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 December 31, 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 /X/ No / /
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
December 31, 1999 and March 31, 1999 1
Statements of Operations for the
three and nine months ended
December 31, 1999 and 1998 2
Statements of Stockholders' Equity
for the nine months ended
December 31, 1999 3
Statements of Cash Flows for the
nine months ended December 31, 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 Bancorp, Inc.
Balance Sheets as of
December 31, 1999 and March 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
At At
December 31, 1999 March 31, 1999
----------------- --------------
Assets
<S> <C> <C>
Cash $500,307 $313,575
Interest bearing deposits 3,498,647 2,504,860
Mortgage-backed securities 21,481 28,863
Loans receivable, net 5,667,089 6,231,435
Premises & equipment 288,911 297,135
Real estate owned 285,187 0
Stock in federal home loan bank 56,500 56,500
Refundable income taxes 7,403 7,403
Other assets 29,120 24,555
------ ------
Total Assets $10,354,645 $9,464,326
=========== ==========
Liabilities
Deposits 8,763,036 7,902,237
Advances for taxes and insurance 48,859 57,556
Other liabilities 70,937 94,571
------ ------
Total liabilities 8,882,832 8,054,364
--------- ---------
Stockholders' Equity
Common Stock, $.01 and $1 per share;
76,000 shares issued 760 76,000
Additional paid in capital 629,382 554,142
Retained earnings 841,671 779,820
Total Stockholders' Equity 1,471,813 1,409,962
--------- ---------
Total liabilities and Stockholders' Equity $10,354,645 $9,464,326
=========== ==========
</TABLE>
<PAGE>
Dollar Bancorp, Inc.
Statements of Operations
For the three and nine months ended
December 31, 1999 and 1998
(Unaudited)
<TABLE>
For the three months ended For the nine months ended
December 31, December 31,
-------------------------- -------------------------
1999 1998 1999 1998
--------- -------- --------- --------
Interest Income:
<S> <C> <C> <C> <C>
Loans $139,607 $153,490 $405,280 $468,168
Mortgage-backed securities 469 693 1,587 2,164
Other 51,839 34,939 136,867 99,517
------- ------- ------ -------
Total interest income 191,915 189,122 543,734 569,849
------- ------- ------- -------
Interest expense
Deposits:
Savings 27,302 22,994 76,813 68,333
Time 38,210 39,315 97,309 111,901
------ ------ ------ -------
Total interest expense 65,512 62,309 174,122 180,234
------ ------ ------- -------
Net interest income 126,403 126,813 369,612 389,615
Provision for loan losses 0 74,687 0 74,687
Net interest income after provision
for loan losses 126,403 52,126 369,612 314,928
------- ------ ------- -------
Non-interest income:
Loan fees and service charges 7,145 11,432 14,569 37,589
Income from real estate operations 2,410 0 2,410 0
Other 3,845 3,857 11,511 10,705
----- ----- ------ ------
Total non-interest income 13,400 15,289 28,490 48,294
Non-interest expense:
Salaries and employee benefits 57,987 54,200 165,087 152,897
Net occupancy expense of premises (26) 8,866 4,358 24,787
Equipment 1,107 1,541 4,669 8,304
Federal insurance premium 1,254 1,138 3,758 3,522
Loss from real estate operations 0 0 0 0
Loss from sale of loans 0 0 0 0
Other 49,716 (16,536) 158,379 73,040
------- ------- ------- ------
Total non-interest expense 110,038 49,209 336,251 262,550
Income (Loss) before income taxes $29,765 $18,206 61,851 100,672
Income taxes 0 0 0 0
- - - -
Net Income $29,765 $18,206 61,851 100,672
======== ======= ====== =======
Earnings per share (Basic) .39 .24 .81 1.32
Earnings per share (Diluted) .39 .24 .81 1.32
Cash dividends declared per share 0 0 0 0
Shares used in computing earnings per share 76,000 76,000 76,000 76,000
</TABLE>
<PAGE>
Dollar Bancorp, Inc.
