SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended: March 31, 2001
--------------
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ________ to ________
SEC File Number: 000-32437
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BUCS FINANCIAL CORP
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 52-2265986
- ----------------------------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10455 Mill Run Circle, Owings Mills, Maryland 21117
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(Address of principal executive offices) (Zip Code)
(410) 998-5304
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(Registrant's telephone number, including area code)
Check whether the registrant: (1) filed all reports required to be
filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 subsequent
to 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 No X
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Number of shares outstanding of common stock as of May 14, 2001:
$0.10 Par Value Common Stock 405,085
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Class Shares Outstanding
Transitional Small Business Disclosure Format (check one)
Yes No X
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BUCS FINANCIAL CORP AND SUBSIDIARIES
TABLE OF CONTENTS
Page
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PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 2001 (unaudited)
and December 31, 2000 (audited).................................................................1
Consolidated Statements of Operations for the three months
ended March 31, 2001 and 2000 (unaudited))......................................................2
Consolidated Statement of Changes in Stockholders' Equity for the
three months ended March 31, 2001 (unaudited)...................................................3
Consolidated Statements of Cash Flows for the three
months ended March 31, 2001 and 2000 (unaudited)................................................4
Notes to Consolidated Financial Statements......................................................5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................................................7
PART II. OTHER INFORMATION
- -------- -----------------
Item 1. Legal Proceedings....................................................................................11
Item 2. Changes in Securities and Use of Proceeds............................................................11
Item 3. Defaults Upon Senior Securities......................................................................11
Item 4. Submission of Matters to a Vote of Security-Holders..................................................11
Item 5. Other Information....................................................................................11
Item 6. Exhibits and Reports on Form 8-K.....................................................................11
Signatures
BUCS FINANCIAL CORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2001 AND DECEMBER 31, 2000
(Unaudited)
March 31 December 31
2001 2000
------------ ------------
ASSETS
------
Cash and cash equivalents $ 6,797,706 $ 5,354,010
Securities available for sale 17,922,587 14,350,772
Securities held to maturity 935,493 958,194
Loans receivable, net 50,022,096 49,057,095
Accrued interest, receivable 398,778 418,267
Property and equipment, net 998,263 1,040,923
Investment required by law - Federal Home Loan Bank stock 930,800 930,800
Prepaid expenses and other assets 942,464 987,118
------------ ------------
Total assets $ 78,948,187 $ 73,097,179
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Liabilities:
Deposits $ 58,723,480 $ 51,441,086
Accounts payable and other liabilities 800,804 657,786
Borrowed funds - Federal Home Loan Bank 10,000,000 15,000,000
------------ ------------
69,524,284 67,098,872
------------ ------------
Stockholders' Equity
Preferred stock, par value $0.10 per share, 2,000,000 shares
authorized, 0 shares issued and outstanding - -
Common stock, par value $0.10 per share, 5,000,000 shares
authorized, 405,085 shares issued and outstanding 40,508 -
Additional paid-in capital 3,507,159 -
Retained earnings 6,114,923 6,026,609
Unearned ESOP shares (324,100) -
Accumulated other comprehensive income (loss) 85,413 (28,302)
------------ ------------
9,423,903 5,998,307
------------ ------------
Total liabilities and stockholders' equity $ 78,948,187 $ 73,097,179
============ ============
The accompanying notes are an integral part of these consolidated statements.
1
BUCS FINANCIAL CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000
(Unaudited)
2001 2000
----------- -----------
Interest income
Loans receivable $ 1,058,907 $ 920,233
Securities 349,804 315,634
----------- -----------
Total interest income 1,408,711 1,235,867
----------- -----------
Interest expense
Deposits 546,318 423,902
Borrowed funds 229,305 236,615
----------- -----------
775,623 660,517
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Net interest income 633,088 575,350
Provision for loan losses 45,000 20,000
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588,088 555,350
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Noninterest income
Fees and service charges 281,874 211,264
Investment securities loss (4,375) -
Fee to process and maintain cash facility 30,000 30,000
Other 48,277 4,211
----------- -----------
Total noninterest income 355,776 245,475
----------- -----------
943,864 800,825
----------- -----------
Noninterest expense
Compensation and benefits 350,726 325,444
Professional fees 50,034 30,341
Occupancy expense 138,350 135,773
Office operations 159,080 138,779
Other operating expense 108,447 113,415
----------- -----------
Total noninterest expense 806,637 743,752
----------- -----------
Income before income taxes 137,227 57,073
Income taxes 48,913 21,874
----------- -----------
Net income $ 88,314 $ 35,199
=========== ===========
Earnings per share .22 N/A
=========== ===========
Shares used in computing earnings per share 405,085 N/A
=========== ===========
The accompanying notes are an integral part of these consolidated
statements.
