-----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, ThKtd3GCBs0FEeDeG1ZDfF2ra9NYhQ6HrA8tXFx9xZMqPYMGfR51TaH1d6MEMI9f L1wqGmA2MFvmCWbUc0Eobg== 0000928385-96-001045.txt : 19960919 0000928385-96-001045.hdr.sgml : 19960919 ACCESSION NUMBER: 0000928385-96-001045 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960809 SROS: NASD 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: 1934 Act SEC FILE NUMBER: 000-18014 FILM NUMBER: 96606809 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 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 June 30, 1996 ---------------------------------------------- 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 No.) 611 Avenue C, Bayonne, New Jersey 07002 - - ---------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 201-339-4600 -------------------------- 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, 1996. ------------- $.01 par value common stock - 3,280,964 shares outstanding PAMRAPO BANCORP, INC. AND SUBSIDIARIES INDEX
Page Number ------ PART I - FINANCIAL INFORMATION Consolidated Statements of Financial Condition at June 30, 1996 and December 31, 1995 (Unaudited) 1 Consolidated Statements of Income for the Three Months and Six Months Ended June 30, 1996 and 1995 (Unaudited) 2 Consolidated Statement of Cash Flows for the Six Months Ended June 30, 1996 and 1995 (Unaudited) 3 - 4 Notes to Consolidated Financial Statements 5 Management's Discussion and Analysis of Financial Condition and Results of Operations 6 - 13 PART II - OTHER INFORMATION 14 SIGNATURES 15
PAMRAPO BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION ---------------------------------------------- (Unaudited)
June 30, December 31, Assets 1996 1995 - - ------ ------------ ------------ Cash and amounts due from depository institutions $ 10,238,835 $ 9,293,609 Interest-bearing deposits in other banks 4,500,000 4,500,000 Federal funds sold 100,000 100,000 ------------ ------------ Total cash and cash equivalents 14,838,835 13,893,609 Securities available for sale 26,146,013 28,427,064 Investment securities held to maturity, estimated fair value of $99,000 - 99,000 Mortgage-backed securities held to maturity, net; estimated fair value of $92,599,000 (1996) and $97,329,000 (1995) 94,233,619 96,564,583 Loans receivable, net 214,637,884 218,140,313 Foreclosed real estate, net 2,170,917 1,467,396 Investment in real estate, net 307,465 307,375 Premises and equipment, net 3,652,400 3,716,785 Federal Home Loan Bank of New York stock, at cost 3,072,600 3,072,600 Interest receivable, net 2,856,533 2,954,256 Excess of cost over assets acquired 485,200 545,850 Other assets 3,151,612 2,175,799 ------------ ------------ Total assets $365,553,078 $371,364,630 ============ ============ Liabilities and stockholders' equity - - ------------------------------------ Liabilities - - ----------- Deposits $302,539,951 $298,900,764 Advances from Federal Home Loan Bank of New York 583,100 7,583,100 Other borrowed money 351,858 459,855 Advance payments by borrowers for taxes and insurance 1,851,576 1,632,215 Other liabilities 3,683,362 3,413,267 ------------ ------------ Total liabilities 309,009,847 311,989,201 ============ =========== 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; 3,280,964 shares (1996) and 3,393,034 shares (1995) outstanding 34,500 34,500 Paid-in capital in excess of par value 18,906,768 18,906,768 Retained earnings - substantially restricted 41,679,729 41,284,431 Unrealized loss on securities available for sale, net (266,707) (41,154) Debt of employee stock ownership plan (49,594) (148,781) Treasury stock, at cost; 169,036 shares (1996) and 56,966 shares (1995) (3,761,465) (660,335) ------------ ------------ Total stockholders' equity 56,543,231 59,375,429 ------------ ------------ Total liabilities and stockholders' equity $365,553,078 $371,364,630 ============ ============
