10-Q 1 a13-6932_110q.htm 10-Q

Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 


 

FORM 10-Q

 


 

x

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

 

For the Quarterly Period ended December 31, 2012

 

Or

 

o

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

 

For transition period from              to             

 

Commission File Number 333-184594

 


 

Westbury Bancorp, Inc.

(Exact Name of Registrant as Specified in Charter)

 


 

Maryland

 

46-1834307

(State or Other Jurisdiction

of Incorporation)

 

(I.R.S Employer

Identification Number)

 

 

 

200 South Main Street, West Bend, Wisconsin

 

53095

(Address of Principal Executive Officers)

 

(Zip Code)

 

(262) 334-5563

Registrant’s telephone number, including area code

 

Not Applicable

(Former name or former address, if changed since last report)

 


 

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  o    No  x.

 

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

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See 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 o

 

 

 

Non-accelerated filer o

 

Smaller reporting company x

 

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

 

Indicate the number of shares outstanding of each of the Issuer’s classes of common stock as of the latest practicable date.

 

There were 100 shares of Common Stock, par value $.01 per share, outstanding as of March 26, 2013.

 

 

 




Table of Contents

 

EXPLANATORY NOTE

 

Westbury Bancorp, Inc., a Maryland corporation, was formed on August 10, 2012 to serve as the stock holding company for Westbury Bank as part of the mutual-to-stock conversion of WBSB Bancorp, MHC, the federally chartered mutual holding company of Westbury Bank. As of December 31, 2012, the conversion had not been completed, and, as of that date, Westbury Bancorp, Inc. had no assets or liabilities, and had not conducted any business other than that of an organizational nature. Accordingly, financial and other information of WBSB Bancorp, MHC on a consolidated basis is included in this Quarterly Report on Form 10-Q.

 



Table of Contents

 

WBSB Bancorp, MHC and Subsidiary

 

Financial Report

December 31, 2012

 



Table of Contents

 

PART I

 

ITEM 1.                                                FINANCIAL STATEMENTS

 

WBSB Bancorp, MHC and Subsidiary

 

Consolidated Balance Sheets

December 31, 2012 and September 30, 2012

(Unaudited)

(In Thousands)

 

 

 

December 31,

 

September 30,

 

 

 

2012

 

2012

 

 

 

 

 

 

 

Assets

 

 

 

 

 

Cash and due from banks

 

$

28,422

 

$

22,688

 

Interest-bearing deposits and short-term notes

 

20,632

 

10,453

 

Cash and cash equivalents

 

49,054

 

33,141

 

 

 

 

 

 

 

Securities available-for-sale

 

57,451

 

64,532

 

Loans held for sale, at lower of cost or market

 

2,217

 

3,022

 

Loans, net of allowance for loan losses of $5,968 and $6,690 at December 31 and September 30, respectively

 

367,757

 

375,899

 

Federal Home Loan Bank stock, at cost

 

2,670

 

2,670

 

Foreclosed real estate

 

1,912

 

2,728

 

Real estate held for investment

 

6,323

 

8,451

 

Office properties and equipment, net

 

12,878

 

13,290

 

Cash surrender value of life insurance

 

12,048

 

11,940

 

Mortgage servicing rights

 

1,764

 

1,893

 

Prepaid FDIC assessment

 

877

 

1,139

 

Deferred tax asset

 

3,763

 

3,974

 

Other assets

 

5,108

 

3,787

 

 

 

 

 

 

 

Total assets

 

$

523,822

 

$

526,466

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

Liabilities

 

 

 

 

 

Deposits

 

$

469,103

 

$

466,758

 

Notes payable

 

1,254

 

1,254

 

Advance payments by borrowers for property taxes and insurance

 

593

 

6,670

 

Other liabilities

 

5,515

 

4,920

 

Total liabilities

 

476,465

 

479,602

 

 

 

 

 

 

 

Equity

 

 

 

 

 

Retained earnings

 

46,528

 

45,687

 

Accumulated other comprehensive income

 

829

 

1,177

 

Total equity

 

47,357

 

46,864

 

 

 

 

 

 

 

Total liabilities and equity

 

$

523,822

 

$

526,466

 

 

See Notes to Unaudited Consolidated Financial Statements.

