<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarter Ended June 30, 2000
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____ to _____
Commission file number 000-27244
---------
USABancShares.com, Inc.
-----------------------
(Exact name of small business issuer as specified in its charter)
Pennsylvania 23-2806495
------------ ----------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
1535 Locust Street, Philadelphia, PA, 19102
-------------------------------------------
(Address of Principal Executive Offices)
(Zip Code)
(215) 569-4200
--------------
(Registrant's telephone number, including area code)
Securities registered under Section 12(b) of the Act: None
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 [ ]
Transitional Small Business Format: YES [ ] NO [X ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
Common Stock, $1.00 par value, outstanding on August 11, 2000: 5,507,974 shares
Class B Common Stock, $.01 par value, outstanding on August 11, 2000: 10,000
shares, convertible into 216,460 shares of Common Stock
<PAGE>
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page #
Item 1. Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements of Comprehensive (Loss) Income 5
Consolidated Statements of Changes in Stockholders' Equity 6
Consolidated Statements of Cash Flows 7
Notes to the Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 21
Item 2. Change in Securities 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 5. Other Information 22
Item 6. Exhibits and Reports on Form 8-K 22
SIGNATURES 23
2
<PAGE>
USABANCSHARES.COM, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in Thousands)
<TABLE>
<CAPTION>
(unaudited)
June 30, December 31,
2000 1999
--------- ------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 2,889 $ 3,813
Interest-bearing deposits with banks 8,626 821
Securities available-for-sale 30,908 37,478
Securities held-to-maturity (fair value: 2000 - $102,025;
1999 - $55,595) 108,860 60,337
Federal Home Loan Bank of Pittsburgh (FHLB) Stock 4,011 4,011
Loans receivable, net 183,676 197,623
Premises and equipment, net 4,759 2,851
Accrued interest receivable 3,103 2,906
Other real estate 40 -
Goodwill, net 47 70
Deferred income taxes 1,587 1,475
Bank owned life insurance 5,280 5,149
Other assets 7,575 6,801
--------- ---------
Total assets $ 361,361 $ 323,335
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand $ 3,158 $ 5,168
NOW 22,405 4,692
Money Market 492 973
Savings and Passbook 21,440 19,271
Time 254,171 224,934
--------- ---------
Total deposits 301,666 255,038
Borrowed funds:
Long term borrowings 32,600 35,000
Guaranteed preferred beneficial interests in subordinated debt 10,000 10,000
Accrued interest payable 1,328 4,132
Accrued expenses and other liabilities 1,328 1,237
--------- ---------
Total liabilities 346,922 305,407
STOCKHOLDERS' EQUITY
Preferred stock, $1.00 par value; 5,000,000 authorized shares;
no shares issued and outstanding - -
Common stock, $1.00 par value; 25,000,000 authorized shares;
5,507,974 shares issued and outstanding in 2000; 5,423,784 shares
issued and outstanding in 1999; and 216,460 and 216,460 shares of converted
and un-issued Class B common stock in 2000 and 1999, respectively
actual 5,724,434 shares issued and outstanding in 2000, as adjusted
actual 5,640,244 shares issued and outstanding in 1999, as adjusted 5,724 5,640
Additional paid-in capital 15,832 15,368
Accumulated deficit (5,239) (1,378)
Accumulated other comprehensive (loss) - unrealized
depreciation on securities available-for-sale (1,878) (1,702)
--------- ---------
Total stockholders' equity 14,439 17,928
--------- ---------
Total liabilities and stockholders' equity $ 361,361 $ 323,335
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
USABANCSHARES.COM, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in Thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
-------------------------- --------------------------
2000 1999 2000 1999
-------- -------- ------- --------
<S> <C> <C> <C> <C>
Interest income:
Loans $ 10,183 $ 5,736 $ 5,435 $ 2,980
Investment securities 4,607 2,709 2,307 1,665
Interest-bearing deposits and other 809 104 553 23
-------- ------- ------- -------
Total interest income 15,599 8,549 8,295 4,668
Interest expense:
Deposits 8,413 3,582 4,417 1,915
Borrowed funds 1,567 1,164 819 676
-------- ------- ------- -------
Total interest expense 9,980 4,746 5,236 2,591
-------- ------- ------- -------
Net interest income 5,619 3,803 3,059 2,077
Provision for loan losses - 250 - 150
-------- ------- ------- -------
Net interest income after provision for loan losses 5,619 3,553 3,059 1,927
Non-interest income:
Service fee income 304 110 215 81
(Loss) gain on sales of investment securities (243) 30 24 (25)
Gain on sales of loans receivable - 42 - -
Gain on sales of other real estate 8 60 8 60
Brokerage operations (loss) gain (380) 193 (188) 67
Other 206 134 102 66
-------- ------- ------- -------
Total non-interest income (105) 569 161 249
Non-interest expense:
Salaries and employee benefits 2,088 1,346 659 840
Net occupancy expense 508 342 296 178
Professional fees 735 198 371 99
Office expenses 391 102 162 50
Data processing fees 731 120 380 70
Advertising expense 2,972 132 1,501 87
Travel expense 365 149 189 89
Check printing fees 223 - 185 -
Other operating expenses 1,725 514 1,071 234
-------- ------- ------- -------
Total non-interest expense 9,738 2,903 4,814 1,647
-------- ------- ------- -------
(Loss) income before income tax (benefit) expense (4,224) 1,219 (1,594) 529
Income tax (benefit) expense (363) 295 (188) 19
-------- ------- ------- -------
Net (loss) income $ (3,861) $ 924 $(1,406) $ 510
======== ======= ======= =======
(Loss) earnings per share - basic (1) $ (0.68) $ 0.22 $ (0.25) $ 0.12
======== ======= ======= =======
(Loss) earnings per share - diluted (1) $ (0.68) $ 0.21 $ (0.25) $ 0.12
======== ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
(1) All per share data has been adjusted to reflect all stock dividends and
stock splits.
