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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 September 30, 2002
[ ] 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 0-20402
WILSON BANK HOLDING COMPANY
(Exact Name of Registrant As Specified in its Charter)
Tennessee 62-1497076
------------------------------- -----------------------------
(State or Other Jurisdiction of (IRS Employer Identification
Incorporation or Organization) Number)
623 West Main Street, Lebanon, TN 37087
-----------------------------------------------------
(Address of Principal Executive Offices and Zip Code)
(615) 444-2265
----------------------------------------------------
(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.
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.
Common stock outstanding: 2,108,019 shares at November 13, 2002
1
PART 1: FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited consolidated financial statements of the Company and its
subsidiaries are as follows:
Consolidated Balance Sheets - September 30, 2002 and December
31, 2001.
Consolidated Statements of Earnings - For the three months and
nine months ended September 30, 2002 and 2001.
Consolidated Statements of Comprehensive Earnings - For the
three months and nine months ended September 30, 2002 and
2001.
Consolidated Statements of Cash Flows - For the nine months
ended September 30, 2002 and 2001.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Disclosures required by Item 3 are incorporated by reference
to Management's Discussion and Analysis of Financial Condition
and Results of Operation
Item 4. Controls and Procedures
PART II: OTHER INFORMATION
Item 1. Legal Proceedings.
Item 2. Changes in Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
Signatures
2
WILSON BANK HOLDING COMPANY
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2002 AND DECEMBER 31, 2001
(UNAUDITED)
September 30, December 31,
2002 2001
------------- ------------
(In Thousands)
Assets
Loans $ 536,390 494,766
Less: Allowance for loan losses (6,569) (5,489)
--------- -------
Net loans 529,821 489,277
Securities:
Held to maturity, at cost (market value $15,896,000 and $16,387,000,
respectively) 15,207 16,130
Available-for-sale, at market (amortized cost $85,808,000 and $ 80,239,000,
respectively) 87,408 80,428
--------- -------
Total securities 102,615 96,558
Loans held for sale 5,113 4,369
Other interest bearing assets 2,431 2,003
Federal funds sold 45,709 31,506
--------- -------
Total earning assets 685,689 623,713
Cash and due from banks 19,612 20,154
Bank premises and equipment, net 15,295 15,139
Accrued interest receivable 4,665 4,648
Other real estate 791 415
Deferred income tax asset 1,053 1,579
Other assets 2,417 2,156
--------- -------
Total assets $ 729,522 667,804
========= =======
Liabilities and Stockholders' Equity
Deposits $ 651,982 602,576
Securities sold under repurchase agreements 13,675 8,551
Federal Home Loan Bank Advances 1,022 1,370
Accrued interest and other liabilities 4,239 4,466
Minority interest 5,606 4,870
--------- -------
Total liabilities 676,524 621,833
--------- -------
Stockholders' equity:
Common stock, $2.00 par value; authorized 5,000,000 shares, issued 2,108,019
shares at September 30, 2002 and 2,054,089 shares at
December 31, 2001, respectively 4,216 4,108
Additional paid-in capital 13,931 11,847
Retained earnings 33,935 29,903
Net unrealized gains on available-for-sale securities, net of income
tax expense of $560,000 and $69,000, respectively 916 113
--------- -------
Total stockholders' equity 52,998 45,971
--------- -------
Total liabilities and stockholders' equity $ 729,522 667,804
========= =======
See accompanying notes to consolidated financial statements (unaudited).
3
WILSON BANK HOLDING COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
-----------------------------------------------------------
2002 2001 2002 2001
-------- -------- -------- --------
(Dollars In Thousands (Dollars In Thousands
Except Per Share Amounts) Except Per Share Amounts)
Interest income:
Interest and fees on loans $10,482 10,412 $30,893 31,019
Interest and dividends on securities:
Taxable securities 1,068 1,283 3,436 4,116
Exempt from Federal income taxes 174 184 531 552
Interest on loans held for sale 45 47 116 125
Interest on Federal funds sold 122 319 449 1,257
------- ------- ------- -------
Total interest income 11,891 12,245 35,425 37,069
------- ------- ------- -------
Interest expense:
Interest on negotiable order of withdrawal accounts 100 137 287 418
Interest on money market and savings accounts 1,002 1,198 2,949 3,712
Interest on certificates of deposit 3,381 4,973 10,395 15,718
Interest on securities sold under repurchase 69 111 174 319
Interest on Federal Home Loan Bank advances 25 27 69 87
Interest on Fed funds purchased 1 1 6 1
------- ------- ------- -------
Total interest expense 4,578 6,447 13,880 20,255
------- ------- ------- -------
Net interest income before provision for possible
loan losses 7,313 5,798 21,545 16,814
Provision for possible loan losses 652 461 1,697 1,349
------- ------- ------- -------
Net interest income after provision for possible
loan losses 6,661 5,337 19,848 15,465
------- ------- ------- -------
Non-interest income:
Service charges on deposit accounts 1,075 984 3,068 2,890
Other fees and commissions 308 618 1,032 1,691
Gain on sale of loans 483 291 1,000 896
------- ------- ------- -------
Total non-interest income 1,866 1,893 5,100 5,477
Non-interest expense
Salaries and employee benefits 2,480 2,489 7,743 7,280
Occupancy expenses, net 325 315 926 898
Furniture and equipment expense 200 307 599 941
Data processing expense 112 77 299 274
Directors' fees 152 139 476 438
Other operating expenses 1,388 1,054 3,698 2,907
Loss on sale of other real estate 12 -- 55 5
Minority interest in net earnings of subsidiaries 234 143 686 425
------- ------- ------- -------
Total non-interest expense 4,903 4,524 14,482 13,168
------- ------- ------- -------
Earnings before income taxes 3,624 2,706 10,466 7,774
Income taxes 1,391 1,032 4,057 2,960
------- ------- ------- -------
Net earnings $ 2,233 1,674 $ 6,409 4,814
======= ======= ======= =======
Basic earnings per common share $ 1.06 0.82 $ 3.08 2.37
======= ======= ======= =======
Diluted earnings per common share $ 1.06 0.82 $ 3.07 2.37
======= ======= ======= =======
Dividends per share $ 0.60 0.50 $ 1.15 0.95
======= ======= ======= =======
See accompanying notes to consolidated financial statements (unaudited).
