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This statement is intended to satisfy the requirements for an annual
disclosure statement as contained in Section 350.4(a) of the Federal Deposit
Insurance Corporation regulations. This statement has not been reviewed, or
confirmed for accuracy or relevance, by the Federal Deposit Insurance
Corporation.
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Securities and Exchange Commission
Washington, D.C. 20549
Form 10-K
[X] Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 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 _______
Commission File Number: 0-17177
BSB BANCORP, INC.
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(Exact name of registrant as specified in its charter)
Delaware 16-1327860
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
58-68 Exchange Street, Binghamton, New York 13901
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (607) 779-2406
Securities registered pursuant to Section 12(b) of the Act: Not applicable
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, ($0.01 par value per share)
---------------------------
Title of class
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 and (2) has been subject to such filing requirements for
the past 90 days. Yes [ ] No [X]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K ((S)229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference of Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]
As of March 13, 2001, the aggregate value of the 9,999,986 shares of Common
Stock of the Registrant issued and outstanding on such date, excluding 841,600
shares held by all affiliates of the Registrant, was approximately $180,878,124.
This figure is based on the closing sales price of $19.75 per share of the
Registrant's Common Stock on March 13, 2001. For purposes of this calculation,
the shares held by directors and executive officers of the registrant have been
excluded because such persons may be deemed to be affiliates. This reference to
affiliate status is not necessarily a conclusive determination for other
purposes.
Number of shares of Common Stock outstanding as of March 13, 2001 - 9,999,986
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents incorporated by reference and the Part
of the Form 10-K into which the document is incorporated:
(1) Portions of the Registrant's Annual Report to Shareholders for the year
ended December 31, 2000 are incorporated by reference into Part II, Items 5 - 8
of this Form 10-K.
(2) Portions of the definitive Proxy Statement to be filed within 120 days
after the end of the fiscal year covered by this Report for the Registrant's
Annual Meeting of Shareholders to be held on April 23, 2001 are incorporated by
reference into Part III, Items 10 - 13 of this Form 10-K.
Exhibit Index appears on page 29
TABLE OF CONTENTS
FORM 10-K ANNUAL REPORT
FOR THE YEAR ENDED
DECEMBER 31, 2000
BSB BANCORP, INC.
Page
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PART I
Item 1. Business 1
Item 2. Properties 22
Item 3. Legal Proceedings 23
Item 4. Submission of Matters to a Vote of 23
Security Holders
PART II
Item 5. Market for the Registrants Common Equity and Related Stockholder Matters 23
Item 6. Selected Financial Data 23
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 23
Item 7A. Quantitative and Qualitative 23
Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data 23
Item 9. Changes In and Disagreements with Accountants
on Accounting and Financial Disclosure 23
PART III
Item 10. Directors and Executive Officers of the Registrant 23
Item 11. Executive Compensation 23
Item 12. Security Ownership of Certain Beneficial Owners and Management 23
Item 13. Certain Relationships and Related Transactions 24
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 24-27
PART I
ITEM 1. BUSINESS
GENERAL
BSB Bancorp, Inc.
BSB Bancorp, Inc. (the "Company") is the Delaware-chartered bank holding
company for BSB Bank & Trust Company ("BSB Bank & Trust" or the "Bank"). The
Company owns 100% of the issued and outstanding common stock, $1.00 par value,
of the Bank, which is the primary asset of the Company. The business of the
Company is the business of the Bank. The Company's and the Bank's principal
executive offices are located at 58-68 Exchange Street, Binghamton, New York
13901, telephone (607) 779-2406.
The Company, as a bank holding company, is subject to regulation, examination,
and supervision by the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"). The Bank is subject to regulation, examination, and
supervision by the Federal Deposit Insurance Corporation ("FDIC") and the State
of New York Banking Department ("Banking Department"). Unless the context
otherwise requires, all references to the Company herein are intended to include
the activities of the Bank.
In July 1999, the Company acquired Skaneateles Bancorp, Inc. Pursuant to the
terms of the merger, each share of Skaneateles Bancorp common stock was
exchanged for .97 share of the Company's common stock.
BSB Bank & Trust Company
The Bank is headquartered in Binghamton, New York and at December 31, 2000
conducted business in Broome, Chemung, Chenango, Onondaga, Oswego, and Tioga
Counties, and adjacent areas of New York State. In January 2001, the Bank agreed
to sell its Oswego supermarket branch office with approximately $4.5 million of
deposits and $1.5 million of loans. At year-end 2000, BSB Bank & Trust served
its customers from 22 full-service banking offices with 25 branch-based
automatic teller machines (MachineTeller(R)), and 27 off-premise automatic
teller machines. The Bank also served its customers at 12 proprietary banking
service locations (StoreTeller(R)) situated in a large area supermarket chain.
The primary market area of the Bank is Broome, Chemung, Chenango, Onondaga,
Oswego, and Tioga Counties, with a combined population of 1,002,218 according to
the 1990 United States Census. The Bank is the leader in total deposits in
Broome County. Over the past decade, BSB Bank & Trust has grown from a
traditional thrift institution to a diversified financial service organization
providing a broad range of deposit and loan products to area businesses and
consumers. The Bank is a major provider of banking services to consumers and the
business community, as well as offering banking services to school districts and
cooperative education centers, cities, towns, villages, and numerous municipal
agencies. It is also active in indirect automobile financing.
LENDING ACTIVITIES
Loan Portfolio Composition
BSB Bank & Trust's portfolio of loans totaled $1.8 billion at December 31,
2000, representing 78.7% of the Bank's total assets at that date, compared to
$1.7 billion, and 76.9% of the Bank's total assets at December 31, 1999.
Commercial loans continued to comprise a significant portion of the loan
portfolio, increasing to $997.1 million, or 54.8% of all loans at December 31,
2000 from $904.6 million, or 52.5% of all loans at December 31, 1999. These
loans, being generally tied to the Company's Prime Rate, tend to increase the
interest rate sensitivity of the loan portfolio. The consumer loan share of the
portfolio decreased from 27.2% of all loans at December 31, 1999 to 24.0% or
$436.9 million at December 31, 2000. Originations of all consumer loans were
$183.2 million for 2000, compared to $262.3 million for 1999. Strong competition
from captive finance companies has tempered originations, with total
originations for indirect used autos reduced to $57.8 million for 2000 compared
to $102.8 million for 1999. Indirect
new auto loan originations decreased from 1999 originations of $33.3 million to
$18.2 million in 2000. The combined portfolio of originating consumer loans has
decreased the balance of the indirect new and used auto loan portfolios to
$210.6 million at December 31, 2000 from $242.2 million at December 31, 1999.
The direct consumer loan portfolio has decreased from $82.6 million at December
31, 1999 to $77.8 million at December 31, 2000. The balance of mobile home loans
increased to $72.6 million at December 31, 2000 from $66.8 million at December
31, 1999.
The Company's policy of selling or securitizing fixed-rate residential
mortgages to improve the liquidity of the portfolio, reduce interest rate risk,
and to build servicing portfolio income resulted in sales of $111.7 million in
1999. In 2000, as liquidity pressures abated somewhat, $9.9 million of fixed-
rate residential mortgages were sold. The Company had originations of fixed-rate
residential mortgages of $49.4 million for 2000 compared to $113.6 million in
1999.
The following table sets forth the composition of the Bank's loan portfolio by
loan type as of the dates indicated.
December 31,
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2000 1999 1998 1997 1996
(Dollars in Thousands) Amount Percent Amount Percent Amount Percent Amount Percent Amount
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Commercial $ 997,082 54.78% $ 904,632 52.53% $ 802,474 50.86% $ 677,238 47.68% $ 555,640
Consumer:
Student 1,504 0.08% 1,665 0.10% 2,393 0.15% 4,071 0.29% 2,451
Personal direct 77,845 4.28% 82,579 4.79% 80,069 5.07% 67,244 4.74% 51,494
Personal indirect-used auto 159,989 8.79% 182,844 10.62% 156,606 9.92% 114,249 8.05% 67,336
Personal indirect-new auto 50,650 2.78% 59,354 3.45% 51,746 3.28% 49,475 3.48% 44,844
Personal indirect-mobile homes 72,631 3.99% 66,814 3.87% 54,867 3.48% 45,506 3.20% 27,728
Personal indirect-others 24,092 1.32% 27,039 1.57% 18,715 1.19% 8,864 0.62% 4,374
Savings account 43 0.00% 114 0.01% 153 0.01% 229 0.02% 340
Overdraft checking 537 0.03% 580 0.03% 1,231 0.08% 1,277 0.09% 1,270
Business line of credit 2,306 0.13% 1,612 0.09% 956 0.06% 1,025 0.07%
Home equity 32,930 1.81% 32,125 1.87% 31,738 2.01% 34,081 2.40% 33,433
Debit card 2,946 0.16% 2,662 0.15% 1,814 0.11% 1,278 0.09% 628
Credit card 11,429 0.63% 10,598 0.62% 10,499 0.67% 10,255 0.72% 9,575
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Total consumer loans 436,902 24.00% 467,986 27.17% 410,787 26.03% 337,554 23.77% 243,473
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Real estate:
Fixed-rate:
Residential 126,309 6.94% 96,446 5.60% 100,959 6.40% 101,656 7.16% 92,953
FHA & VA 3,986 0.22% 5,509 0.32% 7,910 0.50% 10,390 0.73% 13,390
Commercial 10,278 0.56% 11,516 0.67% 5,614 0.36% 6,845 0.48% 8,395
Commercial FHA 179 0.01% 186 0.01% 194 0.01% 202 0.01% 208
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Total fixed-rate 140,752 7.73% 113,657 6.60% 114,677 7.27% 119,093 8.38% 114,946
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Adjustable-rate:
Residential 88,700 4.87% 74,481 4.32% 87,644 5.55% 119,115 8.39% 134,945
Commercial 156,831 8.62% 161,496 9.38% 162,327 10.29% 167,352 11.78% 166,181
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Total adjustable-rate 245,531 13.49% 235,977 13.70% 249,971 15.84% 286,467 20.17% 301,126
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Total real estate loans 386,283 21.22% 349,634 20.30% 364,648 23.11% 405,560 28.55% 416,072
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$1,820,267 100.00% $1,722,252 100.00% $1,577,909 100.00% $1,420,352 100.00% $1,215,185
===================================================================================================================================
The following table sets forth scheduled contractual amortization of loans in
the Bank's portfolio at December 31, 2000. Demand loans, loans having no stated
schedule of repayments and no stated maturity, and overdraft loans are reported
as due in one year or less. The following table also sets forth the dollar
amount of loans which are scheduled to mature after one year which have fixed
and adjustable interest rates.
