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Table of Contents

 

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For The Quarterly Period Ended:   March 31, 2011

 

o              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. 000-53003

 


 

WSB HOLDINGS, INC.

(Exact name of Registrant as specified in its Charter)

 

DELAWARE

 

26-1219088

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

4201 Mitchellville Road, Suite 200, Bowie, Maryland 20716

(Address of principal executive offices, Zip Code)

 

(301) 352-3120

(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 o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§223.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o  No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer o

 

Accelerated filer o

 

 

 

Non-accelerated filer o
(Do not check if a smaller reporting company)

 

Smaller reporting company x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  YES o  NO x

 

There were 7,992,232 shares of Common Stock ($0.0001 Par Value) outstanding as of May 2, 2011.

 

 

 



Table of Contents

 

WSB HOLDINGS, INC. AND SUBSIDIARIES

FORM 10-Q

INDEX

 

 

 

 

Page

 

 

 

Number

 

 

 

 

PART I.  FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1. Financial Statements

 

 

 

 

 

 

 

Consolidated Statements of Financial Condition (Unaudited) as of March 31, 2011 and December 31, 2010

2

 

 

 

 

 

 

Consolidated Statements of Operations — (Unaudited) For the Three months ended March 31, 2011 and 2010

3

 

 

 

 

 

 

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) For the Three Months ended March 31, 2011 and 2010

4

 

 

 

 

 

 

Consolidated Statements of Cash Flows — (Unaudited) For the Three Months ended March 31, 2011 and 2010

5

 

 

 

 

 

 

Notes to Consolidated Financial Statements (Unaudited)

6

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

24

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

35

 

 

 

 

 

Item 4.

Controls and Procedures

35

 

 

 

 

PART II.

 

 

 

 

 

 

 

Item 1.

Legal Proceedings

36

 

 

 

 

 

Item 1A.

Risk Factors

36

 

 

 

 

 

Item 6.

Exhibits

36

 

 

 

 

 

Signatures

37

 

1



Table of Contents

 

Item 1.  Financial Statments

 

WSB HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(UNAUDITED)

 

 

 

March 31,

 

December 31,

 

 

 

2011

 

2010

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Cash

 

$

14,869,320

 

$

21,438,474

 

Federal funds sold and interest bearing deposits at FHLB - Atlanta

 

21,424,921

 

2,095,561

 

Total cash and cash equivalents

 

36,294,241

 

23,534,035

 

 

 

 

 

 

 

Loans receivable:

 

 

 

 

 

Held for sale

 

4,853,800

 

24,169,595

 

Held for investment (net of allowance for loan losses of $9,761,442 and $10,219,791 respectively)

 

225,790,467

 

223,844,534

 

 

 

 

 

 

 

Investment securities - available for sale at fair value

 

41,420,011

 

22,110,923

 

Mortgage-backed securities - available for sale at fair value

 

58,883,918

 

58,551,837

 

Investment in Federal Home Loan Bank stock, at cost

 

5,501,800

 

5,501,800

 

Accrued interest receivable on loans

 

1,176,428

 

1,169,898

 

Accrued interest receivable on investments

 

567,014

 

465,831

 

Real estate acquired in settlement of loans

 

5,926,123

 

6,055,945

 

Bank owned life insurance

 

12,024,734

 

11,911,801

 

Premises and equipment - net

 

4,719,932

 

4,802,675

 

Income taxes receivable

 

53,178

 

629,167

 

Deferred income taxes

 

9,755,240

 

9,829,655

 

Other assets

 

2,385,154

 

3,352,288

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

409,352,040

 

$

395,929,984

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Deposits:

 

 

 

 

 

Non-interest bearing

 

$

5,471,987

 

$

6,512,064

 

Interest bearing

 

273,641,084

 

260,069,078

 

Total deposits

 

279,113,071

 

266,581,142

 

 

 

 

 

 

 

Federal Home Loan Bank borrowings

 

76,000,000

 

76,000,000

 

Advances from borrowers for taxes and insurance

 

633,396

 

479,480

 

Accounts payable, accrued expenses and other liabilities

 

1,232,689

 

1,250,469

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

356,979,156

 

344,311,091

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

Preferred stock, no stated par value; 10,000,000 shares authorized; none issued and outstanding

 

 

 

Common stock authorized, 20,000,000 shares at $.0001 par value, 7,992,232 and 7,924,732 issued and outstanding as of March 31, 2011 and December 31, 2010, respectively

 

799

 

792

 

Additional paid-in capital

 

11,087,907

 

10,872,561

 

Retained earnings - substantially restricted

 

41,217,356

 

40,981,757

 

Accumulated other comprehensive income (loss)

 

66,822

 

(236,217

)

 

 

 

 

 

 

TOTAL STOCKHOLDERS’ EQUITY

 

52,372,884

 

51,618,893

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

409,352,040

 

$

395,929,984

 

 

See notes to consolidated financial statements.

 

2



Table of Contents

 

WSB HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

 

Three Months ended

 

 

 

March 31,

 

 

 

2011

 

2010

 

INTEREST INCOME:

 

 

 

 

 

Interest and fees on loans

 

$

3,715,395

 

$

3,854,028

 

Interest on mortgage-backed securities

 

654,085

 

1,346,136

 

Interest and dividends on investments

 

292,703

 

382,051

 

 

 

 

 

 

 

Total interest income

 

4,662,183

 

5,582,215

 

 

 

 

 

 

 

INTEREST EXPENSE:

 

 

 

 

 

Interest on deposits

 

1,115,202

 

1,315,552

 

Interest on other borrowings

 

519,429

 

1,244,082

 

 

 

 

 

 

 

Total interest expense

 

1,634,631

 

2,559,634

 

 

 

 

 

 

 

NET INTEREST INCOME

 

3,027,552

 

3,022,581

 

Provision for loan losses

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES

 

3,027,552

 

3,022,581

 

 

 

 

 

 

 

NON-INTEREST INCOME:

 

 

 

 

 

Loan related fees

 

112,120

 

87,606

 

Gain on sale of loans

 

364,142

 

123,145

 

Gain on sale of investment securities - available for sale

 

182,848

 

 

Gain (loss) on sale of real estate acquired in settlement of loans

 

13,144

 

(36,400

)

Service charges on deposits

 

24,996

 

34,995

 

Rental income

 

94,245

 

101,439

 

Other income

 

155,811

 

155,229

 

 

 

 

 

 

 

Total non-interest income

 

947,306

 

466,014

 

 

 

 

 

 

 

NON-INTEREST EXPENSE:

 

 

 

 

 

Salaries and benefits

 

1,960,225

 

1,560,996

 

Occupancy expense

 

172,798

 

177,040

 

Depreciation

 

114,924

 

137,726

 

Advertising

 

86,514

 

82,893

 

Service bureau charges

 

134,124

 

133,058

 

Service charges from banks

 

9,010

 

8,648

 

Stationary, printing and supplies

 

44,844

 

33,361

 

Professional services

 

99,057

 

231,052

 

FDIC Insurance

 

219,922

 

301,928

 

Provision for losses on real estate acquired in settlement of loans

 

31,880

 

60,240

 

Other taxes

 

80,797

 

81,228

 

Other

 

734,664

 

620,777

 

 

 

 

 

 

 

Total non-interest expense

 

3,688,759

 

3,428,947

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

286,099

 

59,648

 

 

 

 

 

 

 

INCOME TAX EXPENSE (BENEFIT)

 

50,500

 

(194,095

)

 

 

 

 

 

 

NET INCOME

 

$

235,599

 

$

253,743

 

 

 

 

 

 

 

BASIC EARNINGS PER COMMON SHARE

 

$

0.03

 

$

0.03

 

 

 

 

 

 

 

DILUTED EARNINGS PER COMMON SHARE

 

$

0.03

 

$

0.03

 

 

 

 

 

 

 

CASH DIVIDENDS DECLARED PER COMMON SHARE

 

$

0.00

 

$

0.00

 

 

 

 

 

 

 

AVERAGE COMMON SHARES OUTSTANDING

 

7,966,732

 

7,855,732

 

 

 

 

 

 

 

AVERAGE DILUTED COMMON SHARES OUTSTANDING

 

7,967,387

 

7,879,472

 

 

See notes to consolidated financial statements.

 

3



Table of Contents

 

WSB HOLDINGS, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (Unaudited)

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Additional

 

 

 

Other

 

Total

 

 

 

Common

 

Paid-In

 

Retained

 

Comprehensive

 

Stockholders’

 

 

 

Stock

 

Capital

 

Earnings

 

Income (Loss)

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, JANUARY 1, 2010

 

$

785

 

$

10,717,631

 

$

44,854,806

 

$

(2,716,504

)

$

52,856,718

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

 

253,743

 

 

253,743

 

 

 

 

 

 

 

 

 

 

 

 

 

Net changes in unrealized appreciation on available for sale securities

 

 

 

 

1,037,856

 

1,037,856

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive Income

 

 

 

 

 

 

 

 

 

1,291,599

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, MARCH 31, 2010

 

$

785

 

$

10,717,631

 

$

45,108,549

 

$

(1,678,648

)

$

54,148,317

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, JANUARY 1, 2011

 

$

792

 

$

10,872,561

 

$

40,981,757

 

$

(236,217

)

$

51,618,893

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of Stock Options

 

7

 

213,227

 

 

 

213,234

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax effect of stock options exercised

 

 

2,119

 

 

 

2,119

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

 

235,599

 

 

235,599

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income Reclassification adjustment for gains, net of taxes of $72,115

 

 

 

 

110,733

 

110,733

 

 

 

 

 

 

 

 

 

 

 

 

 

Net changes in unrealized appreciation on available for sale securities

 

 

 

 

192,306

 

192,306

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive loss

 

 

 

 

 

 

 

 

 

538,638

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, MARCH 31, 2011

 

$

799

 

$

11,087,907

 

$

41,217,356

 

$

66,822

 

$

52,372,884

 

 

See notes to consolidated financial statements

 

4



Table of Contents

 

WSB HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Three months ended

 

 

 

March 31,

 

 

 

2011

 

2010

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

$

235,599

 

$

253,743

 

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

Depreciation

 

114,924

 

137,726

 

Accretion of discounts on investment securities

 

240,368

 

1,113

 

Gain on sale of mortgage-backed securities-available for sale

 

(182,848

)

 

(Gain) Loss on sale of real estate acquired in settlement of loans

 

(13,144

)

36,400

 

Gain on sale of loans

 

(364,142

)

(123,145

)

Loans originated for sale

 

(32,590,369

)

(18,198,733

)

Proceeds from sale of loans originated for sale

 

52,270,305

 

21,920,958

 

