-----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, FsLch5axiNgYBYqfiSVSV4335wmVU0aHFKkymQol3PEM0yxIFoQ9Tcp7WxE5Bz7p eFQ40zwehFIwlrd/jY6cCA== 0000928385-01-502429.txt : 20020410 0000928385-01-502429.hdr.sgml : 20020410 ACCESSION NUMBER: 0000928385-01-502429 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PAMRAPO BANCORP INC CENTRAL INDEX KEY: 0000854071 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED [6036] IRS NUMBER: 222984813 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18014 FILM NUMBER: 1783957 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 d10q.txt FORM 10-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 September 30, 2001 ------------------------------------ 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) NEW JERSEY 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, including 201-339-4600 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 October 31, 2001. $.01 par value common stock - 2,577,737 shares outstanding PAMRAPO BANCORP, INC. AND SUBSIDIARIES INDEX
Page PART I - FINANCIAL INFORMATION Number ------------- Item 1: Financial Statements Consolidated Statements of Financial Condition at September 30, 2001 and December 31, 2000 (Unaudited) 1 Consolidated Statements of Income for the Three Months and Nine Months Ended September 30, 2001 and 2000 (Unaudited) 2 Consolidated Statements of Comprehensive Income for the Three Months and Nine Months Ended September 30, 2001 and 2000 (Unaudited) 3 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2001 and 2000 (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)
September 30, December 31, ASSETS 2001 2000 - ------ ------------- ------------ Cash and amounts due from depository institutions $ 14,035,428 $ 12,553,854 Interest-bearing deposits in other banks -- 1,700,000 ------------- ------------ Total cash and cash equivalents 14,035,428 14,253,854 Securities available for sale 4,997,693 5,713,206 Investment securities held to maturity; estimated fair value of $6,106,000 (2001) and $6,886,000 (2000) 5,998,747 6,996,297 Mortgage-backed securities held to maturity; estimated fair value of $126,458,000 (2001) and $119,328,000 (2000) 122,135,011 118,791,206 Loans receivable 365,198,925 309,082,076 Foreclosed real estate 326,536 620,072 Investment in real estate 230,381 240,998 Premises and equipment 4,915,713 5,042,595 Federal Home Loan Bank stock of New York, at cost 3,796,100 3,496,200 Interest receivable 2,987,117 2,765,984 Other assets 2,865,614 2,555,760 ------------- ------------ Total assets $ 527,487,265 $469,558,248 ============= ============ LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Liabilities: Deposits $ 408,850,003 $379,409,856 Advances from Federal Home Loan Bank of New York 60,583,100 35,583,100 Other borrowed money 185,074 204,962 Advance payments by borrowers for taxes and insurance 3,413,079 2,531,694 Other liabilities 7,669,621 5,300,127 ------------- ------------ Total liabilities 480,700,877 423,029,739 ------------- ------------ 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 2,577,737 (2001) and 2,597,737 (2000) 34,500 34,500 Paid-in capital in excess of par value 18,906,768 18,906,768 Retained earnings - substantially restricted 46,886,709 46,332,436 Accumulated other comprehensive income - net 182,199 73,593 Treasury stock, at cost; 872,263 shares (2001) and 852,263 shares (2000) (19,223,788) (18,818,788) ------------- ------------ Total stockholders' equity 46,786,388 46,528,509 ------------- ------------ Total liabilities and stockholders' equity $ 527,487,265 $469,558,248 ============= ============
See notes to consolidated financial statements. -1- PAMRAPO BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME --------------------------------- (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ------------------------------ -------------------------------- 2001 2000 2001 2000 ------------- ----------- ------------ ------------- Interest income: Loans $ 7,114,335 $ 5,984,994 $ 20,171,775 $ 17,285,038 Mortgage-backed securities 2,054,315 2,015,540 5,942,269 6,154,955 Investments and other interest-earning assets 259,986 321,480 1,018,974 1,158,744 ------------- ----------- ------------ ------------ Total interest income 9,428,636 8,322,014 27,133,018 24,598,737 ------------- ----------- ------------ ------------ Interest expense: Deposits 3,740,615 3,525,195 11,633,380 10,019,965 Advances and other borrowed money 733,146 393,965 1,788,892 1,226,048 ------------- ----------- ------------ ------------ Total interest expense 4,473,761 3,919,160 13,422,272 11,246,013 ------------- ----------- ------------ ------------ Net interest income 4,954,875 4,402,854 13,710,746 13,352,724 Provision for loan losses 150,000 60,000 270,000 180,000 ------------- ----------- ------------ ------------ Net interest income after provision for loan losses 4,804,875 4,342,854 13,440,746 13,172,724 ------------- ----------- ------------ ------------ Non-interest income: Fees and service charges 298,842 253,701 856,383 767,705 