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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 March 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period_______________to____________
Commission File No. 0-30505
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
--------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (618) 234-5700
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 is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
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 May 12, 2003
- ------------------------- ---------------------------
Common stock $1 par value 981,421
TABLE OF CONTENTS
Page
----
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Balance Sheets 3
Consolidated Statements of Income 4
Consolidated Statements of Comprehensive Income 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK 18
ITEM 4. CONTROLS AND PROCEDURES 18
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 19
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 19
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 19
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS 19
ITEM 5. OTHER INFORMATION 19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 20
SIGNATURE PAGE 21
CERTIFICATIONS 22
EXHIBIT INDEX 24
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WEST POINTE BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
MARCH 31 DECEMBER 31
2003 2002
-------------- --------------
Assets
Cash and due from banks $ 10,424,206 $ 10,660,773
Interest bearing due from banks 4,357,682 11,813,253
-------------- --------------
Cash and cash equivalents 14,781,888 22,474,026
Investment securities:
Available-for-sale, at fair value (cost of $152,584,676 and
$143,220,825 at March 31, 2003 and December 31, 2002, respectively) 155,130,625 146,751,455
Loans 224,240,917 221,581,298
Allowance for loan losses (2,795,887) (2,409,446)
-------------- --------------
Net Loans 221,445,030 219,171,852
Accrued interest receivable 1,988,431 2,086,560
Real estate acquired by foreclosure 468,212 365,000
Bank premises and equipment 11,868,476 11,712,031
Income taxes receivable 624,313 961,133
Other assets 8,519,458 8,296,532
-------------- --------------
Total Assets $ 414,826,433 $ 411,818,589
============== ==============
Liabilities
Deposits:
Noninterest bearing $ 37,188,305 $ 40,604,261
Interest bearing 318,834,597 310,385,576
-------------- --------------
Total Deposits 356,022,902 350,989,837
Securities sold under agreements to repurchase 19,821,404 21,692,278
Other borrowings 1,462,100 1,537,100
Federal Home Loan Bank advances 5,000,000 5,000,000
Accrued interest payable 775,724 874,845
Deferred tax liability, net 1,136,520 1,568,717
Other liabilities 1,790,777 1,616,109
-------------- --------------
Total Liabilities 386,009,427 383,278,886
Stockholders' Equity
Preferred stock, $1 par value - 50,000 shares authorized;
none issued or outstanding at March 31, 2003 or December 31, 2002 ---- ----
Common stock, $1 par value - 10,000,000 shares authorized; 999,171 and 995,835
shares issued at March 31, 2003 and December 31, 2002, respectively 999,171 995,835
Surplus 13,122,820 13,005,154
Retained earnings 13,765,102 12,998,298
Treasury stock, 17,750 shares, at cost (648,575) (648,575)
Accumulated other comprehensive income 1,578,488 2,188,991
-------------- --------------
Total Stockholders' Equity 28,817,006 28,539,703
-------------- --------------
Total Liabilities and Stockholders' Equity $ 414,826,433 $ 411,818,589
============== ==============
See the accompanying notes to consolidated financial statements.
3
WEST POINTE BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED
MARCH 31
------------------------
2003 2002
---------- ----------
Interest and Fee Income:
Loans
Taxable $3,781,207 $3,767,080
Non-taxable 50,557 19,341
Investments
Taxable 1,016,849 1,102,443
Non-taxable 394,252 368,282
Federal funds sold ---- 98
Deposits with banks 34,024 46,669
---------- ----------
Total Interest and Fee Income 5,276,889 5,303,913
Interest Expense:
Deposits 1,797,423 2,123,166
Securities sold under agreements to repurchase 91,941 65,915
Other borrowings 13,770 17,184
Federal Home Loan Bank advances 70,375 70,375
---------- ----------
Total Interest Expense 1,973,509 2,276,640
---------- ----------
Net Interest Income 3,303,380 3,027,273
Provision for Loan Losses 495,000 150,000
---------- ----------
Net Interest Income After
Provision For Loan Losses 2,808,380 2,877,273
Noninterest Income:
Service charges on deposits 338,065 318,835
Mortgage banking 273,352 75,482
Trust fees 177,033 169,227
Brokerage income 72,883 43,749
Credit card income 94,000 84,841
Increase in cash surrender value of life insurance 124,537 68,407
Gain on sale of investment securities, net 333,331 239,344
Other 58,440 78,430
---------- ----------
Total Noninterest Income 1,471,641 1,078,315
Noninterest Expense:
Employee compensation and other benefits 1,627,624 1,364,813
Occupancy, net 186,798 176,941
Furniture and equipment 160,453 136,908
Legal and professional fees 271,128 135,485
Data processing 118,829 113,813
Advertising 86,171 87,158
Other 665,855 596,466
---------- ----------
Total Noninterest Expense 3,116,858 2,611,584
---------- ----------
Income Before Income Taxes 1,163,163 1,344,004
Income Tax Expense 278,800 413,000
---------- ----------
Net Income $ 884,363 $ 931,004
========== ==========
Average Shares Outstanding:
Basic 978,608 972,318
Diluted 1,003,937 988,104
Per Share Data:
Net income:
Basic $ .90 $ .96
Diluted $ .88 $ .94
Dividends declared $ .12 $ .10
See the accompanying notes to consolidated financial statements.