Increase in cash surrender value of bank owned life insurance

 

(112,933

)

(118,152

)

Chanage in deferred income taxes

 

(138,696

)

13,080

 

(increase) decrease in accrued interest receivable

 

(107,713

)

119,755

 

Decrease in other assets

 

967,137

 

432,391

 

Increase (decrease) in net deferred loan fees

 

58,346

 

(58,279

)

Change in income taxes payable/receivable

 

575,989

 

 

(Decrease) increase in accrued interest payable

 

(1,765

)

5,192

 

Decrease in accounts payable, accrued expenses and other liabilities

 

(17,780

)

(59,672

)

 

 

 

 

 

 

Net cash provided by operating activities

 

20,933,278

 

4,362,377

 

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

Net increase in loans

 

(2,358,789

)

(1,136,160

)

Purchase of mortgage-backed securities - available for sale

 

(13,027,549

)

47,412

 

Repayment of mortgage-backed securities - available for sale

 

5,699,130

 

16,275,929

 

Sale of mortgage backed securities -availabe for sale

 

7,715,995

 

 

Redemption of Federal Home Loan Bank Stock

 

 

(247,500

)

Purchase of investment securities - available for sale

 

(19,990,000

)

(10,453

)

Purchase of investment securities - held to maturity

 

 

 

Repayment of investment securities - available for sale

 

419,885

 

1,097,195

 

Purchase of premises and equipment

 

(32,182

)

(4,161

)

Sale of investment securities - available for sale

 

0

 

 

Development of real estate acquired in settlement of loans

 

(14,961

)

(8,750

)

Proceeds from sale of real estate acquired in settlement of loans

 

512,436

 

1,458,601

 

 

 

 

 

 

 

Net cash (used in) provided by investing activities

 

(21,076,035

)

17,472,113

 

 

 

 

 

 

 

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

Net increase in demand deposits, NOW accounts and savings accounts

 

17,894,028

 

4,624,092

 

Proceeds from issuance of certificates of deposit

 

1,530,830

 

11,066,416

 

Payments for maturing certificates of deposit

 

(6,891,164

)

(9,289,943

)

Net increase in advance payments by borrowers for taxes and insurance

 

153,916

 

233,569

 

Decrease in advance from the Federal Home Loan Bank

 

 

(8,000,000

)

Excess tax benefit from stock-based compensation

 

2,118

 

0

 

Proceeds from exercise of stock options

 

213,234

 

 

 

 

 

 

 

 

Net cash provided by (used in) by financing activities

 

12,902,962

 

(1,365,866

)

 

 

 

 

 

 

NET INCREASE IN CASH AND CASH EQUIVALENTS

 

12,760,205

 

20,468,624

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

23,534,036

 

9,068,864

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

36,294,241

 

$

29,537,488

 

 

 

 

 

 

 

CASH PAID DURING THE PERIOD FOR:

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

$

 

$

 

 

 

 

 

 

 

Interest

 

$

1,675,477

 

$

2,735,344

 

 

 

 

 

 

 

Non-cash transactions:

 

 

 

 

 

Transfer from loans to real estate acquired in settlement of loans

 

$

354,510

 

$

1,072,570

 

 

 

 

 

 

 

See notes to consolidated financial statements.

 

 

 

 

 

 

5



Table of Contents

 

WSB HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010

(unaudited)

 

1.      Financial Statements

 

The Consolidated Financial Statements for the three months ended March 31, 2011 and 2010 have been prepared by WSB Holdings, Inc. (“WSB” or the “Company”) without audit.  In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at March 31, 2011, and for all periods presented, have been made.  All significant intercompany transactions have been eliminated.

 

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission.   Management believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 (the “2010 Annual Report”), a copy of which is available at www.twsb.com and www.sec.gov.  The results of operations for the period ended March 31, 2011, are not necessarily indicative of the operating results for the full year, or any other period.

 

Certain prior year’s amounts have been reclassified to conform with the current year’s presentation.

 

2.      Earnings Per Common Share

 

The following is the reconciliation of the numerators and denominators of the basic and diluted Earnings Per Common Share (“EPS”) computation for all periods presented in the Consolidated Statements of Operations.

 

 

 

Three Months Ended March 31,

 

 

 

2011

 

2010

 

 

 

Net Income

 

Shares

 

Per Share

 

Net Income

 

Shares

 

Per Share

 

 

 

(Numerator)

 

(Denominator)

 

Amount

 

(Numerator)

 

(Denominator)

 

Amount

 

Basic EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to Common Stockholders

 

$

235,599

 

7,966,732

 

$

0.03

 

$

253,743

 

7,855,732

 

$

0.03

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of Dilutive Options Incremental Shares

 

 

 

655

 

 

 

 

 

23,740

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS Net income available to Common Stockholders

 

$

235,599

 

7,967,387

 

$

0.03

 

$

253,743

 

7,879,472

 

$

0.03

 

 

6



Table of Contents

 

WSB HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010

(unaudited)

 

Options to purchase 260,375 shares of common stock were not included in the computation of diluted EPS for the three months ended March 31, 2011 because their effect would have been antidilutive.

 

Options to purchase 325,375 shares of common stock were not included in the computation of diluted EPS for the three months ended March 31, 2010 because their effect would have been antidilutive.

 

3.                   Stock-Based Compensation

 

We have incentive compensation plans that permit the granting of incentive and non-qualified awards in the form of stock options.  Generally, the terms of these plans stipulate that the exercise price of options may not be less than the fair market value of WSB’s common stock on the date the options are granted.  Options predominantly vest over a two year period from the date of grant, and expire not later than ten years from the date of grant.

 

There were no awards granted during 2011 or 2010.  There was no pre-tax stock-based compensation during the three months ending March 31, 2011 and 2010.

 

All outstanding options are vested and there is currently no unrealized compensation cost related to non-vested share based compensation arrangements.

 

Stock Option Plans - We have five stock option plans, which reserve shares of common stock for issuance to certain key employees and non-employee directors. Collectively, these plans reserve 2,310,000 shares for issuance pursuant to options as of March 31, 2011, 1,899,125 options have been granted or expired and 410,875 options remain available for grant. Options granted generally expire ten years after grant date and are exercisable at 50% one year after the date of grant and the remaining 50% two years after the date of grant, with the exceptions of (1) options granted under the Non-Employee Directors’ Plan, which options are exercisable at 25% on the first and second anniversary dates and the remaining 50% three years after the date of grant and (2) the 5,000 option grant to WSB’s CEO in September 2005, which were fully vested at time of grant and have since expired. The exercise price of the options granted pursuant to these plans is in each case the fair market value of the shares on the date of grant.

 

7



Table of Contents

 

WSB HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010

(unaudited)

 

The following table summarizes stock option activity for the three month period ended March 31, 2011:

 

 

 

 

 

Weighted

 

Weighted

 

 

 

 

 

 

 

Average

 

Average

 

Aggregate

 

 

 

 

 

Exercise

 

Remaining

 

Intrinsic

 

 

 

Shares

 

Price

 

Life (Years)

 

Value

 

 

 

 

 

 

 

 

 

 

 

Outstanding at December 31, 2010

 

341,375

 

$

3.56

 

 

 

 

 

Exercised

 

(67,500

)

3.19

 

 

 

 

 

Granted

 

 

 

 

 

 

 

Forfeited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding at March 31, 2011

 

273,875

 

$

3.65

 

0.09

 

$

7,695

 

Exercisable at March 31, 2011

 

273,875

 

$

3.65

 

0.09

 

$

7,695

 

 

4.                   Fair Value Measurements

 

The Company applies guidance issued by FASB regarding fair value measurements which provides a framework for measuring and disclosing fair value under generally accepted accounting principles. This guidance requires disclosures about the fair value of assets and liabilities recognized in the balance sheet in periods subsequent to initial recognition, whether the measurements are made on a recurring basis (for example, available-for-sale investment securities) or on a nonrecurring basis (for example, impaired loans). This guidance defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  This guidance also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

 

We utilize fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. Securities available for sale are recorded at fair value on a recurring basis. Additionally, from time to time, we may be required to record at fair value other assets on a nonrecurring basis, such as loans held for sale, loans held for investment and certain other assets. These nonrecurring fair value adjustments typically involve application of lower of cost or market accounting or write-downs of individual assets.

 

Under the fair value measurement guidance, we group assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine the fair value. These hierarchy levels are:

 

Level 1 inputs — Unadjusted quoted prices in active markets for identical assets or liabilities that the entity has the ability to access at the measurement date.

 

8



Table of Contents

 

WSB HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010

(unaudited)

 

Level 2 inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.

 

Level 3 inputs - Unobservable inputs for determining the fair values of assets or liabilities that reflect an entity’s own assumptions about the assumptions that market participants would use in pricing the assets or liabilities.

 

An asset or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.  Management reviews and updates the fair value hierarchy classifications of our assets and liabilities on a quarterly basis.

 

The following is a description of valuation methodologies used for assets and liabilities recorded at fair value:

 

Investment Securities Available-for-Sale

 

Investment securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange such as the New York Stock Exchange, Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include mortgage backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. Securities classified as Level 3 include asset-backed securities in less liquid markets.  With the exception of our private labeled mortgage-backed securities, all securities available for sale are classified as Level 2.

 

Loans

 

We do not record loans held-for-investment at fair value on a recurring basis, however, from time to time, a loan is considered impaired and an allowance for loan loss is established. Loans for which it is probable that payment of interest and principle will not be made in accordance with the contractual terms of the loan are considered impaired.  Once a loan is identified as individually impaired, management measures impairment in accordance with the FASB’s Accounting Standards Codification Receivables Topic.  The fair value of impaired loans is estimated using one of several methods, including the collateral value, market value of similar debt, enterprise value, liquidation value and discounted cash flows. Those impaired loans not requiring a specific allowance represent loans for which the fair value of expected repayments or collateral exceed the recorded investment in such loans. At March 31, 2011, substantially all of the totally impaired loans were evaluated based upon the fair value of the collateral. In accordance with guidance regarding fair value measurements, impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. When the fair value of the collateral is based on an observable market price or a current appraised value, we record the loan as nonrecurring Level 2. When an appraised value is not available

 

9



Table of Contents

 

WSB HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010

(unaudited)

 

or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, we record the loan as nonrecurring Level 3.

 

Loans Held for Sale- Loans held for sale are valued based on quotations from the secondary market for similar instruments and is classified as level 2 of the fair value hierarchy.

