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, 2003

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
--------------------

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 August 8, 2003
- ------------------------- -----------------------------
Common stock $1 par value 984,531

TABLE OF CONTENTS

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

WEST POINTE BANCORP, INC.
CONSOLIDATED BALANCE SHEETS

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 STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

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, 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 its 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 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:

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NOTE B--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, 2003 and 2002, and
its financial condition, asset quality, and capital resources as of June 30,
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 second quarter of 2003 was $960,047 or $.95 per
diluted common share compared to net income of $994,525 or $1.00 per diluted
common share for the second quarter of 2002. Net income for the first six months
of 2003 was $1,844,410 or $1.82 per diluted common share compared to net income
of $1,925,529 or $1.94 per diluted common share for the first six months of
2002. Return on average assets for the second quarter and first six months of
2003 was .93% and .90%, respectively, compared to 1.06% and 1.05% for the second
quarter and first six months of 2002, respectively. Return on average equity for
the second quarter and first six months of 2003 was 13.10% and 12.75%,
respectively, compared to 16.10% and 15.93% for the second quarter and first six
months of 2002, respectively.

The decreases in net income, for the quarters and six-month periods
compared, were primarily attributable to increases in the provision for loan
losses and noninterest expense, partially offset by increases in net interest
income and noninterest income.

Total assets at June 30, 2003 increased to $415,495,346 from
$411,818,589 at December 31, 2002. The increase in total assets was primarily
from an increase in investments. The increase in total assets was funded by
increases in deposits.

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RESULTS OF OPERATIONS

Table 1 summarizes West Pointe's statements 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 $53,913 or 1.6% for the
second quarter of 2003 compared to the same period of 2002 and increased
$376,072 or 5.7% for the first six months of 2003 compared to the same period of
2002. 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 $368,964 or 6.4% for the
second quarter of 2003 compared to the same period of 2002 and decreased
$349,936 or 3.1% for the first six months of 2003 compared to the same period of
2002. 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.
Average earning assets increased $32,034,315 or 9.1% for the second quarter of
2003 compared to the same quarter of 2002 and increased $39,592,712 or 11.6% for
the first six months of 2003 compared to the same period of 2002. Average
earning assets excluding loans increased $13,544,157 for the second quarter of
2003 compared to the same quarter of 2002 and increased $19,871,773 for the six
months of 2003 compared to the same period of 2002. The yield on these assets
decreased 123 basis points for the second quarter of 2003 compared to the same
quarter of 2002 and decreased 109 basis points for the first six months of 2003
compared to the same period of 2002. Average loans increased $18,490,158 for the
second quarter of 2003 compared to the same quarter of 2002 and increased
$19,720,939 for the first six months of 2003 compared to the same period of
2002. The yield on loans decreased 72 basis points for the second quarter of
2003 compared to the same quarter of 2002 and decreased 66 basis points for the
first six months of 2003 compared to the same period of 2002. The increase in
the volume of

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earning assets for both periods compared was due to internal growth in the loan
and investment portfolios. The decrease in the yield was a result of a declining
interest rate environment.

Total interest expense decreased $422,877 or 18.3% for the second
quarter of 2003 compared to the same period of 2002 and decreased $726,008 or
15.8% for the first six months of 2003 compared to the same period of 2002. The
decreases in interest expense were primarily attributable to the lower interest
rate environment, partially offset by higher volumes of interest-bearing
liabilities. Average interest-bearing liabilities increased $29,492,469 for the
second quarter of 2003 compared to the same period of 2002 and increased
$37,195,324 for the first six months of 2003 compared to the same period of
2002. The average rate paid on interest-bearing liabilities decreased 74 basis
points to 2.19% for the second quarter of 2003 compared to the same period of
2002. The average rate on interest-bearing liabilities decreased 74 basis points
to 2.25% for the first six months of 2003 compared to the same period of 2002.
The decrease in the average rate for both periods compared was due to a
declining interest rate environment.

The net interest margin was 3.65% for the second quarter of 2003
compared to 3.93% for the second quarter of 2002. The net interest margin for
the first six months of 2003 was 3.68% compared to 3.89% for the first six
months of 2002. The decreases in the net interest margin for the quarters and
six-month 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 provision for loan losses was $195,000 and $690,000 for the second
quarter and first six months of 2003, respectively, compared to $150,000 and
$300,000 for the second quarter and first six months of 2002, 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 increases in the provision for
loan losses for the quarter and six-month period ending June 30, 2003 compared
to the same periods of 2002 were primarily reflective of growth of the loan
portfolio, higher net charge-offs, and an increase in non-performing loans.
Activity in the allowance for loan losses and nonperforming loan data are
presented under "ASSET QUALITY."

