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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(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, 2003
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 No. 0-18993
WINTON FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 31-1303854
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5511 Cheviot Road, Cincinnati, Ohio 45247
- --------------------------------------------------------------------------------
(Address of principal executive office)
Registrant's telephone number, including area code: (513) 385-3880
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 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 [ ]
Indicated by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
As of May 13, 2003, the latest practicable date, 4,537,184 shares of the
registrant's common stock, no par value, were issued and outstanding.
Page 1 of 24
Winton Financial Corporation
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Consolidated Statements of Financial Condition 3
Consolidated Statements of Earnings 4
Consolidated Statements of Comprehensive
Income 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 8
Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
PART II - OTHER INFORMATION 21
SIGNATURES 22
CERTIFICATIONS 23
2
ITEM 1 FINANCIAL STATEMENTS
WINTON FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
MARCH 31, SEPTEMBER 30,
ASSETS 2003 2002
--------- -------------
Cash and due from banks $ 2,093 $ 1,263
Interest-bearing deposits in other financial institutions 24,230 10,702
--------- ---------
Cash and cash equivalents 26,323 11,965
Investment securities available for sale - at market 15,386 13,095
Mortgage-backed securities available for sale - at market 2,167 197
Mortgage-backed securities held to maturity - at amortized cost,
approximate market value of $5,004 and $5,685 at
March 31, 2003 and September 30, 2002, respectively 5,091 5,761
Loans receivable - net 436,903 428,367
Loans held for sale - at lower of cost or market 7,342 28,610
Office premises and equipment - at depreciated cost 4,397 3,571
Real estate acquired through foreclosure 1,920 2,462
Federal Home Loan Bank stock - at cost 7,995 7,828
Accrued interest receivable 2,666 2,867
Prepaid expenses and other assets 599 523
Intangible assets - net of amortization 127 158
Prepaid federal income taxes 382 297
--------- ---------
Total assets $ 511,298 $ 505,701
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits $ 334,803 $ 332,995
Advances from the Federal Home Loan Bank 125,174 124,427
Other borrowed money 2,000 2,000
Accounts payable on mortgage loans serviced for others 547 675
Advance payments by borrowers for taxes and insurance 1,876 1,830
Other liabilities 2,817 2,091
Deferred federal income taxes 1,567 1,667
--------- ---------
Total liabilities 468,784 465,685
Shareholders' equity
Preferred stock - 2,000,000 shares without par value authorized;
no shares issued -- --
Common stock - 18,000,000 shares without par value authorized;
4,501,054 and 4,465,054 shares issued at March 31, 2003 and
September 30, 2002, respectively -- --
Additional paid-in capital 10,579 10,321
Retained earnings - restricted 31,690 29,360
Less 500 shares of treasury stock - at cost (5) (5)
Accumulated comprehensive income, unrealized gains on securities
designated as available for sale, net of related tax effects 250 340
--------- ---------
Total shareholders' equity 42,514 40,016
--------- ---------
Total liabilities and shareholders' equity $ 511,298 $ 505,701
========= =========
3
WINTON FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
SIX MONTHS ENDED THREE MONTHS ENDED
MARCH 31, MARCH 31,
----------------------- ----------------------
2003 2002 2003 2002
-------- -------- -------- --------
Interest income
Loans $ 15,594 $ 16,296 $ 7,628 $ 8,103
Mortgage-backed securities 134 156 75 70
Investment securities 192 331 109 153
Interest-bearing deposits and other 237 200 121 87
-------- -------- -------- --------
Total interest income 16,157 16,983 7,933 8,413
Interest expense
Deposits 5,004 6,584 2,371 3,033
Borrowings 3,492 3,474 1,742 1,763
-------- -------- -------- --------
Total interest expense 8,496 10,058 4,113 4,796
-------- -------- -------- --------
Net interest income 7,661 6,925 3,820 3,617
Provision for losses on loans 305 637 150 172
-------- -------- -------- --------
Net interest income after provision
for losses on loans 7,356 6,288 3,670 3,445
Other income
Mortgage banking income 1,740 1,144 797 331
Gain on sale of deposits -- 250 -- --
Gain on sale of office premises 243 -- -- --
Gain on sale of investment securities designated
as available for sale 97 214 -- 214
Gain on sale of real estate acquired through foreclosure 25 -- 2 --
Other operating 358 315 183 160
-------- -------- -------- --------
Total other income 2,463 1,923 982 705
General, administrative and other expense
Employee compensation and benefits 2,759 2,539 1,396 1,350
Occupancy and equipment 601 544 329 271
Data processing 224 216 111 113
Franchise taxes 208 188 108 103
Amortization of intangible assets 31 31 16 16
Advertising 124 116 64 53
Other operating 1,004 839 467 427
-------- -------- -------- --------
Total general, administrative and other expense 4,951 4,473 2,491 2,333
-------- -------- -------- --------
Earnings before income taxes 4,868 3,738 2,161 1,817
Federal income taxes
Current 1,673 1,362 674 583
Deferred (54) (91) 40 35
-------- -------- -------- --------
Total federal income taxes 1,619 1,271 714 618
-------- -------- -------- --------
NET EARNINGS $ 3,249 $ 2,467 $ 1,447 $ 1,199
======== ======== ======== ========
EARNINGS PER SHARE
Basic $ 0.72 $ 0.56 $ 0.32 $ 0.27
======== ======== ======== ========
Diluted $ 0.70 $ 0.54 $ 0.31 $ 0.26
======== ======== ======== ========
Dividends per share $ 0.2050 $ 0.185 $ 0.1025 $ 0.0925
======== ======== ======== ========
4
WINTON FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
SIX MONTHS ENDED THREE MONTHS ENDED
MARCH 31, MARCH 31,
