UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(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, 1999
or
[ ] Transition Report Pursuant to Section 13 or 15(d)of the Securities
Exchange Act of 1934
For the transition period from ___________ to _____________
Commission File Number: 00025027
COHOES BANCORP, INC.
(Exact name of registrant as specified in its charter)
Delaware 14-1807865
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
75 Remsen Street, Cohoes, New York 12047
(Address of principal executive offices) (Zip Code)
(518)233-6500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
[ X ] Yes [ ] No
As of May 3,1999, there were 9,535,225 shares of the registrant's common
stock outstanding.
1
<PAGE>
FORM 10-Q
Cohoes Bancorp, Inc.
INDEX
Page
PART 1 - FINANCIAL INFORMATION Number
Item 1. Financial Statements
Consolidated Statements of Financial Condition at
March 31, 1999 and June 30, 1998 3
Consolidated Statements of Income for the three and
nine months ended March 31, 1999 and 1998 4-5
Consolidated Statements of Changes in Stockholders' Equity
for the nine months ended March 31, 1999 and 1998 6
Consolidated Statements of Cash Flows for the nine
months ended March 31, 1999 and 1998 7
Notes to Consolidated Interim Financial Statements 8-11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12-21
Item 3. Quantitative and Qualitative Disclosures about Market Risk 22
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 22
Item 2. Changes in Securities and Use of Proceeds 22
Item 3. Defaults Upon Senior Securities 22
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 5. Other Information 22
Item 6. Exhibits and Reports on Form 8-K 22
Signature Page 23
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
COHOES BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
March June
1999 1998
ASSETS: (In thousands)
CASH AND CASH EQUIVALENTS:
Cash and due from banks $ 8,653
$ 6,891
Federal funds sold 15,510 5,000
Interest-bearing deposits with banks 330 576
Total cash and cash equivalents 22,731 14,229
MORTGAGE LOANS HELD FOR SALE - 38
SECURITIES AVAILABLE FOR SALE, amortized cost of 43,147 48,720
$43,084 and $48,701 at March 31, 1999 and June
30, 1998, respectively
INVESTMENT SECURITIES, Approximate fair value of 54,921 45,424
$55,027 and $45,547 at March 31, 1999 and June
30, 1998, respectively
NET LOANS RECEIVABLE 489,527 412,759
ACCRUED INTEREST RECEIVABLE 3,687 3,482
BANK PREMISES AND EQUIPMENT 7,639 7,303
OTHER REAL ESTATE OWNED 507 509
MORTGAGE SERVICING RIGHTS 892 1,042
OTHER ASSETS 5,168 2,210
Total assets $ 628,219 $ 535,716
LIABILITIES AND STOCKHOLDERS' EQUITY:
LIABILITIES:
Due to depositors $ 429,004 $ 449,541
Mortgagors' escrow deposits 6,146 8,994
Borrowings 49,263 19,897
Other liabilities 5,376 4,002
Total liabilities 489,789 482,434
Commitments and contingent liabilities
STOCKHOLDERS' EQUITY:
Common stock 95 -
Additional paid in capital 93,018 -
Retained earnings 54,035 53,270
Unallocated common stock held by ESOP (8,757) -
Accumulated other comprehensive
income, net 39 12
Total stockholders' equity 138,430 53,282
Total liabilities and stockholders' $ 628,219 $ 535,716
equity
See accompanying notes to consolidated interim financial statements.
3
<PAGE>
COHOES BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the three months ended March 31,
1999 1998
(In thousands, except per share amounts)
INTEREST INCOME:
Loan receivable $ 9,278 $8,269
Securities available for sale 501 372
Investment securities 785 443
FHLB stock 59 64
Federal funds sold 530 267
Bank deposits 4 -
Total interest income 11,157 9,415
INTEREST EXPENSE:
Deposits 4,066 4,594
Mortgagors' escrow deposits 22 21
Borrowings 698 40
Total interest expense 4,786 4,655
Net interest income 6,371 4,760
Provision for loan losses 425 180
Net interest income after
Provision for loan losses 5,946 4,580
NONINTEREST INCOME:
Service charges on deposits 187 175
Loan servicing revenue 88 124
Net gain on sale of mortgage loans 2 31
Other 424 376
Total noninterest income 701 706
NONINTEREST EXPENSE:
Compensation and benefits 2,176 1,905
Occupancy 736 661
FDIC deposit insurance premium 17 16
Advertising 96 150
Other 959 688
Total noninterest expense 3,984 3,420
Income before income tax expense 2,663 1,866
Income tax expense 1,043 731
NET INCOME $ 1,620 $1,135
Net income per share since conversion
Basic $ .18 $ N/A
Diluted $ .18 $ N/A
See accompanying notes to consolidated interim financial statements.
4
<PAGE>
COHOES BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the nine months ended March 31,
1999 1998
(In thousands, except per share amounts)
INTEREST INCOME:
Loan receivable $26,668 $25,129
Securities available for sale 1,750 1,262
Investment securities 2,223 1,276
FHLB stock 186 183
Federal funds sold 980 605
Bank deposits 22 3
Total interest income 31,829 28,458
INTEREST EXPENSE:
Deposits 13,451 14,083
Mortgagors' escrow deposits 299 83
Borrowings 1,781 40
Total interest expense 15,531 14,206
Net interest income 16,298 14,252
Provision for loan losses 785 580
Net interest income after
provision for loan losses 15,513 13,672
NONINTEREST INCOME:
Service charges on deposits 590 555
Loan servicing revenue 296 380
Net gain on sale of mortgage loans 8 77
Other 1,282 1,099
Total noninterest income 2,176 2,111
NONINTEREST EXPENSE:
Compensation and benefits 6,290 5,470
Occupancy 2,220 2,004
FDIC deposit insurance premium 44 49
Advertising 289 313
Contribution to Cohoes Savings Foundation 2,777 -
Merger termination fee 2,000 -
Other 2,785 2,196
Total noninterest expense 16,405 10,032
Income before income tax expense 1,284 5,751
Income tax expense 519 2,279
NET INCOME $ 765 $ 3,472
Net income per share since conversion
Basic $ .18 $ N/A
Diluted $ .18 $ N/A
See accompanying notes to consolidated interim financial statements.
