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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2005
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________to________________________
Commission file number 0-30505
WEST POINTE BANCORP, INC.
(Exact Name of Registrant as Specified in Its Charter)
Illinois 36-4149655
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
West Pointe Bancorp, Inc.
5701 West Main Street
Belleville, Illinois 62226
-------------------- -----
(Address of Principal Executive Offices) (Zip Code)
(618) 234-5700
--------------
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days
[X] Yes [ ] No
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
[ ] Yes [X] No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date.
Class Outstanding at May 10, 2005
----- -----------------------------
Common stock $1 par value 1,010,068
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 19
ITEM 4. CONTROLS AND PROCEDURES 19
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 19
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 20
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 20
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 20
ITEM 5. OTHER INFORMATION 20
ITEM 6. EXHIBITS 20
SIGNATURE PAGE 21
EXHIBIT INDEX 22
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WEST POINTE BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
MARCH 31, DECEMBER 31,
2005 2004
---------------- ----------------
Assets
Cash and due from banks $ 10,533,043 $ 11,737,677
Interest bearing due from banks 7,632,809 131,747
---------------- ----------------
Cash and cash equivalents 18,165,852 11,869,424
Available for sale securities 142,746,670 154,389,611
Loans held for sale -- 74,238
Loans 246,562,858 240,767,062
Allowance for loan losses (2,572,751) (2,692,903)
---------------- ----------------
Net Loans 243,990,107 238,074,159
Bank premises and equipment 12,261,723 12,393,908
Federal Home Loan Bank stock 13,482,200 13,299,700
Cash surrender value of life insurance 10,726,025 10,610,716
Accrued interest and other assets 3,533,948 3,309,368
---------------- ----------------
Total Assets $ 444,906,525 $ 444,021,124
================ ================
Liabilities
Deposits:
Noninterest bearing $ 47,491,948 $ 45,206,286
Interest bearing 329,951,986 330,038,134
---------------- ----------------
Total Deposits 377,443,934 375,244,420
Repurchase agreements 20,071,626 20,486,973
Federal Home Loan Bank advances -- 550,000
Subordinated debentures 10,310,000 10,310,000
Accrued interest and other liabilities 3,784,614 3,912,112
---------------- ----------------
Total Liabilities 411,610,174 410,503,505
Stockholders' Equity
Preferred stock, $1 par value - 50,000 shares authorized and unissued -- --
Common stock, $1 par value - 10,000,000 shares authorized; 1,027,818
and 1,024,029 shares issued at March 31, 2005 and December 31, 2004,
respectively 1,027,818 1,024,029
Surplus 14,279,253 14,113,209
Retained earnings 19,599,357 18,894,017
Treasury stock, 17,750 shares (648,575) (648,575)
Accumulated other comprehensive income (loss) (961,502) 134,939
---------------- ----------------
Total Stockholders' Equity 33,296,351 33,517,619
---------------- ----------------
Total Liabilities and Stockholders' Equity $ 444,906,525 $ 444,021,124
================ ================
See the accompanying notes to consolidated financial statements.
3
WEST POINTE BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
---------------------------------------
2005 2004
------------- -------------
Interest Income:
Loans, including fees
Taxable $ 3,683,777 $ 3,395,148
Non-taxable 43,279 39,712
Securities
Taxable 1,041,498 1,137,409
Non-taxable 415,563 396,224
Deposits with banks 21,338 5,171
------------- -------------
Total Interest Income 5,205,455 4,973,664
Interest Expense:
Deposits 1,691,559 1,400,771
Repurchase agreements 117,651 65,845
Other borrowings -- 10,332
Federal Home Loan Bank advances 3,740 77,669
Subordinated debentures 122,363 --
------------- -------------
Total Interest Expense 1,935,313 1,554,617
------------- -------------
Net Interest Income 3,270,142 3,419,047
Provision for Loan Losses (45,000) 180,000
------------- -------------
Net Interest Income After
Provision For Loan Losses 3,315,142 3,239,047
Noninterest Income:
Service charges on deposits 327,275 354,855
Mortgage banking 64,004 114,176
Trust fees 170,238 167,374
Brokerage and insurance services 63,632 75,415
Credit card income 103,436 84,384
Earnings on cash surrender value of life insurance 113,888 95,693
Gain on sale of securities, net 211,258 147,847
Other 65,772 48,887
------------- -------------
Total Noninterest Income 1,119,503 1,088,631
Noninterest Expense:
Employee compensation and benefits 1,687,362 1,726,208
Occupancy, net 189,830 165,707
Furniture and equipment 179,920 183,239
Legal and professional fees 199,446 260,775
Data processing 121,247 116,606
Advertising 116,735 78,464
Other 794,136 681,136
------------- -------------
Total Noninterest Expense 3,288,676 3,212,135
------------- -------------
Income Before Income Taxes 1,145,969 1,115,543
Income Tax Expense 259,400 258,800
------------- -------------
Net Income $ 886,569 $ 856,743
============= =============
Average Shares Outstanding:
Basic 1,006,763 991,869
Diluted 1,057,301 1,032,040
Per Share Data:
Net income:
Basic $ .88 $ .86
Diluted $ .84 $ .83
Dividends declared $ .18 $ .14
4
WEST POINTE BANCORP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
----------------------------
2005 2004
------------ ------------
Net Income $ 886,569 $ 856,743
Other Comprehensive Income (Loss), Net of Tax
Unrealized holding gains (losses) on securities
available for sale (net of income tax (benefit) of
$(591,735) and $427,466 for 2005 and 2004,
respectively) (965,461) 697,445
Less adjustment for realized gains included in net
income (net of income taxes of $80,278 and
$56,182 for 2005 and 2004, respectively 130,980 91,665
------------ ------------
Other Comprehensive Income (Loss) (1,096,441) 605,780
------------ ------------
Comprehensive Income (Loss) $ (209,872) $ 1,462,523
============ ============
See the accompanying notes to consolidated financial statements.
