10QSB 1 0001.txt FORM 10QSB FOR WYMAN PARK BANCORPORATION, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities --------- Exchange Act of 1934 For the quarterly period ended September 30, 2000 --------- Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _____ to _____ Commission File Number: 0-23345 WYMAN PARK BANCORPORATION, INC. ------------------------------ (Exact Name of Small Business Issuer as Specified in its Charter) DELAWARE 52-2068893 --------------------------------------- ---------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 11 WEST RIDGELY ROAD, LUTHERVILLE, MARYLAND 21093 ------------------------------------------------- (Address of Principal Executive Offices) (410)-252-6450 -------------- Registrant's Telephone Number, Including Area Code Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d)of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ As of November 10, 2000, the issuer had 827,090 shares of Common Stock issued and outstanding. Transitional Small Business Disclosure Format (check one): Yes___ No X ------- CONTENTS -------- PART I. FINANCIAL INFORMATION PAGE --------------------- ---- Item I. Financial Statements Consolidated Statements of Financial Condition at September 30, 2000 and June 30, 2000............................ 2 Consolidated Statements of Operations for the Three Month Periods ended September 30, 2000 and 1999...................... 3 Consolidated Statements of Cash Flows for the Three Month Periods Ended September 30, 2000 and 1999...................... 4 Notes to Consolidated Financial Statements..................... 5-6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.......................................... 7-11 PART II. OTHER INFORMATION ----------------- Item 1. Legal Proceedings............................................... 12 Item 2. Changes in Securities and Use of Proceeds....................... 12 Item 3. Defaults Upon Senior Securities................................. 12 Item 4. Submission of Matters to a Vote of Security Holders............. 12 Item 5. Other Information............................................... 12 Item 6. Exhibits and Reports on Form 8-K................................ 12 SIGNATURES............................................................... 13 1 Wyman Park Bancorporation, Inc. and Subsidiaries Lutherville, Maryland Consolidated Statements of Financial Condition
September 30 June 30, 2000 2000 ---- ---- (Unaudited) Assets ------ Cash and noninterest bearing deposits $ 189,930 $ 310,442 Interest bearing deposits in other banks 923,828 474,358 Federal funds sold 1,888,859 1,301,106 ------------ ------------ Total cash and cash equivalents 3,002,617 2,085,906 Loans receivable, net 64,992,025 65,223,905 Mortgage-backed securities held to maturity at amortized cost, fair value of $169,100 (9/00) and $176,350 (6/00) 167,637 174,086 Federal Home Loan Bank of Atlanta stock, at cost 508,500 508,500 Accrued interest receivable 346,949 333,114 Ground rents owned, at cost 122,600 122,600 Property and equipment, net 97,340 107,304 Federal and state income taxes receivable 5,986 16,985 Deferred tax asset 203,364 203,364 Prepaid expenses and other assets 91,984 63,850 ------------ ------------ Total Assets $ 69,539,002 $ 68,839,614 ------------ ------------ Liabilities & Stockholders'Equity --------------------------------- Liabilities: Demand deposits $ 5,511,981 $ 5,643,177 Money market and NOW accounts 8,613,074 9,093,949 Time deposits 41,705,278 40,609,938 ------------ ------------ Total deposits 55,830,333 55,347,064 Checks outstanding in excess of bank balance 84,549 -- Borrowings 4,000,000 3,000,000 Advance payments by borrowers for taxes, insurance and ground rents 392,654 1,315,538 Accrued interest payable on savings deposits 17,516 17,267 Accrued interest on borrowings 22,107 14,786 Federal and state income taxes payable 41,748 8,748 Accrued expenses and other liabilities 582,684 528,975 ------------ ------------ Total liabilities 60,971,591 60,232,378 Stockholders' Equity -------------------- Common stock, par value $.0l per share; authorized 2,000,000 shares; issued 1,011,713 shares 10,117 10,117 Additional paid-in capital 4,053,677 4,053,677 Contra equity - Employee Stock Ownership Plan (ESOP) (539,770) (539,770) Retained earnings, substantially restricted 6,426,384 6,327,076 Treasury Stock; 133,987 shares, at cost at September 30,2000 and 112,987 at cost at June 30, 2000 (1,382,997) (1,243,864) ------------ ------------ Total stockholders' equity 8,567,411 8,607,236 ------------ ------------ Total liabilities and stockholders' equity $ 69,539,002 $ 68,839,614 ------------ ------------
See accompanying notes to financial statements. 2 Wyman Park Bancorporation, Inc. and Subsidiaries Lutherville, Maryland Consolidated Statements of Operation (Unaudited) For the Three Months Ended September 30, 2000 1999 ---- ---- Interest and fees on loans receivable $1,218,279 $1,063,714 Interest on mortgage-backed securities 3,305 3,420 Interest on other investments 51,874 103,244 ---------- ---------- Total interest income $1,273,458 $1,170,378 ---------- ---------- Interest on savings deposits $ 685,751 $ 653,808 Interest on borrowed money 59,412 3,084 Interest on escrow deposits 676 835 ---------- ---------- Total interest expense $ 745,839 $ 657,727 Net interest income before provision for loan losses 527,619 512,651 Provision for loan losses -- -- ---------- ---------- Net interest income $ 527,619 $ 512,651 ---------- ---------- Other Income ------------ Loan fees and service charges $ 22,107 $ 18,724 Other 2,102 4,276 ---------- ---------- Total other income $ 24,209 $ 23,000 ---------- ---------- Noninterest Expenses -------------------- Salaries and employee benefits $ 232,674 $ 229,598 Occupancy costs 26,483 24,310 Professional services 15,327 22,070 Federal deposit insurance premiums 2,847 8,434 Furniture and fixtures depreciation and maintenance 11,719 13,135 Data processing 20,671 20,301 Advertising 22,051 9,783 Franchise and other taxes 11,466 11,271 Other 47,282 46,533 ---------- ---------- Total noninterest expenses $ 390,520 $ 385,435 Income before tax provision 161,308 150,216 Provision for income taxes 62,000 60,021 ---------- ---------- Net Income $ 99,308 $ 90,195 ---------- ---------- Net income per share, basic $0.13 $0.11 Net income per share, diluted $0.13 $0.11 See accompanying notes to financial statements. 3 Wyman Park Bancorporation, Inc. and Subsidiaries Lutherville, Maryland CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended September 30, 2000 1999 ---- ---- Cash Flows from operating activities ------------------------------------ Net income $ 99,308 $ 90,195 Adjustments to reconcile net income to net Cash provided by operating activities: Depreciation and amortization 10,343 12,759 Amortization of loan fees (21,450) (16,638) Increase in accrued interest receivable (13,835) (37) Increase in prepaid expenses and other assets (28,134) (805) Increase in accrued expenses and other liabilities 53,709 27,856 Decrease in federal and state income taxes receivable 10,999 13,688 Increase in federal and state income taxes payable 33,000 45,765 Increase in accrued interest payable on savings deposits 249 795 Increase (decrease) in accrued interest payable on borrowings 7,321 (5,038) ------------ ------------ Net cash provided by operating activities 151,510 168,540 Cash flows from investing activities ------------------------------------ Net (increase) decrease in loans receivable 394,705 (1,032,919) Purchase of loan participations (141,375) (500,000) Mortgage-backed securities principal repayments 6,449 9,115 Purchases of property and equipment (379) (2,145) ------------ ------------ Net cash provided by (used in) investing activities 259,400 (1,525,949) Cash flows from financing activities ------------------------------------ Net increase (decrease) in savings deposits 483,269 (1,640,921) Net increase in checks outstanding in excess of bank balance 84,549 -- Increase (decrease) in borrowings 1,000,000 (2,650,000) Decrease in advance payments by