SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1999.
[ ] 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 0-27747
DOLLAR BANCORP, INC.
--------------------
(Exact name of registrant as specified in its charter)
Delaware 52-2197122
- --------------------------------- -----------------------------------
(State or other jurisdiction (IRS Employer Identification number)
of incorporation or organization)
893 Franklin Avenue, Newark, New Jersey 07107
---------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (973) 483-0001
--------------
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
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 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. (1) Yes /X/ No / /
(2) Yes / / No /X/
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of stock, as of the latest practicable date: 76,000 shares of common
stock, par value $.01 per share
Transitional Small Business Disclosure Format (check one):
Yes / / No /X/
<PAGE>
DOLLAR BANCORP, INC. AND SUBSIDIARY
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of
September 30, 1999 and March 31, 1999 1
Statements of Operations for the
three and six months ended
September 30, 1999 and 1998 2
Statements of Stockholders' Equity
for the six months ended
September 30, 1999 3
Statements of Cash Flows for the
six months ended September 30, 1999 and 1998 4
Notes to Financial Statements 5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 6
PART II. OTHER INFORMATION 9
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Dollar Savings Bank
Balance Sheets as of
September 30, 1999 and March 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
At At
September 30, 1999 March 31, 1999
------------------ --------------
Assets
<S> <C> <C>
Cash $257,872 $313,575
Interest bearing deposits 3,941,774 2,504,860
Mortgage-backed securities 22,576 28,863
Loans receivable, net 5,438,012 6,231,435
Premises & equipment 292,040 297,135
Real estate acquired in settlement of loans 285,187 0
Stock in federal home loan bank 56,500 56,500
Refundable income taxes 7,403 7,403
Other assets 25,917 24,555
------ ------
Total Assets $10,327,281 $9,464,326
=========== ==========
Liabilities
Deposits 8,752,137 7,902,237
Advances for taxes and insurance 51,320 57,556
Other liabilities 81,776 94,571
------ ------
Total liabilities 8,885,233 8,054,364
--------- ---------
Stockholders' Equity
Common Stock, $1 per share;
76,000 shares issued 76,000 76,000
Additional paid in capital 554,142 554,142
Retained earnings 811,906 779,820
Total Stockholders' Equity 1,442,048 1,409,962
--------- ---------
Total liabilities and Stockholders' Equity $10,327,281 $9,464,326
=========== ==========
</TABLE>
<PAGE>
Dollar Savings Bank
Statements of Operations
For the three and six months ended
September 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended For the six months ended
September 30, September 30,
------------------------- -------------------------
1999 1998 1999 1998
--------- ---------- --------- ---------
Interest Income:
<S> <C> <C> <C> <C>
Loans $129,797 $153,004 $265,673 $314,678
Mortgage-backed securities 514 720 1,118 1,471
Other 50,62534,186 85,028 64,578
------------ ------ ------
Total interest income 180,936 187,910 351,819 380,727
------- ------- ------- -------
Interest expense
Deposits:
Savings 26,188 22,300 49,511 45,340
Time 29,946 40,823 59,098 72,585
------ ------ ------ ------
Total interest expense 56,134 63,123 108,609 117,925
------ ------ ------- -------
Net interest income 124,802 124,787 243,210 262,802
Provision for loan losses 0 0 0 0
Net interest income after provision
for loan losses 124,802 124,787 243,210 262,802
------- ------- ------- -------
Non-interest income:
Loan fees and service charges 3,325 15,051 7,423 26,157
Other 3,900 3,420 7,666 6,848
----- ----- ----- -----
Total non-interest income 7,225 18,471 15,089 33,005
Non-interest expense:
Salaries and employee benefits 55,454 47,218 107,100 98,697
Net occupancy expense of premises 1,096 9,228 4,384 15,921
Equipment 1,667 1,393 3,562 6,763
Federal insurance premium 1,285 1,130 2,504 2,384
Loss from real estate operations 0 0 0 0
Loss from sale of loans 0 0 0 0
Other 47,830 63,000 108,663 89,576
-------- ------- ------ -------
Total non-interest expense 107,332 122,039 226,213 213,341
Income (Loss) before income taxes 24,695 21,219 32,086 82,466
Income taxes 0 0 0 0
------- ------- ------ ------
Net Income $24,695 $21,219 $32,086 $82,466
======== ======= ====== ======
</TABLE>
<PAGE>
Dollar Savings Bank
Statement of Stockholders' Equity
Six months ended September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Common Additional Retained Total
stock paid-in earnings stockholders'
capital equity
<S> <C> <C> <C> <C>
Balance, March 31, 1999 $76,000 $ 554,142 $779,820 $1,409,962
Net Income $32,086 $32,086
Balance, September 30, 1999 $76,000 $554,142 $811,906 $1,442,048
</TABLE>
<PAGE>
Dollar Savings Bank
Statements of Cash Flows
Six months ended September 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
September 30, September 30,
1999 1998
