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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2003
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 030505
WEST POINTE BANCORP, INC.
(Exact Name of Registrant as Specified in Its Charter)
Illinois
(State or Other Jurisdiction of 36-4149655
Incorporation or Organization) (I.R.S. Employer
5701 West Main Street, Belleville, Illinois 62226 Identification
(Address of Principal Executive Offices) (Zip Code) Number)
Registrant's telephone number, including area code: (618) 234-5700
Securities Registered Pursuant to Section 12(b) of the Act:
None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, par value $1.00 per share
(Title of Class)
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
requirements for the past 90 days.
YES |X| NO |_|
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |X|
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2).
YES |_| NO |X|
There is no non-voting common equity. There is no active trading market in the
registrant's common equity. Based on information available to West Pointe
regarding sales of the company's common stock, the aggregate market
1
value of the common stock held by nonaffiliates, as of June 30, 2003, was
$28,291,662, which is the last business day of the registrant's most recently
completed second fiscal quarter. For this purpose, all shares held by directors,
executive officers and shareholders beneficially holding five percent or more of
the company's common stock have been treated as held by affiliates.
As of March 1, 2004 there were 1,009,879 shares issued, of which
992,129 shares were outstanding, of the registrant's common stock.
2
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to Shareholders for the year
ended December 31, 2003 (the "2003 Annual Report") are incorporated by reference
in Part II.
Portions of the registrant's Proxy Statement for its April 14, 2004 Annual
Meeting of Shareholders (the "2004 Proxy Statement") are incorporated by
reference in Part III.
FORWARD LOOKING STATEMENTS
This report contains certain forward-looking statements with respect to
the financial condition, results of operations and business of West Pointe.
These forward-looking statements are based on assumptions and describe future
plans, strategies, projections and expectations of West Pointe and are generally
identified by the use of the 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. These
forward-looking statements are subject to risks, uncertainties and assumptions
which 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 or composition of
the loan or investment portfolios, demand for loan products, deposit flows,
competition, the consequences of continued bank acquisitions and mergers in our
market area, demand for financial services in West Pointe's market areas and
changes in accounting principles and guidelines. Additionally, the policies of
the State of Illinois Office of Banks and Real Estate, the Federal Deposit
Insurance Corporation, the Financial Accounting Standards Board, the Public
Company Accounting Oversight Board 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 operation and regulation may prove to be other than as anticipated.
West Pointe assumes no obligation to update any forward-looking statements that
are made from time to time, whether as a result of new information, future
events or otherwise. In light of the risks, uncertainties and assumptions, the
events discussed in this report might not occur.
TABLE OF CONTENTS
PART I...................................................................................................4
Item 1. Business......................................................................................4
Item 2. Properties...................................................................................13
Item 3. Legal Proceedings............................................................................13
Item 4. Submission of Matters to a Vote of the Security Holders......................................14
PART II.................................................................................................14
3
Item 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of
Equity Securities.......................................................................14
Item 6. Selected Financial Data......................................................................14
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations........14
Item 7a. Quantitative and Qualitative Disclosures About Market Risk.................................14
Item 8. Financial Statements and Supplementary Data..................................................14
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.........15
Item 9a. Controls and Procedures....................................................................15
PART III................................................................................................15
Item 10. Directors and Executive Officers of the Registrant..........................................15
Item 11. Executive Compensation......................................................................16
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.................................................................................17
Item 13. Certain Relationships and Related Transactions..............................................17
Item 14. Principal Accountant Fees and Services......................................................18
PART IV.................................................................................................18
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K............................18
PART I.
ITEM 1. BUSINESS.
Business of the Holding Company
West Pointe Bancorp, Inc., referred to herein as "West Pointe", the
"Company", "we", or "us", was incorporated in 1997 under the Illinois Business
Corporation Act of 1983, as amended. We are registered as a bank holding company
under the Illinois Bank Holding Company Act of 1957, as amended, and the federal
Bank Holding Company Act of 1956, as amended. We function as the holder of the
capital stock of West Pointe Bank And Trust Company (the "Bank"), our
wholly-owned subsidiary. Subject to constraints under the 1956 Act, the Company
may acquire or develop other financially oriented businesses in the future,
although it has no present commitments for any such acquisition or development.
Under Illinois and federal law, the Company may acquire additional banks or
engage in other permitted activities which are closely related to banking;
however, the Company has no present commitments for any such bank acquisitions
or for engaging in other banking related activities. Any such acquisitions of
banks or organizations engaged in permitted activities could be made for stock,
cash or debt obligations of the Company.
At the present time, except as mentioned below, West Pointe has no material
assets, liabilities or operations other than those of the Bank, does not own or
lease any property and has no paid employees. We utilize the premises and
services of the employees of the Bank. As described in our financial statements,
West Pointe has entered
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into a revolving line of credit with an unaffiliated bank that had a balance of
$1,237,100 as of December 31, 2003. See the financial statements incorporated by
reference to Item 8 of this report, including notes 9 and 18 therein. The
principal executive offices of West Pointe are located at 5701 West Main Street,
Belleville, Illinois 62226.
