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-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VSVinJsNBtNP9D/KDIT2W5VKjFxJbY9C2DORVFe+HdB9lkr+DKukeq2iNN4W5knk gJelvGJl2fDfDfxQ8EiAvA== 0000950144-09-002192.txt : 20090313 0000950144-09-002192.hdr.sgml : 20090313 20090313162112 ACCESSION NUMBER: 0000950144-09-002192 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20081231 FILED AS OF DATE: 20090313 DATE AS OF CHANGE: 20090313 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WILSON BANK HOLDING CO CENTRAL INDEX KEY: 0000885275 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 621497076 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20402 FILM NUMBER: 09680369 BUSINESS ADDRESS: STREET 1: 623 W MAIN STREET STREET 2: P.O. BOX 768 CITY: LEBANON STATE: TN ZIP: 37087 BUSINESS PHONE: 6154442265 MAIL ADDRESS: STREET 1: 623 W MAIN STREET STREET 2: P.O. BOX 768 CITY: LEBANON STATE: TN ZIP: 37087 10-K 1 g18042e10vk.htm 10-K 10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)


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

For the fiscal year ended December 31, 2008


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 number 0-20402

WILSON BANK HOLDING COMPANY

(Exact name of registrant as specified in its charter)


Tennessee		62-1497076

(State or other jurisdiction		(I.R.S. Employer Identification No.)
of incorporation or organization)

623 West Main Street
Lebanon, Tennessee		37087

(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code:

(615) 444-2265

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $2.00 par value per share

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

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 þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 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. (Check one):


Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

The aggregate market value of the voting stock held by non-affiliates of the registrant on June 30, 2008, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $209,320,382. For purposes of this calculation, “affiliates” are considered to be the directors of the registrant. The market value calculation was determined using $34.25 per share.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

Shares of common stock, $2.00 par value per share, outstanding on March 13, 2009 were 7,074,748.

TABLE OF CONTENTS


DOCUMENTS INCORPORATED BY REFERENCE
PART I
	Item 1. Business
	Item 1A. Risk Factors
	Item 1B. Unresolved Staff Comments
	Item 2. Properties
	Item 3. Legal Proceedings
	Item 4. Submission of Matters to a Vote of Security Holders
PART II
	Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchasers of Equity Securities
	Item 6. Selected Financial Data
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 7A. Quantitative and Qualitative Disclosures About Market Risk
	Item 8. Financial Statements and Supplementary Data
	Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
	Item 9A. Controls and Procedures
	Item 9B. Other Information
PART III
	Item 10. Directors, Executive Officers and Corporate Governance
	Item 11. Executive Compensation
	Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
	Item 13. Certain Relationships and Related Transactions, and Director Independence
	Item 14. Principal Accountant Fees and Services
	Item 15. Exhibits, Financial Statement Schedules
SIGNATURES
INDEX TO EXHIBITS
EX-10.5
EX-13.1
EX-21.1
EX-23.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

DOCUMENTS INCORPORATED BY REFERENCE


Part of Form 10-K		Documents from which portions are incorporated by reference

Part II		Portions of the Registrant’s Annual Report to Shareholders for the fiscal year ended December 31, 2008 are incorporated by reference into Items 5, 6, 7, 7A and 8.

Part III		Portions of the Registrant’s Proxy Statement relating to the Registrant’s Annual Meeting of Shareholders to be held on April 14, 2009 are incorporated by reference into Items 10, 11, 12, 13 and 14.

PART I

Item 1. Business.

General

Wilson Bank Holding Company (the “Company”) was incorporated on March 17, 1992 under the laws of the State of Tennessee. The purpose of the Company was to acquire all of the issued and outstanding capital stock of Wilson Bank and Trust (the “Bank”) and act as a one-bank holding company. On November 17, 1992, the Company acquired 100% of the capital stock of the Bank pursuant to the terms of a plan of share exchange and agreement.

All of the Company’s banking business is conducted through the Bank, a state chartered bank organized under the laws of the State of Tennessee. The Bank, on December 31, 2008, had eleven full service banking offices located in Wilson County, Tennessee, one full service banking facility in Trousdale County, Tennessee, two full service banking offices in eastern Davidson County, Tennessee, four full service banking offices located in Rutherford County, Tennessee, two full service banking offices in DeKalb County, Tennessee and two full service banking facilities in Smith County, Tennessee.

Prior to March 31, 2005, the Company owned a 50% interest in DeKalb Community Bank and Community Bank of Smith County. On March 31, 2005, the Company acquired the minority interest in the subsidiaries when the two subsidiaries were merged into the Bank with the shareholders of these subsidiaries, other than the Company, receiving shares of the Company’s common stock in exchange for their shares of common stock in the subsidiaries. Prior to March 31, 2005, these two 50% owned subsidiaries were included in the consolidated financial statements.

The Company’s principal executive office is located at 623 West Main Street, Lebanon, Tennessee, which is also the principal location of the Bank. The Bank’s branch offices are located at 1444 Baddour Parkway, Lebanon, Tennessee; 200 Tennessee Boulevard, Lebanon, Tennessee; Public Square, 402 Watertown, Tennessee; 8875 Stewart’s Ferry Pike, Gladeville, Tennessee; 1476 North Mt. Juliet Road, Mt. Juliet, Tennessee; 11835 Highway 70, Mount Juliet, Tennessee; 127 McMurry Boulevard, Hartsville, Tennessee; 1130 Castle Heights Avenue North, Lebanon, Tennessee; the Wal-Mart Super Center, Lebanon, Tennessee; 440 Highway 109 North, Lebanon, Tennessee; 1436 West Main Street, Lebanon, Tennessee; 4736 Andrew Jackson Parkway in Hermitage, Tennessee; 151 Heritage Park Drive, Suite 102, in Murfreesboro, Tennessee; 217 Donelson Pike, Nashville, Tennessee, 802 NW Broad St, Murfreesboro, Tennessee, 3110 Memorial Blvd, Murfreesboro, Tennessee, 210 Commerce Drive, Smyrna, Tennessee, 2640 South Church Street, Murfreesboro, Tennessee, 576 West Broad Street, Smithville, Tennessee, 306 Brush Creek Road, Alexandria, Tennessee,1300 Main Street North, Carthage, Tennessee, and 7 New Middleton Highway, Gordonsville, Tennessee. Management believes that Wilson County, Trousdale County, Davidson County, Rutherford County, DeKalb County and Smith County offer an environment for continued banking growth in the Company’s target market, which consists of local consumers, professionals and small businesses. The Bank offers a wide range of banking services, including checking, savings, and money market deposit accounts, certificates of deposit and loans for consumer, commercial and real estate purposes. The Bank also offers custodial, trust and discount brokerage services to its customers. The Bank does not have a concentration of deposits obtained from a single person or entity or a small group of persons or entities, the loss of which would have a material adverse effect on the business of the Bank. Furthermore, no concentration of loans exists within a single industry or group of related industries

The Bank was organized in 1987 to provide Wilson County with a locally-owned, locally-managed commercial bank. Since its opening, the Bank has experienced a steady growth in deposits and loans as a result of providing personal, service-oriented banking services to its targeted market. For the year ended December 31, 2008, the Company reported net earnings of approximately $11.4 million and had total assets of approximately $1.4 billion.

Financial and Statistical Information

The Company’s audited consolidated financial statements, selected financial data and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Company’s Annual Report to Shareholders for the year ended December 31, 2008 filed as Exhibit 13.1 to this Form 10-K (the “2008 Annual Report”), are incorporated herein by reference.

Regulation and Supervision

In addition to the information set forth herein, Management’s Discussion and Analysis of Financial Condition and Results of Operations, incorporated by reference in Item 7 hereof, further discusses recent banking legislation and regulation and should be reviewed in conjunction herewith.

The Company and the Bank are subject to extensive regulation under state and federal statutes and regulations. The discussion in this section, which briefly summarizes certain of such statutes, does not purport to be complete, and is qualified in its entirety by reference

to such statutes. Other state and federal legislation and regulations directly and indirectly affecting banks are likely to be enacted or implemented in the future; however, such legislation and regulations and their effect on the business of the Company and its subsidiaries cannot be predicted.

The Company is a bank holding company within the meaning of the Bank Holding Company Act of 1956 (the “Act”) and is registered with the Board of Governors of the Federal Reserve System (the “Board”). The Company is required to file annual reports with, and is subject to examination by, the Board. The Bank is chartered under the laws of the State of Tennessee and is subject to the supervision of, and is regularly examined by, the Tennessee Department of Financial Institutions. The Bank is also regularly examined by the Federal Deposit Insurance Corporation.

Under the Act, a bank holding company may not directly or indirectly acquire ownership or control of more than five percent of the voting shares or substantially all of the assets of any company, including a bank, without the prior approval of the Board. In addition, bank holding companies are generally prohibited under the Act from engaging in non-banking activities, subject to certain exceptions and the modernization of the financial services industry in connection with the passing of the Gramm-Leach-Bliley Act of 1999 (the “GLB Act”). Under the Act, the Board is authorized to approve the ownership by a bank holding company of shares of any company whose activities have been determined by the Board to be so closely related to banking or to managing or controlling banks as to be a proper incident thereto.

In November 1999, the GLB Act became law. Under the GLB Act, a “financial holding company” may engage in activities the Board determines to be financial in nature or incidental to such financial activity or complementary to a financial activity and not a substantial risk to the safety and soundness of such depository institutions or the financial system. Generally, such companies may engage in a wide range of securities activities and insurance underwriting and agency activities. The Company has not made application to the Board to become a “financial holding company.”

Under the Tennessee Bank Structure Act, a bank holding company which controls 30% or more of the total deposits in all federally insured financial institutions in Tennessee is prohibited from acquiring any bank in Tennessee. Furthermore, no bank holding company may acquire any bank in Tennessee that has been in operation less than three years or organize a new bank in Tennessee, except in the case of certain interim bank mergers and acquisitions of banks in financial difficulty. State banks and national banks in Tennessee, however, may establish branches anywhere in the state.

The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the “IBBEA”) authorized interstate acquisitions of banks and bank holding companies without geographic limitation beginning on June 1, 1997. In addition, on that date, the IBBEA authorized a bank to merge with a bank in another state as long as neither of the states has opted out of interstate branching between the date of enactment of the IBBEA and May 1, 1997. Tennessee enacted interstate branching laws in response to the federal law which prohibit the establishment or acquisition in Tennessee by any bank of a branch office, branch bank or other branch facility in Tennessee except (i) a Tennessee-chartered bank, (ii) a national bank which has its main office in Tennessee or (iii) a bank which merges or consolidates with a Tennessee-chartered bank or national bank with its main office in Tennessee.

The Company and the Bank are subject to certain restrictions imposed by the Federal Reserve Act and the Federal Deposit Insurance Act, respectively, on any extensions of credit to the bank holding company or its subsidiary bank, on investments in the stock or other securities of the bank holding company or its subsidiary bank, and on taking such stock or other securities as collateral for loans of any borrower. The Bank takes Company Common Stock as collateral for borrowings subject to the aforementioned restrictions.

The FDIC has adopted a risk-based assessment system for insured depository institutions that takes into account the risks attributable to different categories and concentrations of assets and liabilities. In early 2006, Congress passed the Federal Deposit Insurance Reform Act of 2005, which made certain changes to the Federal deposit insurance program. These changes included merging the Bank Insurance Fund and the Savings Association Insurance Fund, increasing retirement account coverage to $250,000 and providing for inflationary adjustments to general coverage beginning in 2010, providing the FDIC with authority to set the fund’s reserve ratio within a specified range, and requiring dividends to banks if the reserve ratio exceeds certain levels. The new statute grants banks an assessment credit based on their share of the assessment base on December 31, 1996, and the amount of the credit can be used to reduce assessments in any year subject to certain limitations. In 2008, the Bank had utilized none of its credit. All outstanding credits were used prior to 2008.

The Emergency Economic Stabilization Act of 2008 (“EESA”) provides for a temporary increase in the basic limit on federal deposit insurance coverage from $100,000 to $250,000 per depositor. This legislation provides that the basic deposit insurance limit will return to $100,000 on December 31, 2009. In addition, on October 14, 2008, the FDIC instituted a Temporary Liquidity Guarantee Program that provided for FDIC guarantees of unsecured debt of depository institutions and certain holding companies and for temporary unlimited FDIC coverage of non-interest bearing deposit transaction accounts. Institutions were automatically covered, without cost, under these programs for 30 days (later extended until December 5, 2008); however, after the specified deadline (December 5, 2008), institutions were required to opt-out of these programs if they did not wish to participate and incur fees

thereunder. The Company has elected to participate in the transaction account guarantee program, which expires on December 31, 2009, and the temporary debt guarantee program. Under the transaction account guarantee program, an institution can provide full coverage on non-interest bearing transaction accounts for an annual assessment of 10 basis points of any deposit amounts exceeding the $250,000 deposit insurance limit, in addition to the normal risk-based assessment. Under the terms of the temporary debt guarantee program, the Company is eligible to issue prior to June 30, 2009 up to $25,500,000 of senior unsecured debt guaranteed by the FDIC until the earlier of the maturity of such debt or June 30, 2012. Such guaranteed debt would be subject to an annual assessment amount ranging from 50 to 100 basis points depending on its maturity date.

The Financial Reform, Recovery and Enforcement Act of 1989 (“FIRREA”) provides that a holding company’s controlled insured depository institutions are liable for any loss incurred by the FDIC in connection with the default of, or any FDIC-assisted transaction involving, an affiliated insured bank or savings association.

The maximum permissible rates of interest on most commercial and consumer loans made by the Bank are governed by Tennessee’s general usury law and the Tennessee Industrial Loan and Thrift Companies Act (“Industrial Loan Act”). Certain other usury laws affect limited classes of loans, but the Company believes that the laws referenced above are the most significant. Tennessee’s general usury law authorizes a floating rate of 4% per annum over the average prime or base commercial loan rate, as published by the Federal Reserve Board from time to time, subject to an absolute 24% per annum limit. The Industrial Loan Act, which is generally applicable to most of the loans made by the Company’s bank subsidiary in Tennessee, authorizes an interest rate of up to 24% per annum and also allows certain loan charges, generally on a more liberal basis than does the general usury law.

Competition

The banking industry is highly competitive. The Company, through its subsidiary bank, competes with national and state banks for deposits, loans, and trust and other services.

The Bank competes with much larger commercial banks in Wilson County, the Bank’s primary market area, including four banks in Wilson County owned by regional multi-bank holding companies headquartered outside of Tennessee and four banks owned by Tennessee multi-bank holding companies. These institutions enjoy existing depositor relationships and greater financial resources than the Company and can be expected to offer a wider range of banking services. In addition, the Bank competes with two credit unions located in Wilson County and two locally-owned banks which were organized in 2001.

The Bank competes with much larger commercial banks in DeKalb County, including two banks owned by Tennessee multi-bank holding companies and one regional multi-bank holding company headquartered outside Tennessee. While these institutions enjoy existing depositor relationships and greater financial resources than the Bank and can be expected to offer a wider range of banking services, the Company believes that the Bank can expect to attract customers since most loan and management decisions will be made at the local level.

The Bank competes with three commercial banks in Smith County, all of which are small community banking organizations. These institutions enjoy existing depositor relationships; however, the Company believes that the Bank can be expected to offer a wider range of banking services through its financial resources as well as broader range of product offerings.

The Bank competes with over fifteen banks, some them much larger than the Bank in Rutherford County. These competitors include several regional multi-bank holding companies. While these larger institutions enjoy existing depositor relationships and greater financial resources than the Bank and can be expected to offer a wider range of banking services, the Company believes that the Bank can expect to attract customers since most loan and management decisions will be made at the local level.

The Bank competes with two commercial banks in Trousdale County, both of which are small community banking organizations. These institutions enjoy existing depositor relationships; however, the Company believes that the Bank can be expected to offer a wider range of banking services through its financial resources as well as a broader range of product offerings.

The Bank also competes with over twenty banks, some of them much larger than the Bank, in Davidson County, including several regional multi-bank holding companies.

Given the competitive market place, the Company makes no predictions as to how its relative position will change in the future.

Monetary Policies

The results of operations of the Bank and the Company are affected by the policies of the regulatory authorities, particularly the Board. An important function of the Board is to regulate the national supply of bank credit in order to combat recession and curb inflation. Among the instruments used to attain these objectives are open market operations in U.S. government securities, changes in the discount rate on bank borrowings and changes in reserve requirements relating to member bank deposits. These instruments are used in varying combinations to influence overall growth and distribution of bank loans, investments and deposits, and their use may also affect interest rates charged on loans and paid for deposits. Policies of the regulatory agencies have had a significant effect on the

operating results of commercial banks in the past and are expected to do so in the future. The effect of such policies upon the future business and results of operations of the Company and the Bank cannot be predicted with accuracy.

Employment

As of March 13, 2009, the Company and its subsidiary collectively employed 375 full-time equivalent employees. Additional personnel will be hired as needed to meet future growth.

Available Information

The Company’s Internet website is http://www.wilsonbank.com. Please note that our website address is provided as an inactive textual reference only. The Company makes available free of charge on its website the Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports as soon as reasonably practicable after it electronically files or furnishes such materials to the Securities and Exchange Commission (the “SEC”). The information provided on our website is not part of this report, and is therefore not incorporated by reference herein unless such information is otherwise specifically referenced elsewhere in this report.

Statistical Information Required by Guide 3

The statistical information required to be displayed under Item 1 pursuant to Guide 3, “Statistical Disclosure by Bank Holding Companies,” of the Exchange Act Industry Guides is incorporated herein by reference to the Consolidated Financial Statements and the notes thereto and the Management’s Discussion and Analysis sections in the Company’s 2008 Annual Report. Certain information not contained in the Company’s 2008 Annual Report, but required by Guide 3, is contained in the tables immediately following:

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WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2008

Distribution of Assets, Liabilities and Stockholders’ Equity;
Interest Rates and Interest Differential

The Schedule which follows indicates the average balances for each major balance sheet item, an analysis of net interest income and the change in interest income and interest expense attributable to changes in volume and changes in rates.

The difference between interest income on interest-earning assets and interest expense on interest-bearing liabilities is net interest income, which is the Company’s gross margin. Analysis of net interest income is more meaningful when income from tax-exempt earning assets is adjusted to a tax equivalent basis. Accordingly, the following schedule includes a tax equivalent adjustment of tax-exempt earning assets, assuming a weighted average Federal income tax rate of 34%.

In this Schedule, “change due to volume” is the change in volume multiplied by the interest rate for the prior year. “Change due to rate” is the change in interest rate multiplied by the volume for the prior year. Changes in interest income and expense not due solely to volume or rate changes have been allocated to the “change due to volume” and “change due to rate” in proportion to the relationship of the absolute dollar amounts of the change in each category.

Non-accrual loans have been included in the loan category. Loan fees of $2,252,000, $2,483,000 and $2,359,000 for 2008, 2007 and 2006, respectively, are included in loan income and represent an adjustment of the yield on these loans.

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2008


	*In Thousands, Except Interest Rates*
	2008								2007								2008/2007 Change
	Average			Interest			Income/		Average			Interest			Income/		Due to			Due to
	Balance			Rate			Expense		Balance			Rate			Expense		Volume			Rate			Total

Loans, net of unearned interest	$	1,051,550			7.01	%		73,731		931,238			7.73	%		71,945		8,830			(7,044	)		1,786

Investment securities — taxable		201,188			5.44			10,942		207,105			5.02			10,398		(304	)		848			544

Investment securities — tax exempt		14,174			3.82			542		15,098			3.88			585		(34	)		(9	)		(43	)

Taxable equivalent adjustment		—			1.97			279		—			1.99			301		(19	)		(3	)		(22	)


Total tax-exempt investment securities		14,174			5.79			821		15,098			5.87			886		(53	)		(12	)		(65	)


Total investment securities		215,362			5.46			11,763		222,203			5.08			11,284		(353	)		832			479


Loans held for sale		4,127			4.53			187		5,124			4.94			253		(46	)		(20	)		(66	)

Federal funds sold		30,970			2.50			773		49,836			5.06			2,524		(750	)		(1,001	)		(1,751	)

Restricted equity securities		3,003			6.06			182		2,960			5.98			177		3			2			5


Total earning assets		1,305,012			6.64			86,636		1,211,361			7.11			86,183		6,382			(5,929	)		453


Cash and due from banks		34,800								33,526

Allowance for loan losses		(10,507	)							(9,817	)

Bank premises and equipment		30,707								29,416

Other assets		25,328								24,265


Total assets	$	1,385,340								1,288,751

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2008


	*In Thousands, Except Interest Rates*
	2008							2007							2008/2007 Change
	Average		Interest			Income/		Average		Interest			Income/		Due to			Due to
	Balance		Rate			Expense		Balance		Rate			Expense		Volume			Rate			Total

Deposits:
Negotiable order of withdrawal accounts	$	168,239		2.16	%		3,628		117,115		2.44	%		2,858		1,129			(359	)		770
Money market demand accounts		195,700		1.73			3,388		218,387		2.66			5,815		(556	)		(1,871	)		(2,427	)
Individual retirement accounts		70,046		4.35			3,048		57,872		5.00			2,895		560			(407	)		153
Other savings deposits		40,851		2.20			897		40,190		3.00			1,204		20			(327	)		(307	)
Certificates of deposit $100,000 and over		322,815		4.40			14,207		285,328		5.29			15,092		1,839			(2,724	)		(885	)
Certificates of deposit under $100,000		334,745		4.29			14,352		323,376		5.18			16,759		569			(2,976	)		(2,407	)

Total interest-bearing deposits		1,132,396		3.49			39,520		1,042,268		4.28			44,623		3,625			(8,728	)		(5,103	)

Securities sold under repurchase agreements		8,682		2.07			180		7,804		4.38			342		35			(197	)		(162	)
Federal funds purchased		166		2.41			4		—		—			—		—			4			4
Advances from Federal Home Loan Bank		14,672		4.69			688		16,308		4.64			756		(76	)		8			(68	)

Total interest-bearing liabilities		1,155,916		3.49			40,392		1,066,380		4.29			45,721		3,643			(8,972	)		(5,329	)


Demand deposits		96,798							101,905

Other liabilities		9,563							9,607

Stockholders’ equity		123,063							110,859

Total liabilities and stockholders’ equity	$	1,385,340							1,288,751


Net interest income							46,244							40,462


Net yield on earning assets				3.54	%						3.34	%


Net interest spread				3.15	%						2.82	%

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2008


	*In Thousands, Except Interest Rates*
	2007								2006								2007/2006 Change
	Average			Interest			Income/		Average			Interest			Income/		Due to			Due to
	Balance			Rate			Expense		Balance			Rate			Expense		Volume			Rate			Total

Loans, net of unearned interest	$	931,238			7.73	%		71,945		845,311			7.40	%		62,567		6,518			2,860			9,378

Investment securities — taxable		207,105			5.02			10,398		138,724			3.83			5,312		3,119			1,967			5,086

Investment securities — tax exempt		15,098			3.88			585		15,986			3.96			633		(34	)		(14	)		(48	)

Taxable equivalent adjustment		—			1.99			301		—			2.04			326		(18	)		(7	)		(25	)

Total tax-exempt investment securities		15,098			5.87			886		15,986			6.00			959		(52	)		(21	)		(73	)


Total investment securities		222,203			5.08			11,284		154,710			4.05			6,271		3,166			1,847			5,013


Loans held for sale		5,124			4.94			253		4,554			4.41			201		27			25			52

Federal funds sold		49,836			5.06			2,524		36,973			4.91			1,814		653			57			710

Restricted equity securities		2,960			5.98			177		2,838			5.74			163		7			7			14


Total earning assets		1,211,361			7.11			86,183		1,044,386			6.80			71,016		10,371			4,796			15,167


Cash and due from banks		33,526								29,693

Allowance for loan losses		(9,817	)							(9,597	)

Bank premises and equipment		29,416								26,931

Other assets		24,265								21,649


Total assets	$	1,288,751								1,113,062

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2008


	*In Thousands, Except Interest Rates*
	2007							2006							2007/2006 Change
	Average		Interest			Income/		Average		Interest			Income/		Due to			Due to
	Balance		Rate			Expense		Balance		Rate			Expense		Volume			Rate		Total

Deposits:
Negotiable order of withdrawal accounts	$	117,115		2.44	%		2,858		84,484		1.49	%		1,262		602			994		1,596
Money market demand accounts		218,387		2.66			5,815		209,011		2.38			4,980		230			605		835
Individual retirement accounts		57,872		5.00			2,895		48,764		4.32			2,104		426			365		791
Other savings deposits		40,190		3.00			1,204		37,561		2.59			975		71			158		229
Certificates of deposit $100,000 and over		285,328		5.29			15,092		207,155		4.38			9,071		3,883			2,138		6,021
Certificates of deposit under $100,000		323,376		5.18			16,759		290,021		4.48			12,980		1,602			2,177		3,779

Total interest-bearing deposits		1,042,268		4.28			44,623		876,996		3.58			31,372		6,814			6,437		13,251

Securities sold under repurchase agreements		7,804		4.38			342		8,460		4.18			354		(28	)		16		(12	)
Federal funds purchased		—		—			—		—		—			—		—			—		—
Advances from Federal Home Loan Bank		16,308		4.64			756		14,718		4.43			652		72			32		104

Total interest-bearing liabilities		1,066,380		4.29			45,721		900,174		3.60			32,378		6,858			6,485		13,343


Demand deposits		101,905							105,176

Other liabilities		9,607							7,048

Stockholders’ equity		110,859							100,664

Total liabilities and stockholders’ equity	$	1,288,751							1,113,062


Net interest income							40,462							38,638


Net yield on earning assets				3.34	%						3.70	%


Net interest spread				2.82	%						3.20	%

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2008

II.

Investment Portfolio:

	A.		Continued:

			Investment securities at December 31, 2008 consist of the following:


	Securities Held-To-Maturity
	(In Thousands)
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Obligations of states and political subdivisions	$	11,074		91		162		11,003
Mortgage-backed securities		19		—		1		18


	$	11,093		91		163		11,021


	Securities Available-For-Sale
	(In Thousands)
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
U.S. Treasury and other U.S. Government agencies and corporations	$	146,876		464		1,582		145,758
Obligations of states and political subdivisions		1,523		—		76		1,447
Mortgage-backed securities		46,688		330		56		46,962


	$	195,087		794		1,714		194,167

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2008

II.

Investment Portfolio, Continued:

Securities at December 31, 2007 consist of the following:


	Securities Held-To-Maturity
	(In Thousands)
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Obligations of states and political subdivisions	$	13,423		72		42		13,453
Mortgage-backed securities		27		—		—		27


	$	13,450		72		42		13,480


	Securities Available-For-Sale
	(In Thousands)
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
U.S. Treasury and other U.S. Government agencies and corporations	$	206,528		329		952		205,905
Obligations of states and political subdivisions		1,928		—		17		1,911
Mortgage-backed securities		2,105		15		5		2,115


	$	210,561		344		974		209,931

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2008

II.

Investment Portfolio, Continued:

Continued:

Securities at December 31, 2006 consist of the following:


	Securities Held-To-Maturity
			(In Thousands)
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Obligations of states and political subdivisions	$	14,270		116		71		14,315
Mortgage-backed securities		61		—		—		61


	$	14,331		116		71		14,376


	Securities Available-For-Sale
			(In Thousands)
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
U.S. Treasury and other U.S. Government agencies and corporations	$	168,236		12		2,345		165,903
Obligations of states and political subdivisions		1,929		3		8		1,924
Mortgage-backed securities		1,664		11		3		1,672


	$	171,829		26		2,356		169,499

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2008

II.