NONINTEREST INCOME

Total noninterest income was $1,288,566 for the second quarter of 2003
compared to $959,422 for the second quarter of 2002. Noninterest income totaled
$2,760,207 for the first six months of 2003 compared to $2,037,737 for the same
period of 2002. Income from mortgage banking services increased $210,479 for the
second quarter of 2003 compared to the second quarter of 2002 and increased
$408,349 for the six-month periods compared. The increases in mortgage banking
income for the periods compared were primarily attributable to the lower
interest rate environment, which improved the level of origination and
refinancing activities. Mortgage banking income includes revenue generated from
the sale of mortgage loans and the servicing of previously sold mortgage loans.
The mortgage loan sales volume depends heavily on the prevailing interest rates
and the strength of the local real estate market. 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 2003. Income from trust fees increased $43,094 for
the second quarter of 2003 compared to the second quarter of 2002 and increased
$50,900 for the six-month periods compared. The increase in income from trust
fees for the quarters and six month periods compared was primarily attributable
to new fiduciary relationships. During the second quarter and first six months
of 2003, West Pointe recorded increases in cash surrender value of life
insurance of $125,105 and $249,642, respectively, compared to increases of
$78,946 and $147,353 recorded during the second quarter and first six months of
2002, respectively. These cash surrender value increases relate to various bank
owned life insurance (BOLI) policies which generally serve as informal funding
mechanisms for various benefit plans established for directors and certain
officers of the Company. 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 securities gains recorded during
the second quarter and the first six months of 2003 totaled $127,733 and
$461,064, respectively, compared to net securities gains of $100,968 and
$340,312 recorded during the second quarter and the first six months of 2002,
respectively. Net securities gains recorded during the 2003 and 2002 periods
resulted from

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management's decision to continue efforts to reconfigure certain segments of the
investment portfolio to limit potential interest rate risk that could result
from a rising interest rate environment.

NONINTEREST EXPENSE

Total noninterest expense was $3,132,949 for the second quarter of 2003
compared to $2,696,948 for the second quarter of 2002. For the first six months
of 2003, total noninterest expense was $6,249,807 compared to $5,308,532 for the
same period of 2002. The increases in noninterest expense were primarily
attributable to increases in employee compensation and benefits and legal and
professional fees. Employee compensation and other benefit expenses increased
$175,857 for the second quarter of 2003 compared to the second quarter of 2002
and increased $438,668 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. Legal and
professional fees increased $151,055 for the second quarter of 2003 compared to
the second quarter of 2002 and increased $286,698 for the six-month periods
compared. 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. Other noninterest expenses increased
$110,406 for the second quarter of 2003 compared to the second quarter of 2002
and increased $179,795 for the six-month periods compared. Other noninterest
expense includes such items as FDIC insurance premiums, mortgage banking
expenses, postage costs and certain credit card program expenses. The increases
in other noninterest expense for the periods compared were attributable to
numerous categories of other noninterest expense.

INCOME TAX EXPENSE

West Pointe recorded income tax expense of $319,600 for the second
quarter of 2003 compared to $388,500 for the second quarter of 2002. For the
first six months of 2003, income tax expense was $598,400 compared to $801,500
for the same period of 2002. The effective income tax rates were 25.0% and 28.1%
for the second quarter of 2003 and 2002, respectively. The effective income tax
rates were 24.5% and 29.4% for the first six months of 2003 and 2002,
respectively. The decreases in income tax expense and the related effective
income tax rates for the 2003 periods compared to the 2002 periods primarily
resulted from a lower level of income before income taxes, as well as an
increase in the amount of income exempt from income taxes.

13

FINANCIAL CONDITION

GENERAL

Certain components of West Pointe's consolidated balance sheet at June
30, 2003 compared to December 31, 2002 are presented in summary form in Table 2.
Total assets increased $3,676,757 to $415,495,346 compared to $411,818,589 at
December 31, 2002. This increase primarily resulted from an increase in
investments partially offset by decreases in cash and cash equivalents. The
balances in investments and cash and cash equivalents fluctuate based on timing
of investment paydowns and reinvestment of those proceeds.

TABLE 2 - Selected Comparative Balance Sheet Items

LOANS

Loans increased .1%, or $154,759, from year-end 2002 to June 30, 2003.
The majority of this increase was derived from growth in the commercial real
estate and real estate construction segments of the portfolio. West Pointe also
experienced decreases in the commercial, financial and agricultural and
residential real estate 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

INVESTMENTS

Total investments increased to $159,275,534 at June 30, 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

14

repurchase. Additional information regarding West Pointe's securities sold under
agreements to repurchase is presented and discussed under "Borrowings."

Available-for-sale investments are recorded at fair value. Net
unrealized gains on available-for-sale investments totaled $2,717,447 at June
30, 2003, compared to net unrealized gains of $3,530,630 at December 31, 2002.