4
WILSON BANK HOLDING COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
-----------------------------------------
2002 2001 2002 2001
-------- -------- -------- --------
(In Thousands) (In Thousands)
Net earnings $ 2,233 1,674 $ 6,409 4,814
------- ------- ------- -------
Other comprehensive earnings net of tax:
Unrealized gains on available-for-sale securities
arising during period, net of tax expense of
$260,000, $353,000, $491,000, and $768,000, respectively 425 577 803 1,257
------- ------- ------- -------
Other comprehensive earnings 425 577 803 1,257
------- ------- ------- -------
Comprehensive earnings $ 2,658 2,251 $ 7,212 6,071
======= ======= ======= =======
See accompanying notes to consolidated financial statements (unaudited).
5
WILSON BANK HOLDING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(UNAUDITED)
2002 2001
-------- --------
(In Thousands)
Cash flows from operating activities:
Interest received $ 35,309 36,461
Fees and commissions received 4,100 4,581
Proceeds from sale of loans 50,264 45,234
Origination of loans held for sale (50,008) (46,336)
Interest paid (14,667) (19,873)
Cash paid to suppliers and employees (12,548) (10,895)
Income taxes paid (4,708) (3,352)
-------- --------
Net cash provided by operating activities 7,742 5,820
-------- --------
Cash flows from investing activities:
Proceeds from maturities of held-to-maturity securities 2,002 1,463
Proceeds from maturities of available-for-sale securities 57,819 69,550
Purchase of held-to-maturity securities (1,077) (1,173)
Purchase of available-for-sale securities (63,365) (73,541)
Loans made to customers, net of repayments (43,373) (46,317)
Purchase of premises and equipment (409) (521)
Proceeds from sale of other real estate 701 552
Proceeds from sale of premises and equipment -- 118
Increase in other interest bearing assets (354) --
-------- --------
Net cash used in investing activities (48,056) (49,869)
-------- --------
Cash flows from financing activities:
Net increase in non-interest bearing, savings
and NOW deposit accounts 28,162 12,129
Net increase in time deposits 21,244 26,442
Increase in securities sold under repurchase agreements 5,124 3,709
Net decrease in advances from Federal Home Loan Bank (348) (375)
Increase in Federal Funds Purchased -- 139
Dividends paid (2,377) (1,918)
Dividends paid to minority shareholders (207) (120)
Proceeds from sale of stock to minority shareholders 185 107
Proceeds from sale of common stock 2,151 1,741
Proceeds from exercise of stock options 41 31
-------- --------
Net cash provided by financing activities 53,975 41,885
-------- --------
Net increase (decrease) in cash and cash equivalents 13,661 (2,164)
Cash and cash equivalents at beginning of period 51,660 57,866
-------- --------
Cash and cash equivalents at end of period $ 65,321 55,702
======== ========
See accompanying notes to consolidated financial statements (unaudited).
6
WILSON BANK HOLDING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(UNAUDITED)
2002 2001
-------- --------
(In Thousands)
Reconciliation of net earnings to net cash provided by
Operating activities:
Net earnings $ 6,409 4,814
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 228 803
Provision for loan losses 1,697 1,349
Minority interests in net earnings of commercial bank
subsidiaries 686 425
FHLB dividend reinvestment (74) (90)
Loss on sale of other real estate 55 5
Increase in loans held for sale (744) (1,998)
Increase in deferred tax assets (10) (12)
Increase in other assets, net (261) (237)
Decrease in taxes payable (641) (380)
Increase in interest receivable (17) (391)
Increase in other liabilities 1,201 1,150
Increase (decrease) in interest payable (787) 382
------- -------
Total adjustments 1,333 1,006
------- -------
Net cash provided by operating activities $ 7,742 5,820
======= =======
Supplemental schedule of non-cash activities:
Unrealized gain in values of securities
available-for-sale, net of income tax expense of $491,000
and $768,000 for the nine months
ended September 30,2002 and 2001, respectively $ 803 1,257
======= =======
Non-cash transfers from loans to other real estate $ 1,132 480
======= =======
See accompanying notes to consolidated financial statements (unaudited).
7
WILSON BANK HOLDING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
BASIS OF PRESENTATION
The unaudited consolidated financial statements include the accounts of Wilson
Bank Holding Company (Company), its wholly-owned subsidiary, Wilson Bank and
Trust, Hometown Finance Company, a wholly-owned subsidiary of Wilson Bank and
Trust, DeKalb Community Bank, a 50% owned subsidiary, and Community Bank of
Smith County, a 50% owned subsidiary. The assets and liabilities of Hometown
Finance were distributed to Wilson Bank and Trust in December of 2001.
The accompanying consolidated financial statements have been prepared, without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations.
In the opinion of management, the consolidated financial statements contain all
adjustments and disclosures necessary to summarize fairly the financial position
of the Company as of September 30, 2002 and December 31, 2001, the results of
operations for the three months and nine months ended September 30, 2002 and
2001, comprehensive earnings for the three months and nine months ended
September 30, 2002 and 2001 and changes in cash flows for the nine months ended
September 30, 2002 and 2001. All significant intercompany transactions have been
eliminated. The interim consolidated financial statements should be read in
conjunction with the notes to the consolidated financial statements presented in
the Company's 2001 Annual Report to Stockholders. The results for interim
periods are not necessarily indicative of results to be expected for the
complete fiscal year.