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, ----------------------- -------------------------- 1996 1995 1996 1995 ---------- ---------- ---------- ---------- Interest income: Loans $4,793,984 $5,043,244 $ 9,735,202 $10,166,585 Mortgage-backed securities 1,878,422 2,024,793 3,836,486 4,030,575 Investments and other interest-earning assets 317,396 280,891 593,559 573,506 ---------- ---------- ----------- ----------- Total interest income 6,989,802 7,348,928 14,165,247 14,770,666 ---------- ---------- ----------- ----------- Interest expense: Deposits 2,787,938 2,681,006 5,581,127 5,192,181 Advances and other borrowed money 27,812 187,518 137,357 456,406 ---------- ---------- ----------- ----------- Total interest expense 2,815,750 2,868,524 5,718,484 5,648,587 ---------- ---------- ----------- ----------- Net interest income 4,174,052 4,480,404 8,446,763 9,122,079 Provision for loan losses 150,000 100,000 300,000 200,000 ---------- ---------- ----------- ----------- Net interest income after provision for loan losses 4,024,052 4,380,404 8,146,763 8,922,079 ---------- ---------- ----------- ----------- Non-interest income: Fees and service charges 108,575 117,906 216,553 232,062 Miscellaneous 48,412 40,667 99,391 113,097 ---------- ---------- ----------- ----------- Total non-interest income 156,987 158,573 315,944 345,159 ---------- ---------- ----------- ----------- Non-interest expenses: Salaries and employee benefits 1,320,369 1,150,989 2,643,474 2,395,821 Net occupancy expense of premises 185,795 151,040 383,898 315,827 Equipment 179,651 169,836 375,370 352,121 Advertising 26,979 29,422 69,926 69,359 Loss on foreclosed real estate 49,089 51,693 113,714 99,960 Federal insurance premium 172,339 181,815 347,412 363,629 Amortization of intangibles 30,325 30,325 60,650 60,650 Miscellaneous 586,385 672,393 1,421,699 1,151,782 ---------- ---------- ----------- ----------- Total non-interest expenses 2,550,932 2,437,513 5,416,143 4,809,149 ---------- ---------- ----------- ----------- Income before income taxes 1,630,107 2,101,464 3,046,564 4,458,089 Income taxes 587,742 731,377 800,119 1,545,695 ---------- ---------- ----------- ----------- Net income $1,042,365 $1,370,087 $ 2,246,445 $ 2,912,394 ========== ========== =========== =========== Net income per common share and common stock equivalents $ .32 $ .40 $ .67 $ .86 ========== ========== =========== =========== Dividends per common share $ .225 $ .175 $ .450 $ .350 ========== ========== =========== =========== Weighted average number of common shares and common stock equivalents outstanding 3,312,506 3,439,275 3,377,183 3,395,033 ========== ========== =========== ===========
See notes to consolidated financial statements. - 2 - PAMRAPO BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS ------------------------------------ (Unaudited)
Six Months Ended June 30, --------------------------- 1996 1995 ------------ ------------ Cash flows from operating activities: Net income $ 2,246,445 $ 2,912,394 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of premises and equipment and investment in real estate 160,217 157,846 Amortization of deferred fees, premiums and discounts, net (79,667) (103,856) Provision for loan losses 300,000 200,000 Provision for losses on foreclosed real estate 47,000 30,000 Loss on sale of foreclosed real estate 12,393 7,635 Decrease in interest and dividends receivable, net 97,723 208,795 (Increase) in other assets (843,363) (121,690) Increase in other liabilities 270,095 272,387 Amortization of intangibles 60,650 60,650 Amortization of cost of stock contributed to Management Recognition and Retention Plan and Trust - 9,718 Reduction in debt of Employee Stock Ownership Plan 99,187 99,187 ------------ ------------ Net cash provided by operating activities 2,370,680 3,733,066 ------------ ------------ Cash flows from investing activities: Proceeds from maturities of securities available for sale 2,000,000 5,000,000 Purchases of securities available for sale (2,013,209) - Principal repayments on securities available for sale 1,905,072 398,027 Proceeds from maturities of investment securities held to maturity 99,000 - Purchases of mortgage-backed securities held to maturity (5,013,295) - Principal repayments on mortgage-backed securities held to maturity 7,293,383 6,768,276 Purchase of loans (45,500) - Proceeds from sale of student loans 415,524 375,906 Net change in loans receivable 1,976,660 2,277,673 Proceeds from sale of foreclosed real estate 254,559 185,741 Additions to investment in real estate (6,900) - Additions to premises and equipment (89,022) (170,622) (Purchase) of Federal Home Loan Bank of New York stock - (48,000) ------------ ------------ Net cash provided by investing activities 6,776,272 14,787,001 ------------ ------------ Cash flows from financing activities: Net increase (decrease) in deposits 3,639,187 (5,125,396) Repayment of advances from Federal Home