Bank Products and Services
The Bank was established in 1990 under the Illinois Banking Act, and
operates in the financial services segment. Since its establishment, it has
conducted a general banking business embracing the customary functions of
commercial banking, including residential real estate, commercial, industrial
and consumer lending, collections, safe deposit operations, and other services
tailored to individual customer needs. On April 8, 1997, the Bank became a
wholly-owned subsidiary of the Company pursuant to the Plan of Reorganization
and Exchange dated as of February 12, 1997. In March of 1997, West Pointe
launched its web site at www.westpointebank.com, providing customers with
full-service internet banking and bill payment capabilities. At December 31,
2003, the Company had total assets of $425,150,441, total deposits of
$360,920,884 and total loans (net of allowance for loan losses of $2,697,139) of
$214,396,579. For information relating to our results of operations and other
financial data see our Management's Discussion and Analysis of Financial
Condition and Results of Operations in Item 7 of this report.
Market Area
The Company's primary geographic market areas consist of St. Clair, Monroe
and Madison counties in Illinois and St. Louis City and St. Louis County in
Missouri. Our five branch locations in East and West Belleville, Columbia, Dupo
and Swansea, Illinois and 29 ATMs serve to meet the convenience and financial
needs of our customers. The Company believes that the area is experiencing
growth in both the commercial and residential populations serviced by the
Company. Our strategy is to operate as an independent, retail oriented financial
institution dedicated to serving the needs of customers in our market areas. Our
commitment is to provide a broad range of personalized products and services to
meet the needs of our customers.
Lending Activities
The Bank makes and services both secured and unsecured loans to
individuals, firms and corporations. The Bank's loan portfolio is composed of
loans in the following categories: commercial, financial and agricultural;
commercial real estate; real estate construction; consumer residential real
estate; and other consumer loans. The percent of loans for the various areas of
business of the Bank as of December 31, 2003, based on principal amount, were
25.4% commercial, 24.1% residential real estate, 45.7% commercial and other real
estate, 2.5% automobile and 2.3% other consumer loans. As of December 31, 2003,
the Bank had approximately 5,663 loans outstanding in the aggregate amount of
$217,093,718.
5
The commercial, financial and agricultural loan portfolio is
diversified and includes loans secured by non-real estate collateral to
manufacturers, retailers, distributors, service providers and investors.
Emphasis is generally placed upon middle-market and community businesses with
financial stability and known local management. Underlying collateral for
commercial, financial and agricultural loans includes, but is not limited to,
inventory, equipment, vehicles and accounts receivable. In the case of
corporations, the Bank may obtain personal guarantees from principal
shareholders and/or officers.
The commercial real estate loan portfolio consists largely of mortgage
loans secured by commercial properties located in the communities served by West
Pointe's banking centers. A significant portion of the commercial real estate
portfolio is comprised of traditional commercial loans with real estate taken as
additional collateral. These loans are made to fund the acquisition of buildings
and real estate for commercial, industrial, office and retail use. The maximum
loan-to-value ratio applicable to improved commercial properties is 85%. Prior
approval of the Bank's Loan and Discount Committee is required for new loans
with loan-to-value ratios exceeding this limit.
The real estate construction loan portfolio consists of loans made to
finance land development preparatory to erecting new structures or the on-site
construction of 1-4 family residences, commercial properties, retail centers,
medical and business offices, warehouse facilities and multi-family residential
developments. The maximum loan-to-value ratio applicable to loans made for the
purpose of land development activities is 75%. The maximum loan-to-value ratios
applicable to commercial/multi-family and 1-4 family residential construction
loans are 80% and 85%, respectively.
The 1-4 family residential real estate portfolio is predominantly
comprised of loans extended for owner-occupied residential properties. These
loans typically are secured by first mortgages on the properties financed and
generally have a maximum loan-to-value ratio of 85%. The amortization periods
for these loans generally do not exceed twenty years with interest being
calculated on a fixed or floating rate basis. The 1-4 family residential real
estate category also includes home equity lines of credit and closed-end second
mortgage loans. Closed-end second mortgage loans generally bear a fixed rate of
interest over a three to five year term with a five to fifteen year
amortization, while home equity lines of credit generally have an interest rate
indexed to the prime rate. Home equity loans generally have a maximum
loan-to-value ratio of 85%.
The consumer loan portfolio consists of both secured and unsecured
loans to individuals for household, family, and other personal expenditures such
as automobile financing, home improvements and recreational and educational
purposes. Consumer loans are typically structured with fixed rates of interest
and full amortization of principal and interest within three to five years. The
maximum loan-to-value ratio applicable to consumer loans is generally 80%. This
category of loans also includes revolving credit products such as checking
overdraft protection and MasterCard and VISA credit cards. Consumer loans are
either unsecured or are secured with various forms of collateral, other than
real estate.
6
The Bank's asset quality management program, particularly with regard
to loans, is designed to analyze potential risk elements and to support the
growth of a profitable and high quality loan portfolio. The Bank employs the use
of a loan rating system to monitor the loan portfolio and to determine the
adequacy of the allowance for loan losses. The Bank's lending philosophy is to
invest in loans in the communities served by its banking centers so it can
effectively monitor and control credit risk. The majority of the loan portfolio
is comprised of retail loans and loans to small-to-midsized businesses. A
periodic review of selected credits (based on loan size) is conducted to
identify loans with heightened risks or inherent losses. Factors which could
contribute to increased risk in the loan portfolio include, but are not limited
to, changes in interest rates, general economic conditions and reduced
collateral values. The Bank is not engaged in making loans to foreign countries.
