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 September 30, 2000
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 November 2, 2000, there were 7,912,705 shares of the
registrant's common stock outstanding.
<PAGE>
FORM 10-Q
Cohoes Bancorp, Inc.
INDEX
Page
PART 1 - FINANCIAL INFORMATION Number
------------------------------ ------
Item 1. Financial Statements
Consolidated Statements of Financial Condition at
September 30, 2000 and June 30, 2000 3
Consolidated Statement of Income for the three
months ended September 30, 2000 and 1999 4
Consolidated Statements of Changes in Stockholders' Equity
for the three months ended September 30, 2000 and 1999 5-6
Consolidated Statements of Cash Flows for the three
months ended September 30, 2000 and 1999 7
Notes to Consolidated Interim Financial Statements 8-12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13-18
Item 3. Quantitative and Qualitative Disclosures about Market
Risk 19
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings 19
Item 2. Changes in Securities and Use of Proceeds 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
Signature Page 20
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
COHOES BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
September 30, June 30,
2000 2000
---- ----
(In thousands)
<S> <C> <C>
ASSETS:
Cash and cash equivalents:
Cash and due from banks $ 11,873 $ 12,531
Federal funds sold -- --
Interest-bearing deposits with banks 137 127
---------- ---------
Total cash and cash equivalents 12,010 12,658
Mortgage loans held for sale -- --
Securities available for sale 40,174 40,074
Investment securities, approximate fair value
of $50,867 and $53,741, respectively 51,649 55,129
Net loans receivable 614,719 600,413
Accrued interest receivable 4,545 4,355
Bank premises and equipment 7,528 7,597
Other real estate owned 1,073 561
Mortgage servicing rights 608 652
Other assets 7,029 5,575
---------- ---------
Total assets $ 739,335 $ 727,014
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
LIABILITIES:
Due to depositors $ 497,632 $ 494,875
Mortgagors' escrow deposits 4,090 9,729
Borrowings 109,316 96,201
Other liabilities 4,665 4,903
---------- ----------
Total liabilities 615,703 605,708
Commitments and contingent liabilities
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value;
5,000,000 share authorized; none issued -- --
Common stock, $.01 par value; 25,000,000 shares
authorized; 9,535,225 shares Issued at September 30,
and June 30, 2000 95 95
Additional paid-in capital 93,007 92,968
Retained earnings-subject to restrictions 59,524 58,652
Treasury stock, at cost (1,622,520 shares at September 30, 2000 and
1,622,970 shares at June 30, 2000) (17,634) (17,639)
Unallocated common stock held by ESOP (7,802) (7,961)
Unearned RRP shares (3,329) (4,161)
Accumulated other comprehensive loss, net (229) (648)
---------- ----------
Total stockholders' equity 123,632 121,306
========== ==========
Total liabilities and stockholders' equity $ 739,335 $ 727,014
========== ==========
</TABLE>
See accompanying notes to consolidated interim financial statements.
<PAGE>
COHOES BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended September 30,
2000 1999
( In thousands, except per share amounts)
<S> <C> <C>
INTEREST INCOME:
Loan receivable $ 11,943 $ 10,212
Securities available for sale 535 600
Investment securities 818 865
FHLB stock 86 72
Federal funds sold -- 2
Bank deposits 1 2
---------- ----------
Total interest income 13,383 11,753
INTEREST EXPENSE:
Deposits 4,892 4,145
Escrow deposits 44 45
Borrowings 1,559 924
---------- ----------
Total interest expense 6,495 5,114
---------- ----------
Net interest income 6,888 6,639
Provision for loan losses 300 340
---------- ----------
Net interest income after
provision for loan losses 6,588 6,299
NONINTEREST INCOME:
Service charges on deposits 251 203
Loan servicing revenue 65 76
Other 710 383
---------- ----------
Total noninterest income 1,026 662
NONINTEREST EXPENSE:
Compensation and benefits 2,913 2,601
Occupancy 886 764
Deposit insurance & assessments 32 17
Advertising 101 123
Merger expenses 649 --
Other 864 806
---------- ----------
Total noninterest expense 5,445 4,311
---------- ----------
Income before income tax expense 2,169 2,650
Income tax expense 786 1,005
---------- ----------
NET INCOME $ 1,383 $ 1,645
========== ==========
Earnings per share
Basic $ .19 $ .19
========== ==========
Diluted $ .19 $ .19
========== ==========
</TABLE>
See accompanying notes to consolidated interim financial statements.