Residential Commercial Commercial
Real Estate Real Estate Business Consumer
(Dollars in Thousands) Loans Loans Loans Loans Total
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Amounts due:
Within one year $ 10,884 $ 25,392 $491,742 $107,815 $ 635,833
After one year through five years 45,955 50,277 445,435 217,394 759,061
Beyond five years 162,156 91,619 59,905 111,693 425,373
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Total $218,995 $167,288 $997,082 $436,902 $1,820,267
=================================================================================================
Amounts due after one year:
Fixed $121,732 $ 9,488 $289,938 $296,150 $ 717,308
================================================================================================
Adjustable $ 86,379 $132,408 $215,402 $ 32,937 $ 467,126
================================================================================================
Contractual maturities of loans do not necessarily reflect the actual life of
loans in the Bank's portfolio. The average life of mortgage loans is
substantially less than their contractual terms because of loan prepayments and
enforcement of due-on-sale clauses. These clauses give the Bank the right to
declare a loan immediately due and payable in the event, among other things,
that the borrower sells the real property subject to the mortgage and the loan
is not repaid. The average life of mortgage loans tends to increase, however,
when current mortgage rates substantially exceed rates on existing mortgages.
Interest rates charged by the Bank on loans are affected principally by the
demand for such loans and the supply of funds available for lending purposes.
These factors are in turn affected by general economic conditions, monetary
policies of the federal government, including the Federal Reserve Board,
legislative tax policies, and governmental budgetary matters.
Origination, Securitization, and Sale of Loans
The following table shows the loans originated, securitized, sold, and repaid
during the periods indicated.
Years Ended December 31,
(Dollars in Thousands) 2000 1999 1998
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Gross loans receivable at beginning of period $1,724,337 $1,594,715 $1,427,811
Mortgage loan originations:
Conventional
One- to four-family dwellings
Fixed-rate 45,964 112,024 191,096
Adjustable-rate 26,531 4,822 4,073
Commercial real estate 20,708 46,640 56,042
FHA/VA 3,432 1,588 2,795
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Total mortgage loans originated 96,635 165,074 254,006
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Commercial loan originations 262,932 285,999 346,881
Consumer loan originations:
Student loans 3,351 3,221 3,033
Personal direct loans 30,232 38,206 39,295
Personal indirect used auto loans 57,786 102,798 105,315
Personal indirect new auto loans 18,181 33,277 29,311
Personal indirect mobile home loans 15,574 22,431 20,428
Personal indirect other loans 3,265 15,352 2,460
Home improvement loans 82
Savings account loans 18 39
Business line of credit loans 3,723 4,144 2,998
Overdraft checking 1,851 1,857 2,137
Debit card 7,623 5,887 4,094
Equity lines of credit 17,986 15,567 17,899
Credit card 23,667 19,571 17,525
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Total consumer loans originated 183,239 262,329 244,616
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Total loans originated 542,806 713,402 845,503
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Commercial loan-credit advances 1,099,072 1,048,761 927,898
Principal repayments 1,532,484 1,517,802 1,421,987
Loans securitized:
FNMA-fixed 43,761
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Total loans securitized 43,761
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Loan sales:
Student loans 3,512 3,056 4,562
Residential mortgages 9,858 111,683 136,187
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Total loan sales 13,370 114,739 140,749
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Net loan activity 96,024 129,622 166,904
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Gross loans receivable and loans
held for sale at end of period 1,820,361 1,724,337 1,594,715
Loans held for sale (94) (2,085) (16,806)
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Gross loans receivable at the end of the period 1,820,267 1,722,252 1,577,909
Allowance for possible credit losses (59,291) (29,134) (25,030)
Net deferred fees and costs 844 636 507
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Net loans receivable at the end of period $1,761,820 $1,693,754 $1,553,386
=======================================================================================
Commercial Lending
The commercial loan portfolio is a significant part of the Bank's asset base.
As of December 31, 2000, commercial loans amounted to $997.1 million, or 54.8%
of the Bank's total loans as compared with $904.6 million, or 52.5% as of
December 31, 1999. Under New York law, the Bank generally may not lend to any
one entity more than 15% of the bank's capital stock, surplus, and undivided
profits. However, the Bank is permitted to extend a loan up to 25% of the Bank's
capital stock, surplus, and undivided profits, provided that the loan is
collateralized to the extent that such loan is between 15% and 25% of the Bank's
capital stock, surplus, and undivided profits. The Bank's policy, however,
restricts loans to any borrower and related entities to 15% of shareholders'
equity. Loan relationships approaching 15% of the Bank's shareholders' equity
generally require diversification in both repayment source and collateral. At
December 31, 2000, 10 loan relationships had outstanding loans and commitments
exceeding 10% of shareholders' equity compared to 14 at December 31, 1999. There
were no loan relationships with outstanding loans and commitments exceeding 15%
of shareholders' equity at December 31, 2000 or 1999. The Bank offers a variety
of commercial loan services, including term loans and revolving lines of credit,
as well as letters of credit. Commercial lending involves somewhat greater
credit risks to the Bank than most other types of lending. See "Loan
Underwriting Policies".
At December 31, 2000, there were $321.5 million in commitments outstanding and
the portfolio consisted of loans with an average outstanding balance of
$181,627. Management continues to review commercial loan applications from
companies with a strong financial base and strong credit history. Commercial
loan originations amounted to $286.0 million, or 40.1% of total loans originated
in 1999 compared to $262.9 million, or 48.4% of total loans originated in 2000.
Total loan commitments to the 10 largest lending relationships ranged from $22.3
million to $16.3 million at December 31, 2000. Outstanding loan balances for
these 10 relationships, ranging from $19.8 million to $6.0 million, are made up
of 83 individual loans. Each of these loans has varied sources of repayment and
collateral. The Bank continually reviews all larger group credits.
The commercial loan portfolio is diversified by industry, type, and size, and
the loans have been made primarily to small- and medium-sized businesses in the
regional market. Approximately 62% of the Bank's commercial loans bear floating
interest rates tied to the Bank's prime rate ("Prime Rate"). The average yield
on the commercial loan portfolio was 9.89% in 2000 and 9.03% in 1999. The Bank's
average Prime Rate was 9.24% in 2000 and 8.02% in 1999. Commercial loans are
made on both a collateralized and uncollateralized basis, and include
collateralized lines of credit. Although most have shorter terms, the maximum
term of a non-real estate collateralized commercial loan is ten years. The
largest single extension of credit at December 31, 2000 was in the amount of
$17.0 million and, as of that date, the largest single loan outstanding was
$14.7 million on that credit. As of December 31, 2000, the Bank had 25 other
relationships with outstanding loans and relationships exceeding $10.8 million.
The Bank monitors commercial loan and commercial real estate industry
stratifications at least twice a year and continues to require diversity
throughout its commercial loan and commercial real estate portfolios. At
December 31, 2000, the manufacturing industry made up 21.7% of the portfolio. At
that same date, the service industry was 20.4% of the portfolio,
finance/insurance/real estate was 19.0% of the portfolio, loans to retail
businesses stood at 15.8%, and loans to wholesale trade businesses at 10.9%
rounded the top five. The order of these industrial classifications has not
changed from December 31, 1999 and the percentages remained constant, except
that loans to wholesale trades companies increased from 14.6% to 15.7%
representing the largest change. Geographic concentrations are also reviewed at
the same time as industry concentrations. Approximately 66.2% of commercial
loans are located in the Bank's primary market area of Broome, Chemung,
Chenango, Onondaga, Oswego, and Tioga Counties. Of the remaining 33.8%, 27.8%
are spread through other counties of New York State, and 6.0% in other states.
In addition to the various types of lending services, the Bank also offers to
commercial customers a range of depository and related services, including
commercial demand deposit accounts, cash management, payroll, and direct deposit
to employees' accounts.
Consumer Lending
The Bank engages in a variety of consumer lending activities. As of December
31, 2000, a total of $436.9 million of consumer loans was outstanding as
compared to $468.0 million and $410.8 million at December 31, 1999 and 1998,
respectively. As seen in the table on page 2, the majority of the consumer loans
is comprised of $385.3 million in personal loans (which includes indirect loans
and savings account loans), $32.9 million in home equity loans, and $14.4
million in credit and debit card loans. Consumer loans generally involve more
risk of collectibility than mortgage loans because of the type and nature of the
collateral, and, in certain cases, the absence of collateral. As a result,
consumer lending collections are dependent on the borrowers' continuing
financial stability, and thus are more likely to be adversely affected by job
loss, divorce, personal bankruptcy, and by adverse economic conditions.
Of the $385.3 million in personal loans outstanding at December 31, 2000,
$77.8 million or 20.2% represented the Bank's portfolio of direct consumer loans
originated by the Bank's lending staff; the $307.4 million or 79.8% represented
the indirect consumer loan portfolio originated through relationships with
mobile home service companies, automobile, and other retail dealers. Indirect
originations in 2000 totaled $94.8 million or 51.8% of all consumer loan
originations. Of these indirect originations, used auto loans was the largest
source at $57.8 million. Mobile home loans are originated through service
companies and are supported by recourse agreements against significant reserve
account balances. All personal loans originated for the Bank are advanced at
fixed interest rates, with a high percentage of the loans offering repayment
terms up to 60 months.
The Bank continues to originate indirect consumer loans, though at a slower
pace than in prior years. These loans tend to earn some of the highest yields of
Bank assets, but also tend to have a higher risk associated with them. Going
forward, the Bank will originate these loans with the emphasis on controlling
charge-offs and maintaining the profitability of this product line. In 2000, the
Bank originated $94.8 million of indirect consumer loan contracts compared with
$173.9 million of such consumer loans in 1999.
Home equity lines of credit are primarily an adjustable-rate consumer loan
product with a term of 20 or 30 years, and are generally collateralized by the
borrower's primary residence, when the loan to value ratio, taking into account
the first mortgage loan, does not exceed 75%. As of December 31, 2000, the
outstanding balance of total home equity lines of credit was $32.9 million.
Interest rates on home equity lines of credit are adjusted monthly to reflect
changes in the Prime Rate.
The Bank has an adjustable-rate MasterCard program to complement its fixed-
rate Visa credit card program. As of December 31, 2000, there were total credit
card lines available of $46.5 million with an outstanding balance of $11.4
million as compared to $42.8 million and $10.6 million, respectively, at
December 31, 1999.