2
BUCS FINANCIAL CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
THREE MONTH PERIOD ENDED MARCH 31, 2001
(Unaudited)
Accumulated
Other
Unearned Additional Comprehensive
Common ESOP Paid-in Retained Income Total
Stock Shares Capital Earnings (Loss) Equity
----------- ------------ ------------- ------------ ------------------ ------
Balance at December 31, 2000 $ - $ - $ - $6,026,609 $(28,302) $5,998,307
Net income for three months
ended March 31, 2001 - - - 88,314 - 88,314
Net change in unrealized gains
(losses) on securities available
for sale, net of deferred income
tax benefit - - - - 113,715 113,715
---------
Comprehensive income - - - - - 202,029
---------
Issuance of BUCS Financial Corp
common stock 40,508 (324,100) 3,507,159 - - 3,223,567
------- --------- ---------- ---------- -------- ----------
Balance at March 31, 2001 $40,508 $(324,100) $3,507,159 $6,114,923 $ 85,413 $9,423,903
======= ========= ========== ========== ======== ==========
The accompanying notes are an integral part of these consolidated statements.
3
BUCS FINANCIAL CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2001 AND 2000
(Unaudited)
2001 2000
------------ ------------
Cash flows from operating activities
Cash inflows
Interest income $ 1,428,200 $ 1,265,303
Fees and service charges 281,874 211,264
Other income 48,277 4,211
------------ ------------
1,758,351 1,480,778
------------ ------------
Cash outflows
General and administrative expenses 551,970 423,332
Interest on deposits 546,318 423,902
Interest on borrowed funds 261,355 249,927
Income taxes 1,152 106,960
------------ ------------
1,360,795 1,204,121
------------ ------------
Net cash provided by operating activities 397,556 276,657
------------ ------------
Cash flows from investing activities
Cash inflows
Loan principal repayments and loan participations sold 7,871,602 4,861,186
Proceeds from maturities and redemptions of securities
available for sale 3,305,873 311,731
Proceeds from repayments on securities held to maturity 22,701 126
------------ ------------
11,200,176 5,173,043
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Cash outflows
Purchase of securities available for sale 6,813,348 1,691,483
Loan disbursements 8,836,603 4,709,568
Purchase of property and equipment 10,046 35,965
------------ ------------
15,659,997 6,437,016
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Net cash used in investing activities (4,459,821) (1,263,973)
------------ ------------
Cash flows from financing activities
Cash inflows
Issuance of common stock 3,223,567 -
Net increases (decreases) in borrowed funds from the
Federal Home Loan Bank (5,000,000) (3,615,000)
Net increase in deposits 7,282,394 6,105,446
------------ ------------
Net cash provided by financing activities 5,505,961 2,490,446
------------ ------------
Net increase in cash and cash equivalents 1,443,696 1,503,130
Cash and cash equivalents, beginning of period 5,354,010 4,870,193
------------ ------------
Cash and cash equivalents, end of period $ 6,797,706 $ 6,373,323
============ ============
Reconciliation of net income to net cash
provided by operating activities
Net income $ 88,314 $ 35,199
Investment securities losses 4,375 -
Adjustments for items not providing or not requiring cash
or cash equivalents
Provision for loan losses 45,000 20,000
Depreciation and amortization 52,706 47,377
Effects of changes in operating assets and liabilities
Accrued interest receivable 19,489 29,436
Prepaid expenses and other assets 44,654 284,670
Accounts payable and other liabilities 143,018 (140,025)
------------ ------------
Net cash provided by operating activities $ 397,556 $ 276,657
============ ============
The accompanying notes are an integral part of these consolidated statements.
4
BUCS FINANCIAL CORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1 - Organization
------------
BUCS Financial Corp ("the Company") was incorporated under the laws of the State
of Maryland in October 2000, primarily to hold all the outstanding shares of
capital stock of BUCS Federal (the "Bank").
In March 2001, the Bank completed its mutual to stock conversion (the
"Conversion"). In connection with the Conversion, the Company sold 405,085
shares of its common stock in a subscription offering at $10.00 per share. Upon
completion of these transactions, the Bank became the wholly owned subsidiary of
the Company.
