10-Q 1 form10q-53556_webster.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------------------- FORM 10-QSB (Mark One) |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2003. |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to __________________ COMMISSON Number: 0-26577 Webster City Federal Bancorp (Exact name of registrant as specified in its charter) United States 42-1491186 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 820 Des Moines Street, Webster City, Iowa 50595-0638 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 515-832-3071 -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Transitional Small Business Disclosure Format: |_| Yes |X| No Indicate the number of shares outstanding for each of the issuer's classes of common stock, as of the latest practicable date. 1,886,186 shares of common stock outstanding at July 31, 2003. Webster City Federal Bancorp and Subsidiaries Index Page ---- Part I. Financial Information Item 1. Financial Statements Consolidated Balance Sheets at June 30, 2003 and December 31, 2002 1 Consolidated Statements of Operations for the three and six months ended June 30, 2003 and 2002 2 Consolidated Statements of Cash Flows for the six months ended June 30, 2003 and 2002 3 Notes to Consolidated Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6 Item 3. Controls and Procedures Part II. Other Information Other Information 9 Item 1 Webster City Federal Bancorp and Subsidiaries Consolidated Balance Sheets

See accompanying notes to consolidated financial statements. Webster City Federal Bancorp and Subsidiaries Consolidated Statements of Operations (Unaudited)

See accompanying notes to consolidated financial statements. Webster City Federal Bancorp and Subsidiaries Consolidated Statements of Cash Flows

See accompanying notes to consolidated financial statements. Webster City Federal Bancorp and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) 1. DESCRIPTION OF BUSINESS Webster City Federal Bancorp ( the "Company" ) and its subsidiaries, Webster City Federal Savings Bank, a federal stock savings bank, (the "Bank"), and Security Title and Abstract, Inc., conduct operations in Webster City, Iowa, a community of approximately 8,000 people. The Bank is primarily engaged in the business of attracting deposits from the general public in its market area and investing such deposits in mortgage loans secured by one-to-four family residential real estate. The Bank's primary area of lending and other financial services consists of Hamilton County, Iowa, and the surrounding contiguous counties. Security Title and Abstract, Inc. is engaged in the business of providing abstracting and title services for properties located in Hamilton County, Iowa. Approximately 60% of the Company's outstanding common stock is owned by WCF Financial M.H.C., a mutual holding company (the "Holding Company"). The remaining 40% of the Company's outstanding common stock is owned by the general public including the Bank's Employee Stock Ownership Plan. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES The consolidated financial statements for the three and six-month periods ended June 30, 2003 and 2002 are unaudited. In the opinion of management of the Company, these financial statements reflect all adjustments, consisting only of normal recurring accruals necessary to present fairly these consolidated financial statements. The results of operations for the interim periods are not necessarily indicative of results that may be expected for an entire year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. Principles of Consolidation The consolidated financial statements include the accounts of Webster City Federal Bancorp, Security Title and Abstract, Inc., Webster City Federal Savings Bank and its wholly owned subsidiary, WCF Service Corporation, which is engaged in the sales of mortgage life and credit life insurance to the Bank's loan customers. All material inter-company accounts and transactions have been eliminated in the consolidation. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. In preparing such financial statements, management is required 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 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 management's determination of the allowance for loan losses. Reclassifications Certain amounts in the 2002 financial statements have been reclassified to conform to the presentation in the 2003 financial statements. 3. EARNINGS PER SHARE COMPUTATIONS 2003 Earnings per share - basic is computed using the weighted average number of common shares outstanding of 1,886,186 and 1,886,186 for the three and six months ended June 30, 2003, respectively, and divided into the net earnings of $300,800 and $606,400 for the three and six months ended June 30, 2003, respectively, resulting in net earnings per share basic of $.16 and $.32 for the three and six months ended June 30, 2003, respectively. Earnings per share - diluted is computed using the weighted average number of common shares outstanding after giving effect to additional shares assumed to be issued in relation to the Bank's stock option plan using the average price per share for the period. Such additional shares were 3,878 and 3,597 for the three and six months ended June 30, 2003, respectively, due to the average price per share being more than the stock option exercise price. Net earnings for the three and six months ended June 30, 2003 were $300,800 and $606,400, respectively, resulting in net earnings per share diluted of $.16 and $.32 for the three and six months ended June 30, 2003, respectively. 