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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 2000
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Exchange Act
For the transition period from ______ to ______
Commission file number: 0-25217
PEOPLES BANKCORP, INC.
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(Exact Name of Small Business Issuer as Specified in its Charter)
New York 16-1560886
- ------------------------------- -----------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
825 State Street, Ogdensburg, New York 13669
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(Address of Principal Executive Offices)
(315) 393-4340
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Registrant's Telephone Number, Including Area Code
Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the
past 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X ] No [ ]
As of May 12, 2000, the issuer had 134,390 shares of Common
Stock issued and outstanding.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition
as of March 31, 2000 (unaudited)
and December 31, 1999 . . . . . . . . . . . . . . . 3
Consolidated Statements of Income for the Three
Months Ended March 31, 2000 and 1999
(unaudited) . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2000 and
1999 (unaudited). . . . . . . . . . . . . . . . . 5-6
Notes to Consolidated Financial Statements. . . . . . . 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations. . . . . . . . . . . . . . . . . . .8-11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . .12
Item 2. Changes in Securities. . . . . . . . . . . . . . . .12
Item 3. Defaults Upon Senior Securities. . . . . . . . . . .12
Item 4. Submissions of Matters to a Vote of Security
Holders. . . . . . . . . . . . . . . . . . . . . .12
Item 5. Other Information. . . . . . . . . . . . . . . . . .12
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . .12
SIGNATURES
2
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PART I - FINANCIAL INFORMATION
PEOPLES BANKCORP, INC.
Consolidated Statements of Financial Condition
March 31, 2000 and December 31, 1999
(In thousands)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
--------- ------------
ASSETS (Audited)
------
<S> <C> <C>
Cash and Cash Equivalents:
Cash and due from banks $ 420 $ 847
Interest-bearing deposits with other banks 1,402 610
------- -------
Total Cash and Cash Equivalents 1,822 1,457
Securities held-to-maturity (fair value of
$3,778 (unaudited) at March 31, 2000 and
$3,829 at December 31, 1999) 3,831 3,865
Loans, net of deferred fees 20,603 20,942
Less allowance for loan losses 172 176
------- -------
Net loans $20,431 $20,766
Premises and equipment, net 456 463
Federal Home Loan Bank stock, at cost
required by law 155 139
Accrued interest receivable 144 163
Other assets 18 7
------- -------
TOTAL ASSETS $26,857 $26,860
======= =======
LIABILITIES AND EQUITY
Liabilities:
Deposits:
Demand accounts - non-interest bearing $ 781 $ 594
Savings and club accounts -interest
bearing 2,991 3,025
Time certificates -interest bearing 17,544 16,963
NOW and money market accounts -interest
bearing 1,542 1,862
------- -------
Total deposits $22,858 $22,444
======= =======
Advance payments by borrowers for property
taxes and insurance 3 3
Other liabilities 165 125
Borrowed money 1,000 1,500
------- -------
Total liabilities $24,026 $24,072
======= =======
Commitments and contingencies
Stockholders' Equity:
Preferred stock $.01 par value per share,
500,000 shares authorized, no shares
issued or outstanding -- --
Common stock of $.01 par value, 3,000,000
shares authorized, 134,390 shares issued
and outstanding at March 31, 2000 and
December 31, 1999 1 1
Additional paid-in capital 1,002 1,002
Retained earnings 1,925 1,882
Accumulated other comprehensive income --
Loan to employee stock ownership plan (97) (97)
------- -------
Total stockholders' equity $ 2,831 $ 2,788
------- -------
Total liabilities and stockholders'
equity $26,857 $26,860
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
3
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PEOPLES BANKCORP, INC.