Loan Bank of New York (7,000,000) (10,000,000) Repayment of other borrowed money (107,997) (104,647) Increase in advance payments by borrowers for taxes and insurance 219,361 55,035 Purchase of treasury stock (3,761,063) - Proceeds from sale of treasury stock 327,973 721,382 Cash dividends paid (1,519,187) (1,187,562) ------------ ------------ Net cash (used in) financing activities (8,201,726) (15,641,188) ------------ ------------ Net increase in cash and cash equivalents 945,226 2,878,879 Cash and cash equivalents - beginning 13,893,609 12,134,632 ------------ ------------ Cash and cash equivalents - ending $ 14,838,835 $ 15,013,511 ============ ============
See notes to consolidated financial statements. - 3 - PAMRAPO BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS ------------------------------------ (Unaudited)
Six Months Ended June 30, --------------------------- 1996 1995 ------------ ------------ Supplemental information: Transfer of loans receivable to foreclosed real estate $ 1,504,973 $ 938,403 ============ ============ Loans to facilitate sale of forclosed real estate $ 487,500 $ 232,500 ============ ============ Change in unrealized gain on securities available for sale, net $ 225,553 $ 287,365 ============ ============ Debt incurred in connection with purchase of office building $ - $ 325,000 ============ ============ Cash paid during the period for: Income taxes $ 1,341,053 $ 1,305,161 ============ ============ Interest on deposits and borrowings $ 5,718,484 $ 5,648,587 ============ ============
See notes to consolidated financial statements. - 4 - 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 "Corporation"), 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 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 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, 1996, are not necessarily indicative of the results which may be expected for the entire fiscal year. 3. NET INCOME PER COMMON SHARE - - ------------------------------- Net income per common share is based on the weighted average number of common shares actually outstanding plus the shares that would be outstanding assuming the exercise of dilutive stock options, all of which are considered to be common stock equivalents. The number of common shares that would be issued from the exercise of stock options has been reduced by the number of common shares that could have been purchased from the proceeds at the average market price of the Corporation's common stock. - 5 - PAMRAPO BANCORP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- CHANGES IN FINANCIAL CONDITION - - ------------------------------ The Corporation's assets at June 30, 1996 totaled $365.6 million, which represents a decrease of $5.8 million or 1.56% as compared with $371.4 million at December 31, 1995. Securities available for sale at June 30, 1996 decreased $2.3 million or 8.10% to $26.1 million when compared with $28.4 million at December 31, 1995. The decrease during the six months ended June 30, 1996, resulted primarily from repayments on and maturities of securities available for sale of $3.9 million along with an increase in unrealized loss on such portfolio of $358,000 which offset purchases of securities available for sale of $2.0 million. Investments securities held to maturity of $99,000 at December 31, 1995 matured during the six months ended June 30, 1996. Mortgage-backed securities held to maturity decreased $2.4 million or 2.48% to $94.2 million at June 30, 1996 when compared to $96.6 million at December 31, 1995. The decrease during the six months ended June 30, 1996, resulted primarily from repayments on mortgage-backed securities of $7.3 million which offset purchases of such securities of $5.0 million. Net loans amounted to $214.6 million at June 30, 1996 as compared to $218.1 million at December 31, 1995, which represents a decrease of $3.5 million or 1.60%. The decrease, during the six months ended June 30, 1996, resulted primarily from the transfer of $1.5 million in loans to foreclosed real estate and loan principal repayments exceeding loan originations by $2.0 million. Foreclosed real estate amounted to $2.2 million, $2.1 million and $1.5 million at June 30, 1996, March 31, 1996 and December 31, 1995, respectively. At June 30, 1996, foreclosed real estate consisted of twenty-one properties, of which fifteen were residential, four were land and two