 

Foreclosed Assets

 

Foreclosed assets are adjusted for fair value upon transfer of the loans to foreclosed assets. Subsequently, foreclosed assets are carried at the lower of carrying value and fair value. Fair value is based upon independent market prices, appraised value of the collateral or management’s estimation of the value of the collateral. When the fair value of the collateral is based on an observable market price or a current appraised value, we record the foreclosed asset as nonrecurring Level 2. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, we record the foreclosed asset at nonrecurring Level 3.

 

Assets and Liabilities Measured at Fair Value on a Recurring Basis

 

The table below presents the recorded amount of assets and liabilities measured at fair value on a recurring basis at March 31, 2011 and December 31, 2010:

 

 

 

At March 31, 2011 (In thousands)

 

 

 

 

 

Quoted Prices in

 

Other

 

Significant

 

Total Changes

 

 

 

 

 

Active Markets for

 

Observable

 

Unobservable

 

in Fair Values

 

 

 

Carrying Value

 

Identical Assets

 

Inputs

 

Inputs

 

Included in

 

 

 

March 31, 2011

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

Period Earnings

 

Loans Held-for-sale

 

$

4,854

 

 

 

$

4,854

 

 

 

$

 

 

Available-for-sale, FHLB Agencies callable

 

39,088

 

 

39,088

 

 

 

Available-for-Sale, Municipal Bonds

 

2,332

 

 

2,332

 

 

 

Available-for-Sale Residential MBS

 

58,884

 

 

37,326

 

21,558

 

 

 

 

$

105,158

 

$

 

$

83,600

 

$

21,558

 

$

 

 

 

 

At December 31, 2010 (In thousands)

 

 

 

 

 

Quoted Prices in

 

Other

 

Significant

 

Total Changes

 

 

 

 

 

Active Markets for

 

Observable

 

Unobservable

 

in Fair Values

 

 

 

Carrying Value

 

Identical Assets

 

Inputs

 

Inputs

 

Included in

 

 

 

December 31, 2010

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

Period Earnings

 

Loans Held-for-sale

 

$

24,170

 

 

 

$

24,170

 

 

 

$

 

 

Available-for-sale, FHLB Agencies callable

 

19,784

 

 

19,784

 

 

 

Available-for-Sale, Municipal Bonds

 

2,327

 

 

2,327

 

 

 

Available-for-Sale Residential MBS

 

58,552

 

 

35,187

 

23,365

 

(2,932

)

 

 

$

104,833

 

$

 

$

81,468

 

$

23,365

 

$

(2,932

)

 

10



Table of Contents

 

WSB HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010

(unaudited)

 

Loans held-for-sale, which are carried at the lower of cost or market, did not have any impairment charge at March 31, 2011.

 

Assets included in Level 3 include our private-labeled mortgage-backed securities (“MBS”) due to lack of observable market data due to decreases in market activity for these securities.  Our policy is to recognize transfers in and out as of the actual date of the event or change in circumstances that caused the transfer.  No assets were transferred to Level 3 during the three month period ending March 31, 2011.  The change in the assets included in Level 3 was due to principal repayments and the change in unrealized gains/losses for the three month period ending March 31, 2011.

 

The table below presents a reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2011 and March 31, 2010.

 

 

 

Fair Value Measurements

 

 

 

Using Significant Unobservable Inputs

 

 

 

(Level 3)

 

 

 

Private Labeled Mortgage-Backed

 

 

 

Securities-Available for Sale

 

 

 

Three months ended March 31,

 

 

 

2011

 

2010

 

 

 

 

 

 

 

Beginning Balance

 

$

23,365

 

$

40,194

 

Accretion/Amortization of Discount/Premiums

 

4

 

7

 

Payments received

 

(3,002

)

(4,174

)

Difference in Unrealized gain (loss)

 

1,191

 

396

 

Other than temporary impairment

 

 

 

 

 

 

 

 

 

 

 

Ending Balance

 

$

21,558

 

$

36,423

 

 

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

 

We may be required from time to time, to measure certain assets at fair value on a non- recurring basis in accordance with U.S. generally accepted accounting principles. These include assets that are measured at the lower of cost or market that were recognized at fair value below cost at the end of the period. Assets measured at fair value on a nonrecurring basis at March 31, 2011 and December 31, 2010 is included in the tables below:

 

11



Table of Contents

 

WSB HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010

(unaudited)

 

 

 

At March 31, 2011 (In thousands)

 

 

 

 

 

Quoted Prices in

 

Other

 

Significant

 

 

 

 

 

Active Markets for

 

Observable

 

Unobservable

 

 

 

Carrying Value

 

Identical Assets

 

Inputs

 

Inputs

 

 

 

March 31, 2011

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

Impaired Loans:

 

 

 

 

 

 

 

 

 

Residential Real estate

 

$

10,453

 

$

 

$

10,453

 

$

 

Construction

 

 

 

 

 

Land and land Acquisition

 

4,351

 

 

4,351

 

 

Commercial Real Estate and Commercial

 

14,029

 

 

14,029

 

 

Consumer

 

1

 

 

1

 

 

Total Impaired Loans

 

28,834

 

 

28,834

 

 

 

 

 

 

 

 

 

 

 

 

Real estate acquired in settlement of loans:

 

 

 

 

 

 

 

 

 

Residential Real estate

 

$

1,237

 

$

 

$

1,237

 

$

 

Construction

 

1,049

 

 

1,049

 

 

Land and land Acquisition

 

1,938

 

 

1,938

 

 

Commercial Real Estate and Commercial

 

1,702

 

 

1,702

 

 

Total Real estate acquired in settlement of loans:

 

5,926

 

 

5,926

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

34,760

 

$

 

$

34,760

 

$

 

 

12



Table of Contents

 

WSB HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010

(unaudited)

 

 

 

At December 31, 2010 (In thousands)

 

 

 

 

 

Quoted Prices in

 

Other

 

Significant

 

 

 

 

 

Active Markets for

 

Observable

 

Unobservable

 

 

 

Carrying Value

 

Identical Assets

 

Inputs

 

Inputs

 

 

 

December 31, 2010

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

Impaired Loans:

 

 

 

 

 

 

 

 

 

Residential Real estate

 

$

12,228

 

$

 

$

12,228

 

$

 

Construction

 

1,617

 

 

1,617

 

 

Land and land Acquisition

 

2,942

 

 

2,942

 

 

Commercial Real Estate and Commercial

 

16,304

 

 

16,304

 

 

Consumer

 

1

 

 

1

 

 

Total Impaired Loans

 

33,092

 

 

33,092

 

 

 

 

 

 

 

 

 

 

 

 

Real estate acquired in settlement of loans:

 

 

 

 

 

 

 

 

 

Residential Real estate

 

$

1,053

 

$

 

$

1,053

 

$

 

Construction

 

1,330

 

 

1,330

 

 

Land and land Acquisition

 

1,976

 

 

1,976

 

 

Commercial Real Estate and Commercial

 

1,697

 

 

1,697

 

 

Total Real estate acquired in settlement of loans:

 

6,056

 

 

6,056

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

39,148

 

$

 

$

39,148

 

$

 

 

Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans, had a principal balance of $34,561,000, with a related valuation allowance of $5,859,000 at March 31, 2011 compared to principal balance of $38,785,000, with a related valuation allowance of $5,693,000 at December 31, 2010.

 

Real estate acquired in settlement of loans is carried at the lower of our recorded investment or fair value at the date of acquisition.  Write-downs to fair value at the date of acquisition are charged to the allowance for loan losses.  Subsequent write downs are included in non-interest expense.  Costs relating to the development and improvement of a property are capitalized, whereas those relating to holding the property are charged to expense when incurred.  The real estate is carried at the lower of acquisition or fair value net of estimated costs to sell subsequent to acquisition.  Operating expenses of real estate owned are reflected in other non-interest expenses.  The value of OREO properties held due to foreclosures at March 31, 2011 was $5.9 million compared to $6.1 million at December 31, 2010.

 

Impaired loans, Real Estate Acquired in Settlement of Loans are classified as Level 2 within the valuation hierarchy.

 

13



Table of Contents

 

WSB HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010

(unaudited)

 

The following disclosures of the estimated fair value of financial instruments are made in accordance with the requirements of FASB’s Accounting Standards Codification Topic 820, “Fair Value Measurements and Disclosures”.   We have determined the fair value amounts by using available market information and appropriate valuation methodologies.  However, considerable judgment is required in interpreting market data to develop the estimates of fair value.  Accordingly, the estimates presented herein are not necessarily indicative of the amount we could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

 

 

 

March 31, 2011

 

December 31, 2010

 

 

 

 

 

Estimated

 

 

 

Estimated

 

 

 

Carrying

 

Fair

 

Carrying

 

Fair

 

 

 

Amount

 

Value

 

Amount

 

Value

 

 

 

(000’s)

 

(000’s)

 

(000’s)

 

(000’s)

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

36,294

 

$

36,294

 

$

23,534

 

$

23,534

 

Loans receivable, net

 

230,644

 

233,079

 

248,014

 

248,175

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

Available for sale

 

58,884

 

58,884

 

58,552

 

58,552

 

Investment securities:

 

 

 

 

 

 

 

 

 

Available for sale

 

41,420

 

41,420

 

22,111

 

22,111

 

Investment in Federal Home

 

 

 

 

 

 

 

 

 

Loan Bank stock

 

5,502

 

5,502

 

5,502

 

5,502

 

Bank Owned Life Insurance

 

12,025

 

12,025

 

11,912

 

11,912

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

Non-interest-bearing

 

5,472

 

5,472

 

6,512

 

6,512

 

Interest bearing

 

273,641

 

275,269

 

260,069

 

261,964

 

Borrowings

 

76,000

 

75,962

 

76,000

 

76,086

 

 

Cash and Cash Equivalents - For cash and cash equivalents, the carrying amount is a reasonable estimate of fair value.

 

Loans Receivable, Net - Loans not having quoted market prices are priced using the discounted cash flow method.  The discount rate used is the rate currently offered on similar products.  The estimated fair value of loans held-for-sale is based on the terms of the related sale commitments.

 

Mortgage-Backed Securities - Fair values are based on quoted market prices or dealer quotes.  If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

 

Investment Securities - Fair values are based on quoted market prices or dealer quotes.  If a quoted market price is not available, fair values are estimated using quoted market prices for similar securities.

 

14



Table of Contents

 

WSB HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010

(unaudited)

 

Investment in Federal Home Loan Bank Stock - The carrying amount of Federal Home Loan Bank (FHLB) Stock is a reasonable estimate of fair value as FHLB stock does not have a readily available market and can only be sold back to the FHLB at its par value of $100 per share.

 

Bank Owned Life Insurance - The carrying amount of Bank Owned Life Insurance (“BOLI”) purchased on a group of officers is a reasonable estimate of fair value.   BOLI is an insurance product that provides an effective way to offset current employee benefit costs.

