UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 March 31, 2000
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-25172
FIRST BELL BANCORP, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 251752651
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
300 DELAWARE AVENUE, SUITE 1704, WILMINGTON, DELAWARE 19801
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(Address of principal executive offices) (Zip Code)
(302) 427-7883
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 4,888,573 shares of common
stock, par value $.01 per share, were outstanding as of May 12, 2000.
FIRST BELL BANCORP, INC.
FORM 10-Q
INDEX
PAGE
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PART I FINANCIAL INFORMATION
Item 1 Consolidated Balance Sheet March 31, 2000 (unaudited)
and December 31, 1999 (audited)................................. 4
Consolidated Statements of Income for the
Three Months Ended March 31, 2000 and 1999
(unaudited)..................................................... 5
Consolidated Statements of Comprehensive Income for the
Three Months Ended March 31, 2000 and
1999 (unaudited)................................................ 6
Consolidated Statements of Changes in Stockholders' Equity
for the Three Months Ended March 31, 2000 and 1999 (unaudited).. 7
Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2000 and 1999 (unaudited)............................. 8
Notes to Unaudited Consolidated Financial Statements............ 10
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations................... 11
Item 3 Quantitative and Qualitative Disclosure About Market Risk....... 16
PART II OTHER INFORMATION
Item 1 Legal Proceedings............................................... 16
Item 2 Changes in Securities........................................... 16
Item 3 Defaults Upon Senior Securities................................. 16
Item 4 Submission of Matters to a Vote of Security Holders............. 16
Item 5 Other Information............................................... 16
Item 6 Exhibits and Reports on Form 8-K................................ 16
SIGNATURES 18
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
FIRST BELL BANCORP, INC.
CONSOLIDATED BALANCE SHEET
(in thousands)
MARCH 31, DECEMBER 31,
2000 1999
---- ----
ASSETS (unaudited) (audited)
- ------
Cash:
Cash on-hand $ 719 $ 1,857
Non-interest-bearing deposits 2,021 2,204
Interest-bearing deposits 13,507 16,407
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Total cash 16,247 20,468
Federal funds sold 17,475 33,000
Investment securities held to maturity - at cost (fair value of $5,211 and
$5,242 at March 31, 2000 and December 31, 1999, respectively) 4,990 4,989
Investment securities available-for-sale at fair value (cost of $216,640 and $217,043
at March 31, 2000 and December 31, 1999, respectively) 204,085 202,382
Mortgage-backed securities available-for-sale at fair value (cost $6,360 at March 6,332 -
31, 2000)
Conventional mortgage loans - net of allowance for loan losses of $925 at March 31,
2000 and December 31, 1999, respectively 535,339 532,292
Other loans, net 1,035 967
Real estate owned 29 390
Premises and equipment, net 3,854 3,924
Federal Home Loan Bank stock, at cost 11,400 11,400
Accrued interest receivable 5,491 4,947
Other assets 1,734 1,363
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Total assets $808,011 $816,122
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Deposits:
Passbook, club and other accounts $ 72,571 $ 73,308
Money market and NOW accounts 57,987 52,259
Certificate accounts 385,117 386,364
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Total deposits 515,675 511,931
Borrowings 223,000 238,000
Advances by borrowers for taxes and insurance 12,046 11,223
Accrued interest on deposits 2,691 703
Accrued interest on borrowings 1,044 864
(Receivable)/payable for income taxes (395) 93
Deferred income tax liability/(asset) (3,489) (4,365)
Dividend payable on common stock 519 453
Other liabilities 3,033 2,702
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Total liabilities 754,124 761,604
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Stockholders' equity:
Preferred stock, ($0.01 par value; 2,000,000 shares authorized;
no shares issued or outstanding) -- --
Common stock ($0.01 par value; 20,000,000 shares authorized;
8,596,250 issued; 4,968,063 outstanding at March 31, 2000
5,189,063 outstanding at December 31, 1999; one stock right per share) 86 86
Paid-in capital 62,268 62,217
Unearned ESOP shares (521,245 and 528,739 shares at March 31, 2000
and December 31, 1999, respectively) (3,687) (3,740)
Unearned MRP shares (242,384 shares at March 31, 2000 and
December 31, 1999, respectively) (3,378) (3,378)
Treasury stock (3,628,187 shares and 3,407,187 shares at March 31,
2000 and December 31, 1999, respectively) (58,952) (55,523)
Accumulated other comprehensive loss, net of taxes (7,691) (8,931)
Retained earnings 65,241 63,787
------ ------
Total Stockholders' Equity 53,887 54,518
Total Liabilities and Stockholders' Equity $808,011 $816,122
======== ========
