623 West Main Street (cid:129) Lebanon, Tennessee 37087
(615) 444-BANK (2265)
wilsonbank.com
Middle Tennessee’s Community Bank™
Annual Report 2018
Building Bridges to Sustain Success
Middle Tennessee’s Community Bank™
Table Of Contents
Board of Directors
Emeritus Directors
Letter to Shareholders
Executive Management Team
Foundational Investment
Williamson County Expansion
We Believe Together
Special Recognition
Digital Dynamics
Financial Highlights
Management’s Discussion and Analysis
Management’s Report on Internal Control
Over Financial Reporting
Report of Independent Registered
Accounting Firm
Consolidated Financial Statements
Holding Company & Stock Information
Five Year Performance Index
2
3
4
5
6
8
9
10
11
12
14
36
37
39
89
90
Locations
Back Cover
Cover photo provided by Clark Oakley
For more information:
Wilson Bank & Trust
623 West Main Street
Lebanon, Tennessee 37087
(615) 444-BANK (2265)
wilsonbank.com
The mission of Wilson Bank Holding Company is to maximize its sustainable
earnings while being a responsible business that renders high quality service
to customers through the efforts of fairly treated employees.
We will offer banking services to the communities we serve while assuring
equal access to credit for everyone. The management and staff of the bank
are to operate the bank in a sound manner to provide a proper return on
assets. We believe great things happen when management, employees and
directors work together as a team.
A N N U A L R E P O R T 2 0 1 8
Building Bridges to Sustain Success
Middle Tennessee’s Community Bank™
Table Of Contents
Board of Directors
Emeritus Directors
Letter to Shareholders
Executive Management Team
Foundational Investment
Williamson County Expansion
We Believe Together
Special Recognition
Digital Dynamics
Financial Highlights
Management’s Discussion and Analysis
Management’s Report on Internal Control
Over Financial Reporting
Report of Independent Registered
Accounting Firm
Consolidated Financial Statements
Holding Company & Stock Information
Five Year Performance Index
2
3
4
5
6
8
9
10
11
12
14
36
37
39
89
90
Locations
Back Cover
Cover photo provided by Clark Oakley
For more information:
Wilson Bank & Trust
623 West Main Street
Lebanon, Tennessee 37087
(615) 444-BANK (2265)
wilsonbank.com
The mission of Wilson Bank Holding Company is to maximize its sustainable
earnings while being a responsible business that renders high quality service
to customers through the efforts of fairly treated employees.
We will offer banking services to the communities we serve while assuring
equal access to credit for everyone. The management and staff of the bank
are to operate the bank in a sound manner to provide a proper return on
assets. We believe great things happen when management, employees and
directors work together as a team.
A N N U A L R E P O R T 2 0 1 8
Building Bridges to Sustain Success
Board of Directors
Front Row (L-R): Elmer Richerson, John McDearman, Randall Clemons, Will Jordan, Tony Patton
Back Row (L-R): Bob Goodall, Jimmy Comer, Jack Bell
Jack Bell
Jack W. Bell Builders, Inc.
Bob Goodall
Goodall Homes
Randall Clemons
President/CEO — Wilson Bank
Holding Company
Chairman/CEO —Wilson Bank & Trust
Will Jordan
Farming, Real Estate Investment
Chairman—Wilson Bank
Holding Company
James Anthony Patton
Mid Tenn Technologies
Elmer Richerson
Retired President —
Wilson Bank & Trust
Jimmy Comer
Comerica Enterprises
John McDearman
Executive Vice President —
Wilson Bank Holding Company,
President — Wilson Bank & Trust
Middle Tennessee’s Community Bank™ — page 2
Middle Tennessee’s Community Bank™ — page 2
Wilson Bank & Trust
Emeritus Directors
From left: Harold Patton, Charles Bell, Johnny Trice, Jerry Franklin, Bob VanHooser
In Remembrance
In summer 2018, the WBT family mourned the loss of one of the
bank's founding board members, emeritus director John Freeman. A
former Marine captain, deacon and Jaycees and chamber president,
Mr. Freeman was a small business entrepreneur in the auto parts
industry, and was a founding member of Hearthside Retirement
Center. Through his work in the community and the support he
provided for many other groups, organizations and fellow citizens, he
left an indelible mark in Lebanon and Wilson County, one that
extended well beyond his pivotal role as a member of the team that
established Wilson Bank & Trust in 1987.
Annual Report — page 3
Building Bridges to Sustain Success
To Our Shareholders
In a year we’ll remember for connecting our illustrious first
three decades to a horizon filled with more opportunity and
promise, Wilson Bank & Trust in 2018 began to bridge the gap
between our tremendous history and a bright future. Building on
a foundation of continued stability and commitment, WBT
enjoyed monumental financial success – including record growth
in loans, deposits and earnings – while extending our brand to
even more of Middle Tennessee.
Net income for 2018 totaled $32.59 million, compared to
$23.53 million in 2017. Earnings per share totaled $3.09 for
2018 compared to $2.26 for 2017. Growth in earnings for 2018
were attributable in part to the Tax Cuts and Jobs Act (the
“Act”), a tax reform bill which, among other items, reduced the
corporate federal tax rate from 35% to 21%. Our shareholder
return on equity for 2018 was 11.70% compared to 9.06% for
2017, and dividends per share totaled $.90 per year in 2018
compared to $.65 per year in 2017. Stockholders’ equity
increased $27.9 million as a result of our net earnings and
dividend reinvestment by our shareholders, partially offset by an
additional $3.47 million increase in unrealized losses on
available-for-sale securities.
Your stock’s book value increased $2.21 per share for the
year to $27.83, and our return on assets was 1.35%.
Alongside financial performance, plenty of external
indicators also revealed 2018 as a year of banner achievement. A
national top 20 ranking by Bank Director magazine, a fourth
consecutive Top Workplace award from the Tennessean,
BauerFinancial’s highest five-star rating for the 19th straight
Middle Tennessee’s Community Bank™ — page 4
quarter and multiple recognitions for community involvement
were a few of the accolades garnered by WBT over the course of
the year.
Our progress and growth in 2018 were also evident in the
form of two major expansions. The completion of the Clemons-
Richerson Operations Center provided a new work home for
about a fourth of the bank’s workforce, and the project itself
represented a bold commitment to remaining an independent,
community-focused organization. Late in the year, Wilson Bank
also added its first official presence in Williamson County with
the opening of the new Cool Springs office.
Thank you for sharing in a journey that continues to take
Wilson Bank & Trust to exciting new places. We’re thriving and
growing in many ways, and that is possible only because your
support paves the way.
Sincerely,
Randall Clemons
President/CEO
Wilson Bank Holding Company
Chairman/CEO— Wilson Bank & Trust
John McDearman
Executive Vice President
Wilson Bank Holding Company
President— Wilson Bank & Trust
Wilson Bank & Trust
Executive Management
Front (L-R): Tonya Strobel, SVP/Mortgage President; Lisa Pominski, Executive VP/CFO;
Andy Jakes, SVP/South Region President; John McDearman, President; Randall Clemons, Chairman/CEO;
Clark Oakley, Executive VP/COO; Stephen Jaquish, SVP/Technology; Amelia Vance, SVP/Central Region President;
Christy Norton, SVP/Operations
Back (L-R): Gary Whitaker, Executive VP/Chief Credit Officer; John Goodman, SVP/West Region President;
Mac Griffin, SVP/Regulatory; Wes Taylor, SVP/East Region President; Ralph Mallicoat, SVP;
John Foster, SVP/Consumer Lending; Scott Jasper, SVP/Retail Banking
(not pictured: Damon Bates, SVP/Investment Center; Taylor Walker, SVP/North Region President)
Annual Report 2018 — page 5
Building Bridges to Sustain Success
Foundational Investment
The completion of the Clemons-Richerson Operations Center
in spring 2018 brought some advantages like workflow efficiencies, new technology and synergy among
department teams. Adding a three-story, 67,000-square-foot facility also made an important symbolic
statement: WBT’s willingness to invest significant capital in such a project reaffirmed the bank's plans to
remain an independent organization for years to come.
The operations center became the new work home for more than 140 employees, with office space,
meeting rooms, a training center and more, plus ample room for future growth. The surrounding
community had an opportunity to tour the new building at a special open house event in May.
Middle Tennessee’s Community Bank™ — page 6
Wilson Bank & Trust
2018 Annual Report — page 7
Annual Report — page 7
Building Bridges to Sustain Success
Welcome
to Williamson
Stable, organic growth took WBT into a new market in 2018
with the opening of the Cool Springs office. The bank’s 28th full-service location was its first in Williamson
County, where an existing base of loan and deposit customers, a strong local economy and shared community
values provided an advantageous scenario for selective expansion. Located in one of Middle Tennessee’s most
notable retail centers, the Cool Springs office officially opened for business in December as preparations were
made for a grand opening event in early 2019.
Middle Tennessee’s Community Bank™ — page 8
Wilson Bank & Trust
We Believe Together
Building on an initiative from the bank's 30th anniversary year,
a 2018 giving program allowed each office and department to partner with and support a local
charity selected by employees. Through fundraising, paid volunteer hours and a matching donation
program, Wilson Bank & Trust staff members assisted more than 40 nonprofit organizations over the
course of the year, while also giving back to communities through campaigns, donations and school
sponsorships that have always been part of WBT’s charitable efforts.
2018 Annual Report — page 9
Building Bridges to Sustain Success
Special Recognition
Your community bank routinely garnered attention
for all the right reasons in 2018. A top-20 national ranking by
magazine highlighted a series
of distinguishing accolades for financial performance, workplace excellence and community involvement
in 2018:
Bank Director
(cid:2)In its 2018 scorecard issue,
in the nation, and 13th nationally among institutions in the $1 billion to $5 billion asset category.
magazine ranked Wilson Bank & Trust the 19th strongest bank
Bank Director
(cid:2)For the fourth year in a row, WBT earned a Top Workplace award from the Tennessean, and tacked on a
Hall of Fame designation for the sustained success.
(cid:2)Through fall 2018, WBT had received the highest 5-star rating from financial ratings firm Bauer Financial
for 19 consecutive quarters.
(cid:2)In May, the American Cancer Society presented WBT with a Legacy Award, the first of its kind in
Tennessee, as the bank surpassed $1 million in funds raised to fight cancer. Wilson Bank & Trust has
supported ACS through Relay For Life since Wilson County started a local event in 1996.
(cid:2)In the spring, Everfi, Inc., presented WBT with a 2018 Financial Capability Innovation Award for making
digital learning initiatives available to students.
Middle Tennessee’s Community Bank™ — page 10
Middle Tennessee’s Community Bank™ — page 10
Wilson Bank & Trust
Digital Dynamics
To deliver added convenience and security for customers,
WBT introduced several new mobile and online solutions in 2018. An enhanced mobile
banking app added new features and integrated the bank’s personal financial management
tool, while other new apps and products gave cardholders complete control of their debit
and credit cards and helped safeguard against fraud and identity theft.
2018 Annual Report — page 11
Building Bridges to Sustain Success
2018 Financial Highlights
$2.5 Billion in Assets
Record Growth in Earnings
ASSETS
$2,198,051
$2,317,033
$2,543,682
$1,873,242
$2,021,604
$32,594
$23,863
$25,633
$23,526
$20,777
NET INCOME
2014
2015
2016
2017
2018
Middle Tennessee’s Community Bank™ — page 12
WILSON BANK HOLDING COMPANY FINANCIAL HIGHLIGHTS (UNAUDITED)
In Thousands, Except Per Share Information
As Of December 31,
2018
2017
2016
2015
2014
$
2,543,682
$
2,016,005
$
285,252
$
2,235,655
$
295,667
2,317,033
1,727,253
365,196
2,037,745
267,730
2,198,051
1,667,088
349,209
1,942,135
244,620
2,021,604
1,443,179
359,323
1,789,850
223,438
1,873,242
1,329,865
374,543
1,660,270
200,892
CONSOLIDATED
BALANCE SHEETS:
Total assets end of year
Loans, net
Securities
Deposits
Stockholders' equity
CONSOLIDATED STATEMENTS
Years Ended December 31,
OF EARNINGS:
Interest income
Interest expense
Net interest income
Provision for loan losses
Net interest income after provision for loan losses
Non-interest income
Non-interest expense
Earnings before income taxes
Income taxes
Net earnings
Cash dividends declared
PER SHARE DATA: (1)
Basic earnings per common share
Diluted earnings per common share
Cash dividends
Book value
RATIOS:
Return on average stockholders' equity
Return on average assets
Total capital to assets
Dividends declared per share as a percentage of
basic earnings per share
2018
2017
2016
2015
2014
$
103,525
14,018
89,507
4,298
85,209
25,248
69,080
41,377
8,783
$
32,594
$
$
$
$
$
9,447
3.09
3.08
0.90
27.83
11.70%
1.35%
11.62%
29.13%
91,020
8,889
82,131
1,681
80,450
22,821
60,391
42,880
19,354
23,526
6,729
2.26
2.26
0.65
25.62
9.06
1.04
11.55
28.76
84,746
8,284
76,462
379
76,083
21,654
57,263
40,474
14,841
25,633
5,756
2.49
2.49
0.56
23.71
10.80
1.21
11.13
22.49
78,839
8,608
70,231
388
69,843
19,941
52,159
37,625
13,762
23,863
4,935
2.35
2.35
0.49
21.90
11.17
1.23
11.05
20.85
74,380
9,768
64,612
498
64,114
16,678
47,705
33,087
12,310
20,777
4,510
2.06
2.06
0.45
19.90
10.95
1.15
10.72
21.82
(1) Per share data for periods prior to January 1, 2016 have been retroactively adjusted to reflect a 4 for 3 stock split which occurred effective March 30, 2016.
13
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Forward-Looking Statements
This report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995,
Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended
regarding, among other things, the anticipated financial and operating results of the Company. Investors are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation
to publicly release any modifications or revisions to these forward-looking statements to reflect events or circumstances occurring
after the date hereof or to reflect the occurrence of unanticipated events.
The Company cautions investors that future financial and operating results may differ materially from those projected in forward-
looking statements made by, or on behalf of, the Company. The words “expect,” “intend,” “should,” “may,” “could,” “believe,”
“suspect,” “anticipate,” “seek,” “plan,” “estimate” and similar expressions are intended to identify such forward-looking statements,
but other statements not based on historical fact may also be considered forward-looking. Such forward-looking statements involve
known and unknown risks and uncertainties, including, but not limited to those described in the Company’s Annual Report on Form
10-K for the year ended December 31, 2018, and also include, without limitation, (i) deterioration in the financial condition of
borrowers resulting in significant increases in loan losses and provisions for these losses, (ii) renewed deterioration in the real estate
market conditions in the Company’s market areas, (iii) the impact of increased competition with other financial institutions,
including pricing pressures, and the resulting impact on the Company's results, including as a result of compression to net interest
margin, (iv) the deterioration of the economy in the Company’s market areas, (v) fluctuations in interest rates on loans or deposits
that affect the yield curve, (vi) the ability to grow and retain low-cost core deposits, (vii) significant downturns in the business of
one or more large customers, (viii) the inability of the Company to comply with regulatory capital requirements, including those
resulting from changes to capital calculation methodologies and required capital maintenance levels, (ix) changes in state or Federal
regulations, policies, or legislation applicable to banks and other financial service providers, including regulatory or legislative
developments arising out of current unsettled conditions in the economy, including implementation of the Dodd Frank Wall Street
Reform and Consumer Protection Act (the "Dodd-Frank Act"), (x) changes in capital levels and loan underwriting, credit review or
loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments, (xi) inadequate
allowance for loan losses, (xii) the effectiveness of the Company’s activities in improving, resolving or liquidating lower quality
assets, (xiii) results of regulatory examinations, (xiv) the vulnerability of our network and online banking portals, and the systems of
parties with whom the Company contracts, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error,
natural disasters, power loss and other security breaches, (xv) the possibility of additional increases to compliance costs as a result
of increased regulatory oversight, (xvi) loss of key personnel, and (xvii) adverse results (including costs, fines, reputational harm
and/or other negative effects) from current or future obligatory litigation, examinations or other legal and/or regulatory actions.
These risks and uncertainties may cause the actual results or performance of the Company to be materially different from any future
results or performance expressed or implied by such forward-looking statements. The Company’s future operating results depend on
a number of factors which were derived utilizing numerous assumptions that could cause actual results to differ materially from
those projected in forward-looking statements.
General
The Company is a registered bank holding company that owns 100% of the common stock of Wilson Bank and Trust (“Wilson
Bank”), a Tennessee state-chartered bank headquartered in Lebanon, Tennessee. The Company was formed in 1992.
Wilson Bank is a community bank headquartered in Lebanon, Tennessee, serving Wilson County, DeKalb County, Smith County,
Trousdale County, Rutherford County, Davidson County, Putnam County, Sumner County, and Williamson County, Tennessee as its
primary market areas. Generally, this market is the Nashville-Davidson-Murfreesboro-Franklin, Tennessee metropolitan statistical
area. At December 31, 2018, Wilson Bank had twenty-eight locations in Wilson, Davidson, DeKalb, Smith, Sumner, Rutherford,
Putnam, Trousdale and Williamson Counties. Management believes that these counties offer an environment for continued growth,
and the Company’s target market is local consumers, professionals and small businesses. Wilson Bank offers a wide range of
banking services, including checking, savings and money market deposit accounts, certificates of deposit and loans for consumer,
commercial and real estate purposes. The Company also offers an investment center which offers a full line of investment services
to its customers.
The following discussion and analysis is designed to assist readers in their analysis of the Company’s consolidated financial
statements and should be read in conjunction with such consolidated financial statements and the notes thereto.
14
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Critical Accounting Estimates
The accounting principles we follow and our methods of applying these principles conform with U.S. generally accepted accounting
principles and with general practices within the banking industry. In connection with the application of those principles, we have
made judgments and estimates which, in the case of the determination of our allowance for loan losses have been critical to the
determination of our financial position and results of operations. Additional information regarding significant accounting policies is
described in Note 1 to the Company's consolidated financial statements for the year ended December 31, 2018 included in the
Company’s Annual Report on Form 10-K.
Allowance for Loan Losses (“allowance”)-Our management assesses the adequacy of the allowance prior to the end of each
calendar quarter. This assessment includes procedures to estimate the allowance and test the adequacy and appropriateness of the
resulting balance. The level of the allowance is based upon management’s evaluation of the loan portfolio, past loan loss
experience, current asset quality trends, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s
ability to repay (including the timing of future payment), the estimated value of any underlying collateral, composition of the loan
portfolio, economic conditions, industry and peer bank loan quality indicators and other pertinent factors, including regulatory
recommendations. This evaluation is inherently subjective as it requires material estimates, including the amounts and timing of
future cash flows expected to be received on impaired loans, that may be susceptible to significant change. Loan losses are charged
off when management believes that the full collectability of the loan is unlikely. A loan may be partially charged-off after a
“confirming event” has occurred which serves to validate that full repayment pursuant to the terms of the loan is unlikely.
Allocation of the allowance may be made for specific loans, but the entire allowance is available for any loan that, in management’s
judgment, is deemed to be uncollectible.
A loan is impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due
according to the contractual terms of the loan agreement. Collection of all amounts due according to the contractual terms means
that both the interest and principal payments of a loan will be collected as scheduled in the loan agreement.
An impairment allowance is recognized if the fair value of the loan is less than the recorded investment in the loan (recorded
investment in the loan is the principal balance plus any accrued interest, net of deferred loan fees or costs and unamortized premium
or discount). The impairment is recognized through the allowance. Loans that are impaired are recorded at the present value of
expected future cash flows discounted at the loan’s effective interest rate, or if the loan is collateral dependent, impairment
measurement is based on the fair value of the collateral, less estimated disposal costs. If the measure of the impaired loan is less
than the recorded investment in the loan, the Company recognizes an impairment by creating a valuation allowance with a
corresponding charge to the provision for loan losses or by adjusting an existing valuation allowance for the impaired loan with a
corresponding charge or credit to the provision for loan losses. Management believes it follows appropriate accounting and
regulatory guidance in determining impairment and accrual status of impaired loans.
The level of allowance maintained is believed by management to be adequate to absorb probable losses inherent in the portfolio at
the balance sheet date. The allowance is increased by provisions charged to expense and decreased by charge-offs, net of recoveries
of amounts previously charged-off.
In assessing the adequacy of the allowance, we also consider the results of our ongoing loan review process. We undertake this
process both to ascertain whether there are loans in the portfolio whose credit quality has weakened over time and to assist in our
overall evaluation of the risk characteristics of the entire loan portfolio. Our loan review process includes the judgment of
management, the input from our independent loan reviewers, and reviews that may have been conducted by bank regulatory
agencies as part of their usual examination process. We incorporate loan review results in the determination of whether or not it is
probable that we will be able to collect all amounts due according to the contractual terms of a loan.
As part of management’s quarterly assessment of the allowance, management divides the loan portfolio into twelve segments based
on bank call reporting requirements. Each segment is then analyzed such that an allocation of the allowance is estimated for each
loan segment.
The allowance allocation begins with a process of estimating the probable losses in each of the twelve loan segments. The estimates
for these loans are based on our historical loss data for that category over the last twenty quarters.
15
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The estimated loan loss allocation for all twelve loan portfolio segments is then adjusted for several “environmental” factors. The
allocation for environmental factors is particularly subjective and does not lend itself to exact mathematical calculation. This
amount represents estimated probable inherent credit losses which exist, but have not yet been identified, as of the balance sheet
date, and are based upon quarterly trend assessments in delinquent and nonaccrual loans, unanticipated charge-offs, credit
concentration changes, prevailing economic conditions, changes in lending personnel experience, changes in lending policies or
procedures, changes in interest rate, and other influencing factors. These environmental factors are considered for each of the twelve
loan segments, and the allowance allocation, as determined by the processes noted above for each component, is increased or
decreased based on the incremental assessment of these various environmental factors.
We then test the resulting allowance by comparing the balance in the allowance to industry and peer information. Our management
then evaluates the result of the procedures performed, including the result of our testing, and concludes on the appropriateness of
the balance of the allowance in its entirety. The board of directors reviews and approves the assessment prior to the filing of
quarterly and annual financial information.
Impairment of Goodwill and Intangible Assets—Long-lived assets, including purchased intangible assets subject to amortization,
are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to
estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its
estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds
the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of
the carrying amount or fair value less costs to sell, and are no longer depreciated.
Goodwill and intangible assets that have indefinite useful lives are evaluated for impairment annually and are evaluated for
impairment more frequently if events and circumstances indicate that the asset might be impaired. That annual assessment date is
December 31. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. The Company
first has the option to perform a qualitative assessment of goodwill to determine if impairment has occurred. Based upon the
qualitative assessment, if the fair value of goodwill exceeds the carrying value, the evaluation of goodwill is complete. If the
qualitative assessment indicates that impairment is present, the goodwill impairment analysis continues with a two-step test. The
first step, used to identify potential impairment, involves comparing each reporting unit’s estimated fair value to its carrying value,
including goodwill. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill is considered not to be
impaired. If the carrying value exceeds estimated fair value, there is an indication of potential impairment and the second step is
performed to measure the amount of impairment.
If required, the second step involves calculating an implied fair value of goodwill for each reporting unit for which the first step
indicated potential impairment. The implied fair value of goodwill is determined in a manner similar to the amount of goodwill
calculated in a business combination, by measuring the excess of the estimated fair value of the reporting unit, as determined in the
first step, over the aggregate estimated fair values of the individual assets, liabilities and identifiable intangibles as if the reporting
unit was being acquired in a business combination. If the implied fair value of goodwill exceeds the carrying value of goodwill
assigned to the reporting unit, there is no impairment. If the carrying value of goodwill assigned to a reporting unit exceeds the
implied fair value of the goodwill, an impairment charge is recorded for the excess. An impairment loss cannot exceed the carrying
value of goodwill assigned to a reporting unit, and the loss establishes a new basis in the goodwill.
Other-than-temporary Impairment—Impaired securities are assessed quarterly for the presence of other-than-temporary
impairment (“OTTI”). A decline in the fair value of any available-for-sale or held-to-maturity security below cost that is deemed to
be other-than-temporary results in a reduction in the carrying amount of the security. To determine whether OTTI has occurred,
management considers factors such as (1) length of time and extent that fair value has been less than cost, (2) the financial condition
and near term prospects of the issuer, and (3) the Company’s ability and intent to hold the security for a period sufficient to allow
for an anticipated recovery in fair value. If management deems a security to be OTTI, management reviews the present value of the
future cash flows associated with the security. A shortfall of the present value of the cash flows expected to be collected in relation
to the amortized cost basis is referred to as a credit loss. If a credit loss is identified, the credit loss is recognized in that period as a
charge to earnings and a new cost basis for the security is established. If management concludes that no credit loss exists and it is
not more-likely-than-not that the Company will be required to sell the security before the recovery of the security’s cost basis, then
the security is not deemed OTTI and the shortfall is recorded as a component of equity.
16
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Fair Value of Financial Instruments—Fair values of financial instruments are estimated using relevant market information and
other assumptions, as more fully disclosed in Note 21 to the Company's consolidated financial statements for the year ended
December 31, 2018 included in the Company's Annual Report on Form 10-K. Fair value estimates involve uncertainties and matters
of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad
markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates.
Results of Operations
Net earnings for the year ended December 31, 2018 were $32,594,000, an increase of $9,068,000, or 38.54%, compared to net
earnings of $23,526,000 for 2017. Our 2017 net earnings were 8.22%, or $2,107,000, below our net earnings of $25,633,000 for
2016. Basic earnings per share were $3.09 in 2018, compared with $2.26 in 2017 and $2.49 in 2016. Diluted earnings per share
were $3.08 in 2018, compared to $2.26 in 2017 and $2.49 in 2016. Net income and diluted and basic earnings per share were
significantly and negatively impacted by the revaluation of the Company’s deferred tax assets triggered by the passage of the Tax
Cuts and Jobs Act in late December 2017. Net yield on earning assets for the year ended December 31, 2018 was 4.01%, compared
to 3.84% and 3.82% for the years ended December 31, 2017 and December 31, 2016, respectively. Net interest spread for the year
ended December 31, 2018 was 3.87%, compared to 3.75% and 3.73% for the years ended December 31, 2017 and December 31,
2016, respectively. See below for further discussion regarding variances related to net interest income, provision for loan losses,
non-interest income, non-interest expense and income taxes.
Net Interest Income
Net interest income represents the amount by which interest earned on various earning assets exceeds interest paid on deposits and
other interest-bearing liabilities and is the most significant component of the Company’s earnings. Total interest income in 2018 was
$103,525,000, up 13.7% when compared with $91,020,000 in 2017 and up 22.2% when compared to $84,746,000 in 2016, in each
case excluding tax exempt adjustments relating to tax exempt securities and loans. The increase in total interest income in 2018
when compared to 2017 was primarily attributable to an overall increase in loans and the resulting increase in the aggregate amount
of interest and fees earned on loans as well as an increase in average loan yields from 4.84% to 5.11% resulting from rate increases
enacted by the Federal Reserve in 2018. The ratio of average earning assets to total average assets was 95.0%, 95.4% and 95.8% for
each of the years ended December 31, 2018, 2017 and 2016, respectively. Average earning assets increased $123,040,000 from
December 31, 2017 to December 31, 2018. The average rate earned on earning assets for 2018 was 4.62%, compared with 4.25% in
2017 and 4.23% in 2016.
Total interest expense for 2018 was $14,018,000, an increase of $5,129,000, or 57.70%, compared to total interest expense of
$8,889,000 in 2017. Average interest bearing deposits increased to $1,867,037,000 for 2018 compared to $1,766,052,000 for 2017.
The average rate paid on interest-bearing deposits was 0.75% for 2018 compared to 0.50% for 2017. Total interest expense
increased from $8,284,000 in 2016 to $8,889,000 in 2017, an increase of $605,000, or 7.30%. The increases in total interest expense
in 2018 and 2017 resulted primarily from a rising rate environment and competitive pressures in our markets, as well as an overall
increase in the volume of average interest-bearing deposits. If the rates we pay on our interest-bearing liabilities rise faster than the
yields we receive on our interest-earning assets, our net interest income could decrease when compared to prior periods if we are
unable to grow our interest-earning assets at a pace that exceeds the growth in our interest-bearing liabilities.
Net interest income for 2018 totaled $89,507,000 as compared to $82,131,000 and $76,462,000 in 2017 and 2016, respectively. The
net interest spread, defined as the effective yield on earning assets less the effective cost of deposits and borrowed funds (calculated
on a fully taxable equivalent basis), increased to 3.87% in 2018 from 3.75% in 2017. The net interest spread was 3.73% in 2016.
Net yield on earning assets increased to 4.01% in 2018 from 3.84% in 2017. The net yield on earning assets was 3.82% in 2016.
The change in net yield on earning assets resulted from an increase in yields on loans and securities that were only partially offset
by an increase in the interest paid on our interest-bearing liabilities. The increase in the loan yields from 2017 to 2018 is primarily
the result of increases in short-term rates enacted by the Federal Reserve. The increase in yield on securities was due to
management's ability to invest in higher yielding securities as the overall rates in the market increased. The rate the Company pays
on its deposits and other funding sources increased in 2018 when compared to 2017, as the Company increased the rates it is paying
on all of its deposit products as a result of competitive pressures in its markets and increases in short-term rates. Changes in interest
rates paid on products such as interest checking, savings, and money market accounts will generally increase or decrease in a
manner that is consistent with changes in the short-term environment, but are also impacted by competitive market conditions. The
Company’s liabilities are positioned to re-price faster than its assets such that a short-term declining rate environment should have a
17
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
positive impact on the Company’s earnings as its interest expense decreases faster than interest income. Conversely, a rising rate
environment could have a short-term negative impact on margins, as deposits would likely re-price faster than assets. Management
regularly monitors the deposit rates of the Company’s competitors and these rates continue to put pressure on the Company’s
deposit pricing, just as loan pricing pressure from competition within our markets continues to negatively impact loan yields. This
pressure could continue to negatively impact the Company’s net interest margin and earnings if short-term rates continue to rise.
