<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
FORM 10-Q
[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 Number: O-17177
-------
BSB Bancorp, Inc.
-----------------
(Exact name of registrant as specified in its charter)
Delaware 16-1327860
------------------------------ ------------------------
(State or other jurisdiction of (I.R.S. Employer Number)
incorporation or organization)
58-68 Exchange Street, Binghamton, New York 13901
-------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (607) 779-2492
--------------
n/a
----------------------------------
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 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:[ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. As of May 8, 2000:
10,259,193 shares of common stock, $0.01 par value.
<PAGE>
INDEX
-----
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
- ------------------------------ ----
<S> <C>
Item 1: Financial Statements
- ------
Consolidated Statements of Condition
March 31, 2000 and December 31, 1999.............................. 1
Consolidated Statements of Income Three Months
Ended March 31, 2000 and March 31, 1999........................... 2
Consolidated Statements of Comprehensive Income Three
Months Ended March 31, 2000 and March 31, 1999.................... 3
Consolidated Statements of Cash Flows Three Months
Ended March 31, 2000 and March 31, 1999........................... 4
Consolidated Statements of Changes in Shareholders' Equity Three
Months Ended March 31, 1999 and March 31, 2000.................... 5
Notes to Consolidated Financial Statements........................ 6
Item 2: Management's Discussion and Analysis of
------
Financial Condition and Results of Operations................. 7-16
Item 3: Quantitative and Qualitative Disclosures About Market Risk........ 17
------
PART II. OTHER INFORMATION
- ----------------------------
Items 1-6......................................................... 18
Signature Page.................................................... 19
</TABLE>
<PAGE>
Item 1
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
BSB BANCORP, INC. (In Thousands - Except Share Data)
CONSOLIDATED STATEMENTS OF CONDITION
- ----------------------------------------------------------------------------------------------------------------
March 31, December 31,
2000 1999
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 47,718 $ 70,065
Investment securities available for sale 382,703 387,251
Investment securities held to maturity (market value $13,208 and $14,588) 13,079 14,472
Mortgages held for sale 2,085
Loans:
Commercial 937,426 904,632
Consumer 457,724 467,986
Real estate 350,232 349,634
- ----------------------------------------------------------------------------------------------------------------
Total loans 1,745,382 1,722,252
Less: Net deferred costs (577) (636)
Allowance for possible credit losses 31,705 29,134
- ----------------------------------------------------------------------------------------------------------------
Net loans 1,714,254 1,693,754
Bank premises and equipment 15,541 15,988
Accrued interest receivable 14,886 14,612
Other real estate 744 910
Intangible assets 1,502 1,598
Other assets 40,437 40,213
- ----------------------------------------------------------------------------------------------------------------
$2,230,864 $2,240,948
================================================================================================================
LIABILITIES & SHAREHOLDERS' EQUITY
- ----------------------------------------------------------------------------------------------------------------
Due to depositors $1,899,278 $1,901,204
Borrowings 135,982 142,045
Other liabilities 8,588 13,206
Company obligated mandatorily redeemable preferred securities of
subsidiary, Capital Trust I, holding solely junior subordinated
debentures of the Company 30,000 30,000
Commitments
Shareholders' Equity:
Preferred Stock, par value $0.01 per share;
authorized 2,500,000 shares; none issued
Common Stock, par value $0.01 per share;
authorized 30,000,000 shares; 11,430,761
and 11,398,991 shares issued 114 114
Additional paid-in capital 37,590 37,287
Undivided profits 143,481 140,295
Accumulated other comprehensive income (10,712) (9,757)
Treasury stock, at cost: 1,174,216 and 1,173,669 shares (13,457) (13,446)
- ----------------------------------------------------------------------------------------------------------------
Total Shareholders' Equity 157,016 154,493
- ----------------------------------------------------------------------------------------------------------------
$2,230,864 $2,240,948
================================================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
1
<PAGE>
Item 1 - continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
BSB BANCORP, INC. (In Thousands-Except Share Data)
CONSOLIDATED STATEMENTS OF INCOME
- ---------------------------------------------------------------------------------------------------------------
Three Months Ended March 31,
2000 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Interest income:
Interest and fees on loans $39,568 $35,168
Interest on federal funds sold 13 204
Interest on investment securities 6,674 6,838
Interest on mortgages held for sale 25 295
- ---------------------------------------------------------------------------------------------------------------
Total interest income 46,280 42,505
Interest expense:
Interest on savings deposits 1,183 1,168
Interest on time accounts 15,434 13,368
Interest on money market deposit accounts 4,614 2,937
Interest on NOW accounts 88 454
Interest on borrowed funds 1,966 2,842
Interest on mandatorily redeemable preferred securities of subsidiary 616 624
- ---------------------------------------------------------------------------------------------------------------
Total interest expense 23,901 21,393
- ---------------------------------------------------------------------------------------------------------------
Net interest income 22,379 21,112
Provision for credit losses 4,608 3,461
- ---------------------------------------------------------------------------------------------------------------
Net interest income after provision for credit losses 17,771 17,651
Gains (losses) on sale of securities (401)
Gains (losses) on sale of loans 7 6
Non-interest income:
Service charges on deposit accounts 1,213 1,000
Credit card fees 402 286
Mortgage servicing fees 320 362
Fees and commissions-brokerage services 174 148
Trust fees 331 251
Other charges, commissions, and fees 914 737
- ---------------------------------------------------------------------------------------------------------------
Total non-interest income 3,354 2,784
- ---------------------------------------------------------------------------------------------------------------
Operating expense:
Salaries, pensions, and other employee benefits 5,899 5,081
Building occupancy 1,169 1,200
Dealer commission expense 134 239
Computer service fees 416 490
Services 1,479 1,331
FDIC insurance 93 57
Goodwill 96 96
Interchange fees 314 212
Other real estate 46 18
Other expenses 2,067 2,440
- ---------------------------------------------------------------------------------------------------------------
Total operating expense 11,713 11,164
- ---------------------------------------------------------------------------------------------------------------
Income before income taxes 9,419 8,876
Provision for income taxes 3,671 3,340
- ---------------------------------------------------------------------------------------------------------------
NET INCOME $ 5,748 $ 5,536
===============================================================================================================
Earnings per share:
Basic $ 0.56 $ 0.55
Diluted $ 0.56 $ 0.54
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
Item 1 - continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
