<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 December 31, 1999
[ ] Transition Report under Section 13 or 15(d) of the
Exchange Act
For the transition period from ______ to ______
Commission File Number: 0-24589
BCSB BANKCORP, INC.
--------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in its
Charter)
UNITED STATES 52-2108333
- ------------------------------- ----------------
(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)
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 January 31, 1999, the issuer had 6,053,162 shares of
Common Stock issued and outstanding.
Traditional Small Business Disclosure Format (check one):
Yes No X
----- -----
<PAGE>
<PAGE>
CONTENTS
PAGE
----
PART I. FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
Consolidated Statements of Financial
Condition as of December 31, 1999
(unaudited) and September 30, 1998 . . . . . . 2
Consolidated Statements of Operations
for the Three Months Ended December
31, 1999 and 1998 (unaudited). . . . . . . . . 3
Consolidated Statements of Cash Flows
for the Three Months Ended December
31, 1999 and 1998 (Unaudited). . . . . . . . . 4
Notes to Consolidated Financial Statements . . . . 7
Item 2. Management's Discussion and Analysis or
Plan of Operation . . . . . . . . . . . . . . . . 9
PART II. OTHER INFORMATION
-----------------
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 . . . . . . . . . 14
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . 15
1
<PAGE>
<PAGE>
BCSB BANKCORP, INC. AND SUBSIDIARIES
------------------------------------
BALTIMORE, MARYLAND
-------------------
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
----------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1999 1998
----------- -------------
(Unaudited)
Assets
------
<S> <C> <C>
Cash $ 7,892,751 $ 5,976,961
Interest bearing deposits in other banks 6,068,956 8,651,267
Federal funds sold 554,223 448,945
Investment securities, held to maturity 35,233,338 35,232,306
Loans receivable, net 222,208,071 215,383,087
Mortgage backed securities, held to maturity 22,961,629 23,499,794
Foreclosed real estate, net 89,091 89,091
Investment in real estate development and loans to
joint venture 5,584 5,287
Premises and equipment, net 5,117,956 4,846,121
Federal Home Loan Bank of Atlanta stock 1,650,300 1,650,300
Accrued interest receivable - loans 597,016 834,424
- investments 648,188 635,757
- mortgage backed securities 136,873 140,005
Prepaid income taxes 227,027 361,211
Other assets 1,294,596 547,171
------------ ------------
Total assets $304,685,599 $298,301,727
============ ============
Liabilities and Stockholders' Equity
------------------------------------
Liabilities
- -----------
Deposits $239,267,399 $233,364,564
Borrowed money 16,500,000 16,000,000
Advance payments by borrowers for taxes and insurance 1,874,055 1,101,971
Income taxes payable 13,683 60,670
Dividends payable 286,871 294,797
Payables to disbursing agents 185,919 163,923
Other liabilities 1,806,150 2,035,343
------------ ------------
Total liabilities 259,934,077 253,021,268
Commitments and contingencies
Stockholders' Equity
- --------------------
Common stock (Par value $.01 - 13,500,000 authorized,
6,053,162 and 6,116,562 shares issued and
outstanding at December 31, 1999 and September 30,
1999 respectively) 60,532 61,166
Additional paid-in capital 21,361,404 21,918,472
Retained earnings (substantially restricted) 25,789,225 25,788,692
Employee Stock Ownership Plan (1,463,424) (1,509,156)
Stock held by Rabbi Trust (996,215) (978,715)
------------ ------------
44,751,522 45,280,459
------------ ------------
Total liabilities and retained earnings $304,685,599 $298,301,727
============ ============
</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 OPERATIONS (UNAUDITED)
-------------------------------------------------
<TABLE>
<CAPTION>
FOR THREE MONTHS ENDED
DECEMBER 31,
-----------------------
1999 1998
-------- --------
<S> <C> <C>
Interest Income
- ---------------
Interest and fees on loans $4,117,600 $3,571,122
Interest on mortgage-backed securities 377,329 511,043
Interest and dividends on investment securities 569,946 195,870
Other interest income 107,140 500,423