 

1



Table of Contents

 

WBSB Bancorp, MHC and Subsidiary

 

Consolidated Statements of Operations

Three Months Ended December 31, 2012 and 2011

(Unaudited)

(In Thousands)

 

 

 

Three Months Ended

 

 

 

December 31,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Interest and dividend income:

 

 

 

 

 

Loans

 

$

4,695

 

$

5,167

 

Investments - nontaxable

 

3

 

25

 

Investments - taxable

 

319

 

480

 

Interest bearing deposits and short term notes

 

19

 

38

 

Total interest and dividend income

 

5,036

 

5,710

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

Deposits

 

600

 

1,002

 

Advances from the Federal Home Loan Bank

 

 

80

 

Notes payable

 

25

 

49

 

Advance payments by borrowers for property taxes and insurance

 

1

 

1

 

Total interest expense

 

626

 

1,132

 

 

 

 

 

 

 

Net interest income before provision for loan losses

 

4,410

 

4,578

 

 

 

 

 

 

 

Provision for loan losses

 

330

 

3,153

 

 

 

 

 

 

 

Net interest income after provision for loan losses

 

4,080

 

1,425

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

Service fees on deposit accounts

 

1,149

 

1,292

 

Gain on sales of loans, net

 

952

 

629

 

Servicing fee income, net of amortization and impairment

 

(128

)

(658

)

Insurance and securities sales commissions

 

223

 

200

 

Gain on sales of securities

 

219

 

74

 

Loss on sales of branches and other assets

 

(22

)

(97

)

Increase in cash surrender value of life insurance

 

108

 

107

 

Rental income from real estate operations

 

159

 

263

 

Other income

 

215

 

225

 

Total noninterest income

 

2,875

 

2,035

 

 

 

 

 

 

 

Noninterest expenses:

 

 

 

 

 

Salaries and employee benefits

 

2,106

 

3,568

 

Commissions

 

247

 

416

 

Occupancy

 

400

 

667

 

Furniture and equipment

 

347

 

338

 

Data processing

 

753

 

707

 

Advertising

 

79

 

99

 

Real estate held for investment

 

141

 

148

 

Net loss from operations and sale of foreclosed real estate

 

265

 

1,068

 

FDIC insurance premiums

 

270

 

259

 

Other expenses

 

1,082

 

693

 

Total noninterest expenses

 

5,690

 

7,963

 

 

 

 

 

 

 

Income (loss) before income tax expense (benefit)

 

1,265

 

(4,503

)

 

 

 

 

 

 

Income tax expense (benefit)

 

424

 

(226

)

 

 

 

 

 

 

Net income (loss)

 

$

841

 

$

(4,277

)

 

See Notes to Unaudited Consolidated Financial Statements.

 

2



Table of Contents

 

WBSB Bancorp, MHC and Subsidiary

 

Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended December 31, 2012 and 2011

(Unaudited)

(In Thousands)

 

 

 

Three Months Ended

 

 

 

December 31,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Net income (loss)

 

$

841

 

$

(4,277

)

Other comprehensive income (loss), before tax:

 

 

 

 

 

Unrealized appreciation (depreciation) on available-for-sale securities net of taxes

 

(204

)

(48

)

 

 

 

 

 

 

Less: reclassification adjustment for realized gains included in net income, net of taxes

 

(144

)

9

 

 

 

 

 

 

 

 

 

(348

)

(39

)

 

 

 

 

 

 

 

 

$

493

 

$

(4,316

)

 

See Notes to Unaudited Consolidated Financial Statements.

 

3



Table of Contents

 

WBSB Bancorp, MHC and Subsidiary

 

Consolidated Statements of Cash Flows

Three Months Ended December 31, 2012 and 2011

(Unaudited)

(In Thousands)

 

 

 

Three Months Ended

 

 

 

December 31,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Cash Flows From Operating Activities

 

 

 

 

 

Net income (loss)

 

$

841

 

$

(4,277

)

Adjustments to reconcile net income (loss) to cash provided by operating activities:

 

 

 

 

 

Provision for loan losses

 

330

 

3,153

 

Depreciation and amortization

 

206

 

660

 

Net amortization of securities premiums and discounts

 

154

 

394

 

Amortization and impairment of mortgage servicing rights

 

302

 

830

 

Capitalization of mortgage servicing rights

 

(173

)

(351

)

Gain on sales of available-for-sale securities

 

(219

)

(74

)

Loss on sales of branches and other assets

 

22

 

97

 

(Gain) loss on sale of foreclosed real estate

 

(287

)

243

 

