<PAGE>
United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
- ----
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
- ----
For the quarterly period ended March 31, 2000.
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 No. 0-13395
UNITED FINANCIAL BANKING COMPANIES, INC.
A Virginia Corporation IRS Employer Identification
No. 54-1201253
8399 Leesburg Pike, Vienna, Virginia 22182
Telephone: (703) 734-0070
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 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. Yes X No
--- ---
Common Stock $1.00 Par Value
1,001,499 Shares Outstanding
as of March 31, 2000
Transitional Small Business Disclosure Format: Yes No X
--- ---
<PAGE>
Part 1. Financial Information
Item 1: Financial Statements
UNITED FINANCIAL BANKING COMPANIES, INC., AND SUBSIDIARIES
Consolidated Statements of Income and Comprehensive Income/
Results of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------------------
2000 1999
----------------- -----------------
<S> <C> <C>
Interest income:
Interest and fees on loans/leases $ 935,925 $ 803,102
Interest on investment securities 117,065 99,655
Interest on federal funds sold 77,002 71,679
Interest on interest-bearing deposits 67 64
----------------- -----------------
Total interest income 1,130,059 974,500
----------------- -----------------
Interest expense:
Interest on deposits 398,610 397,715
Interest on short-term borrowings - -
----------------- -----------------
Total interest expense 398,610 397,715
----------------- -----------------
Net interest income 731,449 576,785
Provision for loan/lease losses 33,000 12,079
----------------- -----------------
Net interest income after provision
for loan/lease losses 698,449 564,706
Noninterest income:
Gain (loss) on sale of real estate
owned and other earning assets (280) (2,964)
Loan servicing and other fees 15,013 18,380
Other income 43,144 36,177
----------------- -----------------
Total noninterest income 57,877 51,593
----------------- -----------------
Noninterest expense:
Salaries 276,203 229,652
Employee benefits 49,780 46,663
Occupancy 97,847 78,921
Furniture and equipment 43,071 19,798
Legal 5,657 7,185
FDIC insurance 2,417 4,897
Other insurance 6,053 8,965
Data processing 38,235 32,856
Real estate owned holding expense 6,803 7,661
Other expense 104,032 71,933
----------------- -----------------
Total noninterest expense 630,098 508,531
----------------- -----------------
Income (loss) before income taxes 126,228 107,768
Provision (credit) for income taxes - -
----------------- -----------------
Net income (loss) $ 126,228 $ 107,768
================= =================
Net income (loss) per common share (Note 3)
Basic $ 0.13 $ 0.13
================= =================
Diluted $ 0.13 $ 0.13
================= =================
Comprehensive Income (Note 4)
- -----------------------------
Net income $ 126,228 $ 107,768
Other comprehensive income, net of tax
Unrealized gains (losses) on available-for-sale securities (16,729) (16,395)
----------------- -----------------
Comprehensive income $ 109,499 $ 91,373
================= =================
</TABLE>
2
<PAGE>
UNITED FINANCIAL BANKING COMPANIES, INC., AND SUBSIDIARIES
Consolidated Balance Sheets / Financial Condition
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
2000 1999
------------------ -------------------
<S> <C> <C>
Assets
------
Cash and due from banks $ 2,084,709 $ 2,104,515
Federal funds sold 5,263,000 5,033,000
Investment Securities:
Available-for-sale (AFS) 7,541,453 6,813,528
Held-to-maturity (HTM) 906,093 -
Loans and lease financing, net of unearned
income of $54,614 and $38,805 43,332,526 40,652,769
Less: Allowance for loan/lease losses (816,526) (783,143)
------------------ -------------------
Net loans and lease financing 42,516,000 39,869,626
Real estate owned held for sale, net 1,332,407 1,424,650
Premises and equipment, net 293,223 310,784
Deferred income taxes 511,424 511,424
Other assets 409,017 388,365
------------------ -------------------
Total assets $ 60,857,326 $ 56,455,892
================== ===================
Liabilities and Stockholders' Equity
------------------------------------
Deposits:
Demand $ 12,216,142 $ 12,248,025
Savings and NOW 5,019,734 4,902,524
Money market 14,375,622 11,473,851
Time deposits:
Under $100,000 15,487,009 15,513,608
$100,000 and over 6,020,574 5,053,294
------------------ -------------------
Total deposits 53,119,081 49,191,302
------------------ -------------------
Other liabilities 356,296 336,525
------------------ -------------------
Total liabilities 53,475,377 49,527,827
------------------ -------------------
Stockholders' Equity:
Preferred stock of no par value, authorized
5,000,000 shares, no shares issued - -
Common Stock, par value $1; authorized 3,500,000 shares,