were commercial. At March 31, 1996 and December 31, 1995, foreclosed real estate consisted of nineteen and sixteen properties, respectively. During the three months ended June 30, 1996, four properties with a combined book value of $409,000 were sold and another four properties with a combined book value of $519,000 remain under contract for sale. Total deposits at June 30, 1996 increased $3.6 million or 1.20% to $302.5 million when compared with $298.9 million at December 31, 1995. Advances from the Federal Home Loan Bank of New York ("FHLB") amounted to $583,000 and $7.6 million at June 30, 1996 and December 31, 1995, respectively. The decrease, during the six months ended June 30, 1996, resulted from a repayment of short-term advances from the FHLB of $7.0 million. Stockholders' equity totaled $56.5 million and $59.4 million at June 30, 1996 and December 31, 1995, respectively. During the six months ended June 30, 1996, the Corporation repurchased 169,000 shares of its common stock at prices ranging from $19.50 to $23.00 per share, totaling $3.8 million, under the stock repurchase program and issued 56,930 shares of its common stock from treasury stock for $328,000 as a result of the exercise of stock options by directors, officers and employees. - 6 - 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 JUNE 30, 1996 AND 1995 ----------------------------------------- Net income decreased $328,000 or 23.94% to $1.042 million for the three months ended June 30, 1996 compared with $1.370 million for the same 1995 period. The decrease in net income during the 1996 period resulted from decreases in total interest income and non-interest income, along with increases in non- interest expenses and provision for loan losses, which were partially offset by decreases in total interest expense and income taxes. Interest income on loans decreased $249,000 or 4.94% to $4.8 million during the three months ended June 30, 1996 when compared with $5.0 million during the same 1995 period. The decrease during the 1996 period resulted from a decrease in the yield earned on the loan portfolio along with a decrease in the average balance of loans outstanding. Interest on mortgage-backed securities decreased $147,000 or 7.26% to $1.88 million during the three months ended June 30, 1996 when compared with $2.02 million for the same 1995 period. The decrease during the 1996 period resulted from decreases in both the average balance of mortgage-backed securities outstanding and the yield thereon. Interest earned on investments and other interest-earning assets increased by $36,000 or 12.81% to $317,000 during the three months ended June 30, 1996, when compared to $281,000 during the same 1995 period, primarily due to an increase in the average balance of such assets outstanding. Interest expense on deposits increased $107,000 or 3.99% to $2.8 million during the three months ended June 30, 1996 when compared to $2.7 million during the same 1995 period. Such increase was primarily attributable to an increase in the cost of such deposits. Interest expense on advances and other borrowed money decreased by $160,000 or 85.11% to $28,000 during the three months ended June 30, 1996 when compared with $188,000 during the same 1995 period, primarily due to a decrease in the average balance of advances outstanding from the FHLB. Net interest income decreased $306,000 or 6.83% during the three months ended June 30, 1996 when compared with the same 1995 period. Such decrease was due to a decrease in total interest income of $359,000 which more than offset a decrease in total interest expense of $53,000. During the three months ended June 30, 1996 and 1995, the Bank provided $150,000 and $100,000, respectively, 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, 1996, March 31, 1996 and December 31, 1995, the Bank's non-performing loans, which were delinquent 90 days or more, totaled $10.2 million, $9.1 million and $10.9 million, respectively. When non-performing loans are combined with foreclosed real estate, the resulting non-performing assets totaled at June 30, 1996, March 31, 1996 and December 31, 1995, $12.4 million, $11.2 million and $12.4 million, respectively, which represent 3.39%, 3.04% and 3.34%, respectively, of total assets. Approximately $1.0 million of the $1.1 million increase in non-performing loans in the second quarter of 1996 was in one-to-four family