Write-down of foreclosed real estate

 

80

 

(334

)

Loans originated for sale

 

(47,635

)

(45,075

)

Proceeds from sale of loans

 

49,392

 

45,519

 

Gain on sale of loans, net

 

(952

)

(629

)

Deferred income taxes

 

435

 

(540

)

Increase in cash surrender value of life insurance

 

(108

)

(107

)

Net change in:

 

 

 

 

 

Prepaid FDIC insurance assessment

 

262

 

249

 

Other assets

 

489

 

(689

)

Other liabilities

 

(5,482

)

(7,790

)

Net cash used in operating activities

 

(2,343

)

(8,721

)

 

 

 

 

 

 

Cash Flows From Investing Activities

 

 

 

 

 

Purchases of securities available-for-sale

 

(7,737

)

(17,056

)

Proceeds from sales of securities available-for-sale

 

10,303

 

5,261

 

Proceeds from maturities, prepayments, and calls of securities available-for-sale

 

4,008

 

8,916

 

Net decrease in loans

 

7,476

 

12,908

 

Proceeds from sales of office properties and equipment

 

526

 

1,631

 

Purchases of office properties and equipment

 

(24

)

(349

)

Proceeds from sales of foreclosed real estate

 

1,359

 

119

 

Net cash provided by investing activities

 

15,911

 

11,430

 

 

 

 

 

 

 

Cash Flows From Financing Activities

 

 

 

 

 

Net increase (decrease) in deposits

 

2,345

 

(20,896

)

Repayment of advances from the Federal Home Loan Bank

 

 

(6,000

)

Net change in notes payable

 

 

(37

)

Net cash provided by (used in) financing activities

 

2,345

 

(26,933

)

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

15,913

 

(24,224

)

 

 

 

 

 

 

Cash and cash equivalents at beginning

 

33,141

 

45,721

 

 

 

 

 

 

 

Cash and cash equivalents at end

 

$

49,054

 

$

21,497

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information Interest paid (including amounts credited to deposits)

 

$

628

 

$

1,165

 

 

 

 

 

 

 

Supplemental Schedules of Noncash Investing Activities Loans receivable transferred to foreclosed real estate

 

$

336

 

$

1,701

 

 

See Notes to Unaudited Consolidated Financial Statements.

 

4



Table of Contents

 

WBSB Bancorp, MHC and Subsidiary

 

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands)

 

Note 1.                                 Basis of Presentation

 

The accompanying unaudited consolidated financial statements of WBSB Bancorp, MHC and Subsidiary (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.  Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

 

The preparation of financial statements in conformity with U.S. 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 as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Estimates used in the preparation of the financial statements are based on various factors including the current interest rate environment and the general strength of the local economy.  Changes in the overall interest rate environment can significantly affect the Company’s net interest income and the value of its recorded assets and liabilities.  Actual results could differ from those estimates used in the preparation of the financial statements.

 

In the opinion of management, the accompanying unaudited financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the Company’s financial position as of December 31, 2012 and September 30, 2012 and the results of operations and cash flows for the interim periods ended December 31, 2012 and 2011.  All interim amounts have not been audited, and the results of operations for the interim periods herein are not necessarily indicative of the results of operations to be expected for the year.  These financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto as of September 30, 2012 filed as part of Westbury Bancorp, Inc.’s Prospectus dated February 11, 2013, as filed with the Securities and Exchange Commission pursuant to Securities Act Rule 424(b)(3) on February 21, 2013.

 

5



Table of Contents

 

WBSB Bancorp, MHC and Subsidiary

 

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands)

 

Note 2.                                 Securities Available-for-Sale

 

The amortized costs and fair values of securities available-for-sale are summarized as follows:

 

 

 

December 31, 2012

 

 

 

 

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

 

 

Cost

 

Gains

 

(Losses)

 

Value

 

 

 

 

 

 

 

 

 

 

 

U.S. Government and agency securities

 

$

2,991

 

$

18

 

$

(1

)

$

3,008

 

U.S. Government agency residential mortgage-backed securities

 

22,989

 

639

 

 

23,628

 

U.S. Government agency collateralized mortgage obligations

 

6,960

 

85

 

(30

)

7,015

 

Municipal securities

 

23,145

 

738

 

(83

)

23,800

 

 

 

 

 

 

 

 

 

 

 

 

 

$

56,085

 

$

1,480

 

$

(114

)

$

57,451

 

 