As of December 31, 2003, and effective January 30, 2004, the statutory
legal lending limit amount for the Bank to loan to one customer was $8,209,868.
Deposit Activities
The Bank offers similar types of deposit accounts to those offered by
other financial institutions. The categories of deposit accounts within the
Bank's portfolio include non-interest bearing demand deposits, interest bearing
demand deposits, savings and money market deposits, time deposits of $100,000
and more, and time deposits of less than $100,000. On December 31, 2003, the
Bank had approximately 26,130 deposit accounts representing $360,920,884 in
deposits.
Core deposits originating within the communities served by our banking
locations continue to be the Bank's most reliable and most important source of
funds. Deposit products are offered to individuals, partnerships, corporations,
public entities and not-for-profit organizations. Within each deposit category,
customers have a variety of product options to choose from, each of which may
have characteristics specifically suited to their needs. These product options
may have variations in service fees, minimum balance requirements and interest
rates. In the case of time deposits, the Bank offers a wide variety of products
with varying maturity terms and rates. The Bank operates in a highly competitive
market place for deposits and strives to price its deposit products accordingly.
The Bank has no brokered deposits. No material portion of the Bank's deposits
has been obtained from a single customer or customers (including federal, state,
and local governments and agencies) the loss of any one or more of which would
have a materially adverse effect on the Bank, nor is a material portion of the
Bank's deposits concentrated within a single industry or group of related
industries.
Investment Activities
The Bank invests a portion of its assets in U.S. Treasury and U.S.
agencies, mortgage-backed securities, state, county and municipal obligations
and equity securities. The Bank's investments are managed in relation to loan
demand and deposit growth, and are generally used to provide for the investment
of excess funds at yields and risks
7
relative to yields and risks of the loan portfolio, while providing liquidity to
fund increases in loan demand or to offset fluctuations in deposits. The Bank
does not engage in hedging activities.
The Bank classifies investment securities as available-for-sale or
held-to-maturity. Available-for-sale investment securities are held with the
option of their disposal in the foreseeable future to meet investment objectives
or for other operational needs. Held-to-maturity investment securities generally
provide a relatively stable source of income. As of December 31, 2003, the Bank
had no investment securities classified as held-to-maturity.
Available-for-sale investment securities are recorded at fair value. As
of December 31, 2003, all of the investment securities held in the Bank's
investment portfolio are classified as available-for-sale. At December 31, 2003,
the Bank's available-for-sale portion of the investment securities portfolio
reflected a fair value of $179,220,703 and an amortized cost of $177,695,273.
The U.S. government agencies portion of the available-for-sale portfolio is
comprised primarily of securities issued by the Federal Home Loan Bank.
Available-for-sale mortgage-backed securities are comprised of securities issued
by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association and the Government National Mortgage Association. Over 75% of the
obligations of states and political subdivisions portion of the
available-for-sale portfolio is rated by either Moody's Rating Service or
Standard and Poor's Rating Service as "AAA." Holdings of Federal Home Loan Bank
stock comprise the equity securities portion of the available-for-sale
portfolio.
In the foreseeable future, the Bank intends to purchase investment
securities with characteristics similar to those currently held in the
portfolio.
Supervision and Regulation
General
As a bank holding company, we are primarily regulated by the Board of
Governors of the Federal Reserve System under the Bank Holding Company Act of
1956 (the "BHC Act"). Under the BHC Act, the Federal Reserve Board's prior
approval is required if we propose to acquire all or substantially all of the
assets of any bank, acquire direct or indirect ownership or control of more than
5% of the voting shares of any bank, or merge or consolidate with any other bank
holding company. The BHC Act also prohibits us, with certain exceptions, from
acquiring direct or indirect ownership or control of more than 5% of any class
of voting shares of any non-banking company. Under the BHC Act, we may not
engage in any business other than managing and controlling banks or furnishing
certain specified services to subsidiaries and may not acquire voting control of
non-banking companies unless the Federal Reserve Board determines such
businesses and services to be closely related to banking. When reviewing bank
acquisition applications for approval, the Federal Reserve Board considers,
among other things, each subsidiary bank's record in meeting the credit needs
8
of the communities it serves in accordance with the Community Reinvestment Act
of 1977, as amended (the "CRA").
We are required to file with the Federal Reserve Board various reports
and such additional information as the Federal Reserve Board may require. The
Bank is also subject to regulation by the Federal Deposit Insurance Corporation.
In addition, there are numerous other federal and state laws and regulations
which control the activities of us and our bank subsidiary, including
requirements and limitations relating to capital and reserve requirements,
permissible investments and lines of business, transactions with affiliates,
loan limits, mergers and acquisitions, issuance of securities, dividend payments
and extensions of credit. This regulatory framework is intended primarily for
the protection of depositors and the preservation of the federal deposit
insurance funds, and not for the protection of securityholders. Statutory and
regulatory controls increase a bank holding company's cost of doing business and
limit the options of its management to employ assets and maximize income.
