WEST POINTE BANCORP INC - 10-Q Quarterly Report

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period to
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Commission File No. 0-30505
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WEST POINTE BANCORP, INC.
(Exact name of registrant as specified in its charter)

Illinois 36-4149655
------------------------ ---------------------------------
(State of incorporation) (IRS Employer Identification No.)

West Pointe Bancorp, Inc.
5701 West Main Street
Belleville, Illinois 62226
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(Address of principal executive offices)

Registrant's telephone number, including area code: (618) 234-5700
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes [X] No [ ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.

Class Outstanding at August 9, 2002
- ------------------------- -----------------------------
Common stock $1 par value 975,075

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TABLE OF CONTENTS

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

WEST POINTE BANCORP, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)

See the accompanying notes to consolidated financial statements.

3

WEST POINTE BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

See the accompanying notes to consolidated financial statements.

4

WEST POINTE BANCORP, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY AND COMPREHENSIVE
INCOME (UNAUDITED)

(1) Disclosure of reclassification adjustment:

See the accompanying notes to consolidated financial statements.

5

WEST POINTE BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

See the accompanying notes to consolidated financial statements.

6

WEST POINTE BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE A--PRINCIPLES OF ACCOUNTING

The consolidated financial statements of West Pointe Bancorp, Inc.
("West Pointe") or ("the Company") have been prepared in accordance with
accounting principles generally accepted in the United States of America for the
banking industry and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States of America for annual reporting. Reference is hereby made to the notes to
consolidated financial statements contained in West Pointe's Annual Report on
Form 10-K for the year ended December 31, 2001. The foregoing consolidated
financial statements are unaudited. However, in the opinion of management, all
adjustments necessary for a fair presentation of the consolidated financial
statements have been made. All such adjustments are of a normal recurring
nature. The results of operations for the interim periods presented herein are
not necessarily indicative of the results to be expected for the full year.

The consolidated financial statements include the accounts of its
subsidiary. West Pointe is a bank holding company that engages in its business
through its sole subsidiary, West Pointe Bank And Trust Company (the "Bank"), an
Illinois chartered commercial bank. All material intercompany transactions and
balances are eliminated.

In preparing the financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the balance sheet and revenues and expenses for
the period. Actual results could differ significantly from those estimates.

Certain 2001 amounts have been reclassified where appropriate to
conform to the consolidated financial statement presentation used in 2002.

NOTE B--BUSINESS SEGMENTS

On January 1, 1998, West Pointe adopted Financial Accounting Standards
No. 131 (SFAS No. 131), "Disclosures about Segments of an Enterprise and Related
Information", which requires business segments to be reported based on the way
management organizes segments within an organization for making operating
decisions and assessing performance. SFAS No. 131 is effective for fiscal years
beginning after December 15, 1997. Management has not included disclosures
regarding specific segments since management makes operating decisions and
assesses performance based on West Pointe as a whole.

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NOTE C--NET INCOME PER SHARE

The calculation of net income per share is summarized as follows:

8

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion describes West Pointe's results of operations
during the three-month and six-month periods ended June 30, 2002 and 2001, and
its financial condition, asset quality, and capital resources as of June 30,
2002. This discussion should be read in conjunction with West Pointe's unaudited
consolidated financial statements and notes thereto. The results of operations
for the interim periods presented herein are not necessarily indicative of the
results to be expected for the full year.

FORWARD-LOOKING STATEMENTS

This filing and future filings made by West Pointe with the Securities
and Exchange Commission, as well as other filings, reports and press releases
made or issued by West Pointe, and oral statements made by executive officers or
directors of West Pointe may include forward-looking statements, which are based
on assumptions and describe future plans, strategies, projections and
expectations of West Pointe. These forward-looking statements are generally
identified by use of terms "believe", "expect", "intend", "anticipate",
"estimate", "project", or similar words. West Pointe's ability to predict
results or the actual effect of future plans or strategies is uncertain. Factors
which could have a material adverse effect on West Pointe's operations include,
but are not limited to, changes in interest rates, general economic conditions,
legislative/regulatory changes, monetary and fiscal policies of the U. S.
Government, including policies of the U. S. Treasury and the Federal Reserve
Board, the quality and composition of the loan or investment portfolios, demand
for loan products, deposit flows, competition, demand for financial services in
West Pointe's market areas and accounting principles and guidelines. All of
these uncertainties, as well as others, are present in a banking operation and
stockholders are cautioned that management's view of the future on which it
prices its products, evaluates collateral, sets loan reserves and estimates
costs of operations and regulation may prove to be other than anticipated. West
Pointe assumes no obligation to update any forward-looking statements that are
made from time to time.