Consolidated Statements of Income
For the Three Months Ended March 31, 2000 and 1999
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
2000 1999
------ ------
<S> <C> <C>
Interest income:
Loans $413 $411
Securities 65 26
Other short-term investments 20 24
---- ----
Total interest income 498 461
---- ----
Interest expense:
Deposits 257 254
Borrowings 20 --
---- ----
Total interest expense 277 254
---- ----
Net interest income 221 207
Provision for loan losses 8 11
---- ----
Net interest income after
provision for loan losses 213 196
---- ----
Non-interest income:
Service charges 8 8
Other 2 7
---- ----
Total non-interest income 10 15
---- ----
Non-interest expenses:
Salaries and employee
benefits 76 72
Directors fees 12 10
Building, occupancy and
equipment 15 14
Data processing 9 8
Postage and supplies 6 5
Deposit insurance premium 1 3
Insurance 5 2
Other 32 33
---- ----
Total non-interest expenses 156 147
---- ----
Income before income tax
expense 67 64
---- ----
Income tax expense 24 21
---- ----
Net income $ 43 $ 43
==== ====
Earnings per share
Basic and diluted $.32 $.32
---- ----
Weighted average shares
outstanding 134 134
---- ----
</TABLE>
See accompanying notes to consolidated financial statements.
4
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PEOPLES BANKCORP, INC.
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2000 and 1999
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
2000 1999
-------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 43 $ 43
Adjustment to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 7 2
Decrease in accrued interest receivable 19 36
Provision for loan losses 8 1
Net gains on sales of securities -- --
Net amortization (accretion of
premium/discounts) -- --
Increase in other liabilities 40 63
Deferred income taxes -- --
Decrease in other assets (11) (47)
------- -------
Net cash provided by operating
activities 106 141
------- -------
Cash flows from investing activities:
Net increase (decrease) in loans 327 (246)
Proceeds from sales of securities
available-for-sale -- --
Proceeds from maturities and principal
reductions of securities available-for-sale -- --
Purchases of securities held-to-maturity -- --
Proceeds from maturities and principal
reductions of securities held-to-maturity 34 1,001
Purchase of FHLB stock (16) --
Purchase of fixed assets -- (18)
------- -------
Net cash provided by investing
activities 345 737
------- -------
Cash flows from financing activities:
Increase (decrease) in deposits 414 (105)
Decrease in advance payments from borrowers
for property taxes and insurance -- --
Borrowings from FHLB -- --
Repayments to FHLB (500) --
------- -------
Net cash provided by
financing activities (86) (105)
Net increase in cash and cash equivalents 365 773
Cash and cash equivalents at beginning of period 1,457 2,475
------- -------
Cash and cash equivalents at end of period $ 1,822 $ 3,248
======= =======
</TABLE>
5
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PEOPLES BANKCORP, INC.
Consolidated Statements of Cash Flows, Continued
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
2000 1999
-------- -------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Non-cash investing activities:
Additions to real estate owned $ -- $ --
Cash paid during the period for:
Interest 281 254
Income taxes 11 20
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
6
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PEOPLES BANKCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
NOTE 1 - PEOPLES BANKCORP, INC.
Peoples Bankcorp, Inc. (the "Company") was incorporated under
the laws of the State of New York for the purpose of becoming
the holding company of Ogdensburg Federal Savings and Loan
Association (the "Association") in connection with the
Association's conversion from a federally chartered mutual
savings and loan association to a federally chartered capital
stock savings and loan association. On November 22, 1998, the
Company commenced a subscription offering of its shares in
connection with the Association's conversion. The Company's
offering and the Association's conversion closed on December 28,
1998. A total of 134,390 shares were sold at $10.00 per share.
NOTE 2 - BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
The accompanying unaudited financial statements have been
prepared in accordance with the instructions to Form 10-QSB and
on the same basis as the Company's audited financial statements.
In the opinion of management, all adjustments, consisting of
normal recurring accruals, necessary to present fairly the
financial position, results of operations, and cash flows for
the interim periods presented have been included. The results
of operations for such interim periods are not necessarily
indicative of the results expected for the full year.
NOTE 3 - PLAN OF CONVERSION
On July 23, 1998, the Association's Board of Directors formally
approved a plan ("Plan") to convert from a federally chartered
mutual savings and loan association to a federally chartered
stock savings and loan association subject to approval by the
Association's members and the Office of Thrift Supervision. The
Plan called for the common stock of the Association to be
purchased by the Company and the common stock of the Company to
be offered to various parties in a subscription offering at a
price based upon an independent appraisal of the Association.