Provision for Loan Losses
The provision for loan losses represents a charge to earnings necessary to establish an allowance for loan losses that, in
management’s evaluation, is adequate to provide coverage for estimated losses on outstanding loans and to provide for uncertainties
in the economy. The 2018 provision for loan losses was $4,298,000, an increase of $2,617,000 from the provision of $1,681,000 in
2017, which was $1,302,000 higher than the provision in 2016. The increase in the provision for the year ended December 31, 2018
is primarily attributable to an increase in the volume of loans originated during the period with an overall growth in the loan
portfolio of 16.68%. Management continues to fund the allowance for loan losses through provisions based on management’s
calculation of the allowance for loan losses. The provision for loan losses is based on past loan experience and other factors which,
in management’s judgment, deserve current recognition in estimating loan losses. Such factors include growth and composition of
the loan portfolio, review of specific problem loans, past due and nonperforming loans, change in lending staff, the
recommendations of the Company’s regulators, and current economic conditions that may affect the borrowers’ ability to repay.
Wilson Bank’s charge-off policy for impaired loans is similar to its charge-off policy for all loans in that loans are charged-off in the
month when a determination is made that the loan is uncollectible. Net charge-offs increased to $1,033,000 in 2018 from $503,000
in 2017. Net charge-offs in 2016 totaled $548,000. The ratio of net charge-offs to average total outstanding loans was 0.05% in
2018, 0.03% in 2017 and 0.04% in 2016. Overall, Wilson Bank has continued to experience a stabilization in past dues and
nonaccruals and is experiencing fewer foreclosures than it experienced in the recession.
The increase in provision for loan losses resulted in an increase of the allowance for loan losses (net of charge-offs and recoveries)
to $27,174,000 at December 31, 2018 from $23,909,000 at December 31, 2017 and $22,731,000 at December 31, 2016. The
allowance for loan losses increased 13.66% between December 31, 2017 and December 31, 2018 as compared to the 16.68%
increase in total loans over the same period. The allowance for loan losses was 1.33% of total loans outstanding at December 31,
2018 compared to 1.37% at December 31, 2017 and 1.35% at December 31, 2016. As a percentage of nonperforming loans at
December 31, 2018, 2017 and 2016, the allowance for loan losses represented 667%, 493% and 340%, respectively. The internally
classified loans as a percentage of the allowance for loan losses were 44.3% and 67.8%, respectively, at December 31, 2018 and
2017.
The level of the allowance and the amount of the provision involve evaluation of uncertainties and matters of judgment. The
Company maintains an allowance for loan losses which management believes is adequate to absorb losses inherent in the loan
portfolio. A formal review is prepared quarterly by the Chief Financial Officer and provided to the Board of Directors to assess the
risk in the portfolio and to determine the adequacy of the allowance for loan losses. The review includes analysis of historical
performance, the level of non-performing and adversely rated loans, specific analysis of certain problem loans, loan activity since
the previous assessment, reports prepared by the Company's independent Loan Review Department, consideration of current
economic conditions and other pertinent information. The level of the allowance to net loans outstanding will vary depending on the
overall results of this quarterly assessment. See the discussion above under “Critical Accounting Estimates” for more information.
Management believes the allowance for loan losses at December 31, 2018 to be adequate, but if economic conditions deteriorate
beyond management’s current expectations and additional charge-offs are incurred, the allowance for loan losses may require an
increase through additional provision for loan losses expense which would negatively impact earnings.
Non-Interest Income
The components of the Company’s non-interest income include service charges on deposit accounts, other fees and commissions,
fees and gains on sales of loans, gains (losses) on sales of securities, bank-owned life insurance (BOLI) and annuity earnings, gain
on the sale of other real estate and other income. Total non-interest income for 2018 was $25,248,000, compared with $22,821,000
in 2017 and $21,654,000 in 2016. The 10.63% increase from 2017 was primarily due to an increase in other fees and commissions,
an increase in service charges on deposits, and an increase on the gain on sale of loans offset in part by a decrease on the gain on
sale of securities. Other fees and commissions increased $1,952,000, or 16.61%, in 2018 to $13,704,000 when compared to 2017.
18
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Other fees and commissions include income on brokerage accounts, debit card interchange fee income, and various other fees. The
increase in other fees and commissions is primarily due to an increase in brokerage income, debit card interchange fee income, and
management's decision to sell shares of previously acquired Visa stock to fund a portion of the Bank's loan growth. Brokerage
income increased due to the addition of two financial advisors and higher recurring income due to higher stock market values
throughout much of 2018 when compared to the comparable periods in 2017. Debit card interchange fee income increased due to an
increase in the number and volume of debit card holders and transactions. The service charges on deposit accounts increased
$675,000, or 11.02%, to $6,799,000 for the year ended December 31, 2018 compared to the year ended December 31, 2017 due to
an increase in the number of consumer checking accounts, an increase in the number of transactions, an increase in the service
charge on insufficient funds, and an increase in continuous overdraft fees. The fees and gains on sales of mortgage loans increased
$381,000, or 8.95%, to $4,639,000 for the year ended December 31, 2018 compared to the year ended December 31, 2017. Overall,
volume from the sale of loans decreased $18,835,000 from December 31, 2017 to December 31, 2018 primarily resulting from a
decrease in refinancings due to increased interest rates in 2018. Although the volume of mortgage loans sold decreased during 2018,
the gain on sale of mortgage loans increased during the period ended December 31, 2018 compared to December 31, 2017 as a
result of a new secondary market strategy we implemented in the first quarter of 2018, which included expanding our loan sale
investor count and new pricing strategy. Loss on sale of securities increased $475,000, or 271.43%, to a loss of $650,000 in 2018
when compared to a loss of $175,000 in 2017 due to management's decision to sell securities and reinvest the proceeds in higher
yielding assets as interest rates rose in 2018.
The Company’s non-interest income is composed of several components, some of which vary significantly between periods. Service
charges on deposit accounts and other non-interest income generally reflect the Company’s growth, while fees for origination of
mortgage loans and brokerage fees and commissions will often reflect home mortgage market and stock market conditions and
fluctuate more widely from period to period.
Non-Interest Expenses
Non-interest expenses consist primarily of employee costs, FDIC premiums, occupancy expenses, furniture and equipment
expenses, data processing expenses, directors’ fees, and other operating expenses. Total non-interest expenses for 2018 increased
14.39% to $69,080,000 from $60,391,000 in 2017. Non-interest expenses for 2017 were up 5.46% over non-interest expenses in
2016 which totaled $57,263,000. The increase in non-interest expenses in 2018 is primarily attributable to a year-over-year increase
in salaries and employee benefits of $3,760,000, equity-based compensation expense of $545,000, other operating expenses of
$2,177,000, occupancy expenses of $685,000, furniture and equipment expenses of $682,000, and ATM and interchange fees of
$522,000. Salaries and employee benefits were up in 2018 when compared to 2017 because the number of employees continued to
increase in order to support the Company's growth in operations and new branch expansions. The increase in equity-based
compensation expense is due to the increased expense associated with stock appreciation rights, which was driven by an increase in
our year-end stock price. The increase in other operating expenses is due to increased account servicing costs associated with an
increase in consumer checking accounts, brokerage accounts and loans made to customers. Occupancy expenses were up in 2018
when compared to 2017 due to the opening of a new branch in Davidson County in the third quarter of 2017, the opening of a new
operations center in the second quarter of 2018, and the initial lease payments associated with the opening of a new branch in
Williamson County in the fourth quarter of 2018. The increase in furniture and equipment expenses is primarily attributable to an
increase in depreciation related to the opening of the new operations building as well as an increase in the cost of maintenance and
repairs. The increase in ATM and interchange fees is primarily attributable to the addition of ATMs as branch expansion has
occurred and increasing interchange fees associated with a higher volume of debit card transactions. The Company anticipates that
salaries and employee benefits expense and occupancy expense will continue to increase as the Company's operations grow.
Income Taxes
The Company’s income tax expense was $8,783,000 for 2018, a decrease of $10,571,000 from $19,354,000 for 2017, which was up
by $4,513,000 from the 2016 total of $14,841,000. The percentage of income tax expense to earnings before taxes was 21.2% in
2018, 45.1% in 2017 and 36.7% in 2016. The decrease in income tax expense as well as the percentage of income expense to
earnings before taxes is primarily due to the changes in statutory corporate tax rates resulting from the Tax Cuts and Jobs Act (the
"Act"), a tax reform bill passed in December 2017 which, among other items, reduced the then current corporate federal tax rate to
21% from 35%. Our effective tax rate represents our blended federal and state rate of 26.135% affected by the impact of anticipated
favorable permanent differences between our book and taxable income such as bank-owned life insurance, income earned on tax-
19
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
exempt securities and certain federal and state tax credits. The rate reduction was effective January 1, 2018. The Company
concluded that the Act caused the Company's deferred tax assets to be revalued. As changes in tax laws or rates are enacted,
deferred tax assets and liabilities are adjusted through income tax expense. During the fourth quarter of 2017, we reduced the value
of our deferred tax assets by $3.6 million and recorded an additional income tax expense, thus causing the increase in income tax
expense from 2016 to 2017.
Our income tax expense, deferred tax assets and liabilities reflect management’s best assessment of estimated future taxes to be
paid. We are subject to income taxes at both the federal and state level. Significant judgments and estimates are required in
determining the consolidated income tax expense.
Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and
expense. In evaluating our ability to recover our deferred tax assets we consider all available positive and negative evidence,
including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial
operations. In projecting future taxable income, we begin with historical results adjusted for changes in accounting policies and
incorporate assumptions including the amount of future state and federal pretax operating income, the reversal of temporary
differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment
about the forecasts of future taxable income and are consistent with the plans and estimates we are using to manage the underlying
businesses. In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating
income. Changes in current tax laws and rates could also affect recorded deferred tax assets and liabilities in the future as was the
case with the passage of the Act.
Financial Accounting Standards Board (“FASB”) ASC Topic 740, Income Taxes (“ASC 740”) provides that a tax benefit from an
uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination,
including resolutions of any related appeals or litigation processes, based on the technical merits. ASC Topic 740 also provides
guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and
transition.
We recognize tax liabilities in accordance with ASC Topic 740 and we adjust these liabilities when our judgment changes as a result
of the evaluation of new information not previously available. Due to the complexity of some of these uncertainties, the ultimate
resolution may result in a payment that is materially different from our current estimate of the tax liabilities. These differences will
be reflected as increases or decreases to income tax expense in the period in which they are determined.
Earnings Per Share
The computation of basic earnings per share is based on the weighted average number of common shares outstanding during the
period. The computation of diluted earnings per share for the Company begins with the basic earnings per share plus the effect of
common shares contingently issuable from stock options.
The following is a summary of components comprising basic and diluted earnings per share (“EPS”) for the years ended
December 31, 2018, 2017 and 2016:
20
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Basic EPS Computation:
Numerator – Earnings available to common stockholders
Denominator – Weighted average number of common shares outstanding
Basic earnings per common share
Diluted EPS Computation:
Numerator – Earnings available to common stockholders
Denominator – Weighted average number of common shares outstanding
Dilutive effect of stock options
Diluted earnings per common share
Financial Condition
Balance Sheet Summary
Years Ended December 31,
2018
2017
2016
(Dollars in Thousands except per share amounts)
$
$
$
$
32,594
23,526
25,633
10,564,172
10,407,211
10,279,332
3.09
2.26
2.49
32,594
23,526
25,633
10,564,172
10,407,211
10,279,332
8,049
5,325
4,996
10,572,221
10,412,536
10,284,328
3.08
2.26
2.49
The Company’s total assets increased by $226,649,000, or 9.78%, to $2,543,682,000 at December 31, 2018, after increasing 5.41%
in 2017 to $2,317,033,000 at December 31, 2017. Loans, net of allowance for loan losses, totaled $2,016,005,000 at December 31,
2018, a 16.72% increase compared to December 31, 2017. The increase in loans resulted from an overall increase in demand for
construction loans and 1-4 family residential real estate loans, along with an increase in marketing efforts that concentrated on
increasing the volume of loans and our recent branch expansion. We operate in a market area that is experiencing economic growth,
particularly growth in new jobs due to the opening of several new distribution centers which caused our construction and residential
1-4 family portfolios to increase as of December 31, 2018, when compared to December 31, 2017. At year end 2018, securities
totaled $285,252,000, a decrease of 21.89% from $365,196,000 at December 31, 2017, primarily as a result of management's
decision to sell securities and reinvest the proceeds in higher yielding assets.
Total liabilities increased by $198,712,000, or 9.70%, to $2,248,015,000 at December 31, 2018 compared to $2,049,303,000 at
December 31, 2017. This increase was composed primarily of the $197,910,000 increase in total deposits to $2,235,655,000, a
9.71% increase from December 31, 2017. Securities sold under repurchase agreements decreased to $0 from $864,000 at the
respective year ends 2018 and 2017.
Stockholders’ equity increased $27,937,000, or 10.43%, in 2018, due to net earnings and the issuance of stock pursuant to the
Company’s Dividend Reinvestment Plan and the exercise of stock options, offset by increases in unrealized loss on available-for-
sale securities and dividends paid on the Company’s common stock. The change in stockholders’ equity includes a $3,470,000
increase in net unrealized losses on available-for-sale securities, net of taxes during the period. A more detailed discussion of assets,
liabilities and capital follows.
Loan category amounts and the percentage of loans in each category to total loans are as follows:
December 31, 2018
December 31, 2017
(Dollar Amounts in Thousands)
AMOUNT
PERCENTAGE
(Dollar Amounts in Thousands)
PERCENTAGE
AMOUNT
Commercial, financial
and agricultural
Installment and other
Real estate – mortgage
Real estate – construction
Total
$ 89,554
48,759
1,393,641
518,245
$ 2,050,199
4.3%
2.4
68.0
25.3
100.0%
$ 59,797
43,009
1,263,696
392,039
$ 1,758,541
3.4%
2.4
71.9
22.3
100.0%
21
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Loans are the largest component of the Company’s assets and are its primary source of income. The Company’s loan portfolio, net
of allowance for loan losses, increased 16.72% at year end 2018 when compared to year end 2017. The loan portfolio is composed
of four primary loan categories: commercial, financial and agricultural; installment and other; real estate-mortgage; and real estate-
construction. The table above sets forth the loan categories and the percentage of such loans in the portfolio as of December 31,
2018 and 2017.
As represented in the table, Wilson Bank experienced loan growth for the year ended December 31, 2018 in all four primary loan
categories. Real estate mortgage loans increased 10.28% in 2018 and comprised 68.0% of the total loan portfolio at December 31,
2018, compared to 71.9% at December 31, 2017. Management believes the increase in real estate mortgage loans was primarily due
to the continued favorable population growth in the Company's market areas and the Company's ability to increase its market share
of such loans while maintaining its loan underwriting standards. Installment loans increased 13.37% in 2018 and comprised 2.4% of
the total loan portfolio at December 31, 2018 and December 31, 2017. Commercial, financial, and agricultural loans increased
49.76% in 2018 and comprised 4.3% of the total loan portfolio at December 31, 2018, compared to 3.4% at December 31, 2017
due, in part, to the addition of one large commercial loan relationship in 2018. Real estate construction loans increased 32.19% in
2018 and comprised 25.3% of the portfolio at December 31, 2018, compared to 22.3% at December 31, 2017. The increase in real
estate construction loans during 2018 reflected the overall increase in demand for such loans in the overall economy and the
Company’s market. Because of the increase in the construction portfolio, Wilson Bank has implemented an additional layer of
monitoring as it seeks to avoid advancing funds that exceed the present value of the collateral securing the loan. The responsibility
for monitoring percentage of completion and distribution of funds tied to these completion percentages are now monitored and
administered by a credit administration department independent of the lending function. Wilson Bank continues to seek to diversify
its real estate portfolio to avoid having concentrations in any one type of loan.
Banking regulators define highly leveraged transactions to include leveraged buy-outs, acquisition loans and recapitalization loans
of an existing business. Under the regulatory definition, at December 31, 2018, the Company had no highly leveraged transactions,
and there were no foreign loans outstanding during any of the reporting periods. As of December 31, 2018, the Company had not
underwritten any loans in connection with capital leases.
The following tables present the Company’s nonaccrual loans and past due loans as of December 31, 2018 and December 31, 2017.
Loans on Nonaccrual Status
Residential 1-4 family
Multifamily
Commercial real estate
Construction
Farmland
Second mortgages
Equity lines of credit
Commercial
Agricultural, installment and other
Total
In Thousands
2018
2017
$
948
-
1,102
-
-
-
-
-
-
2,050
$
$
-
-
1,729
-
310
-
-
-
1
2,040
$
22
WB&T | Annual Report 2018
0
9
n
a
h
T
r
e
t
a
e
r
G
s
n
a
o
L
d
n
a
l
a
u
r
c
c
a
n
o
N
r
e
t
a
e
r
G
9
8
-
0
6
9
5
-
0
3
)
s
d
n
a
s
u
o
h
t
n
I
(
Y
N
A
P
M
O
C
G
N
I
D
L
O
H
K
N
A
B
N
O
S
L
I
W
N
O
I
T
I
D
N
O
C
L
A
I
C
N
A
N
I
F
F
O
S
I
S
Y
L
A
N
A
D
N
A
N
O
I
S
S
U
C
S
I
D
S
’
T
N
E
M
E
G
A
N
A
M
S
N
O
I
T
A
R
E
P
O
F
O
S
T
L
U
S
E
R
D
N
A
d
n
a
e
u
D
t
s
a
P
s
y
a
D
t
s
e
r
e
t
n
I
g
n
i
u
r
c
c
A
s
n
a
o
L
t
n
e
r
r
u
C
e
u
D
t
s
a
P
0
9
n
a
h
T
e
u
D
t
s
a
P
s
y
a
D
s
y
a
D
e
u
D
t
s
a
P
s
y
a
D
e
u
D
t
s
a
P
0
2
9
-
2
7
2
3
1
2
-
5
4
4
2
5
9
$
2
9
6
,
0
6
4
3
1
6
,
4
3
1
5
5
0
,
1
0
7
5
4
2
,
8
1
5
1
7
0
,
4
2
7
9
1
,
1
1
3
1
0
,
2
6
5
4
2
,
8
7
8
6
0
,
0
6
4
7
4
,
4
5
4
3
1
6
,
4
3
1
0
6
4
,
9
9
6
0
2
6
,
6
1
5
8
9
9
,
3
2
4
6
8
,
0
1
1
7
6
,
1
6
8
2
1
,
8
7
1
8
4
,
9
5
8
1
2
,
6
-
5
9
5
,
1
5
2
6
,
1
3
7
3
3
3
2
4
3
7
1
1
7
8
5
8
6
8
,
1
-
4
7
1
,
1
2
3
1
2
-
5
4
4
2
5
9
9
0
2
,
1
$
9
9
1
,
0
5
0
,
2
9
0
3
,
9
3
0
,
2
0
9
8
,
0
1
9
5
2
,
3
3
7
6
-
-
3
1
1
-
2
-
1
4
8
4
1
7
7
9
$
7
6
6
,
6
0
4
2
9
9
,
1
9
3
2
2
,
1
6
6
9
3
0
,
2
9
3
2
1
2
,
4
3
2
5
9
,
8
0
5
6
,
0
6
9
3
9
,
7
4
7
6
8
,
4
5
9
3
8
,
1
0
4
2
9
9
,
1
9
1
1
4
,
9
5
6
3
9
4
,
1
9
3
0
9
7
,
3
3
0
5
9
,
8
9
0
6
,
0
6
0
0
8
,
7
4
9
2
2
,
4
5
8
2
8
,
4
-
2
1
8
,
1
6
4
5
2
2
4
2
1
4
9
3
1
8
3
6
$
1
4
5
,
8
5
7
,
1
3
1
1
,
0
5
7
,
1
8
2
4
,
8
-
3
7
6
9
2
7
,
1
3
1
1
0
1
3
2
1
4
-
9
4
1
7
1
0
,
3
2
9
0
,
1
8
5
2
,
3
$
y
l
i
m
a
f
4
-
1
l
a
i
t
n
e
d
i
s
e
R
8
1
0
2
,
1
3
r
e
b
m
e
c
e
D
-
9
0
1
6
2
9
-
-
-
5
8
1
2
3
,
1
4
2
5
-
3
8
-
-
-
-
7
3
1
7
5
1
0
8
-
2
1
3
7
6
5
,
1
3
4
3
3
3
7
9
2
3
9
7
0
4
0
1
3
,
6
1
3
6
,
3
-
-
3
3
4
2
1
1
-
-
2
2
3
4
$
$
l
a
t
o
T
y
l
i
m
a
f
4
-
1
l
a
i
t
n
e
d
i
s
e
R
7
1
0
2
,
1
3
r
e
b
m
e
c
e
D
y
l
i
m
a
f
i
t
l
u
M
e
t
a
t
s
e
l
a
e
r
l
a
i
c
r
e
m
m
o
C
t
i
d
e
r
c
f
o
s
e
n
i
l
y
t
i
u
q
E
s
e
g
a
g
t
r
o
m
d
n
o
c
e
S
l
a
i
c
r
e
m
m
o
C
n
o
i
t
c
u
r
t
s
n
o
C
d
n
a
l
m
r
a
F
r
e
h
t
o
d
n
a
t
n
e
m
l
l
a
t
s
n
i
,
l
a
r
u
t
l
u
c
i
r
g
A
r
e
h
t
o
d
n
a
t
n
e
m
l
l
a
t
s
n
i
,
l
a
r
u
t
l
u
c
i
r
g
A
e
t
a
t
s
e
l
a
e
r
l
a
i
c
r
e
m
m
o
C
y
l
i
m
a
f
i
t
l
u
M
t
i
d
e
r
c
f
o
s
e
n
i
l
y
t
i
u
q
E
s
e
g
a
g
t
r
o
m
d
n
o
c
e
S
l
a
i
c
r
e
m
m
o
C
n
o
i
t
c
u
r
t
s
n
o
C
d
n
a
l
m
r
a
F
23
WB&T | Annual Report 2018
0
1
6
,
4
$
l
a
t
o
T
WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Non-performing loans, which include nonaccrual loans and loans 90 days past due, totaled $3,259,000 at December 31, 2018, an
increase from $3,017,000 at December 31, 2017, resulting from a $10,000, or 0.49%, increase in nonaccrual loans and a $232,000,
or 23.75%, increase in 90 day past due and accruing loans. The increase in non-performing loans during the year ended
December 31, 2018 of $242,000 was due primarily to an increase in non-performing residential 1-4 family real estate loans of
$1,195,000, offset in part by a decrease in non-performing commercial real estate loans of $555,000 and a decrease in non-
performing farmland loans of $289,000. The increase in non-performing residential 1-4 family loans resulted primarily from the
addition of one large 1-4 family residential loan on nonaccrual status. The decrease in non-performing commercial real estate loans
from December 31, 2017 to December 31, 2018 primarily resulted from the pay-down of one large loan on nonaccrual status.
Nonaccrual loans are loans on which interest is no longer accrued because management believes collection of such interest is
doubtful due to management’s evaluation of the borrower’s financial condition, collateral liquidation value, economic and business
conditions and other factors affecting the borrower’s ability to pay. Management believes that it is probable that it will incur losses
on nonperforming loans but believes that these losses should not exceed the amount in the allowance for loan losses already
allocated to these loans, unless there is a deterioration of local real estate values.
At December 31, 2018, the Company had two impaired loans totaling $2,050,000 which were on non-accruing interest status. At
December 31, 2017, the Company had one impaired loan of $1,729,000 which was on non-accruing interest status. In each case, at
the date such loans were placed on nonaccrual status, the Company reversed all previously accrued interest income against current
year earnings.
The following table presents the Company’s impaired loans (including loans on nonaccrual status and loans past due 90 days or
more) at December 31, 2018 and December 31, 2017.
24
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Recorded
Investment
Unpaid
Principal
Balance
In Thousands
Related
Allowance
Average
Recorded
Investment
Interest Income
Recognized
December 31, 2018
With no related allowance recorded:
Residential 1-4 family
$
1,196
Multifamily
Commercial real estate
Construction
Farmland
Second mortgages
Equity lines of credit
Commercial
Agricultural, installment and other
With allowance recorded:
Residential 1-4 family
Multifamily
Commercial real estate
Construction
Farmland
Second mortgages
Equity lines of credit
Commercial
Agricultural, installment and other
Total
Residential 1-4 family
Multifamily
Commercial real estate
Construction
Farmland
Second mortgages
Equity lines of credit
Commercial
Agricultural, installment and other
$
$
$
$
—
317
690
—
—
—
—
—
1,795
—
316
686
—
—
—
—
—
2,203
2,797
1,641
—
1,515
—
—
—
—
—
—
1,635
—
1,515
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
852
—
312
—
—
—
—
—
—
1,862
—
320
822
233
—
—
—
—
3,237
1,782
—
2,001
—
—
—
—
—
—
3,156
3,150
1,164
3,783
2,837
—
1,832
690
—
—
—
—
—
3,430
—
1,831
686
—
—
—
—
—
852
—
312
—
—
—
—
—
—
3,644
—
2,321
822
233
—
—
—
—
42
—
16
42
—
—
—
—
—
100
77
—
17
—
—
—
—
—
—
94
119
—
33
42
—
—
—
—
—
$
5,359
5,947
1,164
7,020
194
25
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
In Thousands
Recorded
Investment
Unpaid Principal
Balance
Related
Allowance
Average
Recorded
Investment
Interest Income
Recognized
$
$
$
$
$
December 31, 2017
With no related allowance recorded:
Residential 1-4 family
Multifamily
Commercial real estate
Construction
Farmland
Second mortgages
Equity lines of credit
Commercial
Agricultural, installment and other
With allowance recorded:
Residential 1-4 family
Multifamily
Commercial real estate
Construction
Farmland
Second mortgages
Equity lines of credit
Commercial
Agricultural, installment and other
Total
Residential 1-4 family
Multifamily
Commercial real estate
Construction
Farmland
Second mortgages
Equity lines of credit
Commercial
Agricultural, installment and other
2,314
—
893
1,185
—
—
—
—
—
4,392
409
—
2,157
—
—
—
—
—
—
2,566
2,723
—
3,050
1,185
—
—
—
—
—
2,322
—
889
1,182
—
—
—
—
—
4,393
581
—
2,157
—
—
—
—
—
—
2,738
2,903
—
3,046
1,182
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
136
—
291
—
—
—
—
—
—
427
136
—
291
—
—
—
—
—
—
742
—
902
1,354
26
—
—
—
—
3,024
461
—
2,894
—
—
—
—
—
—
3,355
1,203
—
3,796
1,354
26
—
—
—
—
103
—
39
64
—
—
—
—
—
206
29
—
17
—
—
—
—
—
—
46
132
—
56
64
—
—
—
—
—
$ 6,958 7,131 427
6,379 252
A loan is considered impaired, in accordance with the impairment accounting guidance of FASB ASC 310, when the current net
worth and financial capacity of the borrower or of the collateral pledged, if any, is viewed as inadequate and it is probable that the
Company will be unable to collect the scheduled payments of principal and interest due under the contractual terms of the loan
agreement. In those cases, such loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt, and if
such deficiencies are not corrected, there is a probability that the Company will sustain some loss. In such cases, interest income
continues to accrue as long as the loan does not meet the Company’s criteria for nonaccrual status. Impaired loans are measured at
the present value of expected future cash flows discounted at the loan’s effective interest rate, at the loan’s observable market price,
or the fair value of the collateral if the loan is collateral dependent. If the fair value of the impaired loan is less than the recorded
investment in the loan, the Company shall recognize impairment by creating a valuation allowance with a corresponding charge to
26
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
the provision for loan losses or by adjusting an existing valuation allowance for the impaired loan with a corresponding charge or
credit to the provision for loan losses. The decrease in impaired loans during the year ended December 31, 2018 as compared to the
year ended December 31, 2017 was the result of the pay-off or pay-down of five loan relationships, partially offset by one large loan
relationship becoming impaired in the first quarter of 2018. Overall, the Company’s market areas have seen continued strengthening
in the residential real estate market in recent years while the commercial real estate market has remained steady. The allowance for
loan losses related to collateral dependent impaired loans was measured based upon the estimated fair value of related collateral.
The Company considers all loans subject to the provisions of FASB ASC 310 that are on nonaccrual status to be impaired. Loans
are placed on nonaccrual status when doubt as to timely collection of principal or interest exists, or when principal or interest is past
due 90 days or more unless such loans are well-secured and in the process of collection. Delays or shortfalls in loan payments are
evaluated with various other factors to determine if a loan is impaired. Generally, delinquencies under 90 days are considered
insignificant unless certain other factors are present which indicate impairment is probable. The decision to place a loan on
nonaccrual status is also based on an evaluation of the borrower’s financial condition, collateral liquidation value, and other factors
that affect the borrower’s ability to pay.
The Company also internally classifies loans which, although current, management questions the borrower’s ability to comply with
the present repayment terms of the loan agreement. These internally classified loans totaled $12,039,000, inclusive of the
Company’s non-performing loans, at December 31, 2018, as compared to $16,199,000 at December 31, 2017. Of the internally
classified loans at December 31, 2018, $11,855,000 are real estate related loans (including loans to home builders and developers of
land, commercial real estate loans, as well as multifamily mortgage loans) and $184,000 are various other types of loans. These
loans have been graded accordingly considering bankruptcies, inadequate cash flows and delinquencies. Overall, in 2018 Wilson
Bank experienced a stabilization in internally graded loans as the cash flows from home builders, land developers and commercial
real estate borrowers continue to improve. Management does not anticipate losses on these loans to exceed the amount already
allocated to loan losses for these loans, unless there is a deterioration of local real estate values.
