<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, 2000
[ ] 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 May 9, 2000, the issuer had 5,931,962 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 March 31, 2000
(unaudited) and September 30, 1999 . . . . . . 2
Consolidated Statements of Operations
for the Six and Three Months Ended
March 31, 2000 and 1999 (unaudited). . . . . . 3
Consolidated Statements of Cash Flows
for the Six Months Ended March
31, 2000 and 1999 (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. . . . . . . . . . . . . . . . . 16
Item 2. Changes in Securities and Use of Proceeds. . . . . 16
Item 3. Defaults Upon Senior Securities. . . . . . . . . . 16
Item 4. Submission of Matters to a Vote of Security
Holders. . . . . . . . . . . . . . . . . . . . . . 16
Item 5. Other Information. . . . . . . . . . . . . . . . . 16
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 16
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . 18
1
<PAGE>
<PAGE>
BCSB BANKCORP, INC. AND SUBSIDIARIES
------------------------------------
BALTIMORE, MARYLAND
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
----------------------------------------------
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
2000 1999
----------- -------------
(Unaudited)
Assets
------
<S> <C> <C>
Cash $ 5,326,235 $ 5,976,961
Interest bearing deposits in other banks 6,344,277 8,651,267
Federal funds sold 143,596 448,945
Investment securities, held to maturity 38,783,370 35,232,306
Loans receivable, net 229,779,739 215,383,087
Mortgage backed securities, held to maturity 23,344,379 23,499,794
Foreclosed real estate, net 89,091 89,091
Investment in real estate development and loans
to joint venture 5,820 5,287
Premises and equipment, net 6,704,406 4,846,121
Federal Home Loan Bank of Atlanta stock 1,834,400 1,650,300
Accrued interest receivable - loans 681,740 834,424
- investments 670,213 635,757
- mortgage backed securities 136,764 140,005
Deferred and prepaid income taxes 363,154 361,211
Other assets 507,752 547,171
------------ ------------
Total assets $314,714,936 $298,301,727
============ ============
Liabilities and Stockholders' Equity
------------------------------------
Liabilities
- -----------
Deposits $249,096,503 $233,364,564
Advances from the Federal Home Loan Bank of Atlanta 17,100,000 16,000,000
Advance payments by borrowers for taxes and insurance 1,992,256 1,101,971
Income taxes payable 11,458 60,670
Payables to disbursing agents 343,347 163,923
Dividends payable 274,950 294,797
Other liabilities 2,185,808 2,035,343
------------ ------------
Total liabilities 271,004,322 253,021,268
Commitments and contingencies
Stockholders' Equity
- --------------------
Common stock (Par value $.01 - 13,500,000 authorized,
5,931,962 shares issued and 6,116,562 outstanding
at March 31, 2000 and September 30, 1999
respectively) 59,320 61,166
Additional paid-in capital 20,468,292 21,918,472
Retained earnings (substantially restricted) 25,645,218 25,788,692
------------ ------------
46,172,830 47,768,330
Employee Stock Ownership Plan (1,417,692) (1,509,156)
Stock held by Rabbi Trust (1,044,524) (978,715)
------------ ------------
43,710,614 45,280,459
------------ ------------
Total liabilities and retained earnings $314,714,936 $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 Six Months Ended For Three Months Ended
March 31, March 31,
----------------------------------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest Income
- ---------------
Interest and fees on loans $ 8,254,671 $7,153,165 $4,137,071 $3,582,043
Interest on mortgage backed
securities 741,307 950,861 363,978 439,818
Interest and dividends on
investment securities 1,150,344 565,386 580,398 369,516
Other interest income 206,757 894,142 99,617 393,719
----------- ---------- ---------- ----------
Total interest income 10,353,079 9,563,554 5,181,064 4,785,096
Interest Expense
- ----------------
Interest on deposits 5,009,131 4,854,149 2,566,887 2,413,723
Interest on borrowings - short
term 439,275 -- 203,392 --
Other Interest Expense 2,453 3,539 1,147 2,026
----------- ---------- ---------- ----------
Total interest expense 5,450,859 4,857,688 2,771,426 2,415,749