2002 Earnings per share - basic is computed using the weighted average number of common shares outstanding of 1,857,595 and 1,874,734 for the three and six months ended June 30, 2002, respectively, and divided into the net earnings of $382,500 and $720,700 for the three and six months ended June 30, 2002, respectively, resulting in net earnings per share basic of $.20 and $.38 for the three and six months ended June 30, 2002, respectively. Earnings per share - diluted is computed using the weighted average number of common shares outstanding after giving effect to additional shares assumed to be issued in relation to the Bank's stock option plan using the average price per share for the period. Such additional shares were 3,653 and 3,207 for the three and six months ended June 30, 2002, respectively, due to the average price per share being more than the stock exercise option price. Net earnings for the three and six months ended June 30, 2002 were $382,500 and $720,700, respectively, resulting in net earnings per share diluted of $.20 and $.38 for the three and six months ended June 30, 2002, respectively. 4. DIVIDENDS On April 16, 2003 the Company declared a cash dividend on its common stock payable on May 21, 2003 to stockholders of record as of May 5, 2003, equal to $.25 per share or approximately $471,547. Of this amount, the payment of approximately $287,500 (representing the dividend payable on 1,150,000 shares owned by WCF Financial, M.H.C., the Company's mutual holding company) was waived by the mutual holding company, resulting in an actual dividend distribution of $184,047. 5. INTANGIBLE ASSET A Company subsidiary maintains an intangible asset relating to a customer list. It has an estimated useful life of 15 years and is being amortized using the straight-line method. At June 30, 2003, the gross carrying amount was $145,000 with accumulated amortization of $27,400. Amortization expense for the six months ended June 30, 2003 and 2002 was $4,800 and $4,800 respectively. The estimated amortization expense for the following five year period is as follows: December 31, 2003 $ 9,667. December 31, 2004 9,667. December 31, 2005 9,667. December 31, 2006 9,667. December 31, 2007 9,667. 6. STOCK - BASED COMPENSATION SFAS No. 123, Accounting for Stock-Based Compensation, established accounting and disclosure requirements using a fair-value-based method of accounting for stock-based employee compensation plans. As allowed by SFAS No. 123, the Company has elected to continue to apply the intrinsic-value-based method of accounting described above, and has adopted only the disclosure requirements of SFAS No. 123. The following table illustrates the effect on net income if the fair-value-based method had been applied to all outstanding and unvested awards in each period.

Webster City Federal Bancorp and Subsidiaries Management's Discussion and Analysis of Financial Condition and Results of Operations FINANCIAL CONDITION Total assets increased by $2.7 million, or 2.6%, from December 31, 2002 to June 30, 2003. Cash and cash equivalents increased $1.8 million or 34.3%, due to an increase in the number of loans paid off and an increase in deposits during the period. Loans receivable decreased $4.6 million, or 6.3% during the same period. As a portfolio lender the Bank felt it best to allow some loans be paid off or refinanced at other financial institutions due the rate environment that we are currently in. At June 30, 2003, the Company had $56,200 in real estate owned. Securities available-for-sale increased by $5.0 million or 65.1% from December 31, 2002 to June 30, 2003, and investment securities held-to-maturity decreased $607,600 or 17.1%, from December 31, 2002 to June 30, 2003. The increase in securities available-for-sale was due to the purchase of additional securities during the first part of 2003. During the six-month period, deposits increased $2.5 million, or 3.5%, due to an increase in public funds being deposited. Total stockholders' equity increased by $210,800 to $22.5 million at June 30, 2003 from $22.3 million at December 31, 2002 as earnings of $606,400 were partially offset by two quarterly cash dividends totaling $366,500. CAPITAL The Company's total stockholders' equity increased by $210,800, to $22.5 million at June 30, 2003 from $22.3 million at December 31, 2002. The Office of Thrift Supervision (OTS) requires that the Bank meet certain minimum capital requirements. As of June 30, 2003, the Bank was in compliance with all regulatory capital requirements. The Bank's required, actual and excess capital levels as of June 30, 2003 were as follows: Required % of Actual % of Excess Amount Assets Amount Assets Capital ------ ------ ------ ------ ------- (Dollars in thousands) Tier 1 (Core) Capital $ 3,169 3.0% $21,808 20.64% $18,639 Risk-based Capital $ 4,022 8.0% $22,053 43.86% $18,031 RESULTS OF OPERATIONS Interest Income. Interest income decreased by $157,300 or 9.5% for the three months ended June 30, 2003 compared to the three months ended June 30, 2002. This was the result of a decrease in the average yield on interest-earning assets to 5.88% for the three months ended June 30, 2003 from 6.85% for the three months ended June 30, 2002 partially offset by an increase in the average balance of interest earning assets of $5.4 million or 5.5% to $102.4 million for the three months ended June 30, 2003 from $97.0 million for the three months ended June 30, 2002. Interest income totaled $3.1 million for the six months ended June 30, 2003 compared to $3.3 million for the six months ended June 30, 2002. This was the result of a decrease in the average yield on interest-earning assets to 6.04% for the six months ended June 30, 2003 from 