ALLOWANCE FOR LOAN LOSSES
Transactions in the allowance for loan losses were as follows:
Nine Months Ended
September 30,
----------------------
2002 2001
-------- --------
(In Thousands)
Balance, January 1, 2002 and 2001, respectively $ 5,489 $ 4,525
Add (deduct):
Losses charged to allowance (778) (781)
Recoveries credited to allowance 161 182
Provision for loan losses 1,697 1,349
------- -------
Balance, September 30, 2002 and 2001, respectively $ 6,569 $ 5,275
======= =======
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The purpose of this discussion is to provide insight into the financial
condition and results of operations of the Company and its subsidiaries. This
discussion should be read in conjunction with the consolidated financial
statements. Reference should also be made to the Company's Annual Report on Form
10-K for the year ended December 31, 2001 for a more complete discussion of
factors that impact liquidity, capital and the results of operations.
FORWARD-LOOKING STATEMENTS
This Form 10-Q contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934 regarding, among other things, the anticipated
financial and operating results of the Company. Investors are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date hereof. The Company undertakes no obligation to publicly release any
modifications or revisions to these forward-looking statements to reflect events
or circumstances occurring after the date hereof or to reflect the occurrence of
unanticipated events.
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company cautions investors that
future financial and operating results may differ materially from those
projected in forward-looking statements made by, or on behalf of, the Company.
The words "believe," "suspect," "anticipate," "seek," "plan," "estimate" and
similar expressions are intended to identify such forward-looking statements,
but other statements not based on historical fact may also be considered
forward-looking. Such forward-looking statements involve known and unknown risks
and uncertainties, including, but not limited to, increased competition with
other financial institutions, lack of sustained growth in the Company's market
area, rapid fluctuations in interest rates, significant downturns in the
business of one or more large customers, changes in the legislative and
regulatory environment, inadequate allowance for loan losses and loss of key
personnel. These risks and uncertainties may cause the actual results or
performance of the Company to be materially different from any future results or
performance expressed or implied by such forward-looking statements. The
Company's future operating results depend on a number of factors which were
derived utilizing numerous assumptions and other important factors that could
cause actual results to differ materially from those projected in
forward-looking statements.
CRITICAL ACCOUNTING POLICIES
The accounting principles we follow and our methods of applying
these principles conform with accounting principles generally accepted in the
United States and with general practices within the banking industry. In
connection with the application of those principles to the determination of our
allowance for loan losses(ALL) and the recognition of our deferred income tax
assets, we have made judgments and estimates which have significantly impacted
our financial position and results of operations.
Allowance for Loan Losses. Our management assesses the adequacy of the ALL prior
to the end of each calendar quarter. This assessment includes procedures to
estimate the ALL and test the adequacy and appropriateness of the resulting
balance. The ALL consists of two portions(1) an allocated amount representative
of specifically identified credit exposure and exposures readily predictable by
historical or comparative experience; and (2) an unallocated amount
representative of inherent loss which is not readily identifiable. Even though
the ALL is composed of two components, the entire allowance is available to
absorb any credit losses.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
We establish the allocated amount separately for two different risk groups(1)
unique loans(commercial loans, including those loans considered impaired); and
(2) homogenous loans(generally consumer loans). We base the allocation for
unique loans primarily on risk rating grades assigned to each of these loans as
a result of our loan management and review processes. Each risk-rating grade is
assigned an estimated loss ratio, which is determined based on the experience of
management, discussions with banking regulators, historical and current economic
conditions and our independent loan review process. We estimate losses on
impaired loans based on estimated cash flows discounted at the loan's original
effective interest rate or the underlying collateral value. We also assign
estimated loss ratios to our consumer portfolio. However, we base the estimated
loss ratios for these homogenous loans on the category of consumer credit (e.g.,
automobile, residential mortgage, home equity) and not on the results of
individual loan reviews.
The unallocated amount is particularly subjective and does not lend itself to
the exact mathematical calculation. We use the unallocated amount to absorb
inherent losses which may exist as of the balance sheet date for such matters as
changes in the local or national economy, the depth or experience of the lending
staff, any concentrations of credit in any particular industry group, and new
banking laws or regulations. After we assess applicable factors, we evaluate the
aggregate unallocated amount based on our management's experience.
We then test the resulting ALL balance by comparing the balance in the allowance
account to historical trends and peer information. Our management then evaluates
the result of the procedures performed, including the result of our testing, and
concludes on the appropriateness of the balance of the ALL in its entirety. The
loan review and the finance committee of our board of directors review the
assessment prior to the filing of quarterly financial information.
RESULTS OF OPERATIONS
Net earnings increased 33.1% to $ 6,409,000 for the nine months ended
September 30, 2002 from $ 4,814,000 in the first nine months of 2001. Net
earnings were $ 2,233,000 for the quarter ended September 30, 2002, an increase
of $559,000 or 33.4% from $ 1,674,000 for the three months ended September 30,
2001 and an increase of $104,000 or 4.9% over the quarter ended June 30, 2002.
The increase in net earnings during the nine months ended September 30, 2002 was
primarily due to a 28.1% increase in net interest income.
NET INTEREST INCOME
Net interest income represents the amount by which interest earned
on various earning assets exceeds interest paid on deposits and other
interest-bearing liabilities and is the most significant component of the
Company's earnings. The Company's total interest income, excluding tax
equivalent adjustments, decreased $ 1,644,000 or 4.4% during the nine months
ended September 30, 2002 as compared to the same period in 2001. The decrease in
total interest income was $ 354,000 or 2.9% for the quarter ended September 30,
2002 as compared to the quarter ended September 30, 2001. Interest income
increased $ 43,000 or .4% over the second quarter of 2002. The decrease in net
interest income for the first nine months of 2002 was primarily attributable to
the continued decline in the interest rate
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
environment. The ratio of average earning assets to total average assets was
96.5% and 94.7% for the nine months ended September 30, 2002 and September 30,
2001, respectively.