OVERVIEW

Net income for the second quarter of 2002 was $994,525 or $1.00 per
diluted common share compared to net income of $568,754 or $.58 per diluted
common share for the second quarter of 2001. Net income for the first six months
of 2002 was $1,925,529 or $1.94 per diluted common share compared to net income
of $1,231,625 or $1.25 per diluted common share for the first six months of
2001. Return on average assets for the second quarter and first six months of
2002 was 1.06% and 1.05%, respectively, compared to .65% and .72% for the second
quarter and first six months of 2001, respectively. Return on average equity for
the second quarter and first six months of 2002 was 16.10% and 15.93%,
respectively, compared to 10.99% and 11.83% for the second quarter and first six
months of 2001, respectively.

The increases in net income, for the quarters and six-month periods
compared, were primarily attributable to increases in net interest income and
noninterest income. Increases in these items were partially offset by increases
in noninterest expenses and income tax expenses.

Total assets at June 30, 2002 increased to $391,853,558 from
$366,713,993 at December 31, 2001. The increase in total assets was primarily
from internal growth in the volume of interest bearing due from bank balances,
investment securities and loans. The increase in total assets was partially
funded by increases in deposits and securities sold under agreements to
repurchase.

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RESULTS OF OPERATIONS

Table 1 summarizes West Pointe's statement of income and the change in
each category for the periods presented.

TABLE 1 - Comparative Statements of Income

NET INTEREST INCOME

Tax-equivalent net interest income increased $873,015 or 34.1% for the
second quarter of 2002 compared to the same period of 2001 and increased
$1,637,589 or 32.9% for the first six months of 2002 compared to the same period
of 2001. The increases in tax-equivalent net interest income, for all periods
compared, were principally attributable to decreases in interest expense which
were partially offset by decreases in tax-equivalent interest income.

Total tax-equivalent interest income decreased $455,689 or 7.4% for the
second quarter of 2002 compared to the same period of 2001 and decreased
$1,273,770 or 10.2% for the first six months of 2002 compared to the same period
of 2001. The decreases in tax-equivalent interest income for the quarters and
six-month periods compared were primarily attributable to the lower interest
rate environment, partially offset by higher volumes of interest earning assets.

Total interest expense decreased $1,328,704 or 36.5% for the second
quarter of 2002 compared to the same period of 2001 and decreased $2,911,359 or
38.8% for the first six months of 2002 compared to the same period of 2001. The
decreases in interest expense were primarily attributable to the lower interest
rate environment, partially offset by higher volumes of interest bearing
liabilities.

The net interest margin was 3.93% for the second quarter of 2002
compared to 3.18% for the second quarter of 2001. The net interest margin for
the first six months of 2002 was 3.89% compared to 3.13% for the first six
months of 2001. The increases in the net interest margin for the quarters and
six-month periods compared primarily resulted from continuing efforts to control
the Company's cost of funds which, as a result, declined at a faster pace than
the Company's yield on interest earning assets.

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PROVISION FOR LOAN LOSSES

The provision for loan losses was $150,000 and $300,000 for the second
quarter and first six months of 2002, respectively, compared to $188,000 and
$304,000 for the second quarter and first six months of 2001, respectively. The
provision for loan losses represents management's judgment of the cost
associated with credit risk inherent in the loan portfolio. Factors which
influence management's determination of the provision for loan losses include,
among other things, size and quality of the loan portfolio measured against
prevailing economic conditions, regulatory guidelines, a review of individual
loans and historical loan loss experience. The modest decreases in the provision
for loan losses for the quarter and six-month period ending June 30, 2002
compared to the same periods of 2001 were primarily reflective of overall
improvement in the quality of the loan portfolio. Activity in the allowance for
loan losses and nonperforming loan data are presented under "ASSET QUALITY."

