FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(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
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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 No. 0-25217
PEOPLES BANKCORP, INC.
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(Exact name of registrant as specified in its charter)
New York 16-1560886
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
825 State Street
Ogdensburg, New York 13669
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(Address of principal (Zip Code)
executive office)
Issuer's telephone number, including area code: (315) 393-4340
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Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 [ ]
As of May 11, 2001, the latest practicable date, 132,390 shares of the
registrant's common stock, $.01 par value per share, were issued and
outstanding.
Transitional small business disclosure format (check one):
Yes [ ] No [ ]
PART I. FINANCIAL STATEMENTS
Item 1. Financial Statements
Consolidated Statements of Financial Condition as of
March 31, 2001 (unaudited) and December 31, 2000....................3
Consolidated Statements of Income for the Three Months
Ended March 31, 2001 and 2000 (unaudited).............................4
Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 2001 and 2000 (unaudited)......................5
Notes to Consolidated Financial Statements............................7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.............................................8
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
2
PART I FINANCIAL STATEMENTS
PEOPLES BANKCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
MARCH 31, 2001 AND DECEMBER 31, 2000
(In thousands, except per share data)
March 31, December 31,
ASSETS 2001 2000
------------- ------------
(Audited)
Cash and Cash Equivalents:
Cash and due from banks $ 925 $ 605
Interest-bearing deposits in other banks 1,962 204
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Total cash and cash equivalents 2,887 809
Securities available-for-sale - at fair value 2,955 1,017
Securities held-to-maturity (fair value of $3,640 (unaudited)
at March 31, 2001 and $4,192 at December 31, 2000) 3,564 4,126
Loans, net of deferred fees 20,502 20,688
Less allowance for loan losses 176 176
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Net loans 20,326 20,512
Premises and equipment, net 437 444
Federal Home Loan Bank stock, at cost-required by law 162 155
Accrued interest receivable 171 179
Other assets 52 19
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TOTAL ASSETS $ 30,554 $ 27,261
========= =========
LIABILITIES AND EQUITY
Liabilities:
Deposits:
Demand accounts - non-interest bearing $ 754 $ 813
Savings and club accounts - interest bearing 3,088 2,930
Time certificates - interest bearing 18,664 18,075
NOW and money market accounts - interest bearing 2,826 1,927
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Total deposits 25,332 23,745
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Borrowed money 2,000 500
Advance payments by borrowers for property taxes and insurance 2 2
Other liabilities 252 86
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Total liabilities 27,586 24,333
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Commitments and contingencies
Stockholders' Equity:
Preferred stock $.01 par value per share, 500,000 shares authorized,
no shares issued or outstanding -- --
Common stock of $.01 par value, 3,000,000
shares authorized, 132,390 shares issued and
outstanding at March 31, 2001 and December 31, 2000 1 1
Additional paid-in capital 1,003 1,003
Retained earnings - substantially restricted 2,076 2,036
Accumulated other comprehensive income -- --
Loan to employee stock ownership plan (86) (86)
Common stock in treasury, at cost (2,000 shares) (26) (26)
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Total stockholders' equity 2,968 $ 2,928
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 30,554 $ 27,261
========= =========
See accompanying notes to consolidated financial statements.
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PEOPLES BANKCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(In thousands, except per share data)
Three Months Ended
March 31,
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2001 2000
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(In thousands)
Interest income
Loans $ 421 $ 413
Securities 110 65
Other short-term investments 17 20
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Total interest income 548 498
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Interest expense:
Deposits 312 257
Borrowings 18 20
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Total interest expense 330 277
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Net interest income 218 221
Provision for loan losses 6 8
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Net interest income after provision for loan losses 212 213
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Non-interest income:
Service charges 10 8
Other 2 2
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Total non-interest income 12 10
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Non-interest expense:
Salaries and employee benefits 84 76
Director fees 13 12
Building, occupancy and equipment 16 15
Data processing 9 9
Postage and supplies 10 6
Deposit insurance premium 1 1
Insurance 3 5
Other 27 32
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Total non-interest expense 163 156
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Income before income tax expense 61 67
Income tax expense 21 24
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Net income $ 40 $ 43
======== =========
Earnings per share
Basic $ .30 $ .32
Diluted $ .29 $ .32
Weighted average shares outstanding 132 134
See accompanying notes to consolidated financial statements.