<PAGE>
COHOES BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Unallocated
Accumulated Common
Additional other com- Stock Unearned Com-
Common paid in Retained Treasury prehensive held by RRP prehensive
stock capital earnings stock loss, net ESOP shares Total income
Three Months Ended
September 30, 2000
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30, 2000 $95 $92,968 $58,652 $(17,639) $(648) $(7,961) $(4,161) $121,306
Net income, July 1, 2000 -
September 30, 2000 -- -- 1,383 -- -- -- -- 1,383 $1,383
ESOP shares committed
to be released -- 39 -- -- -- 159 -- 198
Cash dividends paid -- -- (511) -- -- -- -- (511)
Exercised stock options
450 shares -- -- -- 5 -- -- -- 5
Vested RRP shares of 68,990 -- -- -- -- -- -- 832 832
Change in unrealized loss
on securities available
for sale, net -- -- -- -- 419 -- -- 419 419
-- -- -- -- -- -- -- -- --
Balance, September 30, 2000 $95 $93,007 $59,524 $(17,634) $(229) $(7,802) $(3,329) $123,632 $1,802
=== ======= ======= ======== ===== ======= ======= ======== ======
</TABLE>
<PAGE>
COHOES BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Unallocated
Accumulated Common
Additional other com- Stock Unearned Com-
Common paid in Retained Treasury prehensive held by RRP prehensive
stock capital earnings stock loss, net ESOP shares Total income
Three Months Ended
September 30, 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1999 $95 $93,004 $55,173 $ -- $(244) $(8,598) $ -- $139,430
Net income, July 1, 1999 -
September 30, 1999 -- -- 1,645 -- -- -- -- 1,645 $1,645
ESOP shares committed
to be released -- 7 -- -- -- 159 -- 166
Cash dividends paid -- -- (513) -- -- -- -- (513)
Public market purchase
of 857,170 shares
of Cohoes Bancorp, Inc.
common stock -- -- -- (11,083) -- -- -- (11,083)
Granting of restricted
Stock under RRP -- -- -- 4,505 -- -- (4,505) --
Change in unrealized loss
On securities available
for sale, net -- -- -- -- (105) -- -- (105) (105)
=== ====== ======= ======== ===== ======= ======= ======== ======
Balance, September 30, 1999 $95 $93,011 $56,305 $ (6,578) $(349) $(8,439) $(4,505) $129,540 $1,540
</TABLE>
See accompanying notes to consolidated interim financial statements.
<PAGE>
COHOES BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended September 30,
2000 1999
(In thousands)
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,383 $ 1,645
-------- --------
Adjustments to reconcile net income to net cash
provided by operating activities-
Depreciation 400 328
Amortization of purchased and originated
mortgage servicing rights 44 49
Provision for loan losses 300 340
Provision for deferred tax expense (benefit) 230 (73)
Net gain on sale of securities available for sale -- (1)
Net premium amortization of investment securities 3 10
Net gain on sale of mortgage loans (6) (2)
Proceeds from sale of loans held for sale 419 877
Loans originated for sale (413) (1,062)
ESOP compensation 198 166
Increase in interest receivable (190) (135)
(Increase) decrease in other assets, net of deferred
tax (benefit) expense (1,684) 588
Increase (decrease) in other liabilities 594 (409)
Net (gain) loss on sale of other real estate owned (1) 34
-------- --------
Total adjustments (106) 710
-------- --------
Net cash provided by operating activities 1,277 2,355
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from investment securities called/matured 2,000 500
Purchase of investment securities -- (2,014)
Proceeds from the sale of securities available for sale -- 1,391
Purchase of securities available for sale (282) (678)
Proceeds from principal reduction in investment securities 1,477 1,829
Proceeds from principal reduction in securities
available for sale 601 1,570
Net loans made to customers (15,176) (31,155)
Proceeds from sale of other real estate owned 59 169
Capital expenditures (331) (408)
-------- --------
Net cash used in investing activities (11,652) (28,796)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in mortgagors' escrow deposits (5,639) (5,816)
Net increase in borrowings 13,115 34,614
Net increase in deposits 2,757 8,197
Purchase of treasury shares -- (11,083)
Stock options exercised 5 --
Cash dividends paid (511) (513)
-------- --------
Net cash provided by financing activities 9,727 25,399
-------- --------
Net decrease in cash and cash equivalents (648) (1,042)
CASH AND CASH EQUIVALENTS, beginning of period 12,658 11,114
-------- --------
CASH AND CASH EQUIVALENTS, end of period $ 12,010 $ 10,072
======== ========
ADDITIONAL DISCLOSURE RELATIVE TO CASH FLOWS:
Interest paid $ 6,589 $ 5,277
Taxes paid 930 1,040
======== ========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES:
Transfer of loans to other real estate owned $ 569 $ 687
======== ========
</TABLE>
See accompanying notes to consolidated interim financial statements.