Miscellaneous 159,676 125,595 436,677 360,861 ------------- ----------- ------------ ------------ Total non-interest income 458,518 379,296 1,293,060 1,128,566 ------------- ----------- ------------ ------------ Non-interest expenses: Salaries and employee benefits 1,568,599 1,650,490 4,898,461 4,950,856 Net occupancy expense of premises 286,357 286,025 908,822 873,633 Equipment 315,605 219,187 921,208 809,378 Advertising 67,260 68,926 163,041 281,750 Loss on foreclosed real estate (4,454) 12,531 22,113 25,259 Amortization of intangibles - - - 60,649 Miscellaneous 1,022,588 800,761 2,538,457 2,188,192 ------------- ----------- ------------ ------------ Total non-interest expenses 3,255,955 3,037,920 9,452,102 9,189,717 ------------- ----------- ------------ ------------ Income before income taxes 2,007,438 1,684,230 5,281,704 5,111,573 Income taxes 736,072 612,649 1,943,477 1,858,065 ------------- ----------- ------------ ------------ Net income $ 1,271,366 $ 1,071,581 $ 3,338,227 $ 3,253,508 ============= =========== ============ ============ Net income per common share: Basic/diluted $ 0.49 $ 0.41 $ 1.29 $ 1.23 ============= =========== ============ ============ Dividends per common share $ 0.360 $ 0.345 $ 1.080 $ 1.035 ============= =========== ============ ============ Weighted average number of common shares and common stock equivalents outstanding: Basic/diluted 2,577,737 2,618,306 2,581,070 2,643,858 ============= =========== ============ ============
See notes to consolidated financial statements. -2- PAMRAPO BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPEHENSIVE INCOME ---------------------------------------------- (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ---------------------------- ------------------------------- 2001 2000 2001 2000 ----------- ----------- ------------ -------------- Net income $ 1,271,366 $ 1,071,581 $ 3,338,227 $ 3,253,508 ----------- ----------- ------------ ------------- Other comprehensive income, net of income taxes: Gross unrealized holding loss on securities available for sale 84,240 70,957 169,706 52,290 Deferred income taxes (30,300) (25,600) (61,100) (18,900) ----------- ----------- ------------ ------------- Other comprehensive gain 53,940 45,357 108,606 33,390 ----------- ----------- ------------ ------------- Comprehensive income $ 1,325,306 $ 1,116,938 $ 3,446,833 $ 3,286,898 =========== =========== ============ =============
-3- PAMRAPO BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- (Unaudited)
Nine Months Ended September 30, ------------------------------------ 2001 2000 ----------------- ----------------- Cash flows from operating activities: Net income $ 3,338,227 $ 3,253,508 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of premises and equipment and investment in real estate 437,799 438,076 Accretion of deferred fees, premiums and discounts, net (1,940) (13,501) Provision for loan losses 270,000 180,000 Provision for losses on foreclosed real estate 20,037 5,000 (Gain) on sales of foreclosed real estate (18,146) - (Increase) in interest receivable (221,133) (268,402) (Increase) in other assets (370,954) (676,004) Increase in other liabilities 2,369,494 2,700,236 Amortization of intangibles - 60,649 -------------- -------------- Net cash provided by operating activities 5,823,384 5,679,562 -------------- -------------- Cash flows from investing activities: Principal repayments on securities available for sale 855,911 810,624 Purchases of securities available for sale (56,332) (59,236) Purchases of investment securities held to maturity (3,000,000) (1,000,000) Proceeds from calls of investment securities held to maturity 4,000,000 - Principal repayments on mortgage-backed securities held to maturity 20,820,005 13,430,229 Purchases of mortgage-backed securities held to maturity (24,209,578) (9,174,892) Purchases of loans - (982,400) Proceeds from sales of student loans - 116,730 Net change in loans receivable (56,289,215) (27,614,742) Proceeds from sales of foreclosed real estate 324,909 10,000 Additions to premises and equipment and investment in real estate (300,300) (680,153) Purchase of Federal Home Loan Bank of New York stock (299,900) (253,000) -------------- -------------- Net cash (used in) investing activities (58,154,500) (25,396,840) -------------- -------------- Cash flows from financing activities: Net increase in deposits 29,440,147 10,523,296 Net increase (decrease) in advances from Federal Home Loan Bank of New York 25,000,000 (3,000,000) Net (decrease) in other borrowed money (19,888) (18,365) Net increase (decrease) in payments by borrowers for taxes and insurance 881,385 (249,441) Cash dividends paid (2,783,954) (2,721,838) Purchase of treasury stock (405,000) (2,703,475) -------------- -------------- Net cash provided by financing activities 52,112,690 1,830,177 -------------- -------------- Net (decrease) in cash and cash equivalents (218,426) (17,887,101) Cash and cash equivalents - beginning 14,253,854 31,062,080 -------------- -------------- Cash and cash equivalents - ending $ 14,035,428 $ 13,174,979 ============== ==============