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

TABLE 4 - Investment 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 $5,924,534 to $356,914,371 at June 30, 2003
from year-end 2002. The noninterest bearing demand deposit, interest bearing
demand deposit, and savings and money market deposit components of the deposit
portfolio increased $1,344,984, $837,728 and $9,600,584, respectively, from
year-end 2002. The increase in noninterest bearing demand deposits was primarily
attributable to seasonal fluctuations. The majority of the increase in interest
bearing demand deposits was attributable to an increase 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. Balances in time deposits decreased $5,858,762 from
year-end 2002. This decrease was primarily attributable to a shift from time
deposits to more liquid interest-bearing deposits. 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 $24,723,755 at June 30, 2003, compared to
$28,229,378 at year-end 2002. At June 30, 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 $3,355,623 from year-end 2002. These
borrowings serve as an alternative funding source to deposits. The majority of
the decrease 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, 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 June 30, 2003, other borrowings consisted of a $1,387,100 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, 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 June 30, 2003, nonperforming assets totaled $2,681,495, or .65% of
total assets, compared to nonperforming assets at year-end 2002 of $2,101,904 or
..51% of total assets. Nonperforming assets, at June 30, 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 value
declines. As of June 30, 2003, management does not anticipate any significant
losses upon the disposition of the remaining foreclosed property. Nonperforming
loans in the commercial, financial and agricultural segment of the portfolio
decreased $479,917 from December 31, 2002. The majority of this decrease related
to payments received on loans to one commercial borrower. Nonperforming loans in
the 1-4 family residential real estate segment of the portfolio increased
$1,031,111 and primarily related to several loans to one borrower. The remaining
categories of nonperforming loans relating to other consumer loans remained
relatively stable at June 30, 2003 compared to December 31, 2002. Management is
in various stages of workout or liquidation of the remaining nonperforming
loans.

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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 2003 totaled $199,731
compared to $91,341 for the second quarter of 2002. During the first six months
of 2003, net charge-offs totaled $308,290 compared to $141,642 for the first six
months of 2002. Charge-offs recorded in the commercial, financial and
agricultural segment of the loan portfolio during the second quarter and first
six months of 2003 totaled $188,381 and $229,100, respectively and were
primarily due to one borrower. Charge-offs and recoveries recorded during the
second quarter and first six months of 2003 and 2002 in all other segments of
the loan portfolio were not significant.

West Pointe's allowance for loan losses at June 30, 2003, increased to
$2,791,156 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 non-performing loans. At June 30, 2003, the allowance for
loan losses represented 126.11% of nonperforming loans compared to 274.42% at
June 30, 2002. The ratio of the allowance for loan losses to total loans was
1.26% at June 30, 2003 compared to 1.14% at June 30, 2002. Management believes
that the allowance for loan losses at June 30, 2003 was adequate to absorb
probable incurred losses 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.

17

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 $1,323,675 from $28,539,703 at
December 31, 2002 to $29,863,378 at June 30, 2003. Net income for the six-month
period ended June 30, 2003 was $1,844,410. Accumulated other comprehensive
income decreased $504,174 to $1,684,817 at June 30, 2003. The decrease is
attributable to investment gains realized during the first six months of 2003 as
well as a slight decrease in the market value of the remainder of the investment
portfolio.

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

18

to risk-weighted assets of 4% and 8%, respectively. At June 30, 2003, West
Pointe's Tier 1 and Total capital ratios were 11.20% and 12.31%, 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, 2003, was 6.82%. Accordingly, West Pointe has satisfied these
regulatory guidelines.

RECENT ACCOUNTING PRONOUNCEMENTS

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement
133 on Derivative Instruments and Hedging Activities." This statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities under SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities." This statement is effective for contracts entered into
or modified after June 30, 2003, except for hedging relationships designated
after June 30, 2003. As the Company does not have these instruments, this
statement is not anticipated to materially affect the Company's operating
results or financial condition.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity." This
statement establishes standards for how certain financial instruments with
characteristics of both liabilities and equity should be classified. All
financial instruments that are within the scope of this statement should now be
classified as liabilities. This statement is effective for financial statements
entered into or modified after May 31, 2003, and otherwise is effective at the
beginning of the first interim period beginning after June 13, 2003. As the
Company does not have these instruments, this statement is not anticipated to
materially affect the Company's operating results or financial condition.

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 (as defined in Exchange Act Rule 13a-15(c)) as of the
end of the period covered by 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.
There were no changes in the Company's internal control over financial reporting
during the period covered by this quarterly report that has materially affected,
or is reasonably likely to materially affect, the Company's internal control
over financial reporting.

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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

None

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:

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

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits: See Exhibit Index on page 22 hereof.

(b) Reports on Form 8-K:

(1) The Company filed a Form 8-K May 30, 2003 under Item
4, which reported the resignation of its prior
certifying accountants, Rubin, Brown, Gornstein &
Co., LLP and the engagement of Crowe Chizek and
Company LLC as its principal accountants.

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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, 2003 By: /s/ Terry W. Schaefer
- ---------------------- ---------------------
Terry W. Schaefer
President and Chief
Executive Officer

DATE: August 13, 2003 By: /s/ Bruce A. Bone
- ---------------------- -----------------
Bruce A. Bone
Executive Vice President and
Chief Financial Officer

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EXHIBIT INDEX

(1) Documents incorporated by reference to the Company's Registration
Statement on Form 10 (file no. 000-30505) at the corresponding
exhibit. All such previously filed documents are hereby incorporated
by reference in accordance with Item 601 of Regulation S-K.

22