4
WEST POINTE BANCORP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
THREE MONTHS ENDED
MARCH 31
----------------------
2003 2002
--------- ---------
Net Income $ 884,363 $ 931,004
--------- ---------
Other Comprehensive Loss, Net Of Tax
Unrealized holding losses on securities available
for sale (net of income tax benefits of
$247,513 and $126,504 for 2003 and 2002,
respectively) (403,838) (214,429)
Less adjustment for realized gains included in net
income (net of income taxes of $126,666 and $95,871,
for 2003 and 2002, respectively) 206,665 148,393
--------- ---------
Other Comprehensive Loss (610,503) (362,822)
--------- ---------
Comprehensive Income $ 273,860 $ 568,182
========= =========
See the accompanying notes to consolidated financial statements.
5
WEST POINTE BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED
MARCH 31
----------------------------
2003 2002
------------ ------------
Operating Activities
Net income $ 884,363 $ 931,004
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 173,645 158,210
Net amortization on investment securities 355,456 177,602
Gain on sale of investment securities, net (333,331) (239,344)
Gain on sale of loans (253,487) (67,566)
Deferred income tax (58,019) 29,456
Federal Home Loan Bank stock dividends (258,000) (86,400)
Provision for loan losses 495,000 150,000
Changes in:
Accrued interest receivable 98,129 (47,810)
Accrued interest payable (99,121) (231,440)
Mortgage loans held for sale 1,674,538 856,222
Other assets and other liabilities 413,099 374,744
------------ ------------
Net Cash Provided By Operating Activities 3,092,272 2,004,678
Investing Activities
Proceeds from sales of investment securities available for sale 4,624,201 20,902,536
Proceeds from maturities of investment securities available for sale 25,604,648 9,010,323
Purchases of investment securities available for sale (39,356,825) (28,097,784)
Net increase in loans (4,292,441) (2,348,312)
Increase in cash surrender value of life insurance policies (124,537) (68,407)
Sales of real estate acquired by foreclosure ---- 21,500
Purchases of bank premises and equipment (330,090) (92,129)
------------ ------------
Net Cash Used in Investing Activities (13,875,044) (672,273)
Financing Activities
Net decrease in noninterest bearing deposits (3,415,956) (3,606,944)
Net increase in interest bearing deposits 8,449,021 3,812,282
Net increase (decrease) in securities sold under agreements to repurchase (1,870,874) 1,494,514
Increase (decrease) in other borrowings (75,000) 274,600
Proceeds from issuance of common stock 121,002 49,762
Purchase of treasury stock ---- (311,075)
Dividends paid (117,559) (97,185)
------------ ------------
Net Cash Provided By Financing Activities 3,090,634 1,615,954
------------ ------------
Net Increase (Decrease) in Cash and Cash Equivalents (7,692,138) 2,948,359
Cash and cash equivalents - Beginning of year 22,474,026 20,281,637
------------ ------------
Cash and cash equivalents - End of Period $ 14,781,888 $ 23,229,996
============ ============
Supplemental Disclosure of Cash Flow Information
Interest paid $ 2,072,630 $ 2,508,080
Income taxes paid ---- 166,521
Real estate acquired in settlement of loans 103,212 ----
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, 2002. 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 balance sheet of the Company as of December 31, 2002 has been
derived from the audited consolidated balance sheet of the Company as of that
date.
The consolidated financial statements include the accounts of the
Company and it's wholly owned subsidiary West Pointe Bank And Trust Company (the
"Bank"), an Illinois chartered commercial bank. All material intercompany
transactions and balances are eliminated. West Pointe is a bank holding company
that engages in its business through its sole subsidiary.
In preparing the consolidated 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 consolidated balance sheet and
revenues and expenses for the period. Actual results could differ significantly
from those estimates.
Material estimates that are particularly susceptible to significant
change relate to the determination of the allowance for loan losses and the
valuation of real estate acquired in connection with foreclosures or in
satisfaction of loans. In connection with the determination of the allowance for
loan losses and the valuation of real estate acquired by foreclosure, management
obtains independent appraisals for significant properties.
Certain 2002 amounts have been reclassified where appropriate to
conform to the consolidated financial statement presentation used in 2003.
