<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended 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 0-18014
-------
PAMRAPO BANCORP, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 22-2984813
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
611 Avenue C, Bayonne, New Jersey 07002
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, 201-339-4600
including area code
------------------------------------------------
Indicate by check X 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
--- ---
The number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date April 30, 2000.
$.01 par value common stock - 2,637,924 shares outstanding
<PAGE>
PAMRAPO BANCORP, INC.
AND SUBSIDIARIES
INDEX
Page
PART I - FINANCIAL INFORMATION Number
-----------
Item 1: Financial Statements
Consolidated Statements of Financial Condition
at March 31, 2000 and December 31, 1999 (Unaudited) 1
Consolidated Statements of Income for the
Three Months Ended March 31, 2000 and 1999 (Unaudited) 2
Consolidated Statements of Comprehensive Income for the
Three Months Ended March 31, 2000 and 1999 (Unaudited) 3
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2000 and 1999 (Unaudited) 4 - 5
Notes to Consolidated Financial Statements 6
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations 7 - 10
Item 3: Quantitative and Qualitative Disclosure About Market Risk 11 - 12
PART II - OTHER INFORMATION 13 - 14
SIGNATURES 15
<PAGE>
<TABLE>
<CAPTION>
PAMRAPO BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
----------------------------------------------
(Unaudited)
March 31, December 31,
-------------- -------------
ASSETS 2000 1999
- ------ -------------- -------------
<S> <C> <C>
Cash and amounts due from depository institutions $ 12,902,355 $ 11,862,080
Interest-bearing deposits in other banks 10,131,064 19,200,000
------------- -------------
Total cash and cash equivalents 23,033,419 31,062,080
Securities available for sale 6,048,243 6,428,631
Investment securities held to maturity;
estimated fair value of $7,596,000 (2000) 7,996,030 7,995,941
and $7,586,000 (1999)
Mortgage-backed securities held to maturity; estimated
fair value of $118,769,000 (2000) and $118,324,000 (1999) 122,699,029 120,823,781
Loans receivable 271,689,883 268,280,380
Foreclosed real estate 456,196 456,196
Investment in real estate 252,076 255,769
Premises and equipment 4,417,078 4,471,586
Federal Home Loan Bank stock, at cost 3,496,200 3,243,200
Interest receivable 2,636,674 2,553,908
Excess of cost over assets acquired 30,324 60,649
Other assets 2,648,670 2,388,330
------------- -------------
Total assets $ 445,403,822 $ 448,020,451
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Deposits $ 365,614,105 $ 361,924,668
Advances from Federal Home Loan Bank of New York 25,583,100 30,583,100
Other borrowed money 223,696 229,696
Advance payments by borrowers for taxes and insurance 2,788,827 2,946,639
Other liabilities 4,509,664 4,082,384
------------- ------------
Total liabilities 398,719,392 399,766,487
------------- ------------
Stockholders' equity:
Preferred stock; authorized 3,000,000 shares;
issued and outstanding - none -- --
Common stock; par value $.01; authorized 7,000,000 shares;
3,450,000 shares issued; shares outstanding 2,647,924 (2000)
and 2,727,924 (1999) 34,500 34,500
Paid-in capital in excess of par value 18,906,768 18,906,768
Retained earnings - substantially restricted 45,646,321 45,474,883
Unrealized (loss) on securities available for sale (69,723) (46,874)
Treasury stock, at cost; 802,076 shares and
722,076 shares (1999) (17,833,436) (16,115,313)
-------------- -------------
Total stockholders' equity 46,684,430 48,253,964
------------- -------------
Total liabilities and stockholders' equity $ 445,403,822 $ 448,020,451
------------- -------------
</TABLE>
See notes to consolidated financial statements.
