-----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, SFaHLM+EPmpTKn2wjhU72izIf0bfnQ+nAmhECxrmoFqoRaQRdYRbgufvp5vZcjlg laqioedR9rlQEtSxJqFOOg== /in/edgar/work/0000085149-00-000011/0000085149-00-000011.txt : 20001115 0000085149-00-000011.hdr.sgml : 20001115 ACCESSION NUMBER: 0000085149-00-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEBFINANCIAL CORP CENTRAL INDEX KEY: 0000085149 STANDARD INDUSTRIAL CLASSIFICATION: [5331 ] IRS NUMBER: 562043000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-00631 FILM NUMBER: 766653 BUSINESS ADDRESS: STREET 1: 150 EAST 52ND STREET 21ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2128131500 MAIL ADDRESS: STREET 1: 150 EAST 52ND ST STREET 2: 21ST FL CITY: NEW YORK STATE: NY ZIP: 10022 FORMER COMPANY: FORMER CONFORMED NAME: ROSES HOLDINGS INC DATE OF NAME CHANGE: 19970826 FORMER COMPANY: FORMER CONFORMED NAME: ROSES STORES INC DATE OF NAME CHANGE: 19920703 10-Q 1 0001.txt QUARTERLY REPORT FOR WEBFINANCIAL CORPORATION SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (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 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 Commission File Number 0-631 WEBFINANCIAL CORPORATION (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 56-2043000 (I.R.S. Employer Identification No.) 150 East 52nd Street, 21st Floor New York, New York 10022 (Address and zip code of principal executive offices) 877-431-2942 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 ( ) Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes (X) No ( ) Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. Class Outstanding at November 3, 2000 Common Stock, par value $.001 4,354,280 Shares WEBFINANCIAL CORPORATION AND SUBSIDIARIES FORM 10-Q INDEX PART I--FINANCIAL INFORMATION Item 1. Consolidated Financial Statements: Consolidated Statements of Financial Condition September 30, 2000 (unaudited) and December 31, 1999 2 Consolidated Statements of Operations for the three months ended September 30, 2000 and 1999 (unaudited) 4 Consolidated Statements of Operations for the nine months ended September 30, 2000 and 1999 (unaudited) 5 Consolidated Statements of Cash Flow for the nine months ended September 30, 2000 and 1999 (unaudited) 6 Notes to Consolidated Financial Statements (unaudited) 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Item 3. Quantitative and Qualitative Disclosures about Market Risk 13 PART II--OTHER INFORMATION Item 1. Legal Proceedings 15 Item 2. Changes in Securities 15 Item 3. Defaults Upon Senior Securities 15 Item 4. Submission of Matters to a Vote of Security Holders 15 Item 5. Other Information 15 Item 6. Exhibits and Reports on Form 8-K 15 Signatures 16 WEBFINANCIAL CORPORATION AND SUBSIDIARIES PART I--FINANCIAL INFORMATION Item 1. CONSOLIDATED FINANCIAL STATEMENTS (AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
September 30, 2000 December 31, 1999 ------------------ ----------------- (unaudited) ASSETS Cash and cash equivalents $ 7,469 $ 7,266 Investment securities Held-to-maturity (estimated fair value $33 and $37 at September 30, 2000 and December 31, 1999) 33 37 Available-for-sale 6,345 858 ------------- ------------ Total investment securities 6,378 895 Loans, net of deferred premium 12,666 10,868 Less allowance for loan loss 681 472 ------------- ------------ Total loans, net 11,985 10,396 Accounts receivable - 14 Prepaid expense 46 63 Premises and equipment, net of accumulated depreciation and amortization 119 101 Accrued interest receivable 402 163 Goodwill, net of accumulated amortization of $247 and $158 1,528 1,616 Other assets 3,341 428 ------------- ------------ $ 31,268 $ 20,942 ============= ============ =
(continued) WEBFINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (continued)
September 30, 2000 December 31, 1999 ------------------ ----------------- (unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Non interest-bearing demand $ 250 $ 250 Interest-bearing time certificates of deposit 13,954 4,639 ------------- ------------ Total deposits 14,204 4,889 Short term borrowing -- 1,100 Accounts payable and accrued liabilities 2,570 953 Servicing liability 44 108 ------------ ------------ Total liabilities before minority interests 2,614 7,050 Commitments and contingencies -- -- Minority interests 544 457 Stockholders' Equity Preferred stock, 10,000,000 shares authorized, none issued -- -- Common stock, 50,000,000 shares authorized; $.001 par value, 4,354,280 and 4,,349,996 shares issued and outstanding at September 30, 2000 and December 31, 1999, respectively 4 4 Paid-in capital 36,624 36,578 Unearned compensation (65) (65) Accumulated deficit (22,657) (23,082) ------------- ------------ Total stockholders' equity 13,906 13,435 ------------- ------------ $ 31,268 $ 20,942 ============= ============
See accompanying notes to consolidated financial statements. WEBFINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Amounts in thousands except per share amounts)