residential category with over $500,000 attributable to two borrowers. At - 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 JUNE 30, 1996 AND 1995 (Cont'd) ----------------------------------------- June 30, 1996, $4.0 million of non-performing loans were accruing interest and $6.2 million were on non-accrual status. During the three months ended June 30, 1996 and 1995, the Bank transferred $511,000 and $818,000, respectively, of loans to foreclosed real estate. The non-performing loans primarily consist of one-to-four family mortgage loans. During the three months ended June 30, 1996 and 1995, the Bank had net loan charge offs aggregating $111,000 and $561,000, respectively. The allowance for loan losses amounted to $2.770 million at June 30, 1996, representing 1.27% of total loans and 27.17% of loans delinquent ninety days or more and $2.725 million at December 31, 1995, representing 1.22% of total loans and 25.09% of loans delinquent ninety days or more. Non-interest income decreased nominally by $2,000 or 1.26% to $157,000 during the three months ended June 30, 1996 from $159,000 during the same 1995 period. The decrease resulted from a decrease in fees and service charges of $9,000 which offset an increase in miscellaneous income of $7,000. Non-interest expenses increased by $113,000 or 4.63% to $2.55 million during the three months ended June 30, 1996 when compared with $2.44 million during the same 1995 period. Salaries and employees benefits, net occupancy expense and equipment increased $169,000, $35,000 and $10,000, respectively, which was sufficient to offset decreases in advertising, loss on foreclosed real estate, federal insurance premium and miscellaneous expenses of $2,000, $3,000, $10,000 and $86,000, respectively, during the 1996 period when compared with the same 1995 period. Income taxes totaled $588,000 and $731,000 during the three months ended June 30, 1996 and 1995, respectively. The decrease during the 1996 period resulted from a decrease in pre-tax income. COMPARISON OF OPERATING RESULTS FOR THE - - --------------------------------------- SIX MONTHS ENDED JUNE 30, 1996 AND 1995 --------------------------------------- Net income decreased $666,000 or 22.87% to $2.246 million for the six months ended June 30, 1996 compared with $2.912 million for the same 1995 period. The decrease in net income during the 1996 period resulted from decreases in total interest income and non-interest income, along with increases in total interest expense, non-interest expenses and provision for loan losses, which were partially offset by a decrease in income taxes. - 8 - PAMRAPO BANCORP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- COMPARISON OF OPERATING RESULTS FOR THE - - --------------------------------------- SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (Cont'd) --------------------------------------- Interest income on loans decreased $432,000 or 4.25% to $9.7 million during the six months ended June 30, 1996 when compared with $10.2 million during the same 1995 period. The decrease during the 1996 period resulted from a decrease in the yield earned on the loan portfolio along with a decrease in the average balance of loans outstanding. Interest on mortgage- backed securities decreased $195,000 or 4.84% to $3.8 million during the six months ended June 30, 1996 when compared with $4.0 million for the same 1995 period. The decrease during the 1996 period resulted from decreases in both the average balance of mortgage-backed securities outstanding and the yield earned thereon. Interest earned on investments and other interest-earning assets increased by $20,000 or 3.48% to $594,000 during the six months ended June 30, 1996, when compared to $574,000 during the same 1995 period primarily due to an increase in the average balance of such assets outstanding. Interest expense on the deposits increased $389,000 or 7.49% to $5.6 million during the six months ended June 30, 1996 when compared to $5.2 million during the same 1995 period. Such increase was primarily attributable to an increase in the cost of such deposits. Interest expense on advances and other borrowed money decreased by $319,000 or 69.96% to $137,000 during the six months ended June 30, 1996 when compared with $456,000 during the same 1995 period, primarily due to a decrease in the average balance of advances outstanding from the FHLB. Net interest