10-Q 1 c95280e10vq.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 -------------- FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2005 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________to________________________ Commission file number 0-30505 WEST POINTE BANCORP, INC. (Exact Name of Registrant as Specified in Its Charter) Illinois 36-4149655 (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) West Pointe Bancorp, Inc. 5701 West Main Street Belleville, Illinois 62226 -------------------- ----- (Address of Principal Executive Offices) (Zip Code) (618) 234-5700 -------------- (Registrant's Telephone Number, Including Area Code) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days [X] Yes [ ] No Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. Class Outstanding at May 10, 2005 ----- ----------------------------- Common stock $1 par value 1,010,068 TABLE OF CONTENTS

2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS WEST POINTE BANCORP, INC. CONSOLIDATED BALANCE SHEETS

See the accompanying notes to consolidated financial statements. 3 WEST POINTE BANCORP, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

4 WEST POINTE BANCORP, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

See the accompanying notes to consolidated financial statements. 5 WEST POINTE BANCORP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

See the accompanying notes to consolidated financial statements. 6 WEST POINTE BANCORP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE A -- PRINCIPLES OF ACCOUNTING The consolidated financial statements of West Pointe Bancorp, Inc. ("West Pointe" or "the Company") have been prepared in accordance with accounting principles generally accepted in the United States of America for the banking industry and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for annual reporting. Reference is hereby made to the notes to consolidated financial statements contained in West Pointe's Annual Report on Form 10-K for the year ended December 31, 2004. The foregoing consolidated financial statements are unaudited. However, in the opinion of management, all adjustments necessary for a fair presentation of the consolidated financial statements have been made. All such adjustments are of a normal recurring nature. The results of operations for the interim periods presented herein are not necessarily indicative of the results to be expected for the full year. The consolidated balance sheet of the Company as of December 31, 2004 has been derived from the audited consolidated balance sheet of the Company as of that date. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary West Pointe Bank And Trust Company (the "Bank"), an Illinois chartered commercial bank. All material intercompany transactions and balances are eliminated. West Pointe is a bank holding company that engages in its business through its sole subsidiary. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of allowance for loan losses and the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans. In connection with the determination of the allowance for loan losses and the valuation of real estate acquired by foreclosure, management obtains independent appraisals for significant properties. Certain 2004 amounts have been reclassified where appropriate to conform to the consolidated financial statement presentation used in 2005. The Company has a stock-based employee compensation plan, which is described more fully in West Pointe's annual report on Form 10-K for the year ended December 31, 2004. The Company accounts for this plan under the recognition and measurement principles of Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. No stock-based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the grant date. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of Statement of Financial Accounting Standard (SFAS) No. 123, "Accounting for Stock-Based Compensation," to stock-based employee compensation:

7 NOTE B -- NET INCOME PER SHARE The calculation of net income per share is summarized as follows:

NOTE C -- NEW ACCOUNTING STANDARDS In December 2004, the Financial Accounting Standards Board (the "FASB"), issued Statement No. 123(R), "Share-Based Payment". This statement is a revision of FASB Statement No. 123, "Accounting for Stock-Based Compensation". This statement requires all public companies to record compensation cost for stock options provided to employees in return for employee service. The cost is measured at the fair value of the options when granted, and this cost is expensed over the employee service period, which is normally the vesting period of the options. Initially, the statement was scheduled to apply to awards granted or modified after the first quarter or year beginning after June 15, 2005. In April 2005, the Securities and Exchange Commission announced the adoption of a new rule that amends the compliance dates for the statement. The new rule allows companies to implement the new rules at the beginning of their next fiscal year, instead of the next reporting period, that begins after June 15, 2005. As a result, West Pointe will implement the new rule on January 1, 2006. Compensation cost will also be recorded for prior option grants that vest after the date of adoption. The effect on results of operations will depend on the level of future option grants and the calculation of the fair value of the options granted at such future date, as well as the vesting periods provided, and so cannot currently be predicted. As a result of the amendment to the statement, there will be no additional compensation expense recorded in the financial statements of the Company during 2005. Existing options, including the options granted in January 2005, that will vest after the adoption date are expected to result in additional compensation expense of approximately $182,700 in 2006. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion describes West Pointe's results of operations during the three-month periods ended March 31, 2005 and 2004, and its financial condition, asset quality, and capital resources as of March 31, 2005 and December 31, 2004. This discussion should be read in conjunction with West Pointe's unaudited consolidated financial statements and notes thereto. The results of operations for the interim periods presented herein are not necessarily indicative of the results to be expected for the full year. FORWARD-LOOKING STATEMENTS This filing and future filings made by West Pointe with the Securities and Exchange Commission (the "SEC"), as well as other filings, reports and press releases made or issued by West Pointe, and oral statements made by executive officers or directors of West Pointe may include forward-looking statements. These forward-looking statements are not based on historical information, but rather are based on assumptions and describe future plans, strategies, projections and expectations of West Pointe and are generally identified by use of terms "believe", "expect", "intend", "anticipate", "estimate", "project", or similar words. West Pointe's ability to predict results or the actual effect of future plans or strategies is uncertain. Factors which could have a material adverse effect on West Pointe's operations include, but are not limited to, changes in interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U. S. Government, including policies of the U. S. Treasury and the Board of Governors of the Federal Reserve System, the quality and composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in West Pointe's market areas and accounting principles and guidelines. Additionally, the policies of the Federal Deposit Insurance Corporation (the "FDIC"), the State of Illinois Department of Financial and Professional Regulation, the FASB, the Public Company Accounting Oversight Board (the "PCAOB") and the SEC could cause actual results to differ from those currently anticipated. All of these uncertainties, as well as others, are present in a banking operation and stockholders are cautioned that management's view of the future on which it prices its products, evaluates collateral, sets loan reserves and estimates costs of operations and regulation may prove to be other than anticipated. West Pointe assumes no obligation to update any forward-looking statements that are made from time to time. OVERVIEW Net income for the first quarter of 2005 was $886,569 or $.84 per diluted common share compared to net income of $856,743 or $.83 per diluted common share for the first quarter of 2004. Return on average assets was .81% for the first quarter of 2005 and the first quarter of 2004. Return on average equity for the first quarter of 2005 was 10.59% compared to 10.83% for the first quarter of 2004. The increase in net income, for the quarters compared, was primarily attributable to an increase in noninterest income and a decrease in the provision for loan losses. The impact of these items on net income was partially offset by a decrease in net interest income and an increase in noninterest expense. Total assets at March 31, 2005 increased modestly to $444,906,525 from $444,021,124 at December 31, 2004. At March 31, 2005, loans totaled $246,562,858 compared to $240,767,062 at December 31, 2004. At March 31, 2005, securities totaled $142,746,670 compared to $154,389,611 at December 31, 2004. West Pointe's primary funding source for assets is deposits, which totaled $377,443,934 at March 31, 2005 compared to $375,244,420 at December 31, 2004. 9 RESULTS OF OPERATIONS Table 1 summarizes West Pointe's statements of income and the change in each category for the periods presented. TABLE 1 - Comparative Statements of Income

NET INTEREST INCOME Tax-equivalent net interest income decreased $148,776 or 4.1% for the first quarter of 2005 compared to the first quarter of 2004. The decrease in tax-equivalent net interest income for the first quarter of 2005 compared to the first quarter of 2004 was attributable to an increase in interest expense, partially offset by an increase in tax-equivalent interest income. Total tax-equivalent interest income increased $231,920 or 4.5% for the first quarter of 2005 compared to the first quarter of 2004. The increase in tax-equivalent interest income for the quarters compared was primarily due to a higher interest rate environment coupled with a higher volume of interest earning assets. Average interest earning assets increased 3.7% to $410,090,131 for the first quarter of 2005 from $395,270,183 for the first quarter of 2004. The increase in average interest earning assets was primarily due to internal growth in the loan portfolio. The average rate earned on interest earning assets increased slightly to 5.28% in 2005 from 5.25% in 2004. The increase in the average rate earned was primarily due to the higher interest rate environment, including the impact of 7 increases in the prime-lending rate totaling 175 basis points. West Pointe's loan portfolio yields tend to follow trends in the prime-lending rate. While loan yields tend to follow trends in the prime-lending rate, they may not follow simultaneously with such trends. 10 Total interest expense increased $380,696 for the first quarter of 2005 compared to the first quarter of 2004. The increase in interest expense was primarily attributable to the higher interest rate environment coupled with a higher volume of interest bearing liabilities. Average interest bearing liabilities increased 3.2% to $362,979,659 in 2005 compared to $351,833,580 in 2004. The increase in average interest bearing liabilities was primarily due to increases in the average balances of interest bearing demand deposits, time deposits and the Company's subordinated debentures. These increases were partially offset by decreases in the average balance of savings and money market deposits and Federal Home Loan Bank advances. The average interest rate paid on interest bearing liabilities increased 21.3% to 2.16% in 2005 from 1.78% in 2004. The net interest margin was 3.37% for the first quarter of 2005 compared to 3.67% for the first quarter of 2004. The decrease in the net interest margin for the periods compared resulted from the Company's cost of funds on interest bearing liabilities increasing at a faster pace than the Company's yield on interest earning assets. During the first quarter of 2005 compared to the first quarter of 2004, the Company's cost of funds on interest bearing liabilities increased 38 basis points while the Company's yield on earning assets increased 3 basis points. PROVISION FOR LOAN LOSSES The Company recorded a negative provision for loan losses of $45,000 during the first quarter of 2005 compared to a provision for loan losses of $180,000 during the first quarter of 2004. The provision for loan losses is the charge to earnings that management determines to be necessary to maintain the adequacy of the allowance for loan losses. Factors which influence management's determination of the provision for loan losses include, among other things, a review of individual loans, size and quality of the loan portfolio, current and projected economic conditions, regulatory guidelines, and historical loan loss experience. The reduction in the provision for loan losses during the first quarter of 2005 compared to the first quarter of 2004 primarily resulted from continued improvement in asset quality indicators, in particular, lower levels of net charge-offs and nonperforming loans. Activity in the allowance for loan losses and nonperforming loan data is presented under "ASSET QUALITY." NONINTEREST INCOME Total noninterest income was $1,119,503 for the first quarter of 2005 compared to $1,088,631 for the first quarter of 2004. Service charges on deposit accounts decreased $27,580 for the first quarter of 2005 compared to the first quarter of 2004. This decrease resulted from a reduction in volume of service charges on business deposit accounts. Income from mortgage banking services decreased $50,172 for the first quarter of 2005 compared to the first quarter of 2004. The decrease in mortgage banking income for the periods compared was primarily due to a higher interest rate environment, which resulted in a reduced level of mortgage origination and refinancing activities. Mortgage loan sales volume depends heavily on the prevailing interest rates and the strength of the local real estate market. As of March 31, 2005, management anticipates that the level of mortgage banking income will remain stable during the remainder of 2005. Income from trust fees, income from brokerage and insurance services and credit card income collectively increased $10,133 for the first quarter of 2005 compared to the first quarter of 2004. The combined increase from these components of noninterest income was primarily due to normal fluctuations. Income from trust fees is derived primarily from management of estates, personal trusts and investment agencies. Products offered through our brokerage and insurance function include stocks, bonds, mutual funds, annuities and other non-deposit investment products. Credit card income primarily consists of merchant processing fees for credit card transactions, revenues received from West Pointe's "debit" card product and interchange fees received on credit card transactions of West Pointe's cardholders. During the first quarter of 2005, West Pointe recorded an increase in cash surrender value of life insurance of $113,888 compared to an increase of $95,693 for the first quarter of 2004. These cash surrender value increases relate to various bank owned life insurance (BOLI) policies. Certain of the insurance policies serve as funding mechanisms for West Pointe's director fee deferral program. The remaining policies serve as funding mechanisms for various employee benefit plans. These BOLI policies provide certain benefits to the Company including, but not limited to, the exclusion from income taxes on the increase in their cash surrender values. The increase in income from this component of noninterest income was primarily due to higher rates earned on the BOLI policies coupled with the impact of earnings on additional policies purchased during the second quarter of 2004. Net securities gains recorded during the first quarter of 2005 totaled $211,258 compared to $147,847 during the first quarter of 2004. Net securities gains recorded during the quarters compared primarily resulted from opportunities in the marketplace to take such gains. Other noninterest income includes such items as interchange fees on automated teller machine (ATM) transactions, safe deposit rental fees, check printing fees, wire transfer fees 11 and other miscellaneous fees. Collectively, the components of other noninterest income generated revenues of $65,772 for the first quarter of 2005 compared to $48,887 for the first quarter of 2004. The increase in other noninterest income for the first quarter of 2005 compared to the first quarter of 2004 resulted from modest increases in a number of categories of noninterest income. NONINTEREST EXPENSE Total noninterest expense was $3,288,676 for the first quarter of 2005 compared to $3,212,135 for the first quarter of 2004. The increase in noninterest expense for the quarters compared was primarily attributable to increases in various components of other noninterest expense. Employee compensation and benefit expenses decreased $38,846 for the first quarter of 2005 compared to the first quarter of 2004. The decrease in employee compensation and benefits for the quarters compared was primarily attributable to a reduction in the West Pointe's workforce following a comprehensive analysis of the Company's operations and related staffing levels. As of March 31, 2005, the Company had 117 full-time equivalent employees compared to 126 full-time equivalent employees as of March 31, 2004. The decrease in employee compensation and benefits that resulted from the aforementioned staffing analysis was partially offset by normal merit increases. Net occupancy expenses increased $24,123 for the first quarter of 2005 compared to the first quarter of 2004. The increase in net occupancy expenses for the periods compared was primarily attributable to normal operations. Furniture and equipment expenses remained stable for the first quarter of 2005 compared to the first quarter of 2004. Legal and professional fees decreased $61,329 for the first quarter of 2005 compared to the first quarter of 2004. The decrease in legal and professional fees for the quarters compared was primarily attributable to a reduced level of legal fees paid in connection with certain lawsuits of which the Company was a party. Certain of those lawsuits were resolved in 2004. Data processing expenses remained stable for the first quarter of 2005 compared to the first quarter of 2004. Advertising expenses increased $38,271 for the first quarter of 2005 compared to the first quarter of 2004. The increase in advertising expenses for the quarters compared was primarily attributable to expanded promotional activities in areas served by West Pointe's banking centers. Other noninterest expense increased $113,000 for the first quarter of 2005 compared to the first quarter of 2004. Other noninterest expense includes such items as FDIC insurance premiums, mortgage banking expenses, contributions, telephone expenses, postage costs, certain credit card program expenses and other miscellaneous expenses. The increase in other noninterest expense for the quarters compared was primarily attributable to a write-down, in the amount of $81,346, of one parcel of foreclosed property. INCOME TAX EXPENSE West Pointe recorded income tax expense of $259,400 for the first quarter of 2005 and remained stable when compared to income tax expense of $258,800 recorded during the first quarter of 2004. The effective income tax rate was 22.6% for the first quarter of 2005 compared to 23.2% for the first quarter of 2004. The slight change in the effective income tax rates for the 2005 period compared to the 2004 period was partially attributable to a modest increase in the level of tax-exempt income as a percentage of income before income taxes. FINANCIAL CONDITION GENERAL Certain components of West Pointe's consolidated balance sheet at March 31, 2005 compared to December 31, 2004 are presented in summary form in Table 2. Total assets increased $885,401 to $444,906,525 compared to $444,021,124 at December 31, 2004. The increase in total assets was primarily due to an increase in the volume of loans and interest bearing due from bank balances, partially offset by a decrease in securities. 12 TABLE 2 - Selected Comparative Balance Sheet Items

LOANS Loans increased 2.4%, or $5,795,796, from year-end 2004 to March 31, 2005. The majority of this increase was derived from growth in the commercial, financial and agricultural and real estate construction segments of the portfolio. West Pointe also experienced a modest increase in the 1-4 family residential real estate segment of the portfolio. When compared to several previous quarters, West Pointe's loan demand increased considerably during the last two quarters of 2004 and the first quarter of 2005. Table 3 presents the composition of the loan portfolio by type of borrower and major loan category and the percentage of each to the total portfolio for the periods presented. TABLE 3 - Loan Portfolio Composition

SECURITIES Total securities decreased $11,642,941 to $142,746,670 at March 31, 2005 compared to $154,389,611 at year-end 2004. The security portfolio provides a balance to interest rate and credit risk in other categories of the balance sheet while providing a vehicle for the investment of available funds not needed to fund loan demand. The security portfolio also supplies securities as required collateral for certain deposits and for repurchase agreements. The majority of this decrease resulted from principal payments received on the Company's mortgage-backed securities and from management's decision to sell certain securities, which resulted from favorable opportunities in the market place. Proceeds from the aforementioned principal payments and sales were used to fund West Pointe's increased loan demand. Additional information regarding West Pointe's repurchase agreements is presented and discussed under "Borrowings." All of West Pointe's securities are classified as available for sale. Available for sale securities are recorded at fair value. Net unrealized losses on available for sale securities totaled $1,550,811 at March 31, 2005, compared to net unrealized gains of $217,643 at December 31, 2004. The change in net unrealized gains and losses from December 31, 2004 to March 31, 2005 was primarily attributable to a higher interest rate environment. 13 Table 4 presents the composition of securities at their carrying values for the periods presented. TABLE 4 - Security Portfolio Composition

Table 5 presents the composition of securities with unrealized losses at March 31, 2005, presented by length of time in an unrealized loss position. TABLE 5 - Composition of Securities with Unrealized Losses

West Pointe management does not currently expect any losses to result from any unrealized losses in the portfolio, as maturities of securities and other funding sources should meet the Company's liquidity needs. Any losses taken will result from strategic or discretionary decisions to adjust the security portfolio. DEPOSITS West Pointe's deposit base is its primary source of liquidity and consists of deposits originating within the communities served by its banking locations. Deposits are West Pointe's primary and most reliable funding source for interest-earning assets. Total deposits increased $2,199,514 to $377,443,934 at March 31, 2005 from $375,244,420 at year-end 2004. The noninterest bearing demand deposit and savings and money market deposit components of the deposit portfolio increased $2,285,662 and $2,394,937, respectively, from year-end 2004. The increases in these components of the deposit portfolio were primarily attributable to normal fluctuations, partially offset by decreases of $633,460 and $1,847,625, respectively, in the interest bearing demand deposit and time deposit components of the deposit portfolio. These decreases were also attributable to normal fluctuations. 14 Table 6 sets forth the composition of deposits and the percentage of each category to total deposits for the periods presented. TABLE 6 - Deposit Liability Composition

BORROWINGS Total borrowings amounted to $30,381,626 at March 31, 2005 compared to $31,346,973 at year-end 2004. At March 31, 2005, borrowings consisted of repurchase agreements and subordinated debentures. At year-end 2004, borrowings consisted of repurchase agreements, an overnight Federal Home Loan Bank advance and subordinated debentures. At March 31, 2005, repurchase agreements decreased $415,347 from year-end 2004. These borrowings serve as an alternative funding source to deposits. The majority of the Company's repurchase agreements were in the form of cash management repurchase agreement accounts. Such accounts involve the daily transfer of excess funds from noninterest bearing deposit accounts into interest bearing cash management repurchase agreement accounts. Cash management repurchase agreement accounts are marketed to commercial and individual deposit customers and are considered to be a stable source of funds. Repurchase agreements, other than cash management repurchase agreements, generally represent an alternative to short-term certificates of deposit. At December 31, 2004, the Bank had one $550,000 Federal Home Loan Bank overnight advance. This overnight advance served as a funding alternative to federal funds purchased. At March 31, 2005 and December 31, 2004, West Pointe had subordinated debentures totaling $10,310,000. On December 15, 2004, the Company completed a private placement to an institutional investor of $10,000,000 of floating rate trust preferred securities, through a newly formed unconsolidated Delaware trust affiliate, West Pointe Statutory Trust I (the "Trust"). The trust preferred securities mature in December 2034, are redeemable at the Company's option beginning in five years, and require quarterly distributions by the Trust to the holder of the trust preferred securities, initially at an interest rate of 4.70%, which resets quarterly at the three-month LIBOR rate plus 2.25%. As of March 31, 2005, the obligation reflected an interest rate of 5.26%. The proceeds from the sale of the trust preferred securities were used by the Trust to purchase $10,310,000 in aggregate principal amount of the Company's floating rate junior subordinated debentures. A portion of the net proceeds to the Company from the sale of the debentures to the Trust was used by the Company to pay off a line of credit with an unaffiliated bank. The Company expects that the remainder of the net proceeds will be used for general corporate purposes. ASSET QUALITY West Pointe's asset quality management program, particularly with regard to loans, is designed to analyze potential risk elements and to support the growth of a high quality loan portfolio. The existing loan portfolio is monitored via West Pointe's loan rating system. The loan rating system is used to determine the adequacy of the allowance for loan losses. West Pointe's loan analysis process proactively identifies, monitors and works with borrowers for whom there are indications of future repayment difficulties. West Pointe's lending philosophy is to invest in the communities served by its banking centers so that it can effectively monitor and control credit risk. 15 At March 31, 2005, nonperforming assets totaled $2,654,248 or .60% of total assets, compared to nonperforming assets at year-end 2004 of $5,292,309 or 1.19% of total assets. Nonperforming assets at March 31, 2005, included $830,054 relating to three parcels of foreclosed property. All foreclosed property is held for sale and is initially recorded on an individual property basis at estimated fair value less cost to sell. Subsequent to foreclosure, management evaluates the foreclosed properties and a valuation allowance is established if the estimated fair value declines. As a result of such evaluation and prior to March 31, 2005, management recorded a write-down in the amount of $81,346 on one parcel of foreclosed property. As of March 31, 2005, management does not anticipate any significant losses upon the disposition of the remaining foreclosed property. Nonperforming loans in the commercial real estate segment of the portfolio decreased $2,257,352 from December 31, 2004. The majority of this decrease is related to loans to one commercial borrower. Management is in various stages of workout to remedy or liquidate this and other nonperforming loans. The remaining categories of nonperforming loans remained relatively stable at March 31, 2005 compared to December 31, 2004. Table 7 sets forth a summary of West Pointe's loan portfolio mix and nonperforming assets. TABLE 7 - Loan Portfolio Mix and Nonperforming Assets

