UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 3, 2018
WEST END INDIANA BANCSHARES, INC.
(Exact Name of Registrant as Specified in its Charter)
| Maryland | 000-54578 | 36-4713616 |
| (State or Other Jurisdiction) | (Commission File No.) | (I.R.S. Employer |
| of Incorporation) | Identification No.) |
| 34 South 7th Street, Richmond, Indiana | 47374 |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (765) 962-9587
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate
by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 8.01. | Other Events. |
On August 3, 2018, West End Indiana Bancshares, Inc. (the “Company”) announced its financial results at and for the quarter ended June 30, 2018.
A copy of the press release dated August 3, 2018 giving details associated with the earnings release is attached as Exhibit 99 to this report. The press release shall not be deemed filed for any purpose.
| Item 9.01. | Financial Statements and Exhibits. |
| (a) | Financial Statements of Businesses Acquired. |
Not Applicable. |
| (b) | Pro Forma Financial Information. |
Not Applicable. |
| (c) | Shell Company Transactions. |
Not Applicable. |
| (d) | Exhibit 99 | Press Release dated August 3, 2018 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
| WEST END INDIANA BANCSHARES, INC. | |||
| DATE: August 3, 2018 | By: | /s/ Timothy R. Frame | |
| Timothy R. Frame | |||
| President and Chief Executive Officer | |||
Exhibit 99
RICHMOND, Indiana. August 3, 2018 - West End Indiana Bancshares, Inc. (the “Company”), the Holding Company for West End Bank, S.B. (the “Bank”), announces net income of $702,000 or $0.68 per diluted share, for the six months ended June 30, 2018, an increase of $363,000, or 107.3% as compared to net income for the six months ended June 30, 2017. The increase in net income resulted primarily from increased noninterest income of $549,000 and a decrease in noninterest expenses of $186,000, offset by increases in the provision for loan losses of $270,000, the provision for income tax of $87,000 and a decrease in net interest income of $15,000. Net income for the quarter ended June 30, 2018 was $354,000 compared to a net loss of $99,000 for the quarter ended June 30, 2017. The increase was primarily due to increased other income of $456,000 and a decrease in other expenses of $295,000, offset by increases in the provision for loan losses of $73,000, the provision for income tax of $197,000 and a decrease in net interest income of $28,000.
Interest income increased $448,000 for the six months ended June 30, 2108 to $7.4 million from $6.9 million for the six months ended June 30, 2017. The increase was due to an increase in interest on loans of $366,000, other interest income of $76,000 and interest on securities of $6,000. For the quarter ended June 30, 2018 interest income increased $223,000 to $3.8 million, from $3.5 million for the quarter ended June 30, 2017.
Interest expense increased $463,000, or 46.2%, to $1.5 million for the six months ended June 30, 2018, from $1.0 million for the six months ended June 30, 2017. The increase was the result of an increase in interest expense on deposits of $240,000 and an increase in the cost of borrowings of $223,000. These changes resulted in a slight decrease of $15,000 to net interest income year over year. The increase in interest expense on deposits was due to higher market interest rates. Interest expense on borrowings increased due to a higher average balance and higher market interest rates. For the quarter ended June 30, 2018, interest expense increased $250,000 to $765,000 from $515,000 from June 30, 2017, reflecting higher market interest rates and a higher average balance on borrowings.
The provision for loan losses was $1.0 million for the six months ended June 30, 2018, compared to $764,000 for the six months ended June 30, 2017. The provision for loan losses was $479,000 for the three months ended June 30, 2018 compared to $406,000 for the three months ended June 30, 2017. These increases to the provision were based on management’s quarterly analyses of the loan portfolio and credit quality indicators including charge off trends and qualitative factors.
Noninterest income increased $549,000, or 135.8%, to $954,000 for the six months ended June 30, 2018 as compared to the six months ended June 30, 2017. The increase was due primarily to the increase in gain on other assets of $523,000 to $20,000 for the six months ended June 30, 2018 from a loss of $503,000 for the six months ended June 30, 2017. The change was due primarily to management’s determination that the fair market value on a single commercial property held in foreclosed real estate held for sale had decreased during the second quarter of 2017 resulting in a write down of $400,000. For the quarter ended June 30, 2018, noninterest income increased $457,000 due to the increase in gain on other assets of $509,000 to $27,000 for the quarter ended June 30, 2018 from a loss of $482,000 for the quarter ended June 30, 2017.
For the six months ended June 30, 2018, noninterest expense decreased $186,000, or 3.7%, to $4.9 million, from $5.1 million for the six months ended June 30, 2017. The decrease was due primarily to decreases in foreclosed real estate and repossession expense of $278,000, professional fees of $107,000, and ATM charges of $81,000, offset by increases in salaries and employee benefits of $156,000, and net occupancy of $137,000. Salaries and employee benefits increased due to normal cost of living and merit increases, and other employee benefit programs. Net occupancy expense increased due to the completion of the administrative and operations building late in 2017 and affixed depreciation on the building and furniture fixtures and equipment. The savings in ATM charges are due to the transition to a new servicer. Expenses related to foreclosed real estate decreased due to the sale in 2017 of a commercial property held in foreclosure and relief of the related carryforward costs. For the quarter ended June 30, 2018, noninterest expense decreased $295,000 due primarily to decreases in foreclosed real estate and repossession expense, professional fees and ATM charges.
The provision for income taxes was $239,000 for six months ended June 30, 2018 compared to $152,000 for six months ended June 30, 2017. Our effective tax rates were 25.4% and 31.0% for the six months ended June 30, 2018 and 2017, respectively, reflecting an increase in pretax income and the reduced corporate federal income tax rate. Due to a pre-tax net loss for the quarter ending June 30, 2017, a tax benefit of $78,000 was recorded for the 2017 quarter. Our effective tax rates were 25.3% and (43.9%) for the three months ended June 30, 2018 and 2017, respectively.