issued 1,001,499 shares at 3/31/00 and 963,234 at 12/31/99 1,001,499 963,234
Capital in excess of par value 15,975,810 15,669,690
Retained earnings (9,478,059) (9,604,287)
Unrealized holding gain (loss) - AFS securities (117,301) (100,572)
------------------ -------------------
Total stockholders' equity 7,381,949 6,928,065
------------------ -------------------
Total liabilities and stockholders' equity $ 60,857,326 $ 56,455,892
================== ===================
</TABLE>
3
<PAGE>
UNITED FINANCIAL BANKING COMPANIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------------------------
March 31, 2000 March 31, 1999
---------------------- ----------------------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 126,228 $ 107,768
Adjustment to reconcile net income (loss) to
net cash provided by (used in) operating activities:
Depreciation & amortization 25,344 12,214
Provision for loan/lease losses 33,000 12,079
Amortization of investment security discount 1,233 1,509
Amortization of loan fees and discounts, net 14,526 22,884
Net (gain) loss on disposal of equipment (1,650) -
Net (gain) loss on sale of other real estate owned 280 2,964
(Increase) decrease in other assets (20,652) (6,312)
Increase (decrease) in other liabilities 19,771 (14,319)
---------------------- ----------------------
Net cash provided by (used in) operating activities 198,080 138,787
---------------------- ----------------------
Cash flows from investing activities:
Loans originated - non-bank subsidiaries (72,051) (50,000)
Principal collected - non-bank subsidiaries 50,389 23,169
Loans and lease originations, net of collections (2,672,238) 567,353
Purchases of securities available-for-sale (1,167,482) (1,511,047)
Purchases of securities held-to-maturity (906,308) -
Investment made in other real estate owned (34,657) -
Proceeds received from maturity of securities available-for-sale 421,810 788,542
Proceeds received from maturity of securities held to maturity - 855,000
Proceeds from real estate owned 126,620 66,536
Purchases of premises and equipment (12,133) (4,620)
Proceeds from disposal of equipment 6,000 -
---------------------- ----------------------
Net cash provided by (used in) investing activities (4,260,050) 734,933
---------------------- ----------------------
Cash flow from financing activities:
Net increase (decrease) in demand deposits, savings
accounts, NOW accounts and money market accounts 2,987,098 102,736
Certificates of deposit sold (matured), net 940,681 (2,460,061)
Proceeds from sale of common stock 344,385 -
---------------------- ----------------------
Net cash provided by (used in) financing activities 4,272,164 (2,357,325)
---------------------- ----------------------
Net increase (decrease) in cash and cash equivalents 210,194 (1,483,605)
Cash and cash equivalents at beginning of the year 7,137,515 10,170,910
---------------------- ----------------------
Cash and cash equivalents at end of the quarter $ 7,347,709 $ 8,687,305
====================== ======================
Supplemental disclosures of cash flow information:
Cash paid during the years for:
Interest on deposits and other borrowings $ 137,322 $ 152,604
Income taxes - 10,885
Non-Cash Items:
Effect on stockholders' equity of an unrealized gain (loss)
on debt and equity securities available-for-sale $ (16,729) $ (16,395)
</TABLE>
4
<PAGE>
Notes to Consolidated Financial Statements
------------------------------------------
Note 1 - The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions for Form 10-QSB and,
therefore, do not include all information and footnotes required by
generally accepted accounting principles for complete financial
statements. The interim financial statements have been prepared
utilizing the interim basis of reporting and, as such, reflect all
adjustments which are, in the opinion of management, necessary for a
fair presentation of the results for the periods presented. The results
of operations for the interim periods are not necessarily indicative of
the results for the full year.
Note 2 - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Note 3 - On December 31, 1997, the Company adopted Statement of Financial
Accounting Standards No. 128, Earnings per share (SFAS 128), which
supersedes Accounting Principles Board Opinion No. 15. Under SFAS 128,
earnings per common share are computed by dividing net income (loss)
available to common stockholders by the weighted average number of
common shares outstanding during the period. Diluted earnings per share
reflects the potential dilution, if any, that could occur if securities
or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock. Prior
period amounts have been restated, where appropriate, to conform to the
requirements of SFAS 128.