5
WEST POINTE BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
-------------------------------------------
2005 2004
------------------ ------------------
Operating Activities
Net income $ 886,569 $ 856,743
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 200,511 187,300
Net amortization on securities 142,720 292,677
Gain on sale of securities, net (211,258) (147,847)
Gain on sale of mortgage loans (30,048) (83,301)
Federal Home Loan Bank stock dividends (182,500) (203,400)
Provision for loan losses (45,000) 180,000
Proceeds from sales of mortgage loans held for sale 1,836,136 4,249,253
Originations of mortgage loans held for sale (1,731,850) (4,908,922)
Earnings on cash surrender value of life insurance policies (113,888) (95,693)
Increase in other assets and other liabilities, net 318,513 1,212,531
------------------ ------------------
Net Cash Provided By Operating Activities 1,069,905 1,539,341
Investing Activities
Proceeds from sales of securities available for sale 5,625,812 2,373,081
Proceeds from maturities of securities available for sale 9,891,947 4,351,004
Purchases of securities available for sale (5,574,733) (1,649,542)
Net (increase) decrease in loans (5,870,948) 2,204,757
Purchases of life insurance policies -- (200,000)
Purchases of bank premises and equipment (68,326) (158,038)
------------------ ------------------
Net Cash Used In Investing Activities 4,003,752 6,921,262
Financing Activities
Net increase (decrease) in noninterest bearing deposits 2,285,662 (243,915)
Net increase (decrease) in interest bearing deposits (86,148) 7,176,852
Net increase (decrease) repurchase agreements (415,347) 1,517,268
Decrease in other borrowings -- (75,000)
Net decrease in short-term FHLB advances (550,000) (4,400,000)
Proceeds from issuance of common stock 169,833 178,417
Dividends paid (181,229) (138,897)
------------------ ------------------
Net Cash Provided By Financing Activities 1,222,771 4,014,725
------------------ ------------------
Net Increase in Cash and Cash Equivalents 6,296,428 12,475,328
Cash and Cash Equivalents - Beginning of Year 11,869,424 8,979,883
------------------ ------------------
Cash and Cash Equivalents - End of Period $ 18,165,852 $ 21,455,211
================== ==================
Supplemental Disclosure of Cash Flow Information
Interest paid $ 1,892,979 $ 1,557,971
Real estate acquired in settlement of loans -- 29,300
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, 2004. 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, 2004 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 2004 amounts have been reclassified where appropriate to conform
to the consolidated financial statement presentation used in 2005.
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, 2004. 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,
----------------------------------
2005 2004
-------------- --------------
Net income, as reported $ 886,569 $ 856,743
Less: Total stock-based employee
compensation cost determined under the fair
value based method, net of income taxes (61,155) (56,317)
-------------- --------------
Pro forma net income $ 825,414 $ 800,426
============== ==============
Earnings per share:
Basic - as reported $ .88 $ .86
Basic - pro forma .82 .81
Diluted - as reported .84 .83
Diluted - pro forma .78 .78
7
NOTE B -- NET INCOME PER SHARE
The calculation of net income per share is summarized as follows:
THREE MONTHS ENDED
MARCH 31,
----------------------------------
2005 2004
-------------- --------------
Basic
Net Income $ 886,569 $ 856,743
============== ==============
Average common shares outstanding 1,006,763 991,869
============== ==============
Net income per common share - basic $ .88 $ .86
============== ==============
Diluted
Net Income $ 886,569 $ 856,743
============== ==============
Average common shares outstanding 1,006,763 991,869
Dilutive potential due to stock options 50,538 40,171
-------------- --------------
Average common shares outstanding 1,057,301 1,032,040
============== ==============
Net income per common share - diluted $ .84 $ .83
============== ==============
NOTE C -- NEW ACCOUNTING STANDARDS
In December 2004, the Financial Accounting Standards Board (the "FASB"),
issued Statement No. 123(R), "Share-Based Payment". This statement is a revision
of FASB Statement No. 123, "Accounting for Stock-Based Compensation". This
statement requires all public companies to record compensation cost for stock
options provided to employees in return for employee service. The cost is
measured at the fair value of the options when granted, and this cost is
expensed over the employee service period, which is normally the vesting period
of the options. Initially, the statement was scheduled to apply to awards
granted or modified after the first quarter or year beginning after June 15,
2005. In April 2005, the Securities and Exchange Commission announced the
adoption of a new rule that amends the compliance dates for the statement. The
new rule allows companies to implement the new rules at the beginning of their
next fiscal year, instead of the next reporting period, that begins after June
15, 2005. As a result, West Pointe will implement the new rule on January 1,
2006. Compensation cost will also be recorded for prior option grants that vest
after the date of adoption. The effect on results of operations will depend on
the level of future option grants and the calculation of the fair value of the
options granted at such future date, as well as the vesting periods provided,
and so cannot currently be predicted. As a result of the amendment to the
statement, there will be no additional compensation expense recorded in the
financial statements of the Company during 2005. Existing options, including the
options granted in January 2005, that will vest after the adoption date are
expected to result in additional compensation expense of approximately $182,700
in 2006.