Comparison of Financial Condition at June 30, 2018 and December 31, 2017
Total assets increased $11.9 million, or 4.4%, to $311.7 million at June 30, 2018 from $299.4 million at December 31, 2017. The increase was primarily the result of increases to cash and cash equivalents, investment securities available for sale, net loans, and other assets, offset by a decrease in loans held for sale.
Cash and cash equivalents increased $3.4 million, or 32.4%, to $13.7 million at June 30, 2018 from $10.3 million at December 31, 2017. Securities available for sale increased $1.4 million, or 6.9%, to $21.7 million at June 30, 2018 from $20.3 million at December 31, 2017.
Net loans increased $9.9 million, or 4.1%, to $250.8 million at June 30, 2018 from $240.9 million December 31, 2017. Growth in the loan portfolio was due primarily to increases in commercial and multi-family loans of $3.9 million, consumer loans of $2.3 million, construction loans of $1.8 million and commercial loans of $1.3 million, offset by a decrease in second mortgages and home equity lines of credit of $228,000.
Deposits increased $3.2 million, or 1.4%, to $230.2 million at June 30, 2018 from $227.0 million at December 31, 2017. Core deposits, including savings, interest-bearing and noninterest-bearing checking, and money market deposit accounts increased $517,000 to $120.6 million at June 30, 2018 from $120.1 million at December 31, 2017. Certificates and other time deposits increased $2.7 million to $109.6 million at June 30, 2018 from $106.9 million at December 31, 2017, as core deposits have begun to move to higher interest paying certificates of deposit.
Borrowings, which consisted entirely of Federal Home Loan Bank advances, increased $9.0 million, or 21.7%, to $50.5 million at June 30, 2018 from $41.5 million at December 31, 2017. These advances were used to fund loan growth.
Total stockholders’ equity increased $438,000, or 1.5%, to $29.5 million at June 30, 2018 from $29.0 million at December 31, 2017. The increase was primarily a result of year to date net income of $702,000, stock-based compensation expense of $133,000, and ESOP shares earned of $80,000, offset in part by decreases to accumulated other comprehensive income of $302,000, dividends of $129,000 and shares repurchased of $46,000.
| June 30, 2018 (Unaudited) | December 31, 2017 | |||||||
| (In Thousands) | ||||||||
| SELECTED FINANCIAL CONDITION DATA: | ||||||||
| Total assets | $ | 311,728 | $ | 299,414 | ||||
| Total cash and cash equivalents | 13,702 | 10,346 | ||||||
| Investment in available for sale securities, at fair value | 21,694 | 20,297 | ||||||
| Loans held for sale | 520 | 2,877 | ||||||
| Loans, net | 250,775 | 240,859 | ||||||
| Bank-owned life insurance | 7,047 | 6,960 | ||||||
| Premises and equipment | 8,999 | 9,128 | ||||||
| Foreclosed real estate held for sale | 39 | 39 | ||||||
| Federal Home Loan Bank of Indianapolis, at cost | 2,436 | 2,436 | ||||||
| Deposits | 230,153 | 226,981 | ||||||
| Borrowings | 50,500 | 41,500 | ||||||
| Total Equity | 29,467 | 29,029 | ||||||
| Total Stockholders’ equity less maximum cash obligation related to ESOP shares | 28,582 | 28,175 | ||||||
| ASSET quality ratios: | ||||||||
| Nonperforming loans to total loans | 0.42 | % | 0.34 | % | ||||
| Nonperforming assets to total assets | 0.47 | % | 0.38 | % | ||||
| Net charge-offs annualized (recoveries) to average loans outstanding | 0.57 | % | 0.66 | % | ||||
| Allowance for loan losses to non-performing loans | 288.10 | % | 333.54 | % | ||||
| Allowance for loan losses to total loans | 1.21 | % | 1.13 | % | ||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| 30-Jun | 30-Jun | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| (In Thousands, except per share amounts) | (In Thousands, except per share amounts) | |||||||||||||||
| SELECTED FINANCIAL CONDITION DATA: | ||||||||||||||||
| Interest income | $ | 3,751 | $ | 3,528 | $ | 7,376 | $ | 6,928 | ||||||||
| Interest expense | 765 | 515 | 1,466 | 1,003 | ||||||||||||
| 2,986 | 3,013 | 5,910 | 5,925 | |||||||||||||
| Provision for loan losses | 479 | 406 | 1,034 | 764 | ||||||||||||
| Net interest income after provision for loan losses | 2,507 | 2,607 | 4,876 | 5,161 | ||||||||||||
| Noninterest income (loss) | 447 | (9 | ) | 954 | 404 | |||||||||||
| Noninterest expense | 2,480 | 2,775 | 4,889 | 5,075 | ||||||||||||
| Income (loss) before income tax expense | 474 | (177 | ) | 941 | 490 | |||||||||||
| Income tax expense (benefit) | 120 | (78 | ) | 239 | 152 | |||||||||||
| Net income (loss) | 354 | (99 | ) | 702 | 338 | |||||||||||
| Basic earnings (loss) per share | $ | 0.36 | $ | (0.10 | ) | $ | 0.71 | $ | 0.34 | |||||||
| Diluted earnings (loss) per share | 0.34 | (0.10 | ) | 0.68 | 0.33 | |||||||||||
| Dividends per share | 0.07 | 0.06 | 0.13 | 0.12 | ||||||||||||