 

Deposits - The fair value of non-interest bearing accounts is the amount payable on demand at the reporting date.  The fair value of interest-bearing deposits is determined using the discounted cash flow method.  The discount rate used is the rate currently offered on similar products.

 

Borrowings — The fair value of borrowings is determined using the discounted cash flow method.  The discount rate used is the rate currently offered on similar products.

 

Commitments to Grant Loans and Standby Letters of Credit and Financial Guarantees Written - The majority of our commitments to grant loans and standby letters of credit and financial guarantees written carry current market interest rates if converted to loans.  Because commitments to extend credit and letters of credit are generally un-assignable by either the Bank or the borrower, they only have value to the Bank and the borrower and therefore it is impractical to assign any value to these commitments.

 

The fair value estimates presented herein are based on pertinent information available to management as of March 31, 2011 and December 31, 2010.  Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively reevaluated for purposes of these financial statements since reporting period ending March 31, 2011 and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.

 

15



Table of Contents

 

WSB HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010

(unaudited)

 

5.                   Loans

 

The following table summarizes loans at March 31, 2011 and December 31, 2010.

 

 

 

March 31, 2011

 

December 31, 2010

 

 

 

 

 

 

 

FIRST MORTGAGE LOANS:

 

 

 

 

 

Secured by single-family residences

 

$

74,541,817

 

$

72,968,063

 

Secured by 5 or more- residential

 

2,407,029

 

3,019,186

 

Secured by other properties

 

40,708,881

 

41,306,353

 

Construction loans

 

6,091,158

 

4,898,672

 

Land and land development loans

 

10,739,501

 

11,613,824

 

Land acquisition loans

 

2,341,995

 

1,849,875

 

 

 

 

 

 

 

 

 

136,830,381

 

135,655,973

 

 

 

 

 

 

 

SECOND MORTGAGE LOANS

 

2,578,312

 

2,597,198

 

 

 

 

 

 

 

COMMERCIAL AND OTHER LOANS:

 

 

 

 

 

Commercial -secured by real estate

 

92,831,947

 

92,458,529

 

Commercial

 

3,268,546

 

3,212,401

 

Loans secured by savings accounts

 

189,595

 

205,637

 

Consumer installment loans

 

310,427

 

333,540

 

 

 

 

 

 

 

 

 

236,009,208

 

234,463,278

 

 

 

 

 

 

 

LESS:

 

 

 

 

 

Allowance for loan losses

 

(9,761,442

)

(10,219,791

)

Deferred loan fees

 

(457,299

)

(398,953

)

 

 

 

 

 

 

TOTAL LOANS RECEIVABLE HELD-FOR-INVESTMENT

 

$

225,790,467

 

$

223,844,534

 

 

16



Table of Contents

 

WSB HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010

(unaudited)

 

Allowance for loan losses and recorded investment in loans for the quarter ended March 31, 2011 is summarized as follows:

 

 

 

Residential
Real Estate

 

Construction

 

Land and Land
Acquisition

 

Commercial
Real Estate and
Commercial

 

Consumer

 

Total

 

 

 

(dollars in thousands)

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

2,891

 

$

326

 

$

2,932

 

$

4,067

 

$

4

 

$

10,220

 

Charge-offs

 

(427

)

 

(37

)

 

(2

)

(466

)

Recoveries

 

8

 

 

 

 

 

8

 

Provisions

 

 

 

 

 

 

 

Ending Balance

 

2,472

 

326

 

2,895

 

4,067

 

2

 

9,762

 

Ending Balance: individually evaluated for impairment

 

1,251

 

 

2,378

 

2,230

 

 

5,859

 

Ending Balance: collectively evaluated for impairment

 

1,221

 

326

 

517

 

1,837

 

2

 

3,903

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

Ending Balance

 

$

120,236

 

$

6,091

 

$

13,081

 

$

96,101

 

$

500

 

$

236,009

 

Ending Balance: individually evaluated for impairment

 

12,881

 

 

6,922

 

16,955

 

1

 

36,759

 

Ending Balance: collectively evaluated for impairment

 

107,355

 

6,091

 

6,159

 

79,146

 

499

 

199,250

 

 

As part of our on-going monitoring of the credit quality of our loan portfolio, we categorize loans into risk categories based on relevant information about the ability of borrowers to repay their debt.  Current financial information, historical payment experience, credit documentation, current economic trends and other factors are used to categorize loans into risk categories.

 

Credit quality indicators as of March 31, 2011 are as follows:

 

Pass — Loans classified as pass generally meet or exceed normal credit standards.  Factors include repayment source, collateral, borrower cash flows, and performance history.

 

Special Mention:  Loans classified Special Mention loans have potential weaknesses that deserve management’s attention. These loans are not adversely classified and do not expose an institution to sufficient risk to currently warrant adverse classification.

 

Substandard:  Loans classified as substandard are loans that have a well-defined weakness. They are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected.  These loans are inadequately protected by the current net worth and paying capacity of the obligor or the collateral pledged as security for the asset.

 

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WSB HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010

(unaudited)

 

Doubtful:  Loans classified as doubtful consists of loans where we expect a loss, but not a total loss.  These loans have all the weaknesses inherent in a substandard asset, in addition, these weaknesses make collection highly questionable or improbable based on the existing circumstances.

 

Loss:  Loans classified as loss are considered uncollectible.  A loan classified as a loss does not mean that an asset has no recovery value, but that is practical to defer writing off or reserving all or a portion of the asset, even though partial recovery may be collected in the future.  Loans that are classified as “Loss” are fully reserved for on our financial statements.

 

Credit risk profile by internally assigned grade, as described above as of March 31, 2011 is as follows:

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

Land and

 

Real Estate

 

 

 

 

 

 

 

 

 

 

 

Land

 

and

 

 

 

 

 

 

 

Real Estate

 

Construction

 

Acquisition

 

Commercial

 

Consumer

 

Total

 

 

 

(dollars in thousands)

 

Pass

 

$

104,609

 

$

4,438

 

$

5,967

 

$

62,727

 

$

497

 

$

178,238

 

Special Mention

 

4,331

 

 

378

 

17,100

 

 

21,809

 

Substandard

 

11,174

 

1,653

 

6,419

 

16,159

 

3

 

35,408

 

Doubtful/Loss

 

122

 

 

317

 

115

 

 

554

 

Total

 

$

120,236

 

$

6,091

 

$

13,081

 

$

96,101

 

$

500

 

$

236,009

 

 

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WSB HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010

(unaudited)

 

Information on impaired loans for the quarter ended March 31, 2011 is as follows:

 

 

 

 

 

Unpaid

 

 

 

Average

 

Interest

 

 

 

Recorded

 

Principal

 

Related

 

Recorded

 

Income

 

 

 

Investment

 

Balance

 

Allowance

 

Investment

 

Recognized

 

 

 

(dollars in thousands)

 

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

Residential Real Estate

 

$

3,434

 

$

3,434

 

$

 

$

3,575

 

$

40

 

Construction

 

 

 

 

 

 

Land and Land Acquisition

 

164

 

164

 

 

164

 

 

Commercial Real Estate and Commercial

 

898

 

898

 

 

898

 

16

 

Consumer

 

1

 

1

 

 

1

 

 

With an allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

Residential Real Estate

 

$

8,196

 

$

9,447

 

$

1,251

 

$

8,500

 

$

98

 

Construction

 

 

 

 

 

 

Land and Land Acquisition

 

4,380

 

6,758

 

2,378

 

4,379

 

19

 

Commercial Real Estate and Commercial

 

13,827

 

16,057

 

2,230

 

13,767

 

101

 

Consumer

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

Residential Real Estate

 

$

11,630

 

$

12,881

 

$

1,251

 

$

12,075

 

$

138

 

Construction

 

 

 

 

 

 

Land and Land Acquisition

 

4,544

 

6,922

 

2,378

 

4,543

 

19

 

Commercial Real Estate and Commercial

 

14,725

 

16,955

 

2,230

 

14,665

 

117

 

Consumer

 

1

 

1

 

 

1

 

 

 

At March 31, 2011 and December 31, 2010, nonaccrual loans were $21.9 million and $27.1 million, respectively.

 

An age analysis of past due loans as of March 31, 2011 is as follows:

 

 

 

2 payments

 

3 payments

 

Non-Accrual

 

Total

 

 

 

 

 

 

 

Past Due

 

Past Due

 

Loans

 

Past Due

 

Current

 

Total

 

 

 

(dollars in thousands)

 

Residential Real Estate

 

$

4,968

 

$

2,796

 

$

6,983

 

$

14,747

 

$

105,489

 

$

120,236

 

Construction

 

 

 

 

 

6,091

 

6,091

 

Land and Land Acquisition

 

2,388

 

36

 

5,744

 

8,168

 

4,913

 

13,081

 

Commercial Real Estate and Commercial

 

574

 

565

 

9,236

 

10,375

 

85,726

 

96,101

 

Consumer

 

1

 

1

 

1

 

3

 

497

 

500

 

Total

 

$

7,931

 

$

3,398

 

$

21,964

 

$

33,293

 

$

202,716

 

$

236,009

 

 

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WSB HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010

(unaudited)

 

Loans on which the recognition of interest has been discontinued amounted to approximately $21.9 million and $27.1 million at March 31, 2011 and December 31, 2010, respectively.  If interest income had been recognized on those loans at their stated rates during the period ending March 31, 2011 and 2010, interest income would have been increased in each period by approximately $1.6 million. The total allowance for loan losses on these impaired loans was approximately $5.7 million at March 31, 2011 and December 31, 2010.

 

Period-end impaired loans were as follows:

 

 

 

March 31, 2011

 

December 31, 2010

 

 

 

 

 

 

 

Balance of impaired loans with no allocated allowance

 

$

4,497

 

$

4,641

 

Balance of impaired loans with an allocated allowance

 

26,403

 

34,143

 

 

 

 

 

 

 

Total recorded investment of impaired loans

 

$

30,900

 

$

38,784

 

 

 

 

 

 

 

Amount of the allowance allocated to impaired loans

 

$

5,859

 

$

5,693

 

 

The impaired loans included in the table above were comprised of collateral dependent 1-4 residential real estate, lot loans and commercial real estate loans. The average recorded investment in impaired loans was $31.2 million and $25.0 million at March 31, 2011 and December 31, 2010, respectively.