- 1 -
<PAGE>
PAMRAPO BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOM
--------------------------------------
(Unaudited)
Three Months Ended
March 31,
------------------------
2000 1999
------------------------
Interest income:
Loans $5,592,076 $5,088,960
Mortgage-backed securities 2,093,945 2,050,070
Investments and other interest-earning assets 421,728 328,939
---------- ----------
Total interest income 8,107,749 7,467,969
Interest expense: ---------- ----------
Deposits 3,178,131 2,788,714
Advances and other borrowed money 448,043 419,206
---------- ----------
Total interest expense 3,626,174 3,207,920
---------- ----------
Net interest income 4,481,575 4,260,049
Provision for loan losses 60,000 75,000
---------- ----------
Net interest income after provision for loan losses 4,421,575 4,185,049
---------- ----------
Non-interest income:
Fees and service charges 250,532 245,482
Miscellaneous 128,631 122,561
Total non-interest income 379,163 368,043
---------- ----------
Non-interest expenses:
Salaries and employee benefits 1,667,888 1,541,789
Net occupancy expense of premises 300,012 291,349
Equipment 282,631 269,099
Advertising 133,320 54,250
Loss on foreclosed real estate 7,194 4,875
Federal insurance premium 18,970 48,336
Amortization of intangibles 30,325 30,325
Miscellaneous 662,995 609,586
---------- ----------
Total non-interest expenses 3,103,335 2,849,609
---------- ----------
Income before income taxes 1,697,403 1,703,483
Income taxes 612,431 613,776
---------- ----------
Net income $1,084,972 $1,089,707
---------- ----------
Net income per common share:
Basic/diluted $ 0.40 $ 0.38
---------- ----------
Dividends declared per common share $ 0.345 $ 0.3125
---------- ----------
Weighted average number of common shares
and common stock equivalents outstanding:
Basic/diluted 2,683,034 2,842,924
See notes to consolidated financial statements.
- 2 -
<PAGE>
PAMRAPO BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
-----------------------------------------------
(Unaudited)
Three Months Ended
March 31,
-----------------------------
2000 1999
-----------------------------
Net income $ 1,084,972 $ 1,089,707
----------- -----------
Other comprehensive (loss), net of income taxes:
Gross unrealized holding loss on securities
securities
available for sale (35,649) (42,959)
Deferred income tax benefit 12,800 15,500
----------- -----------
Other comprehensive (loss) (22,849) (27,459)
----------- -----------
Comprehensive income $ 1,062,123 $ 1,062,248
=========== ===========
See notes to consolidated financial statements.
- 3 -
<PAGE>
PAMRAPO BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------
2000 1999
-----------------------------------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 1,084,972 $ 1,089,707
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation of premises and equipment
and investment in real estate 149,136 151,902
Accretion of deferred fees, premiums and discounts, net (11,696) 10,203
Provision for loan losses 60,000 75,000
Provision for losses on foreclosed real estate -- 25,000
(Gain) on sales of foreclosed real estate -- (25,512)
(Increase) in interest receivable (82,766) (81,184)
(Increase) in other assets (247,540) (182,323)
Increase in other liabilities 427,280 504,496
Amortization of intangibles 30,325 30,325
----------- ----------
Net cash provided by operating activities 1,409,711 1,597,614
----------- ----------
Cash flow from investing activities:
Principal repayments on securities available for sale 354,054 351,610
Purchases of securities available for sale (18,382) (15,474)
Principal repayments on mortgage-backed securities
held to maturity 4,281,890 9,899,421
Purchases of mortgage-backed securities held to maturity (6,207,705) (15,081,080)
Proceeds from sales of student loans 33,633 41,809
Net change in loans receivable (3,431,895) (8,752,654)
Proceeds from sales of foreclosed real estate -- 133,385
Additions to premises and equipment (90,935) (101,660)
Purchase of Federal Home Loan Bank of New York stock (253,000) (146,000)
----------- ----------
Net cash (used in) investing activities (5,332,340) (13,670,643)
</TABLE>
See notes to consolidated financial statements.