See notes to consolidated financial statements. -4- PAMRAPO BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- (Unaudited)
Nine Months Ended September 30, ------------------------------ 2001 2000 ------------ ----------- Supplemental information: Transfer of loans receivable to foreclosed real estate $ 33,264 $ - ============ =========== Loans to facilitate sales of foreclosed real estate $ - $ - ============ =========== Cash paid during the period for: Income taxes $ 1,324,854 $ 1,909,780 ============ =========== Interest on deposits and borrowings $ 13,422,272 $ 11,246,013 ============ ============
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 Company'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 Regulation 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 accounting principles generally accepted in the United States of America. 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 nine month periods ended September 30, 2001, 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 stock options, if dilutive, using the treasury stock method. There were no potentially dilutive contracts or securities outstanding at either September 30, 2001 or 2000 or during the three or nine 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 September 30, 2001 totalled $527.5 million, which represents an increase of $57.9 million or 12.34% as compared with $469.6 million at December 31, 2000. Securities available for sale at June 30, 2001 decreased $715,000 or 12.52% to $5.0 million when compared with $5.7 million at December 31, 2000. The decrease during the nine months ended September 30, 2001, resulted primarily from repayments on securities available for sale of $856,000, sufficient to offset an increase in net unrealized gain of $170,000 and purchases of $56,000. Investment securities held to maturity at September 30, 2001 decreased $1.0 million or 14.25% to $6.0 million when compared with $7.0 million at December 31, 2000. The decrease during the nine months ended September 30, 2001 resulted primarily from proceeds from calls of such securities of $4.0 million sufficient to offset purchases of $3.0 million. Mortgage-backed securities held to maturity increased $3.3 million or 2.82% to $122.1 million at September 30, 2001 when compared to $118.8 million at December 31, 2000. The increase during the nine months ended June 30, 2001, resulted primarily from purchase of mortgage-backed securities of $24.2 million sufficient to offset principal repayments of $20.8 million. Net loans amounted to $365.2 million at September 30, 2001, as compared to $309.1 million at December 31, 2000, which represents an increase of $56.1 million or 18.16%. The increase during the nine months ended September 30, 2001 resulted primarily from loan originations exceeding principal repayments. Foreclosed real estate amounted to $327,000 and $620,000 at September 30, 2001 and December 31, 2000, respectively. At September 30, 2001, foreclosed real estate consisted of three properties of which two properties with a combined book value of $172,000 are under contract for sale. Total deposits at September 30, 2001 totalled $408.9 million as compared with $379.4 million at December 31, 2000, representing an increase of $29.5 million or 7.78%. Advances from the Federal Home Loan Bank ("FHLB") increased $25.0 million or 70.22% to $60.6 million at September 30, 2001 when compared with $35.6 at December 31, 2000, primarily due to new advances from the Federal Home Loan Bank of New York ("FHLB"). Stockholders' equity totalled $46.8 million and $46.5 million at September 30, 2001 and December 31, 2000, respectively. The increase of $258,000 was primarily the result of the net income for the nine months ended September 30, 2001 of $3.3 million offset by the Company's repurchase of 20,000 shares of its common stock at an aggregate cost of $405,000, along with cash dividend paid of $2.8 million. Comparison of Operating Results for the Three Months Ended September 30, 2001 and 2000 Net income increased $199,000 or 18.56% to $1.3 million for the three months ended September 30, 2001 compared with $1.1 million for the same 2000 period. The increase in net income during the 2001 period resulted from increases in total interest income and non-interest income, which were partially offset by increases in total interest expense, non-interest expenses, and income taxes. -7- PAMRAPO BANCORP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- Comparison of Operating Results for the Three Months Ended September 30, 2001 and 2000 (Cont'd.) Interest income on loans increased by $1.1 million or 18.86% to $7.1 million during the three months ended September 30, 2001 when compared with $6.0 million for the same 2000 period. The increase during the 2001 period resulted from an increase of $64.2 million in the average balance of loans outstanding which was sufficient to offset a twenty-two basis point decrease in the yield earned on