---------- ----------
Total interest income 5,172,015 4,778,458
Interest Expense
- ----------------
Interest on deposits 2,442,244 2,440,426
Interest on borrowings - short term 235,883 --
Other interest expense 1,306 1,513
---------- ----------
Total interest expense 2,679,433 2,441,939
---------- ----------
Net interest income 2,492,582 2,336,519
Provision for losses on loans 51,400 194,587
---------- ----------
Net interest income after provision
for losses on loans 2,441,182 2,141,932
Other Income
- ------------
Gain on sale of foreclosed real estate -- 42,078
Servicing fee income 121 145
Fees and charges on loans 35,546 38,290
Fees on transaction accounts 47,727 49,130
Rental income 29,020 35,029
Gain from real estate development and joint
venture 297 6,038
Miscellaneous income 15,769 19,938
---------- ----------
Net other income 128,480 190,648
Non-Interest Expenses
- ---------------------
Salaries and related expense 1,085,158 1,132,955
Occupancy expense 210,195 172,914
Deposit insurance premiums 50,309 42,359
Data processing expense 131,891 103,188
Property and equipment expense 197,377 118,881
Professional fees 52,191 79,917
Advertising 191,159 104,693
Telephone, postage and office supplies 126,506 81,184
Amortization of excess of cost over fair
value of net assets acquired -- 6,678
Other expenses 56,295 84,354
---------- ----------
Total non-interest expenses 2,101,081 1,927,123
---------- ----------
Income before tax provision 468,581 405,457
Income tax provision 180,774 160,692
---------- ----------
Net income $ 287,807 $ 244,765
========== ==========
Basic and diluted earnings per share $ 0.05 $ 0.04
========== ==========
</TABLE>
The accompanying notes to the consolidated financial statements
are an integral part of these statements.
3
<PAGE>
<PAGE>
BCSB BANKCORP, INC. AND SUBSIDIARIES
------------------------------------
BALTIMORE, MARYLAND
-------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
-------------------------------------------------
<TABLE>
<CAPTION>
FOR THREE MONTHS ENDED
DECEMBER 31,
-----------------------
1999 1998
------- -------
<S> <C> <C>
Operating Activities
- --------------------
Net Income $ 287,807 $ 244,765
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities
-------------------------------------
Accretion of discount on investments (1,032) (123)
Loan fees and costs deferred, net (23,053) 14,711
Amortization of deferred loan fees, net (15,008) (66,982)
Provision for losses on loans 51,400 194,587
Non-cash compensation under Stock-Based
Benefit Plan 34,462 57,730
Amortization of premium on mortgage backed securities 62 10,359
Gain on sale of foreclosed real estate -- (42,078)
Proceeds from joint venture -- 8,883
Gain from real estate development and joint venture (297) (6,038)
Provision for depreciation 140,640 86,595
Decrease in accrued interest receivable on loans 237,408 129,823
(Increase)/Decrease in accrued interest receivable on
investments (12,431) 366,515
Decrease in accrued interest receivable on mortgage
backed securities 3,132 20,602
Decrease in prepaid income taxes 163,031 147,745
Increase in deferred income tax assets (28,847) (31,512)
Amortization of excess of cost over fair value of
net assets acquired -- 6,678
Increase in other assets (747,425) (183,253)
Increase/(decrease) in accrued interest payable on
deposits (68,285) 31,184
Decrease in income taxes payable (46,987) (3,639)
Increase/(decrease) in other liabilities and payables
to disbursing agents (207,197) 444,999
--------- ----------
Net cash provided by operating activities (232,620) 1,431,551
</TABLE>
4
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<PAGE>
BCSB BANKCORP, INC. AND SUBSIDIARIES
------------------------------------
BALTIMORE, MARYLAND
-------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
------------------------------------------------
<TABLE>
<CAPTION>
FOR THREE MONTHS ENDED
DECEMBER 31,
----------------------
1999 1998
------ ------
<S> <C> <C>
Cash Flows from Investing Activities
- ------------------------------------
Proceeds from maturing interest bearing deposits $ 3,205,000 $ 1,752,000
Purchase of interest bearing deposits (1,178,000) (8,694,000)