<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 Cohoes Savings Bank (the "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 months ended September 30,
2000 are not necessarily indicative of the results of operations that may be
expected for the entire year ending June 30, 2001. 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 Company's 2000 Annual Report on Form 10-K.
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 September 30, 2000,
111,419 shares have been released or committed to be released from the ESOP
trust for allocation to ESOP participants. Consequently, the remaining
651,399 shares have not yet been released and under AICPA Statement of
Position 93-6, these shares are not considered outstanding for purposes of
calculating per share amounts. The following is a reconciliation of the
numerator and denominator for the basic and diluted earnings per share (EPS)
calculations for the three months ended September 30, 2000 and 1999.
For the three months ended September 30,:
2000
------------------------------------------------
Weighted
Average
Net income Shares Per share
(numerator) (denominator) Amount
(In thousands, except for and per share amounts)
Basic EPS $ 1,383 7,247,993 $ 0.19
=======
Dilutive effect of
potential common
shares related to
stock based
compensation plans -- 164,277
------- ---------
Diluted EPS $ 1,383 7,412,270 $ 0.19
======= ========= =======
For the three months ended September 30, :
1999
------------------------------------------------
Weighted
Average
Net income Shares Per share
(numerator) (denominator) Amount
(In thousands, except for and per share amounts)
Basic EPS $ 1,645 8,562,120 $ 0.19
=======
Dilutive effect of
potential common
shares related to
stock based
compensation plans -- 29,579
-------- ---------
Diluted EPS $ 1,645 8,591,699 $ 0.19
======== ========= =======
<PAGE>
3. Loan Portfolio Composition
The following table sets forth the composition of the loan portfolio
in dollar amounts and as a percentage of the portfolio at the dates
indicated.
<TABLE>
<CAPTION>
September 30, 2000 June 30, 2000
Amount % of Total Amount % of Total
(Dollars in thousands)
<S> <C> <C> <C> <C>
Real estate loans:
One-to-four family real estate $366,996 59.24% $353,349 58.40%
Multi-family and commercial real estate 172,328 27.82 172,596 28.53
-------- ------ -------- ------
Total real estate loans 539,324 87.06 525,945 86.93
Consumer loans:
Home equity lines of credit 19,394 3.13 19,692 3.25
Conventional second mortgages 11,676 1.88 11,853 1.96
Automobile loans 8,105 1.31 8,610 1.42
Other consumer loans 1,614 0.26 1,626 0.27
-------- ------ -------- ------
Total consumer loans 40,789 6.58 41,781 6.90
Commercial business loans 39,381 6.36 37,316 6.17
-------- ------ -------- ------
Total loans 619,494 100.00% 605,042 100.00%
======== ====== ======== ======
Less:
Net deferred loan origination fees and costs 436 384
Allowance for loan losses (5,211) (5,013)
-------- --------
Net loans receivable $614,719 $600,413
======== ========
</TABLE>
<PAGE>
4. 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>
September 30, June 30,
2000 2000
(Dollars in thousands)
<S> <C> <C>
Non-accrual loans:
One-to-four family real estate $ 1,747 $ 2,250
Multi-family and commercial real estate 1,248 861
Conventional second mortgages 2 33
Consumer loans 167 184
Commercial business loans 250 --
---------- ----------
Total non-accrual loans 3,414 3,328
Loans contractually past due 90 days or more and still accruing interest:
Consumer loans -- --
---------- ----------
Total loans 90 days or more and still accruing interest -- --
Troubled debt restructurings 699 715
---------- ----------
Total non-performing loans 4,113 4,043
Other real estate owned (ORE) 1,073 561
---------- ----------
Total non-performing assets $ 5,186 $ 4,604
========== ==========
Allowance for loan losses $ 5,211 $ 5,013
========== ==========
Coverage of non-performing loans 126.70% 123.99%
========== ==========
Total non-performing loans as a percentage of total loans .66% .67%
========== ==========
Total non-performing loans as a percentage of total assets .56% .56%
========== ==========
</TABLE>
<PAGE>
5. 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.