Consumer lending, with its short-term characteristics, contributes to the
improvement of the Bank's overall interest rate sensitivity because of its more
rapid amortization compared to residential and commercial real estate loans.
Residential Real Estate Lending
The Bank historically has been, and continues to be, a leading originator of
residential real estate loans in its market area. At December 31, 2000, $219.0
million, or 12.0% of the Bank's total loan portfolio consisted of residential
mortgage loans. In 2000 and 1999, residential mortgage loan originations
amounted to $75.9 million and $118.4 million, respectively, which represented
approximately 14.0% and 16.6%, respectively, of the Bank's total loan
originations.
In years prior to 2000, the Bank sold large portions of the residential
mortgage loans originated and retained the servicing of these loans. In 2000,
only $9.9 million of the $75.9 million originated were sold. This compares to
sales of $111.7 million in 1999 to originations of $118.4 million. The Bank has
the ability, and currently intends, to retain more of its residential mortgage
loan originations, as it reduces the balance of its commercial loan portfolio to
provide a better mix of assets. Because of the decision to retain more
residential mortgage loans in the Bank's portfolio, the serviced mortgage loan
portfolio, a source of non-interest income, decreased from $559.9 million at
December 31, 1999 to $516.7 million at December 31, 2000.
Commercial Real Estate Lending
The Bank originated $20.7 million in commercial real estate loans in 2000
compared to $46.6 million in 1999 and $56.0 million in 1998. At December 31,
2000, the Bank had $167.3 million of commercial real estate loans outstanding,
representing approximately 9.2% of the Bank's total loan portfolio. Adjustable-
rate commercial real estate loans, with rates adjusting every one, three, or
five years, represent 8.6% of the total loan portfolio at December 31, 2000.
The commercial real estate loans offered by the Bank are being underwritten
with terms of up to 25 years. In setting interest rates and origination fees on
new loans and extensions, management considers both current market conditions
and its analysis of the risk associated with the particular project. The
weighted average yield on commercial real estate adjustable-rate loans for 2000
was 8.66% and 8.80% in 1999. The largest single commercial real estate loan
advanced during 2000 was $3.0 million.
Non-performing Loans and Other Real Estate Owned ("ORE")
The following table sets forth information regarding non-accrual (non-
performing) loans, accruing loans which are 90 days or more overdue, and other
real estate owned held by the Bank at December 31:
(Dollars in Thousands) 2000 1999 1998 1997 1996
- ------------------------------------------------------------------------------------------------------
Non-accrual loans:
Commercial loans $17,104 $ 1,852 $ 5,326 $ 8,489 $ 7,212
Residential real estate loans 2,071 2,161 2,813 2,400 2,915
Commercial real estate loans 1,522 53 1,730 2,305 4,016
Consumer accruing loans with principal
or interest payments 90 days overdue 781 945 818 557 451
Loans which are "troubled debt
restructurings" as defined in the Statement of
Financial Accounting Standards ("SFAS") No. 15
"Accounting by Debtors and Creditors for
Troubled Debt Restructurings" 10,660 6,596 6,406 3,142 1,193
- ------------------------------------------------------------------------------------------------------
Total non-performing loans $32,138 $11,607 $17,093 $16,893 $15,787
======================================================================================================
Total non-performing loans to total loans 1.77% 0.67% 1.08% 1.19% 1.30%
======================================================================================================
Total real estate acquired in settlement of loans
at lower of cost or fair value $ 323 $ 910 $ 3,021 $ 3,735 $ 2,110
======================================================================================================
Total non-performing loans and real estate acquired
in settlement of loans at net
realizable value to total assets 1.40% 0.56% 0.94% 1.14% 1.11%
======================================================================================================
During 2000, 1999, 1998, 1997, and 1996, approximately $1.8 million, $806,000,
$783,000, $768,000 and $882,000 of additional interest income would have been
recorded on loans accounted for on a non-accrual basis as of the end of each
period if such loans had been current. These amounts were not included in the
Bank's interest and dividend income for the respective periods.
During 2000, 1999, 1998, 1997, and 1996, $1.3 million, $119,000, $567,000,
$682,000, and $442,000 respectively, of interest income on non-accrual loans
were recognized during the periods.
Total non-performing loans and other real estate owned increased to $32.5
million, or 1.40% of total assets at December 31, 2000, compared to $12.5
million, or 0.56% of total assets at December 31, 1999. Certain steps have been
taken to address the increase in the non-performing loans in the Bank's
portfolio. During the fourth quarter of
2000, the Bank concluded a comprehensive evaluation of its existing credit and
loan reserves. In order to accomplish this within a short time frame, the Bank
retained Ernst&Young LLP to assist in a credit risk management assessment, which
included a review of certain specific loans and segments of the portfolio as
well as credit administration issues. Late in the fourth quarter, the Bank also
hired an experienced banking executive with very strong credentials in bank
examination and credit quality issues, to take a lead role in evaluating the
Bank's risk management process. The Bank believes its work has resulted in an
appropriate assessment of the loan portfolios at year-end 2000.
For many years the loan growth rate at BSB, particularly in commercial and
industrial ("C&I") loans was significantly higher than the growth rate of
economic activity in its core markets in Central New York. The Bank's present
strategy is to change the mix of loans in its portfolio. These changes will
include aggressive reduction of C&I loans as well as the more volatile and high-
cost deposits that have funded them. The second step involves the implementation
of a new risk management process. The Bank has hired a Senior Vice President-
Risk Management and, in the first quarter of 2001, established an independent,
commercial credit administration department. This group, staffed by senior loan
officers, is charged with managing the Bank's non-performing loans and certain
other loans. Various strategies are being pursued to maximize the value of these
credits, including the possible sale of loans at acceptable price levels. The
Bank's objective is to manage the disposition of the loans through diligent
collection efforts. The new credit administration department is separate and
distinct from the Bank's ongoing lending operation, both administratively and
physically. The segregation of the non-performing loans will allow the Bank to
monitor and report better on the performance of its core lending operations.
Similarly, senior management will work with other departments to identify
potential risks in the lines of business they are handling and to develop
procedures geared toward limiting those risks.
At December 31, 2000, the recorded investment in loans for which impairment
has been recognized in accordance with SFAS No. 114, "Accounting by Creditors
for Impairment of a Loan," totaled $31.6 million with a valuation allowance
aggregating $13.6 million. For the twelve months ended December 31, 2000, the
average recorded investment in impaired loans was approximately $16.4 million.
The Company recognized, on a cash basis, no interest on impaired loans during
the portion of the year they were impaired. The Bank will work with borrowers to
restructure or modify terms of their loans if difficulties arise in repayment.
If necessary, at the time of modification, the loan will be written down to the
estimated amount of future cash receipts. A non-performing loan that has been
modified will remain a non-performing loan until an adequate history of
recovered or collected principal and interest has been established, the loan is
repaid, or related foreclosed or repossessed property is sold to satisfy the
debt. Also the repayment of all future contractual principal and interest must
be deemed collectible and the borrower must demonstrate the ability to sustain
performance. At December 31, 2000, the Bank had $10.7 million of restructured
commercial loans included in non-accrual status. At December 31, 1999, the Bank
had $6.6 million of restructured commercial loans in non-accrual status.
At December 31, 2000, non-performing residential real estate loans totaled
$2.1 million. At December 31, 1999, non-performing residential real estate loans
totaled $2.2 million. Loan loss reserves have been established that are deemed
adequate by management.
At December 31, 1999, non-performing commercial real estate loans totaled
$53,000. At December 31, 2000, non-performing commercial real estate loans
increased to $1.5 million. This increase resulted primarily from one
relationship for $1.4 million with a customer in the Southern Tier New York
region.
Non-performing commercial loans at December 31, 2000 totaled $17.1 million,
and included 55 individual loans ranging in size from $3,000 to $4.5 million.
Within this group of loans, neither one industry nor one geographical area
stands out; nor does any other one factor or influence form any consistent
pattern in the loans that are shown as part of non-performing assets. At
December 31, 1999, non-performing commercial loans were at $1.9 million. These
loans and all other non-performing loans have been internally risk-rated.
Loans that are still accruing but are 30 to 89 days past due increased $18.5
million at December 31, 1999 to $66.5 million at December 31, 2000. All loans in
this category are risk-weighted to determine the adequacy of the allowance for
possible credit losses. See further discussion in "Allowance for Possible Credit
Losses".
At December 31, 2000, ORE, which is defined to include property acquired by
foreclosure or by deed in lieu of foreclosure, totaled $323,000 and consisted of
five single-family residential properties with a book value totaling $133,000
and two commercial real estate properties with a book value totaling $190,000.
At December 31, 1999, ORE totaled $910,000, which consisted of ten single-family
residential properties with a book value totaling $526,000 and four local
commercial real estate properties with a book value totaling $384,000.
During 2000, 15 single-family residential properties with a book value
totaling $660,000 were sold, and 15 single-family residential properties with a
book value of $607,000 were added to the ORE portfolio from 1999. In 2000, 16
residential real estate ORE properties were written down by $232,000.
During 2000, three commercial real estate properties with a book value
totaling $230,000 were sold, two commercial real estate properties with a book
value totaling $526,000 were charged off, and four commercial real estate
properties valued at $3.5 million were partially charged off. In addition, one
commercial real estate property with a book value totaling $154,000 was added to
the portfolio, and three commercial real estate ORE properties were written down
by $22,000 in 2000. All real estate carried in the Company's ORE portfolio is
supported by recent independent appraisals.
Allowance for Possible Credit Losses
Management reviews the adequacy of the allowance for possible credit losses at
least quarterly. The adequacy of the allowance is assessed by applying projected
loss ratios to the risk-ratings (i.e. "classification") of loans both
individually and by category. The projected loss ratios incorporate such factors
as recent loss experience, current economic conditions and trends, trends in
past due and non-accrual amounts, the risk characteristics of various
"classifications" and concentrations of loans, transfer risks, and other
pertinent factors.
The Bank added significantly to the allowance for possible credit losses in
the third and fourth quarters of 2000 bringing the ratio of the allowance to
total loans outstanding at December 31, 2000 to 3.26% from 1.69% at December 31,
1999. The additional allowance for possible credit losses was considered
necessary due to an increase in non-performing loans and net charge offs during
the third and fourth quarters of 2000. In the fourth quarter of 2000, the Bank
completed a preliminary analysis of lending operations and policies, including
policies for reviewing existing credits and establishing reserves. The process
included the retention of Ernst & Young LLP to assist in the review, and a
thorough evaluation by the Bank's new President and Chief Executive Officer and
his senior management team. Based on that review, the allowance for possible
credit losses was increased to $59.3 million at December 31, 2000.