----------- ---------- ---------- ----------
Net interest income 4,902,220 4,705,866 2,409,638 2,369,347
Provision for losses on loans 51,400 232,361 -- 37,774
----------- ---------- ---------- ----------
Net interest income after
provision for losses on
loans 4,850,820 4,473,505 2,409,638 2,331,573
Other Income (Loss)
- -------------------
Gain (loss) on sale of foreclosed
real estate (5,654) 1,007 (5,654) (41,071)
Servicing fee income 4,327 281 4,206 136
Fees and charges on loans 73,328 77,591 37,782 39,301
Fees on transaction accounts 96,404 89,292 48,677 40,162
Rental income 58,203 63,860 29,183 28,831
Gain from real estate development
and joint venture 533 6,038 236 --
Gain on sale of Fixed Assets 3,475 -- 3,475 --
Miscellaneous income 33,574 33,341 17,805 13,403
----------- ---------- ---------- ----------
Net other income (loss) 264,190 271,410 135,710 80,762
Non-Interest Expenses
- ---------------------
Salaries and related expense 2,223,486 2,159,087 1,138,328 1,026,132
Occupancy expense 464,577 340,685 254,382 167,771
Deposit insurance premiums 84,468 68,943 34,154 26,584
Data processing expense 276,783 264,849 144,892 161,661
Property and equipment expense 407,458 248,283 210,081 129,402
Professional fees 107,971 112,829 55,780 32,912
Advertising 456,325 200,916 265,166 96,223
Telephone, postage and office
supplies 247,757 166,753 121,251 85,569
Amortization of excess of cost
over fair value of net
assets acquired -- 13,356 -- 6,678
Other expenses 157,266 194,213 100,971 109,859
----------- ---------- ---------- ----------
Total non-interest expenses 4,426,086 3,769,914 2,325,005 1,842,791
----------- ---------- ---------- ----------
Income before tax provision 688,924 975,001 220,343 569,544
Income tax provision 270,172 382,400 89,398 221,708
----------- ---------- ---------- ----------
Net income $ 418,752 $ 592,601 $ 130,945 $ 347,836
=========== ========== ========== ==========
Basic and diluted earnings
per share $ .07 $ 0.10 $ .02 $ .06
=========== ========== ========== ==========
</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 SIX MONTHS ENDED
MARCH 31,
--------------------------
2000 1999
-------- -------
<S> <C> <C>
Operating Activities
- --------------------
Net Income $418,752 $ 592,778
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities
-------------------------------------
Accretion of discount on investments (1,064) (2,104)
Loan fees (costs) deferred, net (64,734) (2,235)
Amortization of deferred loan fees
(costs), net (24,456) (137,608)
Provision for losses on loans 51,400 232,361
Non-cash compensation under Stock-Based
Benefit Plans 66,897 66,745
Amortization of premium on mortgage
backed securities 19,937 20,880
Gain on sale of foreclosed real estate -- (1,007)
Gain from real estate development and
joint venture (533) (6,038)
Provision for depreciation 293,005 180,458
Gain on Sale of Fixed Assets (3,475) --
Decrease in accrued interest receivable
on loans 152,684 53,015
(Increase) decrease in accrued interest
receivable on investments (34,456) 45,654
Decrease in accrued interest receivable
on mortgage backed securities 3,241 41,891
Increase (decrease) in prepaid income
taxes 26,906 (63,518)
Increase in deferred income tax assets (28,848) (72,647)
Amortization of excess of cost over fair
value of net assets acquired -- 13,356
(Increase) decrease in other assets 39,419 (252,672)
Decrease in accrued interest payable
on deposits (64,260) (49,817)
Decrease in income taxes payable (49,212) (1,315)
Increase in other liabilities and
payables to disbursing agents 329,888 565,596
Decrease in Dividends Payable (19,847) --
-------- ----------
Net cash provided by operating activities 111,244 1,223,773
</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,
---------------------
2000 1999
-------- --------
<S> <C> <C>
Cash Flows from Investing Activities
- ------------------------------------
Proceeds from maturing interest bearing
deposits $3,495,000 $ 2,252,000
Purchase of interest bearing deposits (1,178,000) (10,444,000)
Purchases of investment securities -
held to maturity (4,050,000) (25,049,611)
Proceeds from maturities of investment
securities - held to maturity 500,000 9,426,000