income decreased $675,000 or 7.40% during the six months ended June 30, 1996 when compared with the same 1995 period. Such decrease was due to a decrease in total interest income of $606,000 along with an increase in total interest expense of $69,000. During the six months ended June 30, 1996 and 1995, the Bank provided $300,000 and $200,000, respectively, 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, 1996 and December 31, 1995, the Bank's non-performing loans, which were delinquent 90 days or more, totaled $10.2 million or 2.79% of total assets and $10.9 million or 2.94% of total assets, respectively. At June 30, 1996, $4.0 million of non-performing loans were accruing interest and $6.2 million were on non-accrual status. During the six months ended June 30, 1996 and 1995, the Bank transferred $1.5 million and $938,000, respectively, of loans to foreclosed real estate. The non-performing loans primarily consist of one-to-four family mortgage loans. During the six months ended June 30, 1996 and 1995, the Bank had net loan charge offs aggregating $255,000 and $675,000, respectively. The allowance for loan losses amounted to $2.770 million at June 30, 1996, representing 1.27% of total loans and 27.17% of loans delinquent ninety days or more and $2.725 million at December 31, 1995, representing 1.22% of total loans and 25.09% of loans delinquent ninety days or more. - 9 - PAMRAPO BANCORP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- COMPARISON OF OPERATING RESULTS FOR THE - - --------------------------------------- SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (Cont'd) --------------------------------------- Non-interest income decreased by $29,000 or 8.41% to $316,000 during the six months ended June 30, 1996 from $345,000 during the same 1995 period. The decrease resulted from decreases in fees and service charges and miscellaneous income of $15,000 and $14,000, respectively. Non-interest expenses increased by $607,000 or 12.62% to $5.4 million during the six months ended June 30, 1996 when compared with $4.8 million during the same 1995 period. Salaries and employees benefits, net occupancy expense, equipment, loss on foreclosed real estate and miscellaneous expenses increased $247,000, $68,000, $23,000, $14,000 and $270,000, respectively, which was sufficient to offset a decrease in federal insurance premium of $17,000, during the 1996 period when compared with the same 1995 period. The increase in miscellaneous expenses resulted primarily from a non-recurring expense of $250,000 related to the 1996 Annual Meeting of Stockholders. Income taxes totaled $800,000 and $1.5 million during the six months ended June 30, 1996 and 1995, respectively. The decrease during the 1996 period resulted from a decrease in pre-tax income and a reduction in income tax expense of $293,000 resulting from the exercise of non-statutory stock options. LIQUIDITY AND CAPITAL RESOURCES - - ------------------------------- The Bank is required to maintain mimimum 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 5%. The Bank's liquidity averaged 9.12% during the month of June 1996. 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. Federal funds sold and interest-bearing deposits at June 30, 1996 amounted to $100,000 and $4.5 million, respectively. - 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. These activities are summarized below:
Six Months Ended June 30, ------------------------- 1996 1995 --------- --------- (In Thousands) Cash and cash equivalents - Beginning $13,894 $12,135 ------- ------- Operating activities: Net Income 2,246 2,912 Adjustment to reconcile net income to net cash provided by operating activities 125 821 ------- ------- Net cash provided by operating activities 2,371 3,733 Net cash provided by investing activities 6,776 14,787 Net cash (used in) financing activities (8,202) (15,641) ------- ------- Net increase in cash and cash equivalents 945 2,879 ------- ------- Cash and cash equivalents - Ending $14,839 $15,014 ======= =======