Note 4 - On January 1, 1998, United Financial Banking Companies, Inc. adopted
Statement of Financial Accounting Standards No. 130, Reporting
Comprehensive Income (SFAS 130). Under SFAS 130, each company is
required to present a `Statement of Comprehensive Income'.
Comprehensive income is defined as the change in equity during a period
from transactions and other events and circumstances from non-owner
sources such as foreign currency items, minimum pension liability
adjustments and unrealized gains and losses on certain investments in
debt and equity securities.
5
<PAGE>
- ---------------------------------------------------------------------
UNITED FINANCIAL BANKING COMPANIES, INC.
CONSOLIDATED AVERAGE BALANCES/NET INTEREST ANALYSIS/
YIELDS AND RATES
- ---------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended
March 31, 2000 March 31, 1999
- ---------------------------------------------------------------------------------------------------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Earning assets:
Loans/Leases:
Commercial $26,229,953 $ 593,257 9.17% $24,073,891 $ 543,310 9.15%
Real estate construction 5,059,499 130,753 10.48% 3,775,617 86,864 9.33%
Real estate mortgage 8,748,960 169,990 7.88% 6,963,211 137,668 8.02%
Installment 1,872,321 41,925 9.08% 1,589,676 35,260 9.00%
Leases - - - -
--------------- -------------- --------------- --------------
Total loans/leases 41,910,733 935,925 9.06% 36,402,395 803,102 8.95%
--------------- -------------- --------------- --------------
Interest-bearing deposits - - - -
Federal funds sold 5,421,700 77,069 5.77% 6,039,474 71,743 4.82%
Investment securities 7,646,398 117,065 6.21% 6,851,191 99,655 5.90%
--------------- -------------- --------------- --------------
Total earning assets 54,978,831 1,130,059 8.34% 49,293,060 974,500 8.02%
============== ==============
Noninterest-earning assets
Cash and due from banks 2,153,733 1,991,707
Other assets 2,520,642 2,198,575
Allowance for loan losses/lease (789,915) (722,777)
--------------- ---------------
Total assets $58,863,291 $52,760,565
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Interest-bearing deposits:
Savings and NOW accounts 4,999,224 34,804 2.82% 3,823,875 21,073 2.24%
Money market accounts 12,229,619 97,428 3.23% 8,386,297 63,650 3.08%
Time:
Under $100,000 15,379,224 198,780 5.24% 17,355,482 224,742 5.25%
$100,000 and over 5,341,223 67,598 5.13% 6,883,052 88,250 5.20%
--------------- -------------- --------------- --------------
Total interest-bearing
deposits 37,949,290 398,610 4.26% 36,448,706 397,715 4.43%
Short-term borrowings - - - -
--------------- -------------- --------------- --------------
Total interest-bearing
liabilities 37,949,290 398,610 4.26% 36,448,706 397,715 4.43%
============== ==============
Non interest-bearing liabilities:
Demand deposits 13,152,947 10,931,431
Other liabilities 419,226 334,659
Stockholders' equity 7,341,828 5,045,769
--------------- ---------------
Total liabilities and
stockholders' equity $58,863,291 $52,760,565
=============== ===============
Net interest income $ 731,449 $ 576,785
============== ==============
Net interest margin (1) 5.40% 4.75%
========= =========
Net interest spread (2) 4.08% 3.59%
========= =========
Fees included in loan income $ 36,250 $ 27,486
============== ==============
Taxable equivalent adjustment $ - $ -
============== ==============
</TABLE>
Average balances for the years presented are calculated on a monthly basis.
Nonaccruing loans are included in the average loan balance.
(1) Net interest income divided by total earning assets.
(2) Average rate earned on total earning assets less average rate paid for
interest-bearing liabilities.
6
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Forward looking statements. This discussion contains forward looking statements,
including statements of goals, intentions and expectations as to future trends,
plans, or results of Company operations and policies and regarding general
economic conditions. These statements are based upon current and anticipated
economic conditions, nationally and in the Company's market, interest rates and
interest rate policy, competitive factors, statements by suppliers of data
processing equipment and services, government agencies and of third parties, as
to Year 2000 compliance, and other conditions which, by their nature, are not
susceptible to accurate forecast, and are subject to significant uncertainty.