Interest expense decreased $ 6,375,000 or 31.5% for the nine months
ended September 30, 2002 as compared to the same period in 2001. The decrease
was $ 1,869,000 or 29.0% for the three months ended September 30, 2002 as
compared to the same period in 2001. Interest expense increased $ 21,000 or .5%
for the quarter ended September 30, 2002 over the second quarter of 2002. The
overall decrease in total interest expense for the first nine months of 2002 was
primarily attributable to a decrease in the rates paid on deposits.
The foregoing resulted in an increase in net interest income, before
the provision for possible loan losses, of $ 4,731,000 or 28.1% for the first
nine months of 2002 as compared to the same period in 2001. The increase was $
1,515,000 or 26.1% for the quarter ended September 30, 2002 compared to the
quarter ended September 30, 2001 and $ 22,000 or .3% when compared to the second
quarter of 2002.
PROVISION FOR POSSIBLE LOAN LOSSES
The provision for possible loan losses was $ 1,697,000 and $1,349,000
for the first nine months of 2002 and 2001, respectively. The provision for loan
losses during the three month periods ended September 30, 2002 and 2001 was $
652,000 and $461,000, respectively. The provision for possible loan losses is
based on past loan experience and other factors, which in management's judgment,
deserve current recognition in estimating possible loan losses. Such factors
include past loan loss experience, growth and composition of the loan portfolio,
review of specific problem loans, the relationship of the allowance for loan
losses to outstanding loans, and current economic conditions that may affect the
borrower's ability to repay. Management has in place a system designed for
monitoring its loan portfolio in an effort to identify potential problem loans.
The provision for possible loan losses raised the allowance for possible loan
losses (net of charge offs and recoveries) to $ 6,569,000, an increase of 19.7%
from $5,489,000 at December 31, 2001. The allowance for possible loan losses as
a percentage of total outstanding loans was 1.2% and 1.1% at September 30, 2002
and December 31, 2001, respectively.
The level of the allowance and the amount of the provision involve
evaluation of uncertainties and matters of judgment. The Company maintains an
allowance for loan losses which management believes is adequate to absorb losses
inherent in the loan portfolio. A formal review is prepared bi-monthly by the
Loan Review Officer to assess the risk in the portfolio and to determine the
adequacy of the allowance for loan losses. The review includes analysis of
historical performance, the level of non-performing and adversely rated loans,
specific analysis of certain problem loans, loan activity since the previous
assessment, reports prepared by the Loan Review Officer, consideration of
current economic conditions, and other pertinent information. The level of the
allowance to net loans outstanding will vary depending on the overall results of
this bi-monthly assessment. The review is presented to the Finance Committee and
subsequently approved by the Board of Directors. Management believes the
allowance for possible loan losses at September 30, 2002 to be adequate.
NON-INTEREST INCOME
The components of the Company's non-interest income include service
charges on deposit accounts, other fees and commissions and gain on sale of
loans. Total non-interest income for the nine months ended September 30, 2002
decreased 6.9% to $ 5,100,000 from $5,477,000 for the same period in 2001. The
decrease was $ 27,000 or 14.3% during the quarter ended September 30, 2002
compared to the third quarter in 2001 and there was an increase of $ 208,000 or
12.5% over the second quarter of 2002. The decrease for the first nine months of
2002 was due primarily to decreases in other fees and
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
commissions. Other fees and commissions totaled $ 1,032,000 and $ 1,691,000
during the nine months ended September 30, 2002 and 2001, respectively, a
decrease of $ 659,000 or 39.0%. Service charges on deposit accounts increased
$178,000 or 6.2% during the nine months ended September 30, 2002.
NON-INTEREST EXPENSES
Non-interest expenses consist primarily of employee costs,
occupancy expenses, furniture and equipment expenses, data processing expenses,
loss on sale of other real estate, other operating expenses and minority
interest in net earnings of subsidiaries. Total non-interest expenses increased
$ 1,314,000 or 10.0% during the first nine months of 2002 compared to the same
period in 2001. The increases for the quarter ended September 30, 2002 were
$379,000 or 8.4% as compared to the comparable quarter in 2001. There was a
decrease of $38,000 or .8% as compared to the second quarter of 2002. The
increase in non-interest expenses is attributable primarily to increases in
employee salaries and benefits associated with an increase in the number of
employees necessary to support the Company's operations. The number of employees
increased to 243 at September 30, 2002 an increase from 226 at September 30,
2001. Increases in occupancy and furniture and equipment expenses were also due
to the Company's growth. Other operating expenses for the nine months ended
September 30, 2002 increased to $ 3,698,000 from $ 2,907,000 for the comparable
period in 2001. Other operating expenses increased $ 334,000 or 31.7% during the
quarter ended September 30, 2002 as compared to the same period in 2001. These
expenses include Federal deposit insurance premiums, supplies and general
operating costs which increased as a result of continued growth of the Company.
INCOME TAXES
The Company's income tax expense was $ 4,057,000 for the nine
months ended September 30, 2002, an increase of $ 1,097,000 over the comparable
period in 2001. Income tax expense was $ 1,391,000 for the quarter ended
September 30, 2002, and increase of $ 359,000 over the same period in 2001. The
percentage of income tax expense to net income before taxes was 38.8% and 38.1%
for the nine months ended September 30, 2002 and 2001, respectively and 38.4%
and 38.1% for the quarters ended September 30, 2002 and 2001. The percentage of
income tax expense to net income before taxes was 39.1% for the second quarter
of 2002. The increase in the percentage is due to a decrease in the amount of
tax exempt interest income as a percentage of total interest income and an
increase in the state income tax rate from 6.0% to 6.5%. This percentage was
1.5% for the nine months ended September 30, 2002 and September 30, 2001,
respectively. The effective tax rate exceeds the statutory tax rate as a result
of permanent differences related to life insurance premiums.
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
EARNINGS PER SHARE
The computation of basic earnings per share is based on the weighted
average number of common shares outstanding during the period. The computation
of diluted earnings per share for the Company begins with the basic earnings per
share plus the effect of common shares contingently issuable from stock options.