 

 

September 30, 2012

 

 

 

 

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

 

 

Cost

 

Gains

 

(Losses)

 

Value

 

 

 

 

 

 

 

 

 

 

 

U.S. Government and agency securities

 

$

2,994

 

$

17

 

$

(2

)

$

3,009

 

U.S. Government agency residential mortgage-backed securities

 

31,349

 

1,161

 

 

32,510

 

U.S. Government agency collateralized mortgage obligations

 

8,709

 

93

 

(57

)

8,745

 

Municipal securities

 

19,542

 

790

 

(64

)

20,268

 

 

 

 

 

 

 

 

 

 

 

 

 

$

62,594

 

$

2,061

 

$

(123

)

$

64,532

 

 

6



Table of Contents

 

WBSB Bancorp, MHC and Subsidiary

 

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands)

 

Note 2.                                 Securities Available-for-Sale (Continued)

 

The amortized cost and fair value of securities available-for-sale, by contractual maturity at December 31, 2012 and September 30, 2012, are shown in the following tables.  Actual maturities differ from contractual maturities for mortgage-backed securities because the mortgages underlying the securities may be called or repaid without penalty.  Therefore, these securities are not presented in the maturity categories in the table below.

 

 

 

 

 

December 31, 2012

 

 

 

Amortized Cost

 

Fair Value

 

 

 

 

 

 

 

Due in one year or less

 

$

305

 

$

308

 

Due after one year through five years

 

6,967

 

7,110

 

Due after five years through ten years

 

15,635

 

16,123

 

Due after ten years

 

3,229

 

3,267

 

U.S. Government agency collateralized mortgage obligations

 

6,960

 

7,015

 

U.S. Government agency residential mortgage-backed securities

 

22,989

 

23,628

 

 

 

 

 

 

 

 

 

$

56,085

 

$

57,451

 

 

 

 

September 30, 2012

 

 

 

Amortized Cost

 

Fair Value

 

 

 

 

 

 

 

Due in one year or less

 

$

308

 

$

310

 

Due after one year through five years

 

4,624

 

4,737

 

Due after five years through ten years

 

14,987

 

15,548

 

Due after ten years

 

2,617

 

2,682

 

U.S. Government agency collateralized mortgage obligations

 

8,709

 

8,745

 

U.S. Government agency residential mortgage-backed securities

 

31,349

 

32,510

 

 

 

 

 

 

 

 

 

$

62,594

 

$

64,532

 

 

Proceeds from sales of securities available-for-sale during the three months ended December 31, 2012 and 2011, were $10,303 and $5,261, respectively.  Gross realized gains, during the three months ended December 31, 2012 and 2011, on these sales amounted to $244 and $78, respectively.  Gross realized losses on these sales were $25 and $4, during the three months ended December 31, 2012 and 2011, respectively.

 

Securities with carrying values of $0 and $6,173 at December 31, 2012 and December 31, 2011, respectively, were pledged to secure treasury, tax, and loan deposits and other purposes required or permitted by law.

 

7



Table of Contents

 

WBSB Bancorp, MHC and Subsidiary

 

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands)

 

Note 2.                                 Securities Available-for-Sale (Continued)

 

Information pertaining to securities with gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are summarized as follows:

 

 

 

December 31, 2012

 

 

 

Less than 12 Months

 

12 Months or Longer

 

Total

 

 

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

 

 

Value

 

Loss

 

Value

 

Loss

 

Value

 

Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government and agency securities

 

$

1,000

 

$

(2

)

$

 

$

 

$

1,000

 

$

(2

)

U.S. Government agency collateralized mortgage obligations

 

976

 

(2

)

689

 

(28

)

1,665

 

(30

)

Municipal securities

 

3,799

 

(77

)

307

 

(6

)

4,106

 

(83

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

5,775

 

$

(81

)

$

996

 

$

(34

)

$

6,771

 

$

(115

)

 

 

 

September 30, 2012

 

 

 

Less than 12 Months

 

12 Months or Longer

 

Total

 

 

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

 

 

Value

 

Loss

 

Value

 

Loss

 

Value

 

Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government and agency securities

 

$

998

 

$

(2

)

$

 

$

 

$

998

 

$

(2

)

U.S. Government agency collateralized mortgage obligations

 

2,932

 

(57

)

 

 

2,932

 

(57

)

Municipal securities

 

2,100

 

(64

)

 

 

2,100

 