6.84% for the six months ended June 30, 2002 partially offset by an increase in the average balance of interest earning assets of $3.7 million or 3.6% to $101.6 million for the six months ended June 30, 2003 from $97.9 million for the six months ended June 30, 2002. Interest on loans for the three months ended June 30, 2003 decreased $182,100 or 12.9% compared to the three months ended June 30, 2002. The decrease resulted primarily from a decrease in average loans outstanding to $68,800 for the three months ended June 30, 2003 from $75,200 for the same period ended June 30, 2002, and a decrease in the average yield on loans receivable from 7.51% for the three months ended June 30, 2002 to 7.15% for the three months ended June 30, 2003. Interest on loans for the six months ended June 30, 2003 decreased $306,900 or 10.8% compared to the six months ended June 30, 2002. The decrease resulted from a decrease in average total loans outstanding during the period from $74,700 for the period ending June 30, 2002 to $70,100 for the same period ending June 30, 2003 and a decrease in the yield on loans receivable from 7.58% for the six months ended June 30, 2002 to 7.21% for the six months ended June 30, 2003. The decrease in the average yield on loans receivable was primarily due to lower market rates and adjustable rate loans repricing at a lower rate based on the lagging index used by the Bank. Interest on mortgage-backed securities decreased by $27,100 or 46.7% for the three-month period ended June 30, 2003 as compared to the same period ended June 30, 2002. The decline resulted from a decrease of $1.4 million or 38.8% in the average balance of mortgage-backed securities to $2.2 million for the three months ended June 30, 2003 compared to $3.6 million for three months ended June 30, 2002 and a decrease of 75 basis points in the average yield on mortgage-backed securities to 5.68% for the three months ended June 30, 2003 from 6.43% for the three months ended June 30, 2002. Interest on mortgage-backed securities decreased $56,400 or 45.8% for the six months ended June 30, 2003 compared to same period ended June 30, 2002. The decline resulted from a decrease of $1.5 million or 39.8% in the average balance of mortgage-backed securities to $2.3 million for the six months ended June 30, 2003 compared to $3.8 million for the six months ended June 30, 2002 and a decrease of 80 basis points in the average yield on mortgage-backed securities to 5.73% for the six months ended June 30, 2003 from 6.53% for the six months ended June 30, 2002. Interest on investment securities decreased by $1,000 or .7% for the three months ended June 30, 2003 compared to the same period ended June 30, 2002. This was due to a decrease in the average yield of 104 basis points from 5.04%, for the three months ended June 30, 2002 to 4.08% for the three months ended June 30, 2003, partially offset by an increase in the average balance of investment securities from $11.4 million for the three months ended June 30, 2002 to $14.1 million for the three months ended June 30, 2003. Interest on investment securities decreased by $49,100 or 16.4% for the six months ended June 30, 2003 as compared to the same period ended June 30, 2002. This was due to a decrease in the average yield of 104 basis points from 5.15%, for the six months ended June 30, 2002 to 4.11%, for the six months ended June 30, 2003 partially offset by an increase in the average balance of investment securities from $11.6 million for the six months ended June 30, 2002 to $12.2 million for the six months ended June 30, 2003. Interest Expense. Interest expense decreased by $90,000, or 13.0%, from $691,000 for the three months ended June 30, 2002 to $601,000 for the three months ended June 30, 2003. Interest expense decreased by $238,100 or 16.4%, from $1.5 million for the six months ended June 30, 2002 to $1.2 million for the six months ended June 30, 2003. The decrease in interest expense was due to a decrease in deposit interest rates of 84 basis points from 3.55% for the six month period ended June 30, 2002 to 2.71% for the same six month period ended June 30, 2003. Interest on FHLB advances remained unchanged at 5.19% for both periods. Net Interest Income. Net interest income before provision for losses on loans decreased by $67,200 or 6.9% from $973,000 for the three months ended June 30, 2002 to $905,700 for the three months ended June 30, 2003. Net interest income before provisions for losses on loans decreased by $42,500 or 2.2% for the six months ended June 30, 2003 compared to the same period ended June 30, 2002. The Company's interest rate spread for the three months ended June 30, 2003 decreased by 29 basis points to 2.95% from 3.24% for the three months ended June 30, 2002. The Company's interest rate spread for the six months ended June 30, 2003 decreased by 4 basis points to 3.04% from 3.08% for the six months ended June 30, 2002. Provision for Losses on Loans. There were no additional provisions for losses on loans for the three and six months ended June 30, 2003. The Company had charge offs of $5,200 and recoveries of $6,500 during the three month period ended June 30, 2003 and charge offs of $17,700 and recoveries of $18,800 during the three month period ended June 30, 2002. The Company had charge offs of $39,100 and recoveries of $14,600 during the six month period ended June 30, 2003 and had charge-offs of $26,700 and recoveries of $18,800 during the six month period ended June 30, 2002. On June 30, 2003 the Company had $355,500 in non-accrual loans compared to $471,700 on June 30, 2002. The allowance for losses on loans is based on management's periodic evaluation