Longer term loans originated (17,509,864) (20,290,340)
Principal collected on longer term loans 14,887,123 15,819,806
Net Increase in short-term loans (11,736,120) (4,783,360)
Principal collected on mortgage backed
securities 2,963,743 8,626,673
Purchase of mortgage backed securities (2,828,265) (481,965)
Proceeds from sales of foreclosed real
estate -- 230,019
Proceeds from joint venture -- 8,261
Investment in premises and equipment (2,147,815) (447,936)
Purchase of Federal Home Loan Bank of
Atlanta stock (184,100) (138,400)
------------ ------------
Net cash provided (used) by investing
activities (17,788,298) (25,272,853)
Cash Flows from Financing Activities
- ------------------------------------
Net increase in demand deposits,
money market, passbook accounts and
advances by borrowers for taxes and
insurance 5,825,098 5,047,322
Increase in Federal Home Loan Bank of
Atlanta advances 6,600,000 --
Repayment of Federal Home Loan Bank of
Atlanta advances (5,500,000) --
Net increase in certificates of deposit 10,861,386 6,882,743
Acquisition of Stock for Rabbi Trust (65,809) --
Treasury Stock Purchase (1,389,795) --
Acquisition of Stock for Management
Retention Plan (37,665) --
Dividends declared on stock (562,226) --
------------ ------------
Net cash provided by financing
activities 15,730,989 11,930,065
------------ ------------
Increase (decrease) in cash and cash
equivalents (946,065) (12,119,015)
Cash and cash equivalents at beginning
of period 7,188,173 31,074,481
------------ ------------
Cash and cash equivalents at end of period $ 6,242,108 $ 18,955,466
============ ============
</TABLE>
5
<PAGE>
<PAGE>
BCSB BANKCORP, INC. AND SUBSIDIARIES
------------------------------------
BALTIMORE, MARYLAND
-------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
-------------------------------------------------
<TABLE>
<CAPTION>
FOR SIX MONTH PERIOD
ENDED MARCH 31,
-------------------------
2000 1999
-------- --------
<S> <C> <C>
The following is a summary of cash and cash equivalents:
Cash $ 5,326,235 $ 2,789,304
Interest bearing deposits in other banks 6,344,277 17,476,517
Federal funds sold 143,596 8,813,645
----------- -----------
Balance of cash items reflected on Statement of
Financial Condition 11,814,108 29,079,466
Less - certificate of deposit with a maturity
of more than three months 5,572,000 10,124,000
----------- -----------
Cash and cash equivalents reflected on the
Statement of Cash Flows $ 6,242,108 $18,955,466
=========== ===========
Supplemental Disclosures of Cash Flows Information:
Cash paid during the period for:
Interest $ 5,596,650 $ 4,988,332
=========== ===========
Income taxes $ 235,200 $ 486,435
=========== ===========
Transfer from loans to real estate acquired
through foreclosure $ -- $ 151,232
=========== ===========
</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 - Principal 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 and six months ended
March 31, 2000 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 and six months ended March 31,
2000 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 Six Months Ended March 31, 2000
------------------------------------------
Income Shares Per Share
Basic EPS (Numerator) (Denominator) Amount
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Income available to shareholders $418,752 5,707,327 $0.07
Effect of dilutive shares -- 103,393 --
-------- --------- -----
Diluted EPS
-----------
Income available to common
stockholders plus assumed
conversions $418,752 5,810,720 $0.07
======== ========= =====
<CAPTION>
For the Three Months Ended March 31, 2000
------------------------------------------
Income Shares Per Share
Basic EPS (Numerator) (Denominator) Amount
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Income available to shareholders $130,495 5,666,140 $0.02
Effect of dilutive shares -- 107,794 --
-------- --------- -----
Diluted EPS
-----------
Income available to common
stockholders plus assumed
conversions $130,495 5,773,934 $0.02
======== ========= =====
</TABLE>
<PAGE>
Note 5 - Regulatory Capital
------------------
The following table sets forth the Bank's capital
position at March 31, 2000.
