UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM
10-Q
(Mark One)
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended March 31, 2008
or
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For
the transition period from
to
Commission File Number
0-20402
WILSON BANK HOLDING COMPANY
(Exact name of registrant as specified in its charter)
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Tennessee
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62-1497076
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer Identification No.)
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623 West Main Street, Lebanon, TN
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37087
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(Address of principal executive offices)
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Zip Code
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(615) 444-2265
(Registrants telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
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
þ
NO
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
a non-accelerated filer, or a smaller reporting company.
See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer
o
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Accelerated filer
þ
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
YES
o
NO
þ
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of
the latest practicable date.
Common stock outstanding: 6,976,226 shares at May 9, 2008
WILSON BANK HOLDING COMPANY
Consolidated Balance Sheets
March 31, 2008 and December 31, 2007
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March 31,
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December 31,
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2008
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2007
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(Unaudited)
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Dollars in Thousands
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Except Per Share Amounts)
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Assets
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Loans
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$
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1,027,657
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$
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997,526
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Less: Allowance for possible loan losses
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(9,662
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)
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(9,473
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)
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Net loans
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1,017,995
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988,053
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Securities:
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Held to maturity, at cost (market value $13,992 and $13,480,
respectively)
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13,924
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13,450
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Available-for-sale, at market (amortized cost $215,350 and $210,561,
respectively)
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215,729
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209,931
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Total securities
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229,653
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223,381
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Loans held for sale
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6,401
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6,034
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Restricted equity securities
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2,983
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2,983
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Federal funds sold
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57,590
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14,722
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Total earning assets
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1,314,622
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1,235,173
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Cash and due from banks
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34,213
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44,853
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Bank premises and equipment, net
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30,582
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30,411
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Accrued interest receivable
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9,060
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8,864
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Deferred income tax asset
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2,164
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2,539
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Other real estate
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1,749
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1,268
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Goodwill
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4,805
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4,805
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Other intangible assets, net
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1,597
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1,696
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Other assets
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4,767
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4,636
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Total assets
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$
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1,403,559
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$
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1,334,245
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Liabilities and Shareholders Equity
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Deposits
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$
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1,246,569
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$
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1,182,590
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Securities sold under repurchase agreements
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9,827
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9,771
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Federal Home Loan Bank advances
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15,049
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15,470
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Accrued interest and other liabilities
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10,869
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8,229
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Total liabilities
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1,282,314
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1,216,060
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Shareholders equity:
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Common stock, $2.00 par value; authorized 10,000,000 shares, issued
6,976,027 and 6,916,390 shares, respectively
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13,952
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13,833
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Additional paid-in capital
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36,176
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34,373
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Retained earnings
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70,883
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70,368
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Net unrealized losses on available-for-sale securities, net of income
taxes of $145 and $241, respectively
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234
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(389
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)
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Total shareholders equity
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121,245
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118,185
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Total liabilities and shareholders equity
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$
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1,403,559
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$
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1,334,245
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See
accompanying notes to consolidated financial statements (unaudited).
3
WILSON BANK HOLDING COMPANY
Consolidated Statements of Earnings
Three Months Ended March 31, 2008 and 2007
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2008
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2007
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(Dollars In Thousands
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Except Per Share Amounts)
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(Unaudited)
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Interest income:
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Interest and fees on loans
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$
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18,839
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$
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17,327
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Interest and dividends on securities:
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Taxable securities
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2,650
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1,966
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Exempt from Federal income taxes
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152
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152
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Interest on loans held for sale
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55
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67
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Interest on Federal funds sold
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476
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1,076
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Interest and dividends on restricted securities
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52
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16
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Total interest income
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22,224
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20,604
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Interest expense:
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Interest on negotiable order of withdrawal accounts
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954
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357
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Interest on money market and savings accounts
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1,145
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1,753
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Interest on certificates of deposit
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8,990
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8,264
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Interest on securities sold under repurchase agreements
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64
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87
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Interest on Federal Home Loan Bank advances
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178
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194
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Total interest expense
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11,331
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10,655
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Net interest income before provision for possible loan losses
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10,893
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9,949
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Provision for possible loan losses
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916
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762
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Net interest income after provision for possible loan losses
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9,977
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9,187
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Non-interest income:
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Service charges on deposit accounts
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1,455
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1,498
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Other fees and commissions
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1,169
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734
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Gain on sale of loans
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422
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433
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Other income
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74
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13
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Total non-interest income
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3,120
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2,678
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Non-interest expense:
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Salaries and employee benefits
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4,990
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4,683
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Occupancy expenses, net
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525
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461
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Furniture and equipment expense
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363
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371
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Data processing expense
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263
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205
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Directors fees
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219
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225
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Other operating expenses
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2,019
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1,757
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Loss on sale of other assets
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1
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44
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Loss on sale of other real estate
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31
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16
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Loss on sale of fixed assets
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2
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Total non-interest expense
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8,413
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7,762
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Earnings before income taxes
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4,684
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4,103
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Income taxes
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1,810
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1,567
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Net earnings
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$
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2,874
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$
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2,536
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Weighted average number of shares outstanding-basic
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6,954,648
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6,878,708
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Weighted average number of shares outstanding-diluted
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6,990,341
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6,918,148
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Basic earnings per common share
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$
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.41
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$
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.37
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Diluted earnings per common share
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$
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.41
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$
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.37
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Dividends per share
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$
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.30
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$
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.34
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See
accompanying notes to consolidated financial statements (unaudited).
4
WILSON BANK HOLDING COMPANY
Consolidated Statements of Comprehensive Earnings
Three Months Ended March 31, 2008 and 2007
(Unaudited)
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2008
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2007
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( Thousands)
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Net earnings
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$
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2,874
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$
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2,536
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Other comprehensive earnings, net of tax:
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Unrealized gains on available-for-sale securities
arising during period, net of taxes of $386 and
$139 respectively
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623
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224
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Other comprehensive earnings
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623
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224
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Comprehensive earnings
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$
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3,497
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$
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2,760
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See
accompanying notes to consolidated financial statements (unaudited).