 

6.      Investments and Mortgage-Backed Securities

 

Investment securities consist of the following:

 

 

 

March 31, 2011

 

 

 

 

 

Gross

 

Gross

 

Estimated

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

 

 

Cost

 

Gains

 

Losses

 

Value

 

 

 

 

 

 

 

 

 

 

 

AVAILABLE FOR SALE:

 

 

 

 

 

 

 

 

 

FHLB Agencies

 

$

19,390,832

 

$

301,805

 

$

262,600

 

$

19,430,037

 

FNMA Agencies

 

14,981,109

 

700

 

48,860

 

14,932,949

 

Farmer Mac

 

5,000,000

 

 

274,750

 

4,725,250

 

Municipal Bonds

 

2,294,585

 

37,190

 

 

2,331,775

 

 

 

$

41,666,526

 

$

339,695

 

$

586,210

 

$

41,420,011

 

 

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WSB HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010

(unaudited)

 

 

 

December 31, 2010

 

 

 

 

 

Gross

 

Gross

 

Estimated

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

 

 

Cost

 

Gains

 

Losses

 

Value

 

 

 

 

 

 

 

 

 

 

 

AVAILABLE FOR SALE:

 

 

 

 

 

 

 

 

 

FHLB Agencies

 

$

9,811,049

 

$

326,524

 

$

160,450

 

$

9,977,123

 

FNMA Agencies

 

4,985,020

 

25,330

 

 

5,010,350

 

Farmer Mac

 

5,000,000

 

 

203,550

 

4,796,450

 

Municipal Bonds

 

2,295,741

 

31,259

 

 

2,327,000

 

 

 

$

22,091,810

 

$

383,113

 

$

364,000

 

$

22,110,923

 

 

Mortgage-backed securities consisted of the following:

 

 

 

March 31, 2011

 

 

 

 

 

Gross

 

Gross

 

Estimated

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

 

 

Cost

 

Gains

 

Losses

 

Value

 

 

 

 

 

 

 

 

 

 

 

AVAILABLE FOR SALE:

 

 

 

 

 

 

 

 

 

GNMA certificates

 

$

865,631

 

$

90,753

 

$

 

$

956,384

 

Private label collaterized mortgage obligations

 

21,944,356

 

20,472

 

407,145

 

21,557,683

 

FHLMC pass-through certificates

 

6,061,635

 

15,150

 

16,066

 

6,060,719

 

FNMA pass-through certificates

 

16,498,719

 

273,620

 

36,874

 

16,735,465

 

Other pass-through certificates

 

13,156,690

 

416,976

 

 

13,573,668

 

 

 

$

58,527,031

 

$

816,971

 

$

460,085

 

$

58,883,917

 

 

 

 

 

 

 

 

 

 

 

Weighted average interest rate

 

4.72

%

 

 

 

 

 

 

 

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WSB HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010

(unaudited)

 

 

 

December 31, 2010

 

 

 

 

 

Gross

 

Gross

 

Estimated

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

 

 

Cost

 

Gains

 

Losses

 

Value

 

 

 

 

 

 

 

 

 

 

 

AVAILABLE FOR SALE:

 

 

 

 

 

 

 

 

 

GNMA certificates

 

$

965,230

 

$

104,993

 

$

 

$

1,070,223

 

Private label collaterized mortgage obligations

 

24,942,257

 

5,052

 

1,582,644

 

23,364,665

 

FHLMC pass-through certificates

 

10,165,914

 

263,607

 

 

10,429,521

 

FNMA pass-through certificates

 

9,099,423

 

250,779

 

 

9,350,202

 

Other pass-through certificates

 

13,788,148

 

549,078

 

 

14,337,226

 

 

 

$

58,960,972

 

$

1,173,509

 

$

1,582,644

 

$

58,551,837

 

 

 

 

 

 

 

 

 

 

 

Weighted average interest rate

 

5.39

%

 

 

 

 

 

 

 

The portfolio classified as “Available for Sale” is consistent with management’s assessment and intention as to the portfolio.  While we have the ability to hold the securities until maturity, from time to time or with changing conditions, it may be advantageous to sell certain securities either to take advantage of favorable interest rate changes or to increase liquidity.  Securities classified as “Held to Maturity” are not subject to fair value adjustment due to temporary changes in value due to interest rate variations, while securities classified as “Available for Sale” are subject to adjustment in carrying value through the accumulated comprehensive income line item in Stockholder’s Equity section of the Consolidated Statement of Financial Condition.

 

Gross unrealized losses and fair value by length of time that the individual available-for-sale investment and mortgage-backed securities have been in a continuous unrealized loss position is as follows:

 

 

 

March 31, 2011

 

December 31, 2010

 

 

 

 

 

Continuous

 

 

 

Continuous

 

 

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

 

 

Value

 

Losses

 

Value

 

Losses

 

 

 

 

 

 

 

 

 

 

 

Less than 12 months

 

 

 

 

 

 

 

 

 

FHLB Agencies

 

$

14,727,500

 

$

262,600

 

 

 

Farmer Mac Callable

 

$

4,725,250

 

$

274,750

 

 

 

FNMA Agencies

 

$

9,932,250

 

$

48,859

 

 

 

FHLMC MBS

 

$

5,000,307

 

$

16,066

 

 

 

FNMA MBS

 

$

2,961,444

 

$

36,874

 

 

 

 

 

 

 

 

 

 

 

 

 

More than 12 months

 

 

 

 

 

 

 

 

 

Other pass-through

 

20,054,167

 

407,146

 

23,182,150

 

1,582,644

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

57,400,917

 

$

1,046,295

 

$

23,182,150

 

$

1,582,644

 

 

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WSB HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010

(unaudited)

 

In evaluating whether a security was other than temporarily impaired, we considered the severity and length of time impaired for each security in a loss position. Other qualitative data was also considered including recent developments specific to the organization issuing the security, market liquidity, extension risk, credit rating downgrades as well as analysis of performance of the underlying collateral.

 

We believe that the unrealized losses, included in the table above, are not other-than-temporary.  The unrealized losses are driven by market illiquidity causing price deterioration.  Because our intention is not to sell the MBS and it is not more likely than not that we will be required to sell the MBS before recovery of their amortized cost bases, which may be maturity, as such, management does not consider these MBS to be other-than-temporarily impaired at March 31, 2011.

 

There are five remaining non-agency MBS that have been rated less than investment grade by at least one rating agency.  The remaining portfolio is U.S. Government securities.  We continue to aggressively monitor the performance of these securities and the underlying collateral.

 

Proceeds from the sale of mortgage-backed securities were as follows for the three months ending March 31, 2011:

 

 

 

March 31, 2011

 

 

 

 

 

 

 

Gross Realized

 

 

 

Carrying

 

 

 

Gain (Loss)

 

 

 

Value

 

Proceeds

 

on sales

 

 

 

 

 

 

 

 

 

MBS - available-for-sale

 

$

7,715,995

 

$

7,898,843

 

$

182,848

 

 

 

$

7,715,995

 

$

7,898,843

 

$

182,848

 

 

7.     New Accounting Pronouncements

 

All pending but not yet effective Accounting Standards Updates (“ASU”) were evaluated and only that listed below could have a material impact on our financial condition or results of operations.

 

In April 2011, the FASB amended existing guidance for assisting a creditor in determining whether a restructuring is a troubled debt restructuring. The amendments clarify the guidance for a creditor’s evaluation of whether it has granted a concession and whether a debtor is experiencing financial difficulties. This guidance is effective for interim and annual reporting periods beginning after June 15, 2011, and should be applied retrospectively to the beginning of the annual period of adoption. For purposes of measuring impairment on newly identified troubled debt restructurings, the amendments should be applied prospectively for the first interim or annual period beginning on or after June 15, 2011. The Company has not determined the impact, if any, upon the adoption of the standard.

 

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WSB HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010

(unaudited)

 

In April, 2011, the FASB issued ASU No. 2011-03, “Reconsideration of Effective Control for Repurchase Agreements.” ASU No. 2011-03 affects all entities that enter into agreements to transfer financial assets that both entitle and obligate the transferor to repurchase or redeem the financial assets before their maturity.  The amendments in ASU No. 2011-03 remove from the assessment of effective control the criterion relating to the transferor’s ability to repurchase or redeem financial assets on substantially the agreed terms, even in the event of default by the transferee.  ASU No. 2011-03 also eliminates the requirement to demonstrate that the transferor possesses adequate collateral to fund substantially all the cost of purchasing replacement financial assets.  The guidance is effective for the Company’s reporting period ended March 31, 2012.  The guidance will be applied prospectively to transactions or modifications of existing transaction that occur on or after January 1, 2012.

 

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Some of the matters discussed below include forward-looking statements within the meaning of the federal securities laws. Forward-looking statements often use words such as “may,” “will,” “believe,” “expect,” “estimate,” “anticipate”, “continue” or other words of similar meaning.  You can also identify them by the fact that they do not relate strictly to historical or current facts. Our actual results and the actual outcome of our expectations and strategies could be materially different from those anticipated or estimated for the reasons

 

24



Table of Contents

 

discussed below and the reasons under the heading “Information Regarding Forward Looking Statements.”

 

Overview

 

The consolidated financial statements include WSB Holdings, Inc. (“WSB”) and its wholly owned subsidiaries, The Washington Savings Bank FSB (the “Bank”), and WSB, Inc. and WSB Realty, Inc. (collectively referred to herein, as the “Company”).

 

We operate a general commercial banking business, attracting deposit customers from the general public and using such funds, together with other borrowed funds, to make loans, with an emphasis currently on residential mortgage lending.  Our results of operations are primarily determined by the difference between the interest income and fees earned on loans, investments and other interest-earning assets and the interest expense paid on deposits and other interest-bearing liabilities. The difference between the average yield earned on interest-earning assets and the average cost of interest-bearing liabilities is known as net interest-rate spread.  Our principal expense generally is the interest we pay on deposits and other borrowings.  The difference between interest income on interest-earning assets and interest expense on interest-bearing liabilities is referred to as net interest income.  Net interest income is significantly affected by general economic conditions and by policies of state and federal regulatory authorities and the monetary policies of the Federal Reserve Board. Our net income is also affected by the level of our non-interest income, including loan-related fees, deposit-based fees, rental income, operations of our service corporation subsidiary, gain on sale of real estate acquired in settlement of loans, gain on the sale of investment securities and gain on sale of loans, as well as our non-interest and tax expenses.