--------------------- ---------------------
2003 2002 2003 2002
------- ------- ------- -------
Net earnings $ 3,249 $ 2,467 $ 1,447 $ 1,199
Other comprehensive loss, net of tax:
Unrealized holding losses on securities during
the period, net of tax benefits of $13, $46,
$6 and $32 during the respective periods (26) (89) (12) (62)
Reclassification adjustment for realized gains included
in earnings, net of tax of $33, $73, and $73 for the
respective periods (64) (141) -- (141)
------- ------- ------- -------
Comprehensive income $ 3,159 $ 2,237 $ 1,435 $ 996
======= ======= ======= =======
Accumulated comprehensive income $ 250 $ 333 $ 250 $ 333
======= ======= ======= =======
5
WINTON FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended March 31,
(In thousands)
2003 2002
--------- ---------
Cash flows from operating activities:
Net earnings for the period $ 3,249 $ 2,467
Adjustments to reconcile net earnings to net cash provided
by (used in) operating activities:
Amortization of premiums and discounts on investment and
mortgage-backed securities 11 63
Amortization of deferred loan origination fees (94) (90)
Depreciation and amortization 198 237
Amortization of intangible assets 31 31
Provision for losses on loans 305 637
Gain on sale of mortgage loans (1,670) (975)
Loans originated for sale in the secondary market (111,537) (54,483)
Proceeds from sale of loans in the secondary market 134,475 57,480
Gain on sale of office premises (243) --
Gain on sale of deposits -- (250)
Gain on sale of investments designated as available for sale (97) (214)
Gain on sale of real estate acquired through foreclosure (25) --
Federal Home Loan Bank stock dividends (167) (187)
Increase (decrease) in cash due to changes in:
Accrued interest receivable 201 195
Prepaid expenses and other assets (76) (87)
Accounts payable on mortgage loans serviced for others (128) (22)
Other liabilities 673 125
Federal income taxes
Current (85) (335)
Deferred (54) (91)
--------- ---------
Net cash provided by operating activities 24,967 4,501
Cash flows from investing activities:
Principal repayments on mortgage-backed securities 721 1,368
Purchase of mortgage-backed securities designated as available for sale (2,000) --
Proceeds from maturity/calls of investment securities designated
as available for sale 6,315 1,485
Proceeds from sale of securities designated as available for sale 3,622 3,889
Purchase of investment securities designated as available for sale (12,299) (5,780)
Loan principal repayments 106,521 84,895
Loan disbursements (115,268) (100,189)
Proceeds from sale of real estate acquired through foreclosure 771 --
Proceeds from sale of office premises and equipment 366 --
Purchase of office premises and equipment (1,138) (168)
Additions to real estate acquired through foreclosure (160) --
--------- ---------
Net cash used in investing activities (12,549) (14,500)
--------- ---------
Net cash provided by (used in) operating and investing
activities (balance carried forward) 12,418 (9,999)
--------- ---------
6
WINTON FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the six months ended March 31,
(In thousands)
2003 2002
-------- --------
Net cash provided by (used in) operating and investing
activities (balance brought forward) $ 12,418 $ (9,999)
Cash flows from financing activities:
Sale of deposits -- (7,806)
Net increase in deposit accounts 1,808 1,295
Repayments of Federal Home Loan Bank advances (14,253) (44,404)
Proceeds from Federal Home Loan Bank advances 15,000 63,500
Advances by borrowers for taxes and insurance 46 127
Proceeds from exercise of stock options 258 78
Dividends paid on common stock (919) (823)
Purchase of treasury stock -- (5)
-------- --------
Net cash provided by financing activities 1,940 11,962
-------- --------
Net increase in cash and cash equivalents 14,358 1,963
Cash and cash equivalents at beginning of period 11,965 5,609
-------- --------
Cash and cash equivalents at end of period $ 26,323 $ 7,572
======== ========
Supplemental disclosure of cash flow information: Cash paid during the period
for:
Federal income taxes $ 1,695 $ 1,680
======== ========
Interest on deposits and borrowings $ 8,468 $ 10,133
======== ========
Supplemental disclosure of noncash investing activities:
Unrealized losses on securities designated as available
for sale, net of related tax effects $ (90) $ (230)
======== ========
Recognition of mortgage servicing rights in accordance with
SFAS No. 140 $ 190 $ 166
======== ========
Transfers from loans to real estate acquired through foreclosure $ -- $ 202
======== ========
7
WINTON FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the six- and three-month periods ended March 31, 2003 and 2002
1. Basis of Presentation
The accompanying unaudited consolidated financial statements were
prepared in accordance with instructions for Form 10-Q and, therefore,
do not include information or footnotes necessary for a complete
presentation of financial position, results of operations, and cash
flows in conformity with accounting principles generally accepted in
the United States of America. Accordingly, these financial statements
should be read in conjunction with the consolidated financial
statements and notes thereto of Winton Financial Corporation ("Winton
Financial" or the "Corporation") included in the Annual Report on Form
10-K for the year ended September 30, 2002. However, all adjustments
(consisting of only normal recurring accruals) which, in the opinion of
management, are necessary for a fair presentation of the consolidated
financial statements have been included. The results of operations for
the six- and three-month periods ended March 31, 2003, are not
necessarily indicative of the results which may be expected for the
entire fiscal year.
2. Principles of Consolidation
The accompanying consolidated financial statements include the accounts
of Winton Financial and its wholly-owned subsidiary, The Winton Savings
and Loan Co. ("Winton Savings" or the "Company"). All significant
intercompany items have been eliminated.