The Company has a stock-based employee compensation plan, which is
described more fully in West Pointe's annual report on Form 10-K for the year
ended December 31, 2002. The Company accounts for this plan under the
recognition and measurement principles of Accounting Principles Board (APB)
Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations. No stock-based employee compensation cost is reflected in net
income, as all options granted under those plans had an exercise price equal to
the market value of the underlying common stock on the grant date. The following
table illustrates the effect on net income and earnings per share if the Company
had applied the fair value recognition provisions of Statement of Financial
Accounting Standard (SFAS) No. 123, "Accounting for Stock-Based Compensation,"
to stock-based employee compensation:
THREE MONTHS ENDED
MARCH 31
----------------------------------
2003 2002
--------------- --------------
Net income, as reported $ 884,363 $ 931,004
Less: Total stock-based employee
compensation cost determined under the fair
value based method, net of income taxes (52,375) (43,588)
--------------- --------------
Pro forma net income $ 831,988 $ 887,416
=============== ==============
Earnings per share:
Basic - as reported $ .90 $ .96
Basic - pro forma .85 .91
Diluted - as reported .88 .94
Diluted - pro forma .83 .90
7
NOTE B--NET INCOME PER SHARE
The calculation of net income per share is summarized as follows:
THREE MONTHS ENDED
MARCH 31
-------------------------
2003 2002
---------- --------
Basic
Net Income $ 884,363 $931,004
========== ========
Average common shares outstanding 978,608 972,318
========== ========
Net income per common share - basic $ .90 $ .96
========== ========
Diluted
Net Income $ 884,363 $931,004
========== ========
Average common shares outstanding 978,608 972,318
Dilutive potential due to stock options 25,329 15,786
---------- --------
Average common shares outstanding 1,003,937 988,104
========== ========
Net income per common share - diluted $ .88 $ .94
========== ========
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 periods ended March 31, 2003 and 2002, and its financial
condition, asset quality, and capital resources as of March 31, 2003 and
December 31, 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. These
forward-looking statements are not based on historical information, but rather
are based on assumptions and describe future plans, strategies, projections and
expectations of West Pointe and 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 Board of Governors of the Federal Reserve System, 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. Additionally,
the policies of the Federal Deposit Insurance Corporation (FDIC), the State of
Illinois Office of Banks and Real Estate, the Financial Accounting Standards
Board (FASB) and the Securities and Exchange Commission could cause actual
results to differ from those currently anticipated. 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 first quarter of 2003 was $884,363 or $.88 per
diluted common share compared to net income of $931,004 or $.94 per diluted
common share for the first quarter of 2002. Return on average assets for the
first quarter of 2003 was .87% compared to 1.05% for the first quarter of 2002.
Return on average equity for the first quarter of 2003 was 12.39% compared to
15.75% for the first quarter of 2002.
The decrease in net income, for the quarters compared, was primarily
attributable to increases in noninterest expense and the provision for loan
losses partially offset by increases in net interest income and noninterest
income and a reduction in income tax expense.
Total assets at March 31, 2003 increased to $414,826,433 from
$411,818,589 at December 31, 2002 primarily from increases in investment
securities and loans partially offset by a reduced level of interest bearing due
from bank balances. The increase in total assets was primarily funded by an
increase in deposits.
9
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
Three Months Ended
March 31 Change
----------------------- ---------------------
2003 2002 Amount Percent
---------- ---------- ---------- -------
Total interest income
(fully tax-equivalent) $5,469,272 $5,450,244 $ 19,028 .3%
Total interest expense 1,973,509 2,276,640 (303,131) (13.3)
---------- ---------- ----------
Net interest income 3,495,763 3,173,604 322,159 10.2
Provision for loan losses 495,000 150,000 345,000 230.0
Noninterest income:
Service charges on deposits 338,065 318,835 19,230 6.0
Mortgage banking 273,352 75,482 197,870 262.1
Trust fees 177,033 169,227 7,806 4.6
Brokerage income 72,883 43,749 29,134 66.6
Credit card income 94,000 84,841 9,159 10.8
Increase in cash surrender value of life insurance 124,537 68,407 56,130 82.1
Investment securities gains 333,331 239,344 93,987 39.3
Other 58,440 78,430 (19,990) (25.5)
---------- ---------- ----------
Total 1,471,641 1,078,315 393,326 36.5
---------- ---------- ----------
Noninterest expense:
Employee compensation and other benefits 1,627,624 1,364,813 262,811 19.3
Occupancy, net 186,798 176,941 9,857 5.6
Furniture and equipment 160,453 136,908 23,545 17.2
Legal and professional fees 271,128 135,485 135,643 100.1
Data processing 118,829 113,813 5,016 4.4
Advertising 86,171 87,158 (987) (1.1)
Other 665,855 596,466 69,389 11.6
---------- ---------- ----------
Total 3,116,858 2,611,584 505,274 19.3
---------- ---------- ----------
Income before income taxes 1,355,546 1,490,335 (134,789) (9.0)
Less: tax-equivalent adjustment 192,383 146,331 46,052 31.5
Income tax expense 278,800 413,000 (134,200) (32.5)
---------- ---------- ----------
Net income $ 884,363 $ 931,004 $ (46,641) (5.0)%
========== ========== ==========
NET INTEREST INCOME
Tax-equivalent net interest income increased $322,159 or 10.2% for the
first quarter of 2003 compared to the first quarter of 2002. The increase in
tax-equivalent net interest income for the first quarter of 2003 compared to the
first quarter of 2002 was attributable to a decrease in interest expense as well
as a slight increase in tax-equivalent interest income.
