-----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, ULXHIwaahTfg0/wXPRZT/cdNSLOIlTdLH5FF6KqxcrgsnMKQnwSVui1OZqHpFXB6 PjeIoKnT1yY2r31KaBEIbA== 0000950144-97-005668.txt : 19970515 0000950144-97-005668.hdr.sgml : 19970515 ACCESSION NUMBER: 0000950144-97-005668 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WILSON BANK HOLDING CO CENTRAL INDEX KEY: 0000885275 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 621497076 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-20402 FILM NUMBER: 97603532 BUSINESS ADDRESS: STREET 1: 623 W MAIN STREET STREET 2: P.O. BOX 768 CITY: LEBANON STATE: TN ZIP: 37087 BUSINESS PHONE: 6154442265 MAIL ADDRESS: STREET 1: 623 W MAIN STREET STREET 2: P.O. BOX 768 CITY: LEBANON STATE: TN ZIP: 37087 10-Q 1 WILSON BANK HOLDING COMPANY FORM 10-Q 3-31-97 1 UNITED STATES 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 MARCH 31, 1997 [ ] 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 0-20402 WILSON BANK HOLDING COMPANY --------------------------- (Exact Name of Registrant As Specified in Its Charter) Tennessee 62-1497076 --------- ---------- (State or Other Jurisdiction of (IRS Employer Incorporation or Organization) Identification No.) 623 West Main Street, Lebanon, Tennessee 37087 ---------------------------------------------- (Address of principal executive offices and Zip Code) (615) 444-2265 -------------- (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 the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. Common stock outstanding: 1,392,182 shares at May 11, 1997. 1 2 PART I: FINANCIAL INFORMATION Item 1. Financial Statements The unaudited consolidated financial statements of the registrant and its wholly-owned subsidiary Wilson Bank & Trust ("WB&T" or "Wilson") and its 50% owned subsidiaries DeKalb Community Bank ("DCB" or "DeKalb") and Community Bank of Smith County ("CBSC") are as follows: Consolidated Balance Sheets - March 31, 1997 and December 31, 1996. Consolidated Statements of Income - For the three months ended March 31, 1997 and 1996. Consolidated Statements of Cash Flows - For the three months ended March 31, 1997 and 1996. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II: OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K. SIGNATURES 2 3 WILSON BANK HOLDING COMPANY Consolidated Balance Sheets March 31, 1997 and December 31, 1996 (Unaudited)
Mar. 31, Dec. 31, 1997 1996 (In Thousands) ASSETS ------ Loans (less allowance for possible loan losses of $2,609,000 and $2,452,000 respectively) $ 195,965 $ 183,642 Securities: Held-to-maturity, at cost (market value of $26,313,000 and $26,702,000 respectively) 26,313 26,535 Available-for-sale, at market (amortized cost $32,317,000 and $28,888,000, respectively) 32,208 29,010 ----------- ----------- Total securities 58,521 55,545 ----------- ----------- Loans held for sale 737 2,219 Federal funds sold 25,697 10,626 ----------- ----------- Total earning assets 280,920 252,032 ----------- ----------- Cash and due from banks 8,580 9,938 Bank premises and equipment, net 10,099 9,614 Accrued interest receivable 2,330 2,063 Other real estate 244 - Organizational costs 98 104 Deferred income tax asset 682 612 Other assets 931 941 ----------- ----------- TOTAL ASSETS $ 303,884 $ 275,304 =========== ===========
See accompanying notes to unaudited consolidated financial statements. (Continued on following page.) 3 4 WILSON BANK HOLDING COMPANY Consolidated Balance Sheets March 31, 1997 and December 31, 1996 (Unaudited) (Continued from previous page)
Mar. 31, Dec. 31, 1997 1996 (In Thousands) LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ LIABILITIES ----------- Deposits $ 270,355 $ 243,250 Securities sold under agreement to repurchase 6,240 5,616 Accrued interest 1,593 1,356 Other liabilities 465 405 Minority interest in assets of subsidiary 3,378 3,425 ----------- ----------- Total liabilities 282,031 254,052 ----------- ----------- STOCKHOLDERS' EQUITY Common stock, $2.00 par value per share; authorized 5,000,000 shares; 1,392,182 and 1,363,838 issued and outstanding at March 31, 1997 and December 31, 1996, respectively 2,784 2,756 Additional paid-in capital 7,072 6,684 Retained earnings 12,059 11,737 Net unrealized appreciation (losses) on available-for-sale securities, net of tax benefit of $47,000 and income taxes of $46,000, respectively (62) 75 ----------- ----------- Total stockholders' equity 21,853 21,252 ----------- ----------- Commitments and contingencies - - TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 303,884 $ 275,304 =========== ===========
