-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JmpozFcFpywmTwcKTt7i+MmOtAkJm0gaN2lzS6NJoiT0PsrWRV49L00vyp2TKMtl DxakQzj1wWRLLmkTynfM/A== /in/edgar/work/0000914317-00-000656/0000914317-00-000656.txt : 20000930 0000914317-00-000656.hdr.sgml : 20000930 ACCESSION NUMBER: 0000914317-00-000656 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000928 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WYMAN PARK BANCORPORATION INC CENTRAL INDEX KEY: 0001046354 STANDARD INDUSTRIAL CLASSIFICATION: [6035 ] IRS NUMBER: 522068893 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10KSB SEC ACT: SEC FILE NUMBER: 000-23345 FILM NUMBER: 730265 BUSINESS ADDRESS: STREET 1: 11 WEST RIDGELY RD CITY: LUTHERVILLE STATE: MD ZIP: 21094 BUSINESS PHONE: 4102526450 MAIL ADDRESS: STREET 1: 11 WEST RIDGELY RD CITY: LUTHERVILLE STATE: MD ZIP: 21094 10KSB 1 0001.txt FORM 10KSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2000 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from __________________ to ___________________ Commission file number 0-23345 WYMAN PARK BANCORPORATION, INC. - -------------------------------------------------------------------------------- (Name of small business issuer in its charter) Delaware 52-2068893 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 11 West Ridgely Road, Lutherville, Maryland 21093 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (410) 252-6450 -------------- Securities Registered Pursuant to Section 12(b) of the Act: None ---- Securities Registered Pursuant to Section 12(g) of the Act: Common Stock, par value $0.01 per share --------------------------------------- (Title of class) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 _. Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained herein, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X] State the issuer's revenues for its most recent fiscal year: $4,890,000. The aggregate market value of the voting stock held by non-affiliates of the registrant, computed by reference to the average of the bid and ask price of such stock as of June 30, 2000, was approximately $4.0 million. (The exclusion from such amount of the market value of the shares owned by any person shall not be deemed an admission by the registrant that such person is an affiliate of the registrant.) As of September 18, 2000, there were 877,726 shares issued and outstanding of the registrant's Common Stock. DOCUMENTS INCORPORATED BY REFERENCE 1. Portions of Annual Report to Stockholders for the fiscal year ended June 30, 2000 (Part II) 2. Portions of Proxy Statement for 2000 Annual Meeting of Stockholders (Part III) PART I Item 1. Description of Business Forward-Looking Statements When used in this filing and in future filings by the Wyman Park Bancorporation (the "Company") with the Securities and Exchange Commission, in the Company's press releases or other public or shareholder communications, or in oral statements, the words or phrases "would be," "will allow," "intends to," "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 risks and uncertainties, including but not limited to 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, all or some of which 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, and advises readers that various factors, including regional and national economic conditions, substantial changes in levels of market interest rates, credit and other risks of lending and investment activities and competitive and regulatory factors, could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from those anticipated or projected. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements. General The Company. Wyman Park Bancorporation, Inc. (the "Company") is a savings and loan holding company which became the sole stockholder of Wyman Park Federal Savings & Loan Association (the "Association" or "Wyman Park") in connection with the Association's conversion from the mutual to the stock form on January 5, 1998. All references to the Company prior to January 5, 1998, except where otherwise indicated, are to the Association. At June 30, 2000, the Company had assets of $68.8 million, deposits of $55.3 million and stockholders' equity of $8.6 million. The principal executive offices of the Company are located at 11 West Ridgely Road, Lutherville, Maryland 21093, and its telephone number is (410) 252-6450. 1 The activities of the Company itself have been limited to investment in the stock of the Association, interest-bearing deposits at financial institutions, short-term borrowings and a note receivable from the Association's Employee Stock Ownership Plan. Unless otherwise indicated, all activities discussed below are of the Association. The Association. The Association is a federally-chartered savings association with its principal executive offices in Lutherville, Maryland. Its deposits are insured up to applicable limits by the Federal Deposit Insurance Corporation (the "FDIC"). The Association is primarily engaged in the business of attracting savings deposits from the general public and investing such funds in permanent mortgage loans secured by one- to four-family residential real estate located primarily in central Baltimore county and northern Baltimore City, Maryland. Through its branch office located in Glen Burnie, a suburb to the south of Baltimore, the Association also services Anne Arundel County, Maryland. In addition to permanent mortgage loans, the Association also originates, to a lesser extent, loans for the construction of one- to four-family real estate, commercial loans secured by multi-family real estate (over four units) and nonresidential real estate, and consumer loans, including home equity lines of credit, home improvement loans, and loans secured by savings deposits. The Association invests in U.S. government obligations, interest-bearing deposits in other financial institutions, mortgage-backed securities, and other investments permitted by applicable law. Lending Activities Market Area. The Company's office is located at 11 West Ridgely Road, Lutherville, Maryland. Through this office and a branch location, the Company primarily serves central Baltimore County and northern Baltimore City, Maryland, as well as Glen Burnie, a suburb south of Baltimore and Anne Arundel County, Maryland. General. The principal lending activity of the Company is originating first mortgage loans secured by owner-occupied one- to four-family residential properties located in its primary market areas. In addition, in order to increase the yield and the interest rate sensitivity of its portfolio and in order to provide more comprehensive financial services to families and community businesses in the Company's primary market area, the Company also originates commercial real estate, multi-family, consumer (secured and unsecured), land, and second mortgage loans. The Company may in the future adjust or discontinue any product offerings to respond to competitive or economic factors. During fiscal year 2000, the Company implemented its commercial non-real estate lending operations to provide business loans to small businesses in the local community. The Company believes that this additional lending activity will assist the Company in increasing the yield on its total loan portfolio. 2 Loan Portfolio Composition. The following information concerning the composition of the Company's loan portfolios in dollar amounts as of the dates indicated. June 30, ------------------------------- 2000 1999 ------------------------------- Amount Amount ------ ------ (Dollars in Thousands) Real Estate Loans: - ----------------- One- to four-family........................... $53,384 $47,324 Multi-family ................................. 314 508 Commercial ................................... 7,709 6,395 Construction or development .................. 250 621 -------- ------- Total real estate loans................... 61,657 54,848 Commercial Non-Real Estate Loans .............. 968 --- Other Loans: - ----------- Consumer Loans: Deposit account loans....................... 170 151 Home equity................................. 3,010 2,850 Home improvement............................ 11 13 Overdraft lines of credit 12 8 -------- ------- Total consumer loans..................... 3,203 3,022 -------- ------- Total loans, gross....................... 65,828 57,870 -------- ------- Less: - ---- Loans in process.............................. (112) (528) Deferred fees and discounts................... (207) (219) Allowance for losses.......................... (285) (283) -------- ------- Total loans receivable, net.............. $65,224 $56,840 ======== ======= Loan Maturities. The following table reflects at June 30, 2000 the dollar amount of loans maturing or subject to rate adjustment based on their contractual terms to maturity. Loans with fixed rates are reflected based upon the contractual repayment schedule while loans with variable interest rates are reflected based upon the contractual repayment schedule up to the contractual rate adjustment date. Demand loans, loans having no stated schedule of repayments and loans having no stated maturity are reported as due within one year or less.
Due in One Due After One Year Due After Year or Less through Five Years Five Years Total ------------ ------------------ ---------- ----- (In thousands) One-to-four family..................... $ 9,377 $13,720 $30,287 $53,384 Multi-family and Commercial............ 416 1,819 5,788 8,023 Commercial Non-Real Estate 467 261 240 968 Consumer loans......................... 3,106 97 3,203 Construction or development............ 250 250 -------- ------- ------- ------- Total $13,616 $15,897 $36,315 $65,828 ======= ======= ======= =======
3 Under federal law, the aggregate amount of loans that the Company is permitted to make to any one borrower is generally limited to 15% of unimpaired capital and surplus (25% if the security for such loan has a "readily ascertainable" value or 30% for certain residential development loans). At June 30, 2000, based on the above, the Company's regulatory loan-to-one borrower limit was approximately $1.1 million. On the same date, the Company had no borrowers with outstanding balances in excess of this amount. As of June 30, 2000, the largest dollar amount of indebtedness to one borrower or group of related borrowers was a $996,000 loan secured by condominiums. The next two largest loans had outstanding balances of $969,000 and $641,000, respectively, and were secured by commercial office buildings and a strip shopping center. Such loans are performing in accordance with their terms. One- to Four-Family Residential Real Estate Lending The principal activity of the Company's lending program involves the origination of loans secured by first mortgages on owner-occupied one- to four-family residences. At June 30, 2000, $53.4 million, or 81.1% of the Company's gross loan portfolio consisted of such loans. Substantially all of the residential loans originated by the Company are secured by properties located in the Company's market area. Although the Company has generally sold its fixed-rate loan production since 1989, historically, the Company originated for retention in its own portfolio 30-year fixed-rate loans secured by one- to four-family residential real estate. The Company also originates adjustable rate mortgage loans ("ARMs"). The Company has from time to time sold some of its ARM production, which conforms to standards promulgated by Freddie Mac (so-called "conforming loans") and also originates fixed-rate residential loans in amounts and at rates and terms which are monitored for compliance with the Company's asset/liability management policy. Currently, the Company originates both conforming and jumbo construction and jumbo fixed-rate permanent loans with maturities of up to 30 years. Jumbo loans are loans with initial balances in excess of the maximum amount permitted for conforming loans. The Company's ARM and balloon loans are offered at rates, terms and points determined in accordance with market and competitive factors. The Company's current one- to four-family residential ARMs are fully amortizing loans with contractual maturities of up to 30 years. Balloon loans also have terms of up to 30 years. Though from time to time "teaser" rates are offered, applicants are qualified pursuant to Freddie Mac guidelines, which permits qualifications at less than the fully indexed rate, and no ARMs allow for negative amortization. The interest rates on the ARMs originated by the Company are generally subject to adjustment at one-, three- and five-year intervals based on a margin over the Treasury Securities Constant Maturity Index. Decreases or increases in the interest rate of the Company's ARMs are generally limited to 6% above the initial interest rate over the life of the loan, and up to a 2% per adjustment period per year or per adjustment period. The Company's ARMs may be convertible into fixed-rate loans, depending on the program selected, and do not contain prepayment penalties. Loans are not assumable. At June 30, 2000, the total balance of one- to four-family ARMs was $14.0 million, or 21.3% of the Company's gross loan portfolio. 4 As a service to its older customers, the Company originates and sells reverse mortgages, allowing the homeowner to utilize equity values that have built up in the underlying property. The Company originates residential mortgage loans with loan-to-value ratios generally up to 95%. On mortgage loans exceeding an 80% loan-to-value ratio at the time of origination, the Company will generally require private mortgage insurance in an amount intended to reduce the Company's exposure to less than 80% of the appraised value of the underlying property. Construction and Development Lending The Company makes construction loans to individuals for the construction of their primary or secondary residences. Loans to individuals for the construction of their residences typically run for up to nine months. The borrower pays interest only during the construction period. Residential construction loans are generally underwritten pursuant to the same guidelines used for originating permanent residential loans. At June 30, 2000 construction loans totaled $250,000, or 0.4% of the Company's gross loan portfolio. The Company has participated in loans to builders and developers to finance the construction of residential property. Such loans generally have adjustable interest rates based upon prime or treasury indexes with variable terms. The proceeds of the loan are advanced during construction based upon the percentage of completion as determined by an inspection by the lead lender. The loan amount normally does not exceed 75% of the projected completed value. Whether the Company is willing to provide permanent takeout financing to the purchaser of the home is determined independently of the construction loan by separate underwriting. In the event that upon completion the house is not sold, the builder is required to make principal and interest payments until the house is sold. Building lot loans, which include loans to acquire vacant or raw land, are made to individuals. All of such loans are secured by land zoned for residential developments and located within the Company's market area. Before extending credit, the Company will require percolation tests and related permits to be secured. Construction and development lending, through participation or direct lending, generally affords the Company an opportunity to receive interest at rates higher than those obtainable from residential lending and to receive higher origination and other loan fees. In addition, such loans are generally made for relatively short terms. Nevertheless, construction lending to persons other than owner-occupants is generally considered to involve a higher level of credit risk than one- to four-family permanent residential lending due to the concentration of principal in a limited number of loans and borrowers and the effects of general economic conditions on construction projects, real estate developers and managers. In addition, the nature of these loans is such that they are more difficult to evaluate and monitor. The Company's risk of loss on a construction or development loan is dependent largely upon the accuracy of the initial estimate of the property's value upon completion of the project and the estimated cost (including interest) of the project. If the estimate of value proves to be inaccurate, the Company may be confronted, at or prior to the 5 maturity of the loan, with a project with a value which is insufficient to assure full repayment and/or the possibility of having to make substantial investments to complete and sell the project. Because defaults in repayment may not occur during the construction period, it may be difficult to identify problem loans at an early stage. When loan payments become due, the cash flow from the property may not be adequate to service the debt. In such cases, the Company may be required to modify the terms of the loan. Commercial Real Estate Lending The Company's commercial real estate loan portfolio consists of loans on a variety of non-residential properties including retail facilities, warehouses, small office buildings, small industrial parks and shopping centers. At June 30, 2000, the Company had $7.7 million in commercial real estate loans, comprising 11.7% of the Company's gross loan portfolio. The Company has originated both balloon, adjustable-rate and fixed-rate commercial real estate loans, although most current originations have balloon or adjustable rates. Commercial loans generally adjust based on a constant maturity index plus a margin. Adjustable rate loans generally have a balloon feature after one or two adjustment periods to allow the Company to re-evaluate the terms of the loan. Balloon loans mature at the end of the initial balloon term and may be modified, extended or refinanced by the Company. Commercial loans are generally underwritten in amounts of up to 75% of the appraised value of the underlying property. Substantially all of the commercial real estate loans originated by the Company are secured by properties located within the Company's market area. Commercial real estate loans generally present a higher level of credit risk than loans secured by one- to four-family residences. This greater risk is due to several factors, including the concentration of principal in a limited number of loans and borrowers, the effects of general economic conditions on income producing properties and the increased difficulty of evaluating and monitoring these types of loans. Furthermore, the repayment of loans secured by commercial real estate is typically dependent upon the successful operation of the related real estate project. If the cash flow from the project is reduced (for example, if leases are not obtained or renewed), the borrower's ability to repay the loan may be impaired. Multi-Family Lending The Company has historically made few permanent multi-family loans in its primary market area. As with commercial real estate loans, multi-family loans present a higher level of credit risk than do loans secured by one- to four-family residences. At June 30, 2000, loans secured by multi-family properties aggregated $314,000, or 0.5% of the Company's gross loan portfolio. The Company's multi-family loan portfolio includes loans secured by five or more unit residential buildings located primarily in the Company's market area. 6 Consumer Lending The Company offers a variety of consumer loans, including loans secured by savings deposits, home equity lines of credit and overdraft lines of credit as well as unsecured home improvement loans. The Company currently originates substantially all of its consumer loans in its market area. At June 30, 2000, the Company's consumer loans totaled $3.2 million or 4.9% of the Company's gross loan portfolio. The largest component of the Company's consumer lending program is its home equity line. At June 30, 2000, home equity loans totaled $3.0 million or 4.6% of gross loans receivable. The Company's home equity lines of credit are originated in amounts which, together with the amount of the first mortgage, generally do not exceed 90% of the appraised value of the property securing the loan. At June 30, 2000, the Company had $6.1 million of funds committed, but undrawn, under such lines. Consumer loans may entail greater risk than residential mortgage loans, particularly in the case of consumer loans which are unsecured or secured by rapidly depreciable assets. In addition, consumer loan collections are dependent on the borrower's continuing financial stability, and thus are more likely to be affected by adverse personal circumstances. Furthermore, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount which can be recovered on such loans. Delinquencies and Non-Performing Assets Non-Performing Assets. The table below sets forth the amounts and categories of non-performing assets in the Company's loan portfolio. Loans are placed on non-accrual status when the collection of principal and/or interest becomes doubtful. Foreclosed assets include assets acquired in settlement of loans. June 30, -------------------------------- 2000 1999 --------------- ------------- (Dollars in Thousands Non-accruing loans ........................ $ --- $ --- ----- ----- Total non-performing assets................ $ --- $ --- ===== ===== Total as a percentage of total assets...... ---% ---% ===== ===== Classification of Assets. Federal regulations require that each savings institution classify its own assets on a regular basis. In addition, in connection with examinations of savings institutions, OTS and FDIC examiners have authority to identify problem assets and, if appropriate, require them to be classified. There are three classifications for problem assets: Substandard, Doubtful and Loss. Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Doubtful assets have the weaknesses of Substandard assets, with the additional characteristics that the weaknesses make collection or liquidation in full on the 7 basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss. An asset classified Loss is considered uncollectible and of such little value that continuance as an asset on the balance sheet of the institution, without establishment of a specific valuation allowance or charge-off, is not warranted. Assets classified as Substandard or Doubtful require the institution to establish prudent general allowances for loan losses. If an asset or portion thereof is classified as a Loss, the institution may charge off such amount against the loan loss allowance. If an institution does not agree with an examiner's classification of an asset, it may appeal this determination to the District Director of the OTS. On the basis of management's review of its assets, at June 30, 2000, the Company had no loans classified substandard. Other Assets of Concern. In addition to non-performing loans and substandard loans discussed above, as of June 30, 2000, the Company had six loans totaling $278,000, which, because of known information about the possible credit problems of the borrowers or the cash flows of the security property, would cause management to have some doubts as to the ability of the borrowers to comply with present loan repayment terms and may result in the future inclusion of such assets in non-performing asset categories. Allowance for Loan Losses. The allowance for loan losses is established through a provision for loan losses charged to earnings based on management's evaluation of the risk inherent in its entire loan portfolio and changes in the nature and volume of its loan activity. Such evaluation, which includes a review of all loans of which full collectibility may not be reasonably assured, considers the estimated net realizable value of the underlying collateral, economic conditions, historical loan loss experience and other factors that warrant recognition in providing for an adequate allowance for loan losses. In determining the general reserves under these policies, historical charge-offs and recoveries, changes in the mix and levels of the various types of loans, net realizable values, the current loan portfolio and current economic conditions are considered. Management also considers the Company's non-performing assets in establishing its allowance for loan losses. As of June 30, 2000, the Company's allowance for loan losses as a percent of gross loans receivable amounted to 0.4%. The Company did not have any non-performing loans. While management believes that it uses the best information available to determine the allowance for loan losses, unforeseen market conditions could result in adjustments to the allowance for loan losses, and net earnings could be significantly affected, if circumstances differ substantially from the assumptions used in making the final determination. 8 The following table sets forth an analysis of the Company's allowance for loan losses.