of the loan portfolio and reflects an amount that, in management's opinion, is adequate to absorb probable losses in the existing portfolio. In evaluating the portfolio, management takes into consideration numerous factors, including current economic conditions, prior loan loss experience, the composition of the loan portfolio, and management's estimate of anticipated credit losses. Non-interest Income. Total non-interest income increased by $25,000 or 19.7% for the three-month period ended June 30, 2003 as compared to the same period ended June 30, 2002. The increase was due to a gain on the sale of a security offset by a decrease in loan fees earned. Non-interest income remained unchanged for the six months ended June 30, 2003 as compared to the same period ended June 30, 2002. Non-interest Expense. Non-interest expense increased $44,900 or 8.7% for the three-month period ended June 30, 2003 compared to the same period ended June 30, 2002. Non-interest expense increased $100,500 or 10.1% for the six-month period ended June 30, 2003 compared to the same period ended June 30, 2002. Data processing expenses increased $8,500 or 21.5% for the three-month period ended June 30,2003 compared to the same period ended June 30,2002. Data processing expenses increased $21,200 or 26.0% for the six-month period ended June 30, 2003 compared to the same period ended June 30, 2002. The increases were due to our data processor giving us a deeper discount on services during the first years of service. Other expenses increased due to additional professional fees. Compensation and benefit costs increased $21,100 or 7.8% from $272,100 for the three months ended June 30, 2002 to $293,200 for the three month period ended June 30, 2003. Compensation and benefit costs increased by $55,600 or 10.3% from $539,900 for the six months ended June 30, 2002 to $595,500 for the six months ended June 30, 2003. The increases were primarily due to an increase of $11,100 in the Company's contribution to its employee retirement plan and a 3.5% increase in employee compensation. Taxes on Income. Income taxes for the three months ended June 30, 2003, decreased by $17,300 or 8.1%, compared to the same period ended June 30, 2002. Income taxes for the six months ended June 30, 2003, decreased by $29,500 or 7.1%, compared to the same six month period ended June 30, 2002. The effective income tax rate for the three months ended June 30, 2003 was 39.4% compared to 36.5% for the three months ended June 30, 2002. The effective income tax rate for the first six months of 2003 was 38.8% compared to 36.5% for the first six months of 2002. The increase in the effective tax rate was due to the Company adjusting the tax estimate to better match its year tax amount due the IRS. Net Earnings. Net earnings decreased $69,800 or 18.8% to $300,800 for the three months ended June 30, 2003 compared to $370,600 for the three months ended June 30, 2002. Net earnings decreased $114,300 or 15.9% to $606,400 for the six-month period ended June 30, 2003 compared to $720,700 for the same period ended June 30, 2002. Impact of New Accounting Standards In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations (SFAS No. 143). SFAS No. 143 requires the Company to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development, and/or normal use of the assets. The Company also records a corresponding asset which is depreciated over the life of the asset. The Company was required to adopt SFAS No. 143 on January 1, 2003. The adoption of SFAS No. 143 was not material to the Company's financial statements. In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. SFAS No. 145 amends existing guidance on reporting gains and losses on the extinguishment of debt to prohibit the classification of the gain or loss as extraordinary, as the use of such extinguishments have become part of the risk management strategy of many companies. SFAS No. 145 also amends SFAS No. 13 to require sale-leaseback accounting for certain lease modifications that have economic effects similar to sale-leaseback transactions. The provisions of the Statement related to the rescission of the Statement No. 4 are applied in fiscal years beginning after May 15, 2002. Earlier application of these provisions is encouraged. The provisions of the Statement related to Statement No. 13 were effective for transactions occurring after May 15, 2002, with early application encouraged. The impact of adopting SFAS No. 145 on the Company's financial statements was not material. In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. This Statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). The provisions of this Statement are effective for exit and disposal activities that are initiated after December 31, 2002. The effect of this Statement on the Company's financial statements was not material. In October 2002, the FASB Statement No. 147 (FAS 147), Acquisitions of Certain Financial Institutions, which amends Statement No. 72 (FAS 72), Accounting for Certain Acquisitions of Banking or Thrift Institutions and no longer requires the separate recognition and subsequent amortization of goodwill that was originally required by FAS 72. FAS 147 also amend Statement No. 144 (FAS 144), Accounting for the Impairment or Disposal of Long-Lived Assets, to include in its scope long-term customer-relationship intangible assets (such as core deposit intangibles). The effects of implementation on the Company's financial statements were not material. In November 2002, the FASB issued Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others, an interpretation of FASB Statements No. 5, 57, and 107 and a rescission of FASB