Statement of Stockholders' Equity
Nine months ended December 31, 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 $61,851 $61,851
Reorganization ($75,240) $75,240
Balance, December 31, 1999 $760 $629,382 $841,671 $1,471,813
</TABLE>
<PAGE>
Dollar Bancorp, Inc.
Statements of Cash Flows
Nine months ended December 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
Cash flows from operating activities:
<S> <C> <C>
Net income (loss) $ 61,851 $ 100,672
Adjustments to reconcile net income (loss) to net
cash provided by operating activities
Amortization of deferred loan fees (2,625) (6,516)
Depreciation of premises and equipment 9,457 10,292
Provision for losses on loans and real estate 0 74,687
Loss on sale of loans 0 0
Loss on sale of real esstate owned 0 0
Decrease in refundable income taxes 0 0
(Increase) in other assets (4,565) (4,589)
(Decrease) in other liabilities (23,634) (88,701)
Increase in accrued interest payable on
deposits 8,290 18,992
----- ------
Net cash provided by(used in) operating activities 48,774 104,837
------ -------
Cash flows from investing activities:
Proceeds from redemption of Federal Home Loan
Bank stock 0 0
Principal repayment on mortgage-backed securities 7,382 4,456
Proceeds from sales of loans 0 0
Proceeds from sales of real estate owned 0 6,953
Net decrease in loans receivable 281,784 211,371
Loan Purchased (354,000)
Purchase of equipment (1,233) 0
------- -
Net cash provided by (used in) investing activities 287,933 (131,220)
------- ---------
Cash flows from financing activities:
Net increase in deposits 852,509 469,690
(Decrease) in advance payments by borrowers
for taxes and insurance (8,697) (24,734)
------- --------
Net cash provided by financing activities 843,812 444,956
------- -------
Net increase in cash and cash equivalents 1,180,519 418,573
Cash and cash equivalents, beginning 2,818,435 2,383,767
--------- ---------
Cash and cash equivalents, ending $ 3,998,954 $ 2,802,340
============ =============
</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 Bancorp, Inc. (the "Company").
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 nine month periods ending December 31, 1999.
Operating results for the nine month period ended December 31, 1999 are
not necessarily indicative of the results that may be expected for the fiscal
year ending March 31, 2000.
(2) Holding Company Reorganization
------------------------------
At a Special Meeting of Stockholders held September 20, 1999,
stockholders of Dollar Savings Bank (the "Bank") approved the reorganization of
the Bank into the holding company structure, whereby the Bank becomes a
wholly-owned subsidiary of the Company, a Delaware corporation. Each outstanding
share of the Bank's common stock, par value $1.00 per share, was automatically
converted into one share of the Company's common stock, par value $.01 per
share. The Bank completed the reorganization on October 20, 1999.
(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 nine months ended
December 31, 1999 is $.39 and $.81 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 December 31, 1999 is $19.37.
<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 Company
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 December 31, 1999 and March 31, 1999
Assets
Total assets increased $890,319, or 9.4%, to $10,354,645 at December
31, 1999, from $9,464,326 at March 31, 1999. The increase in total assets was
primarily attributable to a $993,787 increase in interest bearing deposits, a
$285,187 increase in real estate owned and a $186,732 increase in cash, which
were partially offset by a $564,346 decrease in loans receivable, net, a $7,382
decrease in mortgage-backed securities and a $8,224 decrease in premises and
equipment.
Liabilities
Total liabilities increased by $828,468, or 10.3%, to $8,882,832 at
December 31, 1999 from $8,054,364 at March 31, 1999. Deposits increased to
$8,763,036 from $7,902,237 while advances for taxes decreased to $48,859 from
$57,556 and other liabilities including accrued expenses and uncashed bank
checks decreased to $70,937 from $94,571.