The Company's primary operations are conducted by the Bank, which operates two
offices, one in Owings Mills, Maryland and one in Columbia, Maryland. The Bank
is principally engaged in the business of providing retail banking services,
with an emphasis on residential mortgage loans and home equity, auto, and other
consumer loans.
NOTE 2 - Summary of Significant Accounting Policies
------------------------------------------
Basics of Presentation
The accompanying consolidated financial statements include the activity of BUCS
Financial Corp and its wholly-owned subsidiary BUCS Federal Bank, and the
wholly-owned subsidiaries of BUCS Federal Bank, C.U. Benefits, Inc. and Armor
Insurance, LLC. All material intercompany transactions have been eliminated in
consolidation.
The accompanying consolidated financial statements for March 31, 2001 and the
three month period ending March 31, 2001 and 2000 have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. However, the Company believes that the disclosures are adequate to
make the information presented not misleading.
These consolidated financial statements should be read in conjunction with the
financial statements and notes thereto for the year ended December 31, 2000,
included in the Company's Annual Report on Form 10-KSB, filed with the
Securities and Exchange Commission. The balance sheet as of December 31, 2000
has been derived from the audited financial statements at that date.
The unaudited consolidated financial statements included herein reflect all
adjustments (which include only normal, recurring adjustments) which are, in the
opinion of management, necessary to state fairly the financial position of the
Company as of March 31, 2001 and the results of its operations, changes in
stockholders' equity, and cash flows for the three month period ended March 31,
2001. The results of interim periods are not necessarily indicative of the
results expected for the full fiscal year.
5
Cash and Cash Equivalents
Cash and cash equivalents include interest-bearing deposits in other banks with
original maturities of less than three months and Federal funds sold. Generally,
Federal funds are purchased and sold for one-day periods.
Federal Home Loan Bank Stock
Federal Home Loan Bank Stock is carried at cost.
Comprehensive Income
During 1997, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income" (SFAS No. 130"), which is effective for fiscal years beginning after
December 15, 1997. This statement establishes standards for reporting and
display of comprehensive income and its components. Comprehensive income is
defined as the change in equity of a business enterprise during a period from
transactions and other events and circumstances from nonowner sources. The
Company adopted this standard effective January 1, 1999.
Derivatives
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 established accounting and
reporting standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its fair value. SFAS
No. 133 requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. SFAS
No. 133 is effective for fiscal years beginning after June 15, 1999 and cannot
be applied retroactively. The Bank adopted SFAS No. 133 effective January 1,
2000. The Bank anticipates that the adoption of SFAS No. 133 will not have a
material effect on its financial condition or results of operations.
Use of Estimates
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE 3 - Earnings
--------
Earnings per common share is computed by dividing net income (loss) by the
weighted average number of common shares outstanding during the period. Diluted
net income per common share is computed by dividing net income by the weighted
average number of common shares outstanding during the period, including any
potential dilutive common shares outstanding, such as options and warrants.
6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The Company's results of operations are primarily dependent upon net
interest income, which is the difference between the interest income earned on
interest-earning assets, primarily loans, mortgage-backed securities, and
investments, and the interest expense on interest-bearing liabilities, primarily
deposits and borrowings. Net interest income may be affected significantly by
general economic and competitive conditions and policies of regulatory agencies,
particularly those with respect to market interest rates. The results of
operations are also significantly influenced by the level of noninterest
expenses, such as employee salaries and benefits, noninterest income, such as
loan-related fees and fees on deposit-related services, and the provision for
loan losses.
The Management Discussion and Analysis section of this Form 10-QSB
contains certain forward-looking statements (as defined in the Private
Securities Litigation Reform Act of 1995). These forward-looking statements may
involve risks and uncertainties. Although management believes that the
expectations reflected in such forward-looking statements are reasonable, actual
results may differ from the results in these forward-looking statements.
Changes in Financial Condition
The Company's total assets of $78.9 million at March 31, 2001, reflect
an increase of $5.9 million as compared to $73.1 million at December 31, 2000.
The increase in total assets was due in part to the receipt of proceeds from the
Company's sale of 405,085 shares of common stock at $10.00 per share in
connection with the Bank's mutual to stock conversion. The increase in assets
was comprised of increases in cash and cash equivalents, securities available
for sale, and loans receivable, net of $1.4 million, $3.6 million and $965,000,
respectively.