BSB BANCORP, INC. (In Thousands)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
- ---------------------------------------------------------------------------------------------------------------
Three Months Ended March 31,
2000 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net unrealized losses on securities $(1,637) $(1,371)
Reclassification adjustment for net realized
losses included in net income (401)
- ---------------------------------------------------------------------------------------------------------------
Other comprehensive income, before tax (1,637) (1,772)
Income tax benefit 682 741
- ---------------------------------------------------------------------------------------------------------------
Comprehensive income $ (955) $(1,031)
===============================================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
Item 1 - continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
BSB BANCORP, INC. (In Thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS
- ---------------------------------------------------------------------------------------------------------------
Three Months Ended March 31,
2000 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating activities:
Net income $ 5,748 $ 5,536
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses 4,608 3,461
Realized losses on available for sale investment securities 401
Other losses, net (3) 31
Depreciation and amortization 737 705
Net accretion of premiums and discounts on investment securities (65) (127)
Net accretion of premiums and discounts on loans 60 (91)
Sales of loans originated for sale 2,126 29,156
Net increase in loans originated for sale (44) (17,267)
Writedowns of other real estate 276 95
Net change in other assets and liabilities (4,434) 15,129
- ---------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 9,009 37,029
- ---------------------------------------------------------------------------------------------------------------
Investing activities:
Proceeds from calls of held to maturity investment securities 1,738 2,775
Purchases of held to maturity investment securities (475) (312)
Principal collected on held to maturity investment securities 130 136
Proceeds from sales of available for sale investment securities 6,126 33,105
Purchases of available for sale investment securities (7,869) (22,321)
Principal collected on available for sale investment securities 4,718 7,071
Net increase in longer-term loans (30,199) (148,573)
Proceeds from sales of loans 4,883 22,950
Proceeds from sales of other real estate 39 137
Other (188) (477)
- ---------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (21,097) (105,509)
- ---------------------------------------------------------------------------------------------------------------
Financing activities:
Net increase (decrease) in demand deposits, NOW accounts,
savings accounts, and money market deposit accounts 2,836 (10,937)
Net increase (decrease) in time deposits (4,762) 57,292
Net increase (decrease) in short-term borrowings (6,053) 27,480
Proceeds from long-term borrowings 560
Repayment of long-term borrowings (10)
Proceeds from exercise of stock options 303 260
Purchases of treasury stock (11)
Dividends paid (2,562) (2,268)
- ---------------------------------------------------------------------------------------------------------------
Net cash (used) provided by financing activities (10,259) 72,387
- ---------------------------------------------------------------------------------------------------------------
(Decrease) increase in cash and cash equivalents (22,347) 3,907
Cash and cash equivalents at beginning of year 70,065 70,287
- ---------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 47,718 $ 74,194
===============================================================================================================
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest credited on deposits and paid on other borrowings $ 23,600 $ 21,738
- ---------------------------------------------------------------------------------------------------------------
Income taxes $ 156 $ 538
- ---------------------------------------------------------------------------------------------------------------
Non-cash investing activity:
Securitization of mortgage loans and transfers to other real estate $ 158 $ 364
- ---------------------------------------------------------------------------------------------------------------
Unrealized depreciation in securities $ (1,637) $ (1,750)
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
Item 1 - continued
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
BSB BANCORP, INC. (Dollars In Thousands-Except Per Share Data)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
- ----------------------------------------------------------------------------------------------------------------------------------
Accumulated
Three Months Ended Additional Other
March 31, Number Common Paid-In Undivided Treasury Comprehensive
1999 of Shares Stock Capital Profits Stock Income Total
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1998 11,237,470 $ 112 $35,202 $131,723 $(13,371) $ 425 $154,091
Comprehensive income:
Net income 5,536 5,536
Other comprehensive income:
Unrealized appreciation in
available for sale securities,
net of reclassification amount (1,031) (1,031)
- ----------------------------------------------------------------------------------------------------------------------------------
Comprehensive income 5,536 (1,031) 4,505
Stock options exercised 37,233 1 260 261
Cash dividend paid on common
stock ($0.22 per share) (2,268) (2,268)
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at March 31, 1999 11,274,703 $ 113 $35,462 $134,991 $(13,371) $ (606) $156,589
==================================================================================================================================
2000
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999 11,398,991 $ 114 $37,287 $140,295 $(13,446) $ (9,757) $154,493
Comprehensive income:
Net income 5,748 5,748
Other comprehensive income:
Unrealized depreciation in
available for sale securities,
net of reclassification amount (955) (955)
- ----------------------------------------------------------------------------------------------------------------------------------
Comprehensive income 5,748 (955) 4,793
Stock options exercised 31,770 303 303
Cash dividend paid on common
stock ($0.25 per share) (2,562) (11) (2,573)
- ----------------------------------------------------------------------------------------------------------------------------------
Balance at March 31, 2000 11,430,761 $ 114 $37,590 $143,481 $(13,457) $(10,712) $157,016
==================================================================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
Item 1 - continued
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
(1) In the opinion of management, the interim financial statements reflect all
adjustments which are of a normal recurring nature necessary to a fair
statement of the results for the interim periods presented. The December
31, 1999 data in the Consolidated Statements of Condition is derived from
the audited consolidated financial statements included in the Company's
1999 Annual Report to Shareholders. The accompanying unaudited interim
consolidated financial statements and related notes should be read in
conjunction with the audited consolidated financial statements and related
notes included in the Company's 1999 Annual Report to Shareholders.
(2) Basic earnings per share are computed based on the weighted average shares
outstanding. Diluted earnings per share are computed based on the weighted
average shares outstanding adjusted for the dilutive effect of the assumed
exercise of stock options during the period.
The following is a reconciliation of basic earnings per share to diluted
earnings per share for the quarters ended March 31, 2000 and 1999.