- 4 -
<PAGE>
PAMRAPO BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
2000 1999
----------------------------
Cash flows from financing activities:
<S> <C> <C>
Net increase in deposits $ 3,689,437 $ 11,629,793
Net (decrease) in advances from Federal Home Loan Bank
of New York (5,000,000) --
Net (decrease) in other borrowed money (6,000) (5,541)
Net (decrease) increase in payments by borrowers for
taxes and insurance (157,812) 16,348
Cash dividends paid (913,534) (888,414)
Purchase of treasury stock (1,718,123) --
------------ ------------
Net cash (used in) provided by financing activities (4,106,032) 10,752,186
------------ ------------
Net (decrease) in cash and cash equivalents (8,028,661) (1,320,843)
Cash and cash equivalents - beginning 31,062,080 28,047,045
------------ ------------
Cash and cash equivalents - ending $ 23,033,419 $ 26,726,202
------------ ------------
Supplemental information:
Loans to facilitate sales of foreclosed real estate $ -- $ 270,000
------------ ------------
Cash paid during the period for:
Interest on deposits and borrowings $ 3,626,174 $ 3,207,920
------------ ------------
Income taxes $ -- $ --
------------ ------------
</TABLE>
See notes to consolidated financial statements.
- 5 -
<PAGE>
PAMRAPO BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
1. PRINCIPLES OF CONSOLIDATION
- --------------------------------
The consolidated financial statements include the accounts of Pamrapo Bancorp,
Inc. (the "Company") and its wholly owned subsidiaries, Pamrapo Savings Bank,
SLA (the "Bank") and Pamrapo Service Corp, Inc. The Corporation's business is
conducted principally through the Bank. All significant intercompany accounts
and transactions have been eliminated in consolidation.
2. BASIS OF PRESENTATION
- --------------------------
The accompanying unaudited consolidated financial statements were prepared in
accordance with instructions for Form 10-Q and regulations S-X and do not
include information or footnotes necessary for a complete presentation of
financial condition, results of operations, and cash flows in conformity with
generally accepted accounting principles. However, in the opinion of
management, all adjustments (consisting of normal recurring adjustments)
necessary for a fair presentation of the consolidated financial statements have
been included. The results of operations for the three months ended March 31,
2000, are not necessarily indicative of the results which may be expected for
the entire fiscal year.
3. NET INCOME PER COMMON SHARE
- --------------------------------
Basic net income per common share is based on the weighted average number of
common shares actually outstanding. Diluted net income per share is calculated
by adjusting the weighted average number of shares of common stock outstanding
to include the effect of contracts or securities exercisable or which could be
converted into common stock, if dilutive, using the treasury stock method.
There were no potentially dilutive contracts or securities outstanding at either
March 31, 2000 or 1999 or during the three months then ended.
- 6 -
<PAGE>
PAMRAPO BANCORP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Changes in Financial Condition
The Company's assets at March 31, 2000 totalled $445.4 million, which represents
a decrease of $2.6 million or 0.58% as compared with $448.0 million at December
31, 1999.
Securities available for sale at March 31, 2000 decreased $381,000 or 5.93% to
$6.0 million when compared with $6.4 million at December 31, 1999. The decrease
during the three months ended March 31, 2000, resulted primarily from repayments
on securities available for sale of $354,000 along with an increase in net
unrealized loss of $36,000.
Investment securities held to maturity remained unchanged at $8.0 million at
March 31, 2000 and December 31, 1999. Mortgage-backed securities held to
maturity increased $1.9 million or 1.57% to $122.7 million at March 31, 2000
when compared to $120.8 million at December 31, 1999. The increase during the
three months ended March 31, 2000, resulted from purchases of $6.2 million,
which were sufficient to offset principal repayments of $4.3 million.
Net loans amounted to $271.7 million at March 31, 2000, as compared to $268.3
million at December 31, 1999, which represents an increase of $3.4 million or
1.27%. The increase, during the three months ended March 31, 2000, resulted
primarily from loan originations exceeding principal repayments.