Stockholders' Equity
Stockholders' equity increased by $61,851, or 4.4%, to $1,471,813 at
December 31, 1999 from $1,409,962 at March 31, 1999. The increase in
stockholders' equity is attributable to the Company's net income of $61,851 for
the nine month period.
Comparison of Operating Results for the Three Months Ended December 31, 1999 and
December 31, 1998
Net Income
Net income increased $11,559 to $29,765 for the three months ended
December 31, 1999 from $18,206 for the three months ended December 31, 1998. The
increase in net income resulted primarily from a $2,793 increase in interest
income and a $74,687 decrease in provision for loan losses which was partially
offset by a decrease in non-interest income of $1,889 and an increase in
non-interest expense of $60,829.
<PAGE>
Interest Income
Interest income increased $2,793, or 1.5%, to $191,915 for the three
months ended December 31, 1999 from $189,122 for the three months ended December
31,1998. The increase in interest income was attributed to a $16,900 increase in
other interest income which was partially offset by a $13,883 decrease in
interest income attributable to loans and a slight decrease in interest income
attributable to mortgage-backed securities of $224.
Interest Expense
Interest expense increased $3,203, or 5.1%, to $65,512 for the three
months ended December 31, 1999 from $62,309 for the three months ended December
31, 1998. This increase was due to a $4,308 increase in the cost of savings
deposits which was partially offset by a $1,105 decrease in the cost of time
deposits.
Provision for Loan Losses
The Company did not establish a provision for loan losses during the
three month period ended December 31, 1999 but did establish a $74,687 provision
for the three month period ended December 31, 1998 because one of the Company's
borrowers went into bankruptcy. The Company maintains its allowance for loan
losses based upon management's periodic evaluation of known or inherent risks in
the loan portfolio, the Company'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 Company
did not experience any loss from real estate operations during the three months
ended December 31, 1999 or December 31, 1998.
Non-Interest Income
Non-interest income decreased $1,889, or 12.4%, to $13,400 for the
three months ended December 31, 1999 from $15,289 for the three months ended
December 31, 1998. The decrease was due to a $4,287 decrease in loan fees and
service charges which was offset by an increase of $2,410 in income from real
estate operations and a slight increase in other non-interest income consisting
primarily of fees generated by executing money orders.
Non-Interest Expense
Non-interest expense increased $60,829 or 123.6%, to $110,038 for the
three months ended December 31, 1999 from $49,209 for the three months ended
December 31, 1998. The increase was primarily due to a $66,252 increase in other
non-interest expenses and an increase in salaries and employees benefits of
$3,787 which were partially offset by a decrease of $8,892 in net occupancy
expense of premises and a slight decrease in equipment expense.
Income Tax Expense
The Company did not incur any income tax expense during the three
months ended December 31, 1999 and December 31, 1998. This is due to a net
operating loss carryover from previous years.
<PAGE>
Comparison of Operating Results for the Nine Months Ended December 31, 1999 and
December 31, 1998
Net Income
Net income decreased $38,821 to $61,851 for the nine months ended
December 31, 1999 from $100,672 for the nine months ended December 31, 1998. The
decrease in net income resulted primarily from a decrease in non-interest income
of $19,804 and an increase in non-interest expense of $73,701 which was
partially offset by a decrease in provision for loan losses of $74,687.
Interest Income
Interest income decreased $26,115, or 4.6%, to $543,734 for the nine
months ended December 31, 1999 from $569,849 for the nine months ended December
31,1998. The decrease in interest income was attributed to a $62,888 decrease in
interest income on loans which was partially offset by a $577 in interest income
attributable to mortgage-backed securitie and a $37,350 increase other interest
income.
Interest Expense
Interest expense decreased $6,112, or 3.4%, to $174,122 for the nine
months ended December 31, 1999 from $180,234 for the nine months ended December
31, 1998. This decrease was due to a $14,592 decrease in the cost of time
deposits, which was partially offset by a $8,480 increase in the cost of savings
deposits.