<TABLE>
<CAPTION>
Quarters Ended March 31, Net Income Weighted Average Shares Earnings Per Share
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
2000
Basic earnings per share $5,748 10,243,073 $0.56
Effect of stock options 93,863
- ---------------------------------------------------------------------------------------
Diluted earnings per share $5,748 10,336,936 $0.56
=======================================================================================
1999
Basic earnings per share $5,536 10,070,835 $0.55
Effect of stock options 270,625
- ---------------------------------------------------------------------------------------
Diluted earnings per share $5,536 10,341,460 $0.54
=======================================================================================
</TABLE>
(3) In 1998, the Company formed a wholly owned subsidiary business trust, BSB
Capital Trust I, L.L.C. (the "Trust"), for the purpose of issuing preferred
securities. The Trust issued at par $30.0 million of 8.125% preferred
securities. The Preferred securities are non-voting, mandatorily redeemable
in 2028, and guaranteed by the Company. The Company's guarantee, together
with its other obligations under the relevant agreements, constitute a
full, irrevocable, and unconditional guarantee by the Company of the
securities issued by the Trust. The entire net proceeds to the Trust from
the offering were invested in junior subordinated obligations of the
Company, which are the sole assets of the Trust.
6
<PAGE>
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
General
- -------
BSB Bancorp, Inc., holding company for BSB Bank & Trust Company, earned net
income for the quarter ended March 31, 2000 of $5.7 million, or $0.56 per
diluted share, compared to $5.5 million or $0.54 per diluted share for the same
period of 1999.
On April 20, 2000, NBT Bancorp Inc. (NBT) and BSB Bancorp, Inc. (BSB)
announced the signing of a definitive agreement to merge. This strategic
alliance is expected to create a bank holding company with assets of $4.7
billion and proforma market capitalization of approximately $539 million. The
holding company will adopt a new name before the merger occurs. Under the terms
of the agreement, BSB stockholders will receive two shares of NBT common stock
for each share of BSB held. The merger, which has been unanimously approved by
the boards of directors of NBT and BSB, is subject to standard regulatory and
shareholder approvals. A copy of the definitive documents related to the merger
were filed under cover of Form 8-K on April 21,2000.
On April 24, 2000, the Board of Directors announced a quarterly cash dividend
of $0.25 per share payable on June 9, 2000 to shareholders of record at the
close of business on May 24, 2000.
Financial Condition
- -------------------
Total assets of the Company decreased from $2,240.9 million at December 31,
1999 to $2,230.9 million at March 31, 2000. During the first three months of
2000, the Company originated $53.1 million of commercial loans, which
contributed to a net increase in the commercial loan portfolio of $32.8 million
from $904.6 million at December 31, 1999 to $937.4 million at March 31, 2000.
The interest rates on these loans are generally tied to the Bank's Prime Rate.
Consumer loans decreased from $468.0 million at December 31, 1999 to $457.7
million at March 31, 2000, and during this period the Company originated $43.6
million in consumer loans. Real estate loans increased from $349.6 million at
December 31, 1999 to $350.2 million at March 31, 2000. During the above
mentioned period, the Company originated $15.5 million of real estate loans, of
which $4.6 million of residential real estate loans were sold. Investment
securities decreased from $401.7 million at December 31, 1999 to $395.8 million
at March 31, 2000.
The average commercial loan at March 31, 2000 was $175,915. Total loan
commitments to the 10 largest lending relationships ranged from $20.2 million to
$16.1 million at March 31, 2000. Outstanding loan balances for these 10
relationships ranged from $19.2 million, made up of 17 individual loans, to $4.9
million, made up of 8 individual loans. These loans generally have varied
sources of repayment and collateral. The Bank continually reviews all larger
group credits and often sells participations in these credits to other local
banks to limit exposure.
Non-performing loans are shown in a table within this report. See "Non-
Performing Loans and ORE". Total non-performing loans declined from 0.67% of
total loans at December 31, 1999 to 0.66% of total loans at March 31, 2000.
Total loans, in all types of loan portfolios, which were 30-89 days past due,
rose from $18.5 million at December 31, 1999 to $22.6 million at March 31, 2000.
Respectively, these dollar amounts represent 1.07% and 1.30% of total loans at
those dates, and historically have fluctuated from quarter to quarter.
The competition for consumer loans has been tremendous, mainly due to the
automobile captive finance companies. Because of this competition, the total
consumer loan portfolio has declined from $468.0 million at December 31, 1999 to
$457.7 million at March 31, 2000. Net charge-offs declined from the first
quarter 1999 amount of $2.3 million to the first quarter 2000 amount of $2.0
million. This, combined with the continued decline in non-performing assets to
$12.2 million at March 31, 2000 from $12.5 million at December 31, 1999, and an
increase in the allowance for loan losses from $29.1 million at December 31,
1999 to $31.7 million at March 31, 2000, provides, what management feels, is
sufficient reserves to cover potential losses. Gross asset yields through March
31, 2000, were 8.72%, up from 8.29% for the comparable period in 1999. Net
asset yields, after credit losses, in the first three months of 2000 increased
to 8.34% from 7.83% for the first quarter of 1999.
7
<PAGE>
Item 2 - continued
Total deposits declined slightly, totaling $1,901.2 million at December 31,
1999 as compared to $1,899.3 million at March 31, 2000. During the first
quarter 2000, the Bank's money desk funds decreased to $191.3 million at March
31, 2000 from $221.6 million at December 31, 1999, and brokered certificates of
deposits deceased from $231.9 million at December 31, 1999 to $206.4 million at
March 31, 2000. Offsetting these decreases was an increase in retail
certificates of deposit of $16.6 million and an increase in municipal deposits
of $34.5 million. The slower growth, or in the case of consumer lending, the
decline, in loan balances has allowed the Bank to focus on using core funding
products. The decrease in the non-core funding products has allowed the Bank to
mitigate the impact that rising interest rates has had on its cost of funds.
Interest credited to depositors and interest paid on borrowings totaled $23.9
million during that three-month period, as compared to $21.4 million for the
first three months of 1999. The Company's borrowings decreased from $142.0
million at December 31, 1999 to $136.0 million at March 31, 2000. Borrowings at
March 31, 2000 consisted of $50.0 million of Federal Home Loan Bank advances and
$34.8 million of a Federal Home Loan Bank line of credit. Of the remaining
$51.2 million, $48.9 million are securities sold under agreement to repurchase.