June 30, ---------------------------- 2000 1999 ------------ ----------- (Dollars in Thousands Balance at beginning of period....................... $ 283 $ 278 Charge-offs ......................................... --- --- Additions charged to operations...................... 2 5 -------- ------- Balance at end of period............................. $ 285 $ 283 ======== ======= Ratio of net charge-offs during the period to Average loans outstanding during the period.......... --- --- ======== ======= Ratio of net charge-offs during the period to Average non-performing assets........................ ---% ---% ======== =======
The distribution of the Company's allowance for losses on loans at the dates indicated is summarized as follows:
June 30, --------------------------------------------------------------------- 2000 1999 ---------------------------------- --------------------------------- Percent Percent of Loans of Loans in Each in Each Amount of Category Amount of Category Loan Loss to Total Loan Loss to Total Allowance Loans Allowance Loans -------------- ----------------- ---------------- --------------- (Dollars in Thousands) One- to four-family......... $ 27 81.10% $ 25 81.78% Multi-family................ --- 0.48 --- 0.88 Commercial real estate...... 77 11.71 64 11.05 Commercial non-real estate.... 10 1.47 --- --- Construction or development. --- 0.38 --- 1.07 Consumer.................... --- 4.86 --- 5.22 Unallocated................. 171 --- 194 --- --------- --------- --------- --------- Total $ 285 100.00% $ 283 100.00% ========= ========= ========= =========
Investment Activities As part of its asset/liability management strategy and liquidity requirements, the Company invests in U.S. government and agency obligations to supplement its lending activities. The Company's investment policy also allows for investments in overnight funds, mortgage-backed securities and certificates of deposit. The Company may consider the expansion of investments into other securities if deemed appropriate. At June 30, 2000, the Company did not own any securities of a single issuer which exceeded 10% of the Company's 9 retained earnings. See Note 3 of the Notes to the Consolidated Financial Statements for additional information regarding the Company's investment securities portfolio. All of the Company's investment securities, except mortgage-backed securities, are classified as available for sale. Mortgage-backed securities are classified as held to maturity. The Company may elect to classify investment securities acquired in the future as trading securities or as held to maturity, instead of available-for-sale, but there are no current plans to do so. The following table sets forth the composition of the Company's investment and mortgage-backed securities at the dates indicated.
June 30, ------------------------------------------------------------- 2000 1999 ---------------------------- ---------------------------- Book Book Value % of Total Value % of Total ----- ---------- ----- ---------- (Dollars in Thousands) Investment securities: FHLB stock.......................................... $ 509 100.00% $ 509 100.00% ========= ========== ========= ========== Other interest-earning assets: Interest bearing deposits with banks................ $ 474 26.70% $ 7,069 60.14% Federal funds sold.................................. 1,301 73.30 4,685 39.86 ---------- ---------- --------- ---------- Total............................................... $ 1,775 100.00% $ 11,754 100.00% ========== =========== ========= ========== Securities Held to Maturity: Mortgage-backed securities: FNMA................................................ $ 1 0.57% $ 2 0.92% FHLMC............................................... 173 99.43 215 99.08 ---------- ---------- --------- ----------- Total mortgage-backed securities.................... $ 174 100.00% $ 217 100.00% ---------- ========== --------- ===========
The following table sets forth the contractual maturities of the Company's mortgage-backed securities at June 30, 2000. Due in June 30, 2000 10 to 20 Balance Years Outstanding ---------- ----------- (In Thousands) Freddie Mac............................. $ 173 $ 173 Fannie Mae.............................. 1 1 --------- ----------- Total............................... $ 174 $ 174 ========= =========== 10 Sources of Funds General. The Company's primary sources of funds are deposits, amortization and prepayment of loan principal, maturities of investment securities, short-term investments and funds provided from operations as well as FHLB advances and short-term borrowings. Deposits. The Company offers a variety of deposit accounts having a wide range of interest rates and terms. The Company's deposits consist of passbook and statement accounts, NOW accounts, Christmas Club and money market and certificate accounts, including Individual Retirement Accounts. The Company relies primarily on advertising, including newspaper and radio, pricing policies and customer service to attract and retain these deposits. Neither premiums nor brokered deposits are utilized. The flow of deposits is influenced significantly by general economic conditions, changes in money market and prevailing interest rates and competition. The Company's mix of transaction accounts and certificate accounts is less favorable than its peers, resulting in a higher cost of funds for the Company in relation to its peer group. At June 30, 2000, 26.6% of the Company's deposits were in transaction accounts, versus 73.4% in certificates. The Company has become more susceptible to short-term fluctuations in deposit flows, as customers have become more interest rate sensitive. The Company manages the pricing of its deposits in keeping with its asset/liability management, profitability and growth objectives. Based on its experience, the Company believes that its passbook, demand and NOW accounts are relatively stable sources of deposits. However, the ability of the Company to attract and maintain certificate deposits, and the rates paid on these deposits, has been and will continue to be significantly affected by market conditions. 11 The following table sets forth the dollar amount of savings deposits in the various types of deposit programs offered by the Company for the periods indicated.
June 30, --------------------------------------------------------- 2000 1999 -------------------------- --------------------------- Average Average Average Average Amount Rate Amount Rate ------ ---- ------ ---- (Dollars in Thousands) Transactions and Savings Deposits: - --------------------------------- Demand Deposits................................ $ 5,597 3.02% $ 5,727 3.27% Money Market & NOW Accounts.................... 11,053 2.52 11,268 2.57 ----------- --------- ---------- -------- Total Non-Certificates..................... 16,650 2.69 16,995 2.81 ----------- --------- ---------- -------- Certificates: - ------------ Total Certificates............................. 38,961 5.40 39,980 5.50 ----------- --------- ---------- ======== Total Deposits................................. $ 55,611 4.59% $ 56,975 4.70% =========== ========= ========== ========
At June 30, 2000, the Company had approximately $5.2 million in certificate accounts in amounts of $100,000 or more maturing as follows: Maturity Period Amount ----------------------------------------------- ------------------- (Dollars in Thousands) Three months or less........................... $ 721 Over three through six months.................. 212 Over six through 12 months..................... 893 Over 12 months................................. 3,362 -------- Total................................... $ 5,188 ======== Borrowings. The Company's other available sources of funds include advances from the Federal Home Loan Bank ("FHLB") of Atlanta and other borrowings. As a member of the FHLB of Atlanta, the Association is required to own capital stock in the FHLB of Atlanta and is authorized to apply for advances from the FHLB of Atlanta. Each FHLB credit program has its own interest rate, which may be fixed or variable, and range of maturities. The FHLB of Atlanta may prescribe the acceptable uses for these advances, as well as limitations on the size of the advances and repayment provisions. The Association's total credit line at the FHLB of Atlanta was approximately $8.0 million at June 30, 2000, of which the Association had drawn down, through FHLB advances, $3.0 million. 12 The Company may also borrow funds from other financial institutions. Competition The Company experiences strong competition both in originating real estate loans and in attracting deposits. This competition arises from a highly competitive market area with numerous commercial banks and savings institutions, as well as credit unions and mortgage bankers and, with respect to deposits, banking institutions and other financial intermediaries. The Association competes for loans principally on the basis of the interest rates and loan fees it charges, the types of loans it originates and the quality of services it provides to borrowers. The Company attracts all of its deposits through the communities in which its offices are located; therefore, competition for those deposits is principally from other savings institutions, commercial banks, securities firms, money market and mutual funds and credit unions located in the same community. The ability of the Company to attract and retain deposits depends on its ability to provide an investment opportunity that satisfies the requirements of investors as to rate of return, liquidity, risk, convenient locations and other factors. The Company competes for these deposits by offering a variety of deposit accounts at competitive rates, convenient business hours and a customer-oriented staff. At June 30, 2000, the Company had in excess of 60 financial institutions competing with it in its market area. The Company estimates its market share of savings deposits in its market area to be approximately 11.4%. Employees At June 30, 2000, the Company had a total of 16 full-time employees and no part-time employees. None of the Company's employees are represented by any collective bargaining group. Management considers its employee relations to be good. 13 REGULATION General As a federal savings bank, Wyman Park is subject to regulation, supervision and regular examination by the OTS. In addition, the FDIC has certain regulatory and examination authority over OTS-regulated savings institutions and may recommend enforcement actions against savings institutions to the OTS. The supervision and regulation of Wyman Park is intended primarily for the protection of the deposit insurance fund and depositors. As a savings and loan holding company, the Company is subject to OTS regulation, examination, supervision and reporting requirements. The Holding Company also is required to file certain reports with, and otherwise comply with the rules and regulations of, the SEC under the federal securities laws. Regulation of Wyman Park Regulatory Capital. The OTS's capital adequacy regulations require savings institutions such as Wyman Park to meet three minimum capital standards: a "core" capital requirement of between 3% and 5% of adjusted total assets, a "tangible" capital requirement of 1.5% of adjusted total assets, and a "risk-based" capital requirement of 8% of total risk-based capital to total risk-weighted assets. In addition, the OTS has adopted regulations imposing certain restrictions on savings institutions that have a total risk-based capital ratio of less than 8%, a ratio of Tier 1 capital to risk-weighted assets of less than 4% or a ratio of Tier 1 capital to total assets of less than 4% (or 3% if the institution is rated composite 1 under the CAMELS examination rating system). See "--Prompt Corrective Regulatory Action." The following table sets forth the Association's compliance with its regulatory capital requirements as of June 30, 2000.
Association's Capital Capital Requirements Excess Capital Amount Percent Amount Percent Amount Percent ---------- ------- ---------- ------- ---------- ------- Tangible capital............ $7,467,000 10.9% $1,033,000 1.5% $6,434,000 9.4% Core capital................ 7,467,000 10.9 2,754,000 4.0 4,713,000 6.9 Total risk-based capital.... 7,752,000 19.4 3,199,000 8.0 4,553,000 11.4
Prompt Corrective Regulatory Action. The Federal Deposit Insurance Act ("FDI Act") requires the federal banking regulators to take prompt corrective action in respect of depository institutions that do not meet certain minimum capital requirements, including a leverage limit and a risk-based capital requirement. The federal bank regulators, including the OTS, have issued regulations that classify insured depository institutions by capital levels and provide that the applicable agency will take various prompt corrective actions to resolve the problems of any institution that fails to satisfy the capital standards. Under the joint prompt corrective action 14 regulations, a "well-capitalized" institution is one that is not subject to any regulatory order or directive to meet any specific capital level and that has or exceeds the following capital levels: a total risk-based capital ratio of 10%, a Tier 1 risk-based capital ratio of 6%, and a ratio of Tier 1 capital to total assets ("leverage ratio") of 5%. An "adequately capitalized" institution is one that does not qualify as "well capitalized" but meets or exceeds the following capital requirements: a total risk-based capital of 8%, a Tier 1 risk-based capital ratio of 4%, and a leverage ratio of either (i) 4% or (ii) 3% if the institution has the highest composite examination rating. An institution not meeting these criteria is treated as "undercapitalized," "significantly undercapitalized," or "critically undercapitalized" depending on the extent to which its capital levels are below these standards. An institution that falls within any of the three "undercapitalized" categories will be subject to certain severe regulatory sanctions required by the FDI Act and the implementing regulations. As of June 30, 2000, Wyman Park was "well-capitalized" as defined by the regulations. Qualified Thrift Lender Test. The Home Owners' Loan Act ("HOLA") and OTS regulations require all savings institutions to satisfy one of two Qualified Thrift Lender ("QTL") tests or to suffer a number of sanctions, including restrictions on activities. A savings institution must maintain its status as a QTL on a monthly basis in at least nine out of every 12 months. An initial failure to qualify as a QTL results in a number of sanctions, including the imposition of certain operating restrictions and a restriction on obtaining additional advances from its Federal Home Loan Bank. If a savings institution does not requalify under the QTL test within the three-year period after it fails the QTL test, it would be required to terminate any activity not permissible for a national bank and repay as promptly as possible any outstanding advances from its Federal Home Loan Bank. In addition, the holding company of such an institution would similarly be required to register as a bank holding company with the Federal Reserve Board. At June 30, 2000, Wyman Park qualified as a QTL. Limitations on Capital Distributions. OTS regulations impose limitations upon capital distributions by savings institutions, such as cash dividends, payments to repurchase or otherwise acquire its shares, payments to stockholders of another institution in a cash-out merger and other distributions charged against capital. Under the OTS capital distribution regulations, a savings institution that qualifies for expedited treatment of applications by maintaining specified supervisory examination ratings and that is not otherwise restricted in making capital distributions may, without prior approval by the OTS, make capital distributions during a calendar year equal to its net income for such year plus its retained net income for the preceding two years. Capital distributions in excess of such amount are subject to prior OTS approval. In addition, even if a proposed capital distribution is less than the above limit, a savings institution must give notice to the OTS at least 30 days before declaration of a capital distribution to its holding company. Under the OTS's prompt corrective action regulations, Wyman Park would be prohibited from paying dividends if Wyman Park were classified as "undercapitalized" under such rules. See "--Prompt Corrective Regulatory Action." Further, earnings of Wyman Park appropriated to bad debt reserves and deducted for federal income tax purposes are not available for payment of dividends or other distributions to Wyman Park without payment of taxes at the then current 15 tax rate by Wyman Park on the amount of earnings removed from the reserves for such distributions. Transactions with Affiliates and Insiders. Generally, transactions between a savings association or its subsidiaries and its affiliates are required to be on terms as favorable to the association as transactions with non-affiliates. In addition, certain of these transactions, such as loans to an affiliate, are restricted to a percentage of the association's capital. Affiliates of Wyman Park include the Company and any company that is under common control with the Association. In addition, a savings association may not lend to any affiliate engaged in activities not permissible for a bank holding company or acquire the securities of most affiliates. The OTS has the discretion to treat subsidiaries of savings associations as affiliates on a case by case basis. Certain transactions with directors, officers or controlling persons are also subject to conflict of interest regulations enforced by the OTS. These conflict of interest regulations and other statutes also impose restrictions on loans to such persons and their related interests. Among other things, such loans must generally be made on terms that are substantially the same as for loans to unaffiliated individuals. Reserve Requirements. The Federal Reserve Board requires all depository institutions to maintain noninterest bearing reserves at specified levels against their transaction accounts (primarily checking, NOW and Super NOW checking accounts). At June 30, 2000, Wyman Park was in compliance with these reserve requirements. Liquidity Requirements. Wyman Park is required by OTS regulations to maintain an average daily balance of liquid assets. The current minimum liquid asset ratio required by the OTS is 4% of a liquidity base as defined under OTS regulations. For the quarter ended June 30, 2000, Wyman Park was in compliance with the requirement, with an average daily liquidity ratio of 8.51%. Federal Home Loan Bank System. The Federal Home Loan Bank System consists of 12 district Federal Home Loan Banks subject to supervision and regulation by the Federal Housing Finance Board ("FHFB"). The Federal Home Loan Banks provide a central credit facility primarily for member institutions. As a member of the FHLB, Wyman Park is required to acquire and hold shares of capital stock in the FHLB in an amount at least equal to 1% of the aggregate unpaid principal of its home mortgage loans, home purchase contracts, and similar obligations at the beginning of each year, or 1/20 of its advances (borrowings) from the FHLB, whichever is greater. Wyman Park was in compliance with this requirement, with an investment in FHLB stock at June 30, 2000 of $508,500. Regulation of the Company The Company is a unitary savings and loan holding company subject to regulatory oversight by the OTS. As such, the Company is required to register and file reports with the OTS and is subject to regulation and examination by the OTS. In addition, the OTS has enforcement authority over the Company and its non-savings association subsidiaries, which permits the OTS 16 to restrict or prohibit activities that are determined to be a serious risk to the subsidiary savings association. As a unitary savings and loan holding company, the Company generally is not subject to activity restrictions. If the Company were to acquire control of another savings association as a separate subsidiary, it would become a multiple savings and loan holding company, and the activities of the Company and any of its subsidiaries (other than Wyman Park or any other SAIF-insured savings association) would become subject to such restrictions unless such other associations each qualify as a QTL and were acquired in a supervisory acquisition. If Wyman Park fails the QTL test, the Company must obtain the approval of the OTS prior to continuing after such failure, directly or through its other subsidiaries, any business activity other than those approved for multiple savings and loan holding companies or their subsidiaries. In addition, within one year of such failure the Company would be required to register as, and would become subject to, the restrictions applicable to bank holding companies. The activities authorized for a bank holding company are more limited than are the activities authorized for a unitary or multiple savings and loan holding company. See "--Qualified Thrift Lender Test." The Company must obtain approval from the OTS before acquiring control of any other SAIF-insured association. Such acquisitions are generally prohibited if they result in a multiple savings and loan holding company controlling savings associations in more than one state. However, such interstate acquisitions are permitted based on specific state authorization or in a supervisory acquisition of a failing savings institution. 17 Item 2. Description of Properties The following table sets forth information concerning the main office and a branch office of the Company at June 30, 2000.