5
<PAGE>
COHOES BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Accumulated Unallocated
Additional other Com- ESOP Com-
Common Paid In Retained prehensive Common prehensive
Stock Capital Earnings Income, net Stock Total Income
Nine Months Ended
March 31, 1999
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1998 $ - $ - $53,270 $ 12 $ - $ 53,282
Net Income, July 1, 1998 -
March 31, 1999 - - 765 - - 765 $ 765
Issuance of 9,257,500 shares
of $.01 par value common
stock in initial public
offering, net of conversion
related expense 92 90,258 - - - 90,350
Issuance of 277,725 shares
of $.01 par value common
stock to the Cohoes Savings
Foundation 3 2,774 - - - 2,777
Open market purchases of Cohoes
Bancorp, Inc. common stock
by ESOP trustee - - - - (9,137) (9,137)
Allocation of ESOP shares - (14) - - 380 366
Change in unrealized gain or loss
on securities available for sale,
net - - - 27 - 27 27
Balance, March 31, 1999 $95 $93,018 $54,035 $ 39 $(8,757) $138,430 $ 792
Nine Months Ended
March 31, 1998
Balance, June 30, 1997 $ - $ - $49,183 $(91) $ - $ 49,092
Net Income, July 1, 1997
March 31, 1998 - - 3,472 - - 3,472 $3,472
Change in unrealized gain or loss
on securities available for sale,
net - - - 84 - 84 84
Balance, March 31, 1998 $ - $ - $52,655 $ (7) $ - $ 52,648 $3,556
</TABLE>
See accompanying notes to consolidated interim financial statements.
6
<PAGE>
COHOES BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the nine months ended March 31,
1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS: (In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 765 $ 3,472
Adjustments to reconcile net income to net cash provided by operating activities-
Charitable contribution to the Cohoes Savings Foundation 2,777 -
Depreciation 980 869
Amortization of purchased and originated mortgage servicing rights 151 136
Provision for loan losses 785 580
ESOP compensation expense 366 -
Net (gain) loss on securities available for sale (2) 1
Net premium (discount) amortization of investment securities 38 28
Net premium (discount) amortization of securities available for sale (7) 5
Net gain on sale of mortgage loans (8) (77)
Proceeds from sale of loans held for sale 602 8,138
Loans originated for sale (556) (7,886)
(Increase) decrease in interest receivable (205) 383
Increase in other assets (2,958) (390)
Increase (decrease) in other liabilities 1,374 144
Net loss on sale of other real estate owned 73 145
Total adjustments 3,410 2,076
Net cash provided by operating activities 4,175 5,548
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from investment securities called/matured 16,025 15,000
Purchase of investment securities (32,580) (29,047)
Proceeds from the maturity of securities available for sale - 585
Proceeds from securities available for sale called 22,300 24,000
Proceeds from the sale of securities available for sale 716 -
Purchase of securities available for sale (23,569) (29,823)
Proceeds from principal reduction in investment securities 7,020 5,115
Proceeds from principal reduction in securities available for sale 6,162 3,065
Net loans made to customers (78,839) (2,668)
Originated mortgage servicing rights (1) (81)
Proceeds from sale of other real estate owned 1,215 1,688
Capital expenditures (1,316) (571)
Net cash used in investing activities (82,867) (12,737)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in mortgagors' escrow deposits (2,848) (3,160)
Net Increase in borrowings 29,366 5,000
Net increase (decrease) in deposits (20,537) 2,445
Net proceeds from the issuance of common stock 90,350 -
Purchase of ESOP common stock (9,137) -
Net cash provided by financing activities 87,194 4,285
Net increase (decrease) in cash and cash equivalents 8,502 (2,906)
CASH AND CASH EQUIVALENTS, beginning of period 14,229 16,664
CASH AND CASH EQUIVALENTS, end of period $ 22,731 $ 13,760
ADDITIONAL DISCLOSURE RELATIVE TO CASH FLOWS:
Interest paid $ 15,538 $ 14,343
Taxes paid 540 1,599
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES:
Transfer of loans to other real estate owned $ 1,286 $ 979
</TABLE>
See accompanying notes to consolidated interim financial statements.
7
<PAGE>
COHOES BANCORP, INC.
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. Basis of Presentation
Cohoes Bancorp, Inc. ("Company") was incorporated under Delaware law in
September 1998 as a savings and loan holding company to purchase 100% of the
common stock of the Cohoes Savings Bank ("Bank"). On December 31, 1998,
Cohoes Bancorp, Inc. completed its initial public offering of 9,257,500
shares of common stock in connection with the conversion of the Bank from a
mutual form institution to a stock savings bank (the "Conversion").
Concurrently with the Conversion, Cohoes Bancorp, Inc. acquired all of the
Bank's common stock.
The consolidated financial statements included herein reflect all normal
recurring adjustments which are, in the opinion of management, necessary to
present a fair statement of the results for the interim periods presented.
The results of operations for the three and nine months ended March 31, 1999
are not necessarily indicative of the results of operations that may be
expected for the entire year ending June 30, 1999. Certain information and
note disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted pursuant to the rules and regulations of the U.S. Securities and
Exchange Commission.
These consolidated financial statements should be read in conjunction
with the Bank's audited consolidated financial statements and notes thereto
included in the Company's Prospectus dated November 12, 1998.
2. Earnings Per Share
On December 31, 1998, Cohoes Bancorp, Inc. completed its initial stock
offering of 9,257,500 shares of common stock. Concurrent with the offering,
approximately 8% of the shares issued (762,818) were purchased by the Cohoes
Bancorp, Inc. Employee Stock Ownership Plan ("ESOP") using the proceeds of a
loan from the Company to the ESOP. As of March 31, 1999, 18,363 shares have
been released and 13,294 have been committed to be released from the ESOP
trust for allocation to ESOP participants. Consequently, the remaining
731,161 shares have not yet been released and under AICPA Statement of
Position 93-6, these shares will not be considered outstanding for purposes
of calculating per share amounts. Earnings per share are not presented for
periods prior to the initial public offering as the Bank was a mtutal savings
bank, and had no stock outstanding. During the three month period ended March
31, 1999, the Company had no outstanding securities or other contracts which,
if exercised or converted, would have resulted in the issuance of common
stock. Hence, in accordance with Statement of Financial Accounting Standards
No. 128 "Earnings per Share," basic and diluted earnings per share are
identical.
3. Comprehensive Income
The Company adopted Statement of Financial Accounting Standards No.130
"Reporting Comprehensive Income" ("SFAS N0. 130") in 1998. All comparative
financial statements provided for earlier periods have been reclassified to
reflect application of the provisions of this Statement.