These borrowings, along with deposits, are used to fund the Company's lending
and investment activities.
The following factors affected shareholders' equity in the first three months
of 2000. Earnings and stock options exercised increased shareholders' equity by
$5.7 million and $303,000, respectively. An increase of $1.0 million in
unrealized losses of available for sale securities and shareholder cash
dividends of $2.6 million reduced shareholders equity for the first three months
of 2000.
Results of Operations
- ---------------------
The operating results of the Company depend primarily on its net interest
income, which is the difference between interest income on interest-earning
assets, primarily loans and investments, and interest expense on interest-
bearing liabilities, primarily deposits and borrowings. The Company's operating
results also are affected by credit losses and provisions for such future
losses, operating expenses, the level of other income, including gains or losses
on sale of loans and securities, and other fees.
Item 2 - continued
The following tables set forth, for the periods indicated, information
regarding (i) the Company's average balance sheet, (ii) the total dollar amount
of interest income from interest-earning assets and the resulting average
yields, (iii) the total dollar amount of interest expense on interest-bearing
liabilities and the resultant average cost, (iv) net interest income, (v)
interest rate margin and interest rate spread, (vi) net interest-earning assets,
(vii) net yield on interest-earning assets, and (viii) ratio of interest-earning
assets to interest-bearing liabilities. Average balances are based on daily or
month-end balances. No tax equivalent adjustments were made.
8
<PAGE>
Item 2 - continued
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Three Months Ended March 31,
(Dollars in Thousands) 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Commercial loans $ 895,510 $21,424 9.57% $ 817,721 $ 17,885 8.75%
Consumer loans:
Passbook 108 3 11.11 146 4 10.96
Overdraft checking 537 28 20.86 1,179 29 9.84
Business line of credit 1,593 47 11.80 913 25 10.95
Credit cards 9,814 400 16.30 9,645 384 15.93
Personal-direct 80,927 1,966 9.72 82,342 1,952 9.48
Personal-indirect-new auto 57,963 1,183 8.16 51,494 1,088 8.45
Personal-indirect-used auto 178,319 4,202 9.43 159,408 3,789 9.51
Personal-indirect-mobile homes 66,421 1,638 9.86 55,032 1,313 9.54
Personal-indirect-other 26,226 552 8.42 19,074 434 9.10
Home equity line of credit 32,706 755 9.23 31,676 664 8.38
Checkcard reserve 2,496 312 50.00 1,775 175 39.44
Student 2,582 70 10.84 3,562 87 9.77
- ------------------------------------------------------------------------------------------------------------------------------------
Total consumer loans 459,692 11,156 9.71 416,246 9,944 9.56
- ------------------------------------------------------------------------------------------------------------------------------------
Real estate loans:
Residential-fixed 103,095 1,958 7.60 110,249 1,994 7.23
Commercial-fixed 11,568 248 8.58 5,776 121 8.38
Residential-adjustable 74,011 1,447 7.82 86,164 1,643 7.63
Commercial-adjustable 157,072 3,335 8.49 164,025 3,581 8.73
- ------------------------------------------------------------------------------------------------------------------------------------
Total real estate loans 345,746 6,988 8.08 366,214 7,339 8.02
- ------------------------------------------------------------------------------------------------------------------------------------
Investment securities 419,751 6,674 6.36 420,478 6,838 6.51
Mortgages held for sale 837 25 11.95 13,797 295 8.55
Federal funds sold 1,000 13 5.20 17,620 204 4.63
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 2,122,536 $46,280 8.72% 2,052,076 $ 42,505 8.29%
- ------------------------------------------------------------------------------------------------------------------------------------
Non-interest-earning assets 118,927 109,415
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $2,241,463 $2,161,491
====================================================================================================================================
Interest-bearing liabilities:
Deposits:
Savings $ 181,950 $ 1,183 2.60% $ 184,483 $ 1,168 2.53%
Money market 434,060 4,614 4.25 301,890 2,937 3.89
Certificates of deposit 1,113,600 15,434 5.54 1,020,015 13,368 5.24
NOW 25,244 88 1.39 109,547 454 1.66
Commercial checking 132,609 110,868
- ------------------------------------------------------------------------------------------------------------------------------------
Total deposits 1,887,463 21,319 4.52 1,726,803 17,927 4.15
- ------------------------------------------------------------------------------------------------------------------------------------
Borrowings 141,574 1,966 5.55 232,484 2,842 4.89
Mandatorily redeemable preferred securities 30,000 616 8.21 30,000 624 8.32
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 2,059,037 $23,901 4.64% 1,989,287 $ 21,393 4.30%
- ------------------------------------------------------------------------------------------------------------------------------------
Non-interest-bearing liabilities 16,168 17,204
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 2,075,205 2,006,491
- ------------------------------------------------------------------------------------------------------------------------------------
Shareholders' equity 166,258 155,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $2,241,463 $2,161,491
====================================================================================================================================
Net interest income/net interest rate spread $22,379 4.08% $ 21,112 3.99%
====================================================================================================================================
Net earning assets/net interest rate margin $63,499 4.22% $ 62,789 4.12%
====================================================================================================================================
Ratio of interest-earning assets to
interest-bearing liabilities 1.03X 1.03X
====================================================================================================================================
</TABLE>
9
<PAGE>
Item 2 - continued
The following table presents changes in interest income and interest expense
attributable to (i) changes in volume (change in volume multiplied by old rate),
and (ii) changes in rate (change in rate multiplied by old volume). The net
change attributable to the combined impact of volume and rate has been allocated
proportionately to the change due to volume and the change due to rate.
