<PAGE>
<PAGE>
United States Securities and Exchange Commission
Washington, D. C. 20549
FORM 10 - QSB
(Mark One)
[ X ] Quarterly Report under Section 13 or 15(d) of
the Securities Exchange Act of 1934 for the quarterly
period ended March 31, 2000
[ ] Transition Report under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the transition period from ________ to _________
Commission File Number: 0-28032
PATAPSCO BANCORP, INC.
(Exact Name of Small Business Issuer as Specified
in its Charter)
MARYLAND 52-1951797
- ------------------------------- -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1301 MERRITT BOULEVARD, DUNDALK, MARYLAND 21222-2194
-----------------------------------------------------
(Address of Principal Executive Offices)
(410) 285-1010
Registrant's Telephone Number, Including Area Code
Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the
past 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--- ---
As of May 8, 2000, the issuer had 327,390 shares of Common
Stock issued and outstanding.
Transitional Small Business Disclosure Format (check one):
Yes No X
--- ---
<PAGE>
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CONTENTS
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PAGE
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PART I. FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
Consolidated Statements of Financial Condition
at March 31, 2000 and June 30, 1999 3
Consolidated Statements of Operations for the
Three and Nine-Month Periods Ended March
31, 2000 and 1999 4
Consolidated Statements of Comprehensive Income for
the Three and Nine-Month Periods Ended
March 31, 2000 and 1999 5
Consolidated Statements of Cash Flows for the
Nine-Month Periods Ended March 31, 2000 and
1999 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis or Plan of
Operations 8
PART II. OTHER INFORMATION
-----------------
Item 1. Legal Proceedings 15
Item 2. Changes in Securities and Use of Proceeds 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of
Security-Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
2
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PATAPSCO BANCORP, INC. AND SUBSIDIARY
DUNDALK, MARYLAND
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
----------------------------------------------
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
Assets 2000 (UNAUDITED) 1999
------ --------------- --------------
<S> <C> <C>
Cash:
On hand and due from banks $ 954,651 $ 1,601,598
Interest bearing deposits in other banks 1,148,170 2,170,254
Federal funds sold 2,789,475 5,580,098
Equity securities, at fair value 447,328 213,761
Mortgage Backed securities, at fair value 4,522,624 4,879,359
Loans receivable, net 87,901,208 77,777,163
Investment in securities required by law, at cost 950,850 800,850
Property and equipment, net 1,029,855 1,052,618
Deferred income taxes 433,501 441,000
Accrued interest, prepaid expenses and other assets 1,145,051 811,660
------------ -----------
Total assets $101,322,713 $95,328,361
============ ===========
Liabilities and Stockholders' Equity
------------------------------------
Liabilities:
Savings deposits:
Interest bearing deposits $ 71,599,950 $66,792,156
Non interest bearing deposits 3,586,783 2,879,263
Borrowings 14,900,000 13,900,000
Accrued expenses and other liabilities 1,945,992 2,539,082
------------ -----------
Total liabilities 92,032,725 86,110,501
Stockholders' equity:
Common stock $0.01 par value: authorized 4,000,000
shares: issued and outstanding 328,891 and
344,426 shares, respectively 3,289 3,445
Additional paid-in capital 1,463,218 1,888,962
Contra equity - Employee stock ownership plan (325,100) (325,100)
Contra equity - Management recognition plan (154,761) (257,095)
Retained income, substantially restricted 8,451,162 8,017,059
Unrealized net holding losses on available-for-sale
portfolios, net of taxes (147,819) (109,411)
------------ -----------
Total stockholders' equity 9,289,988 9,217,860
------------ -----------
Total liabilities and stockholders'
equity $101,322,713 $95,328,361
============ ===========
</TABLE>
See accompanying notes to financial statements.