Investment Portfolio, Continued:

The following schedule details the contractual maturities and weighted average yields of investment securities of the Company. Actual maturities may differ from contractual maturities of mortgage-backed securities because the mortgages underlying the securities may be called or prepaid with or without penalty. Therefore, these securities are not included in the maturity categories noted below as of December 31, 2008:


			Estimated		Weighted
	Amortized		Market		Average
Held-To-Maturity Securities	Cost		Value		Yields
	(In Thousands, Except Yields)
U.S. Treasury and other U.S. Government agencies and corporations:
Less than one year	$	—		—		—	%
One to five years		—		—		—
Five to ten years		—		—		—
More than ten years		—		—		—

Total securities of U.S. Treasury and other U.S. Government agencies and corporations		—		—		—


Obligations of states and political subdivisions*:
Less than one year		1,505		1,510		5.67
One to five years		5,668		5,736		6.16
Five to ten years		2,240		2,249		6.27
More than ten years		1,661		1,508		6.23

Total obligations of states and political subdivisions		11,074		11,003		6.13


Total held-to-maturity securities	$	11,074		11,003		6.13	%


*		Weighted average yield is stated on a tax-equivalent basis, assuming a weighted average Federal income tax rate of 34%.

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2008

II.

Investment Portfolio, Continued:

Continued:


			Estimated		Weighted
	Amortized		Market		Average
Available-For-Sale Securities	Cost		Value		Yields
	(In Thousands, Except Yields)
U.S. Treasury and other U. S. Government agencies and corporations:
Less than one year	$	—		—		—	%
One to five years		11,000		10,703		2.07
Five to ten years		36,011		36,003		5.13
More than ten years		99,865		99,052		5.64

Total securities of U.S. Treasury and other U.S. Government agencies and corporations		146,876		145,758		5.25


Obligations of states and political subdivisions*:
Less than one year		—		—		—
One to five years		—		—		—
Five to ten years		—		—		—
More than ten years		1,523		1,447		5.97

Total obligations of states and political subdivisions		1,523		1,447		5.97


Total available-for-sale securities	$	148,399		147,205		5.26	%


*		Weighted average yield is stated on a tax-equivalent basis, assuming a weighted average Federal income tax rate of 34%.

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2008

III.

Loan Portfolio:

Loan Types

The following schedule details the loans of the Company at December 31, 2008, 2007, 2006, 2005 and 2004:


	In Thousands
	2008			2007			2006			2005			2004
Commercial, financial and agricultural	$	359,752			337,368			301,589			251,494			217,372
Real estate — construction		99,768			100,036			67,162			58,672			49,085
Real estate — mortgage		557,796			486,504			439,164			414,543			384,062
Installment		71,869			73,618			82,964			86,079			73,482

Total loans		1,089,185			997,526			890,879			810,788			724,001

Less unearned interest		—			—			—			—			—


Total loans, net of unearned interest		1,089,185			997,526			890,879			810,788			724,001

Less allowance for loan losses		(12,138	)		(9,473	)		(10,209	)		(9,083	)		(9,370	)


Net loans	$	1,077,047			988,053			880,670			801,705			714,631

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2008

III.

Loan Portfolio, Continued:

	B.		Maturities and Sensitivities of Loans to Changes in Interest Rates

			The following schedule details maturities and sensitivity to interest rates changes for commercial loans of the Company at December 31, 2008:


	In Thousands
			1 Year to
	Less Than		Less Than		After 5
	1 Year*		5 Years		Years		Total
Maturity Distribution:

Commercial, financial and agricultural	$	198,812		115,172		45,768		359,752

Real estate — construction		71,425		28,343		—		99,768


	$	270,237		143,515		45,768		459,520


Interest-Rate Sensitivity:

Fixed interest rates	$	213,201		80,788		11,148		305,137

Floating or adjustable interest rates		57,036		62,727		34,620		154,383


Total commercial, financial and agricultural loans plus real estate — construction loans	$	270,237		143,515		45,768		459,520


*		Includes demand loans, bankers acceptances, commercial paper and deposit notes.

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2008

III.

Loan Portfolio, Continued:

	C.		Risk Elements

			The following schedule details selected information as to non-performing loans of the Company at December 31, 2008, 2007, 2006, 2005 and 2004:


	In Thousands, Except Percentages
	2008			2007		2006		2005		2004
Non-accrual loans:
Commercial, financial and agricultural	$	228			534		817		—		7
Real estate — construction		5,964			—		—		—		—
Real estate — mortgage		4,189			1,620		387		190		526
Installment		27			13		156		35		91
Lease financing receivable		—			—		—		—		—

Total non-accrual	$	10,408			2,167		1,360		225		624


Loans 90 days past due:
Commercial, financial and agricultural	$	1,388			97		739		80		197
Real estate — construction		182			90		44		42		—
Real estate — mortgage		1,807			1,502		2,604		1,585		1,698
Installment		339			437		556		308		638
Lease financing receivable		—			—		—		—		—

Total loans 90 days past due	$	3,716			2,126		3,943		2,015		2,533


Renegotiated loans:
Commercial, financial and agricultural	$	—			—		—		—		—
Real estate — construction		—			—		—		—		—
Real estate — mortgage		—			—		—		—		—
Installment		—			—		—		—		—
Lease financing receivable		—			—		—		—		—

Total renegotiated loans past due	$	—			—		—		—		—


Loans current — considered uncollectible	$	—			—		—		—		—


Total non-performing loans	$	14,124			4,293		5,303		2,240		3,157


Total loans, net of unearned interest	$	1,089,185			997,526		890,879		810,788		724,001


Percent of total loans outstanding, net of unearned interest		1.30	%		0.43		0.59		0.28		0.44


Other real estate	$	4,993			1,268		555		277		580

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2008

III.

Loan Portfolio, Continued:

	C.		Risk Elements, Continued:

			The accrual of interest income is discontinued when it is determined that collection of interest is less than probable or the collection of any amount of principal is doubtful. The decision to place a loan on a non-accrual status is based on an evaluation of the borrower’s financial condition, collateral liquidation value, economic and business conditions and other factors that affect the borrower’s ability to pay. At the time a loan is placed on a non-accrual status, the accrued but unpaid interest is also evaluated as to collectibility. If collectibility is doubtful, the unpaid interest is charged off. Thereafter, interest on non-accrual loans is recognized only as received. Non-accrual loans totaled $10,408,000 at December 31, 2008, $2,167,000 at December 31, 2007, $1,360,000 at December 31, 2006, $225,000 at December 31, 2005 and $624,000 at December 31, 2004. Gross interest income on non-accrual loans that would have been recorded for the year ended December 31, 2008 if the loans had been current totaled $370,000 compared to $128,000 in 2007, $11,000 in 2006, $13,000 in 2005 and $13,000 in 2004. The amount of interest and fee income recognized on total loans during 2008 totaled $73,731,000 as compared to $71,945,000 in 2007, $62,567,000 in 2006, $50,283,000 in 2005 and $42,796,000 in 2004.

			At December 31, 2008, loans, which include the above, totaling $27,799,000 were included in the Company’s internal classified loan list. Of these loans $24,855,000 are real estate and $2,944,000 are various other types of loans. The values collateralizing these loans is estimated by management to be approximately $64,711,000 ($59,684,000 related to real property securing real estate loans and $5,027,000 related to the various other types of loans). Such loans are listed as classified when information obtained about possible credit problems of the borrowers has prompted management to question the ability of the borrower to comply with the repayment terms of the loan agreement. The loan classifications do not represent or result from trends or uncertainties which management expects will materially impact future operating results, liquidity or capital resources.

			At December 31, 2008, there were no loan concentrations that exceeded ten percent of total loans other than as included in the preceding table of types of loans. Loan concentrations are amounts loaned to a multiple number of borrowers engaged in similar activities which would cause them to be similarly impacted by economic or other conditions.

			At December 31, 2008 and 2007, other real estate totaled $4,993,000 and $1,268,000, respectively.

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2008

III.

Loan Portfolio, Continued:

	C.		Risk Elements, Continued:

			There were no material amounts of other interest-bearing assets (interest-bearing deposits with other banks, municipal bonds, etc.) at December 31, 2008 which would be required to be disclosed as past due, non-accrual, restructured or potential problem loans, if such interest-bearing assets were loans.

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2008

IV.

Summary of Loan Loss Experience:

The following schedule details selected information related to the allowance for loan loss account of the Company at December 31, 2008, 2007, 2006, 2005 and 2004 and the years then ended.


	In Thousands, Except Percentages
	2008			2007			2006			2005			2004
Allowance for loan losses at beginning of period	$	9,473			10,209			9,083			9,370			8,077


Less: net of loan charge-offs:
Charge-offs:
Commercial, financial and agricultural		(1,068	)		(1,396	)		(861	)		(359	)		(229	)
Real estate construction		(345	)		(187	)		(7	)		—			(7	)
Real estate — mortgage		(1,464	)		(1,318	)		(327	)		(133	)		(632	)
Installment		(1,590	)		(2,284	)		(1,822	)		(1,124	)		(1,430	)
Lease financing		—			—			—			—			—

		(4,467	)		(5,185	)		(3,017	)		(1,616	)		(2,298	)


Recoveries:
Commercial, financial and agricultural		30			14			17			4			53
Real estate construction		66			3			21			—			—
Real estate — mortgage		51			5			13			3			5
Installment		267			282			286			186			260
Lease financing		—			—			—			—			—

		414			304			337			193			318

Net loan charge-offs		(4,053	)		(4,881	)		(2,680	)		(1,423	)		(1,980	)


Provision for loan losses charged to expense		6,718			4,145			3,806			1,136			3,273


Allowance for loan losses at end of period	$	12,138			9,473			10,209			9,083			9,370


Total loans, net of unearned interest, at end of year	$	1,089,185			997,526			890,879			810,788			724,001


Average total loans out- standing, net of unearned interest, during year	$	1,051,550			931,238			845,311			747,922			656,973


Net charge-offs as a percentage of average total loans outstanding, net of unearned interest, during year		0.39	%		0.52			0.32			0.19			0.30


Ending allowance for loan losses as a percentage of total loans outstanding net of unearned interest, at end of year		1.11	%		0.95			1.15			1.12			1.29

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2008

IV.		Summary of Loan Loss Experience, Continued:

		The allowance for loan losses is an amount that management believes will be adequate to absorb possible losses on existing loans that may become uncollectible. The provision for loan losses charged to operating expense is based on past loan loss experience and other factors which, in management’s judgment, deserve current recognition in estimating possible loan losses. Such other factors considered by management include growth and composition of the loan portfolio, review of specific loan problems, the relationship of the allowance for loan losses to outstanding loans, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral and current economic conditions that may affect the borrower’s ability to pay.

		Management conducts a continuous review of all loans that are delinquent, previously charged down or which are determined to be potentially uncollectible. Loan classifications are reviewed periodically by a person independent of the lending function. The Board of Directors of the Company periodically reviews the adequacy of the allowance for loan losses.

		The following detail provides a breakdown of the allocation of the allowance for loan losses:


	December 31, 2008					December 31, 2007
			Percent of					Percent of
			Loans In					Loans In
	In		Each Category			In		Each Category
	Thousands		To Total Loans			Thousands		To Total Loans
Commercial, financial and agricultural	$	3,435		33.0	%	$	2,941		33.8	%
Real estate construction		704		9.2			724		10.0
Real estate mortgage		6,407		51.2			3,897		48.8
Installment		1,592		6.6			1,911		7.4

	$	12,138		100.0	%	$	9,473		100.0	%


	December 31, 2006					December 31, 2005
			Percent of					Percent of
			Loans In					Loans In
	In		Each Category			In		Each Category
	Thousands		To Total Loans			Thousands		To Total Loans
Commercial, financial and agricultural	$	2,573		33.9	%	$	2,802		31.0	%
Real estate construction		392		7.5			253		7.2
Real estate mortgage		5,288		49.3			4,162		51.2
Installment		1,956		9.3			1,866		10.6

	$	10,209		100.0	%	$	9,083		100.0	%


	December 31, 2004
			Percent of
			Loans In
	In		Each Category
	Thousands		To Total Loans
Commercial, financial and agricultural	$	4,754		30.0	%
Real estate construction		114		6.8
Real estate mortgage		2,800		53.0
Installment		1,702		10.2

	$	9,370		100.0	%

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2008

Deposits:

The average amounts and average interest rates for deposits for 2008, 2007 and 2006 are detailed in the following schedule:


	2008					2007					2006
	Average					Average					Average
	Balance					Balance					Balance
	In		Average			In		Average			In		Average
	Thousands		Rate			Thousands		Rate			Thousands		Rate
Non-interest bearing deposits	$	96,798		—	%		101,905		—	%		105,176		—	%
Negotiable order of withdrawal accounts		168,239		2.16	%		117,115		2.44	%		84,484		1.49	%
Money market demand accounts		195,700		1.73	%		218,387		2.66	%		209,011		2.38	%
Individual retirement accounts		70,046		4.35	%		57,872		5.00	%		48,764		4.32	%
Other savings		40,851		2.20	%		40,190		3.00	%		37,561		2.59	%
Certificates of deposit $100,000 and over		322,815		4.40	%		285,328		5.29	%		207,155		4.38	%
Certificates of deposit under $100,000		334,745		4.29	%		323,376		5.18	%		290,021		4.48	%


	$	1,229,194		3.22	%		1,144,173		3.90	%		982,172		3.19	%

The following schedule details the maturities of certificates of deposit and individual retirement accounts of $100,000 and over at December 31, 2008:


	In Thousands
	Certificates		Individual
	of		Retirement
	Deposit		Accounts		Total
Less than three months	$	122,279		8,698		130,977

Three to six months		58,306		3,293		61,599

Six to twelve months		99,403		6,310		105,713

More than twelve months		55,002		9,914		64,916

	$	334,990		28,215		363,205

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2008

VI.

Return on Equity and Assets:

The following schedule details selected key ratios of the Company at December 31, 2008, 2007 and 2006:


	2008			2007			2006
Return on assets		.82	%		.85	%		.95	%
(Net income divided by average total assets)

Return on equity		9.26	%		9.86	%		10.51	%
(Net income divided by average equity)

Dividend payout ratio		36.81	%		28.48	%		43.26	%
(Dividends declared per share divided by net income per share)

Equity to asset ratio		8.88	%		8.60	%		9.04	%
(Average equity divided by average total assets)

Leverage capital ratio		8.96	%		8.63	%		9.32	%
(Equity divided by fourth quarter average total assets, excluding the net unrealized gain (loss) on available-for-sale securities and including minority interest)

The minimum leverage capital ratio required by the regulatory agencies is 4%.

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2008

VI.

Return on Equity and Assets, Continued:

The following schedule details the Company’s risk-based capital at December 31, 2008 excluding the net unrealized loss on available-for-sale securities which is shown as a deduction in stockholders’ equity in the consolidated financial statements:


	In Thousands
Tier I capital:
Stockholders’ equity, excluding the net unrealized loss on available-for-sale securities and goodwill	$	124,881

Total capital:
Allowable allowance for loan losses (limited to 1.25% of risk-weighted assets)		12,561


Total capital	$	137,442


Risk-weighted assets	$	1,095,829


Risk-based capital ratios:
Tier I capital ratio		11.40	%


Total risk-based capital ratio		12.54	%

WILSON BANK HOLDING COMPANY

Form 10-K

December 31, 2008

VI.

Return on Equity and Assets, Continued:

The Company is required to maintain a total capital to risk-weighted asset ratio of 8% and a Tier I capital to risk-weighted asset ratio of 4%. At December 31, 2008, the Company and Wilson Bank & Trust were in compliance with these requirements.

The following schedule details the Company’s interest rate sensitivity at December 31, 2008:


	Repricing Within
(In Thousands)	Total		0-30 Days			31-90 Days			91-180 Days			181-365 Days			Over 1 Year
Earning assets:
Loans, net of unearned interest	$	1,089,185		36,072			75,589			82,061			98,224			797,239
Securities		205,260		—			875			300			330			203,755
Loans held for sale		3,541		3,541			—			—			—			—
Federal funds sold		21,170		21,170			—			—			—			—
Restricted equity securities		3,100		3,100			—			—			—			—

Total earning assets		1,322,256		63,883			76,464			82,361			98,554			1,000,994


Interest-bearing liabilities:
Negotiable order of withdrawal accounts		168,246		168,246
Money market demand accounts		218,658		218,658
Individual retirement accounts		74,918		8,743			11,109			11,263			17,769			26,034
Other savings		34,658		34,658
Certificates of deposit, $100,000 and over		334,990		47,723			74,556			58,306			99,403			55,002
Certificates of deposit, under $100,000		326,235		44,208			73,942			52,431			91,387			64,267
Securities sold under repurchase agreements		7,447		7,447
Advances from Federal Home Loan Bank		13,811											13,751			60

		1,178,963		529,683			159,607			122,000			222,310			145,363


Interest-sensitivity gap	$	143,293		(465,800	)		(83,143	)		(39,639	)		(123,756	)		855,631


Cumulative gap				(465,800	)		(548,943	)		(588,582	)		(712,338	)		143,293


Interest-sensitivity gap as % of total assets				(33.11	)		(5.91	)		(2.82	)		(8.80	)		60.82


Cumulative gap as % of total assets				(33.11	)		(39.02	)		(41.84	)		(50.64	)		10.18

The Company presently maintains a liability sensitive position over the next twelve months. However, management expects that liabilities of a demand nature will renew and that it will not be necessary to replace them with significantly higher cost funds.

Item 1A. Risk Factors.

Recent negative developments in the financial services industry and U.S. and global credit markets may adversely impact the Company’s operations and results.

Negative developments in the latter half of 2007 and throughout 2008 in the capital markets have resulted in uncertainty in the financial markets in general with the expectation of the general economic downturn continuing into 2009. Loan portfolio performances have deteriorated at many institutions, including the Bank, resulting from, amongst other factors, a weak economy and a decline in the value of the collateral supporting their loans. The competition for the Company’s deposits has increased significantly due to liquidity concerns at many of these same institutions. Stock prices of bank holding companies, like the Company, have been negatively affected by the current condition of the financial markets, as has the Company’s ability, if needed, to raise capital or borrow in the debt markets compared to recent years. As a result, there is a potential for new federal or state laws and regulations regarding lending and funding practices and liquidity standards, and financial institution regulatory agencies are expected to be very aggressive in responding to concerns and trends identified in examinations, including the expected issuance of many formal enforcement actions. Negative developments in the financial services industry and the impact of new legislation in response to those developments could negatively impact the Company’s operations by restricting its business operations, including its ability to originate or sell loans, and adversely impact the Company’s financial performance. In addition, industry, legislative or regulatory developments may cause the Company to materially change its existing strategic direction, capital strategies, compensation or operating plans.

The Company is geographically concentrated in Wilson County, Tennessee and its surrounding counties and changes in local economic conditions could impact its profitability.

The Company operates primarily in Wilson, DeKalb, Smith and Rutherford counties and the surrounding counties and substantially all of its loan customers and most of its deposit and other customers live or have operations in this same geographic area. Accordingly, the Company’s success significantly depends upon the growth in population, income levels, and deposits in these areas, along with the continued attraction of business ventures to the area and the area’s economic stability and strength of the housing market, and its profitability is impacted by the changes in general economic conditions in this market. In addition, unfavorable local or national economic conditions, like those currently being experienced, could reduce the Company’s growth rate, affect the ability of its customers to repay their loans and generally affect its financial condition and results of operations. The Company is less able than a larger institution to spread the risks of unfavorable local economic conditions across a large number of diversified economies.

The Company could sustain losses if its asset quality declines.

The Company’s earnings are significantly affected by its ability to properly originate, underwrite and service loans. The Company could sustain losses if it incorrectly assesses the creditworthiness of its borrowers or fails to detect or respond to deterioration in asset quality in a timely manner. Problems with asset quality could cause the Company’s interest income and net interest margin to decrease and its provisions for loan losses to increase, which could adversely affect its results of operations and financial condition.

Fluctuations in interest rates could reduce our profitability.

The absolute level of interest rates as well as changes in interest rates may affect the Company’s level of interest income, the primary component of its gross revenue, as well as the level of its interest expense. Interest rate fluctuations are caused by many factors which, for the most part, are not under the Company’s direct control. For example, national monetary policy plays a significant role in the determination of interest rates. Additionally, competitor pricing and the resulting negotiations that occur with the Company’s customers also impact the rates the Company collects on loans and the rates it pays on deposits.

As interest rates change, the Company expects that it will periodically experience “gaps” in the interest rate sensitivities of its assets and liabilities, meaning that either its interest-bearing liabilities will be more sensitive to changes in market interest rates than its interest-earning assets, or vice versa. In either event, if market interest rates should move contrary to the Company’s position, this “gap” may work against the Company, and its earnings may be negatively affected.

Changes in the level of interest rates also may negatively affect the Company’s ability to originate real estate loans, the value of its assets and its ability to realize gains from the sale of its assets, all of which ultimately affect the Company’s earnings. A decline in the market value of the Company’s assets may limit the Company’s ability to borrow additional funds. As a result, the Company could be required to sell some of its loans and investments under adverse market conditions, upon terms that are not favorable to the Company, in order to maintain its liquidity. If those sales are made at prices lower than the amortized costs of the investments, the Company will incur losses.

An inadequate allowance for loan losses would reduce the Company’s earnings.

The risk of credit losses on loans varies with, among other things, general economic conditions, the type of loan being made, the creditworthiness of the borrower over the term of the loan and, in the case of a collateralized loan, the value and marketability of the collateral for the loan. Management maintains an allowance for loan losses based upon, among other things, historical experience, an evaluation of economic conditions and regular reviews of delinquencies and loan portfolio quality. Based upon such factors, management makes various assumptions and judgments about the ultimate collectibility of the loan portfolio and provides an allowance for loan losses based upon a percentage of the outstanding balances and takes a charge against earnings with respect to specific loans when their ultimate collectibility is considered questionable. If management’s assumptions and judgments prove to be incorrect and the allowance for loan losses is inadequate to absorb losses, or if the bank regulatory authorities require the Bank to increase the allowance for loan losses as a part of their examination process, the Bank’s earnings and capital could be significantly and adversely affected.

Liquidity needs could adversely affect the Company’s results of operations and financial condition.

The Company relies on dividends from the Bank as its primary source of funds. The primary source of funds of the Bank are customer deposits and loan repayments. While scheduled loan repayments are a relatively stable source of funds, they are subject to the ability of borrowers to repay the loans. The ability of borrowers to repay loans can be adversely affected by a number of factors, including changes in economic conditions, adverse trends or events affecting business industry groups, reductions in real estate values or markets, business closings or lay-offs, inclement weather, natural disasters and international instability. Additionally, deposit levels may be affected by a number of factors, including rates paid by competitors, general interest rate levels, returns available to customers on alternative investments and general economic conditions. Accordingly, the Company may be required from time to time to rely on secondary sources of liquidity to meet withdrawal demands or otherwise fund operations. Such sources include Federal Home Loan Bank (“FHLB”) advances and federal funds lines of credit from correspondent banks. While the Company believes that these sources are currently adequate, there can be no assurance they will be sufficient to meet future liquidity demands.

Competition from financial institutions and other financial service providers may adversely affect the Company’s profitability.

The banking business is highly competitive and the Company experiences competition in each of its markets from many other financial institutions. The Company competes with commercial banks, credit unions, savings and loan associations, mortgage banking firms, consumer finance companies, securities brokerage firms, insurance companies, money market funds, and other mutual funds, as well as other community banks and super-regional and national financial institutions that operate offices in the Company’s primary market areas and elsewhere. Many of the Company’s competitors are well-established, larger financial institutions that have greater resources and lending limits and a lower cost of funds than the Company has.

Additionally, the Company faces competition from de novo community banks, including those with senior management who were previously affiliated with other local or regional banks or those controlled by investor groups with strong local business and community ties. These de novo community banks may offer higher deposit rates or lower cost loans in an effort to attract the Company’s customers, and may attempt to hire the Company’s management and employees.

The Company competes with these other financial institutions both in attracting deposits and in making loans. In addition, the Company has to attract its customer base from other existing financial institutions and from new residents. This competition has made it more difficult for the Company to make new loans and at times has forced the Company to offer higher deposit rates. Price competition for loans and deposits might result in the Company earning less interest on its loans and paying more interest on its deposits, which reduces the Company’s net interest income. The Company’s profitability depends upon its continued ability to successfully compete with an array of financial institutions in its market areas.

The Company’s key management personnel may leave at any time.

The Company’s future success depends to a significant extent on the continued service of its key management personnel, especially Randall Clemons, its president and chief executive officer and Elmer Richerson, the president of the Bank. While the Company does not have employment agreements with any of its personnel and can provide no assurance that it will be able to retain any of its key officers and employees or attract and retain qualified personnel in the future, it has entered into non-competition agreements with such persons which would prevent them in most circumstances, from competing with the Bank for one year following their termination. In addition, these persons are parties to certain deferred compensation and equity incentive plans, the benefits of which would cease to accrue upon the termination of the person’s employment with the Company or the Bank.

The Company, as well as the Bank, operate in a highly regulated environment and are supervised and examined by various federal and state regulatory agencies who may adversely affect the Company’s ability to conduct business.

The Tennessee Department of Financial Institutions and the Board of Governors of the Federal Reserve supervise and examine the Bank and the Company, respectively. Because the Bank’s deposits are federally insured, the FDIC also regulates its activities. These and other regulatory agencies impose certain regulations and restrictions on the Bank, including:

	•		explicit standards as to capital and financial condition;

	•		limitations on the permissible types, amounts and extensions of credit and investments;

	•		restrictions on permissible non-banking activities; and

	•		restrictions on dividend payments.

Federal and state regulatory agencies have extensive discretion and power to prevent or remedy unsafe or unsound practices or violations of law by banks and bank holding companies. As a result, the Company must expend significant time and expense to assure that it is in compliance with regulatory requirements and agency practices.

The Company, as well as the Bank, also undergoes periodic examinations by one or more regulatory agencies. Following such examinations, the Company or the Bank may be required, among other things, to make additional provisions to its allowance for loan loss or to restrict its operations. These actions would result from the regulators’ judgments based on information available to them at the time of their examination. The Bank’s operations are also governed by a wide variety of state and federal consumer protection laws and regulations. These federal and state regulatory restrictions limit the manner in which the Company and the Bank may conduct business and obtain financing. These laws and regulations can and do change significantly from time to time, and any such change could adversely affect the Company’s results of operations.

The enactment of Emergency Economic Stabilization Act of 2008 and the American Recovery and Reinvestment Act of 2009 may not be able to stabilize the U.S. financial system or the economy and may significantly affect the Company’s financial condition, results of operation or liquidity.

On October 3, 2008, President Bush signed into law the EESA. The legislation was the result of a proposal by Treasury Secretary Henry Paulson to the U.S. Congress on September 20, 2008 in response to the financial crises affecting the banking system and financial markets and going concern threats to investment banks and other financial institutions. On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009 (“ARRA”) in an effort to stimulate the economy and provide for broad infrastructure, energy, health, and education needs. The U.S. Treasury and banking regulators are implementing a number of programs under this legislation to address capital and liquidity issues in the banking system. There can be no assurance, however, as to the actual impact that the EESA or ARRA will have on the financial markets, including the extreme levels of volatility and limited credit availability currently being experienced. The failure of the EESA or ARRA to help stabilize the financial markets and a continuation or worsening of current financial market conditions could materially affect the registrant’s business, financial condition, results of operations, access to credit or the trading price of the registrant’s common stock.