The internally classified loans as a percentage of the allowance for loan losses were 44.3% and 67.8%, respectively, at
December 31, 2018 and 2017.
The Company’s loan portfolio includes certain loans that have been modified in a troubled debt restructuring (TDR), where
economic, or other, concessions have been granted to borrowers who have experienced or are expected to experience financial
difficulties. The concessions typically result from the Company’s loss mitigation activities and could include reduction in the
interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Certain TDRs are classified as
nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained
repayment performance for a reasonable period, generally six months. Nonperforming TDRs as of December 31, 2018 decreased
$1,018,000 to $816,000 at December 31, 2018 when compared to December 31, 2017 due to the payoff of one large TDR loan
relationship that was non-performing. Total TDRs decreased $1,592,000 to $2,492,000 from December 31, 2017 to December 31,
2018 due the pay-down of one large loan relationship and the pay-off of several loan relationships in 2018 that were classified as
TDRs.
The allowance for loan losses is discussed under “Critical Accounting Estimates” and “Provision for Loan Losses.” The Company
maintains its allowance for loan losses at an amount believed by management to be adequate to absorb probable loan losses inherent
in the loan portfolio as of December 31, 2018.
Substantially all of the Company’s loans are from Wilson, DeKalb, Smith, Putnam, Trousdale, Davidson, Rutherford, Williamson
and adjacent counties. Although the majority of the Company's loans are in the real estate market, the Company seeks to exercise
prudent risk management in lending through the diversification by loan category within the real estate segment, including 1-4
family residential real estate, commercial real estate, multifamily, construction, second mortgages, farmland, and equity lines of
credit. At December 31, 2018, no single industry segment accounted for more than 10% of the Company’s portfolio other than
construction, commercial real estate, and residential 1-4 family real estate loans.
The Company’s management believes there is an opportunity to increase the loan portfolio in 2019 as economic conditions in the
Company's primary market areas continue to outperform other markets. The Company will target owner-occupied commercial real
estate, residential real estate lending and consumer lending as areas of emphasis in 2019. At December 31, 2018, the Company’s
total loans equaled 91.4% of its total deposits. As a practice, the Company generates its own loans and does not buy participations
27
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
from other institutions. The Company may sell portions of the loans it generates to other financial institutions for cash in order to
improve the liquidity of the Company’s loan portfolio or extend its lending capacity.
Securities
Securities decreased 21.89% to $285,252,000 at December 31, 2018 from $365,196,000 at December 31, 2017, and comprised the
second largest and other primary component of the Company’s earning assets. Securities decreased as the result of management’s
decision to sell securities and reinvest the proceeds into higher yielding assets. During the year ended December 31, 2018, the
Company sold securities classified as held-to-maturity with a book value of $4,843,000 for a loss of $79,000. Due to the sale,
management determined the Company no longer had the intent to hold the remaining securities classified as held-to-maturity to
their respective maturity dates and transferred the remaining book value of $22,800,000 to the available-for-sale classification. The
average yield, excluding tax equivalent adjustment, of the securities portfolio at December 31, 2018 was 2.45% with a weighted
average life of 6.50 years, as compared to an average yield of 2.30% and a weighted average life of 6.17 years at December 31,
2017. The weighted average lives on mortgage-backed securities reflect the repayment rate used for book value calculations.
Certain debt securities that management has the positive intent and ability to hold to maturity are classified as “held-to-maturity”
and recorded at amortized cost. Trading securities are recorded at fair value with changes in fair value included in earnings.
Securities not classified as held to maturity or trading, including equity securities with readily determinable fair values, are
classified as “available-for-sale” and recorded at fair value, with unrealized gains and losses excluded from earnings and reported in
other comprehensive income. Purchase premiums and discounts are recognized in interest income using the interest method over the
terms of the securities. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific
identification method.
No securities have been classified as trading securities or held-to-maturity at December 31, 2018.
The Company’s classification of securities as of December 31, 2018 and December 31, 2017 is as follows:
(In Thousands)
December 31, 2018
Available-For-Sale
Amortized Cost
Estimated
Market Value
U.S. Government-sponsored enterprises (GSEs)
$ 71,446
$ 68,467
Mortgage-backed securities
Asset-backed securities
Obligations of state and political
subdivisions
152,375
22,534
147,510
21,700
49,328
47,575
$
295,683
$
285,252
28
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(In Thousands)
December 31, 2017
Held-To-Maturity
December 31, 2017
Available-For-Sale
Amortized Cost
Estimated
Market Value
Amortized Cost
Estimated
Market Value
U.S. Government-sponsored enterprises (GSEs)
$ — $ — $ 74,690
$ 72,980
Mortgage-backed securities
Asset-backed securities
Obligations of state and political
subdivisions
9,886
—
9,761
—
200,175
26,387
197,926
25,598
22,594
22,350
37,197
36,212
$
32,480 $
32,111 $
338,449 $
332,716
The classification of a portion of the securities portfolio as available-for-sale was made to provide for more flexibility in
asset/liability management and capital management.
The following table shows the Company’s investments’ gross unrealized losses and fair value, aggregated by investment category
and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2018:
In Thousands, Except Number of Securities
Less than 12 Months
12 Months or More
Total
Fair
Value
Unrealized
Losses
Number
of
Securities
Fair
Value
Unrealized
Losses
Number
of
Securities
Fair
Value
Unrealized
Losses
Available-for-Sale Securities:
GSEs
$
— $
Mortgage-backed securities
Asset-backed securities
Obligations of states and
political subdivisions
8,651
—
4,064
$
12,715
$
—
64
—
26
90
— $
68,467 $
2,979
28 $
68,467 $
2,979
10
—
137,457
4,810
94
146,108
4,874
20,597
844
14
20,597
844
6
39,841
1,749
94
43,905
1,775
16 $
266,362 $
10,382
230 $
279,077 $
10,472
The impaired securities are considered high quality investments in line with normal industry investing practices. The unrealized
losses are primarily the result of changes in the interest rate and sector environments. Impaired securities are assessed quarterly for
the presence of other-than-temporary impairment (“OTTI”). A decline in the fair value of any available-for-sale or held-to-maturity
security below cost that is deemed to be other-than-temporary results in a reduction in the carrying amount of the security. To
determine whether OTTI has occurred, management considers factors such as (1) length of time and extent that fair value has been
less than cost, (2) the financial condition and near term prospects of the issuer, and (3) the Company’s ability and intent to hold the
security for a period sufficient to allow for an anticipated recovery in fair value. If management deems a security to be OTTI,
management reviews the present value of the future cash flows associated with the security. A shortfall of the present value of the
cash flows expected to be collected in relation to the amortized cost basis is referred to as a credit loss. If a credit loss is identified,
the credit loss is recognized in that period as a charge to earnings and a new cost basis for the security is established. If management
concludes that no credit loss exists and it is not more-likely-than-not that it will be required to sell the security before the recovery
of the security’s cost basis, then the security is not deemed OTTI and the shortfall is recorded as a component of equity.
Accordingly, as of December 31, 2018, management believes the impairments detailed in the table above are temporary and no
impairment loss has been realized in our consolidated income statement.
29
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Deposits
The increases in assets in 2018 and 2017 were funded primarily by increases in deposits and the Company’s earnings. Total
deposits, which are the principal source of funds for the Company, totaled $2,235,655,000 at December 31, 2018 compared to
$2,037,745,000 at December 31, 2017. The Company has targeted local consumers, professionals and small businesses as its central
clientele; therefore, deposit instruments in the form of demand deposits, savings accounts, money market demand accounts,
certificates of deposits and individual retirement accounts are offered to customers. Management believes the Wilson County,
Davidson County, DeKalb County, Putnam County, Smith County, Sumner County, Rutherford County, Trousdale County and
Williamson County areas are attractive economic markets offering growth opportunities for the Company; however, the Company
competes with several larger banks and community banks that have bank offices in these counties which may negatively impact
market growth or maintenance of current market share. Even though the Company is in a very competitive market, management
currently believes that its market share can be maintained or expanded.
The $197,910,000, or 9.71%, growth in deposits in 2018 was due to a $98,974,000, or 22.59%, increase in certificates of deposits, a
$79,048,000, or 12.19%, increase in money market accounts, a $14,598,000, or 6.09%, increase in demand deposit accounts, a
$7,505,000, or 1.51%, increase in NOW accounts, a $96,000, or 0.07%, increase in savings accounts, offset by a decrease in
individual retirement accounts of $2,311,000, or 2.93%. The average rate paid on average total interest-bearing deposits was 0.75%
for 2018 compared to 0.50% for 2017. The average rate paid in 2016 was 0.50%. Competitive pressure from other banks in our
market area relating to deposit pricing continues to adversely affect the rates paid on deposit accounts as it limits our ability to keep
deposit rates unchanged as short-term interest rates rise. It’s these same competitive pressures that may cause our deposit rates to
rise more quickly than we are able to increase rates we earn on loans in a rising rate environment like the one we are currently
experiencing. If this were to happen our net interest margin would experience compression and our results of operations would be
negatively impacted. The ratio of average loans to average deposits was 89.7% in 2018, 86.5% in 2017, and 84.0% in 2016. The
Company anticipates that during 2019 deposits will shift to time deposits due to the expected stabilization of rates based upon the
policies enacted by the Federal Reserve.
Contractual Obligations
The Company’s contractual obligations at December 31, 2018 are as follows:
(In Thousands)
Long-Term Debt
Operating Leases
Purchases
Other Long-Term Liabilities
Total
Less than 1
Year
1–3 Years
3–5 Years
More than
5 Years
Total
$
— $ — $ — $ — $ —
401
—
—
748
—
—
265
—
—
13
—
—
1,427
—
—
$
401 $
748 $
265 $
13 $
1,427
Long-term debt contractual obligations would typically include advances from the Federal Home Loan Bank, but at December 31,
2018, the Company had no such advances. The Company leases land for certain branch facilities and automatic teller machine
locations. Future minimum rental payments required under the terms of these non-cancellable leases are included in operating lease
obligations.
Off Balance Sheet Arrangements
At December 31, 2018, the Company had unfunded lines of credit of $583 million and outstanding standby letters of credit of $80
million. Since many of the commitments are expected to be drawn upon, the total commitment amounts generally represent future
cash requirements. If needed to fund these outstanding commitments, the Company’s bank subsidiary has the ability to liquidate
Federal funds sold or securities available-for-sale or on a short-term basis to borrow and purchase Federal funds from other
financial institutions. Additionally, the Company’s bank subsidiary could sell participations in these or other loans to correspondent
banks. As mentioned below, Wilson Bank has been able to fund its ongoing liquidity needs through its stable core deposit base, loan
payments, its investment security maturities, and short-term borrowings.
30
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Quantitative and Qualitative Disclosures About Market Risk
The Company’s primary component of market risk is interest rate volatility. Fluctuations in interest rates will ultimately impact both
the level of income and expense recorded on a large portion of the Company’s assets and liabilities, and the market value of all
interest-earning assets and interest-bearing liabilities, other than those which possess a short term to maturity. Based upon the nature
of the Company’s operations, the Company is not subject to foreign currency exchange or commodity price risk.
Interest rate risk (sensitivity) management focuses on the earnings risk associated with changing interest rates. Management seeks
to maintain profitability in both short term and long term earnings through funds management/interest rate risk management. The
Company’s rate sensitivity position has an important impact on earnings. Senior management of the Company meets quarterly to
analyze the rate sensitivity position. These meetings focus on the spread between the cost of funds and interest yields generated
primarily through loans and investments.
Liquidity and Asset Management
The Company’s management seeks to maximize net interest income by managing the Company’s assets and liabilities within
appropriate constraints on capital, liquidity and interest rate risk. Liquidity is the ability to maintain sufficient cash levels necessary
to fund operations, meet the requirements of depositors and borrowers and fund attractive investment opportunities. Higher levels of
liquidity bear corresponding costs, measured in terms of lower yields on short-term, more liquid earning assets and higher interest
expense involved in extending liability maturities. Liquid assets include cash and cash equivalents, investment securities and money
market instruments that will mature within one year. At December 31, 2018, the Company’s liquid assets totaled approximately
$134.1 million.
The Company maintains a formal asset and liability management process to quantify, monitor and control interest rate risk, and to
assist management in maintaining stability in the net interest margin under varying interest rate environments. The Company
accomplishes this process through the development and implementation of lending, funding and pricing strategies designed to
maximize net interest income under varying interest rate environments subject to specific liquidity and interest rate risk guidelines.
Analysis of rate sensitivity and rate gap analysis are the primary tools used to assess the direction and magnitude of changes in net
interest income resulting from changes in interest rates. Included in the analysis are cash flows and maturities of financial
instruments held for purposes other than trading, changes in market conditions, loan volumes and pricing and deposit volume and
mix. These assumptions are inherently uncertain, and, as a result, net interest income can not be precisely estimated nor can the
impact of higher or lower interest rates on net interest income be precisely predicted. Actual results will differ due to timing,
magnitude and frequency of interest rate changes and changes in market conditions and management’s strategies, among other
factors.
The Company’s primary source of liquidity is a stable core deposit base. In addition, short-term borrowings, loan payments and
investment security maturities provide a secondary source. At December 31, 2018, the Company had a liability sensitive position (a
negative gap). Liability sensitivity means that more of the Company’s liabilities are capable of re-pricing over certain time frames
than its assets. The interest rates associated with these liabilities may not actually change over this period but are capable of
changing.
Interest rate risk (sensitivity) management focuses on the earnings risk associated with changing interest rates. Management seeks
to maintain profitability in both immediate and long-term earnings through funds management/interest rate risk management. The
Company’s rate sensitivity position has an important impact on earnings. Senior management of the Company meets quarterly to
analyze its rate sensitivity position. These meetings focus on the spread between the Company’s cost of funds and interest yields
generated primarily through loans and investments.
The Company’s securities portfolio consists of earning assets that provide interest income. For those securities classified as held-to-
maturity, the Company has the ability and intent to hold these securities to maturity or on a long-term basis. Securities classified as
available-for-sale include securities intended to be used as part of the Company’s asset/liability strategy and/or securities that may
be sold in response to changes in interest rates, prepayment risk, the need or desire to increase capital and similar economic factors.
At December 31, 2018, securities totaling approximately $26.1 million mature or will be subject to rate adjustments within the next
twelve months.
31
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
A secondary source of liquidity is the Company’s loan portfolio. At December 31, 2018, loans totaling approximately $673.6
million either will become due or will be subject to rate adjustments within twelve months from that date. Continued emphasis will
be placed on structuring adjustable rate loans.
As for liabilities, certificates of deposit and individual retirement accounts of $250,000 or greater totaling approximately $61.8
million will become due or reprice during the next twelve months. Historically, there has been no significant reduction in
immediately withdrawable accounts such as negotiable order of withdrawal accounts, money market demand accounts, demand
deposit accounts and regular savings accounts. Management anticipates that there will be no significant withdrawals from these
accounts in 2019.
The following table shows the rate sensitivity gaps for different time periods as of December 31, 2018:
Interest Rate Sensitivity Gaps
(In Thousands)
1-90
Days
Interest-earning assets
Interest-bearing liabilities
Interest-rate sensitivity gap
$
452,762
(1,436,434)
(983,672)
$
91-180
Days
114,027
(67,380)
46,647
181-365
Days
225,135
(154,305)
70,830
One Year
And
Longer
Total
1,636,218
2,428,142
(323,379) (1,981,498)
446,644
1,312,839
Cumulative gap
$
(983,672)
(937,025)
(866,195)
446,644
The Company also uses simulation modeling to evaluate both the level of interest rate sensitivity as well as potential balance sheet
strategies. The Asset Liability Committee meets quarterly to analyze the interest rate shock simulation. The interest rate simulation
model is based on a number of assumptions. The assumptions relate primarily to loan and deposit growth, asset and liability
prepayments, the call features of investment securities, interest rates and balance sheet management strategies. The Company also
uses Economic Value of Equity (“EVE”) sensitivity analysis to understand the impact of changes in interest rates on long-term cash
flows, income and capital. EVE is calculated by discounting the cash flows for all balance sheet instruments under different interest
rate scenarios. The EVE is a longer term view of interest rate risk because it measures the present value of the future cash flows.
Presented below is the estimated impact on Wilson Bank’s net interest income and EVE as of December 31, 2018, assuming an
immediate shift in interest rates:
% Change from Base Case for Immediate Parallel Changes in Rates
-200 BP(1) -100 BP(1) +100 BP +200 BP +300 BP
Net interest income (6.82)% (1.08)% (1.14)% (2.60)% (4.41)%
EVE
(13.26) (3.81) 0.36
(2.06)
(0.49)
(1) Because certain current short-term interest rates are at or below 1.00% or 2.00%, the 100 basis points downward shock
assumes that certain corresponding interest rates reflect a decrease of less than the full 100 or 200 basis points downward
shock.
Each of the above analyses may not, on its own, be an accurate indicator of how our net interest income will be affected by changes
in interest rates. Income associated with interest-earning assets and costs associated with interest-bearing liabilities may not be
affected uniformly by changes in interest rates. In addition, the magnitude and duration of changes in interest rates may have a
significant impact on net interest income. For example, although certain assets and liabilities may have similar maturities or periods
of repricing, they may react in different degrees to changes in market interest rates. Interest rates on certain types of assets and
liabilities fluctuate in advance of changes in general market rates, while interest rates on other types may lag behind changes in
general market rates. In addition, certain assets, such as adjustable rate mortgage loans, have features (generally referred to as
interest rate caps and floors) which limit changes in interest rates. Prepayment and early withdrawal levels also could deviate
significantly from those assumed in calculating the maturity of certain instruments. The ability of many borrowers to service their
debts also may decrease during periods of rising interest rates. We review each of the above interest rate sensitivity analyses along
with several different interest rate scenarios as part of our responsibility to provide a satisfactory, consistent level of profitability
within the framework of established liquidity, loan, investment, borrowing, and capital policies.
Management believes that with present maturities, the anticipated growth in deposit base, and the efforts of management in its
asset/liability management program, liquidity will not pose a problem in the near term future. At the present time there are no other
32
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
known trends or any known commitments, demands, events or uncertainties that will result in, or that are reasonably likely to result
in, the Company’s liquidity changing in a materially adverse way.
Impact of Inflation
Although interest rates are significantly affected by inflation, for the fiscal years ended December 31, 2018, 2017, and 2016, the
inflation rate is believed to have had an immaterial impact on the Company’s results of operations.
Capital Resources, Capital Position and Dividends
At December 31, 2018, total stockholders’ equity was $295,667,000, or 11.62% of total assets, which compares with $267,730,000,
or 11.55% of total assets, at December 31, 2017, and $244,620,000, or 11.13% of total assets, at December 31, 2016. The dollar
increase in the Company’s stockholders’ equity during 2018 reflects (i) net income of $32,594,000 less cash dividends of $0.90 per
share totaling $9,447,000, (ii) the issuance of 161,514 shares of common stock for $7,470,000, as reinvestment of cash dividends,
(iii) the issuance of 11,585 shares of common stock pursuant to exercise of stock options for $394,000, (iv) the net unrealized loss
on available-for-sale securities of $3,470,000, and (v) a stock-based compensation expense of $396,000.
The Company and the Bank are subject to regulatory capital requirements administered by the FDIC, the Federal Reserve and the
Tennessee Department of Financial Institutions. Failure to meet minimum capital requirements can initiate certain mandatory and
possibly additional discretionary actions by the regulators that, if undertaken, could have a direct material effect on the Company’s
and the Bank’s financial statements. Under capital adequacy guidelines and, in the case of the Bank, the regulatory framework for
prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of
their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts
and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
Prompt corrective action provisions are not applicable to bank holding companies.
Quantitative measures established by regulation to ensure capital adequacy require the Company and Wilson Bank to maintain
minimum amounts and ratios (set forth in the following table) of total, Tier 1, and common equity Tier 1 capital (as defined in the
regulations) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average assets (as defined). As of December 31,
2018 and December 31, 2017, the Company and the Bank are considered to be “well-capitalized” under applicable regulatory
definitions.
As of December 31, 2018, the most recent notification from the FDIC categorized Wilson Bank as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well capitalized for prompt corrective action regulations as
of December 31, 2018 and December 31, 2017, an institution was required to maintain minimum total risk-based, Tier 1 risk-based,
common equity Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following tables and not be subject to a written
agreement, order or directive to maintain a specific capital level. There are no conditions or events since the notification that
management believes have changed Wilson Bank’s category. The Company’s and Wilson Bank’s actual capital amounts and ratios
as of December 31, 2018 and 2017, are presented in the following table (dollar amounts in thousands):
33
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Actual
Minimum Capital Adequacy
Requirements With Basel III
Capital Conservation Buffer
Minimum To Be Well Capitalized
Under Applicable Prompt
Corrective Action Regulatory
Provisions
Amount
Ratio
Amount
Ratio
Amount
Ratio
December 31, 2018
Total capital to risk
weighted assets:
Consolidated
Wilson Bank
Tier 1 capital to risk
weighted assets:
Consolidated
Wilson Bank
Common equity Tier
1 capital to risk
weighted assets:
Consolidated
Wilson Bank
Tier 1 capital to
average assets:
Consolidated
Wilson Bank
$
326,099
323,852
14.1% $
14.0
227,974
227,915
9.875 %
9.875
$ 230,860
230,800
10.0%
10.0
298,566
296,319
298,566
296,319
298,566
296,319
12.9
12.8
12.9
12.8
12.3
11.9
181,802
181,756
7.875
7.875
138,516
184,641
6.0
8.0
147,173
147,136
97,022
99,373
6.375
6.375
N/A
150,021
N/A
6.5
4.0
4.0
N/A
124,217
N/A
5.0
Actual
Minimum Capital Adequacy
Requirements With Basel III
Capital Conservation Buffer
Minimum To Be Well Capitalized
Under Applicable Prompt
Corrective Action Regulatory
Provisions
December 31, 2017
Amount
Ratio
Amount
Ratio
Amount
Ratio
Total capital to risk
weighted assets:
Consolidated
$
291,395
14.2 %
$
Wilson Bank
289,824
14.1
189,658
189,618
9.250%
9.250
$ 205,036
204,992
10.0%
10.0
Tier 1 capital to risk
weighted assets:
Consolidated
267,159
Wilson Bank
265,588
13.0
13.0
148,651
148,619
7.250
7.250
123,021
163,994
6.0
8.0
Common equity Tier 1
capital to risk
weighted assets:
Consolidated
267,159
13.0
117,895
5.750
Wilson Bank
265,588 13.0
117,871
5.750
N/A N/A
133,245 6.5
Tier 1 capital to
average assets:
Consolidated
Wilson Bank
267,159
265,588
11.9
11.5
90,110
92,062
4.0
4.0
N/A
115,078
N/A
5.0
In July 2013, the Federal banking regulators, in response to the Statutory Requirements of The Dodd-Frank Act, adopted new
regulations implementing the Basel Capital Adequacy Accord (“Basel III”) and the related higher minimum capital ratios. The new
34
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
capital requirements were effective beginning January 1, 2015 and include a new “Common Equity Tier I Ratio”, which has stricter
rules as to what qualifies as Common Equity Tier I Capital.
The guidelines under Basel III establish a 2.5% capital conservation buffer requirement that was phased in over four years
beginning January 1, 2016. The buffer is related to Risk Weighted Assets. In order to avoid limitations on capital distributions such
as dividends and certain discretionary bonus payments to executive officers, a banking organization must maintain capital ratios
above the minimum ratios including the buffer. The Basel III minimum requirements after giving effect to the buffer as of January
1, of each year presented are as follows:
Common Equity Tier I Ratio
Tier I Capital to Risk Weighted Assets Ratio
Total Capital to Risk Weighted Assets Ratio
2016
2017
2018
2019
5.125 %
5.75 %
6.375 %
6.625 %
7.25 %
7.875 %
7.0 %
8.5 %
8.625 %
9.25 %
9.875 %
10.5 %
The requirements of Basel III also place more restrictions on the inclusion of deferred tax assets and capitalized mortgage servicing
rights as a percentage of Tier I Capital. In addition, the risk weights assigned to certain assets such as past due loans and certain real
estate loans have been increased.
The requirements of Basel III allowed banks and bank holding companies with less than $250 billion in assets a one-time
opportunity to opt-out of a requirement to include unrealized gains and losses in accumulated other comprehensive income in their
capital calculation. The Company and Wilson Bank have opted out of this requirement.
The application of these more stringent capital requirements to the Company and Wilson Bank could, among other things, result in
lower returns on invested capital, require the raising of additional capital, and result in regulatory actions if the Company and
Wilson Bank were to be unable to comply with such requirements. Furthermore, the imposition of liquidity requirements in
connection with the implementation of the final rules regarding Basel III could result in the Company or Wilson Bank having to
lengthen the term of their funding, restructure their business models and/or increase their holdings of liquid assets. Implementation
of changes to asset risk weightings for risk-based capital calculations, items included or deducted in calculating regulatory capital
and/or additional capital conservation buffers could result in management modifying its business strategy and could limit the
Company’s and Wilson Bank’s ability to make distributions, including paying dividends or buying back shares.
In 2018, the U.S. Congress passed, and the President signed into law, the Economic Growth, Regulatory Relief, and Consumer
Protection Act of 2018 (the “Growth Act”). The Growth Act, among other things, requires the federal banking agencies to issue
regulations allowing community bank organizations with total assets of less than $10.0 billion in assets and limited amounts of
certain assets and off-balance sheet exposures to access a simpler capital regime focused on a bank’s Tier 1 leverage capital levels
rather than risk-based capital levels that are the focus of the capital rules issued under the Dodd-Frank Act implementing Basel III.
In November 2018, the federal banking agencies proposed regulations that would exempt a qualifying community bank and its
holding company that have Tier 1 leverage ratios of greater than 9 percent from the risk-based capital requirements of the capital
rules issued under the Dodd-Frank Act. A qualifying community banking organization and its holding company that have chosen the
proposed framework would not be required to calculate the existing risk-based and leverage capital requirements. Such a bank
would also be considered to have met the capital ratio requirements to be well capitalized for the agencies' prompt corrective action
rules provided it has a community bank leverage ratio greater than 9 percent.
The Growth Act also raised the eligibility for the small bank holding company policy statement to $3 billion of assets from $1
billion.
The rules implementing these provisions of the Growth Act are not yet finalized and the Company has not yet made a determination
regarding whether it will seek to take advantage of these new capital rules under the Growth Act.
35
WB&T | Annual Report 2018
WILSON
BANK HOLDING CO.
YOUR FAMILY FINANCIAL CENTER
MANAGEMENT’S REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING
The management of Wilson Bank Holding Company is responsible for establishing and
maintaining adequate internal control over financial reporting. This internal control
system was designed to provide reasonable assurance to the company’s management and
board of directors regarding the preparation and fair presentation of published financial
statements. All internal control systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined to be effective can provide only
reasonable assurance with respect to financial statement preparation and presentation.
Wilson Bank Holding Company’s management assessed the effectiveness of the
company’s internal control over financial reporting as of December 31, 201(cid:27). In making
this assessment, it used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control-Integrated
Framework (2013). Based on our assessment, we believe that, as of December 31, 201(cid:27),
the company’s internal control over financial reporting is effective based on those
criteria. Wilson Bank Holding Company’s independent auditors have issued an audit
report on our assessment of the company’s internal control over financial reporting.
February 9, 201(cid:28)
_______________________________
Randall Clemons
President & CEO
_____________________________
Lisa Pominski
Executive Vice President and CFO
623 WEST MAIN ST. • P.O. BOX 768 • LEBANON, TN 37088-0768 • 615-444-2265
36
WB&T | Annual Report 2018
Stephen M. Maggart, CPA, ABV, CFF
J. Mark Allen, CPA
Joshua K. Cundiff, CPA
Michael T. Holland, CPA, ABV, CFF
M. Todd Maggart, CPA, ABV, CFF
Michael F. Murphy, CPA
P. Jason Ricciardi, CPA, CGMA
David B. von Dohlen, CPA
T.KeithWilson,CPA,CITP
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To The Board of Directors and Shareholders of
Wilson Bank Holding Company:
Opinions on the Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of Wilson Bank Holding Company and Subsidiary (the
Company) as of December 31, 2018 and 2017, and the related consolidated statements of earnings, comprehensive earnings,
changes in stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2018, and the
related notes (collectively referred to as the financial statements). We also have audited the Company’s internal control over
financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the
Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the three-
year period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of
America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by
COSO.
Basis for Opinion
The Company’s management is responsible for these financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the
accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion
on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included performing procedures to assess the risks of material misstatements of the
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the
overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a
reasonable basis for our opinions.
1201 DEMONBREUN STREET (cid:402) SUITE 1220 (cid:402) NASHVILLE, TENNESSEE 37203-3140 (cid:402) (615) 252-6100 (cid:402) Fax (cid:402) (615) 252-6105
www.maggartpc.com
37
WB&T | Annual Report 2018
To The Board of Directors and Shareholders of
Wilson Bank Holding Company:
Page Two
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions
of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
MAGGART & ASSOCIATES, P.C.
We have served as the Company’s auditor since 1987.