Comprehensive income includes net income and all other changes in equity
during a period except those resulting from investments by owners and
distributions to owners. Other comprehensive income includes revenues,
expenses, gains, and losses that under generally accepted accounting
principles are included in comprehensive income but excluded from net income.
Comprehensive income and accumulated other comprehensive income are
reported net of related income taxes. Accumulated other comprehensive income
for the Company consists solely of unrealized holding gains or losses on
available-for-sale securities.
8
<PAGE>
4. Loan Portfolio Composition
The following table sets forth the composition of the loan portfolio in
dollar amounts and percentage of the portfolio at the dates indicated.
<TABLE>
<CAPTION>
March 31, 1999 June 30, 1998
Amount % of Total Amount % of Total
(Dollars in thousands)
<S> <C> <C> <C> <C>
Real estate loans:
One-to-four family real estate $309,426 62.76% $258,399 62.07%
Multi-family and commercial real estate 121,568 24.66 93,229 22.39
Total real estate loans 430,994 87.42 351,628 84.46
Consumer loans:
Home equity lines of credit 20,055 4.07 21,976 5.28
Conventional second mortgages 13,122 2.66 15,093 3.63
Automobile loans 9,651 1.96 9,783 2.35
Credit cards - - 1,655 0.40
Other consumer loans 1,305 0.26 1,184 0.28
Total consumer loans 44,133 8.95 49,691 11.94
Commercial business loans 17,919 3.63 14,991 3.60
Total loans 493,046 100.00% 416,310 100.00%
Less:
Net deferred loan origination fees and costs 244 (18)
Allowance for loan losses (3,763) (3,533)
Net loans receivable $489,527 $412,759
</TABLE>
9
<PAGE>
5. Non-Performing Assets
The following table sets forth information regarding non-accrual loans,
other past due loans, troubled debt restructurings and other real estate
owned at the dates indicated.
<TABLE>
<CAPTION>
March 31, June 30,
1999 1998
(Dollars in thousands)
<S> <C> <C>
Non-accrual loans:
One-to-four family real estate $2,306 $2,635
Multi-family and commercial real estate 1,152 823
Conventional second mortgages 10 35
Consumer loans 106 105
Commercial business loans 62 65
Total non-accrual loans 3,636 3,663
Loans contractually past due 90 days or more and still accruing interest:
Consumer loans - 57
Total loans 90 days or more and still accruing interest - 57
Troubled debt restructurings 1,306 1,929
Total non-performing loans 4,942 5,649
Other real estate owned (ORE) 507 509
Total non-performing assets $5,449 $6,158
Allowance for loan losses $3,763 $3,533
Coverage of non-performing loans 76.14% 62.54%
Total non-performing loans as a percentage of total loans 1.00% 1.36%
Total non-performing loans as a percentage of total assets .79% 1.05%
</TABLE>
10
<PAGE>
6. Allowance for Loan Losses
The following table sets forth the activity in the allowance for loan
losses at the dates and for the periods indicated.
At or for the nine months
ended March 31,
1999 1998
(In thousands)
Allowance for loan losses, beginning period $3,533 $3,105
Charge-off loans:
Real estate loans
One-to-four family real estate 205 266
Multi-family and commercial real estate 339 74
Total real estate loan charge-offs 544 340
Commercial business loans charge-offs - 52
Consumer loans
Home equity lines of credit - 8
Conventional second mortgages 24 16
Automobile loans 23 116
Credit cards 144 167
Other consumer loans 34 28
Total consumer loan charge-offs 225 335
Total charged-offs loans 769 727
Recoveries on loans previously charged-off:
Real estate loans
One-to-four family real estate 113 40
Multi-family and commercial real estate 50 93
Total real estate loan recoveries 163 133
Commercial business loan recoveries 1 35
Consumer loans
Home equity lines of credit 19 -
Conventional second mortgages - -
Automobile loans 3 8
Credit cards 20 16
Other consumer loans 8 7
Total consumer loan recoveries 50 31
Total recoveries 214 199
Net loans charged-off (555) (528)
Provision for loan losses 785 580
Allowance for loan losses, end of period $3,763 $3,157
11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Cohoes Bancorp, Inc. ("Company"), headquartered in Cohoes, New York is a
savings and loan holding company incorporated in September 1998 under the
laws of the State of Delaware. The Company was organized at the direction of
Cohoes Savings Bank ("Bank") for the purpose of acquiring all of the common
stock of the bank issued in connection with the conversion of the Bank from
mutual to stock form ("Conversion"). On December 31, 1998, the Bank completed
its Conversion, and the Company sold 9,257,500 shares of its common stock at
a price of $10.00 per share in a subscription offering ("Offering") to
certain depositors of the Bank. In connection with the Conversion and
Offering, the Company established the Cohoes Savings Foundation, Inc.
("Foundation") and made a charitable contribution of 277,725 shares of the
Company's common stock to the Foundation, which resulted in a one-time charge
relating to the funding of the Foundation of $2.8 million ($1.7 million net
of tax). The net proceeds from the Offering amounted to $90.4 million, and
the Company contributed 50% of the net proceeds from the Offering to the Bank
in exchange for all of the issued and outstanding shares of common stock of
the Bank. The Company had no significant assets or operations prior to
December 31, 1998. Per share data is reported for the period since
Conversion. Presently, the only significant assets of the Company are the
capital stock of the Bank, the Company's loan to the Employee Stock Ownership
Plan of the Company and the investments of the net proceeds from the Offering
retained by the Company. The Company is subject to the financial reporting
requirements of the Securities Exchange Act of 1934, as amended.
Financial Condition
For the nine month period ending March 31, 1999, total assets of the
company increased $92.5 million, or 17.3%, from $535.7 million at June 30,
1998 to $628.2 million at March 31, 1999. This increase in total assets was
primarily attributable to a $76.7 million, or 18.6%, increase in net loans
receivable which increased from $412.8 at June 30, 1998 to $489.5 million at
March 31, 1999, and a $10.5 million increase in federal funds sold, which
increased from $5.0 million at June 30, 1998 to $15.5 million at March 31,
1999. These increases resulted from the investment of conversion proceeds in
loans, particularly mortgage loans, and in federal funds sold. The increase
in the loan portfolio was reduced by the sale of the $1.5 million credit card
portfolio in February 1999.
Deposits decreased $20.5 million, or 4.6%, from $449.5 million at June
30, 1998, to $429.0 million at March 31, 1999. This decrease was primarily
attributable to the withdrawal of deposits to purchase stock in the
Conversion.