<TABLE>
<CAPTION>
At or for the three months ended September 30,
2000 1999
(In thousands)
<S> <C> <C>
Allowance for loan losses, beginning period $ 5,013 $ 4,025
Charged-off loans:
Real estate loans
One-to-four family real estate 39 45
Multi-family and commercial real estate 7 --
--------- ---------
Total real estate loan charge-offs 46 45
Commercial business loans charge-offs -- --
Consumer loans
Home equity lines of credit -- --
Conventional second mortgages 31 --
Automobile loans 12 --
Credit cards -- --
Other consumer loans 18 5
--------- ---------
Total consumer loan charge-offs 61 5
--------- ---------
Total charged-off loans 107 50
Recoveries on loans previously charged-off:
Real estate loans
One-to-four family real estate -- 7
Multi-family and commercial real estate -- --
--------- ---------
Total real estate loan recoveries -- 7
Commercial business loan recoveries -- --
Consumer loans
Home equity lines of credit -- --
Conventional second mortgages -- --
Automobile loans -- --
Credit cards 3 9
Other consumer loans 2 2
--------- ---------
Total consumer loan recoveries 5 11
--------- ---------
Total recoveries 5 18
--------- ---------
Net loans charged-off 102 32
Provision for loan losses 300 340
--------- ---------
Allowance for loan losses, end of period $ 5,211 $ 4,333
========= =========
</TABLE>
<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 three month period ended September 30, 2000, total
assets of the Company increased $12.3 million, or 1.7%, from $727.0 million
at June 30, 2000 to $739.3 million at September 30, 2000. This increase in
total assets was primarily attributable to a $14.3 million, or 2.4%, increase
in net loans receivable which increased from $600.4 million at June 30, 2000
to $614.7 million at September 30, 2000. This increase resulted from
continued growth in the loan portfolio, particularly mortgage loans.
Deposits increased $2.8 million, from $494.9 million at
June 30, 2000, to $497.6 million at September 30, 2000. This increase was
primarily attributable to an $11.8 million increase in demand deposits
largely due to escrow funds of approximately $8.5 million being deposited at
month end. The remaining $3.3 million increase is attributed to growth in
demand accounts from both our consumer and commercial customers. This
increase in demand balances was partially offset by a decrease in savings
account balances of $4.1 million and time deposits of $4.9 million due
primarily to highly competitive rates offered by the Company's competition.
Borrowings, comprised primarily of Federal Home Loan Bank
advances, increased $13.1 million, or 13.6%, from $96.2 million at June 30,
2000 to $109.3 million at September 30, 2000. This increase was primarily the
result of additional Federal Home Loan Bank advances used to fund loan
growth.
Total stockholders' equity increased $2.3 million, or 1.9%,
from $121.3 million at June 30, 2000 to $123.6 million at September 30, 2000.
This increase was primarily attributable to the earnings for the quarter
ended September 30, 2000 of $1.4 million, the vesting of shares under the
recognition and retention plan of $832,000 and an increase in the Company's
available for sale portfolio market value valuation, net of tax of $419,000.
These increases were partially offset by declared dividends of approximately
$511,000. The book value per share at September 30, 2000 was $15.62.