3
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<PAGE>
PATAPSCO BANCORP, INC. AND SUBSIDIARY
DUNDALK, MARYLAND
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(UNAUDITED)
<TABLE>
<CAPTION>
FOR NINE MONTHS ENDED FOR THREE MONTHS ENDED
MARCH 31, MARCH 31,
-------------------- ----------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest income:
Loans receivable $5,335,449 $ 4,997,609 $1,850,076 $1,684,066
Investment & Mortgage-backed securities 250,129 188,357 82,060 29,599
Federal funds sold and other investments 209,254 193,593 69,136 66,954
---------- ---------- ---------- ----------
Total interest income 5,794,833 5,379,559 2,001,272 1,780,619
---------- ---------- ---------- ----------
Interest expense:
Savings deposits 2,011,983 2,043,305 699,591 658,755
Borrowings 645,991 433,827 235,055 134,651
---------- ---------- ---------- ----------
Total interest expense 2,657,974 2,477,132 934,646 793,406
---------- ---------- ---------- ----------
Net interest income 3,136,859 2,902,427 1,066,626 987,213
Provision for losses on loans 255,000 170,000 115,000 60,000
---------- ---------- ---------- ----------
Net interest income after provision
for losses on loans 2,881,859 2,732,427 951,626 927,213
Noninterest income:
Fees and service charges 193,887 168,044 67,986 58,468
Net gain (loss) on sales of real estate
owned 50,000 -- 50,000
Other 10,379 13,378 3,145 8,293
---------- ---------- ---------- ----------
Total noninterest income 254,266 181,422 121,131 66,761
---------- ---------- ---------- ----------
Noninterest expenses:
Compensation and employee benefits 1,381,067 1,301,352 475,601 440,815
Insurance premiums 44,749 51,021 10,687 16,556
Professional fees 99,753 87,191 32,694 22,865
Equipment expense 124,227 82,726 37,848 28,588
Occupancy Expense 58,868 63,080 18,836 17,750
Advertising 29,400 31,144 10,933 10,242
Data processing 118,458 85,716 36,939 24,458
Other 337,618 323,099 115,580 103,074
---------- ---------- ---------- ----------
Total noninterest expense 2,194,139 2,025,329 739,118 664,348
---------- ---------- ---------- ----------
Income before provision for
income taxes 941,986 888,520 333,639 329,626
Provision for income taxes 365,680 333,711 128,860 125,541
---------- ---------- ---------- ----------
Net Income $ 576,306 $ 554,809 $ 204,779 $ 204,085
========== ========== ========== ==========
Basic earnings per share $ 1.84 $ 1.69 $ 0.66 $ 0.63
========== ========== ========== ==========
Diluted earnings per share 1.75 1.62 0.63 0.60
========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
4
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<PAGE>
PATAPSCO BANCORP, INC. AND SUBSIDIARY
DUNDALK, MARYLAND
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
-----------------------------------------------
(UNAUDITED)
<TABLE>
<CAPTION>
FOR NINE MONTHS ENDED FOR THREE MONTHS ENDED
MARCH 31, MARCH 31,
-------------------- ----------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income $ 576,306 $ 554,809 $ 204,779 $204,085
Other comprehensive income, net of tax:
Unrealized net holding (losses)/gains on
available-for-sale portfolios (147,819) (26,625) (147,819) (6,793)
--------- --------- --------- --------
Comprehensive income $ 428,487 $ 528,184 $ 56,960 $197,292
========= ========= ========= ========
</TABLE>
See accompanying notes to financial statements.
5
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PATAPSCO BANCORP, INC. AND SUBSIDIARY
DUNDALK, MARYLAND
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(UNAUDITED)
<TABLE>
<CAPTION>
FOR NINE MONTHS ENDED
MARCH 31,
-------------------------
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 576,306 $ 554,809
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 105,929 88,657
Provision for losses on loans 255,000 170,000
Gain on sale of real estate owned (50,000) -
Non-cash compensation under stock-based benefit
plans 134,216 82,130
Amortization of premiums and discounts, net 3,332 12,196
Deferred loan origination fees, net of costs (4,945) 86,730
Gain on sales of mortgage-backed securities
and investment securities - -
Change in deferred income taxes 7,499 -
(Increase) in accrued interest on investments,
prepaid expenses and other assets (332,908) (234,147)
Decrease in accrued expenses and other liabilities (399,268) (608,548)
------------ -----------
Net cash used in operating activities 295,161 151,827
------------ -----------
Cash flows from investing activities:
Loan principal disbursements, net of repayments (10,589,240) (2,120,034)
Purchase of loans 0 (1,794,554)
Proceeds from the sale of repossessed real estate 93,433 -
Purchase of property and equipment (83,166) (46,546)
Purchase of stock in Federal Home Loan Bank of Atlanta (150,000) -
Purchase of investment security available-for-sale (184,062) (204,173)
Principal repayment on mortgage-backed securities