Borrowings, comprised primarily of Federal Home Loan Bank advances,
increased $29.4 million, or 147.7%, from $19.9 million at June 30, 1998 to
$49.3 million at March 31, 1999. This increase was primarily the result of
additional longer term fixed rate Federal Home Loan Bank advances used to
fund long-term fixed rate residential mortgages held in the portfolio.
Total stockholder's equity increased $85.1 million, or 159.7%, from
$53.3 million at June 30, 1998 to $138.4 million at March 31, 1999. The
increase was primarily attributable to the $90.4 million in net proceeds
raised by the Company in its Offering in connection with the Bank's
Conversion.
12
<PAGE>
Average Balance Sheets. The following tables set forth certain
information relating to the Company for the three and nine months ended March
31, 1999 and 1998. The yields and costs were derived by dividing interest
income or expense by the average balance of assets or liabilities,
respectively, for the periods shown. The yields include deferred fees and
discounts which are considered yield adjustments.
<TABLE>
<CAPTION>
Three Months Ended March 31,
1999 1998
Average Interest Average Interest
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Balance Paid Rate Balance Paid Rate
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets
Loans receivable $478,600 $ 9,278 7.86% $400,405 $8,269 8.38%
Securities available for sale 34,516 501 5.89 23,748 372 6.35
Investments securities 53,126 785 5.99 27,523 443 6.53
Federal funds sold 40,549 530 5.30 19,637 267 5.51
FHLB stock 3,603 59 6.64 3,469 64 7.48
Other interest-earning assets 398 4 4.08 6 - -
Total interest-earning assets 610,792 11,157 7.41 474,788 9,415 8.04
Non-earning assets 23,830 18,276
Total assets $634,622 $493,064
Interest-bearing liabilities
Savings accounts $126,559 934 2.99 $119,952 887 3.00
School savings accounts 16,477 172 4.23 15,383 210 5.54
Money market accounts 20,510 167 3.30 18,095 139 3.12
Demand deposits 67,539 87 0.52 47,138 76 0.65
Time deposits 206,332 2,706 5.32 227,649 3,282 5.85
Escrow accounts 5,022 22 1.78 5,240 21 1.63
Borrowings 49,362 698 5.73 2,611 40 6.21
Total interest-bearing liabilities 491,801 4,786 3.95 436,068 4,655 4.33
Other liabilities 5,488 4,504
Stockholders' equity 137,333 52,492
Total liabilities and
stockholders' equity $634,622 $493,064
Net interest income $ 6,371 $4,760
Net interest rate spread 3.46% 3.71%
Net earning assets $118,991 $ 38,720
Net yield on average
interest-earning assets 4.23% 4.07%
Average interest-earning assets to
average interest-bearing 1.24 X 1.09 X
liabilities
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Nine Months Ended March 31,
1999 1998
Average Interest Average Interest
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Balance Paid Rate Balance Paid Rate
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets
Loans receivable $449,161 $26,668 7.91% $403,661 $25,129 8.29%
Securities available for sale 37,953 1,750 6.14 26,025 1,262 6.46
Investments securities 49,471 2,223 5.99 26,531 1,276 6.41
Federal funds sold 26,253 980 4.97 14,724 605 5.47
FHLB stock 3,569 186 6.94 3,452 183 7.06
Other interest-earning assets 528 22 5.55 58 3 6.93
Total interest-earning assets 566,935 31,829 7.48 474,451 28,458 7.99
Non-earning assets 22,097 18,506
Total assets $589,032 $492,957
Interest-bearing liabilities
Savings accounts $127,768 2,863 2.98 $120,448 2,707 2.99
School savings accounts 17,286 640 4.93 14,608 607 5.54
Money market accounts 20,129 504 3.34 17,327 402 3.09
Demand deposits 59,457 255 0.57 46,161 223 0.64
Time deposits 219,536 9,189 5.58 230,905 10,144 5.85
Escrow accounts 16,305 299 2.44 6,692 83 1.65
Borrowings 41,238 1,781 5.75 858 40 6.21
Total interest-bearing liabilities 501,719 15,531 4.12 436,999 14,206 4.33
Other liabilities 5,485 4,656
Stockholders' equity 81,828 51,302
Total liabilities and
stockholders' equity $589,032 $492,957
Net interest income $16,298 $14,252
Net interest rate spread 3.36% 3.66%
Net earning assets $ 65,216 $ 37,452
Net yield on average
interest-earning assets 3.83% 4.00%
Average interest-earning assets to
average interest-bearing 1.13 X 1.09 X
liabilities
</TABLE>
14
<PAGE>
Rate/Volume Analysis. The following table presents the extent to which
changes in interest rates and changes in the volume of interest-earning
assets and interest-bearing liabilities have affected the Company's interest
income and interest expense during the periods indicated. Information is
provided in each category with respect to (i) changes attributable to changes
in volume (changes in volume multiplied by prior rate), (ii) changes
attributable to changes in rate (changes in rate multiplied by prior volume)
and (iii) the net change. The changes attributable to the combined impact of
volume and rate have been allocated proportionately to the changes due to
volume and the changes due to rate.
<TABLE>
<CAPTION>
Three Months Ended March 31,1999 Nine Months Ended March 31,1999
Compared to Compared to
Three Months Ended March 31,1998 Nine Months Ended March 31,1998
Increase (Decrease) Total Increase (Decrease) Total
Due To Increase Due to Increase
Volume Rate (Decrease) Volume Rate (Decrease)
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest and dividend income from:
Loans receivable $3,897 $(2,888) $1,009 $3,287 $(1,748) $1,539
Securities available for sale 302 (173) 129 590 (102) 488
Investment securities 585 (243) 342 1,088 (141) 947
Federal funds sold 335 (72) 263 468 (93) 375
FHLB stock 14 (19) (5) 8 (5) 3
Other interest-earning assets 4 - 4 20 (1) 19
Total interest and dividend income 5,137 (3,395) 1,742 5,461 (2,090) 3,371
Interest expense for:
Savings accounts 59 (12) 47 169 (13) 156
School savings accounts 84 (122) (38) 131 (98) 33
Money market accounts 19 9 28 68 34 102
Demand deposits 92 (81) 11 71 (39) 32
Time deposits (293) (283) (576) (487) (468) (955)
Escrow accounts (5) 6 1 162 54 216
Borrowings 680 (22) 658 1,746 (5) 1,741
Total interest expense 636 (505) 131 1,860 (535) 1,325
Net interest income $4,501 $(2,890) $1,611 $3,601 $(1,555) $2,046
</TABLE>
15
<PAGE>
Comparison of Operating Results for the Three Months Ended March 31, 1999 and
1998
For the three months ended March 31, 1999 the Company reported net
income of $1.6 million, as compared to net income of $1.1 million for the
three months ended March 31, 1998. Net interest income increased $1.6 million
for the three months ended March 31, 1999 as compared to the same period last
year. This increase was in part offset by an increase in the provision for
loan losses of $245,000, an increase in noninterest expense of $564,000 and
an increase in income tax expense of $312,000.