Purchases of investment securities - held to maturity -- (8,314,796)
Proceeds from maturities of investment securities -
held to maturity -- 7,561,000
Longer term loans originated (9,398,768) (8,189,906)
Principal collected on longer term loans 2,899,634 2,588,993
Net (increase) decrease in short-term loans (339,188) 3,037,837
Principal collected on mortgage backed securities 1,537,176 4,797,278
Purchase of mortgage backed securities (999,073) (481,965)
Proceeds from sales of foreclosed real estate -- 230,019
Investment in premises and equipment (412,475) (146,630)
----------- -----------
Net cash provided (used) by investing activities (4,685,694) (5,860,170)
Cash Flows from Financing Activities
- ------------------------------------
Net increase in demand deposits, money market, passbook
accounts and advances by borrowers for taxes and
insurance 9,197,908 4,151,135
Increase in Federal Home Loan Bank of Atlanta advances 500,000 --
Net increase (decrease) in certificates of deposit (2,454,704) 6,914,594
Acquisition of stock for Rabbi Trust (17,500) --
Acquisition of stock for Management Retention Plan (508,768) --
Treasure stock purchase (37,665) --
Increase in dividends payable (7,926) --
Dividends paid on stock (287,274) --
----------- -----------
Net cash provided by financing activities 6,384,071 11,065,729
----------- -----------
Increase in cash and cash equivalents 1,465,757 6,637,110
Cash and cash equivalents at beginning of period 7,188,173 31,074,481
----------- -----------
Cash and cash equivalents at end of period $ 8,653,930 $37,711,591
=========== ===========
</TABLE>
5
<PAGE>
<PAGE>
BCSB BANKCORP, INC. AND SUBSIDIARIES
------------------------------------
BALTIMORE, MARYLAND
-------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
-------------------------------------------------
<TABLE>
<CAPTION>
FOR THREE MONTH PERIOD
ENDED DECEMBER 31,
----------------------
1999 1998
------ ------
<S> <C> <C>
The following is a summary of cash and cash equivalents:
Cash $ 7,892,751 $ 4,304,929
Interest bearing deposits in other banks 6,068,956 12,974,680
Federal funds sold 554,223 29,305,982
----------- -----------
Balance of cash items reflected on Statement of
Financial Condition 14,515,930 46,585,591
Less - certificate of deposit with a maturity of
more than three months 5,862,000 8,874,000
----------- -----------
Cash and cash equivalents reflected on the
Statement of Cash Flows $ 8,653,930 $37,711,591
=========== ===========
Supplemental Disclosures of Cash Flows Information:
Cash paid during the period for:
Interest $ 2,716,923 $ 2,416,591
=========== ===========
Income taxes $ 93,604 $ 48,035
=========== ===========
Transfer from loans to real estate acquired through foreclosure $ -- $ --
=========== ===========
Dividends declared on stock $ 287,274 $ --
=========== ===========
</TABLE>
The accompanying notes to the consolidated financial statements
are an integral part of these statements.
6
<PAGE>
<PAGE>
BCSB BANKCORP, INC. AND SUBSIDIARIES
------------------------------------
BALTIMORE, MARYLAND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
------------------------------------------------------
Note 1 - Principals of Consolidation
---------------------------
BCSB Bankcorp, Inc. (the "Company") owns 100% of Baltimore
County Savings Bank, F.S.B. and subsidiaries (the "Bank")
and also invests in federal funds sold, interest-bearing
deposits in other banks and U.S. Agency bonds. The Bank
owns 100% of Baltimore County Service Corporation and
Ebenezer Road, 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 has 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 for Financial Statement 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. The results for
the three months ended December 31, 1999 are not
necessarily indicative of the results of operations that
may be expected for the year ended September 30, 2000. The
consolidated financial statements should be read in
conjunction with the consolidated financial statements and
related notes which are incorporated by reference in the
Company's Annual Report on Form 10-KSB for the year ended
September 30, 1999.