<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
--------- ------ -------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C>
Tangible (1) $34,107,826 11.08% $ 4,614,669 1.50% $ N/A N/A%
Tier 1 capital (2) 34,107,826 18.43 N/A N/A 11,106,057 6.00
Core (1) 34,107,826 11.08 9,229,337 3.00 15,382,229 5.00
Risk-weighted (2) 35,423,142 19.14 14,808,077 8.00 18,510,096 10.00
<FN>
____________
(1) To adjusted total assets.
(2) To risk-weighted assets.
</FN>
</TABLE>
8
<PAGE>
<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.
COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2000 AND
SEPTEMBER 30, 1999
During the six months ended March 31, 2000, the Company's
assets increased by $16.4 million, or 5.5%, from $298.3 million
at September 30, 1999 to $314.7 million at March 31, 2000. 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 $14.4 million, or 6.7%, from $215.4 million at September 30,
1999 to $229.8 million at March 31, 2000. The Company's
mortgage-backed securities decreased by $156,000, or .01%, from
$23.5 million at September 30, 1999 to $23.3 million at March
31, 2000. The Company's investment securities increased by $3.5
million, or 10.1%, from $35.2 million at September 30, 1999 to
$38.8 million at March 31, 2000. The Company's premises and
equipment increased $1.9 million or 38.3% from $4.8 million at
September 31, 1999 to $6.7 million at March 31, 2000. The
increase was due to the construction of a new branch office
building. The Company's deposits increased by $15.7 million, or
6.7%, from $233.3 million at September 30, 1999 to $249.0
million at March 31, 2000. The increase in deposits was
achieved through the opening of new offices, increased
advertising and promotion activities. The Company took $1.1
million in advances from the Federal Home Loan Bank of Atlanta
during the quarter ended March 31, 2000.
9
<PAGE>
<PAGE>
COMPARISON OF OPERATING RESULTS FOR THE SIX MONTHS ENDED MARCH
31, 2000 AND 1999
Net Income. Net income decreased by $174,000, or 29.3%,
from $593,000 for the six months ended March 31, 1999 to
$419,000 for the six months ended March 31, 2000. The decrease
in net income was primarily attributable to increased
non-interest expense, which was only partially offset by an
increase in net interest income.
Net Interest Income. Net interest income was $4.9 million
for the six months ended March 31, 2000, compared to $4.7
million for the six months ended March 31, 1999, representing an
increase of $196,000, or 4.2%. The increase was primarily due
to the lower yield paid on deposits of 4.14% for the six months
ended March 31, 2000 compared to 4.24% for the six months ended
September 30, 1999 and an increase in interest rate spread from
2.89% for the six months ended September 30,1999 to 2.95% for
the six months ended March 31, 2000.
Interest Income. Interest income increased by $789,000, or
8.2%, from $9.6 million for the six months ended March 31, 1999
to $10.4 million for the six months ended March 31, 2000. This
increase was due primarily to a $1.1 million, or 15.4%, increase
in interest and fees on loans from $7.2 million for the six
months ended March 31, 1999 to $8.3 million for the six months
ended March 31, 2000. The increase in interest and fees on
loans was primarily due to a $37.0 million increase in the
average balance of loans receivable. This increase more than
offsets decreases in interest on mortgage-backed securities and
other interest income. Other interest income which consists of
interest earned on deposits in banks and Federal Funds sold,
decreased by $687,000, or 76.8% from $894,000 for the six months
ended March 31, 1999 to $207,000 for the six months ended March
31, 2000. Interest on mortgage-backed securities decreased by
$210,000, or 22.0%, from $951,000 for the six months ended March
31, 1999 to $741,000 for the six months ended March 31, 2000.