Because of these uncertainties and the assumptions on which this discussion and
the forward looking statements are based, actual future operations and results
may differ materially from those indicated herein.
A. Results of Operations for the Three Months Ended March 31, 2000 as Compared
---------------------------------------------------------------------------
to the Three Months Ended March 31, 1999
----------------------------------------
General
- -------
The following discussion provides an overview of the financial condition
and results of operations of United Financial Banking Companies, Inc. (UFBC) and
its subsidiaries, The Business Bank and Business Venture Capital, Inc., which is
presented on a consolidated basis. UFBC reported net income of $126,228 for the
three-month period ended March 31, 2000. This compares with net income of
$107,768 for the same period of 1999. Basic earnings per share were $.13 for the
first three months ended March 31, 2000 and $.13 for the first three months of
1999.
Earnings for the first three months of 2000 are primarily due to increased
earning assets and decreased cost of funds. During the past year, UFBC's primary
subsidiary, The Business Bank (the Bank), continued to increase the Company's
earning asset base. At March 31, 2000, average total earning assets increased
$5,685,771 or 11.5% when compared to the first three months of March 31, 1999
(Consolidated Average Balances table). The increase contributed favorably to the
Company's operating earnings. The cost of total interest-bearing liabilities
declined seventeen basis points from 4.43% at March 31, 1999 to 4.26% at March
31, 2000. The rate decline also contributed favorably to the Company's net
income.
During the first quarter of 2000, the Company closed its public offering of
common stock. The common stock was offered at $9.00 per share. The Company sold
155,909 shares and raised $1,359,153, net of $44,028 of offering costs. The
proceeds were primarily used to expand banking operations.
Net Interest Income
- -------------------
For the three-month period ended March 31, 2000, net interest income
increased $154,664 or 16.8% from $576,785 at March 31, 1999 to $731,449 at March
31, 2000. The increase is primarily attributable to increased loan volume. As
shown in the Consolidated Average Balances table, average total loans increased
$5,508,338 or 15.1% from $36,402,395 at March 31, 1999 to $41,910,733 at March
31, 2000.
The change in the deposit mix over the past year also contributed to the
increase in net interest income at March 31, 2000 when compared to March 31,
1999. Though the average volume of deposits increased during the past year,
interest expense on deposits increased only minimally, $895 or .2% during the
comparable period. The minimal increase was due to the growth of money market,
savings and NOW and demand deposit accounts which are less costly funding. The
average volume of money market, savings and NOW and demand deposit accounts
increased $7,240,187 or 31.3% when comparing March 31, 1999 and 2000. The
average volume of certificate of deposit accounts decreased $3,518,087 or 14.5%
for the comparable period and the related interest expense decreased $46,614 or
14.9%. Rate sensitive certificate of deposits (customers without an established
banking relationship) were allowed to runoff as they matured during the past
year.
Provision for Loan/Lease Losses
- -------------------------------
Provision expense increased $20,921 or 173.2% from $12,079 at March 31,
1999 to $33,000 at March 31, 2000. During the first quarter of 1999, the parent
company, UFBC, sold its only booked loan which resulted in a $19,529
7
<PAGE>
charge to its allowance of $30,940. The remaining UFBC allowance of $11,411 was
reversed and credited to the Company's provision expense.
Noninterest Income
- ------------------
Total noninterest income increased $6,284 or 12.2% for the three month
period ended March 31, 2000 compared to the same period of 1999. The increase
was primarily attributable to revenue generated from an increased number of
deposit accounts.
Noninterest Expense
- -------------------
Total noninterest expense increased $121,567 or 23.9% during the three
months ended March 31, 2000 when compared to the same period of 1999. The rise
was primarily attributable to costs associated with operating the McLean branch
which opened in July 1999. During the first quarter of 2000, branch operating
costs impacted expenses such as salaries, employee benefits, occupancy,
furniture and equipment, communications and advertising.
Salaries and employee benefits increased $49,686 or 17.9% from $276,315 at
March 31, 1999 to $325,983 at March 31, 2000. Occupancy increased $18,926 or
23.9% for the comparable period. The increases were due to additional staffing
and leased space necessary for the Company to expands its banking operations,
most notably the McLean branch.