the loan portfolio. Interest on mortgage-backed securities increased $39,000 or 1.93% to $2.05 million during the three months ended September 30, 2001 when compared with $2.02 million for the same 2000 period. The increase during the 2001 period resulted from an increase of $2.5 million in the average balance of mortgage-backed securities outstanding. The yield earned on the mortgage-backed securities remained unchanged at 6.52%. Interest earned on investments and other interest-earning assets decreased by $61,000 or 19.00% to $260,000 during the three months ended September 30, 2001, when compared to $321,000 during the same 2000 period primarily due to a decrease of 154 basis points in the yield earned on such portfolio, sufficient to offset an increase of $150,000 in the average balance of such assets. Interest expense on deposits increased $216,000 or 6.13% to $3.7 million during the three months ended September 30, 2001 when compared to $3.5 million during the same 2000 period. Such increase was primarily attributable to an increase of $40.0 million in the average balance of interest-bearing deposits sufficient to offset a decrease of nineteen basis points in the cost of interest-bearing deposits. Interest expense on advances and other borrowed money increased by $339,000 or 86.04% to $733,000 during the three months ended September 30, 2001 when compared with $394,000 during the same 2000 period, primarily due to an increase of $23.0 million in the average balance of advances outstanding from the FHLB, sufficient to offset a four basis point decrease in the cost of advances and other borrowed money. Net interest income increased $552,000 or 12.54% during the three months ended September 30, 2001 when compared with the same 2000 period. Such increase was due to an increase in total interest income of $1.1 million which was sufficient to offset an increase in total interest expense of $555,000. The Bank's net interest rate spread decreased from 3.56% in 2000 to 3.51% in 2001. The decrease in the interest rate spread resulted from a decrease of fifteen basis point decrease in the yield earned on interest-earning assets, sufficient to offset a decrease of ten basis points in the cost of interest-bearing liabilities. During the three months ended September 30, 2001 and 2000, the Bank recorded a provision for loan losses of $150,000 and $60,000, respectively. 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 September 30, 2001 and 2000, the Bank's non-performing loans, which were delinquent ninety days or more, totalled $3.1 million or 0.59% of total assets and $4.1 million or 0.91% of total assets, respectively. At September 30, 2001, $800,000 of non-performing loans were accruing interest and $2.3 million were on nonaccrual status. The non-performing loans primarily consist of one-to-four family mortgage loans. During the three months ended September 30, 2001 and 2000, the Bank charged off loans aggregating $97,000 and $85,000, respectively. The allowance for loan losses amounted to $2.0 million at September 30, 2001, representing 0.54% of total loans and 64.15% of loans delinquent ninety days or more and $2.1 million at September 30, 2000, representing 0.68% of total loans and 50.06% 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 --------------------------------------------- Comparison of Operating Results for the Three Months Ended September 30, 2001 and 2000 (Cont'd.) Non-interest income increased $80,000 or 21.11% to $459,000 during the three months ended September 30, 2001 from $379,000 during the same 2000 period. The increase resulted from increases in fees and service charges of $45,000 and miscellaneous income of $35,000. Non-interest expenses increased by $218,000 or 7.18% to $3.3 million during the three months ended September 30, 2001 when compared with $3.0 million during the same 2000 period. Equipment and miscellaneous expenses increased $96,000 and $222,000, respectively, which was sufficient to offset decreases in salaries and employee benefits, advertising and loss on foreclosed real estate of $81,000, $2,000 and $17,000, respectively, during the 2001 period when compared with the same 2000 period. Income taxes totalled $736,000 and $613,000 during the three months ended September 30, 2001 and 2000, respectively. The increase during the 2001 period resulted from an increase in pre-tax income. Comparison of Operating Results for the Nine Months Ended September 30, 2001 and 2000 Net income increased $84,000 or 2.58% to $3.34 million for the nine months ended September 30, 2001 compared with $3.25 million for the same 2000 period. The increase in net income during the 2001 period resulted from increases in total interest income and non-interest income, which were partially offset by increases in total interest expenses, non-interest expenses and income taxes. Interest income on loans increased by $2.9 million or 16.70% to $20.2 million during the nine months ended September 30, 2001 when compared with $17.3 million for the same 2000 