<TABLE>
<CAPTION>
Three Months Ended March 31,
2000 Compared to 1999
Increase (Decrease)
(Dollars in Thousands) Volume Rate Net
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income on interest-earning assets:
Commercial loans $ 1,783 $ 1,756 $3,539
Consumer loans 1,054 158 1,212
Real estate loans (698) 347 (351)
Investment securities (278) (77) (355)
Mortgages held for sale (849) 579 (270)
- -------------------------------------------------------------------------------
Total $ 1,012 $ 2,763 $3,775
===============================================================================
Interest expense on interest-bearing liabilities:
Deposits and mortgage escrow funds $ 1,732 $ 1,660 $3,392
Borrowings (3,395) 2,511 (884)
- -------------------------------------------------------------------------------
(1,663) 4,171 2,508
- -------------------------------------------------------------------------------
Total $ 2,675 $(1,408) $1,267
===============================================================================
</TABLE>
Interest Income
- ---------------
The Company's interest income on interest-earning assets increased from $42.5
million for the three months ended March 31, 1999 to $46.3 million for the three
months ended March 31, 2000, respectively. This increase in interest income was
the result of increases in the average balance of interest-earning assets from
$2,052.1 million to $2,122.5 million for the three months ended March 31, 1999
and March 31, 2000, respectively. The increase in average balances was
accompanied by the increase in the average yield on interest-earning assets from
8.29% to 8.72% for the three months ended March 31, 1999 and 2000, respectively.
This reflected steady increases in the Company's Prime Rate totaling 125 basis
points from the 1st quarter of 1999 through the first quarter of 2000.
The increase in the average balance of the commercial loan portfolio was the
largest contributor to the increase in interest income. The average balance of
commercial loans increased $77.8 million from the first quarter of 1999 to
$895.5 million for the first quarter of 2000. The average yield on commercial
loans increased from 8.75% for the first quarter of 1999 to 9.57% for the first
quarter of 2000. The Prime Rate was 7.75% through the first and second quarter
of 1999, rose to 8.00% in July, 8.25% in August, 8.50% in November 1999, then
continued to increase to 8.75% in February, and to 9.00% in March 2000.
The average balance of consumer loans increased 10.4% to $459.7 million for
the three-month period ended March 31, 2000 compared to $416.2 million for the
three-month period ended March 31, 1999, with an increase in yield on these
assets from 9.56% for the first quarter of 1999 to 9.71% for the first quarter
of 2000. The Company continues to emphasize origination of indirect and direct
auto loans, which adds to the Company's market base for potential business and
provides some of the highest yielding assets for the Company. These loans
provided an increase in interest income from $9.9 million compared to the same
period in 1999 to $11.2 million in the first quarter of 2000.
The average balance of real estate loans decreased $20.5 million to $345.7
million for the quarter ended March 31, 2000 compared to the quarter ended March
31, 1999. The quarter period reflected an increase in yield from 8.02% to
8.08%, and the reduced average balance resulted in a net decline of $351,000 in
interest income from real estate loans to $7.0 million. The Bank continues to
originate a significant amount of fixed-rate residential mortgage loans and,
after filling the remainder of its loan sale commitments in the first quarter of
2000, will retain the residential mortgages originated in its portfolio.
The average balance of investment securities decreased from $420.5 million for
the first quarter of 1999 to $419.8 million for the first quarter of 2000.
Yields on investment securities decreased for this same period from 6.51% to
6.36%, as the interest income on investment securities decreased $164,000 for
the comparative quarters.
10
<PAGE>
Item 2 - continued
Interest Expense
- ----------------
Total interest expense increased by $2.5 million for the quarter ended March
31, 2000 as compared to the same period in 1999. The average balance of all
interest-bearing liabilities increased from $1,989.3 million for the quarter
ended March 31, 1999 to $2,059.0 million for the quarter ended March 31, 2000,
accompanied by an increase in the average rate paid on all interest-bearing
liabilities from 4.30% to 4.64% during the respective period. The average
balance of deposits increased from $1,726.8 million during the three months
ended March 31, 1999 to $1,887.5 million during the same period in 2000. This
average balance increase and the increase in the yield of deposits were major
factors contributing to the increase in interest paid on deposits from $17.9
million for the first quarter of 1999 to $21.3 million for the first quarter of
2000. Another component of the change in interest-bearing liabilities was the
decrease in average balance of borrowings from $232.5 million for the three
months ended March 31, 1999 to $141.6 million for the three months ended March
31, 2000. This decrease in average balance more than offset an increase in the
rate paid on borrowings from 4.89% to 5.55% during the three-month period as
borrowing costs decreased to $2.0 million for the three months ended March 31,
2000. As the balance of deposit accounts tied to moneymarket indices has
increased from $305.1 million at March 31, 1999 to $446.2 million, these
deposits, which reprice in anticipation of the increase in rates, has caused
deposit costs to escalate more rapidly than asset yields.
Provision for Credit Losses
- ---------------------------
The provision for credit losses increased from $3.5 million to $4.6 million
for the quarters ended March 31, 1999 and March 31, 2000, respectively. The
allowance for possible credit losses increased to $31.7 million as of March 31,
2000, compared to $29.1 million as of December 31, 1999. As the nature of the
loan portfolio continues to move toward commercial lending, the Bank continues
to increase the allowance for possible credit losses to reflect the increased
level of risk inherent in this type of lending. See "Non-performing Loans and
ORE".
Non-interest Income
- -------------------
Non-interest income increased 20.5% from $2.8 million to $3.4 million for the
three months ended March 31, 1999 to March 31, 2000, respectively. The factors
contributing to the increase comparing first quarter of 1999 to the same quarter
of 2000 were a $213,000 increase in service charges on deposit accounts,
$177,000 in miscellaneous other charges, commissions, and fees, $116,000 in
credit card fees, $80,000 in trust fees, and a $26,000 increase in fees and
commissions on brokerage services.
Gains (Losses) On Sale of Securities
- ------------------------------------
There were no gains (losses) on sale of securities for the first quarter of
2000. This compares to losses of $401,000 for the same quarter of 1999. The
Company's investment portfolio is used to maintain its liquidity position; from
time to time, securities are sold when deemed prudent by management, to adjust
the interest rate sensitivity of the Company's balance sheet.