Owned Net Book Year Or Value at Location Opened Leased(1) June 30, 2000 - ------------------------------- ---------- ----------------------- --------------- Main Office: 11 Ridgely Road 1977 Land Leased;(2) $39,084 Lutherville, MD 21093 Building Owned Branch Office: 7963 Baltimore/Annapolis Blvd. 1981 Leased;(3) N/A Glen Burnie, MD 21060
- --------------------- (1) See Note 6 to Notes to Consolidated Financial Statements. (2) There are five, five-year options which expire in May 2027. (3) Lease expires in November 2001. The Company's depositor and borrower customer files are maintained by an independent data processing company. The net book value of the data processing and computer equipment utilized by the Company at June 30, 2000 was approximately $7,200. Item 3. Legal Proceedings From time to time, the Company and its subsidiaries are parties to various legal proceedings incident to its business. At June 30, 2000, there were no legal proceedings which management anticipates would have a material adverse effect on the Company. Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of security holders during the quarter ended June 30, 2000. 18 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters The information contained under the section captioned "Stock Listing and Price Range of Common Stock" in the Company's 2000 Annual Report to Shareholders (the "Annual Report") filed as Exhibit 13 hereto is incorporated herein by reference. Item 6. Management's Discussion and Analysis or Plan of Operation The information contained in the table captioned "Selected Consolidated Financial Information" in the Company's Annual Report is incorporated herein by reference. Item 7. Financial Statements The following information appearing in the Company's Annual Report to Stockholders for the year ended June 30, 2000, is incorporated by reference in this Annual Report on Form 10-KSB and attached hereto as Exhibit 13. Report of Independent Auditors Consolidated Statements of Financial Condition as of June 30, 2000 and 1999 Consolidated Statements of Operations for the Years Ended June 30, 2000 and 1999 Consolidated Statements of Stockholders' Equity for Years Ended June 30, 2000 and 1999 Consolidated Statements of Cash Flows for Years Ended June 30, 2000 and 1999 Notes to Consolidated Financial Statements Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable 19 PART III Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act Directors For information concerning the Board of Directors of the Company, the information contained under the section captioned "Election of Directors" in the Company's definitive proxy statement for the Company's 2000 Annual Meeting of Shareholders (the "Proxy Statement") is incorporated herein by reference. Executive Officers For information concerning the executive officers of the Company, the information contained under the section captioned "Executive Officers" in the Company's definitive proxy statement for the Company's 2000 Annual Meeting of Shareholders (the "Proxy Statement") is incorporated herein by reference. Compliance with Section 16(a) Information regarding delinquent Form 3, 4 or 5 filers is incorporated herein by reference to the section entitled "Section 16(a) Beneficial Ownership Reporting Compliance" in the Proxy Statement. Item 10. Executive Compensation The information contained under the section captioned "Election of Directors -- Executive Compensation" in the Proxy Statement is incorporated herein by reference. Item 11. Security Ownership of Certain Beneficial Owners and Management (a) Security Ownership of Certain Beneficial Owners Information required by this item is incorporated herein by reference to the section captioned "Voting Securities and Principal Holders of Securities" in the Proxy Statement. (b) Security Ownership of Management Information required by this item is incorporated herein by reference to the sections captioned "Voting Securities and Principal Holders of Securities" and "Election of Directors" in the Proxy Statement. 20 (c) Changes in Control Management of the Company knows of no arrangements, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the registrant. Item 12. Certain Relationships and Related Transactions The information required by this item is incorporated herein by reference to the section captioned "Election of Directors" in the Proxy Statement. Item 13. Exhibits and Reports on Form 8-K (a) Exhibits Reference to Prior Filing or Exhibit Exhibit Number Number Document Attached Hereto - ------- -------------------------------------------- --------------- 3(i) Certificate of Incorporation * 3(ii) Bylaws * 4 Instruments defining the rights of security * holders, including debentures 10 Material Contracts (a) Employment Contract between * Ernest A. Moretti and the Association (b) Executive Supplemental Retirement Plan ** (c) 1999 Stock Option and Incentive Plan (d) Recognition and Retention Plan 13 Annual Report to Stockholders 13 21 Subsidiaries of Registrant 21 23 Consents of Experts and Counsel 23 27 Financial Data Schedule 27 - ------------- * Filed as exhibits to the Company's Form SB-2 Registration Statement as initially filed on September 22, 1997 and subsequently amended (File No. 333-36119) of the Securities Act of 1933. All of such previously filed documents are hereby incorporated herein by reference in accordance with Item 601 of Regulation S-B. ** Filed as exhibit 10(b) to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1998 and is hereby incorporated herein by reference in accordance with Item 601 of Regulation S-B. (b) Reports on Form 8-K There were no reports on Form 8-K filed during the last quarter of the year ended June 30, 2000. 21 SIGNATURES In accordance with Section 13 of 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. WYMAN PARK BANCORPORATION, INC. Date: September 28, 2000 By: /s/ Ernest A. Moretti ------------------ --------------------------------------- Ernest A. Moretti (President and Chief Executive Officer) In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Ernest A. Moretti By: /s/ Ronald W. Robinson -------------------------------------- ------------------------------- Ernest A. Moretti Ronald W. Robinson, (Principal Executive Officer) (Principal Financial and Accounting Officer) Date: September 28, 2000 Date: September 28, 2000 ------------------- ------------------ By: /s/ Allan B. Heaver By: /s/ H. Douglas Huether -------------------------------------- ------------------------------- Allan B. Heaver, H. Douglas Huether, Director Chairman of the Board Date: September 28, 2000 Date: September 28, 2000 ------------------ ------------------ By: /s/ John K. White By: /s/ John R. Beever -------------------------------------- ------------------------------- John K. White, Director John R. Beever, Director Date: September 28, 2000 Date: September 28, 2000 ------------------ ------------------ By: /s/ Albert M. Copp By: /s/ Gilbert D. Marsiglia, Sr. -------------------------------------- ------------------------------- Albert M. Copp, Director Gilbert D. Marsiglia, Sr., Director Date: September 28, 2000 Date: September 28, 2000 ------------------ ------------------ By: /s/ Jay H. Salkin By: /s/ G. Scott Barhight -------------------------------------- ------------------------------- Jay H. Salkin, Director G. Scott Barhight, Director Date: September 28, 2000 Date: September 28, 2000 ------------------ ------------------ EX-10.C 2 0002.txt 1999 STOCK OPTION AND INCENTIVE PLAN EXHIBIT 10(C) WYMAN PARK BANCORPORATION, INC. 1999 STOCK OPTION AND INCENTIVE PLAN 1. Plan Purpose. The purpose of the Plan is to promote the long-term interests of the Corporation and its stockholders by providing a means for attracting and retaining directors, advisory directors, directors emeriti, officers and employees of the Corporation and its Affiliates. It is intended that designated Options granted pursuant to the provisions of this Plan to persons employed by the Corporation or its Affiliates will qualify as Incentive Stock Options. Options granted to persons who are not employees will be Non-Qualified Stock Options. 2. Definitions. The following definitions are applicable to the Plan: "Affiliate" - means any "parent corporation" or "subsidiary corporation" of the Corporation, as such terms are defined in Section 424(e) and (f), respectively, of the Code. "Association" - means Wyman Park Federal Savings & Loan Association and any successor entity. "Award" - means the grant of an Incentive Stock Option, a Non-Qualified Stock Option, a Stock Appreciation Right, a Limited Stock Appreciation Right or any combination thereof, as provided in the Plan. "Code" - means the Internal Revenue Code of 1986, as amended. "Committee" - means the Committee of the Board of Directors referred to in Section 3 hereof. "Continuous Service" - means the absence of any interruption or termination of service as a director, advisory director, director emeritus, officer or employee of the Corporation or an Affiliate, except that when used with respect to persons granted an Incentive Stock Option means the absence of any interruption or termination of service as an Employee of the Corporation or an Affiliate. Service shall not be considered interrupted in the case of sick leave, military leave or any other leave of absence approved by the Corporation or any Affiliate or in the case of transfers between payroll locations of the Corporation or between the Corporation, its Affiliates or its successor. With respect to any advisory director or director emeritus, continuous service shall mean the availability to perform such functions as may be required of such persons. "Corporation" - means Wyman Park Bancorporation, Inc. "Disability" - means any physical or mental impairment which qualifies a director, advisory director, director emeritus, officer or employee for disability benefits under any applicable long-term disability plan maintained by the Association or an Affiliate, or, if no such plan applies, which A-1 renders such employee or director, in the judgment of the Committee, unable to perform his customary duties and responsibilities. "Early Retirement" -- means retirement from employment with or as a director, advisory director, or emeritus director of the Corporation prior to the Participant either (i) having reached the age of 62 or (ii) having maintained Continuous Service for at least three years. "Employee" - means any person, including an officer or director, who is employed by the Corporation or any Affiliate. "ERISA" - means the Employee Retirement Income Security Act of 1974, as amended. "Exercise Price" - means (i) in the case of an Option, the price per Share at which the Shares subject to such Option may be purchased upon exercise of such Option and (ii) in the case of a Right, the price per Share (other than the Market Value per Share on the date of exercise and the Offer Price per Share as defined in Section 10 hereof) which, upon grant, the Committee determines shall be utilized in calculating the aggregate value which a Participant shall be entitled to receive pursuant to Sections 9, 10 or 12 hereof upon exercise of such Right. "Incentive Stock Option" - means an option to purchase Shares granted by the Committee pursuant to Section 6 hereof which is subject to the limitations and restrictions of Section 8 hereof and is intended to qualify under Section 422(b) of the Code. "Limited Stock Appreciation Right" - means a stock appreciation right with respect to Shares granted by the Committee pursuant to Sections 6 and 10 hereof. "Market Value" - means the average of the high and low quoted sales price on the date in question (or, if there is no reported sale on such date, on the last preceding date on which any reported sale occurred) of a Share on the Composite Tape for the New York Stock Exchange-Listed Stocks, or, if on such date the Shares are not quoted on the Composite Tape, on the New York Stock Exchange, or, if the Shares are not listed or admitted to trading on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which the Shares are listed or admitted to trading, or, if the Shares are not listed or admitted to trading on any such exchange, the mean between the closing high bid and low asked quotations with respect to a Share on such date on the Nasdaq Stock Market, or any similar system then in use, or, if no such quotations are available, the fair market value on such date of a Share as the Committee shall determine. "Non-Employee Director" - means a director who (a) is not currently an officer or employee of the Corporation; (b) is not a former employee of the Corporation who receives compensation for prior services (other than from a tax-qualified retirement plan); (c) has not been an officer of the Corporation; (d) does not receive renumeration from the Corporation in any capacity other than as a director; and (e) does not possess an interest in any other transactions or is not engaged in a business relationship for which disclosure would be required under Item 404(a) or (b) of Regulation S-K. A-2 "Non-Qualified Stock Option" - means an option to purchase Shares granted by the Committee pursuant to Section 6 hereof, which is not intended to qualify under Section 422(b) of the Code. "Normal Retirement" -- means retirement from employment with or as a director, advisory director, or emeritus director of the Corporation after the Participant has (i) reached the age of 65 and (ii) maintained Continuous Service for at least three years. "Option" - means an Incentive Stock Option or a Non-Qualified Stock Option. "Participant" - means any director, advisory director, director emeritus, officer or employee of the Corporation or any Affiliate who is selected by the Committee to receive an Award or who is granted an Award. "Plan" - means the 1999 Stock Option and Incentive Plan of the Corporation. "Related" - means (i) in the case of a Right, a Right which is granted in connection with, and to the extent exercisable, in whole or in part, in lieu of, an Option or another Right and (ii) in the case of an Option, an Option with respect to which and to the extent a Right is exercisable, in whole or in part, in lieu thereof has been granted. "Right" - means a Limited Stock Appreciation Right or a Stock Appreciation Right. "Shares" - means the common stock, par value $0.01 per share, of the Corporation. "Stock Appreciation Right" - means a stock appreciation right with respect to Shares granted by the Committee pursuant to Sections 6 and 9 hereof. 3. Administration. The Plan shall be administered by a Committee consisting of two or more members, each of whom shall be a Non-Employee Director. The members of the Committee shall be appointed by the Board of Directors of the Corporation. Except as limited by the express provisions of the Plan, the Committee shall have sole and complete authority and discretion to (i) select Participants and grant Awards; (ii) determine the number of Shares to be subject to types of Awards generally, as well as to individual Awards granted under the Plan; (iii) determine the terms and conditions upon which Awards shall be granted under the Plan; (iv) prescribe the form and terms of instruments evidencing such grants; and (v) establish from time to time regulations for the administration of the Plan, interpret the Plan, and make all determinations deemed necessary or advisable for the administration of the Plan. A majority of the Committee shall constitute a quorum, and the acts of a majority of the members present at any meeting at which a quorum is present, or acts approved in writing by a ma jority of the Committee without a meeting, shall be acts of the Committee. 4. Participation in Committee Awards. The Committee may select from time to time Participants in the Plan from those directors (including advisory directors and directors emeriti), A-3 officers and employees of the Corporation or its Affiliates who, in the opinion of the Committee, have the capacity for contributing to the successful performance of the Corporation or its Affiliates. 5. Shares Subject to Plan. Subject to adjustment by the operation of Section 11 hereof, the maximum number of Shares with respect to which Awards may be made under the Plan is 101,171 of the common shares of the Corporation. The Shares with respect to which Awards may be made under the Plan may be either authorized and unissued shares or issued shares heretofore or hereafter reacquired and held as treasury shares. Shares which are subject to Related Rights and Related Options shall be counted only once in determining whether the maximum number of Shares with respect to which Awards may be granted under the Plan has been exceeded. An Award shall not be considered to have been made under the Plan with respect to any Option or Right which terminates and new Awards may be granted under the Plan with respect to the number of Shares as to which such termination has occurred. 6. General Terms and Conditions of Options and Rights. The Committee shall have full and complete authority and discretion except as expressly limited by the Plan, to grant Options and/or Rights and to provide the terms and conditions (which need not be identical among Participants) thereof. In particular, the Committee shall prescribe the following terms and conditions: (i) the Exercise Price of any Option or Right, which shall not be less than the Market Value per Share at the date of grant of such Option or Right, (ii) the number of Shares subject to, and the expiration date of, any Option or Right, which expiration date shall not exceed ten years from the date of grant, (iii) the manner, time and rate (cumulative or otherwise) of exercise of such Option or Right, and (iv) the restrictions, if any, to be placed upon such Option or Right or upon Shares which may be issued upon exercise of such Option or Right. The Committee may, as a condition of granting any Option or Right, require that a Participant agree not to thereafter exercise one or more Options or Rights previously granted to such Participant. No individual shall be granted Awards in any calendar year with respect to more than 25,292 shares, subject to adjustment as provided in Section 11. At the time of any Award, the Participant shall enter into an agreement with the Corporation in a form specified by the Committee, agreeing to the terms and conditions of the Award and such other matters as the Committee, in its sole discretion, shall determine (the "Option Agreement"). 7. Exercise of Options or Rights. (a) Except as provided herein, an Option or Right granted under the Plan shall be exercisable during the lifetime of the Participant to whom such Option or Right was granted only by such Participant and, except as provided in paragraphs (c) and (d) of this Section 7, no such Option or Right may be exercised unless at the time such Participant exercises such Option or Right, such Participant has maintained Continuous Service since the date of grant of such Option or Right. (b) To exercise an Option or Right under the Plan, the Participant to whom such Option or Right was granted shall give written notice to the Corporation in form satisfactory to the Committee (and, if partial exercises have been permitted by the Committee, by specifying the number of Shares with respect to which such Participant elects to exercise such Option or Right) together A-4 with full payment of the Exercise Price, if any and to the extent required. The date of exercise shall be the date on which such notice is received by the Corporation. Payment, if any is required, shall be made either (i) in cash (including check, bank draft or money order) or (ii) by delivering (A) Shares already owned by the Participant and having a fair market value equal to the applicable Exercise Price, such fair market value to be determined in such appropriate manner as may be provided by the Committee or as may be required in order to comply with or to conform to requirements of any applicable laws or regulations, or (B) a combination of cash and such Shares. (c) If a Participant to whom an Option or Right was granted shall cease to maintain Continuous Service for any reason other than termination for cause, such Participant may, but only within the period of three months immediately succeeding such cessation of Continuous Service and in no event after the expiration date of such Option or Right, exercise such Option or Right to the extent that such Participant was entitled to exercise such Option or Right at the date of such cessation, provided, however, that such right of exercise after cessation of Continuous Service shall not be available to a Participant if the Committee otherwise determines and so provides in the applicable instrument or instruments evidencing the grant of such Option or Right. If a Participant to whom an Option or Right was granted shall cease to maintain Continuous Service by reason of death, Normal Retirement, Early Retirement, or Disability then, unless the Committee shall have otherwise provided in the instrument evidencing the grant of an Option or Right, all Options and Rights granted and not fully exercisable shall become exercisable in full upon the happening of such event and shall remain so exercisable (i) in the event of death for the period described in paragraph (d) of this Section 7 and (ii) in the event of Normal Retirement, Early Retirement or Disability, for a period of three months following such date. If the Continuous Service of a Participant to whom an Option or Right was granted by the Corporation is terminated for cause, all rights under any Option or Right of such Participant shall expire immediately upon the giving to the Participant of notice of such termination. (d) In the event of the death of a Participant while in the Continuous Service of the Corporation or an Affiliate or within the three-month period referred to in paragraph (c) of this Section 7, the person to whom any Option or Right held by the Participant at the time of his death is transferred by will or the laws of descent and distribution, or in the case of an Award other than an Incentive Stock Option, pursuant to a qualified domestic relations order, as defined in the Code or Title I of ERISA or the rules thereunder may, but only to the extent such Participant was entitled to exercise such Option or Right as set forth in paragraph (c) of this Section 7, exercise such Option or Right at any time within a period of one year succeeding the date of death of such Participant, but in no event later than ten years from the date of grant of such Option or Right. Following the death of any Participant to whom an Option was granted under the Plan, irrespective of whether any Related Right shall have theretofore been granted to the Participant or whether the person entitled to exercise such Related Right desires to do so, the Committee may, as an alternative means of settlement of such Option, elect to pay to the person to whom such Option is transferred by will or by the laws of descent and distribution, or in the case of an Option other than an Incentive Stock Option, pursuant to a qualified domestic relations order, as defined in the Code or Title I of ERISA or the rules A-5 thereunder, the amount by which the Market Value per Share on the date of exercise of such Option shall exceed the Exercise Price of such Option, multiplied by the number of Shares with respect to which such Option is properly exercised. Any such settlement of an Option shall be considered an exercise of such Option for all purposes of the Plan. 8. Incentive Stock Options. Incentive Stock Options may be granted only to Participants who are Employees. Any provision of the Plan to the contrary notwithstanding, (i) no Incentive Stock Option shall be granted more than ten years from the date the Plan is adopted by the Board of Di rectors of the Corporation and no Incentive Stock Option shall be exercisable more than ten years from the date such Incentive Stock Option is granted, (ii) the Exercise Price of any Incentive Stock Option shall not be less than the Market Value per Share on the date of grant of such Incentive Stock Option, (iii) any Incentive Stock Option shall not be transferable by the Participant to whom such Incentive Stock Option is granted other than by will or the laws of descent and distribution, and shall be exercisable during such Participant's lifetime only by such Participant, (iv) no Incentive Stock Option shall be granted to any individual who, at the time such Incentive Stock Option is granted, owns stock possessing more than ten percent of the total combined voting power of all classes of stock of the Corporation or any Affiliate unless the Exercise Price of such Incentive Stock Option is at least 110 percent of the Market Value per Share at the date of grant and such Incentive Stock Option is not exercisable after the expiration of five years from the date such Incentive Stock Option is granted, and (v) the aggregate Market Value (determined as of the time any Incentive Stock Option is granted) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by a Participant in any calendar year shall not exceed $100,000. 