4
<PAGE>
USABANCSHARES.COM, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive (Loss) Income
(in Thousands)
(unaudited)
<TABLE>
<CAPTION>
Six months ended
June 30,
----------------------------------
2000 1999
--------- -------
<S> <C> <C>
Net (loss) income $ (3,861) $ 924
Other comprehensive loss:
Unrealized losses on securities available-for-sale:
Unrealized holding losses arising during the period,
net of taxes (176) (489)
-------- -----
Comprehensive (loss) income $ (4,037) $ 435
======== =====
</TABLE>
<TABLE>
<CAPTION>
Three months ended
June 30,
----------------------------------
2000 1999
--------- -------
<S> <C> <C>
Net (loss) income $ (1,406) $ 510
Other comprehensive loss:
Unrealized losses on securities available-for-sale:
Unrealized holding losses arising during the period,
net of taxes (383) (174)
-------- -----
Comprehensive (loss) income $ (1,789) $ 336
======== =====
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
USABANCSHARES.COM, INC. AND SUBSIDIARIES
Consolidated Statement Of Changes In Stockholders' Equity
For the six months ended June 30, 2000
(in Thousands)
(unaudited)
<TABLE>
<CAPTION>
Accumulated
Additional other Total
Common paid-in Accumulated comprehensive stockholders'
Stock capital deficit loss equity
------- ---------- ----------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1999 $ 5,640 $ 15,368 $ (1,378) $ (1,702) $ 17,928
Net unrealized gain on
securities available-for-sale - - - 207 207
Exercise of options 67 309 - - 376
Warrants - 62 - - 62
Net loss - - (2,455) - (2,455)
------- -------- -------- -------- --------
Balances, March 31, 2000 $ 5,707 $ 15,739 $ (3,833) $ (1,495) $ 16,118
======= ======== ======== ======== ========
Net unrealized loss on
securities available-for-sale - - - (383) (383)
Exercise of options 17 32 - - 49
Warrants - 61 - - 61
Net loss - - (1,406) - (1,406)
------- -------- -------- -------- --------
Balances, June 30, 2000 $ 5,724 $ 15,832 $ (5,239) $ (1,878) $ 14,439
======= ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
(1) All per share data has been adjusted to reflect all stock dividends and
stock splits.
6
<PAGE>
USABANCSHARES.COM, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in Thousands)
<TABLE>
<CAPTION>
Six months ended
June 30,
----------------------------
2000 1999
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (3,861) $ 924
Adjustments to reconcile net (loss) income to net cash
used in operating activities:
Provision for possible loan losses - 250
Depreciation and amortization 256 192
Decrease (increase) of goodwill 2 (4)
Net accretion of discounts on purchased loan portfolios (1,095) (568)
Net accretion/amortization of securities discounts/premiums (217) (39)
Net amortiziation of warrants 123 -
Net losses on sale of securities (243) (30)
Net gains on sale of loan assets - (42)
Net gains (losses) on sale of real estate owned 8 (60)
Net increase in deferred fees 29 -
Increase in accrued interest receivable (197) (773)
(Increase) decrease in deferred tax asset (112) 38
Increase in bank owned life insurance (131) -
Increase in other assets (774) (7,499)
(Decrease) increase in accrued interest payable (2,804) 584
Increase in accrued expenses and other liabilities 91 213
-------- --------
Net cash used by operating activities (8,925) (6,814)
-------- --------
Cash flows from investing activities:
Investment securities available-for-sale:
Purchases - (41,560)
Sales 5,957 1,620
Maturities and principal repayments 583 155
Net realized losses 76 -
Investment securities held-to-maturity:
Purchases (53,314) (1,979)
Sales 1,000 1,200
Maturities and principal repayments 3,815 2,704
Purchases of FHLB Stock - (488)
Increase in interest bearing deposits with banks (7,805) (5,281)
Principal payments on loans 18,098 18,727
Originations of loans (13,827) (31,300)
Sale/participation of loans 10,940 -
(Increase) decrease in other real estate, net (40) 66
Purchases of premises and equipment (2,135) (837)
-------- --------
Net cash used in investing activities (36,652) (56,973)
-------- --------
Cash flows from financing activities:
Net increase in deposits 46,628 55,568
Decrease in short-term borrowings - (1,906)
Decrease in long-term borrowings (2,400) -
Exercise of stock options 425 -
Proceeds from issuance of trust preferred securities - 10,000
-------- --------
Net cash provided by financing activities 44,653 63,662
-------- --------
Net decrease in cash and cash equivalents (924) (125)
Cash and cash equivalents, beginning 3,813 1,335
-------- --------
Cash and cash equivalents, end $ 2,889 $ 1,210
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
7
<PAGE>
USABANCSHARES.COM, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
June 30, 2000
1. Basis of Presentation
The accompanying unaudited consolidated financial statements include the
accounts of USABancShares.com, Inc., (the "Company"), vBank, (the "Bank") a
Pennsylvania chartered stock savings bank, USACredit, Inc., a Pennsylvania
corporation, USARealEstate, Inc., a Pennsylvania corporation and USA Capital
Trust I, a Delaware business trust. All significant intercompany accounts and
transactions have been eliminated. The interim financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments including
normal recurring accruals necessary for fair presentation of results of
operations for the interim periods included herein have been made. The unaudited
consolidated financial statements as of June 30, 2000 and for the six and three
months ended June 30, 2000 and 1999, are not necessarily indicative of results
to be anticipated for the full year.
2. Trust Preferred Securities
On March 9, 1999, the Company issued $10.0 million of 9.5% junior subordinated
debentures to USA Capital Trust I, a Delaware business trust, in which the
Company owns all of the common equity. The trust issued $10.0 million of trust
preferred securities to investors, secured by the junior subordinated debentures
and the guarantee of the Company. The junior subordinated debentures mature in
2029.
3. Secondary Offering
On September 30, 1999, the Company issued 1,400,000 common shares in a secondary
offering. The Company issued these share at $6.75, with net proceeds of $8.1
million, subsequent to offering costs of $1.4 million.