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, 2005 and 2004, and its financial
condition, asset quality, and capital resources as of March 31, 2005 and
December 31, 2004. 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 (the "SEC"), 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 (the
"FDIC"), the State of Illinois Department of Financial and Professional
Regulation, the FASB, the Public Company Accounting Oversight Board (the
"PCAOB") and the SEC 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 2005 was $886,569 or $.84 per diluted
common share compared to net income of $856,743 or $.83 per diluted common share
for the first quarter of 2004. Return on average assets was .81% for the first
quarter of 2005 and the first quarter of 2004. Return on average equity for the
first quarter of 2005 was 10.59% compared to 10.83% for the first quarter of
2004.
The increase in net income, for the quarters compared, was primarily
attributable to an increase in noninterest income and a decrease in the
provision for loan losses. The impact of these items on net income was partially
offset by a decrease in net interest income and an increase in noninterest
expense.
Total assets at March 31, 2005 increased modestly to $444,906,525 from
$444,021,124 at December 31, 2004. At March 31, 2005, loans totaled $246,562,858
compared to $240,767,062 at December 31, 2004. At March 31, 2005, securities
totaled $142,746,670 compared to $154,389,611 at December 31, 2004. West
Pointe's primary funding source for assets is deposits, which totaled
$377,443,934 at March 31, 2005 compared to $375,244,420 at December 31, 2004.
9
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
Three Months Ended
March 31, Change
------------------------------------ ----------------------------
2005 2004 Amount Percent
---------------- ---------------- --------------- ---------
Total interest income
(fully tax-equivalent) $ 5,400,071 $ 5,168,151 $ 231,920 4.5%
Total interest expense 1,935,313 1,554,617 380,696 24.5
---------------- ---------------- --------------- ------
Net interest income 3,464,758 3,613,534 (148,776) (4.1)
Provision for loan losses (45,000) 180,000 (225,000) (125.0)
Noninterest income:
Service charges on deposits 327,275 354,855 (27,580) (7.8)
Mortgage banking 64,004 114,176 (50,172) (43.9)
Trust fees 170,238 167,374 2,864 1.7
Brokerage and insurance services 63,632 75,415 (11,783) (15.6)
Credit card income 103,436 84,384 19,052 22.6
Increase in cash surrender value of life insurance 113,888 95,693 18,195 19.0
Gains on sale of securities, net 211,258 147,847 63,411 42.9
Other 65,772 48,887 16,885 34.5
---------------- ---------------- --------------- ------
Total Noninterest Income 1,119,503 1,088,631 30,872 2.8
---------------- ---------------- --------------- ------
Noninterest Expense:
Employee compensation and benefits 1,687,362 1,726,208 (38,846) (2.3)
Occupancy, net 189,830 165,707 24,123 14.6
Furniture and equipment 179,920 183,239 (3,319) (1.8)
Legal and professional fees 199,446 260,775 (61,329) (23.5)
Data processing 121,247 116,606 4,641 4.0
Advertising 116,735 78,464 38,271 48.8
Other 794,136 681,136 113,000 16.6
---------------- ---------------- --------------- ------
Total Noninterest Expense 3,288,676 3,212,135 76,541 2.4
---------------- ---------------- --------------- ------
Income Before Income Taxes 1,340,585 1,310,030 30,555 2.3
Less: tax-equivalent adjustment 194,616 194,487 129 0.1
Income tax expense 259,400 258,800 600 0.2
---------------- ---------------- --------------- ------
Net Income $ 886,569 $ 856,743 $ 29,826 3.5%
================ ================ =============== ======
NET INTEREST INCOME
Tax-equivalent net interest income decreased $148,776 or 4.1% for the
first quarter of 2005 compared to the first quarter of 2004. The decrease in
tax-equivalent net interest income for the first quarter of 2005 compared to the
first quarter of 2004 was attributable to an increase in interest expense,
partially offset by an increase in tax-equivalent interest income.
Total tax-equivalent interest income increased $231,920 or 4.5% for the
first quarter of 2005 compared to the first quarter of 2004. The increase in
tax-equivalent interest income for the quarters compared was primarily due to a
higher interest rate environment coupled with a higher volume of interest
earning assets. Average interest earning assets increased 3.7% to $410,090,131
for the first quarter of 2005 from $395,270,183 for the first quarter of 2004.
The increase in average interest earning assets was primarily due to internal
growth in the loan portfolio. The average rate earned on interest earning assets
increased slightly to 5.28% in 2005 from 5.25% in 2004. The increase in the
average rate earned was primarily due to the higher interest rate environment,
including the impact of 7 increases in the prime-lending rate totaling 175 basis
points. West Pointe's loan portfolio yields tend to follow trends in the
prime-lending rate. While loan yields tend to follow trends in the prime-lending
rate, they may not follow simultaneously with such trends.
