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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2002
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-631
WEBFINANCIAL CORPORATION
------------------------
(Exact name of registrant as specified in its charter)
Delaware 56-2043000
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 East 52nd Street, 21st Floor
New York, New York 10022
------------------------
(Address and zip code of principal executive offices)
877-431-2942
------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes (X) No ( )
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13, or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court. Yes (X) No ( )
As of November 18, 2002, 4,366,866 shares of the issuer's Common
Stock, $.001 par value (the "Common Stock") were issued and outstanding.
Table of Contents
Page No.
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Part I Financial Information
Item 1. Consolidated Financial Statements:
Consolidated Statements of Financial Condition as of
September 30, 2002 (unaudited) and December 31, 2001 2
Consolidated Statements of Operations
for the three months ended September 30, 2002 and 2001 (unaudited) 4
Consolidated Statements of Operations
for the nine months ended September 30, 2002 and 2001 (unaudited) 5
Consolidated Statements of Cash Flow
for the nine months ended September 30, 2002 and 2001 (unaudited) 6
Notes to Consolidated Financial Statements (unaudited) 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures about Market Risk 12
Item 4. Controls and Procedures 13
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
Section 302 Certifications 16
PART I FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
WEBFINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Amounts in thousands)
September 30, 2002 December 31, 2001
------------------ -----------------
(unaudited)
Assets
Cash and due from banks $ 2,579 $ 4,961
Federal funds sold 1,372 134
------- -------
Total cash and cash equivalents 3,951 5,095
Investment securities
Held-to-maturity (estimated fair value $20 at September
30, 2002 and $27 at December 31, 2001) 18 25
Available-for-sale 1,074 262
------- -------
Total investment securities 1,092 287
Loans, net 19,477 12,611
Less allowance for loan losses 1,502 1,972
------- -------
Total loans, net 17,975 10,639
Foreclosed assets 462 449
Premises and equipment,
net of accumulated depreciation and amortization 49 77
Accrued interest receivable 342 54
Goodwill, net of accumulated
amortization of $394 in 2002 and 2001 1,380 1,380
Other assets 1,048 897
------- -------
$26,299 $18,878
======= =======
Liabilities and Stockholders' Equity
Deposits:
Non interest-bearing demand $ 564 $ 75
Interest-bearing:
MMA and NOW deposits 470 19
Certificates of deposit 13,953 7,220
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Total deposits 14,987 7,314
Other liabilities 235 170
------- -------
Total liabilities before minority interest 15,222 7,484
Commitments and contingencies -- --
Minority interest 343 324
(continued)
2
WEBFINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (continued)
(Amounts in thousands)
September 30, 2002 December 31, 2001
------------------ -----------------
(unaudited)
Stockholders' Equity
Preferred stock, 10,000,000 shares authorized, none issued -- --
Common stock, 50,000,000 shares authorized;
$.001 par value, 4,366,866 shares issued
and outstanding at September 30, 2002 and
December 31, 2001 4 4
Paid-in capital 36,606 36,606
Accumulated other comprehensive income (loss) (180) 2
Accumulated deficit (25,696) (25,542)
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Total stockholders' equity 10,734 11,070
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$ 26,299 $ 18,878
======== ========
See accompanying notes to consolidated financial statements.
3
WEBFINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Amounts in thousands except per share amounts)
For the Three Months Ended
September 30, 2002 September 30, 2001
------------------ ------------------
Interest income
Loans, including fees $ 795 $ 260
Due from banks 12 45
Federal funds sold 4 1
Investments 5 8
------- -------
Total interest income 816 314
Interest expense 90 66
------- -------
Net interest income before provision for
loan losses 726 248
Provision for loan losses 51 49
------- -------
Net interest income after provision for
loan losses 675 199
------- -------
Noninterest income
Fee income 97 90
Miscellaneous income, net 69 104
------- -------
Total noninterest income 166 194
Noninterest expenses
Salaries, wages, and benefits 183 319
Professional and legal fees 101 144
Occupancy expense 41 50
Amortization of goodwill -- 30
Other general and administrative 363 182
------- -------
Total noninterest expenses 688 725
------- -------
Operating income (loss) 153 (332)
Income tax expense 30 3
------- -------
Income (loss) before minority interests 123 (335)
(Income) loss attributable to minority interests (7) 17
------- -------
Net income (loss) $ 116 $ (318)
======= =======
Net income (loss) per share, basic and diluted $ .03 $ (.07)
Weighted average number of common shares and
common share equivalents, basic and diluted 4,367 4,367
See accompanying notes to consolidated financial statements.