Foreclosed real estate remained unchanged at $456,000 at March 31, 2000 and
December 31, 1999, respectively. At March 31, 2000, foreclosed real estate
consisted of six properties of which two properties with a combined book value
of $171,000 are under contract for sale.
Total deposits at March 31, 2000 totalled $365.6 million as compared with $361.9
million at December 31, 1999, representing an increase of $3.7 million or 1.02%.
Advances from the Federal Home Loan Bank ("FHLB") amounted to $25.6 million and
$30.6 million at March 31, 2000 and December 31, 1999, respectively. The $5.0
million decline was the result of debt repayment of $10.0 million which more
than offset new borrowings of $5.0 million.
Stockholders' equity totalled $46.7 million and $48.3 million at March 31, 2000
and December 31, 1999, respectively. The decrease of $1.6 million was primarily
the result of the Company's repurchase of 80,0000 shares of its common stock at
an aggregate cost of $1.7 million.
Comparison of Operating Results for the Three Months Ended March 31, 1999 and
1998
Net income decreased $5,000 or .46% to $1.085 million for the three months ended
March 31, 2000 compared with $1.090 million for the same 1999 period. The
decrease in net income during the 2000 period resulted from increases in total
interest expense and non-interest expenses, which were partially offset by
increases in total interest income and non-interest income and a decrease in
income taxes.
Interest income on loans increased by $503,000 or 9.88% to $5.6 million during
the three months ended March 31, 2000 when compared with $5.1 million for the
same 1999 period. The increase during the 2000 period resulted from an increase
of $27.2 million in the average balance of loans outstanding sufficient to
offset a ten basis point decrease in the yield earned on the loan portfolio.
Interest on mortgage-backed securities increased $44,000 or 2.15% to $2.094
million during the three
- 7 -
<PAGE>
PAMRAPO BANCORP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
months ended March 31, 2000 when compared with $2.050 million for the same 1999
period. The increase during the 2000 period resulted primarily from an increase
of four basis points in the yield earned on the mortgage-backed securities and
an increase of $1.8 million in the average balance of such portfolio
outstanding. Interest earned on investments and other interest-earning assets
increased by $93,000 or 28.27% to $422,000 during the three months ended March
31, 2000, when compared to $329,000 during the same 1999 period primarily due to
an increase of $1.5 million in the average balance of such assets outstanding
along with a 110 basis point increase in the yield earned on such portfolio.
The increased yield on investments and other interest-earning assets is
indicative of higher market interest rates available on short-term investments.
Interest expense on deposits increased $389,000 or 13.95% to $3.2 million during
the three months ended March 31, 2000 when compared to $2.8 million during the
same 1999 period. Such increase was primarily attributable to increases of
sixteen basis points in the cost of interest-bearing deposits and $26.5 million
in the average balance of interest-bearing deposits. Interest expense on
advances and other borrowed money increased by $29,000 or 6.92% to $448,000
during the three months ended March 31, 2000 when compared with $419,000 during
the same 1999 period, primarily due to an increase of $1.9 million in the
average balance of advances outstanding from the FHLB along with a two basis
point increase in the cost of advances and other borrowed money.
Net interest income increased $222,000 or 5.21% during the three months ended
March 31, 2000 when compared with the same 1999 period. Such increase was due
to an increase in total interest income of $640,000, sufficient to offset an
increase in total interest expense of $418,000. The Bank's net interest rate
spread decreased from 3.79% in 1999 to 3.69% in 2000. The decrease in the
interest rate spread resulted from an increase of sixteen basis points in the
cost of interest-bearing liabilities sufficient to offset a six basis point
increase in the yield earned on interest-earning assets. Net interest income
increased despite the decline in interest rate spread as the interest income
provided by the $30.5 million increase in average interest-earning assets
exceeded the interest expense related to the $28.4 million increase in average
interest-bearing liabilities.