see notes to consolidated financial statements
4
FIRST BELL BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
THREE THREE
MONTHS MONTHS
ENDED ENDED
March 31, 2000 March 31, 1999
-------------- --------------
Interest income:
Conventional mortgage loans $ 9,556 $ 9,954
Interest-bearing deposits 223 262
Mortgage-backed securities 46 --
Federal funds sold 291 237
Investment securities 2,670 2,329
Other loans 17 15
Federal Home Loan Bank stock 192 169
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Total interest and dividend income 12,995 12,966
Interest expense on deposits 6,427 6,021
Interest expense on borrowings 3,245 2,877
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Total interest expense 9,672 8,898
Net interest income 3,323 4,068
Provision for loan losses - 30
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Net interest income after provision
for loan losses 3,323 4,038
Other income:
Loan fees and service charges 158 97
Gain on sale of loans and securities -- 45
Miscellaneous income 88 (19)
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Total other income 246 123
Other general and administrative expense:
Compensation, payroll taxes and fringe benefits 729 733
Federal insurance premiums 26 74
Office occupancy expense, excluding depreciation 117 150
Depreciation 71 72
Computer services 70 59
Other expenses 325 544
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Total general and administrative expense 1,338 1,632
Net Income before provision for income taxes 2,231 2,529
Provision for income taxes:
Current:
Federal 223 401
State 41 190
Deferred credit (2) (97)
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Total provision for income taxes 262 494
Net income $ 1,969 $ 2,035
======= =======
Basic earnings per share $0.46 $0.39
Diluted earnings per share $0.44 $0.37
Weighted average shares outstanding-Basic 4,322 5,256
Weighted average shares outstanding-Diluted 4,475 5,471
see notes to consolidated financial statements
5
FIRST BELL BANCORP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
(in thousands)
THREE THREE
MONTHS MONTHS
ENDED ENDED
MARCH 31, 2000 MARCH 31, 1999
--------------- ---------------
Net income $1,969 $ 2,035
Unrealized gains/(losses) on securities:
Unrealized holding gains/(losses) arising during
the period 2,118 (1,622)
Less: reclassification adjustment for gains
realized in net income -- (45)
------ -------
Other comprehensive income, before taxes 2,118 (1,577)
Tax (expense)/benefit related to other comphensive income (879) 616
------ -------
Comprehensive income $3,208 $ 1,074
====== =======
see notes to consolidated financial statements
6
FIRST BELL BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(in thousands)
(unaudited)
Accumulated
Number of Other
Common Additional Unearned Comprehensive
Stock Common Paid-in ESOP Treasury MRP Income, Net Retained
Shares Stock Capital Shares Stock Stock of Taxes Earnings Total
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- ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998 6,100 $86 $61,768 ($3,972) ($38,918) ($3,839) $1,179 $57,598 $ 73,902
Purchase of treasury stock (127) (2,206) (2,206)
Allocation of ESOP shares 66 55 121
Dividend on common stock ($0.10) (439) (439)
Change in unrealized gain or
(loss), net of taxes (961) (961)
Net income 2,035 2,035
----- --- ------- -------- --------- -------- ---- ------- --------
Balance at March 31, 1999 5,973 $86 $61,834 $(3,917) $(41,124) $(3,839) $218 $59,194 $ 72,452
===== === ======= ======== ========= ======== ==== ======= ========
Balance at December 31, 1999 5,189 $86 $62,217 $(3,740) $(55,522) $(3,378) $(8,931) $63,786 $54,518
Purchase of treasury stock (221) (3,430) (3,430)
Allocation of ESOP shares 51 53 104
Dividend on common stock ($0.12) (514) (514)
Change in unrealized gain or
(loss), net of taxes 1,240 1,240
Net income 1,969 1,969
----- --- ------- -------- --------- -------- ---- ------- --------
Balance at March 31, 2000 4,968 $86 $62,268 ($3,687) ($58,952) $(3,378) ($7,691) $65,241 $53,887
===== === ======= ======== ========= ======== ======== ======= =======
see notes to consolidated financial statements
7
FIRST BELL BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended Three Months Ended
March 31, 2000 March 31, 1999
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,969 $ 2,035
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 71 72
Deferred income taxes (2) (97)
Amortization of premiums and accretion of discounts (21) (29)
Provision for loan losses - 30
Compensation expense-allocation of ESOP and MRP shares 217 253
(Gain)/Loss on sale of real estate owned (84) 21
Gain on sale of investment securities, available for sale - (45)
(Increase) or decrease in assets and liabilities
Accrued interest receivable (544) (681)
Accrued interest on deposits 1,988 1,806
Accrued interest on borrowings 180 120
Accrued income taxes (488) 394
Other assets (370) (5)
Other liabilities 152 96
Dividend payable 67 (97)
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Net cash provided by operating activities 3,135 3,873