The increase in the Company's liabilities was due primarily to a $7.3
million increase in deposits, reflecting the cyclical nature of the Bank's
deposit levels resulting from its status as a former credit union. The increase
in deposits was partially offset by a $5.0 million decrease in Federal Home Loan
Bank ("FHLB") advances. Changes in the components of assets, liabilities and
equity are discussed herein.
Cash and Cash Equivalents. Cash and cash equivalents, which include
interest-bearing deposits in other banks with original maturities of less than
three months and Liquid Cash Trust investments, totaled approximately $6.8
million at March 31, 2001, an increase of $1.4 million or almost 27%, as
compared to $5.4 million at December 31, 2000. This increase was primarily due
to increases in overnight deposits into interest-bearing FHLB and liquid funds
investment accounts resulting from the receipt of proceeds of the Company's
stock offering completed during the quarter ended March 31, 2001 and an
increased inflow of payroll and employer bonus deposits late in the quarter.
Securities Available for Sale. Securities available for sale increased
by $3.6 million or 24.9%, to $17.9 million at March 31, 2001 as compared to
$14.4 million at December 31, 2000, as the Company invested excess liquidity.
This was primarily a result of purchases of $6.8 million of mortgage backed
securities offset by maturities of securities available for sale and principal
repayments on mortgage backed securities totaling $3.3 million.
Loans Receivable, net. Net loans receivable at March 31, 2001 totaled $50.0
million, an increase of $965,000 or approximately 2.0%, as compared to $49.1
million at December 31,
7
2000. The increase was primarily due to originations of $8.8 million, which
includes $5.4 million of consumer, $1.9 million of one-to-four family and $1.5
million of commercial loans, offset by principal repayments and loan
participations sold totaling $7.9 million.
Deposits. Total deposits, after interest credited, increased by $7.3
million or 14.2% to $58.7 million at March 31, 2001, as compared to $51.4
million at December 31, 2000. The increase was primarily due to strong demand
for certificates of deposit and money market accounts as stock and mutual fund
prices declined during early 2001 and the cyclical nature of the Bank's deposit
levels resulting from its status as a former credit union. The size of the
increase reflects the relation of number of payroll dates for several of the
larger employer groups whose employees are customers of the Bank during the last
month of the quarter ended March 31, 2001 to the date of the month end in
addition to payment of year-end bonuses.
FHLB Advances. FHLB advances, at March 31, 2001, totaled $10.0 million,
a decrease of $5.0 million or 33.3%, as compared to $15.0 million at December
31, 2000. The Company uses FHLB advances as a supplement to deposits to fund its
origination of loans and purchase of investments. Advances were paid down
because the large inflow of cash from sale of common stock and deposit growth
during the quarter made excess cash available which could not be immediately
invested in loans or favorable term investments.
Stockholders' Equity. Stockholders' equity totaled $9.4 million at
March 31, 2001, as compared to $6.0 million at December 31, 2000. The increase
of $3.4 million is primarily due to the completion during the quarter ended
March 31, 2001 of the Bank's mutual to stock conversion and the proceeds from
the sale of 405,085 shares of the Company's stock. In addition, earnings for the
quarter ended March 31, 2001 of approximately $88,000 and a net increase in
unrealized gains (losses) on securities available for sale of approximately
$114,000 contributed to the increase in stockholders' equity.
Results of Operations for the Three Months Ended March 31, 2001 and 2000
Net Income. The Company recorded net income of $88,000 for the quarter
ended March 31, 2001, as compared to net income of $35,000 for the same quarter
in 2000, representing a $53,000 or 150% increase. Net interest income increased
by $58,000 or 10% and noninterest income increased by $110,000 or 44.9%, while
noninterest expense increased by $63,000 or 8.5%. The increases in net interest
income and noninterest income were partially offset by a $25,000 or 125%
increase in provision for loan losses for the quarter and by a $27,000 or 123.6%
increase in the provision for income taxes. Changes in the components of income
and expense are discussed herein.
Net Interest Income. Net interest income increased $58,000 or 10% for
the quarter ended March 31, 2001, as compared to the same quarter in 2000. The
average balance of interest- earning assets increased by $7.8 million or 12.5%,
while the average yield earned thereon increased 12 basis points. The average
balance of interest-bearing liabilities increased $6.4 million or 10.2% and the
average rate paid thereon increased 28 basis points. The increase in earning
assets is the result of the investment of the proceeds from the sale of common
stock and the increase in deposit volume during February and March 2001. The
average yield earned increased because 81% of the growth in earning assets came
in loans rather than lower yielding investments. The increase in the average
rate paid on deposits results from the fact that more deposits were in higher
yielding money market and certificate of deposit accounts during the first
quarter of 2001 than in the same period of 2000. The total of money market and
certificate of deposit accounts equaled 47.8% and 40.1% of total deposits as of
March 31, 2001 and 2000, respectively.
The net interest rate spread, which is the difference between the yield
on average interest- earning assets and the cost of average interest-bearing
liabilities, decreased to 3.43% for the
8
quarter ended March 31, 2001 from 3.59% for the same quarter in 2000. The
decrease in the net interest rate spread was primarily the result of an increase
in the average rate paid on certificates of deposit and FHLB advances, partially
offset by an increase in the average yield earned on loans receivable and
securities.
Interest Income. Interest income increased $172,000 or 14% to $1.4
million for the quarter ended March 31, 2001, as compared to $1.2 million for
the same quarter in 2000.
Interest on loans receivable increased $139,000 or 15.1% for the
quarter ended March 31, 2001, as compared to the same quarter in 2000. This
increase was primarily the result of a $5.5 million increase in the average
balance of loans receivable, in addition to a 20 basis point increase in the
average yield earned thereon.
Interest income on securities increased $34,000 or 10.8% for the
quarter ended March 31, 2001, as compared to the same quarter in 2000. This
increase was primarily the result of a $2.3 million increase in the average
balance of securities, in addition to a 8 basis point increase in the average
yield earned thereon.
The average yield on the average balance of interest-earning assets was
7.96% and 7.84% for the quarter ended March 31, 2001 and 2000, respectively.
Interest Expense. Interest expense totaled $776,000 for the quarter
ended March 31, 2001, as compared to $661,000 for the same quarter in 2000. The
average balance of interest- bearing liabilities increased $6.4 million, and the
average rate paid thereon increased 28 basis points, resulting in a $115,000 or
17.4% increase in interest expense.
Interest expense on deposits increased $122,000 or 28.9% for the
quarter ended March 31, 2001, as compared to the same quarter in 2000. The
increase was due to a 31 basis point increase in the average rate paid thereon
and a $8.5 million increase in the average balance of deposits.
Interest on FHLB advances decreased slightly to $229,000 for the
quarter ended March 31, 2001, as compared to $237,000 for the same quarter in
2000. The decrease was due to a $2.1 million decrease in the average balance of
advances, offset by a 59 basis point increase in the rate paid thereon. The
Company uses FHLB advances as a funding source and has in the past used
borrowings to supplement deposits, which are the Company's primary source of
funds.
Provision for Loan Losses. During the quarter ended March 31, 2001 and
2000, the Company established provisions for loan losses of $45,000 and $20,000,
respectively. This reflected management's evaluation of the underlying credit
risk of the loan portfolio and the level of allowance for loan losses. The
increase in loan loss provision reflects management's decision to provide
additional funding due to the sizeable increase in the total loan portfolio from
March 31, 2000 to March 31, 2001 and the downturn in the general economy during
early 2001.
At March 31, 2001, the allowance for loan losses totaled $630,000 or
1.24% and 211.4% of total loans and total non-performing loans, respectively, as
compared to $548,000 or 1.24% and 383.2%, respectively, at March 31, 2000. The
Company's non-performing loans (non-accrual loans and accruing loans 90 days or
more overdue) totaled $298,000 and $143,000 at March 31, 2001 and March 31,
2000, respectively, which represented .6% and .3% of the Company's total loans,
respectively. The Company's ratio of non-performing loans to total assets was
.4% and .2% at March 31, 2001 and March 31, 2000, respectively. The increase in
non-performing loans is primarily the result of one past due mortgage loan with
a balance of $116,000.
Noninterest Income. Total noninterest income, primarily fees and service
charges increased $110,000 or 44.9% for the quarter ended March 31, 2001 as
compared to the same
9
quarter in 2000. Fees and service charges increased to $282,000 for the quarter
ended March 31, 2001 from $211,000 for the same quarter in 2000, a 33.4%
increase. This increase reflects an emphasis on charging appropriate fees for
services, such as ATM fees, insufficient funds fees, and interchange income
generated by customers' use of check cards. In addition, other noninterest
income, composed primarily of commissions on insurance sales by the Bank's
wholly-owned subsidiary, Armor Insurance, LLC, which commenced operations in
2000, increased to $48,000 for the quarter ended March 31, 2001 from $4,000 for
the same quarter in 2000.
Noninterest Expense. Total noninterest expense increased by $63,000 or
8.5% for the quarter ended March 31, 2001, as compared to the same quarter in
2000. The increase was attributable to increases of $25,000 or 7.8% in
compensation and benefits expense resulting from increases in benefit costs and
normal cost of living salary increases, $20,000 or 64.9% in professional fees
resulting mainly from employment of an outside firm to provide in-depth sales
and service training to all employees, and $20,000 or 14.6% in office operations
resulting primarily from the operating costs associated with the Bank's
wholly-owned subsidiary, Armor Insurance, LLC.
Income Tax Expense. The provision for income tax totaled $49,000 for
the quarter ended March 31, 2001, as compared to $22,000 for the same quarter in
2000. The $27,000 or 123% increase was due to increased net taxable income.
Capital Requirements
The Bank is subject to federal regulations that impose certain minimum
capital requirements. Quantitative measures, established by regulation to ensure
capital adequacy, require the Bank to maintain amounts and ratios of tangible
and core capital to adjusted total assets and of total risk-basked capital to
risk-weighted assets. On March 31, 2001, the Bank was in compliance with all of
its regulatory capital requirements.
Management believes that under current regulations, the Bank will
continue to meet its minimum capital requirements in the foreseeable future.
Events beyond the control of the Bank, such as changes in market interest rates
or a downturn in the economy in areas in which the Bank operates could adversely
affect future earnings and as a result, the ability of the Bank to meet its
future minimum capital requirements.
10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
-----------------
The Bank, from time to time, is a party to routine litigation, which
arises in the normal course of business, such as claims to enforce liens,
condemnation proceedings on properties in which the Bank holds security
interests, claims involving the making and servicing of real property loans, and
other issues incident to the business of the Bank. There were no lawsuits
pending or known to be contemplated against the Bank at March 31, 2001 that
would have a material effect on the Bank's operations or income.
Item 2. Changes in Securities and Use of Proceeds.
-----------------------------------------
Use of Proceeds. The Registration Statement on Form SB-2 (No.
333-47524) for which the use of proceeds information is being disclosed was
declared effective by the Securities and Exchange Commission on January 16,
2001. The offering commenced on January 22, 2001 and terminated on February 22,
2001 after 405,085 shares were sold. The Registration Statement covered the
issuance of 575,288 shares. The managing underwriter for the offering was
Trident Securities, a division of McDonald Investments, Inc. The title of the
securities registered was Common Stock, par value $0.10 per share. The aggregate
price of the offering amount registered was $5,752,880, and the aggregate
offering price of the amount sold was $4,050,850. The expenses incurred by the
Company and the Bank in connection with the issuance and distribution of the
securities were approximately $512,000, including $100,000 in underwriting fees.
Such payments were not direct or indirect payments to directors, officers,
general partners of the issuer or their associates, persons owning 10 percent or
more of any class of equity security of the Company or affiliates of the
Company. The net offering proceeds to the Company were approximately $3,540,000.
Of this amount, approximately $1,770,000 was contributed to the working capital
of the Bank and $1,770,000 was contributed to the working capital of the
Company.
Item 3. Defaults Upon Senior Securities
-------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security-Holders.
---------------------------------------------------
Not applicable.
Item 5. Other Information.
-----------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits:
Exhibit 3(ii) Amended and Restated Bylaws of BUCS Financial
Corp
b) On March 14, 2001, the Registrant filed a Current Report on
Form 8-K to report the completion of the Bank's mutual to
stock conversion and the sale of 405,085 shares of common
stock, par value $0.10 per share, by the Registrant in
connection with the conversion.
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SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
BUCS FINANCIAL CORP
Date: May 14, 2001 By: /s/ Herbert J. Moltzan
--------------------------------------
Herbert J. Moltzan
President and Chief Executive Officer
(Duly Authorized Representative)
Pursuant to the requirement of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/Herbert J. Moltzan /s/Herbert J. Moltzan
- ------------------------------------- -------------------------------------------
Herbert J. Moltzan Herbert J. Moltzan
President and Chief Executive Officer Chief Financial Officer
(Principal Executive Officer) (Principal Financial and Accounting Officer)
Date: May 14, 2001 Date: May 14, 2001
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