Note 3 - Cash Flow Presentation
----------------------
For purposes of the statements of cash flows, cash and cash
equivalents include cash and amounts due from depository
institutions, investments in federal funds, and
certificates of deposit with maturities of 90 days or less.
Note 4 - Earnings Per Share
------------------
Basic per share amounts are based on the weighted average
shares of common stock outstanding. Diluted earnings per
share assume the conversion, exercise or issuance of all
potential common stock instruments such as options,
warrants and convertible securities, unless the effect is
to reduce a loss or increase earnings per share. No
adjustments were made to net income (numerator) for all
periods presented. The basic and diluted weighted average
shares outstanding for the three months ended December 31,
1999 and 1998 is as follows:
7
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<PAGE>
BCSB BANKCORP, INC. AND SUBSIDIARIES
------------------------------------
BALTIMORE, MARYLAND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
------------------------------------------------------
Note 4 - Earnings Per Share (Continued)
------------------
<TABLE>
<CAPTION>
For the Three Months Ended December 31, 1999
---------------------------------------------
Income Shares Per Share
Basic EPS (Numerator) (Denominator) Amount
--------- ----------- ------------- ---------
<S> <C> <C> <C>
Income available to
shareholders $ 287,807 5,749,765 $ 0.05
Effect of dilutive shares -- 99,044 --
---------- --------- ------
Diluted EPS
-----------
Income available to common
stockholders plus assumed
conversions $ 287,807 5,848,809 $ 0.05
========== ========= ======
<CAPTION>
For the Three Months Ended December 31, 1998
---------------------------------------------
Income Shares Per Share
Basic EPS (Numerator) (Denominator) Amount
--------- ----------- ------------- ---------
<S> <C> <C> <C>
Income available to
shareholders $244,765 $5,849,951 $ 0.04
Effect of dilutive shares -- 88,859 --
-------- ---------- ------
Diluted EPS
-----------
Income available to common
stockholders plus assumed
conversions $244,765 $5,938,810 $ 0.04
======== ========== ======
</TABLE>
Note 5 - Regulatory Capital
------------------
The following table sets forth the Bank's capital position at
December 31, 1999.
<TABLE>
<CAPTION>
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provision
--------------------- -------------------- ------------------
Actual % of Required % of Required % of
Amount Assets Amount Assets Amount Assets
--------- ------ -------- ------ -------- ------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
Tangible (1) $35,303,538 11.84% $ 4,471,003 1.50% N/A N/A
Tier 1 capital (2) 35,303,538 21.77 N/A N/A $ 9,729,727 6.00%
Core (1) 35,303,538 11.84 8,942,005 3.00 14,903,063 5.00
Risk-weighted (2) 36,626,316 22.59 12,972,969 8.00 16,216,211 10.00
<FN>
____________
(1) To adjusted total assets.
(2) To risk-weighted assets.
</FN>
</TABLE>
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
GENERAL
The Company was formed by the Bank to become the holding
company of the Bank following the Bank's reorganization to the
mutual holding company form of organization (the
"Reorganization"). The Reorganization was consummated on July
8, 1998.
The Company's net income is dependent primarily on its net
interest income, which is the difference between interest income
earned on its loan, investment securities and mortgage-backed
securities portfolio and interest paid on interest-bearing
liabilities. Net interest income is determined by (i) the
difference between yields earned on interest-earning assets and
rates paid on interest-bearing liabilities ("interest rate
spread") and (ii) the relative amounts of interest-earning
assets and interest-bearing liabilities. The Company's interest
rate spread is affected by regulatory, economic and competitive
factors that influence interest rates, loan demand and deposit
flows. To a lesser extent, the Company's net income also is
affected by the level of other income, which primarily consists
of fees and charges, and levels of non-interest expenses such as
salaries and related expenses.