3. Effects of Recent Accounting Pronouncements
In August 2001, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS
No. 144 carries over the recognition and measurement provisions in SFAS
No. 121. Accordingly, an entity must recognize an impairment loss if
the carrying value of a long-lived asset or asset group (a) is not
recoverable and (b) exceeds its fair value. Similar to SFAS No. 121,
SFAS No. 144 requires an entity to test an asset or asset group for
impairment whenever events or changes in circumstances indicate that
its carrying amount may not be recoverable. SFAS No. 144 differs from
SFAS No. 121 in that it provides guidance on estimating future cash
flows to test recoverability. An entity may use either a
probability-weighted approach or best-estimate approach in developing
estimates of cash flows to test recoverability. SFAS No. 144 is
effective for financial statements issued for fiscal years beginning
after December 15, 2001 and interim periods within those fiscal years.
Management adopted SFAS No. 144 effective October 1, 2002, without
material effect on the Corporation's financial condition or results of
operations.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS No. 146 provides
financial accounting and reporting guidance for costs associated with
exit or disposal activities, including one-time termination benefits,
contract termination costs other than for a capital lease, and costs to
consolidate facilities or relocate employees. SFAS No. 146 is effective
for exit or disposal activities initiated after December 31, 2002.
Management adopted SFAS No. 146 effective January 1, 2003, without
material effect on the Corporation's financial condition or results of
operations.
In October 2002, the FASB issued SFAS No. 147, "Accounting for Certain
Financial Institutions: An Amendment of FASB Statements No. 72 and 144
and FASB Interpretation No. 9," which removes acquisitions of financial
institutions from the scope of SFAS No. 72, "Accounting for Certain
Acquisitions of Banking and Thrift Institutions," except for
transactions between mutual enterprises. Accordingly, the
8
WINTON FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the six- and three-month periods ended March 31, 2003 and 2002
3. Effects of Recent Accounting Pronouncements (continued)
excess of the fair value of liabilities assumed over the fair value of
tangible and intangible assets acquired in a business combination
should be recognized and accounted for as goodwill in accordance with
SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and
Other Intangible Assets."
SFAS No. 147 also requires that the acquisition of a less-than-whole
financial institution, such as a branch, be accounted for as a business
combination if the transferred assets and activities constitute a
business. Otherwise, the acquisition should be accounted for as the
acquisition of net assets.
SFAS No. 147 also amends the scope of SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," to include long-term
customer relationship assets of financial institutions (including
mutual enterprises) such as depositor- and borrower-relationship
intangible assets and credit cardholder intangible assets.
The provisions of SFAS No. 147 related to unidentifiable intangible
assets and the acquisition of a less-than-whole financial institution
are effective for acquisitions for which the date of acquisition is on
or after October 1, 2002. The provisions related to impairment of
long-term customer relationship assets are effective October 1, 2002.
Transition provisions for previously recognized unidentifiable
intangible assets are effective on October 1, 2002, with earlier
application permitted.
Management adopted SFAS No. 147 on October 1, 2002, without material
effect on the Corporation's financial condition or results of
operations.
In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure." SFAS No. 148
amends SFAS No. 123, "Accounting for Stock-Based Compensation," to
provide alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based employee
compensation. In addition, SFAS No. 148 amends the disclosure
requirements of SFAS No. 123 to require prominent disclosures in both
annual and interim financial statements about the method of accounting
for stock-based employee compensation and the effect of the method used
on reported results. SFAS No. 148 is effective for fiscal years
beginning after December 15, 2002. The interim disclosure provisions
are effective for financial reports containing financial statements for
interim periods beginning after December 15, 2002. Management adopted
the disclosure provisions of SFAS No. 148 effective March 31, 2003,
without material effect on the Corporation's financial position or
results of operations.
In November 2002, the FASB issued FASB Interpretation No. 45 ("FIN
45"), "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others."
FIN 45 requires a guarantor entity, at the inception of a guarantee
covered by the measurement provisions of the interpretation, to record
a liability for the fair value of the obligation undertaken in issuing
the guarantee. The Corporation has financial letters of credit which
require the Corporation to make payment if the customer's financial
condition deteriorates, as defined in the agreements. FIN 45 requires
the Corporation to record an initial liability, generally equal to the
fees received for these letters of credit when guaranteeing
obligations. FIN 45 applies prospectively to letters of credit the
Corporation issues or modifies subsequent to December 31, 2002.
9
WINTON FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the six- and three-month periods ended March 31, 2003 and 2002
3. Effects of Recent Accounting Pronouncements (continued)
The Corporation defines the initial fair value of these letters of
credit as the fee received from the customer. The maximum potential
undiscounted amount of future payments of these letters of credit as of
March 31, 2003 are $106,000 and they expire through January 2004.
Amounts due under these letters of credit would be reduced by any
proceeds that the Corporation would be able to obtain in liquidating
the collateral for the loans, which varies depending on the customer.
In January 2003, the FASB issued FIN 46, "Consolidation of Variable
Interest Entities." FIN 46 requires a variable interest entity to be
consolidated by a company if that company is subject to a majority of
the risk of loss from the variable interest entity's activities or
entitled to receive a majority of the entity's residual returns, or
both. FIN 46 also requires disclosures about variable interest entities
that a company is not required to consolidate, but in which it has a
significant variable interest. The consolidation requirements of FIN 46
apply immediately to variable interest entities created after January
31, 2003. The consolidation requirements apply to existing entities in
the first fiscal year or interim period beginning after June 15, 2003.