Cash was generated by operating activities during the six months ended June 30, 1996. The primary sources of cash was net income and investing activities. Funds used on financing activities resulted primarily from a $7.0 million reduction in short-term FHLB advances and the utilization of $3.8 million to repurchase 169,000 shares of common stock at prices ranging from $19.50 to $23.00 per share, which more than offset a net increase in deposits of $3.6 million. Additionally, during the six months ended June 30, 1996, the Corporation issued 56,930 shares of its common stock out of treasury stock for $328,000 as a result of the exercise of stock options by directors, officers and employees. Cash dividends paid during the six months ended June 30, 1996 and 1995 amounted to $1.5 million and $1.2 million, respectively. The primary sources of investing activity are lending and the purchase of mortgage-backed securities. Net loans amounted to $214.6 million and $218.1 million at June 30, 1996 and December 31, 1995, respectively. Securities available for sale totaled $26.1 million and $28.4 million at June 30, 1996 and December 31, 1995, respectively. Mortgage-backed securities held to maturity totaled $94.2 million and $96.6 million at June 30, 1996 and December 31, 1995, respectively. In addition to funding new loan production and the purchase of mortgage-backed securities through operations and financing activities, such activities were funded by principal repayments on existing loans and mortgage-backed securities. - 11 - PAMRAPO BANCORP, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- LIQUIDITY AND CAPITAL RESOURCES (Cont'd) - - ------------------------------- 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 exit with the FHLB which provide an additional source of funds. At June 30, 1996, advances from the FHLB amounted to $583,100. The Bank anticipates that it will have sufficient funds available to meet its current loan commitments. At June 30, 1996, the Bank has outstanding commitments to originate mortgage loans of $7.4 million, to purchase mortgage- backed securities of $1.0 million and to purchase investment securities of $1.0 million. Certificates of deposit scheduled to mature in one year or less at June 30, 1996, totaled $115.1 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 at least 3.0% of its adjusted total assets. The core capital requirement has been effectively increased to 4.0% since under OTS regulations an institution with less than 4.0% core capital is deemed to be "under capitalized". The Capital Rule further requires each savings institution to maintain total capital equal to at least 8.0% of its risk-weighted assets. The following table sets forth the Bank's capital position at June 30, 1996, as compared to the minimum regulatory capital requirements:
Amount Percent of adjusted assets ------ -------------------------- (Dollars in millions) Tangible capital: Requirement $ 5,458 1.50% Actual 47,522 13.06% ------- ----- Excess $42,064 11.56% ======= ===== Core Capital: Requirement $14,555 4.00% Actual 47,522 13.06% ------- ----- Excess $32,967 9.06% ======= ===== Risk-based capital: Requirement $14,644 8.00% Actual 48,548 26.52% ------- ----- Excess $33,904 18.52% ======= =====
- 12 - PAMRAPO BANCORP, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- LIQUIDITY AND CAPITAL RESOURCES (Cont'd) - - ------------------------------- The OTS issued final regulations which set forth the methodology for calculating an interest rate risk component that will be incorporated in the OTS regulatory capital rules. Under the new regulations, only savings associations with "above normal" interest rate risk exposure would be required to maintain additional capital. The dollar amount of capital would be an addition to the existing risk-based capital requirement. The OTS recently deferred the implementation of this regulation. It is estimated that under the new regulation, the Bank's risk-based capital requirement would increase by approximately $2.2 million at June 30, 1996 and the Bank would continue to exceed the OTS capital regulations. The Bank is considered a "Well Capitalized" institution under the OTS' prompt corrective action regulations. SUPERVISORY EXAMINATION - - ----------------------- The Bank's financial statements are periodically examined by the OTS, Federal Deposit Insurance Corporation ("FDIC") and New Jersey Department of Banking, as part of their regulatory oversight of the thrift industry. As a result of these examinations, the regulators can direct that the Bank make adjustments to its financial statements based on their findings. RECAPITALIZATION OF SAIF AND OTHER LEGISLATIVE MATTERS - - ------------------------------------------------------ Legislative initiatives