See accompanying notes to unaudited consolidated financial statements. 4 5 WILSON BANK HOLDING COMPANY Consolidated Statements of Earnings For the Three Months Ended March 31, 1997 and 1996 (Unaudited)
Three Months Ended Mar. 31, 1997 1996 (Dollars In Thousands Except Per Share Amounts) Interest income: Interest and fees on loans $ 4,717 $ 3,769 Interest and dividends on securities: Taxable securities 587 464 Exempt from Federal income taxes 279 283 Interest on loans held for sale 26 23 Interest on federal funds sold 260 185 Interest on interest-bearing deposits in financial institutions - 2 ----------- ----------- Total interest income 5,869 4,726 ----------- ----------- Interest expense: Interest on negotiable order of withdrawal accounts 167 149 Interest on money market and savings accounts 541 464 Interest on certificates of deposit 2,045 1,689 Interest on securities sold under agreement to repurchase 70 70 ----------- ----------- Total interest expens 2,823 2,372 ----------- ----------- Net interest income before provisions for possible loan losses 3,046 2,354 Provision for possible loan losses 187 131 ----------- ----------- Net interest income after provision for possible loan losses 2,859 2,223 ----------- ----------- Non-interest income: Service charges on deposit accounts 333 290 Other fees and commissions 81 116 Gain on sale of loans 134 158 Minority interest in net loss of subsidiary 33 - ----------- ----------- Total non-interest income 581 564 ----------- -----------
(Continued on following page) 5 6 WILSON BANK HOLDING COMPANY Consolidated Statements of Earnings For the Three Months Ended March 31, 1997 and 1996 (Unaudited) (Continued from previous page)
Three Months Ended Mar. 31, 1997 1996 (Dollars In Thousands Except Per Share Amounts) Non-interest expenses: Salaries and employee benefits 1,183 877 Occupancy expenses, net 153 87 Furniture and equipment expense 322 196 Data processing expense 139 73 Other operating expenses 441 330 Minority interest in net earnings of subsidiary 11 - ----------- ----------- Total non-interest expenses 2,249 1,563 ----------- ----------- Earnings before income taxes 1,191 1,224 Income taxes 387 396 ----------- ----------- Net earnings $ 804 $ 828 =========== =========== Weighted average number of shares of common stock outstanding 1,387,479 1,359,149 =========== =========== Net earnings per share $ 0.58 0.61 =========== =========== Dividends per share $ 0.35 0.35 =========== ===========
See accompanying notes to unaudited consolidated financial statements. 6 7 WILSON BANK HOLDING COMPANY Consolidated Statements of Cash Flows For the Three Months March 31, 1997 and 1996 Increase (Decrease) in Cash and Cash Equivalents (Unaudited)
Three Months Ended Mar. 31, 1997 1996 (Dollars In Thousands Cash flows from operating activities: Interest received $ 5,600 $ 4,677 Fees and commissions received 405 273 Proceeds from sale of loans 9,510 7,582 Origination of loans held for sale (7,894) (7,380) Interest paid (2,586) (2,265) Cash paid to suppliers and employees (2,138) (1,338) Income taxes paid (187) (171) ----------- ----------- Net cash provided by operating activities 2,710 1,378 ----------- ----------- Cash flows from investing activities: Proceeds from maturities of held-to-maturity securities 5,619 1,603 Proceeds from maturities of available-for-sale securities 2,858 5,548 Proceeds from sales of available-for-sale securities 250 - Purchase of held-to-maturity securities (4,046) (3,043) Purchase of available-for-sale securities (7,868) (3,616) Proceeds from sale of fixed assets - 1 Loans made to customers, net of repayments (12,754) (2,976) Purchase of premises and equipment (719) (797) ----------- ----------- Net cash used in investing activities (16,660) (3,280) ----------- ----------- Cash flows from financing activities: Net increase in non-interest bearing, savings and NOW deposit accounts 12,608 7,324 Net increase in time deposits 14,497 4,799 Increase (decrease) in securities sold under agreement to repurchase 624 (56) Sale of minority owned commercial bank subsidiary common stock - 1,750