NONINTEREST INCOME

Total noninterest income was $959,422 for the second quarter of 2002
compared to $866,089 for the second quarter of 2001. Noninterest income totaled
$2,037,737 for the first six months of 2002 compared to $1,857,699 for the same
period of 2001. Service charges on deposit accounts increased $18,362 for the
second quarter of 2002 compared to the second quarter of 2001 and increased
$68,668 for the six-month periods compared. The increases in service charges on
deposit accounts for the periods compared were primarily attributable to the
growth in the volume of deposit accounts on which service charges are assessed.
Income from mortgage banking services increased $8,526 for the second quarter of
2002 compared to the second quarter of 2001 and increased $51,594 for the
six-month periods compared. The modest increases in mortgage banking income for
the periods compared were primarily attributable to the lower interest rate
environment, which improved the level of origination activities. Assuming that
interest rates remain at lower levels, Company management anticipates that the
level of mortgage loan origination and refinancing activities will remain
relatively strong for the remainder of 2002. Income from trust fees decreased
$15,365 for the second quarter of 2002 compared to the second quarter of 2001
and increased $34,486 for the six-month periods compared. The decrease in income
from trust fees for the quarters compared was primarily attributable to a
reduction in fees resulting from the termination of one particular fiduciary
relationship in July 2001. The increase in income from trust fees for the
six-month periods compared was partially attributable to one-time fees charged
in connection with the administration of certain estates and new business
development. Credit card income increased $13,788 during the second quarter of
2002 compared to the second quarter of 2001 and increased $25,399 for the
six-month periods compared. The modest increases in credit card income were
primarily due to additional merchant related revenues and additional revenues
related to West Pointe's "debit" card product. During the second quarter and
first six months of 2002, West Pointe recorded increases in cash surrender value
of life insurance of $78,946 and $147,353, respectively, compared to increases
of $74,973 and $149,946 recorded during the second quarter and first six months
of 2001, respectively. These cash surrender value increases relate to various
bank owned life insurance (BOLI) policies. Certain of the insurance policies
serve as funding mechanisms for West Pointe's director fee deferral program,
West Pointe's salary continuation plan which was established in 2000 for the
Company's President and Chief Executive Officer and for West Pointe's Community
Scholarship Program which was also established in 2000. The remaining policies
were purchased to provide an additional employee benefit to certain Company
officers. These BOLI policies provide certain benefits to the Company including,
but not limited to, the deferral of income taxes on the increase in their cash
surrender values. Net securities gains recorded during the second quarter and
the first six months of 2002 totaled $100,968 and $340,312, respectively,
compared to net securities gains of $15,209 and $335,839 recorded during the
second quarter and the first six months of 2001, respectively. Net securities
gains recorded during the 2002 periods resulted from management's decision to
continue efforts to reconfigure certain segments of the investment portfolio so
as to limit potential interest rate risk

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that could result from a rising interest rate environment. These efforts to
reconfigure the investment portfolio resulted in the sale of certain U. S.
Government agency and mortgage-backed securities with par values totaling
approximately $24,124,000. The majority of securities gains in 2001 resulted
from management's decision and opportunities in the market place to sell certain
U. S. Government agency securities, with par values totaling $18,485,000, in the
available-for-sale portion of the investment portfolio. In the recent
environment of rapidly declining interest rates, the majority of these
securities were likely to be called by the issuers in the near future. Other
noninterest income includes such items as brokerage and insurance revenues,
interchange fees on automated teller machine (ATM) transactions, safe deposit
box rental fees, check printing fees and other miscellaneous fees. Other
noninterest income decreased $21,710 for the second quarter of 2002 compared to
the second quarter of 2001 and decreased $1,989 for the six-month periods
compared. The decreases in other noninterest income for the 2002 periods
compared to the 2001 periods were attributable to decreases in income derived
from a number of miscellaneous sources. These decreases were partially offset by
increases in revenues derived from West Pointe's brokerage and insurance
function. In January 2001, through an arrangement with Raymond James Financial
Services, Inc., member NASD and SIPC, West Pointe expanded its products to
include additional investment services. Products available through this
arrangement include stocks, bonds, mutual funds, annuities and other non-deposit
investment products. The Company employed two additional staff members to
administer the brokerage and insurance function.

NONINTEREST EXPENSE

Total noninterest expense was $2,696,948 for the second quarter of 2002
compared to $2,412,868 for the second quarter of 2001. For the first six months
of 2002, total noninterest expense was $5,308,532 compared to $4,748,280 for the
same period of 2001. The increases in noninterest expense were primarily
attributable to increases in employee compensation and benefits, the largest
component of noninterest expense. Employee compensation and other benefit
expenses increased $168,120 for the second quarter of 2002 compared to the
second quarter of 2001 and increased $333,693 for the six-month periods
compared. The increases in employee compensation and benefits for the quarters
and six-month periods compared were primarily attributable to normal merit
increases and staff additions associated with overall growth in banking
operations. Net occupancy expenses decreased $7,362 during the second quarter of
2002 compared to the second quarter of 2001 and decreased $2,853 for the
six-month periods compared. These decreases in net occupancy expenses were
primarily the result of an increase in building rent income. This building rent
income was derived from various third party tenants that lease office space from
West Pointe. Furniture and equipment expenses increased $5,879 during the second
quarter of 2002 compared to the second quarter of 2001 and increased $8,867 for
the six-month periods compared. The increases for the periods compared related
primarily to furniture and equipment expenses associated with normal growth in
operations. Data processing expenses increased $16,671 for the second quarter of
2002 compared to the second quarter of 2001 and increased $32,170 for the
six-month periods compared. The increases in data processing expenses for the
periods compared resulted primarily from normal growth in operations.
Advertising expenses increased $16,759 for the second quarter of 2002 compared
to the second quarter of 2001 and increased $31,964 for the six-month periods
compared. The increase in advertising expenses for the quarters and six-month
periods compared resulted from normal increases associated with the Company's
promotional advertising activities. Other noninterest expenses increased $84,013
for the second quarter of 2002 compared to the second quarter of 2001 and
increased $156,411 for the six-month periods compared. Other noninterest
expenses includes such items as legal and professional fees, FDIC insurance
premiums, mortgage banking expenses, postage costs and certain credit card
program expenses. The increases in other noninterest expenses for the periods
compared were partially attributable to increased legal and professional fees.
Numerous other categories of noninterest expenses also contributed to the
increases.

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INCOME TAX EXPENSE

West Pointe recorded income tax expense of $388,500 for the second
quarter of 2002 compared to $162,000 for the second quarter of 2001. For the
first six months of 2002, income tax expense was $801,500 compared to $355,400
for the same period of 2001. The effective income tax rates were 28.1% and 22.2%
for the second quarter of 2002 and 2001, respectively. The effective income tax
rates were 29.4% and 22.4% for the first six months of 2002 and 2001,
respectively. The increases in income tax expense and the related effective
income tax rates for the 2002 periods compared to the 2001 periods primarily
resulted from higher levels of earnings partially offset by the impact of
slightly higher levels of tax-exempt interest.

FINANCIAL CONDITION

GENERAL

Certain components of West Pointe's consolidated balance sheet at June
30, 2002 compared to December 31, 2001 are presented in summary form in Table 2.
Total assets increased $25,139,565 to $391,853,558 compared to $366,713,993 at
December 31, 2001. This increase primarily resulted from increases in interest
bearing due from bank balances, loans and investment securities. The increase in
interest bearing due from bank balances, at June 30, 2002, was attributable to
the temporary investment of excess funds not needed to fund loan demand or
investment security purchases. These due from bank balances serve as an
alternative to federal funds sold.

TABLE 2 - Selected Comparative Balance Sheet Items

LOANS

Loans increased 4.6%, or $9,311,896, from year-end 2001 to June 30,
2002. The majority of this increase was derived from growth in the commercial,
financial and agricultural, commercial real estate and residential real estate
segments of the portfolio. West Pointe also experienced modest growth in the
real estate construction segment of the portfolio. Other consumer loans
decreased modestly from December 31, 2001.

14

Table 3 presents the composition of the loan portfolio by type of
borrower and major loan category and the percentage of each to the total
portfolio for the periods presented.

TABLE 3 - Loan Portfolio Composition

INVESTMENTS

Total investments increased to $138,950,784, at June 30, 2002 compared
to $128,728,724 at year-end 2001. Effective January 1, 2001, West Pointe adopted
Financial Accounting Standards No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities." Additional information concerning
the provisions of this pronouncement is reflected later in these discussions
under "Recent Accounting Pronouncements." Although West Pointe does not have any
derivative instruments to record, management reconsidered its ability and intent
to hold certain debt securities to maturity and transferred $2,821,121 of
mortgage-backed securities to available for sale on January 1, 2001. As a
result, as of January 1, 2001, West Pointe's entire investment portfolio was
classified as available for sale.

The investment portfolio provides a balance to interest rate and credit
risk in other categories of the balance sheet while providing a vehicle for the
investment of available funds not needed to fund loan demand. The investment
portfolio also supplies securities as required collateral for certain deposits
and for securities sold under agreements to repurchase. Additional information
regarding West Pointe's securities sold under agreements to repurchase is
presented and discussed under "Borrowings."

Available-for-sale investment securities are recorded at fair value.
Net unrealized gains on available-for-sale investment securities totaled
$2,805,572 at June 30, 2002, compared to net unrealized gains of $456,568 at
December 31, 2001.

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Table 4 presents the composition of investment securities at their
carrying values for the periods presented.

TABLE 4 - Investment Securities Portfolio Composition

DEPOSITS

West Pointe's deposit base is its primary source of liquidity and
consists of deposits originating within the communities served by its banking
locations. Deposits are West Pointe's primary and most reliable funding source
for interest earning assets.

Total deposits increased $14,025,709 to $336,126,432 at June 30, 2002
from year-end 2001. The savings and money market deposit and time deposit
components of the deposit portfolio increased $6,239,685 and $10,766,692,
respectively, from year-end 2001. Increases in these categories were partially
reflective of the poor performance of the stock market, during the first six
months of 2002, which resulted in customer deposits into more stable interest
earning investments. Balances in noninterest bearing demand deposits decreased
$1,355,293 from year-end 2001. This decrease was primarily attributable to
seasonal fluctuations, which generally result in higher balances at year-end.
Interest bearing demand deposits decreased $1,625,375 from year-end 2001. The
majority of this decrease was attributable to a reduction in account balances
associated with one particular public entity. In the normal course of business,
account balances associated with this public entity may, on a daily basis,
fluctuate significantly. West Pointe continues to emphasize sales efforts and
offers competitive pricing of deposits.

Table 5 sets forth the composition of deposits and the percentage of
each category to total deposits for the periods presented.

TABLE 5 - Deposit Liability Composition

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BORROWINGS

Total borrowings amounted to $26,591,252 at June 30, 2002, compared to
$18,724,629 at year-end 2001. At June 30, 2002 and December 31, 2001, borrowings
consisted of securities sold under agreements to repurchase (repurchase
agreements), Federal Home Loan Bank advances and a short-term borrowing with an
unaffiliated bank.

Repurchase agreements increased $7,667,023 from year-end 2001. These
borrowings serve as an alternative funding source to deposits. The majority of
the increase in repurchase agreements was in the form of cash management
repurchase agreement accounts. Such accounts involve the daily transfer of
excess funds from noninterest bearing deposit accounts into interest bearing
cash management repurchase agreement accounts. Cash management repurchase
agreement accounts are marketed to commercial and individual deposit customers
and are considered to be a stable source of funds. Repurchase agreements, other
than cash management repurchase agreements, generally represent an alternative
to short-term certificates of deposit.

At June 30, 2002 and December 31, 2001, the Bank had one $5,000,000
Federal Home Loan Bank advance, which reflected an interest rate of 5.63% and
had a scheduled maturity of December 13, 2004. As of December 13, 2000, this
advance is callable on a quarterly basis.

At June 30, 2002, other borrowings consisted of a $1,687,100 borrowing
under a line of credit with an unaffiliated bank. This line of credit allows for
borrowings, by West Pointe, of up to $5,000,000. The line of credit matures on
January 7, 2003, and bears interest at a rate of 50 basis points under the prime
lending rate. As of December 31, 2001, the amount of this borrowing totaled
$1,487,500. The increase in the amount borrowed as of June 30, 2002 compared to
December 31, 2001 primarily resulted from the purchase of 11,500 shares of West
Pointe's common stock from an individual stockholder. This increase was
partially offset by a $75,000 principal payment made in April 2002.

ASSET QUALITY

West Pointe's asset quality management program, particularly with
regard to loans, is designed to analyze potential risk elements and to support
the growth of a high quality loan portfolio. The existing loan portfolio is
monitored via West Pointe's loan rating system. The loan rating system is used
to determine the adequacy of the allowance for loan losses. West Pointe's loan
analysis process proactively identifies, monitors and works with borrowers for
whom there are indications of future repayment difficulties. West Pointe's
lending philosophy is to invest in the communities served by its banking centers
so that it can effectively monitor and control credit risk.