A loan is considered impaired, based on current information and events, if it
is probable that the Bank will be unable to collect the scheduled payments of
principal or interest when due according to the contractual terms of the loan
agreement. The measurement of impaired loans is generally based upon the present
value of expected future cash flows discounted at the historical effective
interest rate, except that all collateral-dependent loans are measured for
impairment based on the fair value of the collateral. Loans not deemed impaired
continue to be classified to their risk-rating and general reserves are
maintained accordingly. The following table summarizes activity in the Bank's
allowance for possible credit losses during the periods indicated. Management
considers the allowance for possible credit losses (reserves) of $59.3 million
at December 31, 2000 adequate to cover potential credit losses.
Years Ended December 31,
- --------------------------------------------------------------------------------------------------------
(Dollars in Thousands) 2000 1999 1998 1997 1996
- --------------------------------------------------------------------------------------------------------
Average total loans outstanding $1,780,105 $1,699,850 $1,507,493 $1,313,576 $1,158,568
========================================================================================================
Allowance at beginning of period $ 29,134 $ 25,030 $ 21,768 $ 19,168 $ 17,179
Charge-offs:
Commercial loans 21,058 11,635 6,389 5,314 6,799
Consumer loans 4,272 5,110 3,280 2,244 1,774
Residential real estate loans 151 267 238 175 190
Commercial real estate loans 110 381 1,083 2,718 1,352
- --------------------------------------------------------------------------------------------------------
Total loans charged-off 25,591 17,393 10,990 10,451 10,115
Recoveries:
Commercial loans 836 1,173 456 1,348 1,232
Consumer loans 1,030 1,087 785 588 558
Residential real estate loans 83 9 2 12
Commercial real estate loans 161 17 71 299 156
- --------------------------------------------------------------------------------------------------------
Total recoveries 2,027 2,360 1,321 2,237 1,958
- --------------------------------------------------------------------------------------------------------
Net charge-offs 23,564 15,033 9,669 8,214 8,157
- --------------------------------------------------------------------------------------------------------
Provision for credit losses charged to
operating expenses 53,721 19,137 12,931 10,814 10,146
- --------------------------------------------------------------------------------------------------------
Allowance at end of period $ 59,291 $ 29,134 $ 25,030 $ 21,768 $ 19,168
========================================================================================================
Ratio of net charge-offs to:
Average total loans outstanding 1.32% 0.88% 0.64% 0.63% 0.70%
Ratio of allowance to:
Non-performing loans 184.49% 251.00% 146.43% 128.86% 121.42%
Year-end total loans outstanding 3.26% 1.69% 1.59% 1.53% 1.58%
The provision for credit losses was $53.7 million in 2000 and $19.1 million in
1999. The allowance for possible credit losses increased to $59.3 million, or
3.26% of total loans at December 31, 2000, from $29.1 million, or 1.69% at year-
end 1999 to reflect the reserves necessary to cover potential losses in the loan
portfolios based on current adverse conditions within the economy and the
current risk-weighting of the individual loans in the commercial portfolio. Net
charge-offs in 2000 amounted to $23.6 million, or 1.32% of average total loans
outstanding, compared to $15.0 million, or 0.88% in 1999. Non-performing loans
at December 31, 2000 were $32.1 million, or 1.77% of total loans outstanding as
compared to $11.6 million, or 0.67% at December 31, 1999.
The following table indicates the allowance for possible credit losses by the
following categories of loans for the following periods:
Years Ended December 31,
- -------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
- -------------------------------------------------------------------------------------------------------
Amount % (1) Amount % (1) Amount % (1) Amount % (1) Amount % (1)
- -------------------------------------------------------------------------------------------------------
Real Estate:
Commercial $ 2,817 9.19% $ 2,329 10.06% $ 2,873 10.66% $ 3,946 12.28% $ 3,644 14.38%
Residential 272 12.03 240 10.24 444 12.45 268 16.27 289 19.86
Commercial 48,616 54.78 21,446 52.53 17,270 50.86 14,886 47.68 13,677 45.72
Consumer 7,586 24.00 5,119 27.17 4,443 26.03 2,668 23.77 1,558 20.04
- -------------------------------------------------------------------------------------------------------
$59,291 100.00% $29,134 100.00% $25,030 100.00% $21,768 100.00% $19,168 100.00%
=======================================================================================================
(1) Percent of loans in each category to total loans at the dates indicated.
INVESTMENT ACTIVITIES
As of December 31, 2000, the Bank's investment securities portfolio of $401.7
million constituted 17.4% of its total assets. Such securities consist of United
States Treasury securities, United States Government Agency securities,
mortgage-backed securities, collateralized mortgage obligations ("CMO"),
obligations of state and local governments, and corporate debt and equity
securities.
Collateralized mortgage obligations consist of pools of mortgages. Interest,
principal amortization, and prepayments are directed in a predetermined order
("traunches"), as received, until each class is paid off. The vast majority of
CMOs purchased by the Bank are issued by the Federal Home Loan Mortgage
Corporation ("FHLMC") and the Federal National Mortgage Association ("FNMA").
The Bank owns and occasionally buys private issuer CMOs. The Bank purchases
mostly senior traunches that have been rated in the top two categories by major
rating services such as Moody's and Standard and Poor's. The Bank performs tests
on CMOs at the time of purchase to determine that the issues being considered
for purchase fall within the risk parameters established by the Bank's
investment policy.
The Bank also purchases and sells mortgage participation certificates that
consist primarily of certificates issued by FNMA and the FHLMC. The Bank's
portfolio of mortgage-backed securities also includes securities guaranteed by
the Government National Mortgage Association ("GNMA"). At December 31, 2000, the
Bank's gross mortgage-backed securities portfolio of $170.9 million included
$100.6 million of CMOs, $18.7 million in GNMA securities, and $51.6 million in
participation certificates.
There is significant uncertainty as to the timing of repayments from mortgage-
backed securities because borrowers whose mortgages are pooled into mortgage-
backed securities have the option to prepay their loans at any time. This option
can affect the returns the Bank anticipates earning by investing in these
securities. When interest rates fall as they did during 1997 and 1998, borrowers
tend to refinance their mortgages resulting in accelerated prepayments of the
mortgages underlying mortgage-backed securities, thereby reducing the period of
time the Bank will receive the anticipated higher rate of return.
Market values are also affected by the borrowers option to prepay. In falling
rate environments, the possibility of prepayment increases as borrowers
refinance the underlying loans in order to receive a lower rate of interest.
This factor limits the degree to which mortgage-backed securities appreciate.
When interest rates rise the probability of the underlying mortgages refinancing
decreases; this extends the average time during which a lower rate will be
received and decreases the value of the security.
The following table sets forth the carrying value of the Bank's gross
mortgage-backed securities portfolio as of the dates indicated (also, see Note 2
of the Consolidated Financial Statements included in the 2000 Annual Report to
Shareholders):
December 31,
- ---------------------------------------------------------------------------------------------------
(Dollars in Thousands) 2000 1999 1998 1997 1996
- ---------------------------------------------------------------------------------------------------
Collateralized mortgage obligations $ 100,615 $111,613 $110,300 $57,988 $108,780
GNMA securities 18,749 9,591 10,228 1,204 1,495
Participation certificates 51,552 44,628 51,033 27,453 53,797
- ---------------------------------------------------------------------------------------------------
170,916 165,832 171,561 86,645 164,072
- ---------------------------------------------------------------------------------------------------
Net premiums and (discounts) 951 844 486 (253) 47
Unrealized (depreciation) appreciation (1,453) (6,931) 375 (1,265) (530)
- ---------------------------------------------------------------------------------------------------
$170,414 (1) $159,745 $172,422 $85,127 $163,589
===================================================================================================
(1) The carrying value of mortgage-backed securities at December 31, 2000
includes approximately $151.8 million pledged under various agreements,
principally lines of credit and Municipal Option Put Securities.
The U.S. Government Agency Obligations in the Bank's investment portfolio
consist primarily of securities callable by the issuing agencies with calls
ranging out to four years. The call features limit the appreciation potential
of the securities as the probability of them being called on the call date rises
as interest rates decline.
The following table shows the Bank's activity in mortgage-backed securities
during the years indicated:
December 31,
- ------------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands) 2000 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Mortgage-backed securities at beginning of year (gross) $165,832 $171,561 $ 86,645
Purchases:
GNMA securities 10,000 9,989
Collateralized mortgage obligations 33,540 119,220
Participation certificates 11,147 1,621
- ------------------------------------------------------------------------------------------------------------------------------------
Total purchases 21,147 33,540 130,830
- ------------------------------------------------------------------------------------------------------------------------------------
Securitizations:
Participation certificates 43,761
- ------------------------------------------------------------------------------------------------------------------------------------
Sales:
GNMA securities 697
Collateralized mortgage obligations 58 10,101 46,831
Participation certificates 177 17,009
- ------------------------------------------------------------------------------------------------------------------------------------
Total sales 58 10,278 64,537
Principal repayments:
GNMA securities 842 637 268
Collateralized mortgage obligations 10,939 23,420 20,076
Participation certificates 4,224 4,934 4,794
- ------------------------------------------------------------------------------------------------------------------------------------
Total principal repayments 16,005 28,991 25,138
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in principal 5,084 (5,729) 84,916
- ------------------------------------------------------------------------------------------------------------------------------------
Mortgage-backed securities at end of year (gross) 170,916 165,832 171,561
- ------------------------------------------------------------------------------------------------------------------------------------
Net premiums 951 844 486
Unrealized (depreciation) appreciation (1,453) (6,931) 375
- ------------------------------------------------------------------------------------------------------------------------------------
Net mortgage-backed securities at end of year $170,414 $159,745 $172,422
====================================================================================================================================
The following table sets forth the Bank's investment portfolio at carrying value at the
dates indicated:
December 31,
- ------------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands) 2000 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Bond investments:
U.S. Government obligations $186,996 $202,906 $217,662
Municipal obligations 18,467 22,482 17,513
Corporate obligations 1,491
Other 1,619 1,372 1,020
- ------------------------------------------------------------------------------------------------------------------------------------
Total bond investments 208,573 226,760 236,195
- ------------------------------------------------------------------------------------------------------------------------------------
Stock investments:
Marketable equity securities 70 20 22
Preferred sinking fund stocks 3,000 3,591 591
Other securities 21,448 21,421 17,884
- ------------------------------------------------------------------------------------------------------------------------------------
Total stock investments 24,518 25,032 18,497
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment securities at book value 233,091 251,792 254,692
- ------------------------------------------------------------------------------------------------------------------------------------
Unrealized (depreciation) appreciation (1,830) (9,814) 422
- ------------------------------------------------------------------------------------------------------------------------------------
Total investment securities $231,261 $241,978 $255,114
====================================================================================================================================
The following table presents the maturities of and the weighted average yield
on the Bank's investment portfolio at December 31, 2000. At this date, the Bank
had no securities which exceeded 10% of stockholders' equity. No tax equivalent
adjustments have been made.