10
Total interest expense increased $380,696 for the first quarter of 2005
compared to the first quarter of 2004. The increase in interest expense was
primarily attributable to the higher interest rate environment coupled with a
higher volume of interest bearing liabilities. Average interest bearing
liabilities increased 3.2% to $362,979,659 in 2005 compared to $351,833,580 in
2004. The increase in average interest bearing liabilities was primarily due to
increases in the average balances of interest bearing demand deposits, time
deposits and the Company's subordinated debentures. These increases were
partially offset by decreases in the average balance of savings and money market
deposits and Federal Home Loan Bank advances. The average interest rate paid on
interest bearing liabilities increased 21.3% to 2.16% in 2005 from 1.78% in
2004.
The net interest margin was 3.37% for the first quarter of 2005 compared
to 3.67% for the first quarter of 2004. The decrease in the net interest margin
for the periods compared resulted from the Company's cost of funds on interest
bearing liabilities increasing at a faster pace than the Company's yield on
interest earning assets. During the first quarter of 2005 compared to the first
quarter of 2004, the Company's cost of funds on interest bearing liabilities
increased 38 basis points while the Company's yield on earning assets increased
3 basis points.
PROVISION FOR LOAN LOSSES
The Company recorded a negative provision for loan losses of $45,000
during the first quarter of 2005 compared to a provision for loan losses of
$180,000 during the first quarter of 2004. The provision for loan losses is the
charge to earnings that management determines to be necessary to maintain the
adequacy of the allowance for loan losses. Factors which influence management's
determination of the provision for loan losses include, among other things, a
review of individual loans, size and quality of the loan portfolio, current and
projected economic conditions, regulatory guidelines, and historical loan loss
experience. The reduction in the provision for loan losses during the first
quarter of 2005 compared to the first quarter of 2004 primarily resulted from
continued improvement in asset quality indicators, in particular, lower levels
of net charge-offs and nonperforming loans. Activity in the allowance for loan
losses and nonperforming loan data is presented under "ASSET QUALITY."
NONINTEREST INCOME
Total noninterest income was $1,119,503 for the first quarter of 2005
compared to $1,088,631 for the first quarter of 2004. Service charges on deposit
accounts decreased $27,580 for the first quarter of 2005 compared to the first
quarter of 2004. This decrease resulted from a reduction in volume of service
charges on business deposit accounts. Income from mortgage banking services
decreased $50,172 for the first quarter of 2005 compared to the first quarter of
2004. The decrease in mortgage banking income for the periods compared was
primarily due to a higher interest rate environment, which resulted in a reduced
level of mortgage origination and refinancing activities. Mortgage loan sales
volume depends heavily on the prevailing interest rates and the strength of the
local real estate market. As of March 31, 2005, management anticipates that the
level of mortgage banking income will remain stable during the remainder of
2005. Income from trust fees, income from brokerage and insurance services and
credit card income collectively increased $10,133 for the first quarter of 2005
compared to the first quarter of 2004. The combined increase from these
components of noninterest income was primarily due to normal fluctuations.
Income from trust fees is derived primarily from management of estates, personal
trusts and investment agencies. Products offered through our brokerage and
insurance function include stocks, bonds, mutual funds, annuities and other
non-deposit investment products. Credit card income primarily consists of
merchant processing fees for credit card transactions, revenues received from
West Pointe's "debit" card product and interchange fees received on credit card
transactions of West Pointe's cardholders. During the first quarter of 2005,
West Pointe recorded an increase in cash surrender value of life insurance of
$113,888 compared to an increase of $95,693 for the first quarter of 2004. 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. The remaining policies serve as
funding mechanisms for various employee benefit plans. 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. The
increase in income from this component of noninterest income was primarily due
to higher rates earned on the BOLI policies coupled with the impact of earnings
on additional policies purchased during the second quarter of 2004. Net
securities gains recorded during the first quarter of 2005 totaled $211,258
compared to $147,847 during the first quarter of 2004. Net securities gains
recorded during the quarters compared primarily resulted from opportunities in
the marketplace to take such gains. Other noninterest income includes such items
as interchange fees on automated teller machine (ATM) transactions, safe deposit
rental fees, check printing fees, wire transfer fees
11
and other miscellaneous fees. Collectively, the components of other noninterest
income generated revenues of $65,772 for the first quarter of 2005 compared to
$48,887 for the first quarter of 2004. The increase in other noninterest income
for the first quarter of 2005 compared to the first quarter of 2004 resulted
from modest increases in a number of categories of noninterest income.
NONINTEREST EXPENSE
Total noninterest expense was $3,288,676 for the first quarter of 2005
compared to $3,212,135 for the first quarter of 2004. The increase in
noninterest expense for the quarters compared was primarily attributable to
increases in various components of other noninterest expense. Employee
compensation and benefit expenses decreased $38,846 for the first quarter of
2005 compared to the first quarter of 2004. The decrease in employee
compensation and benefits for the quarters compared was primarily attributable
to a reduction in the West Pointe's workforce following a comprehensive analysis
of the Company's operations and related staffing levels. As of March 31, 2005,
the Company had 117 full-time equivalent employees compared to 126 full-time
equivalent employees as of March 31, 2004. The decrease in employee compensation
and benefits that resulted from the aforementioned staffing analysis was
partially offset by normal merit increases. Net occupancy expenses increased
$24,123 for the first quarter of 2005 compared to the first quarter of 2004. The
increase in net occupancy expenses for the periods compared was primarily
attributable to normal operations. Furniture and equipment expenses remained
stable for the first quarter of 2005 compared to the first quarter of 2004.