Interpretation No. 34. This Interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees issued. The Interpretation also clarifies that a guarantor is required to recognize, at inception of a guarantee, a liability for the fair value of the obligation undertaken. The initial recognition and measurement provisions of the Interpretation are applicable to guarantees issued or modified after December 31, 2002. The disclosure requirements are effective for financial statements of interim and annual periods ending after December 15, 2002. The effects of implementation on the Company's financial statements were not material. In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure, an amendment of FASB Statement No. 123. This Statement amends FASB Statement No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of Statement No. 123 to require prominent disclosures of both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. Certain of the disclosure modifications are required for fiscal years ending after December 15, 2002 and are included in the notes to these consolidated financial statements. In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46). FIN 46 addresses consolidation by business enterprises of variable interest entities that have certain characteristics. It requires a business enterprise that has a controlling interest in a variable interest entity (as defined by FIN 46) to include the assets, liabilities and results of the activities of the variable interest entity of the consolidated financial statements of the business enterprise. FIN 46 applies immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. For variable interest acquired before February 1, 2003, it applies in the first fiscal year or interim period beginning after June 15, 2003. The impact of adopting FIN 46 will not be material as the Company does not presently have any variable interest entities. Safe Harbor Statement This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Reform Act of 1995, and is including this statement for the purposes of these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project," or similar expressions. The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations and future prospects of the Company and its subsidiaries include, but are not limited to, changes in: interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal polices of the U.S. Government, including polices of the U.S. Treasury and the Federal Reserve Board, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Bancorp's market area and accounting principles, polices and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Item 3 Controls and Procedures (a) Evaluation of disclosure controls and procedures. Under the supervision and with participation of our management, including the Company's Chief Executive Officer and Chief Financial Officer, the Company evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a-14(c) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures were effective in timely alerting them to the material information relating to the Company's (or its consolidated subsidiaries) required to be included in its periodic SEC filings. (b) Changes in internal controls. There has been no change made in the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. Webster City Federal Bancorp and Subsidiaries PART II. Other Information Item 1. Legal Proceedings There are various claims and lawsuits in which the Registrant is periodically involved incidental to the Registrant's business. In the opinion of management, no material loss is expected from any of such pending claims or lawsuits. Item 2. Changes in Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders. The Registrant convened its 2003 Annual Meeting of Stockholders on April 16, 2003. At the meeting the stockholders of the Registrant considered and voted upon: 1. The election of Stephen L. Mourlam, Kyle R. Swon and Dennis J. Tasler as directors for a term of three years. 2. The ratification of the appointment of KPMG LLP as auditors of the Registrant for the fiscal year ending December 31, 2003. The election of Stephen L. Mourlam, as director was as approved by a vote of 1,760,962 votes in favor, 6,500 withheld and 0 abstaining. The election of Kyle R. Swon, as director was as approved by a vote of 1,760,962 votes in favor, 6,500 withheld and 0 abstaining. The election of Dennis J. Tasler, as director was as approved by a vote of 1,763,262 votes in favor, 4,200 withheld and 0 abstaining. The ratification of the engagement of KPMG LLP as auditors was approved by a vote of 1,766,362 votes in favor, 600 opposed and 500 abstaining. Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K. Exhibit 31.1 Certification of Chief Executive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act Exhibit 31.2 Certification of Chief Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act Exhibit 32.1 Certification of Chief Executive Officer, Pursuant to Section 906 of the Sarbanes-Oxley Act Exhibit 32.2 Certification of Chief Financial Officer, Pursuant to Section 906 of the Sarbanes-Oxley Act On April 21, 2003 a Form 8-K report was filed relating to earnings and dividends for the first quarter of 2003. Webster City Federal Bancorp and Subsidiaries Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed by the undersigned thereunto duly authorized. WEBSTER CITY FEDERAL BANCORP Registrant Date: August 8, 2003 By: ------------------------------------- Phyllis A. Murphy President and Chief Executive Officer Date: August 8, 2003 By: ------------------------------------- Stephen L. Mourlam Executive Vice President/ Chief Financial Officer

WEBSTER CITY FEDERAL BANCORP 10-Q