(64

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

6,030

 

$

(123

)

$

 

$

 

$

6,030

 

$

(123

)

 

At September 30, 2012, the investment portfolio did not include any available-for-sale securities which had been in unrealized loss positions for greater than twelve months.  At December 31, 2012, the investment portfolio included two securities available-for-sale which had been in unrealized loss positions for twelve months or greater. Both securities are considered to be acceptable credit risks.  Based upon an evaluation of the available evidence, including recent changes in market rates, credit rating information and information obtained from regulatory filings, management believes the decline in fair value for these securities is temporary.  In addition, the Company does not intend to sell these investment securities for a period of time sufficient to allow for anticipated recovery.  The Company does not have any current requirement to sell its investment in the issuer prior to any anticipated recovery in fair value.

 

8



Table of Contents

 

WBSB Bancorp, MHC and Subsidiary

 

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands)

 

Note 3.                                Loans

 

A summary of the balances of loans follows:

 

 

 

December 31,
2012

 

September 30,
2012

 

 

 

 

 

 

 

Real Estate:

 

 

 

 

 

Single Family

 

$

145,409

 

$

153,090

 

Multifamily

 

40,781

 

38,491

 

Commercial real estate

 

131,519

 

132,782

 

Construction and land development

 

9,080

 

8,975

 

Total Real Estate

 

326,789

 

333,338

 

 

 

 

 

 

 

Commercial Business

 

22,135

 

22,938

 

 

 

 

 

 

 

Consumer:

 

 

 

 

 

Home equity lines of credit

 

18,134

 

19,356

 

Education

 

5,666

 

5,709

 

Other

 

1,051

 

1,255

 

Total Consumer

 

24,851

 

26,320

 

 

 

 

 

 

 

Total Loans

 

373,775

 

382,596

 

Less:

 

 

 

 

 

Net Deferred Loan Fees

 

50

 

7

 

Allowance for Loan Losses

 

5,968

 

6,690

 

 

 

 

 

 

 

Net Loans

 

$

367,757

 

$

375,899

 

 

9



Table of Contents

 

WBSB Bancorp, MHC and Subsidiary

 

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands)

 

Note 3.                                 Loans (Continued)

 

The following tables present the contractual aging of the recorded investment in past due loans by class of loans as of December 31, 2012 and September 30, 2012:

 

 

 

 

 

 

 

 

 

Loans Past

 

 

 

 

 

 

 

30-59 Days

 

60-89 Days

 

Due 90 Days

 

 

 

December 31, 2012

 

Current

 

Past Due

 

Past Due

 

or More

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Single family

 

$

138,582

 

$

2,261

 

$

1,259

 

$

3,307

 

$

145,409

 

Multifamily

 

40,781

 

 

 

 

40,781

 

Commercial real estate

 

127,848

 

1,649

 

156

 

1,866

 

131,519

 

Construction and land development

 

8,833

 

247

 

 

 

9,080

 

Commercial business

 

22,016

 

74

 

 

45

 

22,135

 

Consumer and other:

 

 

 

 

 

 

 

 

 

 

 

Home equity lines of credit

 

17,356

 

542

 

14

 

222

 

18,134

 

Education

 

5,304

 

99

 

44

 

219

 

5,666

 

Other

 

1,039

 

10

 

1

 

1

 

1,051

 

 

 

$

361,759

 

$

4,882

 

$

1,474

 

$

5,660

 

$

373,775

 

 

 

 

 

 

 

 

 

 

Loans Past

 

 

 

 

 

 

 

30-59 Days

 

60-89 Days

 

Due 90 Days

 

 

 

September 30, 2012

 

Current

 

Past Due

 

Past Due

 

or More

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Single family

 

$

147,197

 

$

1,747

 

$

1,112

 

$

3,034

 

$

153,090

 

Multifamily

 

38,491

 

 

 

 

38,491

 

Commercial real estate

 

130,237

 

 

169

 

2,376

 

132,782

 

Construction and land development

 

8,814

 

53

 

 

108

 

8,975

 

Commercial business

 

22,785

 

153

 

 

 

22,938

 

Consumer and other:

 

 

 

 

 

 

 

 

 

 

 

Home equity lines of credit

 

18,367

 

453

 

248

 

288

 

19,356

 

Education

 

5,449

 

61

 

85

 

114

 

5,709

 

Other

 

1,236

 

5

 

5

 

9

 

1,255

 

 

 

$

372,576

 

$

2,472

 

$

1,619

 

$

5,929

 

$

382,596

 

 

There were no loans past due ninety days or more still accruing interest as of December 31, 2012 and September 30, 2012.