4
WEBFINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Amounts in thousands except per share amounts)
For the Nine Months Ended
September 30, 2002 September 30, 2001
------------------ ------------------
Interest income
Loans, including fees $ 1,719 $ 995
Due from banks 44 187
Federal funds sold 18 42
Investments 35 24
------- -------
Total interest income 1,816 1,248
Interest expense 236 340
------- -------
Net interest income before provision for
loan losses 1,580 908
Provision (credit) for loan losses (89) 915
------- -------
Net interest income (loss) after provision for
loan losses 1,669 (7)
------- -------
Noninterest income
Gain on sale of loans -- 219
Fee income 313 422
Miscellaneous income, net 213 454
------- -------
Total noninterest income 526 1,095
Noninterest expenses
Salaries, wages, and benefits 751 920
Professional and legal fees 544 432
Occupancy expense 136 148
Amortization of goodwill -- 89
Other general and administrative 908 694
------- -------
Total noninterest expenses 2,339 2,283
------- -------
Operating loss (144) (1,195)
Income tax expense (benefit) (9) 11
------- -------
Loss before minority interests (135) (1,206)
(Income) loss attributable to minority interests (17) 72
------- -------
Net loss $ (152) $(1,134)
======= =======
Net loss per share, basic and diluted $ (.03) $ (.26)
Weighted average number of common shares and
common share equivalents, basic and diluted 4,367 4,367
See accompanying notes to consolidated financial statements.
5
WEBFINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)
(Amounts in thousands)
For the Nine Months Ended
September 30, 2002 September 30, 2001
------------------ ------------------
Cash flows from operating activities:
Net loss $ (152) $(1,134)
Adjustments to reconcile net loss to net cash
used in operating activities:
Minority interests 17 (72)
Depreciation and amortization 30 35
Gain on sale of loans -- (219)
Gain on sale of other assets (8) --
Common stock granted in lieu of cash -- 47
Provision (credit) for loan losses (89) 915
Accretion of loan income and fees, net (92) (70)
Amortization of goodwill -- 89
Amortization of servicing assets 26 62
Changes in operating assets and liabilities:
Accrued interest receivable (288) 19
Other assets (177) (24)
Other liabilities 65 (515)
------- -------
Net cash used in operating activities (660) (867)
Cash flows from investing activities:
Principal payments received on held-to-maturity securities 7 5
Principal payments received on available-for-sale securities 123 128
Purchases of available-for-sale securities (1,177) --
Sales of available-for-sale securities 60 --
Purchase of premises and equipment (2) (12)
Cash received on settlement of loan sale -- 4,250
Sale of foreclosed assets 19 --
Loans originated and principal collections, net (7,187) (650)
------- -------
Net cash provided by (used in) investing activities (8,157) 3,721
Cash flows from financing activities:
Net increase (decrease) in noninterest bearing deposits 489 (175)
Net increase in MMA and NOW deposits 451 9
Net increase (decrease) in certificates of deposit 6,733 (4,663)
Net increase in short term borrowings -- 841
------- -------
Net cash provided by (used in) financing activities 7,673 (3,988)
------- -------
(continued)
6
WEBFINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited) (continued)
(Amounts in thousands)
For the Nine Months Ended
September 30, 2002 September 30, 2001
------------------ ------------------
Net decrease in cash and cash equivalents (1,144) (1,134)
Cash and cash equivalents at beginning of period 5,095 6,162
------- -------
Cash and cash equivalents at end of period $ 3,951 $ 5,028
======= =======
Supplemental disclosure of additional cash activities:
Cash paid for interest $ 197 $ 501
Cash paid for (received from) income taxes $ (9) $ 11
Noncash investing and financing activities:
At September 30, 2002, the Company had a net unrealized loss on
available-for-sale securities of $180. As a result, a comprehensive loss of $182
was recorded in the stockholders' equity section of the consolidated statements
of financial condition at September 30, 2002.