For the Three Months Ended September 30, 2000 September 30, 1999 ------------------ ------------------ Interest and fees on commercial loans $ 509 $ 167 Interest on cash and cash equivalents 143 135 Interest on investment securities available for sale 116 50 ---------------- -------------- Total interest income 768 352 Interest expense 298 67 ---------------- -------------- Net interest income before loan loss provision 470 285 Loan loss provision 163 88 ---------------- -------------- Net interest income after loan loss provision 307 197 ---------------- -------------- Non interest income: Gain on sale of commercial loans 365 67 Fee income on single payment loans 418 7 Fee income on structured settlements 58 68 Credit card servicing 60 -- Other income 66 192 ---------------- -------------- Total non interest income 967 334 Non interest expenses: Salaries 482 382 Occupancy 48 47 Professional fees 130 33 Goodwill amortization 30 32 Other 298 448 ---------------- -------------- Total non interest expenses 988 942 Income (loss) before minority interests 286 (411) ---------------- -------------- (Income) loss attributable to minority interests -- 21 ---------------- -------------- Net income (loss) $ 286 $ (390) ================ ============== Basic and diluted net income per share $ .07 $ (.09) Weighted average number of common shares and common share equivalents, basic 4,354 4,432 Weighted average number of common shares and common share equivalents, diluted 4,386 4,432
See accompanying notes to consolidated financial statements. WEBFINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Amounts in thousands except per share amounts)
For the Nine Months Ended September 30, 2000 September 30, 1999 ------------------ ------------------ Interest and fees on commercial loans $ 1,199 $ 265 Interest on cash and cash equivalents 347 381 Interest on investment securities available for sale 175 130 ---------------- -------------- Total interest income 1,721 776 Interest expense 601 116 ---------------- -------------- Net interest income before loan loss provision 1,120 660 Loan loss provision 428 144 ---------------- -------------- Net interest income after loan loss provision 692 516 ---------------- -------------- Non interest income: Gain on sale of commercial loans 924 303 Fee income on single payment loans 927 11 Fee income on structured settlements 222 146 Credit card servicing 170 -- Other income 485 234 ---------------- -------------- Total non interest income 2,728 694 Non interest expenses: Salaries 1,423 1,185 Occupancy 142 148 Professional fees 445 75 Goodwill amortization 88 97 Other 844 1,168 ---------------- -------------- Total non interest expenses 2,942 2,673 Income (loss) before minority interests 478 (1,463) ---------------- -------------- (Income) loss attributable to minority interests (53) 100 ----------------- -------------- Net income (loss) $ 425 $ (1,363) ================ ============== Basic net income (loss) per share $ .10 $ (.31) Diluted net income (loss) per share $ .09 $ (.31) Weighted average number of common shares and common share equivalents, basic 4,354 4,381 Weighted average number of common shares and common share equivalents, diluted 4,696 4,381
See accompanying notes to consolidated financial statements. WEBFINANCIAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited) (Amounts in thousands)
For the Nine For the Nine Months Ended Months Ended September 30, 2000 September 30, 1999 ------------------ ------------------ Cash flows from operating activities: Net income (loss) $ 425 $ (1,363) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Minority interest 53 (100) Depreciation and amortization 40 46 Common stock granted in lieu of cash 46 23 Gain on sale of commercial loans 924 (303) Loan loss provision 428 144 Amortization of loan premiums -- 18 Amortization of goodwill 88 97 Amortization of premiums for held-to-maturity securities -- 1 Amortization of deferred gains on sale of loans 48 (6) Amortization of servicing asset (64) 2 Amortization of deferred compensation on stock options -- 61 Net changes in: Cash restricted in escrow -- 1,687 Accounts receivable 14 -- Prepaid expenses 17 (40) Accrued interest receivable (239) (51) Other assets (2,913) (100) Accounts payable and accrued expenses 1,617 68 ------------ ------------ Net cash provided by operating activities 484 184 Cash flows from investing activities: Principal payments received on available-for-sale securities 4 1,050 Purchase of available-for-sale securities (5,487) (205) Purchase of held-to-maturity securities -- (49) Payments on held-to-maturity securities -- 10 Purchase of premises and equipment (58) (17) Principal payments received on loans -- 62 Deferred loan origination fees -- 155 Servicing asset on sale of commercial loans -- (122) Addition to minority interest 34 -- Net increase in loans (2,989) (8,818) ------------ ------------ Net cash used in investing activities (8,496) (7,934)
(continued) WEBFINANCIAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited) (continued) (Amounts in thousands)
For the Nine For the Nine Months Ended Months Ended September 30, 2000 September 30, 1999 ------------------ ------------------ Cash flows provided by financing activities: Non interest-bearing demand -- 145 Net increase in interest-bearing certificates of deposit 9,315 5,436 Minority interest -- 30 Stock options exercised -- 416 Contribution of capital -- 184 Net decrease in line of credit (1,100) -- ------------ ------------ Net cash provided by financing activities 8,215 6,211 Net increase (decrease) in cash and cash equivalents 203 (1,539) Cash and cash equivalents at beginning of period 7,266 8,681 ------------ ------------ Cash and cash equivalents at end of period $ 7,469 $ 7,142 ============ ============ Supplemental disclosure of additional cash activities: Cash paid for interest $ 333 $ 101