 

10



Table of Contents

 

WBSB Bancorp, MHC and Subsidiary

 

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands)

 

Note 3.                                 Loans (Continued)

 

The following table presents the recorded investment in nonaccrual loans by class of loans as of December 31, 2012 and September 30, 2012:

 

 

 

December 31,

 

September 30,

 

 

 

2012

 

2012

 

 

 

 

 

 

 

Single family

 

$

4,557

 

$

4,610

 

Multifamily

 

2,735

 

2,789

 

Commercial real estate

 

1,905

 

2,376

 

Construction and land development

 

 

108

 

Commercial business

 

84

 

 

Consumer and other:

 

 

 

 

 

Home equity lines of credit

 

243

 

310

 

Education

 

263

 

199

 

Other

 

31

 

45

 

 

 

$

9,818

 

$

10,437

 

 

As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management categorizes loans into risk categories based on relevant information about the ability of the borrowers to service their debt and comply with various terms of their loan agreements.  The Company considers current financial information, historical payment experience, credit documentation, public information and current economic trends.  Generally, all sizeable credits receive a financial review no less than annually to monitor and adjust, if necessary, the credit’s risk profile.  Credits classified as watch and special mention generally receive a review more frequently than annually.

 

The Company categorizes loans into the following risk categories based on relevant information about the ability of borrowers to service their debt:

 

Pass — A pass asset is well protected by the current worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less costs to acquire and sell in a timely manner, of any underlying collateral.

 

Watch — A watch asset has potential weaknesses that deserve management’s close attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date.  Watch assets are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification.

 

Special Mention — A special mention asset has characteristics of deterioration in quality exhibited by any number of well-defined weaknesses requiring significant corrective action.  The repayment ability of the borrower has not been validated, or has become marginal or weak and the loan may have exhibited some overdue payments or payment extensions and/or renewals.

 

Substandard — A substandard asset is an asset with a well-defined weakness that jeopardizes repayment in whole or in part, of the debt.  These credits are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged.  These assets are characterized by the distinct possibility that the Company will or has sustained some loss of principal and/or interest if the deficiencies are not corrected.

 

11



Table of Contents

 

WBSB Bancorp, MHC and Subsidiary

 

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands)

 

Note 3.                                 Loans (Continued)

 

Doubtful — A doubtful asset is an asset that has all the weaknesses inherent in the substandard classification with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.  These credits have a high probability for loss, yet because certain important and reasonably specific pending factors may work toward the strengthening of the asset, its classification of loss is deferred until its more exact status can be determined.

 

Homogeneous loan types are assessed for credit quality based on the contractual aging status of the loan and payment activity.  In certain cases, based upon payment performance, the loan being related with another commercial type loan or for other reasons, a loan may be categorized into one of the risk categories noted above.  Such assessment is completed at the end of each reporting period.

 

The following tables present the risk category of loans evaluated by internal asset classification based on the most recent analysis performed and the contractual aging as of December 31, 2012 and September 30, 2012:

 

December 31, 2012

 

Pass

 

Watch

 

Special Mention

 

Substandard

 

Doubtful

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Single family

 

$

7,906

 

$

697

 

$

124

 

$

2,496

 

$

––

 

$

11,223

 

Multifamily

 

34,932

 

1,995

 

937

 

2,917

 

––

 

40,781

 

Commercial real estate

 

108,188

 

10,473

 

2,802

 

10,056

 

––

 

131,519

 

Construction and land development

 

7,936

 

74

 

 

1,070

 

––

 

9,080

 

Commercial business

 

19,593

 

1,027

 

322

 

1,193

 

––

 

22,135

 

Total

 

$

178,555

 

$

14,266

 

$

4,185

 

$

17,732

 

$

––

 

$

214,738

 

 

 

 

Performing

 

Non-Performing

 

Total

 

 

 

 

 

 

 

 

 

Single family

 

$

129,917

 

$

4,269

 

$

134,186

 

Consumer and other:

 

 

 

 

 

 

 

Home equity lines of credit

 

17,891

 

243

 

18,134

 

Education

 

5,403

 

263

 

5,666

 

Other

 

1,020

 

31

 

1,051

 

 

 