borrowers for taxes, insurance and ground rents (922,884) (946,889) Repurchase of common stock (139,133) -- ------------ ------------ Net cash provided by (used in) financing activities 505,801 (5,237,810) Net increase (decrease) in cash and cash equivalents $ 916,711 $ (6,595,219) Cash and cash equivalents at beginning of period 2,085,906 12,100,730 ------------ ------------ Cash and cash equivalents at end of period $ 3,002,617 $ 5,505,511 ------------ ------------ Supplemental information ------------------------ Interest paid on savings deposits and borrowed funds $ 745,839 $ 657,728 Income taxes paid $ 18,000 $ 569
See accompanying notes to financial statements. 4 WYMAN PARK BANCORPORATION, INC. AND SUBSIDIARIES LUTHERVILLE, MARYLAND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1: WYMAN PARK BANCORPORATION, INC. Wyman Park Bancorporation, Inc. (the "Company") is the holding company of Wyman Park Federal Savings & Loan Association ("Association"), which converted from mutual to stock form ("Stock Conversion") and became the wholly owned subsidiary of the Company on January 5, 1998. All references to the Company prior to January 5, 1998, except where otherwise indicated are to the Association. The Company's common stock began trading on the OTC Electronic Bulletin Board on January 7, 1998 under the symbol "WPBC". The Association is regulated by the Office of Thrift Supervision ("OTS"). The primary business of the Association is to attract deposits from individual and corporate customers and to originate residential and commercial mortgage loans and consumer loans. The Association competes with other financial and mortgage institutions in attracting and retaining deposits and originating loans. The Association conducts operations through its main office located at 11 West Ridgely Road, Lutherville, Maryland 21093 and one branch office located at 7963 Baltimore-Annapolis Boulevard, Glen Burnie, Maryland 21060. NOTE 2: BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with instructions for Form 10-QSB and therefore, do not include all disclosures necessary for a complete presentation of the statements of condition, statements of operations and statements of cash flows in conformity with generally accepted accounting principles. However, all adjustments which, in the opinion of management, are necessary for the fair presentation of the interim financial statements have been included. Such adjustments were of a normal recurring nature. The results of operations for the three months ended September 30, 2000 are not necessarily indicative of the results that may be expected for the entire year. Certain prior year amounts have been reclassified to conform with the current year presentation. NOTE 3: 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. 5 NOTE 4: EARNINGS PER SHARE Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding for the appropriate period. Unearned Employee Stock Ownership Plan (ESOP) shares are not included in outstanding shares. Diluted earnings per share 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 relating to the calculations of net income per share of common stock is summarized for the three months ended September 30, 2000 and 1999 as follows: Three Months Ended Three Months Ended September 30, 2000 September 30, 1999 ------------------ ------------------- Net income $ 99,308 $ 90,195 Weighted average shares Outstanding basic EPS 757,936 815,949 Dilutive items Stock options 27,942 33,005 Unvested stock awards 935 - Adjusted weighted average shares Outstanding used for diluted EPS 786,813 848,954 NOTE 5: REGULATORY CAPITAL REQUIREMENTS Under OTS regulations, the Association must maintain capital at least equal to specified percentage of its assets. The Association's assets and capital for these purposes are subject to OTS regulatory definition, and the percentage levels vary depending on the capital levels being measured. The following table presents the Association's capital position based on the September 30, 2000 financial statements.