Net Interest Income. Net interest income for the three months ended
March 31, 1999 was $6.4 million, up $1.6 million from the same period last
year. The increase was primarily the result of the increase of $136.0 million
in average earning assets from $474.8 million for the three months ended
March 31, 1998 to $610.8 million for the same period this year.
Interest-bearing liabilities also increased during the same period, up $55.7
million. The net impact of these volume increases resulted in an increase in
net interest income of $4.5 million. The volume increase was offset by a 25
basis point reduction in the interest rate spread resulting in a $2.9 million
decrease in net interest income due to rate. The Company's net interest
margin for the three months ended March 31, 1999 was 4.23%, up 16 basis
points from 4.07% for the same period last year. The yield on average earning
assets decreased from 8.04% to 7.41% , while the rate paid on average
interest-bearing liabilities decreased from 4.33% to 3.95%.
Interest Income. Interest income for the three months ended March 31,
1999 was $11.2 million, up from $9.4 million for the comparable period in
1998. The largest component of interest income is interest on loans. Interest
on loans increased from $8.3 million for the three months ended March 31,
1998 to $9.3 million for the three months ended March 31, 1999. This increase
of $1.0 million is the result of an increase in the average balance of loans
partially offset by a decrease in the average yield earned. The average
balance of loans increased $78.2 million to $478.6 million, while the yield
on loans decreased 52 basis points from 8.38% to 7.86%. The increase in
interest on loans was supplemented by increases in interest on securities
available for sale, investment securities and federal funds sold. Interest
income on these categories of earning assets increased $129,000, $342,000 and
$263,000, respectively. Substantially all of the increases in interest income
on these assets are attributed to increases in volume. The average balance of
securities available for sale increased from $23.7 million for the quarter
ended March 31, 1998 to $34.5 million for the quarter ended March 31, 1999.
This increase in volume resulted in an increase in interest income of
$302,000. The average balance of investment securities increased from $27.5
million in the quarter ended March 31, 1998 to $53.1 million in the quarter
ended March 31, 1999, resulting in a $585,000 increase in interest income due
to volume. The average balance of federal funds sold increased from $19.6
million in the quarter ended March 31, 1998 to $40.5 million in the quarter
ended March 31, 1999. The increase in the volume of federal funds sold
resulted in a $335,000 increase in interest income in the quarter ended March
31, 1999 as compared to the quarter ended March 31, 1998. The changes in
yield on securities available for sale, investment securities and federal
funds sold reduced interest income by $488,000.
Interest Expense. Interest expense increased during the quarter ended
March 31, 1999 to $4.8 million, up from $4.7 million for the comparable
period in 1998. Substantially all of the Company's interest expense is from
the Company's interest-bearing deposits. The largest category of
interest-bearing deposits is time deposits. Interest on time deposits for the
quarter ended March 31, 1999 was $2.7 million, down $576,000 from the $3.3
million for the quarter ended March 31, 1998. This decrease is the result of
a decrease in the average balance of time deposits, from $227.6 million for
the quarter ended March 31, 1998 to $206.3 million for the quarter ended
March 31, 1999 and a decrease of 53 basis points in the rates paid on these
deposits from 5.85% for the quarter ended March 31, 1998 to 5.32% for the
same period in 1999. Interest expense on savings accounts increased $47,000
for the quarter ended March 31, 1999 as compared to the same period in the
prior year. This increase is almost entirely attributable to an increase in
the average balance of savings accounts of $6.6 million. Interest on school
savings accounts decreased $38,000, from $210,000 for the quarter ended March
31, 1998 to $172,000 for the quarter ended March 31, 1999, due primarily to a
decrease of 131 basis points in the average rate paid on school savings
accounts from 5.54% to 4.23% partially offset by an increase in the average
balance of school savings accounts of $1.1 million. Interest on money market
accounts increased $28,000, from $139,000 for the quarter ended March 31,
1998 to $167,000 for the quarter ended March 31, 1999. The increase is
attributed to an increase in the average balance of money market accounts of
$2.4 million as well as an increase of 18 basis points in the rates paid on
these money market accounts, from 3.12% to 3.30%. Interest on borrowings
increased $658,000, from $40,000 for the quarter ended March 31, 1998 to
$698,000 for the quarter ended March 31, 1999. The increase is primarily due
to a $46.8 million increase in the average balance of borrowings.
16
<PAGE>
Provision for Loan Losses. The provision for loan losses increased from
$180,000 for the quarter ended March 31, 1998 to $425,000 for the quarter
ended March 31, 1999. The increase in the provision is attributed to an
increase in the level of net charge-offs from $135,000 for the quarter ended
March 31, 1998 to $357,000 for the quarter ended March 31, 1999 and an
increase in the balance of loans outstanding.
Noninterest Income. Total noninterest income for the quarter ended March
31, 1999 was $701,000, substantially unchanged from the $706,000 for the
quarter ended March 31, 1998. Service charges on deposits increased slightly
to $187,000 for the quarter ended March 31, 1999, from $175,000 for the
quarter ended March 31, 1998. Loan servicing revenue declined $36,000 from
$124,000 for the quarter ended March 31, 1998 to $88,000 for the quarter
ended March 31, 1999. The decline relates to a reduction in the balance of
loans serviced for others. Net gain on sale of mortgage loans decreased
$29,000 from $31,000 for the quarter ended March 31, 1998 to $2,000 for the
quarter ended March 31, 1999. The decrease is a result of management's
decision to sell fewer loans in the secondary market. Other noninterest
income increased $48,000 primarily as a result of the establishment of ATM
surcharges in April 1998.