4. Bondsonline Group, Inc.
In May 2000, the Company and its wholly owned subsidiary, USACapital, Inc.
entered into an Asset Contribution Agreement with Bondsonline, Inc., resulting
in the creation of a new entity known as Bondsonline Group, Inc. Using the
equity method to account for the transaction, the Company contributed all of the
issued and outstanding capital stock of USACapital, Inc. in exchange for
5,472,867 shares or 49% of Bondsonline Group, Inc.'s common shares outstanding.
The common stock has a par value of $.001 per share.
5. Computation of Per Share Earnings
Basic earnings per share ("EPS") amounts are computed by dividing net earnings
by the weighted average number of common shares outstanding during the period.
Diluted earnings per share amounts are computed by dividing net earnings by the
weighted average number of shares and all dilutive potential shares outstanding
during the period.
8
<PAGE>
The following information was used in the computation of earnings per share on
both a basic and diluted basis for the six and three month periods ended June
30, 2000 and 1999:
(in Thousands, except per share data)
<TABLE>
<CAPTION>
Six months ended
June 30,
---------------------------
2000 1999
--------- --------
<S> <C> <C>
Basic EPS Computation:
Numerator - Net (loss) earnings $ (3,861) $ 924
Denominator - Weighted average shares outstanding 5,687 4,231
-------- -------
Basic (loss) earnings per share (1) $ (0.68) $ 0.22
======== =======
Diluted EPS Computation:
Numerator - Net (loss) earnings $ (3,861) $ 924
Denominator - Weighted average shares outstanding 5,687 4,231
Effect of dilutive securities - 82
-------- -------
Diluted (loss) earnings per share (1) $ (0.68) $ 0.21
======== =======
</TABLE>
<TABLE>
<CAPTION>
Three months ended
June 30,
---------------------------
2000 1999
--------- --------
<S> <C> <C>
Basic EPS Computation:
Numerator - Net (loss) earnings $ (1,406) $ 510
Denominator - Weighted average shares outstanding 5,723 4,231
-------- -------
Basic (loss) earnings per share (1) $ (0.25) $ 0.12
======== =======
Diluted EPS Computation:
Numerator - Net (loss) earnings $ (1,406) $ 510
Denominator - Weighted average shares outstanding 5,723 4,231
Effect of dilutive securities - 163
-------- -------
Diluted (loss) earnings per share (1) $ (0.25) $ 0.12
======== =======
</TABLE>
(1) All per share data has been adjusted to reflect all stock dividends and
stock splits.
There were options to purchase 1,178,168 shares and 923,818 shares of common
stock at a range of $2.83 to $6.63 per share which were outstanding for the six
and three months ended June 30, 2000, respectively. These shares were not
included in the computation of diluted earnings per share due to the net
operating losses incurred by the Company for the six and three months ended June
30, 2000.
6. New Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activity". SFAS No. 133 establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments imbedded in other contracts, and for hedging activities.
On April 1, 1999 in conjunction with the adoption of SFAS No. 133, the Bank
reclassified $33.4 million of securities from available-for-sale to held-to-
maturity. Due to the reclassification, the Bank accreted approximately $15,000
into equity during the six months ended June 30, 2000 to restore the securities
back to their carrying value.
9
<PAGE>
USABANCSHARES.COM, INC. AND SUBSIDIARIES
Management's Discussion and Analysis
of Financial Condition and Results of Operations
June 30, 2000
Forward-looking Statements
When used in this Form 10-QSB, the words or phrases "will likely result", "are
expected to", "will continue", "is anticipated", "estimate", "project", or
similar expressions are intended to identify "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are subject to certain risks and uncertainties including changes in
economic conditions in the Company's market area, changes in policies by
regulatory agencies, fluctuations in interest rates, demand for loans in the
Company's market area, and competition that could cause actual results to differ
materially from historical earnings and those presently anticipated or
projected. The Company wishes to caution readers not to place undue reliance on
any such forward-looking statements, which speak only as to the date made. The
Company wishes to advise readers that the factors listed above could affect the
Company's financial performance and could cause the Company's actual results for
future periods to differ materially from any opinions or statements expressed
with respect to future periods in any current statements.
The Company does not undertake, and specifically disclaims any obligation, to
publicly release the result of any revisions which may be made to any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.
FINANCIAL CONDITION
The Company's total assets increased from $323.3 million at December 31, 1999 to
$361.4 million at June 30, 2000, an increase of $38.1 million, or 11.8%. The
increase was due primarily to increases in the securities portfolio, interest
bearing deposits, premises and equipment and other assets, of $42.0 million,
$7.8 million, $1.9 million, and $774,000, respectively. The increase in the
securities portfolio was primarily due to the acquisition of federal agency
bonds and U.S. Treasury securities, partially offset by the sale of corporate
debt instruments. The increase in interest bearing deposits can be attributed to
the growth in deposit liabilities. The increase in premises and equipment is the
result of the purchase of a new administrative office building in February 2000
at a cost of approximately $1.6 million. The Company is currently in the process
of applying for approximately $1.0 million in tax credits associated with the
purchase of this property. The increase in other assets is associated with fees
relating to the Company's strategic marketing agreements with several leading
Internet entities. These increases were partially offset by a decrease in the
net loan portfolio of $13.9 million, partially due to the sale of $4.8 million
and participation of $6.1 million of loan assets during the second quarter of
2000. Additionly, repayments and prepayments of loan assets totaled $18.6
million and were offset by $13.8 million in loan originations.
The growth in total assets was funded by an increase in deposits of $46.6
million. Retail and Internet time deposits increased $45.1 million and
transaction accounts increased $17.4 million. These increases were partially
offset by a decrease of $15.9 million in institutional deposits. The Company's
stockholders' equity decreased from $17.9 million at December 31, 1999 to $14.4
million at June 30, 2000, due to the operating loss incurred by the Company for
the six months ended June 30, 2000, partially offset by $425,000 in proceeds
received from the exercise of stock options.
