10QSB 1 wyman10qsb9302001.txt WYMAN PARK FORM 10QSB 9/30/2001 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, 2001 ________ 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 2, 2001, the issuer had 822,490 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, 2001 and June 30, 2001............................... 2 Consolidated Statements of Operations for the Three Month Periods ended September 30, 2001 and 2000.......................... 3 Consolidated Statements of Cash Flows for the Three Month Periods Ended September 30, 2001 and 2000.......................... 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, June 30, 2001 2001 ----------- --------- (Unaudited) Assets ------ Cash and noninterest bearing deposits $ 475,825 $ 882,696 Interest bearing deposits in other banks 300,045 93,680 Federal funds sold 2,558,662 3,455,641 ------------ ------------ Total cash and cash equivalents 3,334,532 4,432,017 Loans receivable, net 63,159,501 64,712,777 Mortgage-backed securities held to maturity at amortized cost, fair value of $137,527 (9/2001) and $146,691 (6/2001) 135,020 145,796 Federal Home Loan Bank of Atlanta stock, at cost 528,900 528,900 Accrued interest receivable 336,389 345,969 Ground rents owned, at cost 120,100 122,600 Property and equipment, net 73,084 83,069 Federal and state income taxes receivable -- 6,237 Deferred tax asset 217,646 217,646 Prepaid expenses and other assets 57,679 53,596 ------------ ------------ Total Assets $ 67,962,851 $ 70,648,607 ------------ ------------ Liabilities & Stockholders' Equity ---------------------------------- Liabilities: Demand deposits $ 5,054,970 $ 5,246,632 Money market and NOW accounts 8,860,552 9,454,074 Time deposits 44,220,228 45,481,277 ------------ ------------ Total deposits 58,135,750 60,181,983 Advance payments by borrowers for taxes, insurance and ground rents 344,889 1,196,077 Accrued interest payable on savings deposits 12,305 12,544 Federal and state income taxes payable 34,919 20,455 Accrued expenses and other liabilities 660,888 556,820 ------------ ------------ Total liabilities 59,188,751 61,967,879 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 4,149,733 4,149,733 Contra equity - Employee Stock Ownership Plan (ESOP) (451,008) (451,008) Retained earnings, substantially restricted 6,814,198 6,720,826 Treasury Stock; 189,223 shares at cost at September 30, 2001 and June 30, 2001 (1,748,940) (1,748,940) ------------ ------------ Total stockholders' equity 8,774,100 8,680,728 Total liabilities and stockholders' equity $ 67,962,851 $ 70,648,607 ------------ ------------
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, 2001 2000 ---- ---- Interest and fees on loans receivable $1,181,976 $1,218,279 Interest on mortgage-backed securities 2,214 3,305 Interest on other investments 42,889 51,874 ---------- ---------- Total interest income $1,227,079 $1,273,458 ---------- ---------- Interest on savings deposits $ 721,610 $ 685,751 Interest on borrowed money -- 59,412 Interest on escrow deposits 388 676 ---------- ---------- Total interest expense $ 721,998 $ 745,839 Net interest income before provision for loan losses 505,081 527,619 Provision for loan losses -- -- ---------- ---------- Net interest income $ 505,081 $ 527,619 ---------- ---------- Other Income ------------ Loan fees and service charges $ 29,328 $ 22,107 Gain on sales of loans receivable 4,775 -- Other 9,116 2,102 ---------- ---------- Total other income $ 43,219 $ 24,209 ---------- ---------- Noninterest Expenses -------------------- Salaries and employee benefits $ 253,175 $ 232,674 Occupancy costs 26,619 26,483 Professional services 12,729 15,327 Federal deposit insurance premiums 2,707 2,847 Furniture and fixtures depreciation and maintenance 10,991 11,719 Data processing 20,644 20,671 Advertising 6,779 22,051 Franchise and other taxes 12,489 11,466 Other 51,095 47,282 ---------- ---------- Total noninterest expenses $ 397,228 $ 390,520 Income before tax provision 151,072 161,308 Provision for income taxes 57,700 62,000 ---------- ---------- Net Income $ 93,372 $ 99,308 ---------- ---------- Basic net income per share $ 0.13 $ 0.13 Diluted net income per share $ 0.12 $ 0.13 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, 2001 2000 ---- ---- Cash Flows from operating activities ------------------------------------ Net income $ 93,372 $ 99,308 Adjustments to reconcile net income to net Cash provided by operating activities: Depreciation and amortization 9,985 10,343 Amortization of loan fees (8,602) (21,450) Gain on sales of loans receivable (4,775) -- Loans originated for sale (392,500) -- Proceeds from loans originated for sale 397,275 -- (Increase) decease in accrued interest receivable 9,580 (13,835) Increase in prepaid expenses and other assets (4,083) (28,134) Increase in accrued expenses and other liabilities 104,068 53,709 Decrease in federal and state income