During the nine months ended September 30, 2002, the Company acquired real
estate in satisfaction of loans in the amount of $32.
See accompanying notes to consolidated financial statements.
7
WEBFINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(All numbers except shares and per share data in thousands)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation--The accompanying interim consolidated
financial statements of WebFinancial Corporation and its subsidiaries (the
"Company") are unaudited and have been prepared in conformity with the
requirements of Regulation S-X promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), particularly Rule 10-01 thereof, which
governs the presentation of interim financial statements. Accordingly, they do
not include all of the information and footnotes required by accounting
principles generally accepted in the United States of America. The accompanying
interim consolidated financial statements should be read in conjunction with the
Company's significant accounting policies as set forth in Note 1 to the
consolidated financial statements in the Company's Annual Report on Form 10-K
for the year ended December 31, 2001 (the "2001 10-K"). The Consolidated
Statement of Financial Condition at December 31, 2001 was extracted from the
Company's audited consolidated financial statements contained in the 2001 10-K,
and does not include all disclosures required by accounting principles generally
accepted in the United States of America for annual consolidated financial
statements.
In the opinion of management, all adjustments are comprised of
normal recurring accruals necessary for the fair presentation of the interim
financial statements. Operating results for the three and nine months ended
September 30, 2002 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2002.
2. ORGANIZATION AND RELATIONSHIPS
The consolidated financial statements include the financial
statements of WebFinancial Corporation and its subsidiaries: WebFinancial
Holding Corporation, a wholly owned subsidiary of the Company ("Holdings"),
WebBank ("WebBank"), Praxis Investment Advisers, Inc. ("Praxis"), WebFinancial
Government Lending, Inc. ("Lending"), and Web Film Financial, Inc. ("Film"),
collectively referred to as the Company. WebBank is a Utah-chartered industrial
loan corporation, and is subject to comprehensive regulation, examination, and
supervision by the Federal Deposit Insurance Corporation ("FDIC"), and the State
of Utah Department of Financial Institutions. WebBank provides commercial and
consumer specialty finance services. All intercompany accounts and transactions
have been eliminated in consolidation.
3. GOODWILL
In July 2001, the Financial Accounting Standards Board (FASB) issued
FAS 142, "Goodwill and Other Intangible Assets". FAS 142 revises the method of
accounting for goodwill and other intangible assets. FAS 142 eliminates the
amortization of goodwill, but requires goodwill to be tested for impairment at
least annually at a reporting unit level. FAS 142 became effective for the
Company on January 1, 2002. The adoption of FAS 142 did not have a significant
impact on the Company's Consolidated Financial Statements.
The following tables reconcile the Company's net income (loss) for
the three and nine months ended September 30, 2002 and 2001 adjusted to exclude
goodwill amortization pursuant to SFAS 142 to amounts previously reported:
8
3. GOODWILL (continued)
Three Months Ended
September 30, 2002 September 30, 2001
------------------ ------------------
Net income (loss)
Reported net income (loss) $ 116 $ (318)
Add back: Goodwill amortization - 30
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Adjusted net income (loss) $ 116 $ (288)
========== ===========
Income (loss) per share - basic and diluted
Reported net income (loss) $ .03 $ (.07)
Goodwill amortization - -
---------- -----------
Adjusted net income (loss) $ .03 $ (.07)
========== ===========
Nine Months Ended
September 30, 2002 September 30, 2001
------------------ ------------------
Net loss
Reported net loss $ (152) $ (1,134)
Add back: Goodwill amortization - 89
---------- -----------
Adjusted net loss $ (152) $ (1,045)
========== ===========
Loss per share - basic and diluted
Reported net loss $ (.03) $ (.26)
Goodwill amortization - .02
---------- -----------
Adjusted net loss $ (.03) $ (.24)
=========== ===========
4. OTHER COMPREHENSIVE INCOME (LOSS)
Other comprehensive income (loss) is defined as the change in equity
during a period from transactions and other events not included in net earnings,
excluding changes resulting from investments by owners (e.g., supplement stock
offerings) and distributions to owners (e.g., dividends).