There have been numerous actions undertaken in connection with or following EESA and ARRA by the Federal Reserve Board, Congress, the Treasury, the FDIC, the SEC and others in efforts to address the current liquidity and credit crisis in the financial industry that followed the sub-prime mortgage market meltdown which began in late 2007. These measures include homeowner relief that encourages loan restructuring and modification; the establishment of significant liquidity and credit facilities for financial institutions and investment banks; the lowering of the federal funds rate; emergency action against short selling practices; a temporary guaranty program for money market funds; the establishment of a commercial paper funding facility to provide back-stop liquidity to commercial paper issuers; and coordinated international efforts to address illiquidity and other weaknesses in the banking sector. The purpose of these legislative and regulatory actions is to help stabilize the U.S. banking system. EESA, ARRA and the other regulatory initiatives described above may not have their desired effects. If the volatility in the markets continues and economic conditions fail to improve or worsen, the Company’s business, financial condition and results of operations could be materially and adversely affected.

Stress on the Federal Home Loan Bank system may cause our results of operations and financial condition to be adversely affected.

In recent months, the financial media has disclosed that the nation’s FHLB system may be under stress due to deterioration in the financial markets, particularly in relation to valuation of mortgage securities. Several FHLB institutions have announced impairment charges of these and other assets and as such their capital positions have deteriorated to the point that they may suspend

dividend payments to their members. We are a member of the FHLB-Cincinnati which continues to pay dividends. However, should financial conditions continue to weaken, the FHLB system (including FHLB-Cincinnati) in the future may have to, not only suspend dividend payments, but also curtail advances to member institutions like us. Should the FHLB system deteriorate to the point of not being able to fund future advances to banks, including Wilson Bank and Trust, this would place increased pressure on other wholesale funding sources, which may negatively impact our net interest margin and results of operations.

The Company’s asset valuation may include methodologies, estimations and assumptions which are subject to differing interpretations and could result in changes to asset valuations that may materially adversely affect its results of operations or financial condition.

The Company uses estimates, assumptions, and judgments when financial assets and liabilities are measured and reported at fair value. Assets and liabilities carried at fair value inherently result in a higher degree of financial statement volatility. Fair values and the information used to record valuation adjustments for certain assets and liabilities are based on quoted market prices and/or other observable inputs provided by independent third-party sources, when available. When such third-party information is not available, fair value is estimated primarily by using cash flow and other financial modeling techniques utilizing assumptions such as credit quality, liquidity, interest rates and other relevant inputs. Changes in underlying factors, assumptions, or estimates in any of these areas could materially impact the Company’s future financial condition and results of operations.

During periods of market disruption, including periods of significantly rising or high interest rates, rapidly widening credit spreads or illiquidity, it may be difficult to value certain assets if trading becomes less frequent and/or market data becomes less observable. There may be certain asset classes that were in active markets with significant observable data that become illiquid due to the current financial environment. In such cases, certain asset valuations may require more subjectivity and management judgment. As such, valuations may include inputs and assumptions that are less observable or require greater estimation. Further, rapidly changing and unprecedented credit and equity market conditions could materially impact the valuation of assets as reported within our consolidated financial statements and the period-to-period changes in value could vary significantly. Decreases in value may have a material adverse effect on results of operations or financial condition.

Valuation methodologies which are particularly susceptible to the conditions mentioned above include those used to value certain securities in the Company’s available for sale investment portfolio such as auction rate securities and non-agency mortgage and asset-backed securities, in addition to non-marketable private equity securities, loans held for sale and intangible assets.

The Company’s common stock is thinly traded, and recent prices may not reflect the prices at which the stock would trade in an active trading market.

The Company’s common stock is not traded through an organized exchange, but rather is traded in individually-arranged transactions between buyers and sellers. Therefore, recent prices may not necessarily reflect the actual value of the Company’s common stock. A shareholder’s ability to sell the shares of Company common stock in a timely manner may be substantially limited by the lack of a trading market for the common stock.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties

The Company’s main office is owned by the Company and consists of approximately four acres at 623 West Main Street, Lebanon, Tennessee. The building is a two story, brick building, with approximately 35,000 square feet. The lot has approximately 350 feet of road frontage on West Main Street. In addition thereto, the Bank has twenty-one branch locations located at the following locations: 1436 West Main Street, Lebanon, Tennessee; 1444 Baddour Parkway, Lebanon, Tennessee; 200 Tennessee Boulevard, Lebanon, Tennessee; 8875 Stewart’s Ferry Pike, Gladeville, Tennessee; 402 Public Square, Watertown, Tennessee; 1476 North Mt. Juliet Road, Mt. Juliet, Tennessee; 11835 Highway 70, Mount Juliet, Tennessee; 1130 Castle Heights Avenue North, Lebanon, Tennessee; 127 McMurry Blvd., Hartsville, Tennessee; the Wal-Mart Supercenter, Lebanon, Tennessee; 440 Highway 109 North, Lebanon, Tennessee; 4736 Andrew Jackson Parkway in Hermitage, Tennessee; 3110 Memorial Blvd in Murfreesboro, Tennessee, 210 Commerce Drive in Smyrna, Tennessee, 2640 South Church Street, Murfreesboro, Tennessee, 217 Donelson Pike, Nashville, Tennessee, 802 NW Broad in Murfreesboro, Tennessee, 576 West Broad Street in Smithville, Tennessee, 306 Brush Creek Road in Alexandria, Tennessee, 1300 Main Street North in Carthage, Tennessee, and 7 New Middleton Highway in Gordonsville, TN.

The Mt. Juliet office contains approximately 16,000 square feet of space; the Castle Heights Office contains 2,400 square feet of space; the Hartsville Office contains 8,000 square feet of space; the Leeville-109 branch contains approximately 4,000 square feet and the Heritage Park Drive branch contains less than 1,000 square feet. The Hermitage branch opened in the fall of 1999 and contains

8,000 square feet of space. The Gladeville branch contains approximately 3,400 square feet of space. The Lebanon facility at Tennessee Boulevard was expanded in 1997 to 2,200 square feet of space. The Mount Juliet facility on Highway 70 was completed in July 2004 and contains approximately 3,450 square feet of space. The NorthWest Broad Street facility contains approximately 2800 square feet. The Smyrna office opened in September of 2006 and contains approximately 3,600 square feet of space. The Memorial Blvd office in Murfreesboro opened in October of 2006 and contains approximately 7,800 square feet of space. Also, the South Church Street office in Murfreesboro opened in January 2008 and contains approximately 7,800 square feet of space. Each of the branch facilities of the Bank not otherwise described above contains approximately 1,000 square feet of space. The Bank owns all of its branch facilities except for the Lebanon facility at Tennessee Boulevard, its space in the Wal-Mart Supercenter, its North West Broad facility in Murfreesboro, which are leased. The Bank also leases space at 11 locations within Wilson County, DeKalb County, Rutherford County, Davidson County, Smith County and Cannon County where it maintains and operates automatic teller machines.

The Bank also has a facility at 576 West Broad Street in Smithville, Tennessee which was expanded in 2001 and now contains approximately 10,300 square feet of space and a facility at 306 Brush Creek Road in Alexandria, Tennessee which occupies approximately 2,400 square feet of space. The Bank owns both facilities. The Bank also owns a building at 1300 Main Street North, Carthage, Tennessee, which was expanded in 2005 and now contains approximately 11,000 square feet and a second facility in Gordonsville, Tennessee at 7 New Middleton Highway, Gordonsville, Tennessee.

Item 3. Legal Proceedings

As of the date hereof, there are no material pending legal proceedings to which the Company or any of its subsidiaries is a party or of which any of its properties are subject; nor are there material proceedings known to the Company or its subsidiaries to be contemplated by any governmental authority; nor are there material proceedings known to the Company or its subsidiaries, pending or contemplated, in which any director, officer or affiliate or any principal security holder of the Company or any of its subsidiaries or any associate of any of the foregoing, is a party or has an interest adverse to the Company or any of its subsidiaries.

Item 4. Submission of Matters to a Vote of Security Holders

No matters were submitted to a vote of security holders in the fourth quarter of 2008.

PART II

Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchasers of Equity Securities

Information required by this item is contained under the heading “Holding Company & Stock Information” on page 89 of the Company’s 2008 Annual Report and is incorporated herein by reference.

The Company did not repurchase any shares of its common stock during the quarter ended December 31, 2008.

Item 6. Selected Financial Data

Information required by this item is contained under the heading “Wilson Bank Holding Company Financial Highlights (Unaudited)” on page 18 of the Company’s 2008 Annual Report and is incorporated herein by reference.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Information required by this item is contained under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as set forth on pages 19 through 38 of the Company’s 2008 Annual Report and is incorporated herein by reference.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Information required by this item is contained under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Quantitative and Qualitative Disclosures About Market Risk” as set forth on page 32 of the Company’s 2008 Annual Report and is incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data

The consolidated financial statements and the independent auditor’s report of Maggart & Associates, P.C. required by this item are contained in pages 39 through 88 of the Company’s 2008 Annual Report and are incorporated herein by reference.

Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by it in the reports that if files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Company carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures as of the end of the period covered by this report. Based on the evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.

Management Report on Internal Control Over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes those written policies and procedures that:

	•		Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

	•		Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the Company; and

	•		Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness of future periods are subject to the risk that controls may become inadequate because of the changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management evaluated the Company’s internal control over financial reporting as of December 31, 2008. This assessment was based on criteria for effective internal control over financial reporting described in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on that assessment, management concluded that, as of December 31, 2008, the Company’s internal control over financial reporting was effective based on those criteria.

The Company’s independent registered public accounting firm has issued an attestation report on the Company’s internal control over financial reporting, which report is contained on pages 39 through 40 of Wilson Bank Holding Company’s 2008 Annual Report and is incorporated herein by reference.

Changes in Internal Controls

No changes were made to the Company’s internal control over financial reporting during the quarter ended December 31, 2008 that have materially affected, or that are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this item with respect to directors is incorporated herein by reference to the section entitled “Election of Directors” in the Company’s definitive proxy materials filed in connection with the Company’s 2009 Annual Meeting of Shareholders. The information required by this item with respect to executive officers is set forth below:

James Randall Clemons (56) — Mr. Clemons is President and Chief Executive Officer of the Company and the Chief Executive Officer of the Bank. Mr. Clemons also serves on the Board of Directors of the Company and the Bank. He has held such positions with the Company since its formation in March 1992 and has held his Bank positions since the Bank commenced operations in May 1987. Prior to that time, Mr. Clemons served as Senior Vice President and Cashier for Peoples Bank, Lebanon, Tennessee.

Ken Dill (63) — Mr. Dill joined the Bank in 1997. Prior to that time he was employed by Farm Credit Services, Lebanon, TN for 20 years. Currently, Mr. Dill serves as Senior Vice President of Lending of the Bank. His primary duties include overseeing the lending function of the bank including SBA and commercial lending and supervision of the Rutherford County offices.

Elmer Richerson (56) — Mr. Richerson joined the Bank in February 1989. Prior to such time, Mr. Richerson was the manager of the Lebanon branch of Heritage Federal Savings and Loan Association from March 1988 to February 1989. From September 1986 until March 1988, Mr. Richerson was a liquidation assistant for the Federal Deposit Insurance Corporation. Since May 2002, Mr. Richerson has served as President of the Bank. From 1997 to May 2002, Mr. Richerson served as an Executive Vice President and Senior Loan Officer of the Bank and oversaw the branch administration for the Bank. Mr. Richerson also serves on the Board of Directors of the Bank and in 1998 was elected to serve on the Board of Directors of the Company as well.

Larry Squires (57) — Mr. Squires joined the Bank in 1989 and is currently Senior Vice President and Investment Officer. Prior to that time Mr. Squires was Vice President of Liberty State Bank in Lebanon. His principal duty is overseeing the Bank’s investment and brokerage center.

Gary Whitaker (51) — Mr. Whitaker joined the Bank in May 1996. Prior to that time Mr. Whitaker was employed with NationsBank of Tennessee, N.A. in Nashville (and its predecessors) from 1979. He has held positions in collections, as branch manager, in construction lending, retail marketing, automobile lending, loan administration, operations analyst, as Vice President, Senior Vice President and most recently as Executive Vice President since 2002. His principal duties include overseeing the Bank’s lending function and loan operations.

Lisa Pominski (44) — Ms. Pominski is Senior Vice President and the Chief Financial Officer of the Bank and the Company and is the Company’s principal financial and accounting officer. Ms. Pominski has held several positions including Asst. Cashier, Asst. Vice President and Vice President since the Bank’s formation in May of 1987. Prior to 1987 Ms. Pominski was employed by People’s Bank, Lebanon, TN 37087.

John Goodman (42) — Mr. Goodman joined the Bank in November of 2002 as Senior Vice President-Western Division. From 1998 to 2002 he was First Vice President of Commercial Lending for NBC Bank, Nashville, TN. His primary duties include the development of commercial lending and the supervision of the branch offices in the western portion of Wilson County and the eastern portion of Davidson County.

John McDearman (40) — Mr. McDearman joined the Bank in November of 1998. He has held positions in branch administration and commercial lending. Currently he serves as Executive Vice President-Central Division of the Bank, a position he has held since January 2009. Prior to joining the Bank in 1998 he was Assistant Vice President, Banking Center Manager for NationsBank, Chattanooga, TN, a position he held from 1994 to 1998. His primary duties include the continuing development of the commercial loan portfolio.

Christy Norton (42) — Mrs. Norton joined the Bank in February of 1989. Prior to that time she was employed by First Tennessee Bank, Lebanon, TN. She has held several positions for the Bank in Retail and Branch Administration and is currently a Senior Vice President, a position she has held since November of 2002. Her primary duties include bank operations and supervision of the Bank’s training department.

Clark Oakley (39) — Mr. Oakley joined the Bank in October of 1995. He has held positions in branch administration and mortgage lending. Currently he serves as Senior Vice-President-Eastern Division. Prior to joining the bank in 1995 he was a lending officer for Union Planters Bank in Alexandria, TN.

Barry Buckley (56) — Mr. Buckley joined the Bank in June of 2006 and now serves as Senior Vice President-Southern Division. Prior to joining the Bank in 2006, he was a Regional Executive for Rutherford Bank & Trust, an office of Greene County Bank, Murfreesboro, Tennessee. His primary duties include the supervision of the branch offices in Trousdale, Dekalb, and Smith counties.

Ralph Mallicoat (53) — Mr. Mallicoat joined the Bank in July of 2006 as Senior Vice President. Prior to joining the Bank in 2006, he was President and CEO of Liberty State Bank, Lebanon, Tennessee. Hs primary duties include development of the lending function and overseeing SBA loans.

All officers serve at the pleasure of the Board of Directors. No officers are involved in any legal proceedings which are material to an evaluation of their ability and integrity.

The Company has adopted a code of conduct for its senior executive and financial officers (the “Code of Conduct”), a copy of which will be provided to any person, without charge, upon request to the Company at 623 West Main Street, Lebanon, Tennessee 37087, Attention: Corporate Secretary. The Company will make any legally required disclosures regarding amendments to, or waivers of, provisions of its Code of Conduct in accordance with the rules and regulations of the Securities and Exchange Commission.

The information required by this item with respect to the Company’s audit committee and any “audit committee financial expert” is incorporated herein by reference to the section entitled “ Item-1 Election of Directors — Description of the Board and Committees of the Board” in the Company’s definitive proxy materials filed in connection with the 2009 Annual Meeting of Shareholders.

The information required by this item with respect to compliance with Section 16(a) of the Exchange Act is incorporated herein by reference to the Section entitled “Item-1 Election of Directors — Compliance with Section 16(a) of the Securities Exchange Act of 1934” in the Company’s definitive proxy materials filed in connection with the 2009 Annual Meeting of Shareholders.

Item 11. Executive Compensation

Information required by this item is incorporated herein by reference to the section entitled “Executive Compensation” in the Company’s definitive proxy materials filed in connection with the 2009 Annual Meeting of Shareholders.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information required by this item is incorporated herein by reference to the section entitled “Stock Ownership” in the Company’s definitive proxy materials filed in connection with the 2009 Annual Meeting of Shareholders.

The following table summarizes information concerning the Company’s equity compensation plans at December 31, 2008 and has been adjusted to reflect the Company’s two-for-one stock split in the form of a 100% stock dividend paid on October 30, 2003 and a four for three stock split in the form of a stock dividend paid on May 31, 2007:

Number of Shares to

be Issued upon

Weighted Average

Number of Shares Remaining Available

Exercise of

Exercise Price of

for Future Issuance Under Equity

Outstanding Options

Compensation Plans (Excluding Shares

Plan Category

or Warrants

Reflected in First Column)

Equity compensation plans approved by shareholders

26,572

18.19

133,414

Equity compensation plans not approved by shareholders

—

Total

26,572

18.19

133,414

Item 13. Certain Relationships and Related Transactions, and Director Independence

Information required by this item with respect to certain relationships and related transactions is incorporated herein by reference to the section entitled “Certain Relationships and Related Transactions” in the Company’s definitive proxy materials filed in connection with the 2009 Annual Meeting of Shareholders.

Information required by this item with respect to director independence is incorporated herein by reference to the section entitled “Item-1 Election of Directors — Director Independence” in the Company’s definitive proxy materials filed in connection with the 2009 Annual Meeting of Shareholders.

Item 14. Principal Accountant Fees and Services

Information required by this item is incorporated herein by reference to the section entitled “Independent Registered Public Accounting Firm Information” in the Company’s definitive proxy materials filed in connection with the 2009 Annual Meeting of Shareholders.

Item 15. Exhibits, Financial Statement Schedules


		(a)(1)		Financial Statements. See Item 8.

		(a)(2)		Financial Statement Schedules. Inapplicable.

		(a)(3)		Exhibits. See Index to Exhibits.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		WILSON BANK HOLDING COMPANY

		By:		/s/ J. Randall Clemons

				J. Randall Clemons
				President and Chief Executive Officer

		Date: March 13, 2009

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Signature	Title	Date

/s/ J. Randall Clemons	President, Chief Executive Officer and Director
J. Randall Clemons	(Principal Executive Officer)	March 13, 2009

/s/ Lisa Pominski	Chief Financial Officer (Principal
Lisa Pominski	Financial and Accounting Officer)	March 13, 2009

	Executive Vice President & Director
Elmer Richerson

/s/ Charles Bell	Director	March 13, 2009
Charles Bell

/s/ Jack W. Bell	Director	March 13, 2009
Jack W. Bell

/s/ Mackey Bentley	Director	March 13, 2009
Mackey Bentley

/s/ James F. Comer	Director	March 13, 2009
James F. Comer

/s/ Jerry L. Franklin	Director	March 13, 2009
Jerry L. Franklin

/s/ John B. Freeman	Director	March 13, 2009
John B. Freeman


Signature	Title	Date

/s/ Marshall Griffith	Director	March 13, 2009
Marshall Griffith

/s/ Harold R. Patton	Director	March 13, 2009
Harold R. Patton

/s/ James Anthony Patton	Director	March 13, 2009
James Anthony Patton

/s/ John R. Trice	Director	March 13, 2009
John R. Trice

/s/ Robert T. VanHooser, Jr.	Director	March 13, 2009
Robert T. VanHooser, Jr.

INDEX TO EXHIBITS


2.1		Agreement and Plan of Merger dated November 16, 2004, among Wilson Bank Holding Company, Wilson Bank and Trust and DeKalb Community Bank. (Pursuant to Item 601(b)(2) of Regulation S-K, the Schedules to this agreement are omitted, but will be provided supplementally to the Securities and Exchange Commission upon request.) (incorporated herein by reference to Exhibit 2.1 of the Company’s Registration Statement on Form S-4 (Registration No. 333-121943)).

2.2		Agreement and Plan of Merger dated November 16, 2004, among Wilson Bank Holding Company, Wilson Bank and Trust and Community Bank of Smith County. (Pursuant to Item 601(b)(2) of Regulation S-K, the schedules to this agreement are omitted, but will be provided supplementally to the Securities and Exchange Commission upon request.) (incorporated herein by reference to Exhibit 2.1 of the Company’s Registration Statement on Form S-4 (Registration No. 333-122534)).

3.1		Charter of Wilson Bank Holding Company, as amended (restated for SEC electronic filling purposes only) (incorporated herein by reference to Exhibit 3.1 of the Company’s Registration Statement on Form S-4 (Registration No. 333-121943)).

3.2		Bylaws of Wilson Bank Holding Company, as amended (restated for SEC electronic filling purposes only) (incorporated herein by reference to Exhibit 3.2 of the Company’s Registration Statement on Form S-4 (Registration No. 333-121943)).

4.1		Specimen Common Stock Certificate. (incorporated herein by reference to Exhibit 2.1 of the Company’s Registration Statement on Form S-4 (Registration No. 333-121943)).

10.1		Wilson Bank Holding Company 1999 Stock Option Plan (incorporated herein by reference to the Company’s Registration Statement on Form S-8 (Registration No. 333-32442)).*

10.2		Executive Salary Continuation Agreement by and between the Company and Larry Squires dated September 16, 1996 (incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001).*

10.3		Amendment to the Wilson Bank and Trust Executive Salary Continuation Agreement dated as of January 1, 2001 by and between Wilson Bank and Trust and Larry Squires (incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001).*

10.4		Form of Wilson Bank Holding Company Incentive Stock Option Agreement (incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005).*

10.5		Director and Named Executive Officer Compensation Summary.*

10.6		Amendment, dated December 30, 2008, to Amended and Restated Executive Salary Continuation Agreement dated as of October 7, 2002, by and between Wilson Bank and Trust and J. Randall Clemons (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 6, 2009).*

10.7		Amendment, dated December 30, 2008, to Amended and Restated Executive Salary Continuation Agreement dated as of October 7, 2002, by and between Wilson Bank and Trust and Elmer Richerson (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 6, 2009).*

10.8		Amendment, dated December 30, 2008, to Amended and Restated Executive Salary Continuation Agreement dated as of October 7, 2002, by and between Wilson Bank and Trust and Lisa T. Pominski (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 6, 2009).*


10.9		Amendment, dated December 30, 2008, to Executive Salary Continuation Agreement dated as of March 30, 2006, by and between Wilson Bank and Trust and Johnny D. Goodman III (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 6, 2009).*

10.10		Amendment, dated December 30, 2008, to Amended and Restated Executive Salary Continuation Agreement dated as of October 7, 2002, by and between Wilson Bank and Trust and Gary Whitaker (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 6, 2009).*

10.11		Amendment, dated December 30, 2008, to Executive Salary Continuation Agreement dated as of January 1, 2006, by and between Wilson Bank and Trust and John C. McDearman III (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 6, 2009).*

10.12		Amended and Restated Executive Salary Continuation Agreement dated as of October 7, 2002, by and between Wilson Bank and Trust and J. Randall Clemons (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 6, 2009).*

10.13		Amended and Restated Executive Salary Continuation Agreement dated as of October 7, 2002, by and between Wilson Bank and Trust and Elmer Richerson (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 6, 2009).*

10.14		Amended and Restated Executive Salary Continuation Agreement dated as of October 7, 2002, by and between Wilson Bank and Trust and Lisa T. Pominski (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 6, 2009).*

10.15		Executive Salary Continuation Agreement dated as of March 30, 2006, by and between Wilson Bank and Trust and Johnny D. Goodman III (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 6, 2009).*

10.16		Amended and Restated Executive Salary Continuation Agreement dated as of October 7, 2002, by and between Wilson Bank and Trust and Gary Whitaker (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 6, 2009).*

10.17		Executive Salary Continuation Agreement dated as of July 28, 2006, by and between Wilson Bank and Trust and John C. McDearman III (incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 6, 2009).*

13.1		Selected Portions of the Wilson Bank Holding Company Annual Report to Shareholders for the year ended December 31, 2008 incorporated by reference into items 5, 6, 7, 7A and 8.

21.1		Subsidiaries of the Company.

23.1		Consent of Independent Registered Public Accounting Firm.

31.1		Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


*		Management compensatory plan or contract

EX-10.5 2 g18042exv10w5.htm EX-10.5 EX-10.5

EXHIBIT 10.5

Director^* Compensation Summary

Meeting Fees

The Board of Directors of the Wilson Bank Holding Company (the “Company”) also serves as the Board of Directors of Wilson Bank and Trust (the “Bank”). In 2008, each director received $2,300 per month for his services as a director of the Company. In addition, each director of the Bank received $850 per month for his services as a director of the Bank and $450 for each committee meeting of the Bank he attended, not to exceed $1,700 per month, as a member of the various committees on which he serves. In addition, fees of $1,518 and $1,112 were paid to each of the directors of the Company and the directors of the Bank, respectively, for attendance at two Company and Bank planning retreats held during 2008. Messrs. C. Bell and Comer received $400 per month for serving on the Advisory Board of the Smith County branches of the Bank. Messrs. Trice, J. Bell and VanHooser received $400 per month for serving on the Advisory Board of the Dekalb County branches of the Bank.

Directors are reimbursed for their expenses incurred in connection with their activities as the Company’s directors.

Committee Meeting Fees

Each director of the Bank receives $450 for each committee meeting of the Bank he attended, not to exceed $1,700 per month, as a member of the various committees on which he serves.

The foregoing information is summary in nature. Additional information regarding director compensation will be provided in the Company’s proxy statement to be filed in connection with the 2009 annual meeting of the Company’s shareholders.

Named Executive Officer Compensation Summary

The following table sets forth the current base salaries paid to the Company’s President and Chief Executive Officer and its other named executive officers and the amount of the cash bonus paid to these persons for 2008.


Executive Officer	Current Salary		2008 Cash Bonus
J. Randall Clemons, President and Chief Executive Officer of the Company and Chief Executive Officer of the Bank	$	321,607	$	172,436

Lisa Pominski, Chief Financial Officer of the Company and the Bank	$	99,607	$	16,130

H. Elmer Richerson, President of the Bank Executive Vice President of the Company	$	248,957	$	132,201

Gary Whitaker, Executive Vice President of the Bank	$	151,836	$	45,943

John C. McDearman III Senior Vice President — Central Division of the Bank	$	129,226	$	32,171

The Company has entered into Executive Salary Continuation Agreements, as amended on December 30, 2008 with certain of its senior executive officers, including Messrs. Clemons, Richerson, Whitaker and McDearman


^*		Includes directors that are also employees of the Company.

and Ms. Pominski, pursuant to which each such executive officer (or his or her beneficiaries) is entitled, if certain performance targets for the Bank are met, to receive annual payments for 15 years, upon retirement at age 65 or, if sooner, the death or disability of such executive officer.

In addition to their base salaries, these executive officers are also eligible to:

• Participate in the Company’s cash bonus plan;

• Participate in the Company’s equity incentive programs, which currently involves the award of stock options pursuant to the Company’s Stock Option Plan; and

• Participate in the Company’s broad-based benefit programs generally available to its employees, including health, disability and life insurance programs and the Company’s 401(k) Plan.

The foregoing information is summary in nature. Additional information regarding the named executive officer compensation is included in the Company’s proxy statement filed in connection with the 2009 annual meeting of the Company’s shareholders.

EX-13.1 3 g18042exv13w1.htm EX-13.1 EX-13.1

Exhibit 13.1

Holding Company & Stock Information

Wilson Bank Holding Company Directors and Executive Officers

Mackey Bentley , Chairman; Randall Clemons, President & CEO; Charles Bell; Jack Bell; Jimmy Comer; Jerry Franklin; John Freeman ; Marshall Griffith; Harold Patton; James Anthony Patton; Elmer Richerson, Executive Vice President; John R. Trice; Bob VanHooser.

Common Stock Market Information

The common stock of Wilson Bank Holding Company is not traded on an exchange nor is there a known active trading market. The number of stockholders of record at February 1, 2009 was 2,812. Based solely on information made available to the Company from limited numbers of buyers and sellers, the Company believes that the following table sets forth the quarterly range of sale prices for the Company’s stock during the years 2007 and 2008. *The information set forth below has been adjusted to reflect a four for three split for shareholders of record as of May 8, 2007.