 

During this continuing period of economic slowdown, the effects of which, including declining real estate values resulting in asset impairment and tightening liquidity, has particularly impacted the banking industry in general, management continues to stress credit quality within both our loan and investment portfolios.  The Bank originates residential loans for its portfolio and for sale in the secondary market.  We had previously focused on diversifying our loan portfolio by broadening our lending emphasis to include commercial real estate and commercial and industrial loans.  Recently, however, as demand for these and other areas of lending have slowed, we again are focusing on increasing our mortgage activity in order to reduce balance sheet risk as well as to realize gains on the sale of loans in the secondary market.  As a result, our portfolios of commercial business, commercial real estate, and residential land development loans to commercial borrowers have decreased.  We also use available funds to retain certain higher-yielding fixed rate residential mortgage loans in our portfolio in order to improve interest income. Although we intend to again focus on diversifying or loan portfolio when demand for these other areas of loans picks up, we believe that our continued efforts to expand our residential mortgage lending department are important to ensure future profitability based on the current slow demand for commercial lending.  Management believes that interest rates and general economic conditions nationally and in our market area are most likely to have a significant impact on our results of operations. We carefully evaluate all loan applications in an attempt to minimize our credit risk exposure by obtaining a thorough application with enhanced approval procedures; however, there is no assurance that this process can reduce lending risks.

 

Both basic and diluted EPS amounts are shown on the Consolidated Statements of Operations.  However, “basic” earnings per share is utilized in this report’s narrative when per share amounts are listed, unless otherwise stated.

 

Critical Accounting Policies

 

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of consolidated financial statements requires management to make judgments in the application of certain of its accounting policies that involve significant estimates and assumptions about the effect of matters that are inherently uncertain.  These estimates and assumptions are based on information available as of the date of the financial statements, and may materially impact the reported

 

25



Table of Contents

 

amounts of certain assets, liabilities, revenues and expenses as the information changes over time. Accordingly, different amounts could be reported as a result of the use of revised estimates and assumptions in the application of these accounting policies.

 

Accounting policies considered relatively more critical due to either the subjectivity involved in the estimate and/or the potential impact that changes in the estimates can have on the reported financial results include the accounting for the allowance for loan losses.  Information concerning this policy is included in the “Critical Accounting Policies” section of Management’s Discussion and Analysis in our Form 10-K for the year ended December 31, 2010 (“2010 Form 10-K”).  There were no significant changes in this accounting policy during the three months ending March 31, 2011.

 

Consolidated Results of Operations

 

Net income for the three months ended March 31, 2011 was $236,000 or $0.03 per basic and diluted share, compared to net income of $254,000 or $0.03 per basic share and diluted share for the corresponding 2010 period.  Net income for the three month period ended March 31, 2011, represents a decrease of $18,100, or 7%, over the same period last year.

 

The change in net income for the three month period ending March 31, 2011, is primarily the result a tax expense of $51,000 compared to a tax benefit of $194,00 for the same period last year and the increase in non-interest expenses of $259,810, or 7.6%, offset by an increase in non-interest income of $481,291, or 103.3%.   Interest expense also decreased $925,000, or 36%, primarily due to the reduction in our cost of funds, primarily as a result of a decrease in the average yield on interest-bearing liabilities, offset by a decrease in interest income.  The increase in non-interest income is primarily the result our gain on sale of loans and gain on the sale of available for sale MBS.

 

The tax expense for the period ending March 31, 2011 includes an exclusion of income for the bank owned life insurance and tax benefit attributable to our investment portfolio which consists of callable investments backed by U.S. Agencies (“U.S. Agencies”).  The tax benefit for the period ending March 31, 2010 was primarily attributable to the reversal of a portion of a reserve established for an uncertain tax position resulting from a settlement of an IRS examination and, to a lesser extent, the exclusion of income for the bank owned life insurance and a tax benefit attributable to our investment portfolio which consists of U.S. Agencies.  See our 2010 Form 10-K for further details regarding the settlement.

 

The increase in non-interest expense is primarily the result of increased salaries and benefits. Non-interest expenses increased $260,000 for the three month period ending March 31, 2011, primarily as a result in the expansion of our mortgage lending department. The expansion included hiring experience loan officers during the fourth quarter of 2010 who primarily originate loans sold in the secondary market.

 

Interest Income/Expense

 

Total interest income decreased $920,000, or 16.5%, for the three month period ending March 31, 2011, compared to the same period last year, due primarily to a decrease in the average volume and average yield on interest-earning assets.

 

The average three month balance of interest-earning assets decreased to $365.3 million for the three months ending March 31, 2011 from $401.9 million for the three month ending March 31, 2010, due primarily to a decrease in MBS and loans held for investment, offsetting the increase in investment securities.  The decrease on MBS is primarily the result of selling approximately $14.6 million of MBS and principal pay-downs since March 2010.  The average yield on our interest-earning assets decreased to 5.08% during the three months ended March 

 

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31, 2011 from 5.56% during the same period in 2010.  The decrease is primarily the result of lower interest rates on our MBS and investment securities compared to the same period last year due to a lower interest rate environment.  In addition, we had more restructured loans in the 2011 period compared to the same period last year, which also negatively impacted the yield on our interest-earning assets.

 

Total interest expense decreased $925,000 or 36.1% for the three month period ended March 31, 2011, compared to the same period in the prior year.  The decrease was attributable to both a decrease in both the average balance, resulting from our repayment of $30 million of reverse repurchase agreements in June 2010, and the average interest rate on our interest-bearing liabilities.  For the three month period ended March 31, 2011, our average interest-bearing liabilities were $338.9 million with an average rate of 1.96%, compared to $371.7 million with an average rate of 2.79% for the corresponding period last year.

 

Net interest income increased $5,000, or .2%, for the three month period ended March 31, 2011, compared to the same period in the prior year.  Due to a lower average cost of our interest-bearing liabilities, our net interest rate spread increased to 3.12% for the three month period ended March 31, 2011 from 2.77% for the same period in the prior year.  The ratio of our interest-earning assets to interest-bearing liabilities decreased to 107.79% from 108.13%.

 

We continue to experience pressure on the compression of our interest rate margins due to slowing demand for loans and lower yields on loan originations and investment security offerings, however, the effects of this have been minimized by our ability to decrease interest rate expense through lower deposit costs. This lower interest rate environment for loans and investment securities compresses the interest rate spread by reducing interest income.  Interest rate margins may be further enhanced when and if economic conditions begin to become more favorable to lending and funds currently held in investment securities can be redirected back into the loan portfolio.

 

Allowance for Loan Losses

 

Our loan portfolio is subject to varying degrees of credit risk.  Credit risk is mitigated through portfolio diversification and limiting exposure to any single customer or industry.  We maintain an allowance for loan losses (the “allowance”) to absorb losses inherent in the loan portfolio.  The allowance is based on careful, continuous review and evaluation of the loan portfolio, along with ongoing, quarterly assessments of the probable losses inherent in that portfolio.  The methodology for assessing the appropriateness of the allowance includes:  (1) a formula allowance reflecting historical losses by credit category; (2) the specific allowance for risk rated credits on an individual or portfolio basis; and (3) a nonspecific allowance which accounts for risks not reflected by the other two components of the methodology.  The amount of the allowance is reviewed monthly by our Loan Committee, and reviewed and approved monthly by the Board of Directors.

 

The allowance is increased by provisions for loan losses, which are an expense.  Charge-offs of loan amounts determined by management to be uncollectible or impaired decrease the allowance, while recoveries of loans previously charged-off are added back to the allowance.  We make provisions for loan losses in amounts necessary to maintain the allowance at an appropriate level, as established by use of the allowance methodology.

 

Under the methodology, we consider trends in credit risk against broad categories of homogenous loans, as well as a loan by loan review of loans criticized or classified by management. Classified loans exceeding $300,000 are individually evaluated quarterly as part of the calculation of the adequacy of the allowance.

 

The allowance for loans losses is very subjective in nature, relying significantly on historical loss experience, collateral valuations available to management on specific loans, and economic conditions.    The challenges caused by the recent recession and continuing high unemployment levels and uncertain real estate valuations, have resulted in the Bank shortening its loss history look back period used for the allowance for loan losses from

 

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36 months to 12 months.  We continue to be mindful of the continued problems within the economy and its impact on our loan portfolio as well as the inherent risk within the portfolio, and management will make adjustments to the allowance and loan loss provision as necessary. The shortened loss history component of our calculation of the allowance for loan losses was due, in part, to recent recommendations from our regulators.  Based on our review, no provision was necessary for the period ending March 31, 2011.

 

During the three months ended March 31, 2011, the allowance decreased in net by $458,000 or 4.5%, to $9.8 million at March 31, 2011 from $10.2 million at December 31, 2010, as a result of net charge-offs of approximately $458,000 during the three months ending March 31, 2011. At March 31, 2011, the allowance was 4.15% of total loans held-for-investment, compared to 4.37% of total loans held-for-investment at December 31, 2010.

 

Our determination of the adequacy of the allowance requires significant judgment, and estimates of probable losses inherent in the loans held-for-investment portfolio can vary significantly from the amounts actually observed. See Critical Accounting Policies in the 2010 Form 10-K. While we use available information to recognize probable losses, future additions to the allowance may be necessary based on changes in the credits comprising the portfolios, changes in the financial condition of borrowers, such as may result from changes in economic conditions, or other considerations determined by management to be appropriate.

 

In addition, various regulatory agencies, as an integral part of their examination process, periodically review the loan portfolio and the allowance.  Such review may result in additional provisions based upon their judgments of information available at the time of each examination. As previously reported, an examination was completed by the Office of Thrift Supervision, our primary regulator, in November 2010.  At the conclusion of the examination, the examiners recommended a change in our methodology of our calculation of the allowance for loan losses which has been applied and resulted in no provision for the period ending March 31, 2011.

 

We experienced a decrease in charge-offs in our loan portfolio during the three months ending March 31, 2011 compared to the same period last year.  During the three months ending March 31, 2011 we recorded loan charge-offs of $466,000 and recoveries of previous charged-off loans of approximately $8,000 compared to charge-offs of $1.0 million during the quarter ended March 31, 2010.

 

Assets subject to our Loan Committee review include loans which meet our criteria for classification as sub-standard due to collateral deficiencies that may reflect inherent losses.  Based on the review of the individual loans involved, management estimates inherent losses. We continue to assess the allowance as new and relevant data is obtained.

 

We believe that the allowance reflects our best estimate of the probable inherent losses existing in our $235.6 million loans-held for investment portfolio as of March 31, 2011.  The $4.9 million loan held-for-sale portfolio has been committed to be purchased by investors at March 31, 2011 and will be settled subsequent to that date.

 

We have developed a comprehensive review process to monitor the adequacy of the allowance.  The review process and guidelines were developed utilizing guidance from federal banking regulatory agencies and relies on relevant observable data.  The observable data considered in the determination of the allowance is modified as more relevant data becomes available.  The results of this review process support management’s view that the allowance reflects probable losses within the loan portfolio as of March 31, 2011.

 

Changes in the estimation valuations may take place based on the status of the economy and the estimate of the value of the property securing loans, and as a result, the allowance may increase or decrease.  Future adjustments could substantially affect the amount of the allowance.