Maturing After Five Years
After One Year Through Five Years Through Ten Years
- ---------------------------------------------------------------------------------------------------------------
In OneYear Fixed
or less Interest Variable Fixed Variable
Amount Rate Amount Rate Amount Rate Amount Rate Amount Rate
- ---------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
Investment securities:
U.S. Treasury and U.S.
government agencies
and corporations $1,021 5.44% $77,412 6.25% $4,997 3.37% $ 93,092 6.45% $ - -%
Obligations of states and
political subdivisions 2,480 4.54 7,054 4.63 7,009 4.79
Corporate bonds:
Domestic 364 7.71 1,491 6.93
Corporate stocks
Other securities
- ---------------------------------------------------------------------------------------------------------------
Total net investments
and other securities $3,865 5.08% $85,957 6.13% $4,997 3.37% $100,101 6.33% $ - -%
===============================================================================================================
After Ten Years Total
- --------------------------------------------------------------------------------
Fixed Variable
Amount Rate Amount Rate Amount Rate
- --------------------------------------------------------------------------------
(Dollars in Thousands)
Investment securities:
U.S. Treasury and U.S.
government agencies
and corporations $10,474 7.49% -$ -% $186,996 6.34%
Obligations of states and
political subdivisions 1,924 6.50 18,467 4.87%
Corporate bonds:
Domestic 1,255 7.39 3,110 7.21%
Corporate stocks 3,070 8.63 3,070 8.63%
Other securities 21,448 6.69 21,448 6.69%
- --------------------------------------------------------------------------------
Total net investments
and other securities $38,171 7.08% -$ -% $233,091 6.30%
================================================================================
DEPOSITS
At December 31, 2000, the Bank had $1,881.2 million in total deposits
(including escrow funds). Deposits are attracted principally from within the
Bank's primary market area through the offering of a broad selection of deposit
instruments, including commercial savings and demand deposits, negotiable order
of withdrawal ("NOW") accounts, money market deposit accounts, passbook and
statement savings accounts, certificates of deposit, and pension accounts for
both individuals and small businesses. Of these deposit instruments, $1,048.3
million, or 55.8% of all deposits consisted of term accounts, $492.7 million, or
26.2% consisted of money market deposit accounts, $164.5 million, or 8.7%
consisted of passbook, escrow, and statement savings accounts, $21.0 million, or
1.1% consisted of NOW accounts, and $154.7 million, or 8.2% consisted of
commercial checking accounts.
At December 31, 2000, brokered deposits totaled $286.8 million with original
maturities of one to five years. This compares to a balance of $231.9 million at
December 31, 1999. The variety of deposit accounts offered by the Bank has
allowed it to be competitive with other financial institutions; however, the
threat of disintermediation (the flow of funds away from banking institutions
into direct investment vehicles such as government and corporate securities)
still exists.
The Bank maintains a "sweep program" allowing balances to be "swept" from NOW
accounts into money market deposit accounts. At December 31, 2000, approximately
$99.0 million of the money market accounts were NOW balances being swept into
the account. The growth of commercial lending within the Bank also resulted in
an increase of $7.0 million in commercial checking account balances to $108.9
million compared to $101.9 million at December 31, 2000 and 1999, respectively.
The Bank's electronic delivery systems include an ATM network
(MachineTeller(R)) and point-of-sale network (StoreTeller(R)); they have
processed over 22.3 million transactions for the Bank's depositors.
Deposit accounts in the Bank are insured to the maximum permissible amounts by
the Bank Insurance Fund ("BIF"), as administered by the FDIC. Accordingly, the
Bank is subject to rules, regulations, and examinations of the FDIC.
The following table shows the distribution of the deposit accounts in the Bank
by type of deposits as of the dates indicated:
December 31,
- -----------------------------------------------------------------------------------------------------------------------------
2000 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
Average Average Average
Interest Interest Interest
(Dollars in Thousands) Amount % Rate Amount % Rate Amount % Rate
- -----------------------------------------------------------------------------------------------------------------------------
Passbook and statement $ 159,185 8.46% 2.50% $ 182,264 9.59% 2.50% $ 183,883 10.75% 3.00%
NOW accounts 21,019 1.12 1.30 31,197 1.64 1.31 113,948 6.66 1.52
Money market deposit accounts 492,711 26.20 4.30 429,991 22.62 4.08 300,911 17.60 4.02
Checking accounts 154,695 8.22 141,907 7.46 115,429 6.75
One to two year certificates (1) 338,882 18.01 5.72 283,068 14.89 5.04 249,699 14.60 5.44
Two to three year certificates (1) 69,777 3.71 5.36 110,971 5.84 5.52 146,848 8.59 5.78
Other certificates (1) 639,670 34.00 6.15 717,272 37.72 5.59 594,771 34.79 6.01
Escrow 5,287 0.28 2.00 4,534 0.24 2.00 4,371 0.26 2.00
- -----------------------------------------------------------------------------------------------------------------------------
Total deposits at end of period $1,881,226 100.00% 4.68% $1,901,204 100.00% 4.37% $1,709,860 100.00% 4.52%
=============================================================================================================================
(1) Minimum balance required to earn interest, depending upon type of
certificate, ranges from $500 to $100,000.
The Bank attempts to manage the flow of deposits by pricing its accounts to
remain generally competitive with other financial institutions in its market
area. The Bank has used its pricing policies to moderate deposit inflow to
control its cost of funds in view, among other considerations, of its capital
adequacy requirements. Management believes that this action does not have an
adverse effect on its ability to acquire deposits.
The following table presents, by various interest rate categories, the amounts
of certificate accounts at December 31, 1999 and December 31, 2000, which mature
during the periods indicated:
Amounts at December 31, 2000
Maturing Within
December 31, One Two Three
(Dollars in Thousands) 1999 2000 Year Years Years Thereafter
- ------------------------------------------------------------------------------------------------------------------------------------
Certificate accounts:
2% to 3.99% $ 5,586 $ 5,876 $ 5,872 $ 4
4% to 5.99% 909,851 316,673 255,788 40,452 $12,006 $8,427
6% to 7.99% 194,349 724,640 599,890 107,935 16,241 574
8% to 9.99% 1,294 886 256 139 451 40
10% to 11.99% 230 254 254
- ------------------------------------------------------------------------------------------------------------------------------------
Total certificate accounts $1,111,310 $1,048,329 $862,060 $148,530 $28,698 $9,041
====================================================================================================================================
The following table sets forth deposit activity for the periods indicated:
Years Ended December 31,
(Dollars in Thousands) 2000 1999 1998
- ---------------------------------------------------------------------------------------------
Net (decrease) increase before
interest credited $ (109,948) $ 115,802 $179,947
Interest credited 89,970 75,542 72,387
- ---------------------------------------------------------------------------------------------
Net deposit (decrease) increase $ (19,978) $ 191,344 $252,334
=============================================================================================
The following table sets forth the deposits and the changes in dollar amount
of deposits in the various programs offered by the Bank for the periods
indicated. The net increase (decrease) in deposits during the period is
inclusive of the effects of interest credited.
Years Ended December 31,
(Dollars in Thousands) 2000 1999 1998
- ---------------------------------------------------------------------------
Deposits at beginning of period $1,901,204 $1,709,860 $1,457,526
(Decrease) increase in:
Passbook accounts (23,079) (1,619) 9,425
NOW accounts (10,178) (82,752) 22,243
Money market deposit accounts 62,720 129,080 13,332
Commercial checking accounts 12,787 26,478 19,035
One to two year certificates 75,815 33,369 16,669
Two to three year certificates (41,194) (35,877) (8,887)
Other certificates (97,602) 122,501 180,756
Escrow 753 164 (239)
- ---------------------------------------------------------------------------
Net (decrease) increase in deposits
during the period (19,978) 191,344 252,334
- ---------------------------------------------------------------------------
Deposits at end of period $1,881,226 $1,901,204 $1,709,860
===========================================================================
The following table presents, by various interest rate categories, the amounts
of certificate accounts of $100,000 or more at December 31, 2000, which mature
during the periods indicated:
Maturing Within
-----------------
Over Over
Three Six to
Three to Six Twelve
(Dollars in Thousands) Total Months Months Months Thereafter
- --------------------------------------------------------------------------
2% to 3.99% $ 5,818 $ 3,496 $ 740 $ 1,582
4% to 5.99% 34,401 14,960 5,082 9,592 $ 4,767
6% to 7.99% 222,111 111,478 53,247 41,848 15,538
10% to 11.99% 180 180
- --------------------------------------------------------------------------
Total $262,510 $129,934 $59,069 $53,202 $20,305
==========================================================================
BORROWINGS
The Bank has available a number of sources for borrowing funds. The Bank's
principal borrowings are securities sold under repurchase agreements, and
advances from the Federal Home Loan Bank of New York ("FHLB"). See Note 8 of
Notes to Consolidated Financial Statements included in the 2000 Annual Report to
Shareholders.
The following table sets forth the borrowings and mandatorily redeemable
preferred securities of the Bank as of the dates indicated:
December 31,
(Dollars in Thousands) 2000 1999
- ----------------------------------------------------------------------------------------------------------------------------------
FHLB advances $150,455 $ 90,538
Securities sold under repurchase agreements 72,819 49,218
Other 2,194 2,289
- ----------------------------------------------------------------------------------------------------------------------------------
Total borrowings 225,468 142,045
Mandatorily redeemable preferred securities 30,000 30,000
- ----------------------------------------------------------------------------------------------------------------------------------
$255,468 $172,045
==================================================================================================================================
Borrowings at December 31, 2000 have maturity dates as follows:
Weighted
(Dollars in Thousands) Average Rate Amount
- ----------------------------------------------------------------------------------------------------------------------------------
Borrowings maturing or callable in 2001 6.22% $202,513
December 23, 2002 10.51 2,000
October 6, 2003 4.73 20,000
February 5, 2007 7.08 418
January 11, 2019 6.08 537
Mandatorily redeemable preferred securities - 2028 8.13 30,000
- ----------------------------------------------------------------------------------------------------------------------------------
6.37% $255,468
==================================================================================================================================
The following table sets forth information related to short-term borrowings of the Bank as of
the dates indicated:
December 31,
- ----------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands) 2000 1999 1998
- ----------------------------------------------------------------------------------------------------------------------------------
Outstanding balance at end of year $202,513 $119,048 $155,272
Average interest rate 6.22% 5.45% 5.00%
Maximum outstanding at any month end $214,588 $256,863 $187,758
Average amount outstanding during year $156,086 $179,499 $153,242
Average interest rate during year 6.02% 5.11% 5.48%
(1) Average amounts outstanding and average interest rates are computed using
weighted monthly averages.
