-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DEKgwhlauEMX2JW+QOEl5vtrAMLvcs8/vUc5LdifHS7KGlSWn2z5QK1cP1bMF5QX Y8wtN9z6cy7XveW2/mHWvw== /in/edgar/work/20000814/0000928385-00-002232/0000928385-00-002232.txt : 20000921 0000928385-00-002232.hdr.sgml : 20000921 ACCESSION NUMBER: 0000928385-00-002232 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PAMRAPO BANCORP INC CENTRAL INDEX KEY: 0000854071 STANDARD INDUSTRIAL CLASSIFICATION: [6036 ] IRS NUMBER: 222984813 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-18014 FILM NUMBER: 698364 BUSINESS ADDRESS: STREET 1: 611 AVE C CITY: BAYONNE STATE: NJ ZIP: 07002 BUSINESS PHONE: 2013394600 MAIL ADDRESS: STREET 2: 611 AVENUE C CITY: BAYONNE STATE: NY ZIP: 07002 10-Q 1 0001.txt FORM 0-Q 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 June 30, 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 July 31, 2000. ------------- $.01 par value common stock - 2,618,724 shares outstanding PAMRAPO BANCORP, INC. AND SUBSIDIARIES INDEX
Page PART I - FINANCIAL INFORMATION Number ------------- Item 1: Financial Statements Consolidated Statements of Financial Condition at June 30, 2000 and December 31, 1999 (Unaudited) 1 Consolidated Statements of Income for the Three Months and Six Months Ended June 30, 2000 and 1999 (Unaudited) 2 Consolidated Statements of Comprehensive Income for the Three Months and Six Months Ended June 30, 2000 and 1999 (Unaudited) 3 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 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 - 12 Item 3: Quantitative and Qualitative Disclosure About Market Risk 13 - 14 PART II - OTHER INFORMATION 15 SIGNATURES 16
PAMRAPO BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION ---------------------------------------------- (Unaudited)
June 30, December 31, 2000 1999 ---------- ------------ ASSETS - ------ Cash and amounts due from depository institutions $ 14,364,991 $ 11,862,080 Interest-bearing deposits in other banks 4,569,471 19,200,000 ------------ ------------ Total cash and cash equivalents 18,934,462 31,062,080 Securities available for sale 5,887,125 6,428,631 Investment securities held to maturity; estimated fair value of $8,567,000 (2000) and $7,586,000 (1999) 8,996,118 7,995,941 Mortgage-backed securities held to maturity; estimated fair value of $117,780,000 (2000) and $118,324,000 (1999) 121,109,209 120,823,781 Loans receivable 283,318,692 268,280,380 Foreclosed real estate 456,196 456,196 Investment in real estate 248,384 255,769 Premises and equipment 4,535,733 4,471,586 Federal Home Loan Bank stock, at cost 3,496,200 3,243,200 Interest receivable 2,701,986 2,553,908 Excess of cost over assets acquired - 60,649 Other assets 2,777,107 2,388,330 ------------ ------------ Total assets $452,461,212 $448,020,451 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Liabilities: Deposits $371,194,857 $361,924,668 Advances from Federal Home Loan Bank of New York 25,583,100 30,583,100 Other borrowed money 217,576 229,696 Advance payments by borrowers for taxes and insurance 2,661,279 2,946,639 Other liabilities 6,391,318 4,082,384 ------------ ------------ Total liabilities 406,048,130 399,766,487 ------------ ------------ 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 2,623,724 (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 45,838,091 45,474,883 Unrealized (loss) on securities available for sale (58,841) (46,874) Treasury stock, at cost; 826,276 shares (2000) and 722,076 shares (1999) (18,307,436) (16,115,313) ------------ ------------ Total stockholders' equity 46,413,082 48,253,964 ------------ ------------ Total liabilities and stockholders' equity $452,461,212 $448,020,451 ============ ============
See notes to consolidated financial statements. -1- PAMRAPO BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME -------------------------------------- (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, --------------------------------- ----------------------------------- 2000 1999 2000 1999 --------------- --------------- ----------------- --------------- Interest income: Loans $5,707,968 $5,380,044 $11,300,044 $10,469,004 Mortgage-backed securities 2,045,470 2,096,554 4,139,415 4,146,624 Investments and other interest-earning assets 415,536 344,897 837,264 673,836 ---------- ---------- ----------- ----------- Total interest income 8,168,974 7,821,495 16,276,723 15,289,464 ---------- ---------- ----------- ----------- Interest expense: Deposits 3,316,639 2,935,295 6,494,770 5,724,009 