Legal and professional fees decreased $61,329 for the first quarter of 2005
compared to the first quarter of 2004. The decrease in legal and professional
fees for the quarters compared was primarily attributable to a reduced level of
legal fees paid in connection with certain lawsuits of which the Company was a
party. Certain of those lawsuits were resolved in 2004. Data processing expenses
remained stable for the first quarter of 2005 compared to the first quarter of
2004. Advertising expenses increased $38,271 for the first quarter of 2005
compared to the first quarter of 2004. The increase in advertising expenses for
the quarters compared was primarily attributable to expanded promotional
activities in areas served by West Pointe's banking centers. Other noninterest
expense increased $113,000 for the first quarter of 2005 compared to the first
quarter of 2004. Other noninterest expense includes such items as FDIC insurance
premiums, mortgage banking expenses, contributions, telephone expenses, postage
costs, certain credit card program expenses and other miscellaneous expenses.
The increase in other noninterest expense for the quarters compared was
primarily attributable to a write-down, in the amount of $81,346, of one parcel
of foreclosed property.
INCOME TAX EXPENSE
West Pointe recorded income tax expense of $259,400 for the first quarter
of 2005 and remained stable when compared to income tax expense of $258,800
recorded during the first quarter of 2004. The effective income tax rate was
22.6% for the first quarter of 2005 compared to 23.2% for the first quarter of
2004. The slight change in the effective income tax rates for the 2005 period
compared to the 2004 period was partially attributable to a modest increase in
the level of tax-exempt income as a percentage of income before income taxes.
FINANCIAL CONDITION
GENERAL
Certain components of West Pointe's consolidated balance sheet at March
31, 2005 compared to December 31, 2004 are presented in summary form in Table 2.
Total assets increased $885,401 to $444,906,525 compared to $444,021,124 at
December 31, 2004. The increase in total assets was primarily due to an increase
in the volume of loans and interest bearing due from bank balances, partially
offset by a decrease in securities.
12
TABLE 2 - Selected Comparative Balance Sheet Items
March 31, December 31,
2005 2004
---------------- ----------------
Total assets $ 444,906,525 $ 444,021,124
Loans 246,562,858 240,767,062
Securities 142,746,670 154,389,611
Deposits 377,443,934 375,244,420
Repurchase agreements 20,071,626 20,486,973
Federal Home Loan Bank advances -- 550,000
Stockholders' equity 33,296,351 33,517,619
LOANS
Loans increased 2.4%, or $5,795,796, from year-end 2004 to March 31, 2005.
The majority of this increase was derived from growth in the commercial,
financial and agricultural and real estate construction segments of the
portfolio. West Pointe also experienced a modest increase in the 1-4 family
residential real estate segment of the portfolio. When compared to several
previous quarters, West Pointe's loan demand increased considerably during the
last two quarters of 2004 and the first quarter of 2005.
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,
2005 2004
---------------------------- ----------------------------
Amount Percent Amount Percent
---------------- ------- ---------------- -------
Commercial borrowers:
- ---------------------
Commercial, financial and agricultural $ 66,069,670 26.7% $ 64,073,669 26.6%
Commercial real estate 81,251,369 33.0 83,832,494 34.8
Real estate construction 36,668,766 14.9 30,794,287 12.8
---------------- ------ ---------------- ------
Total commercial 183,989,805 74.6 178,700,450 74.2
---------------- ------ ---------------- ------
Consumer borrowers:
- -------------------
1-4 family residential real estate 52,595,312 21.4 51,798,164 21.5
Other consumer loans 9,977,741 4.0 10,268,448 4.3
---------------- ------ ---------------- ------
Total consumer 62,573,053 25.4 62,066,612 25.8
---------------- ------ ---------------- ------
Total loans $ 246,562,858 100.0% $ 240,767,062 100.0%
================ ===== ================ ======
SECURITIES
Total securities decreased $11,642,941 to $142,746,670 at March 31, 2005
compared to $154,389,611 at year-end 2004. The security 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 security portfolio also supplies securities as required
collateral for certain deposits and for repurchase agreements. The majority of
this decrease resulted from principal payments received on the Company's
mortgage-backed securities and from management's decision to sell certain
securities, which resulted from favorable opportunities in the market place.
Proceeds from the aforementioned principal payments and sales were used to fund
West Pointe's increased loan demand. Additional information regarding West
Pointe's repurchase agreements is presented and discussed under "Borrowings."
All of West Pointe's securities are classified as available for sale.
Available for sale securities are recorded at fair value. Net unrealized losses
on available for sale securities totaled $1,550,811 at March 31, 2005, compared
to net unrealized gains of $217,643 at December 31, 2004. The change in net
unrealized gains and losses from December 31, 2004 to March 31, 2005 was
primarily attributable to a higher interest rate environment.
13
Table 4 presents the composition of securities at their carrying values
for the periods presented.