During the three months ended March 31, 2000 and 1999, the Bank provided $60,000
and $75,000, respectively, as a provision for loan losses. The allowance for
loan losses is based on management's evaluation of the risk inherent in its loan
portfolio and gives due consideration to the changes in general market
conditions and in the nature and volume of the Bank's loan activity. The Bank
intends to continue to provide for loan losses based on its periodic review of
the loan portfolio and general market conditions. At March 31, 2000, December
31, 1999 and March 31, 1999, the Bank's non-performing loans, which were
delinquent ninety days or more, totalled $3.9 million or 0.88% of total assets,
$4.2 million or 0.94% of total assets and $5.1 million or 1.19% of total assets,
respectively. At March 31, 2000, $1.2 million of non-performing loans were
accruing interest and $2.7 million were on nonaccrual status. The non-
performing loans primarily consist of one-to-four family mortgage loans. During
the three months ended March 31, 2000 and 1999, the Bank charged off loans
aggregating $22,000 and $1,000, respectively. The allowance for loan losses
amounted to $2.0 million at March 31, 2000, representing 0.73% of total loans
and 51.3% of loans delinquent ninety days or more and $2.0 million at December
31, 1999, representing 0.73% of total loans and 47.62% of loans delinquent
ninety days or more.
Non-interest income increased $11,000 or 2.99% to $379,000 during the three
months ended March 31, 2000 from $368,000 during the same 1999 period. The
increase resulted from increases in fees and service charges of $5,000 and
miscellaneous income of $6,000.
- 8 -
<PAGE>
PAMRAPO BANCORP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Non-interest expenses increased by $253,000 or 8.88% to $3.1 million during the
three months ended March 31, 2000 when compared with $2.8 million during the
same 1999 period. Salaries and employee benefits, net occupancy expense,
equipment, advertising, loss on foreclosed real estate and miscellaneous
expenses increased $126,000, $9,000, $13,000, $79,000, $2,000 and $53,000,
respectively, which was sufficient to offset a decrease in federal insurance
premium of $29,000 during the 2000 period when compared with the same 1999
period.
Income taxes totalled $612,000 and $614,000 during the three months ended March
31, 2000 and 1999, respectively. The decrease during the 2000 period resulted
from a decrease in pre-tax income.
Liquidity and Capital Resources
The Bank is required to maintain minimum levels of liquid assets as defined by
the Office of Thrift Supervision (the "OTS") regulations. This requirement,
which may vary from time to time, depending upon economic conditions and deposit
flows, is based upon a percentage of deposits and short-term borrowings. The
required ratio currently is 4%. The Bank's liquidity averaged 8.16% during the
month of March 2000. The Bank adjusts its liquidity levels in order to meet
funding needs for deposit outflows, payment of real estate taxes from escrow
accounts on mortgage loans, repayment of borrowings, when applicable, and loan
funding commitments. The Bank also adjusts its liquidity level as appropriate to
meet its asset/liability objectives.
The Bank's primary sources of funds are deposits, amortization and prepayments
of loans and mortgage-backed securities principal, FHLB advances, maturities of
investment securities and funds provided from operations. While scheduled loan
and mortgage-backed securities amortization and maturing investment securities
are a relatively predictable source of funds, deposit flow and loan and
mortgage-backed securities prepayments are greatly influenced by market interest
rates, economic conditions and competition. The Bank invests its excess funds
in federal funds and overnight deposits with the FHLB, which provides liquidity
to meet lending requirements. Interest-bearing deposits at March 31, 2000
amounted to $10.1 million.
The Bank's liquidity, represented by cash and cash equivalents, is a product of
its operating, investing and financing activities.
Cash was generated by operating activities during the three months ended March
31, 2000. The primary source of cash was net income. Cash dividends paid during
the three months ended March 31, 2000 and 1999 amounted to $914,000 and
$888,000, respectively.