Advances and other borrowed money 384,040 423,697 832,083 842,903 ---------- ---------- ----------- ----------- Total interest expense 3,700,679 3,358,992 7,326,853 6,566,912 ---------- ---------- ----------- ----------- Net interest income 4,468,295 4,462,503 8,949,870 8,722,552 Provision for loan losses 60,000 75,000 120,000 150,000 ---------- ---------- ----------- ----------- Net interest income after provision for loan losses 4,408,295 4,387,503 8,829,870 8,572,552 ---------- ---------- ----------- ----------- Non-interest income: Fees and service charges 263,472 264,721 514,004 510,203 Miscellaneous 106,635 173,129 235,266 295,690 ---------- ---------- ----------- ----------- Total non-interest income 370,107 437,850 749,270 805,893 ---------- ---------- ----------- ----------- Non-interest expenses: Salaries and employee benefits 1,632,478 1,540,110 3,300,366 3,081,899 Net occupancy expense of premises 287,596 283,726 587,608 575,075 Equipment 307,560 267,830 590,191 536,929 Advertising 79,504 78,120 212,824 132,370 Loss on foreclosed real estate 5,534 23,222 12,728 28,097 Amortization of intangibles 30,324 30,325 60,649 60,650 Miscellaneous 705,466 681,690 1,387,431 1,339,612 ---------- ---------- ----------- ----------- Total non-interest expenses 3,048,462 2,905,023 6,151,797 5,754,632 ---------- ---------- ----------- ----------- Income before income taxes 1,729,940 1,920,330 3,427,343 3,623,813 Income taxes 632,985 702,680 1,245,416 1,316,456 ---------- ---------- ----------- ----------- Net income $1,096,955 $1,217,650 $ 2,181,927 $ 2,307,357 ========== ========== =========== =========== Net income per common shares: Basic/diluted $0.42 $0.44 $0.82 $0.82 ========== ========== =========== =========== Dividends per common share $0.3450 $0.3125 $0.69 $0.6250 ========== ========== =========== =========== Weighted average number of common shares and common stock equivalents outstanding Basic/diluted 2,630,515 2,770,397 2,656,775 2,806,460 ========== ========== =========== ===========
See notes to consolidated financial statements. -2- PAMRAPO BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ----------------------------------------------- (Unaudited)
Three Months Six Months Ended June 30, Ended June 30, ----------------------------------- ------------------------------------ 2000 1999 2000 1999 --------------- --------------- --------------- ---------------- Net income $1,096,955 $1,217,650 $2,181,927 $2,307,357 ---------- ---------- ---------- ---------- Other comprehensive income (loss), net of income taxes: Gross unrealized holding gain (loss) on securities available for sale 16,982 (82,472) (18,667) (125,431) Deferred income taxes (6,100) 29,700 6,700 45,200 ---------- ---------- ---------- ---------- Other comprehensive income (loss) 10,882 (52,772) (11,967) (80,231) ---------- ---------- ---------- ---------- Comprehensive income $1,107,837 $1,164,878 $2,169,960 $2,227,126 ========== ========== ========== ==========
-3- PAMRAPO BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- (Unaudited)
Six Months Ended June 30, ------------------------------------ 2000 1999 ----------------- ----------------- Cash flows from operating activities: Net income $2,181,927 $2,307,357 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of premises and equipment and investment in real estate 294,602 305,321 Accretion of deferred fees, premiums and discounts, net (28,971) (21,600) Provision for loan losses 120,000 150,000 Provision for losses on foreclosed real estate - 50,000 (Gain) on sales of foreclosed real estate - (39,177) (Increase) in interest receivable (148,078) (85,958) (Increase) in other assets (382,077) (108,506) Increase (decrease) in other liabilities 2,308,934 (330,716) Amortization of intangibles 60,649 60,650 ---------------- --------------- Net cash provided by operating activities 4,406,986 2,287,371 ---------------- --------------- Cash flows from investing activities: Principal repayments on securities available for sale 542,755 694,204 Purchases of securities available for sale (37,918) (31,105) Purchases of investment securities held to maturity (1,000,000) (1,997,500) Principal repayments on mortgage-backed securities held to maturity 8,789,425 18,116,460 Purchases of mortgage-backed securities held to maturity (9,174,892) (19,098,971) Purchases of loans (430,200) (131,000) Proceeds from sales of student loans 116,730 83,982 Net change in loans receivable (14,698,007) (23,061,251) Proceeds from