Nashville, Tennessee
February 28, 2019
38
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Consolidated Balance Sheets
December 31, 2018 and 2017
ASSETS
Loans, net of allowance for loan losses of $27,174 and $23,909, respectively
Securities:
Held-to-maturity, at amortized cost (market value $32,111)
Available-for-sale, at market (amortized cost $295,683 and $338,449,
respectively)
Total securities
Loans held for sale
Interest bearing deposits
Federal funds sold
Restricted equity securities, at cost
Total earning assets
Cash and due from banks
Premises and equipment, net
Accrued interest receivable
Deferred income taxes
Other real estate
Bank owned life insurance
Goodwill
Other assets
Dollars In Thousands
2018
2017
$
2,016,005
1,727,253
-
285,252
285,252
7,484
80,215
9,000
3,012
2,400,968
9,976
58,363
6,724
8,901
1,357
30,952
4,805
21,636
32,480
332,716
365,196
5,106
83,787
-
3,012
2,184,354
11,731
54,215
6,266
7,424
1,635
29,475
4,805
17,128
Total assets
$
2,543,682
2,317,033
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Securities sold under repurchase agreements
Accrued interest and other liabilities
Total liabilities
Stockholders' equity:
Common stock, par value $2.00 per share, authorized 50,000,000
shares, 10,623,810 and 10,450,711 shares issued and outstanding,
respectively
Additional paid-in capital
Retained earnings
Net unrealized losses on available-for-sale securities, net of taxes of
$2,726 and $1,498, respectively
Total stockholders' equity
COMMITMENTS AND CONTINGENCIES
2,235,655
$
-
12,360
2,248,015
2,037,745
864
10,694
2,049,303
21,248
73,960
208,164
(7,705 )
295,667
20,901
66,047
185,017
(4,235 )
267,730
Total liabilities and stockholders' equity
$
2,543,682
2,317,033
See accompanying notes to consolidated financial statements.
39
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Consolidated Statements of Earnings
Three Years Ended December 31, 2018
Dollars In Thousands (except per share data)
2016
2017
2018
$
94,917
Interest income:
Interest and fees on loans
Interest and dividends on securities:
Taxable securities
Exempt from Federal income taxes
Interest on loans held for sale
Interest on Federal funds sold
Interest on interest bearing deposits
Interest and dividends on restricted equity securities
Total interest income
Interest expense:
Interest on negotiable order of withdrawal accounts
Interest on money market accounts and other savings accounts
Interest on certificates of deposit and individual retirement
accounts
Interest on securities sold under repurchase agreements
Interest on Federal funds purchased
Total interest expense
Net interest income before provision for loan losses
Provision for loan losses
Net interest income after provision for loan losses
Non-interest income
Non-interest expense
Earnings before income taxes
Income taxes
Net earnings
Basic earnings per common share
Diluted earnings per common share
$
$
$
6,158
1,020
184
83
979
184
103,525
1,823
4,231
7,944
16
4
14,018
89,507
4,298
85,209
25,248
(69,080 )
41,377
8,783
32,594
3.09
3.08
83,120
5,397
1,208
324
97
723
151
91,020
1,308
2,211
5,353
9
8
8,889
82,131
1,681
80,450
22,821
(60,391 )
42,880
19,354
23,526
2.26
2.26
77,024
5,714
1,191
391
26
278
122
84,746
1,371
1,915
4,978
3
17
8,284
76,462
379
76,083
21,654
(57,263 )
40,474
14,841
25,633
2.49
2.49
Weighted average common shares outstanding:
Basic
10,564,172
10,407,211
10,279,332
Diluted
10,572,221
10,412,536
10,284,328
See accompanying notes to consolidated financial statements.
40
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Consolidated Statements of Comprehensive Earnings
Three Years Ended December 31, 2018
Net earnings
Other comprehensive earnings (losses), net of tax:
Net unrealized gains (losses) on available-for-sale securities
arising during period, net of taxes of $1,398, $271, and
$1,830, respectively
Reclassification adjustment for net losses (gains) included in net
earnings, net of taxes of $170, $67, and $176, respectively
Other comprehensive earnings (losses)
2018
Dollars In Thousands
2017
2016
$
32,594
23,526
25,633
(3,950 )
480
(3,470 )
437
108
545
(2,948 )
(284 )
(3,232 )
22,401
Comprehensive earnings
$
29,124
24,071
See accompanying notes to consolidated financial statements.
41
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Consolidated Statements of Changes in Stockholders' Equity
Three Years Ended December 31, 2018
Common
Stock
Additional
Paid-In
Capital
Dollars In Thousands
Net Unrealized
Gain (Loss) On
Available-For-
Sale Securities
Retained
Earnings
Balance December 31, 2015
$
15,304
61,339
147,646
(851 )
Cash dividends declared, $.56 per share
-
-
(5,756 )
-
Issuance of 98,318 shares of common stock
pursuant to dividend reinvestment plan
Issuance of 5,120 shares of common stock
pursuant to exercise of stock options
Issuance of 2,564,091 shares of common
stock pursuant to a 4 for 3 stock split
197
10
4,119
-
-
142
-
-
Share based compensation expense
-
69
-
5,128
(5,128 )
-
-
-
-
69
Net change in fair value of available-for-
sale securities during the year, net of
taxes of $2,006
Net earnings for the year
Balance December 31, 2016
-
-
-
-
-
(3,232 )
25,633
-
20,639
60,541
167,523
(4,083 )
Cash dividends declared, $.65 per share
-
-
(6,729 )
-
Issuance of 125,960 shares of common stock
pursuant to dividend reinvestment plan
Issuance of 5,078 shares of common stock
pursuant to exercise of stock options
252
10
5,014
-
-
142
-
-
(3,232 )
25,633
244,620
(6,729 )
5,266
152
-
-
697
(697 )
-
350
-
-
350
Reclassification of deferred tax asset
revaluation
Share based compensation expense
Net change in fair value of available-for-
sale securities during the year, net of
taxes of $338
Net earnings for the year
Balance December 31, 2017
-
-
-
-
-
545
23,526
-
20,901
66,047
185,017
(4,235 )
Cash dividends declared, $.90 per share
-
-
(9,447 )
-
Issuance of 161,514 shares of common stock
pursuant to dividend reinvestment plan
Issuance of 11,585 shares of common stock
pursuant to exercise of stock options
324
23
Share based compensation expense
-
7,146
-
-
371
396
-
-
-
-
Net change in fair value of available-for-
sale securities during the year, net of
taxes of $1,228
Net earnings for the year
-
-
-
-
-
(3,470 )
32,594
-
Balance December 31, 2018
$
21,248
73,960
208,164
(7,705 )
See accompanying notes to consolidated financial statements.
42
WB&T | Annual Report 2018
Total
223,438
(5,756 )
4,316
152
545
23,526
267,730
(9,447 )
7,470
394
396
(3,470 )
32,594
295,667
WILSON BANK HOLDING COMPANY
Consolidated Statements of Cash Flows
Three Years Ended December 31, 2018
Increase (Decrease) in Cash and Cash Equivalents
Cash flows from operating activities:
Interest received
Fees and other income received
Proceeds from sales of loans
Origination of loans held for sale
Interest paid
Cash paid to suppliers and employees
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities:
Purchase of available-for-sale securities
Proceeds from calls, maturities and paydowns of available-for-sale
securities
Proceeds from sale of available-for-sale securities
Purchase of held-to-maturity securities
Proceeds from maturities and paydowns of held-to-maturity securities
Proceeds from sale of held-to-maturity securities
Loans made to customers, net of repayments
Purchase of bank owned life insurance and annuity contracts
Purchase of bank premises and equipment
Proceeds from sale of other assets
Proceeds from sale of other real estate
Net cash used in investing activities
Cash flows from financing activities:
Net increase in non-interest bearing, savings, NOW and money
market deposit accounts
Net increase (decrease) in time deposits
Net increase (decrease) in securities sold under agreements to
repurchase
Dividends paid
Proceeds from sale of common stock pursuant to dividend
reinvestment
Proceeds from sale of common stock pursuant to exercise of
stock options
Net cash provided by financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Dollars In Thousands
2018
2017
2016
$
105,318
20,503
131,321
(129,060 )
(12,565 )
(64,186 )
(10,558 )
40,773
93,506
17,876
149,775
(135,835 )
(8,612 )
(57,643 )
(16,400 )
42,667
86,641
16,029
160,816
(161,114 )
(8,278 )
(53,454 )
(13,837 )
26,803
(9,118 )
(96,180 )
(181,285 )
36,955
35,093
38,839
35,555
-
-
3,859
102,596
90,007
(11,479 )
2,742
4,651
4,764
(293,655 )
(4,301 )
(7,752 )
4
796
(232,563 )
101,248
96,662
(864 )
(9,447 )
7,470
394
195,463
3,673
95,518
-
-
(61,826 )
-
(12,660 )
43
2,876
(89,494 )
87,116
8,494
128
(6,729 )
5,266
152
94,427
47,600
47,918
95,518
(223,950 )
(11,916 )
(5,147 )
15
581
(237,836 )
158,775
(6,490 )
(1,299 )
(5,756 )
4,316
152
149,698
(61,335 )
109,253
47,918
Cash and cash equivalents at end of year
$
99,191
See accompanying notes to consolidated financial statements.
43
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Consolidated Statements of Cash Flows, Continued
Three Years Ended December 31, 2018
Increase (Decrease) in Cash and Cash Equivalents
Reconciliation of net earnings to net cash provided by operating
activities:
Net earnings
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Dollars In Thousands
2018
2017
2016
$
32,594
23,526
25,633
Depreciation, amortization and accretion
Provision for loan losses
Share-based compensation expense
Provision for deferred tax expense (benefit)
Revaluation of deferred tax assets due to change in tax rates
Loss (gain) on sales of other real estate, net
Loss on sales of other assets
Loss on sales of premises and equipment
Security losses (gains)
Decrease (increase) in loans held for sale
Increase (decrease) in taxes payable
Increase in other assets, bank owned life insurance and
annuity contract earnings
Increase in accrued interest receivable
Increase in interest payable
Increase (decrease) in other liabilities
Total adjustments
5,853
4,298
1,237
(248 )
-
80
3
2
650
(2,378 )
(1,526 )
(1,684 )
(458 )
1,453
897
8,179
Net cash provided by operating activities
$
40,773
5,507
1,681
692
(607 )
3,603
(6 )
15
-
175
9,682
(42 )
(1,231 )
(162 )
277
(443 )
19,141
42,667
5,515
379
69
(164 )
-
(52 )
1
73
(460 )
(4,653 )
1,168
(2,408 )
(860 )
6
2,556
1,170
26,803
Supplemental Schedule of Non-Cash Activities:
Change in fair value of securities available-for-sale,
net of taxes of $1,228 in 2018, $338 in 2017 and
$2,006 in 2016
Non-cash transfers from held-to-maturity securities to
available-for-sale securities
Non-cash transfers from loans to other real estate
Non-cash transfers from other real estate to loans
Non-cash transfers from loans to other assets
$
$
$
$
$
(3,470 )
545
(3,232 )
22,800
-
-
693
95
7
173
195
2
696
1,050
16
See accompanying notes to consolidated financial statements.
44
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements
December 31, 2018, 2017 and 2016
(1)
Summary of Significant Accounting Policies
The accounting and reporting policies of Wilson Bank Holding Company (the “Company”) and Wilson Bank & Trust
("Wilson Bank") are in accordance with accounting principles generally accepted in the United States of America
(“U.S.”) and conform to general practices within the banking industry. The following is a brief summary of the
significant policies.
(a)
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary
Wilson Bank. All significant intercompany accounts and transactions have been eliminated in consolidation.
(b)
Nature of Operations
Wilson Bank operates under a state bank charter and provides full banking services. As a state-chartered
bank that is not a member of the Federal Reserve, Wilson Bank is subject to regulations of the Tennessee
Department of Financial Institutions and the Federal Deposit Insurance Corporation (“FDIC”). The areas
served by Wilson Bank include Wilson County, DeKalb County, Rutherford County, Smith County,
Trousdale County, Putnam County, Sumner County, Davidson County and Williamson County, Tennessee
and surrounding counties in Middle Tennessee. Services are provided at the main office and twenty-eight
branch locations.
(c)
Estimates
In preparing consolidated financial statements in conformity with accounting principles generally accepted in
the United States (“U.S. GAAP”), management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those estimates. Material
estimates that are particularly susceptible to significant change in the near term relate to the determination of
the allowance for loan losses, the valuation of deferred tax assets and other real estate, other-than-temporary
impairments of securities, and the fair value of financial instruments.
(d)
Significant Group Concentrations of Credit Risk
Most of the Company’s activities are with customers located within Middle Tennessee. The types of
securities in which the Company invests are described in note 3. The types of lending in which the Company
engages are described in note 2. The Company does not have any significant concentrations to any one
industry or customer other than as disclosed in note 2.
Residential 1-4 family, commercial real estate and construction mortgage loans, represented 22%, 34% and
25% and 23%, 38% and 22% of the loan portfolio at December 31, 2018 and 2017, respectively.
(e)
Loans
The Company grants mortgage, commercial and consumer loans to customers. A substantial portion of the
loan portfolio is represented by mortgage loans throughout Middle Tennessee. The ability of the Company’s
debtors to honor their contracts is dependent upon the real estate and general economic conditions in this
area.
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-
off generally are reported at their outstanding unpaid principal balances adjusted for unearned income, the
allowance for loan losses, and any unamortized deferred fees or costs on originated loans, and premiums or
discounts on purchased loans.
Loan origination fees, net of certain direct origination costs, as well as premiums and discounts, are deferred
and amortized on a straight line basis over the respective term of the loan.
45
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(1)
Summary of Significant Accounting Policies, Continued
(e)
Loans, Continued
As part of its routine credit monitoring process, the Company performs regular credit reviews of the loan
portfolio and loans receive risk ratings by the assigned credit officer, which are subject to validation by our
independent loan review department. Risk ratings are categorized as pass, special mention, substandard or
doubtful. The Company believes its categories follow those outlined by Wilson Bank’s primary federal
regulator.
Generally the accrual of interest on mortgage and commercial loans is discontinued at the time the loan is 90
days past due unless the credit is well-secured and in process of collection. Credit card loans and other
personal loans are typically charged off no later than when they become 180 days past due. Past due status is
based on contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged-off at an
earlier date if collection of principal or interest is considered doubtful.
All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed
against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery
method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and
interest amounts contractually due are brought current and future payments are reasonably assured.
(f)
Allowance for Loan Losses
Management provides for loan losses by establishing an allowance. The allowance for loan losses is
established as losses are estimated to have occurred through a provision for loan losses charged to earnings.
Loan losses are charged against the allowance when management believes the uncollectibility of a loan
balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.
The allowance for loan losses is evaluated on a quarterly basis by management and is based upon
management’s quarterly review of the collectibility of the loans in light of historical experience, the nature
and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated
value of any underlying collateral and prevailing economic conditions. This evaluation is inherently
subjective as it requires estimates that are susceptible to significant revision as more information becomes
available.
In assessing the adequacy of the allowance, we also consider the results of our ongoing independent loan
review process. We undertake this process both to ascertain whether there are loans in the portfolio whose
credit quality has weakened over time and to assist in our overall evaluation of the risk characteristics of the
entire loan portfolio. Our loan review process includes the judgment of management, independent loan
reviewers, and reviews that may have been conducted by third-party reviewers. We incorporate relevant loan
review results in the loan impairment determination. In addition, regulatory agencies, as an integral part of
their examination process, will periodically review the Company’s allowance for loan losses and may require
the Company to record adjustments to the allowance based on their judgment about information available to
them at the time of their examinations.
In addition to the independent loan review process, the aforementioned risk ratings are subject to continual
review by loan officers to determine that the appropriate risk ratings are being utilized in our allowance for
loan loss process. Each risk rating is also subject to review by our independent loan review department.
Currently, our independent loan review department targets reviews of 100% of existing loan relationships
with aggregate debt of $1.0 million and greater and new loans with aggregate debt of $500,000 and greater.
In addition, our independent loan review department targets particular portfolio segments, loans assigned to a
particular lending officer, and loans with four or more renewals.
The allowance consists of allocated and general components. The allocated component relates to loans that
are classified as impaired. For those loans that are individually classified as impaired, an allowance is
established when the discounted cash flows (or collateral value or observable market price) of the impaired
loan is lower than the carrying value of that loan. The general component covers nonclassified loans and is
based on historical charge-off experience, historical loan loss factors, loss experience of various loan
segments and other adjustments based on management’s assessment of internal or external influences on
credit quality that are not fully reflected in the historical loss or risk rating data.
46
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(1)
Summary of Significant Accounting Policies, Continued
(f)
Allowance for Loan Losses, Continued
A loan is considered impaired when, based on current information and events, it is probable that the
Company will be unable to collect the scheduled payments of principal or interest when due according to the
contractual terms of the loan agreement. Factors considered by management in determining impairment
include payment status, collateral value, and the probability of collecting scheduled principal and interest
payments when due. Loans that experience insignificant payment delays and payment shortfalls generally
are not classified as impaired. Management determines the significance of payment delays and payment
shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and
the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment
record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured
on a loan by loan basis for commercial, mortgage and agricultural loans by either the present value of
expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price,
or the fair value of the collateral if the loan is collateral dependent.
Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly,
the Company does not separately identify individual consumer loans for impairment disclosures, unless such
loans are the subject of a restructuring agreement due to financial difficulties of the borrower.
(g)
Debt and Equity Securities
Certain debt securities that management has the positive intent and ability to hold to maturity are classified as
“held to maturity” and recorded at amortized cost. Trading securities are recorded at fair value with changes
in fair value included in earnings. Securities not classified as held to maturity or trading, including equity
securities with readily determinable fair values, are classified as “available for sale” and recorded at fair
value based on available market prices, with unrealized gains and losses excluded from earnings and reported
in other comprehensive income on an after-tax basis. Securities classified as “available for sale” are held for
indefinite periods of time and may be sold in response to movements in market interest rates, changes in the
maturity or mix of Company assets and liabilities or demand for liquidity. Purchase premiums and discounts
are recognized in interest income using the interest method over the terms of the securities. Gains and losses
on the sale of securities are recorded on the trade date and are determined using the specific identification
method.
Other-than-temporary Impairment - Impaired securities are assessed quarterly for the presence of other-than-
temporary impairment (“OTTI”). A decline in the fair value of any available-for-sale or held-to-maturity
security below cost that is deemed to be other-than-temporary results in a reduction in the carrying amount of
the security. To determine whether OTTI has occurred, management considers factors such as (1) length of
time and extent that fair value has been less than cost, (2) the financial condition and near term prospectus of
the issuer, and (3) Wilson Bank’s ability and intent to hold the security for a period sufficient to allow for any
anticipated recovery in fair value. If management deems a security to be OTTI, management reviews the
present value of the future cash flows associated with the security. A shortfall of the present value of the
cash flows expected to be collected in relation to the amortized cost basis is referred to as a credit loss. If a
credit loss is identified, the credit loss is recognized as a charge to earnings and a new cost basis for the
security is established. If management concludes that no credit loss exists and it is not “more-likely-than-
not” that it will be required to sell the security before the recovery of the security’s cost basis, then the
security is not deemed OTTI and the shortfall is recorded as a component of equity.
No securities have been classified as trading securities or held-to-maturity securities at December 31, 2018.
(h)
Federal Home Loan Bank Stock
The Company, as a member of the Federal Home Loan Bank (“FHLB”) Cincinnati system, is required to
maintain an investment in capital stock of the FHLB. Based on redemption provisions of the FHLB, the
stock has no quoted market value and is carried at par value, which approximates its fair value. Management
reviews the investment for impairment based on the ultimate recoverability of the cost basis in the FHLB
stock. As of December 31, 2018, this minimum required investment was valued at approximately $2.8
million. Stock redemptions are at the discretion of the FHLB.
47
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(1)
Summary of Significant Accounting Policies, Continued
(i)
Loans Held for Sale
Mortgage loans held for sale are carried at fair value. The fair value of loans held for sale is determined
using quoted prices for similar assets, adjusted for specific attributes of that loan.
(j)
Premises and Equipment
Premises and equipment are stated at cost. Depreciation is computed primarily by the straight-line method
over the estimated useful lives of the related assets. Gains or losses realized on items retired and otherwise
disposed of are credited or charged to operations and cost and related accumulated depreciation are removed
from the asset and accumulated depreciation accounts.
Expenditures for major renovations and improvements of premises and equipment are capitalized and those
for maintenance and repairs are charged to earnings as incurred.
(k)
Other Real Estate
Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value
less the estimated cost to sell at the date the Company acquires the property, establishing a new cost basis.
Subsequent to their acquisition by the Company, valuations of these assets are periodically performed by
management, and the assets are carried at the lower of carrying amount or fair value less cost to sell.
Revenue and expenses from operations and changes in the valuation allowance [i.e. any direct write-downs]
are included within non-interest expense.
(l)
Intangible Assets
The Financial Accounting Standards Board “FASB” Accounting Standards Codification “ASC” 350,
Goodwill and Other Intangible Assets requires that management determine the allocation of intangible assets
into identifiable groups at the date of acquisition and that appropriate amortization periods be established.
Under the provisions of FASB ASC 350, goodwill is not to be amortized; rather, it is to be monitored for
impairment and written down to the impairment value at the time impairment occurs. The Company has
determined that no impairment loss needs to be recognized related to its goodwill.
(m)
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from
banks and Federal funds sold. Generally, Federal funds sold are purchased and sold for one-day periods.
Management makes deposits only with financial institutions it considers to be financially sound.
(n)
Long-Term Assets
Premises and equipment, intangible assets, and other long-term assets are reviewed for impairment
when events indicate their carrying amount may not be recoverable from future undiscounted cash flows. If
impaired, the assets are recorded at fair value.
(o)
Securities Sold Under Agreements to Repurchase
Substantially all repurchase agreement liabilities represent amounts advanced by various customers.
Securities are pledged to cover these liabilities, which are not covered by Federal deposit insurance.
(p)
Income Taxes
The Company accounts for Income Taxes in accordance with income tax accounting guidance
(FASB ASC 740, Income Taxes). The Company follows accounting guidance related to accounting for
uncertainty in income taxes, which sets out a consistent framework to determine the appropriate level of tax
reserves to maintain for uncertain tax positions.
48
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(1)
Summary of Significant Accounting Policies, Continued
(p)
Income Taxes, Continued
The income tax accounting guidance results in two components of income tax expense: current and deferred.
Current income tax expense reflects taxes to be paid or refunded for the current period by applying the
provisions of the enacted tax law to the taxable income. The Company determines deferred income taxes
using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is
based on the tax effects of the differences between the book and tax bases of assets and liabilities, and
enacted changes in tax rates and laws are recognized in the period in which they occur.
Deferred income tax expense results from changes in deferred tax assets and liabilities between periods.
Deferred tax assets are recognized if it is more-likely-than-not, based on the technical merits, that the tax
position will be realized or sustained upon examination. The term “more-likely-than-not” means a likelihood
of more than 50 percent. The terms “examined” and “upon examination” also include resolution of the
related appeals or litigation processes, if any. A tax position that meets the more-likely-than-not recognition
threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50
percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all
relevant information. The determination of whether or not a tax position has met the more-likely-than-not
recognition threshold considers the facts, circumstances, and information available at the reporting date and is
subject to management’s judgment. Deferred tax assets are reduced by a valuation allowance if, based on the
weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not
be realized.
The Company recognizes interest and penalties on income taxes as a component of income tax expense.
(q)
Mortgage Banking Derivatives
Commitments to fund mortgage loans (interest rate locks) to be sold into the secondary market and forward
commitments for the future delivery of these mortgage loans are accounted for as free standing derivatives.
The fair value of the interest rate lock is recorded at the time the commitment to fund the mortgage loan is
executed and is adjusted for the expected exercise of the commitment before the loan is funded. Fair value of
these mortgage derivatives are estimated based on changes in mortgage interest rates from the date the
interest rate on the loan is locked. The Company enters into forward commitments for the future delivery of
mortgage loans when interest rate locks are entered into, in order to hedge the change in interest rates
resulting from its commitments to fund the loans. Changes in the fair values of these derivatives are included
in net gains on sale of mortgage loans.
(r)
Equity-Based Incentives
Stock compensation accounting guidance (FASB ASC 718, “Compensation - Stock Compensation”) requires
that the compensation cost relating to share-based payment transactions be recognized in financial statements.
That cost will be measured based on the grant date fair value of the equity or liability instruments issued.
The stock compensation accounting guidance covers a wide range of share-based compensation arrangements
including stock options, restricted share plans, performance-based awards, cash-settled stock appreciation
rights (SARs), and employee share purchase plans. Because cash-settled SARs do not give the grantee the
choice of receiving stock, all cash-settled SARs are accounted for as liabilities, not equity, as compensation is
accrued over the requisite service period.
The stock compensation accounting guidance requires that compensation cost for all stock awards be
calculated and recognized over the employees’ service period, generally defined as the vesting period. For
awards with graded-vesting, compensation cost is recognized on a straight-line basis over the requisite
service period for the entire award. The Company uses the Black-Scholes option pricing model to estimate
the fair value of stock options and cash-settled SARs.
(s)
Advertising Costs
Advertising costs are expensed as incurred by the Company and totaled $2,552,000, $2,326,000 and
$2,310,000 for 2018, 2017 and 2016, respectively.
49
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(1)
Summary of Significant Accounting Policies, Continued
(t)
Earnings Per Share
Basic earnings per share represents income available to common stockholders divided by the weighted-
average number of common shares outstanding during the period. Diluted earnings per share reflects
additional potential common shares that would have been outstanding if dilutive potential common shares
had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential
common shares that may be issued by the Company relate solely to outstanding stock options and are
determined using the treasury stock method.
(u)
Fair Value of Financial Instruments
Fair values of financial instruments are estimated using relevant market information and other assumptions,
as more fully disclosed in Note 21 – Disclosures About Fair Value of Financial Instruments of the
consolidated financial statements. Fair value estimates involve uncertainties and matters of significant
judgment. Changes in assumptions or in market conditions could significantly affect the estimates.
(v)
Reclassifications
Certain reclassifications have been made to the 2017 and 2016 figures to conform to the presentation for
2018.
(w)
Off-Balance-Sheet Financial Instruments
In the ordinary course of business, Wilson Bank has entered into off-balance-sheet financial instruments
consisting of commitments to extend credit, commitments under credit card arrangements, commercial letters
of credit and standby letters of credit. Such financial instruments are recorded in the financial statements
when they are funded or related fees are incurred or received.
(x)
Stock Split
The Company paid a 4 for 3 stock split to stockholders on March 30, 2016. Each stockholder received four
(4) shares of common stock for each three (3) shares owned with no allowance for fractional shares. Per
share data and stock options included in these financial statements for periods prior to 2017 has been restated
to give effect to the stock split.
(y)
Accounting Standard Updates
Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606).”
ASU 2014-09 implements a common revenue standard that clarifies the principles for recognizing revenue.
The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of
promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity
should apply the following steps: (i) identify the contract(s) with a customer, (ii) identify the performance
obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the
performance obligations in the contract and (v) recognize revenue when (or as) the entity satisfies a
performance obligation. Our revenue is primarily comprised of net interest income on financial assets and
financial liabilities, which is explicitly excluded from the scope of ASU 2014-09. Because of this, our
adoption of this Standard in the first quarter of 2018 did not have a significant impact on our financial
statements.
In February 2016, FASB issued ASU 2016-02, "Leases (Topic 842)." The amendments in this ASU are
effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after
December 15, 2018. As a result of the amendment, lessees will need to recognize a right-of-use asset and a
lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease).
The liability will be equal to the present value of lease payments. The asset will be based on the liability,
subject to adjustments, such as adjustments for initial direct costs. For income statement purposes, FASB
retained a dual model, requiring leases to be classified as either operating or finance. Operating leases will
50
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(1)
Summary of Significant Accounting Policies, Continued
(y)
Accounting Standard Updates, Continued
result in straight-line expense (similar to current operating leases) while finance leases will result in a front-
loaded expense pattern (similar to current capital leases). Classification will be based on criteria that are
largely similar to those applied in current lease accounting, but without explicit bright lines. Based on
preliminary estimates made by management, we expect to record a right-of-use asset and offsetting lease
liability in the amount of $2.5 million during the first quarter of 2019.
In June 2016, FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement
of Credit Losses on Financial Instruments." ASU 2016-13 requires the measurement of all expected credit
losses for financial assets held at the reporting date based on historical experience, current conditions, and
reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates
and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an
organization’s portfolio. In addition, ASU 2016-13 amends the accounting for credit losses on held-to-
maturity debt securities and purchased financial assets with credit deterioration. ASU 2016-13 will be
effective on January 1, 2020. We are currently evaluating the potential impact of ASU 2016-13 on our
financial statements. We are also evaluating the sufficiency of current systems and data needed to comply
with this ASU. While we are currently unable to reasonably estimate the impact of adopting ASU 2016-13,
we expect that the impact of adoption will be significantly influenced by the composition, characteristics and
quality of our loan and securities portfolios as well as the prevailing economic conditions and forecasts as of
the adoption date.
In August 2016, FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of
Certain Cash Receipts and Cash Payments.” ASU 2016-15 clarifies how certain cash receipts and cash
payments are presented and classified in the statement of cash flows under Topic 230. The update addresses
eight specific cash flow issues including, but not limited to, proceeds from the settlement of bank-owned life
insurance policies, with the objective of reducing the existing diversity in practice. ASU 2016-15 was
effective on January 1, 2018 and did not have a significant impact to our financial statements.
In January 2017, FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350) - Simplifying
the Test for Goodwill Impairment.” ASU 2017-04 eliminates Step 2 from the goodwill impairment test
which required entities to compute the implied fair value of goodwill. Under ASU 2017-04, an entity should
perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with
its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying
amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total
amount of goodwill allocated to that reporting unit. ASU 2017-04 will be effective for us on January 1, 2020,
with early adoption permitted for interim or annual impairment tests beginning in 2017. ASU 2017-04 is not
expected to have a significant impact on our financial statements.