During the third and fourth quarters of 1999, the Company purchased
furniture and equipment for the McLean branch. The Company also purchased
equipment for technological upgrading and Year 2000 compliance. Premises and
equipment rose $181,479 or 162.4% from $111,744 at March 31, 1999 to $293,223 at
March 31, 2000. Most of the equipment was placed on a three year amortization
schedule. Depreciation initiated by the purchases accounted for the increased
expense when comparing March 31, 1999 and March 31, 2000.
Other expense rose $32,099 or 17.1% during the three-month period ended
March 31, 2000 when compared to the first three months of 1999. The increase was
primarily attributable to expanded banking operations and growth. Costs such as
data processing, franchise tax, advertising and communications increased $20,338
or 43.9% when comparing the three month periods ended March 31, 1999 and March
31, 2000.
Income Taxes
- ------------
The Company will not accrue a tax liability during 2000. Management expects
to utilize UFBC's deferred income tax benefit to off-set the any tax liability
that may be incurred for 2000.
B. Financial Condition as of March 31, 2000
----------------------------------------
Assets
- ------
Total assets increased $4,401,434 or 7.8% during the first three months of
2000 when compared to the period ended December 31, 1999. The rise in assets was
primarily attributable to the Bank's increased volume of deposits which
increased the volume of assets available for investment. Total deposits
increased $3,927,779 or 7.9% from $49,191,302 at December 31, 1999 to
$53,119,081 at March 31, 2000 due to new deposit relationships generated by the
McLean branch. The increased volume of assets were invested into loans which
increased $2,679,757 or 6.6% from $40,652, 769 at December 31, 1999 to
$43,332,526 at March 31, 2000 and securities which increased $1,634,018 or 23.9%
for the comparable period.
Allowance for Loan/Lease Losses
- -------------------------------
The allowance for loan/lease losses (allowance) represents an amount which
management believes will be adequate to absorb potential losses inherent in the
loan/lease portfolio. The provision for loan losses represents the charge to
earnings during the year to fund the allowance to cover potential future losses.
The amount charged to expense during the year is dependent upon management's and
the Board of Directors' assessment of the adequacy of the allowance. Principal
factors used in evaluation include prior loss experience, changes in the
composition and volume of the portfolio, overall portfolio quality, the value of
underlying collateral, reviews of portfolio quality by state and
8
<PAGE>
federal supervisory authorities, specific problem loans, and current and
anticipated economic conditions that may affect a borrower's ability to repay.
At March 31, 2000 and December 31, 1999, the allowance was $816,526 and
$783,143, respectively, or 1.9% of total loans and leases. Nonperforming loans
for the three-month period ended March 31, 2000 totaled $132,689, of which
$122,141 resided in the Bank and of which $17,548 resided in the subsidiary,
Business Venture Capital, Inc. (BVCI). This compares to a balance of $15,781 at
December 31, 1999 which was held by BVCI. The consolidated allowance for
loan/lease losses covers nonperforming loans 5.9 times at March 31, 2000
compared to a coverage of 49.6 times at year end 1999.
Deferred Tax Asset
- ------------------
At December 31, 1999, the Company had potential off balance sheet deferred
income tax credits of $2,471,000. The deferred income tax credits primarily
resulted from net operating loss carryforwards. The Company used the following
criteria to determine an appropriate and reasonable amount of deferred income
tax credits to recognize as an asset for the year ended December 31, 1999. The
Company projected income three years forward, 2000, 2001 and 2002. A discount
was applied to each year's income projection in consideration for unknown
variables. Other factors such as the Company's historical earnings performance,
growth potential, the local and national economy and market competition were
also used to determine the reasonableness of the Company's income projections.
Once the projected income was ascertained, a 34% tax rate was applied to the
projection to determine the amount of deferred income tax credits to
beneficially recognize. Until all of the deferred tax credits have either been
utilized to off-set income or beneficially recognized as an asset, the amount of
tax credits appropriately recognized as an asset will be reevaluated annually.
Liabilities and Equity
- ----------------------
Total deposits increased $3,927,779 or 7.9% during the first three months
of 2000 when compared to the year ended 1999. During the three months ended
March 31, 2000, the deposit mix grew favorably in response to the rate
environment and the Bank's liquidity and investment requirements. Core deposits,
which consist of demand, savings, NOW, money market and certificate of deposits
less than $100,000, grew $2,960,499 or 6.7% during the first quarter of 2000
while more volatile and costly certificates of deposits over $100,000 grew
$967,280 or 19.1%.