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PEOPLES BANKCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(In thousands)
Three Months Ended
March 31,
-------------------------
2001 2000
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(In thousands)
Cash flows from operating activities:
Net income $ 40 $ 43
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 7 7
Decrease in accrued interest receivable 8 19
Provision for loan losses 6 8
Net amortization (accretion) of premium/discounts (58) --
Increase in other liabilities 166 40
(Increase) decrease in other assets (33) (11)
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Net cash provided by operating activities 136 106
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Cash flows from investing activities:
Net (increase) decrease in loans 180 327
Purchases of securities available-for-sale (1,996) --
Proceeds from maturities and principal reductions
of securities available-for-sale 96 --
Purchases of securities held-to-maturity -- --
Proceeds from maturities and principal reductions
of securities held-to-maturity 582 34
Purchase of FHLB stock (7) (16)
Purchase of fixed assets -- --
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Net cash provided (used) by investing activities (1,145) 345
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Cash flows from financing activities:
Increase in deposits 1,587 414
Borrowings from FHLB 2,000 --
Repayments to FHLB (500) (500)
Loan payment received from Employee Stock Ownership Plan -- --
Decrease in advance payments from borrowers for
property taxes and insurance -- --
Cash dividends paid on common stock -- --
Payments to acquire treasury stock -- --
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Net cash provided (used) by financing activities 3,087 (86)
Net increase in cash and cash equivalents 2,078 365
Cash and cash equivalents at beginning of period 809 1,457
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Cash and cash equivalents at end of period $ 2,887 $ 1,822
======== =========
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PEOPLES BANKCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(In thousands)
Three Months Ended
March 31,
-------------------------
2001 2000
-------- --------
(In thousands)
Supplemental Disclosure of Cash Flow Information:
Non-cash investing activities:
Loans transferred to real estate owned through foreclosure $ -- $ --
Cash paid during the period for:
Interest 318 281
Income taxes 4 11
======== =========
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PEOPLES BANKCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended March 31, 2001 and 2000
NOTE 1 - PEOPLES BANKCORP, INC.
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Peoples Bankcorp, Inc. (the "Company") was incorporated under the laws of the
State of New York for the purpose of becoming the holding company of Ogdensburg
Federal Savings and Loan Association (the "Association") in connection with the
Association's conversion from a federally chartered mutual savings and loan
association to a federally chartered capital stock savings and loan association.
On November 22, 1998, the Company commenced a subscription offering of its
shares in connection with the Association's conversion. The Company's offering
and the Association's conversion closed on December 28, 1998. A total of 134,390
shares were sold at $10.00 per share.
NOTE 2 - BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
- --------------------------------------------------------------
The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-QSB and on the same basis as the Company's
audited financial statements. In the opinion of management, all adjustments,
consisting of normal recurring accruals, necessary to present fairly the
financial position, results of operations, and cash flows for the interim
periods presented have been included. The results of operations for such interim
periods are not necessarily indicative of the results expected for the full
year.
NOTE 3 - PLAN OF CONVERSION
- ---------------------------
On July 23, 1998, the Association's Board of Directors formally approved a plan
("Plan") to convert from a federally chartered mutual savings and loan
association to a federally chartered stock savings and loan association subject
to approval by the Association's members and the Office of Thrift Supervision.
The Plan called for the common stock of the Association to be purchased by the
Company and the common stock of the Company to be offered to various parties in
a subscription offering at a price based upon an independent appraisal of the
Association. All requisite approvals were obtained and the conversion and the
Company's offering were consummated effective December 28, 1998.
Upon consummation of the conversion, the Association established a liquidation
account in an amount equal to its retained earnings as reflected in the latest
statement of financial condition used in the final conversion prospectus. The
liquidation account will be maintained for the benefit of certain depositors of
the Association who continue to maintain their deposit accounts in the
Association after conversion. In the event of a complete liquidation of the
Association, such depositors will be entitled to receive a distribution from the
liquidation account before any liquidation may be made with respect to the
common stock.
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PEOPLES BANKCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company's assets consist primarily of its ownership of the Association. As
such, the following discussion relates primarily to the Association's financial
condition and results of operations. The Association's results of operations
depend primarily on net interest income, which is determined by (i) the
difference between rates of interest it earns on its interest-earning assets and
the rates it pays on interest-bearing liabilities (interest rate spread), and
(ii) the relative amounts of interest-earning assets and interest-bearing
liabilities.
The Association's results of operations are also affected by non-interest
expense, including primarily compensation and employee benefits, federal deposit
insurance premiums and office occupancy costs. The Association's results of
operations also are affected significantly by general and economic and
competitive conditions, particularly changes in market interest rates,
government policies and actions of regulatory authorities, all of which are
beyond its control.
