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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 10-QA
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30,1998
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission file number 23663
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CRUSADER HOLDING CORPORATION
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-2562545
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1230 Walnut Street, Philadelphia, PA 19107
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(Address of principal executive offices)
(Zip Code)
(215) 893-1500
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
Common Stock, par value $0.01 per share, 3,832,500 shares of outstanding as
of November 13, 1998
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Crusader Holding Corporation
Index to Form 10-QA Report
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<CAPTION>
PART I. FINANCIAL INFORMATION Page
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 1998
and June 30,1998..............................................................3
Consolidated Statements of Income and Comprehensive Income
for the three months ended and nine months ended
September 30, 1998 and 1997...................................................4
Consolidated Statement of Shareholders' Equity as of September 30, 1998.......5
Consolidated Statements of Cash Flows for the three months ended
September 30, 1998 and 1997...................................................6
Notes to Consolidated Financial Statements....................................7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...........................................9
-Intentionally Ommitted as No Amendment is Required
Item 3. Quantitative and Qualitative Disclosures about Market Risk...........11
-Intentionally Ommitted as No Amendment is Required
PART II. OTHER INFORMATION
-Intentionally Ommitted as No Amendment is Required
Item 1. Legal Proceedings....................................................13
Item 2. Changes in Securities and Use of Proceeds............................13
Item 3. Defaults Upon Senior Securities......................................13
Item 4. Submission of Matters to a Vote of Security Holders..................13
Item 5. Other Information....................................................13
Item 6. Exhibits and Reports on Form 8-K.....................................13
</TABLE>
2
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Item 1. Financial Statements
Crusader Holding Corporation and Subsidiary
Consolidated Balance Sheets
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<TABLE>
<CAPTION>
September 30, June 30,
1998 1998
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(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and cash equivalents $13,882,000 $10,670,000
Loans held for sale (estimated market value
of $60,157,000 and $6,338.000 at March 31,1998
and June 30, 1997, respectively) 52,997,000 48,389,000
Investment securities available-for-sale 6,363,000 3,363,000
Mortgage-backed securities available-for-sale 14,152,000 14,188,000
Loans receivable, net 139,479,000 120,984,000
Accrued interest receivable 1,529,000 1,372,000
Other real estate owned -- --
Premises and equipment, net 1,000,000 986,000
Other assets 1,885,000 2,082,000
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Total Assets $231,287,000 $202,034,000
============ ============
LIABILITIES
Deposits $137,718,000 $118,831,000
Advances from Federal Home Loan Bank 57,500,000 49,150,000
Securities sold under agreements to repurchase 8,280,000 8,280,000
Other liabilities 3,263,000 2,457,000
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Total Liabilities 206,761,000 178,718,000
MINORITY INTEREST 80,000 93,000
SHAREHOLDERS' EQUITY
Preferred stock - authorized, 5,000,000 shares of
$0.01 par value; none outstanding -- --
Common stock - authorized, 20,000,000 shares of
$0.01 par value; 3,650,000 and 2,170,000
shares issued and outstanding at December 31,
1997 and June 30, 1997 respectively 39,000 39,000
Additional paid in capital 21,607,000 21,607,000
Retained earnings 2,828,000 1,577,000
Net unrealized gains (losses) on securities
available-for -sale (28,000) --
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Total Shareholders' Equity 24,446,000 23,223,000
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Total Liabilities and Shareholders' Equity $231,287,000 $202,034,000
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</TABLE>
See accompanying notes to consolidated financial statements
3
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Crusader Holding Corporation and Subsidiary
Consolidated Statements of Income and Comprehensive Income (Unaudited)
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<TABLE>
<CAPTION>
Three months
ended September 30,
1998 1997
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<S> <C> <C>
INTEREST INCOME
Loans, including fees $4,380,000 $2,415,000
Investment and mortgage-backed securities 311,000 403,000
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Total interest income 4,691,000 2,818,000
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INTEREST EXPENSE
Deposits 1,678,000 1,473,000
Borrowed funds 843,000 240,000
Shareholder notes -- 38,000
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Total interest expense 2,521,000 1,751,000
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NET INTEREST INCOME 2,170,000 1,067,000
PROVISION FOR LOAN LOSSES 100,000 15,000
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NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 2,070,000 1,052,000
NON-INTEREST INCOME
Service charges on deposit accounts and
other fees 28,000 46,000
Conforming mortgage banking revenues 176,000 108,000
Non-interest income from Crusader
Mortgage Corporation 981,000 833,000
Other 33,000 14,000
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Total non-interest income 1,218,000 1,001,000
NON-INTEREST EXPENSES
Employee compensation and benefits 335,000 234,000
Data processing 31,000 26,000
Federal insurance premiums 20,000 13,000
Occupancy and equipment 78,000 75,000
Professional fees 30,000 16,000
Crusader Mortgage Corporation expenses 638,000 562,000
Other operating 147,000 85,000
Goodwill amortization 21,000 --
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Total non-interest expenses 1,300,000 1,011,000
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INCOME BEFORE INCOME TAX EXPENSE 1,988,000 1,042,000
INCOME TAX EXPENSE 708,000 358,000
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Income before minority interest 1,280,000 684,000
Minority interest 29,900 19,000
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NET INCOME $1,251,000 $ 665,000
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Unrealized gain (loss) on securities, net of tax (28,000) --
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Comprehensive income $1,223,000 $ 665,000
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Net income per share, basic and diluted $ 0.33 $ 0.29
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</TABLE>
See accompanying notes to consolidated financial statements.
4
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Crusader Holding Corporation and Subsidiary
Consolidated Statement of Shareholders' Equity
For the three months ended September 30, 1998 (unaudited)
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<TABLE>
<CAPTION>
Net unrealized
gain (loss)
Additional on securities
Common paid-in Retained available-
stock capital earnings for-sale Total
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<S> <C> <C> <C> <C> <C>
Balance at June 30, 1998 $ 39,000 21,607,000 $1,577,000 $ -- $23,223,000
Net unrealized loss on
securities available-for-sale -- -- -- (28,000) (28,000)
Net income -- -- 1,251,000 -- 1,251,000
-------- ---------- ---------- -------- -----------
Balance at September 30, 1998 $ 39,000 21,607,000 $2,828,000 $(18,000) $24,446,000
======== ========== ========== ======== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
5
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Crusader Holding Corporation and Subsidiary
Consolidated Statements of Cash Flows (unaudited)
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<TABLE>
<CAPTION>
Three months ended
September 30, September 30,
1998 1997
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<S> <C> <C>
OPERATING ACTIVITIES
Net income $1,251,000 $665,000
Adjustments to reconcile net income to net cash used in operating activities:
Amortization of premiums and discounts on securities and loans net 161,000 77,000
Amortization of goodwill 21,000 --
Provision for loan losses 100,000 15,000
Net gain on sale of loans held for sale (1,157,001) (105,000)
Depreciation and amortization of premises and equipment 59,000 34,000
Proceeds from sale of assets held for sale 69,507,000 20,431,000
Originations of loans held for sale (72,938,000) (30,849,000)
Increase in accrued interest receivable 157,000 (19,000)
(Increase) decrease in deferred income taxes 331,000 127,000
Other, net 301,000 304,000
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Net cash used in operating activities 2,207,000 (9,320,000)
INVESTMENT ACTIVITIES
Net increase in loans (18,595,000) (7,760,000)
Purchase of investment securities available-for-sale (3,975,000) --
Purchase of mortgage-backed securities available-for-sale -- (3,255,000)
Repayment of principal of investment securities available-for-sale 1,123,000 80,000
Repayment of principal of mortgage-backed securities available-for-sale 1,948,000 936,000
Proceeds from sale of mortgage-backed securities available-for-sale -- 3,978,000
Proceeds from sale of property acquired through loan foreclosure actions -- 105,000
Purchase of premises and equipment (73,001) (24,000)
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Net cash used in investing activities (21,818,000) (5,940,000)
FINANCING ACTIVITIES
Net increase in deposits 18,887,000 14,719,000
Advances and other borrowings, net 8,350,000 400,000
Repayment of shareholders' note, net -- 248,000
Proceeds from issuance of common stock, net -- 252,000
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Net cash provided by financing activities 27,237,000 15,619,000
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Net increase in cash and cash equivalents 3,212,000 359,000
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Cash and cash equivalents at beginning of year 10,670,000 325,000
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Cash and cash equivalents at end of year $13,882,000 $ 684,000
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</TABLE>
See accompanying notes to consolidated financial statements.
6
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Crusader Holding Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information as of and for the three month periods ended September 30, 1998
and 1997 is unaudited)
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1. BASIS OF PRESENTATION
The unaudited consolidated financial statements as of September 30, 1998, and
for the three month periods ended September 30, 1998 and 1997 include the
accounts of Crusader Holding Corporation (the "Company") and its wholly-owned
subsidiary, Crusader Savings Bank FSB (the "Bank"), along with the Bank's wholly
owned and majority owned subsidiaries, including Crusader Mortgage Corporation
("CMC"). All significant intercompany accounts and transactions have been
eliminated.