9. Stock Appreciation Rights. A Stock Appreciation Right shall, upon its exercise, entitle the Participant to whom such Stock Appreciation Right was granted to receive a number of Shares or cash or combination thereof, as the Committee in its discretion shall determine, the aggregate value of which (i.e., the sum of the amount of cash and/or Market Value of such Shares on date of exercise) shall equal (as nearly as possible, it being understood that the Corporation shall not issue any fractional shares) the amount by which the Market Value per Share on the date of such exercise shall exceed the Exercise Price of such Stock Appreciation Right, multiplied by the number of Shares with respect of which such Stock Appreciation Right shall have been exercised. A Stock Appreciation Right may be Related to an Option or may be granted independently of any Option as the Committee shall from time to time in each case determine. At the time of grant of an Option the Committee shall determine whether and to what extent a Related Stock Appreciation Right shall be granted with respect thereto; provided, however, and notwithstanding any other provision of the Plan, that if the Related Option is an Incentive Stock Option, the Related Stock Appreciation Right shall satisfy all the restrictions and limitations of Section 8 hereof as if such Related Stock Appreciation Right were an Incentive Stock Option and as if other rights which are Related to In centive Stock Options were Incentive Stock Options. In the case of a Related Option, such Related Option shall cease to be exercisable to the extent of the Shares with respect to which the Related Stock Appreciation Right was exercised. Upon the exercise or termination of a Related Option, any Related Stock Appreciation Right shall terminate to the extent of the Shares with respect to which the Related Option was exercised or terminated. A-6 10. Limited Stock Appreciation Rights. At the time of grant of an Option or Stock Appreciation Right to any Participant, the Committee shall have full and complete authority and discretion to also grant to such Participant a Limited Stock Appreciation Right which is Related to such Option or Stock Appreciation Right; provided, however and notwithstanding any other provision of the Plan, that if the Related Option is an Incentive Stock Option, the Related Limited Stock Appreciation Right shall satisfy all the restrictions and limitations of Section 8 hereof as if such Related Limited Stock Appreciation Right were an Incentive Stock Option and as if all other Rights which are Related to Incentive Stock Options were Incentive Stock Options. Notwithstanding any other provision of the Plan, a Limited Stock Appreciation Right shall be exercisable only during the period beginning on the first day following the date of expiration of any "offer" (as such term is hereinafter defined) and ending on the forty-fifth day following such date. A Limited Stock Appreciation Right shall, upon its exercise, entitle the Participant to whom such Limited Stock Appreciation Right was granted to receive an amount of cash equal to the amount by which the "Offer Price per Share" (as such term is hereinafter defined) or the Market Value on the date of such exercise, as shall have been provided by the Committee in its discretion at the time of grant, shall exceed the Exercise Price of such Limited Stock Appreciation Right, multiplied by the number of Shares with respect to which such Limited Stock Appreciation Right shall have been exercised. Upon the exercise of a Limited Stock Appreciation Right, any Related Option and/or Related Stock Appreciation Right shall cease to be exercisable to the extent of the Shares with respect to which such Limited Stock Appreciation Right was exercised. Upon the exercise or termination of a Related Option or Related Stock Appreciation Right, any Related Li mited Stock Appreciation Right shall terminate to the extent of the Shares with respect to which such Related Option or Related Stock Appreciation Right was exercised or terminated. For the purposes of this Section 10, the term "Offer" shall mean any tender offer or exchange offer for Shares other than one made by the Corporation, provided that the corporation, person or other entity making the offer acquires pursuant to such offer either (i) 25% of the Shares outstanding immediately prior to the commencement of such offer or (ii) a number of Shares which, together with all other Shares acquired in any tender offer or exchange offer (other than one made by the Corporation) which expired within sixty days of the expiration date of the offer in question, equals 25% of the Shares outstanding immediately prior to the commencement of the offer in question. The term "Offer Price per Share" as used in this Section 10 shall mean the highest price per Share paid in any Offer which Offer is in effect any time during the period beginning on the sixtieth day prior to the date on which a Limited Stock Appreciation Right is exercised and ending on the date on which such Limited Stock Appreciation Right is exercised. Any securities or property which are part or all of the consideration paid for Shares in the Offer shall be valued in determining the Offer Price per Share at the higher of (A) the valuation placed on such securities or property by the corporation, person or other entity making such Offer or (B) the valuation placed on such securities or property by the Committee. 11. Adjustments Upon Changes in Capitalization. In the event of any change in the outstanding Shares subsequent to the effective date of the Plan by reason of any reorganization, re capitalization, stock split, stock dividend, cash distribution in excess of normal dividend levels, combination or exchange of Shares, merger, consolidation or any change in the corporate structure A-7 or Shares of the Corporation, the maximum aggregate number, class and Exercise Price of shares as to which Awards may be granted under the Plan and the number and class of Shares with respect to which Awards theretofore have been granted under the Plan shall be appropriately adjusted by the Committee, whose determination shall be conclusive. 12. Effect of Merger. In the event of any merger, consolidation or combination of the Corporation (other than a merger, consolidation or combination in which the Corporation is the continuing entity and which does not result in the outstanding Shares being converted into or exchanged for different securities, cash or other property, or any combination thereof) pursuant to a plan or agreement the terms of which are binding upon all stockholders of the Corporation (except to the extent that dissenting stockholders may be entitled, under statutory provisions or provisions contained in the certificate of incorporation, to receive the appraised or fair value of their holdings), any Participant to whom an Option or Right has been granted shall have the right (subject to the pro visions of the Plan and any limitation applicable to such Option or Right), thereafter and during the term of each such Option or Right, to receive upon exercise of any such Option or Right an amount equal to the excess of the fair market value on the date of such exercise of the securities, cash or other property, or combination thereof, receivable upon such merger, consolidation or combination in respect of a Share over the Exercise Price of such Right or Option, multiplied by the number of Shares with respect to which such Option or Right shall have been exercised. Such amount may be payable fully in cash, fully in one or more of the kind or kinds of property payable in such merger, consolidation or combination, or partly in cash and partly in one or more of such kind or kinds of property, all in the discretion of the Committee. 13. Effect of Change in Control. Each of the events specified in the following clauses (i) through (iii) of this Section 13 shall be deemed a "change of control": (i) any third person, including a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, shall become the beneficial owner of shares of the Corporation with respect to which 25% or more of the total number of votes for the election of the Board of Directors of the Corporation may be cast, (ii) as a result of, or in connection with, any cash tender offer, merger or other business combination, sale of assets or contested election, or combination of the foregoing, the persons who were directors of the Corporation shall cease to constitute a majority of the Board of Directors of the Corporation, or (iii) the stockholders of the Corporation shall approve an agreement providing either for a transaction in which the Corporation will cease to be an independent publicly-owned corporation or for a sale or other disposition of all or substantially all the assets of the Corporation. Upon a change in control, unless the Committee shall have otherwise provided in the applicable Option Agreement, all Options and Stock Appreciation rights theretofore granted and not fully exercisable shall become exercisable in accordance with their terms; provided, however, that no Option or Stock Appreciation Right which has previously been exercised or otherwise terminated shall become exercisable. 14. Assignments and Transfers. No Award nor any right or interest of a Participant under the Plan in any instrument evidencing any Award under the Plan may be assigned, encumbered or transferred except, in the event of the death of a Participant, by will or the laws of descent and distribution or in the case of Awards other than Incentive Stock Options pursuant to a qualified domestic relations order, as defined in the Code or Title I of ERISA or the rules thereunder. A-8 15. Employee Rights Under the Plan. No director, advisory director, director emeritus, officer or employee shall have a right to be selected as a Participant nor, having been so selected, to be selected again as a Participant and no director, advisory director, director emeritus, officer, employee or other person shall have any claim or right to be granted an Award under the Plan or under any other incentive or similar plan of the Corporation or any Affiliate. Neither the Plan nor any action taken thereunder shall be construed as giving any Employee any right to be retained in the employ of the Corporation or any Affiliate. 16. Delivery and Registration of Stock. The Corporation's obligation to deliver Shares with respect to an Award shall, if the Committee so requests, be conditioned upon the receipt of a representation as to the investment intention of the Participant to whom such Shares are to be delivered, in such form as the Committee shall determine to be necessary or advisable to comply with the provisions of the Securities Act of 1933 or any other Federal, state or local securities legislation or regulation. It may be provided that any representation requirement shall become inoperative upon a registration of the Shares or other action eliminating the necessity of such representation under such Securities Act or other securities legislation. The Corporation shall not be required to deliver any Shares under the Plan prior to (i) the admission of such Shares to listing on any stock exchange on which Shares may then be listed, and (ii) the completion of such regis tration or other qualification of such Shares under any state or Federal law, rule or regulation, as the Committee shall determine to be necessary or advisable. This Plan is intended to comply with Rule 16b-3 under the Securities Exchange Act of 1934. Any provision of the Plan which is inconsistent with said Rule shall, to the extent of such inconsistency, be inoperative and shall not affect the validity of the remaining provisions of the Plan. 17. Withholding Tax. The Corporation shall have the right to deduct from all amounts paid in cash with respect to the exercise of a Right under the Plan any taxes required by law to be withheld with respect to such cash payments. Where a Participant or other person is entitled to receive Shares pursuant to the exercise of an Option or Right pursuant to the Plan, the Corporation shall have the right to require the Participant or such other person to pay the Corporation the amount of any taxes which the Corporation is required to withhold with respect to such Shares, and may, in its sole discretion, withhold sufficient Shares to cover the amount of taxes which the Corporation is required to withhold. No discretion or choice shall be conferred upon any Participant with respect to the form, timing or method of any such tax withholding. 18. Amendment or Termination. The Board of Directors of the Corporation may amend, suspend or terminate the Plan or any portion thereof at any time, but no amendment shall be made without approval of the stockholders of the Corporation which shall (i) materially increase the aggregate number of Shares with respect to which Awards may be made under the Plan, (ii) materially increase the aggregate number of Shares which may be subject to Awards to Participants who are not Employees, or (iii) change the class of persons eligible to participate in the Plan; provided, however, that no such amendment, suspension or termination shall impair the rights of any Participant, without his consent, in any Award theretofore made pursuant to the Plan. A-9 19. Effective Date and Term of Plan. The Plan shall become effective upon its ratification by stockholders of the Corporation. It shall continue in effect for a term of ten years unless sooner terminated under Section 18 hereof. 20. Initial Grants. By, and simultaneously with, ratification of this Plan by the Corporation's stockholders, each member of the Board of Directors of the Corporation at the time of the stockholders ratification of the Plan who is not an Employee, is hereby granted a ten year, NonQualified Stock Option to purchase 5,058 Shares of the Corporation's common stock at an Exercise Price per Share equal to the Market Value of the Corporation's common stock on the date of grant of the Option. Each such Option shall be evidenced by a Non-Qualified Stock Option agreement in a form approved by the Board of Directors of the Corporation and shall be subject in all respects to the terms and conditions of this Plan, which are controlling. A-10 EX-10.D 3 0003.txt RECOGNITION AND RETENTION PLAN EXHIBIT 10(d) WYMAN PARK BANCORPORATION, INC. RECOGNITION AND RETENTION PLAN 1. Plan Purpose. The purpose of the Plan is to promote the long-term interests of the Corporation and its stockholders by providing a means for attracting and retaining directors, officers and employees of the Corporation and its Affiliates. 2. Definitions. The following definitions are applicable to the Plan: "Affiliate" - means any "parent corporation" or "subsidiary corporation" of the Corporation, as such terms are defined in Section 424(e) and (f), respectively, of the Code. "Association" - means Wyman Park Federal Savings & Loan Association, a savings institution and its successors. "Award" - means the grant of Restricted Stock pursuant to the terms of Section 13 of the Plan or by the Committee, as provided in the Plan. "Beneficiary" - means the person or persons designated by a Participant to receive any benefits payable under the Plan in the event of such Participant's death. Such person or persons shall be designated in writing on forms provided for this purpose by the Committee and may be changed from time to time by similar written notice to the Committee. In the absence of a written designation, the Beneficiary shall be the Participant's surviving spouse, if any, or if none, his estate. "Code" - means the Internal Revenue Code of 1986, as amended. "Committee" - means the Committee of the Board of Directors of the Corporation referred to in Section 7 hereof. "Continuous Service" - means the absence of any interruption or termination of service as a director, advisory director, director emeritus, officer or employee of the Corporation or any Affiliate. Service shall not be considered interrupted in the case of sick leave, military leave or any other leave of absence approved by the Corporation or any Affiliate or in the case of transfers between payroll locations of the Corporation or between the Corporation, its Affiliates or its successor. With respect to any advisory director or director emeritus, continuous service shall mean the availability to perform such functions as may be required of such individuals. "Corporation" - means Wyman Park Bancorporation, Inc. "Disability" - means any physical or mental impairment which qualifies a director, advisory director, director emeritus, officer or employee for disability benefits under any B-1 applicable long-term disability plan maintained by the Association or an Affiliate, or, if no such plan applies, which renders such employee or director, in the judgment of the Committee, unable to perform his customary duties and responsibilities. "Early Retirement" -- means retirement from employment with or as a director, advisory director, or emeritus director of the Corporation prior to the Participant either (i) having reached the age of 62 or (ii) having maintained Continuous Service for at least three years. "ERISA" - means the Employee Retirement Income Security Act of 1974, as amended. "Non-Employee Director" - means a director who (a) is not currently an officer or employee of the Corporation; (b) is not a former employee of the Corporation who receives compensation for prior services (other than from a tax-qualified retirement plan); (c) has not been an officer of the Corporation; (d) does not receive renumeration rom the Corporation in any capacity other than as a director; and (e) does not possess an interest in any other transactions or is not engaged in a business relationship for which disclosure would be required under Item 404(a) or (b) of Regulation S-K. "Normal Retirement" -- means retirement from employment with or as a director, advisory director, or emeritus director of the Corporation after the Participant has (i) reached the age of 65 and (ii) maintained Continuous Service for at least three years. "Participant" - means any director, advisory director, director emeritus, officer or employee of the Corporation or any Affiliate who is selected by the Committee to receive an Award or is granted an Award. "Plan" - means the Recognition and Retention Plan of the Corporation. "Restricted Period" - means the period of time selected by the Committee for the purpose of determining when restrictions are in effect under Section 3 hereof with respect to Restricted Stock awarded under the Plan. "Restricted Stock" - means Shares which have been contingently awarded to a Participant by the Committee subject to the restrictions referred to in Section 3 hereof, so long as such restrictions are in effect. "Shares" - means the common stock, par value $0.01 per share, of the Corporation. 3. Terms and Conditions of Restricted Stock. The Committee referred to in Section 7 hereof shall have full and complete authority, subject to the limitations of the Plan, to grant Awards and, in addition to the terms and conditions contained in paragraphs (a) through (f) of this Section 3, to provide such other terms and conditions (which need not be identical among Participants) in respect of such Awards, and the vesting thereof, as the Committee shall determine. B-2 (a) At the time of an Award, the Committee shall establish for each Participant a Restricted Period during which or at the expiration of which, as the Committee shall determine and provide in the agreement referred to in paragraph (d) of this Section 3, the Shares awarded as Restricted Stock shall vest, and subject to any such other terms and conditions as the Committee shall provide, Shares of Restricted Stock may not be sold, assigned, transferred, pledged, voted or otherwise encumbered by the Participant, except as hereinafter provided, during the Restricted Period. Except for such restrictions, and subject to paragraphs (d) and (e) of this Section 3 and Section 4 hereof, the Participant as owner of such Shares shall have all the rights of a stockholder. The Committee shall have the authority, in its discretion, to accelerate the time at which any or all of the restrictions shall lapse with respect to an Award, or to remove any or all of such restrictions, whenever it may determine that such action is appropriate by reason of changes in applicable tax or other laws or other changes in circumstances occurring after the commencement of such Restricted Period. (b) Except as provided in Section 5 hereof, if a Participant ceases to maintain Continuous Service for any reason (other than death, Disability, Normal Retirement, or Early Retirement), unless the Committee shall otherwise determine, all Shares of Restricted Stock theretofore awarded to such Participant and which at the time of such termination of Continuous Service are subject to the restrictions imposed by paragraph (a) of this Section 3 shall upon such termination of Continuous Service be forfeited and returned to the Corporation. If a Participant ceases to maintain Continuous Service by reason of death, Disability, Normal Retirement, or Early Retirement, Restricted Stock then still subject to restrictions imposed by paragraph (a) of this Section 3 will be free of those restrictions as of the day prior to such death, Disability, Normal Retirement, or Early Retirement. (c) Each certificate in respect of Shares of Restricted Stock awarded under the Plan shall be registered in the name of the Participant and deposited by the Participant, together with a stock power endorsed in blank, with the Corporation and shall bear the following (or a similar) legend: The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) contained in the Recognition and Retention Plan of Wyman Park Bancorporation, Inc. Copies of such Plan are on file in the offices of the Secretary of Wyman Park Bancorporation, Inc., 11 West Ridgely Road, Lutherville, Maryland 21093. (d) At the time of the granting of any Award, the Participant shall enter into an Agreement with the Corporation in a form specified by the Committee, agreeing to the terms and conditions of the Award and such other matters as the Committee, in its sole discretion, shall determine (the "Restricted Stock Agreement"). (e) At the time of an Award, the Committee may, in its discretion, determine that the payment to the Participant of dividends declared or paid by the Corporation on any Restricted Stock shall be deferred until the earlier to occur of (i) the lapsing of the restrictions imposed B-3 under paragraph (a) of this Section 3 or (ii) the forfeiture of such Shares under paragraph (b) of this Section 3, and shall instead be held by the Corporation for the account of the Participant until such time. In the event of such deferral, there shall be credited at the end of each year (or portion thereof) interest on the amount of the Participant's account at the beginning of the year at a rate per annum as the Committee, in its discretion, may determine. Payment of deferred dividends to the Participant, together with interest accrued thereon, shall be made upon the earlier to occur of the events specified in (i) and (ii) of the immediately preceding sentence. (f) At the lapsing of the restrictions imposed by paragraph (a) of this Section 3, the Corporation shall redeliver to the Participant (or where the relevant provision of paragraph (b) of this Section 3 applies in the case of a deceased Participant, to his legal representative, Beneficiary or heir) the certificate(s) and stock power deposited with it pursuant to paragraph (c) of this Section 3 and the Shares represented by such certificate(s) shall be free of the restrictions referred to in paragraph (a) of this Section 3. 4. Adjustments Upon Changes in Capitalization. In the event of any change in the outstanding Shares subsequent to the effective date of the Plan by reason of any reorganization, recapitalization, stock split, stock dividend, combination or exchange of shares, merger, consolidation or any change in the corporate structure or shares of the Corporation, the maximum aggregate number and class of Shares as to which Awards may be granted under the Plan and the number and class of Shares with respect to which Awards theretofore have been granted under the Plan shall be appropriately adjusted by the Committee, whose determination shall be conclusive. Any shares of stock or other securities received, as a result of any of the foregoing, by a Participant with respect to Restricted Stock shall be subject to the same restrictions and the certificate(s) or other instruments representing or evidencing such shares or securities shall be legended and deposited with the Corporation in the manner provided in Section 3 hereof. 5. Effect of Change in Control. Each of the events specified in the following clauses (i) through (iii) of this Section 5 shall be deemed a "change of control": (i) any third person, including a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, shall become the beneficial owner of shares of the Corporation with respect to which 25% or more of the total number of votes for the election of the Board of Directors of the Corporation may be cast, (ii) as a result of, or in connection with, any cash tender offer, merger or other business combination, sale of assets or contested election, or combination of the foregoing, the persons who were directors of the Corporation shall cease to constitute a majority of the Board of Directors of the Corporation, or (iii) the stockholders of the Corporation shall approve an agreement providing either for a transaction in which the Corporation will cease to be an independent publicly-owned corporation or for a sale or other disposition of all or substantially all of the assets of the Corporation. Upon a change in control, unless the Committee shall have otherwise provided in the applicable Restricted Stock Agreement, any Restricted Period with respect to Restricted Stock theretofore awarded to such participant shall lapse upon the happening of such event and all Shares awarded as Restricted Stock shall become fully vested in the Participant to whom such Shares were awarded. B-4 6. Assignments and Transfers. During the Restricted Period, no Award nor any right or interest of a Participant under the Plan in any instrument evidencing any Award under the Plan may be assigned, encumbered or transferred except (i) in the event of the death of a Participant, by will or the laws of descent and distribution, or (ii) pursuant to a qualified domestic relations order as defined in the Code or Title I of ERISA or the rules thereunder. 7. Administration. The Plan shall be administered by a Committee consisting of two or more members, each of whom shall be a Non-Employee Director. The members of the Committee shall be appointed by the Board of Directors of the Corporation. Except as limited by the express provisions of the Plan, the Committee shall have sole and complete authority and discretion to: (i) select Participants and grant Awards; (ii) determine the number of Shares to be subject to types of Awards generally, as well as individual Awards granted under the Plan; (iii) determine the terms and conditions upon which Awards shall be granted under the Plan; (iv) prescribe the form and terms of instruments evidencing such grants; and (v) establish from time to time regulations for the administration of the Plan, interpret the Plan, and make all determinations deemed necessary or advisable for the administration of the Plan. A majority of the Committee shall constitute a quorum, and the acts of a majority of the members present at any meeting at which a quorum is present, or acts approved in writing by a majority of the Committee without a meeting, shall be acts of the Committee. 