To Be Well Capitalized Under For Capital Prompt Corrective Actual Adequacy Purposes Action Provisions ------------------- ----------------- ------------------- Amount Ratio Amount Ratio Amount Ratio ------ ----- ------ ----- ------ ----- Total Capital (to Risk Weighted Assets) $ 7,848,899 19.5% $3,214,934 8.0% $4,018,668 10.0% Tier I capital (to Risk Weighted Assets) 7,564,899 18.8% 1,607,467 4.0% 2,411,201 6.0% Tier 1 Capital (to Average Assets) 7,564,899 10.9% 2,781,604 4.0% 3,477,005 5.0%
6 ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. FORWARD-LOOKING STATEMENTS When used in this filing and in future filings by the Company with the Securities and Exchange Commission, in the Company's press releases or other public or shareholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases "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 obligations, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements. 7 COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2000 AND JUNE 30, 2000 The Company's assets increased $700,000 or 1.0% to $69.5 million at September 30, 2000 from $68.8 million at June 30, 2000. Cash and cash equivalents increased $900,000 or 42.9% to $3.0 million at September 30, 2000 from $2.1 million at June 30, 2000, primarily as a result of an increase in borrowings, an increase in savings deposits, and a decrease in loans receivable offset by a decrease in advance payments by borrowers for taxes, insurance and ground rents. Advances from the Federal Home Loan Bank of Atlanta increased $1.0 million or 33.3% to $4.0 million at September 30, 2000 from $3.0 million at June 30, 2000, as a result of the Company's paying real estate taxes from borrowers' escrow accounts. Savings deposits increased $500,000 or 0.9% to $55.8 million at September 30, 2000 from $55.3 million at June 30, 2000 as the Company attracted more funds in certificates of deposit. Advance payments by borrowers for taxes, insurance and ground rents decreased $900,000 or 69.2% to $400,000 at September 30, 2000 from $1.3 million at June 30, 2000 as the result of the payment of real estate taxes. Net loans receivable decreased $200,000 or 0.3% to $65.0 million at September 30, 2000 from $65.2 million at June 30, 2000 as a result of normal amortization. The Company's stockholders' equity remained virtually unchanged at $8.6 million at September 30, 2000 due to an increase in Treasury stock of $100,000 or 7.7% to $1.4 million at September 30, 2000 from $1.3 million at June 30, 2000, offset by net income of $100,000 for the three months ended September 30, 2,000. COMPARISON OF OPERATING RESULTS FOR THE QUARTER ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999 Net Income ---------- The Company reported net income of $99,000 for the quarter ended September 30, 2000 compared to $90,000 for the quarter ended September 30, 1999. The $9,000 increase in net income was primarily due to an increase in net interest income of $15,000; offset by an increase in noninterest expenses of $6,000. Interest Income --------------- Total interest income increased by $103,000 or 8.8% to $1,273,000 for the quarter ended September 30, 2000 from $1,170,000 for the quarter ended September 30, 1999. The increase in total interest income for the comparable three months periods was due primarily to an increase of $3.1 million in the average balance of interest-earning assets to $68.1 million from $65.0 million, and an increase of 28 basis points in the average yield on interest-earning assets to 7.48% from 7.20%. The increase in the average balance of interest-earning assets was due primarily to an increase in average loans receivable as a result of increased loan volume. 8 Interest Expense ---------------- Total interest expense increased by $88,000 or 13.4% to $746,000 for the quarter ended September 30, 2000 from $658,000 for the quarter ended September 30, 1999. The increase in total interest expense for the comparable three months periods was due primarily to an increase of $2.1 million in the average balance of interest-bearing liabilities to $58.9 million from $56.8 million and an increase of 45 basis points in the average yield on interest-bearing liabilities to 5.06% from 4.61%. The increase in the average balance of interest-bearing liabilities was due to an increase in average borrowings of $3.5 million for the three months comparable periods, partially offset by a decrease of $1.4 million in the average balance of savings deposits for the three months comparable periods. Net Interest Income ------------------- The Company's net interest income increased by $15,000 or 2.9% to $528,000 for the quarter ended September 30, 2000 from $513,000 for the quarter ended September 30, 1999. The increase in net interest income was primarily due to an increase in the ratio of average interest-earning assets to average interest-bearing liabilities to 115.6% from 114.5%, as the Company