TRUST POWERS
The Bank provides full trust services to individuals, corporations, and non-
profit organizations including executor of estates, trustee under wills, living
trust agreements, custodian services, investment management services, and acts
as trustee of qualified retirement plans. At December 31, 2000, the Bank managed
$329.5 million in trust assets.
INVESTMENT IN SUBSIDIARIES
At December 31, 2000, BSB Bank & Trust Company, Inc. is the only banking
subsidiary of the Company.
B-Save Corporation was incorporated in 1982 and performs treasury management
services for the Bank.
BSB Credit Corporation was incorporated in 1983 to solicit mortgage loan
applications for BSB Bank & Trust. During 1992, the name was changed to BSB
Mortgage Corporation.
During 1996, the Bank formed a wholly owned subsidiary, BSB Financial
Services, Inc. This Company became the focal point for marketing brokerage
services. Additional financial services are being reviewed that may expand the
Bank's product mix to better serve the non-traditional banking customer.
BSB NEWPRO, Inc. was incorporated in 1997 and acquires, holds, maintains, and
disposes of property acquired through foreclosure for the Bank.
On July 21, 1998, the Company formed a subsidiary business trust, BSB Capital
Trust I, L.L.C. (the "Trust"), for the purpose of issuing preferred securities
which qualify as Tier I capital. Concurrent with its formation, the Trust issued
$30.0 million at par value of 8.125% preferred securities in an exempt offering.
The preferred securities are non-voting, mandatorily redeemable in 2028, and
guaranteed by the Company. The entire net proceeds to the Trust from the
offering were invested in junior subordinated obligations of the Company. The
costs related to the issuance of these securities are capitalized and amortized
over the life of the period to redemption on a straightline basis. The net
proceeds were used to fund commercial and consumer loan growth.
As part of the acquisition of Skaneateles Bancorp, Inc., the Company acquired
a wholly owned real estate investment trust subsidiary. This company, now named
BSB Preferred Capital Corporation, was formed to provide a cost effective means
of raising funds, including capital, on a consolidated basis. The Bank's
strategy is to acquire, hold, and manage real estate mortgage assets, including,
but not limited to residential mortgage loans, mortgage-backed securities, and
commercial mortgage loans.
PERSONNEL
As of December 31, 2000, the Company, on a consolidated basis, had 438 full-
time and 123 part-time employees. The employees are not represented by any
collective bargaining unit, and the Bank considers its relationship with its
employees to be good.
COMPETITION
BSB Bank & Trust faces significant competition in attracting deposits and
loans. Its most direct competition for deposits has historically come from
commercial banks, thrift institutions, and credit unions located in its market
area. The Bank also faces additional significant competition for investors'
funds from short-term money market mutual funds and issuers of corporate and
government securities. BSB Bank & Trust competes for deposits principally by
offering depositors a wide variety of deposit programs, convenient branch
locations and banking hours, tax-deferred retirement programs, and other
services. The Bank also utilizes newspaper, radio, television, and other media
to advertise its deposit and loan services. BSB Bank & Trust does not rely upon
any individual group or entity for a material portion of its deposits.
BSB Bank & Trust's competition for loans comes principally from thrift
institutions, credit unions, mortgage banking companies, and commercial banks.
BSB Bank & Trust competes for loan originations primarily through the interest
rates and loan fees it charges, and the efficiency and quality of services it
provides consumers and commercial borrowers, real estate brokers, automobile
dealers, builders, and regional mortgage correspondent originators. The Bank
also relies on the residential mortgage origination efforts of BSB Mortgage
Corporation, a wholly owned subsidiary. Factors which affect competition include
the general availability of lendable funds and credit, general and local
economic conditions, current interest rate levels, and volatility in the lending
markets.
REGULATION
General
The Company, as a bank holding company, is subject to regulation,
supervision, and examination by the Federal Reserve Board. The Bank, as a New
York-chartered bank and trust company, is subject to regulation, supervision,
and examination by the FDIC as its primary federal regulator and by the Banking
Department as its state regulator. The Bank also is subject to regulation,
supervision, and examination as to certain matters by the Federal Reserve Board.
The Bank's deposits are insured to applicable limits by the Bank Insurance
Fund, as administered by the FDIC.
As a bank holding company, the Company is subject to capital adequacy
guidelines of the Federal Reserve Board. Under current capital adequacy
guidelines, bank holding companies generally must maintain a ratio of Tier 1
capital to total assets of 4.0% to 5.0%. The minimum ratio is 3.0% for the most
highly rated bank holding companies. The Federal Reserve Board's capital
adequacy guidelines also require bank holding companies to maintain a minimum
ratio of qualifying total capital to risk-weighted assets of 8.0%, including a
minimum ratio of Tier 1 capital to risk-weighted assets of 4.0%. The Company's
ratio of Tier 1 capital to total assets, Tier 1 capital to risk-weighted assets,
and qualifying total capital to risk-weighted assets of 6.81%, 8.41%, and
11.29%, respectively, at December 31, 2000, were in compliance with such
guidelines. Based on these ratios, the Company met the requirements of a "well-
capitalized" institution. The Bank is subject to similar capital requirements
imposed by the FDIC. Although there are some differences between the capital
adequacy guidelines adopted by the Federal Reserve Board with respect to the
Company and the FDIC with respect to the Bank, the primary elements of each are
generally identical. Under the minimum leverage-based capital requirement
adopted by the FDIC, insured state nonmember banks must maintain a ratio of Tier
1 capital to total assets of at least 3.0% to 5.0% depending on the Bank's
CAMELS rating. Under such regulations, state nonmember banks must maintain a
minimum ratio of qualifying total capital to risk-weighted assets of 8.0%,
including a minimum ratio of Tier 1 capital to risk-weighted assets of 4.0%. At
December 31, 2000, the Bank had a ratio of qualifying total capital to risk-
weighted assets of 10.67%, a ratio of Tier 1 capital to risk-weighted assets of
9.40%, and a leverage ratio of 7.62%. As a result, the Bank met the requirements
of a "well-capitalized" institution.
On November 12, 1999, President Clinton signed legislation to reform the U.S.
banking laws, including the Bank Holding Company Act (the "BHCA"). The changes
made to the BHCA by this legislation, referred to as the Gramm-Leach-Bliley Act,
became effective on March 11, 2000, and expanded the permissible activities of
bank holding companies like the Company. In order to engage in the expanded
activities, the Company would have to file a notice to become a financial
holding company. As a financial holding company, the Company would be permitted
to own and control depository institutions and to engage in activities that are
financial in nature or incidental to financial activities, or activities that
are complementary to a financial activity and do not pose a substantial risk to
the safety and soundness of depository institutions or the financial system
generally. The legislation identifies certain activities that are deemed to be
financial in nature, including nonbanking activities currently permissible for
bank holding companies to engage in both within and outside the United States,
as well as insurance and securities underwriting and merchant banking
activities. The Federal Reserve Board is authorized under the legislation to
identify additional activities that are permissible financial activities.
In order to become a financial holding company and take advantage of this new
authority, the Company's depository institution subsidiaries, currently the
Bank, must be well-capitalized and well-managed and have at least a satisfactory
record of performance under the Community Reinvestment Act. No prior notice to
the Federal Reserve Board would be required from a financial holding company to
acquire a company engaging in non-banking activities or to commence these
activities directly or indirectly through a subsidiary. The Company has no
current intention to become a financial holding company.
Provisions of the Gramm-Leach-Bliley Act permit national banks to establish
financial subsidiaries that may engage in the activities noted above that will
be permissible for financial holding companies, other than insurance
underwriting, merchant banking, and real estate development and investment
activities. In order to exercise this authority, a bank and its depository
institution affiliates must be well-capitalized, well-managed, and have CRA
ratings of at least "satisfactory." For a state bank, such activities also must
be permissible under relevant state law.
The Gramm-Leach-Bliley Act imposes certain obligations on financial
institutions, including state-chartered banks like the Bank, to develop privacy
policies, restrict the sharing of nonpublic customer data with nonaffiliated
parties at the customer's request, and establish procedures and practices to
protect and secure customer data. The privacy provisions will be implemented by
regulations that become effective July 1, 2001.
TAXATION
Federal Taxation
General. The Company files a consolidated tax return which includes the
income of all subsidiaries. The following discussion of federal taxation is a
summary of certain pertinent federal income tax matters.
Bad Debts. The Bank is currently taxed as a "large" bank for federal income
tax purposes, since its average total assets exceed $500 million. As a "large"
bank, the Bank may only deduct specific wholly or partially worthless debts
pursuant to Section 166 of the Internal Revenue Code.
Net Operating Loss Carryovers. Generally, a corporation may carry back net
operating losses ("NOLs") to the preceding two taxable years and forward to the
succeeding 20 taxable years. At December 31, 2000, the Company and the Bank had
no net operating loss carryforward for federal income tax purposes.
Capital Gains and Corporate Dividends-Received Deduction. Corporate net
capital gains are taxed at a maximum tax rate of 35%. The dividends-received
deduction is 70% of the dividends received from less than 20% owned
corporations. However, certain dividend payments between members of an
"affiliated group" are eligible for a 100% deduction.
The Bank's federal income tax returns for its tax years beginning in 1997 are
open under the statute of limitations and are subject to review by the IRS.
New York State Taxation
The Company and the Bank are subject to an annual New York State Franchise
tax equal to the greater of a regular tax (the "State Regular Tax"), an
alternative minimum tax (the "State Alternative Minimum Tax"), a tax based on
the combined taxable assets of the Company and the Bank, or a fixed minimum tax
of $250.
The State Regular Tax is computed at the rate of 9% for 2000, 8.5% for 2001,
8.00% for 2002, and 7.5% for 2003 on the Company's and the Bank's entire net
income.