<PAGE>
Average Balance Sheets. The following tables set forth
certain information relating to the Company for the three months ended
September 30, 2000 and 1999. 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 September 30,
---------------------------------------------------------------------------------
2000 1999
--------------------------------------- -------------------------------------
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 $612,072 $11,943 7.74% $540,186 $10,212 7.50%
Securities available for sale 34,766 535 6.11 39,212 600 6.07
Investments securities 54,326 818 5.97 57,668 865 5.95
Federal funds sold -- -- -- 171 2 4.64
FHLB stock 5,222 86 6.53 4,065 72 7.03
Other interest-earning assets 128 1 3.10 195 2 4.07
-------- ------- -------- -------
Total interest-earning assets 706,514 13,383 7.52 641,497 11,753 7.27
-------- ------- -------- -------
Non-earning assets 23,206 23,821
-------- --------
Total assets $729,720 $665,318
======== ========
Interest-bearing liabilities
Savings accounts $131,197 904 2.73 $136,667 1,003 2.91
School savings accounts 17,266 183 4.20 17,044 182 4.24
Money market accounts 21,697 185 3.38 26,714 234 3.48
Demand deposits 75,945 126 0.66 65,679 103 0.62
Time deposits 246,425 3,494 5.63 204,752 2,623 5.08
Escrow accounts 9,342 44 1.87 9,765 45 1.83
Borrowings 100,229 1,559 6.17 65,656 924 5.58
-------- ------- -------- -------
Total interest-bearing
liabilities 602,101 6,495 4.28 526,277 5,114 3.86
-------- ------- -------- -------
Other liabilities 4,973 6,274
Stockholders' equity 122,646 132,767
-------- --------
Total liabilities and
stockholders' equity $729,720 $665,318
======== ========
Net interest income $ 6,888 $ 6,639
======= =======
Net interest rate spread 3.24% 3.41%
==== ====
Net earning assets $104,413 $115,220
======== ========
Net yield on average
interest-earning assets 3.88% 4.11%
==== ====
Average interest-earning assets
to average interest-bearing
liabilities 1.17 X 1.22 X
</TABLE>
<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 September 30, 2000
Compared to
Three Months Ended September 30, 1999
-------------------------------------
Increase (Decrease)
Due To Total
------------------------ Increase
Volume Rate (Decrease)
<S> <C> <C> <C>
Interest and dividend income from:
Loans receivable $1,394 $337 $1,731
Securities available for sale (88) 23 (65)
Investment securities (69) 22 (47)
Federal funds sold (1) (1) (2)
FHLB stock 43 (29) 14
Other interest-earning assets (1) -- (1)
------ ---- ------
Total interest and dividend income 1,278 352 1,630
------ ---- ------
Interest expense for:
Savings accounts (39) (60) (99)
School savings accounts 7 (6) 1
Money market accounts (43) (6) (49)
Demand accounts 17 6 23
Time deposit accounts 571 300 871
Escrow accounts (6) 5 (1)
Other borrowings 529 106 635
------ ---- ------
Total interest expense 1,036 345 1,381
------ ---- ------
Net interest income $ 242 $ 7 $ 249
====== ==== ======
</TABLE>
<PAGE>
Comparison of Operating Results for the Three Months Ended September 30, 2000
and 1999
For the three months ended September 30, 2000 the Company recognized
net income of $1.4 million, as compared to net income of $1.6 million for the
three months ended September 30, 1999. Net interest income increased $249,000
for the three months ended September 30, 2000 as compared to the same period
last year. Noninterest income increased by $364,000 from $662,000 for the
quarter ended September 30, 1999 to $1.0 million for the same period this
year. Another increase in net income was seen by the reduction in income tax
expense of $219,000 for the three months ended September 30, 2000 as compared
to the same period last year. These increases in net income were more than
offset by an increase in noninterest expense of $5.4 million recognized for
the quarter ending September 30, 2000 compared to $4.3 million for the same
period last year.
Net Interest Income. Net interest income for the three months ended
September 30, 2000 was $6.9 million, up $249,000 from the same period last
year. The increase was primarily the result of an increase of $65.0 million
in the balance of average earning assets from $641.5 million for the three
months ended September 30, 1999 to $706.5 million for the same period this
year. The balance of interest-bearing liabilities also increased during the
same period, up $75.8 million. The net impact of these volume increases was
an increase in net interest income of $242,000. The net increase in net
interest income due to rate was $7,000 for the three months ended September
30, 2000 as compared to the same period last year. The yield on average
earning assets increased from 7.27% to 7.52% while the rate paid on average
interest-bearing liabilities increased from 3.86% to 4.28%. This resulted in
a decrease in net interest rate spread of 17 basis points from 3.41% for the
three months ended September 30, 1999 to 3.24% for the three months ended
September 30, 2000. The Company's net interest margin for the three months
ended September 30, 2000 was 3.88%, down 23 basis points from 4.11% for the
same period last year. The net interest margin decrease was partially the
result of the Company's share repurchases reducing the amount of capital as a
no-cost funding source.
Interest Income. Interest income for the three months ended
September 30, 2000 was $13.4 million, up from $11.8 million for the
comparable period in 1999. The largest component of interest income is
interest on loans. Interest on loans increased from $10.2 million for the
three months ended September 30, 1999 to $11.9 million for the three months
ended September 30, 2000. This increase of $1.7 million was the result of an
increase in the average balance of loans and an increase in the average yield
earned. The average balance of loans increased $71.9 million to $612.1
million, which accounted for an increase in income due to volume of $1.4
million. The yield on loans increased 24 basis points from 7.50% to 7.74% due
to an increase in market interest rate conditions, which accounted for an
increase in interest income due to rate of $337,000.