In addition to its regulatory powers, the Federal Reserve impacts the
conditions under which we operate by its influence over the national supply of
bank credit. The Federal Reserve Board employs open market operations in U.S.
Government securities, changes in the discount rate on bank borrowings, changes
in the federal funds rate on overnight inter-bank borrowings, and changes in
reserve requirements on bank deposits in implementing its monetary policy
objectives. These instruments are used in varying combinations to influence the
overall level of the interest rates charged on loans and paid for deposits, the
price of the dollar in foreign exchange markets and the level of inflation. The
monetary policies of the Federal Reserve have had a significant effect on the
operating results of financial institutions in the past, most notably the strong
decrease in interest rates which occurred in 2001 and the low rate environment
in 2002 and 2003. In view of changing conditions in the national economy and in
the money markets, as well as the effect of credit policies of monetary and
fiscal authorities, no prediction can be made as to possible future changes in
interest rates, deposit levels or loan demand, or their effect on our financial
performance.
Under Federal Reserve policy, we are expected to act as a source of
financial strength to our bank subsidiary and to commit resources to support our
bank subsidiary in circumstances when it might not otherwise do so. The Federal
Reserve Board may prohibit the payment of dividends by bank holding companies if
their actions constitute unsafe or unsound practices. The payment of dividends
by the Bank also may be affected by factors such as the maintenance of adequate
capital. At December 31, 2003, the Bank was "well-capitalized" under regulatory
capital adequacy standards.
Illinois Regulation
West Pointe is subject to additional regulation under the Illinois Bank
Holding Company Act of 1957, as amended. As an Illinois bank holding company, we
are subject to examination by the Illinois Office of Banks and Real Estate (the
"OBRE"). The Bank is organized under the laws of the State of Illinois and as
such is also subject to OBRE supervision. The OBRE requires all state banks to
file a full and accurate statement of
9
their affairs annually, and OBRE examiners conduct periodic examinations of
state banks.
The OBRE has the right to promulgate rules and regulations necessary
for the supervision and regulation of Illinois banks under its jurisdiction and
for the protection of the public investing in such institutions. The regulatory
authority of the OBRE includes, but is not limited to, the establishment of
reserve requirements; the regulation of the payment of dividends; the regulation
of stock repurchases; the regulation of incorporators, shareholders, directors,
officers and employees; the establishment of permitted types of withdrawable
accounts and types of contracts for savings programs, loans and investments; the
regulation of the conduct and management of banks, chartering and branching of
institutions, mergers, conversions; and, limitations on investments in and loans
to affiliates.
Legislation
These laws and regulations are under constant review by various
agencies and legislatures, and are subject to frequent change. The
Gramm-Leach-Bliley Financial Modernization Act of 1999 (the "GLB Act") contained
major changes in laws that previously kept the banking industry largely separate
from the securities and insurance industries. The GLB Act authorized the
creation of a new kind of financial institution, known as a "financial holding
company" and a new kind of bank subsidiary called a "financial subsidiary",
which may engage in a broader range of investment banking, insurance agency,
brokerage, and underwriting activities. The GLB Act also included privacy
provisions that limit banks' abilities to disclose non-public information about
customers to non-affiliated entities. Banking organizations are not required to
become financial holding companies, but instead may continue to operate as bank
holding companies, providing the same services they were authorized to provide
prior to the enactment of the GLB Act.
Recent Legislation
Sarbanes-Oxley Act of 2002
On July 30, 2002, the Sarbanes-Oxley Act of 2002 ("SOX") was signed
into law, which mandated a variety of reforms intended to address corporate and
accounting fraud. SOX contained provisions which amend the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and provisions which directed the
Securities and Exchange Commission (the "SEC") to promulgate rules. The
following summary is not meant to be a complete description of the requirements
of SOX.
SOX provides for the establishment of a new Public Company Accounting
Oversight Board ("PCAOB"), which will enforce auditing, quality control and
independence standards for firms that audit SEC-reporting companies and will be
funded by fees from all SEC-reporting companies. SOX imposes higher standards
for auditor independence and restricts provision of consulting services by
auditing firms to companies they audit. Any non-audit services being provided to
an audit client will
10
require pre-approval by the Company's audit committee members. In addition,
certain audit partners must be rotated periodically. SOX requires chief
executive officers and chief financial officers, or their equivalent, to certify
to the accuracy of periodic reports filed with the SEC, subject to civil and
criminal penalties if they knowingly or willfully violate this certification
requirement. In addition, under SOX, counsel will be required to report evidence
of a material violation of the securities laws or a breach of fiduciary duty by
a company to its chief executive officer or its chief legal officer, and, if
such officer does not appropriately respond, to report such evidence to the
audit committee or other similar committee of the board of directors or the
board itself.