Provision for Loan Losses
The Company did not establish a provision for loan losses during the
nine month period ended December 31, 1999 but did establish a $74,687 provision
for the nine month period ended December 31, 1998 because one of the Company's
borrowers went into bankruptcy. The Company maintains its allowance for loan
losses based upon management's periodic evaluation of known or inherent risks in
the loan portfolio, the Company'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 Company
did not experience any loss from real estate operations during the nine months
ended December 31, 1999 or December 31, 1998.
Non-Interest Income
Non-interest income decreased $19,804, or 41.0%, to $28,490 for the
nine months ended December 31, 1999 from $48,294 for the nine months ended
December 31, 1998. The decrease was due to a $23,020 decrease in loan fees and
service charges which was offset by an increase of $2,410 in income from real
estate operations and a slight increase in other non-interest income consisting
primarily of fees generated by executing money orders.
Non-Interest Expense
Non-interest expense increased $73,701 or 28.1%, to $336,251 for the
nine months ended December 31, 1999 from $262,550 for the nine months ended
December 31, 1998. The increase was primarily due to an increase of $85,339 in
other non-interest expenses and a $12,190 decrease in salaries and employees
benefits which was partially offset by a decrease in net occupancy expense of
premises of $20,429.
<PAGE>
Income Tax Expense
The Bank did not incur any income tax expense during the nine months
ended December 31, 1999 and December 31, 1998. This is due to a net operating
loss carryover from previous years.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company's most significant form of market risk is interest rate
risk, as the majority of the Company's assets and liabilities are sensitive to
changes in interest rates. The Company's assets consist primarily of fixed rate
mortgage loans (the majority of which have five year balloon terms), which have
longer maturities than the Company's liabilities which consist primarily of
deposits. The Company'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 Company does not own any trading
assets. At December 31, 1999, the Company did not have any hedging transactions
in place, such as interest rate swaps and caps. The Company's interest rate risk
management focuses primarily on evaluating and managing the composition of the
Company'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 December 31, 1999, there were no significant
changes in the Company'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 Company'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.
<PAGE>
Not applicable.
(b) Use of proceeds.
Not applicable.
ITEM 4. OTHER INFORMATION
None.
ITEM 5. 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: February 10, 2000 By: /s/ Robert DeMane
-------------------------------------
Robert DeMane
President and Chief Executive Officer
Date: February 10, 2000
By: /s/ Susan L. Velardi
-------------------------------------
Susan L. Velardi
Vice President and Treasurer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Mar-31-2000
<PERIOD-END> Dec-31-1999
<CASH> 500,307
<INT-BEARING-DEPOSITS> 3,498,647
<FED-FUNDS-SOLD> 850,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 21,481
<INVESTMENTS-MARKET> 21,481
<LOANS> 5,667,089
<ALLOWANCE> 348,305
<TOTAL-ASSETS> 10,354,645
<DEPOSITS> 8,763,036
<SHORT-TERM> 0
<LIABILITIES-OTHER> 70,937
<LONG-TERM> 0
0
0
<COMMON> 760
<OTHER-SE> 1,471,053
<TOTAL-LIABILITIES-AND-EQUITY> 10,354,645
<INTEREST-LOAN> 405,280
<INTEREST-INVEST> 1,587
<INTEREST-OTHER> 136,867
<INTEREST-TOTAL> 543,734
<INTEREST-DEPOSIT> 174,122
<INTEREST-EXPENSE> 174,122
<INTEREST-INCOME-NET> 369,612
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 158,379
<INCOME-PRETAX> 61,581
<INCOME-PRE-EXTRAORDINARY> 61,581
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 61,581
<EPS-BASIC> .81
<EPS-DILUTED> .81
<YIELD-ACTUAL> 5.59
<LOANS-NON> 226,283
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 456,430
<ALLOWANCE-OPEN> 348,305
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 348,305
<ALLOWANCE-DOMESTIC> 17,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 331,305
</TABLE>