Gains (Losses) On Sale of Loans
- -------------------------------
In prior years, the practice of the Company had been to sell or securitize
long-term, fixed-rate residential mortgage loans. This provided liquidity to
fund shorter-term, or more rate-sensitive assets, and collateral to provide
borrowing for lending activities. In 2000, the Company started to retain
originated mortgages for its own portfolio. As a result of this practice, the
Company sold or securitized $4.6 million and $51.8 million for the first quarter
of 2000 and 1999, respectively. This resulted in gains of $7,000 and $6,000 for
the same two periods, respectively.
11
<PAGE>
Item 2 - continued
Operating Expense
- -----------------
Operating expense increased from $11.2 million for the quarter ended March 31,
1999 to $11.7 million for the quarter ended March 31, 2000. The main factor
contributing to the increase was the accrual of benefits associated with the
payment of amounts owed under contract with the Company's former President and
CEO, Alex DePersis, in the amount of $855,000 during the first quarter of 2000.
In the first quarter of 1999, acquisition charges of $318,000 were recognized.
Income Taxes
- ------------
The income tax expense was $3.7 million and $3.3 million for the quarters
ended March 31, 2000 and March 31, 1999, respectively. This increase was mainly
due to increased levels of taxable income.
Non-Performing Loans and ORE
- ----------------------------
When a borrower fails to make a scheduled payment on a loan, the Company
attempts to cure the deficiency by contacting the borrower and seeking payment.
Contacts are generally made within five business days after the expiration of
the payment grace period, set forth in the loan contract. In most cases,
deficiencies are cured promptly. If a delinquency extends beyond 60 days, the
loan and payment histories are reviewed and legal proceedings may be instituted
to remedy the default. While the Company generally prefers to work with
borrowers to resolve such problems, the Company does initiate foreclosure
proceedings or pursues other legal collection procedures, as necessary, to
minimize any potential loss. Once the Company takes legal title to the
property, it is classified as ORE on the Statement of Condition.
Loans are placed on a non-accrual status when, in the judgment of management,
the probability of collection of interest is deemed to be insufficient to
warrant further accrual. Such loans include potential problem loans where known
information about possible credit problems of borrowers has caused management to
have serious doubts as to the ability of such borrowers to comply with the loan
repayment terms. When a loan is placed on non-accrual status, previously
accrued but unpaid interest is deducted from interest income. Other than with
respect to consumer loans, the Company does not accrue interest on loans greater
than 90 days or more past due for the payment of interest unless the value of
the collateral and active collection efforts ensure full recovery. Consumer
loans are charged-off before they become non-accrual.
The following table sets forth information regarding non-performing loans
which are 90 days or more overdue and ORE held by the Company at the dates
indicated.
<TABLE>
<CAPTION>
March 31, December 31,
(Dollars In Thousands) 2000 1999
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial loans:
Non-accrual loans $ 8,219 $ 8,448
Consumer loans:
Accruing loans 90 days overdue 550 945
Residential real estate loans:
Non-accrual loans 1,805 2,161
Commercial real estate loans:
Non-accrual loans 911 53
- -----------------------------------------------------------------------------------------------------------
Total non-performing loans and accruing loans 90 days overdue $11,485 $11,607
===========================================================================================================
Total non-performing loans to total gross loans 0.66% 0.67%
Total real estate acquired in settlement of
loans at lower of cost or fair value $ 744 $ 910
Total non-performing loans and real estate acquired in settlement
of loans at fair value to total assets 0.55% 0.56%
</TABLE>
Total non-performing loans and ORE, which is defined to include property
acquired by foreclosure or by deed in lieu of
12
<PAGE>
Item 2 - continued
foreclosure, decreased to $12.2 million, or 0.55% of total assets at March 31,
2000, compared to $12.5 million, or 0.56% of total assets at December 31, 1999.
At December 31, 1999, non-performing residential real estate loans totalled
$2.2 million and included 40 loans. At March 31, 2000, non-performing
residential real estate loans totalled $1.8 million and included 33 loans.
At December 31, 1999, there was 1 non-performing commercial real estate loan
of $53,000. At March 31, 2000, there was 1 non-performing commercial real
estate loan of $0.9 million.
Non-performing commercial loans at December 31, 1999 totalled $8.4 million and
included 34 individual loans ranging in size from $6,000 to $1.2 million. At
March 31, 2000, non-performing commercial loans decreased to $8.2 million and
consisted of 36 individual loans ranging in size from $1,287 to $1.2 million.
At December 31, 1999, the Company had $0.9 million of consumer loans 90 days
or more past due on which it was accruing interest, as compared to $0.5 million
at March 31, 2000.
At March 31, 2000, the recorded investment in loans for which impairment has
been recognized in accordance with SFAS No. 114 totalled $4.7 million with a
corresponding valuation allowance of $1.6 million.
At December 31, 1999, ORE totalled $0.9 million, which consisted of 10 single-
family residential properties with a book value totalling $526,000 and 4
commercial real estate properties with a book value totalling $384,000. At
March 31, 2000, ORE totalled $744,000, which consisted of 9 single-family
residential properties totalling $405,000 million and 4 commercial real estate
properties with a book value of $339,000.
Management reviews the adequacy of the allowance for possible credit losses at
least quarterly, applying projected loss ratios to the risk-ratings of loans
both individually and by category. The projected loss ratios incorporate such
factors as recent loss experience, current economic conditions and trends,
trends in past due and non-accrual amounts, the risk characteristics of various
categories and concentrations of loans, transfer risks and other pertinent
factors.
13
<PAGE>
Item 2 - continued
The following table summarizes activity in the Company's allowance for
possible credit losses during the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended March 31,
(Dollars in Thousands) 2000 1999
- ------------------------------------------------------------------------------------
<S> <C> <C>
Average gross loans outstanding $1,731,556 $1,625,279
====================================================================================
Allowance at beginning of period $ 29,134 $ 25,030
Charge-offs:
Commercial loans 1,915 1,408
Consumer loans 1,031 868
Residential real estate loans 1 167
Commercial real estate loans 339
- ------------------------------------------------------------------------------------
Total loans charged-off 2,947 2,782
Recoveries:
Commercial loans 568 286
Consumer loans 342 154
Residential real estate loans
Commercial real estate loans
- ------------------------------------------------------------------------------------
Total recoveries 910 440
- ------------------------------------------------------------------------------------
Net charge-offs 2,037 2,342
- ------------------------------------------------------------------------------------
Provision for credit losses charged to operating expenses 4,608 3,461
- ------------------------------------------------------------------------------------
Allowance at end of period $ 31,705 $ 26,149
====================================================================================
Ratio of net charge-offs to:
Average total loans outstanding (annualized) 0.47% 0.58%
Ratio of allowance to:
Non-performing loans 276.06% 140.37%
Period-end total loans outstanding 1.82% 1.54%
</TABLE>
Net charge-offs decreased from $2.3 million for the first quarter of 1999 to
$2.0 million for the same quarter in 2000. Management continues to take an
aggressive approach to the charge-off of problem loans and continues to review
the level of reserves to maintain a level of loan loss reserves that is
considered adequate to cover potential credit losses.