In March 2017, FASB issued ASU 2017-08, “Receivables - Nonrefundable Fees and Other Costs (Subtopic
310-20) - Premium Amortization on Purchased Callable Debt Securities.” ASU 2017-08 provides guidance
on the amortization period for certain purchased callable debt securities held at a premium. This update
shortens the amortization period for the premium to the earliest call date. Under current generally accepted
accounting principles, entities generally amortize the premium as an adjustment of yield over the contractual
life of the instrument related to certain cash flow issues. ASU 2017-08 will be effective for us on January 1,
2019. We do not expect this update to have a significant impact on our financial statements.
In February 2018, FASB issued ASU 2018-02, "Income Statement - Reporting Comprehensive Income (Topic
220) - Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." Under
ASU 2018-02, entities may elect to reclassify certain income tax effects related to the change in the U.S.
statutory federal income tax rate under the Tax Cuts and Jobs Act, which was enacted on December 22,
2017, from accumulated other comprehensive
ASU 2018-02 also
income
requires certain accounting policy disclosures. We elected to adopt the provisions of ASU 2018-02
for the year ended December 31, 2018 in advance of the required application date of January 1, 2019.
See Note 10 - Income Taxes.
to retained earnings.
51
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(1)
Summary of Significant Accounting Policies, Continued
(y)
Accounting Standard Updates, Continued
In March 2018, FASB issued ASU 2018-05, "Income Taxes (Topic 740) - Amendments to SEC
Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 118. ASU 2018-05 amends the
Accounting Standards Codification to incorporate various SEC paragraphs pursuant to the issuance of
SAB 118. SAB 118 addresses the application of generally accepted accounting principles in situations
when a registrant does not have the necessary information available, prepared, or analyzed (including
computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Cuts
and Jobs Act. See Note 10 - Income Taxes.
In August 2018, FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820) - Disclosure
Framework-Changes to the Disclosure Requirements for Fair Value Measurement." ASU 2018-13
modifies the disclosure requirements on fair value measurements in Topic 820. The amendments in this
update remove disclosures that no longer are considered cost beneficial, modify/clarify the specific
requirements of certain disclosures, and add disclosure requirements identified as relevant. ASU 2018-13
will be effective for us on January 1, 2020, with early adoption permitted, and is not expected to have a
significant impact on our financial statements.
Other than those previously discussed, there were no other recently issued accounting pronouncements
that may materially impact the Company.
(2)
Loans and Allowance for Loan Losses
The classification of loans at December 31, 2018 and 2017 is as follows:
Mortgage loans on real estate:
Residential 1-4 family
Multifamily
Commercial
Construction
Farmland
Second mortgages
Equity lines of credit
Total mortgage loans on real estate
Commercial loans
Agricultural loans
Consumer installment loans:
Personal
Credit cards
Total consumer installment loans
Other loans
Net deferred loan fees
Total loans
Less: Allowance for loan losses
In Thousands
2018
2017
$
460,692
134,613
701,055
518,245
24,071
11,197
62,013
1,911,886
78,245
1,985
45,072
3,687
48,759
9,324
406,667
91,992
661,223
392,039
34,212
8,952
60,650
1,655,735
47,939
1,665
40,155
3,385
43,540
9,662
2,050,199
(7,020 )
1,758,541
(7,379 )
2,043,179
1,751,162
(27,174 )
(23,909 )
Loans, net
$ 2,016,005
1,727,253
52
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(2)
Loans and Allowance for Loan Losses, Continued
At December 31, 2018, variable rate and fixed rate loans totaled $1,495,918,000 and $554,281,000, respectively. At
December 31, 2017, variable rate and fixed rate loans totaled $1,252,794,000 and $505,747,000, respectively.
In the normal course of business, Wilson Bank has made loans at prevailing interest rates and terms to directors and
executive officers of the Company and to their affiliates. The aggregate amount of these loans was $13,019,000 and
$7,759,000 at December 31, 2018 and 2017, respectively. None of these loans were restructured, charged-off or
involved more than the normal risk of collectibility or presented other unfavorable features during the three years ended
December 31, 2018.
An analysis of the activity with respect to such loans to related parties is as follows:
In Thousands
December 31,
2018
2017
Balance, January 1
New loans and renewals during the year
Repayments (including loans paid by renewal)
during the year
Balance, December 31
$
$
7,759
17,278
(12,018)
13,019
9,692
15,299
(17,232)
7,759
Risk characteristics relevant to each portfolio segment are as follows:
Construction and land development: Loans for non-owner-occupied real estate construction or land development are
generally repaid through cash flow related to the operation, sale or refinance of the property. The Company also
finances construction loans for owner-occupied properties. A portion of the Company’s construction and land portfolio
segment is comprised of loans secured by residential product types (residential land and single-family construction).
With respect to construction loans to developers and builders that are secured by non-owner occupied properties that
the Company may originate from time to time, the Company generally requires the borrower to have had an existing
relationship with the Company and have a proven record of success. Construction and land development loans are
underwritten utilizing independent appraisal reviews, sensitivity analysis of absorption and lease rates, market sales
activity, and financial analysis of the developers and property owners. Construction loans are generally based upon
estimates of costs and value associated with the complete project. These estimates may be inaccurate. Construction
loans often involve the disbursement of substantial funds with repayments substantially dependent on the success of the
ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved
long-term lenders, sales of developed property or an interim loan commitment from the Company until permanent
financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risks
than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental
regulation of real property, general economic conditions and the availability of long-term financing.
1-4 family residential real estate: Residential real estate loans represent loans to consumers or investors to finance a
residence. These loans are typically financed on 15 to 30 year amortization terms, but generally with shorter maturities
of 5 to 15 years. Many of these loans are extended to borrowers to finance their primary or secondary residence.
Loans to an investor secured by a 1-4 family residence will be repaid from either the rental income from the property or
from the sale of the property. This loan segment also includes closed-end home equity loans that are secured by a first
or second mortgage on the borrower’s residence. This allows customers to borrow against the equity in their home.
Loans in this portfolio segment are underwritten and approved based on a number of credit quality criteria including
limits on maximum Loan-to-Value (LTV), minimum credit scores, and maximum debt to income. Real estate market
values as of the time the loan is made directly affect the amount of credit extended and, in addition, changes in these
residential property values impact the depth of potential losses in this portfolio segment.
1-4 family HELOC: This loan segment includes open-end home equity loans that are secured by a first or second
mortgage on the borrower’s residence. This allows customers to borrow against the equity in their home utilizing a
revolving line of credit. These loans are underwritten and approved based on a number of credit quality criteria
including limits on maximum LTV, minimum credit scores, and maximum debt to income. Real estate market values
as of the time the loan is made directly affect the amount of credit extended and, in addition, changes in these
residential property values impact the depth of potential losses in this portfolio segment. Because of the revolving
nature of these loans, as well as the fact that many represent second mortgages, this portfolio segment can contain more
risk than the amortizing 1-4 family residential real estate loans.
53
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(2)
Loans and Allowance for Loan Losses, Continued
Multi-family and commercial real estate: Multi-family and commercial real estate loans are subject to underwriting
standards and processes similar to commercial and industrial loans, in addition to those of real estate loans. These
loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate.
Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is
generally largely dependent on the successful operation of the property securing the loan or the business conducted on
the property securing the loan. Commercial real estate loans may be more adversely affected by conditions in the real
estate markets or in the general economy. The properties securing the Company’s commercial real estate portfolio are
diverse in terms of type. This diversity helps reduce the Company’s exposure to adverse economic events that affect
any single market or industry. Management monitors and evaluates commercial real estate loans based on collateral,
geography and risk grade criteria. The Company also utilizes third-party experts to provide insight and guidance about
economic conditions and trends affecting the market areas it serves. In addition, management tracks the level of
owner-occupied commercial real estate loans versus non-owner occupied loans. Non-owner occupied commercial real
estate loans are loans secured by multifamily and commercial properties where the primary source of repayment is
derived from rental income associated with the property (that is, loans for which 50 percent or more of the source of
repayment comes from third party, nonaffiliated rental income) or the proceeds of the sale, refinancing, or permanent
financing of the property. These loans are made to finance income-producing properties such as apartment buildings,
office and industrial buildings, and retail properties. Owner-occupied commercial real estate loans are loans where the
primary source of repayment is the cash flow from the ongoing operations and business activities conducted by the
party, or affiliate of the party, who owns the property.
Commercial and Industrial: The commercial and industrial loan portfolio segment includes commercial and industrial
loans to commercial customers for use in normal business operations to finance working capital needs, equipment
purchases or other expansion projects. Collection risk in this portfolio is driven by the creditworthiness of underlying
borrowers, particularly cash flow from customers’ business operations. Commercial and industrial loans are primarily
made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the
borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may
fluctuate in value. Most commercial and industrial loans are secured by the assets being financed or other business
assets such as accounts receivable or inventory and usually incorporates a personal guarantee; however, some short-
term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of
funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts
due from its customers.
Consumer: The consumer loan portfolio segment includes non-real estate secured direct loans to consumers for
household, family, and other personal expenditures. Consumer loans may be secured or unsecured and are usually
structured with short or medium-term maturities. These loans are underwritten and approved based on a number of
consumer credit quality criteria including limits on maximum LTV on secured consumer loans, minimum credit scores,
and maximum debt to income. Many traditional forms of consumer installment credit have standard monthly payments
and fixed repayment schedules of one to five years. These loans are made with either fixed or variable interest rates
that are based on specific indices. Installment loans fill a variety of needs, such as financing the purchase of an
automobile, a boat, a recreational vehicle or other large personal items, or for consolidating debt. These loans may be
unsecured or secured by an assignment of title, as in an automobile loan, or by money in a bank account. In addition to
consumer installment loans, this portfolio segment also includes secured and unsecured personal lines of credit as well
as overdraft protection lines. Loans in this portfolio segment are sensitive to unemployment and other key consumer
economic measures.
A loan is considered impaired, in accordance with the impairment accounting guidance (ASC 310), when based on
current information and events, it is probable that the Company will be unable to collect all amounts due from the
borrower in accordance with the contractual terms of the loan. Impaired loans include nonperforming loans but also
include loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing
financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions,
forgiveness of principal, forbearance or other actions intended to maximize collection. Substantially all of the
Company’s impaired loans are collateral dependent.
54
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(2)
Loans and Allowance for Loan Losses, Continued
The following tables, present the Company’s impaired loans at December 31, 2018 and 2017:
Recorded
Investment
Unpaid
Principal
Balance
In Thousands
Related
Allowance
Average
Recorded
Investment
Interest
Income
Recognized
December 31, 2018
With no related allowance
recorded:
Residential 1-4 family
Multifamily
Commercial real estate
Construction
Farmland
Second mortgages
Equity lines of credit
Commercial
Agricultural, installment
and other
December 31, 2018
With allowance recorded:
Residential 1-4 family
Multifamily
Commercial real estate
Construction
Farmland
Second mortgages
Equity lines of credit
Commercial
Agricultural, installment
and other
1,196
$
-
1,795
-
317
690
316
686
-
-
-
-
-
$
2,203
-
-
-
-
-
2,797
-
-
-
-
-
-
-
-
-
-
42
16
42
1,862
-
-
320
822
233
-
-
-
-
-
-
-
-
-
3,237
100
Recorded
Investment
Unpaid
Principal
Balance
In Thousands
Related
Allowance
Average
Recorded
Investment
Interest
Income
Recognized
1,641
$
-
1,515
-
-
-
-
-
1,635
852
1,782
-
-
-
-
1,515
312
2,001
77
17
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
3,156
-
-
-
-
3,150
1,164
3,783
94
55
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(2)
Loans and Allowance for Loan Losses, Continued
December 31, 2018
Total:
Residential 1-4 family
Multifamily
Commercial real estate
Construction
Farmland
Second mortgages
Equity lines of credit
Commercial
Agricultural, installment
and other
December 31, 2017
With no related allowance
recorded:
Residential 1-4 family
Multifamily
Commercial real estate
Construction
Farmland
Second mortgages
Equity lines of credit
Commercial
Agricultural, installment
and other
December 31, 2017
With allowance recorded:
Residential 1-4 family
Multifamily
Commercial real estate
Construction
Farmland
Second mortgages
Equity lines of credit
Commercial
Agricultural, installment
and other
Recorded
Investment
Unpaid
Principal
Balance
In Thousands
Related
Allowance
Average
Recorded
Investment
Interest
Income
Recognized
2,837
$
-
1,832
690
-
-
-
-
-
$
5,359
3,430
852
3,644
119
-
-
-
-
1,831
686
-
-
-
-
312
-
-
-
-
-
2,321
822
233
-
-
-
33
42
-
-
-
-
-
-
-
-
5,947
1,164
7,020
194
Recorded
Investment
Unpaid
Principal
Balance
In Thousands
Related
Allowance
Average
Recorded
Investment
Interest
Income
Recognized
2,314
$
-
2,322
-
893
1,185
889
1,182
-
-
-
-
-
$
4,392
-
-
-
-
-
4,393
-
-
-
-
-
-
-
-
-
-
742
103
-
-
902
1,354
26
-
-
-
39
64
-
-
-
-
-
-
3,024
206
Recorded
Investment
Unpaid
Principal
Balance
In Thousands
Related
Allowance
Average
Recorded
Investment
Interest
Income
Recognized
$
-
409
2,157
-
-
-
-
-
581
136
461
-
-
-
-
2,157
291
2,894
29
17
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
2,566
-
-
-
-
2,738
427
3,355
46
56
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(2)
Loans and Allowance for Loan Losses, Continued
December 31, 2017
Total:
Residential 1-4 family
Multifamily
Commercial real estate
Construction
Farmland
Second mortgages
Equity lines of credit
Commercial
Agricultural, installment
and other
Recorded
Investment
Unpaid
Principal
Balance
In Thousands
Related
Allowance
Average
Recorded
Investment
Interest
Income
Recognized
2,723
$
-
3,050
1,185
-
-
-
-
-
$
6,958
2,903
136
1,203
132
-
-
-
-
3,046
1,182
-
-
-
-
291
-
-
-
-
-
3,796
1,354
26
-
-
-
56
64
-
-
-
-
-
-
-
-
7,131
427
6,379
252
The following tables present the Company’s nonaccrual loans, credit quality indicators and past due loans as of
December 31, 2018 and 2017.
Loans on Nonaccrual Status
Residential 1-4 family
Multifamily
Commercial real estate
Construction
Farmland
Second mortgages
Equity lines of credit
Commercial
Agricultural, installment and other
Total
In Thousands
2018
2017
$
-
948
-
-
1,102
1,729
-
-
-
-
-
-
$
2,050
-
310
-
-
-
1
2,040
The impact on net interest income for these loans was not material to the Company’s results of operations for the years
ended December 31, 2018, 2017 and 2016.
57
WB&T | Annual Report 2018
Y
N
A
P
M
O
C
G
N
I
D
L
O
H
K
N
A
B
N
O
S
L
I
W
d
e
u
n
i
t
n
o
C
,
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
i
F
d
e
t
a
d
i
l
o
s
n
o
C
o
t
s
e
t
o
N
6
1
0
2
d
n
a
7
1
0
2
,
8
1
0
2
,
1
3
r
e
b
m
e
c
e
D
l
a
i
t
n
e
t
o
P
.
7
1
0
2
,
1
3
r
e
b
m
e
c
e
D
t
a
n
o
i
l
l
i
m
2
.
6
1
$
o
t
d
e
r
a
p
m
o
c
8
1
0
2
,
1
3
r
e
b
m
e
c
e
D
t
a
n
o
i
l
l
i
m
0
.
2
1
$
y
l
e
t
a
m
i
x
o
r
p
p
a
o
t
d
e
t
n
u
o
m
a
,
s
n
a
o
l
g
n
i
m
r
o
f
r
e
p
n
o
n
e
d
u
l
c
n
i
h
c
i
h
w
,
s
n
a
o
l
m
e
l
b
o
r
p
l
a
i
t
n
e
t
o
P
'
s
y
n
a
p
m
o
C
e
h
t
,
I
C
D
F
e
h
t
y
b
d
e
h
s
i
l
b
a
t
s
e
s
d
r
a
d
n
a
t
s
e
h
t
h
t
i
w
t
n
e
t
s
i
s
n
o
c
y
l
l
a
i
t
n
a
t
s
b
u
s
e
b
o
t
d
e
v
e
i
l
e
b
s
i
n
o
i
t
i
n
i
f
e
d
s
i
h
T
.
s
m
r
e
t
t
n
e
m
y
a
p
e
r
t
n
e
s
e
r
p
h
t
i
w
y
l
p
m
o
c
o
t
y
t
i
l
i
b
a
s
'
r
e
w
o
r
r
o
b
e
h
t
t
u
o
b
a
s
t
b
u
o
d
s
u
o
i
r
e
s
e
v
a
h
o
t
t
n
e
m
e
g
a
n
a
m
d
e
s
u
a
c
s
a
h
s
r
e
w
o
r
r
o
b
f
o
s
m
e
l
b
o
r
p
t
i
d
e
r
c
e
l
b
i
s
s
o
p
t
u
o
b
a
n
o
i
t
a
m
r
o
f
n
i
e
r
e
h
w
d
n
a
s
s
e
n
k
a
e
w
d
e
n
i
f
e
d
l
l
e
w
a
h
t
i
w
s
n
a
o
l
e
s
o
h
t
t
n
e
s
e
r
p
e
r
s
n
a
o
l
m
e
l
b
o
r
p
.
s
n
a
o
l
g
n
i
m
r
o
f
r
e
p
n
o
n
f
o
t
c
a
p
m
i
e
h
t
g
n
i
d
u
l
c
x
e
,
l
u
f
t
b
u
o
d
r
o
,
d
r
a
d
n
a
t
s
b
u
s
,
n
o
i
t
n
e
m
l
a
i
c
e
p
s
s
a
d
e
i
f
i
s
s
a
l
c
s
n
a
o
l
r
o
f
,
r
o
t
a
l
u
g
e
r
l
a
r
e
d
e
f
y
r
a
m
i
r
p
n
a
h
t
r
e
h
t
o
s
t
i
d
e
r
c
l
l
a
e
d
u
l
c
n
i
s
n
a
o
l
d
e
t
a
r
s
s
a
P
.
y
r
o
g
e
t
a
c
g
n
i
t
a
r
k
s
i
r
h
c
a
e
n
i
h
t
i
w
d
e
i
f
i
s
s
a
l
c
t
n
u
o
m
a
e
h
t
d
n
a
n
o
i
t
a
c
i
f
i
s
s
a
l
c
n
a
o
l
y
r
a
m
i
r
p
y
b
s
e
c
n
a
l
a
b
n
a
o
l
r
u
o
s
t
n
e
s
e
r
p
e
l
b
a
t
g
n
i
w
o
l
l
o
f
e
h
T
:
s
w
o
l
l
o
f
s
a
d
e
n
i
f
e
d
e
r
a
h
c
i
h
w
l
u
f
t
b
u
o
d
d
n
a
d
r
a
d
n
a
t
s
b
u
s
,
n
o
i
t
n
e
m
l
a
i
c
e
p
s
n
i
d
e
d
u
l
c
n
i
e
s
o
h
t
e
h
t
f
o
n
o
i
t
a
r
o
i
r
e
t
e
d
n
i
t
l
u
s
e
r
y
a
m
s
e
s
s
e
n
k
a
e
w
l
a
i
t
n
e
t
o
p
e
s
e
h
t
,
d
e
t
c
e
r
r
o
c
n
u
t
f
e
l
f
I
.
n
o
i
t
n
e
t
t
a
e
s
o
l
c
s
'
t
n
e
m
e
g
a
n
a
m
e
v
r
e
s
e
d
t
a
h
t
s
e
s
s
e
n
k
a
e
w
l
a
i
t
n
e
t
o
p
e
v
a
h
s
n
a
o
l
n
o
i
t
n
e
m
l
a
i
c
e
p
S
.
e
t
a
d
e
r
u
t
u
f
e
m
o
s
t
a
n
o
i
t
i
s
o
p
t
i
d
e
r
c
'
s
y
n
a
p
m
o
C
e
h
t
n
i
r
o
t
e
s
s
a
e
h
t
r
o
f
s
t
c
e
p
s
o
r
p
t
n
e
m
y
a
p
e
r
e
v
a
h
t
s
u
m
d
e
i
f
i
s
s
a
l
c
o
s
s
t
e
s
s
A
.
y
n
a
f
i
,
d
e
g
d
e
l
p
l
a
r
e
t
a
l
l
o
c
e
h
t
f
o
r
o
r
o
g
i
l
b
o
e
h
t
f
o
y
t
i
c
a
p
a
c
g
n
i
y
a
p
d
n
a
h
t
r
o
w
d
n
u
o
s
t
n
e
r
r
u
c
e
h
t
y
b
d
e
t
c
e
t
o
r
p
y
l
e
t
a
u
q
e
d
a
n
i
e
r
a
s
n
a
o
l
d
r
a
d
n
a
t
s
b
u
S
n
i
a
t
s
u
s
l
l
i
w
y
n
a
p
m
o
C
e
h
t
t
a
h
t
y
t
i
l
i
b
i
s
s
o
p
t
c
n
i
t
s
i
d
e
h
t
y
b
d
e
z
i
r
e
t
c
a
r
a
h
c
e
r
a
s
n
a
o
l
d
r
a
d
n
a
t
s
b
u
S
.
t
b
e
d
e
h
t
f
o
n
o
i
t
a
d
i
u
q
i
l
e
z
i
d
r
a
p
o
e
j
t
a
h
t
s
e
s
s
e
n
k
a
e
w
r
o
s
s
e
n
k
a
e
w
d
e
n
i
f
e
d
-
l
l
e
w
a
.
d
e
t
c
e
r
r
o
c
t
o
n
e
r
a
s
e
i
c
n
e
i
c
i
f
e
d
e
h
t
f
i
s
s
o
l
e
m
o
s
y
l
t
n
e
r
r
u
c
f
o
s
i
s
a
b
e
h
t
n
o
,
l
l
u
f
n
i
n
o
i
t
a
d
i
u
q
i
l
r
o
n
o
i
t
c
e
l
l
o
c
e
k
a
m
s
e
s
s
e
n
k
a
e
w
e
h
t
t
a
h
t
s
c
i
t
s
i
r
e
t
c
a
r
a
h
c
d
e
d
d
a
e
h
t
h
t
i
w
s
n
a
o
l
d
r
a
d
n
a
t
s
b
u
s
f
o
s
c
i
t
s
i
r
e
t
c
a
r
a
h
c
e
h
t
l
l
a
e
v
a
h
s
n
a
o
l
l
u
f
t
b
u
o
D
.
s
u
t
a
t
s
l
a
u
r
c
c
a
n
o
n
n
o
s
n
a
o
l
e
h
t
s
e
c
a
l
p
d
n
a
d
e
r
i
a
p
m
i
e
b
o
t
s
n
a
o
l
l
u
f
t
b
u
o
d
l
l
a
s
r
e
d
i
s
n
o
c
y
n
a
p
m
o
C
e
h
T
.