The operations of the Company are significantly affected
by prevailing economic conditions, competition and the monetary,
fiscal and regulatory policies of governmental agencies.
Lending activities are influenced by the demand for and supply
of housing, competition among lenders, the level of interest
rates and the availability of funds. Deposit flows and costs of
funds are influenced by prevailing market rates of interest,
primarily on competing investments, account maturities and the
levels of personal income and savings in the Company's market
area.
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 READINESS DISCLOSURE
The following information constitutes "Year 2000 Readiness
Disclosure" under the Year 2000 Information and Readiness
Disclosure Act.
The Company's operations, like those of most financial
institutions, are substantially dependent upon computer systems
for lending and deposit activities. The Company's Year 2000
committee has successfully completed all five phases of the Year
2000 Plan, which was approved by the Board of Directors and
developed in accordance with the Federal Financial Institutions
Examination Council.
9
<PAGE>
<PAGE>
For the three months ended December 31, 1999 there were no
additional Year 2000 expenditures. The Company estimates that
the total future cost of Year 2000 compliance, excluding
internal staffing costs, will not exceed $10,000. The Company
believes that its policies, plans and actions are in compliance
with regulatory guidelines and milestone dates.
The Bank is not aware of any customers experiencing Year
2000 problems that would have adversely affected their ability
to comply with their obligations to the Bank.
Management experienced no material problems in its
transition to the Year 2000. All estimates and benchmark dates
were achieved with little or no deviations.
COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 1999 AND
SEPTEMBER 30, 1999
During the three months ended December 31, 1999, the
Company's assets increased by $6.4 million, or 2.1%, from $298.3
million at September 30, 1999 to $304.6 million at December 31,
1999. The Company has sought to increase loans in order to take
advantage of the higher yields on loans compared to investment
securities and mortgage-backed securities. Loans receivable,
net increased by $6.8 million, or 3.2%, from $215.3 million at
September 30, 1999 to $222.2 million at December 31, 1999. The
Company's mortgage-backed securities decreased by $538,000 , or
2.3%, from $23.5 million at September 30, 1999 to $23.0 million
at December 31, 1999. The Company's investment portfolio
remained stable with $35.2 million at September 30, 1999 and
December 31, 1999. The Company's deposits increased by $5.9
million, or 2.5%, from $233.4 million at September 30, 1999 to
$239.3 million at December 31, 1999. The increase in deposits
was achieved through the opening of new offices, increased
advertising and promotion activities. The Company took $500,000
in advances from the Federal Home Loan Bank of Atlanta during
the quarter ended December 31, 1999. The borrowed money was
used to fund loan demand.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED
DECEMBER 31, 1999 AND 1998
Net Income. Net income increased by $43,000, or 17.5%,
from $245,000 for the three months ended December 31,1998 to
$288,000 for the three months ended December 31, 1999. The
increase in net income was primarily attributable to increased
interest income from the increased loan portfolio.
Net Interest Income. Net interest income was $2.5 million
for the three months ended December 31, 1999, compared to $2.3
million for the three months ended December 31, 1998,
representing an increase of $156,000, or 6.8%. The increase was
primarily due to the lower yield paid on deposits of 4.10% for
the three months ended December 31, 1999 compared to a 4.30%
yield paid on deposits for the three months ended December 31,
1998, and an increase in interest rate spread from 2.89% for
the three months ended December 31, 1998 to 3.06% for the three
months ended December 31, 1999.