All requisite approvals were obtained and the conversion and the
Company's offering were consummated effective December 28, 1998.
Upon consummation of the conversion, the Association established
a liquidation account in an amount equal to its retained
earnings as reflected in the latest statement of financial
condition used in the final conversion prospectus. The
liquidation account will be maintained for the benefit of
certain depositors of the Association who continue to maintain
their deposit accounts in the Association after conversion. In
the event of a complete liquidation of the Association, such
depositors will be entitled to receive a distribution from the
liquidation account before any liquidation may be made with
respect to the common stock.
7
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
The Company's assets consist primarily of its ownership of
the Association. As such, the following discussion relates
primarily to the Association's financial condition and results
of operations.
The Association's results of operations depend primarily on
net interest income, which is determined by (i) the difference
between rates of interest it earns on its interest-earning
assets and the rates it pays on interest-bearing liabilities
(interest rate spread), and (ii) the relative amounts of
interest-earning assets and interest-bearing liabilities. The
Association's results of operations are also affected by
non-interest expense, including primarily compensation and
employee benefits, federal deposit insurance premiums and office
occupancy costs. The Association's results of operations also
are affected significantly by general and economic and
competitive conditions, particularly changes in market interest
rates, government policies and actions of regulatory
authorities, all of which are beyond its control.
FORWARD-LOOKING STATEMENTS
In addition to historical information contained herein,
the following discussion contains forward-looking statements
that involve risks and uncertainties. Economic circumstances,
the Company's operations and the Company's actual results could
differ significantly from those discussed in the forward-looking
statements. Some of the factors that could cause or contribute
to such differences are discussed herein but also include
changes in the economy and interest rates in the nation and the
Company's market area generally. Some of the forward-looking
statements included herein are the statements regarding
management's determination of the amount and adequacy of the
allowance for losses on loans, the effect of certain recent
accounting pronouncements and the Company's projected effects
related to the year 2000 compliance issue.
COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2000 AND DECEMBER
31, 1999
Total assets at March 31, 2000 amounted to $26.9 million, a
$3,000 decrease from December 31, 1999's level of $26.9 million.
The composition of the Company's balance sheet had changed
somewhat with cash and cash equivalents increasing by $365,000
from $1.5 million at December 31, 1999 to $1.8 million at March
31, 2000, an increase of 25.05%. Offsetting this increase was a
$335,000 decrease in net loans from $20.8 million at December
31, 1999 to $20.4 million at March 31, 2000. Total liabilities
at March 31, 2000 had decreased marginally from December 31,
1999, to $24.0 million at March 31, 2000 as compared to $24.1
million at December 31, 1999. Deposits, which comprise the
majority of total liabilities, amounted to $22.9 million at
March 31, 2000, up from $22.4 million at December 31, 1999 for
an increase of $414,000, or 1.85%, with decreases in NOW and
savings and club accounts being offset by increases in demand
accounts and certificates of deposit. Total stockholders'
equity at March 31, 2000 amounted to $2.8 million as compared to
$2.8 million at December 31, 1999 with the $43,000 increase
attributable to the retention of earnings from the period. At
March 31, 2000 the Association was in compliance with all
applicable regulatory capital requirements with total core and
tangible capital of $2.4 million (9.2% of adjusted total assets)
and total risk-based capital of $2.6 million (17.4%) of risk
weighted assets).
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RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000
AND 1999
NET INCOME. Net income for the three months ended March
31, 2000 and the three months ended March 31, 1999 amounted to
$43,000, with an increased level of net interest income in the
fiscal 2000 quarter, offset by the combined effects of a
decrease in non-interest income and increases in non-interest
expenses and income tax expense.
