six Months Ended September 30, 1999 (unaudited) 5
Consolidated Statements of Cash Flows,
Six Months Ended September 30, 1999 and 1998 (unaudited) 6
Notes to Financial Statements 7-8
Item 2. Management's Discussion and Analysis or Plan of Operation 9-14
Part II. OTHER INFORMATION 15
Signatures 16
Index to Exhibits 17
Earnings Per Share Analysis (Exhibit 11) 18
</TABLE>
<PAGE>
WEST TOWN BANCORP, INC.
AND SUBSIDIARIES
----------------
Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
September 30, March 31,
------------- ---------
1999 1999
---- ----
Assets (unaudited)
- ------
<S> <C> <C>
Cash and amounts due from depository institutions $ 221,801 244,104
Interest-bearing deposits 9,859,964 7,895,043
----------- ----------
Total cash and cash equivalents 10,081,765 8,139,147
Mortgage-backed securities, held to maturity
(fair value: September 30, 1999 - $710,000;
March 31, 1999 - $954,000) 698,616 937,938
Loans receivable (net of allowance for
loan losses: September 30, 1999 - $55,171;
March 31, 1999 - $52,171) 18,989,664 20,109,900
Stock in Federal Home Loan Bank of Chicago 183,300 177,400
Other investments, available for sale, at fair value 267,500 270,000
Accrued interest receivable 147,459 152,450
Office properties and equipment - net 646,781 556,326
Prepaid expenses and other assets 529,989 640,703
----------- ----------
Total assets 31,545,074 30,983,864
=========== ==========
Liabilities and Stockholders' Equity
- ------------------------------------
Liabilities
- -----------
Deposits 26,969,710 26,429,517
Advance payments by borrowers for taxes and insurance 142,192 41,032
Other liabilities 264,002 266,891
----------- ----------
Total liabilities 27,375,904 26,737,440
----------- ----------
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
210,462 shares outstanding at September 30, 1999 and
222,603 shares outstanding at March 31, 1999 2,319 2,319
Additional paid-in capital 1,994,763 1,993,869
Retained earnings, substantially restricted 2,498,721 2,437,026
Accumulated other comprehensive income,
net of income taxes 43,232 44,832
Treasury stock, at cost (21,466 shares at
September 30, 1999 and 9,325 shares at March 31, 1999) (253,482) (107,206)
Common stock acquired by Employee Stock Ownership Plan (116,383) (124,416)
----------- ----------
Total stockholders' equity 4,169,170 4,246,424
----------- ----------
Total liabilities and stockholders' equity $31,545,074 30,983,864
=========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
-3-
<PAGE>
WEST TOWN BANCORP, INC.
AND SUBSIDIARIES
----------------
Consolidated Statements of Income
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
------------------ ----------------
1999 1998 1999 1998
---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Interest income:
Loans $353,467 388,865 727,307 755,674
Mortgage-backed securities 11,253 21,808 23,234 46,599
Investment securities - 3,545 2,750 8,793
Interest-bearing deposits 125,107 110,857 227,429 224,312
Dividends on FHLB stock 3,003 2,986 5,945 5,916
-------- ------- ------- ---------
Total interest income 492,830 528,061 986,665 1,041,294
-------- ------- ------- ---------
Interest expense:
Deposits 304,515 313,458 602,445 627,870
-------- ------- ------- ---------
Net interest income before
provision for loan losses 188,315 214,603 384,220 413,424
Provision for loan losses 1,500 1,500 3,000 3,000
-------- ------- ------- ---------
Net interest income after
provision for loan losses 186,815 213,103 381,220 410,424
-------- ------- ------- ---------
Non-interest income:
Loan fees and service charges 2,975 1,287 6,615 4,018
Rental income 2,430 2,430 4,860 4,860
Deposit related fees and other income 5,200 5,434 9,675 10,672
-------- ------- ------- ---------
Total non-interest income 10,605 9,151 21,150 19,550
-------- ------- ------- ---------
Non-interest expense:
Staffing costs 74,602 75,952 149,071 150,617
Advertising 2,868 2,769 5,527 5,217
Occupancy and equipment expense 36,418 20,346 69,728 43,156
Data processing 8,922 11,446 17,618 23,676
Federal deposit insurance premiums 3,814 3,840 7,552 7,749
Legal, audit and examination services 17,931 14,894 31,710 30,418
Other 12,560 10,619 28,264 21,248
-------- ------- ------- ---------
Total non-interest expense 157,115 139,866 309,470 282,081
-------- ------- ------- ---------
Income before income taxes 40,305 82,388 92,900 147,893
Provision for income taxes 13,575 31,152 31,205 53,842
-------- ------- ------- ---------
Net income $ 26,730 51,236 61,695 94,051
======== ======= ======= =========
Earnings per share - basic $ .13 .25 .30 .45
--- --- --- ---
Earnings per share - diluted $ .13 .24 .29 .44
--- --- --- ---
Dividends declared per common share $ - - - -
--- --- --- ---
</TABLE>
See accompanying notes to consolidated financial statements.