The primary sources of investing activity are lending and the purchase of
mortgage-backed securities. Net loans amounted to $271.7 million and $268.3
million at March 31, 2000 and December 31, 1999, respectively. Securities
available for sale totalled $6.0 million and $6.4 million at March 31, 2000 and
December 31, 1999, respectively. Mortgage-backed securities held to maturity
totalled $122.7 million and $120.8 million at March 31, 2000 and December 31,
1999, respectively. The nominal increase was due in part to a slow down in
prepayments on existing portfolio pools thereby reducing reinvested funds. In
addition to funding new loan production and mortgage-backed securities purchases
through operating and financing activities, such activities were funded by
principal repayments on existing loans and mortgage-backed securities.
- 9 -
<PAGE>
PAMRAPO BANCORP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Liquidity management is both a daily and long-term function of business
management. Excess liquidity is generally invested in short-term investments,
such as federal funds and interest-bearing deposits. If the Bank requires funds
beyond its ability to generate them internally, borrowing agreements exist with
the FHLB which provide an additional source of funds. At March 31, 2000,
advances from the FHLB amounted to $25.6 million.
The Bank anticipates that it will have sufficient funds available to meet its
current loan commitments. At March 31, 2000, the Bank has outstanding
commitments to originate loans of $12.6 million. Certificates of deposit
scheduled to mature in one year or less at March 31, 2000, totalled $147.7
million. Management believes that, based upon its experience and the Bank's
deposit flow history, a significant portion of such deposits will remain with
the Bank.
Under OTS regulations, three separate measurements of capital adequacy (the
"Capital Rule") are required. The Capital Rule requires each savings
institution to maintain tangible capital equal to at least 1.5% and core capital
equal to 4.0% of its adjusted total assets. The Capital rule further requires
each savings institution to maintain total capital equal to at least 8.0% of its
risk-weighted assets.
The following table sets forth the Bank's capital position at March 31, 2000, as
compared to the minimum regulatory capital requirements:
<TABLE>
<CAPTION>
To Be Well
Capitalized
Under Prompt
Minimum Capital Corrective
Actual Requirements Actions Provisions
-------------------- ------------------- ---------------------
Amount Ratio Amount Ratio Amount Ratio
---------- --------- ---------- --------- --------- ----------
Total Capital
<S> <C> <C> <C> <C> <C> <C>
(to risk-weighted assets) $ 44,389 20.04% $17,716 8.00% $22,146 10.00%
Tier 1 Capital
(to risk-weighted assets) 42,757 19.31% -- -- 13,287 6.00%
Core (Tier 1) Capital
(to adjusted total assets) 42,757 9.63% 17,768 4.00% 22,210 5.00%
Tangible Capital
(to adjusted total assets) 42,757 9.63% 6,663 1.50% -- --
</TABLE>
- 10 -
<PAGE>
PAMRAPO BANCORP, INC. AND SUBSIDIARIES
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Management of Interest Rate Risk. The ability to maximize net interest income
is largely dependent upon the achievement of a positive interest rate spread
that can be sustained during fluctuations in prevailing interest rates.
Interest rate sensitivity is a measure of the difference between amounts of
interest-earning assets and interest-bearing liabilities which either reprice or
mature within a given period of time. The difference, or the interest rate
repricing "gap", provides an indication of the extent to which an institution's
interest rate spread will be affected by changes in interest rates. A gap is
considered positive when the amount of interest-rate sensitive assets exceeds
the amount of interest-rate sensitive liabilities, and is considered negative
when the amount of interest rate sensitive liabilities exceeds the amount of
interest-rate sensitive assets. Generally, during a period of rising interest
rates, a negative gap within shorter maturities would adversely affect net
interest income, while a positive gap within shorter maturities would result in
an increase in net interest income, and during a period of falling interest
rates, a negative gap within shorter maturities would result in an increase in
net interest income while a positive gap within shorter maturities would result
in a decrease in net interest income.