Cash flows from operating activities:
<S> <C> <C>
Net income (loss) $ 32,086 $ 82,466
Adjustments to reconcile net income (loss) to net
cash provided by operating activities
Amortization of deferred loan fees (2,003) (5,437)
Depreciation of premises and equipment 6,328 6,861
Provision for losses on loans and real estate 0 0
Loss on sale of loans 0 0
Loss on sale of real esstate acquired in settlement of
loans
0 0
Decrease in refundable income taxes 0 0
(Increase) in other assets (1,362) (8,008)
(Decrease) in other liabilities (12,795) (35,340)
(Decrease) increase in accrued interest payable on
deposits (2,544) 8,192
------- -----
Net cash provided by(used in) operating activities 19,710 48,734
------ ------
Cash flows from investing activities:
Proceeds from redemption of Federal Home Loan
Bank stock 0 0
Principal repayment on mortgage-backed securities 6,287 2,863
Proceeds from sales of loans 0 0
Proceeds from sales of real estate acquired in settlement
of loans 0 4,635
Net decrease in loans receivable 510,239 129,897
Purchase of equipment (1,233) 0
------- -
Net cash provided by (used in) investing activities 515,293 137,395
------- -------
Cash flows from financing activities:
Net increase in deposits 852,444 368,356
(Decrease) increase in advance payments by borrowers
for taxes and insurance (6,236) 5,696
------- -----
Net cash provided by financing activities 846,208 374,052
------- -------
Net increase in cash and cash equivalents 1,381,211 560,181
Cash and cash equivalents, beginning 2,818,435 2,383,767
--------- ---------
Cash and cash equivalents, ending $ 4,199,646 $ 2,943,948
============ =============
</TABLE>
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS
(1) Basis of Presentation
---------------------
The accompanying unaudited financial statements were prepared in
accordance with instructions for Form 10-QSB and therefore, do not include
information for footnotes necessary for a complete presentation of financial
position, results of operations, and cash flows in conformity with generally
accepted accounting principles. The following material under the heading
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" is written with the presumption that the users of the interim
financial statements have read, or have access to the latest audited financial
statements and notes thereto of Dollar Savings Bank (the OBankO).
All adjustments (consisting only of normal recurring accruals) which,
in the opinion of management, are necessary for a fair presentation of the
financial statements have been included in the results of operations for the
three and six month periods ending September 30, 1999.
Operating results for the six month period ended September 30, 1999 are
not necessarily indicative of the results that may be expected for the fiscal
year ending March 31, 2000.
(2) Reorganization into the Holding Company Structure
-------------------------------------------------
At a special meeting of stockholders on September 20, 1999, the Bank's
stockholders approved the reorganization of the Bank into a holding company
structure. The reorganization was completed on October 20, 1999. As a result of
the reorganization, the Bank became a wholly-owned subsidiary of Dollar Bancorp,
Inc., a Delaware corporation, and each share of the Bank's common stock, par
value $1.00 per share, was automatically converted into common stock of Dollar
Bancorp, Inc., par value $.01 per share.
Because the reorganization was completed subsequent to September 30,
1999, all information presented in this report is for the Bank, and not Dollar
Bancorp, Inc.
(3) Earnings per share
------------------
Earnings per share are based upon the outstanding common shares or
76,000 shares. The earnings per share for the three and six months ended
September 30, 1999 is $.32 and $.42 respectively.
(4) Book value per share
--------------------
The book value per share is based upon the outstanding common shares or
76,000 shares. The book value per share at September 30, 1999 is $18.97.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Forward Looking Statements
In addition to historical information, this Quarterly Report contains
forward-looking statements. The forward-looking statements contained in this
document are subject to certain risks and uncertainties that could cause actual
results to differ materially from those projected in the forward-looking
statements. Important factors that might cause such a difference include, but
are not limited to, those discussed in this section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
Readers shouldn't place undue reliance on these forward-looking statements, as
they reflect management's analysis as of the date of this report. The Bank has
no obligation to update or revise these forward-looking statements to reflect
events or circumstances that occur after the date of this report. Readers should
carefully review the risk factor described in other documents the Company files
from time to time with the Securities and Exchange Commissison, including
reports filed on Form 8-K.