Certain of the disclosure requirements apply in all financial
statements issued after January 31, 2003, regardless of when the
variable interest entity was established. The Corporation adopted the
disclosure provisions of FIN 46 effective January 31, 2003, without
material effect on its financial statements.
4. Earnings Per Share
Basic earnings per common share is computed based upon the
weighted-average number of common shares outstanding during the period.
Diluted earnings per common share include the dilutive effect of
additional potential common shares issuable under the Corporation's
stock option plans. The computations are as follows:
FOR THE SIX MONTHS ENDED FOR THE THREE MONTHS ENDED
MARCH 31, MARCH 31,
------------------------ ------------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Weighted-average common shares
outstanding (basic) 4,477,664 4,445,279 4,487,565 4,449,154
Dilutive effect of assumed exercise
of stock options 128,682 110,673 128,683 126,396
--------- --------- --------- ---------
Weighted-average common shares
outstanding (diluted) 4,606,346 4,555,952 4,616,248 4,575,550
========= ========= ========= =========
Options to purchase 155,500 shares of common stock with a
weighted-average exercise price of $13.03 were outstanding at both
March 31, 2003 and 2002, but were excluded from the computation of
common share equivalents because their exercise prices were greater
than the average market price of the common shares.
10
WINTON FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the six- and three-month periods ended March 31, 2003 and 2002
5. Stock Option Plans
Shareholders of the Corporation have approved stock option plans that
provide for the issuance of up to 1,498,165 common shares to be granted
at the discretion of the Board of Directors. Under the 1988 Stock
Option Plan, 649,680 common shares were reserved for issuance to
directors, officers, and key employees of the Corporation and Winton
Savings. At March 31, 2003, 406,460 options under the 1988 Plan were
subject to exercise at the discretion of the grantees through fiscal
2008. The 1999 Stock Option Plan reserved 401,530 common shares for
issuance to directors, officers, and key employees of the Corporation
and Winton Savings. At March 31, 2003, 395,500 options under the 1999
Plan were subject to exercise at the discretion of the grantees through
fiscal 2010, while 6,030 options were ungranted. The 2003 Stock Option
Plan reserved 446,955 common shares for issuance to directors, officers
and key employees of the Corporation and Winton Savings. No options
under the 2003 plan have been granted.
The Corporation accounts for its stock option plans in accordance with
SFAS No. 123, "Accounting for Stock-Based Compensation," which contains
a fair value-based method for valuing stock-based compensation that
entities may use, which measures compensation cost at the grant date
based on the fair value of the award. Compensation is then recognized
over the service period, which is usually the vesting period.
Alternatively, SFAS No. 123 permits entities to continue to account for
stock options and similar equity instruments under Accounting
Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued
to Employees." Entities that continue to account for stock options
using APB Opinion No. 25 are required to make pro forma disclosures of
net earnings and earnings per share, as if the fair value-based method
of accounting defined in SFAS No. 123 had been applied.
The Corporation applies APB Opinion No. 25 and related Interpretations
in accounting for its stock option plans. Accordingly, no compensation
cost has been recognized for the plans. The proforma disclosures of net
earnings and earnings per share required under SFAS No. 123 are not
applicable to the six and three month periods ended March 31, 2003 and
2002, as no options were granted during these periods and options
previously granted had all vested in prior periods.
A summary of the status of the Corporation's stock option plans as of
March 31, 2003 and September 30, 2002 and 2001, and changes during the
periods ended on those dates is presented below:
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
------------------------ ---------------------------------------------------
2003 2002 2001
------------------------ ----------------------- -------------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
--------- -------- ------- --------- --------- ---------
Outstanding at beginning of period 801,960 $ 8.33 831,000 $ 8.23 743,000 $ 8.11
Granted -- -- -- -- 124,000 8.75
Exercised (36,000) 5.43 (27,040) 5.00 (26,000) 5.72
Forfeited -- -- (2,000) 10.06 (10,000) 11.98
------- -------- ------- --------- ------- ---------
Outstanding at end of period 765,960 $ 8.47 801,960 $ 8.33 831,000 $ 8.23
======= ======== ======= ========= ======= =========
Options exercisable at period-end 765,960 $ 8.47 801,960 $ 8.33 831,000 $ 8.23
======= ======== ======= ========= ======= =========
Weighted-average fair value of
options granted during the period $ -- $ -- $ 3.68
======== ========= =========
11
WINTON FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the six- and three-month periods ended March 31, 2003 and 2002
5. Stock Option Plans (continued)
The following information applies to options outstanding at March 31,
2003:
Number outstanding 340,460
Range of exercise prices $5.00 - $6.75
Number outstanding 425,500
Range of exercise prices $8.75 - $13.25
Weighted-average exercise price $8.47
Weighted-average remaining contractual life 4.50 years
12
WINTON FINANCIAL CORPORATION
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
In the following pages, management presents an analysis of the financial
condition of Winton Financial as of March 31, 2003, and the results of
operations for the six- and three-month periods ended March 31, 2003 compared to
the same periods in the prior year. In addition to this historical information,
the following discussion contains forward-looking statements that involve risks
and uncertainties. Economic circumstances, Winton Financial's operations and
Winton Financial's actual results could differ significantly from those
discussed in the forward-looking statements. Some of the factors that could
cause or contribute to such differences are discussed herein, but also include
changes in the economy and interest rates in the nation and in Winton
Financial's general market area. Without limiting the foregoing, the following
statements in this discussion and analysis are forward-looking and are,
therefore, subject to such risks and uncertainties:
1. Management's analysis of the interest rate risk of Winton Savings;
2. Management's discussion of the liquidity of Winton Savings' assets and
the regulatory capital of Winton Savings;
3. Management's determination of the amount and adequacy of the allowance
for loan losses; and
4. Management's opinion as to the effects of recent accounting
pronouncements.