Total tax-equivalent interest income increased $19,028 or .3% for the
first quarter of 2003 compared to the first quarter of 2002. The increase in
tax-equivalent interest income for the quarters compared was primarily
attributable to higher volumes of interest bearing assets, partially offset by
the lower interest rate environment. Average interest earning assets increased
14.2% to $380,726,779 in 2003 from $333,491,687 in 2002. The increase in average
interest earning assets was primarily due to a lower interest rate environment
that resulted in an increase in loan demand. The average rate earned on interest
earning assets decreased 12.1% to 5.80% in 2003 from 6.60% in 2002. The decrease
in the average rate earned was due to a lower interest rate environment.
Total interest expense decreased $303,131 or 13.3% for the first
quarter of 2003 compared to the first quarter of 2002. The decrease in interest
expense was primarily attributable to the lower interest rate environment,
partially
10
offset by a higher volume of interest bearing liabilities. Average interest
bearing liabilities increased 14.9% to $345,940,221 in 2003 compared to
$300,956,454 in 2002. The increase in average interest bearing liabilities was
primarily due to customers exiting the stock market in favor of more stable,
liquid financial institution deposits which are offered by the Bank at
competitive rates. The average rate paid on interest bearing liabilities
decreased 24.8% to 2.31% in 2003 from 3.07% in 2002. The decrease in the average
rate paid was due to a lower interest rate environment.
The net interest margin was 3.70% for the first quarter of 2003
compared to 3.86% for the first quarter of 2002. The decrease in the net
interest margin for the periods compared primarily resulted from the Company's
yield on interest earning assets declining at a faster pace than the Company's
cost of funds.
PROVISION FOR LOAN LOSSES
The Company recorded a provision for loan losses of $495,000 during the
first quarter of 2003 compared to $150,000 recorded during the first quarter of
2002. 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 increase in the provision for
loan losses for the first quarter of 2003 compared to the first quarter of 2002
was attributable to an increase in the volume of loans as well as an increase in
non-performing loans. Activity in the allowance for loan losses and
nonperforming loan data is presented under "ASSET QUALITY."
NONINTEREST INCOME
Total noninterest income was $1,471,641 for the first quarter of 2003
compared to $1,078,315 for the first quarter of 2002. Service charges on deposit
accounts increased $19,230 for the first quarter of 2003 compared to the first
quarter of 2002. The increase in service charges on deposit accounts for the
quarters compared was primarily attributable to the growth in the volume of
deposit accounts on which service charges are assessed. Income from mortgage
banking services increased $197,870 for the first quarter of 2003 compared to
the first quarter of 2002. The increase in mortgage banking income for the
periods compared was primarily attributable to the lower interest rate
environment, which improved the level of mortgage origination and refinancing
activities. The level of mortgage loan origination and refinancing activities is
directly related to prevailing interest rates as well as local economic
conditions. As of March 31, 2003, management is optimistic that the level of
mortgage banking income will remain stable during the remainder of 2003. Income
from trust fees increased $7,806 for the first quarter of 2003 compared to the
first quarter of 2002. The increase in income from trust fees was primarily
attributable to fees connected with new fiduciary relationships established
during 2003, partially offset by reductions and income from certain trust fees
that are based upon the market value of trust assets. Income from brokerage
activities increased $29,134 for the first quarter of 2003 compared to the first
quarter of 2002. The increase in brokerage fees is primarily due to new
relationships. Products offered through our brokerage function include stocks,
bonds, mutual funds, annuities and other non-deposit investment products. Credit
card income increased $9,159 during the first quarter of 2003 compared to the
first quarter of 2002. The modest increase in credit card income was primarily
due to additional merchant related revenues and additional revenues related to
West Pointe's "debit" card product. During the first quarter of 2003, West
Pointe recorded an increase in cash surrender value of life insurance of
$124,537 compared to an increase of $68,407 for the first quarter of 2002. 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 and West Pointe's salary
continuation plans which have been established for various officers of the
Company. The remaining policies were purchased to provide additional life
insurance benefits to certain Company officers. These BOLI policies provide
certain benefits to the Company including, but not limited to, the exclusion
from income taxes on the increase in their cash surrender values. Net security
gains recorded during the first quarter of 2003 totaled $333,331 compared to
$239,344 during the first quarter of 2002. Net security gains recorded during
the first quarter of 2003 resulted from management's decision to decrease
interest income on non-taxable investment securities to minimize alternative
minimum tax positions. Net security gains recorded during the first quarter of
2002 resulted from management's decision to continue efforts to reconfigure
certain segments of the investment portfolio so as to limit potential interest
rate risk that could result from a rising interest rate environment. Other
noninterest income includes such items as interchange fees on
11
automated teller machine (ATM) transactions, safe deposit box rental fees, check
printing fees, letter of credit fees and other miscellaneous fees. Other
noninterest income decreased $19,990 for the first quarter of 2003 compared to
the first quarter of 2002. The decrease in other noninterest income for the
first quarter of 2003 compared to the first quarter of 2002 primarily resulted
from a decrease in revenues derived from letter of credit fees.