The State Alternative Minimum Tax is computed at the rate of 3% on the
Company's and the Bank's alternative entire net income for the taxable year. The
Company and the Bank's alternative entire net income consists of their entire
net income, increased by certain deductions not allowed in computing alternative
entire taxable income.
The tax based on combined taxable assets consists of the Company's and the
Bank's combined average assets. The tax is computed at the rate of one-tenth of
a million per dollar of taxable assets, but lower rates apply for banks with at
least 33% of their assets in mortgages and that have a "net worth ratio" of less
than 5%.
The New York State Franchise tax paid by the Company is deductible for
Federal income tax purposes.
The Company's and the Bank's New York State income tax returns for the tax
years beginning in 1997 are open and subject to review by New York State.
Delaware State Taxation
The Company is subject to an annual Delaware State Franchise Tax. The
Franchise Tax provides that every corporation incorporated under the laws of the
State of Delaware "shall pay an annual tax . . . by way of license" for its
corporate franchise. See Del. Code. Ann. Tit. 8, (S) 501. Two methods are
provided for calculating the Franchise Tax and the lesser amount calculated
under either method is the tax payable. The first method, which is referred to
as the "assumed par value capital method". The tax under this method is
calculated by dividing the corporation's total gross assets by its total number
of outstanding shares and multiplying the quotient by the total number of
authorized shares. The product equals the capitalization for assessment of the
franchise tax which is assessed at a rate of $200 per $1 million of
capitalization.
Under the second method, which is called the "authorized shares method," the
franchise tax is calculated based on the authorized number of shares of capital
stock and is calculated according to the following formula: where the authorized
capital stock does not exceed 3,000 shares, $30; where the authorized capital
stock exceeds 3,000 shares but is not more than 5,000 shares, $50; where the
authorized capital stock exceeds 5,000 shares but is not more than 10,000
shares, $90; and the further sum of $50 on each 10,000 shares or part thereof.
Under the first method, the Bank pays approximately $107,000 in annual
Franchise Tax.
ITEM 2. PROPERTIES
The Company does not own or lease any property, other than that owned or
leased by the Bank and its subsidiaries. BSB Bank & Trust conducts its business
from its executive office and 22 full-service offices located in Broome,
Chemung, Chenango, Onondaga, Chemung, Oswego, and Tioga Counties of upstate New
York. The following table sets forth certain information relating to each of BSB
Bank & Trust's offices as of December 31, 2000:
Owned or Lease Expiration Net Book
Office Location Leased Including Options Value *
- -----------------------------------------------------------------------------------------------------------------------
($ In Thousands)
Main Office 56-68 Exchange St., Binghamton Owned N/A $1,344
Annex 58 Exchange St., Binghamton Owned N/A 962
99 Hawley St. 99 Hawley St., Binghamton Owned N/A 345
92 Hawley St. 92 Hawley St., Binghamton Owned N/A 827
Endwell Office 540 Hooper Rd., Endwell Owned N/A 345
Vestal Plaza Office Vestal Plaza, Vestal Leased 2011 129
Tioga County Office Fifth Ave., Owego Leased 2013 54
Oakdale Mall Office Reynolds Rd., Johnson City Leased 2015 15
Norwich Office North Plaza, Norwich Leased 2015 49
Northgate Plaza Office 1250 Front St., Binghamton Leased 2017 74
West Side Office 273 Main St., Binghamton Leased 2012 50
Endicott Office 43 Washington Ave., Endicott Owned N/A 878
Eastside Office 156 Robinson St., Binghamton Leased 2021 446
Elmira Office 351 N. Main St., Elmira Owned N/A 341
Elmira Heights Office 2075 Upper Lake Rd., Elmira Heights Leased 2009 55
Syracuse Office 100 Clinton Square, Syracuse Leased 2001 0
BSB Mortgage Corp. Valley Plaza, Johnson City Leased 2000 0
Skaneateles Office 33 E. Genesee St., Skaneateles Owned N/A 391
Downtown Syracuse 431 E. Fayette St., Syracuse Owned N/A 2,725
Rano Office Rano Blvd., Vestal Leased 2019 217
Cicero 5791 East Seymour St., Cicero Owned N/A 550
Camillus 100 Kasson Rd., Camillus Leased 2000 10
Shop City Teall Ave. & Grant Blvd., Syracuse Leased 2004 106
Airport Plaza 3803 Brewton Rd., N. Syracuse Leased 2009 136
PennCan 7785 Frontage Rd., Cicero Leased 2010 135
Oswego 137 East State Rd., Oswego Leased 2010 147
North Medical 5100 West Taft Rd., Liverpool Leased 2007 135
Fennell Street Building 27 Fennell Street, Skaneateles Leased 2002 140
* Net book value of leasehold improvements are included.
BSB Bank & Trust also operates 52 ATMs (MachineTeller(R)), the most extensive
system in its market area, which provide 24-hour banking services. The Bank
operates 12 proprietary bank service locations (StoreTeller(R)) situated in a
large area supermarket chain. BSB Bank & Trust issued approximately 67,000
plastic cards which allow depositors to use the ATMs and in-store facilities.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to its business, to which the Company or
any of its subsidiaries is a party or of which any of their property is
the subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The information required herein is incorporated by reference from under
the sections captioned "Market Prices and Related Shareholder Matters"
on page 25 of the Company's Annual Report to Shareholders for the year
ended December 31, 2000 portions of which are included herein as
Exhibit 13 ("Annual Report").
ITEM 6. SELECTED FINANCIAL DATA
The information required herein is incorporated by reference from the
table captioned "Selected Financial and Other Data" on page 6 of the
Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required herein is incorporated by reference from the
section captioned "Management's Discussion and Analysis of Financial
Condition and Results of Operations" on pages 7 to 25 of the Annual
Report.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" on pages 7 to 25 of the Annual Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data required are
incorporated by reference from pages 26 to 52 of the Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required herein is incorporated by reference from the
Company's definitive Proxy Statement to be filed with the SEC within
120 days after the end of the fiscal year covered by this Report (the
"Proxy Statement").
ITEM 11. EXECUTIVE COMPENSATION
The information required herein is incorporated by reference from the
Proxy Statement to be filed within 120 days after the end of the fiscal
year covered by this Report.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required herein is incorporated by reference from the
Proxy Statement to be filed within 120 days after the end of the fiscal
year covered by this Report.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required herein is incorporated by reference from the
Proxy Statement to be filed within 120 days after the end of the fiscal
year covered by this Report.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) The following financial statements are incorporated by reference
from Item 8 hereof:
Consolidated Statements of Condition at December 31, 2000 and
1999
Consolidated Statements of Income For Each of the Three Years in
the Period Ended December 31, 2000
Consolidated Statements of Changes In Shareholders' Equity For
Each of the Three Years in the Period Ended December 31, 2000
Consolidated Statements of Cash Flows For Each of the Three
Years in the Period Ended December 31, 2000
Notes to Consolidated Financial Statements
Report of Independent Auditors
(a)(2) There are no financial statement schedules which are required to
be filed as part of this form since they are not applicable.
(a)(3) See (c) below for all exhibits filed herewith and the Exhibit
Index.
(b) Reports on Form 8-K. The Company filed the following Current
Reports of Form 8-K during the fourth quarter of 2000:
Current Report on Form 8-K filed with the Securities and
Exchange Commission (the "SEC") on October 6, 2000.
Current Report on Form 8-K filed with the SEC on November 14,
2000.
Current Report on Form 8-K filed with the SEC on December 29,
2000.
(c) Exhibits. The following exhibits are either filed as part of
this annual report on Form 10-K, or are incorporated herein by
reference:
Exhibit Table
-------------
No. Exhibit
- --- -------
3.1 Certificate of Incorporation, as amended by the Certificate of Amendment
dated May 24, 1993 and the Certificate of Amendment dated April 22, 1996
(incorporated by reference from Exhibit 3.1 to the Quarterly Report on
Form 10-Q of BSB Bancorp, Inc. (the "Company") for the Quarter Ended March
31, 1996).
3.2 Form of Amended Certificate of Designation, Preferences and Rights of
Series A Junior Participating Preferred Stock and form of Certificate of
Designation, Preferences and Rights of Series A Junior Participating
Preferred Stock (incorporated by reference from Exhibit 99.2 to the
Company's Current Report on Form 8-K, filed with the Securities and
Exchange Commission (the "SEC") on May 26, 1999).
3.3 Bylaws, as amended (incorporated by reference from Exhibit 3 to the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1999).
4.1 Specimen common stock certificate (incorporated herein by reference from
Exhibit 4 to the Company's Registration Statement on Form S-4, filed with
the SEC on March 2, 1988).
4.2 Rights Agreement, dated as of May 24, 1999, between the Company and
American Stock Transfer & Trust Company (incorporated herein by reference
to Exhibit 99.1 to the Company's Current Report on Form 8-K, filed with
the SEC on May 26, 1999).
10.1 Long-Term Incentive and Capital Accumulation Plan, as amended
(incorporated herein by reference to Exhibit A to the Company's Proxy
Statement for the 1990 Annual Meeting of Shareholders).
10.2 1996 Long-Term Incentive and Capital Accumulation Plan (incorporated by
reference to Exhibit A to the Company's Proxy Statement for the 1996
Annual Meeting of Shareholders).
10.3 Amendment Number 1 to 1996 Long-Term Incentive and Capital Accumulation
Plan (incorporated herein by reference to Exhibit 10 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998).
10.4 Amendment Number 2 to 1996 Long-Term Incentive and Capital Accumulation
Plan (incorporated by reference to Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the period ended March 31, 1999).
10.5 Directors' Stock Option Plan (incorporated herein by reference to Exhibit
A to the Company's Proxy Statement for the 1994 Annual Meeting of
Shareholders).
10.6 Change of Control Severance Agreement, entered into as of April 19, 2000,
by and among the Company, the Bank, and Matthew W. Schaefer.
10.7 Employment Agreement, entered into as of December 28, 2000, by and among
the Company, the Bank, and Arthur C. Smith.
10.8 Employment Contract, entered into as of November 2, 1990, by and among the
Company, the Bank and Alex S. DePersis (incorporated herein by reference
to Exhibit 10.4 to the Company's Annual Report on Form 10-K for the Year
Ended December 31, 1992).
10.9 Amendment to Employment Contract, entered into as of December 29, 1995,
by and among Alex S. DePersis, the Company and the Bank (incorporated
herein by reference to Exhibit 10.4 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1995).