Discussion of Financial Condition Changes from September 30, 2002 to March 31,
2003
The Corporation had total assets of $511.3 million at March 31, 2003, an
increase of $5.6 million, or 1.1%, over the September 30, 2002 total. The
increase in assets was comprised of a $14.4 million increase in cash and
interest-bearing deposits, a $2.3 million increase in investment securities and
an increase in mortgage-backed securities of $1.3 million, which were partially
offset by a decrease in loans receivable, including loans held for sale, of
$12.7 million. The growth in assets was funded primarily by an increase in
deposits of $1.8 million, a $747,000 increase in advances from the Federal Home
Loan Bank ("FHLB"), undistributed earnings of $2.3 million and proceeds from the
exercise of stock options of $258,000.
Cash and cash equivalents totaled $26.3 million at March 31, 2003, an increase
of $14.4 million over the balance at September 30, 2002. Investment securities
totaled $15.4 million at March 31, 2003, an increase of $2.3 million, or 17.5%,
over September 30, 2002 levels. The increase in investment securities resulted
from purchases of $12.3 million, which were partially offset by sales,
maturities and calls totaling $9.9 million. Purchases during the period were
comprised of $5.2 million of municipal securities and $7.1 million of short-term
U.S. Treasury and government agency securities.
Mortgage-backed securities totaled $7.3 million at March 31, 2003, an increase
of $1.3 million, or 21.8%, over September 30, 2002, due to purchases of $2.0
million, which were partially offset by principal repayments of $721,000 during
the period.
Loans receivable totaled $444.2 million at March 31, 2003, a decrease of $12.7
million, or 2.8%, compared to the September 30, 2002 total. Loan sales of $132.8
million and principal repayments of $106.5 million exceeded loan originations
totaling $226.8 million during the period. Loans originated during the six-month
period ended March 31, 2003, were comprised predominately of refinanced loans
secured by one- to four-family residential real estate as consumers' preference
remained focused on fixed-rate loans. As a result, the volume of loans sold
increased by $76.3 million, or 135.1%, year to year.
13
WINTON FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
Discussion of Financial Condition Changes from September 30, 2002 to March 31,
2003 (continued)
The Company's allowance for loan losses totaled $2.1 million at March 31, 2003,
an increase of $200,000, or 10.8%, over the total at September 30, 2002. At
March 31, 2003, the allowance represented approximately .44% of the total loan
portfolio and 46.51% of total nonperforming loans. Nonperforming loans totaled
$4.4 million and $3.4 million at March 31, 2003 and September 30, 2002,
respectively. At March 31, 2003, nonperforming loans were comprised of $836,000
of loans secured by one- to four-family residential real estate, $2.2 million of
loans secured by nonresidential real estate and $1.3 million in balloon loans,
primarily collateralized by multi-family and nonresidential real estate whose
notes had matured and were ninety days past-due. Interest on these balloon loans
continued to be paid and customers renewed notes and cured document deficiencies
subsequent to March 31, 2003. Nonperforming nonresidential loans consisted of a
$2.2 million loan collateralized by an office building and lot with a
loan-to-value ratio of approximately 73%. At March 31, 2003, the ratio of total
nonperforming loans to total loans amounted to .94%, compared to .76% at
September 30, 2002. Management believes all nonperforming loans are adequately
collateralized and that there are no unreserved losses on such nonperforming
loans at March 31, 2003. Although management believes that its allowance for
loan losses at March 31, 2003 is adequate based on the available facts and
circumstances, there can be no assurance that additions to such allowance will
not be necessary in future periods, which could adversely affect Winton
Financial's results of operations.
Deposits totaled $334.8 million at March 31, 2003, an increase of $1.8 million,
or .5%, over September 30, 2002 levels. Deposits increased during the six months
ended March 31, 2003, due primarily to management's continuing efforts to grow
the portfolio through marketing and pricing strategies. Advances from the FHLB
and other borrowings totaled $127.2 million at March 31, 2003, an increase of
$747,000, or .6%, over September 30, 2002 levels. During the six months ended
March 31, 2003, the Company borrowed $15.0 million from the FHLB, which was
comprised of advances with an average term of 4.75 years and a weighted-average
interest rate of 3.50%, and $14.3 million of such advances were repaid during
the period.
Shareholders' equity totaled $42.5 million at March 31, 2003, an increase of
$2.5 million, or 6.2%, over September 30, 2002. The increase resulted from net
earnings of $3.2 million and proceeds from the exercise of stock options of
$258,000, which were partially offset by dividends totaling $919,000 and a
decrease in unrealized gains on available for sale securities of $90,000.
The Company is required to meet minimum capital standards promulgated by the
Office of Thrift Supervision (the "OTS"). At March 31, 2003, the Company's
regulatory capital exceeded such minimum capital requirements.
Comparison of Operating Results for the Three-Month Periods ended March 31, 2003
and 2002
General
The Corporation recorded net earnings for the three months ended March 31, 2003,
totaling $1.4 million, an increase of $248,000, or 20.7%, compared to net
earnings of $1.2 million for the same period in 2002. The increase in net
earnings was comprised of a $203,000 increase in net interest income, a $22,000
decrease in the provision for losses on loans and a $277,000 increase in other
income, which were partially offset by a $158,000 increase in general,
administrative and other expense and a $96,000 increase in the provision for
federal income taxes.