sales of foreclosed real estate - 247,550 Additions to premises and equipment (351,364) (228,269) Purchase of Federal Home Loan Bank of New York stock (253,000) (146,000) ---------------- --------------- Net cash (used in) investing activities (16,496,471) (25,551,900) ---------------- --------------- Cash flows from financing activities: Net increase in deposits 9,270,189 23,316,668 Net (decrease) in advances from Federal Home Loan Bank of New York (5,000,000) - Net (decrease) in other borrowed money (12,120) (11,192) Net (decrease) increase in payments by borrowers for taxes and insurance (285,360) 12,836 Cash dividends paid (1,818,719) (1,745,578) Purchase of treasury stock (2,192,123) (2,375,000) ---------------- --------------- Net cash (used in) provided by financing activities (38,133) 19,197,734 ---------------- --------------- Net (decrease) in cash and cash equivalents (12,127,618) (4,066,795) Cash and cash equivalents - beginning 31,062,080 28,047,045 ---------------- --------------- Cash and cash equivalents - ending $ 18,934,462 $ 23,980,250 =============== ===============
See notes to consolidated financial statements. -4- PAMRAPO BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- (Unaudited)
Six Months Ended June 30, ------------------------------------ 2000 1999 ----------------- ---------------- Supplemental information: Transfer of loans receivable to foreclosed real estate $ - $ 45,000 =========== =========== Loans to facilitate sales of foreclosed real estate $ - $ 355,500 =========== =========== Cash paid during the period for: Income taxes $ 1,259,780 $ 1,061,654 =========== =========== Interest on deposits and borrowings $ 7,262,634 $ 6,567,037 =========== ===========
See notes to consolidated financial statements. -5- 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 and six months ended June 30, 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 June 30, 2000 or 1999 or during the three and six months then ended. -6- 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 June 30, 2000 totalled $452.5 million, which represents an increase of $4.5 million or 1.00% as compared with $448.0 million at December 31, 1999. Securities available for sale at June 30, 2000 decreased $542,000 or 8.43% to $5.9 million when compared with $6.4 million at December 31, 1999. The decrease during the six months ended June 30, 2000, resulted primarily from repayments on securities available for sale of $543,000. Investment securities held to maturity increased $1.0 million or 12.50% to $9.0 million at June 30, 2000 when compared to $8.0 million at December 31, 1999. The increase during the six months ended June 30, 2000 resulted from a purchase of investment securities $1.0 million. Mortgage-backed securities held to maturity increased $285,000 or .24% to $121.1 million at June 30, 2000 when compared to $120.8 million at December 31, 1999. The increase during the six months ended June 30, 2000, resulted primarily from purchases of $9.2 million, which were sufficient to offset principal repayments of $8.8 million. Net loans amounted to $283.3 million at June 30, 2000, as compared to $268.3 million at December 31, 1999, which represents an increase of $15.0 million or 5.59%. The increase, during the six months ended June 30, 2000, resulted primarily from loan originations exceeding principal repayments. Foreclosed real estate remained unchanged at $456,000 at June 30, 2000 and December 31, 1999, respectively. At June 30, 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 June 30, 2000 totalled $371.2 million as compared with $361.9 million at December 31, 1999, representing an increase of $9.3 million or 2.57%. Advances from the Federal Home Loan Bank ("FHLB") amounted to $25.6 million and $30.6 million at June 30, 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 $46.4 million and $48.3 million at June 30, 2000 and December 31, 1999, respectively. The decrease of $1.9 million was primarily the result of the Company's repurchase of 104,200 shares of its common stock at an aggregate cost of $2.2 million. Comparison of Operating Results for the Three Months Ended June 30, 2000 and 1999 Net income decreased $121,000 or 9.93% to $1.1 million for the three months ended June 30, 2000 compared with $1.2 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 and a decrease in non-interest income, which were partially offset by an increase in total interest income and decreases in provision for loan losses and income