NONINTEREST EXPENSE
Total noninterest expense was $3,116,858 for the first quarter of 2003
compared to $2,611,584 for the first quarter of 2002. The increase in
noninterest expense was primarily attributable to an increase in employee
compensation and benefits, the largest component of noninterest expense.
Employee compensation and other benefit expenses increased $262,811 for the
first quarter of 2003 compared to the first quarter of 2002. The increase in
employee compensation and benefits for the quarters compared was primarily
attributable to normal merit increases and staff additions associated with
overall growth in banking operations. Net occupancy and furniture and equipment
expenses increased $9,857 and $23,545, respectively, during the first quarter of
2003 compared to the first quarter of 2002. These modest increases for the
quarters compared were attributable to normal operations. Legal and professional
fees increased $135,643 for the first quarter of 2003 compared to the first
quarter of 2002. The increase in legal and professional fees was primarily
attributable to legal fees incurred to defend various lawsuits of which the Bank
is a party to in the ordinary course of business. Data processing expenses
increased $5,016 for the first quarter of 2003 compared to the first quarter of
2002. Advertising expenses decreased $987 for the first quarter of 2003 compared
to the first quarter of 2002. Other noninterest expenses increased $69,389 for
the first quarter of 2003 compared to the first quarter of 2002. Other
noninterest expenses include such items as FDIC insurance premiums, mortgage
banking expenses, telephone expenses, postage costs, certain credit card program
expenses and other miscellaneous expenses. The increase in other noninterest
expenses for the quarters compared was partially attributable to increased
telephone expenses. Numerous other categories of noninterest expenses also
contributed to the increase.
INCOME TAX EXPENSE
West Pointe recorded income tax expense of $278,800 for the first
quarter of 2003 compared to income tax expense of $413,000 for the first quarter
of 2002. West Pointe's effective income tax rate was 24.0% for the first quarter
of 2003 compared to 30.7% for the first quarter of 2002. The decrease in income
tax expense and the related effective income tax rate for the quarters compared
resulted from a lower level of earnings as well as a slightly higher level of
tax-exempt interest as a percentage of total interest income.
12
FINANCIAL CONDITION
GENERAL
Certain components of West Pointe's consolidated balance sheet at March
31, 2003 compared to December 31, 2002 are presented in summary form in Table 2.
Total assets increased $3,007,844 to $414,826,433 at March 31, 2003 compared to
$411,818,589 at December 31, 2002. This increase primarily resulted from an
increase in investment securities and an increase in loans, offset by a decrease
in interest bearing due from bank balances. The increase in investment
securities at March 31, 2003, was primarily attributable to the timing of
purchases of investment securities and proceeds received from principal payments
on mortgage-backed securities.
TABLE 2 - Selected Comparative Balance Sheet Items
March 31 December 31
2003 2002
---------------- ----------------
Total assets $ 414,826,433 $ 411,818,589
Loans 224,240,917 221,581,298
Investments 155,130,625 146,751,455
Deposits 356,022,902 350,989,837
Repurchase agreements 19,821,404 21,692,278
Other borrowings 1,462,100 1,537,100
Federal Home Loan Bank advances 5,000,000 5,000,000
Stockholders' equity 28,817,006 28,539,703
LOANS
Loans increased $2,659,619 to $224,240,917 at March 31, 2003 from
$221,581,298 at year-end 2002. This increase was derived from growth in the
commercial real estate and real estate construction segments of the portfolio.
Growth in these segments was offset by reductions in the commercial, financial
and agricultural, residential real estate and consumer loan segments of the
portfolio.
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
March 31 December 31
2003 2002
------------------------ ----------------------
Amount Percent Amount Percent
------------ ------- ------------ -------
Commercial borrowers:
Commercial, financial
and agricultural $ 59,414,810 26.5% $ 59,685,132 26.9%
Commercial real estate 85,569,265 38.2 85,147,362 38.5
Real estate construction 16,155,302 7.2 11,552,620 5.2
------------ ----- ------------ -----
Total commercial 161,139,377 71.9 156,385,114 70.6
------------ ----- ------------ -----
Consumer borrowers:
1-4 family residential
real estate 51,723,758 23.0 53,429,407 24.1
Other consumer loans 11,377,782 5.1 11,766,777 5.3
------------ ----- ------------ -----
Total consumer 63,101,540 28.1 65,196,184 29.4
------------ ----- ------------ -----
Total loans $224,240,917 100.0% $221,581,298 100.0%
============ ===== ============ =====
13
INVESTMENTS
Total investments increased to $155,130,625 at March 31, 2003 compared
to $146,751,455 at year-end 2002. 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
$2,545,949 at March 31, 2003, compared to net unrealized gains of $3,530,630 at
December 31, 2002.