TABLE 4 - Security Portfolio Composition
March 31, December 31,
2005 2004
------------ ------------
Available for sale securities:
U.S. government agencies 3,956,240 3,970,000
Mortgage-backed securities 95,616,375 108,897,319
Obligations of states and political subdivisions 43,174,055 41,522,292
------------ ------------
Total available for sale $142,746,670 $154,389,611
============ ============
Table 5 presents the composition of securities with unrealized losses at
March 31, 2005, presented by length of time in an unrealized loss position.
TABLE 5 - Composition of Securities with Unrealized Losses
Less than 12 Months 12 Months or More Total
----------------------------- ----------------------------- -----------------------------
Fair Unrealized Fair Unrealized Fair Unrealized
Value Loss Value Loss Value Loss
------------ ------------ ------------ ------------ ------------ ------------
U.S. government agencies $ 3,956,240 $ (44,356) $ --- $ --- $ 3,956,240 $ (44,356)
Mortgage-backed securities 68,561,410 (1,083,072) 21,867,575 (650,257) 90,428,985 (1,733,329)
Obligations of states and
political subdivisions 21,466,677 (691,045) --- --- 21,466,677 (691,045)
------------ ------------ ------------ ------------ ------------ ------------
Total temporarily impaired $ 93,984,327 $ (1,818,473) $ 21,867,575 $ (650,257) $115,851,902 $ (2,468,730)
============ ============ ============ ============ ============ ============
West Pointe management does not currently expect any losses to result from
any unrealized losses in the portfolio, as maturities of securities and other
funding sources should meet the Company's liquidity needs. Any losses taken will
result from strategic or discretionary decisions to adjust the security
portfolio.
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 $2,199,514 to $377,443,934 at March 31, 2005 from
$375,244,420 at year-end 2004. The noninterest bearing demand deposit and
savings and money market deposit components of the deposit portfolio increased
$2,285,662 and $2,394,937, respectively, from year-end 2004. The increases in
these components of the deposit portfolio were primarily attributable to normal
fluctuations, partially offset by decreases of $633,460 and $1,847,625,
respectively, in the interest bearing demand deposit and time deposit components
of the deposit portfolio. These decreases were also attributable to normal
fluctuations.
14
Table 6 sets forth the composition of deposits and the percentage of each
category to total deposits for the periods presented.
TABLE 6 - Deposit Liability Composition
March 31, December 31,
2005 2004
------------------------- -------------------------
Amount Percent Amount Percent
------------ ------- ------------ -------
Noninterest bearing demand deposits $ 47,491,948 12.6% $ 45,206,286 12.0%
Interest bearing demand deposits 37,642,906 10.0 38,276,366 10.2
Savings and money market deposits 117,024,870 31.0 114,629,933 30.6
Time deposits $100,000 or more 65,333,445 17.3 68,142,051 18.2
Time deposits less than $100,000 109,950,765 29.1 108,989,784 29.0
------------ ----- ------------ -----
Total deposits $377,443,934 100.0% $375,244,420 100.0%
============ ===== ============ =====
BORROWINGS
Total borrowings amounted to $30,381,626 at March 31, 2005 compared to
$31,346,973 at year-end 2004. At March 31, 2005, borrowings consisted of
repurchase agreements and subordinated debentures. At year-end 2004, borrowings
consisted of repurchase agreements, an overnight Federal Home Loan Bank advance
and subordinated debentures.
At March 31, 2005, repurchase agreements decreased $415,347 from year-end
2004. These borrowings serve as an alternative funding source to deposits. The
majority of the Company's 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 December 31, 2004, the Bank had one $550,000 Federal Home Loan Bank
overnight advance. This overnight advance served as a funding alternative to
federal funds purchased.
At March 31, 2005 and December 31, 2004, West Pointe had subordinated
debentures totaling $10,310,000. On December 15, 2004, the Company completed a
private placement to an institutional investor of $10,000,000 of floating rate
trust preferred securities, through a newly formed unconsolidated Delaware trust
affiliate, West Pointe Statutory Trust I (the "Trust"). The trust preferred
securities mature in December 2034, are redeemable at the Company's option
beginning in five years, and require quarterly distributions by the Trust to the
holder of the trust preferred securities, initially at an interest rate of
4.70%, which resets quarterly at the three-month LIBOR rate plus 2.25%. As of
March 31, 2005, the obligation reflected an interest rate of 5.26%.
The proceeds from the sale of the trust preferred securities were used by
the Trust to purchase $10,310,000 in aggregate principal amount of the Company's
floating rate junior subordinated debentures. A portion of the net proceeds to
the Company from the sale of the debentures to the Trust was used by the Company
to pay off a line of credit with an unaffiliated bank. The Company expects that
the remainder of the net proceeds will be used for general corporate purposes.
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.
15
At March 31, 2005, nonperforming assets totaled $2,654,248 or .60%
of total assets, compared to nonperforming assets at year-end 2004 of
$5,292,309 or 1.19% of total assets. Nonperforming assets at March 31,
2005, included $830,054 relating to three parcels of 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, management evaluates the foreclosed properties
and a valuation allowance is established if the estimated fair value
declines. As a result of such evaluation and prior to March 31, 2005,
management recorded a write-down in the amount of $81,346 on one parcel of
foreclosed property. As of March 31, 2005, management does not anticipate
any significant losses upon the disposition of the remaining foreclosed
property. Nonperforming loans in the commercial real estate segment of the
portfolio decreased $2,257,352 from December 31, 2004. The majority of
this decrease is related to loans to one commercial borrower. Management
is in various stages of workout to remedy or liquidate this and other
nonperforming loans. The remaining categories of nonperforming loans
remained relatively stable at March 31, 2005 compared to December 31,
2004.