Interest Expense. Interest expense increased for the quarter ended
September 30, 2000 compared to the quarter ended September 30, 1999 by $1.4
million. The majority 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 September
30, 2000 was $3.5 million, up $871,000 from $2.6 million for the quarter
ended September 30, 1999. This increase is the result of an increase in the
average balance of time deposits, from $204.8 million for the quarter ended
September 30, 1999 to $246.4 million for the quarter ended September 30,
2000. This increase decreased net interest income due to volume by $571,000
for the period ending September 30, 2000 as compared to the same period last
year. The rates paid on these deposits increased 55 basis points from 5.08%
for the quarter ended September 30, 1999 to 5.63% for the quarter ended
September 30, 2000. The net impact of this rate increase on time deposits
reduced net interest income by $300,000 for the quarter ended September 30,
2000 as compared to the same quarter last year. The average balance of time
deposits increased due to the Company's advertising campaign to raise time
deposit money during the year.
Interest on savings accounts decreased $99,000 for the quarter ended
September 30, 2000 as compared to the same period last year. This decrease
was due largely to a reduction in the rate paid on savings accounts as well
as a decrease in the average balance in savings accounts. The Company
implemented a 25 basis point decrease in the rates paid on savings accounts
in September 1999 due to competitors interest rates paid on comparable
savings products. The average balance decreased by $5.5 million from $136.7
million for the quarter ended September 30, 1999 to $131.2 million for the
quarter ended September 30, 2000. Interest on money market accounts decreased
$49,000, from $234,000 for the quarter ended September 30, 1999 to $185,000
for the quarter ended September 30, 2000. This decrease is largely attributed
to a decrease in the average balance of money market accounts of $5.0 million
as well as a decrease of 10 basis points in the rates paid on these money
market accounts, from 3.48% to 3.38%.
<PAGE>
Interest on borrowings for the quarter ended September 30, 2000 was
$1.6 million, up $635,000 from the same period last year. This increase is
attributable to an increase of $34.6 million in the average balance of
borrowings along with an increase of 59 basis points in the rate paid on
borrowings. The Company borrowed additional funds during 2000 to support
asset growth, particularly in the loan portfolio, as part of the process of
leveraging the additional capital raised in the Offering.
Provision for Loan Losses. The provision for loan losses decreased
from $340,000 for the quarter ended September 30, 1999 to $300,000 for the
quarter ended September 30,2000. The decrease is primarily due to a reduction
in non-performing loans from $4.2 million as of September 30, 1999 to $4.1
million as of September 30, 2000. The Company has also seen an increase in
the coverage ratio of non-performing loans from 103.14% at September 30, 1999
as compared to 126.70% as of September 30, 2000. These two factors were
partially offset by an increase in the balance of average outstanding loans
from $540.2 million for the quarter ended September 30, 1999 to $612.1
million for the quarter ended September 30, 2000.
Noninterest Income. Noninterest income for the quarter ended
September 30, 2000 was $1.0 million, up from $662,000 for the quarter ended
September 30, 1999. Service charges on deposits increased $48,000 to $251,000
for the quarter ending September 30, 2000. This increase was due primarily to
the addition of approximately 2,000 demand deposit accounts from September
30, 1999 to September 30, 2000. Loan servicing revenue declined $11,000 from
$76,000 for the quarter ended September 30, 1999 to $65,000 for the quarter
ended September 30, 2000. The decline relates to a reduction in the balance
of loans serviced for others. Other noninterest income increased by $327,000
from the September 30, 1999 quarter to the September 30, 2000 quarter. The
largest portion of this increase is due to an increase in revenues from CSB
Services Agency, Inc., a wholly owned insurance subsidiary, increasing by
$168,000 for the quarter ended September 30, 2000 as compared to the quarter
ended September 30, 1999. This increase was primarily due to the purchasing
of two insurance agencies in late December 1999. Revenue also increased in
CSB Financial Services, Inc., a wholly owned brokerage subsidiary, increasing
by $93,000 for the quarter ended September 30, 2000 as compared to the
quarter ended September 30, 1999. This increase is attributable to the growth
in branch referrals generating new business. The Company also recognized a
$24,000 gain on the sale of an ORE property and an increase in ATM fees of
$31,000 primarily due to the increase of foreign transactions handled at the
Company's ATM machines.
Noninterest Expense. Noninterest expense increased $1.1 million to
$5.4 million for the quarter ended September 30, 2000, up from $4.3 million
for the comparable period in 1999. Merger related expenses of $649,000
accounted for the majority of the additional expense. The Company, on April
25, 2000, entered into a definitive agreement to merge with Hudson River
Bancorp, Inc., the parent company of Hudson River Bank & Trust. On August 17,
2000, the shareholders of Cohoes Bancorp, Inc. did not approve the merger by
a slight margin. Compensation and benefits increased $312,000 of which
$112,000 is due to CSB Services Agency, Inc. acquiring two new insurance
agencies. CSB Financial Services, Inc. also increased compensation cost by
$64,000 largely due to the increased commission expense resulting from
increased sales volume. Director fees also increased $89,000 for the period
ending September 30, 2000 as compared to the same period last year. This
increase is entirely attributed to the additional board meetings called to
review the strategic alternatives of the Company, as the fees paid per
meeting have not been increased. The Company also recognized an increase in
ESOP expense of $32,000 for the quarter ended September 30, 2000 as compared
to September 30, 1999 due to an increase in the average price of the
Company's stock. The increase in occupancy expense of $110,000 for the
quarter ended September 30, 2000 compared to the quarter ended September 30,
1999 is primarily attributable to the costs incurred to move our Rotterdam
Office into the Price Chopper Supermarket location and the occupancy expense
associated with CSB Services Agency, Inc. Other noninterest expense increased
$78,000 as a result of an increase in ORE related expenses.
Income Tax Expense. Income tax expense declined from $1.0 million
for the quarter ended September 30, 1999 to $786,000 for the quarter ended
September 30, 2000. The decrease is primarily the result of a reduction in
income before income tax expense.
<PAGE>
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 its 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 Bank's credit lines with the Federal Home Loan Bank
of New York. The Company's cash outflows are substantially new loan
originations, securities purchases, purchases of treasury shares 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 Company.
During the three months ended September 30, 2000, the Company's
primary demand for funds was to make loans. Net loans increased by $14.3
million. This activity was funded principally with a net increase in
borrowings of $13.1 million.
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 $100.4 million at September 30, 2000, 13.6% of total assets
on that date. As of September 30, 2000, the Bank exceeded all of the capital
requirements of the FDIC. The Bank's regulatory capital ratios at September
30, 2000 were as follows: Tier I (leverage) capital, 13.5%; Tier I risk-based
capital, 20.3%; and Total risk-based capital, 21.4%. The regulatory capital
minimum requirements to be considered well capitalized are 5.0%, 6.0%, and
10.0%, respectively.
The Company's total equity at September 30, 2000 was $123.6 million,
up $2.3 million from June 30, 2000. The increase was primarily attributable
to the earnings for the quarter ending September 30, 2000 of $1.4 million,
the vesting of shares under the recognition and retention plan of $832,000
and an increase in the Company's available for sale portfolio market value
valuation of $419,000. These increases were partially offset by declared
dividends of approximately $511,000.
<PAGE>
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
The Company and the Bank are from time to time parties to routine legal
actions arising in the normal course of business. Management believes that
there is no proceeding threatened or pending against the Company or the Bank
which, if determined adversely, would materially adversely affect the
consolidated financial position or operations of the Company.
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 held a special meeting of shareholders on August 17, 2000.
At the meeting, a proposal for the adoption of an Agreement and Plan of
Merger between the Company and Hudson River Bancorp, Inc. dated April 25,
2000 was presented for approval. The votes cast for and against the proposal
and the number of abstentions with respect to the proposal was as follows:
Number of Percentage of
Shares Shares
--------- -------------
For 3,762,480 47.55%
Against 2,500,741 31.61%
Abstentions 69,798 .09%
Not voted 1,579,236 19.96%
--------- -------
7,912,255 100.00%
========= =======
Item 5. Other Information
None.
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
None.
<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: November 9, 2000 By: /s/ Harry L. Robinson
---------------------
Harry L. Robinson
President and Chief Executive Officer
Date: November 9, 2000 By: /s/ Richard A. Ahl
------------------
Richard A. Ahl
Executive Vice President,
Chief Financial
Officer and Secretary