Stock Prices


	2007
First Quarter	$	29.62	$	28.87
Second Quarter	$	31.00	$	29.62
Third Quarter	*$	40.00	$	31.00
Fourth Quarter	*$	40.00	$	32.00

2008
First Quarter	$	33.75	$	32.00
Second Quarter	$	34.25	$	33.75
Third Quarter	$	34.75	$	34.25
Fourth Quarter	$	35.25	$	34.75


*		Represents one transaction of which the Company is aware during the quarter. The sale price was at least $3.00 higher than any other trade during the quarter of which the Company is aware.

On January 1, 2007, a $.34 per share cash dividend was declared and paid to shareholders of record on that date. On January 1, 2008, a $.30 per share cash dividend was declared and on July 1, 2008, a $.30 per share cash dividend was declared and paid to shareholders of record on those dates. Future dividends will be dependent upon the Company’s profitability, it’s capital needs, overall financial condition, economic and regulatory consideration.

Annual Meeting and Information Contacts

The Annual Meeting of Shareholders will be held in the Main Office
of Wilson Bank Holding Company at 7:00 P.M., April 14, 2009 at 623
West Main Street, Lebanon, Tennessee.

For further information concerning Wilson Bank Holding Company or Wilson Bank & Trust, or to obtain a copy of the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission, which is available without charge to shareholders, please contact Lisa Pominski, CFO, Wilson Bank & Trust, P.O. Box 768, Lebanon, Tennessee 37088-0768, phone (615) 443-6612.

WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Forward-Looking Statements

This report includes certain forward-looking statements (any statement other than those made solely with respect to historical fact) based upon management’s beliefs, as well as assumptions made by and data currently available to management. This information has been, or in the future may be, included in reliance on the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. The words “expect,” “anticipate,” “intend,” “should,” “may,” “could,” “plan,” “believe,” “suspect,” “seek,” “estimate” and similar expressions are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking. All forward-looking statements are subject to risks, uncertainties and other facts that may cause the actual results, performance or achievements of Wilson Bank Holding Company (the “Company”) to differ materially from any results expressed or implied by such forward-looking statements. Such factors include those described in Item 1A.- Risk Factors of the Company’s Annual Report on Form 10-K and also include, without limitation, (i) deterioration in real estate market conditions in the Company’s market areas, (ii) increased competition with other financial institutions, (iii) the continued deterioration of the economy in the Company’s market area, (iv) continuation of the extremely low short-term interest rate environment or rapid fluctuations in short-term interest rates, (v) significant downturns in the business of one or more large customers, (vi) changes in state or Federal regulations, policies, or legislation applicable to banks and other financial service providers, including regulatory or legislative developments arising out of current unsettled conditions in the economy, (vii) inadequate allowance for loan losses, and (viii) loss of key personnel. Many of such factors are beyond the Company’s ability to control or predict, and readers are cautioned not to put undue reliance on such forward-looking statements. The Company disclaims any obligation to update or revise any forward-looking statements contained in this discussion, whether as a result of new information, future events or otherwise.

General

The Company is a registered bank holding company that owns 100% of the common stock of Wilson Bank and Trust (“Wilson Bank”), a state bank headquartered in Lebanon, Tennessee. The Company was formed in 1992.

Wilson Bank is a community bank headquartered in Lebanon, Tennessee, serving Wilson County, DeKalb County, Smith County, Trousdale County, Rutherford County, and the eastern part of Davidson County, Tennessee as its primary market areas. Generally, this market is the eastern portion of the Nashville-Davidson-Murfreesboro-Franklin, Tennessee metropolitan statistical area. Wilson Bank has twenty-two locations in Wilson, Davidson, DeKalb, Smith, Rutherford and Trousdale Counties. Management believes that these counties offer an environment for continued growth, and the Company’s target market is local consumers, professionals and small businesses. Wilson Bank offers a wide range of banking services, including checking, savings and money market deposit accounts, certificates of deposit and loans for consumer, commercial and real estate purposes. The Company also offers an investment center which offers a full line of investment services to its customers.

The following discussion and analysis is designed to assist readers in their analysis of the Company’s consolidated financial statements and should be read in conjunction with such consolidated financial statements. The Company’s Board of Directors approved a 4 for 3 stock split for stockholders of record as of May 7, 2007 payable May 31, 2007. Each shareholder received one (1) additional share for each three (3) shares owned with no allowance for fractional shares. Per share data included in this discussion and in the Company’s consolidated financial statements has been restated to give effect to the stock split.

WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Critical Accounting Policies

The accounting principles we follow and our methods of applying these principles conform with accounting principles generally accepted in the United States and with general practices within the banking industry. In connection with the application of those principles to the determination of our allowance for loan losses (“ALL”) and the recognition of our deferred income tax assets, we have made judgments and estimates which have significantly impacted our financial position and results of operations. The Bank’s balance sheet includes certain tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Our management assesses the adequacy of the ALL on a regular basis. This assessment includes procedures to estimate the ALL and test the adequacy and appropriateness of the resulting balance. The ALL consists of two portions: (1) an allocated amount representative of specifically identified credit exposure and exposures readily predictable by historical or comparative experience and (2) an unallocated amount representative of inherent loss which is not readily identifiable. Even though the ALL is composed of two components, the entire allowance is available to absorb any credit losses.

We establish the allocated amount separately for two different risk groups: (1) unique loans (commercial loans, including those loans considered impaired) and (2) homogenous loans (generally consumer loans and residential mortgage loans). We base the allocation for unique loans primarily on risk rating grades assigned to each of these loans as a result of our loan management and review processes. Each risk-rating grade is assigned an estimated loss ratio, which is determined based on one or more of the following: the experience of management, discussions with banking regulators, historical and current economic conditions and our independent loan review process. We estimate losses on impaired loans based on estimated cash flows discounted at the loan’s original effective interest rate or the underlying collateral value. We also assign estimated loss ratios to our consumer portfolio. However, we base the estimated loss ratios for these homogenous loans on the category of consumer credit (e.g., automobile, residential mortgage, home equity) and not on the results of individual loan reviews.

The unallocated amount is particularly subjective and does not lend itself to exact mathematical calculation. We use the unallocated amount to absorb inherent losses which may exist as of the balance sheet date for such matters as changes in the local or national economy, the depth or experience of the lending staff, any concentrations of credit in any particular industry group and new banking laws or regulations. After we assess applicable factors, we evaluate the aggregate unallocated amount based on our management’s experience.

We then test the resulting ALL balance by comparing the balance in the allowance account to historical trends and peer information. Our management then evaluates the result of the procedures performed, including the result of our testing, and concludes on the appropriateness of the balance of the ALL in its entirety. The loan review and finance committees of our board of directors review the assessment prior to the filing of financial information.

Results of Operations

Net earnings for the year ended December 31, 2008 were $11,398,000, an increase of $462,000, or 4.2%, compared to net earnings of $10,936,000 for 2007. Our 2007 net earnings were 3.4%, or $361,000, above our net earnings of $10,575,000 for 2006. Basic earnings per share were $1.63 in 2008, compared with $1.58 in 2007 and $1.56 in 2006. Diluted earnings per share were $1.62 in 2008, compared to $1.58 and $1.56 in 2006. Net interest margin for the year ended December 31, 2008 was 3.54%, compared to 3.34% and 3.70% for the years ended December 31, 2007 and December 31, 2006, respectively. The increase in the net interest margin was attributable to the Company effectively working to reduce deposit rates to an appropriate level while being able to sustain the funding base.

WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Net Interest Income

Net interest income represents the amount by which interest earned on various earning assets exceeds interest paid on deposits and other interest-bearing liabilities and is the most significant component of the Company’s earnings. Total interest income in 2008 was $86,357,000, compared with $85,882,000 in 2007 and $70,690,000 in 2006. The increase in total interest income in 2008 was primarily attributable to the growth in loans and the increased Federal funds sold primarily attributable to the growth in deposits. The ratio of average earning assets to total average assets was 94.2%, 94.0% and 93.8% for each of the years ended December 31, 2008, 2007 and 2006, respectively. Average earning assets increased $93.6 million from December 31, 2007 to December 31, 2008, an increase of 7.7%. The average rate earned on earning assets for 2008 was 6.64%, compared with 7.11% in 2007 and 6.80% in 2006, and in 2008 was negatively impacted by the rate cuts implemented by the Federal Reserve Open Markets Committee beginning in August 2007 and described in more detail below which has resulted in extremely low short-term interest rates.

Interest earned on earning assets does not include any interest income which would have been recognized on non-accrual loans if such loans were performing. The amount of interest not recognized on non-accrual loans totaled $370,000 in 2008, $128,000 in 2007 and $11,000 in 2006.

Total interest expense for 2008 was $40,392,000, a decrease of $5,329,000, or 11.7%, compared to total interest expense of $45,721,000 in 2007. The decrease in total interest expense was due to a decrease in rates paid on deposits reflecting the actions of the Federal Reserve Open Markets Committee to lower short term rates. Interest expense increased from $32,378,000 in 2006 to $45,721,000 in 2007, an increase of $13,343,000, or 41.2%. The increase in 2007 was due to an increase in average interest bearing liabilities of approximately $166,206,000 as a result of branch expansion efforts during the second half of 2006 and an increase in the weighted average cost of funds from 3.60% to 4.29% as a result of increased competition on deposit pricing in the Company’s market area and a shift in deposits to higher costing deposits.

Net interest income for 2008 totaled $45,965,000 as compared to $40,161,000 and $38,312,000 in 2007 and 2006, respectively. The net interest spread, defined as the effective yield on earning assets less the effective cost of deposits and borrowed funds (calculated on a fully taxable equivalent basis), increased to 3.15% in 2008 from 2.82% in 2007. The net interest spread was 3.2% in 2006. The increase in the net interest spread for 2008 as compared to the prior period is a result of a declining interest rate environment beginning in August 2007 and continuing through 2008. Net interest margin, which is net interest income expressed as a percentage of average earning assets, increased to 3.54% for 2008 compared to 3.34% in 2007 and 3.70% in 2006. Short-term interest rates decreased during the last five months 2007 and throughout 2008 as a result of the Federal Reserve Board’s decision to lower the discount rate. From August 17, 2007 to December 31, 2008, the Federal Reserve lowered the discount rate by 500 basis points to extremely low levels. The Company believes that the Federal Reserve Board will maintain the current discount rate throughout 2009. While the Company’s liabilities are positioned to re-price faster than its assets such that a short-term declining rate environment should have a positive impact on the Company’s earnings as its interest expense decreases faster than interest income, and the Company’s net interest margin did expand in 2008 when compared to 2007. Management regularly monitors the deposit rates of its competitors and these rates continue to put pressure on the Company’s deposit pricing. This pressure worked to limit the Company’s net interest margin improvement in 2008 and could negatively impact the Company’s net interest margin even in a future short-term falling rate environment like the one experienced in 2008. A significant increase in interest rates could have an adverse impact on net interest yields and earnings. Management believes that the improvement in net interest margin in 2009 will be slightly less than the improvement experienced in 2008.

WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Provision for Loan Losses

The provision for loan losses represents a charge to earnings necessary to establish an allowance for loan losses that, in management’s evaluation, should be adequate to provide coverage for estimated losses on outstanding loans and to provide for uncertainties in the economy. The 2008 provision for loan losses was $6,718,000, an increase of $2,573,000 from the provision of $4,145,000 in 2007. The increase in the provision for the year ended December 31, 2008 was related to the Company’s decision to increase the provision for possible loan losses during 2008 due to an increase in loan growth and the continued weakening of economic conditions in the Company’s market areas, generally, and in the residential real estate construction and development area, specifically. The provision for loan losses was $3,806,000 in 2006. The provision for possible loan losses is based on past loan loss experience and other factors which, in management’s judgment, deserve current recognition in estimating possible loan losses. Such factors include past loan loss experience, growth and composition of the loan portfolio, review of specific problem loans, the relationship of the allowance for loan losses to outstanding loans, and current economic conditions that may affect the borrower’s ability to repay. Management has in place a system designed for monitoring its loan portfolio in an effort to identify potential problem loans.

The Company’s charge-off policy for impaired loans is similar to its charge-off policy for all loans in that loans are charged-off in the month when they are considered uncollectible. Net charge-offs decreased to $4,053,000 in 2008 from $4,881,000 in 2007. The reduction in charge-offs reflected an increase in charge-offs in 2007 of loans related to the portfolio of a former branch manager who had engaged in what appeared to be inappropriate banking procedures when documenting loans and releasing the underlying collateral. While we believe additional charge-offs will be necessary related to such portfolio, charge-offs related to this portfolio decreased in 2008 and will continue to decrease going forward. Net charge-offs in 2006 totaled $2,680,000. The ratio of net charge-offs to average total outstanding loans was 0.39% in 2008, 0.52% in 2007 and 0.32% in 2006.

The net charge-offs and provision for loan losses resulted in an increase of the allowance for loan losses (net of charge-offs and recoveries) to $12,138,000 at December 31, 2008 from $9,473,000 at December 31, 2007 and $10,209,000 at December 31, 2006. The allowance increased 28.1% at December 31, 2008 over December 31, 2007 as compared to a 9.2% increase in total loans over the same period. The allowance for loan losses was 1.11% of total loans outstanding at December 31, 2008 compared to .95% at December 31, 2007 and 1.15% at December 31, 2006. As a percentage of nonperforming loans at December 31, 2008, 2007 and 2006, the allowance for loan losses represented 86%, 221% and 192%, respectively.

The level of the allowance and the amount of the provision involve evaluation of uncertainties and matters of judgment. The Company maintains an allowance for loan losses which management believes is adequate to absorb losses inherent in the loan portfolio. A formal review is prepared monthly by the Loan Review Officer and provided to the Finance Committee to assess the risk in the portfolio and to determine the adequacy of the allowance for loan losses. The review includes analysis of historical performance, the level of non-performing and adversely rated loans, specific analysis of certain problem loans, loan activity since the previous assessment, reports prepared by the Loan Review Officer, consideration of current economic conditions and other pertinent information. The level of the allowance to net loans outstanding will vary depending on the overall results of this monthly assessment. The review is presented to the Finance Committee and subsequently approved by the Board of Directors. See the discussion under “Critical Accounting Policies” for more information. Management believes the allowance for possible loan losses at December 31, 2008 to be adequate, but if economic conditions deteriorate beyond management’s expectations and additional charge-offs are incurred, the allowance for loan losses may require an increase through additional provision for loan losses which would negatively impact our net earnings.

Non-Interest Income

The components of the Company’s non-interest income include service charges on deposit accounts, other fees and commissions, gains on sales of loans, gains on sales of securities and other income. Total non-interest income for 2008 was $12,006,000 compared with $10,636,000 in 2007 and $9,486,000 in 2006. The 12.9% increase over 2007 was primarily due to an increase in other fees and commissions (which increased $1,550,000) and gain on sale of

WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

loans (which increased $70,000). The increase in other fees and commissions was primarily due to a reclassification of income and expenses relating to debit and credit card exchange fees. Other fees and commissions include income on brokerage accounts, insurance policies sold and various other fees. Service charges on deposit accounts totaled $6,034,000 and $6,506,000 at December 31, 2008 and 2007, respectively, a decrease of $472,000, or 7.3%, after increasing $568,000, or 9.6% between December 31, 2006 and December 31, 2007. The decrease in service charges on deposit accounts over 2007 reflected a reduction in insufficient fund fees resulting from the bank changing the posting of debit card transactions from delayed posting to real time balances.

The Company’s non interest income is composed of several components, some of which vary significantly between periods. Service charges on deposit accounts and other non interest income generally reflect the registrant’s growth, while fees for origination of mortgage loans and brokerage fees and commissions will often reflect stock and home mortgage market conditions and fluctuate more widely from period to period.

Non-Interest Expenses

Non-interest expenses consist primarily of employee costs, occupancy expenses, furniture and equipment expenses, advertising and marketing expenses, data processing expenses, director’s fees, loss on sale of other real estate, and other operating expenses. Total non-interest expenses for 2008 increased 11.3% to $32,814,000 from $29,477,000 in 2007. The 2007 non-interest expense was up 10.2% over non-interest expenses in 2006 which totaled $26,746,000. The increase in non-interest expenses in 2008 resulted primarily from increases in employee salaries and benefits and occupancy expenses associated with the number of employees and facilities necessary to support the Company’s operations. The Bank’s FDIC insurance premium increased to $828,000 in 2008 from $129,000 in 2007 due to the implementation of the Deposit Insurance Reform Act of 2005. The Company expects the FDIC insurance premium to increase significantly in 2009 due to the increase in FDIC insurance coverage effective until December 31, 2009. Other operating expenses increased to $7,861,000 in 2008 from $7,264,000 in 2007. The increase in other operating expenses related primarily to a reclassification of income and expenses relating to debit and credit card exchange fees. Other operating expenses included advertising and marketing expenses and supplies and general operating expenses, which increased as a result of continued growth of the Company.

Income Taxes

The Company’s income tax expense was $7,041,000 for 2008, an increase of $802,000 from $6,239,000 for 2007 which was down by $432,000 from the 2006 total of $6,671,000. The percentage of income tax expense to earnings before taxes was 38.2% in 2008, 36.3% in 2007 and 38.7% in 2006.

Earnings Per Share

The computation of basic earnings per share is based on the weighted average number of common shares outstanding during the period. The computation of diluted earnings per share for the Company begins with the basic earnings per share plus the effect of common shares contingently issuable from stock options.

WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following is a summary of components comprising basic and diluted earnings per share (“EPS”) for the years ended December 31, 2008, 2007 and 2006:


	Years Ended December 31,
	2008		2007		2006
	(Dollars in Thousands
	Except per share amounts)
Basic EPS Computation
Numerator — Earnings available to common stockholders	$	11,398	$	10,936	$	10,575
Denominator — Weighted average number of common shares outstanding		6,996,442		6,901,447		6,771,455
Basic earnings per common share	$	1.63	$	1.58	$	1.56

Diluted EPS Computation:
Numerator — Earnings available to common stockholders	$	11,398	$	10,936	$	10,575

Denominator — Weighted average number of common shares outstanding		6,996,442		6,901,447		6,771,455
Diluted effect of stock options		29,379		35,994		39,602

		7,025,821		6,937,441		6,811,057
Diluted earnings per common share	$	1.62	$	1.58	$	1.55

Financial Condition

Balance Sheet Summary

The Company’s total assets increased $72,541,000, or 5.4%, to $1,406,786,000 at December 31, 2008, after increasing 8.4% in 2007 to $1,334,245,000 at December 31, 2007. Loans, net of allowance for possible loan losses, totaled $1,077,047,000 at December 31, 2008, a 9.0% increase compared to December 31, 2007. At year end 2008, securities totaled $205,260,000, a decrease of 8.1% from $223,381,000 at December 31, 2007. Securities decreased during 2008 as a result of many securities being called due to the lowering of rates and the use of these funds to provide liquidity to fund loans.

Total liabilities increased by $61,608,000 to $1,277,668,000 at December 31, 2008 compared to $1,216,060,000 at December 31, 2007. This increase was composed primarily of the $65,910,000 increase in total deposits to $1,248,500,000, a 5.6% increase. Federal Home Loan Bank advances decreased to $13,811,000 from $15,470,000 at the respective year ends 2008 and 2007 and securities sold under repurchase agreements decreased to $7,447,000 from $9,771,000 at the respective year ends 2008 and 2007.

Shareholders’ equity increased $10,933,000, or 9.3%, due to net earnings and the issuance of stock pursuant to the Company’s Dividend Reinvestment Plan, offset by dividends paid on the Company’s common stock, and the exercising of stock options. The increase includes a $179,000 increase in net unrealized losses on available-for-sale securities, net of taxes. A more detailed discussion of assets, liabilities and capital follows.

Loans:

Loan category amounts and the percentage of loans in each category to total loans are as follows:


	December 31, 2008					December 31, 2007
(In Thousands)	AMOUNT		PERCENTAGE			AMOUNT		PERCENTAGE
Commercial, financial and agricultural		359,752		33.0	%	$	337,368		33.8	%
Installment		71,869		9.2			73,618		7.4
Real estate — mortgage		557,796		51.2			486,504		48.8
Real estate — construction		99,768		6.6			100,036		10.0

TOTAL	$	1,089,185		100.0	%	$	997,526		100.0	%

WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Loans are the largest component of the Company’s assets and are its primary source of income. The Company’s loan portfolio, net of allowance for possible loan losses, increased 9.0% as of year end 2008 when compared to year end 2007. The loan portfolio is composed of four primary loan categories: commercial, financial and agricultural; installment; real estate-mortgage; and real estate-construction. The table above sets forth the loan categories and the percentage of such loans in the portfolio at December 31, 2008 and 2007.

As represented in the table, primary loan growth was in real estate mortgage loans and commercial, financial and agricultural loans. Real estate mortgage loans increased 14.7% in 2008 and comprised 51.2% of the total loan portfolio at December 31, 2008, compared to 48.8% at December 31, 2007. Management believes the increase in real estate mortgage loans was primarily due to the continued favorable interest rate environment, favorable population growth in the Company’s market areas, and the Company’s ability to increase its market share of such loans while maintaining its loan underwriting standards. Commercial, financial and agricultural loans increased 6.6% in 2008 and comprised 33.0% of the total loan portfolio at December 31, 2008, compared to 33.8% at December 31, 2007. Real estate construction loans, while almost equal in amount at December 31, 2007 and December 31, 2008, represent 6.6% of total loans at December 31, 2008, compared to 10.0% at December 31, 2007 and are down 13% from the approximate $115,000,000 at September 30, 2008. The decrease in real estate construction loans during the last quarter of 2008 reflected the overall decrease in such loans in the overall economy.

Banking regulators define highly leveraged transactions to include leveraged buy-outs, acquisition loans and recapitalization loans of an existing business. Under the regulatory definition, at December 31, 2008, the Company had no highly leveraged transactions, and there were no foreign loans outstanding during any of the reporting periods.

Non-performing loans, which include non-accrual loans, loans 90 days past due and renegotiated loans totaled $14,124,000 at December 31, 2008, an increase from $4,293,000 at December 31, 2007, resulting from an $8,241,000, or 380.3%, increase in non-accrual loans. Non-accrual loans are loans on which interest is no longer accrued because management believes collection of such interest is doubtful due to management’s evaluation of the borrower’s financial condition, collateral liquidation value, economic and business conditions and other factors affecting the borrower’s ability to pay. Non-accrual loans totaled $10,408,000 at December 31, 2008 compared to $2,167,000 at December 31, 2007. The increase in non-accrual loans during 2008 is due primarily to an increase in non-performing real estate loans, comprised primarily of residential loan development and non improved real estate loans of $5,600,000, and includes three large relationships with real estate developers which make up 88% of the non-accrual loans at December 31, 2008 and make up 0.85% of the Company’s total loan portfolio. Loans 90 days past due, as a component of non-performing loans, increased to $3,716,000 at December 31, 2008 from $2,126,000 at December 31, 2007. This increase is primarily a result of increases in real estate mortgage and construction loans and commercial, financial and agriculture that are 90 days past due. Management continues to examine real estate values in order to evaluate the collateral value position and believes that it is probable that it will incur losses on these loans but believes that these losses should not exceed the amount in the allowance for loan losses already allocated to loan losses, unless there is further deterioration of local real estate values. The Company had no renegotiated loans, which would have been included in non-performing loans at December 31, 2008.

The Company follows the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 114, “Accounting by Creditors for Impairment of a Loan” (“SFAS No. 114”) and SFAS No. 118, “Accounting by Creditors for Impairment of a Loan — Income Recognition and Disclosures” (“SFAS No. 118”). These pronouncements apply to impaired loans except for large groups of smaller-balance homogeneous loans that are collectively evaluated for impairment including credit card, residential mortgage, and consumer installment loans.

A loan is impaired when the current net worth and financial capacity of the borrower or of the collateral pledged, if any, is viewed as inadequate and it is probable that the Company will be unable to collect the scheduled payments of principal and interest due under the contractual terms of the loan agreement. In those cases, such loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt, and if such deficiencies are not

WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

corrected, there is a probability that the Company will sustain some loss. In such cases, interest income continues to accrue as long as the loan does not meet the Company’s criteria for nonaccrual status. Impaired loans are measured at the present value of expected future cash flows discounted at the loan’s effective interest rate, at the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. If the measure of the impaired loan is less than the recorded investment in the loan, the Company shall recognize an impairment by creating a valuation allowance with a corresponding charge to the provision for loan losses or by adjusting an existing valuation allowance for the impaired loan with a corresponding charge or credit to the provision for loan losses.

The Company considers all loans subject to the provisions of SFAS Nos. 114 and 118 that are on nonaccrual status to be impaired. Loans are placed on nonaccrual status when doubt as to timely collection of principal or interest exists, or when principal or interest is past due 90 days or more unless such loans are well-secured and in the process of collection. Delays or shortfalls in loan payments are evaluated with various other factors to determine if a loan is impaired. Generally, delinquencies under 90 days are considered insignificant unless certain other factors are present which indicate impairment is probable. The decision to place a loan on nonaccrual status is also based on an evaluation of the borrower’s financial condition, collateral, liquidation value, and other factors that affect the borrower’s ability to pay.

The Company also internally classifies loans which, although current, management questions the borrower’s ability to comply with the present repayment terms of the loan agreement. These internally classified loans totaled $27,799,000, excluding non-performing loans, at December 31, 2008 as compared to $7,980,000 at December 31, 2007. Of the internally classified loans at December 31, 2008, $24,855,000 are real estate related loans and $2,944,000 are various other types of loans. The internally classified loans as a percentage of the allowance for possible loan losses were 229.0% and 84.2%, respectively, at December 31, 2008 and 2007.

The allowance for possible loan losses is discussed under “Critical Accounting Policies” and “Provision for Possible Loan Losses.” The Company maintains its allowance for possible loan losses at an amount believed by management to be adequate to provide for the possibility of loan losses in the loan portfolio.

Essentially all of the Company’s loans were from Wilson, DeKalb, Smith, Trousdale, Davidson, Rutherford and adjacent counties. The Company seeks to exercise prudent risk management in lending, including diversification by loan category and industry segment as well as by identification of credit risks. At December 31, 2008, no single industry segment accounted for more than 10% of the Company’s portfolio other than real estate loans.

The Company’s management believes there is an opportunity to continue to increase the loan portfolio in the Company’s primary market area which was expanded to include eastern Davidson County, Tennessee in 1999 and Rutherford County, Tennessee in 2004. The Company has targeted commercial business lending, commercial and residential real estate lending and consumer lending. Although it is the Company’s objective to achieve a loan portfolio equal to approximately 85% of deposit balances, various factors, including demand for loans which meet its underwriting standards, will likely determine the size of the loan portfolio in a given economic climate. As a practice, the Company generates its own loans and does not buy participations from other institutions. The Company may sell some of the loans it generates to other financial institutions if the transaction profits the Company and improves the liquidity of the loan portfolio or if the size of the loan exceeds the Company’s lending limits.

Securities

Securities decreased 8.1% to $205,260,000 at year-end 2008 from $223,381,000 at December 31, 2007, and comprised the second largest and other primary component of the Company’s earning assets. The decrease followed a 21.5% increase from year 2006 to 2007. The decrease was attributed to many securities being called during 2008 due to the lowering of rates and the Company’s use of those funds to fund loan growth that exceeded deposit growth. The average yield of the securities portfolio at December 31, 2008 was 5.31% with an average maturity of 11.3 years, as compared to an average yield of 4.05% and an average maturity of 7.7 years at December 31, 2007.

WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The Company has adopted the provisions of SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities” (“SFAS No. 115”). Under the provisions of SFAS No. 115, securities are to be classified in three categories and accounted for as follows:

•

Debt securities that the enterprise has the positive intent and ability to hold to maturity are classified as held-to-maturity securities and reported at amortized cost.