The following is a summary of components comprising basic and diluted
earnings per share (EPS) for the three months and nine months ended September
30, 2002 and 2001:
Three Months Ended Nine Months Ended
September 30, September 30,
---------- ---------- ---------- ----------
2002 2001 2002 2001
---------- ---------- ---------- ----------
(Dollars in Thousands (Dollars in Thousands
Except Per Share Amounts) Except Per Share Amounts)
Basic EPS Computation:
Numerator - Earnings available to common
Stockholders $ 2,233 1,674 $ 6,409 4,814
---------- ---------- ---------- ----------
Denominator - Weighted average number
of common shares outstanding 2,097,750 2,045,909 2,083,036 2,032,455
---------- ---------- ---------- ----------
Basic earnings per common share $ 1.06 0.82 $ 3.08 2.37
========== ========== ========== ==========
Diluted EPS Computation:
Numerator - Earnings available to common
Stockholders $ 2,233 1,674 $ 6,409 4,814
---------- ---------- ---------- ----------
Denominator - Weighted average number
of common shares outstanding 2,097,750 2,045,909 2,083,036 2,032,455
Dilutive effect of stock options 3,212 1,758 3,073 1,587
---------- ---------- ---------- ----------
2,100,962 2,047,667 2,086,109 2,034,042
---------- ---------- ---------- ----------
Diluted earnings per common share $ 1.06 0.82 $ 3.07 2.37
========== ========== ========== ==========
FINANCIAL CONDITION
BALANCE SHEET SUMMARY
The Company's total assets increased 9.2% to $ 729,522,000 during the
nine months ended September 30, 2002 from $667,804,000 at December 31, 2001.
Total assets increased $ 20,139,000 or 2.8%, $5,573,000 or 0.8%, and $36,006,000
or 5.4% during the three-month periods ended September 30, 2002, June 30, 2002,
and March 31, 2002, respectively. Loans, net of allowance for possible loan
losses, totaled $ 529,821,000 at September 30, 2002, a 8.3% increase compared to
$ 489,277,000 at December 31, 2001. Net loans increased $ 8,020,000 or 1.5%,
$21,330,000 or 4.3%, and $11,194,000 or 2.3 % during the quarters ended
September 30, 2002, June 30, 2002, and March 31, 2002, respectively. These
increases were primarily due to the Company's ability to increase its market
share of such loans while maintaining its loan underwriting standards.
Securities increased $ 6,057,000 or 6.3% to $ 102,615,000 at September 30, 2002
from $96,558,000 at December 31, 2001. Securities decreased
13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
$3,982,000 or 3.7% during the three months ended September 30, 2002. The
increase in securities included a net unrealized gain of $ 1,411,000 for the
nine months ended September 30, 2002 as a result of the increase in the
unrealized gain on available-for-sale securities. Federal funds sold increased $
14,203,000 to $ 45,709,000 at September 30, 2002 from $ 31,506,000 at December
31, 2001.
Total liabilities increased by 8.8% to $ 676,524,000 at September 30,
2002 compared to $621,833,000 at December 31, 2001. The increase by quarter
totaled $ 17,560,000 or 2.7%, $2,904,000 or .4%, and $34,227,000 or 5.5% during
the quarters ended September 30, 2002, June 30, 2002, and March 31, 2002,
respectively. These increases were composed primarily of a $ 49,406,000 or 8.2%
increase in total deposits and an increase of $ 5,124,000 or 59.9% in securities
sold under repurchase agreements during the nine months ended September 30,
2002. Federal Home Loan Bank advances decreased $ 348,000 during the nine months
ended September 30, 2002.
The following schedule details the loans of the Company at September
30, 2002 and December 31, 2001:
(In Thousands)
------------------------------
September 30, December 31,
2002 2001
------------- ------------
Commercial, financial & agricultural $ 115,446 190,700
Real estate - construction 38,345 25,044
Real estate - mortgage 310,482 228,316
Installment 72,751 50,741
--------- ---------
537,024 494,801
Unearned interest (634) (35)
--------- ---------
$ 536,390 $ 494,766
========= =========
The Company follows the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 114, "Accounting by Creditors for Impairment of a Loan"
and SFAS No. 118, "Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures". These pronouncements apply to impaired loans
except for large groups of smaller-balance homogeneous loans that are
collectively evaluated for impairment including credit card, residential
mortgage, and consumer installment loans.
A loan is impaired when it is probable that the Company will be unable
to collect the scheduled payments of principal and interest due under the
contractual terms of the loan agreement. Impaired loans are measured at the
present value of expected future cash flows discounted at the loan's effective
interest rate, at the loan's observable market price, or the fair value of the
collateral if the loan is collateral dependent. If the measure of the impaired
loan is less than the recorded investment in the loan, the Company shall
recognize an impairment by creating a valuation allowance with a corresponding
charge to the provision for loan losses or by adjusting an existing valuation
allowance for the impaired loan with a corresponding charge or credit to the
provision for loan losses.
14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
The Company's first mortgage single family residential, consumer and
credit card loans which total approximately $ 273,160,000, $ 63,721,000 and $
1,985,000, respectively at September 30, 2002, are divided into various groups
of smaller-balance homogeneous loans that are collectively evaluated for
impairment and thus are not subject to the provisions of SFAS Nos. 114 and 118.
Substantially all other loans of the Company are evaluated for impairment under
the provisions of SFAS Nos. 114 and 118.
The Company considers all loans subject to the provisions of SFAS 114
and 118 that are on nonaccrual status to be impaired. Loans are placed on
nonaccrual status when doubt as to timely collection of principal or interest
exists, or when principal or interest is past due 90 days or more unless such
loans are well-secured and in the process of collection. Delays or shortfalls in
loan payments are evaluated with various other factors to determine if a loan is
impaired. Generally, delinquencies under 90 days are considered insignificant
unless certain other factors are present which indicate impairment is probable.