8
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NET INTEREST INCOME. Net interest income before provision
for loan losses increased by $14,000, or 6.76%, from $207,000
for the three months ended March 31, 1999 to $221,000 for the
three months ended March 31, 2000. The increase in net interest
income was primarily due to a $37,000 increase in interest
income, partially offset by a $23,000 increase in interest
expense as compared to the three months ended March 31, 1999.
The increase in interest income was primarily due to a $39,000
increase in interest from the securities portfolio due to the
purchase of a GNMA security. Interest expense for the quarter
ended March 31, 2000 amounted to $277,000, a $23,000 increase
from the same period in 1999 with the increase attributable to
FHLB borrowings as well as an increase in prevailing interest
rates.
PROVISION FOR LOAN LOSSES. For the three months ended
March 31, 2000, the Company made an $8,000 provision for loan
losses as compared to a provision of $11,000 or the same period
in 1999. The lower provision in 2000 reflected the level of
charge-offs during that period.
A provision for losses on loans is charged to earnings to
bring the total allowance for loan losses to a level considered
appropriate by management based on historical experience, the
volume and type of lending conducted by the Association, the
status of past due principal and interest payments, general
economic conditions, particularly as such conditions relate to
the Association's market area, and other factors related to the
collectibility of the Association's loan portfolio. There can be
no assurance that the loan loss allowance of the Association
will be adequate to cover losses on nonperforming assets in the
future.
NON-INTEREST INCOME. Non-interest income for the three
months ended March 31, 2000 amounted to $10,000 as compared to
$15,000 for the three months ended March 31, 1999 with the
decrease attributable to decreased appraisal and overdraft fees.
NON-INTEREST EXPENSES. Non-interest expenses for the first
quarter of 2000 totaled $156,000, up from $147,000 for the first
quarter of 1999 with the increase primarily due to a $4,000
increase in salaries and employee benefits, a $3,000 increase in
insurance and a $2,000 increase in directors fees, partially
offset by a $2,000 decrease in FDIC insurance premiums. The
decrease in this item was due to the decreased assessment rate
paid by institutions in connection with the FICO bonds.
INCOME TAX EXPENSE. Income tax expense for the three
months ended March 31, 2000 amounted to $24,000, a $3,000
increase from the same period in 1999 with the increase
primarily attributable to an increase in pre-tax income. The
Company's effective tax rates for the respective periods were
35.82% and 32.81%.
9
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LIQUIDITY AND CAPITAL RESOURCES
The Association is required to maintain minimum levels of
liquid assets as defined by OTS regulations. This requirement,
which varies from time to time depending upon economic
conditions and deposit flows, is based upon a percentage of the
Association's deposits and short-term borrowings. The required
ratio at March 31, 2000 was 4%. For the month ended March 31,
2000 the Association was in compliance.
The Association's primary sources of funds are deposits,
repayment of loans and mortgage-backed securities, maturities of
investments and interest-bearing deposits, funds provided from
operations. The Association is also able to obtain advances
from the Federal Home Loan Bank of New York. While scheduled
repayments of loans and mortgage-backed securities and
maturities of investment securities are predicable sources of
funds, deposit flows and loan prepayments are greatly influenced
by the general level of interest rates, economic conditions and
competition. The Association uses its liquidity resources
principally to fund existing and future loan commitments, to
fund maturing certificates of deposit and demand deposit
withdrawals, to invest in other interest-earning assets, to
maintain liquidity, and to meet operating expenses.
FINANCIAL MODERNIZATION LEGISLATION
On November 12, 1999, President Clinton signed legislation
which could have a far-reaching impact on the financial services
industry. The Gramm-Leach-Bliley ("G-L-B") Act authorizes
affiliations between banking, securities and insurance firms and
authorizes bank holding companies and national banks to engage
in a variety of new financial activities. Among the new
activities that will be permitted to bank holding companies are
securities and insurance brokerage, securities underwriting,
insurance underwriting and merchant banking. The Board of
Governors of the Federal Reserve System (the "Federal Reserve
Board"), in consultation with the Secretary of the Treasury, may
approve additional financial activities. The G-L-B Act,
however, prohibits future acquisitions of existing unitary
savings and loan holding companies, like the Company, by firms
which are engaged in commercial activities and limits the
permissible activities of unitary holding companies formed after
May 4, 1999.