Stockholders' equity increased $453,884 or 6.6% during the three months
ended March 31, 2000 when compared to the year ended 1999. During the first
quarter of 2000, the Company sold 38,265 shares of common stock at $9.00 per
share through a Public Offering which began in September 1999 for the purpose of
expanding banking operations. $300,000 of the first quarter 2000 proceeds were
downstreamed to BVCI for investment purposes. The balance of the proceeds has
been held as working capital for UFBC. The offering closed in February 2000. In
total, the Public Offering sold 155,909 shares of common stock at $9.00 per
share and raised $1,403,181 of capital. Offering costs totaled approximately
$44,000.
Liquidity and Investment
- ------------------------
UFBC's operational needs have been significantly reduced in recent years as
overhead has been allocated proportionately between the subsidiaries. For the
near future, management projects that proceeds received from the past two
capital offerings and reimbursements from allocated expenses will provide
sufficient cash flow for UFBC's continuing operational needs.
Consolidated average liquid assets were 25.9% of average total assets at
March 31, 2000 compared to 28.2% for the same period ended March 31, 1999
(Consolidated Average Balances table). The Company's liquidity needs exist
primarily in the Bank subsidiary. To maintain adequate liquidity, the Bank
purchases certain traditional assets such as government and other investment
securities. The Bank's securities portfolio comprises U.S. Treasury securities,
U.S. Government agency securities, state and municipal securities and equity
securities. The Bank is strategically growing its securities portfolio to ensure
safe levels of liquidity, to enhance the overall credit quality of its asset
base, to generate increased interest income, to balance assets and liabilities
and to hedge interest rate risk. The securities portfolio includes both
instruments available-for-sale and held-to-maturity. Securities classified as
available-for-sale may be sold in response to changes in market interest rates,
changes in prepayment or extension risk, management of the federal tax position,
liquidity needs and other asset/liability management issues. Securities
classified as held-to-maturity are
9
<PAGE>
intended for investment purposes.
At March 31, 2000, the Bank's investment portfolio consisted of the
following:
Available-for-Sale Held-to-Maturity
------------------ ----------------
U.S. Treasury -- --
U.S. Government Agency 7,375,053 906,093
State and Municipal -- --
Equity 166,400 --
Capital Requirements
- --------------------
The Company is subject to various regulatory capital requirements
administered by the Federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory and possibly additional
discretionary actions by regulators that, if undertaken, could have a direct
material effect on the Company's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the
Company and bank subsidiary must meet specific capital guidelines that involve
quantitative measures of assets, liabilities and certain off-balance sheet items
as calculated under regulatory accounting practices. The Company and bank
subsidiary are also subject to qualitative judgments by the regulators about
components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Company and the bank subsidiary to maintain minimum amounts and
ratios of Total and Tier 1 capital to risk-weighted assets, and of Tier 1
capital to average assets. As of March 31, 2000, the Company and the Bank met
the criteria to be well capitalized under the regulatory framework for prompt
corrective action. To be categorized as well capitalized, the Company and the
bank subsidiary must maintain Total risk-based, Tier 1 risk-based and Tier 1
average asset ratios as set forth in the table. There are no conditions or
events since December 31, 1999 that management believes would result in the
institution not being adequately capitalized.
<TABLE>
<CAPTION>
Required for Capital Required To Be
Actual Adequacy Purposes Well Capitalized
-------------------------- ----------------------------- ------------------------
Amount Ratio Amount Ratio Amount Ratio
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
As of March 31, 2000:
Total capital (to risk-weighted assets)
Company 7,701,514 18.20% 3,385,513 8.00% 4,231,891 10.00%
The Business Bank 6,882,132 16.38% 3,362,258 8.00% 4,202,823 10.00%
Tier 1 capital (to risk-weighted assets)
Company 7,168,978 16.94% 1,692,756 4.00% 2,539,135 6.00%
The Business Bank 6,353,614 15.12% 1,681,129 4.00% 2,521,694 6.00%
Tier 1 capital (to average assets)
Company 7,168,978 12.18% 2,354,532 4.00% 2,943,165 5.00%
The Business Bank 6,353,614 10.92% 2,327,423 4.00% 2,909,279 5.00%
As of March 31, 1999:
Total capital (to risk-weighted assets)
Company 5,619,074 15.64% 2,873,298 8.00% 3,591,622 10.00%
The Business Bank 5,443,625 15.08% 2,888,049 8.00% 3,610,062 10.00%
Tier 1 capital (to risk-weighted assets)
Company 5,166,525 14.38% 1,436,649 4.00% 2,154,973 6.00%
The Business Bank 4,992,367 13.83% 1,444,025 4.00% 2,166,037 6.00%
Tier 1 capital (to average assets)
Company 5,166,525 9.79% 2,110,423 4.00% 2,638,028 5.00%
The Business Bank 4,992,367 9.48% 2,106,292 4.00% 2,632,865 5.00%
</TABLE>
10
<PAGE>
Earnings Per Share
- ------------------
The following table is a reconciliation of earnings per common share as
computed under SFAS 128. (See note 3).