See accompanying notes to consolidated financial statements. WEBFINANCIAL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2000 and December 31, 1999 (Amounts in thousands except per share amounts) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation--The accompanying interim consolidated financial statements of WebFinancial Corporation and its subsidiaries (the "Company") are unaudited and have been prepared in conformity with the requirements of Regulations S-X promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), particularly Rule 10-01 thereof, which governs the presentation of interim financial statements. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The accompanying interim consolidated financial statements should be read in conjunction with the Company's significant accounting policies as set forth in Note 1 to the consolidated financial statements in the 1999 Annual Report on Form 10-K. The consolidated Statement of Financial Condition at December 31, 1999 was extracted from the Company's audited consolidated financial statements contained in the 1999 10-K, and does not include all disclosures required by generally accepted accounting principles for annual consolidated financial statements. In the opinion of management, all adjustments are comprised of normal recurring accruals necessary for the fair presentation of the interim financial statements. Operating results for the quarter ended September 30, 2000 are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. 2. ORGANIZATION AND RELATIONSHIPS The consolidated financial statements include the financial statements of WebFinancial Corporation and its subsidiaries: WebFinancial Holding Corporation ("Holding"), WebBank ("WebBank"), Praxis Investment Advisers, Inc. ("Praxis"), WebFinancial Government Lending, Inc. ("Lending"), and Web Film Financial, Inc. ("Film"), collectively referred to as the Company. WebBank is a Utah-chartered industrial loan corporation, and is subject to comprehensive regulation, examination, and supervision by the Federal Deposit Insurance Corporation ("FDIC"), and the State of Utah Department of Financial Institutions. WebBank provides commercial and consumer specialty finance services. WEBFINANCIAL CORPORATION AND SUBSIDIARIES Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the interim consolidated financial statements of the Company and the Notes thereto. OVERVIEW WebFinancial Corporation is a holding company headquartered in New York, NY. As of September 30, 2000, the consolidated Company holds $7.5 million in cash, has no long term debt, and owns 100% of WebFinancial Holding Corporation ("Holding"), an intermediary holding company, which owns 90% of WebBank, 90% of Praxis Investment Advisers, Inc. ("Praxis"), 100% of Web Financial Government Lending Corporation ("Lending"), and 100% of Web Film Financial, Inc. ("Film"). The former President and CEO of Holding is the sole minority stockholder and owns the other 10% of WebBank and Praxis. WebBank, located in Salt Lake City, Utah, is a Utah chartered Industrial Loan Corporation ("ILC") regulated by the Federal Deposit Insurance Corporation ("FDIC") and Utah Department of Financial Institutions and is a member of the Seattle Federal Home Loan Bank. The ILC charter has the ability to attract FDIC insured deposits, underwrite insurance, and export Utah's favorable interest rates and terms to 48 other states. At present, WebBank has one office and has no plan to open any other offices. Due to the benefits and characteristics of the Utah ILC charter, WebBank is uniquely positioned to develop loan products and provide other banking services that could be distributed throughout the United States. WebBank was purchased in August 1998 from H&R Block. WebBank's business plan contains three facets: Portfolio Income, Origination of USDA B&I loans and SBA loans (both as defined below), and Sourcing Partnerships. Portfolio Income - WebBank acquires assets for its portfolio that include loans funded under U.S. Government credit enhancement programs such as USDA Rural Development Business and Industry Loans ("USDA B&I"), Small Business Administration loans ("SBA"), and investment grade securities. Deposits are obtained from both strategic partners and a brokered CD program. These deposits fund the purchases of the above assets. At present, WebBank has about $24.8 million of assets and $14.8 million of deposits, and believes it will be able to meet the funding requirements of its business plans for at least the next 12 months. Origination of USDA B&I loans and SBA loans - These Loan programs are sponsored by U.S. Government agencies that encourage lending to small businesses by guaranteeing a portion of the loan (up to 90%) with a full faith and credit guarantee of the United States Government. In fiscal year 1999, the USDA B&I loan guarantee program had the authority to guarantee up to $1 billion dollars, and since 1994 this program has guaranteed