•

Debt and equity securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and reported at fair value with unrealized gains and losses included in earnings.

•

Debt and equity securities not classified as either held-to-maturity securities or trading securities are classified as available-for-sale securities and reported at fair value with unrealized gains and losses excluded from earnings and reported in a separate component of shareholders’ equity.

The Company’s classification of securities as of December 31, 2008 and December 31, 2007 is as follows:


	December 31, 2008				December 31, 2008
	Held-To-Maturity				Available-For-Sale
	Amortized		Estimated		Amortized		Estimated
(In Thousands)	Cost		Market Value		Cost		Market Value
U.S. Treasury and other U.S. Government agencies and Corporations	$	—		—		146,876		145,758
Obligations of states and political Subdivisions		11,074		11,003		1,523		1,447
Mortgage-backed securities		19		18		46,688		46,962

	$	11,093		11,021	$	195,087		194,167

No securities have been classified as trading securities.


	December 31, 2007				December 31, 2007
	Held-To-Maturity				Available-For-Sale
	Amortized		Estimated		Amortized		Estimated
(In Thousands)	Cost		Market Value		Cost		Market Value
U.S. Treasury and other U.S. Government agencies and Corporations	$	—		—	$	206,528		205,905
Obligations of states and political Subdivisions		13,433		13,453		1,928		1,911
Mortgage-backed securities		27		27		2,105		2,115

	$	13,450		13,480	$	210,561		209,931

No securities have been classified as trading securities.

The classification of a portion of the securities portfolio as available-for-sale was made to provide for more flexibility in asset/liability management and capital management.

WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following table shows the Company’s investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2008


	In Thousands, Except Number of Securities
	Less than 12 Months						12 Months or More						Total
					Number						Number
	Fair		Unrealized		of		Fair		Unrealized		of		Fair		Unrealized
	Value		Losses		Securities		Value		Losses		Securities		Value		Losses

U.S. Treasury and other U.S Government agencies and Corporations	$	71,023	$	1,059		18	$	22,446	$	523		6	$	93,469	$	1,582

Obligations of states and political subdivisions		3,494		238		12		—		—		—		3,494		238

Mortgage-backed Securities		10,363		56		7		10		1		2		10,573		57


Total temporarily impaired securities	$	84,880	$	1,353		37	$	22,456	$	524		8	$	107,336	$	1,877

The impaired securities are considered high quality investments in line with normal industry investing practices. The unrealized losses are primarily the result of changes in the interest rate and sector environments. Consistent with the original classification, as available-for-sale or held-to-maturity securities, the Company intends and has the ability to hold the above securities until maturity or a market price recovery, and as such the impairment of these securities is not deemed to be other-than-temporarily impaired.

Deposits

The increases in assets in 2008 and 2007 were funded primarily by increases in deposits along with proceeds from the calling of a portion of the Company’s securities. Total deposits, which are the principal source of funds for the Company, totaled $1,248,500,000 at December 31, 2008 compared to $1,182,590,000 and $1,086,729,000 at December 31, 2007 and 2006, respectively. The Company has targeted local consumers, professionals and small businesses as its central clientele; therefore, deposit instruments in the form of demand deposits, savings accounts, money market demand accounts, certificates of deposits and individual retirement accounts are offered to customers. Management believes the Wilson County, Davidson County, DeKalb County, Smith County, Rutherford County and Trousdale County areas are growing economic markets offering growth opportunities for the Company; however, the Company competes with several larger bank holding companies that have bank offices in these counties and, therefore, no assurances of market growth or maintenance of current market share can be given. Even though the Company is in a very competitive market, management currently believes that its market share can be maintained or expanded.

WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The $65,910,000, or 5.6%, growth in deposits in 2008 reflected increases in several deposit categories. Total certificates of deposit (including individual retirement accounts) increased $40,742,000, or 5.9%, to $736,143,000, while money market accounts increased $24,650,000, or 12.7%, to $218,658,000. Offsetting some of this growth was a decrease in demand deposit accounts of $7,010,000, or 7.2%, to $90,795,000 and a decrease in other savings accounts of $4,308,000, or 11.1%, to $34,658,000. The average rate paid on average total interest-bearing deposits was 3.5% for 2008, compared to 4.3% for 2007 reflecting a reduction in short-term interest rates and an improvement in our ability to manage certificates of deposits. The average rate paid in 2006 was 3.6%. Competitive pressure from other banks in our market area relating to deposit pricing continues to adversely affect the rates paid on deposit accounts as it limits our ability to reduce deposit rates in line with short-term rates. The shift to longer term deposit accounts, which earn interest at higher rates, also adversely affected our deposit costs in 2008. The ratio of average loans to average deposits was 85.5% in 2008, 81.4% in 2007, and 86.1% in 2006. The Company anticipates that during 2009 deposits will shift to shorter term time deposits due to the recent rate changes and the anticipation of a possible rate increase beginning in 2010.

Contractual Obligations

The Company has the following contractual obligations as of December 31, 2008:


	Less than 1						More than 5
(In Thousands)	Year		1-3 Years		3-5 Years		Years		Total
Long-Term Debt	$	—		13,811		—		—		13,811

Capital Leases		—		—		—		—		—

Operating Leases		140		209		47		16		412

Purchases		—		—		—		—		—

Other Long-Term Liabilities		—		—		—		—		—

Total	$	140	$	14,020	$	47	$	16	$	14,223

Long-term debt contractual obligations consist of advances from the Federal Home Loan Bank. The Company leases land for certain branch facilities and automatic teller machine locations. Future minimum rental payments required under the terms of these non cancellable leases are included in operating lease obligations.

Off Balance Sheet Arrangements

At December 31, 2008, the Company had unfunded loan commitments outstanding of $8.5 million, unfunded lines of credit of $189.6 million and outstanding standby letters of credit of $22.0 million. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee since many of these commitments are expected to be drawn upon, the total commitment amounts generally represent future cash requirements. If needed to fund these outstanding commitments, the Company’s bank subsidiary has the ability to liquidate Federal funds sold or securities available-for-sale or on a short-term basis to borrow and purchase Federal funds from other financial institutions. Additionally, the Company’s bank subsidiary could sell participations in these or other loans to correspondent banks. As mentioned below, Wilson Bank has been able to fund its ongoing liquidity needs through its stable core deposit base, loan payments, investment security maturities and short-term borrowings.

Liquidity and Asset Management

WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The Company’s management seeks to maximize net interest income by managing the Company’s assets and liabilities within appropriate constraints on capital, liquidity and interest rate risk. Liquidity is the ability to maintain sufficient cash levels necessary to fund operations, meet the requirements of depositors and borrowers and fund attractive investment opportunities. Higher levels of liquidity bear corresponding costs, measured in terms of lower yields on short-term, more liquid earning assets and higher interest expense associated with extending liability maturities. Liquid assets include cash and cash equivalents and investment securities and money market instruments that will mature within one year. At December 31, 2008, the Company’s liquid assets totaled approximately $146.9 million.

The Company maintains a formal asset and liability management process to quantify, monitor and control interest rate risk, and to assist management in maintaining stability in the net interest margin under varying interest rate environments. The Company accomplishes this process through the development and implementation of lending, funding and pricing strategies designed to maximize net interest income under varying interest rate environments subject to specific liquidity and interest rate risk guidelines.

Analysis of rate sensitivity and rate gap analysis are the primary tools used to assess the direction and magnitude of changes in net interest income resulting from changes in interest rates. Included in the analysis are cash flows and maturities of financial instruments held for purposes other than trading, changes in market conditions, loan volumes and pricing and deposit volume and mix. These assumptions are inherently uncertain, and, as a result, net interest income can not be precisely estimated nor can the impact of higher or lower interest rates on net interest income be precisely predicted. Actual results will differ due to timing, magnitude and frequency of interest rate changes and changes in market conditions and management’s strategies, among other factors.

The Company’s primary source of liquidity is a stable core deposit base. In addition, short-term borrowings, loan payments and investment security maturities provide a secondary source. At December 31, 2008, the Company had a liability sensitive position (a negative gap) for 2009. Liability sensitivity means that more of the Company’s liabilities are capable of re-pricing over certain time frames than its assets. The interest rates associated with these liabilities may not actually change over this period but are capable of changing.

Interest rate risk (sensitivity) management focuses on the earnings risk associated with changing interest rates. Management seeks to maintain profitability in both immediate and long term earnings through funds management/interest rate risk management. The Company’s rate sensitivity position has an important impact on earnings. Senior management of the Company meets monthly to analyze the rate sensitivity position. These meetings focus on the spread between the cost of funds and interest yields generated primarily through loans and investments.

The Company’s securities portfolio consists of earning assets that provide interest income. For those securities classified as held-to-maturity, the Company has the ability and intent to hold these securities to maturity or on a long-term basis. Securities classified as available-for-sale include securities intended to be used as part of the Company’s asset/liability strategy and/or securities that may be sold in response to changes in interest rate, prepayment risk, the need or desire to increase capital and similar economic factors. At December 31, 2008, securities totaling approximately $1.5 million mature or will be subject to rate adjustments within the next twelve months.

A secondary source of liquidity is the Company’s loan portfolio. At December 31, 2008, loans totaling approximately $291.9 million either will become due or will be subject to rate adjustments within twelve months from that date. Continued emphasis will be placed on structuring adjustable rate loans.

As for liabilities, certificates of deposit of $100,000 or greater totaling approximately $298.8 million will become due or reprice during the next twelve months. Historically, there has been no significant reduction in immediately withdrawable accounts such as negotiable order of withdrawal accounts, money market demand accounts, demand deposit and regular savings. Management anticipates that there will be no significant withdrawals from these accounts in the future.

WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following table shows the rate sensitivity gaps for different time periods as of December 31, 2008:


Interest Rate Sensitivity Gaps										One Year
December 31, 2008	1-90			91-180			181-365			And
(In Thousands)	Days			Days			Days			Longer		Total
Interest-earning assets	$	140,347			82,361			98,554			1,000,994		1,322,256
Interest-bearing liabilities		689,290			122,000			222,310			145,363		1,178,963

Interest-rate sensitivity gap	$	(548,943	)		(39,639	)		(123,756	)		855,631		143,293


Cumulative gap	$	(548,943	)		(588,582	)		(712,338	)		143,293

The Company also uses a simulation modeling to evaluate both the level of interest rate sensitivity as well as potential balance sheet strategies. Senior management meets quarterly to analyze the interest rate shock simulation. The interest rate simulation model is based on a number of assumptions. The assumptions relate primarily to loan and deposit growth, asset and liability prepayments, the call features of investment securities, interest rates and balance sheet management strategies. As of December 31, 2008, a +200 basis point rate shock was forecast to decrease net interest income an estimated $2.7 million, or 6.4%, over the next twelve months, as compared to rates remaining stable. In addition, the +200 basis point rate shock is estimated to decrease the volatility of equity capital by 36.5%. A -200 basis point rate shock is not considered to be an effective shock considering the current short-term rate environment.

At the present time there are no known trends or any known commitments, demands, events or uncertainties that will result in, or that are reasonably likely to result in, the Company’s liquidity changing in any material way.

Capital Resources, Capital Position and Dividends

Capital

At December 31, 2008, total shareholders’ equity was $129,118,000, or 9.2% of total assets, which compares with $118,185,000, or 8.9% of total assets, at December 31, 2007, and $106,168,000, or 8.6% of total assets, at December 31, 2006. The dollar increase in shareholders’ equity during 2008 reflects (i) the Company’s net income of $11,398,000 less cash dividends of $.60 per share totaling $4,168,000, (ii) the issuance of 108,132 shares of common stock for $3,703,000, as reinvestment of cash dividends, (iii) the issuance of 17,520 shares of common stock pursuant to exercise of stock options for $232,000, (iv) the net unrealized loss on available-for-sale securities of $179,000, (v) a charge to retained earnings of $74,000 relating to a change in accounting principles for executive officer deferred compensation, and (vi) a stock based compensation expense of $21,000.

The Company’s principal regulators have established minimum risk-based capital requirements and leverage capital requirements for the Company and its subsidiary bank. These guidelines classify capital into two categories of Tier I and Total risk-based capital. Total risk-based capital consists of Tier I (or core) capital (essentially common equity less intangible assets) and Tier II capital (essentially qualifying long-term debt, of which Wilson Bank has none, and a part of the allowance for possible loan losses). In determining risk-based capital requirements, assets are assigned risk-weights of 0% to 100%, depending on regulatory assigned levels of credit risk associated with such assets. The risk-based capital guidelines require Wilson Bank and the Company to have a total risk-based capital ratio of 8.0% and a Tier I risk-based capital ratio of 4.0%. Set forth below is the Company’s and Wilson Bank’s capital ratios as of December 31, 2008 and 2007. Institutions which have a Tier I leverage capital ratio of at least 5%, a Tier I risk-based capital ratio of at least 5%, and a total risk-based capital ratio of at least 10% are defined as “well capitalized”.

WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Management believes it can adequately capitalize its growth for the next few years with retained earnings and dividends reinvested.


	Wilson Bank Holding
	Company					Wilson Bank & Trust
	Amount		Ratio			Amount		Ratio
	(Dollars in Thousands					(Dollars in Thousands)
December 31, 2008
Actual:
Total Risk Based Capital	$	137,442		12.54	%	$	136,672		12.47	%
Tier 1 Capital		124,881		11.40			124,111		11.32
Leverage		124,881		8.96			124,111		8.91

For Capital Adequacy Purposes:
Total Risk Based Capital				8.0					8.0
Tier 1 Capital				4.0					4.0
Leverage				4.0					4.0

December 31, 2007
Actual:
Total Risked Based Capital	$	123,242		11.67	%	$	123,572		12.08	%
Tier 1 Capital		113,769		10.77			113,350		11.08
Leverage		113,769		8.63			113,350		8.60

For Capital Adequacy Purposes:
Total Risked Based Capital				8.0					8.0
Tier 1 Capital				4.0					4.0
Leverage				4.0					4.0

Quantitative and Qualitative Disclosures About Market Risk

The Company’s primary component of market risk is interest rate volatility. Fluctuations in interest rates will ultimately impact both the level of income and expense recorded on a large portion of the Company’s assets and liabilities, and the market value of all interest-earning assets and interest-bearing liabilities, other than those which possess a short term to maturity. Based upon the nature of the Company’s operations, the Company is not subject to foreign currency exchange or commodity price risk.

WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

investments. The following table provides information about the Company’s financial instruments that are sensitive to changes in interest rates as of December 31, 2008.


	(Dollars in Thousands)
	Expected Maturity Date — Year Ending December 31,																					Fair
	2009			2010			2011			2012			2013			Thereafter			Total			Value
Earning assets:

Loans, net of unearned interest:
Variable rate	$	65,877			46,963			14,162			26,434			14,037			471,929			639,402			639,402
Average interest rate		5.84	%		6.94	%		7.13	%		7.33	%		6.79	%		7.68	%		6.23	%

Fixed rate		227,381			50,807			57,377			31,185			41,910			41,123			449,783			452,343
Average interest rate		6.26	%		9.81	%		9.39	%		8.60	%		7.74	%		7.30	%		6.74	%

Securities		1,505			4,242			10,446			725			2,172			186,170			205,260			205,188
Average interest rate		3.18	%		2.56	%		2.60	%		3.83	%		3.80	%		5.41	%		5.14	%

Loans held for sale		3,541			—			—			—			—			—			3,541			3,541
Average interest rate		4.53	%		—			—			—			—			—			4.53	%

Federal funds sold		21,170			—			—			—			—			—			21,170			21,170
Average interest rate		2.50	%		—			—			—			—			—			2.50	%

Interest-bearing deposits		1,012,403			105,729			34,593			2,227			2,633			120			1,157,705			1,166,325
Average interest rate		2.78	%		3.63	%		4.21	%		4.28	%		3.83	%		3.38	%		3.49	%

Securities sold under repurchase agreements		7,447			—			—			—			—			—			7,447			7,447
Average interest rate		2.07	%		—			—			—			—			—			2.07	%

Advances from Federal Home Loan Bank		13,751			60			—			—			—			—			13,811			13,997
Average interest rate		4.71	%		7.15	%		—			—			—			—			4.69	%

Supervision and Regulation

Bank Holding Company Act of 1956. As a bank holding company, the Company is subject to regulation under the Bank Holding Company Act of 1956 (the “Act”), and the regulations adopted by the Board of Governors of the Federal Reserve System (the “Board”) under the Act. The Company is required to file reports with, and is subject to examination by, the Board. Wilson Bank is a Tennessee state chartered nonmember bank, and is therefore subject to the supervision of and is regularly examined by the Tennessee Department of Financial Institutions (the “TDFI”) and the Federal Deposit Insurance Corporation (“FDIC”).

Under the Act, a bank holding company may not directly or indirectly acquire the ownership or control of more than five percent of the voting shares or substantially all of the assets of any company, including a bank, without the prior approval of the Board. In addition, bank holding companies are generally prohibited under the Act from engaging in non-banking activities, subject to certain exceptions. Under the Act, the Board is authorized to approve the ownership by a bank holding company of shares of any company whose activities have been determined by the Board to be so closely related to banking or to managing or controlling banks as to be a proper incident thereto.

WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

In November, 1999, the Gramm-Leach-Bliley Act of 1999 (the “GLB Act”) became law. Under the GLB Act, a “financial holding company” may engage in activities the Board determines to be financial in nature or incidental to such financial activity or complementary to a financial activity and not a substantial risk to the safety and soundness of depository institutions or the financial system. Generally, such companies may engage in a wide range of securities activities and insurance underwriting and agency activities The Company has not sought “financial holding company” status.

Under the Tennessee Bank Structure Act, a bank holding company which controls 30% or more of the total deposits (excluding certain deposits) in all federally insured financial institutions in Tennessee is prohibited from acquiring any bank in Tennessee. State banks and national banks in Tennessee may establish branches anywhere in the state and generally may branch across state lines either through interstate merger or branch acquisition, provided the other state’s law affords reciprocity.

The Company and Wilson Bank are subject to certain restrictions imposed by the Federal Reserve Act and the Federal Deposit Insurance Act, respectively, on any extensions of credit to the Company or Wilson Bank, on investments in the stock or other securities of the Company or Wilson Bank, and on taking such stock or other securities as collateral for loans of any borrower.

Under the Tennessee Banking Act, approval of the Commission of Financial Institutions is required for declaration of any dividends by Wilson Bank to the Company in excess of net income in the calendar year of declaration plus retained net income for the preceding two years.

FDICIA. Under the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”), the federal banking regulators have assigned each insured institution to one of five categories (“well capitalized,” “adequately capitalized” or one of three under capitalized categories) based upon the three measures of capital adequacy discussed above (see “Capital Resources, Capital Position and Dividends”). Institutions which have a Tier I leverage capital ratio of 5%, a Tier I risk-based capital ratio of 5% and a total risk-based capital ratio of 10% are defined as “well capitalized”. All institutions, regardless of their capital levels, are restricted from making any capital distribution or paying any management fees that would cause the institution to fail to satisfy the minimum levels for any of its capital requirements for “adequately capitalized” status. Wilson Bank currently meets the requirement for “well capitalized”.

An institution that fails to meet the minimum level for any relevant capital measure (an “undercapitalized institution”) may be: (i) subject to increased monitoring by the appropriate federal banking regulator; (ii) required to submit an acceptable capital restoration plan within 45 days (which must be guaranteed by the institution’s holding company); (iii) subject to asset growth limits; and (iv) required to obtain prior regulatory approval for acquisitions, branching and new lines of businesses. The bank regulatory agencies have discretionary authority to reclassify a “well capitalized” institution as “adequately capitalized” or to impose on an “adequately capitalized” institution requirements or actions specified for undercapitalized institutions if the agency determines that the institution is in an unsafe or unsound condition or is engaging in an unsafe or unsound practice.

A “significantly undercapitalized” institution may be subject to a number of additional requirements and restrictions, including (1) orders to sell sufficient voting stock to become “adequately capitalized,” (2) requirements to reduce total assets and (3) cessation of receipt of deposits from correspondent banks. “Critically undercapitalized” institutions are subject to the appointment of a receiver or conservator.

Under FDICIA, bank regulatory agencies have prescribed safety and soundness guidelines for all insured depository institutions relating to internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, asset quality, earnings and compensation. Wilson Bank is assessed quarterly at the rate of .703% of insured deposits for deposit insurance. Management is not aware of any current recommendations by the regulatory authorities which, if implemented, would have a material effect on the Company’s liquidity, capital resources or operations.

WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Monetary Policy. Wilson Bank is affected by commercial bank credit policies of regulatory authorities, including the Board. An important function of the Board is to regulate the national supply of bank credit in order to attempt to combat recessionary and curb inflationary pressures. Among the instruments of monetary policy used by the Board to implement these objectives are open market operations in U.S. Government securities, changes in discount rates on member borrowings, changes in reserve requirements against bank deposits and limitations on interest rates which member banks may pay on time and savings deposits. The monetary policies of the Board have had a significant effect on the operating results of commercial banks, including nonmembers (such as the Company’s bank subsidiary as well as members, in the past and are expected to continue to do so in the future.

Impact of Inflation

Although interest rates are significantly affected by inflation, the inflation rate is believed to be immaterial when reviewing the Company’s results of operations.

Disclosures About Fair Value of Financial Instruments

During the first quarter of 2008, the Company adopted SFAS No. 157 “Fair Value Measurements,” which establishes a fair value hierarchy and requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:


Level 1:		Quoted price (unadjusted) or identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.


Level 2:		Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in market that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.


Level 3:		Unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Except for marketable securities, the Company does not account for any other assets or liabilities using fair value. Substantially all marketable securities are considered Level 2 assets since their fair values are determined using observable pricing inputs. Impaired loans are considered Level 3 assets.

Assets and Liabilities Measured on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below:

Fair Value Measurements at December 31, 2008

Quoted Prices

in Active

Significant*

Carrying Value

Markets for

Other

Significant

at December 31,

Identical Assets

Observable

(in Thousands)

2008

(Level 1)

Inputs (Level 2)

Inputs (Level 3)

Assets:

Available-for-sale Securities

194,167

1,016

193,151

—

Impaired loans

10,408

—

10,408

WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Available-for-sale securities are measured on a recurring basis and are obtained from an independent pricing service. The fair values are based on quoted market prices of comparable securities, broker quotes or comprehensive interest rate tables and pricing matrices.

Impaired loan balances in the table above represent those collateral-dependent loans where management has estimated the credit loss by comparing the loans’ carrying values against the expected realized fair values of the collateral securing those loans. As of December 31, 2008 impaired loans had a carrying amount of $10,408,000, with a valuation allowance of $1,810,000.

SFAS No. 107, “Disclosures about Fair Value of Financial Instruments” (“SFAS No. 107”), requires that the Company disclose estimated fair values for its financial instruments. Fair value estimates, methods, and assumptions are set forth below for the Company’s financial instruments.

Cash and short-term investments

For those short-term instruments, the carrying amount is a reasonable estimate of fair value.

Securities

The carrying amounts for short-term securities approximate fair value because they mature in 90 days or less and do not present unanticipated credit concerns. The fair value of longer-term securities and mortgage-backed securities, except certain state and municipal securities, is estimated based on bid prices published in financial newspapers or bid quotations received from securities dealers. The fair value of certain state and municipal securities is not readily available through market sources other than dealer quotations, so fair value estimates are based on quoted market prices of similar instruments, adjusted for differences between the quoted instruments and the instruments being valued.

SFAS No. 107 specifies that fair values should be calculated based on the value of one unit without regard to any premium or discount that may result from concentrations of ownership of a financial instrument, possible tax ramifications, or estimated transaction costs. Accordingly, these considerations have not been incorporated into the fair value estimates.

Loans

Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as commercial, mortgage, credit card and other consumer. Each loan category is further segmented into fixed and adjustable rate interest terms.

The fair value of the various categories of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining average estimated maturities.

The estimated maturity for mortgages is modified from the contractual terms to give consideration to management’s experience with prepayments. Management has made estimates of fair value discount rates that it believes to be reasonable. However, because there is no market for many of these financial instruments, management has no basis to determine whether the fair value present below would be indicative of the value negotiated in an actual sale.
The value of the loan portfolio is also discounted in consideration of the credit quality of the loan portfolio as would be the case between willing buyers and sellers. Particular emphasis has been given to loans on Wilson Bank’s internal watch list. Valuation of these loans is based upon borrower performance, collateral values (including external appraisals) and certain other factors.

Deposit Liabilities

WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The fair value of demand deposits, savings accounts and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities. Under the provision of SFAS No. 107, the fair value estimates for deposits does not include the benefit that results from the low cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market.

Securities Sold Under Repurchase Agreements

The securities sold under repurchase agreements are payable upon demand. For this reason the carrying amount is a reasonable estimate of fair value.

Advances from Federal Home Loan Bank

The fair value of the advances from the Federal Home Loan Bank are estimated by discounting the future cash outflows using the current market rates.

Commitments to Extend Credit, Standby Letters of Credit and Financial Guarantees Written

Loan commitments are made to customers generally for a period not to exceed one year and at the prevailing interest rates in effect at the time the loan is closed. Commitments to extend credit related to construction loans are generally made for a period not to exceed six months with interest rates at the current market rate at the date of closing. In addition, standby letters of credit are issued for periods extending from one to two years with rates to be determined at the date the letter of credit is funded. Fees are only charged for the construction loans and the standby letters of credit, and the amounts unearned at December 31, 2008 and 2007 are insignificant. Accordingly, these commitments have no carrying value, and management estimates the commitments to have no significant fair value.

Summary of Significant Accounting Policies

Off-Balance-Sheet Financial Instruments

In the ordinary course of business Wilson Bank has entered into off-balance-sheet financial instruments consisting of commitments to extend credit, commitments under credit card arrangements, commercial letters of credit and standby letters of credits. Such financial instruments are recorded in the financial statements when they are funded or related fees are incurred ore received.

Impact of New Accounting Standards

In December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS No. 141(R)”). SFAS No. 141(R) requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction; establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed; and requires the acquirer to disclose to investors and other users all of the information needed to evaluate and understand the nature and financial effect of the business combination. SFAS No. 141(R) is effective for fiscal years beginning after December 15, 2008. The adoption of SFAS No. 141(R) could have a material impact to the consolidated financial statements for business combinations entered into after the effective date of SFAS No. 141(R). Also, any tax contingencies related to acquisitions prior to the effective date of SFAS No. 141(R) that are resolved after the adoption of SFAS No. 141(R) would be recorded through current earning, and also could have a material impact to the consolidated financial statements.

On September 15, 2006, the FASB issued SFAS No. 157 “Fair Value Measurement” (“SFAS No. 157”). SFAS No. 157 provides guidance for using fair value to measure assets and liabilities but does not expand the use of fair value in any circumstance. The standard also responds to investors’ requests for expanded information about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. Under SFAS No. 157, fair value refers to the price that would be

WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. It clarifies the principal that fair value should be based on the assumptions market participation would use when pricing the asset or liability. In support of this principle, SFAS No. 157 establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. The fair value hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data, for example, the reporting entity’s own data. Under SFAS No. 157, fair value measurements would be separately disclosed by level within the fair value hierarchy. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Early adoption is permitted. Additionally, in February 2008, the FASB issued FSP 157-2, “Effective Date of FASB Statement No. 157” (“FSP 157-2”), which delays the effective date of SFAS No. 157 for non-recurring, non-financial instruments to fiscal years beginning after November 15, 2008.