10
<PAGE>
NET INCOME
The Company reported a net operating loss of $3.9 million or $(.68) per share,
for the six months ended June 30, 2000, compared to net income of $924,000 or
$0.21 per diluted share for the six months ended June 30, 1999. Net income
decreased primarily because of the Company's Internet initiative and the
investments made to market and support www.usabancshares.com.
The Company reported a net operating loss of $1.4 million or $(.25) per share,
for the three months ended June 30, 2000, compared to net income of $510,000 or
$0.12 per diluted share for the three months ended June 30, 1999. Net income
decreased primarily because of the Company's Internet initiative and the
investments made to market and support www.usabancshares.com.
INTEREST INCOME
Total interest income increased $7.1 million or 82.5% to $15.6 million for the
six months ended June 30, 2000 compared to the six months ended June 30, 1999,
due to an increase in average earning assets of $151.6 million during the same
time period. Income on loans increased $4.4 million due to the average earning
loan balances increasing $89.8 million, and an increase of $527,000 in accretion
income recognized, due to loan payoffs and loan sales in the second quarter. The
increase in average loans outstanding was partially offset by the yield on the
loan portfolio decreasing by 35 basis points. Income on investments increased
$1.9 million due to the investment portfolio average balances increasing $40.2
million between the noted periods and the yield on the portfolio increasing by
38 basis points. Income on interest bearing deposits increased $705,000 due to
the average balance of overnight funds, held at the Federal Home Loan Bank,
increasing $21.6 million and an increase in the overnight funds rate.
Total interest income increased $3.6 million or 77.7% to $8.3 million for the
three months ended June 30, 2000 compared to the three months ended June 30,
1999, due to an increase in average earning assets of $151.2 million during the
same time period. Income on loans increased $2.5 million due to the average
earning loan balances increasing $85.0 million, and an increase in the yield by
41 basis points. The yield increase was due to an increase of $590,000 in the
accretion income recognized, due to loan payoffs and loan sales during the
quarter. Income on investments increased $642,000 due to the investment
portfolio average balances increasing $31.4 million between the noted periods,
partially offset by a decrease in the yield on the portfolio by 31 basis points.
Income on interest bearing deposits increased $530,000 due to the average
balance of overnight funds, held at the Federal Home Loan Bank, increasing $34.8
million and an increase in the overnight funds rate.
INTEREST EXPENSE
Total interest expense increased $5.2 million or 110.3% to $10.0 million, for
the six months ended June 30, 2000, compared to the six months ended June 30,
1999, primarily due to a higher volume of new time deposits. Interest expense on
deposits increased $4.8 million, due to the average outstanding balances
increasing $153.7 million and an increase in the average cost of funds by 42
basis points. The average cost of funds, including other borrowings, was 6.09%
for the six months ended June 30, 2000 compared to 5.67% over the same period in
1999.
Total interest expense increased $2.7 million or 102.1% to $5.2 million, for the
three months ended June 30, 2000, compared to the three months ended June 30,
1999, due to a higher volume of new time deposits. Interest expense on deposits
increased $2.5 million, due to the average outstanding balances increasing
$154.9 million and an increase in the average cost of funds. The average cost of
funds increased by 55 basis points, including other borrowings, was 6.17% for
the three months ended June 30, 2000 compared to 5.62% for the same period in
1999.
11
<PAGE>
NET INTEREST INCOME
The Company's profitability, like that of many financial institutions, is
dependent to a large extent upon net interest income. Net interest income is the
difference between interest income (principally from loans and investment
securities) and interest expense (principally on customer deposits and
borrowings). Changes in net interest income result from changes in the mix of
rates and volumes of interest-earning assets and interest-bearing liabilities
that occur over time. Volume refers to the average dollar level of
interest-earning assets and interest-bearing liabilities. Net interest rate
spread refers to the differences between the average yield on interest-earning
assets and the average cost of interest-bearing liabilities. Net interest margin
refers to net interest income divided by average interest-earning assets.
Net interest income after the provision for loan losses for the six months ended
June 30, 2000, increased $2.0 million or 58.1%, to $5.6 million from $3.6
million for the same period in 1999. Average interest-earning assets increased
by $151.6 million, or 85.3% to $329.2 million, for the six months ended June 30,
2000 compared to the same period in 1999. Average interest-bearing liabilities
increased $159.7 million or 94.6% over the same period. The net interest spread
and net interest margin decreased for the period ended June 30, 2000 compared to
June 30, 1999, from 3.96% to 3.39% and 4.28% to 3.41% respectively. For the six
months ended June 30, 2000, $1.1 million of discount was accreted into interest
income or 7.0% of total interest income. This compares to $568,000 of discount
accreted into interest income for the six month period ended June 30, 1999 or
6.6% of total interest income. Excluding the income attributable to the
accretion of discount on loans acquired, the net interest margin would have
declined 89 basis points for the six months ended June 30, 2000 compared to June
30, 1999 to 2.75% from 3.64% respectively.
Net interest income after the provision for loan losses for the three months
ended June 30, 2000, increased $1.2 million or 58.7%, to $3.1 million from $1.9
million for the same period in 1999. Average interest-earning assets increased
by $151.2 million, or 80.6% to $338.9 million, for the three months ended June
30, 2000 compared to the same period in 1999. Average interest-bearing
liabilities increased $156.2 million or 84.7% over the same period. The net
interest spread and net interest margin declined for the period ended June 30,
2000 compared to June 30, 1999, from 4.33% to 3.62% and 4.43% to 3.61%
respectively. For the three months ended June 30, 2000, $857,000 of discount was
accreted into interest income or 10.3% of total interest income. This compares
to $267,000, of discount accreted into interest income for the three month
period ended June 30, 1999 or 5.7% of total interest income. Excluding the
income attributable to the accretion of discount on loans acquired, the net
interest margin would have declined 126 basis points for the three months ended
June 30, 2000 compared to June 30, 1999 to 2.60% from 3.86%, respectively.