Interest Income. Interest income increased by $394,000,
or 8.2% to $5.2 million for the three months ended December 31,
1999 from $4.8 million at December 31, 1998. Interest and fees
on loans increased by $546,000, or 15.3%, from $3.6 million for
the three months ended December 31, 1998 to $4.1 million for the
three months ended December 31,1999 primarily due to a $ 36
million increase in the average balance of loans receivable as
the Company implemented its strategy of increasing loan
originations. The increase in the average volume of loans
receivable more than offset a 28 basis point decrease in the
average yield on loans. Additionally, interest and dividends on
investment securities increased by $374,000 or 190.8%,
from$196,000 for the three months ended December 31, 1998 to
$570,000 for the three months ended December 31, 1999. This
increase was due to an increase in the investment securities
portfolio. These increases offset a $134,000 or 26.2%,
decrease in interest on mortgage-backed securities from $511,000
for the three months ended December 31, 1998 to $377,000 for
the three months ended December 31, 1999. This decrease in
interest on mortgage-backed securities was primarily due to a $8
million decrease in the average
10
<PAGE>
<PAGE>
volume of mortgage-backed securities, as the Company pursued a
strategy of using repayments of mortgage-backed securities to
fund loan originations. Additionally, other interest income
decreased by $393,000, or 78.6%, from $500,000 for the three
months ended December 31, 1998 to $107,000 for the three months
ended December 31 1999. This decrease was due to a $33million
decrease in the average balance of other investments.
Interest Expense. Interest expense, which consists of
interest on deposits and interest on borrowed money increased
from $2.4 million for the three months ended December 31, 1998
to $2.7 million for the three months ended December 31, 1999 a
change of $237,000 or 9.7%. Interest on deposits remained flat
at $2.4 million for the three months ended December 31, 1999,
and December 31, 1998, not withstanding a $5.9 million increase
in the volume of deposits due to the opening of new offices.
Interest on short-term borrowings was $236,000 for the three
months ended December 31, 1999. This increase was primarily due
to the $16,500,000 in advances from the Federal Home Loan Bank
of Atlanta during the quarter ended December 31, 1999. The
borrowed money was used to fund loan demand.
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. Such yield and costs are derived by
dividing income or expense by the average balance of assets or
liabilities, respectively, for the periods presented. Average
balances are computed using month-end balance.
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31,
----------------------------------------------------------------------
1999 1998
--------------------------- --------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE
------- -------- ------ ------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans . . . . . . . . . . . . . $219,804 $ 4,118 7.49% $183,761 $3,571 7.77%
Mortgage-backed securities. . . . . . 23,429 377 6.44 31,453 511 6.50
Dividends and investment securities . 35,233 570 6.47 11,522 196 6.80
Other investments . . . . . . . . . . 7,168 107 5.98 40,008 500 5.00
-------- ------- ------ -------- ------ ------
Total interest-earning assets . . 285,635 5,172 7.24 266,743 4,778 7.17
Noninterest-earning assets . . . . . . . 18,210 11,409
-------- --------
Total assets. . . . . . . . . . . $303,845 $278,152
======== ========
Interest-bearing liabilities:
Deposits. . . . . . . . . . . . . . . $238,345 2,442 4.10 $227,184 2,440 4.30
Borrowings-short term . . . . . . . . 16,000 236 5.90 -- -- --
Other liabilities . . . . . . . . . . 1,639 1 0.32 1,379 2 0.44
-------- ------ ------ -------- ------ ------
Total interest-bearing liabilities . . . 255,984 2,389 4.19 228,563 2,442 4.27
------ ------ ------ ------
Noninterest-bearing liabilities. . . . . 2,739 2,138
-------- --------
Total liabilities . . . . . . . . 258,723 230,152
Stockholders' equity . . . . . . . . . . 45,122 47,451
-------- --------
Total liabilities and stockholders'
equity . . . . . . . . . . . $303,845 $278,152
======== ========
Net interest income. . . . . . . . . . . $2,493 $2,337
====== ======
Interest rate spread . . . . . . . . . . 3.06% 2.89%
====== ======
Net interest margin. . . . . . . . . . . 3.49% 3.50%
====== ======
Ratio average interest earning assets/
interest bearing liabilities . . . . 111.58% 116.70%
====== ======
</TABLE>
Provision for Loan Losses. The Company charges provisions
for loan losses to earnings to maintain the total allowance for
loan losses at a level management considers adequate to provide
for probable loan losses, based on prior loss experience. The
Company established provisions for losses on loans of $51,000
for the three months ended December 31 1999, as compared to
$195,000 for the three months ended December 31 1998,
representing a decrease of $144,000. Loan chargeoffs for the
three months ended December 31, 1999 were $38,000 as compared to
$52,000 for the three months ended December 31, 1998. Loan
recoveries were $37,000 for the three months ended December 31,
1999 compared to $42,000 for the three months ended December 31,
1998 . Non performing loans at December 31, 1999 were $513,000
as compared to $1.0 million at December 31, 1998. The total
loss allowance allocated to
11
<PAGE>
<PAGE>
domestic loans is $1.3 million. In establishing such provisions,
management considered an analysis of the risk inherent in the
loan portfolio.