The interim financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (including normal recurring accruals) necessary
for fair presentation of results of operations for the interim periods included
herein have been made. The results of operations for the three month periods
ended September 30, 1998 are not necessarily indicative of results to be
anticipated for the full year.
2. NET INCOME PER SHARE
Basic and diluted earnings per share are calculated using statement of Financial
Accounting Standards ("SFAS") No. 128. Under SFAS No. 128, basic earnings per
share is computed based upon the weighted average number of common shares
outstanding during the period while diluted earnings per share is computed based
upon the weighted average number of common shares and common equivalent shares
outstanding during the period. Common stock equivalents are stock options,
warrants and similar items. In converting the common stock equivalents to common
shares, the Treasury Stock Method is utilized whereby it is assumed that the
proceeds that would be received upon the exercise of the common stock
equivalents are used to repurchase outstanding shares at the average market
price during the period. There was no difference between the Company's basic and
diluted earnings per share.
In determining the weighted average shares outstanding during the period in the
computation of basic and diluted earnings per share, retroactive effect was
given to the December 8, 1997 two for one stock split effected in the form of a
stock dividend and the 5% stock dividend paid on August 28, 1998. Basic and
diluted weighted average shares outstanding were 3,833,000 and 2,279,000 for the
three months ended September 30, 1998, and September 30, 1997, respectively.
3. ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is established through a provision for possible
loan losses charged to expenses. Loans are charged against the allowance for
loan losses when management believes that the collectibility of the principal is
unlikely. The allowance is an amount that management believes will be adequate
to absorb possible loan losses on existing loans that may become uncollectible
based on evaluations of the collectibility of loans and prior loan loss
experience. The evaluations take into consideration such factors as changes in
the nature and volume of the loan portfolio, overall portfolio quality, the
status of specific problem loans and overall current economic conditions that
may affect the ability of borrowers to repay their loans. While management uses
available information to recognize losses on loans, future additions to the
allowance may be necessary based on changes in economic conditions. In addition,
various regulatory agencies, as an integral part of their examination processes,
periodically review the Bank's allowance for loan losses based on their
judgments about information available to them at the time of their examinations.
7
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4. COMPREHENSIVE INCOME
During the quarter ended March 31, 1998, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 130, "Reporting of Comprehensive
Income," which establishes standards for reporting and display of comprehensive
income and its components (revenues, expenses, gains and losses) in a full set
of financial statements. This statement also requires that all items that are
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. This statement was effective
for interim periods and fiscal years beginning after December 15, 1997.
Reclassification of financial statements for earlier periods provided for
comparative purposes is required. The adoption of SFAS No. 130 did not have a
material impact on the Company.
5. RECENT PRONOUNCEMENTS
In June 1997, the FASB issued Statement of Financial Accounting Standards No.
131, "Disclosure About Segments of an Enterprise and Related Information" (SFAS
No. 131), which establishes standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that such enterprises report selected information about
operating segments in interim financial reports issued to shareholders. This
statement also establishes standards for related disclosures about products and
services, geographic areas and major customers. This statement requires the
reporting of financial and descriptive information about the enterprise's
reportable operating segments. This statement is effective for financial
statements for periods beginning after December 15, 1997. In the initial year of
application, comparative information for earlier years is to be restated. The
Company does not anticipate that the adoption of SFAS No. 131 will have a
material impact on the Company's results of operations.
6. RECENT LITIGATION
During October 1998, one of the Company's deposit customers ("Company
Depositor") had approximately $1.3 million of returned money orders which
resulted in its account being deficient by a similar amount. The Bank has
initiated a lawsuit in the Court of Common Pleas of Philadelphia County against
the money order company which placed the stop payments on the money orders
issued, and the Company Depositor; alleging, among other things, that the money
orders were improperly stopped and the Company was a holder in due course and is
therefore entitled to reimbursement. The Company is seeking reimbursement in the
lawsuit. Based upon the facts and circumstances, it is too early for management
to determine whether the Company will be successful in its lawsuit or if the
Company has available insurance if there is a loss. Accordingly, there has been
no provision made in the financial statements for this potential loss. In the
event the Company is unsuccessful in the lawsuit and there is no insurance
coverage, the Company may be required to make a provision for all or a portion
of the $1.3 million, which would result in a pre-tax loss of like amount.
8