period. The increase during the 2001 period resulted from an increase of $52.4 million in the average balance of loans outstanding which was sufficient to offset a fourteen basis point decrease in the yield earned on the loan portfolio. Interest on mortgage-backed securities decreased $213,000 or 3.46% to $5.9 million during the nine months ended September 30, 2001 when compared with $6.1 million for the same 2000 period. The decrease during the 2001 period resulted from a decrease of $5.2 million in the average balance of mortgage-backed securities outstanding, which was sufficient to offset an increase of five basis points in the yield earned on the mortgage-backed securities. Interest earned on investments and other interest-earning assets decreased by $140,000 or 12.08% to $1.0 million during the nine months ended September 30, 2001, when compared to $1.2 million during the same 2000 period primarily due to a decrease of 104 basis points in the yield earned on such portfolio which was sufficient to offset an increase of $540,000 in the average balance of such assets outstanding. Interest expense on deposits increased $1.6 million or 16.10% to $ 11.6 million during the nine months ended September 30, 2001 when compared to $10.0 million during the same 2000 period. Such increase was primarily attributable to increases of twenty basis points in the cost of interest-bearing deposits and $35.5 million in the average balance of interest-bearing deposits. Interest expense on advances and other borrowed money increased by $563,000 or 45.92% to $1.8 million during the nine months ended September 30, 2001 when compared with $1.2 million during the same 2000 period which was primarily due to an increase of $12.7 million in the average balance of advances outstanding from the FHLB. -9- PAMRAPO BANCORP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- Comparison of Operating Results for the Nine Months Ended September 30, 2001 and 2000 (Cont'd.) Net interest income increased $358,000 or 2.68% during the nine months ended September 30, 2001 when compared with the same 2000 period. Such increase was due to an increase in total interest income of $2.5 million, which was sufficient to offset an increase in total interest expense of $2.2 million. The Bank's net interest rate spread decreased from 3.66% in 2000 to 3.37% in 2001. The decrease in the interest rate spread resulted from an increase of twenty-three basis points in the cost of interest-bearing liabilities along with a six basis point decrease in the yield earned on interest-earning assets. During the six months ended September 30, 2001 and 2000, the Bank recorded a provision for loan losses of $270,000 and $180,000, respectively. 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 nine months ended September 30, 2001 and 2000, the Bank charged off loans aggregating $231,000 and $123,000, respectively. Non-interest income increased $164,000 or 14.53% to $1.3 million during the nine months ended September 30, 2001 from $1.1 million during the same 2000 period. The increase resulted from increases in fees and service charges of $88,000 and miscellaneous income of $76,000. Non-interest expenses increased by $263,000 or 2.86% to $9.5 million during the nine months ended September 30, 2001 when compared with $9.2 million during the same 2000 period. Occupancy, equipment, and miscellaneous expenses increased $35,000, $112,000, and $350,000, respectively, which was sufficient to offset decreases in salaries and employee benefits, advertising, loss on foreclosed real estate and amortization of intangibles of $53,000, $119,000, $3,000 and $61,000, respectively, during the 2001 period when compared with the same 2000 period. Income taxes totalled $1.94 million and $1.86 million during the nine months ended September 30, 2001 and 2000, respectively. The increase during the 2001 period resulted from an increase in pre-tax income. Liquidity and Capital Resources The Bank is required to maintain levels of liquid assets under the Office of Thrift Supervision (the "OTS") regulations sufficient to ensure the Bank's safe and sound operation. The Bank's liquidity averaged 6.08% during the month of September 2001. The Bank adjusts its liquidity levels in order to meet funding needs for deposit outflows, payment of real estate taxes from escrow accounts on mortgage loans, repayment of borrowings, when applicable, and loan funding commitments. The Bank also adjusts its liquidity level as appropriate to meet its asset/liability objectives. The Bank's primary sources of funds are deposits, amortization and prepayments of loans and mortgage-backed securities principal, FHLB advances, maturities of investment securities and funds provided from operations. While scheduled loan and mortgage-backed securities amortization and maturing investment securities are a relatively predictable source of funds, deposit flow and loan and mortgage-backed securities prepayments are greatly influenced by market interest rates, economic conditions and competition. The Bank invests its excess funds in federal funds and overnight deposits with the FHLB, which provides liquidity to meet lending requirements. -10- PAMRAPO BANCORP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- Liquidity and Capital Resources (Cont'd.) 