At June 30, 2002, nonperforming assets totaled $1,157,917, or .30% of
total assets, compared to nonperforming assets at year-end 2001 of $1,262,125 or
..34% of total assets. Nonperforming assets, at June 30, 2002, included $289,653
relating to foreclosed property. During the first six months of 2002, three
parcels of foreclosed property were sold. These foreclosed property dispositions
produced a modest loss of $5,338. Management does not anticipate any significant
losses upon the disposition of the remaining foreclosed property. At June 30,
2002, nonperforming loans totaled $868,264, or .41% of total loans, compared to
nonperforming loans at year-end 2001 of $1,105,972, or .55% of total loans.
Nonperforming loans in the commercial, financial and agricultural segment of the
portfolio totaled $225,586 at June 30, 2002 and consisted of loans to two
commercial borrowers. Nonperforming loans in the commercial real estate segment
of the portfolio decreased $492,586 to $152,222 at June 30, 2002. At June 30,
2002, there was only one nonperforming loan in the commercial real estate
segment of the loan portfolio. Nonperforming loans in the 1-4 family residential
real estate segment of the portfolio totaled $454,551 at June 30, 2002 and
consisted of loans to several borrowers. The remaining category of

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nonperforming loans relating to other consumer loans remained relatively stable
at June 30, 2002 compared to December 31, 2001. Management is in various stages
of workout or liquidation of the remaining nonperforming loans.

Table 6 sets forth a summary of West Pointe's loan portfolio mix and
nonperforming assets.

TABLE 6 - Loan Portfolio Mix and Nonperforming Assets

Net charge-offs for the second quarter of 2002 totaled $91,341 compared
to $40,230 for the second quarter of 2001. During the first six months of 2002,
net charge-offs totaled $141,642 compared to $75,961 for the first six months of
2001. Charge-offs and recoveries recorded during the second quarter and first
six months of 2002 in all segments of the loan portfolio were not significant.
Charge-offs recorded during the first six months of 2001 in the commercial,
financial and agricultural segment of the loan portfolio totaled $177,030, the
majority of which was associated with three commercial borrowers. Recoveries
recorded during the first six months of 2001 in the commercial, financial and
agricultural segment totaled $133,051 and primarily resulted from a loan to one
commercial borrower. The aforementioned recovery occurred during the first
quarter of 2001. Charge-offs and recoveries recorded during the second quarter
of 2001 in all segments of the portfolio were not significant.

West Pointe's allowance for loan losses at June 30, 2002, increased to
$2,382,710 from $2,224,352 at December 31, 2001. The modest increase in the
allowance for loan losses was primarily due to overall growth in the loan
portfolio. At June 30, 2002, the allowance for loan losses represented 274.42%
of

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nonperforming loans compared to 158.19% at June 30, 2001. The ratio of the
allowance for loan losses to total loans was 1.14% at June 30, 2002 compared to
..99% at June 30, 2001. Management believes that the allowance for loan losses at
June 30, 2002 was adequate to absorb potential losses inherent in the loan
portfolio. However, past loan loss experience as it relates to current portfolio
mix, evaluation of potential losses in the portfolio, subsequent changes in
economic conditions and other factors may require changes in the levels of the
allowance for loan losses.

Table 7 presents information pertaining to the activity in and an
analysis of West Pointe's allowance for loan losses for the periods presented.

TABLE 7 - Allowance For Loan Losses

CAPITAL RESOURCES

CAPITAL RESOURCES

Total stockholders' equity increased $2,982,441 from $23,387,722 at
December 31, 2001 to $26,370,163 at June 30, 2002. Net income for the six-month
period ended June 30, 2002 was $1,925,529. Stockholders' equity at June 30, 2002
was also favorably impacted by an increase of $1,456,383 in other comprehensive
income. The increase to stockholders' equity resulting from these items was
partially offset

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by a reduction to stockholders' equity resulting from the purchase of 11,500
shares of West Pointe's common stock from an individual stockholder. The
purchase of these shares is reflected as treasury stock in West Pointe's
financial statements.