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment securities, available for sale - (85,188)
Purchase of mortgage-backed securities, available for sale (6,419) -
Maturity of federal funds 15,525 29,475
Principal repayments on mortgage-backed securities, available for sale 63 -
Net proceeds from sale of investments, available for sale - 3,317
Principal repayments on investment securities, available for sale 458 1,814
Net (increase)/decrease in conventional loans (3,077) 3,776
Net (increase)/decrease in other loans (68) 15
Purchase of Federal Home Loan Bank stock - (2,650)
Net proceeds from sale of real estate owned 474 85
Purchase of premises and equipment (1) (8)
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Net cash provided/(used) in investing activities 6,955 (49,364)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits, NOW accounts and savings
accounts 4,991 3,143
Net decrease in certificate accounts (1,247) (5,767)
Net increase in advances by borrowers for taxes and insurance 823 577
Net (decrease)/increase in borrowings (15,000) 53,000
Dividends paid (448) (536)
Purchase of treasury stock (3,430) (2,206)
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Net cash (used)/provided by financing activities (14,311) 48,211
--------
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (4,221) 2,720
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 20,468 21,543
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 16,247 $ 24,263
======== ========
see notes to consolidated financial statements
8
FIRST BELL BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
SUPPLEMENTAL DISCLOSURES:
Cash paid for:
Interest on deposits and advances by borrowers for
taxes and insurance $4,439 $ 4,215
Interest on borrowings 3,065 1,145
Income taxes 755 189
Non-cash transactions:
Transfers from conventional loans to real estate acquired through foreclosures 29 63
Increase in additional paid-in capital ESOP and MRP allocation and options
exercised 51 66
Unrealized appreciation/(depreciation) on securities available for sale 2,118 (1,577)
9
FIRST BELL BANCORP, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
Principles of Consolidation
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The consolidated financial statements include the accounts of First Bell
Bancorp, Inc. ("First Bell" or the "Company") and its wholly-owned subsidiary,
Bell Federal Savings and Loan Association of Bellevue (the "Association"). All
significant intercompany transactions have been eliminated in consolidation.
The investment in the Association on First Bell's financial statements is
carried at the parent company's equity in the underlying net assets.
The consolidated balance sheet as of March 31, 2000 and related consolidated
statements of income, comprehensive income, cash flows and changes in
stockholders' equity for the three months ended March 31, 2000 and 1999 are
unaudited. In the opinion of management, all adjustments necessary for a fair
presentation of such financial statements have been included. Such adjustments
consisted of normal recurring items. Interim results are not necessarily
indicative of results for a full year.
The financial statements and notes are presented as permitted by Form 10-Q.
The interim statements are unaudited and should be read in conjunction with the
financial statements and notes thereto contained in First Bell's annual report
for the fiscal year ended December 31, 1999.
Private Securities and Litigation Reform Act Safe Harbor Statement
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In addition to historical information, this 10-Q includes certain forward-
looking statements based on current management expectations. Examples of this
forward-looking information can be found in, but are not limited to, the
allowance for losses discussion and the quantitative and qualitative disclosure
about market risk. The Company's actual results could differ materially from
those of management expectations. Factors that could cause future results to
vary from current management expectations include, but are not limited to,
general economic conditions, legislative and regulatory changes, monetary and
fiscal policies of the federal government, changes in tax policies, rates and
regulations of federal, state and local tax authorities, changes in interest
rates, deposit flows, the cost of funds, demand for loan products, demand for
financial services, competition, changes in the quality or composition of the
Company's loan and investment portfolios, changes in accounting principles,
policies or guidelines, and other economic, competitive, governmental and
technological factors affecting the Company's operations, markets, products,
services and prices. The Company does not undertake-and specifically disclaims
any obligation-to publicly release the result of any revisions which may be made
to any forward-looking statements to reflect events or circumstances after the
date of such statements or to reflect the occurrence of anticipated or
unanticipated events.