regarding the recapitalization of the Savings Association Insurance Fund ("SAIF") of the FDIC, deposit insurance premiums, FICO bond interest, the merger of the SAIF and Bank Insurance Fund ("BIF"), financial industry regulatory structure, and the revision of thrift and bank charters are still pending before Congress. Management cannot predict the ultimate impact any final legislation or regulatory actions may have on the operations of the Corporation. Without passage of legislation addressing the FDIC insurance premium disparity, the Bank, like other thrifts, will continue to pay deposit insurance premiums significantly higher than banks. As long as such premium differential continues, it may have adverse consequences on the Corporation's earnings and the Corporation may be placed at a substantial competitive disadvantage to commercial banking organizations by the BIF. Legislation has been passed by Congress and sent to the President for signature which would require institutions to recapture their bad debt reserves maintained after 1987 for income tax purposes. Management does not believe that this legislation will have a material impact on the operations of the Company. - 13 - PAMRAPO BANCORP, INC. PART II ITEM 1. Legal Proceedings ----------------- On February 15, 1994, Bank Pulska Kasa Opieki S.A. filed a complaint in the United States District Court, District of New Jersey against the Bank and Chemical Banking Corporation, Civil No. 94-663. See Form 10-K for the fiscal year ended December 31, 1995 for further discussion. Neither the Corporation 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 which in the aggregate are believed by management to be immaterial to the financial condition of the Corporation and the Bank, except as discussed above. ITEM 2. Changes in Securities --------------------- Not applicable. ITEM 3. Defaults Upon Senior Securities ------------------------------- Not applicable. ITEM 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- Not applicable. ITEM 5. Exhibits and Reports on Form 8-K -------------------------------- (a) The following Exhibits are filed as part of this report. 3.1 Certification of Incorporation of Pamrapo Bancorp, Inc.* 3.2 By-Laws of Pamrapo Bancorp, Inc.* 11.0 Computation of earnings per share (filed herewith). 27.0 Financial data schedule (filed herewith). *Incorporated herein by reference to Form S-1, Registration Statement, as amended, filed on August 11, 1989, Registration Number 33-30370. (b) Reports on Form 8-K None - 14 - 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 8, 1996 By: /s/ William J. Campbell -------------------------- ------------------------------------- William J. Campbell President and Chief Executive Officer Date: August 8, 1996 By: /s/ Gary J. Thomas -------------------------- ------------------------------------- Gary J. Thomas Vice President, Chief Financial Officer - 15 - EX-11.0 2 COMPUTATION OF EARNINGS PER SHARE Exhibit 11.0 PAMRAPO BANCORP, INC. AND SUBSIDIARIES STATEMENT RE COMPUTATION OF EARNINGS PER SHARE ----------------------------------------------
Three Six Months Ended Months Ended June 30, 1996 June 30, 1996 ------------- ------------- Net income $ 1,042,365 $ 2,246,445 ============ ============ Weighted average common shares outstanding 3,308,409 3,373,003 Common stock equivalents due to dilutive effect of stock options 4,097 4,180 ------------ ------------ Total weighted average common shares and equivalents outstanding 3,312,506 3,377,183 ============ ============ Primary earnings per share $ 0.32 $ 0.67 ============ ============ Total weighted average common shares and equivalents outstanding for fully diluted computation 3,312,506 3,377,183 ============ ============ Fully diluted earnings per share $ 0.32 $ 0.67 ============ ============
EX-27 3 FINANCIAL DATA SCHEDULE
9 THIS LEGEND CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENT. 6-MOS DEC-30-1996 JAN-01-1996 JUN-30-1996 10,238,835 4,500,000 100,000 0 26,146,013 94,233,619 92,599,000 217,407,751 2,769,867 365,553,078 302,539,951 934,958 5,534,938 0 0 0 34,500 56,508,731 365,553,078 9,735,202 4,430,045 0 14,165,247 5,581,127 5,718,484 8,446,763 300,000 0 5,416,143 3,046,564 3,046,564 0 0 2,246,445 0.32 0.32 0 6,192,000 4,002,000 0 0 2,725,000 318,256 63,123 2,769,867 724,000 0 2,045,867 Not contained in the Form 10-Q
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