8. Shares Subject to Plan and Delivery and Registration of Stock. Subject to adjustment by the operation of Section 4 hereof, the maximum number of Shares with respect to which Awards may be made under the Plan is 40,468 Shares of the Corporation. The Shares with respect to which Awards may be made under the Plan may be either authorized and unissued Shares or issued Shares heretofore or hereafter reacquired and held as treasury Shares. An Award shall not be considered to have been made under the Plan with respect to Restricted Stock which is forfeited and new Awards may be granted under the Plan with respect to the number of Shares as to which such forfeiture has occurred. The Corporation's obligation to deliver Shares with respect to an Award shall, if the Committee so requests, be conditioned upon the receipt of a representation as to the investment intention of the Participant to whom such Shares are to be delivered, in such form as the Committee shall determine to be necessary or advisable to comply with the provisions of the Securities Act of 1933 or any other Federal, state or local securities legislation or regulation. It may be provided that any representation requirement shall become inoperative upon a registration of the Shares or other action eliminating the necessity of such representation under such Securities Act or other securities legislation. The Corporation shall not be required to deliver any Shares under the Plan prior to (i) the admission of such shares to listing on any stock exchange on which Shares may then be listed, and (ii) the completion of such registration or other qualification of such Shares under any state or Federal law, rule or regulation, as the Committee shall determine to be necessary or advisable. B-5 This Plan is intended to comply with Rule 16b-3 under the Securities Exchange Act of 1934. Any provision of the Plan which is inconsistent with said Rule shall, to the extent of such inconsistency, be inoperative and shall not affect the validity of the remaining provisions of the Plan. 9. Employee Rights Under the Plan. No director, advisory director, director emeritus, officer or employee shall have a right to be selected as a Participant nor, having been so selected, to be selected again as a Participant and no director, advisory director, director emeritus officer, employee or other person shall have any claim or right to be granted an Award under the Plan or under any other incentive or similar plan of the Corporation or any Affiliate. Neither the Plan nor any action taken thereunder shall be construed as giving any officer or employee any right to be retained in the employ of the Corporation, the Association or any Affiliate. 10. Withholding Tax. Upon the termination of the Restricted Period with respect to any shares of Restricted Stock (or at any such earlier time, if any, that an election is made by the Participant under Section 83(b) of the Code, or any successor provision thereto, to include the value of such Shares in taxable income), the Corporation may withhold from any payment or distribution made under this Plan sufficient Shares or may withhold or cause to be paid by the Participant sufficient cash to cover any applicable withholding and employment taxes. The Corporation shall have the right to deduct from all dividends paid with respect to Shares of Restricted Stock the amount of any taxes which the Corporation is required to withhold with respect to such dividend payments. No discretion or choice shall be conferred upon any Participant with respect to the form, timing or method of any such tax withholding. 11. Amendment or Termination. The Board of Directors of the Corporation may amend, suspend or terminate the Plan or any portion thereof at any time; provided, however, that no such amendment, suspension or termination shall impair the rights of any Participant, without his consent, in any Award theretofore made pursuant to the Plan. 12. Effective Date and Term of Plan. The Plan shall become effective upon its ratification by the stockholders of the Corporation. It shall continue in effect for a term of ten years unless sooner terminated under Section 10 hereof. 13. Initial Grants. By, and simultaneously with, the ratification of the Plan by the Corporation's stockholders, each member of the Board of Directors of the Corporation who is not a full-time Employee, is hereby granted an Award equal to 2,023 Shares of the Corporation's common stock. Each such Award shall be evidenced by a Restricted Stock Agreement in a form approved by the Committee administering this Plan and shall be subject in all respects to the terms and conditions of this Plan, which are controlling. The Awards will vest in five equal installments, with the first installment vesting immediately upon the ratification of the Plan by the Corporation's stockholders and each additional installment vesting after the end of the subsequent calendar years, as long as the director maintains Continuous Service with the Corporation or its Affiliates. B-6 EX-13 4 0004.txt ANNUAL REPORT TABLE OF CONTENTS
Letter to Shareholders...........................................................................1 Selected Consolidated Financial Information......................................................2 Management's Discussion and Analysis or Plan of Operations.......................................4 Independent Auditor's Report....................................................................15 Consolidated Financial Statements Consolidated Statements of Financial Condition at June 30, 2000 and 1999...................16 Consolidated Statements of Operations for the Years Ended June 30, 2000 and 1999...........17 Consolidated Statements of Stockholders' Equity for the Years Ended June 30, 2000 and 1999....................................................................18 Consolidated Statements of Cash Flows for the Years Ended June 30, 2000 and 1999...........19 Notes to Consolidated Financial Statements.................................................21 Stockholder Information.........................................................................42 Corporate Information...........................................................................43
LETTER TO OUR SHAREHOLDERS September 29, 2000 To our Shareholders: The directors, officers and staff of Wyman Park Bancorporation, Inc. are pleased to provide you with our third Annual Report. Since becoming a public company on January 8, 1998, we have accomplished two strategic goals to maximize shareholder value. These were the payment of a six dollar per share return of capital dividend, which returned to shareholders a full 60% of their original investment through our initial public offering, and the repurchase, as of June 30, 2000, of 147,381 shares of our stock in the open market as part of our ongoing stock repurchase plan. We plan to continue to repurchase our stock at prices that reflect market values. Earnings for the fiscal year ended June 30, 2000 were $436,000 or $0.54 diluted earnings per share, as compared to $626,000 or $0.70 per share for the prior fiscal year, a decrease of $190,000 or 30.4%. The decrease in income resulted primarily from the Company's payment of a special return of capital dividend of approximately $5.4 million at the end of fiscal year 1999, which significantly reduced the amount of the Company's earning assets during fiscal year 2000 and therefore reduced its interest income. The Company had assets of $68.8 million and total shareholders' equity of $8.6 million as of June 30, 2000. You will find a detailed description of the 2000 fiscal year financial results of your Company contained in the audited consolidated Financial Statements and the accompanying Management's Discussion and Analysis of Financial Condition and Results of Operation. In our message to you last year, there was much discussion concerning Y2K readiness and we are pleased to inform you that your Bank was open for business as usual on Monday, January 3, 2000 without any disruption related to Y2K. As with all other financial institutions throughout the nation, we will continue to monitor for Y2K issues throughout 2000. Our newly formed commercial non-real estate department has allowed us to market our products to a new customer base and better serve our existing customers. Our goal is to improve our mix of residential/commercial loans to increase our asset yield. We continue to update our Website to keep information fresh and informative. For the convenience of our shareholders and customers, a link to obtain our most recent stock quote is available, as well as online loan applications and current products and rates. Please visit us at www.wymanpark.com. We would like to thank our dedicated employees for their loyalty and service to Wyman Park Federal Savings & Loan Association and to the customers we serve. The key to your Bank's success is the personal relationship that we maintain with our customers. As always, we wish to thank our shareholders for your past and continued support that has made it possible for us to prosper. Sincerely yours, /s/ Ernest A. Moretti /s/ Allan B. Heaver Ernest A. Moretti Allan B. Heaver President/CEO Chairman of the Board 2 SELECTED CONSOLIDATED FINANCIAL INFORMATION
June 30, ---------------------------------------------------------------- 2000 1999 1998 1997 1996 ---------------------------------------------------------------- (In Thousands) Selected Financial Condition Data: - --------------------------------- Total assets............................................ $68,840 $70,530 $70,541 $62,241 $63,866 Loans receivable, net................................... 65,224 56,840 62,042 55,189 53,244 Mortgage-backed securities.............................. 174 217 284 356 424 Investment securities................................... --- --- --- 2,993 2,964 Deposits................................................ 55,347 58,008 54,018 56,095 57,871 Total equity............................................ 8,607 8,029 14,266 4,750 4,599
Year Ended June 30, ---------------------------------------------------------------- 2000 1999 1998 1997 1996 -------------- ------------ ------------ ---------- ------------ (In Thousands) Selected Operations Data: - ------------------------ Total interest income................................... $4,779 $5,106 $5,081 $4,658 $4,725 Total interest expense.................................. 2,617 2,686 2,722 2,756 3,073 -------------- ------------ ------------ ---------- ------------ Net interest income.................................. 2,162 2,420 2,359 1,902 1,652 Provision for (recovery of) loan losses................. 3 5 8 145 25 -------------- ------------ ------------ ---------- ------------ Net interest income after provision for loan losses..... 2,159 2,415 2,351 1,757 1,627 Fees and service charges................................ 87 69 60 48 47 Gain on sales of loans, mortgage-backed securities and investment securities............................ -- 49 6 6 20 Other non-interest income............................... 25 27 27 24 39 -------------- ------------ ------------ ---------- ------------ Total non-interest income............................... 112 145 93 78 106 Total non-interest expense.............................. 1,557 1,555 1,597 1,614 1,278 -------------- ------------ ------------ ---------- ------------ Income before taxes..................................... 714 1,005 847 221 455 Income tax provision.................................... 278 379 329 87 161 -------------- ------------ ------------ ---------- ------------ Net income.............................................. $ 436 $ 626 $ 518 $ 134 $294 ============== ============ ============ ========== ============
3
Year Ended June 30, ------------------------------------------------------------------------ 2000 1999 1998 1997 1996 -------------- -------------- ------------- -------------- ------------- Selected Financial Ratios and Other Data: - ---------------------------------------- Performance Ratios: Return on assets (ratio of net income to average total assets)................................ 0.65% 0.87% 0.77% 0.22% 0.46% Return on equity (ratio of net income to average equity)........................................... 5.25 4.64 5.49 2.87 6.56 Interest rate spread information: Average during period.............................. 2.64 2.49 2.75 2.76 2.26 End of period...................................... 2.68 2.36 2.68 2.77 2.19 Net interest margin(1)............................... 3.28 3.40 3.55 3.14 2.63 Ratio of operating expense to average total assets... 2.34 2.15 2.37 2.62 2.01 Ratio of average interest-earning assets to Average interest-bearing liabilities............... 116.13 124.25 119.45 108.40 107.66 Loans as a percentage of total assets................ 94.75 80.59 87.95 88.67 83.37 Quality Ratios: Non-performing assets to total assets at end of period............................................. -- -- .04 .28 .04 Allowance for loan losses to non-performing loans.... -- -- 1,112.00 153.11 456.89 Allowance for loan losses to loans receivable, net... 0.44 0.50 0.45 0.49 0.24 Capital Ratios: Stockholders' equity to total assets at end of period 12.50 11.38(2) 20.28(3) 7.64 7.24 Average stockholders' equity to average assets....... 12.47 18.66 14.03 7.58 7.04 Other Data: Number of full-service offices....................... 2 2 2 2 2
- ------------------- (1) Net Interest income divided by average interest-earning assets. (2) Stockholders' equity at end of period reflects special return of capital distribution (3) Increase from prior fiscal year reflects Company's initial public offering consummated in January 1998 in which $10.1 million was raised. 4 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Forward-Looking Statements When used in this filing and in future filings by Wyman Park Bancorporation, Inc. (the "Company") with the Securities and Exchange Commission, in the Company's press releases or other public or shareholder communications, the words or phrases "would be," "will allow," "intends to," "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 risks and uncertainties, including but not limited to 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, all or some of which 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, and advises readers that various factors, including regional and national economic conditions, substantial changes in levels of market interest rates, credit and other risks of lending and investment activities and competitive and regulatory factors, could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from those anticipated or projected. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements. General Management's discussion and analysis of financial condition and results of operations is intended to assist in understanding the financial condition and results of operations of the Company. The information contained in this section should be read in conjunction with the consolidated financial statements and accompanying notes thereto. The principal business of the Company consists of accepting deposits from the general public and investing these funds primarily in loans, investment securities and short-term liquid investments. The Company's loans consist primarily of loans secured by residential real estate located in its market areas, commercial real estate loans and consumer loans. The Company's net income is dependent primarily on its net interest income, which is the difference between interest earned on interest-earning assets and the interest paid on interest-bearing liabilities. Net interest income is a function of the Company's "interest rate spread," which is the difference between the average yield earned on interest-earning assets and the 5 average rate paid on interest-bearing liabilities. The interest rate spread is affected by regulatory, economic and competitive factors that influence interest rates, loan demand and deposit flows. To a lesser extent, the Company's net income also is affected by the level of general and administrative expenses and the level of other income, which primarily consists of service charges and other fees. The operations of the Company are significantly affected by prevailing economic conditions, competition and the monetary, fiscal and regulatory policies of government agencies. Lending activities are influenced by the demand for and supply of housing, competition among lenders, the level of interest rates and the availability of funds. Deposit flows and costs of funds are influenced by prevailing market rates of interest, primarily on competing investments, account maturities and the levels of personal income and savings in the Company's market area. The Company has been notified by its service providers that they are making satisfactory progress in addressing the Year 2000 matter and that costs associated with resolving the issue will not be material. Management of the Company will continue to monitor this issue. Historically, the Company's mission has been to originate loans on a profitable basis to the communities it serves. In seeking to accomplish this mission, the Board of Directors and management have adopted a business strategy designed (i) to maintain the Company's capital level in excess of regulatory requirements; (ii) to maintain the Company's asset quality; (iii) to maintain, and if possible, increase the Company's earnings; and (iv) to manage the Company's exposure to changes in interest rates. Financial Condition June 30, 2000 compared to June 30, 1999 Total assets decreased $1.7 million or 2.4% to $68.8 million at June 30, 2000 from $70.5 million at June 30, 1999. Loans receivable increased by $8.4 million or 14.8% to $65.2 million at June 30, 2000 from $56.8 million at June 30, 1999. The $8.4 million increase in loans receivable consisted of $5.9 million in residential real estate loans, $1.3 million in commercial real estate loans, $1.0 million in commercial non-real estate loans and $180,000 in consumer loans. Cash and cash equivalents decreased $10.0 million or 82.6%, to $2.1 million at June 30, 2000 from $12.1 million at June 30, 1999 primarily as a result of increased loan production and a decrease in savings deposits. Total savings deposits decreased $2.7 million or 4.7%, to $55.3 million at June 30, 2000 from $58.0 million at June 30, 1999. The $2.7 million decrease in savings deposits consisted of $3.1 million in money market and NOW accounts and $200,000 in demand deposits, offset by an increase of $600,000 in time deposits (certificates of deposit). The decrease in savings deposits is primarily the result of withdrawals of liquid deposits which management believes resulted from the shift by customers of their more liquid funds into alternative, higher-yielding investments at other financial service companies. 6 Total liabilities decreased approximately $2.3 million or 3.7%, to $60.2 million at June 30, 2000 from $62.5 million at June 30, 1999. This decrease was primarily the result of the $2.7 million decrease in savings deposits and an increase of $400,000 in borrowings. Operating Results Comparison of Operating Results for the Years Ended June 30, 2000 and 1999 Performance Summary. Net income for the year ended June 30, 2000 was approximately $436,000, a decrease of $190,000, or 30.4% from net income of $626,000 for the year ended June 30, 1999. The decrease was primarily due to a decrease in net interest income of $258,000 and a decrease in non-interest income of $33,000 producing a decrease in income before provision for income taxes of $291,000 to $714,000 for the year ended June 30, 2000 as compared to $1,005,000 for the year ended June 30, 1999. For the years ended June 30, 2000 and 1999, the returns on average assets were 0.65% and 0.87%, respectively, while the returns on average equity were 5.25% and 4.64%, respectively. Net Interest Income. Net interest income decreased by approximately $258,000, or 10.7%, to $2,162,000 for the year ended June 30, 2000 from $2,420,000 for the year ended June 30, 1999. This reflects a decrease of $327,000, or 6.4% in interest income to $4,779,000 in fiscal 2000 from $5,106,000 in fiscal 1999, while interest expense was decreasing by $69,000, or 2.6%, to $2,617,000 in fiscal 2000 from $2,686,000 in fiscal 1999. The decrease in net interest income arose primarily from the decrease in the excess of the average balance of interest-earning assets over the average balance of interest-bearing liabilities. For the year ended June 30, 2000, the yield on average interest-earning assets was 7.25% compared to 7.18% for the year ended June 30, 1999. The cost of average interest-bearing liabilities was 4.61% for the year ended June 30, 2000, a decrease from 4.69% for year ended June 30, 1999. The average balance of interest-earning assets decreased by $5.3 million or 7.4%, to $65.9 million for the year ended June 30, 2000 from $71.2 million for the year ended June 30, 1999. The average balance of interest-bearing liabilities decreased by $500,000 or 0.9%, to $56.8 million for the year ended June 30, 2000, compared to $57.3 million for the year ended June 30, 1999. The interest rate spread increased to 2.64% for the year ended June 30, 2000 from 2.49% for the year ended June 30, 1999 as the Company originated loans at higher market rates. The net interest margin decreased to 3.28% for the year ended June 30, 2000 from 3.40% for the year ended June 30, 1999. Provision for Loan Losses. During the year ended June 30, 2000, the Company recorded a provision for loan losses of $2,400 compared to $4,600 for the year ended June 30, 1999. During the year ended June 30, 2000, the Company's nonperforming loans remained at $0. Management will continue to monitor its allowance for loan losses, making additions to the allowance through the provision for loan losses as economic conditions and other factors dictate. Although the Company maintains its allowance for loan losses at a level which it considers to be adequate to provide for loan losses, there can be no assurance that future losses will not exceed estimated amounts or that additional provisions for loan losses will not be required in the future. 7 Non-Interest Income. For the year ended June 30, 2000 non-interest income decreased approximately $33,000, or 22.8%, to $112,000 from $145,000 for the year ended June 30, 1999. This decrease is primarily due to a decrease in gains on sales of loans receivable of $49,000, offset by an increase in loan fees and service charges of $18,000. Non-Interest Expense. Non-interest expense increased $2,000 or 0.1%, to $1,557,000 for the year ended June 30, 2000 from $1,555,000 for the year ended June 30, 1999. Income Taxes. The provision for income taxes decreased by approximately $101,000 or 26.6%, to $278,000 for the year ended June 30, 2000 from $379,000 for the year ended June 30, 1999. This decrease results from the corresponding $291,000 decrease in income before the tax provision. The Company's effective tax rates were 39.0% and 37.7% for the years ended June 30, 2000 and 1999, respectively. Yields Earned and Rates Paid The following table presents for the periods indicated the total dollar amount of interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates. No tax equivalent adjustments were made. All average balances are monthly average balances. The use of monthly averages, rather than daily averages, does not materially affect the information in the table. Non-accruing loans have been included in the table as loans carrying a zero yield. 8
Year Ended June 30, ------------------- 2000 1999 ------------------------------------- ------------------------------------ Average Interest Average Interest Outstanding Earned/ Yield/ Outstanding Earned/ Yield/ Balance Paid Rate Balance Paid Rate ------- ---- ---- ------- ---- ---- (Dollars in Thousands) Interest-Earning Assets: Loans receivable(1)......... $ 61,359 $ 4,514 7.36% $ 60,154 $ 4,540 7.55% Mortgage-backed securities.. 193 13 6.74 247 17 6.88 FHLB stock.................. 509 39 7.70 509 38 7.47 Other investments........... 3,846 213 5.54 10,248 511 4.99 ------------ -------- ---------- -------- Total interest-earning assets(1) $ 65,907 $ 4,779 7.25 $ 71,158 $ 5,106 7.18 ============ ======== ========== ======== Interest-Bearing Liabilities: Savings deposits............ $ 5,597 $ 169 3.02% $ 5,727 $ 187 3.27% Demand and NOW deposits..... 11,053 279 2.52 11,268 290 2.57 Certificate accounts........ 38,961 2,102 5.40 39,980 2,200 5.50 Escrow deposits............. 60 3 5.00 73 4 5.48 Borrowings.................. 1,083 64 5.91 221 5 2.26(2) ------------ -------- ---------- -------- Total interest-bearing liabilities $ 56,754 $ 2,617 4.61 $ 57,269 $ 2,686 4.69 ============ ======== ========== ======== Net interest income........... $ 2,162 $ 2,420 ======== ======== Net interest rate spread...... 2.64% 2.49% ===== ===== Net earning assets............ $ 9,153 $ 13,889 ============ ========== Net yield on average interest-earning assets. 3.28% 3.40% ===== ===== Average interest-earning assets to average interest-bearing liabilities................... 1.16x 1.24x ============ ===========
(1) Calculated net of deferred loan fees, loan discounts, loans in process and loss reserves. (2) Amounts reflect Company's short-term borrowing of $2.65 million on June 20, 1999 at an annual rate of 6.99%. For more information, see Note 8 of Notes to Consolidated Financial Statements. 9 Rate Volume Analysis The following schedule presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. It distinguishes between the changes related to outstanding balances and that due to the changes in interest rates. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (i) changes in volume (i.e., changes in volume multiplied by old rate) and (ii) changes in rate (i.e., changes in rate multiplied by old volume). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately to the change due to volume and the change due to rate.
Year Ended June 30, ------------------- 2000 vs. 1999 1999 vs. 1998 ----------------------------------- --------------------------------- Increase Increase (Decrease) Total (Decrease) Total Due to Increase Due to Increase Volume Rate (Decrease) Volume Rate (Decrease) ------ ---- -------- ------ ---- -------- (Dollars in Thousands) Interest-earning assets: Loans receivable....................... $ 89 $ (115) $ (26) $ 34 $ (175) $ (141) Mortgage-backed securities............. (4) -- (4) (5) (1) (6) Investment securities.................. -- -- -- (85) (85) Other.................................. (354) 57 (297) 287 (30) 257 ------- ------- ---------- ------- -------- -------- Total interest-earning assets........ $ (269) $ (58) $ (327) $ 231 $ (206) $ 25 ------- -------- ---------- ------- -------- ------- Interest-bearing liabilities: Savings deposits....................... $ (4) $ (14) $ (18) $ -- $ 6 $ 6 Demand and NOW deposits................ (5) (6) (11) 45 (28) 17 Certificate accounts................... (55) (43) (98) 14 (40) (26) Escrow deposits........................ (1) -- (1) (1) -- (1) Borrowings............................. 51 8 59 (8) (24) (32) ------ ------- --------- -------- -------- --------- Total interest-bearing liabilities... $ (14) $ (55) $ (69) $ 50 $ (86) $ (36) ------- -------- ---------- -------- -------- --------- Net interest income..................... $ (258) $ 61 ========== =======
10 Asset/Liability Management Quantitative Aspects of Market Risk. The Company does not maintain a trading account for any class of financial instrument. Further, it is not currently subject to foreign currency exchange rate risk or commodity price risk. The stock in the FHLB of Atlanta does not have equity price risk because it is issued only to members and is redeemable for its $100 par value. The following table illustrates quantitative sensitivity to interest rate risk for financial instruments other than cash and cash equivalents, FHLB stock and demand deposit accounts for the Company as of June 30, 2000.
Maturing in Years Ended June 30, ------------------------------------------------------------------------------------------- 2002 & 2004 & 2006 - 2011 - 2001 2003 2005 2010 2020 Thereafter Total ---- ---- ---- ---- ---- ---------- ----- (Dollars in Thousands) Assets ------ Loans receivable: Amount................. $ 13,544 $5,933 $5,018 $20,604 $15,683 $5,046 $65,828 Average interest rate.. 8.18% 7.30% 6.81% 7.09% 7.23% 7.03% 7.40% Mortgage-backed securities: Amount................. -- -- -- -- 174 -- 174 Average interest rates. -- -- -- -- 7.88% -- 7.88% Liabilities ----------- Deposit Certificate Accounts: Amount................. 18,281 19,814 2,515 -- -- -- 40,610 Average interest rates. 5.51% 6.19% 5.37% -- -- -- 5.83% Borrowings: Amount.................. 3,000 -- -- -- -- -- 3,000 Average interest rate... 6.78% -- -- -- -- -- 6.78%
Qualitative Aspects of Market Risk. One of the Company's principal financial objectives is to achieve long-term profitability while reducing its exposure to fluctuations in interest rates. The Company has sought to reduce exposure of its earnings to changes in market interest rates by managing the mismatch between asset and liability maturities and interest rates. The principal element in achieving this objective has been to increase the interest-rate sensitivity of the Company's assets by originating loans with interest rates subject to periodic repricing to market conditions. Accordingly, the Company has emphasized the origination of one- to three-year adjustable rate mortgage loans, balloon loans, short-term and adjustable-rate commercial loans, and consumer loans for retention in its portfolio. An asset or liability is interest rate sensitive within a specific time period if it will mature or reprice within that time period. If the Company's assets mature or reprice more quickly or to a greater extent than its liabilities, the Company's net portfolio value and net interest income would tend to increase during periods of rising interest rates but decrease during periods of falling interest rates. If the Company's assets mature or reprice more slowly or to a lesser extent than its liabilities, the Company's net portfolio value and net interest income would tend to decrease during periods of rising interest rates but increase during periods of falling interest rates. 11 The Company's Board of Directors has formulated an Interest Rate Risk Management Policy designed to promote long-term profitability while managing interest rate risk. The Board of Directors has established an Asset/Liability Committee which consists primarily of the management team of the Company. This committee meets periodically and reports to the Board of Directors quarterly concerning asset/liability policies, strategies and the Company's current interest rate risk position. The committee's first priority is to structure and price the Company's assets and liabilities to maintain an acceptable interest rate spread while reducing the net effects of changes in interest rates. Management's principal strategy in managing the Company's interest rate risk has been to maintain short and intermediate term assets in the portfolio, including one and three year adjustable rate mortgage loans, as well as increased levels of commercial and consumer loans, which typically are for short or intermediate terms and carry higher interest rates than residential mortgage loans. In addition, in managing the Company's portfolio of investment securities and mortgage-backed and related securities, management seeks to purchase securities that mature on a basis that approximates as closely as possible the estimated maturities of the Company's liabilities or purchase securities that have adjustable rate provisions. The Company does not engage in hedging activities. In addition to shortening the average repricing of its assets, the Company has sought to lengthen the average maturity of its liabilities by adopting a tiered pricing program for its certificates of deposit, which provides higher rates of interest on its longer term certificates in order to encourage depositors to invest in certificates with longer maturities. This policy is blended with management's strategy for reducing the overall balance in certificate accounts in order to reduce the Company's interest expense. Net Portfolio Value. In order to encourage associations to reduce their interest rate risk, the OTS adopted a rule incorporating an interest rate risk ("IRR") component into the risk-based capital rules. The IRR component is a dollar amount that will be deducted from total capital for the purpose of calculating an institution's risk-based capital requirement and is measured in terms of the sensitivity of its net portfolio value ("NPV") to changes in interest rates. NPV is the difference between incoming and outgoing discounted cash flows from assets, liabilities, and off-balance sheet contracts. An institution's IRR is measured as the change to its NPV as a result of a hypothetical 200 basis points ("bp") change in market interest rates. A resulting change in NPV of more than 2% of the estimated market value of its assets will require the institution to deduct from its capital 50% of that excess change. The rules provide that the OTS will calculate the IRR component quarterly for each institution. Management reviews the OTS measurements on a quarterly basis. In addition to monitoring selected measures on NPV, management also monitors effects on net interest income resulting from increases or decreases in rates. This measure is used in conjunction with NPV measures to identify excessive interest rate risk. 12 The following table presents the Company's NPV at June 30, 2000, as calculated by the OTS, based on information provided to the OTS by the Company. NPV as % of Portfolio Value Net Portfolio Value of Assets ------------------------------------- -------------------- Change NPV in Rates $ Amount $ Change % Change Ratio % Change -------- -------- -------- -------- ----- -------- (Dollars in Thousands) +300 $4,475 $(3,682) (45)% 6.98% (4.82)% +200 5,717 (2,441) (30) 8.69 (3.11) +100 6,966 (1,192) (15) (1.48) 10.32 Static 8,158 --- --- 11.80 --- (100) 9,157 999 12 12.97 1.17 (200) 9,715 1,557 19 13.56 1.76 (300) 9,988 1,831 22 13.80 2.00 In the above table, the first column on the left presents the basis points increments of yield curve shifts. The second column presents the overall dollar amount of NPV at each basis point increment. The third and fourth columns present the Company's actual position in dollar change and percentage change in NPV at each basis point increment. The remaining columns present the Company's percentage and percentage change in its NPV as a percentage of portfolio value of assets. Had it been subject to the IRR component at June 30, 2000 the Company would have been considered to have had a greater than normal level of interest rate exposure and a deduction from capital of $366,000 would have been required. Although the OTS has informed the Company that it is not subject to the IRR component discussed above, the Company is still subject to interest rate risk and, as can be seen above, rising interest rates will reduce the Company's NPV. The OTS has the authority to require otherwise exempt institutions to comply with the rule concerning interest rate risk. Certain shortcomings are inherent in the method of analysis presented in the computation of NPV. Although certain assets and liabilities may have similar maturities or periods within which they will reprice, they may react differently to changes in market interest rates. The interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. The Company's Board of Directors is responsible for reviewing the Company's asset and liability policies. The Board reviews interest rate risk and trends on a quarterly basis and liquidity, capital ratios and requirements on a monthly basis. Management is responsible for 13 administering the policies and determinations of the Board of Directors with respect to the Association's assets and liability goals and strategies. Liquidity and Capital Resources The primary investment activity of the Company is originating one- to four-family residential mortgages, commercial real estate loans, and consumer loans to be held to maturity. For the fiscal years ended June 30, 2000 and 1999 the Company originated loans for its portfolio in the amount of $16.8 million and $10.0 million, respectively. For the same two fiscal years, these activities were funded from repayments of $9.4 million and $14.2 million, respectively, and sales and participations of $4.6 million in fiscal year 1999. There were no sales or participations in fiscal year 2000. The Company is required to maintain minimum levels of liquid assets under government regulations. The Company's liquid assets are determined by adding (1) cash on hand, (2) daily investable deposits, (3) U.S. Government agency obligations with maturities of less than five years and (4) accrued interest on unpledged liquid assets. The liquidity base is defined as net withdrawable accounts maturing in less than one year, plus short-term borrowings. The Company's liquidity ratio is determined by dividing the sum of the liquid assets for each calendar day in the current quarter by the liquidity base at the end of the preceding quarter multiplied by the number of calendar days in the current quarter. The Company's most liquid assets are cash and cash equivalents, which include short-term investments. At June 30, 2000 and 1999, cash and cash equivalents were $2.1 million and $12.1 million, respectively. In addition, the Company has used jumbo certificates of deposit as a source of funds. Deposits of $100,000 or more represented $6.9 million at June 30, 2000 (of which $5.2 million were jumbo certificates of deposit) and $8.6 million at June 30, 1999, or 12.5% and 14.8% of total deposits, respectively. The regulatory liquidity requirement for the Company is 4.0%. The Company has always met the liquidity requirements. The Company's eligible total liquidity ratios were 8.5% and 29.3%, respectively, at June 30, 2000 and 1999. Liquidity management for the Company is both an ongoing and long-term function of the Company's asset/liability management strategy. Excess funds, when applicable, generally are invested in overnight deposits at a correspondent bank and at the FHLB of Atlanta. Currently when the Company requires funds, beyond its ability to generate deposits, additional sources of funds are available through the FHLB of Atlanta. The Company has the ability to pledge its FHLB of Atlanta stock or certain other assets as collateral for such advances. Management and the Board of Directors believe that due to significant amounts of adjustable rate mortgage loans that could be sold and the Company's ability to acquire funds from the FHLB of Atlanta, the Company's liquidity is adequate. The Company's principal sources of funds are deposits, loan repayments and prepayments, short-term borrowings and other funds provided by operations. While scheduled loan repayments are relatively predictable, deposit flows and early loan prepayments are more influenced by interest rates, general economic conditions, and competition. The Company maintains investments in liquid assets based upon management's assessment of (1) need for 14 funds, (2) expected deposit flows, (3) yields available on short-term liquid assets and (4) objectives of the asset/liability management program. Impact of Inflation and Changing Prices The 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. Current Accounting Issues SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" was issued in June, 1999. This Statement standardizes the accounting for derivative instruments including certain derivative instruments embedded in other contracts, by requiring that an entity recognize these items as assets or liabilities in the statement of financial position and measure them at fair value. This Statement generally provides for matching the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or the earnings effect of the hedged forecasted transaction. The Statement, which is effective for all fiscal quarters of all fiscal years beginning after June 15, 2000, will not affect the Company's financial position or its results of operations. 15 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES STOCKHOLDER INFORMATION ANNUAL MEETING The annual meeting of stockholders will be held at 3:00 p.m., local time, on October 18, 2000, at the main office located at 11 West Ridgely Road, Lutherville, Maryland. STOCK LISTING AND PRICE RANGE OF COMMON STOCK The Company's stock is traded on the OTC Electronic Bulletin Board under the symbol "WPBC." Quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions. The source of this information is IDD Information Services. High Low Dividends ---- --- --------- September 30, 1998 $ 14.25 $ 10.875 -- December 31, 1998 12.875 10.00 -- March 31, 1999 12.00 10.75 -- June 30, 1999 14.25 6.625 6.00(1) September 30, 1999 7.50 6.75 -- December 31, 1999 7.375 6.25 -- March 31, 2000 7.625 5.50 -- June 30, 2000 7.50 6.125 -- - ---------------------------- (1) Reflects a $6.00 per share return of capital distribution paid on June 21, 1999. Dividend payment decisions are made with consideration of a variety of factors including earnings, financial condition, market considerations and regulatory restrictions. Restrictions on dividend payments are described in Note 11 of the Notes to Financial Statements included in this report. SHAREHOLDERS AND GENERAL INQUIRIES TRANSFER AGENT Ernest A. Moretti, President and CEO Registrar and Transfer Company Wyman Park Bancorporation, Inc. 10 Commerce Drive 11 West Ridgely Road Cranford, New Jersey 07016 Lutherville, Maryland 21093 (908) 272-8511 (410) 252-6450 ANNUAL REPORTS ON FORM 10-KSB The Company has filed an annual report on Form 10-KSB for its fiscal year ended June 30, 2000, with the Securities and Exchange Commission. Copies of the Form 10-KSB may be obtained without charge by contacting: Ernest A. Moretti, President and CEO Wyman Park Bancorporation, Inc. 11 West Ridgely Road Lutherville, Maryland 21093 (410) 252-6450 16 CORPORATE INFORMATION COMPANY AND BANK ADDRESS 11 West Ridgely Road Telephone: (410) 252-6450 Lutherville, Maryland 21093 Fax: (410) 252-6744
DIRECTORS OF THE BOARD Allan B. Heaver John K. White Managing General Partner of Heaver Properties Retired Executive Vice President and current Lutherville, Maryland member of the Board of Directors of Baltimore Life Insurance Company and Life of Maryland Insurance Ernest A. Moretti John R. Beever President and Chief Executive Officer of Wyman Park Retired Chairman of the Board and President of Bancorporation, Inc. John Dittmar & Sons, Inc. H. Douglas Huether Albert M. Copp President and Chairman of the Board of Independent Co-owner and President of Woodhall Wine Cellars Can Company Principal of Woodhall Associates Gilbert D. Marsiglia, Sr. Jay H. Salkin President of the real estate brokerage Senior Vice President - Branch Manager of Advest, firm of Gilbert D. Marsiglia & Co., Inc. Inc. G. Scott Barhight Partner in the law firm of Whiteford, Taylor & Preston, L.L.P.
WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARY OFFICERS Ernest A. Moretti Ronald W. Robinson President and Chief Executive Officer Treasurer Charmaine M. Snyder Secretary and Loan Servicing Manager INDEPENDENT AUDITORS SPECIAL COUNSEL Anderson Associates, LLP Kutak Rock LLP 7621 Fitch Lane Suite 1000 Baltimore, Maryland 21236 1101 Connecticut Avenue, N.W. Washington, DC 20036 Independent Auditor's Report The Board of Directors Wyman Park Bancorporation, Inc. Lutherville, Maryland We have audited the accompanying consolidated statements of financial condition of Wyman Park Bancorporation, Inc. and Subsidiaries as of June 30, 2000 and 1999, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the two years in the two year period ended June 30, 2000. These consolidated financial statements are the responsibility of Wyman Park Bancorporation, Inc.'s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Wyman Park Bancorporation, Inc. and Subsidiaries at June 30, 2000 and 1999, and the consolidated results of their operations and their cash flows for each of the two years in the two year period ended June 30, 2000, in conformity with generally accepted accounting principles. /s/ Anderson Associates LLP July 26, 2000 Baltimore, Maryland F-1 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES Lutherville, Maryland CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION JUNE 30, 2000 AND 1999
2000 1999 ---- ---- Assets Cash and non-interest bearing deposits $ 310,442 $ 346,756 Interest bearing deposits in other banks 474,358 7,068,548 Federal funds sold 1,301,106 4,685,426 ------------- ------------ Total cash and cash equivalents (Notes 1 and 13) 2,085,906 12,100,730 Loans receivable, net (Notes 1, 4 and 13) 65,223,905 56,839,675 Mortgage backed securities held-to-maturity at amortized cost, fair value of $176,350 (2000) and $217,971 (1999) (Notes 1, 3 and 13) 174,086 216,663 Federal Home Loan Bank of Atlanta stock, at cost (Notes 2 and 13) 508,500 508,500 Accrued interest receivable (Note 5) 333,114 292,175 Ground rents owned, at cost (Note 13) 122,600 122,600 Property and equipment, net (Notes 1 and 6) 107,304 155,281 Federal and state income taxes receivable 16,985 13,688 Deferred tax asset (Notes 1 and 9) 203,364 189,020 Prepaid expenses and other assets 63,850 92,056 -------------- -------------- Total assets $ 68,839,614 $ 70,530,388 ============== ============== Liabilities and Equity Liabilities - ----------- Demand deposits $ 5,643,177 $ 5,803,776 Money market and NOW accounts 9,093,949 12,169,347 Time deposits 40,609,938 40,035,036 -------------- -------------- Total deposits (Notes 7 and 13) 55,347,064 58,008,159 Borrowings (Notes 8 and 13) 3,000,000 2,650,000 Advance payments by borrowers for taxes, insurance and ground rents (Note 13) 1,315,538 1,278,634 Accrued interest payable on savings deposits 17,267 20,148 Accrued interest on borrowings - 5,038 Federal and state income taxes payable 8,748 727 Accrued expenses and other liabilities 543,761 538,375 -------------- -------------- Total liabilities 60,232,378 62,501,081 Commitments and contingencies (Notes 4, 6, 9, 10 and 13) Stockholders' Equity - -------------------- Common stock, par value $.01 per share, authorized 2,000,000 shares, issued 1,011,713 shares in 2000 and in 1999 10,117 10,117 Additional paid-in capital 4,053,677 3,959,985 Contra equity - Employee Stock Ownership Plan (ESOP) (539,770) (632,420) Retained earnings, substantially restricted 6,327,076 5,891,389 Treasury stock at cost, shares 112,987 (2000) and 105,787 (1999) (1,243,864) (1,199,764) -------------- -------------- Total stockholders' equity 8,607,236 8,029,307 -------------- -------------- Total liabilities and stockholders' equity $ 68,839,614 $ 70,530,388 ============== ==============
The accompanying notes to consolidated financial statements are an integral part of these statements. F-2 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES Lutherville, Maryland CONSOLIDATED STATEMENTS OF OPERATIONS JUNE 30, 2000 AND 1999
2000 1999 ---- ---- Interest and fees on loans receivable $ 4,513,841 $ 4,540,414 Interest on mortgage backed securities 12,744 16,824 Interest on other investments 252,473 548,437 ----------- ----------- Total interest income 4,779,058 5,105,675 Interest on savings deposits 2,550,106 2,677,149 Interest on Federal Home Loan Bank advances (short term) 61,017 -- Interest on borrowings 3,084 5,038 Interest on escrow deposits 3,336 4,008 ----------- ----------- Total interest expense 2,617,543 2,686,195 Net interest income 2,161,515 2,419,480 Provision for loan losses (Notes 1 and 4) 2,400 4,600 ----------- ----------- Net interest income after provision for loan losses 2,159,115 2,414,880 Other Income Loan fees and service charges 87,202 69,132 Gains on sales of loans receivable -- 49,270 Other 24,758 26,752 ----------- ----------- Total other income 111,960 145,154 General and Administrative Expenses Salaries and employee benefits 875,537 877,553 Occupancy costs 95,290 94,342 Federal deposit insurance premiums 23,029 33,432 Furniture and fixtures depreciation and maintenance 52,948 51,442 Data processing 81,845 84,273 Advertising 68,187 42,439 Franchise and other taxes 48,039 54,015 Professional services 88,833 82,355 Other 223,659 234,915 ----------- ----------- Total general and administrative expenses 1,557,367 1,554,766 Income before tax provision 713,708 1,005,268 Provision for income taxes (Notes 1 and 9) 278,021 379,301 ----------- ----------- Net income $ 435,687 $ 625,967 =========== =========== Basic earnings per share $ .56 $ 0.70 =========== =========== Diluted earnings per share $ .54 $ 0.70 =========== ===========
The accompanying notes to consolidated financial statements are an integral part of these statements. F-3 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES Lutherville, Maryland CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
Additional Contra Equity Common Paid-In Employee Stock Retained Stock Capital Ownership Plan Earnings ---------- -------------- --------------- --------- Balance at June 30, 1998 $10,117 $ 9,704,005 $ (720,090) $ 5,272,252 Purchase of 105,787 shares of common stock - - - - Compensation under stock based benefit plan, net of tax - (5,797) 87,670 - Deferred compensation - Recognition And Retention Plan ("RRP") - (378,334) - (6,830) Compensation under RRP - 75,667 - - Special distribution ($6.00 per share) - (5,435,556) - - Net income - - - 625,967 ----------- ------------ -------------- ----------- Balance at June 30, 1999 10,117 3,959,985 (632,420) 5,891,389 Purchase of 7,200 shares of common stock - - - - Compensation under stock based benefit plan, net of tax - 18,025 92,650 - Compensation under RRP - 75,667 - - Net income - - - 435,687 ----------- ----------- -------------- ----------- Balance at June 30, 2000 $10,117 $ 4,053,677 $ (539,770) $ 6,327,076 =========== =========== ============== =========== Treasury Stock Total -------- ----- Balance at June 30, 1998 $ - $ 14,266,284 Purchase of 105,787 shares of common stock (1,199,764) (1,199,764) Compensation under stock based benefit plan, net of tax - 81,873 Deferred compensation - Recognition And Retention Plan ("RRP") - (385,164) Compensation under RRP - 75,667 Special distribution ($6.00 per share) - (5,435,556) Net income - 625,967 ------------- ------------ Balance at June 30, 1999 (1,199,764) 8,029,307 Purchase of 7,200 shares of common stock (44,100) (44,100) Compensation under stock based benefit plan, net of tax - 110,675 Compensation under RRP - 75,667 Net income - 435,687 ------------- ------------ Balance at June 30, 2000 $ (1,243,864) $ 8,607,236 ============= ============
The accompanying notes to consolidated financial statements are an integral part of these statements. F-4 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES Lutherville, Maryland CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
2000 1999 ---- ---- Cash flows from operating activities Net income $ 435,687 $ 625,967 Adjustments to reconcile net income to net cash provided by operating activities -------------------------------------------------------- Depreciation and amortization 50,642 52,829 Non-cash compensation under Stock Based Benefit and Bonus Plans 186,343 157,540 Deferred income tax benefit (14,344) (39,001) Provision for loan losses 2,400 4,600 Amortization of loan fees (85,246) (88,465) Gain on sales of loans receivable - (49,270) Loans originated for resale - (4,575,600) Proceeds from sale of loans originated for resale - 4,624,870 (Increase) decrease in accrued interest receivable (40,939) 36,759 Decrease (increase) in prepaid expenses and other assets 28,206 (31,552) Increase in accrued expenses and other liabilities 5,386 90,255 Increase in federal and state income taxes receivable (3,297) (13,558) Increase (decrease) increase in federal and state income taxes payable 8,021 (278,346) (Decrease) increase in accrued interest payable (7,919) 7,691 ----------- ------------- Net cash provided by operating activities 564,940 524,719 Cash flows from investment activities - ------------------------------------- Net (increase) decrease in loans receivable (8,301,385) 5,286,654 Mortgage backed securities principal repayments 42,577 67,052 Sale of Federal Home Loan Bank of Atlanta stock - 1,400 Purchases of property and equipment (2,665) (19,990) Sale of ground rents owned - 6,508 ----------- ------------- Net cash provided by (used in) investing activities (8,261,473) 5,341,624 Cash flows from financing activities - ------------------------------------ Net (decrease) increase in savings deposits (2,661,095) 3,990,011 Increase (decrease) in advance payments by borrowers for taxes, insurance and ground rents 36,904 (89,833) Decrease in checks outstanding in excess of bank balance - (143,430) Increase in borrowings 350,000 2,650,000 Special distribution - (5,435,556) Repurchase common stock (44,100) (1,199,764) Common shares repurchased under Stock Bonus Plan - (385,164) ----------- -------------- Net cash provided by (used in) financing activities (2,318,291) (613,736) ----------- --------------
F-5 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES Lutherville, Maryland CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 2000 AND 1999
2000 1999 ---- ---- Net (decrease) increase in cash and cash equivalents $(10,014,824) $ 5,252,607 Cash and cash equivalents at beginning of year 12,100,730 6,848,123 ------------ ------------ Cash and cash equivalents at end of year $ 2,085,906 $ 12,100,730 ============ ============ Supplemental information - ------------------------ Interest paid on savings deposits and borrowed funds $ 2,658,720 $ 2,686,196 ============ ============ Income taxes $ 297,197 $ 732,411 ============ ============
The accompanying notes to consolidated financial statements are an integral part of these statements. F-6 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements for the year ended June 30, 2000 include Wyman Park Bancorporation, Inc. (the "Company") and its wholly-owned subsidiaries, Wyman Park Federal Savings and Loan Association (the "Association") and W. P. Financial Corporation. All significant intercompany transactions have been eliminated. The Company is the holding company of the Association. The Association's primary business activity is the acceptance of deposits from the general public and using the proceeds for investments and loan originations. The Association is subject to competition from other financial institutions. The Association is subject to the regulations of certain federal agencies and undergoes periodic examinations by those regulatory authorities. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statements of financial condition and income and expenses for the period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses. Mortgage Backed Securities Debt securities are classified as held to maturity and are recorded at amortized cost. Management has the positive intent and ability to hold the securities to maturity. Management does not invest in securities for trading purposes. Fair value is determined based on bid prices published in financial newspapers or bid quotations received from securities dealers. Premiums and discounts on mortgage backed securities are amortized over the term of the security using the interest method. Gains and losses on the sale of investments and mortgage backed securities are determined using the specific identification method. Property and Equipment Property and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization are accumulated using the straight-line method over the estimated useful lives of the assets. Additions and improvements are capitalized, and charges for repairs and maintenance are expensed when incurred. The related cost and accumulated depreciation or amortization are eliminated from the accounts when an asset is sold or retired and the resultant gain or loss is credited or charged to income. F-7 WYMAN PARK BANCORPOATION, INC. AND SUBSIDIARIES Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Summary of Significant Accounting Policies - Continued Income Taxes Deferred income taxes are recognized for temporary differences between the financial reporting basis and income tax basis of assets and liabilities based on enacted tax rates expected to be in effect when such amounts are realized or settled. Deferred tax assets are recognized only to the extent that it is more likely than not that such amounts will be realized based on consideration of available evidence. Loans Receivable Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding principal balance adjusted for any charge-offs, the allowance for loan losses, and any deferred fees or costs on originated loans. Loan origination fees and certain direct origination costs are capitalized and recognized as an adjustment of the yield of the related loan. An allowance for loan losses is provided through charges to income in an amount that management believes will be adequate to absorb losses on existing loans that may become uncollectible, based on evaluations of the collectibility of loans and prior loan loss experience. The evaluations take into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, and current economic conditions that may affect the borrowers' ability to pay. Determining the amount of the allowance for loan losses requires the use of estimates and assumptions. Management believes the allowance for losses on loans is adequate. While management uses available information to estimate losses on loans, future additions to the allowances may be necessary based on changes in economic conditions, particularly in the State of Maryland. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Association's allowances for losses on loans. Such agencies may require the Association to recognize additions to the allowances based on their judgments about information available to them at the time of their examination. Statement of Financial Accounting Standards ("SFAS") No. 114, as amended by SFAS No. 118 addresses the accounting by creditors for impairment of certain loans. It is generally applicable for all loans except large groups of smaller balance homogeneous loans that are collectively evaluated for impairment, including residential mortgage loans and consumer installment loans. It also applies to all loans that are restructured in a troubled debt restructuring involving a modification of terms. SFAS No. 114 requires F-8 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Summary of Significant Accounting Policies - Continued Loans Receivable - Continued that impaired loans be measured based on the present value of expected future cash flows discounted at the loan's effective interest rate, or at the loan's observable market price or the fair value of the collateral if the loan is collateral dependent. A loan is considered impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. Accrual of interest is discontinued on a loan when management believes, after considering economic and business conditions and collection efforts, that the borrower's financial condition is such that collection of interest is doubtful. When a payment is received on a loan on non-accrual status, the amount received is allocated to principal and interest in accordance with the contractual terms of the loan. Foreclosed Real Estate Real estate acquired through foreclosure is initially recorded at the lower of cost or estimated fair value, less estimated selling costs. Management periodically evaluates the carrying value of real estate owned and establishes a valuation allowance for declines in fair value, less estimated selling costs, below the initially recorded value. Costs relating to holding such real estate are charged against income in the current period, while costs relating to improving such real estate are capitalized until a saleable condition is reached. Earnings Per Share Basic EPS is computed by dividing net income by the weighted average number of common shares outstanding for the appropriate period. Unearned ESOP shares are not included in outstanding shares. Diluted EPS is computed by dividing net income by the weighted average shares outstanding as adjusted for the dilutive effect of stock options and unvested stock awards based on the "treasury stock" method. Information F - 9 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - Summary of Significant Accounting Policies - Continued Earnings Per Share - Continued relating to the calculation of net income per share of common stock is summarized for the years ended June 30, 2000 and 1999, as follows: 2000 1999 ---- ---- Net income $435,687 $625,967 ======== ======== Weighted Average Shares Outstanding used for basic EPS 774,164 888,705 Dilutive Items Stock options 30,012 5,430 Unvested stock awards 1,359 1,737 -------- --------- Adjusted weighted average shares outstanding used for dilutive EPS 805,535 895,872 ======== ========= Statement of Cash Flows For the purposes of the statement of cash flows, the Association considers all highly liquid investments with maturities at date of purchase of three months or less to be cash equivalents. Cash equivalents consist of interest-bearing deposits and federal funds. Note 2 - Insurance of Savings Accounts and Related Matters The Federal Deposit Insurance Corporation, through the Savings Association Insurance Fund, insures deposits of account holders up to $100,000. The Association pays an annual premium to provide for this insurance. The Association is a member of the Federal Home Loan Bank System and is required to maintain an investment in the stock of the Federal Home Loan Bank of Atlanta equal to at least 1% of the unpaid principal balances of its residential mortgage loans, .3% of its total assets or 5% of its outstanding advances from the bank, whichever is greater. Purchases and sales of stock are made directly with the bank at par value. F - 10 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 3 - Held-to-Maturity Securities: Mortgage backed securities are guaranteed by the Federal National Mortgage Association (FNMA) or the Federal Home Loan Mortgage Corporation (FHLMC) as follows: Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value June 30, 2000 FNMA $ 1,523 $ 169 $ - $ 1,692 FHLMC 172,563 2,095 - 174,658 -------- -------- ---------- -------- Mortgage backed securities $174,086 $ 2,264 $ - $176,350 ======== ======== ========== ======== June 30, 1999 FNMA $ 1,832 $ 64 $ - $ 1,896 FHLMC 214,831 1,244 - 216,075 -------- -------- ---------- -------- Mortgage backed securities $216,663 $ 1,308 $ - $217,971 ======== ======== ========== ======== There were no sales of investment securities or mortgage backed securities during the years ended June 30, 2000 and 1999. Note 4 - Loans Receivable Substantially all of the Association's loans receivable are mortgage loans secured by residential and commercial real estate properties located in the State of Maryland. Loans are extended only after evaluation by management of customers' creditworthiness and other relevant factors on a case-by-case basis. The Association generally does not lend more than 95% of the appraised value of a property and requires private mortgage insurance on residential mortgages with loan-to-value ratios in excess of 80%. In addition, the Association generally obtains personal guarantees of repayment from borrowers and/or others for construction, commercial and multi-family residential loans and disburses the proceeds of construction and similar loans only as work progresses on the related projects. F - 11 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 4 - Loans Receivable - Continued Residential lending is generally considered to involve less risk than other forms of lending, although payment experience on these loans is dependent to some extent on economic and market conditions in the Association's primary lending area. Commercial and construction loan repayments are generally dependent on the operations of the related properties or the financial condition of its borrower or guarantor. Accordingly, repayment of such loans can be more susceptible to adverse conditions in the real estate market and the regional economy. Loans receivable are summarized as follows at June 30:
2000 1999 ---- ---- Loans secured by first mortgages on real estate: Residential - one-to-four family $53,384,414 $47,324,070 Residential - multi-family 313,882 508,109 Commercial 7,709,315 6,395,139 Construction loans 249,600 621,000 ----------- ----------- Total first mortgage loans 61,657,211 54,848,318 Commercial non-real estate 968,163 - Home equity lines-of-credit 3,009,857 2,849,665 Home improvement loans 10,406 13,323 Loans secured by savings deposits 170,055 150,695 Overdraft lines of credit 12,107 8,008 ----------- ------------ 65,827,799 57,870,009 Less: Undisbursed portion of loans in process (111,608) (528,500) Unearned loan fees, net (207,286) (219,234) Allowance for loan losses (285,000) (282,600) ----------- ----------- Loans receivable, net $65,223,905 $56,839,675 =========== ===========