(Continued on following page) 7 8 WILSON BANK HOLDING COMPANY Consolidated Statements of Cash Flows For the Three Months Ended March 31, 1997 and 1996 Increase (Decrease) in Cash and Cash Equivalents (Unaudited) (Continued from previous page) Dividends paid (482) (472) Proceeds from reinvestment of dividends - sale of common stock 416 391 ----------- ----------- Net cash provided by financing activities 27,663 13,736 ----------- ----------- Net increase (decrease) in cash and cash equivalents 13,713 11,834 Cash and cash equivalents at beginning of period 20,564 17,189 ----------- ----------- Cash and cash equivalents at end of period $ 34,277 $ 29,023 =========== =========== Reconciliation of net earnings to net cash provided by operating activities: Net earnings $ 804 $ 828 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 250 145 Provision for loan losses 187 131 Net loss of minority interest of commercial bank subsidiary (33) - Net earnings of minority interest of commercial bank subsidiary 11 - Federal Home Loan Bank stock dividends (12) (11) Decrease in refundable income taxes - 80 Increase in taxes payable 200 145 (Increase) decrease in other assets, net 61 (133) Decrease in loans held for sale 1,482 44 Increase in interest receivable (267) (45) Increase in deferred tax asset (70) - Increase (decrease) in other liabilities (140) 87 Increase in interest payable 237 107 ----------- ----------- Total adjustments 1,906 550 ----------- ----------- Net cash provided by operating activities $ 2,710 $ 1,378 =========== ===========
(Continued on following page) 8 9 WILSON BANK HOLDING COMPANY Consolidated Statements of Cash Flows For the Three Months Ended March 31, 1997 and 1996 Increase (Decrease) in Cash and Cash Equivalents (Unaudited) (Continued from previous page) Supplemental schedule of noncash activities: Unrealized gain (loss) in values of securities available for sale, net of tax benefit of $93,000 and income taxes of $86,000 for the three months ended March 31, 1997 and 1996, respectively. $ (137) $ (141) =========== =========== Loans transferred to other real estate $ 244 - =========== ===========
See accompanying notes to unaudited consolidated financial statements. 9 10 WILSON BANK HOLDING COMPANY Notes to Consolidated Financial Statements (Unaudited) BASIS OF PRESENTATION The unaudited consolidated financial statements include the accounts of Wilson Bank Holding Company (the "Company") and its wholly-owned subsidiary, Wilson Bank and Trust ("WB&T") along with DeKalb Community Bank ("DCB"), a 50% owned subsidiary, and Community Bank of Smith County ("CBSC"), a 50% owned subsidiary. DCB opened for business on April 18, 1996 and CBSC opened for business on December 16, 1996. WB&T also has a wholly-owned consolidated subsidiary, Hometown Finance Company ("HFC"), which is a consumer finance company. The accompanying consolidated financial statements have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the consolidated financial statements contain all adjustments and disclosures necessary to summarize fairly the financial position of the Company as of March 31, 1997 and December 31, 1996, and the results of operations for the three months ended March 31, 1997 and 1996 and changes in cash flows for the three months ended March 31, 1997 and 1996. All significant intercompany transactions have been eliminated. The interim consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements presented in the Company's 1996 Annual Report to Stockholders. The results for interim periods are not necessarily indicative of results to be expected for the complete fiscal year. 10 11 ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The purpose of this discussion is to provide insight into the financial condition and results of operations of the Company and its subsidiaries. This discussion should be read in conjunction with the consolidated financial statements and notes thereto. The unaudited consolidated financial information of the registrant Wilson Bank Holding Company ("Company") presented here includes its wholly-owned subsidiary Wilson Bank & Trust ("WB&T") and its consumer finance subsidiary Hometown Finance Company ("HFC") along with the Company's subsidiaries DeKalb Community Bank ("DCB") and Community Bank of Smith County ("CBSC") of which there are minority interest ownerships. RESULTS OF OPERATIONS Net earnings decreased 2.9% to $804,000 for the three months ended March 31, 1997 from $828,000 in the first three months of 1996. The decrease in net earnings during the three months ended March 31, 1997 was primarily due to a 43.9% increase in non-interest expenses and a 2.8% decrease in non-interest income despite a 29.4% increase in net interest income. NET INTEREST INCOME Net interest