e
l
b
a
b
o
r
p
m
i
d
n
a
e
l
b
a
n
o
i
t
s
e
u
q
y
l
h
g
i
h
,
s
e
u
l
a
v
d
n
a
s
n
o
i
t
i
d
n
o
c
,
s
t
c
a
f
g
n
i
t
s
i
x
e
d
e
u
n
i
t
n
o
C
,
s
e
s
s
o
L
n
a
o
L
r
o
f
e
c
n
a
w
o
l
l
A
d
n
a
s
n
a
o
L
)
2
(
s
d
n
a
s
u
o
h
T
n
I
l
a
t
o
T
,
l
a
r
u
t
l
u
c
i
r
g
A
t
n
e
m
l
l
a
t
s
n
I
r
e
h
t
O
d
n
a
l
a
i
c
r
e
m
m
o
C
t
i
d
e
r
C
f
o
s
e
n
i
L
y
t
i
u
q
E
d
n
o
c
e
S
s
e
g
a
g
t
r
o
M
d
n
a
l
m
r
a
F
n
o
i
t
c
u
r
t
s
n
o
C
l
a
i
c
r
e
m
m
o
C
e
t
a
t
s
E
l
a
e
R
y
l
i
m
a
f
i
t
l
u
M
l
a
i
t
n
e
d
i
s
e
R
y
l
i
m
a
F
4
-
1
1
1
1
6
,
8
2
9
5
,
-
,
0
6
1
8
3
0
2
,
,
9
9
1
0
5
0
2
,
8
7
7
6
-
3
2
9
9
5
,
9
3
6
0
2
8
7
,
-
-
6
8
-
-
9
3
9
7
1
-
4
6
2
1
1
-
4
6
8
5
-
0
9
6
,
1
2
8
2
,
1
-
-
-
-
9
4
9
,
3
2
3
3
,
4
-
7
2
9
1
6
,
9
7
9
0
1
,
5
9
8
,
3
2
3
2
1
,
8
1
5
3
8
0
,
8
9
6
3
1
6
,
4
3
1
1
1
4
,
2
5
4
$
8
6
0
0
6
,
5
4
2
8
7
,
3
1
0
2
6
,
7
9
1
1
1
,
1
7
0
,
4
2
5
4
2
,
8
1
5
5
5
0
,
1
0
7
3
1
6
,
4
3
1
2
9
6
,
0
6
4
$
5
9
6
6
,
,
2
4
3
2
4
7
1
,
7
7
7
9
6
4
5
,
2
7
3
9
7
4
,
1
4
3
5
5
0
6
,
3
4
5
6
7
8
,
4
0
5
9
,
-
,
1
4
5
8
5
7
1
,
3
9
-
7
6
8
4
5
,
-
-
9
3
9
7
4
,
6
5
-
0
5
6
0
6
,
4
4
1
-
2
5
9
8
,
5
2
1
0
0
5
,
3
3
7
8
5
-
2
1
2
,
4
3
7
7
1
-
4
8
8
7
7
,
1
9
3
1
2
1
,
3
6
4
6
6
5
4
,
7
5
6
-
-
2
9
9
,
1
9
-
-
6
2
3
,
5
7
7
6
,
5
4
6
6
,
5
9
3
-
$
9
3
0
,
2
9
3
3
2
2
,
1
6
6
2
9
9
,
1
9
7
6
6
,
6
0
4
$
s
r
o
t
a
c
i
d
n
I
y
t
i
l
a
u
Q
t
i
d
e
r
C
d
e
n
g
i
s
s
A
y
l
l
a
n
r
e
t
n
I
y
b
e
l
i
f
o
r
P
k
s
i
R
t
i
d
e
r
C
e
d
a
r
G
8
1
0
2
,
1
3
r
e
b
m
e
c
e
D
n
o
i
t
n
e
m
l
a
i
c
e
p
S
s
s
a
P
l
a
t
o
T
d
r
a
d
n
a
t
s
b
u
S
l
u
f
t
b
u
o
D
7
1
0
2
,
1
3
r
e
b
m
e
c
e
D
n
o
i
t
n
e
m
l
a
i
c
e
p
S
s
s
a
P
l
a
t
o
T
d
r
a
d
n
a
t
s
b
u
S
l
u
f
t
b
u
o
D
58
WB&T | Annual Report 2018
0
2
9
-
2
7
2
3
1
2
-
5
4
4
2
5
9
9
0
2
1
,
3
7
6
-
-
3
1
1
-
2
1
4
-
8
4
1
7
7
9
d
e
d
r
o
c
e
R
t
n
e
m
t
s
e
v
n
I
n
a
h
T
r
e
t
a
e
r
G
d
n
a
s
y
a
D
0
9
g
n
i
u
r
c
c
A
2
9
6
,
0
6
4
3
1
6
,
4
3
1
5
5
0
,
1
0
7
5
4
2
,
8
1
5
1
7
0
4
2
,
7
9
1
1
1
,
3
1
0
2
6
,
5
4
2
8
7
,
8
6
0
0
6
,
4
7
4
,
4
5
4
3
1
6
,
4
3
1
0
6
4
,
9
9
6
0
2
6
,
6
1
5
8
9
9
3
2
,
4
6
8
0
1
,
1
7
6
1
6
,
8
2
1
8
7
,
1
8
4
9
5
,
l
a
t
o
T
s
n
a
o
L
t
n
e
r
r
u
C
,
9
9
1
0
5
0
2
,
,
9
0
3
9
3
0
2
,
2
9
9
1
9
,
7
6
6
,
6
0
4
3
2
2
,
1
6
6
9
3
0
,
2
9
3
2
5
9
8
,
2
1
2
4
3
,
0
5
6
0
6
,
9
3
9
7
4
,
7
6
8
4
5
,
2
9
9
1
9
,
9
3
8
,
1
0
4
1
1
4
,
9
5
6
3
9
4
,
1
9
3
0
5
9
8
,
0
9
7
3
3
,
9
0
6
0
6
,
0
0
8
7
4
,
9
2
2
4
5
,
,
1
4
5
8
5
7
1
,
,
3
1
1
0
5
7
1
,
s
d
n
a
s
u
o
h
T
n
I
l
a
t
o
T
l
a
u
r
c
c
a
n
o
N
d
n
a
e
u
D
t
s
a
P
l
a
u
r
c
c
a
n
o
N
d
n
a
r
e
t
a
e
r
G
n
a
h
T
s
y
a
D
0
9
9
8
-
0
6
s
y
a
D
e
u
D
t
s
a
P
9
5
-
0
3
s
y
a
D
e
u
D
t
s
a
P
8
1
2
,
6
-
5
9
5
,
1
5
2
6
,
1
3
7
3
3
3
2
4
3
7
1
1
7
8
5
0
9
8
,
0
1
8
2
8
,
4
-
2
1
8
,
1
6
4
5
2
2
4
2
1
4
9
3
1
8
3
6
8
2
4
,
8
8
6
8
,
1
-
4
7
1
,
1
2
3
1
2
-
5
4
4
2
5
9
9
5
2
,
3
3
7
6
-
9
2
7
,
1
3
1
1
0
1
3
2
1
4
-
9
4
1
7
1
0
,
3
9
6
2
9
0
1
-
2
9
0
,
1
-
-
-
5
8
1
2
3
,
1
4
2
5
-
3
8
-
-
-
-
7
3
1
7
5
1
0
8
8
5
2
,
3
-
2
1
3
7
6
5
,
1
3
4
3
3
3
7
9
2
3
9
7
0
4
0
1
3
,
6
-
-
3
3
4
2
1
1
-
-
2
1
3
6
,
3
2
3
4
0
1
6
,
4
$
$
$
$
y
l
i
m
a
f
4
-
1
l
a
i
t
n
e
d
i
s
e
R
y
l
i
m
a
f
i
t
l
u
M
e
t
a
t
s
e
l
a
e
r
l
a
i
c
r
e
m
m
o
C
t
i
d
e
r
c
f
o
s
e
n
i
l
y
t
i
u
q
E
s
e
g
a
g
t
r
o
m
d
n
o
c
e
S
l
a
i
c
r
e
m
m
o
C
n
o
i
t
c
u
r
t
s
n
o
C
d
n
a
l
m
r
a
F
8
1
0
2
,
1
3
r
e
b
m
e
c
e
D
d
n
a
t
n
e
m
l
l
a
t
s
n
i
,
l
a
r
u
t
l
u
c
i
r
g
A
l
a
t
o
T
r
e
h
t
o
y
l
i
m
a
f
4
-
1
l
a
i
t
n
e
d
i
s
e
R
y
l
i
m
a
f
i
t
l
u
M
e
t
a
t
s
e
l
a
e
r
l
a
i
c
r
e
m
m
o
C
t
i
d
e
r
c
f
o
s
e
n
i
l
y
t
i
u
q
E
s
e
g
a
g
t
r
o
m
d
n
o
c
e
S
l
a
i
c
r
e
m
m
o
C
n
o
i
t
c
u
r
t
s
n
o
C
d
n
a
l
m
r
a
F
7
1
0
2
,
1
3
r
e
b
m
e
c
e
D
d
n
a
t
n
e
m
l
l
a
t
s
n
i
,
l
a
r
u
t
l
u
c
i
r
g
A
l
a
t
o
T
r
e
h
t
o
Y
N
A
P
M
O
C
G
N
I
D
L
O
H
K
N
A
B
N
O
S
L
I
W
d
e
u
n
i
t
n
o
C
,
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
i
F
d
e
t
a
d
i
l
o
s
n
o
C
o
t
s
e
t
o
N
6
1
0
2
d
n
a
7
1
0
2
,
8
1
0
2
,
1
3
r
e
b
m
e
c
e
D
d
e
u
n
i
t
n
o
C
,
s
e
s
s
o
L
n
a
o
L
r
o
f
e
c
n
a
w
o
l
l
A
d
n
a
s
n
a
o
L
)
2
(
s
n
a
o
L
e
u
D
t
s
a
P
f
o
s
i
s
y
l
a
n
A
e
g
A
59
WB&T | Annual Report 2018
Y
N
A
P
M
O
C
G
N
I
D
L
O
H
K
N
A
B
N
O
S
L
I
W
d
e
u
n
i
t
n
o
C
,
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
i
F
d
e
t
a
d
i
l
o
s
n
o
C
o
t
s
e
t
o
N
6
1
0
2
d
n
a
7
1
0
2
,
8
1
0
2
,
1
3
r
e
b
m
e
c
e
D
s
d
n
a
s
u
o
h
T
n
I
l
a
t
o
T
,
l
a
r
u
t
l
u
c
i
r
g
A
t
n
e
m
l
l
a
t
s
n
I
r
e
h
t
O
d
n
a
l
a
i
c
r
e
m
m
o
C
t
i
d
e
r
C
f
o
s
e
n
i
L
y
t
i
u
q
E
d
n
o
c
e
S
s
e
g
a
g
t
r
o
M
d
n
a
l
m
r
a
F
n
o
i
t
c
u
r
t
s
n
o
C
l
a
i
c
r
e
m
m
o
C
e
t
a
t
s
E
l
a
e
R
y
l
i
m
a
f
i
t
l
u
M
l
a
i
t
n
e
d
i
s
e
R
y
l
i
m
a
F
4
-
1
:
s
w
o
l
l
o
f
s
a
d
e
z
i
r
a
m
m
u
s
e
r
a
7
1
0
2
d
n
a
8
1
0
2
,
1
3
r
e
b
m
e
c
e
D
d
e
d
n
e
s
r
a
e
y
e
h
t
r
o
f
s
e
s
s
o
l
n
a
o
l
r
o
f
e
c
n
a
w
o
l
l
a
e
h
t
n
i
s
n
o
i
t
c
a
s
n
a
r
T
d
e
u
n
i
t
n
o
C
,
s
e
s
s
o
L
n
a
o
L
r
o
f
e
c
n
a
w
o
l
l
A
d
n
a
s
n
a
o
L
)
2
(
9
9
1
,
0
5
0
,
2
8
6
0
,
0
6
5
4
2
,
8
7
3
1
0
,
2
6
7
9
1
,
1
1
1
7
0
,
4
2
5
4
2
,
8
1
5
5
5
0
,
1
0
7
3
1
6
,
4
3
1
2
9
6
,
0
6
4
$
e
c
n
a
l
a
b
g
n
i
d
n
E
6
4
3
,
5
-
-
-
-
-
6
8
6
1
3
8
,
1
-
9
2
8
,
2
$
t
n
e
m
r
i
a
p
m
i
r
o
f
d
e
t
a
u
l
a
v
e
y
l
l
a
u
d
i
v
i
d
n
i
e
c
n
a
l
a
b
g
n
i
d
n
E
3
5
8
,
4
4
0
,
2
8
6
0
,
0
6
5
4
2
,
8
7
3
1
0
,
2
6
7
9
1
,
1
1
1
7
0
,
4
2
9
5
5
,
7
1
5
4
2
2
,
9
9
6
3
1
6
,
4
3
1
3
6
8
,
7
5
4
$
t
n
e
m
r
i
a
p
m
i
r
o
f
d
e
t
a
u
l
a
v
e
y
l
e
v
i
t
c
e
l
l
o
c
e
c
n
a
l
a
b
g
n
i
d
n
E
8
9
2
,
4
9
0
9
,
3
2
)
3
6
6
,
1
(
0
3
6
4
7
1
,
7
2
6
7
6
0
2
9
3
2
4
7
6
8
)
2
5
1
,
1
(
4
6
1
,
1
-
0
1
0
,
6
2
7
6
8
1
0
4
8
1
2
3
2
2
6
-
-
2
2
6
3
2
7
7
1
-
1
3
7
-
1
3
7
4
9
4
2
-
-
8
1
1
-
8
1
1
7
8
4
)
6
6
2
(
-
-
1
2
2
-
1
2
2
4
9
0
,
6
)
9
1
(
1
2
9
8
8
4
8
0
,
7
6
3
4
7
6
2
,
9
0
5
-
3
5
7
,
9
0
7
4
1
1
0
,
1
-
-
1
8
4
,
1
6
5
1
,
5
8
6
5
,
1
5
6
)
2
9
4
(
7
9
2
,
6
-
2
1
3
-
2
5
8
4
8
0
,
7
1
4
4
,
9
1
8
4
,
1
5
4
4
,
5
$
$
$
$
8
1
0
2
,
1
3
r
e
b
m
e
c
e
D
n
a
o
l
r
o
f
e
c
n
a
w
o
l
l
A
:
s
e
s
s
o
l
e
c
n
a
l
a
b
g
n
i
n
n
i
g
e
B
s
f
f
o
-
e
g
r
a
h
C
s
e
i
r
e
v
o
c
e
R
n
o
i
s
i
v
o
r
P
e
c
n
a
l
a
b
g
n
i
d
n
E
y
l
l
a
u
d
i
v
i
d
n
i
e
c
n
a
l
a
b
g
n
i
d
n
E
t
n
e
m
r
i
a
p
m
i
r
o
f
d
e
t
a
u
l
a
v
e
t
n
e
m
r
i
a
p
m
i
r
o
f
d
e
t
a
u
l
a
v
e
y
l
e
v
i
t
c
e
l
l
o
c
e
c
n
a
l
a
b
g
n
i
d
n
E
:
s
n
a
o
L
60
WB&T | Annual Report 2018
Y
N
A
P
M
O
C
G
N
I
D
L
O
H
K
N
A
B
N
O
S
L
I
W
d
e
u
n
i
t
n
o
C
,
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
i
F
d
e
t
a
d
i
l
o
s
n
o
C
o
t
s
e
t
o
N
6
1
0
2
d
n
a
7
1
0
2
,
8
1
0
2
,
1
3
r
e
b
m
e
c
e
D
s
d
n
a
s
u
o
h
T
n
I
l
a
t
o
T
,
l
a
r
u
t
l
u
c
i
r
g
A
t
n
e
m
l
l
a
t
s
n
I
r
e
h
t
O
d
n
a
l
a
i
c
r
e
m
m
o
C
t
i
d
e
r
C
f
o
s
e
n
i
L
y
t
i
u
q
E
d
n
o
c
e
S
s
e
g
a
g
t
r
o
M
d
n
a
l
m
r
a
F
n
o
i
t
c
u
r
t
s
n
o
C
l
a
i
c
r
e
m
m
o
C
e
t
a
t
s
E
l
a
e
R
y
l
i
m
a
f
i
t
l
u
M
l
a
i
t
n
e
d
i
s
e
R
y
l
i
m
a
F
4
-
1
d
e
u
n
i
t
n
o
C
,
s
e
s
s
o
L
n
a
o
L
r
o
f
e
c
n
a
w
o
l
l
A
d
n
a
s
n
a
o
L
)
2
(
1
4
5
,
8
5
7
,
1
7
6
8
,
4
5
9
3
9
,
7
4
0
5
6
,
0
6
2
5
9
,
8
2
1
2
,
4
3
9
3
0
,
2
9
3
3
2
2
,
1
6
6
2
9
9
,
1
9
7
6
6
,
6
0
4
$
e
c
n
a
l
a
b
g
n
i
d
n
E
6
0
9
,
6
-
-
-
-
-
2
8
1
,
1
6
4
0
,
3
-
8
7
6
,
2
$
t
n
e
m
r
i
a
p
m
i
r
o
f
d
e
t
a
u
l
a
v
e
y
l
l
a
u
d
i
v
i
d
n
i
e
c
n
a
l
a
b
g
n
i
d
n
E
5
3
6
,
1
5
7
,
1
7
6
8
,
4
5
9
3
9
,
7
4
0
5
6
,
0
6
2
5
9
,
8
2
1
2
,
4
3
7
5
8
,
0
9
3
7
7
1
,
8
5
6
2
9
9
,
1
9
9
8
9
,
3
0
4
$
t
n
e
m
r
i
a
p
m
i
r
o
f
d
e
t
a
u
l
a
v
e
y
l
e
v
i
t
c
e
l
l
o
c
e
c
n
a
l
a
b
g
n
i
d
n
E
1
8
6
,
1
1
3
7
,
2
2
)
2
2
2
,
1
(
9
1
7
9
0
9
,
3
2
2
6
5
6
8
7
8
1
4
6
7
6
)
0
9
0
,
1
(
7
2
4
-
6
8
3
9
6
-
1
0
4
-
5
4
5
7
6
3
3
2
7
-
-
2
8
4
,
3
2
6
7
6
1
0
4
3
2
7
)
0
1
(
)
1
1
(
2
1
1
3
4
9
4
9
-
)
3
(
8
5
6
)
8
6
1
(
7
8
4
-
6
8
5
7
8
3
,
5
-
1
2
1
4
9
0
,
6
)
4
1
4
(
1
4
5
,
9
-
0
4
1
7
6
2
,
9
9
3
8
2
7
1
-
-
1
1
0
,
1
5
7
6
)
8
1
1
(
8
2
6
5
1
,
5
-
-
1
9
2
-
6
3
1
7
8
4
4
9
0
,
6
6
7
9
,
8
1
1
0
,
1
0
2
0
,
5
1
7
5
,
4
$
e
c
n
a
l
a
b
g
n
i
n
n
i
g
e
B
7
1
0
2
,
1
3
r
e
b
m
e
c
e
D
n
a
o
l
r
o
f
e
c
n
a
w
o
l
l
A
:
s
e
s
s
o
l
$
$
$
y
l
l
a
u
d
i
v
i
d
n
i
e
c
n
a
l
a
b
g
n
i
d
n
E
t
n
e
m
r
i
a
p
m
i
r
o
f
d
e
t
a
u
l
a
v
e
t
n
e
m
r
i
a
p
m
i
r
o
f
d
e
t
a
u
l
a
v
e
y
l
e
v
i
t
c
e
l
l
o
c
e
c
n
a
l
a
b
g
n
i
d
n
E
:
s
n
a
o
L
s
f
f
o
-
e
g
r
a
h
C
s
e
i
r
e
v
o
c
e
R
n
o
i
s
i
v
o
r
P
e
c
n
a
l
a
b
g
n
i
d
n
E
61
WB&T | Annual Report 2018
Y
N
A
P
M
O
C
G
N
I
D
L
O
H
K
N
A
B
N
O
S
L
I
W
d
e
u
n
i
t
n
o
C
,
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
i
F
d
e
t
a
d
i
l
o
s
n
o
C
o
t
s
e
t
o
N
6
1
0
2
d
n
a
7
1
0
2
,
8
1
0
2
,
1
3
r
e
b
m
e
c
e
D
o
t
d
e
t
n
a
r
g
n
e
e
b
e
v
a
h
s
n
o
i
s
s
e
c
n
o
c
c
i
m
o
n
o
c
e
e
r
e
h
w
,
)
R
D
T
(
g
n
i
r
u
t
c
u
r
t
s
e
r
t
b
e
d
d
e
l
b
u
o
r
t
a
n
i
d
e
i
f
i
d
o
m
n
e
e
b
e
v
a
h
t
a
h
t
s
n
a
o
l
n
i
a
t
r
e
c
s
e
d
u
l
c
n
i
o
i
l
o
f
t
r
o
p
n
a
o
l
'
s
y
n
a
p
m
o
C
e
h
T
d
n
a
s
e
i
t
i
v
i
t
c
a
n
o
i
t
a
g
i
t
i
m
s
s
o
l
'
s
y
n
a
p
m
o
C
e
h
t
m
o
r
f
t
l
u
s
e
r
y
l
l
a
c
i
p
y
t
s
n
o
i
s
s
e
c
n
o
c
e
h
T
.
s
e
i
t
l
u
c
i
f
f
i
d
l
a
i
c
n
a
n
i
f
e
c
n
e
i
r
e
p
x
e
o
t
d
e
t
c
e
p
x
e
e
r
a
r
o
d
e
c
n
e
i
r
e
p
x
e
e
v
a
h
o
h
w
s
r
e
w
o
r
r
o
b
t
a
g
n
i
m
r
o
f
r
e
p
n
o
n
s
a
d
e
i
f
i
s
s
a
l
c
e
r
a
s
R
D
T
n
i
a
t
r
e
C
.
s
n
o
i
t
c
a
r
e
h
t
o
r
o
e
c
n
a
r
a
e
b
r
o
f
,
l
a
p
i
c
n
i
r
p
f
o
s
s
e
n
e
v
i
g
r
o
f
,
s
n
o
i
s
n
e
t
x
e
t
n
e
m
y
a
p
,
e
t
a
r
t
s
e
r
e
t
n
i
e
h
t
n
i
s
n
o
i
t
c
u
d
e
r
e
d
u
l
c
n
i
d
l
u
o
c
y
l
l
a
r
e
n
e
g
,
d
o
i
r
e
p
e
l
b
a
n
o
s
a
e
r
a
r
o
f
e
c
n
a
m
r
o
f
r
e
p
t
n
e
m
y
a
p
e
r
d
e
n
i
a
t
s
u
s
s
'
r
e
w
o
r
r
o
b
e
h
t
g
n
i
r
e
d
i
s
n
o
c
r
e
t
f
a
s
u
t
a
t
s
g
n
i
m
r
o
f
r
e
p
o
t
d
e
n
r
u
t
e
r
e
b
y
l
n
o
y
a
m
d
n
a
e
r
u
t
c
u
r
t
s
e
r
f
o
e
m
i
t
e
h
t
.
s
h
t
n
o
m
x
i
s
:
)
s
d
n
a
s
u
o
h
t
n
i
s
r
a
l
l
o
d
(
7
1
0
2
,
1
3
r
e
b
m
e
c
e
D
d
n
a
8
1
0
2
,
1
3
r
e
b
m
e
c
e
D
t
a
s
R
D
T
f
o
s
e
c
n
a
l
a
b
g
n
i
y
r
r
a
c
e
h
t
s
e
z
i
r
a
m
m
u
s
e
l
b
a
t
g
n
i
w
o
l
l
o
f
e
h
T
d
e
u
n
i
t
n
o
C
,
s
e
s
s
o
L
n
a
o
L
r
o
f
e
c
n
a
w
o
l
l
A
d
n
a
s
n
a
o
L
)
2
(
7
1
0
2
8
1
0
2
0
5
2
2
,
4
3
8
1
,
4
8
0
4
,
6
7
6
1
,
6
1
8
2
9
4
2
,
$
$
s
R
D
T
l
a
t
o
T
s
R
D
T
g
n
i
m
r
o
f
r
e
p
n
o
N
s
R
D
T
g
n
i
m
r
o
f
r
e
P
t
s
o
P
n
o
i
t
a
c
i
f
i
d
o
M
g
n
i
d
n
a
t
s
t
u
O
d
e
d
r
o
c
e
R
,
t
n
e
m
t
s
e
v
n
I
d
e
t
a
l
e
R
f
o
t
e
N
e
c
n
a
w
o
l
l
A
e
r
P
n
o
i
t
a
c
i
f
i
d
o
M
g
n
i
d
n
a
t
s
t
u
O
d
e
d
r
o
c
e
R
t
n
e
m
t
s
e
v
n
I
f
o
r
e
b
m
u
N
s
t
c
a
r
t
n
o
C
t
s
o
P
n
o
i
t
a
c
i
f
i
d
o
M
g
n
i
d
n
a
t
s
t
u
O
d
e
d
r
o
c
e
R
,
t
n
e
m
t
s
e
v
n
I
d
e
t
a
l
e
R
f
o
t
e
N
e
c
n
a
w
o
l
l
A
e
r
P
n
o
i
t
a
c
i
f
i
d
o
M
g
n
i
d
n
a
t
s
t
u
O
d
e
d
r
o
c
e
R
t
n
e
m
t
s
e
v
n
I
r
e
b
m
u
N
s
t
c
a
r
t
n
o
C
f
o
7
1
0
2
,
1
3
r
e
b
m
e
c
e
D
8
1
0
2
,
1
3
r
e
b
m
e
c
e
D
5
3
5
$
0
1
6
$
-
-
-
6
8
-
-
-
3
4
2
6
$
-
-
-
6
8
-
-
-
3
9
9
6
$
6
1
1
8
-
-
-
-
-
-
8
4
4
$
8
4
4
$
4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5
3
5
4
$
5
3
5
4
$
2
6
y
l
i
m
a
f
4
-
1
l
a
i
t
n
e
d
i
s
e
R
y
l
i
m
a
f
i
t
l
u
M
e
t
a
t
s
e
l
a
e
r
l
a
i
c
r
e
m
m
o
C
t
i
d
e
r
c
f
o
s
e
n
i
l
y
t
i
u
q
E
e
g
a
g
t
r
o
m
d
n
o
c
e
S
l
a
i
c
r
e
m
m
o
C
n
o
i
t
c
u
r
t
s
n
o
C
d
n
a
l
m
r
a
F
d
n
a
t
n
e
m
l
l
a
t
s
n
i
,
l
a
r
u
t
l
u
c
i
r
g
A
l
a
t
o
T
r
e
h
t
o
,
7
1
0
2
,
1
3
r
e
b
m
e
c
e
D
f
o
s
A
.
g
n
i
r
u
t
c
u
r
t
s
e
r
e
h
t
f
o
s
h
t
n
o
m
e
v
l
e
w
t
n
i
h
t
i
w
t
l
u
a
f
e
d
R
D
T
a
s
a
d
e
i
f
i
s
s
a
l
c
y
l
s
u
o
i
v
e
r
p
n
a
o
l
y
n
a
e
v
a
h
t
o
n
d
i
d
y
n
a
p
m
o
C
e
h
t
,
8
1
0
2
,
1
3
r
e
b
m
e
c
e
D
t
A
.
g
n
i
r
u
t
c
u
r
t
s
e
r
e
h
t
f
o
s
h
t
n
o
m
e
v
l
e
w
t
n
i
h
t
i
w
t
l
u
a
f
e
d
R
D
T
a
s
a
d
e
i
f
i
s
s
a
l
c
y
l
s
u
o
i
v
e
r
p
0
0
0
,
3
0
1
$
g
n
i
l
a
t
o
t
n
a
o
l
e
n
o
d
a
h
y
n
a
p
m
o
C
e
h
t
,
0
0
0
,
1
0
2
$
d
n
a
0
0
0
,
0
0
2
$
o
t
d
e
t
n
u
o
m
a
e
r
u
s
o
l
c
e
r
o
f
f
o
s
s
e
c
o
r
p
e
h
t
n
i
s
n
a
o
l
e
g
a
g
t
r
o
m
r
e
m
u
s
n
o
c
n
i
t
n
e
m
t
s
e
v
n
i
d
e
d
r
o
c
e
r
'
s
y
n
a
p
m
o
C
e
h
t
,
7
1
0
2
d
n
a
8
1
0
2
,
1
3
r
e
b
m
e
c
e
D
f
o
s
A
.
y
l
e
v
i
t
c
e
p
s
e
r
7
1
0
2
d
n
a
8
1
0
2
,
1
3
r
e
b
m
e
c
e
D
d
e
d
n
e
s
r
a
e
y
e
h
t
r
o
f
n
o
i
t
a
c
i
f
i
s
s
a
l
c
n
a
o
l
y
b
d
e
z
i
r
o
g
e
t
a
c
R
D
T
h
c
a
e
f
o
t
n
u
o
m
a
e
h
t
s
e
n
i
l
t
u
o
e
l
b
a
t
g
n
i
w
o
l
l
o
f
e
h
T
:
)
s
d
n
a
s
u
o
h
t
n
i
s
r
a
l
l
o
d
(
62
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(2)
Loans and Allowance for Loan Losses, Continued
The Company's principal customers are primarily in the Middle Tennessee area with a concentration in Wilson County,
Tennessee. Credit is extended to businesses and individuals and is evidenced by promissory notes. The terms and
conditions of the loans including collateral vary depending upon the purpose of the credit and the borrower's financial
condition.
In 2018, 2017 and 2016, the Company originated mortgage loans for sale into the secondary market of $129,060,000,
$135,835,000 and $161,114,000, respectively. The fees and gain on sale of these loans totaled $4,639,000, $4,258,000
and $4,355,000 in 2018, 2017 and 2016, respectively. The Company sells loans to third-party investors on a loan-by-
loan basis and has not entered into any forward commitments with investors for future bulk sales. All of these loan
sales transfer servicing rights to the buyer.
In some instances, Wilson Bank sells loans that contain provisions which permit the buyer to seek recourse against
Wilson Bank in certain circumstances. At December 31, 2018 and 2017, total mortgage loans sold with recourse in the
secondary market aggregated $94,801,000 and $105,308,000, respectively. At December 31, 2018, Wilson Bank has
not been required to repurchase a significant amount of the mortgage loans originated by Wilson Bank and sold in the
secondary market. Management expects no material losses to result from these recourse provisions.
(3)
Debt and Equity Securities
Debt and equity securities have been classified in the consolidated balance sheet according to management's intent.
Debt and equity securities at December 31, 2018 consist of the following:
Government-sponsored enterprises
(GSEs)
Mortgage-backed securities
Asset-backed securities
Obligations of states and political
subdivisions
Securities Available-For-Sale
In Thousands
Gross
Unrealized
Gains
Gross
Unrealized
Losses
-
9
10
22
41
2,979
4,874
844
1,775
10,472
Amortized
Cost
$
$
71,446
152,375
22,534
49,328
295,683
Estimated
Market
Value
68,467
147,510
21,700
47,575
285,252
There were no debt and equity securities classified as held-to-maturity at December 31, 2018. During the
year ended December 31, 2018, the Company sold securities classified as held-to-maturity with a book value of
$4,843,000 for a loss of $79,000. Due to the sale, management determined the Company no longer had the intent to
hold the remaining securities classified as held-to-maturity to their respective maturity dates and transferred the
remaining book value of $22,800,000 to the available-for-sale classification.
The Company’s classification of securities at December 31, 2017 was as follows:
Securities Held-To-Maturity
In Thousands
Gross
Unrealized
Gains
Gross
Unrealized
Losses
`
31
66
97
156
310
466
Estimated
Market
Value
9,761
22,350
32,111
Amortized
Cost
$
$
9,886
22,594
32,480
Mortgage-backed securities
Obligations of states and political
subdivisions
63
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(3)
Debt and Equity Securities, Continued
The Company’s classification of securities at December 31, 2017 is as follows:
Government-sponsored enterprises
(GSEs)
Mortgage-backed securities
Asset-backed securities
Obligations of states and political
subdivisions
Securities Available-For-Sale
In Thousands
Gross
Unrealized
Gains
Gross
Unrealized
Losses
4
302
-
7
313
1,714
2,551
789
992
6,046
Amortized
Cost
$
$
74,690
200,175
26,387
37,197
338,449
Estimated
Market
Value
72,980
197,926
25,598
36,212
332,716
Included in mortgage-backed securities are collateralized mortgage obligations totaling $11,564,000 (fair value of
$11,295,000) and $17,361,000 (fair value of $17,133,000) at December 31, 2018 and 2017, respectively.
The amortized cost and estimated market value of debt securities at December 31, 2018, by contractual maturity, are
shown below. Expected maturities will differ from contractual maturities of mortgage and asset-backed securities
because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Securities Available-For-Sale
Due in one year or less
Due after one year through five years
Due after five years through ten years
Due after ten years
Mortgage and asset-backed securities
In Thousands
Estimated
Market
Value
2,234
22,409
73,184
18,215
116,042
169,210
285,252
Amortized
Cost
$
$
2,230
22,971
76,604
18,969
120,774
174,909
295,683
Results from sales of debt and equity securities are as follows:
Gross proceeds
Gross realized gains
Gross realized losses
Net realized gains (losses)
2018
In Thousands
2017
2016
39,857
35,555
90,007
102
(752 )
(650 )
76
(251 )
(175 )
716
(256 )
460
$
$
$
Securities carried on the balance sheet of approximately $260,562,000 (approximate market value of $251,549,000)
and $213,154,000 (approximate market value of $209,575,000) were pledged to secure public deposits and for other
purposes as required or permitted by law at December 31, 2018 and 2017, respectively.
Included in the securities above are $14,154,000 and $10,793,000 (approximate market value of $13,724,000 and
$10,219,000) and $23,670,000 and $9,464,000 (approximate market value of $23,404,000 and $9,121,000) at
December 31, 2018 and 2017, respectively, in obligations of political subdivisions located within the State of
Tennessee and Texas, respectively. Management purchases only obligations of such political subdivisions it considers
to be financially sound.
64
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(3)
Debt and Equity Securities, Continued
Securities that have rates that adjust prior to maturity totaled $32,864,000 (approximate market value of $32,217,000)
and $53,248,000 (approximate market value of $53,040,000) at December 31, 2018 and 2017, respectively.
Temporarily Impaired Securities
The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized
losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time
that individual securities have been in a continuous unrealized loss position at December 31, 2018 and 2017.
Available-for-sale and held-to-maturity securities that have been in a continuous unrealized loss position at
December 31, 2018 and 2017 are as follows:
Less than 12 Months
12 Months or More
Total
In Thousands, Except Number of Securities
Fair
Value
Unrealized
Losses
Number
of
Securities
Included
Fair
Value
Unrealized
Losses
Number
of
Securities
Included
Fair
Value
Unrealized
Losses
2018
Available-for-Sale Securities:
Debt securities:
GSEs
$ -
$ -
-
$ 68,467
$
2,979
Mortgage-backed securities
8,651
64
10
137,457
Asset-backed securities
-
-
-
20,597
4,810
844
4,064
$ 12,715
$
26
90
6
16
39,841
1,749
$266,362
$ 10,382
28
94
14
94
230
$ 68,467
$
2.979
146,108
20,597
4,874
844
43,905
1,775
$ 279,077
$ 10,472
Obligations of states and
political subdivisions
2017
Held-to-Maturity Securities:
Debt securities:
Mortgage-backed securities
Obligations of states and
political subdivisions
Available-for-Sale Securities:
Debt securities:
GSEs
10,137
$ 13,453
$
$ 16,099
$
Mortgage-backed securities
92,180
Asset-backed securities
9,087
Obligations of states and
political subdivisions
12,128
$ 129,494
$
1,253
$
3,316
$
21
4
$ 5,206
$
135
5
$ 8,522
$
156
46
67
190
769
181
113
27
31
8
43
7
22
80
7,278
$ 12,484
$
264
399
$ 55,726
$
1,524
81,434
16,510
1,782
608
21,762
879
$175,432
$
4,793
18
23
21
54
8
56
139
17,415
$ 25,937
$
310
466
$ 71,825
$
1,714
173,614
25,597
2,551
789
33,890
992
$ 304,926
$
6,046
65
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(3)
Debt and Equity Securities, Continued
Declines in the fair value of available-for-sale securities below their cost that are deemed to be other than temporary are
reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of the
impairment related to other factors is recognized in other comprehensive income. In estimating other-than-temporary
impairment losses, management considers, among other things, (i) the length of time and the extent to which the fair
value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) the intent and
our ability to retain our investment in the issuer for a period of time sufficient to allow for any anticipated recovery in
cost.