10.10 Amendment to Employment Contract, entered into as of December 30, 1996,
by and among the Company, the Bank and Alex S. DePersis (incorporated
herein by reference to Exhibit 10.6 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1996).
10.11 Amendment to Employment Contract, entered into as of December 29, 1997,
by and among the Company, the Bank and Alex S. DePersis (incorporated
herein by reference to Exhibit 10.8 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1997).
10.12 Amendment to Employment Contract, entered into as of June 28, 1999, by
and among the Company, the Bank and Alex S. DePersis (incorporated herein
by reference to Exhibit 10.12 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1999).
10.13 Employment Agreement, entered into as of January 25, 1999, by and among
the Company, the Bank and John P. Driscoll incorporated herein by
reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1999).
10.14 Amendment to Employment Agreement, entered into as of May 31, 2000, by
and among the Company, the Bank and John P. Driscoll.
10.15 Employment Agreement, entered into as of November 1, 2000, by and among
the Company, the Bank and John B. Wescott.
10.16 Employment Agreement, entered into as of November 10, 2000, by and among
the Company, the Bank and Howard W. Sharp.
10.17 Change of Control Severance Agreement, entered into as of November 2,
1990, by and among the Company, the Bank and Douglas R. Johnson
(incorporated herein by reference to Schedule 10.3 to Exhibit 10.3 to the
Company's Annual Report on Form 10-K for the year ended December 31,
1990).
10.18 Amendment to Change of Control Severance Agreement, entered into as of
December 29, 1995, by and among the Company, the Bank and Douglas R.
Johnson (incorporated herein by reference to Exhibit 10.8 to the
Company's Annual Report on Form 10-K for the year ended December 31,
1995).
10.19 Amendment to Change of Control Severance Agreement, entered into as of
June 28, 1999, by and among the Company, the Bank and Douglas R. Johnson
(incorporated herein by reference to Exhibit 10.19 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1999) .
10.20 Change of Control Severance Agreement, entered into as of February 22,
1999, by and among the Company, the Bank and Rexford C. Decker
(incorporated herein by reference to Exhibit 10.20 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1999).
10.21 Amendment to Change of Control Severance Agreement, entered into as of
June 28, 1999, by and among the Company, the Bank and Rexford C. Decker
(incorporated herein by reference to Exhibit 10.21 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1999).
10.22 Change Employment Agreement, entered into as of December 6, 2000, by and
among the Company, the Bank and William M. LeBeau.
10.23 Employment Agreement, entered into as of December 28, 2000, by and
among the Company, the Bank and Larry G. Denniston.
10.24 Form of Junior Subordinated Indenture, dated as of July 24, 1998,
between the company and Bankers Trust Company (incorporated herein by
reference to Exhibit 4.1 to the Company's Registration Statement on
Form S-4 filed with the SEC on September 25, 1998).
13 Annual Report to Shareholders for the Year Ended December 31, 2000
21 List of the Company's Subsidiaries
23 Consent of Independent Public Accountants
(d) There are no other financial statements and financial statement schedules
which were excluded from the Annual Report which are required to be included
herein.
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, BSB Bancorp, Inc. has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BSB BANCORP, INC.
- -----------------
(Registrant)
By:/s/ Howard W. Sharp Date: March 29, 2001
------------------------ --------------
Howard W. Sharp
Chief Executive Officer and President
Pursuant to the requirements 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.
By:/s/ Rexford C. Decker
------------------------
Rexford C. Decker Date: March 29, 2001
Senior Vice President and Chief Financial --------------
Officer (Principal Accounting Officer)
By:/s/ Ferris G. Akel
------------------------
Ferris G. Akel, Director Date: March 29, 2001
--------------
By:/s/ Robert W. Allen
------------------------
Robert W. Allen, Director Date: March 29, 2001
--------------
By:/s/ Diana J. Bendz
------------------------
Diana J. Bendz, Director Date: March 29, 2001
--------------
By:/s/ William C. Craine
------------------------
William C. Craine, Director Date: March 29, 2001
--------------
By:/s/ John P. Driscoll
------------------------
John P. Driscoll, Director Date: March 29, 2001
--------------
By:/s/ Thomas F. Kelly
------------------------
Thomas F. Kelly , Ph.D., Director Date: March 29, 2001
--------------
By:/s/ David A. Niermeyer
------------------------
David A. Niermeyer, Director Date: March 29, 2001
--------------
By:/s/ Mark T. O'Neil, Jr.
------------------------
Mark T. O'Neil, Jr., Director Date: March 29, 2001
--------------
By:/s/ William H. Rincker
------------------------
William H. Rincker, Director Date: March 29, 2001
--------------
By:/s/ Thomas L. Thorn
------------------------
Thomas L. Thorn, Director Date: March 29, 2001
--------------
Exhibit Index
--------------
No. Exhibit
- --- -------
3.1 Certificate of Incorporation, as amended by the Certificate of Amendment
dated May 24, 1993 and the Certificate of Amendment dated April 22, 1996
(incorporated by reference from Exhibit 3.1 to the Quarterly Report on
Form 10-Q of BSB Bancorp, Inc. (the "Company") for the Quarter Ended
March 31, 1996).
3.2 Form of Amended Certificate of Designation, Preferences and Rights of
Series A Junior Participating Preferred Stock and form of Certificate of
Designation, Preferences and Rights of Series A Junior Participating
Preferred Stock (incorporated by reference from Exhibit 99.2 to the
Company's Current Report on Form 8-K, filed with the Securities and
Exchange Commission (the "SEC") on May 26, 1999).
3.3 Bylaws, as amended (incorporated by reference from Exhibit 3 to the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1999).
4.1 Specimen common stock certificate (incorporated herein by reference from
Exhibit 4 to the Company's Registration Statement on Form S-4, filed
with the SEC on March 2, 1988).
4.2 Rights Agreement, dated as of May 24, 1999, between the Company and
American Stock Transfer & Trust Company (incorporated herein by
reference to Exhibit 99.1 to the Company's Current Report on Form 8-K,
filed with the SEC on May 26, 1999).
10.1 Long-Term Incentive and Capital Accumulation Plan, as amended
(incorporated herein by reference to Exhibit A to the Company's Proxy
Statement for the 1990 Annual Meeting of Shareholders).
10.2 1996 Long-Term Incentive and Capital Accumulation Plan (incorporated by
reference to Exhibit A to the Company's Proxy Statement for the 1996
Annual Meeting of Shareholders).
10.3 Amendment Number 1 to 1996 Long-Term Incentive and Capital Accumulation
Plan (incorporated herein by reference to Exhibit 10 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998).
10.4 Amendment Number 2 to 1996 Long-Term Incentive and Capital Accumulation
Plan (incorporated by reference to Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the period ended March 31, 1999).
10.5 Directors' Stock Option Plan (incorporated herein by reference to
Exhibit A to the Company's Proxy Statement for the 1994 Annual Meeting
of Shareholders).
10.6 Change of Control Severance Agreement, entered into as of April 19,
2000, by and among the Company, the Bank, and Matthew W. Schaefer.
10.7 Employment Agreement, entered into as of December 28, 2000, by and among
the Company, the Bank, and Arthur C. Smith.
10.8 Employment Contract, entered into as of November 2, 1990, by and among
the Company, the Bank and Alex S. DePersis (incorporated herein by
reference to Exhibit 10.4 to the Company's Annual Report on Form 10-K
for the Year Ended December 31, 1992).
10.9 Amendment to Employment Contract, entered into as of December 29, 1995,
by and among Alex S. DePersis, the Company and the Bank (incorporated
herein by reference to Exhibit 10.4 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1995).
10.10 Amendment to Employment Contract, entered into as of December 30, 1996,
by and among the Company, the Bank and Alex S. DePersis (incorporated
herein by reference to Exhibit 10.6 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1996).
10.11 Amendment to Employment Contract, entered into as of December 29, 1997,
by and among the Company, the Bank and Alex S. DePersis (incorporated
herein by reference to Exhibit 10.8 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1997).
10.12 Amendment to Employment Contract, entered into as of June 28, 1999, by
and among the Company, the Bank and Alex S. DePersis (incorporated
herein by reference to Exhibit 10.12 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1999).
10.13 Employment Agreement, entered into as of January 25, 1999, by and among
the Company, the Bank and John P. Driscoll incorporated herein by
reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1999).
10.14 Amendment to Employment Agreement, entered into as of May 31, 2000, by
and among the Company, the Bank and John P. Driscoll.
10.15 Employment Agreement, entered into as of November 1, 2000, by and among
the Company, the Bank and John B. Wescott.
10.16 Employment Agreement, entered into as of November 10, 2000, by and among
the Company, the Bank and Howard W. Sharp.
10.17 Change of Control Severance Agreement, entered into as of November 2,
1990, by and among the Company, the Bank and Douglas R. Johnson
(incorporated herein by reference to Schedule 10.3 to Exhibit 10.3 to
the Company's Annual Report on Form 10-K for the year ended December 31,
1990).
10.18 Amendment to Change of Control Severance Agreement, entered into as of
December 29, 1995, by and among the Company, the Bank and Douglas R.
Johnson (incorporated herein by reference to Exhibit 10.8 to the
Company's Annual Report on Form 10-K for the year ended December 31,
1995).
10.19 Amendment to Change of Control Severance Agreement, entered into as of
June 28, 1999, by and among the Company, the Bank and Douglas R. Johnson
(incorporated herein by reference to Exhibit 10.19 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1999) .
10.20 Change of Control Severance Agreement, entered into as of February 22,
1999, by and among the Company, the Bank and Rexford C. Decker
(incorporated herein by reference to Exhibit 10.20 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1999).
10.21 Amendment to Change of Control Severance Agreement, entered into as of
June 28, 1999, by and among the Company, the Bank and Rexford C. Decker
(incorporated herein by reference to Exhibit 10.21 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1999).
10.22 Change Employment Agreement, entered into as of December 6,
2000, by and among the Company, the Bank and William M. LeBeau.
10.23 Employment Agreement, entered into as of December 28, 2000, by
and among the Company, the Bank and Larry G. Denniston.
10.24 Form of Junior Subordinated Indenture, dated as of July 24,
1998, between the company and Bankers Trust Company
(incorporated herein by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-4 filed with the SEC
on September 25, 1998).
13 Annual Report to Shareholders for the Year Ended December 31,
1998
21 List of the Company's Subsidiaries
23 Consent of Independent Public Accountants
(d) There are no other financial statements and financial statement
schedules which were excluded from the Annual Report which are required
to be included herein.