Longer prison terms will also be applied to corporate executives who
violate federal securities laws, the period during which certain types of suits
can be brought against a company or its officers has been extended, and bonuses
issued to top executives prior to restatement of a company's financial
statements are now subject to disgorgement if such restatement was due to
corporate misconduct. Executives are also prohibited from trading during
retirement plan "blackout" periods, and loans to company executives are
restricted. In addition, a provision directs that civil penalties levied by the
SEC as a result of any judicial or administrative action under the Act be
deposited in a fund for the benefit of harmed investors. Directors and executive
officers must also report most changes in their ownership of a company's
securities within two business days of the change, and only after the end of
June 2003, all ownership reports must be electronically filed.
SOX also requires that all SEC-reporting companies must disclose
whether at least one member of the committee is an audit committee "financial
expert" (as such term is defined by the SEC rules) and if not, why not. Audit
committees must establish procedures for the receipt, retention and treatment of
complaints regarding accounting and auditing matters and procedures for
confidential, anonymous submission of employee concerns regarding questionable
accounting or auditing matters. It is the responsibility of the audit committee
to hire, oversee and work on disagreements with the West Pointe's independent
auditor.
Beginning six months after the SEC determines that the PCAOB is able to
carry out its functions, it will be unlawful for any person that is not a
registered public accounting firm ("RPAF") to audit an SEC-reporting company.
Under SOX, a RPAF is prohibited from performing statutorily mandated audit
services for a company if such company's chief executive officer, chief
financial officer, comptroller, chief accounting officer or any person serving
in equivalent positions has been employed by such firm and participated in the
audit of such company during the one-year period preceding the audit initiation
date. SOX also prohibits any officer or director of a company or any other
person acting under their direction from taking any action to fraudulently
influence, coerce, manipulate or mislead any independent public or certified
accountant engaged in the audit of the Company's financial statements for the
purpose of rendering the financial statement's materially misleading. In
addition, SOX requires that each financial report required to be prepared in
accordance with (or reconciled to) accounting principles generally accepted in
the United States of America and filed with the SEC reflect all material
correcting adjustments that are identified by a RPAF in accordance with
11
accounting principles generally accepted in the United States of America and the
rules and regulations of the SEC.
Although the Company anticipates it will incur additional expense in
complying with the provisions of SOX and the related rules, management does not
expect that such compliance will have a material impact on the Company's
financial condition or results of operations.
Patriot Act
In 2001, President Bush signed into law comprehensive anti-terrorism
legislation known as the USA Patriot Act (the "Patriot Act"). Title III of the
Patriot Act includes numerous provisions for fighting international money
laundering and blocking terrorist access to the United States' financial system.
The Patriot Act is far-reaching in scope, covering a broad range of financial
activities and institutions. The provisions affecting banking organizations are
generally set forth as amendments to the Bank Secrecy Act. These provisions
relate principally to U. S. banking organizations' relationships with foreign
banks and with persons who are resident outside of the United States. The
Patriot Act, which generally applies to insured depository institutions as well
as to the U. S. branches and agencies of foreign banks, does not immediately
impose new filing or reporting requirements for banking organizations, but
requires certain additional due diligence and record-keeping practices.
Competition
West Pointe encounters strong competition both in making loans and in
attracting deposits. The deregulation of the banking industry and the widespread
enactment of state laws permitting multi-bank holding companies, as well as an
increasing level of interstate banking have created a highly competitive
environment for commercial banking. In various aspects of its business, the Bank
competes with other commercial banks, savings and loan associations, credit
unions, finance companies, mutual funds, insurance companies, brokerage and
investment banking companies, and other financial intermediaries. Most of these
competitors, some of which are affiliated with bank holding companies, have
substantially greater resources and lending limits, and may offer certain
services that the Bank does not currently provide. In addition, many of the
Bank's non-bank competitors are not subject to the same extensive federal
regulations that govern bank holding companies and federally insured banks.
Recent federal and state legislation, including the GLB Act discussed above, has
heightened the competitive environment in which financial institutions must
conduct their business, and the potential for competition among financial
institutions of all types has increased significantly. We believe that we
compete with approximately 15 financial institutions in our geographic market.
To compete effectively, the Bank relies upon specialized services,
responsive handling of customer needs, and personal contacts by its officers,
directors, and employees. Large multi-branch banking competitors tend to compete
primarily by rate
12
and the number and location of branches, while smaller, independent institutions
like the Bank tend to compete primarily by rate and personal service.
Employees
As of December 31, 2003, the Bank employed 121 full-time employees and
17 part-time employees. The Company does not have any employees and, as needed,
utilizes the services of the employees retained by the Bank. No collective
bargaining unit represents the employees. The Company and the Bank consider
relations with their employees to be good.
Web Site Address
Our web site address is "www.westpointebank.com." We make available
free of charge on our web site access to our annual reports on Form 10-K, our
quarterly reports on Form 10-Q, our current reports on Form 8-K and all
amendments to such reports as soon as reasonably practicable after we file such
reports with the SEC. The reference to our web site does not constitute
incorporation by reference of the information contained in the web site and
should not be considered part of this document.
ITEM 2. PROPERTIES.