Table 4 presents the composition of investment securities at their
carrying values for the periods presented.
TABLE 4 - Investment Securities Portfolio Composition
March 31 December 31
2003 2002
---------------- ----------------
Available-for-sale securities:
U. S. government agencies $ 9,040,444 $ 9,087,650
Mortgage-backed securities 104,505,582 89,547,303
Obligations of states and political subdivisions 32,016,799 38,806,702
Equity securities 9,567,800 9,309,800
---------------- ----------------
Total available-for-sale $ 155,130,625 $ 146,751,455
================ ================
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 $5,033,065 to $356,022,902 at March 31, 2003
compared to $350,989,837 at year-end 2002. The interest bearing demand deposit
and the savings and money market deposit components of the deposit portfolio
increased $1,951,541 and $10,436,333, respectively, from year-end 2002.
Increases in these categories were partially reflective of the lackluster
performance of the stock market as well as lower rates for time deposits, during
the first quarter of 2003, which resulted in customer deposits migrating into
more liquid interest bearing deposits.
Balances in the noninterest bearing demand and time deposit components
of the deposit portfolio decreased $3,415,956 and $3,938,853, respectively, from
year-end 2002. These decreases were primarily attributable to seasonal
fluctuations, which generally result in higher balances at year-end as well as a
shift from time deposits to more liquid interest bearing deposits.
14
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
March 31 December 31
2003 2002
-------------------------------- ------------------------------
Amount Percent Amount Percent
---------------- -------- ---------------- -------
Noninterest bearing demand deposits $ 37,188,305 10.5% $ 40,604,261 11.6%
Interest bearing demand deposits 31,833,591 8.9 29,882,050 8.5
Savings and money market deposits 114,406,452 32.1 103,970,119 29.6
Time deposits $100,000 or more 58,661,480 16.5 59,388,680 16.9
Time deposits less than $100,000 113,933,074 32.0 117,144,727 33.4
---------------- -------- ---------------- -----
Total deposits $ 356,022,902 100.0% $ 350,989,837 100.0%
================ ======== ================ =====
BORROWINGS
Total borrowings amounted to $26,283,504 at March 31, 2003, compared to
$28,229,378 at year-end 2002. At March 31, 2003 and December 31, 2002,
borrowings consisted of securities sold under agreements to repurchase
(repurchase agreements), a Federal Home Loan Bank advance and a short-term
borrowing with an unaffiliated bank.
Repurchase agreements decreased $1,870,874 from year-end 2002. These
borrowings serve as an alternative funding source to deposits. The majority of
the repurchase agreements were 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 March 31, 2003 and December 31, 2002 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. This advance is callable on a
quarterly basis.
At March 31, 2003, other borrowings consisted of a $1,462,100 borrowing
under a line of credit with an unaffiliated bank. This line of credit presently
allows for borrowings, by West Pointe, of up to $5,000,000. The line of credit
matures on January 7, 2004, and bears interest at a rate of 50 basis points
under the prime-lending rate. As of December 31, 2002, the amount of this
borrowing totaled $1,537,100.