As of December 31, 2018, management does not have the intent to sell any of the securities classified as available-for-
sale in the table above and believes that it is more likely than not that we will not have to sell any such securities before
a recovery of cost. Any unrealized losses are largely due to increases in market interest rates over the yields available
at the time the underlying securities were purchased. The fair value is expected to recover as the bonds approach their
maturity date or repricing date or if market yields for such investments decline. Management does not believe any of
the securities are impaired due to reasons of credit quality. Accordingly, as of December 31, 2018, management
believes the impairments detailed in the table above are temporary and no impairment loss has been realized in our
consolidated statements of earnings.
(4)
Restricted Equity Securities
Restricted equity securities consists of stock of the FHLB of Cincinnati amounting to $3,012,000 at December 31, 2018
and 2017. The stock can be sold back only at par or a value as determined by the issuing institution and only to the
respective financial institution or to another member institution. These securities are recorded at cost.
(5)
Premises and Equipment
The detail of premises and equipment at December 31, 2018 and 2017 is as follows:
Land
Buildings
Leasehold improvements
Furniture and equipment
Automobiles
Construction-in-progress
Less accumulated depreciation
In Thousands
2018
17,022
44,921
492
12,600
343
100
75,478
(17,115 )
58,363
$
$
2017
17,022
31,686
425
12,521
353
10,895
72,902
(18,687 )
54,215
During 2018, 2017 and 2016, payments of $2,633,000, $5,934,000 and $1,361,000, respectively, were made to an
entity owned by a director for the construction of buildings and repair work on existing buildings.
Depreciation expense was $3,602,000, $2,859,000 and $2,760,000 for the years ended December 31, 2018, 2017 and
2016, respectively.
66
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(6)
Acquired Intangible Assets and Goodwill
The Company’s intangible assets result from the excess of purchase price over the applicable book value of the net
assets acquired related to outside ownership of two previously 50% owned subsidiaries that the Company acquired
100% of in 2005.
In Thousands
2018
2017
Goodwill:
Balance at January 1,
Goodwill acquired during year
Impairment loss
Balance at December 31,
(7)
Deposits
Deposits at December 31, 2018 and 2017 are summarized as follows:
4,805
$
-
-
$
4,805
4,805
-
-
4,805
Demand deposits
Savings accounts
Negotiable order of withdrawal accounts
Money market demand accounts
Certificates of deposit $250,000 or greater
Other certificates of deposit
Individual retirement accounts $250,000 or greater
Other individual retirement accounts
In Thousands
2018
2017
$
254,157
136,645
503,435
727,654
134,506
402,690
8,525
68,043
$ 2,235,655
239,559
136,549
495,930
648,606
67,614
370,608
6,954
71,925
2,037,745
Principal maturities of certificates of deposit and individual retirement accounts at December 31, 2018 are as follows:
Maturity
2019
2020
2021
2022
2023
Thereafter
(In Thousands)
Total
$
$
290,385
155,006
89,620
21,662
50,328
6,763
613,764
The aggregate amount of overdrafts reclassified as loans receivable was $496,000 and $531,000 at December 31, 2018
and 2017, respectively.
As of December 31, 2018 and 2017, Wilson Bank was not required to maintain a cash balance with the Federal
Reserve.
(8)
Securities Sold Under Repurchase Agreements
Securities sold under repurchase agreements was $864,000 at December 31, 2017. There was no balance outstanding at
December 31, 2018. The maximum amounts of outstanding repurchase agreements at any month end during 2018 and
2017 were $6,831,000 and $1,843,000, respectively. The average daily balance outstanding during 2018 and 2017 was
$1,090,000 and $1,382,000, respectively. The weighted-average interest rates on the outstanding balance at
December 31, 2017 was 1.47%. The underlying securities are typically held by other financial institutions and are
designated as pledged.
67
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(9)
Non-Interest Income and Non-Interest Expense
The significant components of non-interest income and non-interest expense for the years ended December 31, 2018,
2017 and 2016 are presented below:
Non-interest income:
Service charges on deposits
Other fees and commissions
BOLI and annuity earnings
Security gains (losses), net
Fees and gains on sales of mortgage loans
Gain (loss) on sale of other real estate, net
Loss on sales of premises and equipment, net
Loss on sales of other assets, net
Non-interest expense:
Employee salaries and benefits
Equity-based compensation
Occupancy expenses
Furniture and equipment expenses
Data processing expenses
Advertising expenses
ATM and interchange fees
FDIC insurance
Directors' fees
Other operating expenses
2018
In Thousands
2017
2016
$
6,799
13,704
841
(650 )
4,639
(80 )
(2 )
(3 )
6,124
11,752
871
(175 )
4,258
6
-
(15 )
5,769
10,260
832
460
4,355
52
(73 )
(1 )
$
25,248
22,821
21,654
$
$
39,590
1,237
4,403
2,767
2,900
2,552
3,091
843
543
11,154
69,080
35,830
692
3,718
2,085
2,834
2,326
2,569
683
677
8,977
60,391
34,106
104
3,638
2,019
2,576
2,310
2,475
968
691
8,376
57,263
(10)
Income Taxes
In December, 2017, the Tax Cuts and Jobs Act was signed into law. As a result, the statutory corporate Federal tax rate
was lowered from 35% to 21% effective January 1, 2018. In accordance with accounting principles generally accepted
in the United States of America the effect of rate changes are to be recorded as an adjustment to income in the year of
enactment. As a result of the Tax Cuts and Jobs Act being signed into law, the Company revalued all deferred taxes to
reflect the new statutory corporate tax rate resulting in a $3,603,000 charge to deferred tax expense in the fourth quarter
of 2017. This charge included $697,000 related to unrealized losses on available-for-sale securities. Unrealized losses
on available-for-sale securities are recognized as a component of equity as other comprehensive income. Management
has elected to reclassify the $697,000 expense related to the available-for-sale rate change from retained earnings to
other comprehensive income.
The components of the net deferred tax asset are as follows:
Deferred tax asset:
Federal
State
Deferred tax liability:
Federal
State
In Thousands
2018
2017
$
9,046
2,739
11,785
(2,167 )
(717 )
(2,884 )
7,222
2,068
9,290
(1,402 )
(464 )
(1,866 )
Net deferred tax asset
$
8,901
7,424
68
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(10)
Income Taxes, Continued
The tax effects of each type of significant item that gave rise to deferred tax assets (liabilities) are:
Financial statement allowance for loan losses in excess of
tax allowance
Excess of depreciation deducted for tax purposes over the
amounts deducted in the financial statements
Financial statement deduction for deferred compensation in
excess of deduction for tax purposes
Writedown of other real estate not deductible for income
tax purposes until sold
Financial statement income on FHLB stock dividends not
recognized for tax purposes
Unrealized loss on securities available-for-sale
Equity based compensation
Other items, net
Net deferred tax asset
The components of income tax expense (benefit) are summarized as follows:
In Thousands
2018
2017
$
6,846
5,925
(2,557 )
(1,539 )
1,128
176
(327 )
2,726
469
440
8,901
$
1,075
161
(327 )
1,498
178
453
7,424
2018
Current
Deferred
Total
2017
Current
Deferred
Total
2016
Current
Deferred
Total
Federal
In Thousands
State
$
$
$
$
$
$
8,310
(136 )
8,174
14,004
3,205
17,209
12,910
(136 )
12,774
721
(112 )
609
2,354
(209 )
2,145
2,095
(28 )
2,067
Total
9,031
(248 )
8,783
16,358
2,996
19,354
15,005
(164 )
14,841
69
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(10)
Income Taxes, Continued
A reconciliation of actual income tax expense of $8,783,000, $19,354,000 and $14,841,000 for the years ended
December 31, 2018, 2017 and 2016, respectively, to the "expected" tax expense (computed by applying the statutory
rate of 21% for 2018 and 34% for 2017 and 2016 to earnings before income taxes) is as follows:
Computed "expected" tax expense
State income taxes, net of Federal income tax benefit
Tax exempt interest, net of interest expense exclusion
Federal income tax rate in excess of statutory rate
related to taxable income over $10 million
Earnings on cash surrender value of life insurance
Expenses not deductible for tax purposes
Equity based compensation expense
Revaluation of Federal deferred tax assets due to
change in tax rates
Other
$
8,689
432
(226 )
-
(177 )
16
(39 )
-
88
8,783
$
2018
In Thousands
2017
2016
13,761
1,364
(401 )
370
(283 )
40
35
14,579
1,346
(415 )
399
(292 )
43
16
3,603
75
19,354
-
(45 )
14,841
Total income tax expense for 2018, 2017 and 2016, includes $(170,000), $(67,000) and $176,000 of expense (benefit)
related to the realized gain and loss, respectively, on sale of securities.
As of December 31, 2018, 2017 and 2016 the Company has not accrued or recognized interest or penalties related to
uncertain tax positions. It is the Company’s policy to recognize interest and/or penalties related to income tax matters
in income tax expense.
There were no unrecognized tax benefits at December 31, 2018.
Wilson Bank does not expect that unrecognized tax benefits will significantly increase or decrease within the next 12
months. Included in the balance at December 31, 2018, were approximately $11.8 million of tax positions (deferred tax
assets) for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such
deductibility. Because of the impact of deferred tax accounting, other than interest, the disallowance of the shorter
deductibility period would not affect the annual effective tax rate but would accelerate the payment of cash to the
taxing authority to an earlier period.
The Company and Wilson Bank file income tax returns in the United States (“U.S.”), as well as in the State of
Tennessee. The Company is no longer subject to U.S. federal or state income tax examinations by tax authorities for
years before 2014. The Company’s Federal tax returns have been audited through December 31, 2005 with no
changes.
(11)
Commitments and Contingent Liabilities
The Company is party to litigation and claims arising in the normal course of business. Management, after consultation
with legal counsel, believes that the liabilities, if any, arising from such litigation and claims will not be material to the
Company’s consolidated financial position.
70
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(11)
Commitments and Contingent Liabilities, Continued
Wilson Bank leases three branch facilities and land for certain branch facilities and automatic teller machine locations.
Future minimum rental payments required under the terms of the noncancellable leases are as follows:
Years Ending December 31,
In Thousands
2019
2020
2021
2022
2023
Thereafter
$
401
399
349
180
85
13
Total rent expense amounted to $362,000, $215,000 and $204,000, respectively, during the years ended December 31,
2018, 2017 and 2016.
The Company has lines of credit with other financial institutions totaling $53,000,000 at December 31, 2018 and 2017,
respectively. At December 31, 2018 and 2017, respectively, there was no balance outstanding under these lines of
credit.
The Company also has a Cash Management Advance (“CMA”) Line of Credit Agreement. The CMA is a component
of the Company’s Blanket Agreement for advances with the FHLB. The purpose of the CMA is to assist with short-
term liquidity management. Under the terms of the CMA, the Company may borrow a maximum of $25,000,000,
selecting a variable rate of interest for up to 90 days or a fixed rate for a maximum of 30 days. There were no
borrowings outstanding under the CMA at December 31, 2018 or December 31, 2017.
(12)
Financial Instruments with Off-Balance-Sheet Risk
The Company is party to financial instruments with off-balance-sheet risk in the normal course of business to meet the
financing needs of its customers. These financial instruments consist primarily of commitments to extend credit.
These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the
consolidated balance sheets. The contract or notional amounts of those instruments reflect the extent of involvement
the Company has in particular classes of financial instruments.
The Company's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for
commitments to extend credit is represented by the contractual notional amount of those instruments. The Company
uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet
instruments.
In Thousands
Contract or
Notional Amount
2018
2017
Financial instruments whose contract
amounts represent credit risk:
Unused commitments to extend credit
Standby letters of credit
Total
$
$
582,897
80,165
663,062
605,114
69,156
674,270
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition
established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitments are expected to be drawn upon, the total commitment
amounts generally represent future cash requirements. The Company evaluates each customer's credit-worthiness on a
case-by-case basis. The amount of collateral, if deemed necessary by the Company upon extension of credit, is based
on management's credit evaluation of the counterparty. Collateral normally consists of real property.
71
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(12)
Financial Instruments with Off-Balance-Sheet Risk, Continued
Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a
customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements,
including commercial paper, bond financing, and similar transactions. Most guarantees extend from one to two years.
The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to
customers. The fair value of standby letters of credit is estimated using the fees currently charged to enter into similar
agreements, taking into account the remaining terms of the agreements, the likelihood of the counterparties drawing on
such financial instruments and the present creditworthiness of such counterparties. Such commitments have been made
on terms which are competitive in the markets in which the Company operates; thus, the fair value of standby letters of
credit equals the carrying value for the purposes of this disclosure. The maximum potential amount of future payments
that the Company could be required to make under the guarantees totaled $80.2 million at December 31, 2018.
(13)
Concentration of Credit Risk
Practically all of the Company's loans, commitments, and commercial and standby letters of credit have been
granted to customers in the Company's market area. Practically all such customers are depositors of Wilson Bank. The
concentrations of credit by type of loan are set forth in Note 2 – Loans and Allowance for Loan Losses.
Interest bearing deposits totaling $80,215,000 were deposited with four commercial banks.
Federal funds sold in the amount of $9,000,000 were deposited with one commercial bank.
(14)
Employee Benefit Plan
Wilson Bank has in effect a 401(k) plan (the “401(k) Plan”) which covers eligible employees. To be eligible an
employee must have obtained the age of 20 1/2. The provisions of the 401(k) Plan provide for both employee and
employer contributions. For the years ended December 31, 2018, 2017 and 2016, Wilson Bank contributed
$2,383,000, $2,145,000 and $2,006,000, respectively, to the 401(k) Plan.
(15)
Dividend Reinvestment Plan
Under the terms of the Company's dividend reinvestment plan (the “DRIP”) holders of common stock may elect to
automatically reinvest cash dividends in additional shares of common stock. The Company may elect to sell original
issue shares or to purchase shares in the open market for the account of participants. Original issue shares of 161,514
in 2018, 125,960 in 2017 and 98,318 in 2016 were sold to participants under the terms of the DRIP.
(16)
Regulatory Matters and Restrictions on Dividends
The Company and Wilson Bank are subject to regulatory capital requirements administered by the FDIC, the Federal
Reserve and the Tennessee Department of Financial Institutions. Failure to meet minimum capital requirements can
initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a
direct material effect on the Company’s and Wilson Bank’s financial statements. Under capital adequacy guidelines
and the regulatory framework for prompt corrective action, the Company and Wilson Bank must meet specific capital
guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated
under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments
by the regulators about components, risk weightings, and other factors. Prompt corrective action provisions are not
applicable to bank holding companies.
Quantitative measures established by regulation to ensure capital adequacy require the Company and Wilson Bank to
maintain minimum amounts and ratios (set forth in the following table) of total, Tier 1 and common equity Tier I
capital (each as defined in the regulations) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to
average assets (as defined). Management believes, as of December 31, 2018 and 2017, that the Company and Wilson
Bank meet all capital adequacy requirements to which they are subject.
72
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(16)
Regulatory Matters and Restrictions on Dividends, Continued
As of December 31, 2018, the most recent notification from the FDIC categorized Wilson Bank as well capitalized
under the regulatory framework for prompt corrective action. There are no conditions or events since the notification
that management believes have changed Wilson Bank’s category. To be categorized as well capitalized for purposes of
prompt corrective action regulations as of December 31, 2018 and 2017, an institution must have maintained minimum
capital ratios as set forth in the following tables and not have been subject to a written agreement, order or directive to
maintain a higher capital level. The Company’s and Wilson Bank’s actual capital amounts and ratios as of
December 31, 2018 and 2017, are presented in the following tables:
December 31, 2018
Total capital to risk
weighted assets:
Consolidated
Wilson Bank
Tier 1 capital to risk
weighted assets:
Consolidated
Wilson Bank
Common equity Tier 1
capital to risk weighted
assets:
Consolidated
Wilson Bank
Tier 1 capital to average
assets:
Consolidated
Wilson Bank
December 31, 2017
Total capital to risk
weighted assets:
Consolidated
Wilson Bank
Tier 1 capital to risk
weighted assets:
Consolidated
Wilson Bank
Common equity Tier 1
capital to risk weighted
assets:
Consolidated
Wilson Bank
Tier 1 capital to average
assets:
Consolidated
Wilson Bank
Actual
Amount
Ratio
Regulatory Minimum
Capital Requirement
with Basel III Capital
Conservation Buffer
Amount
Ratio
(dollars in thousands)
Regulatory Minimum
To Be Well Capitalized
Amount
Ratio
$ 326,099
323,852
14.1%
14.0
$ 227,974
227,915
9.875%
9.875
$ 230,860
230,800
10.0%
10.0
298,566
296,319
12.9
12.8
181,802
181,756
7.875
7.875
138,516
184,641
6.0
8.0
298,566
296,319
298,566
296,319
12.9
12.8
12.3
11.9
147,173
147,136
6.375
6.375
N/A
150,021
N/A
6.5
97,022
99,373
4.0
4.0
N/A
124,217
N/A
5.0
$ 291,395
289,824
14.2%
14.1
$ 189,658
189,618
9.25%
9.25
$ 205,036
204,992
10.0%
10.0
267,159
265,588
13.0
13.0
148,651
148,619
7.25
7.25
123,021
163,994
6.0
8.0
267,159
265,588
267,159
265,588
13.0
13.0
11.9
11.5
117,895
117,871
5.75
5.75
N/A
133,245
N/A
6.5
90,110
92,062
4.0
4.0
N/A
115,078
N/A
5.0
73
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(16)
Regulatory Matters and Restrictions on Dividends, Continued
In July 2013, the Federal banking regulators, in response to the Statutory Requirements of The Dodd-Frank Wall Street
Reform and Consumer Protection Act, adopted new regulations implementing the Basel Capital Adequacy Accord
(“Basel III”) and the related minimum capital ratios. The new capital requirements were effective beginning January 1,
2015. The guidelines under Basel III established a 2.5% capital conservation buffer requirement that is phased in over
four years beginning January 1, 2016. The buffer is related to Risk Weighted Assets. In order to avoid limitations on
capital distributions such as dividends and certain discretionary bonus payments to executive officers, a banking
organization must maintain capital ratios above the minimum ratios including the buffer. The Basel III minimum
requirements after giving effect to the buffer as of January 1, of each year presented are as follows:
2016
2017
2018
2019
Common Equity Tier I Ratio
5.125%
5.75%
6.375%
7.0%
Tier I Capital to Risk
Weighted Assets Ratio
Total Capital to Risk
Weighted Assets Ratio
6.625%
7.25%
7.875%
8.5%
8.625%
9.25%
9.875%
10.5%
The requirements of Basel III also place additional restrictions on the inclusion of deferred tax assets and capitalized
mortgage servicing rights as a percentage of Tier I Capital. In addition, the risk weights assigned to certain assets such
as past due loans and certain real estate loans have been increased.
The requirements of Basel III allow banks and bank holding companies with less than $250 billion in assets a one-time
opportunity to opt-out of a requirement to include unrealized gains and losses in accumulated other comprehensive
income in their capital calculation. The Company and Wilson Bank have opted out of this requirement.
In 2018, the U.S. Congress passed, and the President signed into law, the Economic Growth, Regulatory Relief, and
Consumer Protection Act of 2018 (the “Growth Act”). The Growth Act, among other things, requires the federal
banking agencies to issue regulations allowing community bank organizations with total assets of less than $10.0
billion in assets and limited amounts of certain assets and off-balance sheet exposures to access a simpler capital
regime focused on a bank’s Tier 1 leverage capital levels rather than risk-based capital levels that are the focus of the
capital rules issued under the Dodd-Frank Act implementing Basel III.
In November 2018, the federal banking agencies proposed regulations that would exempt a qualifying community bank
and its holding company that have Tier 1 leverage ratios of greater than 9 percent from the risk-based capital
requirements of the capital rules issued under the Dodd-Frank Act. A qualifying community banking organization and
its holding company that have chosen the proposed framework would not be required to calculate the existing risk-
based and leverage capital requirements. Such a bank would also be considered to have met the capital ratio
requirements to be well capitalized for the agencies' prompt corrective action rules provided it has a community bank
leverage ratio greater than 9 percent.
The Growth Act also raised the eligibility for the small bank holding company policy statement to $3 billion of assets
from $1 billion.
The rules implementing these provisions of the Growth Act are not yet finalized and the Company has not yet made a
determination regarding whether it will seek to take advantage of these new capital rules under the Growth Act.
(17)
Salary Deferral Plans
The Company provides its executive officers certain non-qualified pension benefits through an Executive Salary
Continuation Plan (“the Plan”) and Supplemental Executive Retirement Plan (SERP) Agreements (“SERP
Agreements”). The Plan and SERP Agreements were established by the Board of Directors to reward executive
management for past performance and to provide additional incentive to retain the service of executive management.
The Plan and SERP Agreements generally provide executives with benefits of a portion of their salary beginning at
retirement through life. As a result the Company has accrued a liability for future obligations under the Plan and SERP
Agreements. At December 31, 2018 and 2017 the liability related to the Plan totaled $1,825,000 and $1,861,000,
respectively. At December 31, 2018 and 2017 the liability related to the SERP Agreements totaled $2,491,000 and
$2,250,000, respectively.
74
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(17)
Salary Deferral Plans, Continued
The Company has purchased life insurance policies to provide the benefits related to the Plan, which at December 31,
2018 and 2017 had an aggregate cash surrender value of $4,540,000 and $3,791,000, respectively, and an aggregate
face value of insurance policies in force of $13,523,000 and $11,176,000, respectively. The life insurance policies
remain the sole property of the Company and are payable to the Company.
The Company has also purchased bank owned life insurance policies on its executive officers. The insurance policies
remain the sole property of the Company and are payable to the Company. The cash surrender value of the life
insurance contracts totaled $26,412,000 and $25,684,000 and the face amount of the insurance policies in force
approximated $61,202,000 and $61,239,000 at December 31, 2018 and 2017, respectively.
The Company has also purchased Flexible Premium Indexed Deferred Annuity Contracts (“Annuity Contracts”) to
provide benefits related to the SERP Agreements. The Annuity Contracts remain the sole property of the Company and
are payable to the Company. Included in other assets at December 31, 2018 and 2017 are the Annuity Contracts with
an aggregate value of $14,558,000 and $10,816,000, respectively.
(18)
Equity Incentive Plan
In April 1999, the stockholders of the Company approved the Wilson Bank Holding Company 1999 Stock Option Plan
(the "1999 Stock Option Plan"). The Stock Option Plan provided for the granting of stock options, and authorized the
issuance of common stock upon the exercise of such options, for up to 200,000 shares of common stock, to officers and
other key employees of the Company and its subsidiary. Furthermore, the Company and its Subsidiary could reserve
additional shares for issuance under the 1999 Stock Option Plan as needed in order that the aggregate number of shares
that may be issued during the term of the 1999 Stock Option Plan is equal to five percent (5%) of the shares of common
stock then issued and outstanding. The 1999 Stock Option Plan terminated on April 13, 2009, and no additional awards
may be issued under the 1999 Stock Option Plan. The awards granted under the 1999 Stock Option Plan prior to the
plan’s termination will remain outstanding until exercised or otherwise terminated. As of December 31, 2018, the
Company had outstanding 2,133 options with a weighted average exercise price of $26.81 under the 1999 Stock Option
Plan.
In April 2009, the Company’s shareholders approved the Wilson Bank Holding Company 2009 Stock Option Plan (the
“2009 Stock Option Plan”). The 2009 Stock Option Plan was effective as of April 14, 2009 and replaced the 1999
Stock Option Plan. Under the 2009 Stock Option Plan, awards may be in the form of options to acquire common stock
of the Company. Subject to adjustment as provided by the terms of the 2009 Stock Option Plan, the maximum number
of shares of common stock with respect to which awards may be granted under the 2009 Stock Option Plan is 100,000
shares. As of December 31, 2018, the Company had outstanding 27,069 options with a weighted average exercise price
of $31.78 and has available to grant 52,788 options to employees pursuant to the 2009 Stock Option Plan.
Under the 2009 Stock Option Plan, stock option awards may be granted in the form of incentive stock options or
nonstatutory stock options and are generally exercisable for up to ten years following the date such option awards are
granted. Exercise prices of incentive stock options must be equal to or greater than 100% of the fair market value of
the common stock on the grant date.
During the second quarter of 2016, the Company’s shareholders approved the Wilson Bank Holding Company 2016
Equity Incentive Plan, which authorizes awards of up to 750,000 shares of common stock. The 2016 Equity Incentive
Plan was approved by the Board of Directors and effective as of January 25, 2016 and approved by the Company’s
shareholders on April 12, 2016. On September 26, 2016, the Board of Directors approved an amendment and
restatement of the 2016 Equity Incentive Plan (as amended and restated the “2016 Equity Incentive Plan”) to make
clear that directors who are not also employees of the Company may be awarded stock appreciation rights. The
primary purpose of the 2016 Equity Incentive Plan is to promote the interest of the Company and its shareholders by,
among other things, (i) attracting and retaining key officers, employees and directors of, and consultants to, the
Company and its subsidiaries and affiliates, (ii) motivating those individuals by means of performance-related
incentives to achieve long-range performance goals, (iii) enabling such individuals to participate in the long-term
growth and financial success of the Company, (iv) encouraging ownership of stock in the Company by such
individuals, and (v) linking their compensation to the long-term interests of the Company and its shareholders. Except
for certain limitations, awards can be in the form of stock options (both incentive stock options and non-qualified stock
options), stock appreciation rights, restricted shares and restricted share units, performance awards and other stock-
based awards. As of December 31, 2018, the Company has 485,104 shares remaining available for issuance under the
2016 Equity Incentive Plan.
75
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(18)
Equity Incentive Plan, Continued
As of December 31, 2018, the Company had outstanding 128,220 options with a weighted average exercise price of
$41.25 and 120,398 cash-settled stock appreciation rights with a weighted average grant price of $41.00 under the 2016
Equity Incentive Plan.
The fair value of each stock option and cash-settled SAR grant is estimated on the date of grant using the Black-
Scholes option-pricing model with the following weighted average assumptions used for grants in 2018, 2017 and
2016:
2018
2017
2016
Expected dividends
Expected term (in years)
Expected stock price volatility
Risk-free rate
1.22%
9.35
24%
2.83%
1.27%
7.79
26%
2.23%
1.21%
8.71
26%
2.02%
The expected stock price volatility is based on historical volatility adjusted for consideration of other relevant factors.
The risk-free interest rates for periods within the contractual life of the awards are based on the U.S. Treasury yield
curve in effect at the time of the grant. The dividend yield and forfeiture rate assumptions are based on the Company’s
history and expectation of dividend payouts and forfeitures.
A summary of the stock option and cash-settled SAR activity for 2018, 2017 and 2016 is as follows:
2018
2017
2016
Weighted
Average
Exercise
Shares
Price
Shares
Weighted
Average
Exercise
Price
Weighted
Average
Exercise
Price
Shares
285,780
21,666
(22,460 )
(7,166 )
$ 39.31
46.59
37.07
37.53
183,747
112,333
(5,078 )
(5,222 )
$ 38.09
40.87
29.65
39.22
49,895
140,997
(5,545 )
(1,600 )
$ 30.19
40.36
27.38
28.44
277,820
$ 40.11
285,780
$ 39.31
183,747
$ 38.09
94,951
$ 39.14
42,256
$ 36.66
13,553
$ 29.29
Outstanding at
beginning of year
Granted
Exercised
Forfeited or expired
Outstanding at end
of year
Options and cash-settled
SARs exercisable
at year end
The following tables summarize information about stock options and cash-settled SARs for the year ended
December 31, 2018:
Range of
Exercise
Prices
$22.00 - $32.00
$32.01 - $47.75
Aggregate
intrinsic value
(in thousands)
Options and Cash-Settled SARs Outstanding
Weighted
Average
Remaining
Contractual
Term
Weighted
Average
Exercise
Price
Number
Outstanding
at 12/31/18
Options and Cash-Settled SARs Exercisable
Weighted
Average
Remaining
Contractual
Term
Weighted
Average
Exercise
Price
Number
Exercisable
at 12/31/18
16,388
261,432
277,820
$
2,679
$
$
29.02
40.81
1.50 years
7.38 years
76
WB&T | Annual Report 2018
$
$
28.74
40.23
1.32 years
6.12 years
9,022
85,929
94,951
$
1,008
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(18)
Equity Incentive Plan, Continued
The weighted average fair value at the grant date of options and cash-settled SARs granted during the years 2018, 2017
and 2016 was $14.41, $12.59 and $11.29, respectively. The total intrinsic value of options and cash-settled SARs
exercised during the years 2018, 2017 and 2016 was $200,000, $62,000 and $65,000, respectively.
As of December 31, 2018, there was $2,104,000 of total unrecognized cost related to non-vested share-based
compensation arrangements granted under the Company’s equity incentive plans. The cost is expected to be
recognized over a weighted-average period of 3.22 years.