The G-L-B Act imposes new requirements on financial
institutions with respect to customer privacy. The G-L-B Act
generally prohibits disclosure of customer information to
non-affiliated third parties unless the customer has been given
the opportunity to object and has not objected to such
disclosure. Financial institutions are further required to
disclose their privacy policies to customers annually.
Financial institutions, however, will be required to comply with
state law if it is more protective of customer privacy than the
G-L-B Act. The G-L-B Act directs the federal banking agencies,
the National Credit Union Administration, the Secretary of the
Treasury, the Securities and Exchange Commission and the Federal
Trade Commission, after consultation with the National
Association of Insurance Commissioners, to promulgate
implementing regulations within six months of enactment. The
privacy provisions will become effective six months thereafter.
The G-L-B Act contains significant revisions to the FHLB
System. The G-L-B Act imposes new capital requirements on the
FHLBs and authorizes them to issue two classes of stock with
differing dividend rates and redemption requirements. The G-L-B
Act deletes the current requirement that the FHLBs annually
contribute $300 million to pay interest on certain government
obligations in favor of a 20% of net earnings formula. The
G-L-B Act expands the permissible uses of FHLB advances by
community financial institutions (under $500 million in assets)
to include funding loans to small businesses, small farms and
small agri-businesses. The G-L-B Act makes membership in the
FHLB voluntary for federal savings associations.
10
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The G-L-B Act contains a variety of other provisions
including a prohibition against ATM surcharges unless the
customer has first been provided notice of the imposition and
amount of the fee. The G-L-B Act reduces the frequency of
Community Reinvestment Act examinations for smaller institutions
and imposes certain reporting requirements on depository
institutions that make payments to non-governmental entities in
connection with the Community Reinvestment Act. The G-L-B Act
eliminates the SAIF special reserve and authorizes a federal
savings association that converts to a national or state bank
charter to continue to use the term "federal" in its name and to
retain any interstate branches.
The Company is unable to predict the impact of the G-L-B
Act on its operations at this time. Although the G-L-B Act
reduces the range of companies with which the Company may
affiliate, it may facilitate affiliations with companies in the
financial services industry.
11
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None. [Confirm]
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) Exhibits.
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K.
None.
12
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SIGNATURES
In accordance with the requirements of the Securities
Exchange Act of 1934, the registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly
authorized.
PEOPLES BANKCORP, INC.
Date: May 12, 2000 By: /s/ Robert E. Wilson
---------------------------------
Robert E. Wilson
President and Chief Executive
Officer
(Duly Authorized and Principal
Executive, Accounting and
Financial Officer)
13
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 420
<INT-BEARING-DEPOSITS> 1,402
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 3,831
<INVESTMENTS-MARKET> 3,778
<LOANS> 20,603
<ALLOWANCE> 172
<TOTAL-ASSETS> 26,857
<DEPOSITS> 22,858
<SHORT-TERM> 1,000
<LIABILITIES-OTHER> 168
<LONG-TERM> 0
<COMMON> 1
0
0
<OTHER-SE> 2,830
<TOTAL-LIABILITIES-AND-EQUITY> 26,857
<INTEREST-LOAN> 413
<INTEREST-INVEST> 65
<INTEREST-OTHER> 20
<INTEREST-TOTAL> 498
<INTEREST-DEPOSIT> 257
<INTEREST-EXPENSE> 277
<INTEREST-INCOME-NET> 221
<LOAN-LOSSES> 8
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 156
<INCOME-PRETAX> 67
<INCOME-PRE-EXTRAORDINARY> 43
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 43
<EPS-BASIC> .32
<EPS-DILUTED> .32
<YIELD-ACTUAL> 3.39
<LOANS-NON> 26
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 176
<CHARGE-OFFS> 4
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 172
<ALLOWANCE-DOMESTIC> 172
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