about $3.5 billion dollars of B&I loans. Generally, USDA B&I loans tend to be for amounts less than $10 million, and WebBank has been able to structure these loans with prepayment penalties, adjustable rates, and other features to enhance the safety and marketability of the loans. To date in 2000, WebBank has funded $20.3 million of these loans. In general, WebBank will seek to sell the guaranteed portions of the loans while retaining the unguaranteed portions and servicing rights to the loans. Sourcing Partnerships - Sourcing Partnerships are joint ventures in which WebBank works with certain specialty loan originators. WebBank's ILC allows the originator flexibility regarding loan structure, terms and/or conditions. In general, WebBank and its Sourcing Partner (the "Partner") will jointly agree on underwriting criteria. The Partner will generally agree contractually to purchase loans WebBank originates under the program and to directly reimburse WebBank for any and all costs of origination, including legal, compliance, WEBFINANCIAL CORPORATION AND SUBSIDIARIES management oversight, and audit costs. The Partners will generally contribute marketing, sales, in-depth industry knowledge and an origination network. WebBank will establish underwriting standards and approve the credit and originate qualifying loans presented by the Partners. WebBank may resell the loans to the Partner, thereby minimizing portfolio and credit risk while securing attractive fees. WebBank believes these arrangements can generate consistent fee based income streams without any significant risks to WebBank and with minimal incremental expense to WebBank (since most or all expenses will be reimbursed). Additionally, the Partners will fund deposits in WebBank in excess of the daily production of their loan program, giving WebBank the right to offset any losses against these deposits. At present, WebBank has five Sourcing Partnerships that are generating loans. WebBank is currently negotiating with other potential Partners. During the second quarter of the current year, the Company moved assets from Lending into WebBank, which will improve administrative efficiency. On December 31,1999, the Company had net operating loss carry-forwards of approximately $38 million that are scheduled to expire during the years ending 2010 through 2018. The Company has treated net operating losses incurred prior to April 28, 1995 (the "Effective Date") in accordance with Section 382(1)(5) of the Internal Revenue Code. As a result, there is approximately $27 million in net operating losses incurred prior to the Effective Date as well as $11 million incurred subsequent to the Effective Date available as carryovers. At a June 26, 1997 meeting the Company's shareholders approved an amendment to the Corporation's Certificate of Incorporation to prohibit purchases of more than 5% of the Company's shares. The purpose of this limitation is to help assure that the consolidated corporation's substantial tax benefits (in the form of net operating loss carry-forwards) will continue to be available to offset future taxable income. RESULTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1999 Net income increased by $676,000, comparatively, primarily due to improvements in net interest income and non interest income. Net interest income before loan loss provision increased by $185,000. Most of this increase was due to the origination of over $20 million B&I loans and the retention of the unguaranteed portion of those loans by WebBank during the year 2000. A $75,000 increase in loan loss provision reduced the increase in net interest income after loan loss provision to $110,000. Non interest income increased by $633,000, primarily from (i) a $298,000 increase in the gain on sale of USDA B&I loans and (ii) increases in sourcing partnerships with single payment, structured settlement and credit card vendors that created an additional $461,000 in fee income. Other income decreased by $126,000 between periods primarily due to a nonrecurring $75,000 gain on securities sales in 1999. Non interest expense increased by $46,000 primarily from an increase in personnel and related expenses of $100,000 and an increase in professional fees of $97,000. These increases were offset by a decrease in other expense of $150,000. The Company did not record any income tax provision in either period due to prior year tax loss carryforwards. WEBFINANCIAL CORPORATION AND SUBSIDIARIES NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,1999 Net income increased by $1.8 million, comparatively, primarily due to improvements in non interest income. Non interest income increased by $2.0 million primarily due to (i) a $621,000 increase in the gain on sale of USDA B&I loans, (ii) a $1.2 million increase in fees from sourcing partnerships with single payment, structured settlement and credit card vendors, (iii) and a $428,000 increase in fees for services provided in securitizing loans. The Company did not record any income tax provision in either period due to prior year loss carryforwards. LIQUIDITY AND CAPITAL RESOURCES As of September 30, 2000 and December 31, 1999, the Company's cash and cash equivalents totaled approximately $7.5 million and $7.3 million, respectively. Funding currently comes primarily from certificates of deposit obtained through brokers. WebBank is currently investigating the possibility of establishing a retail deposit program in order to secure a less expensive and more dependable source of funds. Management believes that the Company's current cash and cash equivalent balances and expected operating cash flows and available credit lines are adequate to meet its liquidity needs through at least the next 12 months. The Company continues to actively seek acquisition transactions. There can be no assurance that the Company will be able to locate or purchase an additional business, or that such business, will be profitable. In order to finance an acquisition, the Company may be required to incur or assume indebtedness or issue securities. FORWARD-LOOKING STATEMENTS The following important factors, among others, could cause actual results to differ materially from those indicated by forward-looking statements made in this Quarterly Report of Form 10-Q and presented elsewhere by management. All forward-looking statements included in this document are based on information available to the Company on the date hereof, and the Company assumes no obligation to update any such forward-looking statements. A number of uncertainties exist that could affect the Company's future operating results, including, without limitation, general economic conditions, changes in interest rates, the company's ability to attract deposits, and the Company's ability to control costs. Because of these and other factors, past financial performance should not be considered an indication of future performance. The Company's future quarterly operating results may vary significantly. Investors should not use historical trends to anticipate future results and should be aware that the trading price of the Company's Common Stock may be subject to wide fluctuations in response to quarterly variations in operating results and other factors, including those discussed above. WEBFINANCIAL CORPORATION AND SUBSIDIARIES Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company maintains an investment portfolio and participates in commercial loans. Both of these activities are subject to specific policies that are focused on preserving principal, maintaining proper liquidity to meet operating needs, and maximizing yields. The Company's operations may be subject to a variety of market risks, the most material of which is the risk of changing interest rates. Most generally, interest rate risk is the volatility in financial performance attributable to changes in market interest rates, which may result in either fluctuation of net interest income or changes to the economic value of the equity of the Company. The following discusses certain factors that may affect the Company's financial results and operations and should be considered in evaluating the Company. Interest Rates. The Company's earnings may be impacted by changing interest rates. Changes in interest rates impact the level of loans, deposits and investments, the credit profile of existing loans, the rates received on loans and securities and the rates paid on deposits and borrowings. The Company attempts to minimize interest rate risk through various means including the matching of interest rate volatility of assets and liabilities. However, significant fluctuations in interest rates may have an adverse affect on the Company's financial condition and results of operations. Government Regulation and Monetary Policy. The banking industry is subject to extensive federal and state supervision and regulation. Significant new laws or changes in existing laws, or repeals of existing laws may cause the Company's results to differ materially. Further, federal monetary policy, particularly as implemented through the Federal Reserve System, significantly affects credit conditions for the Company and a material change in these conditions could have a material adverse impact on the Company's financial condition and results of operations. Competition. The banking and financial services businesses in the Company's lines of business are highly competitive. The increasingly competitive environment is a result of changes in regulation, changes in technology and product delivery systems, and the accelerating pace of consolidation among financial services providers. The results of the Company may differ if circumstances affecting the nature or level of competition change. Credit Quality. A source of risk arises from the possibility that losses will be sustained because borrowers, guarantors and related parties may fail to perform in accordance with the terms of their loans. The Company has adopted underwriting and credit monitoring procedures and credit policies, including the establishment and review of the allowance for credit losses, that management believes are appropriate to minimize this risk by assessing the likelihood of nonperformance, tracking loan performance and diversifying the Company's credit portfolio. These policies and procedures, however, may not prevent unexpected losses that could have a material adverse effect on the Company's results. Non-banking Activities. The Company may expand its operations into new non-banking activities in 2000. Although the Company has experience in providing bank-related services, this expertise may not assist us in our expansion into non-banking activities. As a result, we may be exposed to risks associated with, among other things, (1) a lack of market and product knowledge or awareness of other industry related matters and (2) an inability to attract and retain qualified employees with experience in these non-banking activities. Year 2000 Compliance. Most of the Company's operations are dependent on the efficient functioning of the Company's computer systems and software. Computer system failures or disruption could have a material adverse effect on the Company's financial condition and results of operations. As of November 3, 2000, WEBFINANCIAL CORPORATION AND SUBSIDIARIES WebBank experienced no problems with respect to Year 2000 technology issues. This does not mean that some problems may not occur in the future. Proposed Legislation. From time to time, various types of federal and state legislation have been proposed that could result in additional regulation of, and modifications of restrictions on, the business of the Company. It cannot be predicted whether any legislation currently being considered will be adopted or how such legislation or any other legislation that might be enacted in the future would affect the business of the Company. WEBFINANCIAL CORPORATION AND SUBSIDIARIES PART II--OTHER INFORMATION Item 1. LEGAL PROCEEDINGS. In January 2000, a former executive officer and director of the Company's subsidiary Praxis (the "officer") filed a lawsuit in the Superior Court of the State of California, County of Napa against the Company, Praxis and Holdings. The lawsuit alleges that Praxis has breached its employment agreement with the officer. The lawsuit also asserts claims for interference with contract and unjust enrichment based upon the purported wrongful termination of the officer's employment contract with Praxis. The lawsuit seeks damages of an unspecified amount and compliance by Praxis with the termination pay out provisions in the officer's employment agreement relating to purchase of the officer's 10% interest in Praxis and WebBank (both 90% covered subsidiaries of the Company) at their fair market value. The time for the Company to answer and assert counterclaims in this matter has not yet expired. The Company and Praxis deny that Praxis wrongfully terminated the officer's employment and intend to vigorously defend this matter. The Company does not believe that this lawsuit will have a material impact on its financial condition, results of operations, or liquidity. Other Risks. From time to time, the Company details other risks with respect to its business and/or financial results in its filings with the Commission. Item 2. CHANGES IN SECURITIES. Not applicable. Item 3. DEFAULTS UPON SENIOR SECURITIES. Not applicable. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matter was submitted to a vote of security holders during the period covered by this report. Item 5. OTHER INFORMATION. None Item 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits See exhibit index immediately following the signature page. (b) Reports on Form 8-K during the quarter None. WEBFINANCIAL CORPORATION AND SUBSIDIARIES 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 thereunto duly authorized. WEBFINANCIAL CORPORATION By /s/ Warren G. Lichtenstein Warren G. Lichtenstein President By /s/ Glen M. Kassan Glen M. Kassan Vice President, Chief Financial Officer Date: November 14, 2000 WEBFINANCIAL CORPORATION AND SUBSIDIARIES EXHIBIT INDEX 11 Statement Regarding Computation of Net Income Per Share 27 Financial Data Schedule as Part of the Electronic Filing Only Exhibit 11 WEBFINANCIAL CORPORATION. AND SUBSIDIARIES Statement Regarding Computation of Net Income (Loss) Per Share (Amounts in thousands except per share amounts)
For the Nine Months Ended September 30, 2000 September 30, 1999 ------------------ ------------------ Net income (loss) $ 425 $ (1,363) Shares used in computation: Weighted average number of common shares and common share equivalents, basic 4,354 4,381 Common shares and common share equivalents, fully diluted 4,696 4,381 Net income (loss) per share-basic $ .10 $ (.31) Net income (loss) per share-diluted $ .09 $ (.31)
Common stock equivalents (stock options and warrants) of approximately 342 were outstanding during the nine month period ended at September 30, 2000 that could potentially dilute basic weighted average earnings per share in the future were included in the computation of diluted earnings per share. Common stock equivalents (stock options and warrants) of approximately 311 shares were outstanding during the nine month period ended at September 30, 1999 that could potentially dilute basic earnings per share in the future were not included in the computation of diluted earnings per share. EX-27 2 0002.txt FDS FOR WEBFINANCIAL CORPORATION
9 0000085149 WEBFINANCIAL CORPORATION 1,000 US DOLLARS 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 1 1,453 6,016 0 0 0 0 6,378 12,666 681 31,268 14,204 0 2,614 0 0 0 4 13,902 31,268 1,199 175 0 1,721 347 601 1,120 428 0 2,942 425 425 0 0 425 .10 .09 0 0 0 0 0 0 0 0 681 681 0 0
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