income represents the amount by which interest earned on various earning assets exceeds interest paid on deposits and other interest-bearing liabilities and is the most significant component of the Company's earnings. The Company's total interest income, excluding tax equivalent adjustments, increased $1,143,000 or 24.2% during the three months ended March 31, 1997 as compared to the same period in 1996. The increase in 1997 was primarily attributable to an increase in average earning assets, combined with an increase in weighted average interest rates. The ratio of average earning assets to total average assets was 93.2% and 93.7% for the quarters ended March 31, 1997 and 1996. Interest expense increased $451,000 or 19.0% for the three months ended March 31, 1997 as compared to the same period in 1996. The overall increase in total interest expense for the first three months of 1997 was primarily attributable to an increase in average interest-bearing liabilities. The foregoing resulted in an increase in net interest income of $692,000 or 29.4% for the first three months of 1997 as compared to the same period in 1996. PROVISION FOR POSSIBLE LOAN LOSSES The provision for possible loan losses was $187,000 and $131,000, for the first three months of 1997 and 1996, respectively. The provision for possible loan losses is based on past loan experience 11 12 and other factors which, in management's judgment, deserve current recognition in estimating possible loan losses. Such factors include past loan loss experience, growth and composition of the loan portfolio, review of specific problem loans, the relationship of the allowance for loan losses to outstanding loans, and current economic conditions that may affect the borrower's ability to repay. Management has in place a system designed for monitoring its loan portfolio in an effort to identify potential problem loans. The provision for possible loan losses raised the allowance for possible loan losses to $2,609,000, an increase of 6.4% from $2,452,000 at December 31, 1996. The allowance for possible loan losses as a percentage of total outstanding loans (excluding loans held for sale) was 1.31% at March 30, 1997 compared to 1.32% at December 31, 1996. The level of the allowance and the amount of the provision involve evaluation of uncertainties and matters of judgment. Management believes the allowance for possible loan losses at March 31, 1997 to be adequate. Transactions related to the allowance for possible loan losses were as follows:
Three Months Ended March 31, 1997 1996 (In Thousands) Balance, January 1, 1997 and 1996, respectively $ 2,452 $ 1,944 Add (deduct): Losses charged to allowance (42) (45) Recoveries credited to allowance 12 24 Provision for loan losses 187 131 ----------- ----------- Balance, March 31, 1997 and 1996, respectively $ 2,609 $ 2,054 =========== ===========
NON-INTEREST INCOME The components of the Company's non-interest income include service charges on deposit accounts, other fees and commissions, gain on sale of loans, gain on sale of investment securities and the offsetting effect of third party interests in the results of operations of CBSC. Total non-interest income for the three months ended March 31, 1997 increased by 3.0% to $581,000 from $564,000 for the same period in 1996. The increase during the first three months of 1997 was due primarily to increases in service charges on deposit accounts. Service charges on deposit accounts increased $43,000 or 14.8% to $333,000 during the three months ended March 31, 1997. Gains on sales of loans totaled $134,000 and $158,000 during the three months ended March 31, 1997 and 1996, respectively, which represented a decrease of 15.1%. Other fees and commissions decreased by $35,000, or 30.1%, during the first quarter of 1997 as compared to the corresponding quarter in 1996. The Company also recognized income of $33,000 from the portion of the net loss attributable to the minority interest shareholders of CBSC. 12 13 NON-INTEREST EXPENSES Non-interest expense consists primarily of employee salaries and benefits, occupancy, furniture and equipment expense and other operating expenses. Total non-interest expense increased $686,000 or 43.9% during the first three months of 1997 compared to the same period in 1996. The increases in non-interest expense are attributable primarily to increases in employee salaries and benefits associated with an increase in the number of employees necessary to