FORWARD-LOOKING STATEMENTS
In addition to historical information contained herein, the following discussion
contains forward-looking statements that involve risks and uncertainties.
Economic circumstances, the Company's operations and the Company's actual
results could differ significantly from those discussed in the forward-looking
statements. Some of the factors that could cause or contribute to such
differences are discussed herein but also include changes in the economy and
interest rates in the nation and the Company's market area generally. Some of
the forward-looking statements included herein are the statements regarding
management's determination of the amount and adequacy of the allowance for
losses on loans and the effect of certain recent accounting pronouncements.
COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2001 AND DECEMBER 31, 2000
Total assets at March 31, 2001 amounted to $30.6 million, a $3.3 million, or
12.08%, increase from December 31, 2000's level of $27.3 million. The increase
in total assets was centered in a $2.1 million increase in cash and cash
equivalents and a $1.9 million increase in securities classified as available
for sale. These increases were funded by a combination of a $1.5 million
increase in FHLB advances and a $1.6 million increase in total deposits along
with a $562,000 reduction in securities held to maturity. Net loans at March 31,
2001 amounted to $20.3 million which represented as decrease of $186,000 from
$20.5 million at December 31, 2000. Total liabilities at March 31, 2001
increased from $24.3 million at December 31, 2000, to $27.6 million at March 31,
2001. Deposits, which comprise the majority of total liabilities, amounted to
$25.3 million at March 31, 2001, up from $23.7 million at December 31, 2000 for
an increase of $1.6 million, or 6.68%, with increases in all categories of
deposits other than demand deposits. Total stockholders' equity at March 31,
2001 amounted to $3.0 million as compared to $2.9 million at December 31, 2000
with the $40,000 increase attributable to the retention of earnings from the
period. At March 31, 2001 the Association was in compliance with all applicable
regulatory capital requirements with total core and tangible capital of $2.63
million (8.63% of adjusted total assets) and total risk-based capital of $2.7
million (18.4%) of risk weighted assets).
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
NET INCOME. Net income for the three months ended March 31, 2001 amounted to
$40,000 as compared to $43,000 for the three months ended March 31, 2000. The
$3,000 or 6.98% decrease was due to the combined effects of a $7,000 increase in
non-interest expenses and a $3,000 decrease in net interest income, partially
offset by a $3,000 decrease in income tax expense, a $2,000 reduction in the
provision for loan losses and a $2,000 increase in non-interest income.
NET INTEREST INCOME. Net interest income before provision for loan losses
decreased by $3,000, or 1.36%, from $221,000 for the three months ended March
31, 2000 to $218,000 for the three months ended March 31, 2001. The decrease in
net interest income was primarily due to a $53,000 increase in interest expense
as compared to the three months ended March 31, 2000, offset by a $50,000
increase in total interest income. The increase in interest expense was due to a
$55,000 increase in interest on deposits which reflected the increase in the
average balance of interest-bearing deposits during the first quarter of 2001 as
compared to the same period in 2000. The increase in
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interest income was primarily due to a $45,000 increase in interest from the
securities portfolio due to the purchase of two GNMA securities.
PROVISION FOR LOAN LOSSES. For the three months ended March 31, 2001, the
Company made a $6,000 provision for loan losses as compared to a provision of
$8,000 or the same period in 2000. The lower provision in 2001 reflected the
level of charge-offs during that period.
A provision for losses on loans is charged to earnings to bring the total
allowance for loan losses to a level considered appropriate by management based
on historical experience, the volume and type of lending conducted by the
Association, the status of past due principal and interest payments, general
economic conditions, particularly as such conditions relate to the Association's
market area, and other factors related to the collectibility of the
Association's loan portfolio. There can be no assurance that the loan loss
allowance of the Association will be adequate to cover losses on nonperforming
assets in the future.
NON-INTEREST INCOME. Non-interest income for the three months ended March 31,
2001 amounted to $12,000 as compared to $10,000 for the three months ended March
31, 2000 with the increase attributable to increased service charges.
NON-INTEREST EXPENSES. Non-interest expenses for the first quarter of 2001
totaled $163,000, up from $156,000 for the first quarter of 2000 with the
increase primarily due to an $8,000 increase in salaries and employee benefits
and a $4,000 increase in postage and supplies, partially offset by a $5,000
decrease in miscellaneous expenses.
INCOME TAX EXPENSE. Income tax expense for the three months ended March 31, 2001
amounted to $21,000, a $3,000 decrease from the same period in 2000 with the
decrease primarily attributable to a decrease in pre-tax income. The Company's
effective tax rates for the respective periods were 34.43% and 35.82%.