In October 2008, the FASB issued FASB Staff Position No. SFAS No. 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active” (“FSP 157-3”). FSP 157-3 clarifies the application of SFAS No. 157 in a market that is not active. FSP 157-3 is intended to address the following application issues: (a) how the reporting entity’s own assumptions (that is, expected cash flows and appropriately risk-adjusted discount rates) should be considered when measuring fair value when relevant observable inputs do not exist; (b) how available observable inputs in a market that is not active should be considered when measuring fair value; and (c) how the use of market quotes (for example, broker quotes or pricing services for the same or similar financial assets) should be considered when assessing the relevance of observable and unobservable inputs available to measure fair value. FSP 157-3 is effective on issuance, including prior periods for which financial statements have not been issued.

In March 2007, the FASB ratified the consensus the EITF reached regarding EITF Issue No. 06-10, "Accounting for Collateral Assignment Split-Dollar Life Insurance Arrangements” (“Issue 06-10”), which provides accounting guidance for postretirement benefits related to collateral assignment split-dollar life insurance arrangements, whereby the employee owns and controls the insurance policies. The consensus concludes that an employer should recognize a liability for the postretirement benefit in accordance with SFAS No. 106 or APB 12, as well as recognize an asset based on the substance of the arrangement with the employee. Issue 06-10 is effective for fiscal years beginning after December 15, 2007 with early application permitted. Effective January 1, 2008, the Company adopted EITF 06-10 through a cumulative effect adjustment to retained earning of $74,000 ($.01 per share), which is net of taxes of $46,000.

In November 2007, the Securities and Exchange Commission (the “SEC”) issued Staff Accounting Bulletin No. 109, “Application of Accounting Principles to Loan Commitments” (“SAB 109”), to inform registrants of the SEC’s view that the fair value of written loan commitments that are accounted for at fair value should include expected net future cash flows related to the associated servicing of the loan. Additionally, the SEC reaffirmed its previous views that internally-developed intangible assets (such as customer relationship intangible assets) should not be recorded as part of the fair value of such commitments. The SEC expects registrants to apply the views stated in SAB 109 on a prospective basis to written loan commitments recorded a fair value which were issued or modified in fiscal quarters beginning after December 15, 2007. The adoption of SAB 109 generally has resulted in higher fair values being recorded upon initial recognition of derivative interest rate lock commitments.

In June 2008, the FASB issued FASB Staff Position No. EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payments Transactions Are Participating Securities” (“FSP EITF 03-6-1”). FSP EITF 03-6-1 requires that instruments granted in share-based payment transactions, that are considered to be participating securities, should be included in the earning allocation in computing EPS under the two-class method described in SFAS No. 128, “Earning per Share”. FSP EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008 with all prior period EPS data being adjusted retrospectively. Early adoption is not permitted.

On September 12, 2008, the FASB issued FSP No. 133-1 and FIN 45-4, “Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Interpretation No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161” (FSP 133-1). FSP 133-1 requires expanded disclosures about credit derivatives and guarantees. The expanded disclosure requirements for FSP 133-1 are

WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

effective for the Company’s financial statements for the year ending December 31, 2008 and earlier adoption is not permitted. The adoption of FSP 133-1 will not impact the Company’s financial condition and results of operations.

On February 20, 2008 the FASB issued FSP No. FAS 140-3, “Accounting for Transfers of Financial Assets and Repurchase Financing Transactions” (“FSP 140-3”). FSP 140-3 requires that an initial transfer of a financial asset and a repurchase financing that was entered into contemporaneously with, or in contemplation of, the initial transfer be evaluated together as a linked transaction under SFAS No. 140, unless certain criteria are met. FSP 140-3 is effective for the Company’s financial statements for the year beginning on January 1, 2009 and earlier adoption is not permitted. The adoption of FSP 140-3 will not have a material impact on the Company’s financial conditions and results of operations.

WILSON BANK HOLDING COMPANY FINANCIAL HIGHLIGHTS (UNAUDITED)


	*In Thousands, Except Per Share Information*
	*As Of December 31,*
	2008			2007			2006			2005			2004
CONSOLIDATED BALANCE SHEETS:
Total assets end of year	$	1,406,786			1,334,245			1,230,285			1,052,263			937,248
Loans, net	$	1,077,047			988,053			880,670			801,705			714,631
Securities	$	205,260			223,381			183,830			153,838			133,072
Deposits	$	1,248,500			1,182,590			1,086,729			929,589			832,922
Stockholders’ equity	$	129,118			118,185			106,168			95,110			71,561

	*Years Ended December 31,*
	2008			2007			2006			2005			2004
CONSOLIDATED STATEMENTS OF EARNINGS:
Interest income	$	86,357			85,882			70,690			56,318			48,022
Interest expense		40,392			45,721			32,378			22,150			15,751

Net interest income		45,965			40,161			38,312			34,168			32,271

Provision for loan losses		6,718			4,145			3,806			1,136			3,273

Net interest income after provision for loan losses		39,247			36,016			34,506			33,032			28,998
Non-interest income		12,006			10,636			9,486			8,218			7,431
Non-interest expense		32,814			29,477			26,746			23,407			21,628


Earnings before income taxes		18,439			17,175			17,246			17,843			14,801

Income taxes		7,041			6,239			6,671			6,847			5,689


Net earnings	$	11,398			10,936			10,575			10,996			9,112


Minority interest in net earnings of subsidiaries	$	—			—			—			236			475


Cash dividends declared	$	4,168			2,306			4,525			3,996			3,262


PER SHARE DATA: (3)
Basic earnings per common share	$	1.63			1.58			1.56			1.70			1.55
Diluted earnings per common share	$	1.62			1.58			1.55			1.69			1.55
Cash dividends	$	0.60			0.34			0.68			0.64			0.56
Book value	$	18.34			17.09			15.55			14.28			12.10

RATIOS:
Return on average stockholders’ equity		9.26	%		9.86	%		10.51	%		12.59	%		13.61	%
Return on average assets (1)		0.82	%		0.85	%		0.95	%		1.12	%		1.04	%
Capital to assets (2)		9.18	%		8.86	%		8.63	%		9.04	%		8.38	%
Dividends declared per share as percentage of basic earnings per share		36.81	%		21.52	%		43.27	%		37.44	%		36.23	%

(1) Includes minority interest earnings of consolidated subsidiaries in numerator in 2005 and 2004.
(2) Includes minority interest of consolidated subsidiaries in numerator in 2005 and 2004.
(3) Per share data has been retroactively adjusted to reflect a 4 for 3 split which occurred effective May 7, 2007.

WILSON BANK HOLDING COMPANY

Consolidated Financial Statements

December 31, 2008 and 2007

(With Independent Auditor’s Report Thereon)

INDEPENDENT AUDITOR’S REPORT

The Board of Directors
Wilson Bank Holding Company:

We have audited the accompanying consolidated balance sheets of Wilson Bank Holding Company and Subsidiary as of December 31, 2008 and 2007, and the related consolidated statements of earnings, comprehensive earnings, changes in stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Wilson Bank Holding Company and Subsidiary as of December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the years in the three year period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Wilson Bank Holding Company’s internal control over financial reporting as of December 31, 2008 based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated January 16, 2009 expressed an unqualified opinion thereon.

/s/ Maggart & Associates, P.C.

Nashville, Tennessee
January 16, 2009

WILSON BANK HOLDING COMPANY

Consolidated Balance Sheets

December 31, 2008 and 2007


	Dollars In Thousands
	2008			2007
ASSETS
Loans, net of allowance for loan losses of $12,138,000 and $9,473,000, respectively	$	1,077,047			988,053
Securities:
Held-to-maturity, at amortized cost (market value $11,021,000 and $13,480,000, respectively)		11,093			13,450
Available-for-sale, at market (amortized cost $195,087,000 and $210,561,000, respectively)		194,167			209,931

Total securities		205,260			223,381

Loans held for sale		3,541			6,034
Federal funds sold		21,170			14,722
Restricted equity securities		3,100			2,983

Total earning assets		1,310,118			1,235,173


Cash and due from banks		38,073			44,853
Premises and equipment, net		31,035			30,411
Accrued interest receivable		8,357			8,864
Deferred income taxes		3,578			2,539
Other real estate		4,993			1,268
Goodwill		4,805			4,805
Other intangible assets, net		1,300			1,696
Other assets		4,527			4,636


Total assets	$	1,406,786			1,334,245


LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits	$	1,248,500			1,182,590
Securities sold under repurchase agreements		7,447			9,771
Advances from Federal Home Loan Bank		13,811			15,470
Accrued interest and other liabilities		7,910			8,229

Total liabilities		1,277,668			1,216,060


Stockholders’ equity:
Common stock, par value $2.00 per share, authorized 10,000,000 shares, 7,042,042 and 6,916,390 shares issued and outstanding, respectively		14,084			13,833
Additional paid-in capital		38,078			34,373
Retained earnings		77,524			70,368
Net unrealized losses on available-for-sale securities, net of income taxes of $352,000 and $241,000, respectively		(568	)		(389	)

Total stockholders’ equity		129,118			118,185


COMMITMENTS AND CONTINGENCIES
Total liabilities and stockholders’ equity	$	1,406,786			1,334,245

See accompanying notes to consolidated financial statements.

WILSON BANK HOLDING COMPANY

Consolidated Statements of Earnings

Three Years Ended December 31, 2008


	Dollars In Thousands (except per share data)
	2008			2007			2006
Interest income:
Interest and fees on loans	$	73,731			71,945			62,567
Interest and dividends on securities:
Taxable securities		10,942			10,398			5,312
Exempt from Federal income taxes		542			585			633
Interest on loans held for sale		187			253			201
Interest on Federal funds sold		773			2,524			1,814
Interest and dividends on restricted equity securities		182			177			163

Total interest income		86,357			85,882			70,690


Interest expense:
Interest on negotiable order of withdrawal accounts		3,628			2,858			1,262
Interest on money market accounts and other savings accounts		4,285			7,019			5,955
Interest on certificates of deposit		31,607			34,746			24,155
Interest on securities sold under repurchase agreements		180			342			354
Interest on advances from Federal Home Loan Bank		688			756			652
Interest on Federal funds purchased		4			—			—

Total interest expense		40,392			45,721			32,378


Net interest income before provision for loan losses		45,965			40,161			38,312
Provision for loan losses		(6,718	)		(4,145	)		(3,806	)

Net interest income after provision for loan losses		39,247			36,016			34,506
Non-interest income		12,006			10,636			9,486
Non-interest expense		(32,814	)		(29,477	)		(26,746	)


Earnings before income taxes		18,439			17,175			17,246

Income taxes		7,041			6,239			6,671


Net earnings	$	11,398			10,936			10,575


Basic earnings per common share	$	1.63			1.58			1.56


Diluted earnings per common share	$	1.62			1.58			1.55


Weighted average common shares outstanding:
Basic		6,996,442			6,901,447			6,771,455


Diluted		7,025,821			6,937,441			6,811,057

See accompanying notes to consolidated financial statements.

WILSON BANK HOLDING COMPANY

Consolidated Statements of Comprehensive Earnings

Three Years Ended December 31, 2008


	Dollars In Thousands
	2008			2007		2006
Net earnings	$	11,398			10,936		10,575

Other comprehensive earnings (losses), net of tax:
Net unrealized gains (losses) on available-for-sale securities arising during period, net of taxes of $23,000 $651,000 and $346,000, respectively		(36	)		1,049		556
Reclassification adjustment for net losses (gains) included in net earnings, net of taxes of $88,000 and $48,000 in 2008 and 2006, respectively		(143	)		—		78

Other comprehensive earnings (losses)		(179	)		1,049		634


Comprehensive earnings	$	11,219			11,985		11,209

See accompanying notes to consolidated financial statements.

WILSON BANK HOLDING COMPANY

Consolidated Statements of Changes in Stockholders’ Equity

Three Years Ended December 31, 2008


	Dollars In Thousands
									Net Unrealized
			Additional						Gain (Loss) On
	Common		Paid-In			Retained			Available-For-
	Stock		Capital			Earnings			Sale Securities			Total
Balance December 31, 2005	$	9,992		31,502			55,688			(2,072	)		95,110
Cash dividends declared, $.68 per share		—		—			(4,525	)		—			(4,525	)
Issuance of 113,774 shares of stock pursuant to dividend reinvestment plan		227		3,924			—			—			4,151
Issuance of 12,587 shares of stock pursuant to exercise of stock options		25		181			—			—			206
Share based compensation expense		—		17			—			—			17
Net change in unrealized loss on available-for-sale securities during the year, net of taxes of $394,000		—		—			—			634			634
Net earnings for the year		—		—			10,575			—			10,575

Balance December 31, 2006		10,244		35,624			61,738			(1,438	)		106,168
Cash dividends declared, $.34 per share		—		—			(2,306	)		—			(2,306	)
Issuance of 53,518 shares of stock pursuant to dividend reinvestment plan		107		2,007			—			—			2,114
Issuance of 1,724,425 shares of stock pursuant to a 4 for 3 stock split		3,450		(3,450	)		—			—			—
Issuance of 16,107 shares of stock pursuant to exercise of stock options		32		171			—			—			203
Share based compensation expense		—		21			—			—			21
Net change in unrealized loss on available-for-sale securities during the year, net of taxes of $651,000		—		—			—			1,049			1,049
Net earnings for the year		—		—			10,936			—			10,936

Balance December 31, 2007		13,833		34,373			70,368			(389	)		118,185
Cash dividends declared, $.60 per share		—		—			(4,168	)		—			(4,168	)
Issuance of 108,132 shares of stock pursuant to dividend reinvestment plan		216		3,487			—			—			3,703
Cumulative effect of change in accounting principle related to deferred compensation plan, net of taxes of $46,000		—		—			(74	)		—			(74	)
Issuance of 17,520 shares of stock pursuant to exercise of stock options		35		197			—			—			232
Share based compensation expense		—		21			—			—			21
Net change in unrealized loss on available-for-sale securities during the year, net of taxes of $111,000		—		—			—			(179	)		(179	)
Net earnings for the year		—		—			11,398			—			11,398

Balance December 31, 2008	$	14,084		38,078			77,524			(568	)		129,118

See accompanying notes to consolidated financial statements.

WILSON BANK HOLDING COMPANY

Consolidated Statements of Cash Flows

Three Years Ended December 31, 2008

Increase (Decrease) in Cash and Cash Equivalents


	Dollars In Thousands
	2008			2007			2006
Cash flows from operating activities:
Interest received	$	86,682			84,950			68,857
Fees received		11,416			10,267			8,881
Other income received		9			89			124
Proceeds from sales of loans		75,587			88,759			88,971
Origination of loans held for sale		(72,744	)		(87,448	)		(92,650	)
Interest paid		(41,501	)		(44,639	)		(29,629	)
Cash paid to suppliers and employees		(29,412	)		(27,096	)		(25,407	)
Income taxes paid		(7,835	)		(5,844	)		(7,733	)

Net cash provided by operating activities		22,202			19,038			11,414


Cash flows from investing activities:
Purchase of available-for-sale securities		(201,831	)		(124,354	)		(66,771	)
Proceeds from maturities of available-for-sale securities		131,232			85,679			27,335
Proceeds from sale of available-for-sale securities		86,378			—			10,303
Purchase of held-to-maturity securities		(1,659	)		(979	)		(462	)
Proceeds from maturities of held-to-maturity securities		4,007			1,847			505
Loans made to customers, net of repayments		(104,271	)		(113,895	)		(85,426	)
Purchase of bank premises and equipment		(2,438	)		(3,423	)		(6,693	)
Proceeds from sale of fixed assets		—			52			46
Proceeds from sale of other assets		26			261			324
Proceeds from sale of other real estate		4,328			1,318			1,764

Net cash used in investing activities		(84,228	)		(153,494	)		(119,075	)


Cash flows from financing activities:
Net increase in non-interest bearing, savings, NOW and money market deposit accounts		25,168			25,489			21,147
Net increase in time deposits		40,742			70,372			135,993
Proceeds from sale (purchase of) of securities under agreements to repurchase		(2,324	)		(3,623	)		4,238
Proceeds from (repayments to) Federal Home Loan Bank, net		(1,659	)		(1,622	)		3,404
Dividends paid		(4,168	)		(2,306	)		(4,525	)
Proceeds from sale of common stock pursuant to dividend reinvestment		3,703			2,114			4,151
Proceeds from sale of common stock pursuant to exercise of stock options		232			203			206

Net cash provided by financing activities		61,694			90,627			164,614


Net increase (decrease) in cash and cash equivalents		(332	)		(43,829	)		56,953

Cash and cash equivalents at beginning of year		59,575			103,404			46,451


Cash and cash equivalents at end of year	$	59,243			59,575			103,404

See accompanying notes to consolidated financial statements.

WILSON BANK HOLDING COMPANY

Consolidated Statements of Cash Flows, Continued

Three Years Ended December 31, 2008

Increase (Decrease) in Cash and Cash Equivalents


	Dollars In Thousands
	2008			2007			2006
Reconciliation of net earnings to net cash provided by operating activities:
Net earnings	$	11,398			10,936			10,575
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		2,125			1,981			1,957
Provision for loan losses		6,718			4,145			3,806
Provision for deferred taxes		(928	)		93			(475	)
Loss on sales of other real estate		398			136			102
Loss on sales of other assets		15			119			101
Security (gains) losses		(231	)		—			126
Loss (gain) on sales of fixed assets		20			36			(18	)
FHLB dividend reinvestment		(117	)		(43	)		(158	)
Decrease (increase) in loans held for sale		2,493			1,031			(4,130	)
Increase (decrease) in taxes payable		134			302			(587	)
(Increase) decrease in accrued interest receivable		507			(845	)		(1,687	)
Increase (decrease) in interest payable		(1,109	)		1,082			2,749
Increase in other assets		—			(103	)		(651	)
Increase (decrease) in accrued expenses		758			147			(313	)
Share based compensation expense		21			21			17

Total adjustments		10,804			8,102			839


Net cash provided by operating activities	$	22,202			19,038			11,414


Supplemental Schedule of Non-Cash Activities:

Unrealized gain (loss) in value of securities available-for-sale, net of taxes of $111,000 in 2008, $651,000 in 2007, and $394,000 in 2006	$	(179	)		1,049			634


Non-cash transfers from loans to other real estate	$	8,451			2,167			2,144


Non-cash transfers from loans to other assets	$	108			200			511


Issuance of 1,724,425 shares of common stock pursuant to a 4 for 3 stock split	$	—			3,450			—

See accompanying notes to consolidated financial statements.

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements

December 31, 2008, 2007 and 2006

*(1)*		*Summary of Significant Accounting Policies*

		The accounting and reporting policies of Wilson Bank Holding Company (“the Company”) and Wilson Bank & Trust (“Wilson Bank”) are in accordance with accounting principles generally accepted in the United States of America and conform to general practices within the banking industry. The following is a brief summary of the significant policies.

	*(a)*		*Principles of Consolidation*

			The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Wilson Bank. All significant intercompany accounts and transactions have been eliminated in consolidation.

	*(b)*		*Nature of Operations*

			Wilson Bank operates under a state bank charter and provides full banking services. As a state bank, Wilson Bank is subject to regulations of the Tennessee Department of Financial Institutions and the Federal Deposit Insurance Corporation. The areas served by Wilson Bank include Wilson County, DeKalb County, Rutherford County, Smith County, Trousdale County, and eastern Davidson County, Tennessee and surrounding counties in Middle Tennessee. Services are provided at the main office and twenty-two branch locations.

	*(c)*		*Estimates*

			The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to determination of the allowance for loan losses and the valuation of debt and equity securities and the related deferred taxes.

	*(d)*		*Loans*

			Loans are stated at the principal amount outstanding. Unearned discount, deferred loan fees net of loan acquisition costs, and the allowance for loan losses are shown as reductions of loans. Loan origination and commitment fees and certain loan-related costs are being deferred and the net amount amortized as an adjustment of the related loan’s yield over the contractual life of the loan. Unearned discount represents the unamortized amount of finance charges, principally related to certain installment loans. Interest income on most loans is accrued based on the principal amount outstanding.

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

(1)

Summary of Significant Accounting Policies, Continued

	*(d)*		*Loans, Continued*

			The Company follows the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 114, “Accounting by Creditors for Impairment of a Loan” (“SFAS No. 114”) and SFAS No. 118, “Accounting by Creditors for Impairment of a Loan — Income Recognition and Disclosures” (“SFAS No. 118”). These pronouncements apply to impaired loans except for large groups of smaller-balance homogeneous loans that are collectively evaluated for impairment including residential mortgage and installment loans.

			A loan is impaired when it is probable that the Company will be unable to collect the scheduled payments of principal and interest due under the contractual terms of the loan agreement. Impaired loans are measured at the present value of expected future cash flows discounted at the loan’s effective interest rate, at the loan’s observable market price, or the fair value of the collateral if the loan is collateral dependent. If the measure of the impaired loan is less than the recorded investment in the loan, the Company shall recognize an impairment by creating a valuation allowance with a corresponding charge to the provision for loan losses or by adjusting an existing valuation allowance for the impaired loan with a corresponding charge or credit to the provision for loan losses.

			The Company’s installment loans are divided into various groups of smaller-balance homogeneous loans that are collectively evaluated for impairment and, thus, are not subject to the provisions of SFAS Nos. 114 and 118. Substantially all other loans of the Company are evaluated for impairment under the provisions of SFAS Nos. 114 and 118.

			The Company considers all loans on nonaccrual status that are subject to the provisions of SFAS Nos. 114 and 118 to be impaired. Loans are placed on nonaccrual status when doubt as to timely collection of principal or interest exists, or when principal or interest is past due 90 days or more unless such loans are well-secured and in the process of collection. Past due status of loans is based on the contractual terms of the loan. Delays or shortfalls in loan payments are evaluated along with various other factors to determine if a loan is impaired. Generally, delinquencies under 90 days are considered insignificant unless certain other factors are present which indicate impairment is probable. The decision to place a loan on nonaccrual status is also based on an evaluation of the borrower’s financial condition, collateral, liquidation value, and other factors that affect the borrower’s ability to pay.

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

(1)

Summary of Significant Accounting Policies, Continued

	*(d)*		*Loans, Continued*

			Generally, at the time a loan is placed on nonaccrual status, all interest accrued and uncollected on the loan in the current fiscal year is reversed from income, and all interest accrued and uncollected from the prior year is charged off against the allowance for loan losses. Thereafter, interest on nonaccrual loans is recognized as interest income only to the extent that cash is received and future collection of principal is not in doubt. If the collectibility of outstanding principal is doubtful, such cash received is applied as a reduction of principal. A nonaccrual loan may be restored to an accruing status when principal and interest are no longer past due and unpaid and future collection of principal and interest on a timely basis is not in doubt.

			Loans not on nonaccrual status are classified as impaired in certain cases when there is inadequate protection by the current net worth and financial capacity of the borrower or of the collateral pledged, if any. In those cases, such loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt, and if such deficiencies are not corrected, there is a probability that the Company will sustain some loss. In such cases, interest income continues to accrue as long as the loan does not meet the Company’s criteria for nonaccrual status.

			Generally, the Company also classifies as impaired any loans the terms of which have been modified in a troubled debt restructuring. Interest is generally accrued on such loans that continue to meet the modified terms of their loan agreements.

			The Company’s charge-off policy for impaired loans is similar to its charge-off policy for all loans in that loans are charged off in the month when they are considered uncollectible.

	*(e)*		*Allowance for Loan Losses*

			The provision for loan losses represents a charge to earnings necessary, after loan charge-offs and recoveries, to maintain the allowance for loan losses at an appropriate level which is adequate to absorb estimated losses inherent in the loan portfolio. Such estimated losses arise primarily from the loan portfolio but may also be derived from other sources, including commitments to extend credit and standby letters of credit. The level of the allowance is determined on a monthly basis using procedures which include: (1) categorizing commercial and commercial real estate loans into risk categories to estimate loss probabilities based primarily on the historical loss experience of those risk

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

(1)

Summary of Significant Accounting Policies, Continued

	*(e)*		*Allowance for Loan Losses, Continued*

			categories and current economic conditions; (2) analyzing significant commercial and commercial real estate credits and calculating specific reserves as necessary; (3) assessing various homogeneous consumer loan categories to estimate loss probabilities based primarily on historical loss experience; (4) reviewing unfunded commitments; and (5) considering various other factors, such as changes in credit concentrations, loan mix, and economic conditions which may not be specifically quantified in the loan analysis process.

			The allowance for loan losses consists of an allocated portion and an unallocated, or general, portion. The allocated portion is maintained to cover estimated losses applicable to specific segments of the loan portfolio. The unallocated portion is maintained to absorb losses which probably exist as of the evaluation date but are not identified by the more objective processes used for the allocated portion of the allowance due to risk of errors or imprecision. While the total allowance consists of an allocated portion and an unallocated portion, these terms are primarily used to describe a process. Both portions of the allowance are available to provide for inherent loss in the entire portfolio.

			The allowance for loan losses is increased by provisions for loan losses charged to expense and is reduced by loans charged off net of recoveries on loans previously charged off. The provision is based on management’s determination of the amount of the allowance necessary to provide for estimated loan losses based on its evaluation of the loan portfolio. Determining the appropriate level of the allowance and the amount of the provision involves uncertainties and matters of judgment and therefore cannot be determined with precision.

	*(f)*		*Debt and Equity Securities*

			The Company applies the provisions of SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities” (“SFAS No. 115”). Under the provisions of SFAS No. 115, securities are classified in three categories and accounted for as follows:

	•		Securities Held-to-Maturity

			Debt securities that the enterprise has the positive intent and ability to hold to maturity are classified as held-to-maturity securities and reported at amortized cost. Amortization of premiums and accretion of discounts are recognized by the interest method.

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

(1)

Summary of Significant Accounting Policies, Continued

(f)

Debt and Equity Securities, Continued

	•		Trading Securities

			Debt and equity securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings.

	•		Securities Available-for-Sale

			Debt and equity securities not classified as either held-to-maturity securities or trading securities are classified as available-for-sale securities and reported at estimated fair value, with unrealized gains and losses excluded from earnings and reported in a separate component of stockholders’ equity. Premiums and discounts are recognized by the interest method.

			No securities have been classified as trading securities.

			Realized gains or losses from the sale of debt and equity securities are recognized based upon the specific identification method.

	*(g)*		*Loans Held for Sale*

			Mortgage loans held for sale are reported at the lower of cost or market value determined by outstanding commitments from investors at the balance sheet date. These loans are valued on an aggregate basis.

	*(h)*		*Premises and Equipment*

			Premises and equipment are stated at cost. Depreciation is computed primarily by the straight-line method over the estimated useful lives of the related assets. Gain or loss on items retired and otherwise disposed of is credited or charged to operations and cost and related accumulated depreciation are removed from the asset and accumulated depreciation accounts.

			Expenditures for major renewals and improvements of premises and equipment are capitalized and those for maintenance and repairs are charged to earnings as incurred.

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

(1)

Summary of Significant Accounting Policies, Continued

	*(i)*		*Intangible Assets*

			SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”) requires that management determine the allocation of intangible assets into identifiable groups at the date of acquisition and appropriate amortization periods be established. Under the provisions of SFAS No. 142, goodwill is not to be amortized; rather, it is to be monitored for impairment and written down to the impairment value at the time impairment occurs. The Company has determined that no impairment loss needs to be recognized related to the goodwill.

	*(j)*		*Cash and Cash Equivalents*

			For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks and Federal funds sold. Generally, Federal funds sold are purchased and sold for one-day periods. Management makes deposits only with financial institutions it considers to be financially sound.

	*(k)*		*Securities Sold Under Agreements to Repurchase*

			Substantially all repurchase agreement liabilities represent amounts advanced by various customers. Securities are pledged to cover these liabilities, which are not covered by Federal deposit insurance.