Comparison of Financial Condition at September 30, 1999 and March 31, 1999
Assets
Total assets increased $862,955, or 9.1%, to $10,327,281 at Septembr
30, 1999, from $9,464,326 at March 31, 1999. The increase in total assets was
primarily attributable to a $1,436,914 increase in interest bearing deposits and
a $285,187 increase in real estate acquired in settlement of loans, which was
partially offset by a $793,423 decrease in loans receivable, net, a $55,703
decrease in cash and a $6,287 decrease in mortgage-backed securities.
Liabilities
Total liabilities increased by $830,869, or 9.4%, to $8,885,233 at
September 30, 1999 from $8,054,364 at March 31, 1999. Deposits increased to
$8,752,137 from $7,902,237 while advances for taxes decreased to $51,320 from
$57,556 and other liabilities including accrued expenses and uncashed bank
checks decreased to $81,776 from $94,571.
Stockholders' Equity
Stockholders' equity increased by $32,086, or 2.2%, to $1,442,048 at
September 30, 1999 from $1,409,962 at March 31, 1999. The increase in
stockholders' equity is attributable to the Bank's net income of $32,086 for the
six month period.
Comparison of Operating Results for the Three Months Ended September 30, 1999
and September 30, 1998
Net Income
Net income increased $3,476 to $24,695 for the three months ended
September 30, 1999 from $21,219 for the three months ended September 30, 1998.
The increase in net income resulted primarily from a $14,707 decrease in
non-interest expense which was partially offset by a decrease in non-interest
income of $11,246 and a decrease in interest income of $6,974.
Interest Income
Interest income decreased $6,974, or 3.7%, to $180,936 for the three
months ended September 30, 1999 from $187,910 for the three months ended
September 30,1998. The decrease in interest income was
<PAGE>
attributed to a $23,207 decrease in interest income on loans and a $206 decrease
in interest income attributable to mortgage-backed securities which was
partially offset by a $16,439 increase in other interest income.
Interest Expense
Interest expense decreased $6,989, or 11.1%, to $56,134 for the three
months ended September 30, 1999 from $63,123 for the three months ended
September 30, 1998. This increase was due to a $10,877 decrease in the cost of
time deposits, which was partially offset by a $3,888 increase in the cost of
savings deposits.
Provision for Loan Losses
The Bank did not establish a provision for loan losses during the three
month period ended September 30, 1999 or September 30, 1998. The Bank maintains
its allowance for loan losses based upon management's periodic evaluation of
known or inherent risks in the loan portfolio, the Bank's past loss experience,
level of delinquencies, adverse situations that may affect a borrower's ability
to repay a loan, the estimated value of the underlying collateral, and market
conditions. The Bank did not experience any loss from real estate operations
during the three months ended September 30, 1999 or September 30, 1998.
Non-Interest Income
Non-interest income decreased $11,246, or 60.9%, to $7,225 for the
three months ended September 30, 1999 from $18,471 for the three months ended
September 30, 1998. The decrease was due to a $11,726 decrease in loan fees and
service charges which was offset by a slight increase in other non-interest
income consisting primarily of fees generated by executing money orders.
Non-Interest Expense
Non-interest expense decreased $14,707 or 12.1%, to $107,332 for the
three months ended September 30, 1999 from $122,039 for the three months ended
September 30, 1998. The decrease was primarily due to a decrease in net
occupancy expense of premises of $8,132 and a decrease of $15,170 in other
non-interest expenses which were partially offset by an increase in salaries and
employees benefits of $8,236.
Income Tax Expense
The Bank did not incur any income tax expense during the three months
ended September 30, 1999 and September 30, 1998. This is due to a net operating
loss carryover from previous years.
Comparison of Operating Results for the Six Months Ended September 30, 1999 and
September 30, 1998
Net Income
Net income decreased $50,380 to $32,086 for the six months ended
September 30, 1999 from $82,466 for the six months ended September 30, 1998. The
decrease in net income resulted primarily from a decrease in interest income of
$28,908 and a decrease in non-interest income of $17,916 which was partially
offset by a decrease in interest expense of $9,316.
<PAGE>
Interest Income
Interest income decreased $28,908, or 7.6%, to $351,819 for the six
months ended September 30, 1999 from $380,727 for the six months ended September
30,1998. The decrease in interest income was attributed to a $49,005 decrease in
interest income on loans which was partially offset by a $353 in interest income
attributable to mortgage-backed securitie and a $20,450 increase other interest
income.
Interest Expense
Interest expense decreased $9,316, or 7.9%, to $108,609 for the six
months ended September 30, 1999 from $108,609 for the six months ended September
30, 1998. This decrease was due to a $13,487 decrease in the cost of time
deposits, which was partially offset by a $4,171 increase in the cost of savings
deposits.