The Company and the Bank both operate out of the Bank's headquarters
office and four branch offices, all of which are owned with the exception of one
branch office. The following is a brief description of the properties owned and
leased by the Company:
Location Size Description Owned/Leased
-------- ---- ----------- ------------
Belleville, Illinois 23,500 s.f. Headquarters Owned
Belleville, Illinois 15,600 s.f. Branch Office Owned
Swansea, Illinois 7,200 s.f. Branch Office Owned
Columbia, Illinois 3,200 s.f. Branch Office Leased
Dupo, Illinois 2,900 s.f. Branch Office Owned
Belleville, Illinois 21,700 s.f. Office Space(1) Owned
(1) West Pointe uses a portion of this property for record retention
purposes only; the remaining portion of the property is leased to third parties
on an interim basis.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not a party to any material pending legal proceedings
before any court, administrative agency or tribunal, nor is the Company aware of
any litigation threatened against it in any court, administrative agency or
other tribunal. The Company's wholly-owned subsidiary, the Bank, is subject to
various claims, lawsuits and administrative proceedings arising in the ordinary
course of business from time to time. The 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.
13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS.
During the fourth quarter of 2003, the Company did not submit any
matters to the vote of security holders through the solicitation of proxies or
otherwise.
Executive Officers of the Registrant
Information regarding executive officers is contained in Item 10 of
Part III of this report and is hereby incorporated by reference.
PART II.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES.
The section of our 2003 Annual Report entitled "Common Stock and
Related Matters" is hereby incorporated by reference. No other sections of the
2003 Annual Report are incorporated herein by this reference.
For information regarding securities issued under our equity
compensation plans, see "Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters."
We did not sell any unregistered equity securities during 2003. We did
not repurchase any equity securities during 2003.
ITEM 6. SELECTED FINANCIAL DATA.
The section of our 2003 Annual Report entitled "Selected Consolidated
Financial Information" is hereby incorporated by reference. No other sections of
such 2003 Annual Report are incorporated herein by this reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The section of our 2003 Annual Report entitled "Management's Discussion
and Analysis of Financial Condition and Results of Operations" is hereby
incorporated by reference. No other sections of such 2003 Annual Report are
incorporated herein by this reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The section of our 2003 Annual Report entitled "Capital Resources and
Asset/Liability Management" of the section "Management's Discussion and Analysis
of Financial Condition and Results of Operations" is hereby incorporated by
reference. No other sections of such 2003 Annual Report are incorporated herein
by this reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The sections of our 2003 Annual Report entitled "Quarterly Financial
Information (unaudited)," "Report of Independent Auditors" "West Pointe Bancorp,
Inc. and Subsidiary Consolidated Balance Sheets," "West Pointe Bancorp, Inc. and
Subsidiary
14
Consolidated Statements of Income," "West Pointe Bancorp, Inc. and Subsidiary
Consolidated Statements of Comprehensive Income," "West Pointe Bancorp, Inc. and
Subsidiary Consolidated Statements of Stockholders' Equity," "West Pointe
Bancorp, Inc. and Subsidiary Consolidated Statements of Cash Flows," and "West
Pointe Bancorp, Inc. and Subsidiary Notes to Consolidated Financial Statements"
are hereby incorporated by reference. No other sections of such 2003 Annual
Report are incorporated herein by this reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, the Company's
principal executive officer and principal financial officer carried out an
evaluation, with the participation of the Company's other management, of the
effectiveness of the Company's disclosure controls and procedures. Based upon
this evaluation, the principal executive officer and principal financial officer
have concluded that the Company's disclosure controls and procedures are
effective in ensuring that information required to be disclosed by the Company
in reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms. It should be noted that the design of the Company's
internal controls and procedures is based in part upon certain reasonable
assumptions about the likelihood of future events, and there can be no
reasonable assurance that any design of disclosure controls and procedures will
succeed in achieving its stated goals under all potential future conditions,
regardless of how remote. However, the Company's principal executive officer and
principal financial officer have concluded that the Company's disclosure
controls and procedures are, in fact, effective at a reasonable assurance level.
Changes in Internal Controls
In addition, there have been no changes in the Company's internal
control over financial reporting identified in connection with the evaluation
described in the above paragraph that occurred during the Company's last fiscal
quarter that has materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial reporting.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding directors and executive officers appearing under
"Election of Directors" on pages 3-5, the section entitled "Compensation of
Directors" on page 7, and "Certain Other Information Regarding
Management--Section 16(a) Beneficial Ownership Reporting Compliance" on page 19
of the 2004 Proxy Statement is hereby
15
incorporated by reference. No other sections of the 2004 Proxy Statement are
incorporated herein by this reference. The following information with respect to
the executive officers of the Company on February 14, 2004 is included pursuant
to Instruction 3 of Item 401(b) of Regulation S-K.
Bruce A. Bone, 49, has served as Chief Financial Officer of the Company
since 1999 and Executive Vice President and Chief Financial Officer since
January 2001. Prior to joining the Company in 1999, Mr. Bone served as Senior
Vice President for Union Planters Corporation and its predecessors, from 1994
until 1999. Mr. Bone served in other capacities for Magna Group, Inc., a
predecessor to Union Planters Corporation, since 1977.
Robert O. Lakin, 52, has served as Executive Vice President and Senior
Lending Officer of the Bank since January 2004. Prior to joining the Company,
Mr. Lakin was employed by U.S. Bank and its predecessors, since 1992.