	*(l)*		*Long-Term Assets*

			Premises and equipment, intangible assets, and other long-term assets are reviewed for impairment when events indicate their carrying amount may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value.

	*(m)*		*Income Taxes*

			Provisions for income taxes are based on taxes payable or refundable for the current year (after exclusion of non-taxable income such as interest on state and municipal securities) and deferred taxes on temporary differences between the amount of taxable and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax asset and liabilities are expected to be realized or settled as prescribed in SFAS No. 109, “Accounting for Income Taxes” (“SFAS No. 109”). As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

(1)

Summary of Significant Accounting Policies, Continued

	*(m)*		*Income Taxes, Continued*

			The Company and Wilson Bank file consolidated Federal and State income tax returns.

	*(n)*		*Stock Options*

			In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123 (Revised 2004) “Share-Based Payment” (“SFAS No. 123R”). The Securities and Exchange Commission (“SEC”) staff issued Staff Accounting Bulletin No. 107 (“SAB 107”) in March 2005 to assist preparers by simplifying some of the implementation challenges of SFAS No. 123R while enhancing the information investors receive. The FASB has also issued various Staff Positions clarifying certain provisions of the new accounting standard. SFAS No. 123R addresses all forms of share-based payment awards, including shares issued under employee stock purchase plans, stock options, restricted stock and stock appreciation rights. SFAS No. 123R requires the Company to expense share-based payment awards with compensation cost measured at the fair value of the award. In addition, SFAS No. 123R requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than an operating cash flow.

			Under the provisions of SFAS No. 123R, stock-based compensation expense recognized during the period is based on the value of the portion of stock-based payment awards that is ultimately expected to vest. Stock-based compensation expense recognized in the accompanying consolidated statements of earnings during 2008, 2007 and 2006 included compensation expense for stock-based payment awards granted prior to, but not yet vested, as of January 1, 2006 and for the stock-based awards granted after January 1, 2006, based on the grant date fair value estimated in accordance with SFAS No. 123R. As stock-based compensation expense recognized in the accompanying statements of earnings for 2008, 2007 and 2006 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. SFAS No. 123R requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. (See note 19 to the consolidated financial statements).

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

(1)

Summary of Significant Accounting Policies, Continued

	*(n)*		*Stock Options, Continued*

			The fair value of each option award is estimated on the date of grant using a Black-Scholes Option Pricing Model (“BS”) that uses the following assumptions. Expected volatility is based on implied volatility from comparable publicly traded banks. The Company uses historical data to estimate option exercise and employee termination within the valuation model; separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The expected term of options granted is derived from the average of: (1) the weighted average vesting term and (2) original contractual term as permitted under SAB 107. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant and the weighted average expected life of the grant.

	*(o)*		*Stock Split*

			The Company’s Board of Directors approved a 4 for 3 stock split effective May 31, 2007. Each stockholder received four (4) shares of common stock in exchange for each three (3) shares owned with no allowance for fractional shares. For 2006, per share data included in these consolidated financial statements was restated to give effect to the stock split.

	*(p)*		*Advertising Costs*

			Advertising costs are expensed when incurred by the Company.

	*(q)*		*Other Real Estate*

			Real estate acquired in settlement of loans is initially recorded at the lower of cost (loan value of real estate acquired in settlement of loans plus incidental expense) or estimated fair value, less estimated cost to sell. Based on periodic evaluations by management, the carrying values are reduced by a direct charge to earnings when they exceed net realizable value. Costs relating to the development and improvement of the property are capitalized, while holding costs of the property are charged to expense in the period incurred.

	*(r)*		*Reclassifications*

			Certain reclassifications have been made to the 2007 and 2006 figures to conform to the presentation for 2008.

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

(1)

Summary of Significant Accounting Policies, Continued

	*(s)*		*Off-Balance-Sheet Financial Instruments*

			In the ordinary course of business Wilson Bank has entered into off-balance-sheet financial instruments consisting of commitments to extend credit, commitments under credit card arrangements, commercial letters of credit and standby letters of credit. Such financial instruments are recorded in the financial statements when they are funded or related fees are incurred or received.

	*(t)*		*Impact of New Accounting Standards*

			In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141(R)”). SFAS 141(R) requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction; establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed; and requires the acquirer to disclose to investors and other users all of the information needed to evaluate and understand the nature and financial effect of the business combination. SFAS 141(R) is effective for fiscal years beginning after December 15, 2008. The adoption of SFAS 141(R) could have a material impact to the consolidated financial statements for business combinations entered into after the effective date of SFAS 141(R). Also, any tax contingencies related to acquisitions prior to the effective date of SFAS 141(R) that are resolved after the adoption of SFAS 141(R) would be recorded through current earnings, and also could have a material impact to the consolidated financial statements.

			On September 15, 2006, the FASB issued SFAS No. 157 “Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 provides guidance for using fair value to measure assets and liabilities but does not expand the use of fair value in any circumstance. The standard also responds to investors’ requests for expanded information about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. Under SFAS No. 157, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. It clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability. In support of this principle, SFAS No. 157 establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. The fair value hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data, for example, the reporting entity’s own data. Under SFAS

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

(1)

Summary of Significant Accounting Policies, Continued

	*(t)*		*Impact of New Accounting Standards, Continued*

			No. 157, fair value measurements would be separately disclosed by level within the fair value hierarchy. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Early adoption is permitted. Additionally, in February 2008, the FASB issued FSP 157-2, “Effective Date of FASB Statement No. 157” (“FSP 157-2”), which delays the effective date of FAS 157 for non-recurring, non-financial instruments to fiscal years beginning after November 15, 2008.

			In October 2008, the FASB issued FASB Staff Position No. 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active” (“FSP 157-3”). FSP 157-3 clarifies the application of SFAS No. 157 in a market that is not active. The FSP is intended to address the following application issues: (a) how the reporting entity’s own assumptions (that is, expected cash flows and appropriately risk-adjusted discount rates) should be considered when measuring fair value when relevant observable inputs do not exist; (b) how available observable inputs in a market that is not active should be considered when measuring fair value; and (c) how the use of market quotes (for example, broker quotes or pricing services for the same or similar financial assets) should be considered when assessing the relevance of observable and unobservable inputs available to measure fair value. FSP 157-3 is effective on issuance, including prior periods for which financial statements have not been issued.

			In March 2007, the FASB ratified the consensus the EITF reached regarding EITF Issue No. 06-10, “Accounting for Collateral Assignment Split-Dollar Life Insurance Arrangements” (“Issue 06-10”), which provides accounting guidance for postretirement benefits related to collateral assignment split-dollar life insurance arrangements, whereby the employee owns and controls the insurance policies. The consensus concludes that an employer should recognize a liability for the postretirement benefit in accordance with Statement 106 or APB 12, as well as recognize an asset based on the substance of the arrangement with the employee. Issue 06-10 is effective for fiscal years beginning after December 15, 2007 with early application permitted. Effective January 1, 2008, the Company adopted EITF 06-10 through a cumulative effect adjustment to retained earnings of $74,000 ($.01 per share), which is net of taxes of $46,000.

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

(1)

Summary of Significant Accounting Policies, Continued

	*(t)*		*Impact of New Accounting Standards, Continued*

			In November 2007, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 109, “Application of Accounting Principles to Loan Commitments” (“SAB 109”), to inform registrants of the Staff’s view that the fair value of written loan commitments that are accounted for at fair value should include expected net future cash flows related to the associated servicing of the loan. Additionally, the Staff reaffirmed its previous views that internally-developed intangible assets (such as customer relationship intangible assets) should not be recorded as part of the fair value of such commitments. The Staff expects registrants to apply the views stated in SAB 109 on a prospective basis to written loan commitments recorded a fair value which were issued or modified in fiscal quarters beginning after December 15, 2007. The adoption of SAB 109 generally has resulted in higher fair values being recorded upon initial recognition of derivative interest rate lock commitments.

			In June 2008, the FASB issued FASB Staff Position No. EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payments Transactions Are Participating Securities” (“FSP EITF 03-6-1”). FSP EITF 03-6-1 requires that instruments granted in share-based payment transactions, that are considered to be participating securities, should be included in the earnings allocation in computing earnings per share (“EPS”) under the two-class method described in FASB Statement No. 128, “Earnings per Share”. FSP EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008 with all prior period EPS data being adjusted retrospectively. Early adoption is not permitted.

			On September 12, 2008, the FASB issued FSP No. 133-1 and FIN 45-4, “Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of FASB Interpretation No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB Statement No. 161” (FSP 133-1). FSP 133-1 requires expanded disclosures about credit derivatives and guarantees. The expanded disclosure requirements of FSP 133-1 are effective for the Company’s financial statements for the year ending December 31, 2008 and earlier adoption is not permitted. The adoption of FSP 133-1 will not impact the Company’s financial condition and results of operations.

			On February 20, 2008 the FASB issued FSP No. FAS 140-3, “Accounting for Transfers of Financial Assets and Repurchase Financing Transactions” (FSP 140-3). FSP 140-3 requires that an initial transfer of a financial asset and a repurchase financing that was entered into contemporaneously with, or in contemplation of, the initial transfer be evaluated together as a linked transaction under SFAS 140, unless certain criteria are met. FSP 140-3 is effective for the Company’s financial statements for the year beginning on January 1, 2009 and earlier adoption is not permitted. The adoption of FSP 140-3 will not have a material impact on the Company’s financial conditions and results of operations.

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

*(2)*		*Loans and Allowance for Loan Losses*

		The classification of loans at December 31, 2008 and 2007 is as follows:


	In Thousands
	2008			2007
Commercial, financial and agricultural	$	359,752			337,368
Installment		71,869			73,618
Real estate — construction		99,768			100,036
Real estate — mortgage		557,796			486,504

		1,089,185			997,526
Allowance for loan losses		(12,138	)		(9,473	)

	$	1,077,047			988,053

The principal maturities on loans at December 31, 2008 are as follows:


	In Thousands
	Commercial,
	Financial
	and				Real Estate -		Real Estate-
	Agricultural		Installment		Construction		Mortgage		Total
3 months or less	$	71,259		5,128		30,797		4,478		111,662
3 to 12 months		127,553		5,611		40,628		6,492		180,284
1 to 5 years		115,172		52,808		28,343		82,138		278,461
Over 5 Years		45,768		8,322		—		464,688		518,778


	$	359,752		71,869		99,768		557,796		1,089,185

		At December 31, 2008, variable rate and fixed rate loans totaled $639,402,000 and $449,783,000, respectively. At December 31, 2007, variable rate loans were $549,569,000 and fixed rate loans totaled $447,957,000.

		Unamortized deferred loan fees totaled $1,293,000 and $906,000 at December 31, 2008 and 2007, respectively.

		In the normal course of business, Wilson Bank has made loans at prevailing interest rates and terms to directors and executive officers of the Company and to their affiliates. The aggregate amount of these loans was $12,966,000 and $15,889,000 at December 31, 2008 and 2007, respectively. As of December 31, 2008, none of these loans were restructured, nor were any related party loans charged-off during the past three years nor did they involve more than the normal risk of collectibility or present other unfavorable features.

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

*(2)*		*Loans and Allowance for Loan Losses, Continued*

		An analysis of the activity with respect to such loans to related parties is as follows:


	In Thousands
	December 31,
	2008			2007
Balance, January 1	$	15,889			13,392
New loans during the year		18,124			32,407
Repayments during the year		(21,047	)		(29,910	)

Balance, December 31	$	12,966			15,889

		A director of the Company performs appraisals related to certain loan customers. Fees paid to the director for these services were $195,000 in 2008, $210,000 in 2007, and $392,000 in 2006.

		Loans which had been placed on non-accrual status totaled $10,408,000 and $2,167,000 at December 31, 2008 and 2007, respectively. Had interest on these loans been accrued, interest income would have been increased by approximately $370,000 in 2008, $128,000 in 2007 and $11,000 in 2006. Loans that are past due 90 days or more and are still accruing interest totaled $3,716,000 and $2,126,000 at December 31, 2008 and 2007, respectively.

		Transactions in the allowance for loan losses for the years ended December 31, 2008, 2007 and 2006 are summarized as follows:


	In Thousands
	2008			2007			2006
Balance, beginning of year	$	9,473			10,209			9,083
Provision charged to operating expense		6,718			4,145			3,806
Loans charged off		(4,467	)		(5,185	)		(3,017	)
Recoveries on losses		414			304			337


Balance, end of year	$	12,138			9,473			10,209

The Company’s principal customers are primarily in the Middle Tennessee area with a concentration in Wilson County, Tennessee. Credit is extended to businesses and individuals and is evidenced by promissory notes. The terms and conditions of the loans including collateral vary depending upon the purpose of the credit and the borrower’s financial condition.

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

*(2)*		*Loans and Allowance for Loan Losses, Continued*

		Impaired loans and related loan loss reserve amounts at December 31, 2008 and 2007 were as follows:


	In Thousands
	December 31,
	2008		2007
Recorded investment	$	10,408		2,167
Loan loss reserve	$	1,810		313

		The average recorded investment in impaired loans for the years ended December 31, 2008, 2007 and 2006 was $9,185,000, $2,630,000 and $650,000, respectively. The Company did not recognize any interest income on the accrual basis on these loans for the period that such loans were impaired during 2008, 2007 and 2006.

		In 2008, 2007 and 2006, the Company originated and sold loans in the secondary market of $72,744,000, $87,448,000 and $92,650,000, respectively. The gain on sale of these loans totaled $350,000, $280,000 and $451,000 in 2008, 2007 and 2006, respectively.

		Of the loans sold in the secondary market, the recourse to Wilson Bank is limited. On loans sold to the Federal Home Loan Mortgage Corporation, Wilson Bank has a recourse obligation for one year from the purchase date. At December 31, 2008, there were $4.2 million in loans sold to the Federal Home Loan Mortgage Corporation with existing recourse. All other loans sold in the secondary market provide the purchaser recourse to Wilson Bank for a period of 90 days up to one year from the date of purchase and only in the event of a default by the borrower pursuant to the terms of the individual loan agreement. At December 31, 2008, total loans sold with recourse to Wilson Bank, including those sold to the Federal Home Loan Mortgage Corporation, aggregated $71,088,000. At December 31, 2008, Wilson Bank had not been required to repurchase any of the loans originated by Wilson Bank and sold in the secondary market. Management expects no loss to result from these recourse provisions.

*(3)*		*Debt and Equity Securities*

		Debt and equity securities have been classified in the consolidated balance sheet according to management’s intent. Debt and equity securities at December 31, 2008 consist of the following:


	Securities Held-To-Maturity
	In Thousands
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Obligations of states and political subdivisions	$	11,074		91		162		11,003
Mortgage-backed securities		19		—		1		18


	$	11,093		91		163		11,021

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

(3)

Debt and Equity Securities, Continued


	Securities Available-For-Sale
	In Thousands
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
U.S. Treasury and other U.S. Government agencies and corporations	$	146,876		464		1,582		145,758
Obligations of states and political subdivisions		1,523		—		76		1,447
Mortgage-backed securities		46,688		330		56		46,962


	$	195,087		794		1,714		194,167

The Company’s classification of securities at December 31, 2007 is as follows:


	Securities Held-To-Maturity
	In Thousands
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
Obligations of states and political subdivisions	$	13,423		72		42		13,453
Mortgage-backed securities		27		—		—		27

	$	13,450		72		42		13,480


	Securities Available-For-Sale
	In Thousands
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value
U.S. Treasury and other U.S. Government agencies and corporations	$	206,528		329		952		205,905
Obligations of states and political subdivisions		1,928		—		17		1,911
Mortgage-backed securities		2,105		15		5		2,115

	$	210,561		344		974		209,931

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

*(3)*		*Debt and Equity Securities, Continued*

		The amortized cost and estimated market value of debt securities at December 31, 2008, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	In Thousands
			Estimated
	Amortized		Market
Securities Held-To-Maturity	Cost		Value
Due in one year or less	$	1,505		1,510
Due after one year through five years		5,668		5,736
Due after five years through ten years		2,240		2,249
Due after ten years		1,661		1,508

		11,074		11,003
Mortgage-backed securities		19		18

	$	11,093		11,021


	In Thousands
			Estimated
	Amortized		Market
Securities Available-For-Sale	Cost		Value
Due in one year or less	$	—		—
Due after one year through five years		11,000		10,703
Due after five years through ten years		36,011		36,003
Due after ten years		101,388		100,499

		148,399		147,205
Mortgage-backed securities		46,688		46,962

	$	195,087		194,167

Results from sales of debt and equity securities are as follows:


	In Thousands
	2008		2007		2006
Gross proceeds	$	86,378		—		10,303

Gross realized gains	$	425		—		20
Gross realized losses		194		—		(146	)

Net realized gains (losses)	$	231		—		(126	)

Securities carried in the balance sheet of approximately $108,884,000 (approximate market value of $108,428,000) and $114,710,000 (approximate market value of $114,447,000) were pledged to secure public deposits and for other purposes as required or permitted by law at December 31, 2008 and 2007, respectively.

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

*(3)*		*Debt and Equity Securities, Continued*

		Included in the securities above are $10,371,000 (approximate market value of $10,322,000) and $13,226,000 (approximate market value of $13,253,000) at December 31, 2008 and 2007, respectively, in obligations of political subdivisions located within the State of Tennessee. Management purchases only obligations of such political subdivisions it considers to be financially sound.

		Securities that have rates that adjust prior to maturity totaled $60,000 (approximate market value of $60,000) and $76,000 (approximate market value of $76,000) at December 31, 2008 and 2007, respectively.

		The following table shows the Company’s investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2008:


	In Thousands, Except Number of Securities
	Less than 12 Months						12 Months or More						Total
					Number						Number
					of						of
	Fair		Unrealized		Securities		Fair		Unrealized		Securities		Fair		Unrealized
	Value		Losses		Included		Value		Losses		Included		Value		Losses
U.S. Treasury and other U.S. Government agencies and corporations	$	71,023		1,059		18		22,446		523		6		93,469		1,582
Obligations of states and political sub- divisions		3,494		238		12		—		—		—		3,494		238
Mortgage-backed securities		10,363		56		7		10		1		2		10,373		57

Total temporarily impaired securities	$	84,880		1,353		37		22,456		524		8		107,336		1,877

		The impaired securities are considered high quality investments in line with normal industry investing practices. The unrealized losses are primarily the result of changes in the interest rate and sector environments. Consistent with the original classification, as available-for-sale or held-to-maturity securities, the Company intends and has the ability to hold the above securities until maturity or a market price recovery, and as such the impairment of these securities is not deemed to be other-than-temporarily impaired.

		The Company may sell the above or other securities in the ordinary course of business in response to unexpected and significant changes in liquidity needs, unexpected and significant increases in interest rates and/or sector spreads that significantly extend the security’s holding period, or conducting a small volume of security transactions.

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

*(4)*		*Restricted Equity Securities*

		Restricted equity securities consists of stock of the Federal Home Loan Bank amounting to $3,012,000 and $2,895,000 at December 31, 2008 and 2007, respectively, and the stock of Silverton Bank amounting to $88,000 at December 31, 2008 and 2007, respectively. The stock can be sold back only at par or a value as determined by the issuing institution and only to the respective financial institution or to another member institution. These securities are recorded at cost.

*(5)*		*Premises and Equipment*

		The detail of premises and equipment at December 31, 2008 and 2007 is as follows:


	In Thousands
	2008			2007
Land	$	12,424			11,306
Buildings		20,512			18,845
Construction in progress		—			1,747
Leasehold improvements		140			140
Furniture and equipment		6,779			7,030
Automobiles		177			224

		40,032			39,292
Less accumulated depreciation		(8,997	)		(8,881	)

	$	31,035			30,411

		Building additions during 2008 and 2007 include payments of $229,000 and $1,439,000, respectively, to a construction company owned by a director of the Company.

		Depreciation expense was $1,794,000, $1,629,000 and $1,561,000 for the years ended December 31, 2008, 2007 and 2006, respectively.

*(6)*		*Acquired Intangible Assets and Goodwill*

		The intangible assets result from the excess of purchase price over the applicable book value of the net assets acquired of 50% owned subsidiaries in 2005:

Amortizable intangible assets:


	In Thousands
	2008		2007
Premium on purchased deposits	$	2,787		2,787

Accumulated amortization		1,487		1,091


	$	1,300		1,696

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

(6)

Acquired Intangible Assets and Goodwill, Continued


	For the Year Ended December 31,
	2008		2007		2006
Amortization expense	$	396		396		396

Estimated amortization expense:


For the Year Ended
2009	$	396
2010		396
2011		396
2012		112

The premium on purchased deposits is being amortized on a straight-line basis over 7 years.

Goodwill:


	In Thousands
	2008		2007
Balance at January 1,	$	4,805		4,805
Goodwill acquired during year		—		—
Impairment loss		—		—

Balance at December 31,	$	4,805		4,805

*(7)*		*Deposits*

		Deposits at December 31, 2008 and 2007 are summarized as follows:


	In Thousands
	2008		2007
Demand deposits	$	90,795		97,805
Savings accounts		34,658		38,966
Negotiable order of withdrawal accounts		168,246		156,410
Money market demand accounts		218,658		194,008
Certificates of deposit $100,000 or greater		334,990		301,801
Other certificates of deposit		326,235		331,243
Individual retirement accounts $100,000 or greater		28,215		18,653
Other individual retirement accounts		46,703		43,704

	$	1,248,500		1,182,590

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

*(7)*		*Deposits, Continued*

		Principal maturities of certificates of deposit and individual retirement accounts at December 31, 2008 are as follows:


	(In Thousands)
Maturity	Total
2009	$	590,841
2010		105,729
2011		34,593
2012		2,227
2013		2,633
Thereafter		120

	$	736,143

		At December 31, 2008, certificates of deposit and individual retirement accounts in denominations of $100,000 or more amounted to $363,205,000 as compared to $320,454,000 at December 31, 2007.

		The aggregate amount of overdrafts reclassified as loans receivable was $444,000 and $429,000 at December 31, 2008 and 2007, respectively.

		Wilson Bank is required to maintain cash balances or balances with the Federal Reserve Bank or other correspondent banks based on certain percentages of deposit types. The average required amounts for the years ended December 31, 2008 and 2007 were approximately $15,815,000 and $15,778,000, respectively.

*(8)*		*Securities Sold Under Repurchase Agreements*

		Securities sold under repurchase agreements were $7,447,000 and $9,771,000 at December 31, 2008 and 2007, respectively. The maximum amounts of outstanding repurchase agreements at any month end during 2008 and 2007 was $9,827,000 and $10,674,000, respectively. The average daily balance outstanding during 2008, 2007 and 2006 was $8,682,000, $7,804,000 and $8,460,000, respectively. The weighted-average interest rate on the outstanding balance at December 31, 2008 and 2007 was 1.75% and 3.55%, respectively. The underlying securities are typically held by other financial institutions and are designated as pledged.

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

*(9)*		*Advances from Federal Home Loan Bank*

		The advances from the Federal Home Loan Bank at December 31, 2008 and 2007 consist of the following:


	In Thousands
	December 31,
	2008					2007
			Weighted					Weighted
	Amount		Average Rate			Amount		Average Rate
Fixed-rate advances	$	13,811		4.72	%	$	15,470		4.65	%

Advances from the Federal Home Loan Bank are to mature as follows at December 31, 2008:


Year Ending	In Thousands
December 31,	Amount
2009	$	13,751
2010		60

	$	13,811

		These advances are collateralized by a required blanket pledge of qualifying mortgage loans.

*(10)*		*Non-Interest Income and Non-Interest Expense*

		The significant components of non-interest income and non-interest expense for the years ended December 31 are presented below:


	In Thousands
	2008		2007		2006
Non-interest income:
Service charges on deposits	$	6,034		6,506		5,938
Other fees		5,382		3,832		3,067
Security gains, net		231		—		—
Gains on sales of loans		350		280		451
Gains on sales of fixed assets		—		—		18
Other income		9		18		12

	$	12,006		10,636		9,486

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

(10)

Non-Interest Income and Non-Interest Expense, Continued


	In Thousands
	2008		2007		2006
Non-interest expense:
Employee salaries and benefits	$	17,972		16,466		14,825
Occupancy expenses		2,288		2,111		1,566
Furniture and equipment expenses		1,541		1,434		2,060
Loss on sale of fixed assets		20		36		—
Loss on sales of other assets, net		15		119		101
Loss on sales of other real estate, net		398		136		102
Data processing expenses		1,084		974		736
Security losses, net		—		—		126
FDIC insurance		828		129		117
Directors’ fees		807		808		815
Other operating expenses		7,861		7,264		6,298

	$	32,814		29,477		26,746

*(11)*		*Income Taxes*

		The components of the net deferred tax asset are as follows:


	In Thousands
	2008			2007
Deferred tax asset:
Federal	$	4,563			3,532
State		728			549

		5,291			4,081

Deferred tax liability:
Federal		(1,422	)		(1,280	)
State		(291	)		(262	)

		(1,713	)		(1,542	)

	$	3,578			2,539

The tax effects of each type of significant item that gave rise to deferred taxes are:


	In Thousands
	2008			2007
Financial statement allowance for loan losses in excess of tax allowance	$	4,443			3,455
Excess of depreciation deducted for tax purposes over the amounts deducted in the financial statements		(735	)		(374	)
Financial statement deduction for deferred compensation in excess of deduction for tax purposes		496			385
Financial statement income on FHLB stock dividends not recognized for tax purposes		(480	)		(435	)
Deposit base premium related to acquisition of minority interest		(498	)		(733	)
Unrealized loss on securities available-for-sale		352			241

	$	3,578			2,539

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

*(11)*		*Income Taxes, Continued*

		The components of income tax expense (benefit) are summarized as follows:


	In Thousands
	Federal			State			Total
2008
Current	$	6,620			1,303			7,923
Deferred		(758	)		(124	)		(882	)

Total	$	5,862			1,179			7,041


2007
Current	$	5,199			947			6,146
Deferred		38			55			93

Total	$	5,237			1,002			6,239


2006
Current	$	6,000			1,146			7,146
Deferred		(559	)		84			(475	)

Total	$	5,441			1,230			6,671

A reconciliation of actual income tax expense of $7,041,000, $6,239,000 and $6,671,000 for the years ended December 31, 2008, 2007 and 2006, respectively, to the “expected” tax expense (computed by applying the statutory rate of 34% to earnings before income taxes) is as follows:


	In Thousands
	2008			2007			2006
Computed “expected” tax expense	$	6,269			5,839			5,864
State income taxes, net of Federal income tax benefit		775			622			811
Tax exempt interest, net of interest expense exclusion		(218	)		(204	)		(211	)
Federal income tax rate in excess of statutory rate related to taxable income over $10 million		187			76			139
Other		28			(94	)		68

	$	7,041			6,239			6,671

Total income tax expense for 2008 and 2006, includes $88,000 and $48,000 expense and benefit, respectively, related to the realized gain and loss, respectively, on sale of securities. There were no sales of securities in 2007.

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

*(11)*		*Income Taxes, Continued*

		FASB Interpretation 48, “Accounting for Income Tax Uncertainties” (“FIN 48”) was issued in June 2006 and defines the threshold for recognizing the benefits of tax return positions in the financial statements as “more-likely-than-not” to be sustained by the taxing authority. FIN 48 also provides guidance on the derecognition, measurement and classification of income tax uncertainties, along with any related interest and penalties and includes guidance concerning accounting for income tax uncertainties in interim periods. The Company adopted the provisions of FIN 48 on January 1, 2007, and determined there was no need to make an adjustment to retained earnings upon adoption of this Interpretation.

		As of December 31, 2008, the Company has accrued no interest and no penalties related to uncertain tax positions. It is the Company’s policy to recognize interest and/or penalties related to income tax matters in income tax expense.