LIQUIDITY AND CAPITAL RESOURCES
The Association is required to maintain levels of liquid assets consistent with
its safe and sound operation. The Association believes its level of liquid
assets are sufficient for its needs.
The Association's primary sources of funds are deposits, repayment of loans and
mortgage-backed securities, maturities of investments and interest-bearing
deposits, funds provided from operations. The Association is also able to obtain
advances from the Federal Home Loan Bank of New York. While scheduled repayments
of loans and mortgage-backed securities and maturities of investment securities
are predicable sources of funds, deposit flows and loan prepayments are greatly
influenced by the general level of interest rates, economic conditions and
competition. The Association uses its liquidity resources principally to fund
existing and future loan commitments, to fund maturing certificates of deposit
and demand deposit withdrawals, to invest in other interest-earning assets, to
maintain liquidity, and to meet operating expenses.
FINANCIAL MODERNIZATION LEGISLATION
On November 12, 1999, President Clinton signed legislation which could have a
far-reaching impact on the financial services industry. The Gramm-Leach-Bliley
("G-L-B") Act authorizes affiliations between banking, securities and insurance
firms and authorizes bank holding companies and national banks to engage in a
variety of new financial activities. Among the new activities that will be
permitted to bank holding companies are securities and insurance brokerage,
securities underwriting, insurance underwriting and merchant banking. The Board
of Governors of the Federal Reserve System (the "Federal Reserve Board"), in
consultation with the Secretary of the Treasury, may approve additional
financial activities. The G-L-B Act, however, prohibits future acquisitions of
existing unitary savings and loan holding companies, like the Company, by firms
which are engaged in commercial activities and limits the permissible activities
of unitary holding companies formed after May 4, 1999.
The G-L-B Act imposes new requirements on financial institutions with respect to
customer privacy. The G-L-B Act generally prohibits disclosure of customer
information to non-affiliated third parties unless the customer has been given
the opportunity to object and has not objected to such disclosure. Financial
institutions are further required to disclose their privacy policies to
customers annually. Financial institutions, however, will be required to comply
with state law if it is more protective of customer privacy than the G-L-B Act.
The G-L-B Act directs the
9
federal banking agencies, the National Credit Union Administration, the
Secretary of the Treasury, the Securities and Exchange Commission and the
Federal Trade Commission, after consultation with the National Association of
Insurance Commissioners, to promulgate implementing regulations within six
months of enactment. The privacy provisions will become effective six months
thereafter.
The G-L-B Act contains significant revisions to the FHLB System. The G-L-B Act
imposes new capital requirements on the FHLBs and authorizes them to issue two
classes of stock with differing dividend rates and redemption requirements. The
G-L-B Act deletes the current requirement that the FHLBs annually contribute
$300 million to pay interest on certain government obligations in favor of a 20%
of net earnings formula. The G-L-B Act expands the permissible uses of FHLB
advances by community financial institutions (under $500 million in assets) to
include funding loans to small businesses, small farms and small
agri-businesses. The G-L-B Act makes membership in the FHLB voluntary for
federal savings associations.
The G-L-B Act contains a variety of other provisions including a prohibition
against ATM surcharges unless the customer has first been provided notice of the
imposition and amount of the fee. The G-L-B Act reduces the frequency of
Community Reinvestment Act examinations for smaller institutions and imposes
certain reporting requirements on depository institutions that make payments to
non-governmental entities in connection with the Community Reinvestment Act. The
G-L-B Act eliminates the SAIF special reserve and authorizes a federal savings
association that converts to a national or state bank charter to continue to use
the term "federal" in its name and to retain any interstate branches.
The Company is unable to predict the impact of the G-L-B Act on its operations
at this time. Although the G-L-B Act reduces the range of companies with which
the Company may affiliate, it may facilitate affiliations with companies in the
financial services industry.
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PEOPLES BANKCORP, INC.
PART II
ITEM 1. Legal Proceedings
-----------------
None.
ITEM 2. Changes in Securities and Use of Proceeds
-----------------------------------------
Not applicable
ITEM 3. Defaults Upon Senior Securities
-------------------------------
Not applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None.
ITEM 5. Other Information
-----------------
None.
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
Reports on Form 8-K: None.
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PEOPLES BANKCORP, INC.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
Date: May 14, 2001 By: /s/ Robert E. Wilson
--------------------------------------------
Robert E. Wilson
President and Chief
Executive Officer
(Duly Authorized and Principal
Executive, Accounting and Financial Officer)
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