taxes. -7- PAMRAPO BANCORP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- Interest income on loans increased by $328,000 or 6.10% to $5.7 million during the three months ended June 30, 2000 when compared with $5.4 million for the same 1999 period. The increase during the 2000 period resulted from an increase of $22.2 million in the average balance of loans outstanding sufficient to offset a twenty basis point decrease in the yield earned on the loan portfolio. Interest on mortgage-backed securities decreased $52,000 or 2.48% to $2.045 million during the three months ended June 30, 2000 when compared with $2.097 million for the same 1999 period. The decrease during the 2000 period resulted primarily from decrease of $3.7 million in the average balance of mortgage-backed securities, sufficient to offset an increase of three basis points in the yield earned on the mortgage-backed securities. Interest earned on investments and other interest-earning assets increased by $71,000 or 20.58% to $416,000 during the three months ended June 30, 2000, when compared to $345,000 during the same 1999 period primarily due to a 124 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 $382,000 or 13.02% to $3.3 million during the three months ended June 30, 2000 when compared to $2.9 million during the same 1999 period. Such increase was primarily attributable to increases of twenty-one basis points in the cost of interest-bearing deposits and $21.9 million in the average balance of interest-bearing deposits. Interest expense on advances and other borrowed money decreased by $40,000 or 9.43% to $384,000 during the three months ended June 30, 2000 when compared with $424,000 during the same 1999 period, primarily due to a decrease of $3.0 million in the average balance of advances outstanding from the FHLB sufficient to offset a seven basis point increase in the cost of advances and other borrowed money. Net interest income increased $6,000 or .13% during the three months ended June 30, 2000 when compared with the same 1999 period. Such increase was due to an increase in total interest income of $348,000, sufficient to offset an increase in total interest expense of $342,000. The net interest rate spread decreased from 3.87% in 1999 to 3.68% in 2000. The decrease in the interest rate spread resulted from an increase of seventeen basis points in the cost of interest-bearing liabilities and a one basis point decrease 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 $18.5 million increase in average interest-earning assets exceeded the interest expense related to the $18.8 million increase in average interest-bearing liabilities. During the three months ended June 30, 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 June 30, 2000, December 31, 1999 and June 30, 1999, the Bank's non-performing loans, which were delinquent ninety days or more, totalled $4.3 million or 0.96% of total assets, $4.2 million or 0.94% of total assets and $4.5 million or 1.04% of total assets, respectively. At June 30, 2000, $1.4 million of non-performing loans were accruing interest and $2.9 million were on nonaccrual status. The non-performing loans primarily consist of one-to-four family mortgage loans. During the three months ended June 30, 2000 and 1999, the Bank charged off loans aggregating $16,000 and $355,000, respectively. The allowance for loan losses amounted to $2.1 million at June 30, 2000, representing 0.72% of total loans and 48.28% 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. -8- PAMRAPO BANCORP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- Non-interest income decreased $68,000 or 15.53% to $370,000 during the three months ended June 30, 2000 from $438,000 during the same 1999 period. The increase resulted from decreases in fees and service charges of $2,000 and miscellaneous income of $66,000. Non-interest expenses increased by $143,000 or 4.92% to $3.0 million during the three months ended June 30, 2000 when compared with $2.9 million during the same 1999 period. Salaries and employee benefits, net occupancy expense, equipment, advertising, and miscellaneous expenses increased $92,000, $4,000, $40,000, $2,000 and $23,000, respectively, which was sufficient to offset a decrease in loss on foreclosed real estate of $17,000 during the 2000 period when compared with the same 1999 period. Income taxes totalled $633,000 and $703,000 during the three months ended June 30, 2000 and 1999, respectively. The decrease during the 2000 