Noninterest Expense. Total noninterest expense increased $564,000 to
$4.0 million for the quarter ended March 31, 1999, up from $3.4 million for
the comparable period in 1998. The increase in compensation and benefits of
$271,000, occupancy of $75,000 and other noninterest expense of $271,000 were
the primary contributors to the overall increase. The increase in
compensation and benefits is primarily attributable to the establishment of
the Company's Employee Stock Ownership Plan in connection with the Company's
Conversion and annual merit increases. Occupancy increased as a result of the
opening of two new branch locations. The increase in other noninterest
expense was attributable to an increase in professional service fees
associated with being a public company and a general increase in other
operating expenses.
Income Tax Expense. Income tax expense increased from $731,000 for the
quarter ended March 31, 1998 to $1.0 million for the comparable period in
1999. The increase is primarily the result of increased income before income
tax expense.
Comparison of Operating Results for the Nine Months Ended March 31, 1999 and
1998
For the nine months ended March 31, 1999 the Company reported net income
of $765,000, as compared to net income of $3.5 million for the nine months
ended March 31, 1998. Noninterest expense increased $6.4 million for the nine
months ended March 31, 1999 as compared to the same period last year. This
increase was in part offset by an increase in net interest income of $2.0
million and a reduction in income tax expense of $1.8 million.
Net Interest Income. Net interest income for the nine months ended March
31, 1999 was $16.3 million, up $2.0 million from the same period last year.
The increase was primarily the result of the increase of $92.4 million in
average earning assets from $474.5 million for the nine months ended March
31, 1998 to $566.9 million for the same period this year. Interest-bearing
liabilities also increased during the same period, up $64.7 million. The net
impact of these volume increases resulted in an increase in net interest
income of $3.6 million. The volume increase was offset by a 30 basis point
reduction in the interest rate spread resulting in a $1.6 million decrease in
net interest income due to rate. The Company's net interest margin for the
nine months ended March 31, 1999 was 3.83%, down 17 basis points from 4.00%
for the same period last year. The yield on average earning assets decreased
from 7.99% to 7.48% , while the rate paid on average interest-bearing
liabilities decreased from 4.33% to 4.12%.
Interest Income. Interest income for the nine months ended March 31,
1999 was $31.8 million, up from $28.5 million for the comparable period in
1998. The largest component of interest income is interest on loans. Interest
on loans increased from $25.1 million for the nine months ended March 31,
1998 to $26.7 million for the nine months ended March 31, 1999. This increase
of $1.6 million is the result of an increase in the average balance of loans
offset by a decrease in the average yield earned. The average balance of
loans increased $45.5 million to $449.2 million, while the yield on loans
decreased 38 basis points from 8.29% to 7.91%. The increase in interest on
loans was supplemented by increases in interest on securities available for
sale, investment securities and federal funds sold. Interest income on these
categories of earning assets increased $488,000, $947,000 and $375,000,
respectively. Substantially all of the increases in interest income on these
assets are attributed to increases in volume. The average balance of
securities available for sale increased from $26.0 million for the nine
months ended March 31, 1998 to $38.0 million for the nine months ended March
31, 1999. This increase in volume resulted in an increase in interest income
of $590,000. The average balance of investment securities increased from
17
<PAGE>
$26.5 million in the nine months ended March 31, 1998 to $49.5 million in the
nine months ended March 31, 1999, resulting in a $1.1 million increase in
interest income due to volume. The average balance of federal funds sold
increased from $14.7 million in the nine months ended March 31, 1998 to $26.3
million in the nine months ended March 31, 1999. The increase in the volume
of federal funds sold resulted in a $468,000 increase in interest income in
the nine months ended March 31, 1999 as compared to the nine months ended
March 31, 1998. The changes in yield on securities available for sale,
investment securities and federal funds sold reduced interest income by
$336,000.
Interest Expense. Interest expense increased during the nine month
period ended March 31, 1999 to $15.5 million, up from $14.2 million for the
comparable period in 1998. Substantially all of the Company's interest
expense is from the Company's interest-bearing deposits. The largest category
of interest-bearing deposits is time deposits. Interest on time deposits for
the nine months ended March 31, 1999 was $9.2 million, down $955,000 from the
$10.1 million for the nine months ended March 31, 1998. This decrease is the
result of a decrease in the average balance of time deposits, from $230.9
million for the nine months ended March 31, 1998 to $219.5 million for the
nine months ended March 31, 1999 and a decrease of 27 basis points in the
rates paid on these deposits from 5.85% for the nine months ended March 31,
1998 to 5.58% for the same period in 1999. Interest expense on savings
accounts increased $156,000 for the nine months ended March 31, 1999 as
compared to the same period the prior year, almost entirely attributable to
an increase in the average balance of savings account of $7.4 million.
Interest on school savings accounts increased $33,000, from $607,000 for the
nine months ended March 31, 1998 to $640,000 for the nine months ended March
31, 1999, as a result of an increase in the average balance of school savings
accounts of $2.7 million partially offset by a 61 basis point reduction in
the rates paid on these school savings accounts. Interest on money market
accounts increased $102,000, from $402,000 for the nine months ended March
31, 1998 to $504,000 for the nine months ended March 31, 1999. The increase
is attributed to an increase in the average balance of money market accounts
of $2.8 million as well as an increase of 25 basis points in the rates paid
on these money market accounts, from 3.09% to 3.34%. Interest on borrowings
for the nine months ended March 31, 1999 was $1.8 million, due to a $40.4
million increase in the average balance of borrowings which were used to fund
loan growth. Interest on escrow accounts increased $216,000, from $83,000 for
the nine months ended March 31, 1998 to $299,000 for the nine months ended
March 31, 1999. The increase is attributed to an increase in the average
balance of escrow accounts of $9.6 million as well as an increase of 79 basis
points in the rates paid on these escrow accounts, from 1.65% to 2.44%.
Provision for Loan Losses. The provision for loan losses increased from
$580,000 for the nine months ended March 31, 1998 to $785,000 for the nine
months ended March 31, 1999. The increase in the provision is attributed to a
slight increase in the level of net charge-offs from $528,000 for the nine
months ended March 31, 1998 to $555,000 for the nine months ended March 31,
1999 and an increase in the balance of loans outstanding.