available-for-sale 242,888 -
Principal repayment on investment securities
available-for-sale - 3,967,295
------------ -----------
Net cash used in investing activities (10,670,147) (198,012)
Cash flows from financing activities:
Net increase (decrease) in deposits 5,515,314 (321,568)
Net increase (decrease) in borrowings 1,000,000 (1,300,000)
Stock repurchase (457,784) (523,380)
Dividends paid (142,198) (127,342)
------------ -----------
Net cash (used in) provided by financing
activities 5,915,332 (2,272,290)
Net (decrease) increase in cash and cash equivalents $ (4,459,654) $(2,318,475)
Cash and cash equivalents at beginning of period 9,351,950 8,538,420
Cash and cash equivalents end of period $ 4,892,296 $ 6,219,945
Supplemental information:
Interest paid on deposits and borrowed funds 2,657,974 2,480,797
Income taxes paid 393,625 627,750
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
PATAPSCO BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1: Principles of Consolidation
The consolidated financial statements include the accounts of
Patapsco Bancorp, Inc. ("the Company") and its wholly-owned
subsidiary, The Patapsco Bank ("the Bank"). All intercompany
accounts and transactions have been eliminated in the
accompanying consolidated financial statements.
Note 2: The Patapsco Bank
The Bank is regulated by The Federal Reserve Bank of Richmond
("the Federal Reserve Bank") and The State of Maryland. The
primary business of the Bank is to attract deposits from
individual and corporate customers and to originate residential
and commercial mortgage loans, consumer loans and commercial
business loans. The Bank competes with other financial and
mortgage institutions in attracting and retaining deposits and
originating loans. In October, 1998 the Bank created a leasing
company called Prime Business Leasing, Inc. The Bank conducts
operations through one office located at 1301 Merritt Boulevard,
Dundalk, Maryland 21222.
Note 3: Basis of Presentation
The accompanying unaudited consolidated financial statements
have been prepared in accordance with instructions for Form
10-QSB and therefore, do not include all disclosures necessary
for a complete presentation of the statements of condition,
statements of operations and statements of cash flows in
conformity with generally accepted accounting principles.
However, all adjustments, which are, in the opinion of
management, necessary for the fair presentation of the interim
financial statements have been included. Such adjustments were
of a normal recurring nature. The results of operations for the
nine and three months ended March 31, 2000 are not necessarily
indicative of the results that may be expected for the entire
year.
Note 4: Cash and Cash Equivalents
Cash equivalents include short-term investments, which consists
of Federal funds sold. Cash equivalents and other liquidity and
short-term investments are carried at cost, which approximates
market value.
7
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<PAGE>
Note 5: Regulatory Capital Requirements
At March 31 2000, the Bank met each of the three minimum
regulatory capital requirements. The following table summarizes
the Bank's regulatory capital position at March 31, 2000 (in
thousands).
<TABLE>
<CAPTION>
Well Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provision
----------------- ------------------- --------------------
Amount % Amount % Amount %
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total Capital (to Risk
Weighted Assets) $ 9,486 14.27% $ 5,317 8.00% $ 6,647 10%
Tier 1 Capital (to Risk
Weighted Assets) $ 8,761 13.18% $ 2,659 4.00% $ 3,988 6%
Tier 1 Capital (to
Average Assets) $ 8,761 8.87% $ 3,951 4.00% $ 4,938 5%
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
When used in this Form 10-QSB, the words or phrases "will
likely result," "are expected to," "will continue," "is
anticipated," "estimate," "project" or similar expressions are
intended to identify "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
Such statements are subject to certain risks and uncertainties
including changes in economic conditions in the Company's market
area, changes in policies by regulatory agencies, fluctuations
in interest rates, demand for loans in the Company's market
area, and competition that could cause actual results to differ
materially from historical earnings and those presently
anticipated or projected. The Company wishes to caution readers
not to place undue reliance on any such forward-looking
statements, which speak only as of the date made. The Company
wishes to advise readers that the factors listed above could
affect the Company's financial performance and could cause the
Company's actual results for future periods to differ materially
from any opinions or statements expressed with respect to future
periods in any current statements.
The Company does not undertake, and specifically disclaims
any obligation, to publicly release the result of any revisions,
which may be made to any forward-looking statements to reflect
events or circumstances after the date of such statements or to
reflect the occurrence of anticipated or unanticipated events.
COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2000 AND JUNE 30,
1999
The Company's assets increased by $5.9 million or 6.3% to
$101.3 million at March 31, 2000 from $95.3 million at June 30,
1999. The increase in the Company's assets during the nine
months ended March 31, 1999 was primarily due to the Company
utilizing cash, deposit growth and borrowed money to fund loan
growth. The Company's net loans receivable increased by $10.2
million or 13.0% to $87.9 million at March 31, 2000 from $77.8
million at June 30, 1999. The increase in net loans receivable
was comprised of $4.7 million in balloon mortgages, $3.5 million
in commercial equipment leases, $2.6 million in commercial real
estate loans $1.3 million in commercial term loans and $600,000
in consumer loans somewhat offset by decreases of $1.9 million
in other residential mortgages and $600,000 in construction
loans. The Company's mortgage-backed securities portfolio
decreased by $400,000 million to $4.5 million at March 31, 2000
from $4.9 million at June 30, 1999 due to amortization and
prepayments.
The Company's borrowings increased by $1,000,000 or 7.1%
to $14.9 million at March 31, 2000 from $13.9 million at June
30, 1999. Deposits increased by $5.5 million or by 7.9% to $75.2
million at March 31, 2000 from $69.7 million at June 30, 1999.
The increase in deposits was largely attributable to the
increase of $4.8 million in interest-bearing deposits consisting
primarily of certificate of deposit accounts. In February 2000,
the Bank acquired $1.0 million in retail brokered deposits in
denominations less than $100,000. Noninterest-bearing deposits
increased by $708,000 or 24.6% during the nine months ended
March 31, 2000.
8
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<PAGE>
The Company's stockholders' equity increased by $72,000 to
$9.3 million at March 31, 2000 from $9.2 million at June 30,
1999. In July 1999, the Company initiated a 5% (17,221 shares)
stock repurchase program. This was completed in November 1999
at a total cost of $457,788.
COMPARISON OF OPERATING RESULTS FOR THE QUARTERS AND NINE MONTHS
ENDED MARCH 31, 2000 AND MARCH 31, 1999
Net Income
- ----------
The Company's net income increased by $1,000 or 0.3% to $205,000
for the quarter ended March 31, 2000 from $204,000 for the
quarter ended March 31, 1999. The Company's net income increased
by $21,000 or 3.9% to $576,000 for the nine months ended March
31, 2000 from $555,000 for the nine months ended March 31, 1999.
The increase in the Company's net income during the comparable
three-month period is a result of higher net interest income
before the provision for loan loss and higher noninterest income
slightly offsetting higher operating expenses. The increase in
the Company's net income in the comparable nine-month period was
primarily due to increases in net interest and noninterest
income offsetting higher compensation, equipment and data
processing expenses.
Interest Income
- ---------------
Total interest income increased by $221,000 or 12.4% to $2.0
million for the quarter ended March 31, 2000 from $1.8 million
for the quarter ended March 31, 1999. Total interest income
increased by $415,000 or 7.7% to $5.8 million for the nine
months ended March 31, 2000 from $5.4 million for the nine
months ended March 31, 1999. The increases in interest income
resulted primarily from the growth in the Company's loan
portfolio that was funded with deposit growth, additional
borrowings from the Federal Home Loan Bank of Atlanta as well as
cash from lower yielding investments in overnight federal funds.
The Company's average yield on assets increased by 9 basis
points to 8.27% from 8.18% during the three-month period ended
March 31, 2000. For the comparative nine-month period, the
Company's average yield on assets increased 7 basis points to
8.26%. The Company's average balance of interest-earning assets
increased by $8.9 million and $5.6 million during the comparable
three and nine-month periods ended March 31, 1999.
Interest income on loans receivable increased by $166,000 or
9.9% to $1.9 million for the quarter ended March 31, 2000 from
$1.7 million for the quarter ended March 31, 1999. Interest
income on loans receivable increased by $338,000 or 6.8% to $5.3
million for the nine months ended March 31, 2000 from $5.0
million for the nine months ended March 31, 1999. The increase
in interest income on loans receivable during the three-month
period is primarily due to an increase in the average balance of
loans receivable. During the three months ended March 31, 2000
as compared to the same period ended March 31, 1999 the average
loans receivable balance increased by $7.0 million or 8.8% to
$86.7 million from $79.7 million and the average yield increased
by 1 basis point to 8.46% from 8.45%. During the nine months
ended March 31, 2000 as compared to the same period ended March
31, 1999 the average balance of loans receivable increased by
$4.4 million or 5.6% to $83.1 million from $78.7 million and the
average yield increased by 6 basis points to 8.52% from 8.46%.
Interest income on investment and mortgage-backed securities
increased by $52,000 and $62,000 for the three and nine-month
periods ended March 31, 2000 as compared to the three and none
month periods ended March 31, 1999.
<PAGE>
Interest income on federal funds sold and other investments
increased by $2,000 or 3.3% to $69,000 for the quarter ended
March 31, 2000 from $67,000 for the quarter ended March 31,
1999. Interest income on federal funds sold and other
investments increased by $16,000 or 8.1% to $209,000 for the
nine months ended March 31, 2000 from $193,000 for the nine
months ended March 31, 1999.
Interest Expense
- ----------------
Total interest expense increased by $141,000 or 17.8% to
$935,000 for the quarter ended March 31, 2000 from $793,000 for
the quarter ended March 31, 1999. Total interest expense
increased by $181,000 or 7.3% to $2.7 million for the nine
months ended March 31, 2000 from $2.5 million at March 31, 1999.
The increases in interest expense during the comparable periods
were primarily due to increases in the average balances of
Federal Home Loan Bank Advances and deposits used to fund loan
growth. During the quarter ended March 31, 2000 as compared to
the quarter ended March 31, 1999 the average balance of
interest-bearing liabilities increased by $9.9 million to $85.8
million from $75.9 million of which $7.0 million is attributable
to increases in borrowings from the Federal Home Loan Bank of
Atlanta. The average rate
9
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<PAGE>
on interest-bearing liabilities increased by 8 basis points to
4.26% from 4.18% in the quarterly period. During the nine months
ended March 31, 2000 as compared to the nine months ended March
31, 1999 the average balance of interest-bearing liabilities in
increased by $6.4 million to $82.5 million from $76.1 million
and the average rate decreased 6 basis points to 4.28% from
4.34%.
Interest expense on deposits increased by $41,000 or 6.2%
to $700,000 for the quarter ended March 31, 2000 from $659,000
for the quarter ended March 31, 1999. Interest expense on
deposits decreased by $31,000 or 1.6% to $2.0 million from $2.0
million for the nine months ended March 31, 1999. The increase
in interest expense on deposits during the comparable quarters
was attributable to an increase in the average rate balance of
interest-bearing deposits $2.8 million or 4.2%.The average rate
decreased by 2 basis points to 3.93% from 3.95%. The decrease in
interest expense on deposits during the comparable nine-month
period was primarily due to a 14 basis point decrease in the
average rate to 3.95% from 4.09% offsetting a $1.0 million
increase in the average balance.
Interest expense on borrowings increased by $100,000 or 74.6%
to $235,000 for the quarter ended March 31, 2000 from $135,000
for the quarter ended March 31, 1999. Interest expense on
borrowings increased by $212,000 or 48.9% to $646,000 during the
nine months ended March 31, 2000 from $434,000 during the nine
months ended March 31, 1999. The increase for the comparable
quarters was primarily attributable to an increase of $7.0
million in the average balance offsetting a decrease of 17 basis
points in the average rate. For the nine-month comparable
periods the increase was attributable to a $5.3 million increase
in the average balance. The average rate decreased 32 basis
points to 5.78% from 6.10%.
Net Interest Income
- -------------------
The Company's net interest income before the provision for
loan losses increased by $79,000 or 8.0% to $1.1million for the
quarter ended March 31, 2000 from $987,000 for the quarter ended
March 31, 1999. Net interest income before the provision for
loan losses increased by $234,000 or 8.1% to $3.1 million for
the nine months ended March 31, 2000 from $2.9 million during
the nine months ended March 31, 1999. The increase in net
interest income during the comparable quarter is primarily due
to higher volumes. The increase in net interest income in the
comparable nine month period is due to both higher volumes and a
higher net interest margin.
Average Balance Sheet
- ---------------------
The following tables sets forth certain information relating to
the Company's average balance sheet and reflects the average
yield on assets and cost of liabilities for the periods
indicated and the average yields earned and rates paid. Dividing
income or expense by the average balance of assets or
liabilities, respectively, for the periods presented derives
these yield and costs. Average balances are daily balances.
The table presents information for the periods indicated
with respect to the net interest margin, which is its net
interest income divided by the average balance of
interest-earning assets. Also presented is the difference
between the average yield earned on interest-earning assets and
average rate paid on interest-bearing liabilities, or interest
rate spread ,which is also used to measure the earnings power of
financial institutions.
10
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<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED MARCH 31,
----------------------------------------------------------------------
2000 1999
--------------------------- --------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE(1) BALANCE INTEREST RATE(1)
------- -------- ------ ------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable (2) $83,134 $5,336 8.52% $78,747 $4,998 8.46%
Investment securities -- -- -- 3,631 188 6.90%
Mortgage-backed securities 4,758 250 6.98% -- -- --
Federal funds sold and other
interest-earning assets 5,260 209 5.28% 5,161 194 5.01%
------- ----- ------- -----
Total interest earning assets 93,152 5,795 8.26% 87,539 5,380 8.19%
-----
Noninterest-earning assets 2,880 2,157
------- -------
Total Average Assets $96,032 $89,696
======= =======
Interest-bearing liabilities:
Savings deposits (3) $67,632 $2,012 3.95% $66,621 $2,043 4.09%
Borrowings 14,842 646 5.78% 9,480 434 6.10%
------- ------ ------- ------
Total interest-bearing liabilities 82,474 2,658 4.28% 76,101 2,477 4.34%
------ ------
Noninterest-bearing liabilities 4,212 4,319
------- -------
Total liabilities 86,686 80,420
Stockholders' equity 9,346 9,276
------- -------
Total liabilities and stockholders'
equity $96,032 $80,696
======= =======
Net interest income $3,137 $2,903
====== ======
Interest rate spread 3.98% 3.85%
====== ======
Net Interest Margin 4.47% 4.42%
====== ======
Ratio of average interest-earning assets
to average interest-bearing liabilities 112.95% 115.03%
====== ======
<FN>
___________
(1) Yields and rates are annualized.
(2) Includes nonaccrual loans.
(3) Includes interest-bearing escrow accounts.
</FN>
</TABLE>
11
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<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------------------------------------------------
2000 1999
--------------------------- --------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE(1) BALANCE INTEREST RATE(1)
------- -------- ------ ------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable (2) $86,697 $1,850 8.46% $79,674 $1,684 8.45%
Investment securities -- -- -- 1,894 30 6.34%
Mortgage-backed securities 4,615 82 6.96% -- -- --
Federal funds sold and other
interest-earning assets 4,749 69 5.50% 5,553 67 4.83%
------- ----- ------- -----
Total interest earning assets 96,061 2,001 8.27% 87,121 1,781 8.18%
----- -----
Noninterest-earning assets 3,174 2,407
------- -------
Total assets $99,235 $89,528
======= =======
Interest-bearing liabilities:
Savings deposits (3) $69,639 $ 700 3.93% $66,766 $ 659 3.95%
Borrowings 16,197 235 5.73% 9,150 135 5.90%
------- ------ ------- ------
Total interest-bearing liabilities 85,836 935 4.26% 75,916 794 4.18%
------ ------
Noninterest-bearing liabilities 4,083 4,333
------- -------
Total liabilities 89,919 81,249
Stockholders' equity 9,316 9,249
------- -------
Total liabilities and stockholders'
equity $99,235 $89,528
======= =======
Net interest income $1,066 $ 987
====== ======
Interest rate spread 3.98% 4.00%
====== ======
Net interest margin 4.45% 4.53%
====== ======
Ratio of average interest-earning assets
to average interest-bearing liabilities 111.91% 114.76%
====== ======
<FN>
___________
(1) Yields and rates are annualized.
(2) Includes nonaccrual loans.
(3) Includes interest-bearing escrow accounts.
</FN>
</TABLE>
Provision For Loan Losses
- -------------------------
Provisions for loan losses are charged to earnings to maintain
the total allowance for loan losses at a level considered
adequate by management to provide for probable loan losses,
based on prior loss experience, volume and type of collateral by
the Company, industry standards and past due loans in the
Company's loan portfolio. The Company's management periodically
monitors and adjusts its allowance for loan losses based upon
its analysis of the loan portfolio. The Company provided
$115,000 for loan losses during the quarter ended March 31, 2000
and $60,000 in the quarter ended March 31, 1999. The Company
provided $255,000 and $170,000 for loan losses during each of
the nine-month periods ended March 31, 2000 and March 31, 1999.
The provision for loan losses were made due to the Company's
higher levels of consumer, construction and commercial loans,
which generally entail a greater risk than single-family
residential loans. Additionally, fiscal year-to-date
charge-offs of $176,000 are 135% higher than March 1999 fiscal
year-to-date charge-offs of $75,000. The Company's allowance
for loan losses as a percentage of total loans outstanding, net
of unearned origination fees of 0.82% at March 31, 2000 is up
slightly from March 31, 1999 when the ratio was 0.81%. The
Company's ratio of net charge-offs to average loans outstanding
was 0.24% and 0.39% for the quarter and nine-month periods ended
March 31, 2000 on an annualized basis.
12
<PAGE>
<PAGE>
Activity in the allowance for loan losses is as follows (dollars
in thousands):
<TABLE>
<CAPTION>
Nine Months Three Months
Ended March 31, Ended March 31,
-------------- --------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Allowance for loan losses, beginning of period $631 $554 $662 $618
Provision for loan losses 255 170 115 60
Loans Charged Off:
Consumer 153 73 38 26
Real Estate 0 2 0 2
Commercial 23 0 18 0
---- ---- ---- ----
Total Charge-Offs 176 75 56 28
Recoveries:
Consumer 14 3 2 2
Real Estate 0 0 1 0
Commercial 1 0 0 0
---- ---- ---- ----
Total Recoveries 15 3 3 2
---- ---- ---- ----
Allowance for loan losses, end of period $725 $652 $725 $652
==== ==== ==== ====
</TABLE>
Noninterest Income
- ------------------
The Company's noninterest income consists of deposit fees,
service charges, late fees and gains and losses on sales of
securities, loans and repossessed real estate and other assets.
Total noninterest income increased by $54,000 or 81.4% to
$121,000 for the quarter ended March 31, 2000 from $67,000 for
the quarter ended March 31, 1999. Total noninterest income
increased by $73,000 or 40.1% to $254,000 during the nine months
ended March 31, 2000 from $181,000 during the nine months ended
March 31, 1999. The majority of the increase in noninterest
income in the three and nine month periods was due to the
recognition of a $50,000 gain on the sale of foreclosed real
estate. The remainder of the increase in noninterest income in
the two comparable periods is primarily due to higher fees on
deposit accounts.
Noninterest Expenses
- --------------------
Total noninterest expenses increased by $75,000 or 11.2%
to $739,000 for the quarter ended March 31, 2000 from $664,000
for the quarter ended March 31, 1999. Total noninterest expense
increased by $169,000 to $2.2 million during the nine months
ended March 31, 2000 from $2.0 million during the nine months
ended March 31, 1999. Compensation and employee benefits expense
increased by $35,000 or 7.9% and $80,000 or 6.1% to $476,000 and
$1.4 million for the quarter and nine month periods ended March
31, 2000 from $441,000 and $1.3 million for the quarter and nine
months ended March 31, 1999, respectively. The increase was
largely attributable to expenses relating to the hiring of
additional personnel and the higher cost of employee benefits,
particularly health insurance. Equipment expenses, consisting
primarily of depreciation and maintenance of the Company's
internal computer systems increased by $9,000 or 32.4% and
$41,000 or 50.1% in the three and nine-month periods ended March
31, 2000 compared to the comparable periods ended March 31,
1999. Data processing expenses increased $12,000 or 51.0% and
$33,000 or 38.2% in the three and nine-month periods ended March
31, 2000 compared to the comparable periods ended March 31,
1999.
Liquidity and Capital Resources
- -------------------------------
An important component of the Company's asset/liability
structure is the level of liquidity available to meet the needs
of customers and creditors. The Company's Asset/Liability
Management Committee has established general guidelines for the
maintenance of prudent levels of liquidity. The Committee
continually monitors the amount and source of available
liquidity, the time to acquire it and its cost. Management of
the Company seeks to maintain an
13
<PAGE>
<PAGE>
adequate level of liquidity in order to retain flexibility in
terms of investment opportunities and deposit pricing. Because
liquid assets generally provide lower rates of return, a high
level of liquidity will, to a certain extent, result in lower
net interest margins and lower net income.
The Company's most liquid assets are cash on hand,
interest-bearing deposits and Federal funds sold, which are
short-term. The levels of these assets are dependent on the
Company's operating, financing and investing activities during
any given period. At March 31, 2000, the Company's cash on hand,
interest-bearing deposits and Federal funds sold totaled $4.9
million. In addition, the Company has approximately $5.0 million
of mortgage-backed and equity securities classified as
available-for-sale.
The Company anticipates that it will have sufficient funds
available to meet its current loan commitments of $4.9 million.
These funds will be internally generated, raised through deposit
operations, or borrowed. Certificates of deposits that are
scheduled to mature in less than one year at March 31, 2000
totaled $38.3 million. Historically, a high percentage of
maturing deposits have remained with the Company.
The Company's primary sources of funds are deposits and
proceeds from maturing investment securities and mortgage-backed
securities and principal and interest payments on loans. While
maturities and scheduled amortization of mortgage-backed
securities and loans are predictable sources of funds, deposit
flows and mortgage prepayments are greatly influenced by general
interest rates, economic conditions, competition and other
factors.
The Company's primary uses of cash in investing activities
during the nine months ended March 31, 2000 were loan principal
disbursements, net of repayments, of $10.6 million. The
Company's primary sources of cash provided from financing
activities during the nine months ended March 31, 2000 was a
$5.5 million increase in deposits and the increase of $1.0
million in outstanding borrowings from the Federal Home Loan
Bank of Atlanta.
The Company's primary use of cash in financing activities
during the nine months ended March 31, 2000 consisted of the
repurchase of stock and payment of cash dividends of $600,000.
As discussed in Note 5 - Regulatory Capital Requirements,
the Company and the Bank exceeded all regulatory minimum capital
requirements.
14
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and use of proceeds.
None.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a vote of securities holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibit is filed herewith:
Exhibit 27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter
ended March 31, 2000.
15
<PAGE>
<PAGE>
Signatures
In accordance with the requirements of the Securities
Exchange Act of 1934, the registrant caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
PATAPSCO BANCORP, INC.
Date: May 9, 2000 /s/ Joseph J. Bouffard
------------------------------
Joseph J. Bouffard
President and Chief Executive Officer
(Principal Executive Officer)
Date: May 9, 2000 /s/ Michael J. Dee
------------------------------
Michael J. Dee
Chief Financial Officer & Controller
(Principal Financial Officer)
16
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 954,651
<INT-BEARING-DEPOSITS> 1,148,170
<FED-FUNDS-SOLD> 2,789,475
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 4,969,952
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 87,901,208
<ALLOWANCE> 725,428
<TOTAL-ASSETS> 101,322,713
<DEPOSITS> 75,186,733
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,945,992
<LONG-TERM> 14,900,000
0
0
<COMMON> 3,289
<OTHER-SE> 9,286,699
<TOTAL-LIABILITIES-AND-EQUITY> 101,322,713
<INTEREST-LOAN> 5,335,449
<INTEREST-INVEST> 250,129
<INTEREST-OTHER> 209,254
<INTEREST-TOTAL> 5,794,833
<INTEREST-DEPOSIT> 2,011,983
<INTEREST-EXPENSE> 2,657,974
<INTEREST-INCOME-NET> 3,136,859
<LOAN-LOSSES> 255,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,194,139
<INCOME-PRETAX> 941,986
<INCOME-PRE-EXTRAORDINARY> 941,986
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 576,306
<EPS-BASIC> 1.84
<EPS-DILUTED> 1.75
<YIELD-ACTUAL> 4.47
<LOANS-NON> 537,000
<LOANS-PAST> 873,000
<LOANS-TROUBLED> 9,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 631,239
<CHARGE-OFFS> 175,522
<RECOVERIES> 14,712
<ALLOWANCE-CLOSE> 725,428
<ALLOWANCE-DOMESTIC> 725,428
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