increased its average loans receivable. The Company's net interest margin decreased 7 basis points to 3.10% from 3.17%. Provision For Loan Losses ------------------------- Management monitors its allowance for loan losses and makes additions to the allowance, through the provision for loan losses, as economic conditions and other factors dictate. Among the other factors considered by management are loan volume, type of collateral and prior loan loss experience. During the three months ended September 30, 2000 and September 30, 1999, the Company recorded no provision for loan losses. The Company's nonperforming loans as a percentage of loans receivable was 0.20% and 0.42% at September 30, 2000, and June 30, 2000, respectively, all consisting of single-family residential mortgage loans. Noninterest Income ------------------ Total noninterest income increased by $1,000 or 4.3% to $24,000 for the quarter ended September 30, 2000 from $23,000 for the quarter ended September 30, 1999. The increase in noninterest income was due primarily to an increase of $1,000 in service fees on checking accounts to $14,000 for the quarter ended September 30, 2000 from $13,000 for the quarter ended September 30, 1999. 9 Noninterest Expenses -------------------- Total noninterest expenses increased by $6,000 or 1.6% to $391,000 for the quarter ended September 30, 2000 from $385,000 for the quarter ended September 30, 1999. The increase in noninterest expenses was primarily due to an increase in advertising expense of $12,000 or 120.0% to $22,000 for the quarter ended September 30, 2000 from $10,000 for the quarter ended September 30, 1999, offset by a decrease in federal deposit insurance premiums of $5,000 or 62.5% to $3,000 for the quarter ended September 30, 2000 from $8,000 for the quarter ended September 30, 1999. The increase in advertising expense was due to a more aggressive advertising campaign and the decrease in federal deposit insurance premiums was a scheduled reduction due to the recapitalization of the insurance fund. Liquidity and Capital Resources ------------------------------- 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 Federal Home Loan Bank (FHLB) of Atlanta. Currently when the Company requires funds, beyond its ability to generate deposits, additional sources of funds are available, as advances or borrowings, through the FHLB of Atlanta. The Company has the ability to pledge its FHLB of Atlanta stock or certain other assets as collateral for up to $14 million in advances. The Company's most liquid assets are cash and cash equivalents, which include short-term investments. The levels of these assets are dependent on the Company's operating, financing and investing activities during any given period. At September 30, 2000, the Company's cash on hand, interest bearing deposits, Federal funds sold and short-term investments totaled $3.0 million. Management and the Board of Directors believe that the Company's liquidity is adequate, including its ability to secure advances from the FHLB of Atlanta, to satisfy its loan commitments of approximately $1.0 million as of September 30, 2000. The Company's principal sources of funds are deposits, loan repayments and prepayments, and other funds provided by operations. Certificates of deposit which are scheduled to mature in less than one year at September 30, 2000 totaled $17.9 million. Historically, a high percentage of maturing deposits have remained with the Company. 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 Association maintains investments in liquid assets based upon management's assessment of (1) need for funds, (2) expected deposit flows, (3) yields available on short-term liquid assets and (4) objectives of the asset/liability management program. The Company's primary source of cash in investing activities during the three months ended September 30, 2000 was a net decrease of $400,000 in loans receivable. 10 The Company's primary sources of cash in financing activities during the three months ended September 30, 2000 consisted of a net increase of $1 million in borrowings and a net increase of $500,000 in savings deposits, offset by a net decrease of $900,000 in advance payments by borrowers for taxes, insurance and ground rents. 11 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS None ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibit is filed as part of this Form 10QSB: Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K None 12 Signatures In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WYMAN PARK BANCORPORATION, INC. Registrant Date: November 10, 2000 /s/ Ernest A. Moretti ------------------------------------ Ernest A. Moretti President and Chief Executive Officer (Principal Executive Officer) Date: November 10, 2000 /s/ Ronald W. Robinson ------------------------------------- Ronald W. Robinson Treasurer (Principal Financial and Accounting Officer) 13