As of September 30, 2002, accumulated other comprehensive income
(loss) consisted of the following:
Balance at December 31, 2001 $ 2
Net change during the period related
to unrealized holding loss
on AFS securities arising
during the period. (182)
--------------
Balance at September 30, 2002 $ (180)
==============
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
consolidated unaudited interim financial statements as of and for the three and
nine month periods ending September 30, 2002 of the Company and the notes
thereto presented elsewhere herein.
CHANGES IN FINANCIAL CONDITION
SEPTEMBER 30, 2002 COMPARED TO DECEMBER 31, 2001
Total assets increased by $7,421,000 during the nine months ended
September 30, 2002. WebBank was the only entity within the consolidated group to
increase in asset size. In January 2002, WebBank began factoring commercial
accounts receivable. In August 2002, WebFinancial Corporation also began
investing in factored receivables. The balance of the Company's factored
accounts receivable at September 30, 2002 was $6,479,000 in contrast to $0 at
December 31, 2001. Cash and due from banks decreased by $2,383,000 during the
nine months as a portion of the Company's money market funds were used to
purchase equity securities and factoring receivables. WebBank's federal funds
sold increased by $1,238,000 between December 31, 2001 and September 30, 2002.
The growth in the Company's total assets was funded primarily with a $6,733,000
increase in certificates of deposit at WebBank. Other deposits at WebBank
increased by $940,000.
CHANGES IN RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 2001
Net income for the quarter ended September 30, 2002 was $116,000 or
$.03 per share compared to a net loss of $(318,000) or $(.07) per share for the
same period in 2001. The change between quarters represented an improvement of
$434,000 or $.10 per share.
The Company's net interest income after provision for loan losses
increased by $476,000. Interest income increased by $502,000 between the two
periods primarily due to a $535,000 increase in interest and fees on loans. Most
of that improvement was due to the initiation of the Company's accounts
receivable factoring program in 2002. Interest expense increased $24,000 between
the two quarters. Large increases in deposit balances were offset by significant
decreases in interest rates paid on deposits. The $89,000 credit for loan losses
during the nine months ended September 30, 2002 was due to recapture of excess
loan loss reserves in WebBank's discontinued commercial loan program in the
second quarter.
Noninterest income for the Company decreased by $28,000 between the
two periods. Fee income remained relatively constant.
The Company's noninterest expenses decreased by $37,000 between the
two periods. Salary expense declined by $136,000 primarily due to staff
reductions at WebBank. Goodwill amortization expense decreased by $30,000
because WebBank discontinued goodwill amortization at the beginning of 2002 in
accordance with Statement of Financial Accounting Standard No. 142. Offsetting
these decreases was a $181,000 increase in other general and administrative
expenses, primarily due to third-party servicing and broker costs related to
WebBank's accounts receivable factoring program.
CHANGES IN RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
2001
The net loss for the nine months ended September 30, 2002 was
$(152,000) or $(.03) per share compared to a net loss of $(1,134,000) or $(.26)
per share for the same period in 2001. The change between periods represented an
improvement of $982,000 or $.23 per share.
10
The Company's net interest income after provision for loan losses
increased by $1,676,000 between the two periods primarily due to a decrease in
the provision for loan losses of $1,004,000 at WebBank. The discontinuation of
WebBank's commercial loan program during 2001 resulted in excess loan loss
reserve which was recaptured and taken into income during the first nine months
of 2002. In addition, interest income increased $568,000 while interest expense
decreased $104,000. The Company's accounts receivable factoring program
contributed significantly to the increase in interest income. The decline in
interest rates from period to period caused the decrease in interest expense
despite an increase in deposit volumes.
Noninterest income for the Company decreased by $569,000 between the
two periods. Discontinuance of the commercial loan origination program at
WebBank in 2001 resulted in a decrease in gain on sale of loans of $219,000 when
compared to 2002. Fee income declined by $109,000 primarily because WebBank's
commercial loan origination, payday lending and structured settlement programs
were discontinued in 2001. Miscellaneous income declined by $241,000 as a result
of non-recurring items in 2001 at WebBank including program start-up and
termination fees and recovery of an operational loss.