 

The following occurred during the three months ending March 31, 2011, which impacted the allowance

 

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analysis:

 

·                  We experienced defaults in 1-4 family residential loans of approximately $423,000.

·                  We experienced defaults in lot loans of approximately $36,000.

·                  We experienced no defaults in commercial loans.

 

All of the above-referenced loan defaults were charged off to the allowance during the three months ended March 31, 2011.  The amounts indicated reflect charge-offs, net of recoveries.

 

We believe our evaluation as to the adequacy of the allowance as of March 31, 2011 is appropriate, and caution the reader that the provisioning for the three month period is not necessarily indicative of future provisioning.  Subjective judgment is significant in the determination of the provision and allowance, manifested in the valuation of collateral, a borrower’s prospects of repayment, and in establishing allowance factors and components for the formula allowance for homogeneous loans. The establishment of allowance factors is a continuing exercise, based on management’s assessment of the factors and their impact on the portfolio, and that allowance factors may change from period to period, resulting in an increase or decrease in the amount of the provision or allowance, based upon the same volume and classification of loans. A time lag between the recognition of loss exposure in the evaluation of the adequacy of the allowance and a loan’s ultimate resolution and/or charge-off is normal and to be expected.  See above for discussion of some of the factors that have had a significant impact in the evaluation of the adequacy of our allowance.

 

We review on a monthly basis the adequacy of the allowance, and make provisions accordingly to meet the deemed losses within the portfolio.  Based on this review, no provision was deemed necessary for the period ending March 31, 2011.  For a better understanding and a more complete description of the allowance and the evaluation process, refer to the 2010 Form 10-K.

 

As shown below in tabular format, there was a decrease in charge-offs compared to the comparable period last year.  While there has been a decrease in loan charge-offs, we believe there are additional, unidentified, probable losses within the portfolio, which may be reflected as charge-offs against the allowance in future quarters as these losses manifest themselves and loan collection efforts continue.

 

 

 

2011

 

2010

 

 

 

1st Qtr

 

1st Qtr

 

Provision for loan losses

 

$

0

 

$

0

 

 

 

 

 

 

 

Loan charge-offs

 

$

466,104

 

$

1,024,081

 

Loan recoveries

 

7,755

 

3,929

 

Net Charge-offs

 

$

458,349

 

$

1,020,152

 

 

 

 

 

 

 

Allowance for loan losses at period end

 

$

9,761,442

 

$

7,161,535

 

Total loans held for investment at at period end

 

$

235,551,909

 

$

248,337,943

 

Allowance to total loans held for investment at period end

 

4.14

%

2.88

%

 

The fair value of impaired loans is estimated using one of several methods, including the collateral value, market value of similar debt, enterprise value, liquidation value and discounted cash flows. Those impaired loans not requiring a specific allowance represent loans for which the fair value of expected repayments or collateral exceed the recorded investment in such loans. At March 31, 2011, substantially all of the impaired loans were evaluated based upon the fair value of the collateral. Management’s analysis of our impaired loans represents a

 

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level of reserves of approximately $5.8 million for the period ending March 31, 2011 compared to approximately $5.7 million at December 31, 2010.

 

At March 31, 2011, total impaired loans were $34.6 million, or 14.68% of total loans held for investment, compared to $38.8 million, or 16.57% of total loans held-for-investment, at December 31, 2010. Non-performing loans consisted of $22.0 million that were non-accrual loans at March 31, 2011 and approximately $12.6 million of troubled debt restructured loans. Significant variation in this ratio may occur from period to period because the amount of non-performing loans depends largely on the condition of a small number of individual credits and borrowers relative to the total loan and lease portfolio.

 

 

 

At March 31,

 

At December 31,

 

 

 

2011

 

2010

 

 

 

(dollars in thousands)

 

Loans accounted for on a non-accrual basis:

 

 

 

 

 

Mortgage loans:

 

 

 

 

 

Single family

 

$

7,414

 

$

9,164

 

Land

 

5,744

 

5,947

 

Construction

 

 

1,648

 

 

 

 

 

 

 

Non-mortgage loans:

 

 

 

 

 

Consumer

 

1

 

3

 

Commercial

 

6,762

 

10,298

 

Non-residential

 

2,043

 

 

Total non-accrual loans

 

21,964

 

27,060

 

 

 

 

 

 

 

Foreclosed real estate

 

5,926

 

6,056

 

 

 

 

 

 

 

Total non-performing assets

 

$

27,890

 

$

33,116

 

 

 

 

 

 

 

Total non-performing loans to total loans held-for-investment

 

9.32

%

11.54

%

 

 

 

 

 

 

Allowance for loan losses to total non-performing loans

 

44.44

%

37.77

%

 

 

 

 

 

 

Total non-performing loans to total assets

 

5.37

%

6.83

%

 

 

 

 

 

 

Total non-performing assets to total assets

 

6.81

%

8.36

%

 

Our policy is to charge off all or that portion of our investment in an impaired loan upon a determination that it is probable the full amount will not be collected. Impaired loans totaled $34.6 million at March 31, 2011 and $38.8 million at December 31, 2010.

 

A troubled debt restructuring (“TDR”) means that, due to a borrower’s current financial difficulties, we have granted a concession to the borrower that we would not otherwise have considered.  We do this when we believe the borrower may default on the loan without such concession and we believe the concession will increase the borrower’s ability to remain current on the loan, in order to maximize recovery of our investment. The majority of our TDRs involve a restructuring of loan terms such as a temporary reduction in the payment amount to require only interest and escrow (if required), lowering of the interest rate and/or extending the maturity date of the loan.  All TDRs are reported as “impaired” but not reported as non-performing loans unless the restructured loans are more than 90 days delinquent or on non-accrual status.  As of March 31, 2011, we had $14.8 million in TDRs, of which $1.0 million were on non-accrual status, compared to $13.8 million in TDRs, of which $1.0 million were on non-accrual status, as of December 31, 2010.

 

As previously reported, there has been an increase in court caseloads resulting in delays in ratification of foreclosure sale actions by the courts affecting mortgage lenders, including us.  This has resulted in both a lengthening of the curing time for delinquent loans and the possibility of an increase in non-performing asset

 

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levels.  Recent Maryland legislation intended to provide extended notice periods and other protections to defaulting mortgagors will further delay the resolution of defaulting loans secured by residential properties, both owner and non-owner occupied.  We are also experiencing increased short sales and resales of bank owned properties in the marketplace, which is having a negative impact on real estate values and collateral on loans, in general. We are continuing our practice of working with borrowers to resolve delinquencies, with foreclosure action being the remedy of last resort when reasonable means to cure deficiencies in the best interest of both the Bank and the borrower, consistent with sound banking considerations, are exhausted.

 

Non-Interest Income

 

Total non-interest income increased $481,000, or 103.3%, for the three month period ended March 31, 2011, compared to the same period in the prior year.  The increase for the three month period is primarily the result gain on the sale of loans sold in the secondary market and gain on the sale of investments.

 

Gain on the sale of $7.9 million in MBS available for sale for the three month period ending March 31, 2011, included approximately $183,000 pretax, $111,000 net of tax, compared to no gains for the same period last year.  We believed there was a good opportunity to receive a premium on the MBS during the quarter and therefore decided to sell the MBS that generated this gain.  We did not sell any MBS during the quarter ended March 31, 2010.

 

Gain on the sale of loans increased $241,000 for the three months ending March 31, 2011, compared to the same period last year.  The increase is primarily due to an increase in number of originations and the premiums associated with loans sold in the secondary market.  Our ability to realize gains in future periods will depend largely on interest rates and the demand for mortgage loans.

 

While production of loans held-for-sale has been negatively impacted nationally by the current market constriction as to non-conforming and non-traditional mortgage offerings, and overall credit tightening, the Bank continues to offer traditional mortgage financing through its mortgage banking operations.  Because loans we sell in the secondary market are with recourse, and we could be required to repurchase such loans if the purchasers turn out to be not creditworthy, we continue to monitor the anticipated negative impact and/or exposure of many of the larger secondary market investors, and as such have further reduced or eliminated the selling of loans to investors where liquidity or financial capacity is in question.

 

The gain on the sale of real estate acquired in settlement of loans for the three month period ending March 31, 2011 is the result of the sale of two properties for a net gain of $13,000 compared to a net loss of $36,000 on the sale of four properties during the same period last year.  In the current economic environment, property values have a material result in our selling these properties.  Management may determine it in our best interests to sell the properties at a lower price than the value we had assigned to them as real estate owned in settlement of loans in order to avoid the ongoing expense associated with maintaining these properties in our portfolio, including maintenance, costs and property taxes, and with selling the properties at a later date.

 

Non-Interest Expenses

 

Non-interest expenses increased $260,000, or 7.6% for the three month period ending March 31, 2011, as compared to the corresponding prior year period.

 

The increase in non-interest expenses for the three month period was primarily due to increases of $399,000 in salaries and benefits and $114,000 in other expenses, partially offset by decreases of $132,000 in professional services. $82,000 in FDIC insurance and $28,000 in provision for losses on real estate acquired in settlement of loans compared to the same period last year.

 

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The increase in salaries and benefits is primarily associated with the growth of the mortgage lending department as well as annual increases and increased employee benefits expenses as compared with the same  period last year.  Benefit costs increased due to higher medical and life insurance premiums.

 

We recognized an expense of $32,000 for the three month period ending March 31, 2011 for the provision for losses on real estate acquired in settlement of loans.  We obtained updated appraisals and/or evaluations on the properties that have been classified as real estate owned, which resulted in additional write downs of certain properties as a result of continuing declines in real estate prices.

 

The increase in other expenses is primarily the result of costs associated with foreclosure of loans as a result of higher taxes we had to pay in connection with foreclosures during the 2011 period.

 

The decrease in deposit insurance premiums is primarily the result of an overall decrease in FDIC assessment rates based on our reduced brokered deposits and our borrowings as compared to the same period last year.

 

Professional services decreased $132,000 for the three month period ended March 31, 2011, as a result of a reduction in fees paid in the prior year due to the IRS litigation that was pending last year and settled in May 2010.

 

Income Taxes

 

A tax expense of $51,000 was recorded for the three months ended March 31, 2011, compared to a tax benefit of $194,000 for the same period last year.  The tax expense for the period ending March 31, 2011 includes an exclusion of income for the bank owned life insurance and tax benefit attributable to our investment portfolio which consists of U.S. Agencies.  The tax benefit for the period ending March 31, 2010 was primarily attributable to the reversal of a portion of a reserve established for an uncertain tax position resulting from a settlement of an IRS examination and, to a lesser extent, the exclusion from taxable income for the bank owned life insurance and a tax benefit attributable to our investment portfolio which consists of U.S. Agencies.  The effective tax rates were 17.7% and (325.4%) for the respective three month periods ended March 31, 2011 and 2010.