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 March 31, 2003, nonperforming assets totaled $2,870,865, or .69% of
total assets, compared to nonperforming assets at year-end 2002 of $2,101,904 or
..51% of total assets. Nonperforming assets, at March 31, 2003, included $468,212
relating to foreclosed property. All foreclosed property is held for sale and is
initially recorded on an individual property basis at estimated fair value less
cost to sell. Subsequent to foreclosure, foreclosed properties are evaluated by
management and a valuation allowance is established if the estimated fair
15
value declines. As of March 31, 2003, management does not anticipate any
significant losses upon disposition of the foreclosed property. Nonperforming
loans in the commercial, financial and agricultural segment of the portfolio
decreased $201,873 from December 31, 2002. The majority of this decrease related
to proceeds received from loans to one commercial borrower. Nonperforming loans
secured by 1-4 family residential real estate increased $851,214 and primarily
related to several loans to one borrower. Management is in various stages of
workout or liquidation of the 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
March 31, 2003 December 31, 2002
---------------------------- ---------------------------
Loans and Loans and
Foreclosed Non-performing Foreclosed Non-performing
Property Assets Property Assets
------------ ------------ ------------ ------------
Commercial borrowers:
Commercial, financial and
agricultural $ 59,414,810 $ 639,309 $ 59,685,132 $ 841,182
Commercial real estate 85,569,265 653,264 85,147,362 653,264
Real estate construction 16,155,302 ---- 11,552,620 ----
------------ ------------ ------------ ------------
Total commercial 161,139,377 1,292,573 156,385,114 1,494,446
Consumer borrowers:
1-4 family residential
real estate 51,723,758 1,066,679 53,429,407 215,465
Other consumer loans 11,377,782 43,401 11,766,777 26,993
------------ ------------ ------------ ------------
Total consumer 63,101,540 1,110,080 65,196,184 242,458
------------ ------------ ------------ ------------
Total loans 224,240,917 2,402,653 221,581,298 1,736,904
Foreclosed property 468,212 468,212 365,000 365,000
------------ ------------ ------------ ------------
Total $224,709,129 $ 2,870,865 $221,946,298 $ 2,101,904
============ ============ ============ ============
Nonaccrual loans $ 1,458,934 $ 796,349
Accruing loans past due
90 days or more 943,719 940,555
Troubled debt restructurings ---- ----
------------ ------------
Total nonperforming loans 2,402,653 1,736,904
Foreclosed property 468,212 365,000
------------ ------------
Total nonperforming assets $ 2,870,865 $ 2,101,904
============ ============
Nonperforming loans to total loans 1.07% .78%
Nonperforming assets to total loans
and foreclosed property 1.28% .95%
Nonperforming assets to total assets .69% .51%
Net charge-offs for the first quarter of 2003 totaled $108,559 compared
to $50,301 for the first quarter of 2002. Charge-offs and recoveries recorded
during the first quarter of 2003 and 2002 in all segments of the loan portfolio
were not significant. Net charge-offs, on an annualized basis, as a percent of
average total loans amounted to .20% during the first quarter of 2003 compared
to .10% for the first quarter of 2002.
West Pointe's allowance for loan losses at March 31, 2003, increased to
$2,795,887 from $2,409,446 at December 31, 2002. The increase in the allowance
for loan losses was primarily due to overall growth in the loan portfolio as
well as an increase in nonperforming loans. At March 31, 2003, the allowance for
loan losses represented 116.37% of nonperforming loans compared to 138.72% and
144.04% at December 31, 2002 and March 31, 2002, respectively. The ratio of the
allowance for loan losses to total loans was 1.25% at March 31, 2003 compared to
1.09% and 1.15% at December 31, 2002 and March 31, 2002, respectively.
Management believes that the allowance for loan losses at March 31, 2003 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
16
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
Three Months Ended
March 31
-----------------------------------------
2003 2002
---------------- ----------------
Balance at beginning of period $ 2,409,446 $ 2,224,352
Loans charged off:
Commercial, financial and agricultural 40,719 3,317
Real estate:
Commercial ---- 27,273
Residential 89,390 4,761
---------------- ----------------
Total real estate 89,390 32,034
Consumer 24,391 4,228
Credit cards ---- 11,720
---------------- ----------------
Total charge-offs 154,500 51,299
---------------- ----------------
Recoveries of loans previously charged off:
Commercial, financial and agricultural 45,673 ----
Real estate:
Residential ---- 275
Consumer 235 723
Credit cards 33 ----
---------------- ----------------
Total recoveries 45,941 998
---------------- ----------------
Net charge-offs 108,559 50,301
Provision for loan losses 495,000 150,000
---------------- ----------------
Balance at end of period $ 2,795,887 $ 2,324,051
================ ================
Net charge-offs (annualized) as a
percent of average total loans .20% .10%
Allowance for loan losses to total loans 1.25% 1.15%
Allowance for loan losses to
nonperforming loans 116.37% 144.04%
CAPITAL RESOURCES
CAPITAL RESOURCES
Total stockholders' equity increased $277,303 from $28,539,703 at
December 31, 2002 to $28,817,006 at March 31, 2003. Net income for the first
quarter of 2003 was $884,363. The increase to stockholders' equity resulting
from first quarter 2003 net income was partially offset by a decrease in
accumulated other comprehensive income and dividends paid to stockholders.
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 March 31, 2003, West
Pointe's Tier 1 and Total capital ratios were 10.73% and 11.84%, 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
17
Leverage Ratio Guideline provides for a minimum ratio of Tier 1 capital to
average assets of 4%. West Pointe's leverage ratio at March 31, 2003, was 6.63%.
Accordingly, West Pointe has satisfied these regulatory guidelines.
RECENT ACCOUNTING PRONOUNCEMENTS
ACCOUNTING FOR COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This statement addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)." This statement
is effective for exit or disposal activities that are initiated after December
31, 2002. Adoption of this statement has not had a material effect on the
Company's consolidated financial statements.
ACCOUNTING FOR STOCK-BASED COMPENSATION -- TRANSITION AND DISCLOSURE
In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation -- Transition and Disclosure," which amends SFAS No.