10
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Comparison of Financial Condition at March 31, 2000 and December 31, 1999.
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Assets. Total assets decreased by $8.1 million or 1.0% to $808.0 million at
March 31, 2000 from $816.1 million at December 31, 1999. The decrease was the
result of declines in federal funds sold and cash offset by increases in
mortgage-backed securities, conventional mortgage loans and investment
securities. Federal funds sold decreased by $15.5 million or 47.0% to $17.5
million at March 31, 2000 from $33.0 million at December 31, 1999. Total cash
decreased by $4.2 million or 20.6% to $16.2 million at March 31, 2000 from $20.5
million at December 31, 1999. The decreases in federal funds sold and cash were
the result of the money being used to paydown borrowings and help fund the
purchase of mortgage-backed securities, treasury stock and the increase in
lending for conventional mortgage loans. Mortgage-backed securities had a
balance of $6.3 million at March 31, 2000. There were no mortgage-backed
securities at December 31, 1999. The increase was the result of the purchase of
$6.4 million in adjustable rate mortgage-backed securities reduced by the
principal paydowns of $63,000. Conventional mortgage loans increased by $3.0
million or 0.6% to $535.3 million at March 31, 2000 from $532.3 million at
December 31, 1999. The increase was the result of the origination of $16.6
million in 1-4 family mortgage loans and disbursements for home equity loans of
$2.4 million offset by principal repayments of $13.8 million. Investment
securities increased to $209.1 million at March 31, 2000 from $207.4 million at
December 31, 1999. The $1.7 million or 0.8% increase was the result of the
unrealized gain or loss on investment securities available-for-sale improving by
$2.1 million during the quarter. The impact of this increase was reduced by
principal paydowns of $458,000 of available-for-sale securities.
Liabilities. Total liabilities decreased by $7.5 million or 1.0% to $754.1
million at March 31, 2000 from $761.6 million at December 31, 1999. The
decrease was primarily the result of a decline in borrowings offset by an
increase in deposits and accrued interest on deposits. Borrowings decreased by
$15.0 million or 6.3% to $223.0 million at March 31, 2000 from $238.0 million at
December 31, 1999. The decrease was the result of the payoff of $20.0 million
of FHLB borrowings offset by an additional $5.0 million in borrowings obtained
from an outside bank. Total deposits increased by $3.7 million or 0.7% to
$515.7 million at March 31, 2000 from $511.9 million at December 31, 1999. The
increase was the result of money market and NOW accounts rising by $5.7 million
during the quarter. The Company has been emphasizing its core deposits through
a cross selling program and through its advertising campaign. Offsetting this
increase was the roll off of higher paying certificate accounts of $1.2 million.
Accrued interest on deposits increased to $2.7 million at March 31, 2000 from
$703,000 at December 31, 1999. The $1.9 million increase is attributable to the
timing of interest payments on certificate accounts.
Capital. Total stockholders' equity decreased by $631,000 or 1.2% to $53.9
million at March 31, 2000 from $54.5 million at December 31, 1999. The decrease
was the result of changes in treasury stock, retained earnings and accumulated
other comprehensive loss, net of taxes. During the quarter, $3.4 million in
treasury stock was purchased. Retained earnings increased by $1.5 million as
the result of net income of $2.0 million and dividends declared of $514,000.
11
Accumulated other comprehensive loss, net of taxes improved by $1.2 million as
the result of the change in unrealized gain or loss on investment securities
available-for-sale.
Liquidity and Capital Resources. The Company's primary sources of funds are
deposits, borrowings, and principal and interest payments on mortgages,
mortgage-backed securities and investments. While maturities and scheduled
amortization of loans are predictable sources of funds, deposit flows and
mortgage prepayments are strongly influenced by changes in general interest
rates, economic conditions and competition.