Table 7 sets forth a summary of West Pointe's loan portfolio mix and
nonperforming assets.
TABLE 7 - Loan Portfolio Mix and Nonperforming Assets
March 31, 2005 December 31, 2004
----------------------------------- -----------------------------------
Loans and Loans and
Foreclosed Non-performing Foreclosed Non-performing
Property Assets Property Assets
--------------- ---------------- --------------- ----------------
Commercial borrowers:
- ---------------------
Commercial, financial and agricultural $ 66,069,670 $ 26,420 $ 64,073,669 $ 38,631
Commercial real estate 81,251,369 1,282,892 83,832,494 3,540,244
Real estate construction 36,668,766 ---- 30,794,287 ----
--------------- ---------------- --------------- ----------------
Total commercial 183,989,805 1,309,312 178,700,450 3,578,875
Consumer borrowers:
- -------------------
1-4 family residential real estate 52,595,312 310,752 51,798,164 556,802
Other consumer loans 9,977,741 204,130 10,268,448 245,232
--------------- ---------------- --------------- ----------------
Total consumer 62,573,053 514,882 62,066,612 802,034
--------------- ---------------- --------------- ----------------
Total loans 246,562,858 1,824,194 240,767,062 4,380,909
Foreclosed property 830,054 830,054 911,400 911,400
--------------- ---------------- --------------- ----------------
Total $ 247,392,912 $ 2,654,248 $ 241,678,462 $ 5,292,309
=============== ================ =============== ================
Nonaccrual loans $ 1,605,167 $ 3,842,710
Accruing loans past due 90 days or more 219,027 538,199
---------------- ----------------
Total nonperforming loans 1,824,194 4,380,909
Foreclosed property 830,054 911,400
---------------- ----------------
Total nonperforming assets $ 2,654,248 $ 5,292,309
================ ================
Nonperforming loans to total loans .74% 1.82%
Nonperforming assets to total loans
and foreclosed property 1.07% 2.19%
Nonperforming assets to total assets .60% 1.19%
Net charge-offs for the first quarter of 2005 totaled $75,152
compared to $333,869 for the first quarter of 2004. Net charge-offs
recorded during the first quarter of 2005 in all segments of the loan
portfolio were not significant. Net charge-offs recorded during the first
quarter of 2004 in the residential real estate segment of the loan
portfolio primarily related to several loans to one borrower. Net
charge-offs and recoveries recorded during the first quarter of 2004 in
all other segments of the loan portfolio were not significant.
West Pointe's allowance for loan losses at March 31, 2005 decreased
to $2,572,751 from $2,692,903 at December 31, 2004. The decrease in the
allowance for loan losses resulted from net charge-offs and the negative
provision for loan losses recorded during the first quarter of 2005. The
negative provision for loan losses resulted from continuing positive asset
quality trends, in particular, a lower level of nonperforming loans. At
March 31, 2005, the allowance for loan losses represented 141.03% of
nonperforming loans compared to 119.89% at March 31,
16
2004 and 61.47% at December 31, 2004. The ratio of the allowance for loan
losses to total loans was 1.04% at March 31, 2005 compared to 1.19% at
March 31, 2004 and 1.12% at December 31, 2004. Management believes that
the allowance for loan losses at March 31, 2005 was adequate to absorb
probable 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.
Table 8 presents information pertaining to the activity in and an
analysis of West Pointe's allowance for loan losses for the periods
presented.
TABLE 8 - Allowance For Loan Losses
Three Months Ended
March 31,
-----------------------------
2005 2004
----------- -----------
Balance at beginning of period $ 2,692,903 $ 2,697,139
Loans charged off:
Commercial, financial and agricultural 18,998 15,064
Real estate:
Commercial 2,767 ----
Residential 29,000 352,279
----------- -----------
Total real estate 31,767 352,279
Consumer 47,005 31,377
----------- -----------
Total charge-offs 97,770 398,720
----------- -----------
Recoveries of loans previously charged off:
Commercial, financial and agricultural 13,467 4,030
Residential real estate ---- 60,452
Consumer 9,151 369
----------- -----------
Total recoveries 22,618 64,851
----------- -----------
Net charge-offs 75,152 333,869
Provision for loan losses (45,000) 180,000
----------- -----------
Balance at end of period $ 2,572,751 $ 2,543,270
=========== ===========
Net charge-offs (annualized) as a
percent of average total loans .12% .62%
Allowance for loan losses to total loans 1.04% 1.19%
Allowance for loan losses to
nonperforming loans 141.03% 119.89%
CAPITAL RESOURCES
CAPITAL RESOURCES
Total stockholders' equity decreased $221,268 from $33,517,619 at
December 31, 2004 to $33,296,351 at March 31, 2005. Net income for the
three-month period ended March 31, 2005 was $886,569. The decrease to
total stockholders' equity resulting from the change in other
comprehensive income (loss) was partially offset by net income recorded
during the quarter. At March 31, 2005, West Pointe recorded an accumulated
other comprehensive loss of $961,502 compared to accumulated other
comprehensive income of $134,939 at December 31, 2004. The change in
accumulated other comprehensive income (loss) is comprised of the
unrealized gain or loss on available for sale securities.
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
17
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, 2005, West Pointe's Tier 1 and Total
Capital ratios were 15.86% and 16.79%, 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 March 31, 2005, was 9.97%. Accordingly, West Pointe has satisfied
these regulatory guidelines.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 2004, the FASB issued Statement No. 123(R), "Share-Based
Payment". This statement is a revision of FASB Statement No. 123,
"Accounting for Stock-Based Compensation". This statement requires all
public companies to record compensation cost for stock options provided to
employees in return for employee service. The cost is measured at the fair
value of the options when granted, and this cost is expensed over the
employee service period, which is normally the vesting period of the
options. Initially, the statement was scheduled to apply to awards granted
or modified after the first quarter or year beginning after June 15, 2005.
In April 2005, the Securities and Exchange Commission announced the
adoption of a new rule that amends the compliance dates for the statement.
The new rule allows companies to implement the new rules at the beginning
of their next fiscal year, instead of the next reporting period, that
begins after June 15, 2005. As a result, West Pointe will implement the
new rule on January 1, 2006. Compensation cost will also be recorded for
prior option grants that vest after the date of adoption. The effect on
results of operations will depend on the level of future option grants and
the calculation of the fair value of the options granted at such future
date, as well as the vesting periods provided, and so cannot currently be
predicted. As a result of the amendment to the statement, there will be no
additional compensation expense recorded in the financial statements of
the Company during 2005. Existing options, including the options granted
in January 2005, that will vest after the adoption date are expected to
result in additional compensation expense of approximately $182,700 in
2006.
CRITICAL ACCOUNTING POLICIES
There have been no significant changes in the Company's critical
accounting policies from those disclosed as of December 31, 2004.
CONTRACTUAL OBLIGATIONS
The Company enters into certain contractual obligations in the
ordinary course of operations. The required payments under these contracts
represent future cash requirements of the Company. The Company's
significant fixed and determinable contractual obligations, as of March
31, 2005, are set forth in the following table:
Payments Due
--------------------------------------------------------------------------------
After One After Three
Year Years
One Year Through Through After
or Less Three Years Five Years Five Years Total
------------ ------------ ------------ ------------ ------------
Time certificates of deposit $118,592,216 $ 47,753,560 $ 8,933,120 $ 5,314 $175,284,210
Operating leases 47,520 79,200 ---- ---- 126,720
------------ ------------ ------------ ------------ ------------
Total contractual cash obligations $118,639,736 $ 47,832,760 $ 8,933,120 $ 5,314 $175,410,930
============ ============ ============ ============ ============
OFF-BALANCE SHEET ARRANGEMENTS
For information on the Company's significant off-balance sheet
commitments as of December 31, 2004, see the information incorporated by
reference under "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2004.
18
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, 2004, the end of the last fiscal year.
ITEM 4. 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 Securities Exchange Act of 1934,
as amended (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 disclosure 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 CONTROL
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 II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings
before any court, administrative agency or 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's 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.
19
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
PURCHASERS
The Company does not have any plans or programs to repurchase shares
of its common stock, nor has the Company made any repurchases of its
securities during the first quarter of 2005.
Issuer Purchases of Equity Securities
-------------------------------------------------------------------------------------
Total Number of Maximum Number of
Shares Purchased as Shares that May
Part of Publicly Yet Be Purchased
Total Number of Average Price Announced Plans or Under the Plans or
Period Shares Purchased Paid per Share Programs Programs
- ------------- ---------------- -------------- ------------------- ------------------
January 2005 ---- ---- ---- ----
February 2005 ---- ---- ---- ----
March 2005 ---- ---- ---- ----
---------------- -------------- ------------------- ------------------
Total ---- ---- ---- ----
================ ============== =================== ==================
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 28, 2005 for the
Company's Annual Meeting of Shareholders, which was held on April
27, 2005. 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 II For Against Withheld
- ---------------------- ------------ ------- ----------
David G. Embry 779,683.3942 0 8,477.3164
Jack B. Haydon 781,077.5801 0 7,083.1305
Charles G. Kurrus, III 781,077.5801 0 7,083.1305
Other directors continuing in office are as follows: William C.
Allison, Harry E. Cruncleton, Terry W. Schaefer, Dr. Edward J.
Szewczyk and Wayne W. Weeke.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS
Exhibits: See Exhibit Index on page 22 hereof.
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 13, 2005 By: /s/ Terry W. Schaefer
--------------------------------
Terry W. Schaefer
President and Chief
Executive Officer
(on behalf of the Registrant)
DATE: May 13, 2005 By: /s/ Bruce A. Bone
--------------------------------
Bruce A. Bone
Executive Vice President and
Chief Financial Officer
(as principal financial officer)
21
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).
31.1 Certification of President and Chief Executive Officer Pursuant to
Rule 13a-14(a) or 15d-15(e) of the Exchange Act, as Adopted Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Executive Vice President and Chief Financial
Officer Pursuant to Rule 13a-14(a) or 15d-15(e) of the Exchange Act,
as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
32.1 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.
32.2 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. 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