This decrease was primarily due to a $6.1 million decrease in
the average balance of mortgage-backed securities. Interest and
dividends on investment securities increased $585,000, or
103.5%, from $565,000 for the six months ended March 31, 1999 to
$1.1 million for the six months ended March 31, 2000. This
increase was primarily due to a 49 basis point increase in the
average yield on investment securities, due to the purchase of
higher yielding securities.
Interest Expense. Interest expense, which consists of
interest on deposits, and interest on short-term borrowings, was
$4.9 million for the six months ended March 31, 1999 and $5.5
million for the six months ended March 31, 2000. This increase
was primarily due to an increase in interest on short term
borrowings from $0 for the six months ended March 31, 1999 to
$439,000 for the six months ended March 31, 2000. During the six
months ended March 31, 2000, an increase in the average volume
of deposits was offset by a 10 basis point decrease in the
average cost of deposits.
10
<PAGE>
<PAGE>
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 balances.
The table also presents information for the periods
indicated with respect to the differences between the average
yield earned on interest-earning assets and average rate paid on
interest-bearing liabilities, or "interest rate spread," which
banks have traditionally used as an indicator of profitability.
Another indicator of an institution's net interest income is its
"net interest margin," which is its net interest income divided
by the average balance of interest-earning assets.
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31,
----------------------------------------------------------------------
2000 1999
--------------------------- --------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE
------- -------- ------ ------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans $222,999 $ 8,255 7.40% $186,016 $7,154 7.69%
Mortgage-backed securities 23,233 741 6.38 29,341 951 6.48
Investment securities and FHLB stock 36,075 1,150 6.38 19,188 565 5.89
Interest-bearing deposits in other
banks and Federal Funds sold 6,908 207 5.99 34,851 894 5.13
-------- ------- -------- ------
Total interest-earning assets 289,215 10,353 7.16 269,396 9,564 7.10
Noninterest-earning assets 16,888 9,799
-------- --------
Total assets $306,103 $279,195
======== ========
Interest-bearing liabilities:
Deposits $241,896 5,009 4.14 $228,997 4,854 4.24
Borrowings-short term 15,083 439 5.82 -- -- --
Other liabilities 1,656 2 0.24 1,776 4 0.45
-------- ------ -------- ------
Total interest-bearing liabilities 258,635 5,450 4.21 230,773 4,858 4.21
------ ------
Noninterest-bearing liabilities 2,737 2,938
-------- --------
Total liabilities 261,372 233,711
Stockholders' equity 44,731 45,484
-------- --------
Total liabilities and stockholders'
equity $306,103 $279,195
======== ========
Net interest income $4,903 $4,706
====== ======
Interest rate spread 2.94% 2.89%
====== ======
Net interest margin 3.39% 3.49%
====== ======
Ratio average interest earning assets/
interest bearing liabilities . . . . 111.82% 116.74%
====== ======
</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 provision for losses on loans of $51,000 for
the six months ended March 31, 2000, as compared to $232,000 for
the six months ended March 31, 1999, representing a decrease of
$181,000. Loan chargeoffs for the six months ended March 31,
2000 were $76,000 as compared to $74,000 for the six months
ended March 31, 1999. Loan recoveries were $67,000 for the six
months ended March 31, 2000, compared to $46,000 for the six
months ended March 31, 1999. Non performing loans at March 31,
2000 were $477,000 as compared to $554,000 at March 31, 1999.
The total loss allowance allocated to domestic loans is $1.3
million. In establishing such provisions, management considered
an analysis of the risk inherent in the loan portfolio.