Financial institutions are required to maintain ratios of capital to
assets in accordance with guidelines promulgated by the federal banking
regulators. The guidelines are commonly known as "Risk-Based Guidelines" as they
define the capital level requirements of a financial institution based upon the
level of credit risk associated with holding various categories of assets. The
Risk-Based Guidelines require minimum ratios of Tier 1 and Total Capital to
risk-weighted assets of 4% and 8%, respectively. At June 30, 2002, West Pointe's
Tier 1 and Total capital ratios were 9.82% and 10.77%, respectively. In addition
to the Risk-Based Guidelines, the federal banking agencies have established a
minimum leverage ratio guideline for financial institutions (the "Leverage Ratio
Guideline"). The Leverage Ratio Guideline provides for a minimum ratio of Tier 1
capital to average assets of 4%. West Pointe's leverage ratio at June 30, 2002,
was 6.54%. Accordingly, West Pointe has satisfied these regulatory guidelines.

RECENT ACCOUNTING PRONOUNCEMENTS

In August 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets". This standard supersedes SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets to Be Disposed Of,"
and provides a single accounting model for long-lived assets to be disposed of.
This standard significantly changes the criteria that would have to be met to
classify an asset as held-for-sale. This distinction is important because assets
to be disposed of are stated at the lower of their fair values or carrying
amounts and depreciation is no longer recognized. The new rules will also
supercede the provisions of APB Opinion 30, "Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions," with
regard to reporting the effects of a disposal of a segment of a business and
will require expected future operating losses from discontinued operations to be
displayed in discontinued operations in the period in which the losses are
incurred, rather than as of the measurement date as required by APB 30. The
Company adopted SFAS No. 144 on January 1, 2002. Adoption of this statement by
the Company did not materially affect the results of operations or financial
condition of the Company.

In July 2001, a Staff Accounting Bulletin No. 102, "Selected Loan Loss
Allowance Methodology and Documentation Issues" ("SAB No. 102") was released. It
expresses the staff's views on the development, documentation, and application
of a systematic methodology as required by Financial Reporting Release No. 28,
"Accounting for Loan Losses by Registrants Engaged in Lending Activities," for
determining allowances for loan and lease losses in accordance with accounting
principles generally accepted in the United States of America. In particular,
SAB No. 102 focuses on the documentation the staff normally would expect
registrants to prepare and maintain in support of their allowances for loan
losses. West Pointe has a systematic methodology for determining an appropriate
allowance for loan losses, consistently followed and supported by written
documentation, policies and procedures. In light of SAB No. 102, West Pointe
management has reviewed its allowance for loan and lease loss methodology and
supporting documentation and finds both to be consistent with the bulletin's
provisions.

In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities." SFAS No. 138 amends the
accounting and reporting standards of SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities," for certain derivative instruments and
hedging activities. These amendments include the application of the normal
purchases and sales exception in SFAS No. 133, and redefinition of hedged risk.
SFAS No. 138 also amends SFAS No. 133 for decisions made by the FASB relating to
the Derivatives Implementation Group process. SFAS No. 138 was adopted

20

concurrently with SFAS No. 133 on January 1, 2001. The adoption of these
statements by the Company did not materially affect the results of operations or
financial condition of the Company.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has been no material change to the market risk position from that
disclosed as of December 31, 2001, the end of the last fiscal year.

21

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is not a party to any material pending legal proceedings
before any court, administrative agency or any tribunal, nor is the
Company aware of any litigation which is threatened against it in any
court, administrative agency, or other tribunal. The Bank is subject to
various claims, lawsuits and administrative proceedings arising in the
ordinary course of business from time to time. Bank management is of
the opinion, based upon present information, including evaluations by
outside counsel, that the Bank's financial condition, results of
operations or cash flows will not be materially affected by the
ultimate resolution of pending or threatened legal proceedings.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company's Annual Meeting of Shareholders was held on April 10,
2002. The only matter submitted to, and approved by, shareholders is
listed below, as is a tabulation of voting.

(1) The following persons nominated as Directors were re-elected:

Other directors continuing in office are as follows: William C.
Allison, Harry E. Cruncleton, Terry W. Schaefer, Edward J. Szewczyk, M.
D. and Wayne W. Weeke.

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits: See Exhibit Index on page 24 hereof.

(b) Reports on Form 8-K: No reports on Form 8-K were filed by West
Pointe during the second quarter 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.

WEST POINTE BANCORP, INC.
-----------------------------------
(Registrant)

DATE: August 13, 2002 By: /s/ Terry W. Schaefer
--------------------------------
Terry W. Schaefer
President and Chief
Executive Officer

DATE: August 13, 2002 By: /s/ Bruce A. Bone
--------------------------------
Bruce A. Bone
Executive Vice President and
Chief Financial Officer

23

INDEX TO EXHIBITS