Noninterest Income. Total noninterest income for the nine month period
ended March 31, 1999 was $2.2 million, up $65,000 from the $2.1 million for
the nine month period ended March 31, 1998. Service charges on deposits
increased slightly to $590,000 for the nine months ended March 31, 1999, from
$555,000 for the nine months ended March 31, 1998. Loan servicing revenue
declined $84,000 from $380,000 for the nine months ended March 31, 1998 to
$296,000 for the nine months ended March 31, 1999. The decline relates to a
reduction in the balance of loans serviced for others. Net gain on sale of
mortgage loans decreased $69,000 from $77,000 for the nine months ended March
31, 1998 to $8,000 for the nine months ended March 31, 1999. The decrease is
a result of management's decision to sell fewer loans in the secondary
market. Other noninterest income increased $183,000 primarilly as a result of
the establishment of ATM surcharges in April 1998.
Noninterest Expense. Total noninterest expense increased $6.4 million to
$16.4 million for the nine months ended March 31, 1999, up from $10.0 million
for the comparable period in 1998. The break-up fee paid to SFS Bancorp, Inc.
of $2.0 million, the contribution of $2.8 million to the Cohoes Savings
Foundation, Inc., the increase in compensation and benefits of $820,000,
occupancy expenses of $216,000 and other noninterest expense of $589,000 were
the primary contributors to the overall increase. The break-up fee was paid
as a result of the termination of the merger agreement with SFS Bancorp, Inc.
The contribution to the Cohoes Savings foundation, Inc. was associated with
the Company's conversion. The increase in compensation and benefits is
primarily attributable to the establishment of the Company's Employee Stock
Ownership Plan in connection with the Company's Conversion and annual merit
increases. Occupancy increased as a result of the opening of two new branch
locations. The increase in other noninterest expense was attributable to an
increase in professional service fees associated with being a public company,
increases in ORE expense, merger related expense, Y2K expense and a general
increase in other operating expenses.
18
<PAGE>
Income Tax Expense. Income tax expense decreased from $2.3 million for
the nine month period ended March 31, 1998 to $519,000 for the comparable
period in 1999. The reduction is primarily the result of less income before
income tax expense.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
Liquidity is defined as the ability to generate sufficient cash flow to
meet all present and future funding commitments, depositor withdrawals and
operating expenses. Management monitors the Company's liquidity position on a
daily basis and evaluates it ability to meet depositor withdrawals or make
new loans or investments. The Company's liquid assets include cash and cash
equivalents, investment securities that mature within one year, and its
portfolio of securities available for sale.
The Company's cash inflows result primarily from loan repayments,
maturities, calls and pay downs of securities, new deposits, and to a lesser
extent, drawing upon the Company's credit lines with the Federal Home Loan
Bank of New York. The bank's cash outflows are substantially new loan
originations, securities purchases, and deposit withdrawals. The timing of
cash inflows and outflows are closely monitored by management although
changes in interest rates, economic conditions, and competitive forces
strongly impact the predictability of these cash flows. The Company attempts
to provide stable and flexible sources of funding through the management of
its liabilities, including core deposit products offered through its branch
network as well as with limited use of borrowings. Management believes that
the level of the Company's liquid assets combined with daily monitoring of
inflows and outflows provide adequate liquidity to fund outstanding loan
commitments, meet daily withdrawal requirements of our depositors, and meet
all other daily obligations of the Bank.
Capital
Consistent with its goals to operate a sound and profitable financial
organization, the Bank actively seeks to remain a "well capitalized"
institution in accordance with regulatory standards. The Bank's total equity
was $91.8 million at March 31, 1999, 14.6% of total assets on that date. As
of March 31, 1999, the Bank exceeded all of the capital requirements of the
FDIC. The Bank's regulatory capital ratios at March 31, 1999 were as follows:
Tier I (leverage) capital, 14.2%; Tier I risk-based capital, 23.38%; and
Total risk-based capital, 24.34%. The regulatory capital minimum requirements
to be considered well capitalized are 5.0%, 6.0%, and 10.0%, respectively.
Impact of the Year 2000
General. The year 2000 ("Y2K") issue confronting the Bank and its
suppliers, customers, customers' suppliers and competitors centers on the
inability of computer systems to recognize the year 2000. Many existing
computer programs and systems originally were programmed with six digit dates
that provided only two digits to identify the calendar year in the date
field. With the impending new millennium, these programs and computers will
recognize "00" as the year 1900 rather than the year 2000.
Financial institution regulators recently have increased their focus
upon Y2K compliance issues and have issued guidance concerning the
responsibilities of senior management and directors. The Federal Financial
Institutions Examination Council ("FFIEC") has issued several interagency
statements on Y2K Project Management Awareness. These statements require
financial institutions to, among other things, examine the Y2K implications
of their reliance on vendors and with respect to data exchange and the
potential impact of the Y2K issue on their customers, suppliers and
borrowers. These statements also require each federally regulated financial
institution to survey its exposure, measure risk and prepare a plan to
address the Y2K issue. In addition, the federal banking regulators have
issued safety and soundness guidelines to be followed by insured depository
institutions, such as the Bank, to assure resolution of any Y2K problems. The
federal banking agencies have asserted that Y2K testing and certification is
a key safety and soundness issue in conjunction with regulatory examinations
and, thus, that an institution's failure to address appropriately the Y2K
19
<PAGE>
issue could result in supervisory action, including the reduction of the
institution's supervisory ratings, the denial of applications for approval of
mergers or acquisitions or the imposition of civil money penalties.
Risk. Like most financial institutions service providers, the Bank and
its operations may be significantly affected by the Y2K issue due to its
dependence on technology and date-sensitive data. Computer software and
hardware and other equipment, both within and outside the Bank's direct
control and third parties with whom the Bank electronically or operationally
interfaces (including without limitation its customers and third party
vendors) are likely to be affected. If computer systems are not modified in
order to be able to identify the year 2000, many computer applications could
fail or create erroneous results. As a result, many calculations which rely
on date field information, such as interest, payment or due dates and other
operating functions, could generate results which are significantly
misstated, and the Bank could experience an inability to process
transactions, prepare statements or engage in similar normal business
activities. Likewise, under certain circumstances, a failure to adequately
address the Y2K issue could adversely affect the viability of the Bank's
suppliers and creditors and the creditworthiness of its borrowers. Thus, if
not adequately addressed, the Y2K issue could result in a significant adverse
impact on the Bank's operations and, in turn, its financial condition and
results of operations.