123, "Accounting for Stock-Based Compensation." SFAS No. 148 provides
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In addition, SFAS
No. 148 amends the disclosure requirements of SFAS No. 123 to require more
prominent and more frequent disclosures in financial statements about the
effects of stock-based compensation.
Under the provisions of SFAS No. 123, companies that adopted the fair
value based method were required to apply that method prospectively for new
stock option awards. This contributed to a "ramp-up" effect on stock-based
compensation expense in the first few years following adoption, which caused
concern for companies and investors because of the lack of consistency in
reported results. To address that concern, SFAS No. 148 provides two additional
methods of transition that reflect an entity's full complement of stock-based
compensation expense immediately upon adoption, thereby eliminating the ramp-up
effect.
SFAS No. 148 requires that the data be presented more prominently and
in a more user-friendly format in the footnotes to the financial statements. In
addition, SFAS No. 148 requires that this information be included in interim as
well as annual financial statements.
The annual and interim disclosure provisions of SFAS No. 148 are now
effective for the Company and are included in the interim financial statements.
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, 2002, the end of the last fiscal year.
ITEM 4. CONTROLS AND PROCEDURES
An evaluation was performed under the supervision and with the
participation of the Company's management, including the President and Chief
Executive Officer and the Executive Vice President and Chief Financial Officer,
of the effectiveness of the design and operation of the Company's disclosure
controls and procedures within 90 days before the filing date of this quarterly
report. Based on that evaluation, the Company's management, including the
President and Chief Executive Officer and the Executive Vice President and Chief
Financial Officer, concluded that the Company's disclosure controls and
procedures were effective. There have been no significant changes in the
Company's internal controls or in other factors that could significantly affect
internal controls subsequent to their evaluation.
18
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company, West Pointe Bancorp, Inc., 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; however, the
Bank, West Pointe Bank And Trust Company, 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
RECENT SALE OF UNREGISTERED SECURITIES
On January 15, 2003, we granted options to purchase an
aggregate of 28,500 shares of our common stock to employees
and directors under the West Pointe Bancorp, Inc. 1998 Stock
Option Plan. The exercise price of these options was $35.75
per share, the fair market value of our common stock on the
date of grant. The options vest ratably in installments of 20
percent per year starting on the first anniversary of the date
of grant. All of these grants were made in reliance upon the
exemption from registration requirements of Rule 701 of the
Securities Act of 1933, as amended, pursuant to a written
compensatory benefit plan or the exemption from registration
provided by Section 4(2) of the Securities Act or Regulation D
promulgated thereunder. On November 15, 2000, the Company
filed a registration statement on Form S-8 registering the
shares underlying the options granted.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Proxies were mailed to shareholders on March 14, 2003 for the
Company's Annual Meeting of Shareholders which was held on
April 9, 2003. 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:
Class III For Against Withheld
--------- --- ------- --------
Terry W. Schaefer 752,328.6494 0 400
Edward J. Szewczyk 752,328.6494 0 400
Wayne W. Weeke 752,328.6494 0 400
Other directors continuing in office are as follows: William
C. Allison, Harry E. Cruncleton, David G. Embry, Jack B.
Haydon and Charles G. Kurrus, III.
ITEM 5. OTHER INFORMATION
None
19
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 first quarter of
2003.
20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WEST POINTE BANCORP, INC.
---------------------------------
(Registrant)
DATE: May 14, 2003 By: /s/ Terry W. Schaefer
---------------------
Terry W. Schaefer
President and Chief
Executive Officer
DATE: May 14, 2003 By: /s/ Bruce A. Bone
-----------------
Bruce A. Bone
Executive Vice President and
Chief Financial Officer
21
CERTIFICATIONS
Certification of Principal Executive Officer
I, Terry W. Schaefer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of West Pointe Bancorp,
Inc.;
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 we 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 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 function):
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 or not 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.
May 14, 2003 /s/ Terry W. Schaefer
---------------------
Terry W. Schaefer
President and Chief Executive Officer
(Principal Executive Officer)
22
CERTIFICATIONS
Certification of Principal Executive Officer
I, Bruce A. Bone, certify that:
1. I have reviewed this quarterly report on Form 10-Q of West Pointe Bancorp,
Inc.;
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 we 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 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 function):
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 or not 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.
May 14, 2003 /s/ Bruce A. Bone
------------------
Bruce A. Bone
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
23
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
3.1 Articles of Incorporation (1)
3.2 Bylaws of West Pointe Bancorp, Inc. (1)
11.1 Computation of Net Income Per Share (incorporated by reference to Note
B of West Pointe's unaudited interim consolidated financial statements
included herein).
99.1 Certification of President and Chief Executive Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
99.2 Certification of Executive Vice President and Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
(1) Documents incorporated by reference to the Company's Registration Statement
on Form 10 (file no. 00030505) at the corresponding exhibit. All such
previously filed documents are hereby incorporated by reference in
accordance with Item 601 of Regulation S-K.
24