-4-
<PAGE>
WEST TOWN BANCORP, INC.
AND SUBSIDIARIES
----------------
Consolidated Statements of Changes in Stockholders' Equity
Six Months Ended September 30, 1999
----------------
(Unaudited)
<TABLE>
<CAPTION>
Accumulated Common
Additional Other Stock
Common Paid-In Retained Comprehensive Treasury Acquired
Stock Capital Earnings Income Stock by ESOP Total
------ ---------- -------- ------------- -------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1999 $2,319 1,993,869 2,437,026 44,832 (107,206) (124,416) 4,246,424
Comprehensive income:
Net income 61,695 61,695
Other comprehensive income,
net of tax:
Unrealized holding loss
during the period (1,600) (1,600)
--------- ------ --------
Total comprehensive income 61,695 (1,600) 60,095
--------- ------ --------
Purchase of treasury stock
(12,141 shares) (146,276) (146,276)
Contribution to fund ESOP loan 894 8,033 8,927
------ --------- --------- ------ -------- -------- ---------
Balance at September 30, 1999 $2,319 1,994,763 2,498,721 43,232 (253,482) (116,383) 4,169,170
====== ========= ========= ====== ======== ======== =========
</TABLE>
See accompanying notes to consolidated financial statements.
-5-
<PAGE>
WEST TOWN BANCORP, INC.
AND SUBSIDIARIES
----------------
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Six Months Ended
September 30,
---------------------------
1999 1998
---- ----
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 61,695 94,051
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation 18,431 13,027
Amortization of cost of stock benefit plans 8,927 8,300
Provision for loan losses 3,000 3,000
Decrease in deferred income (2,761) (6,018)
Change in current and deferred income tax (7,349) 25,544
(Increase) decrease in accrued interest receivable 4,991 (29,718)
Increase in accrued interest payable 44,359 6,084
Change in prepaid and accrued items, net 71,715 694,025
----------- ----------
Net cash provided by operating activities 203,008 808,295
----------- ----------
Cash flows from investing activities:
Proceeds from maturities of investment securities -- 500,000
Proceeds from repayments of mortgage-backed
securities 239,322 316,830
Purchase of Federal Home Loan Bank stock (5,900) --
Disbursements for loans originated or purchased (1,754,332) (4,879,898)
Loan repayments 2,874,329 3,456,265
Participation loans sold -- 491,195
Property and equipment expenditures (108,886) (20,685)
----------- ----------
Net cash provided by (for) investing activities 1,244,533 (136,293)
----------- ----------
Cash flows from financing activities:
Deposit account receipts 5,851,075 4,520,796
Deposit account withdrawals (5,869,491) (4,556,126)
Interest credited to deposit accounts 558,609 485,306
Increase in advance payments by borrowers
for taxes and insurance 101,160 95,978
Purchase of treasury stock (146,276) (24,000)
----------- ----------
Net cash provided by financing activities 495,077 521,954
----------- ----------
Increase in cash and cash equivalents 1,942,618 1,193,956
Cash and cash equivalents at beginning of period 8,139,147 7,177,578
----------- ----------
Cash and cash equivalents at end of period $10,081,765 8,371,534
=========== ==========
Cash paid during the period for:
Interest $ 558,086 621,786
Income taxes 36,754 24,869
=========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
-6-
<PAGE>
WEST TOWN BANCORP, INC.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note A - Basis of Presentation
---------------------
The accompanying unaudited consolidated financial statements have been
prepared in accordance with 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 and six month
periods ended September 30, 1999, 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 - Earnings Per Share
------------------
Earnings per share for the three and six month periods ended September
30, 1999 and 1998 was determined by dividing net income for the period
by the weighted average number of both basic and diluted shares of
common stock and common stock equivalents outstanding (see Exhibit 11
attached). Stock options are regarded as common stock equivalents and
are therefore considered in 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.