12
<PAGE>
ANALYSIS OF NET INTEREST INCOME
The following table presents information regarding yields on interest-earning
assets, expense on interest-bearing liabilities, and net yields on
interest-earning assets for the periods indicated:
(in Thousands)
<TABLE>
<CAPTION>
Six months ended June 30,
2000 1999
--------------------------------------- --------------------------------------------
Average Average Average Average
Balance Interest Yield/Rate Balance Interest Yield/Rate
--------- -------- ---------- --------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans $ 197,176 $ 10,183 10.33% $ 107,388 $ 5,736 10.68%
Investment securities 104,354 4,607 8.83 64,133 2,709 8.45
Interest-bearing deposits and other 27,650 809 5.85 6,085 104 3.42
--------- -------- ------ --------- ------- ------
Total interest-earning assets $ 329,180 $ 15,599 9.48 $ 177,606 $ 8,549 9.63
Interest-bearing liabilities:
Deposits:
NOW $ 12,268 $ 273 4.46% $ 1,348 $ 14 2.08%
Money Market 777 16 4.13 2,506 58 4.64
Savings and Passbook 19,759 393 3.99 12,037 278 4.63
Time 248,774 7,731 6.23 111,984 3,233 5.79
Borrowings 46,960 1,567 6.69 40,934 1,163 5.70
--------- -------- ------ --------- ------- ------
Total interest-bearing liabilities $ 328,538 $ 9,980 6.09 $ 168,809 $ 4,746 5.67
--------- -------- ------ --------- ------- ------
Excess of interest-earning assets over
interest-bearing liabilities $ 642 $ 8,797
========= =========
Net interest income $ 5,619 $ 3,803
======== =======
Net interest rate spread 3.39% 3.96%
====== ======
Net interest margin 3.41% 4.28%
====== ======
Average earning assets to average
interest-bearing liabilities 100.20% 105.21%
====== ======
</TABLE>
13
<PAGE>
RATE VOLUME ANALYSIS
The following schedule presents the dollar amount of changes in interest income
and interest expense for major components of interest-earning assets and
interest-bearing liabilities. It distinguishes between changes (a) related to
outstanding balances and (b) due to changes in interest rates. Information is
provided in each category with respect to: (i) changes attributable to changes
in volume (changes in volume multiplied by prior rate); (ii) changes
attributable to changes in rate (changes in rate multiplied by prior volume);
and (iii) the net change in rate/volume (change in rate multiplied by change in
volume). The changes attributable to the combined impact of volume and rate have
been allocated proportionately to the changes due to volume and the changes due
to rate.
(in Thousands)
June 30, 2000 vs. June 30, 1999
<TABLE>
<CAPTION>
Increase or (Decrease)
Due to Changes in
--------------------------------
Total
Average Average Increase
Volume Rate (Decrease)
--------------- ------------ ------------
<S> <C> <C> <C>
Variance in interest income on:
Interest-earning assets:
Loans $ 4,796 $ (349) $ 4,447
Investment securities 1,699 199 1,898
Interest-earning deposits and other 369 336 705
------- ------ -------
Total interest-earning assets $ 6,864 $ 186 $ 7,050
------- ------ -------
Interest-bearing liabilities:
Deposits:
NOW $ 113 $ 146 $ 259
Money Market (40) (2) (42)
Savings and Passbook 178 (63) 115
Time 3,949 549 4,498
Borrowings 171 233 404
------- ------ -------
Total interest-bearing liabilities $ 4,371 $ 863 $ 5,234
------- ------ -------
Changes in net interest income $ 2,493 $ (617) $ 1,816
======= ====== =======
</TABLE>
PROVISION FOR LOAN LOSSES
Management records the provision for loan losses in amounts that result in an
allowance for loan losses sufficient to cover all potential net charge-offs and
risks believed to be inherent in the loan portfolio. Management's evaluation
includes such factors as past loan loss experience as related to current loan
portfolio mix, evaluation of actual and potential losses in the loan portfolio,
prevailing regional and national economic conditions that might have an impact
on the portfolio, regular reviews and examinations of the loan portfolio
conducted by bank regulatory authorities, and other factors that management
believes deserve current recognition. As a result of management's evaluation of
these factors, no additions to the provision for loan losses were made during
the six months ended June 30, 2000. The allowance for loan losses as a
percentage of loans outstanding, net of discount was 1.14% at June 30, 2000,
compared to 1.06% at December 31, 1999 and 1.14% at June 30, 1999. Management
will continue to record a provision for loan losses to maintain the allowance
for loan losses at a level deemed adequate by management on a quarterly basis.
The Bank had charge-offs on loans of $1,000 during the six months ended June 30,
2000. No charge-offs were recorded for the six months ended June 30, 1999. No
recoveries on loans were recorded during the six months ended June 30, 2000
compared to $24,000 of recoveries for the same period in 1999.
14
<PAGE>
NON-INTEREST INCOME
Non-interest income decreased $674,000 to $(105,000) for the six months ended
June 30, 2000. Loss on sale of investments was $243,000 for the six months ended
June 30, 2000 compared to a gain of $30,000 for the same period in 1999. Net
earnings from brokerage operations decreased $573,000 during the period. The
brokerage operations results reflect the increased costs associated with the
maintenance and support of the on-line trading line of business,
www.usaforce.com and a decrease in income from trading operations. Service fee
income increased $194,000 due to the growth in deposit balances, and due to the
purchase of bank owned life insurance in June 1999, other non-interest income
reflects an increase of $109,000 in income on bank owned life insurance for the
six month period ended June 30, 2000 compared to the same period in 1999.
Non-interest income decreased $88,000 to $161,000 for the three months ended
June 30, 2000 compared to the same period in 1999. Service fee income increased
$134,000 due to the growth in deposit balances, and due to the purchase of bank
owned life insurance in June 1999, other non-interest income reflects an
increase of $44,000 in income on bank owned life insurance for the three month
period ended June 30, 2000 compared to the same period in 1999. Net earnings
from brokerage operations decreased $255,000 during the comparable time periods.