14
WINTON FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
Comparison of Operating Results for the Three-Month Periods ended March 31, 2003
and 2002 (continued)
Net Interest Income
Interest income on loans and mortgage-backed securities totaled $7.7 million for
the three months ended March 31, 2003, a decrease of $470,000, or 5.8%, compared
to the same quarter in 2002. The decrease resulted primarily from a decrease in
the weighted-average yield of 52 basis points, to 6.76% for the three months
ended March 31, 2003, which was partially offset by an increase in the average
balance outstanding of $6.9 million, or 1.6%, year to year.
Interest income on investment securities and interest-bearing deposits decreased
by $10,000, or 4.2%, for the three months ended March 31, 2003, compared to the
same quarter in 2002, due primarily to a decrease of 161 basis points in the
weighted-average yield, to 1.99% for the 2003 quarter, which was partially
offset by an increase of $19.5 million, or 73.1%, in the average balance
outstanding year to year.
Interest expense on deposits decreased by $662,000, or 21.8%, for the three
months ended March 31, 2003, compared to the same period in 2002. The decrease
was primarily attributable to a 109 basis point decrease in the weighted-average
cost of deposits, which was partially offset by a $31.2 million, or 10.1%,
increase in the average balance of deposits outstanding year to year. The
weighted-average cost of deposits amounted to 2.84% and 3.93% for the three
months ended March 31, 2003 and 2002, respectively.
Interest expense on borrowings decreased by $21,000, or 1.2%, during the three
months ended March 31, 2003, compared to the same quarter in 2002, primarily due
to a $653,000, or .5%, decrease in average balance of borrowings outstanding
year to year and a 3 basis point decrease in the weighted-average cost of
borrowings, to 5.32% for the three months ended March 31, 2003. The decreases in
yields on interest-earning assets and costs of interest-bearing liabilities were
due primarily to the overall decrease in interest rates in the economy.
As a result of the foregoing changes in interest income and interest expense,
net interest income increased by $203,000, or 5.6%, to $3.8 million for the
three months ended March 31, 2003, compared to the same quarter in 2002. The
interest rate spread increased by 6 basis points, to 2.78% for the three months
ended March 31, 2003, while the net interest margin remained unchanged at 3.04%
for each of the three months ended March 31, 2003 and 2002.
Provision for Losses on Loans
Winton Savings charges a provision for losses on loans to earnings to bring the
total allowance for loan losses to a level considered appropriate by management
based on historical experience, the volume and type of lending conducted by the
Company, the status of past due principal and interest payments, and general
economic conditions, particularly as such conditions relate to the Company's
loan portfolio and market area. As a result of such analysis, management
recorded a $150,000 provision for losses on loans during the quarter ended March
31, 2003, compared to a provision of $172,000 recorded in the 2002 period. The
provision is based on an internal matrix which evaluates reserves based upon
delinquency levels, risk classification of credits and inherent factors within
the portfolio. There can be no assurance that the allowance for loan losses of
the Company will be adequate to cover losses on nonperforming assets in the
future.
15
WINTON FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
Comparison of Operating Results for the Three-Month Periods ended March 31, 2003
and 2002 (continued)
Provision for Losses on Loans (continued)
The following table sets forth information regarding the Company's delinquent
loans, nonperforming assets and the allowance for loan losses.
MARCH 31, SEPTEMBER 30,
2003 2002
--------- -------------
(Dollars in thousands)
Loans delinquent
30 to 89 days $ 7,994 $ 4,730
90 or more days 4,408 3,398
------- -------
Total delinquent loans(1) $12,402 $ 8,128
======= =======
Loans accounted for on nonaccrual basis $ 3,173 $ 885
Loans greater than 90 days delinquent and still accruing 1,235 2,513
------- -------
Total nonperforming loans 4,408 3,398
Real estate acquired through foreclosure 1,920 2,462
------- -------
Total nonperforming assets $ 6,328 $ 5,860
======= =======
Allowance for loan losses $ 2,050 $ 1,850
======= =======
Allowance for loan losses to total loans 0.44% 0.42%
Allowance for loan losses to nonperforming loans 46.51% 54.44%
Allowance for loan losses to nonperforming assets 32.40% 31.57%
Nonperforming loans to total loans 0.94% 0.76%
(1) Includes $1.8 million in balloon multi-family and nonresidential real
estate loans which were paying interest and performing whose notes had
matured and were greater than thirty days past the maturity date.
Customers have executed new note agreements subsequent to March 31, 2003,
and such loans are no longer delinquent.
While management believes that, based on information currently available, the
allowance for loan losses is sufficient to cover losses inherent in the
Company's loan portfolio at this time, no assurance can be given that the level
of the allowance will be sufficient to cover future loan losses or that future
adjustments to the allowance will not be necessary if economic and/or other
conditions differ substantially from the economic and other conditions
considered by management in evaluating the adequacy of the current level of the
allowance.
Other Income
Other income totaled $982,000 for the three months ended March 31, 2003, an
increase of $277,000, or 39.3%, compared to the 2002 period, due primarily to a
$466,000, or 140.8%, increase in mortgage banking income, a $2,000 gain on sale
of real estate acquired through foreclosure and a $23,000 or 14.4% increase in
other operating income, partially offset by the effects of the $214,000 gain on
sale of investment securities recorded in the three months ended March 31, 2002.
The increase in mortgage banking income was due primarily to the increase in
sales volume quarter to quarter. The increase in other income was primarily
attributable to prepayment fees on nonresidential real estate loans and growth
in service charges on "Generation Gold," a new checking product introduced in
fiscal 2002.