 

Liquidity and Capital Resources

 

Total assets were $409.4 million and $395.9 million at March 31, 2011 and December 31, 2010, respectively. The increase in assets at March 31, 2011, compared to December 31, 2010, was primarily attributable to increases in the available for sale investment securities and federal funds sold, offset by decrease in loans held for sale.  Loans classified as held for sale fluctuate based on the outstanding balance of money due us from the investors that the loans were sold to.  At December 31, 2010, we had $24.2 million to be funded compared to $4.8 million at March 31, 2011.  The excess funds received from these sales were used to purchase investment securities available for sale and federal funds sold.

 

Deposits were $279.1 million at March 31, 2011, compared to $266.6 million at December 31, 2010.  The increase in deposits at March 31, 2011, compared to December 31, 2010, was primarily due to an increase in our savings accounts.  During this period, our rates on money fund accounts were slightly higher than the Bank’s competitors, resulting in an increase in deposits.  Management anticipates continuing to utilize excess funding liquidity to offset a runoff of higher cost certificates of deposit (“CDs”) which were previously originated to fund loan production.

 

Borrowings at March 31, 2011 and December 31, 2010 are as follows:

 

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Balance as of

 

 

 

March 31,

 

Weighted

 

December 31,

 

Weighted

 

 

 

2011

 

Avg Rate

 

2010

 

Avg Rate

 

FHLB-advances -fixed

 

$

76,000,000

 

2.64

%

$

76,000,000

 

2.64

%

Reverse Repurchase Agreement

 

 

 

 

 

 

 

 

 

$

76,000,000

 

 

 

$

76,000,000

 

 

 

 

Total borrowings are $76.0 million as of March 31, 2011.  We maintain funding activities with correspondent banks and the Federal Home Loan Bank of Atlanta, which are cancelable by the lender and subject to lender discretion.  To the extent we do not or cannot use FHLB borrowings, we would expect to rely on alternative funding sources, including our deposit base and correspondent bank lines of credit.  Our remaining credit availability for additional FHLB advances at March 31, 2011 is $42.1 million. We currently have unused lines of credit with our correspondent banks in the amount of $16.0 million.

 

As a member of the FHLB system, and in order to maintain insurance with the FDIC, we must maintain sufficient liquidity to ensure a safe and sound operation.  Liquid assets are defined as cash, Federal Reserve deposits, time and savings deposits in certain institutions, obligations of states and political subdivisions thereof, highly rated corporate debt, mortgage loans and MBS, and accrued interest receivable and principal on certain qualified unpledged assets payable within five years.  Internal sources of liquidity used by the Bank are various short-term investments, MBS, and short-term borrowings.

 

Funding requirements are impacted by loan originations and maturities of CDs and borrowings.  We comply with regulatory guidelines regarding required liquidity levels and monitor our liquidity position.  In an effort to reduce exposure to liquidity risk, the Board’s Asset and Liability Committee monitors our sources of funds and our assets and liabilities, which may result in a change of our asset, liability, and off-balance sheet positions.  Long-term liquidity is generated through growth in our deposits and long-term debt, while short-term liquidity is generated though federal funds and securities sold under agreement to repurchase. We maintain sufficient liquidity to fund routine loan demand and routine deposit withdrawal activity. Liquidity is managed by maintaining sufficient liquid assets in the form of investment securities. Funding and cash flows can also be realized by the sale of securities available for sale, principal pay-downs on loans and MBS and proceeds realized from loans held for sale.

 

Current regulations require subsidiaries of a financial institution to be separately capitalized and require investments in and extensions of credit to any subsidiary engaged in activities not permissible for a bank to be deducted in the computation of the institution’s regulatory capital.  The Bank’s regulatory capital and regulatory assets below also reflect decreases of $54,000 and $90,000, respectively, which represents unrealized gains (after-tax for capital deductions and pre-tax for asset deductions, respectively) on MBS and investment securities classified as available for sale.  In addition, the Bank’s risk-based capital reflects an increase of $3.0 million in the general loan loss reserve.  The loan loss reserve factor represents 1.25% of the Bank’s risk-weighted assets.  The following table shows regulatory thrift capital ratios required, the Bank’s actual ratios, and the amount by which the Bank’s ratios exceed required capital ratios, as of March 31, 2011.

 

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Capital
Category

 

Regulatory
Ratios Required

 

Bank’s Amount
and Ratio

 

Bank’s Excess of
Requirements

 

Calculations

 

Based Upon

 

Leverage

 

$

15,996,550

 

$

41,567,459

 

$

25,570,909

 

$

41,567,459

 

Regulatory Capital

 

 

 

4.00

%

10.39

%

6.39

%

$

399,913,738

 

Regulatory Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible

 

$

5,998,706

 

$

41,567,459

 

$

35,568,753

 

$

41,567,459

 

Regulatory Capital

 

 

 

1.50

%

10.39

%

8.89

%

$

399,913,738

 

Regulatory Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Risk-Based

 

$

19,043,064

 

$

44,554,379

 

$

25,511,315

 

$

44,554,379

 

Regulatory Capital

 

 

 

8.00

%

18.72

%

10.72

%

$

238,038,305

 

Risk-Weighted Assets

 

 

Our management believes that, under current regulations, and eliminating the assets of WSB Holdings, the Bank remains well capitalized and will continue to meet its minimum capital requirements in the foreseeable future.  However, events beyond our control, such as a shift in interest rates or a continued downturn or slower recovery in the economy in areas where we extend credit, could adversely affect future earnings and, consequently, our ability to meet minimum capital requirements in the future.

 

The Qualified Thrift Lender Test currently requires that “qualified thrift investments” be at least 65% of portfolio assets as defined by the Office of Thrift Supervision (“OTS”).  At March 31, 2011, our ratio was approximately 85% of defined portfolio assets.

 

Off-Balance Sheet Transactions

 

We are a party to financial instruments with off-balance sheet risk including commitments to extend credit under existing lines of credit and commitments to sell loans.  These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated Statement of Financial Condition.

 

Off-balance sheet financial instruments whose contract amounts represent credit and interest rate risk are summarized as follows:

 

Commitments to originate new loans

 

$

1,488,439

 

Unfunded commitments to extend credit under existing construction, equity line and commercial lines of credit

 

16,916,635

 

Standby letters of credit

 

692,524

 

Commitments to sell loans held-for-sale

 

4,853,800

 

 

We do not have any unconsolidated special purpose entities or other similar forms of off-balance sheet financing arrangements.

 

Commitments to originate new loans or to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.  Loan commitments generally expire within 90 days.  Most equity line commitments for the unfunded portion of equity lines are for a term of 12 months, and commercial lines of credit are generally renewable on an annual basis.  Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.  Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.  We evaluate each customer’s creditworthiness on a case-by-case basis.  The amount of collateral obtained, if deemed necessary by us upon extension of credit, is based on management’s credit evaluation of the borrower.

 

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Commitments to sell loans held-for-sale are agreements to sell loans to third parties at an agreed upon price.

 

Information Regarding Forward-Looking Statements

 

This report contains forward-looking statements within the meaning of and pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  A forward-looking statement encompasses any estimate, prediction, opinion or statement of belief contained in this report and the underlying management assumptions, including those identified by terminology such as “may,” “will,” “believe,” “expect,” “estimate,” “anticipate,” “continue,” or similar expressions. The statements presented herein with respect to, among other things, the impact of recent accounting pronouncements, our expectations regarding diversifying our loan portfolio when our nonresidential loan demand picks up, the impact of future potential economic conditions, future interest rates and their impact on us, the allowance for loan losses, the collectability of non-accrual loans, the Bank’s continuing to meet its capital requirements and future sources of liquidity are forward-looking.

 

Forward-looking statements are based on our current expectations and assessments of potential developments affecting market conditions, interest rates and other economic conditions and assumptions and results may ultimately vary from the statements made in this report.  Our future results and prospects may be dependent upon a number of factors that could cause our performance to differ from the performance anticipated or projected in these forward-looking statements or to compare unfavorably to prior periods.  Among these factors are: (a) changes we make as a result of our ongoing review of our business and operations; (b) implementation of changes in lending practices and lending operations; (c) changes made as a result of the Board of Directors’ ongoing review of our capital management plan; (d) changes in accounting principles; (e) government legislation and regulation, including regulations adopted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; (f) changes in interests rates; (g) further deterioration of economic conditions or a slowing recovery; (h) credit or other risks of lending activity, such as changes in real estate values and changes in the quality or composition of our loan portfolio; (i) the impact of any legal or regulatory proceedings; and (j) other expectations, assessments and risks that are specifically mentioned in this report and in such other reports filed with the Securities and Exchange Commission. We wish to caution readers not to place undue reliance on any forward-looking statements, which speak only as of the date made, and to advise readers that various factors, including those described above, could affect our financial performance and could cause our actual results or circumstances for future periods to differ materially from those anticipated or projected.  Unless required by law, we do not undertake, and specifically disclaim any obligation, to publicly update or revise any forward- looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

 

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

 

Not applicable

 

Item 4.  Controls and Procedures

 

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as of the end of the period covered by this report.  Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective as of March 31, 2011.

 

During the period covered by this report, there were no changes (including corrective actions with regard to significant or material weaknesses) in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II.

 

Item 1.  Legal Proceedings

 

From time to time we may be involved in ordinary routine litigation incidental to our business.  At March 31, 2011, we were not involved in any legal proceedings the outcome of which, in management’s opinion, would be material to our financial condition or results of operations.

 

Item 1A.       Risk Factors

 

There have been no material changes in the risk factors from those disclosed in Item 1A “Risk Factors” in our 2010 Form 10-K.

 

Item 6.  Exhibits

 

10.9        Letter to Phillip C. Bowman outlining offer of at-will employment dated April 27, 2011.

 

31.1        Rule 13a-14(a) Certification of Principal Executive Officer (Filed herewith).

 

31.2        Rule 13a-14(a) Certification of Principal Financial Officer (Filed herewith).

 

32.1        Section 1350 Certification of Principal Executive Officer and Principal Financial Officer (Furnished herewith).

 

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Table of Contents

 

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.

 

 

 

 

WSB HOLDINGS, INC.

 

 

 

 

 

 

 

 

 

 

By:

/s/ Phillip C. Bowman

 

 

Phillip C. Bowman

 

 

 

Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Carol A. Ramey

 

 

Carol A. Ramey

 

 

 

Senior Vice President and Chief Financial Officer

 

 

 

 

 

 

 

 

Date:   May 12, 2011

 

 

 

 

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