The brokerage operations results reflect the costs associated with the
maintenance and support of the on-line trading line of business,
www.usaforce.com and a decrease in income from trading operations.
NON-INTEREST EXPENSE
Other non-interest expense increased $6.8 million, or 235.4% to $9.7 million,
for the six months ended June 30, 2000. Compensation expense increased $742,000,
or 55.1%, due to the hiring of 42 new employees. Advertising expenses increased
$2.8 million due to marketing initiatives for the www.usabancshares.com web
site. Office expense, travel and entertainment, and other miscellaneous expenses
increased as a result of the increased efforts to attract additional customers
and strategic partners. Data processing expenses and check printing expenses
increased $611,000 and $223,000, respectively, due to the growth in deposit
accounts. Professional fees increased $537,000 due to an increase in outside
consulting and legal services provided during the six months ended June 30,
2000.
Other non-interest expense increased $3.2 million, or 192.3% to $4.8 million,
for the three months ended June 30, 2000. Advertising expenses increased $1.4
million due to marketing initiatives for the www.usabancshares.com web site.
Office expense, travel and entertainment, and other miscellaneous expenses
increased as a result of the increased efforts to attract additional customers
and strategic partners. Data processing expenses and check printing expenses
increased $310,000 and $185,000, respectively, due to the growth in deposit
accounts. Professional fees increased $272,000 due to an increase in outside
consulting and legal services provided during the three months ended June 30,
2000. These increases were partially offset by a decrease in compensation
expense resulting from the reversal of compensation benefit accruals.
INCOME TAX EXPENSE
An income tax benefit of $363,000 was recorded for the six months ended June 30,
2000, compared to income tax expense of $295,000 for the six months ended June
30, 1999.
15
<PAGE>
LOAN PORTFOLIO
Loans receivable, net (net of the allowance for loan losses, purchase discounts,
and unearned fees and origination costs) was $183.7 million at June 30, 2000
compared to $197.6 million at December 31, 1999. Loans receivable represented
50.8% of total assets as of June 30, 2000 compared to 61.1% at December 31,
1999.
The following table summarizes the loan portfolio of the Bank by loan category
and amount at June 30, 2000, compared to December 31, 1999:
<TABLE>
<CAPTION>
June 30, December 31,
----------------------- -----------------------
(in Thousands) 2000 % 1999 %
----------------------- -----------------------
<S> <C> <C> <C> <C>
Real Estate:
1-4 family residential properties $ 13,607 7.3% $ 31,729 15.9%
Commercial real estate 140,655 75.6 143,428 71.7
Multifamily residential properties 9,971 5.4 7,726 3.9
Construction 10,249 5.5 9,467 4.7
Commercial and industrial 9,122 4.9 4,688 2.3
Consumer 2,482 1.3 2,967 1.5
-------- ------ --------- -----
Total loans, net of discount $186,086 100.0% $ 200,005 100.0%
======== ====== ========= ======
Deferred loan fees (296) (267)
Allowance for loan losses (2,114) (2,115)
-------- ---------
Loans receivable, net $183,676 $ 197,623
======== =========
</TABLE>
At June 30, 2000 the Bank's net discounted loan portfolio amounted to $107.6
million or 57.8% of total loans net of discount. These loans have a face value
of $111.6 million, reflecting a discount of $4.0 million or 3.6%. At December
31, 1999 the Bank's net discounted loan portfolio amounted to $121.3 million or
60.7% of total loans net of discount. These loans had a face value of $126.9
million, reflecting a discount of $5.6 million or 4.4%. At June 30, 2000, and
December 31, 1999, the Bank has identified $1.4 million and $2.0 million,
respectively, of the purchased loan discount as a cash discount that will not be
amortized into income as a yield adjustment until a final resolution has been
determined for the identified loans. The decrease in the cash discount can be
attributed to the payoff and sale of loan assets from the discounted loan
portfolio during the second quarter.
On June 30, 2000, the net book value of non-accrual loans was approximately
$782,000 compared to $1.3 million at December 31, 1999. The amount of troubled
debt restructured loans totaled $1.8 million as of June 30, 2000 compared to
$1.7 million as of December 31, 1999. The Bank will recognize income on
non-accrual loans, under the cash basis, when the loans are brought current as
to outstanding principal and collateral on the loan sufficient to cover the
outstanding obligation to the Bank. At June 30, 2000 the allowance for loan
losses to non-performing loans, net of discount was 270.2% compared to 167.1% at
December 31, 1999. The Bank's allowance for loan losses and purchased discount
to total loans, net of discount, was 3.28% and 3.82% at June 30, 2000 and
December 31, 1999, respectively.