16
WINTON FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
Comparison of Operating Results for the Three-Month Periods ended March 31, 2003
and 2002 (continued)
General, Administrative and Other Expense
General, administrative and other expense totaled $2.5 million for the three
months ended March 31, 2003, an increase of $158,000, or 6.8%, compared to the
same period in 2002. The increase was due primarily to increases in employee
compensation and benefits of $46,000, or 3.4%, occupancy and equipment expense
of $58,000, or 21.4%, and an increase in other operating expenses of $40,000, or
9.4%. Employee compensation and benefits increased primarily due to normal merit
increases year to year, an $18,000 increase in the 401(k) contribution quarter
to quarter and an increase in the incentive bonus pool. The increase in
occupancy and equipment was due to the opening of the new mortgage operations
facility and the restructuring and remodeling of corporate administration
offices. The increase in other operating expense was due primarily to increased
costs related to foreclosure activity, an increase in professional fees related
to outsourced internal audit services and pro-rata increases in other operating
expenses related to the Corporation's growth year to year.
Federal Income Taxes
The provision for federal income taxes amounted to $714,000 for the three months
ended March 31, 2003, an increase of $96,000, or 15.5%, compared to the same
period in 2002. The increase was due primarily to the increase in earnings
before taxes of $344,000, or 18.9%, partially offset by nontaxable interest
income in the current quarter. The effective tax rates were 33.0% and 34.0% for
the three-month periods ended March 31, 2003 and 2002, respectively.
Comparison of Operating Results for the Six-Month Periods ended March 31, 2003
and 2002
General
The Corporation recorded net earnings for the six months ended March 31, 2003,
totaling $3.2 million, an increase of $782,000, or 31.7%, compared to net
earnings of $2.5 million for the same period in 2002. The increase in net
earnings was comprised of a $736,000 increase in net interest income, a $332,000
decrease in the provision for losses on loans and a $540,000 increase in other
income, which were partially offset by a $478,000 increase in general,
administrative and other expense and a $348,000 increase in the provision for
federal income taxes.
Net Interest Income
Interest income on loans and mortgage-backed securities totaled $15.7 million
for the six months ended March 31, 2003, a decrease of $724,000, or 4.4%,
compared to the same period in 2002. The decrease resulted primarily from a
decrease in the weighted-average yield of 56 basis points, to 6.83% for the six
months ended March 31, 2003, which was partially offset by an increase in the
average balance outstanding of $15.3 million, or 3.4%, year to year.
Interest income on investment securities and interest-bearing deposits decreased
by $102,000, or 19.2%, for the six months ended March 31, 2003, compared to the
same period in 2002, due primarily to a decrease of 184 basis points in the
weighted-average yield, to 2.15% for the 2003 six month period, which was
partially offset by an increase of $13.3 million, or 5.0%, in the average
balance outstanding year to year.
17
WINTON FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
Comparison of Operating Results for the Six-Month Periods ended March 31, 2003
and 2002 (continued)
Net Interest Income (continued)
Interest expense on deposits decreased by $1.6 million, or 24.0%, for the six
months ended March 31, 2003, compared to the same period in 2002. The decrease
was primarily attributable to a 122 basis point decrease in the weighted-average
cost of deposits, which was partially offset by a $22.5 million, or 7.2%,
increase in the average balance of deposits outstanding year to year. The
weighted-average cost of deposits amounted to 2.99% and 4.21% for the six months
ended March 31, 2003 and 2002, respectively.
Interest expense on borrowings increased by $18,000, or .5%, during the six
months ended March 31, 2003, compared to the same period in 2002, primarily due
to a $3.0 million, or 2.4%, increase in average balance of borrowings
outstanding year to year, which was partially offset by a 10 basis point
decrease in the weighted-average cost of borrowings, to 5.46% for the six months
ended March 31, 2003. The decreases in yields on interest-earning assets and
costs of interest-bearing liabilities were due primarily to the overall decrease
in interest rates in the economy.
As a result of the foregoing changes in interest income and interest expense,
net interest income increased by $736,000, or 10.6%, to $7.7 million for the six
months ended March 31, 2003, compared to the same period in 2002. The interest
rate spread increased by 19 basis points, to 2.78% for the six months ended
March 31, 2003, while the net interest margin increased by 13 basis points, to
3.06% for the six months ended March 31, 2003, compared to 2.93% for the six
months ended March 31, 2002.
Provision for Losses on Loans
Winton Savings charges a provision for losses on loans to earnings to bring the
total allowance for loan losses to a level considered appropriate by management
based on historical experience, the volume and type of lending conducted by the
Company, the status of past due principal and interest payments, and general
economic conditions, particularly as such conditions relate to the Company's
loan portfolio and market area. As a result of such analysis, management
recorded a $305,000 provision for losses on loans during the six months ended
March 31, 2003, compared to a provision of $637,000 recorded in the 2002 period.
The provision is based on an internal matrix which evaluates reserves based upon
delinquency levels, risk classification of credits and inherent factors within
the portfolio. There can be no assurance that the allowance for loan losses of
the Company will be adequate to cover losses on nonperforming assets in the
future.
While management believes that, based on information currently available, the
allowance for loan losses is sufficient to cover losses inherent in the
Company's loan portfolio at this time, no assurance can be given that the level
of the allowance will be sufficient to cover future loan losses or that future
adjustments to the allowance will not be necessary if economic and/or other
conditions differ substantially from the economic and other conditions
considered by management in evaluating the adequacy of the current level of the
allowance.