The Company's noninterest expenses increased by $56,000 between the
two periods. A $214,000 increase occurred in other general and administrative
expenses due to servicing and broker costs for WebBank's accounts receivable
factoring program. In addition, the Company's professional and legal fees
increased by $112,000 between the two periods. Approximately $94,000 of that
increase was incurred by WebFinancial Corporation in the first quarter of 2002
to defend against a legal action brought by a former employee. Partially
offsetting these increases was a decrease in salary expense of $169,000 due to
staff reductions at WebBank. In addition, goodwill amortization was discontinued
at WebBank at the beginning of 2002 in accordance with Statement of Financial
Accounting Standard No. 142, creating a reduction of $89,000 between periods.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2002 and December 31, 2001, the Company's cash and
cash equivalents totaled $3,951,000 and $5,095,000, respectively. Funding for
WebBank is obtained primarily from certificates of deposit obtained through
brokers and from a secured line of credit with a local correspondent bank.
Management believes that the Company's current cash and cash equivalent
balances, expected operating cash flows, and WebBank borrowing sources are
adequate to meet its liquidity needs through at least the next 12 months.
The Company continues to actively seek acquisition transactions.
There can be no assurance that the Company will be able to acquire an additional
business, or that such business will be profitable. In order to finance an
acquisition, the Company may be required to incur or assume indebtedness or
issue securities. To date, the Company has no agreements, commitments, or
understandings with respect to future acquisitions.
FORWARD-LOOKING STATEMENTS
The following important factors, among others, could cause actual
results to differ materially from those indicated by forward-looking statements
made in this Quarterly Report of Form 10-Q and presented elsewhere by
management. All forward-looking statements included in this document are based
on information available to the Company on the date hereof, and the Company
assumes no obligation to update any such forward-looking statements. A number of
uncertainties exist that could affect the Company's future operating results,
including, without limitation, general economic conditions, changes in interest
rates, the Company's ability to attract deposits, the Company's ability to
control costs, and the risk factors described in the 2001 10-K. Because of these
and other factors, past financial performance should not be considered an
indication of future performance. The Company's future quarterly operating
results may vary significantly. Investors should not use historical trends to
anticipate future results and should be aware that the trading price of the
Company's common stock may be subject to wide fluctuations in response to
quarterly variations in operating results and other factors, including those
discussed above.
11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company maintains investment and commercial loan portfolios.
Both of these activities are subject to specific policies that are focused on
preserving principal, maintaining proper liquidity to meet operating needs, and
maximizing yields.
The Company's operations may be subject to a variety of market
risks, the most material of which is the risk of changing interest rates.
Generally, interest rate risk is the volatility in financial performance
attributable to changes in market interest rates, which may result in either
fluctuation of net interest income or changes to the economic value of the
equity of the Company. The following discusses certain factors that may affect
the Company's financial results and operations and should be considered in
evaluating the Company.
Interest Rates. The Company's earnings may be impacted by changing
interest rates. Changes in interest rates impact the level of loans, deposits
and investments, the credit profile of existing loans, the rates received on
loans and securities and the rates paid on deposits and borrowings. The Company
attempts to minimize interest rate risk through various means including the
matching of interest rate volatility of assets and liabilities. However,
significant fluctuations in interest rates may have an adverse effect on the
Company's financial condition and results of operations.
Market Risk. The fair value of the Company's loans and deposit
accounts at September 30, 2002 approximated their book value. Market risk was
estimated as the potential decrease (increase) in future earnings and cash flows
resulting from a hypothetical 3% increase (decrease) in the Company's estimated
weighted average lending rate at September 30, 2002. Although a large portion of
the interest on the Company's loans are indexed to a market rate, there would be
no material effect on the future earnings or cash flows related to the Company's
total debt for such a hypothetical change.
Government Regulation and Monetary Policy. The banking industry is
subject to extensive federal and state supervision and regulation. Significant
new laws or changes in existing laws, or repeals of existing laws may cause the
Company's results to differ materially. Further, federal monetary policy,
particularly as implemented through the Federal Reserve System, significantly
affects credit conditions for the Company and a material change in these
conditions could have a material adverse impact on the Company's financial
condition and results of operations.