taxes receivable 6,237 10,999 Increase in federal and state income taxes payable 14,464 33,000 Increase (decrease) in accrued interest payable on savings deposits (239) 249 Increase in accrued interest payable on borrowings -- 7,321 ----------- ----------- Net cash provided by operating activities 224,782 151,510 Cash flows from investing activities ------------------------------------ Proceeds from sale of ground rents 2,500 -- Net decrease in loans receivable 1,793,913 394,705 Purchase of loan participations (232,035) (141,375) Mortgage-backed securities principal repayments 10,776 6,449 Purchases of property and equipment -- (379) ----------- ----------- Net cash provided by investing activities 1,575,154 259,400 Cash flows from financing activities ------------------------------------ Net increase (decrease) in savings deposits (2,046,233) 483,269 Net increase in checks outstanding in excess of bank balance -- 84,549 Increase in borrowings -- 1,000,000 Decrease in advance payments by borrowers for taxes, insurance and ground rents (851,188) (922,884) Repurchase of common stock -- (139,133) ----------- ----------- Net cash provided by (used in) financing activities (2,897,421) 505,801 Net increase (decrease) in cash and cash equivalents $(1,097,485) $ 916,711 Cash and cash equivalents at beginning of period 4,432,017 2,085,906 ----------- ----------- Cash and cash equivalents at end of period $ 3,334,532 $ 3,002,617 ----------- ----------- Supplemental information ------------------------ Interest paid on savings deposits and borrowed funds $ 721,998 $ 745,839 Income taxes paid $ 37,000 $ 18,000
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, 2001 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 the purposes of the statement of cash flows, the Company considers all highly liquid investments with maturities at date of purchase of three months or less to be cash equivalents. Cash equivalents consist of cash, non-interest bearing deposits, variable rate interest bearing deposits in other banks and federal funds sold. 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, 2001 and 2000 as follows: Three Months Ended Three Months Ended September 30, 2001 September 30, 2000 ------------------ ------------------ Net income $ 93,372 $ 99,308 Weighted average shares Outstanding basic EPS 720,804 757,936 Dilutive items Stock options 40,739 27,942 Unvested stock awards 1,362 935 Adjusted weighted average shares Outstanding used for diluted EPS 762,905 786,813 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, 2001 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) $ 8,434,166 21.2% $3,182,891 8.0% $3,978,614 10.0% Tier I capital (to Risk Weighted Assets) 8,150,211 20.5% 1,591,445 4.0% 2,387,168 6.0% Tier 1 Capital (to Average Assets) 8,150,211 12.0% 2,718,732 4.0% 3,398,416 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, 2001 AND JUNE 30, 2001 The Company's assets decreased $2.6 million or 3.7% to $68.0 million at September 30, 2001 from $70.6 million at June 30, 2001. Cash and cash equivalents decreased $1.1 million or 25.0% to $3.3 million at September 30, 2001 from $4.4 million at June 30, 2001, primarily as a result of a decrease in savings deposits, and a decrease in advance payments by borrowers for taxes, insurance and ground rents, partially offset by a decrease in loans receivable. Savings deposits decreased $2.1 million or 3.5% to $58.1 million at September 30, 2001 from $60.2 million at June 30, 2001. The Company believes the deposit decline is the result of customer reaction to reduced deposit rates, as the Company seeks to manage its net interest margin. Advance payments by borrowers for taxes, insurance and ground rents decreased $900,000 or 75.0% to $300,000 at September 30, 2001 from $1.2 million at June 30, 2001 as the result of the payment of real estate taxes. Net loans receivable decreased $1.5 million or 2.3% to $63.2 million at September 30, 2001 from $64.7 million at June 30, 2001 as a result of normal amortization and payoffs. The Company's stockholders' equity increased $93,000 or 1.1% to $8.8 million at September 30, 2001 from $8.7 million at June 30, 2001 as a result of net income of $93,000 for the three months ended September 30, 2001. COMPARISON OF OPERATING RESULTS FOR THE QUARTER ENDED SEPTEMBER 30, 2001 AND SEPTEMBER 30, 2000 Net Income ---------- The Company reported net income of $93,000 for the quarter ended September 30, 2001 compared to $99,000 for the quarter ended September 30, 2000. The $6,000 decrease in net income was primarily due to a decrease in net interest income of $23,000, offset by an increase in noninterest income of $19,000. Interest Income --------------- Total interest income decreased by $46,000 or 3.6% to $1,227,000 for the quarter ended September 30, 2001 from $1,273,000 for the quarter ended September 30, 2000. The decrease in total interest income for the comparable three months periods was due primarily to a decrease of $600,000 in the average balance of interest-earning assets to $67.5 million from $68.1 million, and a decrease of 21 basis points in the average yield on interest-earning assets to 7.27% from 7.48%. The decrease in the average balance of interest-earning assets was due primarily to a decrease in average loans receivable of $1.3 million as a result of payoffs and regular loan amortization, partially offset by an increase in average federal funds sold and other interest earning assets of $700,000. 