11
<PAGE>
<PAGE>
Other Income. Other income decreased by $7,000, or 2.6%,
from $271,000 for the six months ended March 31, 1999 to
$264,000 for the six months ended March 31, 2000. The decrease
in other income for the six months ended March 31, 2000 was
attributable primarily to a $5,600 loss on the sale of
foreclosed real estate, as compared to a $1,000 gain during the
six months ended March 31, 1999. Additionally, the decrease in
other income reflected a $5,600, or 8.8%, decrease in rental
income from $64,000 for the six months ended March 31, 1999 to
$58,000 for the six months ended March 31, 2000. These losses
were partially offset by a $7,100 increase, or 7.9% in
transaction account fees for the six months ended March 31, 2000
from $89,000 for the six months ended March 31, 1999, compared
to $96,000 for the six months ended March 31, 2000.
Non-interest Expenses. Total non-interest expenses
increased by $656,000, or 17.4%, from $3.8 million for the six
months ended March 31, 1999 to $4.4 million for the six months
ended March 31, 2000. The increase in non-interest expenses was
due to increases in salaries and related expenses, occupancy
expense, telephone postage and office supplies, property and
equipment expense and advertising expense. The Company's
salaries and related expenses increased by $64,000, or 3.0%, due
to the recruitment of personnel for new offices. Occupancy
expense increased by $124,000, or 36.4% and property and
equipment expense increased by $159,000, or 64.1%. Telephone,
postage and office supplies increased by $81,000, or 48.5% due
to the expenses associated with the establishment of new
offices. The Company increased its advertising expense by
$255,000, or 126.9%, in an effort to increase market share, and
promote the new offices.
Income Taxes. The Company's income tax expense was
$270,000 and $382,000 for the six months ended March 31, 2000
and 1999, respectively. The Company's effective tax rates were
39.2% and 39.2% for the six months ended March 31, 2000 and
1999, respectively.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH
31, 2000 AND 1999
Net Income. Net income decreased by $217,000, or 62.4%,
from $348,000 for the three months ended March 31, 1999 to
$131,000 for the three months ended March 31, 2000. The
decrease in net income was primarily attributable to increased
non-interest expense, and increased interest expenses, which
more than offset an increase in interest income.
Net Interest Income. Net interest income remained
unchanged at $2.4 million for the three months ended March 31,
2000, and the three months ended March 31, 1999. This stability
was due to the increase in interest income offsetting the
increase in interest expense.
Interest Income. Interest income increased by $396,000, or
8.3%, from $4.8 million for the three months ended March 31,
1999 to $5.1 million for the three months ended March 31, 2000.
Interest and fees on loans increased by $555,000, or 15.5%,
from $3.6 million for the three months ended March 31, 1999 to
$4.1 million for the three months ended March 31, 2000 primarily
due to a $37.9 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 29 basis point decrease in the
average yield on loans. Additionally, interest and dividends on
investment securities increased by $211,000 or 57.1%. These
increases offset a $294,000 decrease in other interest income
and a $76,000, or 17.2%, decrease in interest on mortgage-backed
securities from $440,000 for the three months ended March 31,
1999 to $364,000 for the three months ended March 31, 2000.
This decrease in mortgage-backed securities was primarily due to
a $4.1 million decrease in the average volume of mortgage-backed
securities, as the Company pursued a strategy of using epayments
of mortgage-backed securities to fund loan originations.
Interest Expense. Interest expense, which consists of
interest on deposits and interest on borrowed money increased
form $2.4 million for the three months ended March 31, 1999 to
$2.7 million for the three months ended March 31, 2000 a change
of $356,000 or 14.7%. Interest on deposits increased $153,000
during the three months ended March 31, 2000, due to an increase
in the average volume of deposits. Interest on short-term
borrowings was $203,000 for the three months end March 31, 2000.
This increase was primarily due to the $17.1 million in advances
from the Federal Home Loan Bank of Atlanta. The borrowed money
was used to fund loan demand.