Provision for Loan Losses
The Bank did not establish a provision for loan losses during the six
month period ended September 30, 1999 or September 30, 1998. The Bank maintains
its allowance for loan losses based upon management's periodic evaluation of
known or inherent risks in the loan portfolio, the Bank's past loss experience,
level of delinquencies, adverse situations that may affect a borrower's ability
to repay a loan, the estimated value of the underlying collateral, and market
conditions. The Bank did not experience any loss from real estate operations
during the six months ended September 30, 1999 or September 30, 1998.
Non-Interest Income
Non-interest income decreased $17,916, or 54.3%, to $15,089 for the six
months ended September 30, 1999 from $33,005 for the six months ended September
30, 1998. The decrease was due to a $18,734 decrease in loan fees and service
charges which was offset by a slight increase in other non-interest income
consisting primarily of fees generated by executing money orders.
Non-Interest Expense
Non-interest expense increased $12,872 or 6.0%, to $226,213 for the six
months ended September 30, 1999 from $213,341 for the six months ended September
30, 1998. The increase was primarily due to an increase in salaries and
employees benefits of $8,403 and an increase of $19,087 in other non-interest
expenses which was partially offset by a decrease in net occupancy expense of
premises of $11,537 and a $3,201 decrease in equipment expense.
Income Tax Expense
The Bank did not incur any income tax expense during the six months
ended September 30, 1999 and September 30, 1998. This is due to a net operating
loss carryover from previous years.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Bank's most significant form of market risk is interest rate risk,
as the majority of the Bank's assets and liabilities are sensitive to changes in
interest rates. The Bank's assets consist primarily of fixed rate mortgage loans
(the majority of which have five year balloon terms), which have longer
maturities than the Bank's liabilities which consist primarily of deposits. The
Bank's mortgage loan portfolio, consisting primarily of loans secured by
residential real property located in Essex County, is also subject to risks
associated with the local economy. The Bank does not own any trading assets. At
June 30, 1999, the Bank did not have any hedging transactions in place, such as
<PAGE>
interest rate swaps and caps. The Bank's interest rate risk management focuses
primarily on evaluating and managing the composition of the Bank's assets and
liabilities in the context of various interest rate scenarios. Factors beyond
management's control, such as market interest rates and competition, also have
an impact on interest income and interest expense.
During the quarter ended June 30, 1999, there were no significant
changes in the Bank's assessment of market risk.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are various claims and lawsuits in which the Bank is periodically
involved incidental to the Bank's business. In the opinion of management, no
material loss is expected from any of such pending claims or lawsuits.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) Changes in Securities.
Not applicable.
(b) Use of proceeds.
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
(a) Defaults upon senior securities.
Not applicable.
(b) Use of proceeds.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On September 20, 1999, the Bank held a special meeting of stockholders
for the purpose of approving the reorganization of the Bank into the holding
company structure with the formation of Dollar Bancorp, Inc. as the Bank's
Delaware chartered stock holding company. 76,000 shares were voted in favor of
the proposal, no shares were voted against the proposal, and there were no
abstentions.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORT ON FORM 8-K.
Exhibit 27 EDGAR Financial Data Schedule.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed by the undersigned
thereunto duly authorized.
DOLLAR BANCORP, INC.
Date: November 11, 1999 By: /s/ Robert DeMane
-------------------------------------
Robert DeMane
President and Chief Executive Officer
Date: November 11, 1999 By: /s/ Susan L. Velardi
-------------------------------------
Susan L. Velardi
Vice President and Treasurer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> SEP-30-1999
<CASH> 257872
<INT-BEARING-DEPOSITS> 3941774
<FED-FUNDS-SOLD> 850000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 22576
<INVESTMENTS-MARKET> 22576
<LOANS> 5786317
<ALLOWANCE> 348305
<TOTAL-ASSETS> 10327281
<DEPOSITS> 8752137
<SHORT-TERM> 0
<LIABILITIES-OTHER> 81776
<LONG-TERM> 0
0
0
<COMMON> 76000
<OTHER-SE> 554142
<TOTAL-LIABILITIES-AND-EQUITY> 10327281
<INTEREST-LOAN> 129797
<INTEREST-INVEST> 50625
<INTEREST-OTHER> 514
<INTEREST-TOTAL> 180936
<INTEREST-DEPOSIT> 56134
<INTEREST-EXPENSE> 56134
<INTEREST-INCOME-NET> 124802
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<EXPENSE-OTHER> 47830
<INCOME-PRETAX> 24695
<INCOME-PRE-EXTRAORDINARY> 24695
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<EPS-BASIC> .32
<EPS-DILUTED> .04
<YIELD-ACTUAL> 7.42
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<ALLOWANCE-DOMESTIC> 17000
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<ALLOWANCE-UNALLOCATED> 331305
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