5
WILSON BANK HOLDING COMPANY
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2008 and 2007
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
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2008
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2007
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(In Thousands)
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Cash flows from operating activities:
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Interest received
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$
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22,032
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$
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19,508
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Fees and commissions received
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2,698
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2,245
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Proceeds from sale of loans held for sale
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22,411
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22,741
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Origination of loans held for sale
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(22,356
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)
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(20,649
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)
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Interest paid
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(11,323
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)
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(6,899
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)
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Cash paid to suppliers and employees
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(7,218
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)
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(8,871
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)
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Income taxes paid
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(274
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)
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(1,127
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)
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Net cash provided by operating activities
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5,970
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|
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6,948
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Cash flows from investing activities:
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Purchase of held-to-maturity securities
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(1,260
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)
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(402
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)
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Purchase of available-for-sale securities
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(98,905
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)
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(37,531
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)
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Proceeds from maturities, calls and principal payments of
available for sale securities
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|
94,118
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8,438
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Proceeds from sale of other real estate
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|
299
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46
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Proceeds from maturities, calls and principal payments
of held-to-maturity securities
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|
780
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|
1,119
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Loans made to customers, net of repayments
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(31,670
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)
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(18,983
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)
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Purchase of premises and equipment
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(567
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)
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|
|
(575
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)
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Proceeds from sale of other assets
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|
7
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|
|
|
155
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|
|
|
|
|
|
|
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Net cash used in investing activities
|
|
|
(37,198
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)
|
|
|
(47,733
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Cash flows from financing activities:
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|
|
|
|
|
|
|
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Net increase in non-interest bearing, savings
and NOW deposit accounts
|
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|
22,709
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|
|
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29,097
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Net increase in time deposits
|
|
|
41,270
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|
|
|
52,573
|
|
Increase (decrease) in securities sold under repurchase
agreements
|
|
|
56
|
|
|
|
(5,735
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)
|
Repayment of Federal Home Loan Bank advances
|
|
|
(421
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)
|
|
|
(422
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)
|
Dividends paid
|
|
|
(2,075
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)
|
|
|
(2,305
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)
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Proceeds from sale of common stock pursuant to
to dividend reinvestment plan
|
|
|
1,850
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|
|
|
2,113
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|
Proceeds from sale of common stock pursuant to
exercise of stock option
|
|
|
67
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|
|
|
33
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
63,456
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|
|
|
75,354
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
32,228
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|
|
|
34,569
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|
|
|
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|
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Cash and cash equivalents at beginning of period
|
|
|
59,575
|
|
|
|
103,404
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Cash and cash equivalents at end of period
|
|
$
|
91,803
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|
|
$
|
137,973
|
|
|
|
|
|
|
|
|
See
accompanying notes to consolidated financial statements (unaudited).
6
WILSON BANK HOLDING COMPANY
Consolidated Statements of Cash Flows, Continued
Three Months Ended March 31, 2008 and 2007
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(In Thousands)
|
|
Reconciliation of net earnings to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
2,874
|
|
|
$
|
2,536
|
|
Adjustments to reconcile net earnings to net cash
provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
497
|
|
|
|
493
|
|
Stock option compensation
|
|
|
5
|
|
|
|
5
|
|
Provision for loan losses
|
|
|
916
|
|
|
|
762
|
|
Loss on sale of other real estate
|
|
|
31
|
|
|
|
16
|
|
Loss on sale of premises and equipment
|
|
|
2
|
|
|
|
|
|
Loss on sale of other assets
|
|
|
1
|
|
|
|
44
|
|
Decrease (increase) in loans held for sale
|
|
|
(367
|
)
|
|
|
1,659
|
|
Increase in deferred tax assets
|
|
|
(11
|
)
|
|
|
(12
|
)
|
Increase in taxes payable
|
|
|
1,547
|
|
|
|
|
|
(Increase) decrease in other assets, net
|
|
|
(314
|
)
|
|
|
4
|
|
Increase (decrease) in other liabilities
|
|
|
977
|
|
|
|
(1,238
|
)
|
Increase in interest receivable
|
|
|
(196
|
)
|
|
|
(1,077
|
)
|
Increase in interest payable
|
|
|
8
|
|
|
|
3,756
|
|
|
|
|
|
|
|
|
Total adjustments
|
|
|
3,096
|
|
|
$
|
4,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
5,970
|
|
|
$
|
6,948
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental schedule of non-cash activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain in value of securities available-for-
sale, net of income taxes of $386 and
$139 for the quarters ended March 31,
2008 and 2007, respectively.
|
|
$
|
623
|
|
|
$
|
224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash transfers from loans to other real estate
|
|
$
|
811
|
|
|
$
|
202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash transfers from loans to other assets
|
|
$
|
1
|
|
|
$
|
104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in accounting principal related to
deferred compensation plan
|
|
$
|
284
|
|
|
$
|
|
|
|
|
|
|
|
|
|
See
accompanying notes to consolidated financial statements (unaudited).
7
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
Notes to Consolidated Financial Statements
(Unaudited)
Basis of Presentation
The unaudited, consolidated financial statements include the accounts of Wilson Bank Holding
Company (Company) and its wholly-owned subsidiary, Wilson Bank and Trust.
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,
2008 and December 31, 2007, the results of operations for the three months ended March 31, 2008 and
2007, comprehensive earnings for the three months ended March 31, 2008 and 2007 and changes in cash
flows for the three months ended March 31, 2008 and 2007. 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 Companys 2007
Annual Report to Stockholders. The results for interim periods are not necessarily indicative of
results to be expected for the complete fiscal year.
Allowance for Loan Losses
Transactions in the allowance for loan losses were as follows:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(In Thousands)
|
|
Balance, January 1, 2008 and 2007, respectively
|
|
$
|
9,473
|
|
|
$
|
10,209
|
|
Add (deduct):
|
|
|
|
|
|
|
|
|
Losses charged to allowance
|
|
|
(886
|
)
|
|
|
(708
|
)
|
Recoveries credited to allowance
|
|
|
159
|
|
|
|
76
|
|
Provision for loan losses
|
|
|
916
|
|
|
|
762
|
|
|
|
|
|
|
|
|
Balance, March 31, 2008 and 2007, respectively
|
|
$
|
9,662
|
|
|
$
|
10,339
|
|
|
|
|
|
|
|
|
8
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
Item 2.
Managements 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 subsidiary. This discussion should be read in conjunction
with the consolidated financial statements. Reference should also be made to the Companys Annual
Report on Form 10-K for the year ended December 31, 2007 for a more complete discussion of factors
that impact liquidity, capital and the results of operations.
Forward-Looking Statements
This Form 10-Q contains certain forward-looking statements regarding, among other things, the
anticipated financial and operating results of the Company. Investors are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the date hereof. The
Company undertakes no obligation to publicly release any modifications or revisions to these
forward-looking statements to reflect events or circumstances occurring after the date hereof or to
reflect the occurrence of unanticipated events.
In connection with the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995, the Company cautions investors that future financial and operating results may differ
materially from those projected in forward-looking statements made by, or on behalf of, the
Company. The words expect, intend, should, may, could, believe, suspect,
anticipate, seek, plan, estimate and similar expressions are intended to identify such
forward-looking statements, but other statements not based on historical fact may also be
considered forward-looking. Such forward-looking statements involve known and unknown risks and
uncertainties, including, but not limited to those described in the Companys Annual Report on
Forms 10-K and also includes, without limitation, adverse real estate market conditions, increased
competition with other financial institutions, lack of sustained growth in the economy in the
Companys market area, rapid fluctuations in interest rates, significant downturns in the business
of one or more large customers, changes in the legislative and regulatory environment, inadequate
allowance for loan losses and loss of key personnel. These risks and uncertainties may cause the
actual results or performance of the Company to be materially different from any future results or
performance expressed or implied by such forward-looking statements. The Companys future
operating results depend on a number of factors which were derived utilizing numerous assumptions
that could cause actual results to differ materially from those projected in forward-looking
statements.
Critical Accounting Policies
The accounting principles we follow and our methods of applying these principles conform with
accounting principles generally accepted in the United States and with general practices within the
banking industry. In connection with the application of those principles to the determination of
our allowance for possible loan losses (ALL) we have made judgments and estimates which have
significantly impacted our financial position and results of operations.
9
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations,
Continued
Allowance for Loan Losses
Our management assesses the adequacy of the ALL prior to the end of each calendar quarter.
This assessment includes procedures to estimate the ALL and test the adequacy and appropriateness
of the resulting balance. The ALL consists of two portions: (1) an allocated amount representative
of specifically identified credit exposure and exposures readily predictable by historical or
comparative experience; and (2) an unallocated amount representative of inherent loss which is not
readily available. Even though the ALL is composed of two components, the entire allowance is
available to absorb any credit losses.
We establish the allocated amount separately for two different risk groups: (1) unique loans
(commercial loans, including those loans considered impaired); and (2) homogenous loans (generally
consumer and residential mortgage loans). We base the allocation for unique loans primarily on
risk rating grades assigned to each of these loans as a result of our loan management and review
processes. Each risk-rating grade is assigned an estimated loss ratio, which is determined based on
the experience of management, discussions with banking regulators, historical and current economic
conditions and our independent loan review process. We estimate losses on impaired loans based on
estimated cash flows discounted at the loans original effective interest rate or the underlying
collateral value. We also assign estimated loss ratios to our consumer portfolio. However, we
base the estimated loss ratios for these homogenous loans on the category of consumer credit (e.g.,
automobile, residential mortgage, home equity) and not on the results of individual loan reviews.
The unallocated amount is particularly subjective and does not lend itself to exact
mathematical calculation. We use the unallocated amount to absorb inherent losses which may exist
as of the balance sheet date for such matters as changes in the local or national economy, the
depth or experience of the lending staff, any concentrations of credit in any particular industry
group, and new banking laws or regulations. After we assess applicable factors, we evaluate the
aggregate unallocated amount based on our managements experience.
We then test the resulting ALL balance by comparing the balance in the allowance account to
historical trends and peer information. Our management then evaluates the result of the procedures
performed, including the result of our testing, and concludes on the appropriateness of the balance
of the ALL in its entirety. The loan review and the finance committee of our board of directors
review the assessment prior to the filing of quarterly financial information.
Results of Operations
Net earnings increased 13.3% to $2,874,000 for the three months ended March 31, 2008 from
$2,536,000 in the first quarter of 2007. The increase in net earnings was primarily due to a 9.5%
increase in net interest income, a 16.5% increase in non-interest income, offset by an 8.4%
increase in the non interest expense. Net earnings for the three months ended March 31, 2008
compared to March 31, 2007 were also negatively impacted by the increase in provision for possible
loan losses of $154,000, or 20.2%. See Provision for Possible Loan Losses for further
explanation. Net interest margin for the quarter ended March 31, 2008 was 3.00% as compared to
3.14% for the first quarter of 2007, reflecting the competitive pricing pressures for loans and
deposits experienced by the Company in its market areas, the increase in the provision for loan
losses described below, the outpacing of loan growth by deposit growth, a shift in deposit mix to
higher costing time deposits and the growth in investment securities, which carry lower yields than
loans.
10
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
Item 2.
Managements Discussion and Analysis of Financial Condition and Results of
Operations,Continued
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 Companys earnings. The Companys interest income, excluding tax
equivalent adjustments, increased 1,620,000, or 7.9%, to $22,224,000 during the three months ended
March 31, 2008 as compared to the first quarter of 2007. The increase in 2008 when compared to
2007 was primarily attributable to the growth of loans and the increased growth in investments and
fed funds sold caused by a high volume of growth in deposits. The ratio of average earning assets
to total average assets was 94.4% and 93.6% for the quarters ended March 31, 2008 and March 31,
2007, respectively.
Interest expense increased $676,000 to $11,331,000 for the three months ended March 31, 2008
compared to the same period in 2007. The increase for the quarter ended March 31, 2008 was due
primarily to an increase in the volume of deposits due to branch expansion in early 2008, as well
as increased competition on deposit pricing in our market area and a shift in deposits to higher
costing time deposits.
The foregoing resulted in an increase in net interest income, before the provision for loan
losses, of $944,000, or 9.5%, for the first three months of 2008 as compared to the first quarter
of 2007.
Provision for Possible Loan Losses
The provision for possible loan losses was $916,000 and $762,000, respectively, for the first
three months of 2008 and 2007, respectively. The increase in the provision was primarily related to
the Companys decision to increase the provision for possible loan losses during 2008 due to the
worsening economic conditions. The provision for loan losses is based on past loan experience and
other factors which, in managements 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 borrowers ability to repay.
Management has in place a system designed for monitoring its loan portfolio and identifying
potential problem loans. The provision for possible loan losses raised the allowance for possible
loan losses (net of charge offs and recoveries) to $9,662,000, an increase of 2.0% from $9,473,000
at December 31, 2007. The allowance for possible loan losses was .94% and .95% of total loans
outstanding at March 31, 2008 and December 31, 2007, respectively.
The level of the allowance and the amount of the provision involve evaluation of uncertainties
and matters of judgment. The Company maintains an allowance for loan losses which management
believes is adequate to absorb losses inherent in the loan portfolio. A formal review is prepared
monthly by the Loan Review Officer to assess the risk in the portfolio and to determine the
adequacy of the allowance for loan losses. The review includes analysis of historical performance,
the level of non-performing and adversely rated loans, specific analysis of certain problem loans,
loan activity since the previous assessment, reports prepared by the Companys loan review
officers, consideration of current economic conditions, and other pertinent information. The level
of the allowance to net loans outstanding will vary depending on the overall results of this
monthly assessment. The review is presented to the Finance Committee and subsequently approved by
the Board of Directors. Management believes the allowance for possible loan losses at March 31,
2008 to be adequate.
11
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
Item 2.
Managements Discussion and Analysis of Financial Condition and Results of
Operations,Continued
Non-Interest Income
The components of the Companys non-interest income include service charges on deposit
accounts, other fees and commissions, and gain on sale of loans. Total non-interest income for the
three months ended March 31, 2008 increased to $3,120,000 from $2,678,000 for the same period in
2007. Other fees and commissions increased $435,000, or 59.3%, to $1,169,000 relating primarily to
an increase in check card interchange fees due to the Company changing vendors. Services charges on
deposit accounts decreased $43,000, or 2.9%, to $1,455,000.
Non-Interest Expenses
Non-interest expenses consist primarily of employee costs, occupancy expenses, furniture and
equipment expenses, data processing expenses, directors fees, loss on sale of other assets, loss
on sale of other real estate, and other operating expenses. Total non-interest expenses increased
$651,000, or 8.4%, during the first three months of 2008 compared to the same period in 2007. The
increase in non-interest expenses is attributable primarily to an increase in employee salaries and
benefits associated with the number of employees necessary to support the Companys operations.
The number of employees was 365 at both March 31, 2008 and March 31, 2007, respectively. Other
operating expenses for the three months ended March 31, 2008 increased to $2,019,000 from
$1,757,000 for the three months ended March 31, 2007, relating
primarily to an increase in FDIC premiums of $165,000 or 569.0% to
$194,000 at March 31, 2008, compared to $29,000 at March 31, 2007.
Income Taxes
The Companys income tax expense was $1,810,000 for the three months ended March 31, 2008, an
increase of $243,000 over the comparable period in 2007. The percentage of income tax expense to
net income before taxes was 38.6% and 38.2% for the periods ended March 31, 2008 and 2007,
respectively. The effective tax rate exceeds the statutory tax rate as a result of permanent
differences related to life insurance premiums.
12
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
Item 2.
Managements Discussion and Analysis of Financial Condition and Results of
Operations, Continued
Earnings Per Share
The computation of basic earnings per share is based on the weighted average number of common
shares outstanding during the period. The computation of diluted earnings per share for the
Company begins with the basic earnings per share plus the effect of common shares contingently
issuable from stock options.
The following is a summary of components comprising basic and diluted earnings per share (EPS)
for the three months ended March 31, 2008 and 2007:
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(Dollars in thousands
|
|
|
|
except per share data)
|
|
Basic EPS Computation:
|
|
|
|
|
|
|
|
|
Numerator Earnings available to common shareholders
|
|
$
|
2,874
|
|
|
$
|
2,536
|
|
|
|
|
|
|
|
|
Denominator Weighted average number of common
shares outstanding
|
|
|
6,954,648
|
|
|
|
6,878,708
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share
|
|
$
|
.41
|
|
|
$
|
.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS Computation:
|
|
|
|
|
|
|
|
|
Numerator Earnings available to common shareholders
|
|
$
|
2,874
|
|
|
$
|
2,536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Weighted average number of common shares
outstanding
|
|
|
6,954,648
|
|
|
|
6,878,708
|
|
Dilutive effect of stock options
|
|
|
35,693
|
|
|
|
39,440
|
|
|
|
|
|
|
|
|
|
|
|
6,990,341
|
|
|
|
6,918,148
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share
|
|
$
|
.41
|
|
|
$
|
.37
|
|
|
|
|
|
|
|
|
Financial Condition
Balance Sheet Summary
The Companys total assets increased 5.2% to $1,403,559,000 during the three months ended
March 31, 2008 from $1,334,245,000 at December 31, 2007. Loans, net of allowance for possible loan
losses, totaled $1,017,995,000 at March 31, 2008, a 3.0% increase from $988,053,000 at December 31,
2007. Securities increased $6,272,000, or 2.8%, to $229,653,000 at March 31, 2008 while Federal
funds sold increased $42,868,000 to $57,590,000 at March 31, 2008 from $14,722,000 at December 31,
2007, each reflecting a growth in deposits that exceeded loan growth.
13
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations,
Continued
Balance Sheet Summary, Continued
Total liabilities increased by 5.4% to $1,282,314,000 during the three months ended March 31,
2008 compared to $1,216,060,000 at December 31, 2007. This increase was composed primarily of a
$63,979,000 increase in total deposits from $1,182,590,000 at December 31, 2007 to $1,246,569,000
at March 31, 2008. The increase in deposits included an increase in time deposits of $41,270,000
and an increase in demand deposits, NOW and savings accounts of $22,709,000. Securities sold under
repurchase agreements increased $56,000 during the quarter ended March 31, 2008, and Federal Home
Loan Bank advances decreased $421,000 during the quarter ended March 31, 2008.
The following schedule details the loans of the Company at March 31, 2008 and December 31,
2007:
|
|
|
|
|
|
|
|
|
|
|
(In Thousands)
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2008
|
|
|
2007
|
|
Commercial, financial & agricultural
|
|
$
|
338,160
|
|
|
$
|
337,368
|
|
Real estate construction
|
|
|
113,330
|
|
|
|
100,036
|
|
Real estate mortgage
|
|
|
503,680
|
|
|
|
486,504
|
|
Installment
|
|
|
72,487
|
|
|
|
73,618
|
|
|
|
|
|
|
|
|
|
|
|
1,027,657
|
|
|
|
997,526
|
|
Allowance for possible losses
|
|
|
(9,662
|
)
|
|
|
(9,473
|
)
|
|
|
|
|
|
|
|
|
|
$
|
1,017,995
|
|
|
$
|
988,053
|
|
|
|
|
|
|
|
|
The Company follows the provisions of Statement of Financial Accounting Standards (SFAS) No.
114, Accounting by Creditors for Impairment of a Loan and SFAS No. 118, Accounting by Creditors
for Impairment of a Loan Income Recognition and Disclosures. These pronouncements apply to
impaired loans except for large groups of smaller-balance homogeneous loans that are collectively
evaluated for impairment including credit card, residential mortgage, and consumer installment
loans.
A loan is impaired when the current net worth and financial capacity of the borrower or of the
collateral pledged, if any, is viewed as inadequate and it is probable that the Company will be
unable to collect the scheduled payments of principal and interest due under the contractual terms
of the loan agreement. In those cases, such loans have a well-defined weakness or weaknesses that
jeopardize the liquidation of the debt, and if such deficiencies are not corrected, there is a
probability that the Company will sustain some loss. In such cases, interest income continues to
accrue as long as the loan does not meet the Companys criteria for nonaccrual status. Impaired
loans are measured at the present value of expected future cash flows discounted at the loans
effective interest rate, at the loans observable market price, or the fair value of the collateral
if the loan is collateral dependent. If the measure of the impaired loan is less than the recorded
investment in the loan, the Company shall recognize an impairment by creating a valuation allowance
with a corresponding charge to the provision for loan losses or by adjusting an existing valuation
allowance for the impaired loan with a corresponding charge or credit to the provision for loan
losses.
14
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations,
Continued
Balance Sheet Summary, Continued
The Companys first mortgage single family residential, consumer and credit card loans, which
totaled approximately $333,436,000, $70,452,000 and $2,670,000, respectively, at March 31, 2008,
are divided into various groups of smaller-balance homogeneous loans that are collectively
evaluated for impairment and thus are not subject to the provisions of SFAS Nos. 114 and 118.
Substantially all other loans of the Company are evaluated for impairment under the provisions of
SFAS Nos. 114 and 118.
The Company considers all loans subject to the provisions of SFAS Nos. 114 and 118 that are on
nonaccrual status to be impaired. Loans are placed on nonaccrual status when doubt as to timely
collection of principal or interest exists, or when principal or interest is past due 90 days or
more unless such loans are well-secured and in the process of collection. Delays or shortfalls in
loan payments are evaluated with various other factors to determine if a loan is impaired.
Generally, delinquencies under 90 days are not considered determinative unless certain other
factors are present which indicate impairment is probable. The decision to place a loan on
nonaccrual status is also based on an evaluation of the borrowers financial condition, collateral,
liquidation value, and other factors that affect the borrowers ability to pay.
Generally, at the time a loan is placed on nonaccrual status, all interest accrued on the loan
in the current fiscal year is reversed from income, and all interest accrued and uncollected from
the prior year is charged off against the allowance for loan losses. Thereafter, interest on
nonaccrual loans is recognized as interest income only to the extent that cash is received and
future collection of principal is not in doubt. If the collectability of outstanding principal is
doubtful, such interest received is applied as a reduction of principal. A nonaccrual loan may be
restored to accruing status when principal and interest are no longer past due and unpaid and
future collection of principal and interest on a timely basis is not in doubt. At March 31, 2008,
the Company had nonaccrual loans totaling $6,922,000 as compared to $2,167,000 at December 31,
2007.
Other loans may be classified as impaired when the current net worth and financial capacity of
the borrower or of the collateral pledged, if any, is viewed as inadequate. Such loans, generally,
have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt, and if such
deficiencies are not corrected, there is a probability that the Company will sustain some loss. In
such cases, however, interest income continues to accrue as long as the loan does not meet the
Companys criteria for nonaccrual status.
Generally, the Company also classifies as impaired any loans the terms of which have been
modified in a troubled debt restructuring. Interest is accrued on such loans that continue to meet
the modified terms of their loan agreements. At March 31, 2008, the Company had no loans that have
had the terms modified in a troubled debt restructuring.
Loans are charged-off in the month when they are considered uncollectible. Net charge-offs for
the first quarter of 2008 was $727,000 as compared to $632,000 for the quarter ended March 31,
2007.
15
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations,
Continued
Balance Sheet Summary, Continued
Impaired loans and related allowance for loan loss amounts at March 31, 2008 and December 31,
2007 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2008
|
|
|
December 31, 2007
|
|
|
|
|
|
|
|
Allowance
|
|
|
|
|
|
|
Allowance
|
|
|
|
Recorded
|
|
|
For
|
|
|
Recorded
|
|
|
For
|
|
(In
Thousands)
|
|
Investment
|
|
|
Loan Loss
|
|
|
Investment
|
|
|
Loan Loss
|
|
Impaired loans with allowance for
loan loss
|
|
$
|
6,922
|
|
|
|
748
|
|
|
|
2,167
|
|
|
|
313
|
|
Impaired loans with no allowance for
loan loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
6,922
|
|
|
|
748
|
|
|
|
2,167
|
|
|
|
313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The allowance for loan loss related to impaired loans was measured based upon the estimated
fair value of related collateral.
The following schedule details selected information as to non-performing loans of the Company:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2008
|
|
|
December 31, 2007
|
|
|
|
Past Due
|
|
|
|
|
|
|
Past Due
|
|
|
|
|
|
|
90 Days
|
|
|
Non-Accrual
|
|
|
90 Days
|
|
|
Non-Accrual
|
|
|
|
(In Thousands)
|
|
|
(In Thousands)
|
|
Real estate loans
|
|
$
|
2,570
|
|
|
|
5,245
|
|
|
|
1,592
|
|
|
|
1,620
|
|
Installment loans
|
|
|
299
|
|
|
|
1,230
|
|
|
|
437
|
|
|
|
13
|
|
Commercial
|
|
|
|
|
|
|
447
|
|
|
|
97
|
|
|
|
534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,869
|
|
|
|
6,922
|
|
|
|
2,126
|
|
|
|
2,167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Renegotiated loans
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing loans, which included non-accrual loans and loans 90 days past due, at
March 31, 2008 totaled $9,791,000 as compared to $4,293,000 at December 31, 2007. The increase of
$5,498,000 in non-performing loans during the three months ended March 31, 2008 is due primarily to
an increase in non-performing real estate loans and installment loans, offset by a decrease in
non-performing commercial loans. The increase in non-performing real estate loans is due to two
customers with large relationships. No material charge-offs on these loans are currently
anticipated by management.
16
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations,
Continued
Balance Sheet Summary, Continued
The following table presents certain internally graded loans as of March 31, 2008 and December
31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2008
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Special
|
|
|
|
|
Total
|
|
|
Mention
|
|
|
Substandard
|
|
|
Doubtful
|
|
Commercial, financial and
agricultural
|
|
$
|
6,108
|
|
|
|
5,545
|
|
|
|
563
|
|
|
|
|
|
Real estate mortgage
|
|
|
4,569
|
|
|
|
1,967
|
|
|
|
2,193
|
|
|
|
409
|
|
Real estate construction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
|
|
|
912
|
|
|
|
290
|
|
|
|
531
|
|
|
|
91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
11,589
|
|
|
|
7,802
|
|
|
|
3,287
|
|
|
|
500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007
|
|
|
|
|
|
|
|
|
(In Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Special
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
Mention
|
|
|
Substandard
|
|
|
Doubtful
|
|
Commercial, financial and
agricultural
|
|
$
|
1,935
|
|
|
|
913
|
|
|
|
1,022
|
|
|
|
|
|
Real estate mortgage
|
|
|
5,135
|
|
|
|
2,464
|
|
|
|
2,413
|
|
|
|
258
|
|
Real estate construction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
|
|
|
909
|
|
|
|
330
|
|
|
|
487
|
|
|
|
92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
7,979
|
|
|
|
3,707
|
|
|
|
3,922
|
|
|
|
350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At March 31, 2008, loans totaling $11,589,000 were included in the Companys internal
classified loan list. Of these loans $4,569,000 are real estate and $7,020,000 are other
commercial and consumer loans. The collateral values securing these loans total approximately
$16,499,000, ($7,860,000 related to real property and $8,639,000 related to personal loans).
Internally classified loans increased $3,610,000, or 45.2%, from $7,979,000 at December 31,
2007. Internally classified commercial loans increased $4,173,000 and personal and real estate
loans decreased $563,000 from December 31, 2007 amounts. 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.
Residential real estate loans that are internally graded totaling $4,569,000 and $5,135,000 at
March 31, 2008 and December 31, 2007, respectively, consist of 73 and 69 loans, respectively, that
have been graded accordingly due to bankruptcies, inadequate cash flows and delinquencies. No
material losses on these loans are currently anticipated by management.
17
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations,
Continued
Balance Sheet Summary, Continued
The following detail provides a breakdown of the allocation of the allowance for possible loan
losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2008
|
|
|
December 31, 2007
|
|
|
|
|
|
|
|
Percent of
|
|
|
|
|
|
|
Percent of
|
|
|
|
Amount
|
|
|
Loans In
|
|
|
Amount
|
|
|
Loans In
|
|
|
|
In
|
|
|
Each Category
|
|
|
In
|
|
|
Each Category
|
|
|
|
Thousands
|
|
|
To Total Loans
|
|
|
Thousands
|
|
|
To Total Loans
|
|
Commercial, financial and
agricultural
|
|
$
|
2,048
|
|
|
|
32.9
|
%
|
|
$
|
2,941
|
|
|
|
33.8
|
%
|
Real estate construction
|
|
|
724
|
|
|
|
11.0
|
|
|
|
724
|
|
|
|
10.0
|
|
Real estate mortgage
|
|
|
4,887
|
|
|
|
49.0
|
|
|
|
3,897
|
|
|
|
48.8
|
|
Consumer
|
|
|
2,003
|
|
|
|
7.1
|
|
|
|
1,911
|
|
|
|
7.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
9,662
|
|
|
|
100.0
|
%
|
|
$
|
9,473
|
|
|
|
100 .0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidity and Asset Management
The Companys management seeks to maximize net interest income by managing the Companys
assets and liabilities within appropriate constraints on capital, liquidity and interest rate risk.
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, 2008, the Companys liquid assets totaled
$186,370,000.
The Company maintains a formal asset and liability management process to quantify, monitor and
control interest rate risk and to assist management in maintaining stability in the net interest
margin under varying interest rate environments. The Company accomplishes this process through the
development and implementation of lending, funding and pricing strategies designed to maximize net
interest income under varying interest rate environments subject to specific liquidity and interest
rate risk guidelines.
Analysis of rate sensitivity and rate gap analysis are the primary tools used to assess the
direction and magnitude of changes in net interest income resulting from changes in interest rates.
Included in the analysis are cash flows and maturities of financial instruments held for purposes
other than trading, changes in market conditions, loan volumes and pricing and deposit volume and
mix. These assumptions are inherently uncertain, and, as a result, net interest income can not be
precisely estimated nor can the impact of higher or lower interest rates on net interest income be
precisely predicted. Actual results will differ due to timing, magnitude and frequency of interest
rate changes and changes in market conditions and managements strategies, among other factors.
18
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations,
Continued
Liquidity and Asset Management, Continued
The Companys primary source of liquidity is a stable core deposit base. In addition, loan
payments, investment security maturities and short-term borrowings 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 Companys rate sensitivity
position has an important impact on earnings. Senior management of the Company meets monthly to
analyze the rate sensitivity position of the Companys subsidiary bank. These meetings focus on
the spread between the Companys cost of funds and interest yields generated primarily through
loans and investments.
The Companys 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 Companys 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 $9.9
million mature or will be subject to rate adjustments within the next twelve months.
A secondary source of liquidity is the Companys loan portfolio. At March 31, 2008, loans
totaling approximately $467.7 million either will become due or will be subject to rate adjustments
within twelve months from that date. Continued emphasis will be placed on structuring adjustable
rate loans.
As for liabilities, certificates of deposit of $100,000 or greater totaling approximately
$314.7 million will become due or reprice 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 accounts and regular savings
accounts. Management anticipates that there will be no significant withdrawals from these accounts
in the future.
Management believes that with present maturities, the anticipated growth in deposit base, and
the efforts of management in its asset/liability management program, liquidity will not pose a
problem in the near term future. At the present time there are no known trends or any known
commitments, demands, events or uncertainties that will result in or that are reasonably likely to
result in the Companys liquidity changing in a materially adverse way.
19
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations,
Continued
Off Balance Sheet Arrangements
At March 31, 2008, we had unfunded loan commitments outstanding of $170.4 million and
outstanding standby letters of credit of $19.5 million. Because these commitments generally have
fixed expiration dates and many will expire without being drawn upon, the total commitment level
does not necessarily represent future cash requirements. If needed to fund these outstanding
commitments, the Companys bank subsidiary has the ability to liquidate Federal funds sold or
securities available-for-sale or on a short-term basis to borrow and purchase Federal funds from
other financial institutions. Additionally, the Companys bank subsidiary could sell participations
in these or other loans to correspondent banks. As mentioned above, the Companys bank subsidiary
has been able to fund its ongoing liquidity needs through its stable core deposit base, loan
payments, its investment security maturities and short-term borrowings.
Capital Position and Dividends
Capital
. At March 31, 2008, total shareholders equity was $121,245,000, or 8.6%, of
total assets, which compares with $118,185,000, or 8.9%, of total assets at December 31, 2007. The
dollar increase in shareholders equity during the three months ended March 31, 2008 results from
the Companys net income of $2,874,000, proceeds from the issuance of common stock related to
exercise of stock options of $67,000, the net effect of a $1,008,000 unrealized gain on investment
securities net of applicable income taxes of $386,000, cash dividends declared of $2,075,000 of
which $1,850,000 was reinvested under the Companys dividend reinvestment plan, a charge to
retained earnings of $284,000 relating to a change in accounting principle for executive officer
deferred compensation, and $5,000 related to stock option compensation.
In April 1999, the shareholders of the Company approved the Wilson Bank Holding Company 1999
Stock Option Plan (the Stock Option Plan). The Stock Option Plan provides for the granting of
stock options, and authorizes the issuance of common stock upon the exercise of such options, for
up to 200,000 shares of common stock, to officers and other key employees of the Company and its
subsidiaries. Furthermore, the Company may issue additional shares under the Stock Option Plan as
needed in order that the aggregate number of shares that may be issued during the term of the Stock
Option Plan is equal to five percent (5%) of the shares of common stock then issued and
outstanding. Under the Stock Option Plan, stock option awards may be granted in the form of
incentive stock options or non-statutory stock options, and are generally exercisable for up to ten
years following the date such option awards are granted. Exercise prices of incentive stock
options must be equal to or greater than 100% of the fair market value of the common stock on the
grant date. As of March 31, 2008, the Company has granted key employees options to purchase a
total of 80,091 shares of common stock. At March 31, 2008, options to purchase 30,382 shares were
exercisable.
20
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations,
Continued
Capital Position and Dividends, Continued
The Companys principal regulators have established minimum risk-based capital requirements
and leverage capital requirements for the Company and its subsidiary bank. These guidelines
classify capital into two categories of Tier I and total risk-based capital. Total risk-based
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 and the Companys
subsidiary bank have none, and a part of the allowance for possible loan 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 subsidiary bank and the Company to have a total risk-based capital ratio of
8.0% and a Tier I risk-based capital ratio of 4.0%. Set forth below is the Companys and the bank
subsidiary capital ratios as of March 31, 2008 and December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wilson Bank Holding
Company
|
|
Wilson Bank & Trust
|
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
|
(Dollars in Thousands)
|
|
(Dollars in Thousands)
|
March 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital
|
|
$
|
124,271
|
|
|
|
11.25
|
%
|
|
$
|
124,457
|
|
|
|
11.26
|
%
|
Tier 1 Capital
|
|
|
114,609
|
|
|
|
10.37
|
|
|
|
114,415
|
|
|
|
10.36
|
|
Leverage
|
|
|
114,609
|
|
|
|
8.45
|
|
|
|
114,415
|
|
|
|
8.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For Capital Adequacy Purposes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital
|
|
|
|
|
|
|
8.0
|
|
|
|
|
|
|
|
8.0
|
|
Tier 1 Capital
|
|
|
|
|
|
|
4.0
|
|
|
|
|
|
|
|
4.0
|
|
Leverage
|
|
|
|
|
|
|
4.0
|
|
|
|
|
|
|
|
4.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital
|
|
$
|
123,242
|
|
|
|
11.67
|
%
|
|
$
|
123,572
|
|
|
|
12.08
|
%
|
Tier 1 Capital
|
|
|
113,769
|
|
|
|
10.77
|
|
|
|
113,350
|
|
|
|
11.08
|
|
Leverage
|
|
|
113,769
|
|
|
|
8.63
|
|
|
|
113,350
|
|
|
|
8.60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For Capital Adequacy Purposes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital
|
|
|
|
|
|
|
8.0
|
|
|
|
|
|
|
|
8.0
|
|
Tier 1 Capital
|
|
|
|
|
|
|
4.0
|
|
|
|
|
|
|
|
4.0
|
|
Leverage
|
|
|
|
|
|
|
4.0
|
|
|
|
|
|
|
|
4.0
|
|
Fair Value Measurements
SAFS 157 provides guidance on how entities should measure fair value under generally accepted
accounting principles (GAAP). For any assets or liabilities requiring a fair value, SFAS 157
establishes a hierarchy of assets valuation summarized as follows:
21
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
|
Ø
|
|
Level 1 assets are those with unadjusted quoted prices in active markets for
identical assets to the instrument of security being valued, for example stocks
trading on the New York Stock Exchange.
|
|
|
Ø
|
|
Level 2 assets are those where pricing inputs for the assets are observable,
either directly or indirectly.
|
|
|
Ø
|
|
Level 3 assets are those that dont have readily observable pricing inputs.
|
Except for marketable securities, restricted equity securities and impaired loans, the Company
does not account for any other assets or liabilities using fair value. All marketable securities
and restricted equity securities are considered Level 2 assets since their fair values are
determined using observable pricing inputs. Impaired loans are considered Level 3 assets.
Impact of Inflation
Although interest rates are significantly affected by inflation, the inflation rate is
immaterial when reviewing the Companys results of operations.
22
WILSON BANK HOLDING COMPANY
FORM 10-Q, CONTINUED
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
The Companys primary component of market risk is interest rate volatility. Fluctuations in
interest rates will ultimately impact both the level of income and expense recorded on a large
portion of the Companys assets and liabilities, and the market value of all interest-earning
assets and interest-bearing liabilities, other than those which possess a short term to maturity.
Based upon the nature of the Companys operations, the Company is not subject to foreign currency
exchange or commodity price risk.
Interest rate risk (sensitivity) management 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 Companys rate
sensitivity position has an important impact on earnings. Senior management of the Company meets
monthly to analyze the rate sensitivity position. These meetings focus on the spread between the
cost of funds and interest yields generated primarily through loans and investments.
There have been no material changes in reported market risks during the three months ended
March 31, 2008.
Item 4.
Controls and Procedures
The Company maintains disclosure controls and procedures, as defined in Rule 13a-15(e)
promulgated under the Securities Exchange Act of 1934 (the Exchange Act), that are designated to
ensure that information required to be disclosed by the Company: in the reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commissions rules and forms and that such
information is accumulated and communicated to the Companys management, including its Chief
Executive Officer its Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure. The Company carried out an evaluation, under the supervision and with the
participation of its management, including its Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of its disclosure controls and procedures as of
the end of the period covered by this report. Based on the evaluation of these disclosure controls
and procedures, its Chief Executive Officer and its Chief Financial Officer concluded that the
Companys disclosure controls and procedures were effective.
There were no changes in the Companys internal control over financial reporting during the
Companys fiscal quarter ended March 31, 2008 that have materially affected, or are reasonably
likely to materially affect, the Companys internal control over financial reporting.
23
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Item 1A. RISK FACTORS
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There were no material changes to the Companys risk factors as previously disclosed in Part I, Item 1A, of the Companys Annual
Report on Form 10-K for the fiscal year ended December 31, 2007.
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Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
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(a)
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None
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(b)
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Not applicable.
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(c)
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The Company did not repurchase any shares of Company common stock during
the quarter ended March 31, 2008.
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Item 3. DEFAULTS UPON SENIOR SECURITIES
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(a)
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None
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(b)
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Not applicable.
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Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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(a)
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None.
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(b)
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Not applicable.
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(c)
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Not applicable.
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(d)
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Not Applicable.
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Item 5. OTHER INFORMATION
Item 6. EXHIBITS
(a) Exhibits
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31.1
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Certification of the Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
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31.2
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Certification of the Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
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32.1
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Certification of the Chief Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
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32.2
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Certification of the Chief Financial Officer Pursuant to Section 906 of the
Sarbanes- Oxley Act of 2002.
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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.
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WILSON BANK HOLDING COMPANY
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(Registrant)
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DATE:
May 9, 2008
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/s/ Randall Clemons
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Randall Clemons
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President and Chief Executive Officer
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DATE:
May 9, 2008
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/s/ Lisa Pominski
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Lisa Pominski
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Senior Vice President & Chief Financial Officer
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