The primary investing activities of the Company for the three months ended
March 31, 2000 was the paydown of $20.0 million in borrowings, the purchase of
$6.4 million of mortgage-backed securities, held as available-for-sale and the
investment of $18.9 million in conventional mortgages. Sources of funds for
three months ended March 31, 2000 were the $14.4 million in principal repayments
of conventional mortgage loans, mortgage-backed securities and investments, $5.0
million in borrowings and $3.7 million in total deposits.
The Association is required to maintain an average daily balance of liquid
assets as a percentage of net withdrawable deposit accounts plus short-term
borrowings as defined by the Office of Thrift Supervision ("OTS") regulations.
The minimum required liquidity ratio is currently 4.0%. The Association's
average liquidity ratio was 9.2% during the three month period ended March 31,
2000. The Association's most liquid assets are cash and short-term investments.
The levels of the Association's liquid assets are dependent on the
Association's operating, financing, lending and investing activities during any
given period. At March 31, 2000, assets qualifying for liquidity, including
cash and investments, totaled $62.0 million.
At March 31, 2000, the Association's capital exceeded all of the capital
requirements of the OTS. The Association's Tangible, Tier I (core) capital (to
total assets), Tier I capital (to risk-based assets) and Risk-Based capital (to
risk-based assets) ratios were 9.3%, 9.3%, 22.1% and 22.3%, respectively. The
Association is considered a "well capitalized" institution under the prompt
corrective action regulations of the OTS.
Comparison of Results of Operation for the Three Months ended March 31, 2000 and
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1999.
- -----
General. Net income for the three months ended March 31, 2000 and 1999
remained flat at $2.0 million. This was the result of reductions in general and
administrative expenses and taxes and an increase in other income offset by a
decrease in net interest income.
Interest Income. Interest income discussed in this section is tax equivalent
interest income. Tax equivalent interest income is being used because interest
on investment securities includes tax-exempt securities. Tax-exempt securities
carry pre-tax yields lower than comparable assets. Therefore, it is more
meaningful to analyze interest income on a tax equivalent basis. Tax equivalent
increases of $1.0 million and $812,000 were made for the quarters ended March
31, 2000 and 1999, respectively. Interest income for the three months ended
March 31, 2000 increased by $229,000 or 1.7% to $14.0 million from $13.8 million
for the three months ended March 31, 1999. The increases in interest income
from investment securities, mortgage-backed securities, federal funds sold and
FHLB stock offset the decreases in interest earned on conventional mortgage
loans and interest-bearing deposits. Interest on investment securities
12
increased by $241,000 or 10.3% to $3.6 million for the three months ended March
31, 2000 from $3.1 million for the same 1999 period. This increase was the
result of the average balance of investment securities increasing to $206.4
million for the three months ended March 31, 2000 from $187.8 million for the
three months ended March 31, 1999. In addition, the rate earned on investment
securities for the quarter ended March 31, 2000 was 7.14% compared to 6.69% for
the quarter ended March 31, 1999. Interest earned on mortgage-backed securities
was $46,000 for the three months ended March 31, 2000 compared to zero for the
three months ended March 31, 1999. Interest earned on federal funds sold
increased by $54,000 or 22.8% to $291,000 for the three months ended March 31,
2000 from $237,000 for the comparable 1999 period. The increase was the result
of the average balance of federal funds sold increasing by $2.2 million or 11.5%
to $21.6 million for the quarter ended March 31, 2000 from $19.4 for the quarter
ended March 31, 1999 and an increase of 49 basis points on the interest earned
on federal funds sold. Dividends on FHLB stock increased by $23,000 or 13.6% to
$192,000 for the three months ended March 31, 2000 from $169,000 for the three
months ended March 31, 1999 primarily as the result of the average balance of
FHLB stock increasing to $11.4 million from $10.3 million for the respective
periods. Interest earned on conventional mortgage loans decreased by $398,000
or 4.0% to $9.6 million for the three months ended March 31, 2000 from $10.0
million for the three months ended March 31, 1999. The decrease was the result
of a decline in the average balance in conventional mortgage loans of $10.7
million or 2.0% from 1999 to 2000 and the average yield falling to 7.18% for the
three months ended March 31, 2000 from 7.33% for the comparable 1999 period.
Interest earned on interest-bearing deposits decreased by $39,000 or 14.9% as
the result of the average balance of interest-bearing deposits declining by $9.5
million or 36.8% to $16.4 million for the three months ended March 31, 2000 from
$25.9 million for the three months ended March 31, 1999.
Interest Expense. Interest expense increased to $9.7 million for the three
months ended March 31, 2000 from $8.9 million for the comparable 1999 period.
The $774,000 or 8.7% increase was the result of an increase in interest expense
on deposits and borrowings. Interest expense on deposits increased by $406,000
or 6.7% to $6.4 million for the three months ended March 31, 2000 from $6.0
million for the three months ended March 31, 1999. The increase was primarily
the result of interest expense on certificate accounts rising to $5.4 million
from $5.1 million for the three months ended March 31, 2000 and 1999,
respectively. Interest expense on certificate accounts rose because the average
balance went from $367.4 million for the three months ended March 31, 1999 to
$384.6 million for the comparable 2000 period. In addition, the average cost
increased to 5.63% for the quarter ended March 31, 2000 from 5.56% for the
quarter ended March 31, 1999. Interest expense on borrowings increased by
$368,000 or 12.8% to $3.2 million for the three months ended March 31, 2000 from
$2.9 million for the three months ended March 31, 1999. The increase was the
result of the average balance increasing by $17.8 million or 8.6% to $225.1
million for the three months ended March 31, 2000 from $207.3 million for the
three months ended March 31, 1999 and the average cost rising to 5.77% from
5.55% for the three months ended March 31, 2000 and 1999, respectively.
Net Interest Income. Net interest income decreased by $545,000 or 11.2% to
$4.3 million for the quarter ended March 31, 2000 from $4.9 million for the
comparable 1999 period as the result of interest expense rising by $774,000
while interest income increased by $229,000.
Provision for Loan Losses. The provision for loan loss was zero for the
quarter ended March 31, 2000 compared to $30,000 for the quarter ended March 31,
1999. At March 31, 2000, non-performing assets were $317,000 compared to
$659,000 at December 31, 1999. The allowance for
13
loan losses equaled 291.8% of total non-performing assets as compared to 140.4%
at December 31, 1999. There were no loans charged off during the quarters ended
March 31, 2000 and 1999, respectively. Management believes that the current
level of loan loss reserve is adequate to cover losses inherent on the portfolio
as of March 31, 2000. There can be no assurance, however, that the Company will
not sustain losses in future periods which could be substantial in relation to
the size of the allowance at March 31, 2000.
Other Income. Other income increased by $123,000 or 100.0% to $246,000 for the
three months ended March 31, 2000 from $123,000 for the three months ended March
31, 1999. The increase was the result of increases in miscellaneous income and
loan fees and service charges reduced by a decrease in gains on sale of
investments. Miscellaneous income increased to $88,000 for the three months
ended March 31, 2000 from a loss of $19,000 for the comparable 1999 period. The
increase was due to a gain of $84,000 during the first quarter of 2000 and a
$21,000 loss during the first quarter of 1999 on real estate owned. Loan fees
and service charges increased by $61,000 or 62.9% to $158,000 for the three
months ended March 31, 2000 from $97,000 for the three months ended March 31,
1999. The increase was due to additional fees earned during the quarter ended
March 31, 2000 as compared to the quarter ended March 31, 1999. Gains on sale
of investments were zero and $45,000 for the three months ended March 31, 2000
and 1999, respectively. The $45,000 gain in 1999 was from the sale of
investment securities available-for-sale.
General and Administrative Expenses. General and administrative expenses
declined by $294,000 or 18.0% to $1.3 million for the three months ended March
31, 2000 from $1.6 million for the three months ended March 31, 1999. The
decline was due to decreases in other expenses, federal insurance premiums and
office occupancy expense. Other expenses decreased by $219,000 or 67.4% to
$325,000 for the three months ended March 31, 2000 from $544,000 for the
comparable 1999 period. The decline was due to costs associated with the annual
meeting and other one time non-recurring expenses that were incurred in 1999.
Federal insurance premiums decreased by $48,000 or 64.9% to $26,000 for the
three months ended March 31, 2000 from $74,000 for the comparable 1999 period.
The decrease was the result of a decline in the premium rate charged by the
Federal Deposit Insurance Company ("FDIC") by Savings Association Insurance Fund
("SAIF") members. Office occupancy expense decreased by $33,000 or 22.0% to
$117,000 for quarter ended March 31, 2000 from $150,000 for the quarter ended
March 31, 1999. The decrease was due to the decline in expenses associated with
the maintenance of buildings and equipment.