support the Company's expanded operations, which included the opening of the two new banks (DCB and CBSC) after the first quarter of 1996. The number of full-time equivalent employees increased to 159 at March 31, 1997, an increase from 137 at March 31, 1996. This included 141 at WB&T, 3 at HFC, 9 at DCB and 6 at CBSC. Increases in occupancy and furniture and equipment expenses were also due to the Company's expanded operations including the expansion to the main office of WB&T which was completed in October 1996 as well as the additions of the branch in Hartsville and the addition of DCB and CBSC. These combined categories totaled $475,000 for the first quarter of 1997 as compared to $283,000 in the first quarter of 1996, a 67.8% increase. Data processing expenses increased $66,000, or 90.4%, during the first quarter of 1997 as compared to the first quarter of 1996 due to the additions of DCB and CBSC as well as some computer system upgrades including check imaging which was added in late 1996. Other operating expenses for the three months ended March 31, 1997 increased 33.6% to $441,000 from $330,000 for the comparable period in 1996. These other operating expenses include supplies, advertising, director fees, postage, telephone expense and general operating costs which increased as a result of continued growth of the Company. INCOME TAXES The Company's income tax expense was $387,000 for the three months ended March 31, 1997, a decrease of $9,000 over the comparable period in 1996. The percentage of income tax expense to net income before taxes was 32.5% and 32.4% for the quarters ended March 31, 1997 and 1996, respectively. FINANCIAL CONDITION BALANCE SHEET SUMMARY The Company's total assets increased 10.4% to $303,884,000 during the three months ended March 31, 1997 from $275,304,000 at December 31, 1996. Loans, net of allowance for possible loan losses ("Net Loans"), totaled $195,965,000 at March 31, 1997 or a 6.7% increase compared to $183,642,000 at December 31, 1996. These increases 13 14 were primarily due to the continued favorable interest rate environment which motivated the refinancing of mortgages and the Company's ability to increase its market share of such loans while maintaining its underwriting standards as well as growth at the two newer banks. Securities increased $2,976,000 or 5.4% to $58,521,000 at March 31, 1997 from $55,545,000 at December 31, 1996. The increase in securities was impacted by a change in fair market value of the securities available-for-sale by $231,000 during the three month period ending March 31, 1997. Federal funds sold increased $15,071,000 to $25,697,000 at March 31, 1997 from $10,626,000 at December 31, 1996 due to the growth in deposits at WB&T as well as DCB and CBSC during the quarter. Total liabilities increased by 11.0% to $282,031,000 at March 31, 1997 compared to $254,052,000 at December 31, 1996. These increases were composed primarily of a $27,105,000 or 11.1% increase in total deposits and an increase of $624,000 or 11.1% in securities sold under repurchase agreements during the three months ended March 31, 1997. The following schedule details selected information as to non-performing loans of the Company at March 31, 1997 and December 31, 1996:
March 31, 1997 -------------- Past due 90 days or more Non-accrual ------- ----------- (In Thousands) Real estate loans $ 298 $ 12 Installment loans 371 219 Credit cards 11 - Commercial, financial and agricultural loans 40 39 ----------- ----------- Total 90 days or more past due and non-accrual loans $ 720 $ 270 =========== =========== Total 90 days or more past due and non-accrual loans $ 990 Renegotiated loans - ----------- Total 90 days or more past due, non- accrual and renegotiated loans $ 990 ===========
14 15
December 31, 1996 ----------------- Past due 90 days or more Non-accrual ------- ----------- (In Thousands) Real estate loans $ 344 59 Installment loans 370 177 Commercial, financial and agricultural loans 80 24 ----------- ----------- Total 90 days or more past due and non-accrual loans $ 794 $ 260 =========== =========== Total 90 days or more past due and non-accrual loans $ 1,054 Renegotiated loans - ----------- Total 90 days or more past due, non- accrual and renegotiated loans $ 1,054 ===========