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 nine months ended September 30, 2001. The primary source of cash was net income. Cash dividends paid during the nine months ended September 30, 2001 and 2000 amounted to $2.8 million and $2.7 million, respectively. The primary sources of investing activity are lending and the purchase of mortgage-backed securities. Net loans amounted to $365.2 million and $309.1 million at September 30, 2001 and December 31, 2000, respectively. Securities available for sale totalled $5.0 million and $5.7 million at September 30, 2001 and December 31, 2000, respectively. Mortgage-backed securities held to maturity totalled $122.1 million and $118.8 million at September 30, 2001 and December 31, 2000, 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 September 30, 2001, advances from the FHLB amounted to $60.6 million. The Bank anticipates that it will have sufficient funds available to meet its current loan commitments. At September 30, 2001, the Bank has outstanding commitments to originate loans of $16.7 million. Certificates of deposit scheduled to mature in one year or less at September 30, 2001, totalled $166.1 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 --------------------------------------------- Liquidity and Capital Resources (Cont'd.) The following table sets forth the Bank's capital position at September 30, 2001, as compared to the minimum regulatory capital requirements:
Minimum Capital Corrective Actual Requirements Actions Provisions --------------------------- --------------------------- --------------------------- Amount Ratio Amount Ratio Amount Ratio ------------ ------------ ------------ ------------ ------------ ------------ Total Capital (to risk-weighted assets) $ 44,235 15.82% $ 22,371 8.00% $ 27,964 10.00% Tier 1 Capital (to risk-weighted assets) 42,327 15.14% - - 16,778 6.00% Core (Tier 1) Capital (to adjusted total assets) 42,327 8.06% 20,999 4.00% 26,248 5.00% Tangible Capital (to adjusted total assets) 42,327 8.06% 7,874 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 OTS 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 June 30, 2001, 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 Change in Percent of Portfolio Interest Rates Net Portfolio Value Value of Assets ---------------------------------------- ------------------------------- In Basis Points Dollar Percent NPV Change In (Rate Shock) Amount Change Change Ratio Basis Points ------------------ ------------ ------------- ------------ ------------ --------------- (Dollars in Thousands) 300 $ 35,398 $ (41,244) (54) 7.12% (702) 200 48,681 (27,962) (36) 9.52% (463) 100 62,659 (13,984) (18) 11.90% (225) Static 76,643 - - 14.14% - -100 86,233 9,590 13 15.59% 145 -200 92,324 15,681 20 16.46% 231 -300 98,581 21,938 29 17.32% 317
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, 2001. 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., as filed with the State of New Jersey on February 7, 2001.* 3.2 By-Laws of Pamrapo Bancorp, Inc.* 4.0 Stock Certificate of Pamrapo Bancorp, Inc.** 10.1 Employment Agreement between the Bank and William J. Campbell.** 10.2 Employment Agreement between the Company and William J. Campbell.** 10.5 Special Termination Agreement (Russo).** 10.7 Management Recognition and Retention Plan and Trust.** 10.11 Board of Directors' Compensation and Trust Agreement.** 11.0 Computation of earnings per share (filed herewith). * Incorporated herein by reference to 10-K Annual Report for the fiscal year ended December 31, 2000, filed with the Securities and Exchange Commission on March 30, 2001, Commission File No. 000-18014. ** Incorporated herein by reference to the Form S-1, Registration Statement, as amended, filed on August 11, 1989, Registration No. 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: November 13, 2001 By: /s/ William J. Campbell ------------------------- -------------------------------- William J. Campbell President and Chief Executive Officer Date: November 13, 2001 By: /s/ Kenneth D. Walter ------------------------- -------------------------------- Kenneth D. Walter Vice President and Chief Financial Officer -16- EX-11 3 dex11.txt EXHIBIT 11 Exhibit 11.0 PAMRAPO BANCORP, INC. AND SUBSIDIARIES STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE -----------------------------------------------
Three Months Ended Nine Months Ended September 30, 2001 September 30, 2001 --------------------- -------------------- Net income $ 1,271,366 $ 3,338,227 ============= ============= Weighted average shares outstanding - basic and diluted 2,577,737 2,581,070 ============= ============= Basic and diluted earnings per share $ 0.49 $ 1.29 ============= =============
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