Other Income
Other income totaled $2.5 million for the six months ended March 31, 2003, an
increase of $540,000, or 28.1%, compared to the 2002 period, due primarily to a
$596,000, or 52.1%, increase in mortgage banking income, a $243,000 gain on sale
of office premises, a $25,000 gain on sale of real estate acquired through
foreclosure and a $43,000, or 13.7%, increase in other operating income,
partially offset by a $117,000 reduction in gains on sale of investment
securities and the effects of the $250,000 gain on sale of deposits recorded in
the six months ended March 31, 2002. The increase in mortgage banking income was
due primarily to the increase in sales volume of $79.7 million, or 141.0%, over
the six months ended March 31, 2002. The Company sold its former Central Parkway
18
WINTON FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
Comparison of Operating Results for the Six-Month Periods ended March 31, 2003
and 2002 (continued)
Other Income (continued)
branch realizing a gain of $243,000. The deposits related to this branch were
sold in the six month period ended March 31, 2002, with the Company recognizing
a $250,000 gain. The increase in other income was primarily attributable to
prepayment fees on nonresidential real estate loans and growth in deposit
service charges on "Generation Gold," a new checking product introduced in
fiscal 2002.
General, Administrative and Other Expense
General, administrative and other expense totaled $5.0 million for the six
months ended March 31, 2003, an increase of $478,000, or 10.7%, compared to the
same period in 2002. The increase was due primarily to an increase in employee
compensation and benefits of $220,000, or 8.7%, and an increase in other
operating expenses of $165,000, or 19.7%. Employee compensation and benefits
increased primarily due to normal merit increases year to year, $35,000 of
expense related to an incentive bonus plan and a $43,000 increase in the 401(k)
contribution year to year. The increase in other operating expense was due
primarily to increased costs related to foreclosure activity, an increase in
professional fees related to outsourced internal audit services and pro-rata
increases in other operating expenses related to the Corporation's growth year
to year.
Federal Income Taxes
The provision for federal income taxes amounted to $1.6 for the six months ended
March 31, 2003, an increase of $348,000, or 27.4%, compared to the same period
in 2002. The increase was due primarily to the increase in earnings before taxes
of $1.1 million, or 30.2%, partially offset by nontaxable interest income in the
current period. The effective tax rates were 33.3% and 34.0% for the six-month
periods ended March 31, 2003 and 2002, respectively.
Liquidity and Capital Resources
Winton Savings maintains sufficient funds to meet deposit withdrawals, loan
commitments and expenses. Control of the Company's cash flow requires the
anticipation of deposit flows and loan payments. The Company's primary sources
of funds are deposits, borrowings, principal and interest repayments on loans
and proceeds from the sale of mortgage loans.
At March 31, 2003, Winton Savings had $123.5 million of certificates of deposit
maturing within one year. It has been the Company's historic experience that
such certificates of deposit will be renewed at Winton Savings' market rates of
interest. It is management's belief that maturing certificates of deposit over
the next year will similarly be renewed at market rates of interest without a
material adverse effect on results of operations.
In the event that certificates of deposit cannot be renewed at prevailing market
rates, the Company can obtain additional advances from the FHLB of Cincinnati.
At March 31, 2003, the Company had $125.2 million of outstanding FHLB advances,
with the ability to borrow an additional $76.6 million. The Company has also
utilized brokered deposits as a supplement to its local deposits when such funds
are attractively priced in relation to the local market. As of March 31, 2003,
the Company had $13.4 million in brokered deposits.
Winton Financial believes that the Company's liquidity posture at March 31,
2003, is adequate to meet outstanding loan commitments and other cash
requirements.
19
WINTON FINANCIAL CORPORATION
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
There has been no adverse material change in the Corporation's market risk since
the Corporation's Form 10-K filed with the Securities and Exchange Commission
for the fiscal year ended September 30, 2002.
ITEM 4 CONTROLS AND PROCEDURES
(a) The Corporation's Chief Executive Officer and Chief Financial
Officer evaluated the disclosure controls and procedures (as defined under Rules
13a-14(c) and 15d-14(c) of the Securities Exchange Act of 1934, as amended) as
of a date within ninety days of the filing date of this quarterly report. Based
upon that evaluation, the Chief Executive Officer and Chief Financial Officer
have concluded that the Corporation's disclosure controls and procedures are
effective.
(b) There were no significant changes in the Corporation's internal
controls or in other factors that could significantly affect these controls
subsequent to the date of their evaluation.
20
Winton Financial Corporation
PART II
ITEM 1. Legal Proceedings
Not applicable
ITEM 2. Changes in Securities and Use of Proceeds
Not applicable
ITEM 3. Defaults Upon Senior Securities
Not applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
None
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
99.1 Certification of Chief Executive Officer
99.2 Certification of Chief Financial Officer
(b) Reports on Form 8-K None.
21
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.
Date: May 13, 2003 By: /s/ Robert L. Bollin
----------------------- -----------------------------
Robert L. Bollin
President
Date: May 13, 2003 By: /s/ Jill M. Burke
----------------------- -----------------------------
Jill M. Burke
Chief Financial Officer
22
CERTIFICATION
I, Robert L. Bollin, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Winton Financial
Corporation;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
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 (the "Evaluation Date"); and
c. Presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
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 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.
Date: May 13, 2003 /s/ Robert L. Bollin
------------------------------
Robert L. Bollin, President
(Chief Executive Officer)
23
CERTIFICATION
I, Jill M. Burke, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Winton Financial
Corporation;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
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 (the "Evaluation Date"); and
c. Presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
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 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.
Date: May 13, 2003 /s/ Jill M. Burke
------------------------------
Jill M. Burke,
Chief Financial Officer
24