Because the Bank's interest-bearing liabilities which mature or reprice within
short periods exceed its interest-earning assets with similar characteristics,
material and prolonged increases in interest rates generally would adversely
affect net interest income, while material and prolonged decreases in interest
rates generally would have a positive effect on net interest income.
The Bank's current investment strategy is to maintain an overall securities
portfolio that provides a source of liquidity and that contributes to the Bank's
overall profitability and asset mix within given quality and maturity
considerations. The securities portfolio is concentrated in U.S. Treasury and
federal government agency securities providing high asset quality to the overall
balance sheet mix. Securities classified as available for sale provide
management with the flexibility to make adjustments to the portfolio given
changes in the economic or interest rate environment, to fulfill unanticipated
liquidity needs, or to take advantage of alternative investment opportunities.
Net Portfolio Value. The Bank's interest rate sensitivity is monitored by
management through the use of the OTDS model which estimates the change in the
Bank's net portfolio value ("NPV") over a range of interest rate scenarios. NPV
is the present value of expected cash flows from assets, liabilities, and off-
balance sheet contracts. The NPV ratio, under any interest rate scenario, is
defined as the NPV in that scenario divided by the market value of assets in the
same scenario. The OTS produces its analysis based upon data submitted on the
Bank's quarterly Thrift Financial Reports. The following table sets forth the
Bank's NPV as of December 31, 1999, the most recent date the Bank's NPV was
calculated by the OTS.
- 11 -
<PAGE>
PAMRAPO BANCORP, INC. AND SUBSIDIARIES
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
NPV as
Percent of Portfolio
Change in Net Portfolio Value Value of Assets
Interest Rates ------------------------------------ --------------------------
In Basis Points Dollar Percent NPV Change In
(Rate Shock) Amount Change Change Ratio Basis Points
- ---------------- ----------- ------------ ------------ --------- --------------
(Dollars in Thousands)
300 $ 21,887 $(28,747) (57) 5.17% (598)
200 31,639 (18,995) (38) 7.29 (386)
100 41,471 (9,163) (18) 9.34 (181)
Static 50,634 -- -- 11.15 --
-100 58,068 7,434 15 12.55 140
-200 64,913 14,279 28 13.80 265
-300 71,208 20,574 41 14.90 375
Certain shortcomings are inherent in the methodology used in the above interest
rate risk measurements. Modeling changes in NPV require the making of certain
assumptions which may or may not reflect the manner in which actual yields and
costs respond to changes in market interest rates. In this regard, the NPV
model presented assumes that the composition of the Bank's interest sensitive
assets and liabilities existing at the beginning of a period remains constant
over the period being measured and also assumes that a particular change in
interest rates is reflected uniformly across the yield curve regardless of the
duration to maturity or repricing of specific assets and liabilities.
Accordingly, although the NPV measurements and net interest income models
provide an indication of the Bank's interest rate risk exposure at a particular
point in time, such measurements are not intended to and do not provide a
precise forecast of the effect of changes in market interest rates on the Bank's
net interest income and will differ from actual results.
- 12 -
<PAGE>
PAMRAPO BANCORP, INC.
PART II
ITEM 1. Legal Proceedings
-----------------
Neither the Company nor the Bank are involved in any pending legal
proceedings other than routine legal proceedings occurring in the ordinary
course of business, which involve amounts in the aggregate believed by
management to be immaterial to the financial condition of the Company and
the Bank.
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
---------------------------------------------------
The Annual Stockholders' Meeting was held on May 5, 2000. The following
matters were submitted to the stockholders:
1. Election of two directors:
A. Directors elected at the meeting for terms to expire in 2003.
Number of Shares
-------------------------
For Withheld
------------- -----------
Mr. William J. Campbell 2,482,422 69,552
Mr. John A. Morecraft 2,512,213 39,761
The following directors' terms of office as a director
continued after the meeting:
(i) Dr. Jamie Portela
(ii) Mr. James Kennedy
(iii) Mr. Daniel J. Masarelli
(iv) Mr. Francis J. O'Donnell
- 13 -
<PAGE>
PAMRAPO BANCORP, INC.