Sources of Funds
- ----------------
Funding for the Company's assets is derived primarily from demand and time
deposits and long and short-term borrowings. The competition for deposits
continues to be very strong in the market area and remains a focus of the Bank's
effort. The average balance of all interest-bearing liabilities increased from
$1,989.3 million for the three-month period ended March 31, 1999 to $2,059.0
million for the same period ended March 31, 2000, an increase of $69.7 million.
The most significant increase in interest-bearing liabilities for the quarter
ended March 31, 2000 compared to March 31, 1999, was an increase in the average
balances of certificates of deposit. The average balance of certificates of
deposit increased to $1,113.6 million for the first quarter of 2000 from
$1,020.0 million for the first quarter of 1999. A shift in balances from
checking products to money market accounts is reflected because of a retail
sweep account program maintained by the Bank. The balance at March 31, 2000 that
represented checking accounts that were swept into moneymarket accounts
approximated $90.2 million. To fund loan growth, the Bank had looked to other
areas to augment retail deposits as a source of funds. Certificates of deposits
from a money desk decreased to an average balance of $210.7 million in the first
quarter of 2000 from a $237.8 million average balance in the same quarter in
1999. Brokered certificates of deposit additionally remain a source of funding
for asset growth. The average balance of these deposits grew from $97.5 million
for the first quarter of 1999 to $217.7 million for the first quarter of 2000.
With the rise in interest rates over the past year, the overall cost of funds
for all certificates of deposits increased from 5.24% to 5.54% from the first
quarter of 1999 to the same period in 2000. Total borrowings decreased from an
average balance of $232.5 million to $141.6 million from the quarter ended March
31, 1999 to the same quarter ended March 31, 2000. With an increase in the
average rate paid on
14
<PAGE>
Item 2 - continued
borrowings from 4.89% for the quarter ended March 31, 1999 to 5.55% for the same
quarter in 2000 offset by the decrease in average balance, interest expense on
these borrowings decreased from $2.8 million for the first quarter of 1999 to
$2.0 million for the first quarter of 2000.
Liquidity and Capital Resources
- -------------------------------
A fundamental objective of the Company is to manage its liquidity effectively.
Prudent liquidity management insures that the Company can meet all of its
contractual obligations, meet its customers' loan demands, fund all of its
operations and minimize the effects of interest rate fluctuation on earnings.
There were no material changes in the Company's liquidity or interest rate
sensitivity since December 31, 1999.
The Company's primary sources of funds have consisted of deposits,
amortization and prepayments of outstanding loans and mortgage-backed
securities, bond maturities, and such other sources as long- and short-term
borrowings, and sales of investment securities, loans, and mortgage-backed
securities. At March 31, 2000, the total of approved loan commitments amounted
to $88.1 million. Long-term borrowings of $23.0 million are scheduled to mature
in the years 2002 through 2019. Savings certificates, which are scheduled to
mature during the next 12 months, totalled $884.9 million. Management expects
that a substantial portion of these maturing certificates will remain on deposit
with the Company.
At March 31, 1999, the Company's Tier I leverage ratio, as defined in
regulatory guidelines, was 9.92%, which exceeds the current requirements for the
Company. At March 31, 2000, the Company's total capital-to-risk-weighted assets
ratio, calculated under the Federal Reserve Board's risk-based capital
requirements, was 11.18%.
The Company's book value per common share increased from $15.11 at December
31, 1999 to $15.31 at March 31, 2000.
Impact of Inflation and Changing Prices
- ---------------------------------------
The financial statements and related data presented herein have been prepared
in accordance with generally accepted accounting principles which require the
measurement of financial position and operating results in terms of historical
dollars, without considering changes in the relative purchasing power of money
over time due to inflation.
Unlike most industrial companies, virtually all of the assets and liabilities
of a financial institution are monetary in nature. As a result, interest rates
have a more significant impact on a financial institution's performance than do
the effects of general levels of inflation. Interest rates do not necessarily
move in the same direction or in the same magnitude as the price of goods and
services.
Other Matters
- -------------
On April 20, 2000, NBT Bancorp Inc. (NBT) and BSB Bancorp, Inc. (BSB)
announced the signing of a definitive agreement to merge. This strategic
alliance is expected to create a bank holding company with assets of $4.7
billion and proforma market capitalization of approximately $539 million. The
holding company will adopt a new name before the merger occurs. Under the terms
of the agreement, BSB stockholders will receive two shares of NBT common stock
for each share of BSB held. The merger, which has been unanimously approved by
the boards of directors of NBT and BSB, is subject to standard regulatory and
shareholder approvals. A copy of the definitive documents related to the merger
were filed under cover of Form 8-K on April 28, 2000.
15
<PAGE>
Item 2 - continued
Forward-Looking Statements
- --------------------------
Certain statements in Management's Discussion and Analysis are forward-looking
statements within the meaning of the Securities Act of 1933 as amended and the
Securities Exchange Act of 1934 as amended. Actual results, performance, or
developments may differ materially from those expressed or implied by such
forward-looking statements as a result of market uncertainties and other
factors. The financial services market generally, and the market for the
Company's products and services specifically, is characterized by a high degree
of competition and rapidly changing local, national, and global market,
financial and economic conditions. Such developments, as well as unforeseen
developments in the financial services industry, could have an adverse impact on
the Company's financial position and results of operations.