$

154,231

 

$

4,806

 

$

159,037

 

 

September 30, 2012

 

Pass

 

Watch

 

Special Mention

 

Substandard

 

Doubtful

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Single family

 

$

8,059

 

$

536

 

$

806

 

$

2,629

 

$

 

$

12,030

 

Multifamily

 

29,948

 

5,208

 

 

3,335

 

 

38,491

 

Commercial real estate

 

114,755

 

5,246

 

1,795

 

10,986

 

 

132,782

 

Construction and land development

 

7,534

 

708

 

177

 

556

 

 

8,975

 

Commercial business

 

20,504

 

280

 

780

 

953

 

 

22,938

 

Total

 

$

181,221

 

$

11,978

 

$

3,558

 

$

18,459

 

$

 

$

215,216

 

 

 

 

Performing

 

Non-Performing

 

Total

 

Single family

 

$

137,936

 

$

3,124

 

$

141,060

 

Consumer and other:

 

 

 

 

 

 

 

Home equity lines of credit

 

19,046

 

310

 

19,356

 

Education

 

5,510

 

199

 

5,709

 

Other

 

1,210

 

45

 

1,255

 

 

 

$

163,702

 

$

3,678

 

$

167,380

 

 

The Company does not classify single family loans unless such loans are either related to an existing classified commercial or commercial real estate loan relationship, or have become more than 90 days delinquent and are not secured by private mortgage insurance.  As of December 31, 2012 and September 30, 2012, $2,496 and $2,629, respectively, of single family loans meeting these criteria are included in the Substandard risk category above.

 

12



Table of Contents

 

WBSB Bancorp, MHC and Subsidiary

 

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands)

 

Note 3.                                 Loans (Continued)

 

The following tables provide additional detail of the activity in the allowance for loan losses, by portfolio segment, for the three months ended December 31, 2012 and December 31, 2011:

 

Three Months Ended

 

 

 

 

 

Commercial

 

Construction and

 

 

 

Consumer

 

 

 

December 31, 2012

 

Single Family

 

Multifamily

 

Real Estate

 

Land Development

 

Commercial

 

and Other

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

1,390

 

$

712

 

$

3,249

 

$

293

 

$

810

 

$

236

 

$

6,690

 

Provision for loan losses

 

760

 

(127

)

(169

)

54

 

(45

)

(143

)

330

 

Loans charged-off

 

(505

)

 

(330

)

(106

)

(99

)

(28

)

(1,068

)

Recoveries

 

 

 

2

 

 

13

 

1

 

16

 

Ending balance

 

$

1,645

 

$

585

 

$

2,752

 

$

241

 

$

679

 

$

66

 

$

5,968

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period-ended amount allocated for:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$

60

 

$

182

 

$

855

 

$

 

$

 

$

 

$

1,097

 

Collectively evaluated for impairment

 

1,585

 

403

 

1,897

 

241

 

679

 

66

 

4,871

 

Ending Balance

 

$

1,645

 

$

585

 

$

2,752

 

$

241

 

$

679

 

$

66

 

$

5,968

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$

4,238

 

$

2,735

 

$

7,139

 

$

443

 

$

 

$

82

 

$

14,637

 

Collectively evaluated for impairment

 

141,171

 

38,046

 

124,380

 

8,637

 

22,135

 

24,769

 

359,138

 

Ending Balance

 

$

145,409

 

$

40,781

 

$

131,519

 

$

9,080

 

$

22,135

 

$

24,851

 

$

373,775

 

 

Three Months Ended

 

 

 

 

 

Commercial

 

Construction and

 

 

 

Consumer

 

 

 

December 31, 2011

 

Single Family

 

Multifamily

 

Real Estate

 

Land Development

 

Commercial

 

and Other

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

1,440

 

$

1,009

 

$

3,367

 

$

251

 

$

1,095

 

$

50

 

$

7,212

 

Provision for loan losses

 

339

 

955

 

927

 

 

796

 

136

 

3,153

 

Loans charged-off

 

(358

)

(1,086

)

(983

)

 

(807

)

(146

)

(3,380

)

Recoveries

 

16

 

40

 

70

 

 

5

 

 

 

131

 

Ending balance

 

$

1,437

 

$

918

 

$

3,381

 

$

251

 

$

1,089

 

$

40

 

$

7,116

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period-ended amount allocated for:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$

52

 

$

522

 

$

1,125

 