Net charge-offs for the first quarter of 2005 totaled $75,152 compared to $333,869 for the first quarter of 2004. Net charge-offs recorded during the first quarter of 2005 in all segments of the loan portfolio were not significant. Net charge-offs recorded during the first quarter of 2004 in the residential real estate segment of the loan portfolio primarily related to several loans to one borrower. Net charge-offs and recoveries recorded during the first quarter of 2004 in all other segments of the loan portfolio were not significant. West Pointe's allowance for loan losses at March 31, 2005 decreased to $2,572,751 from $2,692,903 at December 31, 2004. The decrease in the allowance for loan losses resulted from net charge-offs and the negative provision for loan losses recorded during the first quarter of 2005. The negative provision for loan losses resulted from continuing positive asset quality trends, in particular, a lower level of nonperforming loans. At March 31, 2005, the allowance for loan losses represented 141.03% of nonperforming loans compared to 119.89% at March 31, 16 2004 and 61.47% at December 31, 2004. The ratio of the allowance for loan losses to total loans was 1.04% at March 31, 2005 compared to 1.19% at March 31, 2004 and 1.12% at December 31, 2004. Management believes that the allowance for loan losses at March 31, 2005 was adequate to absorb probable losses in the loan portfolio. However, past loan loss experience as it relates to current portfolio mix, evaluation of potential losses in the portfolio, subsequent changes in economic conditions and other factors may require changes in the levels of the allowance for loan losses. Table 8 presents information pertaining to the activity in and an analysis of West Pointe's allowance for loan losses for the periods presented. TABLE 8 - Allowance For Loan Losses

CAPITAL RESOURCES CAPITAL RESOURCES Total stockholders' equity decreased $221,268 from $33,517,619 at December 31, 2004 to $33,296,351 at March 31, 2005. Net income for the three-month period ended March 31, 2005 was $886,569. The decrease to total stockholders' equity resulting from the change in other comprehensive income (loss) was partially offset by net income recorded during the quarter. At March 31, 2005, West Pointe recorded an accumulated other comprehensive loss of $961,502 compared to accumulated other comprehensive income of $134,939 at December 31, 2004. The change in accumulated other comprehensive income (loss) is comprised of the unrealized gain or loss on available for sale securities. Financial institutions are required to maintain ratios of capital to assets in accordance with guidelines promulgated by the federal banking regulators. The guidelines are commonly known as "Risk-Based Guidelines" as they define the capital level requirements of a financial institution based upon the level of credit risk associated with 17 holding various categories of assets. The Risk-Based Guidelines require minimum ratios of Tier 1 and Total Capital to risk-weighted assets of 4% and 8%, respectively. At March 31, 2005, West Pointe's Tier 1 and Total Capital ratios were 15.86% and 16.79%, respectively. In addition to the Risk-Based Guidelines, the federal banking agencies have established a minimum leverage ratio guideline for financial institutions (the "Leverage Ratio Guideline"). The Leverage Ratio Guideline provides for a minimum ratio of Tier 1 capital to average assets of 4%. West Pointe's leverage ratio at March 31, 2005, was 9.97%. Accordingly, West Pointe has satisfied these regulatory guidelines. RECENT ACCOUNTING PRONOUNCEMENTS In December 2004, the FASB issued Statement No. 123(R), "Share-Based Payment". This statement is a revision of FASB Statement No. 123, "Accounting for Stock-Based Compensation". This statement requires all public companies to record compensation cost for stock options provided to employees in return for employee service. The cost is measured at the fair value of the options when granted, and this cost is expensed over the employee service period, which is normally the vesting period of the options. Initially, the statement was scheduled to apply to awards granted or modified after the first quarter or year beginning after June 15, 2005. In April 2005, the Securities and Exchange Commission announced the adoption of a new rule that amends the compliance dates for the statement. The new rule allows companies to implement the new rules at the beginning of their next fiscal year, instead of the next reporting period, that begins after June 15, 2005. As a result, West Pointe will implement the new rule on January 1, 2006. Compensation cost will also be recorded for prior option grants that vest after the date of adoption. The effect on results of operations will depend on the level of future option grants and the calculation of the fair value of the options granted at such future date, as well as the vesting periods provided, and so cannot currently be predicted. As a result of the amendment to the statement, there will be no additional compensation expense recorded in the financial statements of the Company during 2005. Existing options, including the options granted in January 2005, that will vest after the adoption date are expected to result in additional compensation expense of approximately $182,700 in 2006. CRITICAL ACCOUNTING POLICIES There have been no significant changes in the Company's critical accounting policies from those disclosed as of December 31, 2004. CONTRACTUAL OBLIGATIONS The Company enters into certain contractual obligations in the ordinary course of operations. The required payments under these contracts represent future cash requirements of the Company. The Company's significant fixed and determinable contractual obligations, as of March 31, 2005, are set forth in the following table:

OFF-BALANCE SHEET ARRANGEMENTS For information on the Company's significant off-balance sheet commitments as of December 31, 2004, see the information incorporated by reference under "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2004. 18 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There has been no material change to the market risk position from that disclosed as of December 31, 2004, the end of the last fiscal year. ITEM 4. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES As of the end of the period covered by this report, the Company's principal executive officer and principal financial officer carried out an evaluation, with the participation of the Company's other management, of the effectiveness of the Company's disclosure controls and procedures. Based upon this evaluation, the principal executive officer and principal financial officer have concluded that the Company's disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. It should be noted that the design of the Company's disclosure controls and procedures is based in part upon certain reasonable assumptions about the likelihood of future events, and there can be no reasonable assurance that any design of disclosure controls and procedures will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. However, the Company's principal executive officer and principal financial officer have concluded that the Company's disclosure controls and procedures are, in fact, effective at a reasonable assurance level. CHANGES IN INTERNAL CONTROL There have been no changes in the Company's internal control over financial reporting identified in connection with the evaluation described in the above paragraph that occurred during the Company's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is not a party to any material pending legal proceedings before any court, administrative agency or tribunal, nor is the Company aware of any litigation threatened against it in any court, administrative agency, or other tribunal. The Company's wholly-owned subsidiary, the Bank, is subject to various claims, lawsuits and administrative proceedings arising in the ordinary course of business from time to time. The Bank's management is of the opinion, based upon present information, including evaluations by outside counsel, that the Bank's financial condition, results of operations or cash flows will not be materially affected by the ultimate resolution of pending or threatened legal proceedings. 19 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS The Company does not have any plans or programs to repurchase shares of its common stock, nor has the Company made any repurchases of its securities during the first quarter of 2005.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Proxies were mailed to shareholders on March 28, 2005 for the Company's Annual Meeting of Shareholders, which was held on April 27, 2005. The only matter submitted to, and approved by, shareholders is listed below, as is a tabulation of voting. (1) The following persons nominated as Directors were re-elected:

Other directors continuing in office are as follows: William C. Allison, Harry E. Cruncleton, Terry W. Schaefer, Dr. Edward J. Szewczyk and Wayne W. Weeke. ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS Exhibits: See Exhibit Index on page 22 hereof. 20 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. WEST POINTE BANCORP, INC. --------------------------------- (Registrant) DATE: May 13, 2005 By: /s/ Terry W. Schaefer -------------------------------- Terry W. Schaefer President and Chief Executive Officer (on behalf of the Registrant) DATE: May 13, 2005 By: /s/ Bruce A. Bone -------------------------------- Bruce A. Bone Executive Vice President and Chief Financial Officer (as principal financial officer) 21 EXHIBIT INDEX

(1) Documents incorporated by reference to the Company's Registration Statement on Form 10 (file no. 000-30505) at the corresponding exhibit. All such previously filed documents are hereby incorporated by reference in accordance with Item 601 of Regulation S-K. 22

WEST POINTE BANCORP INC 10-Q