Market Prices and Related Shareholder Matters
- ---------------------------------------------
The stock of the Company is listed on The Nasdaq Stock Market National Market
Tier under the symbol BSBN. As of March 31, 2000, the Company had 2,111
shareholders of record and 10,256,545 shares of common stock outstanding. The
number of shareholders does not reflect persons or entities who hold their stock
in nominee or "street" name through various brokerage firms.
The following table sets forth the market price information as reported by The
Nasdaq Stock Market for the common stock.
<TABLE>
<CAPTION>
Cash
Price Range Dividends
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1999
- --------------------------------------------------------------------------------------------------------------
First Quarter $32.68 $24.25 $0.22
Second Quarter 28.00 24.25 0.23
Third Quarter 27.63 24.00 0.25
Fourth Quarter 24.88 18.50 0.25
2000
- --------------------------------------------------------------------------------------------------------------
First Quarter $22.97 $16.75 $0.25
</TABLE>
16
<PAGE>
Item 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's consolidated results of operations depend to a large extent on
the level of its net interest income, which is the difference between interest
income from interest-earnings assets (such as loans and investments) and
interest expense on interest-bearing liabilities (such as deposits and
borrowings). If interest-rate fluctuations cause the Company's cost of funds to
increase faster than the yield on its interest-bearing assets, net interest
income will decrease. In addition, the market values of most of its financial
assets are sensitive to fluctuations in market interest rates. The Company
measures and manages its interest-rate risk by focusing on the Company's "gap",
which is the measure of the mismatch between the dollar amount of the Company's
interest-earning assets and interest-bearing liabilities which mature or reprice
within certain time frames.
Based on the Company's latest analysis of asset/liability mix (December 31,
1999), management's simulation analysis of the effects of changing interest
rates on a static balance sheet projected that an immediate 200 basis point
increase in interest rates over the 12 months ended December 31, 2000 would
decrease net interest income for that period by 0.33% or less and that a similar
decrease in interest rates would increase net interest income by 0.23% or less.
The test is based on a number of assumptions and there can be no assurance that
if interest rates did move by two percent that the Company's results of
operations would be impacted as estimated. Although the Company uses various
monitors of interest-rate risk, the Company is unable to predict future
fluctuations in interest rates or the specific impact thereof.
Changes in interest rates can also affect the amount of loans the Company
originates, as well as the value of its loans and other interest-earning assets
and its ability to realize gains on the sale of such assets and liabilities.
Prevailing interest rates also affect the extent to which borrowers prepay loans
owned by the Company. When interest rates increase, borrowers are less likely
to prepay their loans, and when interest rate decrease, borrowers are more
likely to prepay loans. Funds generated by prepayment might be invested at less
favorable interest rates. Prepayments may adversely affect the value of
mortgage loans, the levels of such assets that are retained in the Company's
portfolio, net interest income and loan servicing income. Similarly,
prepayments on mortgage-backed securities can adversely affect the value of such
securities and the interest income generated by them.
Increases in interest rates might cause depositors to shift funds from
accounts that have a comparatively lower cost (such as regular savings accounts)
to accounts with a higher cost (such as certificates of deposits). If the cost
of deposits increases at a rate greater than yields on interest-earning assets
increase, the interest-rate spread will be negatively affected. Changes in the
asset and liability mix also affect the Company's interest-rate risk.
The Company faces substantial competition for deposits and loans throughout
its market area both from local financial institutions and from out-of-state
financial institutions that either solicit deposits or maintain loan production
offices in the Company's market area. The Company competes for deposits and
loans primarily with other financial service providers such as savings
institutions, commercial banks, credit unions, money market funds, and other
investment alternatives. The Company believes that its ability to compete
effectively depends largely on its ability to compete with regard to interest
rates, as well as service fees, personalized services, quality and range of
financial products and services offered, convenience of office hours and
locations, and automated services.
17
<PAGE>
Part II
Item 1 - Legal Proceedings
-----------------
Not applicable
Item 2 - Changes in Securities
---------------------
Not applicable
Item 3 - Defaults upon Senior Securities
-------------------------------
Not applicable
Item 4 - Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not applicable
Item 5 - Other Information
-----------------
Not applicable
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
Current Report on Form 8-K filed with the
Securities and Exchange Commission on February 15,
2000 (press release on changes in senior
management)
18
<PAGE>
Part II - continued
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.
BSB Bancorp, Inc.
Date: May 15, 2000 By: /s/ Thomas L. Thorn
---------------------------- ------------------------------
THOMAS L. THORN
Acting President
and Chief Executive Officer
Date: May 15, 2000 By: /s/ Rexford C. Decker
---------------------------- ------------------------------
REXFORD C. DECKER
Senior Vice President
and Chief Financial Officer
19
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 47,718
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 382,703
<INVESTMENTS-CARRYING> 13,079
<INVESTMENTS-MARKET> 395,911
<LOANS> 1,745,382
<ALLOWANCE> 31,705
<TOTAL-ASSETS> 2,230,864
<DEPOSITS> 1,899,278
<SHORT-TERM> 112,994
<LIABILITIES-OTHER> 8,588
<LONG-TERM> 52,988
0
0
<COMMON> 114
<OTHER-SE> 156,902
<TOTAL-LIABILITIES-AND-EQUITY> 2,230,864
<INTEREST-LOAN> 39,593
<INTEREST-INVEST> 6,674
<INTEREST-OTHER> 13
<INTEREST-TOTAL> 46,280
<INTEREST-DEPOSIT> 21,319
<INTEREST-EXPENSE> 2,582
<INTEREST-INCOME-NET> 22,379
<LOAN-LOSSES> 4,608
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 11,713
<INCOME-PRETAX> 9,419
<INCOME-PRE-EXTRAORDINARY> 9,419
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,748
<EPS-BASIC> 0.56
<EPS-DILUTED> 0.56
<YIELD-ACTUAL> 8.72
<LOANS-NON> 10,935
<LOANS-PAST> 550
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 29,134
<CHARGE-OFFS> 2,947
<RECOVERIES> 910
<ALLOWANCE-CLOSE> 31,705
<ALLOWANCE-DOMESTIC> 31,705
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