The decision to place a loan on nonaccrual status is also based on an evaluation
of the borrower's financial condition, collateral, liquidation value, and other
factors that affect the borrower's ability to pay.
Generally, at the time a loan is placed on nonaccrual status, all
interest accrued on the loan in the current fiscal year is reversed from income,
and all interest accrued and uncollected from the prior year is charged off
against the allowance for loan losses. Thereafter, interest on nonaccrual loans
is recognized as interest income only to the extent that cash is received and
future collection of principal is not in doubt. If the collectibility of
outstanding principal is doubtful, such interest received is applied as a
reduction of principal. A nonaccrual loan may be restored to accruing status
when principal and interest are no longer past due and unpaid and future
collection of principal and interest on a timely basis is not in doubt. At
September 30, 2002, the Company had nonaccrual loans totaling $ 369,000 as
compared to $169,000 at December 31, 2001.
Other loans may be classified as impaired when the current net worth
and financial capacity of the borrower or of the collateral pledged, if any, is
viewed as inadequate. In those cases, such loans have a well-defined weakness or
weaknesses that jeopardize the liquidation of the debt, and if such deficiencies
are not corrected, there is a probability that the Company will sustain some
loss. In such cases, interest income continues to accrue as long as the loan
does not meet the Company's criteria for nonaccrual status.
Generally the Company also classifies as impaired any loans the terms
of which have been modified in a troubled debt restructuring after January 1,
1995. Interest is accrued on such loans that continue to meet the modified terms
of their loan agreements. At September 30, 2002, the Company had no loans that
have had the terms modified in a troubled debt restructuring.
The Company's charge-off policy for impaired loans is similar to its
charge-off policy for all loans in that loans are charged-off in the month when
they are considered uncollectible.
15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
Impaired loans and related allowance for loan loss amounts at September
30, 2002 and December 31, 2001 were as follows:
September 30, 2002 December 31, 2001
---------------------- ----------------------
Allowance Allowance
Recorded For Recorded For
(In Thousands) Investment Loan Loss Investment Loan Loss
---------- --------- ---------- ---------
Impaired loans with allowance for
loan loss $ -- -- 168 55
Impaired loans with no allowance for
loan loss -- -- -- --
------ ------ ------ ------
$ -- -- $ 168 55
====== ====== ====== ======
The allowance for loan loss related to impaired loans was measured
based upon the estimated fair value of related collateral.
The average recorded investment in impaired loans for the three months
ended September 30, 2002 and September 30, 2001 was insignificant. There was no
interest income recognized on these loans during 2001.
The following schedule details selected information as to
non-performing loans of the Company at September 30, 2002 and December 31, 2001:
September 30, 2002 December 31, 2001
---------------------- ----------------------
Past Due Past Due
90 Days Non-Accrual 90 Days Non-Accrual
-------- ----------- -------- -----------
(In Thousands) (In Thousands)
Real estate loans $ 727 315 318 71
Installment loans 159 54 270 98
Commercial -- -- -- --
------ ------ ------ ------
$ 886 369 588 169
====== ====== ====== ======
Renegotiated loans $ -- -- -- --
====== ====== ====== ======
Non-performing loans, which included non-accrual loans and loans 90
days past due, at September 30, 2002 totaled $ 1,255,000 an increase from
$757,000 at December 31, 2001. During the three months ended September 30, 2002,
non-performing loans increased $ 519,000 from $736,000 at June 30, 2002. The
increase in non-performing loans during the nine months ended September 30, 2002
of $ 498,000 is due primarily to an increase in non-performing real estate loans
of $ 653,000 and a decrease in installment loans of $ 155,000. No material
losses on these loans are anticipated by management.
16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
The following table presents total internally graded loans as of
September 30, 2002 and December 31, 2001:
September 30, 2002
(In Thousands) Special
Total Mention Substandard Doubtful
------------------ -------- ----------- --------
Commercial, financial and
Agricultural $ 775 123 646 7
Real estate mortgage 2,535 751 1,672 112
Real estate construction -- -- -- --
Consumer 728 201 458 68
-------- -------- -------- --------
$ 4,038 1,075 2,776 187
======== ======== ======== ========
December 31, 2001
(In Thousands) Special
Total Mention Substandard Doubtful
------------------ -------- ----------- --------
Commercial, financial and
Agricultural $ 138 43 80 15
Real estate mortgage 2,441 454 1,987 --
Real estate construction -- -- -- --
Consumer 574 76 389 109
-------- -------- -------- --------
$ 3,153 573 2,456 124
======== ======== ======== ========
The collateral values securing internally graded loans, based on
estimates received by management, total approximately $ 5,589,000 ($ 4,368,000
related to real estate mortgage loans and $ 1,221,000 related to other loans).
The internally classified loans have increased $ 885,000 or 28.1% from
$3,153,000 at December 31, 2001. The increase in the internally classified loans
is concentrated in several loans that were downgraded during the nine months
ended September 30, 2002. These loans were downgraded due primarily to
bankruptcies and inadequate cash flows and delinquencies. Loans are listed as
classified when information obtained about possible credit problems of the
borrower has prompted management to question the ability of the borrower to
comply with the repayment terms of the loan agreement. The loan classifications
do not represent or result from trends or uncertainties which management expects
will materially impact future operating results, liquidity or capital resources.
Residential real estate loans that are internally classified totaling $
2,535,000 and $2,441,000 at September 30, 2002 and December 31, 2001 consist of
45 and 38 individual loans, respectively, that have been graded accordingly due
to bankruptcies, inadequate cash flows and delinquencies. No material loss on
these loans is anticipated by management.