12
<PAGE>
<PAGE>
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 MARCH 31,
----------------------------------------------------------------------
2000 1999
--------------------------- --------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE
------- -------- ------ ------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans $226,194 $ 4,137 7.32% $188,271 $3,582 7.61%
Mortgage-backed securities 23,038 364 6.32 27,229 440 6.46
Investment securities and FHLB stock 36,917 580 6.28 26,854 369 5.50
Interest-bearing deposits in other
banks and Federal Funds sold 6,647 100 6.02 29,695 394 5.31
-------- ------- -------- ------
Total interest-earning assets 292,796 5,181 7.08 272,049 4,785 7.04
Noninterest-earning assets 15,566 9,293
-------- --------
Total assets $308,362 $281,342
======== ========
Interest-bearing liabilities:
Deposits $245,446 2,567 4.18 $230,810 2,414 4.18
Borrowings-short term 14,167 203 5.73 -- -- --
Other liabilities 1,673 1 .24 2,174 2 0.37
-------- ------ -------- ------
Total interest-bearing liabilities 261,286 2,771 4.24 232,984 2,416 4.15
------ ------
Noninterest-bearing liabilities 2,736 2,604
-------- --------
Total liabilities 264,022 235,588
Stockholders' equity 44,340 45,754
-------- --------
Total liabilities and stockholders'
equity $308,362 $281,342
======== ========
Net interest income $2,410 $2,369
====== ======
Interest rate spread 2.84% 2.89%
====== ======
Net interest margin 3.29% 3.48%
====== ======
Ratio average interest earning assets/
interest bearing liabilities 112.06% 116.77%
====== ======
</TABLE>
Provision for Loan Losses. The Company charges provisions
for loan losses to earnings to maintain a total allowance for
loan losses at a level management considers adequate to provide
for probable loan losses, based on prior loss experience. The
Company did not increase the provision for losses for the three
months ended March 31, 2000. The Company believes the $1.3
million allowance for loan losses is sufficient based on past
experience. Loan chargeoffs for the three months ended March 31,
2000 were $38,000 as compared to $32,000 for the three months
ended March 31.1999. Loan recoveries were $30,000 for the three
months ended March 31, 2000 as compared to $14,000 for the three
months ended March 31, 1999. Non performing loans at March 31,
2000 were $477,000 as compared to $554,000 at March 31, 1999.
In establishing such provisions, management considered the
increased size of the loan portfolio, as well as an analysis of
the risk inherent in the loan portfolio and the increased
emphasis on home equity loans, which entail higher credit risks
than residential mortgage loans.
Other Income. Other income increased by $55,000, or 68.0%,
from $81,000 for the three months ended March 31, 1999 to
$136,000 for the three months ended March 31, 2000. The
increase in other income for the three months ended March 31,
2000 was
13
<PAGE>
<PAGE>
attributable primarily to a $35,000 decrease in losses on sales
of foreclosed real estate and a $9,000, increase in fees on
transaction accounts, from $40,000 for the three months ended
March 31, 1999 to $49,000 for the three months ended March 31,
2000.
Non-interest Expenses. Total non-interest expenses
increased by $482,000, or 26.2%, from $1.8 million for the three
months ended March 31, 1999 to $2.3 million for the three months
ended March 31, 2000. The increase in non-interest expenses was
due to increases in salaries and related expenses, occupancy
expense, telephone postage, and office supplies, property and
equipment expense and advertising expense. The Company's
salaries and related expenses increased by $112,000, or 10.9%,
due to the recruitment of personnel for the new offices.
Occupancy expense increased by $87,000, or 51.2%, and property
and equipment expense increased $81,000, or 62.3%, telephone
postage and office supplies increased $36,000 or 41.7% due to
the expenses associated with the establishment of new offices.
The Company increased its advertising expense by $169,000, or
176.0%, in an effort to increase market share and promote the
new offices.