		There was no unrecognized tax benefits at December 31, 2008.

		Wilson Bank does not expect that unrecognized tax benefits will significantly increase or decrease within the next 12 months. Included in the balance at December 31, 2008, were $5.3 million of tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting, other than interest, the disallowance of the shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.

		The Company and its subsidiary file income tax returns in the United States (“U.S.”), as well as the State of Tennessee. The Company is no longer subject to U.S. federal or state income tax examinations by tax authorities for years before 2005, which would include audits of acquired entities. The Company’s Federal tax returns have been audited through December 31, 2003 with no changes.

*(12)*		*Commitments and Contingent Liabilities*

		The Company is party to litigation and claims arising in the normal course of business. Management, after consultation with legal counsel, believes that the liabilities, if any, arising from such litigation and claims will not be material to the consolidated financial position.

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

*(12)*		*Commitments and Contingent Liabilities, Continued*

		Wilson Bank leases land for certain branch facilities and automatic teller machine locations. Future minimum rental payments required under the terms of the noncancellable leases are as follows:


Years Ending December 31,	In Thousands
2009	$	140
2010		123
2011		86
2012		45
2013		2
Thereafter		16

	$	412

		Total rent expense amounted to $167,000, $167,000 and $162,000, respectively, during the years ended December 31, 2008, 2007 and 2006.

		The Company has lines of credit with other financial institutions totaling $48,900,000. At December 31, 2008 and 2007, there was no balance outstanding under these lines of credit.

*(13)*		*Financial Instruments with Off-Balance-Sheet Risk*

		The Company is party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments consist primarily of commitments to extend credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance sheets. The contract or notional amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

		The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.


	In Thousands
	Contract or
	Notional Amount
	2008		2007
Financial instruments whose contract amounts represent credit risk:
Unused commitments to extend credit	$	189,692		162,000
Standby letters of credit		22,005		20,992

Total	$	211,697		182,992

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

*(13)*		*Financial Instruments with Off-Balance-Sheet Risk, Continued*

		Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. 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 be drawn upon, the total commitment amounts generally represent future cash requirements. The Company evaluates each customer’s credit-worthiness on a case-by-case basis. The amount of collateral, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral normally consists of real property.

		Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. Most guarantees extend from one to two years. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The fair value of standby letters of credit is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements, the likelihood of the counter parties drawing on such financial instruments and the present creditworthiness of such counter parties. Such commitments have been made on terms which are competitive in the markets in which the Company operates; thus, the fair value of standby letters of credit equals the carrying value for the purposes of this disclosure. The maximum potential amount of future payments that the Company could be required to make under the guarantees totaled $22.0 million at December 31, 2008.

*(14)*		*Concentration of Credit Risk*

		Practically all of the Company’s loans, commitments, and commercial and standby letters of credit have been granted to customers in the Company’s market area. Practically all such customers are depositors of Wilson Bank. Investment in state and municipal securities also include governmental entities within the Company’s market area. The concentrations of credit by type of loan are set forth in note 2 to the consolidated financial statements.

		At December 31, 2008, the Company’s cash and due from banks and federal funds sold included commercial bank deposits aggregating $21,392,000 in excess of the Federal Deposit Insurance Corporation limit of $250,000 per depositor.

		Federal funds sold were deposited with five banks.

*(15)*		*Employee Benefit Plan*

		Wilson Bank has in effect a 401(k) plan (the “401(k) Plan”) which covers eligible employees. To be eligible an employee must have obtained the age of 20 1/2. The provisions of the 401(k) Plan provide for both employee and employer contributions. For the years ended December 31, 2008, 2007 and 2006, Wilson Bank contributed $1,225,000, $1,099,000 and $961,000, respectively, to the 401(k) Plan.

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

*(16)*		*Dividend Reinvestment Plan*

		Under the terms of the Company’s dividend reinvestment plan (the “DRIP”) holders of common stock may elect to automatically reinvest cash dividends in additional shares of common stock. The Company may elect to sell original issue shares or to purchase shares in the open market for the account of participants. Original issue shares of 108,132 in 2008, 53,518 in 2007 and 113,774 in 2006 were sold to participants under the terms of the DRIP.

*(17)*		*Regulatory Matters and Restrictions on Dividends*

		The Company and Wilson Bank are subject to regulatory capital requirements administered by the Federal Deposit Insurance Corporation, the Federal Reserve and the Tennessee Department of Financial Institutions. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. The Company’s capital classification is also subject to qualitative judgments about components, risk weightings and other factors. Those qualitative judgments could also affect the subsidiary bank’s capital status and the amount of dividends the subsidiary may distribute.

		The Company and Wilson Bank are required to maintain minimum amounts of capital to total “risk weighted” assets, as defined by the banking regulators. At December 31, 2008, the Company and its bank subsidiary are required to have minimum Tier I and total risk-based capital ratios of 4.0% and 8.0%, respectively and a leverage ratio of 4%. The capital ratios required to be well-capitalized under the Prompt Corrective Action Provisions of the regulations administered by the federal banking agencies are 5.0%, 10.0% and 5.0%, respectively. The actual ratios of the Company and Wilson Bank were as follows:


	Wilson Bank
	Holding Company						Wilson Bank
	2008			2007			2008			2007
Tier I ratio		11.40	%		10.77	%		11.32	%		11.08	%

Total risk-based ratio		12.54	%		11.67	%		12.47	%		12.08	%

Leverage ratio		8.96	%		8.63	%		8.91	%		8.60	%

As of December 31, 2008, the most recent notification from the banking regulators categorized the Company and Wilson Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since the notification that management believes have changed the Company’s or Wilson Bank’s category.

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

*(18)*		*Deferred Compensation Plan*

		Wilson Bank provides its executive officers a deferred compensation plan (the “Deferred Compensation Plan”), which also provides for death and disability benefits. The Deferred Compensation Plan was established by the Board of Directors to reward executive management for past performance and to provide additional incentive to retain the service of executive management. There were ten employees participating in the Deferred Compensation Plan at December 31, 2008.

		The Deferred Compensation Plan provides retirement benefits for a period of 180 months after the employee reaches the age of 65 and/or age 55 after twenty years of service. The Deferred Compensation Plan also provides benefits over a period of fifteen years in the event the executive should die or become disabled prior to reaching retirement. Wilson Bank has purchased insurance policies or other assets to provide the benefits listed above. The insurance policies remain the sole property of Wilson Bank and are payable to Wilson Bank. At December 31, 2008 and 2007, the deferred compensation liability totaled $1,294,000 and $1,006,000, respectively, the cash surrender value of life insurance was $1,398,000 and $1,334,000, respectively, and the face amount of the insurance policies in force approximated $5,358,000 and $5,358,000, respectively. The Deferred Compensation Plan is not qualified under Section 401 of the Internal Revenue Code.

*(19)*		*Stock Option Plan*

		In April, 1999, the stockholders of the Company approved the Wilson Bank Holding Company 1999 Stock Option Plan (the “Stock Option Plan”). The Stock Option Plan provides for the granting of stock options, and authorizes the issuance of common stock upon the exercise of such options, for up to 200,000 shares of common stock, to officers and other key employees of the Company and its subsidiaries. Furthermore, the Company may reserve additional shares for issuance under the Stock Option Plan as needed in order that the aggregate number of shares that may be issued during the term of the Stock Option Plan is equal to five percent (5%) of the shares of common stock then issued and outstanding.

		Under the Stock Option Plan, stock option awards may be granted in the form of incentive stock options or nonstatutory stock options and are generally exercisable for up to ten years following the date such option awards are granted. Exercise prices of incentive stock options must be equal to or greater than 100% of the fair market value of the common stock on the grant date.

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

*(19)*		*Stock Option Plan, Continued*

		Effective January 1, 2006, the Company adopted the fair value recognition provisions of SFAS No. 123 using the modified-prospective transition method. Under that transition method, compensation cost recognized in the years beginning January 1, 2006 include: (a) compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123, and (b) compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123R.

		The fair value of each grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used for grants in 2008, 2007 and 2006:


	2008			2007			2006
Expected dividends		2.24	%		4.78	%		4.78	%
Expected term (in years)		7.75			7.75			7.75
Expected volatility		15.2	%		15.2	%		15.2	%
Risk-free rate		5.16	%		4.32	%		4.32	%

		Expected volatility was calculated at 15.2% based upon the consideration of historical and implied volatility of similar publicly traded companies.

		A summary of the stock option activity for 2008, 2007 and 2006 is as follows:


	2008					2007						2006
				Weighted					Weighted						Weighted
				Average					Average						Average
				Exercise					Exercise						Exercise
	Shares			Price		Shares			Price			Shares			Price
Outstanding at beginning of year		84,130		$	16.76		97,304		$	15.34			109,149		$	14.20
Granted		2,499			31.70		6,001			29.63			7,333			26.63
Exercised		(17,520	)		13.23		(16,107	)		(12.61	)		(16,771	)		(12,26	)
Forfeited		(2,523	)		18.24		(3,068	)		(18.89	)		(2,407	)		(19.24	)

Outstanding at end of year		66,586		$	18.19		84,130		$	16.76			97,304		$	15.34

Options exercisable at year end		26,572		$	14.38		30,549		$	13.47			33,189		$	13.14

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

*(19)*		*Stock Option Plan, Continued*

		The following table summarizes information about fixed stock options outstanding at December 31, 2008:


	Options Outstanding					Options Exercisable
					Weighted					Weighted
			Weighted		Average			Weighted		Average
Range of	Number		Average		Remaining	Number		Average		Remaining
Exercise	Outstanding		Exercise		Contractual	Exercisable		Exercise		Contractual
Prices	at 12/31/08		Price		Term	at 12/31/08		Price		Term
$11.46 - $16.88		38,796	$	12.86	1.6 years		22,094	$	12.38	1.3 years
$18.10 - $26.63		19,757	$	23.71	6.0 years		3,945	$	23.54	5.4 years
$29.63 - $33.75		8,033	$	30.40	7.5 years		533	$	29.63	7.0 years


		66,586					26,572


Aggregate intrinsic value (in thousands)	$	1,136				$	554

		The weighted average fair value at the grant date of options granted during the years 2008, 2007 and 2006 was $7.48, $1.16 and $1.50, respectively. The total intrinsic value of options exercised during the years 2008, 2007 and 2006 was $386,000, $311,000 and $261,000, respectively.

		SFAS No. 123R requires the cash flows resulting from the tax benefits of tax deductions in excess of the compensation cost recognized for those options to be classified as financing cash flows. The Company had no excess tax benefits to reflect as financing cash inflows for the three years ended December 31, 2008.

		As of December 31, 2008, there was $50,000 of total unrecognized cost related to non-vested share-based compensation arrangements grant under the Stock Option Plan. The cost is expected to be recognized over a weighted-average period of 3.3 years.

*(20)*		*Earnings Per Share*

		SFAS No. 128 “Earnings Per Share” (“SFAS No. 128”) establishes uniform standards for computing and presenting earnings per share. The computation of basic earnings per share is based on the weighted average number of common shares outstanding during the period. For the Company, the computation of diluted earnings per share begins with the basic earnings per share plus the effect of common shares contingently issuable from stock options. Share and per share data for 2007 and 2006 have been restated to reflect a 4 for 3 stock split effective May 7, 2007.

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

(20)

Earnings Per Share, Continued

The following is a summary of the components comprising basic and diluted earnings per share (“EPS”):


	In Thousands (except share data)
	2008		2007		2006
Basic EPS Computation:
Numerator — Earnings available to common stockholders	$	11,398		10,936		10,575

Denominator — Weighted average number of common shares outstanding		6,996,442		6,901,447		6,771,455

Basic earnings per common share	$	1.63		1.58		1.56


Diluted EPS Computation:
Numerator — Earnings available to common stockholders	$	11,398		10,936		10,575

Denominator:
Weighted average number of common shares outstanding		6,996,442		6,901,447		6,771,455
Dilutive effect of stock options		29,379		35,994		39,602

		7,025,821		6,937,441		6,811,057

Diluted earnings per common share	$	1.62		1.58		1.55

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

(21)

Wilson Bank Holding Company — Parent Company Financial Information

WILSON BANK HOLDING COMPANY
(Parent Company Only)

Balance Sheets

December 31, 2008 and 2007


	Dollars In Thousands
	2008			2007
ASSETS

Cash	$	554	*		243	*
Investment in wholly-owned commercial bank subsidiary		128,348			117,766	*
Refundable income taxes		216			176


Total assets	$	129,118			118,185


LIABILITIES AND STOCKHOLDERS’ EQUITY

Stockholders’ equity:
Common stock, par value $2.00 per share, authorized 10,000,000 shares, 7,042,042 and 6,916,390 shares issued and outstanding, respectively	$	14,084			13,833
Additional paid-in capital		38,078			34,373
Retained earnings		77,524			70,368
Unrealized losses on available-for-sale securities, net of income taxes of $352,000 and $241,000, respectively		(568	)		(389	)

Total stockholders’ equity		129,118			118,185


Total liabilities and stockholders’ equity	$	129,118			118,185


*		Eliminated in consolidation.

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

(21)

Wilson Bank Holding Company — Parent Company Financial Information, Continued

WILSON BANK HOLDING COMPANY
(Parent Company Only)

Statements of Earnings and Comprehensive Earnings

Three Years Ended December 31, 2008


	Dollars In Thousands
	2008			2007			2006
Expenses:
Directors’ fees	$	376			376			372
Other		43			43			29


Loss before Federal income tax benefits and equity in undistributed earnings of commercial bank subsidiaries		(419	)		(419	)		(401	)

Federal income tax benefits		216			176			147

		(203	)		(243	)		(254	)

Equity in undistributed earnings of commercial bank subsidiaries		11,601	*		11,179	*		10,829	*


Net earnings		11,398			10,936			10,575


Other comprehensive earnings (losses), net of tax:
Net unrealized gains (losses) on available-for-sale- securities arising during period, net of taxes of $23,000, $651,000 and $346,000, respectively		(36	)		1,049			556
Reclassification adjustments for net losses (gains) included in net earnings, net of taxes of $88,000 and $48,000 in 2008 and 2006, respectively		(143	)		—			78

Other comprehensive earnings (losses)		(179	)		1,049			634


Comprehensive earnings	$	11,219			11,985			11,209


*		Eliminated in consolidation.

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

(21)

Wilson Bank Holding Company — Parent Company Financial Information, Continued

WILSON BANK HOLDING COMPANY
(Parent Company Only)

Statements of Changes in Stockholders’ Equity

Three Years Ended December 31, 2008


	Dollars In Thousands
									Net Unrealized
			Additional						Gain (Loss) On
	Common		Paid-In			Retained			Available-For-
	Stock		Capital			Earnings			Sale Securities			Total
Balance December 31, 2005	$	9,992		31,502			55,688			(2,072	)		95,110
Cash dividends declared, $.68 per share		—		—			(4,525	)		—			(4,525	)
Issuance of 113,774 shares of stock pursuant to dividend reinvestment plan		227		3,924			—			—			4,151
Issuance of 12,587 shares of stock pursuant to exercise of stock options		25		181			—			—			206
Share based compensation expense		—		17			—			—			17
Net change in unrealized loss on available-for-sale securities during the year, net of taxes of $394,000		—		—			—			634			634
Net earnings for the year		—		—			10,575			—			10,575


Balance December 31, 2006		10,244		35,624			61,738			(1,438	)		106,168
Cash dividends declared, $.34 per share		—		—			(2,306	)		—			(2,306	)
Issuance of 53,518 shares of stock pursuant to dividend reinvestment plan		107		2,007			—			—			2,114
Issuance of 1,724,425 shares of stock pursuant to a 4 for 3 stock split		3,450		(3,450	)		—			—			—
Issuance of 16,107 shares of stock pursuant to exercise of stock options		32		171			—			—			203
Share based compensation expense		—		21			—			—			21
Net change in unrealized loss on available-for-sale securities during the year, net of taxes of $651,000		—		—			—			1,049			1,049
Net earnings for the year		—		—			10,936			—			10,936


Balance December 31, 2007		13,833		34,373			70,368			(389	)		118,185
Cash dividends declared, $.60 per share		—		—			(4,168	)		—			(4,168	)
Issuance of 108,132 shares of stock pursuant to dividend reinvestment plan		216		3,487			—			—			3,703
Cumulative effect of change in accounting principle related to deferred compensation plan net of taxes of $46,000		—		—			(74	)		—			(74	)
Issuance of 17,520 shares of stock pursuant to exercise of stock options		35		197			—			—			232
Share based compensation expense		—		21			—			—			21
Net change in unrealized loss on available-for-sale securities during the year, net of taxes of $111,000		—		—			—			(179	)		(179	)
Net earnings for the year		—		—			11,398			—			11,398


Balance December 31, 2008	$	14,084		38,078			77,524			(568	)		129,118

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

(21)

Wilson Bank Holding Company — Parent Company Financial Information, Continued

WILSON BANK HOLDING COMPANY
(Parent Company Only)

Statements of Cash Flows

Three Years Ended December 31, 2008

Increase (Decrease) in Cash and Cash Equivalents


	Dollars In Thousands
	2008			2007			2006
Cash flows from operating activities:
Cash paid to suppliers and other	$	(398	)		(398	)		(384	)
Tax benefits received		176			147			118

Net cash used in operating activities		(222	)		(251	)		(266	)


Cash flows from investing activities:
Dividends received from commercial bank subsidiary		766			325			450

Net cash provided by investing activities		766			325			450


Cash flows from financing activities:
Dividends paid		(4,168	)		(2,306	)		(4,525	)
Proceeds from sale of stock		3,703			2,114			4,151
Proceeds from exercise of stock options		232			203			206

Net cash provided by (used in) financing activities		(233	)		11			(168	)


Net increase in cash and cash equivalents		311			85			16

Cash and cash equivalents at beginning of year		243			158			142


Cash and cash equivalents at end of year	$	554			243			158

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

(21)

Wilson Bank Holding Company — Parent Company Financial Information, Continued

WILSON BANK HOLDING COMPANY
(Parent Company Only)

Statements of Cash Flows, Continued

Three Years Ended December 31, 2008

Increase (Decrease) in Cash and Cash Equivalents


	Dollars In Thousands
	2008			2007			2006
Reconciliation of net earnings to net cash used in operating activities:
Net earnings	$	11,398			10,936			10,575

Adjustments to reconcile net earnings to net cash used in operating activities:
Equity in earnings of commercial bank subsidiaries		(11,601	)		(11,179	)		(10,829	)
Increase in refundable income taxes		(40	)		(29	)		(29	)
Share based compensation expense		21			21			17

Total adjustments		(11,620	)		(11,187	)		(10,841	)


Net cash used in operating activities	$	(222	)		(251	)		(266	)


Supplemental Schedule of Non-Cash Activities:

Issuance of 1,724,425 shares of common stock pursuant to a 4 for 3 stock split	$	—			3,450			—

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

(22)

Disclosures About Fair Value of Financial Instruments

	Level 1:		Quoted price (unadjusted) or identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

	Level 2:		Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in market that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

	Level 3:		Unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

		Except for marketable securities, the Company does not account for any other assets or liabilities using fair value. Substantially all marketable securities are considered Level 2 assets since their fair values are determined using observable pricing inputs.

		Assets and Liabilities Measured on a Recurring Basis

		Assets and liabilities measured at fair value on a recurring basis are summarized below:

Fair Value Measurements at December 31, 2008

Quoted Prices

Significant *

Carrying

in Active

Other

Significant

Value at

Markets for

Observable

December31,

Identical Assets

Inputs

(in 000’s)

2008

(Level 1)

(Level 2)

(Level 3)

Assets:

Available-for-sale securities

194,167

1,016

193,151

—

Impaired loans

10,408

—

10,408

		Available-for-sale securities are measured on a recurring basis and are obtained from an independent pricing service. The fair values are based on quoted market prices of comparable securities, broker quotes or comprehensive interest rate tables and pricing matrices.

		Impaired loan balances in the table above represent those collateral-dependent loans where management has estimated the credit loss by comparing the loans’ carrying values against the expected realized fair values of the collateral securing those loans. As of December 31, 2008 impaired loans had a carrying amount of $10,408,000, with a valuation allowance of $1,810,000.

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

(22)

Disclosures About Fair Value of Financial Instruments, Continued

Cash and short-term investments

For those short-term instruments, the carrying amount is a reasonable estimate of fair value.

Securities

			The carrying amounts for short-term securities approximate fair value because they mature in 90 days or less and do not present unanticipated credit concerns. The fair value of longer-term securities and mortgage-backed securities, except certain state and municipal securities, is estimated based on bid prices published in financial newspapers or bid quotations received from securities dealers. The fair value of certain state and municipal securities is not readily available through market sources other than dealer quotations, so fair value estimates are based on quoted market prices of similar instruments, adjusted for differences between the quoted instruments and the instruments being valued.

			SFAS No. 107 specifies that fair values should be calculated based on the value of one unit without regard to any premium or discount that may result from concentrations of ownership of a financial instrument, possible tax ramifications, or estimated transaction costs. Accordingly, these considerations have not been incorporated into the fair value estimates.

Loans

			Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as commercial, mortgage, credit card and other consumer. Each loan category is further segmented into fixed and adjustable rate interest terms.

			The fair value of the various categories of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining average estimated maturities.

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

(22)

Disclosures About Fair Value of Financial Instruments, Continued

Loans, Continued

			The estimated maturity for mortgages is modified from the contractual terms to give consideration to management’s experience with prepayments. Management has made estimates of fair value discount rates that it believes to be reasonable. However, because there is no market for many of these financial instruments, management has no basis to determine whether the fair value presented below would be indicative of the value negotiated in an actual sale.

			The value of the loan portfolio is also discounted in consideration of the credit quality of the loan portfolio as would be the case between willing buyers and sellers. Particular emphasis has been given to loans on Wilson Bank’s internal watch list. Valuation of these loans is based upon borrower performance, collateral values (including external appraisals), or certain other factors.

Deposit Liabilities

Securities Sold Under Repurchase Agreements

The securities sold under repurchase agreements are payable upon demand. For this reason the carrying amount is a reasonable estimate of fair value.

Advances from Federal Home Loan Bank

The fair value of the advances from the Federal Home Loan Bank are estimated by discounting the future cash outflows using the current market rates.

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

(22)

Disclosures About Fair Value of Financial Instruments, Continued

Commitments to Extend Credit, Standby Letters of Credit and Financial Guarantees Written

			Loan commitments are made to customers generally for a period not to exceed one year and at the prevailing interest rates in effect at the time the loan is closed. Commitments to extend credit related to construction loans are generally made for a period not to exceed six months with interest rates at the current market rate at the date of closing. In addition, standby letters of credit are issued for periods extending from one to two years with rates to be determined at the date the letter of credit is funded. Fees are only charged for the construction loans and the standby letters of credit, and the amounts unearned at December 31, 2008 and 2007 are insignificant. Accordingly, these commitments have no carrying value, and management estimates the commitments to have no significant fair value.

			The carrying value and estimated fair values of the Company’s financial instruments at December 31, 2008 and 2007 are as follows:


	In Thousands
	2008						2007
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value
Financial assets:
Cash and short-term investments	$	59,243		59,243		59,575		59,575
Securities		205,260		205,188		223,381		223,411
Loans, net of unearned interest		1,089,185				997,526
Less: allowance for loan losses		12,138				9,473

Loans, net of allowance		1,077,047		1,079,607		988,053		989,183


Loans held for sale		3,541		3,541		6,034		6,034
Restricted equity securities		3,100		3,100		2,983		2,983

Financial liabilities:
Deposits		1,248,500		1,257,120		1,182,590		1,186,242
Securities sold under repurchase agreements		7,447		7,447		9,771		9,771
Advances from Federal Home Loan Bank		13,811		13,997		15,470		15,745

Unrecognized financial instruments:
Commitments to extend credit		—		—		—		—
Standby letters of credit		—		—		—		—

WILSON BANK HOLDING COMPANY

Notes to Consolidated Financial Statements, Continued

December 31, 2008, 2007 and 2006

(22)

Disclosures About Fair Value of Financial Instruments, Continued

Limitations

			Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instruments. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

			Fair value estimates are based on estimating on-and-off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. For example, Wilson Bank has a mortgage department that contributes net fee income annually. The mortgage department is not considered a financial instrument, and its value has not been incorporated into the fair value estimates. Other significant assets and liabilities that are not considered financial assets or liabilities include deferred tax assets and liabilities and property, plant and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

(23)

Quarterly Financial Data (Unaudited)

Selected quarterly results of operations for the four quarters ended December 31 are as follows:


	(In Thousands, except per share data)
	2008								2007
	Fourth		Third		Second		First		Fourth		Third		Second		First
	Quarter		Quarter		Quarter		Quarter		Quarter		Quarter		Quarter		Quarter

Interest income	$	20,383		21,731		22,019		22,224		21,331		22,415		21,532		20,604
Net interest income		11,238		12,170		11,664		10,893		9,591		10,566		10,055		9,949
Provision for loan losses		3,366		1,212		1,224		916		1,788		805		790		762
Earnings before income taxes		3,346		5,396		5,013		4,684		3,862		4,651		4,559		4,103
Net earnings		2,172		3,289		3,063		2,874		2,705		2,875		2,820		2,536
Basic earnings per common share		.31		.47		.44		.41		.38		.42		.41		.37
Diluted earnings per common share		.30		.47		.44		.41		.38		.42		.41		.37

EX-21.1 4 g18042exv21w1.htm EX-21.1 EX-21.1

EXHIBIT 21.1

SUBSIDIARIES OF THE ISSUER

The Company has a wholly-owned subsidiary, Wilson Bank and Trust, a state chartered bank incorporated under the laws of the State of Tennessee and doing business under the same name.

EX-23.1 5 g18042exv23w1.htm EX-23.1 EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statement (Form S-8, No. 333-32442) pertaining to the Wilson Bank Holding Company 1999 Stock Option Plan and the Registration Statement (Form S-3, No. 333-81984) pertaining to the Wilson Bank Holding Company Dividend Reinvestment Plan of our reports dated January 16, 2009, with respect to the consolidated financial statements of Wilson Bank Holding Company and with respect to the effectiveness of internal control over financial reporting of Wilson Bank Holding Company, included in this Annual Report on Form 10-K for the year ended December 31, 2008.


		/s/ Maggart & Associates, P.C.
		Maggart & Associates, P.C.

Nashville, Tennessee
March 13, 2009

EX-31.1 6 g18042exv31w1.htm EX-31.1 EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, J. Randall Clemons, certify that:

1.		I have reviewed this annual report on Form 10-K of Wilson Bank Holding Company;

2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.		The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 13, 2009


		By: /s/ J. Randall Clemons Name: J. Randall Clemons
		President and Chief Executive Officer

EX-31.2 7 g18042exv31w2.htm EX-31.2 EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Lisa Pominski , certify that:

1.		I have reviewed this annual report on Form 10-K of Wilson Bank Holding Company;

2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.		The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15(d)-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 13, 2009

EX-32.1 8 g18042exv32w1.htm EX-32.1 EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Wilson Bank Holding Company (the “Company”) on Form 10-K for the period ending December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Randall Clemons, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


		/s/ J. Randall Clemons
		Randall Clemons
		President and Chief Executive Officer

		Date: March 13, 2009

EX-32.2 9 g18042exv32w2.htm EX-32.2 EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Wilson Bank Holding Company (the “Company”) on Form 10-K for the period ending December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Lisa Pominski, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


		/s/ Lisa Pominski
		Lisa Pominski, Senior Vice President and Chief
		Financial Officer

		March 13, 2009

-----END PRIVACY-ENHANCED MESSAGE-----

/s/ Lisa Pominski

Name: Lisa Pominski

Senior Vice President and Chief Financial Officer