<TABLE>
<CAPTION>
Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
<S> <C> <C> <C>
Basic Earnings Per Share:
For the three months ended March 31, 2000
Net Income $ 126,226
Income available to common stockholders $ 126,228 981,315 $ .13
=========== ============ =========
For the three months ended March 31, 1999
Net Income $ 107,768
Income available to common stockholders $ 107,768 831,590 $ .13
=========== ============ =========
Diluted Earnings Per Share:
For the three months ended March 31, 2000
Net Income available to common stockholders $ 126,228 981,315
Add: Contracts to issue common stock
Warrants - expire 9/30/01 5,333
Warrants - expire 1/27/07 333
Options - expire 12/31/05 - 6/30/08 7,622
------------
Weighted-average diluted shares outstanding 13,288
Diluted earnings per common share: $ 126,228 994,603 $ .13
=========== ============ =========
For the three months ended March 31, 1999
Net Income available to common stockholders $ 107,768 831,590
Add: Contracts to issue common stock
Warrants expire 12/31/99 2,000
Warrants - expire 9/30/01 4,571
Warrants - expire 1/27/07 286
Options - expire 12/31/05 - 6/30/08 6,240
------------
Weighted-average diluted shares outstanding 13,097
Diluted earnings per common share: $ 107,768 844,687 $ .13
=========== ============ =========
</TABLE>
Contingencies & Commitments
- ---------------------------
In the opinion of management, there were no legal matters pending as of
March 31, 2000 which would have a material effect on the Company's financial
statements.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(6) None.
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.
UNITED FINANCIAL BANKING COMPANIES, INC.
By: /s/ HAROLD C. RAUNER
-------------------------------
Harold C. Rauner
President and CEO
/s/ LISA M. PORTER
------------------------------
Lisa M. Porter
Chief Financial Officer
Date: May 11, 2000
----------------------
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the Form
10-QSB and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000714286
<NAME> UNITED FINANCIAL BANKING COMPANIES, INC.
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 2,084,709
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 5,263,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 7,541,453
<INVESTMENTS-CARRYING> 8,447,546
<INVESTMENTS-MARKET> 8,447,546
<LOANS> 43,332,526
<ALLOWANCE> 816,526
<TOTAL-ASSETS> 60,857,326
<DEPOSITS> 53,119,081
<SHORT-TERM> 0
<LIABILITIES-OTHER> 356,296
<LONG-TERM> 0
0
0
<COMMON> 1,001,499
<OTHER-SE> 6,380,450
<TOTAL-LIABILITIES-AND-EQUITY> 60,857,326
<INTEREST-LOAN> 935,925
<INTEREST-INVEST> 194,134
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 1,130,059
<INTEREST-DEPOSIT> 398,610
<INTEREST-EXPENSE> 0
<INTEREST-INCOME-NET> 731,449
<LOAN-LOSSES> 33,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 630,098
<INCOME-PRETAX> 126,228
<INCOME-PRE-EXTRAORDINARY> 126,228
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 126,228
<EPS-BASIC> 0.13
<EPS-DILUTED> 0.12
<YIELD-ACTUAL> 8.34
<LOANS-NON> 139,689
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 554,967
<ALLOWANCE-OPEN> 783,143
<CHARGE-OFFS> 0
<RECOVERIES> 383
<ALLOWANCE-CLOSE> 816,526
<ALLOWANCE-DOMESTIC> 816,526
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 575,453
</TABLE>