Robert G. Cady, 56, has served as Senior Vice President and Trust
Officer of the Bank since 1994.
Albert A. Miller, 64, has served as the Senior Vice President of
Operations of the Bank since 1998. Prior to joining the Company, Mr. Miller was
employed by Boatman's Bank and its predecessors, since 1983.
Quinten E. Spivey, 62, has served as the Senior Vice President and
Trust Officer of the Bank since October 2000. Prior to joining the Company, Mr.
Spivey was employed by Union Planters Corporation and its predecessors, from
1982 until September 2000.
The section entitled "Audit Committee" of the section "Board Meetings
and Committees" included in our 2004 Proxy Statement is hereby incorporated by
reference. No other sections of the 2004 Proxy Statement are hereby incorporated
by this reference.
In the past fiscal year, there have not been any material changes,
including the adoption of any written statement, to the procedures by which
shareholders may recommend nominees to the registrant's board of directors. The
section of the 2004 Proxy Statement entitled "Board Meetings and Committees"
(excluding the sections within "Board Meetings and Committees" of the 2004 Proxy
Statement entitled "Executive Committee" and "Audit Committee") is hereby
incorporated by reference. No other sections of the 2004 Proxy Statement are
incorporated herein by this reference.
The section entitled "Code of Ethics Policy" included in our 2004 Proxy
Statement is hereby incorporated by reference. No other sections of the 2004
Proxy Statement are incorporated herein by this reference. The Code of Ethics is
filed herewith as Exhibit 14.1.
ITEM 11. EXECUTIVE COMPENSATION.
The sections of the 2004 Proxy Statement entitled "Compensation of
Directors" and "Executive Compensation" (excluding the section within "Executive
Compensation"
16
of the 2004 Proxy Statement entitled "Report of the Compensation Committee on
Executive Compensation") are hereby incorporated by reference. No other sections
of the 2004 Proxy Statement are incorporated herein by this reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
The section of the 2004 Proxy Statement entitled "Stock Ownership of
Management and Certain Beneficial Owners" is hereby incorporated by reference.
No other sections of the 2004 Proxy Statement are incorporated herein by this
reference.
Equity Compensation Plan Information
------------------------------------
The following table sets forth aggregate information regarding the West
Pointe Bancorp, Inc. 1998 Stock Option Plan, the Company's only equity
compensation plan, as of December 31, 2003:
(C) NUMBER OF SECURITIES
(B) WEIGHTED- REMAINING AVAILABLE FOR FUTURE
(A) NUMBER OF SECURITIES AVERAGE EXERCISE ISSUANCE UNDER EQUITY
TO BE ISSUED UPON EXERCISE PRICE OF OUTSTANDING COMPENSATION PLANS (EXCLUDING
OF OUTSTANDING OPTIONS, OPTIONS, WARRANTS SECURITIES REFLECTED IN
WARRANTS AND RIGHTS AND RIGHTS COLUMN (A))
PLAN CATEGORY ------------------- ---------- -----------
=====================================================================================================================
Equity compensation 155,500 $27.43 94,500
plans approved by
security holders
Equity compensation - - -
plans not approved
by security
holders
===================================================================================================================
TOTAL 155,500 $27.43 94,500
Information regarding the West Pointe Bancorp, Inc. 1998 Stock Option
Plan set forth in Notes 1-3 under "Aggregate Option Exercises in Last Fiscal
Year and Fiscal Year-End Option Values" and Notes 1-3 under "Option Grants in
Last Fiscal Year" of the section "Executive Compensation" included in our 2004
Proxy Statement and in the section of our Annual Report to the Shareholders for
the fiscal year ended December 31, 2003 entitled "West Pointe Bancorp, Inc. and
Subsidiary Notes to Consolidated Financial Statements--Note 13. Stock Option
Plan" is hereby incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The section of the 2004 Proxy Statement, entitled "Transactions and
Relationships; Indebtedness of Management" of the section "Certain Other
Information Regarding Management" is hereby incorporated by reference. No other
sections of the 2004 Proxy Statement are incorporated herein by this reference.
17
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The sections of the 2004 Proxy Statement, entitled "Audit Fees",
"Audit-Related Fees", "Tax Fees", and "All Other Fees" of the section "Report of
the Audit Committee" are hereby incorporated by reference. No other sections of
the 2004 Proxy Statement are incorporated herein by this reference.
PART IV.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1) Financial Statements
The following information appearing in the Company's 2003 Annual Report
is hereby incorporated by reference as Exhibit 13.1 to this Annual Report on
Form 10-K. No other sections of such Annual Report are incorporated herein by
this reference.
Annual Report Page
------------------
Reports of Independent Auditors 31-32
West Pointe Bancorp, Inc. and Subsidiary
Consolidated Balance Sheets as of December 31, 2003 and 2002 33
West Pointe Bancorp, Inc. and Subsidiary
Consolidated Statements of Income for the years ended
December 31, 2003, 2002 and 2001 34
West Pointe Bancorp, Inc. and Subsidiary
Consolidated Statements of Comprehensive Income for the
years ended December 31, 2003, 2002 and 2001 35
West Pointe Bancorp, Inc. and Subsidiary
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 2003, 2002 and 2001 36
West Pointe Bancorp, Inc. and Subsidiary
Consolidated Statements of Cash Flows for the
years ended December 31, 2003, 2002 and 2001 37
Notes to Consolidated Financial Statements 38-56
(a)(2) No additional Financial Statement Schedules are filed as part of this
report pursuant to Item 8 and Item 15(d).