Other Income. Other income decreased by $63,000, or
33.0%, from $191,000 for the three months ended December 31,
1998 to $128,000 for the three months ended December 31, 1999.
The decrease in other income for the three months ended December
31 1999 was attributable primarily to a $42,000 gain on the sale
of foreclosed real estate for the three months ended December
31, 1998. Additionally, rental income decreased by $6,000, or
31.0%, from $38,000 for the three months ended December 31, 1998
to $29,000 for the three months ended December 31, 1999.
Miscellaneous income decreased $ 4,000 or 20.0% from $20,000 for
the three months ended December 31,1998 to $16,000 for the three
months ended December 31, 1999.
Non-interest Expenses. Total non-interest expenses
increased by $174,000, or 9.0%, from $1.9 million for the three
months ended December 31, 1998 to $2.1 million for the three
months ended December 31, 1999. The increase in non-interest
expenses was due to increases in occupancy expense, data
processing expense, property and equipment expense and
advertising expense. Occupancy expense increased by $37,000,
or 21.4%, and property and equipment expense increased $78,000,
or 65.5%, due to the expenses associated with the establishment
of new offices. Data processing expense increased $29,000, or
28.1%, due to the successful increase in account levels. The
Company increased its advertising expense by $86,000, or 81.9%,
in an effort to increase market share and promote new offices
opened in 1999.
Income Taxes. The Company's income tax expense was
$181,000 and $161,000 for the three months ended December 31,
1999 and 1998, respectively. The Company's effective tax rates
were 38.6% and 39.6% for the three months ended December 31,
1999 and 1998, respectively.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1999, the Bank exceeded all regulatory
minimum capital requirements. For information comparing the
Bank's tangible, core and risk-based capital levels to the
regulatory requirements, see Note 5 of Notes to Consolidated
Financial Statements.
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 a predictable source of funds, deposit
flows and mortgage prepayments are greatly influenced by general
interest rates, economic conditions, competition and other
factors.
The primary investing activities of the Company are the
origination of loans and the purchase of investment securities
and mortgage-backed securities. During the three months ended
December 31 1999 and 1998, the Company had $15.9 million and
$12.2 million, respectively, of loan originations. During the
three months ended December 31, 1999 and 1998, the Company
purchased investment securities in the amounts of $-0- and $8.3
million, respectively, and mortgage-backed securities in the
amounts of $1 million and $482,000, respectively. The purchase
of interest-bearing deposits decreased from $8.7 million for the
three months ended December 31, 1998 to $1.2 million for the
three months ended December 31, 1999. The primary financing
activity of the Company is the attraction of savings deposits.
The Company has other sources of liquidity if there is a
need for funds. The Bank has the ability to obtain advances
from the FHLB of Atlanta. In addition, the Company maintains a
portion of its investments in interest-bearing deposits at other
financial institutions that will be available, if needed.
The Bank is required to maintain minimum levels of liquid
assets as defined by OTS regulations. This requirement, which
may be changed at the direction of the OTS depending upon
economic conditions and deposit flows, is based upon a
percentage of deposits and short-term borrowings. The required
minimum ratio is currently 4.0%. The Bank's average daily
liquidity ratio for the month of December was approximately
24.81%, which exceeded the required level for such period.