State of Readiness. During November 1997, the Bank formulated its plan
to address the Y2K issue. Since that time, the Bank has taken the following
steps:
* Established senior management advisory and review responsibilities;
* Completed a Bank-wide inventory of applications and system software;
* Built an internal tracking database for application and vendor software;
* Developed compliance plans and schedules for all lines of business;
* Initiated vendor compliance verification;
* Begun awareness and education activities for employees through existing
internal communication channels; and
* Developed a process to respond to customer inquiries as well as help
educate customers on the Y2K issue.
The following paragraphs summarize the phases of the Bank's Y2K plan:
Awareness Phase. The Bank formally established a Y2K plan headed by a
senior manager, and a project team was assembled for management of the Y2K
project. The project team created a plan of action that includes milestones,
budget estimates, strategies, and methodologies to track and report the
status of the project. Members of the project team also attended conferences
and information sharing sessions to gain more insight into the Y2K issue and
potential strategies for addressing it. This phase is substantially complete.
Assessment Phase. The Bank's strategies were further developed with
respect to how the objectives of the Y2K plan would be achieved, and a Y2K
business risk assessment was made to quantify the extent of the Bank's Y2K
exposure. A corporate inventory (which is periodically updated as new
technology is acquired and as systems progress through subsequent phases) was
developed to identify and monitor Y2K readiness for information systems
(hardware, software, utilities and vendors) as well as environmental systems
(security systems, facilities, etc.). Systems were prioritized based on
business impact and available alternatives. Mission critical systems supplied
by vendors were researched to determine Y2K readiness. If Y2K-ready versions
were not available, the Bank began identifying functional replacements which
were either upgradable or currently Y2K-ready, and a formal plan was
developed to repair, upgrade or replace all mission critical systems. This
phase is substantially complete.
20
<PAGE>
Beginning in October 1998, all unsecured credits greater than $100,000
were sent a questionnaire developed by the Bank's credit administration staff
to evaluate Y2K exposure. The Bank also contacted its most significant
borrowers informing them of the Y2K issue. Because the Bank's loan portfolio
is primarily real estate-based and is diversified with regard to individual
borrowers and types of businesses, and the Bank's primary market area is not
significantly dependent on one employer or industry, the Bank does not expect
any significant or prolonged Y2K-related difficulties that will affect net
earnings or cash flow. As part of the current credit approval process, all
new and renewed loans are evaluated for Y2K risk.
Renovation Phase. The Bank's corporate inventory revealed that Y2K
upgrades were available for all vendor supplied mission critical systems, and
all these Y2K-ready versions have been delivered and placed into production.
The upgrades include the automated teller machines, the voice response unit,
network equipment, and the Bank's voice mail system.
Validation Phase. The validation phase is designed to test the ability
of hardware and software to accurately process date sensitive data. As of
March 31, 1999, the Bank completed the validation testing of its mission
critical systems. The remainer of the validation phase, including testing
with our service providers and supply vendors, will be completed by June 30,
1999. To date, the validation testing indicates that the mission critical
systems are Y2K-ready.
Implementation Phase. After passing the validation phase, the modified
or upgraded versions of hardware/ software have been placed into production.
As of March 31, 1999, the Bank has been operating all mission critical
systems with Y2K compliant versions. Any remaining systems requiring Y2K
upgrades will be installed by June 30, 1999.
Contingency Plans. During the assessment phase, the Bank began to
develop back-up or contingency plans for each of its mission critical
systems. Since virtually all of the Bank's mission critical systems are
dependent upon third party vendors or service providers, the contingency plan
included the option of selecting new vendors or service provider if Y2K-ready
products could not be delivered by our current suppliers. To date, it has not
been necessary to exercise this option. In addition, the Bank is preparing
and testing contingency plans in the event of power outages or
telecommunication disruptions. These plans include backup generators,
reversion to manual procedures, and the use of paper reports until the
problems are corrected.
Customer Education. In October 1998, the Bank sent out FDIC Y2K
brochures with all statement mailings, explaining the Y2K problem and
reassuring customers that FDIC insurance coverage guarantees the safety of
their deposit accounts. All Bank employees have attended special Y2K classes
and there is an ongoing awareness campaign to encourage Y2K dialogue with
customers. A statement mailer with an updated status of our system testing
will be distributed during the month of May. In addition, the Bank will begin
offering public education seminars on Y2K in June 1999.
21
<PAGE>
Item 3. Quantitative And Qualitative Disclosures About Market Risk
Not applicable
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable.
Item 2. Changes in Securities and Use of Proceeds
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable.
Item 5. Other Information
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedules (submitted only with filing
in electronic format)
(b) Reports on Form 8-K
Not Applicable.
22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Cohoes Bancorp, Inc.
(Registrant)
Date: May 10,1999 By: /s/ Harry L. Robinson
-----------------------
Harry L. Robinson
President and Chief Executive Officer
Date: May 10, 1999 By: /s/ Richard A. Ahl
-----------------------
Richard A. Ahl
Executive Vice President, Chief
Financial Officer and Secretary
23
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated statement of financial condition and the consolidated statement of
income and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> MAR-31-1999
<CASH> 6,891
<INT-BEARING-DEPOSITS> 330
<FED-FUNDS-SOLD> 15,510
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 43,147
<INVESTMENTS-CARRYING> 54,921
<INVESTMENTS-MARKET> 55,027
<LOANS> 493,046
<ALLOWANCE> 3,763
<TOTAL-ASSETS> 628,219
<DEPOSITS> 429,004
<SHORT-TERM> 0
<LIABILITIES-OTHER> 5,377
<LONG-TERM> 49,263
0
0
<COMMON> 95
<OTHER-SE> 138,335
<TOTAL-LIABILITIES-AND-EQUITY> 628,219
<INTEREST-LOAN> 26,668
<INTEREST-INVEST> 4,159
<INTEREST-OTHER> 1,002
<INTEREST-TOTAL> 31,829
<INTEREST-DEPOSIT> 13,451
<INTEREST-EXPENSE> 15,531
<INTEREST-INCOME-NET> 16,298
<LOAN-LOSSES> 785
<SECURITIES-GAINS> 2
<EXPENSE-OTHER> 16,405
<INCOME-PRETAX> 1,284
<INCOME-PRE-EXTRAORDINARY> 765
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 765
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
<YIELD-ACTUAL> 3.83
<LOANS-NON> 3,636
<LOANS-PAST> 0
<LOANS-TROUBLED> 1,306
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,533
<CHARGE-OFFS> 769
<RECOVERIES> 214
<ALLOWANCE-CLOSE> 3,763
<ALLOWANCE-DOMESTIC> 2,942
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 821
</TABLE>