Note D - Industry Segments
-----------------
The Company operates principally in the banking industry through its
subsidiary bank. As such, substantially all of the Company's
revenues, net income, identifiable assets and capital expenditures are
related to banking operations.
-7-
<PAGE>
Notes to Financial Statements (continued)
- -----------------------------------------
Note E - Effect of New Accounting Standards
----------------------------------
In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities", ("SFAS No. 133") which is effective for fiscal years
beginning after June 15, 1999. The statement requires all derivatives
to be recorded on the balance sheet at fair value. It also establishes
"special accounting" for hedges of changes in the fair value of
assets, liabilities, or firm commitments (fair value hedges), hedges
of the variable cash flows of forecasted transactions (cash flow
hedges), and hedges of foreign currency exposures of net investments
in foreign operations. To the extent the hedge is considered highly
effective, both the change in the fair value of the derivative and the
change in the fair value of the hedged item are recognized (offset) in
earnings in the same period. Changes in fair value of derivatives that
do not meet the criteria of one of these three hedge categories are
included in income.
In September 1999, the FASB issued Statement of Financial Accounting
Standards No. 137 ("SFAS No. 137"), entitled "Accounting for
Derivative Instruments in Hedging Activities--Deferral of the
Effective Date of FASB Statement No. 133". SFAS No. 137 defers the
effective date of SFAS No. 133 from years beginning after June 15,
1999 to all fiscal quarters of all fiscal years beginning after June
15, 2000. Management does not believe that adoption of SFAS No. 133
will have a material impact on the Company's consolidated financial
condition or results of operations.
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.
-8-
<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 $561,000, or 1.81%, for the six month period ended September 30,
1999. This increase was primarily the result of an increase in cash and cash
equivalents held by West Town Savings Bank (the "Bank"), resulting from
repayments of mortgage-backed securities and loans receivable, and increased
deposits during the six month period ended September 30, 1999.
Net loans receivable decreased $1.1 million, or 5.57%, for the six months
ended September 30, 1999. During that period, the Bank originated or purchased
approximately $1.8 million in loans which were exceeded by repayments of $2.9
million.
The Bank experienced an increase in savings deposits for the six month
period of approximately $540,000, or 2.04%. It is management's belief that part
of the deposit activity for the six months ended September 30, 1999 can be
attributed to new deposit products.
Stockholders' equity decreased approximately $77,000, or 1.82%, for the six
month period ended September 30, 1999. This decrease was primarily the result
of the amortization of the cost of the Company's stock benefit plans of $9,000,
and net income for the six months of $62,000, being more than offset by the
purchase of treasury stock at a cost of $146,000. As of September 30, 1999, the
book value per common share outstanding was $19.81.
Analysis of Operations
- ----------------------
A net profit of $27,000 was recognized for the three months ended September
30, 1999 as compared to a net profit of $51,000 for the same period in 1998.
This $24,000 decrease in net income was due primarily to a decrease in net
interest income of $26,000, and an increase in non-interest expense of $17,000,
partially offset by a decrease in income taxes of $17,000. The Company's net
income for the six months ended September 30, 1999 was $62,000 as compared to a
net profit of $94,000 for the six months ended September 30, 1998. This $32,000
decrease in net income was due primarily to a $29,000 decrease in net interest
income and a $27,000 increase in non-interest expense, partially offset by a
$23,000 decrease in income taxes.
Interest income decreased by $35,000 and $55,000 for the three and six
month periods ended September 30, 1999, respectively, as compared to the three
and six month periods ended September 30, 1998. This was primarily a result of
a decrease in the average yield on interest-earnings assets, partially offset by
an increase in the average balance of interest-earning assets. The average yield
on average interest-earning assets decreased from 7.37% and 7.30% for the three
and six months ended September 30, 1998 to 6.62% and 6.65% for the three and six
months ended September 30, 1999. The average balances of interest-earning
assets increased from approximately $28.6 million to $29.8 million for the three
months ended September 30, 1998 and 1999, respectively, and from $28.5 million
to $29.7 million for the six months ended September 30, 1998 and 1999,
respectively.
-9-
<PAGE>
Analysis of Operations (continued)
- ----------------------------------
Interest expense decreased from $313,000 to $305,000 from the three months
ended September 30, 1998 compared to the same period in 1999. For the six
months ended September 30, 1998 interest expense was $628,000 as compared to
$602,000 for the same six months in 1999. These decreases were attributable to
decreases in the average rate paid on interest-bearing liabilities, partially
offset by increases in the average balances of interest-bearing liabilities.