17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
The following detail provides a breakdown of the allocation of the
allowance for possible loan losses:
September 30, 2002 December 31, 2001
-------------------------- --------------------------
Percent of Percent of
Loans In Loans In
In Each Category In Each Category
Thousands To Total Loans Thousands To Total Loans
-------- -------------- -------- --------------
Commercial, financial and
Agricultural $ 836 21.5% $ 651 38.5%
Real estate construction 341 7.2 236 5.1
Real estate mortgage 4,474 57.8 3,892 46.1
Installment 918 13.5 710 10.3
-------- ------ -------- ------
$ 6,569 100% $ 5,489 100%
======== ====== ======== ======
LIQUIDITY AND ASSET MANAGEMENT
The Company's management seeks to maximize net interest income by
managing the Company's assets and liabilities within appropriate constraints on
capital, liquidity and interest rate risk. Liquidity is the ability to maintain
sufficient cash levels necessary to fund operations, meet the requirements of
depositors and borrowers and fund attractive investment opportunities. Higher
levels of liquidity bear corresponding costs, measured in terms of lower yields
on short-term, more liquid earning assets and higher interest expense involved
in extending liability maturities.
Liquid assets include cash and cash equivalents and securities and
money market instruments that will mature within one year. At September 30,
2002, the Company's liquid assets totaled $ 83,544,000.
The Company maintains a formal asset and liability management process to
quantify, monitor and control interest rate risk and to assist management in
maintaining stability in the net interest margin under varying interest rate
environments. The Company accomplishes this process through the development and
implementation of lending, funding and pricing strategies designed to maximize
net interest income under varying interest rate environments subject to specific
liquidity and interest rate risk guidelines.
Analysis of rate sensitivity and rate gap analysis are the primary tools
used to assess the direction and magnitude of changes in net interest income
resulting from changes in interest rates. Included in the analysis are cash
flows and maturities of financial instruments held for purposes other than
trading, changes in market conditions, loan volumes and pricing and deposit
volume and mix. These assumptions are inherently uncertain, and, as a result,
net interest income can not be precisely estimated nor can the impact of higher
or lower interest rates on net interest income be precisely predicted. Actual
results will differ due to timing, magnitude and frequency of interest rate
changes and changes in market conditions and management's strategies, among
other factors.
18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
LIQUIDITY AND ASSET MANAGEMENT, CONTINUED
The Company's primary source of liquidity is a stable core deposit
base. In addition, loan payments, investment security maturities and short-term
borrowings provide a secondary source.
Interest rate risk (sensitivity) focuses on the earnings risk
associated with changing interest rates. Management seeks to maintain
profitability in both immediate and long-term earnings through funds
management/interest rate risk management. The Company's rate sensitivity
position has an important impact on earnings. Senior management of the Company
meets monthly to analyze the rate sensitivity position of the subsidiary banks.
These meetings focus on the spread between the Company's cost of funds and
interest yields generated primarily through loans and investments.
The Company's securities portfolio consists of earning assets that
provide interest income. For those securities classified as held-to-maturity,
the Company has the ability and intent to hold these securities to maturity or
on a long-term basis. Securities classified as available-for-sale include
securities intended to be used as part of the Company's asset/liability strategy
and/or securities that may be sold in response to changes in interest rate,
prepayment risk, the need or desire to increase capital and similar economic
factors. Securities totaling approximately $ 3.6 million mature or will be
subject to rate adjustments within the next twelve months.
A secondary source of liquidity is the Company's loan portfolio. At
September 30, 2002 loans totaling approximately $261.0 million either will
become due or will be subject to rate adjustments within twelve months from the
respective date. Continued emphasis will be placed on structuring adjustable
rate loans.
At September 30, 2002, we had unfunded loan commitments outstanding of
$67.3 million and outstanding standby letters of credit of $5.3 million. Because
these commitments generally have fixed expiration dates and many will expire
without being drawn upon, the total commitment level does not necessarily
represent future cash requirements. If needed to fund these outstanding
commitments, the Company's bank subsidiary has the ability to liquidate Federal
funds sold or securities available-for-sale or on a short-term basis to borrow
and purchase Federal funds from other financial institutions. Additionally, the
Company's bank subsidiary could sell participations in these or other loans to
correspondent banks. As mentioned above, the Company's bank subsidiary has been
able to fund its ongoing liquidity needs through its stable core deposit base,
loan payments, its investment security maturities and short-term borrowings.
As for liabilities, certificates of deposit of $100,000 or greater
totaling approximately $104.5 million will become due or reprice during the next
twelve months. Historically, there has been no significant reduction in
immediately withdrawable accounts such as negotiable order of withdrawal
accounts, money market demand accounts, demand deposit and regular savings.
Management anticipates that there will be no significant withdrawals from these
accounts in the future.
Management believes that with present maturities, the anticipated
growth in deposit base, and the efforts of management in its asset/liability
management program, liquidity will not pose a problem in the near term future.
At the present time there are no known trends or any known commitments, demands,
events or uncertainties that will result in or that are reasonably likely to
result in the Company's liquidity changing in a materially adverse way.
19
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
CAPITAL POSITION AND DIVIDENDS
Capital. At September 30, 2002, total stockholders' equity was $
52,998,000 or 7.3% of total assets, which compares with $ 45,971,000 or 6.9% of
total assets at December 31, 2001. The dollar increase in stockholders' equity
during the nine months ended September 30, 2002 results from the Company's net
income of $ 6,409,000, the net effect of a $ 803,000 unrealized gain on
investment securities net of applicable income taxes, an exercise of stock
options of $ 41,000 and cash dividends declared of $ 2,377,000 of which $
2,151,000 was reinvested under the Company's dividend reinvestment plan.