period resulted from a decrease in pre-tax income. Comparison of Operating Results for the Six Months Ended June 30, 1999 and 1999 Net income decreased $125,000 or 5.42% to $2.2 million for the six months ended June 30, 2000 compared with $2.3 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 and a decrease in non-interest income, which were partially offset by an increase in total interest income and decreases in provision for loan losses and income taxes. Interest income on loans increased by $831,000 or 7.94% to $11.3 million during the six months ended June 30, 2000 when compared with $10.5 million for the same 1999 period. The increase during the 2000 period resulted from an increase of $24.7 million in the average balance of loans outstanding sufficient to offset a sixteen basis point decrease in the yield earned on the loan portfolio. Interest on mortgage-backed securities decreased $7,000 or .17% to $4.14 million during the six months ended June 30, 2000 when compared with $4.15 million for the same 1999 period. The decrease during the 2000 period resulted primarily from a decrease $1.0 million in the average balance of such portfolio outstanding sufficient to offset an increase of four basis points in the yield earned on the mortgage-backed securities. Interest earned on investments and other interest-earning assets increased by $163,000 or 24.18% to $837,000 during the six months ended June 30, 2000, when compared to $674,000 during the same 1999 period primarily due to a 143 basis point increase in the yield earned on such portfolio sufficient to offset a decrease of $256,000 in the average balance of such assets. 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 $771,000 or 13.47% to $6.5 million during the six months ended June 30, 2000 when compared to $5.7 million during the same 1999 period. Such increase was primarily attributable to increases of twenty basis points in the cost of interest-bearing deposits and $24.1 million in the average balance of interest-bearing deposits. Interest expense on advances and other borrowed money decreased by $11,000 or 1.30% to $832,000 during the six months ended June 30, 2000 when compared with $843,000 during the same 1999 period, primarily due to an decrease of $550,000 in the average balance of advances outstanding from the FHLB sufficient to offset a three basis point increase in the cost of advances and other borrowed money. -9- PAMRAPO BANCORP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- Net interest income increased $227,000 or 2.60% during the six months ended June 30, 2000 when compared with the same 1999 period. Such increase was due to an increase in total interest income of $987,000, sufficient to offset an increase in total interest expense of $760,000. The net interest rate spread decreased from 3.83% in 1999 to 3.70% in 2000. The decrease in the interest rate spread resulted from an increase of seventeen basis points in the cost of interest-bearing liabilities sufficient to offset a four 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 $23.5 million increase in average interest-earning assets exceeded the interest expense related to the $23.5 million increase in average interest-bearing liabilities. During the six months ended June 30, 2000 and 1999, the Bank provided $120,000 and $150,000, 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. During the six months ended June 30, 2000 and 1999, the Bank charged off loans aggregating $38,000 and $356,000, respectively. Non-interest income decreased $57,000 or 7.07% to $749,000 during the six months ended June 30, 2000 from $806,000 during the same 1999 period. The decrease resulted from a decrease in miscellaneous income of $61,000 sufficient to offset an increase in fees and service charges of $4,000. Non-interest expenses increased by $397,000 or 6.90% to $6.2 million during the six months ended June 30, 2000 when compared with $5.8 million during the same 1999 period. Salaries and employee benefits, net occupancy expense, equipment, advertising, and miscellaneous expenses increased $218,000, $13,000, $53,000, $81,000 and $47,000, respectively, which was sufficient to offset a decrease in loss on foreclosed real estate of $15,000 during the 2000 period when compared with the same 1999 period. Income taxes totalled $1.2 million and $1.3 million during the six months ended June 30, 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 7.24% during the month of June 