Competition. The banking and financial services businesses in the
Company's lines of business are highly competitive. The increasingly competitive
environment is a result of changes in regulation, changes in technology and
product delivery systems, and the accelerating pace of consolidation among
financial service providers. The results of the Company may differ if
circumstances affecting the nature or level of competition change.
Credit Quality. A source of risk arises from the possibility that
losses will be sustained because borrowers, guarantors and related parties may
fail to perform in accordance with the terms of their loans. The Company has
adopted underwriting and credit monitoring procedures and credit policies,
including the establishment and review of the allowance for loan losses, that
management believes are appropriate to minimize this risk by assessing the
likelihood of nonperformance, tracking loan performance and diversifying the
Company's credit portfolio. These policies and procedures, however, may not
prevent unexpected losses that could have a material adverse effect on the
Company's results.
Non-banking Activities. The Company may expand its operations into
new non-banking activities. Although the Company has experience in providing
bank-related services, this expertise may not assist us in our expansion into
non-banking activities. As a result, we may be exposed to risks associated with,
among other things, (1) a lack of market and product knowledge or awareness of
other industry related matters and (2) an inability to attract and retain
qualified employees with experience in these non-banking activities.
12
Proposed Legislation. From time to time, various types of federal
and state legislation have been proposed that could result in additional
regulation of, and modifications of restrictions on, the business of the
Company. It cannot be predicted whether any legislation currently being
considered will be adopted or how such legislation or any other legislation that
might be enacted in the future would affect the business of the Company.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures
Within the 90 days prior to the date of this report, the Company
carried out an evaluation, under the supervision and with the participation of
the Company's management, including the Company's Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based upon that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective in timely alerting them to
material information relating to the Company (including its consolidated
subsidiaries) required to be included in the Company's periodic SEC filings.
(b) Changes in internal controls
There were no significant changes in the Company's internal controls
or in other factors that could significantly affect these controls subsequent to
the date of their evaluation.
(c) Asset-Backed issuers
Not applicable.
13
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
See exhibit index immediately following the signature page.
(b) Reports on Form 8-K during the quarter
None.
14
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.
Date: November 18, 2002 WebFinancial Corporation
By: /s/ Warren G. Lichtenstein
------------------------------------------
Warren G. Lichtenstein
President and Chief Executive Officer
By: /s/ Glen M. Kassan
------------------------------------------
Glen M. Kassan
Vice President and Chief Financial Officer
15
CERTIFICATION
Section 302 Certification
I, Warren G. Lichtenstein, certify that:
(1) I have reviewed this quarterly report on Form 10-Q of WebFinancial
Corporation, a Delaware corporation (the "Registrant");
(2) Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
(3) Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in this quarterly report;
(4) The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
(b) evaluated the effectiveness of the Registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
(5) The Registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the Registrant's auditors and the audit committee
of Registrant's board of directors (or persons performing the equivalent
functions):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Registrant's ability to record,
process, summarize and report financial data and have identified for the
Registrant's auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Registrant's internal
controls; and
(6) The Registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: November 18, 2002
By: /s/ Warren G. Lichtenstein
------------------------------
Warren G. Lichtenstein
President and Chief Executive Officer
16
CERTIFICATION
Section 302 Certification
I, Glen M. Kassan, certify that:
(1) I have reviewed this quarterly report on Form 10-Q of WebFinancial
Corporation, a Delaware corporation (the "Registrant");
(2) Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
(3) Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Registrant as of, and for, the periods presented in this quarterly report;
(4) The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is
being prepared;
(b) evaluated the effectiveness of the Registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
(5) The Registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the Registrant's auditors and the audit committee
of Registrant's board of directors (or persons performing the equivalent
functions):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the Registrant's ability to record,
process, summarize and report financial data and have identified for the
Registrant's auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Registrant's internal
controls; and
(6) The Registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: November 18, 2002
By: /s/ Glen M. Kassan
------------------------------------------
Glen M. Kassan
Vice President and Chief Financial Officer
17
EXHIBIT INDEX
11 Statement Regarding Computation of Net Loss Per Share
99.1 Certification of Chief Executive Officer Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
99.2 Certification of Chief Financial Officer Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002