Loans are placed on non-accrual status when they become ninety days or more delinquent. Interest income on such loans is recognized only to the extent that payments have been received. The accrual of interest income on these loans is resumed only after the borrowers have taken steps to bring the loans current and management has reason to believe the loans are no longer impaired. There were no non-accrual loans at June 30, 2000 and June 30, 1999. The average non-accrual loan balance for the year ended June 30, 2000 was $60,125. F - 12 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 4 - Loans Receivable - Continued The Association, through its normal asset review process, classifies certain loans which management believes involve a degree of risk warranting additional attention. Not included above in non-performing and restructured loans was $277,513 and $191,957 at June 30, 2000 and 1999, respectively, which had not yet become ninety days or more delinquent, but had been designated by management for additional collection and monitoring efforts. Changes in the allowance for losses on loans are summarized as follows for the years ended June 30: 2000 1999 ---- ---- Balance at beginning of the year $ 282,600 $ 278,000 Provision for loan losses 2,400 4,600 Charge-offs, net of recoveries - - ----------- ---------- Balance at end of the year $ 285,000 $ 282,600 =========== ========== Commitments to extend credit are agreements to lend to customers, provided that terms and conditions established in the related contracts are met. At June 30, 2000, the Association had commitments to originate first mortgage loans on real estate and home equity loans exclusive of undisbursed loan funds of $334,500 and commercial loans of $1,134,000 at a variable rate of interest. At June 30, 1999, the Association had commitments to originate first mortgage loans on real estate and home equity loans, exclusive of undisbursed loan funds, of $1,721,800, of which $1,360,800 carry a fixed rate, ranging between 6.125% and 7.125%, and $361,000 carry a variable rate of interest. For the years ended June 30, 2000 and 1999 the Association also had commitments to loan funds under unused home-equity lines of credit aggregating approximately $6,097,843 and $6,333,776, respectively. Such commitments carry a floating rate of interest. Loan commitments generally expire within six months and such loans and other commitments are generally funded from loan principal repayments, excess liquidity and savings deposits. Since certain of the commitments may expire without being drawn upon or may not be utilized, the total commitment amounts do not necessarily represent future cash requirements. F - 13 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 4 - Loans Receivable - Continued The Association's exposure to credit loss under these contracts in the event of non-performance by the other parties, assuming that the collateral proves to be of no value, is represented by the commitment amounts. Loans serviced for others, which are not included in the Association's assets, were approximately $3,536,243 and $1,983,280 at June 30, 2000 and 1999, respectively. A fee is charged for such servicing based on the unpaid principal balances. In the normal course of business, loans are made to officers and directors of the Association and their related interests. These loans are consistent with sound banking practices, are within regulatory lending limitations and do not involve more than normal risk of collectibility. Transactions in these loans (omitting loans which aggregate less than $60,000 per officer or director) for the years ended June 30, 2000 and 1999 are summarized as follows: Balance at June 30, 1998 $789,112 New loans 175,000 Repayments (102,350) --------- Balance at June 30, 1999 861,762 New loans 304,400 Repayments (393,907) --------- Balance at June 30, 2000 $772,255 ========= Note 5 - Accrued Interest Receivable Accrued interest receivable is summarized as follows at June 30: 2000 1999 ---- ---- Loans receivable $330,832 $287,973 Mortgage backed securities 1,935 2,406 Other 347 1,796 ----------- ---------- $333,114 $292,175 =========== ========== F - 14 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 6 - Property and Equipment Property and equipment are summarized as follows at June 30: Estimated Useful 2000 1999 Lives ---- ---- ------------- Buildings and improvements $357,668 $357,668 23 years Furniture, fixtures and equipment 313,708 311,043 3-20 years Leasehold improvements 81,499 81,499 5-10 years -------- -------- Total at cost 752,875 750,210 Less accumulated depreciation and amortization 645,571 594,929 -------- -------- Property and equipment, net $107,304 $155,281 ======== ======== The provision for depreciation charged to operations for the years ended June 30, 2000 and 1999 amounted to $50,642 and $52,829, respectively. Depreciation is calculated on a straight-line basis over the estimated useful life. The Association is obligated under long-term operating leases for its branch offices. These leases expire at various dates to 2002, subject to renewal options. The approximate future minimum rental payments under these leases at June 30, 2000 are as follows: Due in Year Ended June 30, -------------- 2001 $37,896 2002 26,590 ------- Total $64,486 ======= Rent expense was $38,514 and $38,391 for the years ended June 30, 2000 and 1999, respectively. F - 15 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 7 - Deposits Time deposits are summarized as follows at June 30:
2000 1999 Amount % Amount % ------ - ------ - Contractual maturity of Certificate Accounts from June 30: --------------------- Under 12 months $18,280,953 45.0 $24,811,614 62.0 12 to 24 months 17,500,234 43.1 8,481,519 21.2 24 to 36 months 2,313,832 5.7 4,937,232 12.3 36 to 48 months 1,305,842 3.2 491,394 1.2 48 to 60 months 1,209,077 3.0 1,301,792 3.3 Over 60 months - 0.0 11,485 0.0 ----------- ------- ----------- ------- $40,609,938 100.0 $40,035,036 100.0 =========== ======= =========== =======
Interest expenses on savings deposits consists of the following for the years ended June 30: 2000 1999 ---- ---- Certificates $2,102,215 $2,199,354 Passbook 168,983 187,459 NOW and money market 278,908 290,336 ---------- ---------- $2,550,106 $2,677,149 ========== ========== As of June 30, 2000 and 1999, the Association had customer deposits in savings accounts of $100,000 or more of approximately $6,926,948 and $8,620,665, respectively. Note 8 - Borrowings The Association has an available line of credit with the Federal Home Loan Bank of Atlanta. The credit availability for Wyman Park Federal Savings and Loan Association is 13% of the Association's total assets. The rate on these short-term advances varies daily. Wyman Park Federal Savings and Loan Association had an outstanding advance in the amount of $3,000,000 at June 30, 2000 with a rate of 7.4%. F - 16 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 9 - Income Taxes The provision for income taxes consists of the following for the years ended June 30: 2000 1999 ---- ---- Current: Federal $ 241,340 $341,911 State 51,025 76,391 --------- -------- 292,365 418,302 Deferred: Federal (11,744) (31,934) State (2,600) (7,067) --------- -------- (14,344) (39,001) --------- -------- Provision for income taxes $ 278,021 $379,301 ========= ======== The net deferred tax asset at June 30, 2000 and 1999 consists of total deferred tax assets of $289,996 and $289,256, respectively, and deferred tax liabilities of $86,632 and $100,236, respectively. The tax effects of temporary differences between the financial reporting and income tax basis of assets and liabilities relate to the following at June 30: 2000 1999 ---- ---- Interest and fees on loans $ 16,845 $ 21,947 Allowance for losses on loans 110,067 109,140 Federal Home Loan Bank stock dividends (80,684) (80,684) Deferred compensation 13,184 12,767 Tax bad debt reserve (5,948) (7,932) Supplemental Executive Retirement Plan 128,997 119,705 ESOP contribution 2,600 2,600 Stock Bonus Plan accrual 12,177 12,177 Other 6,126 (700) --------- ---------- $ 203,364 $ 189,020 ========= ========== No valuation allowance has been provided against the net deferred tax asset at June 30, 2000 because the amount could be realized through a carryback against taxable income of prior years. F - 17 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 9 - Income Taxes - Continued A reconciliation between the provision for income taxes and the amount computed by multiplying income before provision for income taxes by the statutory federal income tax rate is as follows for the years ended June 30: 2000 1999 --------------------- -------------------- Percent Percent of Pretax of Pretax Amount Income Amount Income ------ ------ ------ ------ Tax provision at statutory rate $242,661 34.0% $341,791 34.0% State income taxes, net of federal income tax benefit 31,960 4.5 45,754 4.6 Other 3,400 0.5 (8,244) (0.9) -------- ---- --------- ----- $278,021 39.0% $379,301 37.7% ======== ==== ========= ==== The Association was allowed a special bad debt deduction limited generally to 8% of otherwise taxable income. Beginning July 1, 1996 the percentage of taxable income method of computing the Association's tax bad debt deduction is not longer allowed and the amount by which the tax reserve for bad debts exceeds such amount at June 30, 1998 must be recaptured over a six year period. A tax liability has been established for the recapture. If the amounts which qualified as deductions for federal income tax purposes prior to December 31, 1987 are later used for purposes other than to absorb loan losses, including distributions in liquidations, they will be subject to federal income tax at the then current corporate rate. Retained earnings at June 30, 2000 and 1999 include $1,777,000, for which no provision for federal income tax has been provided. The unrecorded deferred income tax liability on the above amount was approximately $686,000. Note 10- Pension Plan Substantially all employees of the Association are participants in the Financial Institutions Retirement Fund, a multi-employer non-contributory defined benefit pension plan. The actuarial present value of benefit obligations and fair value of plan assets attributable to the Association are not available for this multi-employer plan. Pension expense in connection with the Financial Institutions Retirement Fund reflects the Association's required annual contribution to the Fund. Pension expense for the years ended June 30, 2000 and 1999 was $40,887 and $9,843, respectively. F - 18 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 10- Pension Plan - Continued The Association has established a supplemental Executive Retirement Plan for the benefit of the President of the Association. As a result of this Plan, the Association incurred expense for the years ended June 30, 2000 and 1999 of $24,563 and $22,330, respectively. Note 11 - Common Stock and Stock Benefit Plans In fiscal 1998, the Association converted from a federally chartered mutual savings and loan association to a federally chartered stock savings and loan association. Simultaneously, the Association consummated the formation of a new holding company, Wyman Park Bancorporation, Inc., of which the Association is a wholly-owned subsidiary. In connection with the conversion, the Company issued 1,011,713 shares of common stock. OTS regulations limit the payment of dividends and other capital distributions by the Association. The Association is able to make capital distributions during a calendar year, without regulatory approval, to the extent of its net income for such year plus its retained net income for the preceding two years. The Association must obtain prior OTS approval to make capital distributions in excess of this amount. In addition to the above restriction on its capital distributions, the Association would not be able to pay dividends if Wyman Park Federal Savings and Loan Association would be classified as "undercapitalized" under OTS prompt corrective action regulations following the dividend or if the amount of the dividend would reduce the Association's retained earnings below its accumulated bad debt deduction or the Association's liquidation account. During fiscal 1999, the Company paid a special distribution of $6.00 per common stock share from funds retained by the Company in the conversion. Accordingly, the Company charged the return of capital distribution to additional paid-in-capital. Management believes the entire distribution should constitute a tax-free return of capital. F - 19 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 11- Common Stock and Stock Benefit Plans - Continued Employee Stock Ownership Plan The Association has established an Employee Stock Ownership Plan (ESOP) for its employees. On January 5, 1998 the ESOP acquired 80,937 shares of the Company's common stock in connection with the Association's conversion to a capital stock form of organization. The ESOP holds the common stock in a trust for allocation among participating employees. The Trust purchased 67,972 additional shares with proceeds from the Company's $6.00 special distribution, of which 53,307 related to unearned shares. All employees of the Association who attain the age of 21 and complete twelve months of service with the Association will be eligible to participate in the ESOP. Participants will become 100% vested in their accounts after six years of service with the Association or, if earlier, upon death, disability or attainment of normal retirement age. Participants receive credit for service with the Association prior to the establishment of the ESOP. The Association recognizes the cost of the ESOP in accordance with AICPA Statement of Position 93-6 "Employers' Accounting for Employee Stock Ownership Plans". As shares are committed to be released from collateral, the Association reports compensation expense equal to the current market price of the shares and the shares become outstanding for earnings-per-share computations. Dividends on allocated shares are recorded as a reduction of retained earnings; dividends on unallocated shares are recorded as a reduction of debt. For the years ended June 30, 2000 and 1999 compensation expense recognized related to the ESOP and the Association's contribution to the ESOP was $116,315 and $104,166, respectively. The ESOP shares were as follows as of June 30: 2000 -------- Shares released and allocated 34,770 Unearned shares 99,474 -------- 134,244 ======== Fair value of unearned shares $696,318 ======== F - 20 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 11 - Common Stock and Stock Benefit Plans - Continued Stock Option Plan The Company has a Stock Option Plan (the "Plan") whereby 198,729 shares of common stock have been reserved for issuance under the Plan. Options granted under the Plan may be Incentive Stock Options within the meaning of Section 422 of the Internal Revenue Code of 1986 as amended or Non-Incentive Stock Options. Options are exercisable in five annual installments at the market price of common stock at the date of grant. The Options must be exercised within ten years from the date of grant. During the year ended June 30, 1999, the Company granted options to purchase 85,990 shares at a weighted average price of $11.00 per share. Such shares and fair value have been adjusted to 168,909 shares at a weighted average price of $5.60 for the effect of the special distribution that management anticipates will be a return of capital. The following table summarizes the status of and changes in the Company's stock option plan during the past two years, as retroactively adjusted for the Company's special distribution that management anticipates will constitute a return of capital. Weighted Average Exercise Shares Price ------ -------- Outstanding at June 30, 1998 - - Granted 168,909 $ 5.60 ------- Outstanding at June 30, 1999 and 2000 168,909 $ 5.60 ======= Exercisable at June 30, 2000 67,563 ======= F - 21 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 11 - Common Stock and Stock Benefit Plans - Continued SFAS No. 123, "Accounting for Stock-Based Compensation", requires the Association to make certain disclosures as if the fair value method of accounting had been applied to the Association's stock option grants made subsequent to 1994. Accordingly, the Association estimated the grant date fair value of each option awarded in fiscal 1999 using the Black-Scholes Option-Pricing model with the following relevant assumptions: dividend yield of 0%, risk-free interest rate of 4.71% and expected lives of 10 years. The assumption for expected volatility was 27.31%. Had 1999 compensation cost been determined including the weighted-average estimate of fair value of each option granted of $2.43, the Association's net income would be reduced to proforma amount of $374,033. Proforma earnings, basic and diluted, per share would have been $.42 in fiscal 1999. Stock Bonus Plan The Company established a Recognition and Retention Plan (the "Stock Bonus Plan" or "RRP") to encourage directors, officers and key employees to remain in the service of the Association. Up to 40,469 shares of common stock may be awarded under the terms of the Stock Bonus Plan. Shares of common stock awarded under the plan vest in five equal annual installments beginning at the date of grant. On January 20, 1999, awards of 34,394 shares of common stock with a fair market value of $11.00 per share, were granted. The Association funded the purchase of 34,394 shares of its common stock at an average price of $11.17 to provide shares for distribution under the Stock Bonus Plan. Note 12 - Retained Earnings and Regulatory Matters The Association is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possible additional discretionary, actions by the regulators that, if undertaken, could have a direct material effect on the Association's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Association must meet specific capital guidelines that involve quantitative measures of the Association's assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Association's capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. F - 22 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 12- Retained Earnings and Regulatory Matters - Continued Quantitative measures established by regulation to ensure capital adequacy require the Association to maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital (as defined in the regulations) and risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined). As of June 30, 2000, the Association met all capital adequacy requirements to which it is subject. As of June 30, 2000, the most recent notification from the Office of Thrift Supervision categorized the Association as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Association must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the Association's category. The Association's actual capital amounts and ratios are also presented in the table.
To Be Well Capitalized Under For Capital Prompt Corrective Actual Adequacy Purposes Action Provisions --------------------- ------------------ ------------------- Amount Ratio Amount Ratio Amount Ratio ----------- ----- ------ ----- ------ ----- As of June 30, 2000: Tangible (1) $ 7,466,914 10.9% $1,032,611 1.5% $ N/A N/A% Tier I capital (2) 7,466,914 18.7% N/A N/A% 2,399,400 6.0% Core (1) 7,466,914 10.9% 2,753,629 4.0% 3,442,036 5.0% Risk-weighted (2) 7,751,914 19.4% 3,199,200 8.0% 3,999,000 10.0% As of June 30, 1999: Tangible (1) $ 9,849,962 14.0% $1,058,000 1.5% $ N/A N/A% Tier I capital (2) 9,849,962 27.1% N/A N/A% 2,180,000 6.0% Core (1) 9,849,962 14.0% 2,116,000 3.0% 3,527,000 5.0% Risk-weighted (2) 10,132,562 27.9% 2,907,000 8.0% 3,634,000 10.0%
(1) To adjusted total assets (2) To risk-weighted assets F - 23 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 12- Retained Earnings and Regulatory Matters - Continued Total equity in accordance with generally accepted accounting principles (GAAP capital) is reconciled to regulatory capital as follows: Tangible Core Risk-Based Capital Capital Capital ------- ------- ------- GAAP capital as of June 30, 2000 $8,607,236 $8,607,236 $ 8,607,236 Less: Equity of parent company 1,140,322 1,140,322 1,140,322 Add: Allowance for losses on loans included in risk-based capital- limited to 1.25% of risk- weighted assets - - 285,000 ---------- ---------- ------------ Regulatory capital as of June 30, 2000 $7,466,914 $7,466,914 $ 7,751,914 ========== ========== ============ GAAP capital as of June 30, 1999 $8,029,307 $8,029,307 $ 8,029,307 Negative equity of parent company 1,820,655 1,820,655 1,820,655 Add: Allowance for losses on loans included in risk-based capital- limited to 1.25% of risk- weighted assets - - 282,600 ---------- ---------- ------------ Regulatory capital as of June 30, 1999 $9,849,962 $9,849,962 $ 10,132,562 ========== ========== ============ F - 24 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 13- Disclosures About Fair Value of Financial Instruments The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value. Cash and Cash Equivalents - For cash, non-interest bearing deposits, variable rate interest-bearing deposits in other banks and federal funds sold, the carrying amount is a reasonable estimate of fair value. Securities - For mortgage backed securities, fair values are based on quoted market prices or dealer quotes. Loans Receivable - For fixed rate residential mortgages, fair value is based on computed present value of cash flows using weighted average term to maturity and weighted average rate of the Association's portfolio. For variable rate loans, the carrying amount is considered a reliable estimate of fair value. Ground Rents - The fair value of ground rents is estimated by management based on anticipated realization in the current market. Ground rents are peculiar to the Baltimore Metropolitan area. They carry a fixed interest rate of 6%. Consequently, the fair value varies with fluctuations in market interest rates. Although the fair value may never recover to the Association's carrying amount because ground rents do not have a stated maturity, any permanent decline in value will not be material to the Association's financial statements. Federal Home Loan Bank Stock - Because of the limited nature of the market for this instrument, the carrying amount is a reasonable estimate of fair value. Deposits Liabilities - The fair value of demand deposits, savings accounts and advance payments by borrowers for taxes, insurance and ground rents is the amount payable on demand at the reporting date. The fair value for certificate accounts is based on computed present value of cash flows using the rates currently offered for deposits of similar remaining maturities. Borrowings - The fair value of short-term borrowings is the amount payable at the reporting date. Commitments - For commitments to originate loans and purchase loans and mortgage backed securities, fair value considers the differences between current levels of interest rates and committed rates if any. F - 25 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 13- Disclosures About Fair Value of Financial Instruments - Continued The estimated fair values of the Association's financial instruments as of June 30 are as follows:
2000 1999 ------------------------------ ----------------------------- Carrying Carrying Amount Fair Value Amount Fair Value ------------ ------------ ----------- ----------- Financial Assets ---------------- Cash and cash Equivalents $ 2,085,906 $ 2,085,906 $12,100,730 $12,100,730 Mortgage backed securities 174,086 176,350 216,663 217,971 Loans receivable 65,508,905 57,122,275 Less: allowance for loan Losses 285,000 282,600 ------------ ------------ 65,233,905 63,622,000 56,839,675 56,260,000 Ground rents 122,600 73,600 122,600 73,560 Federal Home Loan Bank of Atlanta stock 508,500 508,500 508,500 508,500 Financial Liabilities --------------------- Savings deposits 55,347,064 55,890,025 58,008,159 58,206,100 Borrowings 3,000,000 3,000,000 2,650,000 2,650,000 Advance payments by borrowers for taxes, insurance and ground rents 1,315,538 1,315,538 1,278,634 1,278,634 Loan commitments - 7,558,843 - 8,055,376
F - 26 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES Lutherville, Maryland NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 14- Accounting Pronouncements With Future Effective Dates SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" was issued in June, 1998. This Statement standardizes the accounting for derivative instruments including certain derivative instruments embedded in other contracts, by requiring that an entity recognize these items as assets or liabilities in the statement of financial position and measure them at fair value. This Statement generally provides for matching the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or the earnings effect of the hedged forecasted transaction. The Statement, which is effective for all fiscal quarters of all fiscal years beginning after June 15, 2000, will not affect the Company's financial position or its results of operations. F - 27 EX-21 5 0005.txt SUBSIDIARIES OF THE REGISTRANT Subsidiaries of the Registrant Parent - ------ Wyman Park Bancorporation, Inc. State or Other Jurisdiction of Percentage Subsidiaries (1) Incorporation Ownership - ---------------- --------------- ---------- Wyman Park Federal Savings and Loan Association United States 100% Subsidiary of Wyman Park Federal Savings and Loan Association - ------------------------------------------------------------- W P Financial Corporation Maryland 100% - ---------- (1) The assets, liabilities and operations of the subsidiaries are included in the consolidated financial statements contained in the Annual Report to Stockholders attached hereto as an exhibit. EX-23 6 0006.txt CONSENT OF INDEPENDENT ACCOUNTANT CONSENT OF INDEPENDENT ACCOUNTANTS Board of Directors Wyman Park Bancorporation, Inc. 11 West Ridgely Road Lutherville, Maryland 21093 We consent to the incorporation of our report dated July 26, 2000, with respect to the financial statements of Wyman Park Bancorporation, Inc., included in this Form 10-KSB, for the year ended June 30, 2000, into the previously filed Registration Statements of Wyman Park Bancorporation, Inc., on Forms S-8 (File Nos. 333-74235 and 333-74249). /s/ Andersen Associates LLP Baltimore, Maryland September 20, 2000 EX-27 7 0007.txt FINANCIAL DATA SCHEDULE
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM WYMAN PARK BANCORPORATION, INC. & SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. YEAR JUN-30-2000 JUL-01-1999 JUN-30-2000 310,442 474,358 1,301,106 0 0 174,086 176,350 65,223,905 (285,000) 68,839,614 55,347,064 3,000,000 1,885,314 0 0 0 10,117 8,597,119 68,839,614 4,513,841 12,744 252,473 4,779,058 2,550,106 2,617,543 2,161,515 (2,400) 0 1,557,367 713,708 713,708 0 0 435,687 .563 .541 7.25 0 277,513 0 0 (282,600) 0 0 (285,000) (285,000) 0 0
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