$

 

$

284

 

$

 

$

1,983

 

Collectively evaluated for impairment

 

1,385

 

396

 

2,256

 

251

 

805

 

40

 

5,133

 

Ending Balance

 

$

1,437

 

$

918

 

$

3,381

 

$

251

 

$

1,089

 

$

40

 

$

7,116

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated for impairment

 

$

4,275

 

$

7,867

 

$

7,159

 

$

650

 

$

812

 

$

121

 

$

20,884

 

Collectively evaluated for impairment

 

166,658

 

36,719

 

128,445

 

11,653

 

22,807

 

28,467

 

394,749

 

Ending Balance

 

$

170,933

 

$

44,586

 

$

135,604

 

$

12,303

 

$

23,619

 

$

28,588

 

$

415,633

 

 

13



Table of Contents

 

WBSB Bancorp, MHC and Subsidiary

 

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands)

 

Note 3.                                 Loans (Continued)

 

The following tables present additional detail of impaired loans, segregated by segment, as of and for the three months ended December 31, 2012, and the three months ended December 31, 2011.  The unpaid principal balance represents the recorded balance prior to any partial charge-offs.  The recorded investment represents customer balances net of any partial charge-offs recognized on the loans.  The interest income recognized column represents all interest income reported on either a cash or accrual basis for the periods presented.

 

 

 

Unpaid

 

 

 

Allowance for

 

Average

 

Interest

 

 

 

Principal

 

Recorded

 

Loan Losses

 

Recorded

 

Income

 

December 31, 2012

 

Balance

 

Investment

 

Allocated

 

Investment

 

Recognized

 

 

 

 

 

 

 

 

 

 

 

 

 

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

Single family

 

$

4,667

 

$

3,791

 

$

 

$

3,659

 

$

8

 

Multifamily

 

2,066

 

1,813

 

 

 

3,588

 

 

Commercial real estate

 

4,152

 

4,068

 

 

 

4,087

 

57

 

Construction and land development

 

443

 

443

 

 

 

547

 

6

 

Commercial business

 

 

 

 

 

193

 

 

Consumer and other

 

40

 

30

 

 

 

76

 

 

 

 

 

 

 

 

 

 

 

 

 

With an allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

Single family

 

504

 

499

 

60

 

 

624

 

6

 

Multifamily

 

978

 

922

 

182

 

 

674

 

 

Commercial real estate

 

4,074

 

3,071

 

855

 

 

2,788

 

19

 

Construction and land development

 

 

 

 

 

 

 

Commercial business

 

 

 

 

 

1,527

 

 

Consumer and other

 

 

 

 

 

 

 

 

 

$

16,924

 

$

14,637

 

$

1,097

 

$

17,763

 

$

96

 

 

14



Table of Contents

 

WBSB Bancorp, MHC and Subsidiary

 

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands)

 

Note 3.                                 Loans (Continued)

 

 

 

Unpaid

 

 

 

Allowance for

 

Average

 

Interest

 

 

 

Principal

 

Recorded

 

Loan Losses

 

Recorded

 

Income

 

December 31, 2011

 

Balance

 

Investment

 

Allocated

 

Investment

 

Recognized

 

 

 

 

 

 

 

 

 

 

 

 

 

With no related allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

Single family

 

$

3,526

 

$

3,526

 

$

 

$

2,137

 

$

 

Multifamily

 

5,362

 

5,362

 

 

5,503

 

29

 

Commercial real estate

 

4,373

 

4,106

 

 

8,077

 

120

 

Construction and land development

 

650

 

650

 

 

144

 

 

Commercial business

 

444

 

386

 

 

2,445

 

7

 

Consumer and other

 

121

 

121

 

 

71

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With an allowance recorded:

 

 

 

 

 

 

 

 

 

 

 

Single family

 

749

 

749

 

52

 

747

 

 

Commercial business

 

426

 

426

 

284

 

403

 

 

Multifamily

 

2,505

 

2,505

 

522

 

3,051

 

 

Construction and land development

 

 

 

 

 

691

 

 

Commercial real estate

 

3,053

 

3,053

 

1,125

 

1,904

 

 

Consumer and other

 

 

 

 

11

 

 

Total

 

$

21,209

 

$

20,884

 

$

1,983

 

$

25,184

 

$

156

 

 

The following is a summary of troubled debt restructured loans (TDRs) at December 31, 2012 and September 30, 2012: