<PAGE>
<PAGE>
U.S. 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, 1998
Transition Report under Section 13 or 15(d) of the
Exchange Act
For the transition period from ______ to ______
Commission File Number: 333-44831
BCSB BANKCORP, INC.
- - ---------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in its
Charter)
United States REQUESTED
- - ------------------------------- --------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
4111 E. Joppa Road, Suite 300, Baltimore, Maryland 21236
- - ---------------------------------------------------------
(Address of Principal Executive Offices)
(410) 256-5000
-----------------------------------------------
Issuer's Telephone Number, Including Area Code)
N/A
- - ---------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Indicate whether the issuer (1) has 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 No X
--- -----
As of June 25, 1998, the issuer had no shares of Common
Stock issued and outstanding.
<PAGE>
<PAGE>
CONTENTS
PAGE
----
PART I. FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
Consolidated Statements of Financial Condition
as of March 31, 1998 (unaudited) and
September 30, 1997 . . . . . . . . . . . . . . . .1
Consolidated Statements of Operations for the
Six Months and Three Months Ended March
31, 1998 and 1997 (unaudited) . . . . . . . . . . 2
Consolidated Statements of Cash Flows for the
Six Months Ended March 31, 1998 and 1997
(unaudited) . . . . . . . . . . . . . . . . . . . 3
Notes to Consolidated Financial Statements. . . . . . 6
Item 2. Management's Discussion and Analysis or Plan
of Operation . . . . . . . . . . . . . . . . . . . 8
PART II. OTHER INFORMATION
-----------------
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . .11
Item 2. Changes in Securities and Use of Proceeds. . . . . .11
Item 3. Defaults Upon Senior Securities. . . . . . . . . . .11
Item 4. Submission of Matters to a Vote of Security
Holders. . . . . . . . . . . . . . . . . . . . . .11
Item 5. Other Information. . . . . . . . . . . . . . . . . .11
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . .11
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . .12
<PAGE>
<PAGE>
BCSB BANKCORP, INC.
-------------------
AND SUBSIDIARIES
----------------
Baltimore, Maryland
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
----------------------------------------------
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1998 1997
---------- ------------
(Unaudited)
Assets
------
<S> <C> <C>
Cash $ 3,950,017 $ 3,909,276
Interest bearing deposits in other banks 21,200,882 8,206,119
Federal funds sold 8,658,384 7,102,231
Investment securities, held to maturity 17,250,169 30,323,460
Loans receivable, net 160,320,455 158,676,168
Mortgage backed securities, held to maturity 36,611,234 37,189,081
Foreclosed Real Estate 119,123 --
Investment in real estate development
and loans to joint venture 7,370 12,732
Premises and equipment 2,753,992 2,856,988
Federal Home Loan Bank of Atlanta stock 1,511,900 1,433,200
Accrued interest receivable
- - - loans 674,548 738,906
- - - investments 407,058 456,687
- - - mortgage backed securities 204,228 218,686
Prepaid income taxes 700 314,384
Intangible assets acquired, net 37,853 51,209
Other assets 592,913 249,097
------------ ------------
Total assets $254,300,826 $251,738,224
============ ============
Liabilities and Retained Earnings
---------------------------------
Liabilities
- - -----------
Deposits $224,900,777 $224,656,081
Advance payments by borrowers for
taxes and insurance 2,152,680 727,272
Income taxes payable 15,510 1,909
Deferred income taxes 151,296 83,538
Payables to disbursing agents 204,655 120,459
Other liabilities 1,753,730 2,290,516
------------ ------------
Total liabilities 229,178,648 227,879,775
Commitments and contingencies
Retained earnings (substantially restricted) 25,122,178 23,858,449
------------ ------------
Total liabilities and retained earnings $254,300,826 $251,738,224
============ ============
</TABLE>
The accompanying notes to the consolidated financial statements
are an integral part of these statements.
1<PAGE>
<PAGE>
BCSB BANKCORP, INC.
-------------------
AND SUBSIDIARIES
----------------
Baltimore, Maryland
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
-------------------------------------------------
<TABLE>
<CAPTION>
FOR SIX MONTHS ENDED FOR THREE MONTHS ENDED
MARCH 31, MARCH 31,
--------------------- ----------------------
1998 1997 1998 1997
------- ------- ------- --------
<S> <C> <C> <C> <C>
Interest and fees on loans $6,606,209 $6,599,135 $3,278,050 $3,283,242
Interest on mortgage backed securities 1,170,762 1,235,702 574,050 603,689
Interest and dividends on investment
securities 742,402 1,456,859 355,990 696,452
Other interest income 691,597 547,679 361,462 322,531
---------- ---------- ---------- ----------
Total interest income 9,210,970 9,839,375 4,569,552 4,905,914
Interest on deposits 4,884,412 5,341,310 2,435,289 2,657,857
Interest on borrowings - short term 4,065 4,661 2,476 2,835
---------- ---------- ---------- ----------
Total interest expense 4,888,477 5,345,971 2,437,765 2,660,692
Net interest income 4,322,493 4,493,404 2,131,787 2,245,222
Provision (reduction of provision)
for losses on loans (39,274) 54,314 (75,524) 55,149
---------- ---------- ---------- ----------
Net interest income after provision
(reduction of provision) for losses
on loans 4,361,767 4,439,090 2,207,311 2,190,073
Other Income (Loss)
- - -------------------
Gain (loss) on sale of foreclosed
real estate (17,111) 40,250 (15,162) 29,456
Servicing fee income 5,852 9,699 1,961 5,117
Fees and charges on loans 101,544 105,676 57,569 42,306
Fees on transaction accounts 78,642 83,198 37,173 36,499
Rental income 62,655 78,007 40,807 37,573
Gain from real estate development
and joint venture -- 3,878 -- 5,295
Gain on sale of investment securities -- 51,376 -- --
Gain on sale of branch deposits 339,000 -- -- --
Miscellaneous income 55,016 29,932 19,796 21,227
---------- ---------- ---------- ----------
Net other income (loss) 625,598 402,016 142,144 177,473
Non-Interest Expenses
- - ---------------------
Salaries and related expenses 1,627,761 1,661,862 694,431 808,597
Provision for losses on
foreclosed real estate -- -- (13,236) --
Occupancy expense 242,859 284,812 125,244 149,651
Deposit insurance premiums 107,132 195,528 52,710 73,056
Data processing expense 216,408 205,673 115,344 113,280
Property and equipment expenses 178,182 169,549 89,289 91,707
Professional fees 59,882 31,160 30,987 16,775
Advertising 138,580 78,113 59,727 46,699
Telephone, postage and office supplies 153,446 151,328 83,682 87,921
Amortization of excess of cost
over fair value of net assets acquired 13,379 13,383 6,701 6,705
Other expenses 160,965 134,598 99,492 79,689
---------- ---------- ---------- ----------
Total non-interest expenses 2,898,594 2,926,006 1,344,371 1,474,080
Income before tax provision 2,088,771 1,915,100 1,005,084 893,466
Income tax provision 825,042 765,902 398,668 351,162
---------- ---------- ---------- ----------
Net income $1,263,729 $1,149,198 $ 606,416 $ 542,304
========== ========== ========== ==========
</TABLE>
The accompanying notes to the consolidated financial statements
are an integral part of these statements.
2<PAGE>
<PAGE>
BCSB BANKCORP, INC.
-------------------
AND SUBSIDIARIES
----------------
Baltimore, Maryland
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
-------------------------------------------------
<TABLE>
<CAPTION>
FOR SIX MONTHS ENDED
MARCH 31,
---------------------
1998 1997
-------- --------
<S> <C> <C>
Operating Activities
Net Income $1,263,729 $1,149,198
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities
-------------------------------------
Accretion of discount on investments 30,467 (104)
Gain on sale of investment securities -- (51,376)
Loan originated for sale (133,000) (450,000)
Proceeds from loans originated for sale 133,000 450,000
Loan fees deferred 54,341 67,314
Amortization of deferred loan fees (170,190) (222,522)
Provision (reduction of provision)
for losses on loans (39,274) 54,314
Amortization of premium on mortgage
backed securities 14,851 35,347
(Gain) loss on sale of foreclosed
real estate 17,111 (40,250)
Gain from real estate development
and joint venture -- (3,787)
Provision for depreciation 140,011 129,905
Increase in accrued interest receivable
on loans 64,358 32,832
(Increase) decrease in accrued interest
receivable on investments 49,629 (39,642)
Decrease in accrued interest receivable on
mortgage backed securities 14,458 21,434
Decrease in prepaid income taxes 313,684 249,260
Decrease in deferred income taxes 67,758 339,066
Amortization of excess of cost over
fair value of net assets acquired 13,379 13,383
(Increase) decrease in other assets (343,816) 179,213
Gain on sale of branch deposits (339,000) --
Increase (decrease) in accrued
interest payable on deposits (107,451) 14,008
Decrease in income taxes payable 13,601 2,098
Decrease in other liabilities and
payables to disbursing agents (452,590) (774,432)
---------- ----------
Net cash provided by operating activities 605,056 1,155,259
</TABLE>
3<PAGE>
<PAGE>
BCSB BANKCORP, INC.
-------------------
AND SUBSIDIARIES
----------------
Baltimore, Maryland
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
-------------------------------------------------
<TABLE>
<CAPTION>
FOR SIX MONTHS ENDED
MARCH 31,
---------------------
1998 1997
-------- --------
<S> <C> <C>
Cash Flows from Investing Activities
Proceeds from maturing interest bearing
deposits $ 1,091,000 $ 693,000
Purchase of interest bearing deposits (5,000,000) --
Purchases of investment securities -
held to maturity (13,500,000) (4,248,766)
Proceeds from maturities of investment
securities - held to maturity 26,542,824 6,354,608
Proceeds from sale of investment
securities - available for sale -- 101,376
Longer term loans originated (16,744,333) (11,793,123)
Principal collected on longer term loans 12,264,496 7,767,807
Net decrease in short-term loans 2,852,416 3,447,171
Principal collected on mortgage backed
securities 5,429,611 3,156,043
Purchases of mortgage backed securities (4,866,615) (504,999)
Proceeds from sales of foreclosed real estate 2,000 174,231
Net investment and loans to joint ventures 5,362 320,543
Investment in premises and equipment (37,015) (418,862)
Purchase of Federal Home Loan Bank of Atlanta
stock (78,700) (132,000)
----------- ----------
Net cash provided by investing activities 7,961,046 4,917,029
Cash Flows from Financing Activities
Proceeds from sale of branch deposits (5,827,235) --
Net increase in demand deposits, money
market, passbook accounts and advances by
borrowers for taxes and insurance 5,545,458 1,188,041
Net increase in certificates of deposit 2,398,332 3,305,320
----------- ----------
Net cash provided by financing activities 2,116,555 4,493,361
----------- ----------
Increase in cash and cash equivalents 10,682,657 10,565,649
Cash and cash equivalents at beginning of period 12,136,628 11,111,733
----------- ----------
Cash and cash equivalents at end of period $22,819,283 $21,677,382
=========== ===========
</TABLE>
4<PAGE>
<PAGE>
BCSB BANKCORP, INC.
-------------------
AND SUBSIDIARIES
----------------
Baltimore, Maryland
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
-------------------------------------------------
<TABLE>
<CAPTION>
FOR SIX MONTHS ENDED
MARCH 31,
---------------------
1998 1997
-------- --------
<S> <C> <C>
The following is a summary of cash and
cash equivalents:
- - --------------------------------------
Cash $ 3,950,017 $ 4,444,860
Interest bearing deposits in other banks 21,200,882 8,304,214
Federal funds sold 8,658,384 17,198,308
----------- -----------
Balance of cash items reflected on Statement
of Financial Condition 33,809,283 29,947,382
Less - certificate of deposit with a
maturity of more than three months 10,990,000 8,270,000
----------- -----------
Cash and cash equivalents reflected on the
Statement of Cash Flows $22,819,283 $21,677,382
=========== ===========
Supplemental Disclosures of Cash Flows
Information:
- - --------------------------------------
Cash paid during the period for:
Interest $ 4,991,863 $ 5,327,302
=========== ===========
Income taxes $ 430,000 $ 168,114
=========== ===========
Transfer from loans to real estate acquired
through foreclosure $ 132,359 $ --
=========== ===========
</TABLE>
The accompanying notes to the consolidated financial statements
are an integral part of these statements.
5<PAGE>
<PAGE>
BCSB BANKCORP, INC.
-------------------
AND SUBSIDIARIES
----------------
Baltimore, Maryland
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- - ------------------------------------------------------
Note 1 Principles of Consolidation
---------------------------
BCSB Bankcorp, Inc. (the "Company") will own 100% of
Baltimore County Savings Bank, F.S.B. and subsidiaries
(the "Bank"). The Bank owns 100% of Baltimore County
Service Corporation and Ebenezer Road, Inc. Baltimore
County Service Corporation owns 100% of Route 543, Inc.
The accompanying consolidated financial statements
include the accounts and transactions of these companies
on a consolidated basis since the date of acquisition.
All intercompany transactions have been eliminated in
the consolidated financial statements. Ebenezer Road,
Inc. sells insurance products. Baltimore County Service
Corporation and Route 543, Inc. have invested in several
joint ventures formed for the purpose of developing real
estate. These investments have been accounted for on
the equity method and separate summary statements are
not presented since the data contained therein is not
material in relation to the consolidated financial
statements.
Note 2 Basis of Financial Statements Presentation
------------------------------------------
The accompanying consolidated financial statements have
been prepared in accordance with generally accepted
accounting principles and the instructions to Form
10-QSB. Accordingly, they do not include all of the
disclosures required by generally accepted accounting
principles for complete financial statements. In the
opinion of management, all adjustments (none of which
were other than normal recurring accruals) necessary for
a fair presentation of the financial position and
results of operations for the periods presented have
been included. The financial statements of the Company
are presented on a consolidated basis with those of the
Bank, although the Company did not own any shares of the
Bank and had no assets, liabilities, equity or
operations at March 31, 1998. Therefore, financial
statements presented in this Form 10-QSB include only
the accounts and operations of the Bank. The results
for the six months ended March 31, 1998 are not
necessarily indicative of the results of operations that
may be expected for the year ending September 30, 1998.
For further information, refer to the consolidated
financial statements and footnotes thereto included in
the Prospectus of the Company dated May 14, 1998.
6<PAGE>
<PAGE>
BCSB BANKCORP, INC.
-------------------
AND SUBSIDIARIES
----------------
Baltimore, Maryland
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- - ------------------------------------------------------
Note 3 Retained Earnings
-----------------
The following table sets forth the Bank's capital
position at March 31, 1998.
<TABLE>
<CAPTION>
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provision
------------------ -------------------- -----------------
Amount % Amount % Amount %
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Tangible (1) $24,154,702 9.50% $ 3,813,834 1.50% N/A N/A
Tier 1 capital (2) 24,154,702 17.74% N/A N/A $ 8,171,548 6.00%
Core (Leverage) (1) 24,154,702 9.50% 7,627,668 3.00% 12,712,780 5.00%
Risk-weighted (2) 25,054,093 18.40% 10,895,398 8.00% 13,619,247 10.00%
<FN>
____________
(1) To adjusted total assets.
(2) To risk-weighted assets.
</FN>
</TABLE>
Current Requirements
--------------------
Retained earnings $ 25,122,178
Less: Non-allowable items:
Intangible assets acquired, net (37,853)
Investment in and advances to
non-includable subsidiaries (929,623)
------------
Tangible and core capital 24,154,702
General valuation allowance 899,391
------------
Risk-based capital $ 25,054,093
============
Total assets $254,300,826
Less: Non-allowable items:
Intangible assets acquired, net (37,853)
Assets of non-includable
subsidiaries not eliminated
for regulatory purposes (7,370)
------------
Tangible and adjusted
tangible assets $254,255,603
============
Risk-weighted assets $136,192,469
============
7<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
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.
YEAR 2000 COMPUTER PROGRAM COMPLIANCE
A great deal of information has been disseminated about
the global computer crash that may occur in the year 2000. Many
computer programs that can only distinguish the final two digits
of the year entered (a common programming practice in earlier
years) are expected to read entries for the year 2000 as the
year 1900 and compute payment, interest or delinquency based on
the wrong date or are expected to be unable to compute payment,
interest or delinquency. Rapid and accurate data processing is
essential to the operations of the Bank. Data processing is
also essential to most other financial institutions and many
other companies.
All of the material data processing of the Bank that could
be affected by this problem is provided by a third party service
bureau. Management closely monitors the progress of the service
bureau in resolving this potential problem and reports the
status of the service bureau's progress to the Board of
Directors on a quarterly basis. The service bureau has advised
the Bank that it expects to resolve this potential problem
before the year 2000 by completing all implementation procedures
by December 31, 1998 to allow for testing to occur in 1999.
However, if the service bureau is unable to resolve this
potential problem in time, the Bank would seek to retain a
replacement service bureau and would likely experience
significant data processing delays, mistakes or failures. These
delays, mistakes or failures could have a significant adverse
impact on the financial condition and results of operation of
the Bank.
The OTS has advised the Bank that it needs to take actions
to improve its preparedness for potential Year 2000 problems.
Specifically, the OTS has advised the Bank that it must
prepare and adopt a written plan detailing the procedures to be
followed by the Board of Directors and management to identify
and solve potential problems and monitor the progress
made by the Bank and its service bureau to accomplish the
procedures and actions required by the plan to be taken. The
plan must also contain contingency plans in the event the Bank's
service bureau is unable to take necessary corrective actions.
In addition, the Board of Directors will be required to monitor
effective implementation of the plan. The Bank has advised the
OTS that it intends to implement the mandated actions, and has
adopted a written plan for Year 2000 preparedness, which plan
has been provided to the OTS for their review. The OTS
conditioned its approval of the Bank's proposed reorganization
(the "Reorganization") as a wholly owned subsidiary of BCSB
Bankcorp, Inc. (the "Company"), which in turn will be a
majority-owned subsidiary of Baltimore County Savings Bank,
M.H.C., and the Company's application to acquire control of the
Bank, on the implementation of the specified actions. Failure
to implement the actions to the satisfaction of the OTS will
result in termination of the Reorganization, in which event
subscription funds will be promptly refunded to subscribers,
with interest.
8<PAGE>
<PAGE>
RECENT DEVELOPMENTS
On June 12, 1998, the Bank announced an expansion in the
Bank's Harford County Branch network. Agreements have been
reached to open three additional offices in Abingdon, Forest
Hill and Hickory.
The Abingdon office is to be located in the Constant
Friendship Business Park opposite Wal-Mart. The Forest Hill
office will be located at the intersection of Route 24 and Route
23 near Klein's Grocery Store. Both of these offices are on
schedule to open during the first half of 1999. The Bank's
Hickory location will be located in a new retail shopping area,
planned near the intersection of Route 1 and Route 543. No firm
date has been set for the Hickory opening.
All three offices will be full service facilities, and
will include ATMs and drive-up lanes. The new offices will
complement the Bank's existing Bel Air office, which was
recently relocated to a free standing/full service facility
located in the Bel Air Plaza Shopping Center. The additional
offices will help the Bank further develop its lending
operations and provide full service banking to new market areas.
In a related branch development, the Bank announced the
closure of its 6368 York Road office. It will be consolidated
into an expanded facility in Timonium, Maryland. The new
Timonium facility should be open sometime in 1999 and will
provide full service banking services including drive-up lanes
and ATM access to the Bank's expanding ATM network.
The expenses associated with establishing and improving
the branch offices will reduce the Bank's net income in the
short term.
COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 1998 AND
SEPTEMBER 30, 1997
During the six months ended March 31, 1998, the Bank
achieved modest asset and liability growth, with assets
increasing by $2.6 million, or 1.0%, from $251.7 million at
September 30, 1997 to $254.3 million at March 31, 1998. Most of
the increase in assets was attributable to an increase in cash,
interest-bearing deposits in other banks and federal funds sold,
which increased by $14.6 million, or 76.0%, from $19.2 million
at September 30, 1997 to $33.8 million at March 31, 1998. The
Bank invested proceeds from maturing investment securities in
federal funds sold in order to have funds available to fund
loans expected to close during the quarter ending June 30, 1998.
The Bank's investment securities decreased by $13.1 million, or
43.1%, from $30.3 million at September 30, 1997 to $17.3 million
at March 31, 1998, as described above. Loans receivable, net
increased by $1.6 million, or 1.0%, from $158.7 million at
September 30, 1997 to $160.3 million at March 31, 1998. The
increase in the Bank's loan portfolio was due primarily to
increased originations of single-family residential mortgage
loans as a result of increased loan demand. The Bank's deposits
were $224.7 million at September 30, 1997 and $224.9 million at
March 31, 1998.
COMPARISON OF OPERATING RESULTS FOR THE THREE AND SIX MONTHS
ENDED MARCH 31, 1998 AND MARCH 31, 1997
Net Income. Net income increased by $65,000, from
$542,000 for the three months ended March 31, 1997 to $607,000
for the three months ended March 31, 1998. The increase in net
income was primarily attributable to a $75,000 reduction in the
provision for loan losses during the three months ended March
31, 1998, as opposed to a provision for loan losses of $55,000
recorded during the three months ended March 31, 1997. Net
income increased by $115,000, from $1.1 million for the six
months ended March 31, 1997 to $1.3 million for the six months
ended March 31, 1998. The increase in net income during the six
months ended March 31, 1998 was due primarily to a $39,000
reduction in the provision for loan losses recorded during the
six months ended March 31, 1998, as compared to a provision for
loan losses of $54,000 recorded during the six months ended
March 31, 1997. The increase in net income during the six
months ended March 31, 1998 also reflected a $224,000 increase
in other income, which more than offset a $170,000 decrease in
net interest income.
Net Interest Income. Net interest income was $2.1 million
for the three months ended March 31, 1998, compared to $2.2
million for the three months ended March 31, 1997, representing
a decrease of $113,000, or 5.0%. Net interest income was $4.3
million for the six months ended March 31, 1998, as compared to
$4.5 million for the six
9<PAGE>
<PAGE>
months ended March 31, 1997,representing a decrease of $170,000,
or 3.8%. The decreases in net interest income were the result
of decreases in the Bank's interest rate spread during the
respective periods. The interest rate spread decreased from
3.28% for the three months ended March 31, 1997 to 3.17% for the
three months ended March 31, 1998 and from 3.32% for the six
months ended March 31, 1997 to 3.24% for the six months ended
March 31, 1998. The Bank's interest rate spread decreased as
the yield on interest-earning assets, primarily loans
receivable, decreased during a decreasing market interest rate
environment while competitive pressures did not permit the Bank
to lower deposit rates as quickly. The Bank's ratio of average
interest-earning assets to average interest-bearing liabilities
increased from 106.13% for the three months ended March 31, 1997
to 108.06% for the three months ended March 31, 1998 and from
105.91% for the six months ended March 31, 1997 to 108.16% for
the six months ended March 31, 1998.
Interest Income. Interest income decreased by $337,000,
or 6.9%, from $4.9 million for the three months ended March 31,
1997 to $4.6 million for the three months ended March 31, 1998.
This decrease was due primarily to a $9.6 million, or 3.8%,
decrease in the average balance of interest-earning assets, as
well as to a 25 basis point decrease in the average yield on
interest-earning assets. Interest income decreased by $628,000,
or 6.4%, from $9.8 million for the six months ended March 31,
1997 to $9.2 million for the six months ended March 31, 1998.
This decrease was due primarily to a $9.3 million, or 3.7%,
decrease in the average balance of interest-earning assets, as
well as to a 22 basis point decrease in the average yield on
interest-earning assets.
Interest Expense. Interest expense, which consists almost
entirely of interest on deposits, decreased by $224,000, or
8.4%, from $2.7 million for the three months ended March 31,
1997 to $2.4 million for the three months ended March 31, 1998.
This decrease was due primarily to a $13.3 million, or 5.6%,
decrease in the average balance of deposits from $237.2 million
for the three months ended March 31, 1997 to $224.0 million for
the three months ended March 31, 1998, primarily due to
decreases in the average balances of passbook savings accounts
and certificates of deposits as a result of the sale of the
deposits of the Severna Park branch office in October 1997.
Interest expense decreased by $458,000, or 8.6%, from $5.3
million for the six months ended March 31, 1997 to $4.9 million
for the six months ended March 31, 1998. This decrease was due
primarily to a $13.6 million, or 5.8%, decrease in the average
balance of deposits from $236.2 million for the six months ended
March 31, 1997 to $222.6 million for the six months ended March
31, 1998, primarily due to the sale of the deposits of the
Severna Park branch office in October 1997.