Income Taxes. The Company's income tax expense was $89,000
and $222,000 for the three months ended March 31, 2000 and 1999,
respectively. The Company's effective tax rates were 40.5% and
38.9% for the three months ended March 31, 2000 and 1999,
respectively.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2000, the Bank exceeded all regulatory minimum
capital requirements. For information reconciling the Bank's
retained earnings as reported in its financial statements at
March 31, 2000 to its tangible, core and risk-based capital
levels and comparing such totals 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 six months ended
March 31, 2000 and 1999, the Company had $17.5 million and $20.3
million, respectively, of loan originations. During the six
months ended March 31, 2000 and 1999, the Company purchased
investment securities in the amounts of $4.1 million and $25.0
million, respectively, and mortgage-backed securities in the
amounts of $2.8 million and $482,000 respectively. The purchase
of interest-bearing deposits decreased from $10.4 million for
the six months ended March 31, 1999 to $1.2 million for the six
months ended March 31, 2000. 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 Ban 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 March was approximately 23.1%,
which exceeded the required level for such period. Management
seeks to maintain a relatively high level of liquidity in order
to retain flexibility in 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 March 31, 2000, cash,
interest-bearing deposits in other banks and federal funds sold
were $5.3 million, $6.3 million and $143,000, respectively.
14
<PAGE>
<PAGE>
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 six months at
March 31, 2000 totaled $72.9 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 March 31, 2000, the Company had commitments under
standby letters of credit and lines of credit and commitments to
originate mortgage loans of $508,000, $20.0 million and $3.2
million, respectively.
15
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-
HOLDERS
The Company's Annual Meeting of Stockholders was held
on February 9, 2000. 6,053,162 shares of the Company's common
stock were represented at the Annual Meeting in person or by
proxy.
Stockholders voted in favor of the election of two nominees
for director. The voting results for each nominee were as
follows:
Votes in Favor
Nominee of Election Votes Withheld
- ------- -------------- --------------
Frank W. Dunton 5,621,456 98,581
Gary C. Loraditch 5,635,025 85,012
There were 0 broker nonvotes on the matter
In addition, stockholders voted in favor of the
ratifcation of the appointment of Anderson Associates, LLP as
independent auditors of the Company for the fiscal year
ending September 30, 2000. 5,677,053 votes were cast in favor of
the proposal to ratify the appointment of auditors, 30,011 votes
were cast against the proposal, and 12793 votes abstained. There
were 0 broker nonvotes on the matter.
ITEM 5. OTHER INFORMATION
None.
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 March 31, 2000.
16
<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 BANKCORP, INC.
Date: May 8, 2000 /s/ Gary C. Loraditch
---------------------------
Gary C. Loraditch
President
(Principal Executive Officer)
Date: May 8, 2000 /s/ Bonnie M. Klein
---------------------------
Bonnie M. Klein
Vice President and Treasurer
(Principal Financial and
Accounting Officer)
17
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 5,326
<INT-BEARING-DEPOSITS> 6,344
<FED-FUNDS-SOLD> 143
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 62,127
<INVESTMENTS-MARKET> 60,300
<LOANS> 229,780
<ALLOWANCE> 1,315
<TOTAL-ASSETS> 314,884
<DEPOSITS> 249,096
<SHORT-TERM> 17,100
<LIABILITIES-OTHER> 2,186
<LONG-TERM> 0
0
0
<COMMON> 59
<OTHER-SE> 43,820
<TOTAL-LIABILITIES-AND-EQUITY> 314,884
<INTEREST-LOAN> 8,255
<INTEREST-INVEST> 1,150
<INTEREST-OTHER> 207
<INTEREST-TOTAL> 10,353
<INTEREST-DEPOSIT> 5,009
<INTEREST-EXPENSE> 5,451
<INTEREST-INCOME-NET> 4,902
<LOAN-LOSSES> 51
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 4,426
<INCOME-PRETAX> 688
<INCOME-PRE-EXTRAORDINARY> 688
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 419
<EPS-BASIC> .07
<EPS-DILUTED> .07
<YIELD-ACTUAL> 7.16
<LOANS-NON> 477
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,273
<CHARGE-OFFS> 76
<RECOVERIES> 67
<ALLOWANCE-CLOSE> 1,315
<ALLOWANCE-DOMESTIC> 1,315
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