(a)(3) See Exhibit Index beginning at page 22 of this report.
(b) Reports on Form 8-K.
18
The registrant filed one report on Form 8-K during the last quarter of
the period covered by this report. The quarterly report on Form 8-K filed
October 29, 2003 reported Items 12 and 7.
(c) The registrant hereby files herewith or incorporates herein by reference
(except to the extent otherwise indicated in this report) the exhibits
identified on the Exhibit Index beginning on page 22 of this report.
19
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
March 24, 2004 By /s/ Terry W. Schaefer
---------------------------------------
Terry W. Schaefer
President, Chief Executive Officer, and
Director
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
March 24, 2004 By /s/ Harry E. Cruncleton
---------------------------------------
Harry E. Cruncleton
Chairman of the Board and Director
March 24, 2004 By /s/ Terry W. Schaefer
---------------------------------------
Terry W. Schaefer
President, Chief Executive Officer, and
Director
March 24, 2004 By /s/ Bruce A. Bone
---------------------------------------
Bruce A. Bone
Executive Vice President and Chief
Financial Officer (Principal Accounting
Officer and Principal Financial
Officer)
March 24, 2004 By /s/ William C. Allison
---------------------------------------
William C. Allison
Director
March 24, 2004 By /s/ David G. Embry
---------------------------------------
David G. Embry
Director
March 24, 2004 By /s/ Jack B. Haydon
---------------------------------------
Jack B. Haydon
Director
20
March 24, 2004 By /s/ Charles G. Kurrus, III
---------------------------------------
Charles G. Kurrus, III
Director
March 24, 2004 By /s/ Edward J. Szewczyk
---------------------------------------
Edward J. Szewczyk
Director
March 24, 2004 By /s/ Wayne W. Weeke
---------------------------------------
Wayne W. Weeke
Director
21
EXHIBIT INDEX
Exhibit
Number Document
- ------ --------
3.1 Articles of Incorporation(1)
3.2 Bylaws of West Pointe Bancorp, Inc.(1)
10.1 West Pointe Bancorp, Inc. 1998 Stock Option Plan(1)
10.2 Split Dollar Agreement(1)
10.3 Employment Agreement with Harry E. Cruncleton(1) *
10.4 Deferred Directors' Fee Program(1)
10.5 Salary Continuation Agreement with Terry W. Schaefer(2)*
10.6 Split Dollar Insurance Agreement with Terry W. Schaefer(2)*
10.7 Salary Continuation Agreement with Glennon A. Albers(3)*
10.8 Salary Continuation Agreement with Bruce A. Bone(3)*
10.9 Salary Continuation Agreement with Robert G. Cady(3)*
10.10 Salary Continuation Agreement with Bonnie M. Hettenhausen(3)*
10.11 Salary Continuation Agreement with Dale A. Hoepfinger(3)*
10.12 Salary Continuation Agreement with William M. Metzger(3)*
10.13 Salary Continuation Agreement with Albert A. Miller(3)*
10.14 Amendment to Salary Continuation Agreement with Terry W. Schaefer*
10.15 Amendment to Split Dollar Insurance Agreement with Terry W. Schaefer*
10.16 Amendment to Salary Continuation Agreement with Glennon A. Albers*
10.17 Amendment to Salary Continuation Agreement with Bruce A. Bone*
10.18 Amendment to Salary Continuation Agreement with Robert G. Cady*
10.19 Amendment to Salary Continuation Agreement with Bonnie M. Hettenhausen*
10.20 Amendment to Salary Continuation Agreement with Dale A. Hoepfinger*
10.21 Amendment to Salary Continuation Agreement with William M. Metzger*
10.22 Amendment to Salary Continuation Agreement with Albert A. Miller*
13.1 Annual Report to Shareholders for Fiscal Year ended December 31, 2003
14.1 Code of Ethics
16.1 Letter Regarding Change in Certifying Accountant
22
21.1 Subsidiary of the Registrant (1)
23.1 Consent of Rubin, Brown, Gornstein & Co. LLP
23.2 Consent of Crowe Chizek and Company LLC
31.1 Rule 13a-14(a) Certification of Chief Executive Officer
31.2 Rule 13a-14(a) Certification of Chief Financial Officer
32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350
32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350
(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.
(2) Documents incorporated by reference to the Company's Annual Report on Form
10-K for the fiscal year ending December 31, 2000 at the corresponding exhibit.
All such previously filed documents are hereby incorporated by reference in
accordance with Item 601 of Regulation S-K.
(3) Documents incorporated by reference to the Company's Annual Report on Form
10-K for the fiscal year ending December 31, 2002 at the corresponding exhibit.
All such previously filed documents are hereby incorporated by reference in
accordance with Item 601 of Regulation S-K.
* These agreements are management contracts or compensation plans or
arrangements required to be filed as exhibits to this Form 10-K.
23