16
<PAGE>
The following table summarizes the changes in the Bank's allowance for loan
losses for the period ended June 30, 2000 compared to December 31, 1999:
(in Thousands)
<TABLE>
<CAPTION>
Six months Twelve months
ended June 30, ended December 31,
2000 1999
-------------- ------------------
<S> <C> <C>
Balance at beginning of period $2,115 $1,051
Provision for loan losses - 1,175
Charge-offs (1) (141)
Recoveries - 30
------ ------
Balance at end of period $2,114 $2,115
====== ======
</TABLE>
INVESTMENT PORTFOLIO
The following table presents the book values and estimated market values at June
30, 2000, and December 31, 1999, respectively, for each major category of the
Bank's investment securities:
<TABLE>
<CAPTION>
June 30, 2000
------------------------------------------------------------
(in Thousands)
Gross Gross Approximate
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Available-for-Sale
U.S. Government and agency
securities $ 1,400 $ - $ (50) $ 1,350
Mortgage-backed securities 8,743 - (444) 8,299
Corporate securities 13,864 43 (973) 12,934
Trust preferred securities 7,585 - (745) 6,840
Other securities 1,622 - (137) 1,485
-------- ---- -------- ---------
Total Available-for-Sale $ 33,214 $ 43 $ (2,349) $ 30,908
======== ==== ======== =========
Held-to-Maturity
U.S. Government and agency
securities $ 53,076 $ - $ (285) $ 52,791
Mortgage-backed securities 8,569 9 (501) 8,077
Corporate obligations 16,106 - (2,019) 14,087
Trust preferred securities 28,708 - (4,577) 24,131
Municipal securities 3,173 - (234) 2,939
-------- ---- -------- ---------
Total Held-to-Maturity $109,632 $ 9 $ (7,616) $ 102,025
======== ==== ======== =========
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
December 31, 1999
---------------------------------------------------------------
(in Thousands)
Gross Gross Approximate
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Available-for-Sale
U.S. Government and agency
securities $ 1,399 $ - $ (51) $ 1,348
Mortgage-backed securities 9,101 - (457) 8,644
Corporate securities 19,326 6 (311) 19,021
Trust preferred securities 7,588 - (608) 6,980
Other securities 2,058 2 (575) 1,485
-------- ---- -------- --------
Total Available-for-Sale $ 39,472 $ 8 $ (2,002) $ 37,478
======== ==== ======== ========
Held-to-Maturity
U.S. Government and agency
securities $ 5,694 $ - $ (262) $ 5,432
Mortgage-backed securities 6,514 8 (152) 6,370
Corporate obligations 16,079 - (1,355) 14,724
Trust preferred securities 29,676 139 (3,595) 26,220
Municipal securities 3,170 - (321) 2,849
-------- ---- -------- --------
Total Held-to-Maturity $ 61,133 $147 $ (5,685) $ 55,595
======== ==== ======== ========
</TABLE>
LIQUIDITY
The Company's primary sources of funds are customer deposits, non-retail time
deposits, maturities of investment securities, sales of "Available-for-Sale"
securities, loan sales, loan repayments, and the use of Federal Funds markets.
Scheduled loan repayments are relatively stable sources of funds while deposit
inflows and unscheduled loan prepayments may fluctuate. Deposit inflows and
unscheduled loan prepayments are influenced by general interest rate levels,
interest rates available on other investments, competition, economic conditions,
and other factors. Deposits are the Company's primary source of new funds. Total
deposits increased 18.3% to $301.7 million at June 30, 2000, compared to $255.0
million as of December 31, 1999. The Bank has made a concerted effort to attract
deposits through competitive pricing of its Internet/retail deposit products.
Management anticipates that the Company will continue relying on customer
deposits, maturity of investment securities, sales of "Available-for-Sale"
securities, loan sales, loan repayments, and the Federal Funds markets to
provide liquidity. Although deposit balances have shown historical growth, such
balances may be influenced by changes in the banking industry in general,
interest rates available on other investments, general economic conditions,
competition and other factors.
18
<PAGE>
The following table summarizes the composition of the Bank's deposit portfolio.
(in Thousands)
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
----------------------------- ----------------------------
Amount Percent Amount Percent
------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Demand $ 3,158 1.0% $ 5,168 2.0%
NOW 22,405 7.4 4,692 1.8
Money Market 492 0.2 973 0.4
Savings and Passbook 21,440 7.1 19,271 7.6
Time 254,171 84.3 224,934 88.2
--------- ------ -------- ------
$ 301,666 100.00% $255,038 100.00%
========= ====== ======== ======
</TABLE>
The following table summarizes the maturity composition of certificates of
deposit at June 30, 2000, compared to December 31, 1999:
(in Thousands)
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
----------------------------- ------------------------------
<S> <C> <C> <C> <C>
Within one year $ 135,628 53.4% $142,907 63.5%
Over one year through two years 46,341 18.2 44,860 20.0
Over two years through three years 35,268 13.9 15,996 7.1
Over three years through five years 36,120 14.2 20,450 9.1
Over five years through ten years 814 0.3 721 0.3
--------- ------ -------- ------
$ 254,171 100.00% $224,934 100.00%
========= ====== ======== ======
</TABLE>
Borrowings decreased 6.9% to $32.6 million as of June 30, 2000 compared to $35.0
million at December 31, 1999. The Bank has four outstanding credit facilities
with fixed rates and a conversion feature to an adjustable rate in the amounts
of $5.0 million, $10.0 million, $5.0 million, and $10.0 million, respectively.
These four credit facilities have interest rates of 5.63%, 6.31%, 4.84%, and
5.37%, and conversion dates of June 15, 2003, December 20, 2001, September 30,
2003, and April 7, 2005, respectively. The conversion rates on these credit
facilities are based on the three month LIBOR rate plus 14 basis points, 16
basis points, 14.5 basis points, and 13.5 basis points, respectively. The
Company also has a prime based loan in the amount of $2.6 million with a
maturity date of December 16, 2001. Currently, the Bank is not able to borrow
any additional funds from the FHLB unless additional collateral is provided.
Borrowings may be used on a short-term basis to compensate for reductions in
other sources of funds.
CAPITAL RESOURCES
The Bank is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory and possibly additional discretionary sanctions by
regulators that, if undertaken, could have a material effect on the financial
statements of the Bank. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Bank must meet specific capital
guidelines that involve quantitative measures of the Bank's assets. Liabilities
and certain off-balance sheet items are calculated under regulatory accounting
practices. The Bank's capital amounts and classifications are also subject to
qualitative judgments by the regulators about component, risk weighting and
other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of Total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined) and of Tier I capital (as defined) to average
assets (as defined). At June 30, 2000, the Company and the Bank meet all capital
adequacy requirements to which they are subject.