Management seeks to maintain a relatively high level of
liquidity in order to retain flexibility in
12
<PAGE>
<PAGE>
terms of investment opportunities and deposit pricing. Because
liquid assets generally provide for lower rates of return, the
Bank's relatively high liquidity will, to a certain extent,
result in lower rates of return on assets.
The Company's most liquid assets are cash,
interest-bearing deposits in other banks and federal funds sold,
which are short-term, highly liquid investments with original
maturities of less than three months that are readily
convertible to known amounts of cash. The levels of these
assets are dependent on the Company's operating, financing and
investing activities during any given period. At December 31,
1999, cash, interest-bearing deposits in other banks and federal
funds sold were $7.9 million, $6.1 million and $554,000,
respectively.
The Company anticipates that it will have sufficient funds
available to meet its current commitments. Certificates of
deposit which are scheduled to mature in less than three months
at December 31,1999 totaled $50.9 million. Based on past
experience, management believes that a significant portion of
such deposits will remain with the Bank. The Bank is a party to
financial instruments with off-balance-sheet risk made in the
normal course of business to meet the financing needs of its
customers. These financial instruments are standby letters of
credit, lines of credit and commitments to fund mortgage loans
and involve to varying degrees elements of credit risk in excess
of the amount recognized in the statement of financial position.
The contract amounts of those instruments express the extent of
involvement the Company has in this class of financial
instruments and represents the Company's exposure to credit loss
from nonperformance by the other party.
The Company generally requires collateral or other
security to support financial instruments with off-balance-sheet
credit risk. At December 31, 1999, the Company had commitments
under standby letters of credit and lines of credit and
commitments to originate mortgage loans of $1.0 million, $11.3
million and $1.4 million, respectively.
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.
13
<PAGE>
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits
Exhibit 27 - Financial Data Schedule
(b) Form 8-K
No Reports on Form 8-K were filed during the quarter
ended December 31, 1999.
14
<PAGE>
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act,
the registrant caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
BCSB BANCORP, INC.
Date: February 3, 2000 /s/ Gary C. Loraditch
------------------------------
Gary C. Loraditch
President
(Principal Executive Officer)
Date: February 3, 2000 /s/ Bonnie M. Klein
------------------------------
Bonnie M. Klein
Vice President and Treasurer
(Principal Financial and
Accounting Officer)
15
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> DEC-31-1999
<CASH> 7,893
<INT-BEARING-DEPOSITS> 6,069
<FED-FUNDS-SOLD> 554
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 59,845
<INVESTMENTS-MARKET> 58,992
<LOANS> 222,208
<ALLOWANCE> 1,323
<TOTAL-ASSETS> 304,686
<DEPOSITS> 239,267
<SHORT-TERM> 16,500
<LIABILITIES-OTHER> 4,167
<LONG-TERM> 0
0
0
<COMMON> 61
<OTHER-SE> 44,690
<TOTAL-LIABILITIES-AND-EQUITY> 304,686
<INTEREST-LOAN> 4,118
<INTEREST-INVEST> 570
<INTEREST-OTHER> 107
<INTEREST-TOTAL> 5,172
<INTEREST-DEPOSIT> 2,442
<INTEREST-EXPENSE> 2,679
<INTEREST-INCOME-NET> 2,493
<LOAN-LOSSES> 51
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<EXPENSE-OTHER> 2,101
<INCOME-PRETAX> 469
<INCOME-PRE-EXTRAORDINARY> 469
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 288
<EPS-BASIC> .05
<EPS-DILUTED> .05
<YIELD-ACTUAL> 7.24
<LOANS-NON> 513
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,273
<CHARGE-OFFS> 38
<RECOVERIES> 37
<ALLOWANCE-CLOSE> 1,323
<ALLOWANCE-DOMESTIC> 1,323
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