8 Interest Expense ---------------- Total interest expense decreased by $24,000 or 3.2% to $722,000 for the quarter ended September 30, 2001 from $746,000 for the quarter ended September 30, 2000. The decrease in total interest expense for the comparable three months periods was due primarily to a decrease of $200,000 in the average balance of interest-bearing liabilities to $58.7 million from $58.9 million and a decrease of 14 basis points in the average yield on interest-bearing liabilities to 4.92% from 5.06%. The decrease in the average balance of interest-bearing liabilities was due to a decrease in average borrowings of $3.5 million for the three months comparable periods, partially offset by an increase of $3.3 million in the average balance of savings deposits for the three months comparable periods. Net Interest Income ------------------- The Company's net interest income decreased by $23,000 or 4.4% to $505,000 for the quarter ended September 30, 2001 from $528,000 for the quarter ended September 30, 2000. The decrease in net interest income was primarily due to a decline in interest income in a greater amount than the decline in interest expense. This is reflected in a decrease in the ratio of average interest-earning assets to average interest-bearing liabilities to 114.9% from 115.6%, as the Company decreased its average loans receivable. This is also reflected in the Company's net interest margin, which decreased 11 basis points to 2.99% from 3.10%. 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, 2001 and September 30, 2000, the Company recorded no provision for loan losses. The Company's nonperforming loans as a percentage of loans receivable was 0.23% and 0.14% at September 30, 2001, and June 30, 2001, respectively, all consisting of single-family residential mortgage loans. Noninterest Income ------------------ Total noninterest income increased by $19,000 or 79.2% to $43,000 for the quarter ended September 30, 2001 from $24,000 for the quarter ended September 30, 2000. The increase in noninterest income was due primarily to an increase of $7,000 in service fees on checking accounts to $21,000 for the quarter ended September 30, 2001 from $14,000 for the quarter 9 ended September 30, 2000, an increase of $5,000 on gain of sales of loans receivable to $5,000 for the quarter ended September 30, 2001 from $0 for the quarter ended September 30, 2000 and an increase of $7,000 in other income to $9,000 for the quarter ended September 30, 2001 from $2,000 for the quarter ended September 30, 2000 due to sales of annuities and miscellaneous fees. Noninterest Expenses -------------------- Total noninterest expenses increased by $6,000 or 1.5% to $397,000 for the quarter ended September 30, 2001 from $391,000 for the quarter ended September 30, 2000. The increase in noninterest expenses was primarily due to an increase in salaries and employee benefits of $20,000 or 8.6% to $253,000 for the quarter ended September 30, 2001 from $233,000 for the quarter ended September 30, 2000 as a result of staff additions. 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 $13.6 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, 2001, the Company's cash on hand, interest bearing deposits, Federal funds sold and short-term investments totaled $3.3 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 $2.8 million as of September 30, 2001. The Company's principal sources of funds are deposits, loan repayments and other funds provided by operations. Certificates of deposit which are scheduled to mature in less than one year at September 30, 2001 totaled $27.4 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, 2001 was a net decrease of $1.8 million in loans receivable. 10 The Company's primary uses of cash in financing activities during the three months ended September 30, 2001 consisted of a net decrease of $2.1 million in savings deposits and 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) 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 2, 2001 /s/ Ernest A. Moretti ------------------------------------ Ernest A. Moretti President and Chief Executive Officer (Principal Executive Officer) Date: November 2, 2001 /s/ Ronald W. Robinson ------------------------------------- Ronald W. Robinson Treasurer (Principal Financial and Accounting Officer) 13