Provision for Loan Losses. The Bank established
provisions for loan losses of $55,000 for the three months ended
March 31, 1997 and reduced its provision for loan losses by
$75,000 during the three months ended March 31, 1998. The Bank
established provisions for loan losses of $54,000 for the six
months ended March 31, 1997 and reduced its provisions for loan
losses by $39,000 during the six months ended March 31, 1998.
In establishing such provisions, management considered the level
of the Bank's non-performing loans which were $927,000 and $2.1
million at March 31, 1998 and 1997, respectively, and the levels
of the Bank's net charge-offs, which totaled $9,000, $26,000,
$39,000 and $137,000 during the three months ended March 31,
1998 and 1997 and the six months ended March 31, 1998 and 1997,
respectively.
Other Income. Other income decreased by $34,000, or
19.2%, from $177,000 for the three months ended March 31, 1997
to $143,000 for the three months ended March 31, 1998. The
decrease primarily was attributable to a decrease in gains on
sale of foreclosed real estate. Total other income increased by
$224,000, or 55.7%, from $402,000 for the six months ended March
31, 1997 to $626,000 for the six months ended March 31, 1998.
The increase in other income for the six months ended March 31,
1998 was attributable to a $339,000 gain on sale of branch
deposits, as the Bank sold the deposits of its Severna Park
branch in October 1997. In connection with such sale, the Bank
sold deposits totaling $6.2 million and recognized a gain of
$339,000 representing a premium paid by the buyer on the
deposits sold. Such increase was offset, in part, by the
absence during the six months ended March 31, 1998 of a gain on
sale of investment securities; the Bank earned a $51,000 gain on
sale of investment securities during the six months ended March
31, 1997.
Non-interest Expenses. Total non-interest expenses
decreased by $129,000, or 8.8%, from $1.5 million for the three
months ended March 31, 1997 to $1.3 million for the three months
ended March 31, 1998. Total non-interest expenses were $2.9
million for the six months ended March 31, 1997 and 1998. The
decrease during the three months ended March 31, 1998 was due to
a decrease in salaries and related expenses and occupancy
expenses, as the Bank closed its Severna Park branch office
following the sale of the deposits of that office in October
1997, as well as to
10
<PAGE>
<PAGE>
reduced pension plan costs. For the six month periods, reduced
salaries and related expense and reduced occupancy expense
attributable to closing the Severna Park branch office were
offset by increased advertising expenses, as the Bank sought to
increase both loan and deposit market share.
Management believes that salaries and related expense will
increase in future periods as a result of the adoption of the
ESOP and other stock benefit plans, if adopted. Furthermore,
the Bank expects other expenses will increase as a result of the
costs associated with being a public institution. Further, the
Company expects to incur an expense, currently estimated to be
$457,000, net of taxes, during the second quarter of calendar
year 1998 in connection with the establishment of a charitable
foundation in connection with the Bank's mutual holding company
reorganization.
Income Taxes. The Bank's income tax expense was $351,000
and $398,000 for the three months ended March 31, 1997 and 1998,
respectively, and $766,000 and $825,000 for the six months ended
March 31, 1997 and 1998, respectively. The Bank's effective tax
rates were 39.3%, 39.6%, 40.0% and 39.5% for the three months
ended March 31, 1997 and 1998 and the six months ended March 31,
1997 and 1998, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Bank's liquidity and capital resources at March 31,
1998 remained relatively unchanged from December 31, 1997. The
Bank anticipates that it will have sufficient funds available to
meet commitments outstanding at March 31, 1998 to originate
loans. As of March 31, 1998, the Bank's ratios of tangible
capital and core capital to adjusted total assets were 9.5%, as
compared to the required levels of 1.5% and 3.0%, respectively.
The risk-based capital ratio at that date was 18.4%, as compared
to the requirement of 8.0%.
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 SECURITY-
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, 1998.
11<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BCSB BANKCORP, INC.
Date: June 26, 1998 /s/ Michael J. Dietz
---------------------------
Michael J. Dietz
President
(Principal Executive Officer)
Date: June 26 , 1998 /s/ Gary C. Loraditch
-----------------------------
Gary C. Loraditch
Vice President, Secretary and
Treasurer
(Principal Financial and
Accounting Officer)
12
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 3,950,017
<INT-BEARING-DEPOSITS> 21,200,882
<FED-FUNDS-SOLD> 8,658,384
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<LOANS-NON> 927,000
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