Non-performing loans at March 31, 1997 totaled $990,000, a decrease of 6.1% from $1,054,000 at December 31, 1996. At March 31, 1997, loans totaling $575,000 (including the above past due and non-accrual loans) were included in the Company's internal classified loan list. Of these loans $182,000 are secured by real estate, $186,000 are commercial and $207,000 are installment loans. The collateral values securing these loans total approximately $420,000 ($187,000 secured by real property, $150,000 relating to commercial loans and $83,000 related to installment loans). The internally classified loans have increased from $561,000 at December 31, 1996, to $575,000 at March 31, 1997. This increase is represented by an increase of $17,000 in loans secured by real estate and a decrease of $3,000 of other various types of loans. Loans are listed as classified when information obtained about possible credit problems of the borrower has prompted management to question the ability of the borrower to comply with the repayment terms of the loan agreement. The loan classifications do not represent or result from trends or uncertainties which management expects will materially impact future operating results, liquidity or capital resources. Bank premises and equipment net of accumulated depreciation increased $485,000 during the three months of 1997 to $10,099,000. Most of this increase can be attributed to the expansion of the Tennessee Boulevard branch of WB&T as well as the addition of a WB&T location in Hartsville. LIQUIDITY AND ASSET MANAGEMENT The Company's management seeks to maximize net interest income by managing the Company's assets and liabilities within appropriate constraints on capital, liquidity and interest rate risk. 15 16 Liquidity is the ability to maintain sufficient cash levels necessary to fund operations, meet the requirements of depositors and borrowers and fund attractive investment opportunities. Higher levels of liquidity bear corresponding costs, measured in terms of lower yields on short-term, more liquid earning assets and higher interest expense involved in extending liability maturities. Liquid assets include cash and cash equivalents and securities and money market instruments that will mature within one year. At March 31, 1997, the Company's liquid assets totaled $45,626,000. The Company's primary source of liquidity is a stable core deposit base. In addition short-term investments, loan payments and investment security maturities provide a secondary source. Interest rate risk (sensitivity) focuses on the earnings risk associated with changing interest rates. Management seeks to maintain profitability in both immediate and long term earnings through funds management/interest rate risk management. The Company's rate sensitivity position has an important impact on earnings. Senior management of the Company meets monthly to analyze the rate sensitivity position of the Company. These meetings focus on the spread between the Company's cost of funds and interest yields generated primarily through loans and investments. The Company's securities portfolio consists of earning assets that provide interest income. For those securities classified as held-to-maturity the Company has the ability and intent to hold these securities to maturity or on a long-term basis. Securities classified as available-for-sale include securities intended to be used as part of the Company's asset/liability strategy and/or securities that may be sold in response to changes in interest rate, prepayment risk, the need or desire to increase capital and similar economic factors. Securities totaling approximately $18,507,000 mature or will be subject to rate adjustments within the next twelve months. A secondary source of liquidity is the Company's loan portfolio. At March 31, 1997 loans of approximately $125,158,000 either will become due or will be subject to rate adjustments within twelve months from the respective date. Continued emphasis will be placed on structuring adjustable rate loans. As for liabilities, certificates of deposit of $100,000 or greater of approximately $44,419,000 will become due during the next twelve months. Certificates of deposit less than $100,000 of approximately $78,683,000 will become due during the next twelve months. Historically, there has been no significant reduction in immediately withdrawable accounts such as negotiable order of withdrawal accounts, money market demand accounts, demand deposit and regular savings. Management does not anticipate that there 16 17 will be significant withdrawals from these accounts in the next twelve months. Management believes that with present maturities, the anticipated growth in deposit base, and the efforts of management in its asset/liability program, management is positioned to effectively manage its liquidity in the near term. CAPITAL POSITION AND DIVIDENDS At March 31, 1997, total stockholders' equity was $21,853,000 or 7.2% of total assets, which compares with $21,252,000 or 7.7% of total assets at December 31, 1996. The dollar increase in stockholders' equity during the three months ended March 31, 1997 results from the Company's net income of $804,000 less $137,000 which is the net effect of the change in the net unrealized loss on securities available for sale net of applicable income taxes along with cash dividends declared of $482,000 (of which $416,000 was reinvested under the Company's dividend reinvestment plan.) The Company's principal regulators have established minimum risk-based capital requirements and leverage capital requirements for the Company, WB&T, DCB and CBSC. These guidelines classify capital into two categories of Tier I and Tier II capital. Total capital consists of Tier I (or core) capital (essentially common equity less intangible assets) and Tier II capital (essentially qualifying long-term debt, of which the Company, WB&T, DCB and CBSC have none, minority interest and a part of the allowance for possible loans losses). In determining risk-based capital requirements, assets are assigned risk-weights of 0% to 100%, depending on regulatory assigned levels of credit risk associated with such assets. The risk-based capital guidelines require the Company, WB&T, DCB and CBSC to have a total risk-based capital ratio of 8.0% and a Tier I risk-based capital ratio of 4.0%. At March 31, 1997 the Company's total risk-based capital ratio was 14.0% and their Tier I risk-based capital ratio was approximately 12.8% compared to ratios of 15.0% and 13.7%, respectively at December 31, 1996. At March 31, 1997 WB&T's total risk-based capital ratio was 11.4% and its Tier I risk-based capital ratio was approximately 10.2% compared to ratios of 11.7% and 10.4%, respectively at December 31, 1996. At March 31, 1997 DCB's total risk-based capital ratio was 33.8% and its Tier I risk-based capital ratio was approximately 32.6% compared to ratios of 40.9% and 39.8%, respectively at December 31, 1996. At March 31, 1997 CBSC's total risk-based capital ratio was 83.1% and its Tier I risk-based capital ratio was approximately 82.0% 17 18 compared to ratios of 256.9% and 256.9%, respectively at December 31, 1996. The required leverage capital ratio (Tier I capital to average assets for the most recent quarter) for the Company, WB&T, DCB and CBSC is 4.0%. At March 31, 1997 the Company had a leverage ratio of 8.7%, compared to 9.2% at December 31, 1996. At March 31, 1997 WB&T had a leverage ratio of 6.9%, compared to 7.06% at December 31, 1996. At March 31, 1997 DCB had a leverage ratio of 19.8% compared to 24.6% at December 31, 1996. At March 31, 1997 CBSC had a leverage ratio of 39.5% compared to 125.0% at December 31, 1996. IMPACT OF INFLATION Although interest rates are significantly affected by inflation, the inflation rate has not materially impacted the Company's results of operations. 18 19 WILSON BANK HOLDING COMPANY FORM 10-Q, CONTINUED PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION During February 1997, WB&T opened a branch in Hartsville, Tennessee, operating under the name "Trousdale Bank and Trust, an Office of Wilson Bank and Trust." ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (27) Financial Data Schedule (for SEC use only). (b) No reports on Form 8-K have been filed during the quarter for which this report is filed. 19 20 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. WILSON BANK HOLDING COMPANY --------------------------- (Registrant) DATE: May 12, 1997 /s/ Randall Clemons ------------- -------------------------------------------------- Randall Clemons, President and Chief Executive Officer DATE: May 12, 1997 /s/ Becky Taylor ------------- -------------------------------------------------- Becky Taylor, Vice President, Cashier and Principal Accounting Officer 20 EX-27 2 FINANCIAL DATA SCHEDULE
9 1,000 3-MOS DEC-31-1997 MAR-31-1997 8,580 0 25,697 0 32,208 58,521 58,521 198,574 2,609 303,884 270,355 6,240 2,058 0 0 0 2,784 19,069 303,884 4,743 866 260 5,869 2,753 2,823 3,046 187 0 2,249 1,191 1,191 0 0 804 0.58 0.58 0.00 270 720 0 990 2,452 42 12 2,609 2,609 0 0
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