PART II (Cont'd.)
ITEM 4. Submission of Matters to a Vote of Security Holders (Cont'd.)
---------------------------------------------------
<TABLE>
<CAPTION>
Number of Shares
-----------------------------------------
Broker
Non-
For Against Abstained Votes
-----------------------------------------
<S> <C> <C> <C> <C> <C>
2. To ratify and approve a proposal to 1,902,356 49,156 21,414 579,048
change the State of Incorporation of
the Company from Delaware to
New Jersey.
</TABLE>
Number of Shares
-----------------------------------
For Against Abstained
-----------------------------------
3. The ratification of Radics & Co., 2,521,489 26,725 3,760
LLC as independent auditors of the
Corporation for the fiscal year
ending December 31, 2000.
ITEM 5. Exhibits and Reports on Form 8-K
--------------------------------
(a) The following Exhibits are filed as part of this report.
3.1 Certificate of Incorporation of Pamrapo Bancorp, Inc.*
3.2 By-Laws of Pamrapo Bancorp, Inc.*
11.0 Computation of earnings per share (filed herewith).
27.0 Financial data schedule (filed herewith).
* Incorporated herein by reference to Form S-1, Registration
Statement, as amended, filed on August 11, 1989, Registration
Number 33-30370.
(b) Reports on Form 8-K
NONE
- 14 -
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PAMRAPO BANCORP, INC.
Date: May 12, 2000 By /s/ William J. Campbell
----------------- ---------------------------------------
William J. Campbell
President and Chief Executive Officer
Date: May 12, 2000 By: /s/ Gary J. Thomas
----------------- ---------------------------------------
Gary J. Thomas
Vice President, Chief Financial Officer
- 15 -
<PAGE>
Exhibit 11.0
PAMRAPO BANCORP, INC. AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
-----------------------------------------------
Three Months Ended
March 31, 2000
--------------------
Net income $1,084,972
==========
Weighted average shares outstanding - basic and diluted 2,683,034
==========
Basic and diluted earnings per share $ 0.40
==========
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 12,902,355
<INT-BEARING-DEPOSITS> 10,131,064
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 6,048,243
<INVESTMENTS-CARRYING> 122,699,029
<INVESTMENTS-MARKET> 118,769,000
<LOANS> 273,728,883
<ALLOWANCE> 2,039,000
<TOTAL-ASSETS> 445,403,822
<DEPOSITS> 365,614,105
<SHORT-TERM> 25,806,796
<LIABILITIES-OTHER> 7,298,491
<LONG-TERM> 0
0
0
<COMMON> 34,500
<OTHER-SE> 46,649,930
<TOTAL-LIABILITIES-AND-EQUITY> 445,403,822
<INTEREST-LOAN> 5,592,076
<INTEREST-INVEST> 2,093,945
<INTEREST-OTHER> 421,728
<INTEREST-TOTAL> 8,107,749
<INTEREST-DEPOSIT> 3,178,131
<INTEREST-EXPENSE> 3,626,174
<INTEREST-INCOME-NET> 4,481,575
<LOAN-LOSSES> 60,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,103,335
<INCOME-PRETAX> 1,697,403
<INCOME-PRE-EXTRAORDINARY> 1,697,403
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,084,972
<EPS-BASIC> .40
<EPS-DILUTED> .40
<YIELD-ACTUAL> 7.62
<LOANS-NON> 2,667,000
<LOANS-PAST> 1,232,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 2,016,627
<ALLOWANCE-OPEN> 2,000,000
<CHARGE-OFFS> 22,073
<RECOVERIES> 1,039
<ALLOWANCE-CLOSE> 2,038,966
<ALLOWANCE-DOMESTIC> 407,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,631,966
</TABLE>