The average rate on average interest-bearing liabilities decreased from 4.95%
and 4.96% for the three and six months ended September 30, 1998 to 4.55% and
4.53% for the three and six months ended September 30, 1999. The average
balances increased approximately $1.4 million and $1.3 million for the three and
six months ended September 30, 1999 as compared to the average balances at
September 30, 1998, respectively.
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 $1,500 were made for the
three month periods ended September 30, 1999 and 1998 respectively, and
provisions of $3,000 and $3,000 were made for the six month periods ended
September 30, 1999 and 1998 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 $1,000 for the three months ended
September 30, 1999 as compared to the same period in 1998. Non-interest income
increased by $2,000 for the six months ended September 30, 1999 as compared to
the same period in 1998. These increases were primarily attributable to
increases in loan related fee income.
Non-interest expense increased from $140,000 to $157,000 from the three
months ended September 30, 1998 to the three months ended September 30, 1999.
Non-interest expense increased from $282,000 to $309,000 from the six months
ended September 30, 1998 to the six months ended September 30, 1999. The
increase for the six month period was primarily the result of increases in
occupancy and equipment expenses of $27,000 as a result of expenditures for the
new branch office and other expenses of $7,000, partially offset by a decrease
in data processing expense of $6,000.
The provision for income taxes decreased $17,000 and $23,000 for the three
and six months ended September 30, 1999, respectively, as compared to the same
periods in 1998. These decreases were attributable to decreases in pre-tax
income in the 1999 periods as compared to the 1998 periods.
-10-
<PAGE>
Liquidity and Capital Resources
-----------------
At September 30, 1999, the Bank continued to comply with its liquidity
requirements, with an overall liquid asset ratio of 31.45% and a short-term
liquid asset ratio of 29.33%. 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 September 30, 1999, 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 September 30,
1999. Capital requirements, ratios, and balances are as follows:
<TABLE>
<CAPTION>
To Be Well-
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
------------------------------------------------------------------
Amount Ratio/1/ Amount Ratio/1/ Amount Ratio/1/
------------------------------------------------------------------
September 30, 1999
------------------
<S> <C> <C> <C> <C> <C> <C>
Risk-based $ 3,352,522 25.14% $ 1,066,975 8.00% $ 1,333,719 10.00%
Core 3,297,351 10.72 922,776 3.00 1,537,960 5.00
</TABLE>
- -----------------
1. 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.
-11-
<PAGE>
Non-Performing Assets
----------------
The following table sets forth the amounts and categories of non-performing
assets in the Company's portfolio. Loans are placed on non-accrual status when
principal and interest are 90 days or more past due, unless, in the judgment of
management, the loan is well collaterized and in the process of collection.
Loans are also reviewed monthly and any loan whose collectibility is doubtful is
placed on non-accrual status. Interest accrued and unpaid at the time a loan is
placed on non-accrual status is charged against interest income. Subsequent
payments are either applied to the outstanding principal balance or recorded as
interest income, depending on the assessment of the ultimate collectibility of
the loan. The following table sets forth the Company's non-performing assets as
of the dates indicated.
<TABLE>
<CAPTION>
September 30, March 31,
1999 1999
------------- ---------
<S> <C> <C>
Non-accruing loans:
One-to-four family.................... $ - $ -
Multi-family.......................... - -
Commercial real estate................ - -
Land and construction................. - -
------- -------
Total non-performing loans.......... - -
------- -------
Real estate owned..................... - -
------- -------
Total non-performing assets............ $ - $ -
======= =======
Total as a percentage of total assets.. - % - %
======= =======
</TABLE>
In addition to the non-performing assets set forth in the table above, as of
September 30, 1999, there were no loans with respect to which known information
about the possible credit problems of the borrowers or the cash flows of the
secured properties have caused management to have concerns as to the ability of
the borrowers to comply with present loan repayment terms and which may result
in the future inclusion of such items in the non-performing asset categories.
Management has considered the Company's non-performing and "of concern" assets
in establishing the allowance for loan losses.