In April, 1999, the stockholders of the Company approved the Wilson
Bank Holding Company 1999 Stock Option Plan (the "Stock Option Plan"). The Stock
Option Plan provides for the granting of stock options, and authorizes the
issuance of common stock upon the exercise of such options, for up to 100,000
shares of common stock, to officers and other key employees of the Company and
its subsidiaries. Furthermore, the Company may issue additional shares under the
Stock Option Plan as needed in order that the aggregate number of shares that
may be issued during the term of the Plan is equal to five percent (5%) of the
shares of common stock then issued and outstanding. Under the Stock Option Plan,
stock option awards may be granted in the form of incentive stock options or
nonstatutory stock options, and are generally exercisable for up to ten years
following the date such option awards are granted. Exercise prices of incentive
stock options must be equal to or greater than 100% of the fair market value of
the common stock on the grant date. As of September 30, 2002, the bank has
granted key employees options to purchase a total of 46,817 shares of common
stock. At September 30, 2002, 12,321 shares were exercisable. The Company has
adopted the provisions of Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123). The impact of the adoption
of SFAS No. 123 has been reflected as a proforma disclosure in the notes to the
annual consolidated financial statements.
The Company's principal regulators have established minimum risk-based
capital requirements and leverage capital requirements for the Company and its
subsidiary banks. These guidelines classify capital into two categories of Tier
I and total risk-based capital. Total risk-based capital consists of Tier I (or
core) capital (essentially common equity less intangible assets) and Tier II
capital (essentially qualifying long-term debt, of which the Company and
subsidiary banks have none, and a part of the allowance for possible loan
losses). In determining risk-based capital requirements, assets are assigned
risk-weights of 0% to 100%, depending on regulatory assigned levels of credit
risk associated with such assets. The risk-based capital guidelines require the
subsidiary banks and the Company to have a total risk-based capital ratio of
8.0% and a Tier I risk-based capital ratio of 4%. At September 30, 2002 the
Company's total risk-based capital ratio was 12.8% and its Tier I risk-based
capital ratio was approximately 11.5% compared to ratios of 12.2% and 11.0%,
respectively at December 31, 2001. The required Tier I leverage capital ratio
(Tier I capital to average assets for the most recent quarter) for the Company
is 4.0%. At September 30, 2002 the Company had a leverage ratio of 7.7% compared
to 7.4% at December 31, 2001.
IMPACT OF INFLATION
Although interest rates are significantly affected by inflation, the
inflation rate is immaterial when reviewing the Company's results of operations.
20
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary component of market risk is interest rate
volatility. Fluctuations in interest rates will ultimately impact both the level
of income and expense recorded on a large portion of the Company's assets and
liabilities, and the market value of all interest-earning assets and
interest-bearing liabilities, other than those which possess a short term to
maturity. Based upon the nature of the Company's operations, the Company is not
subject to foreign currency exchange or commodity price risk.
Interest rate risk (sensitivity) management focuses on the earnings
risk associated with changing interest rates. Management seeks to maintain
profitability in both immediate and long-term earnings through funds
management/interest rate risk management. The Company's rate sensitivity
position has an important impact on earnings. Senior management of the Company
meets monthly to analyze the rate sensitivity position. These meetings focus on
the spread between the cost of funds and interest yields generated primarily
through loans and investments.
There have been no material changes in reported market risks during the
nine months ended September 30, 2002
ITEM 4. CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures, as defined in Rule
13a-14 promulgated under the Securities Exchange Act of 1934(the "Exchange
Act"), that are designed to ensure that information required to be disclosed by
us in the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms and that such information
is accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure. Within the 90 days prior to the date of this
report, we carried out an evaluation, under the supervision and with the
participation of our management, including our Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures. Based on the evaluation of these disclosure
controls and procedures, the Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures were effective.
There were no significant changes in our internal controls or in other
factors that could significantly affect the internal controls subsequent to the
date that we completed our evaluation.
21
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) None
(b) Not Applicable
(c) Not Applicable
(d) Not Applicable.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Charter of Wilson Bank Holding Company, as amended
(amended and restated for SEC electronic filing
purposes only)
99.1 Certification of the Chief Executive Officer Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
99.2 Certification of the Chief Financial Officer Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
(b) No reports on Form 8-K have been filed during the quarter for
which this report is filed.
22
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.
WILSON BANK HOLDING COMPANY
-------------------------------
(Registrant)
DATE: November 14, 2002 /s/ Randall Clemons
------------------------------- -------------------------------
Randall Clemons
President and Chief Executive Officer
DATE: November 14, 2002 /s/ Lisa Pominski
------------------------------- -------------------------------
Lisa Pominski
Sr. Vice President & CFO
23
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Randall Clemons, certify that:
(1) I have reviewed this quarterly report on Form 10-Q of Wilson
Bank Holding Company;
(2) Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by
this quarterly report;
(3) Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this quarterly
report;
(4) The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and procedures
(as such term is defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:
(a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this
quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
quarterly report ("Evaluation Date"); and
(c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the
Evaluation Date;
(5) The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's auditors and
the audit committee of the registrant's board of directors (or persons
fulfilling the equivalent function):
(a) all significant deficiencies in the design or
operation of internal controls which could adversely
affect the registrant's ability to record, process,
summarize and report financial data and have
identified for the registrant's auditors any material
weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and
(6) The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were significant changes
in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
/s/ Randall Clemons
-------------------------------
Randall Clemons, President and Chief
Executive Officer
Date: November 14, 2002
24
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Lisa T. Pominski, certify that:
(1) I have reviewed this quarterly report on Form 10-Q of Wilson
Bank Holding Company;
(2) Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by
this quarterly report;
(3) Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this quarterly
report;
(4) The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and procedures
(as such term is defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:
(a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this
quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
quarterly report ("Evaluation Date"); and
(c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the
Evaluation Date;
(5) The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's auditors and
the audit committee of the registrant's board of directors (or persons
fulfilling the equivalent function):
(a) all significant deficiencies in the design or
operation of internal controls which could adversely
affect the registrant's ability to record, process,
summarize and report financial data and have
identified for the registrant's auditors any material
weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and
(6) The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were significant changes
in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
/s/ Lisa T. Pominski
-------------------------------
Lisa T. Pominski, Senior Vice
President and Chief Financial Officer
Date: November 14, 2002
25