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. -10- PAMRAPO BANCORP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- 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 June 30, 2000 amounted to $4.6 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 six months ended June 30, 2000. The primary source of cash was net income. Cash dividends paid during the six months ended June 30, 2000 and 1999 amounted to $1.8 million and $1.7 million, respectively. The primary sources of investing activity are lending and the purchase of mortgage-backed securities. Net loans amounted to $283.3 million and $268.3 million at June 30, 2000 and December 31, 1999, respectively. Securities available for sale totalled $5.9 million and $6.4 million at June 30, 2000 and December 31, 1999, respectively. Mortgage-backed securities held to maturity totalled $121.1 million and $120.8 million at June 30, 2000 and December 31, 1999, respectively. 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. 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 June 30, 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 June 30, 2000, the Bank has outstanding commitments to originate loans of $12.5 million. Certificates of deposit scheduled to mature in one year or less at June 30, 2000, totalled $153.6 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. -11- PAMRAPO BANCORP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- The following table sets forth the Bank's capital position at June 30, 2000, as compared to the minimum regulatory capital requirements:
To Be Well Capitalized Under Prompt Minimum Capital Corrective Actual Requirements Actions Provisions ---------------------------- -------------------------- -------------------- Amount Ratio Amount Ratio Amount Ratio ------------ ------------ -------------- -------- ----------- ------ Total Capital (to risk-weighted assets) $45,672 19.70% $18,550 8.00% $23,187 10.00% Tier 1 Capital (to risk-weighted assets) 44,012 18.98% - - 13,912 6.00% Core (Tier 1) Capital (to adjusted total assets) 44,012 9.75% 18,056 4.00% 22,570 5.00% Tangible Capital (to adjusted total assets) 44,012 9.75% 6,771 1.50% - -
-12- 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 March 31, 2000, the most recent date the Bank's NPV was calculated by the OTS. -13- 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 (Rate Shock) Amount Change Change Ratio Basis Points - ---------------- ------------ ------------- ------------ ----------- -------------- (Dollars in Thousands) 300 $25,852 $(27,231) (51) 6.14% (560) 200 34,721 (18,361) (35) 8.05 (369) 100 43,982 (9,101) (17) 9.96 (178) Static 53,082 - - 11.74 - -100 60,664 7,582 14 13.15 141 -200 65,019 11,936 22 13.92 218 -300 69,710 16,627 31 14.72 298
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. -14- 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 --------------------------------------------------- This information was reported in the Company's Form 10-Q for the quarter ended March 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 -15- 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: August 14, 2000 By: /s/ William J. Campbell --------------------- ------------------------------------- William J. Campbell President and Chief Executive Officer Date: August 14, 2000 By: /s/ Gary J. Thomas --------------------- ------------------------------------- Gary J. Thomas Vice President, Chief Financial Officer -16- EX-11 2 0002.txt COMPUTATION OF EARNINGS PER SHARE Exhibit 11.0 PAMRAPO BANCORP, INC. AND SUBSIDIARIES STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE -----------------------------------------------
Three Months Ended Six Months Ended June 30, 2000 June 30, 2000 ------------------- --------------------- Net income $1,096,955 $2,181,927 ========== ========== Weighted average shares outstanding - basic and diluted 2,630,515 2,656,775 ========== ========== Basic and diluted earnings per share $ 0.42 $ 0.82 ========== ==========
EX-27 3 0003.txt FINANCIAL DATA SCHEDULE
9 6-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 14,364,991 4,569,471 0 0 5,887,125 130,105,327 126,347,000 285,407,184 2,088,492 452,461,212 371,194,857 25,800,676 9,052,597 0 0 0 34,500 46,378,582 452,461,212 11,300,044 4,139,415 837,264 16,276,723 1,494,770 7,326,853 8,949,870 120,000 0 6,151,797 3,427,343 3,427,343 0 0 2,181,927 .82 .82 7.66 2,904,000 1,421,000 0 2,048,233 2,000,000 58,561 7,060 2,088,492 428,000 0 1,660,492
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