(19)
Earnings Per Share
The following is a summary of the components comprising basic and diluted earnings per share (“EPS”):
Basic EPS Computation:
Numerator - Earnings available to common
stockholders
Denominator - Weighted average number of
common shares outstanding
Basic earnings per common share
Diluted EPS Computation:
Numerator - Earnings available to common
stockholders
Denominator - Weighted average number of
common shares outstanding
Dilutive effect of stock options
In Thousands (except share data)
2017
2016
2018
32,594
23,526
25,633
10,564,172
3.09
10,407,211
2.26
10,279,332
2.49
32,594
23,526
25,633
$
$
$
10,564,172
8,049
10,572,221
10,407,211
5,325
10,412,536
10,279,332
4,996
10,284,328
2.49
Diluted earnings per common share
$
3.08
2.26
(20)
Mortgage Banking Derivatives
Commitments to fund certain mortgage loans (interest rate locks) to be sold into the secondary market and forward
commitments for the future delivery of mortgage loans to third party investors are considered derivatives. It is the
Company’s practice to enter into forward commitments for the future delivery of residential mortgage loans when
interest rate lock commitments are entered into in order to economically hedge the effect of changes in interest rates
resulting from its commitments to fund the loans. At year-end 2018, the Company had approximately $9,655,000 of
interest rate lock commitments and approximately $11,750,000 of forward commitments for the future delivery of
residential mortgage loans. The fair value of these mortgage banking derivatives was reflected by a derivative asset
and liability of $335,000 and $88,000, respectively, at December 31, 2018. Changes in the fair values of these
mortgage-banking derivatives are included in net gains on sale of loans.
The net gains (losses) relating to free-standing derivative instruments used for risk management is summarized below:
(In Thousands)
Forward contracts related to mortgage loans held
for sale and interest rate contracts
Interest rate contracts for customers
2018
$
(88 )
335
The following table reflects the amount and fair value of mortgage banking derivatives included in the consolidated
balance sheet as of December 31, 2018:
(In Thousands)
Included in other assets (liabilities):
Interest rate contracts for customers
Forward contracts related to mortgage
loans held-for-sale
2018
Notional
Amount
Fair
Value
$
9,655
11,750
335
(88)
77
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(21)
Disclosures About Fair Value of Financial Instruments
Fair Value of Financial Instruments
FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), which defines fair value, establishes a
framework for measuring fair value in U.S. GAAP and expands disclosures about fair value measurements. The
definition of fair value focuses on the exit price, i.e., the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date, not the entry
price, i.e., the price that would be paid to acquire the asset or received to assume the liability at the measurement
date. The statement emphasizes that fair value is a market-based measurement; not an entity-specific
measurement. Therefore, the fair value measurement should be determined based on the assumptions that market
participants would use in pricing the asset or liability.
Valuation Hierarchy
FASB ASC 820 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The
valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the
measurement date. The three levels are defined as follows:
(cid:120)
(cid:120)
(cid:120)
Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or
liabilities in active markets.
Level 2 - inputs to the valuation methodology include all prices for similar assets and liabilities in active
markets, and inputs that are observable for the asset or liability, either directly or indirectly, for
substantially the full term of the financial instrument.
Level 3 - inputs to the valuation methodology that are unobservable and significant to the fair value
measurement.
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input
that is significant to the fair value measurement. Following is a description of the valuation methodologies used
for assets and liabilities measured at fair value, as well as the general classification of such assets and liabilities
pursuant to the valuation hierarchy.
Assets
Securities available-for-sale - Where quoted prices are available for identical securities in an active market, securities
are classified within Level 1 of the valuation hierarchy. Level 1 securities include highly liquid government securities
and certain other financial products. If quoted market prices are not available, then fair values are estimated by using
pricing models that use observable inputs or quoted prices of securities with similar characteristics and are classified
within Level 2 of the valuation hierarchy. In certain cases where there is limited activity or less transparency around
inputs to the valuation and more complex pricing models or discounted cash flows are used, securities are classified
within Level 3 of the valuation hierarchy. From time to time, we will validate prices supplied by our third party vendor
by comparison to prices obtained from third parties.
Impaired loans - A loan is considered to be impaired when it is probable the Company will be unable to collect all
principal and interest payments due in accordance with the contractual terms of the loan agreement. Impaired loans are
measured based on the present value of expected payments using the loan’s original effective rate as the discount rate,
the loan’s observable market price, or the fair value of the collateral less selling costs if the loan is collateral dependent.
If the recorded investment in the impaired loan exceeds the measure of fair value, a valuation allowance may be
established as a component of the allowance for loan losses or the expense is recognized as a charge-off. Impaired
loans are classified within Level 3 of the hierarchy due to the unobservable inputs used in determining their fair value
such as collateral values and the borrower’s underlying financial condition.
78
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(21)
Disclosures About Fair Value of Financial Instruments(cid:15)(cid:3)(cid:38)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)
Assets, Continued
Other real estate owned - Other real estate owned (“OREO”) represents real estate foreclosed upon by the Company
through loan defaults by customers or acquired in lieu of foreclosure. Upon foreclosure, the property is recorded at the
lower of cost or fair value, based on appraised value, less selling costs estimated as of the date acquired with any loss
recognized as a charge-off through the allowance for loan losses. Additional OREO losses for subsequent valuation
downward adjustments are determined on a specific property basis and are included as a component of noninterest
expense along with holding costs. Any gains or losses realized at the time of disposal are also reflected in noninterest
income or noninterest expense, as applicable. OREO is included in Level 3 of the valuation hierarchy due to the lack
of observable market inputs into the determination of fair value. Appraisal values are property-specific and sensitive to
the changes in the overall economic environment.
Bank-Owned Life Insurance – The cash surrender value of bank owned life insurance policies is carried at fair value.
The Company uses financial information received from insurance carriers indicating the performance of the insurance
policies and cash surrender values in determining the carrying value of life insurance. The Company reflects these
assets within Level 3 of the valuation hierarchy due to the unobservable inputs included in the valuation of these items.
The Company does not consider the fair values of these policies to be materially sensitive to changes in these
unobservable inputs.
Mortgage loans held for sale – Mortgage loans held for sale are carried at fair value. The fair value of mortgage loans
held for sale is determined using quoted prices for similar assets, adjusted for specific attributes of that loan and
mortgage loans held for sale are included in Level 2 of the valuation hierarchy.
Derivatives - The fair values of derivatives are based on valuation models using observable market data as of the
measurement date (Level 2).
The following tables present the financial instruments carried at fair value as of December 31, 2018 and December 31,
2017, by caption on the consolidated balance sheet and by FASB ASC 820 valuation hierarchy (as described above) (in
thousands):
Total Carrying
Value in the
Consolidated
Balance
Sheet
$
$
$
$
68,467
147,510
21,700
47,575
285,252
7,484
335
30,952
324,023
88
88
Measured on a Recurring Basis
Models with
Significant
Observable
Market
Parameters
(Level 2)
Quoted Market
Prices in an
Active Market
(Level 1)
Models with
Significant
Unobservable
Market
Parameters
(Level 3)
-
-
-
-
-
-
-
-
-
-
-
68,467
147,510
21,700
47,575
285,252
7,484
335
-
293,071
88
88
-
-
-
-
-
-
-
30,952
30,952
-
-
December 31, 2018
Investment securities available-for-sale:
U.S. Government sponsored enterprises
Mortgage-backed securities
Asset-backed securities
State and municipal securities
Total investment securities available-for-sale
Mortgage loans held for sale
Mortgage banking derivatives
Bank owned life insurance
Total assets
Mortgage banking derivatives
Total liabilities
79
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(21)
Disclosures About Fair Value of Financial Instruments, Continued
Total Carrying
Value in the
Consolidated
Balance
Sheet
$
$
72,980
197,926
25,598
36,212
332,716
5,106
29,475
367,297
Measured on a Recurring Basis
Models with
Significant
Observable
Market
Parameters
(Level 2)
Quoted Market
Prices in an
Active Market
(Level 1)
Models with
Significant
Unobservable
Market
Parameters
(Level 3)
-
-
-
-
-
-
-
-
72,980
197,926
25,598
36,212
332,716
5,106
-
337,822
-
-
-
-
-
-
29,475
29,475
Measured on a Non-Recurring Basis
Total Carrying
Value in the
Consolidated
Balance
Sheet
Quoted Market
Prices in an
Active Market
(Level 1)
Models with
Significant
Observable
Market
Parameters
(Level 2)
Models with
Significant
Unobservable
Market
Parameters
(Level 3)
$
$
$
$
1,357
4,195
5,552
1,635
6,531
8,166
-
-
-
-
-
-
-
-
-
-
-
-
1,357
4,195
5,552
1,635
6,531
8,166
December 31, 2017
Investment securities available-for-sale:
U.S. Government sponsored enterprises
Mortgage-backed securities
Asset-backed securities
State and municipal securities
Total investment securities available-for-sale
Mortgage loans held for sale
Bank owned life insurance
Total
December 31, 2018
Other real estate owned
Impaired loans, net (¹)
Total
December 31, 2017
Other real estate owned
Impaired loans, net (¹)
Total
(¹) Amount is net of a valuation allowance of $1,164,000 at December 31, 2018 and $427,000 at December 31, 2017 as required
by ASC 310, “Receivables.”
The following table presents additional quantitative information about assets measured at fair value on a nonrecurring
basis and for which we have utilized Level 3 inputs to determine fair value at December 31, 2018 and 2017:
Valuation
Techniques (²)
Significant
Unobservable Inputs
Range
(Weighted Average)
Impaired loans
Other real estate owned
Appraisal
Appraisal
Estimated costs to sell
Estimated costs to sell
10%
10%
(²) The fair value is generally determined through independent appraisals of the underlying collateral, which may
include Level 3 inputs that are not identifiable, or by using the discounted cash flow method if the loan is not
collateral dependent.
In the case of its investment securities portfolio, the Company monitors the valuation technique utilized by various
pricing agencies to ascertain when transfers between levels have been affected. The nature of the remaining assets and
liabilities is such that transfers in and out of any level are expected to be rare. For the twelve months ended
December 31, 2018, there were no transfers between Levels 1, 2 or 3.
80
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(21)
Disclosures About Fair Value of Financial Instruments, Continued
The table below includes a rollforward of the balance sheet amounts for the year ended December 31, 2018 and 2017
(including the change in fair value) for financial instruments classified by the Company within Level 3 of the valuation
hierarchy for assets and liabilities measured at fair value on a recurring basis. When a determination is made to classify
a financial instrument within Level 3 of the valuation hierarchy, the determination is based upon the significance of the
unobservable factors to the overall fair value measurement. However, since Level 3 financial instruments typically
include, in addition to the unobservable or Level 3 components, observable components (that is, components that are
actively quoted and can be validated to external sources), the gains and losses in the table below include changes in fair
value due in part to observable factors that are part of the valuation methodology (in thousands):
For the Year Ended December 31,
2018
Other
Assets
Other
Liabilities
2017
Other
Assets
Other
Liabilities
Fair value, January 1
Total realized gains included in income
Change in unrealized gains/losses included
in other comprehensive income for
assets and liabilities still held at
December 31
Purchases, issuances and settlements, net
Transfers out of Level 3
Fair value, December 31
Total realized gains included in income
related to financial assets and
liabilities still on the consolidated
balance sheet at December 31
$
$
$
29,475
841
-
636
-
30,952
841
-
-
-
-
-
-
-
$
$
$
28,616
859
-
-
-
29,475
859
-
-
-
-
-
-
-
The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial
instruments that are not measured at fair value. In cases where quoted market prices are not available, fair values are
based on estimates using discounted cash flow models. Those models are significantly affected by the assumptions
used, including the discount rates, estimates of future cash flows and borrower creditworthiness. The fair value
estimates presented herein are based on pertinent information available to management as of December 31, 2018 and
December 31, 2017. Such amounts have not been revalued for purposes of these consolidated financial statements
since those dates and, therefore, current estimates of fair value may differ significantly from the amounts presented
herein.
Cash and Cash Equivalents - The carrying amounts of cash and short-term instruments approximate fair values and
are classified as Level 1.
Held-to-maturity securities - Estimated fair values for held-to-maturity investment securities are based on quoted
market prices where available. If quoted market prices are not available, then fair values are estimated by using pricing
models that use observable inputs or quoted prices of securities with similar characteristics.
Loans - The fair value of our loan portfolio includes a credit risk factor in the determination of the fair value of our
loans. This credit risk assumption is intended to approximate the fair value that a market participant would realize in a
hypothetical orderly transaction.
Fair values are estimated using discounted cash flow models, using current market interest rates offered for loans with
similar terms to borrowers of similar credit quality. We believe current market rates capture a market participant’s cost
of funds, liquidity premiums, capital charges, servicing charges and expectations of future rate movements. The values
derived from the discounted cash flow approach for each of the above portfolios are then further discounted to
incorporate credit risk to determine the exit price.
81
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(21)
Disclosures About Fair Value of Financial Instruments, Continued
Deposits and Securities sold under agreements to repurchase - Fair values for deposits are estimated using
discounted cash flow models, using current market interest rates offered on deposits with similar remaining maturities.
Restricted Equity Securities - It is not practical to determine the fair value of Federal Home Loan Bank or Federal
Reserve Bank stock due to restrictions placed on its transferability.
Accrued Interest Receivable/Payable - The carrying amounts of accrued interest approximate fair value resulting in a
Level 1, Level 2 or Level 3 classification based on the assets/liability with which they are associated.
Off-Balance Sheet Instruments - Fair values for off-balance sheet, credit-related financial instruments are based on
fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and
the counterparties’ credit standing. The fair value of commitments is not material.
The following table presents the carrying amounts, estimated fair value and placement in the fair value hierarchy of the
Company’s financial instruments at December 31, 2018 and December 31, 2017. This table excludes financial
instruments for which the carrying amount approximates fair value. For short-term financial assets such as cash and
cash equivalents, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the
origination of the instrument and its expected realization.
Carrying/
Notional
Amount
Estimated
Fair Value (¹)
Quoted
Market
Prices in
an Active
Market
(Level 1)
Models with
Significant
Observable
Market
Parameters
(Level 2)
Models with
Significant
Unobservable
Market
Parameters
(Level 3)
(in Thousands)
December 31, 2018
Financial assets:
Cash and cash equivalents
Loans, net
Restricted equity securities
Accrued interest receivable
$
99,191
2,016,005
3,012
6,724
99,191
2,017,272
N/A
6,724
Financial liabilities:
Deposits
Accrued interest payable
2,235,655
3,132
1,974,554
3,132
99,191
-
N/A
3
-
-
December 31, 2017
Financial assets:
Cash and cash equivalents
Securities held-to-maturity
Loans, net
Restricted equity securities
Accrued interest receivable
$
95,518
32,480
1,727,253
3,012
6,266
95,518
32,111
1,724,937
N/A
6,266
95,518
-
-
N/A
5
-
-
N/A
1,362
-
-
-
32,111
-
N/A
1,562
-
2,017,272
N/A
5,359
1,974,554
3,132
-
-
1,724,937
N/A
4,699
Financial liabilities:
Deposits and securities sold
under agreements to
repurchase
Accrued interest payable
2,038,609
1,679
1,812,011
1,679
-
-
-
-
1,812,011
1,679
(¹) Estimated fair values are consistent with an exit-price concept. The assumptions used to estimate the fair values are intended
to approximate those that a market-participant would realize in a hypothetical orderly transaction.
82
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(22)
Wilson Bank Holding Company -
Parent Company Financial Information
WILSON BANK HOLDING COMPANY
(Parent Company Only)
Balance Sheets
December 31, 2018 and 2017
ASSETS
Cash
Investment in wholly-owned commercial bank subsidiary
Deferred income taxes
Refundable income taxes
Total assets
LIABILITIES AND STOCKHOLDERS' EQUITY
Stock appreciation rights payable
Total liabilities
Stockholders' equity:
Dollars In Thousands
2018
2017
$
2,759*
293,420
469
177
1,589*
266,159
178
181
$
296,825
268,107
$
1,158
1,158
377
377
Common stock, par value $2.00 per share, authorized 50,000,000 shares,
and 10,623,810 and 10,450,711 shares issued and outstanding,
respectively
Additional paid-in capital
Retained earnings
Net unrealized losses on available-for-sale securities, net of
income taxes of $2,726 and $1,498, respectively
Total stockholders’ equity
21,248
73,960
208,164
(7,705 )
295,667
20,901
66,047
185,017
(4,235 )
267,730
Total liabilities and stockholders' equity
$
296,825
268,107
*Eliminated in consolidation.
83
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(22)
Wilson Bank Holding Company -
Parent Company Financial Information, Continued
WILSON BANK HOLDING COMPANY
(Parent Company Only)
Statements of Earnings
Three Years Ended December 31, 2018
2018
Dollars In Thousands
2017
2016
Income:
Dividends from commercial bank subsidiary
$
3,000
1,500
1,500
Expenses:
Directors’ fees
Other
Income before Federal income tax benefits and equity
in undistributed earnings of commercial bank
subsidiary
Federal income tax benefits
254
1,351
1,605
1,395
468
1,863
334
805
1,139
361
359
720
327
194
521
979
169
1,148
Equity in undistributed earnings of commercial bank
subsidiary
30,731*
22,806*
24,485*
Net earnings
$
32,594
23,526
25,633
*Eliminated in consolidation.
84
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(22)
Wilson Bank Holding Company -
Parent Company Financial Information, Continued
WILSON BANK HOLDING COMPANY
(Parent Company Only)
Statements of Cash Flows
Three Years Ended December 31, 2018
Increase (Decrease) in Cash and Cash Equivalents
Dollars In Thousands
2017
2018
2016
Cash flows from operating activities:
Cash paid to suppliers and other
Tax benefits received
Net cash used in operating activities
$
Cash flows from investing activities:
Dividends received from commercial bank subsidiary
Net cash provided by investing activities
Cash flows from financing activities:
Payments made to stock appreciation rights holders
Dividends paid
Proceeds from sale of stock pursuant to dividend
reinvestment plan
Proceeds from exercise of stock options
Net cash used in financing activities
Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of year
(367 )
181
(186 )
3,000
3,000
(61 )
(9,447 )
7,470
394
(1,644 )
1,170
1,589
Cash and cash equivalents at end of year
$
2.759
(447 )
169
(278 )
1,500
1,500
(417 )
198
(219 )
1,500
1,500
-
-
(6,729 )
(5,756 )
5,266
152
(1,311 )
(89 )
1,678
1,589
4,316
152
(1,288 )
(7 )
1,685
1,678
85
WB&T | Annual Report 2018
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, 2018, 2017 and 2016
(22)
Wilson Bank Holding Company -
Parent Company Financial Information, Continued
WILSON BANK HOLDING COMPANY
(Parent Company Only)
Statements of Cash Flows, Continued
Three Years Ended December 31, 2018
Increase (Decrease) in Cash and Cash Equivalents
Reconciliation of net earnings to net cash used in operating
activities:
Net earnings
$
32,594
23,526
25,633
Dollars In Thousands
2017
2018
2016
Adjustments to reconcile net earnings to net cash used in
operating activities:
Equity in earnings of commercial bank subsidiary
Decrease (increase) in refundable income taxes
Increase in deferred taxes
Share based compensation expense
Total adjustments
(33,731 )
5
(291 )
1,237
(32,780 )
(24,306 )
(12 )
(178 )
692
(23,804 )
(25,985 )
29
-
104
(25,852 )
Net cash used in operating activities
$
(186 )
(278 )
(219 )
86
WB&T | Annual Report 2018
6
1
0
2
)
a
t
a
d
e
r
a
h
s
r
e
p
t
p
e
c
x
e
,
s
d
n
a
s
u
o
h
T
n
I
(
7
1
0
2
8
1
0
2
t
s
r
i
F
r
e
t
r
a
u
Q
d
n
o
c
e
S
r
e
t
r
a
u
Q
d
r
i
h
T
r
e
t
r
a
u
Q
h
t
r
u
o
F
r
e
t
r
a
u
Q
t
s
r
i
F
r
e
t
r
a
u
Q
d
n
o
c
e
S
r
e
t
r
a
u
Q
d
r
i
h
T
r
e
t
r
a
u
Q
h
t
r
u
o
F
r
e
t
r
a
u
Q
t
s
r
i
F
r
e
t
r
a
u
Q
d
n
o
c
e
S
r
e
t
r
a
u
Q
d
r
i
h
T
r
e
t
r
a
u
Q
h
t
r
u
o
F
r
e
t
r
a
u
Q
1
1
1
2
,
6
0
1
2
,
7
7
0
2
,
0
9
9
1
,
4
2
0
2
,
4
9
0
2
,
2
3
3
,
2
9
3
4
,
2
9
5
6
,
2
7
9
0
,
3
6
5
6
,
3
6
0
6
,
4
7
3
3
0
2
,
7
7
8
0
2
,
4
5
4
1
2
,
8
7
0
2
2
,
$
8
5
7
1
2
,
1
7
8
,
2
2
4
0
9
,
2
2
7
8
4
,
3
2
$
4
9
0
,
4
2
8
4
5
,
5
2
8
9
2
,
6
2
5
8
5
,
7
2
$
e
m
o
c
n
i
t
s
e
r
e
t
n
I
e
s
n
e
p
x
e
t
s
e
r
e
t
n
I
6
2
2
8
1
,
1
7
7
8
1
,
7
7
3
9
1
,
8
8
0
0
2
,
4
3
7
9
1
,
7
7
7
,
0
2
2
7
5
,
0
2
8
4
0
,
1
2
5
3
4
,
1
2
1
5
4
,
2
2
2
4
6
,
2
2
9
7
9
,
2
2
e
m
o
c
n
i
t
s
e
r
e
t
n
i
t
e
N
7
6
7
9
0
9
,
3
4
6
5
,
5
5
0
.
5
5
0
.
2
8
1
4
1
9
8
9
8
3
0
2
4
6
3
4
6
3
4
3
2
0
,
1
0
9
0
,
1
8
8
0
,
1
7
9
0
1
,
s
e
s
s
o
l
n
a
o
l
r
o
f
n
o
i
s
i
v
o
r
P
2
6
1
0
1
,
5
9
0
1
1
,
0
2
1
0
1
,
2
6
3
0
1
,
6
8
3
,
1
1
8
3
4
,
0
1
4
9
6
,
0
1
3
5
1
,
0
1
8
9
7
,
9
8
1
7
,
0
1
8
0
7
,
0
1
s
e
x
a
t
e
m
o
c
n
i
e
r
o
f
e
b
s
g
n
i
n
r
a
E
0
7
2
6
,
8
1
9
6
,
2
0
8
6
,
5
9
4
6
,
8
8
9
6
,
9
6
4
,
6
4
7
5
,
3
0
8
4
,
7
9
0
3
,
7
2
7
9
,
7
3
3
8
,
9
s
g
n
i
n
r
a
e
t
e
N
`
1
6
0
.
1
6
0
.
7
6
0
.
7
6
0
.
6
6
0
.
6
6
0
.
3
6
0
.
3
6
0
.
7
6
0
.
7
6
0
.
2
6
.
0
2
6
.
0
4
3
.
0
4
3
.
0
1
7
.
0
1
7
.
0
9
6
.
0
9
6
.
0
5
7
.
0
5
7
.
0
3
9
.
0
2
9
.
0
e
r
a
h
s
n
o
m
m
o
c
r
e
p
s
g
n
i
n
r
a
e
c
i
s
a
B
e
r
a
h
s
n
o
m
m
o
c
r
e
p
s
g
n
i
n
r
a
e
d
e
t
u
l
i
D
87
WB&T | Annual Report 2018
Y
N
A
P
M
O
C
G
N
I
D
L
O
H
K
N
A
B
N
O
S
L
I
W
(cid:3)
d
e
u
n
i
t
n
o
C
,
s
t
n
e
m
e
t
a
t
S
l
a
i
c
n
a
n
i
F
d
e
t
a
d
i
l
o
s
n
o
C
o
t
s
e
t
o
N
(cid:25)
1
0
2
d
n
a
(cid:26)
1
0
2
,
(cid:27)
1
0
2
,
1
3
r
e
b
m
e
c
e
D
:
s
w
o
l
l
o
f
s
a
e
r
a
1
3
r
e
b
m
e
c
e
D
d
e
d
n
e
s
r
e
t
r
a
u
q
r
u
o
f
e
h
t
r
o
f
s
n
o
i
t
a
r
e
p
o
f
o
s
t
l
u
s
e
r
y
l
r
e
t
r
a
u
q
d
e
t
c
e
l
e
S
)
d
e
t
i
d
u
a
n
U
(
a
t
a
D
l
a
i
c
n
a
n
i
F
y
l
r
e
t
r
a
u
Q
)
3
2
(
WILSON BANK HOLDING COMPANY
Notes to Consolidated Financial Statements, Continued
December 31, (cid:21)(cid:19)(cid:20)(cid:27)(cid:15)(cid:3)2017, (cid:68)(cid:81)(cid:71)(cid:3)2016
(24)
Subsequent Events
ASC Topic 855, Subsequent Events, as amended by ASU No. 2010-90, establishes general standards of accounting for
and disclosure of events that occur after the balance sheet date but before financial statements are issued. The
Company evaluated all events or transactions that occurred after December 31, 2018, through the date of the issued
financial statements. During this period there were no material recognizable subsequent events that required
recognition in the disclosures to the Company’s December 31, 2018 financial statements.
This financial information has not been reviewed for accuracy or relevancy by the FDIC.
88
WB&T | Annual Report 2018
Holding Company & Stock Information
Wilson Bank Holding Company Directors
William Jordan, Chairman; Randall Clemons; Jack Bell; James F. Comer; Robert H. Goodall, Anthony
Patton; John C. McDearman III and Elmer Richerson.
Common Stock Market Information
The common stock of Wilson Bank Holding Company is not traded on an exchange nor is there a
known active trading market. The number of stockholders of record at February 19, 201(cid:28) was 4,(cid:20)(cid:27)(cid:25). Based
solely on information made available to the Company from limited numbers of buyers and sellers, the
Company believes that the following table sets forth the quarterly range of sale prices for the Company’s
common stock during the years 2017 and 2018.
On January 1, 2017, a $.30 per share cash dividend was declared and on July 1, 2017 a $.35 per share
cash dividend was declared and paid to shareholders of record on those dates. On January 1, 2018, a $.35 per
share cash dividend was declared and on July 1, 2018, a $.55 per share cash dividend was declared and paid to
shareholders of record on those dates. Future dividends will be dependent upon the Company’s profitability,
its capital needs, overall financial condition and economic and regulatory considerations.
2017
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
2018
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Stock Prices
High
$43.00*
$42.75
$44.00*
$100.00*
High
$46.00
$125.00*
$48.50
$50.00*
Low
$40.75
$41.75
$42.75
$43.75
Low
$44.75
$46.00
$47.25
$48.50
*Represents one transaction of 2,400 shares during the first quarter of 2017, one transaction of 3,395 shares during the third quarter of
2017, one transaction of 100 shares during the fourth quarter of 2017, one transaction of 21 shares during the second quarter of 2018, and
one transaction of 20 shares during the fourth quarter of 2018 of which the Company is aware where the sale prices was at least $0.25
higher than any other trade during the quarter. The volume weighted average stock price during the first quarter of 2017 was $41.17 and
the volume weighted average stock price during the third quarter of 2017 and fourth quarter of 2017 was $42.90 and $44.48,
respectively. The volume weighted average stock price during the second quarter of 2018 was $46.46 and the volume weighted average
stock price during the fourth quarter of 2018 was $48.65.
Annual Meeting and Information Contacts
The Annual Meeting of Shareholders will be held in the Main Office of Wilson Bank Holding
Company at 7:00 P.M., April 23, 2019 at 623 West Main Street, Lebanon, Tennessee.
For further information concerning Wilson Bank Holding Company or Wilson Bank & Trust, or to
obtain a copy of the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange
Commission, which is available without charge to shareholders, please contact Lisa Pominski, CFO, Wilson
Bank & Trust, P.O. Box 768, Lebanon, Tennessee 37088-0768, phone (615) 443-6612.
89
WB&T | Annual Report 2018
Wilson Bank Holding Company
Five Year Performance Index
The following graph compares the percentage change in the unaudited
total return on Wilson Bank Holding Company’s common stock against the
cumulative total return of the NASDAQ Index and The SNL Bank Index
($1B - $5B) between December 31, 2013 and December 31, 2018. The
graph assumes the value of the investment in Wilson Bank Holding
Company’s common stock and each index was $100 at December 31, 2013
and that all dividends were reinvested.
200
150
100
2013
2014
2015
2016
2017
2018
2013
2014
2015
2016
2017
2018
Wilson Bank Holding Company
100.00 105.73
112.54
123.71
137.97
156.38
NASDAQ Composite
100.00
114.75
122.74
133.62
173.22
168.30
SNL Bank $1B-$5B
100.00 104.56
117.04
168.38
179.51
157.27
90
WB&T | Annual Report 2018
Locations
Middle Tennessee’s Community Bank™
WILSON
Main Office
Baddour Office
Tennessee Boulevard Office
Walmart Office
Castle Heights Av. N. Office
Watertown Office
Gladeville Office
Mt. Juliet Office
Highway 70-Mt. Juliet Office
Leeville-Highway 109 Office
Mortgage Center
Providence Office
DAVIDSON
Hermitage Office
Donelson Office
West End Office
RUTHERFORD
N. W. Broad Office
Memorial Boulevard Office
South Church Street Office
Smyrna Office
Highway 96
SUMNER
SMITH
Gallatin Office
Hendersonville Office
TROUSDALE
Hartsville Office
DEKALB
Smithville Office
Alexandria Office
Carthage Office
Gordonsville Office
PUTNAM
Cookeville Office
WILLIAMSON
Cool Springs Office
SUMNER
Gallatin
TROUSDALE
Hartsville
Hendersonville
Castle Hts.
Av. N.
Baddour
Pkwy.
West End
Hermitage
Donelson
Hwy. 70
Mt. Juliet
Main
Mortgage
Center
TN.
Blvd.
Walmart
DAVIDSON
Providence
Leeville 109
WILSON
Gladeville
Watertown
Cool Springs
WILLIAMSON
Smyrna
Memorial Blvd.
Hwy. 96
NW Broad St.
RUTHERFORD
South Church St.
Carthage
SMITH
Gordonsville
Alexandria
DEKALB
Smithville
Cookeville
PUTNAM
623 West Main Street (cid:129) Lebanon, Tennessee 37087
(615) 444-BANK (2265)
wilsonbank.com
Middle Tennessee’s Community Bank™
Annual Report 2018