Income Taxes. Tax equivalent income taxes have remained flat at $1.3 million
for the three months ended March 31, 2000 and 1999. For the three months ended
March 31, 2000 and 1999, tax equivalent adjustments of $1.0 million and $812,000
were made respectively.
Other Comprehensive Income. The Financial Accounting Standards Board ("FASB")
No. 130 established standards for reporting and display of comprehensive income
and its components (revenues, expenses, gains and losses) in a full set of
general purpose financial statements.
The following table sets forth the related tax effects allocated to each
element of comprehensive income for the three months ended March 31, 2000 and
1999.
14
Three Months Ended Three Months Ended
March 31, 2000 March 31, 1999
---------------------------- ------------------------------
Tax Net-of Tax Net-of-
Pre-Tax (Expense) Tax Pre-Tax (Expense) Tax
Amount or Benefit Amount Amount or Benefit Amount
------- ----------- ------ -------- ----------- -------
Unrealized gains or losses
on securities:
Unrealized holding gains/(losses)
arising during the period $2,118 $(879) $1,239 $(1,622) $634 $(988)
Reclassification adjustment
for gains realized in net
income - - - (45) 18 (27)
------- ---------- ------ ------- ---------- ------
Net realized gains/(losses) 2,118 (879) 1,239 (1,577) 616 (961)
------- ---------- ------ ------- ---------- ------
Other comprehensive income $2,118 $(879) $1,239 $(1,577) $616 $(961)
======= ========== ====== ======= ========== ======
The following tables set forth the component of accumulated other comprehensive
income for the three months ended March 31, 2000 and 1999.
Three Months Three Months
Ended Ended
March 31, 2000 March 31, 1999
--------------- ---------------
Beginning Balance $(8,931) $1,179
Net unrealized gains/(losses) on securities, net of taxes 1,240 (961)
------- ------
Ending Balance $(7,691) $ 218
======= ======
Recent Accounting Pronouncements. In June 1998, the FASB issued Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities". This
statement addresses the accounting for derivative instruments, including certain
derivative instruments embedded in other contracts and hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. This statement is effective for all fiscal quarters of fiscal
years beginning after June 15, 2000. First Bell has not yet determined the
impact that this standard will have on its financial statements.
15
Item 3. Quantitative and Qualitative Disclosure About Market Risk
The Company's interest rate sensitivity is monitored by management through
selected interest rate risk measures produced internally and by the OTS. Based
on internal reviews, management does not believe that there has been a material
change in the Company's interest rate sensitivity from December 31, 1999 to
March 31, 2000. However, the OTS results are not yet available for the quarter
ended March 31, 2000. All methods used to measure interest rate sensitivity
involve the use of assumptions. Management cannot predict what assumptions are
made by the OTS, which can vary from management's assumptions. Therefore, the
results of the OTS calculations can differ from management's internal
calculations. The Company's interest rate sensitivity should be reviewed in
conjunction with the financial statements and notes thereto contained in First
Bell's Annual Report for the fiscal year ended December 31, 1999.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
There are various claims and lawsuits in which the Company is periodically
involved incidental to the Company's business, which in the aggregate
involve amounts which are believed by management to be immaterial to the
financial condition and results of operations of the Company.
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. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
(a) The following exhibits are filed as part of this report.
Exhibit 3.1 - Certificate of Incorporation of First Bell Bancorp,
Inc.*
Exhibit 3.2 - Bylaws of First Bell Bancorp, Inc.*
Exhibit 4.0 - Stock Certificate of First Bell Bancorp, Inc.*
Exhibit 11 - Computation of Earnings Per Share (filed herewith)
Exhibit 27 - Financial Data Schedule (filed herewith)
16
(b) Reports on Form 8-K
None* Incorporated herein by reference into this document from the
Exhibits to Form S-1, Registration Statement, filed on November 9,
1994, as amended, Registration No. 33-86160.
17
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
FIRST BELL BANCORP, INC.
(Registrant)
Date: May 12, 2000 /s/ Albert H. Eckert, II
-------------------------------------------
Albert H. Eckert, III
President and Chief Executive Officer
Date: May 12, 2000 /s/ Jeffrey M. Hinds
-------------------------------------------
Jeffrey M. Hinds
Executive Vice President and Chief Financial
Officer (Principal Accounting Officer)
18