-12-
<PAGE>
Year 2000 Readiness Disclosure
----------------
Notice is hereby given that the Year 2000 statement set forth below is being
designated a Year 2000 Readiness Disclosure in accordance with Section 7(b) of
the Year 2000 Information and Readiness Disclosure Act. For more than twenty-
one months, the Company has been engaged in the process of addressing a
potential problem that is facing all users of automated information systems,
including personal computers, that is generally referred to as the Year 2000
Issue. The problem is the result of computer systems processing transactions
based upon 2 digits representing the year of the transaction rather than 4 full
digits (e.g., 98 for 1998). These computer systems may not operate properly
when the last two digits become "00", as will occur on January 1, 2000. In some
cases, this could result in a system failure, miscalculations causing
disruptions of operations, temporary inability to process transactions, send
invoices or engage in similar normal business activities. The problem could
affect a wide variety of automated information systems such as main frame
computer applications, personal computers, communication systems, including
telephone systems, and other information systems utilized not only by the
Company, but also by its vendors and customers. The most significant of the
Company's automated information systems affected by the Year 2000 issue is the
data processing system used to process transactions and information for loan and
deposit customers. The Company currently purchases the services for this system
from a nationally recognized data processing vendor. Other programs and
applications used in the Company's operations that will be affected by the Year
2000 issue include building and security system equipment, ATM modems, loan
document processing systems, investment accounting programs, and computer
software and hardware. All software and hardware has been purchased from
outside vendors. The Company has not developed any in-house computer
applications or equipment. All data processing is done off-site. The Company
has maintenance agreements with vendors on the majority of its equipment and
systems.
The Company's Year 2000 plan process began in the summer of 1997. At that time,
a Year 2000 plan coordinator was appointed and assessment of mission critical
systems began. The Company upgraded much of its computer hardware and software
during 1999, in large part to meet the system requirements when it converted to
a new data processing system in February 1999. The Company believes that Year
2000 compliance had been achieved for substantially all mission critical
applications by the end of the current fiscal year. Further testing occurred
during the first, second and third quarters of 1999 and additional testing is
expected to occur during the fourth quarter of 1999, with the timing dictated by
external vendors. The Company's vendors have been providing updates regarding
their progress in assessment, renovation and testing on a regular basis, and the
Year 2000 Coordinator periodically presents updates regarding Year 2000 issues
to the Board of Directors.
The predominant risk associated with the Year 2000 issue for the Company rests
with the functionality of the data processing system. In order to offset the
inherent risk with its main data processing system, the Company is researching
sites and services offered by vendors which specialize in establishing
operations on an emergency basis, as well as preparing other contingency plans.
The Company has not identified any customers who present potential risk relative
to their compliance with Year 2000 within their own organizations. Loan officers
are aware of the Year 2000 issue, and the issue is being addressed with new
commercial customers. The Company has a large investment portfolio which carries
a potential liquidity risk should the companies handling the investments
experience a Year 2000 issue. These companies appear to be well advanced in
renovating and testing their systems. The Company outsources its item processing
operations to a nationally recognized data processing company. That Company
appears to be well advanced with year 2000 compliance efforts. Other vendors
also appear to be progressing in their Year 2000 efforts. The most difficult
risks for the Company to assess are the risks associated with the utilities
offered by gas, electric and telephone companies. Those are risk shared by
everyone and cannot be accurately quantified at this time
-13-
<PAGE>
As indicated above, the Company is researching "hot-site" options to establish
emergency operations if necessary because of Year 2000 failure. The Company has
generally identified critical requirements for minimum levels of outputs and
services and established recovery plans to implement those requirements. The
Company is considering increasing its liquidity levels during the last quarter
of 1999 in preparation for possible extreme customer reaction to the Year 2000
issue.
The Company has planned for the Year 2000 with its officers and staff. It does
not intend to use outside consultants. Because the Company relies predominantly
on outsourced vendors for its core applications, it does not expect significant
costs related to Year 2000 renovation. Expenses incurred to date which are
directly related to the Year 2000 issue total approximately $5,000. Based on
the Year 2000 plan as currently being executed and the best available
information, the Company does not anticipate that the cost to address the Year
2000 issues will have a material adverse impact on its financial condition,
results of operation or liquidity.
Impact of Inflation and Changing Prices
----------------
The consolidated financial statements and related data presented herein have
been prepared in accordance with generally accepted accounting principles which
require the measurement of financial position and operating results in terms of
historical dollars without considering changes in the relative purchasing power
of money over time due to inflation. The primary impact of inflation on the
operations of the Company is reflected in increased operating costs. Unlike most
industrial companies, virtually all of the assets and liabilities of a financial
institution are monetary in nature. As a result, interest rates, generally,
have a more significant impact on a financial institution's performance than
does inflation. Interest rates do not necessarily move in the same direction or
to the same extent as the prices of goods and services.
Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995
----------------
Management's Discussion and Analysis of Financial Condition and Results of
Operations that are not historical facts are forward-looking statements subject
to the safe harbor created by the Private Securities Litigation Reform Act of
1995. The Company cautions readers of this Form 10-QSB that a number of
important factors could cause the Company's actual results in 1999/2000 and
beyond to differ materially from those expressed in any such forward-looking
statements. These factors include, without limitation, the general economic and
business conditions affecting the Company's customers; changes in interest
rates; the adequacy of the Bank's allowance for loan losses; competition from,
among others, commercial banks, savings and loan associations, mutual funds,
money market funds, finance companies, credit unions, mortgage companies, and
the United States Government; limited partnership activities; federal and state
legislation, regulation and supervision of the Bank and its subsidiaries; the
risk of defaults on loans; and contractual, statutory and regulatory
restrictions on the Bank's ability to pay dividends to the Company.
-14-
<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
---------------------------------------------------
(a) The Annual Meeting of Stockholders (the "Meeting") of West Town
Bancorp, Inc. was held July 14, 1999 at 1:00 PM at the Company's
offices located at 4852 West 30th Street, Cicero, Illinois.
(b) Proxies for the meeting were solicited pursuant to Regulation 14
of the Securities and Exchange Act; there was no solicitation in
opposition and all nominees were elected.
(c) The following are the results of each matter voted upon at the
Meeting:
(i) The election of Directors:
<TABLE>
<CAPTION>
For Withheld
------- --------
<S> <C> <C>
James J. Kemp Jr. 198,310 5,000
</TABLE>
(ii) The ratification of the appointment of Cobitz, VandenBerg &
Fennessy as auditors for the Company for the fiscal year
ended March 31, 2000:
<TABLE>
<S> <C>
Votes For: 198,310
-------
Votes Against: 0
-------
Abstentions: 5,000
-------
</TABLE>
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
September 30, 1999.
-15-
<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: November 3, 1999
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)
-16-
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. PAGE
- ----------- ----
<S> <C>
11 Statement regarding Computation of Earnings Per Share 18
</TABLE>
-17-
<PAGE>
EXHIBIT 11
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
------------------ -----------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Income $ 26,730 51,236 61,695 94,051
======== ======= ======= =======
Weighted average shares outstanding 219,221 222,703 220,836 223,372
Reduction for common shares not yet
released by Employee Stock Ownership Plan 11,841 13,392 12,043 13,575
-------- ------- ------- -------
Total weighted average common shares
outstanding for basic computation 207,380 209,311 208,793 209,797
======== ======= ======= =======
Basic earnings per share $ .13 .25 .30 .45
======== ======= ======= =======
Total weighted average common shares
outstanding for basic computation 207,380 209,311 208,793 209,797
Common stock equivalents due to dilutive
effect of stock options 2,643 4,028 2,796 3,838
-------- ------- ------- -------
Total weighted average common shares and
equivalents outstanding
for diluted computation 210,023 213,339 211,589 213,635
======== ======= ======= =======
Diluted earnings per share $ .13 .24 .29 .44
======== ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 221,801
<INT-BEARING-DEPOSITS> 9,859,964
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 267,500
<INVESTMENTS-CARRYING> 698,616
<INVESTMENTS-MARKET> 710,000
<LOANS> 18,989,664
<ALLOWANCE> (55,171)
<TOTAL-ASSETS> 31,545,074
<DEPOSITS> 26,969,710
<SHORT-TERM> 0
<LIABILITIES-OTHER> 264,002
<LONG-TERM> 0
0
0
<COMMON> 2,319
<OTHER-SE> 4,166,851
<TOTAL-LIABILITIES-AND-EQUITY> 31,545,074
<INTEREST-LOAN> 727,307
<INTEREST-INVEST> 31,929
<INTEREST-OTHER> 227,429
<INTEREST-TOTAL> 986,665
<INTEREST-DEPOSIT> 602,445
<INTEREST-EXPENSE> 602,445
<INTEREST-INCOME-NET> 384,220
<LOAN-LOSSES> 3,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 309,470
<INCOME-PRETAX> 92,900
<INCOME-PRE-EXTRAORDINARY> 61,695
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 61,695
<EPS-BASIC> .30
<EPS-DILUTED> .29
<YIELD-ACTUAL> 2.59
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 52,171
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 55,171
<ALLOWANCE-DOMESTIC> 55,171
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