19
<PAGE>
At June 30, 2000, the Bank's actual and required minimum capital ratios were as
follows:
<TABLE>
<CAPTION>
To be well
Capitalized under
For Capital Prompt Corrective
(in Thousands) Adequacy Purposes Action Provisions
-------------------------- ------------------------
As of June 30, 2000: Amount Ratio Amount Ratio Amount Ratio
-------------------- --------- ------ --------------- --------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total Capital
(to Risk Weighted Assets) $ 27,014 10.0% $ 21,561 8.0% $26,951 10.0%
Tier I Capital
(to Risk Weighted Assets) 24,900 9.2 10,780 4.0 16,170 6.0
Tier I Capital
(to Average Assets) 24,900 7.1 13,979 4.0 17,473 5.0
As of December 31, 1999:
------------------------
Total Capital
(to Risk Weighted Assets) $ 28,266 10.1% $ 22,460 8.0% $28,075 10.0%
Tier I Capital
(to Risk Weighted Assets) 26,151 9.3 11,230 4.0 16,845 6.0
Tier I Capital
(to Average Assets) 26,151 7.9 13,171 4.0 16,464 5.0
</TABLE>
At June 30, 2000, the Company's actual and required minimum capital ratios were
as follows:
<TABLE>
<CAPTION>
For Capital
(in Thousands) Adequacy Purposes
As of June 30, 2000: Amount Ratio Amount Ratio
-------------------- -------- ------- -------- -------
<S> <C> <C> <C> <C>
Total Capital
(to Risk Weighted Assets) $ 28,302 10.4% $ 21,824 8.0%
Tier I Capital
(to Risk Weighted Assets) 21,600 7.9 10,912 4.0
Tier I Capital
(to Average Assets) 21,600 5.9 14,583 4.0
As of December 31, 1999:
------------------------
Total Capital
(to Risk Weighted Assets) $ 31,331 11.2% $ 22,473 8.0%
Tier I Capital
(to Risk Weighted Assets) 25,645 9.1 11,237 4.0
Tier I Capital
(to Average Assets) 25,645 7.8 13,124 4.0
</TABLE>
On September 30, 1999 the Company issued 1,400,000 common shares in a public
offering. The shares were sold at $6.75 providing the Company with $8.1 million
of net proceeds.
On March 9, 1999, the Company issued $10.0 million of 9.5% junior subordinated
debentures to USA Capital Trust I, a Delaware business trust, in which the
Company owns all of the common equity. The trust issued $10.0 million of trust
preferred securities to investors, secured by the junior subordinated debentures
and the guarantee of the Company. The junior subordinated debentures mature in
2029. The trust preferred securities are Tier I eligible except, in accordance
with Federal Reserve Board regulations, the Company is limited to recognizing
$4.6 million as Tier I capital, such that no more than 25% percent of Tier I
capital is comprised of trust preferred securities. The Company has invested
$6.0 million of the proceeds in vBank.
20
<PAGE>
PART II
Item 1. Legal Proceedings
Neither the Company nor the Bank is involved in any pending legal proceedings
other than routine legal proceedings occurring in the ordinary course of
business. Management believes that such routine legal proceedings, in the
aggregate, are immaterial to the Company's and the Bank's financial condition
and results of operations.
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 Company's annual meeting of stockholders was held on May 10, 2000. At the
annual meeting, the stockholders approved the following actions:
(i) Mr. George M. Laughlin, Mr. Kenneth L. Tepper, Mr. Clarence L.
Rader, Mr. George C. Fogwell, III, Mr. John A. Gambone, Mr. Brian M.
Hartline, Ms. Carol J. Kaufman, Mr. Wayne O. Leevy and Mr. Daniel
Stechow were elected as directors of the Company with terms expiring in
2001. For each of the nominees, the vote was as follows:
Shares for Shares against Shares withheld
(a) Mr. Laughlin 5,288,793 0 90,676
(b) Mr. Tepper 5,288,534 0 90,935
(c) Mr. Rader 5,284,593 0 94,876
(d) Mr. Fogwell, III 5,289,734 0 89,735
(e) Mr. Gambone 5,280,763 0 98,706
(f) Mr. Hartline 5,285,834 0 93,635
(g) Ms. Kaufman 5,290,734 0 88,735
(h) Mr. Leevy 5,286,334 0 93,135
(g) Mr. Stechow 5,289,534 0 89,935
(ii) A proposal to amend and restate the Company's Articles of
Incorporation to increase the number of authorized shares of Common
Stock was approved. The vote was:
Shares for Shares against Shares abstain
5,202,763 147,334 29,372
(iii) The selection of the firm of Grant Thornton, LLP as independent
auditors to examine the financial statements of the Company and its
subsidiaries for the 2000 fiscal year was ratified. The vote was:
Shares for Shares against Shares abstain
2,327,477 19,642 32,350
21
<PAGE>
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
The following exhibits are filed as part of this report.
Exhibit numbers correspond to the exhibits required by
Item 601 of Regulation S-B.
Exhibit No. Description
----------- -----------
10.1 Employment agreement between USABancShares.com and Kenneth L.
Tepper and Brian M. Hartline*
10.2 Employment agreement between USABancShares.com and Craig J. Scher
10.3 Agreement by and between Kenneth L. Tepper and USABancShares.com
dated January 2, 1998**
10.4 Registration Rights Agreement between USABancShares.com and
certain shareholders dated February 13, 1998**
10.5 Warrant Agreement between USABancShares.com and Sandler O'Neill &
Partners, L.P. dated February 13, 1998**
10.6 Agreement by and between USABancshares.com, Inc. and Earthlink
and Systemax*
11 Computation of Per Share Earnings (Included in Financial
Statements on Page 9 of this report)
27 Financial Data Schedule
-------------------------
* Incorporated by reference from the Registration Statement on Form SB-2 of
USABancShares.com's, as amended, Registration No. 33-92506.
** Incorporated by reference from USABancShares.com's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1999.
(B) Reports on Form 8-K
On May 25, 2000, the Company filed a current report on
Form 8-K to report the event described in Item 4 of the Notes to the
Consolidated Financial Statements.
22
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) 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, in the City of Philadelphia,
Commonwealth of Pennsylvania.
USABancShares.com, Inc.
Date: August 14, 2000 By: /s/ Kenneth L. Tepper
-------------------------------
Kenneth L. Tepper,
President and Chief Executive Officer
(Principal Executive Officer)
Date: August 14, 2000 By: /s/ Daniel J. Machon, Jr.
----------------------------------------
Daniel J. Machon, Jr.,
Chief Financial Officer
(Principal Accounting and Financial Officer)
23
