UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
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 0-27782
DIME COMMUNITY BANCORP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 11-3297463
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
209 HAVEMEYER STREET, BROOKLYN, NEW YORK 11211
(Address of principal executive offices) (Zip Code)
(718) 782-6200
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all the reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
(1) YES X NO ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASSES OF COMMON STOCK NUMBER OF SHARES OUTSTANDING, OCTOBER 31, 1997
$.01 Par Value 12,624,750
<PAGE>
-2-
PART I - FINANCIAL INFORMATION
PAGE
Item 1. Financial Statements
Consolidated Statements of Condition at September 30, 1997
(Unaudited) and June 30, 1997 3
Consolidated Statements of Operations for the Three months
Ended September 30, 1997 and 1996 (Unaudited) 4
Consolidated Statements of Changes in Stockholders' Equity
for the Three months Ended September 30, 1997 (Unaudited) 5
Consolidated Statements of Cash Flows for the Three months
Ended September 30, 1997 and 1996 (Unaudited) 6
Notes to Consolidated Financial Statements (Unaudited) 7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-18
Item 3 Quantitative and Qualitative Disclosure
About Market Risk 18
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 18
Item 2. Changes in Securities and Use of Proceeds 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
Signatures 20
Exhibits 21
EXPLANATORY NOTE: This Form 10-Q contains certain forward looking
statements consisting of estimates with respect to the financial
condition, results of operations and business of the Company that
are subject to various factors which could cause actual results to
differ materially from these estimates. These factors include:
changes in general, economic and market conditions, and legislative
and regulatory conditions, or the development of an adverse interest
rate environment that adversely affects the interest rate spread or
other income anticipated from the Company's operations and
investments.
<PAGE>
-3-
DIME COMMUNITY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
<S> <C> <C>
AT SEPTEMBER 30, AT JUNE 30,
1997 (UNAUDITED) 1997
------------------- --------------
ASSETS:
Cash and due from banks $13,468 $19,198
Investment securities held to maturity (estimated market value of $109,131
and $102,024 at September 30, 1997 and June 30, 1997, respectively) 108,515 101,587
Investment securities available for sale:
Bonds and notes (amortized cost of $46,346 and $52,426 at September 30,
1997 and June 30, 1997, respectively) 46,797 52,798
Marketable equity securities (historical cost of $4,925 and $4,912 at
September 30, 1997 and June 30, 1997, respectively) 6,470 5,889
Mortgage backed securities held to maturity (estimated market value of
$75,525 and $79,075 at September 30, 1997 and June 30, 1997, respectively) 74,512 78,388
Mortgage backed securities available for sale (amortized cost of $237,759
and $227,776 at September 30, 1997 and June 30, 1997, respectively) 241,272 230,137
Federal funds sold 37,560 18,902
Loans:
Real estate 794,790 744,246
Other loans 5,788 6,076
Less: Allowance for loan losses (11,150) (10,726)
------------------- ---------------
Total loans, net 789,428 739,596
------------------- ---------------
Loans held for sale 163 262
Premises and fixed assets 13,839 13,995
Federal Home Loan Bank of New York Capital Stock 8,322 8,322
Other real estate owned, net 1,084 1,697
Goodwill 25,832 26,433
Other assets 18,094 17,822
------------------- --------------
TOTAL ASSETS $1,385,356 $1,315,026
=================== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Due to depositors $997,708 $963,395
Escrow and other deposits 17,252 14,974
Securities sold under agreements to repurchase 99,519 76,333
Federal Home Loan Bank of New York advances 76,005 63,210
Accrued postretirement benefit obligation 2,589 2,546
Other liabilities 5,332 3,679
------------------- ---------------
TOTAL LIABILITIES 1,198,405 1,124,137
------------------- ---------------
STOCKHOLDERS' EQUITY:
Preferred stock ($0.01 par, 9,000,000 shares authorized,
none outstanding at September 30, 1997 and June 30, 1997) - -
Common stock ($0.01 par, 45,000,000 shares authorized, 12,624,750 and 13,092,750
shares outstanding at September 30, 1997 and June 30, 1997, respectively) 145 145
Additional paid-in capital 142,045 141,716
Unallocated common stock of Employee Stock Ownership Plan (9,974) (10,324)
Unearned Common Stock of Recognition and Retention Plan (9,143) (9,671)
Treasury Stock, at cost (1,922,750 shares and 1,454,750 shares at September 30,
1997 and June 30, 1997, respectively) (36,631) (27,703)
Retained earnings (substantially restricted) 97,533 94,695
Unrealized gain on securities available for sale, net of deferred taxes 2,976 2,031
------------------- ---------------
TOTAL STOCKHOLDERS' EQUITY 186,951 190,889
------------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,385,356 $1,315,026
=================== ===============
</TABLE>
See notes to consolidated financial statements
<PAGE>
-4-
DIME COMMUNITY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
<S> <C> <C>
FOR THE THREE MONTHS
ENDED SEPTEMBER 30,
1997 1996
------------ ------------
INTEREST INCOME:
Loans secured by real estate $16,269 $12,647
Other loans 129 132
Investment securities 2,684 3,918
Mortgage-backed securities 5,193 3,698
Federal funds sold 453 817
------------ ------------
TOTAL INTEREST INCOME 24,728 21,212
------------ ------------
INTEREST EXPENSE:
Deposits and escrow 10,332 9,689
Borrowed funds 2,370 358
------------ ------------
TOTAL INTEREST EXPENSE 12,702 10,047
------------ ------------
NET INTEREST INCOME 12,026 11,165
PROVISION FOR LOAN LOSSES 525 1,050
------------ ------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 11,501 10,115
------------ ------------
NON-INTEREST INCOME:
Service charges and other fees 634 426
Net gain on sales and redemptions of securities and
other assets 15 36
Net gain on sales of loans 18 23
Other 314 272
------------ ------------
TOTAL NON-INTEREST INCOME 981 757
------------ ------------
NON-INTEREST EXPENSE:
Salaries and employee benefits 2,587 2,346
ESOP and RRP compensation expense 1,206 463
Occupancy and equipment 742 728
SAIF special assessment - 2,032
Federal deposit insurance premiums 86 251
Data processing costs 280 247
Provision for losses on Other real estate owned 55 193
Goodwill amortization 601 594
Other 1,189 1,278
------------ ------------
TOTAL NON-INTEREST EXPENSE 6,746 8,132
------------ ------------
INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 5,736 2,740
INCOME TAX EXPENSE 2,898 1,516
------------ ------------
NET INCOME 2,838 1,224
=========== ===========
EARNINGS PER SHARE:
PRIMARY $0.23 $0.09
=========== ===========
FULLY DILUTED $0.23 $0.09
=========== ===========
</TABLE>
See notes to consolidated financial statements
<PAGE>
-5-
DIME COMMUNITY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C>
FOR THE THREE
MONTHS ENDED
SEPTEMBER 30, 1997
---------------------------
COMMON STOCK (PAR VALUE $0.01):
Balance at beginning of period $ 145
---------------------------
Balance at end of period 145
---------------------------
ADDITIONAL PAID-IN CAPITAL:
Balance at beginning of period 141,716
Amortization of excess fair value over cost - ESOP stock 329
---------------------------
Balance at end of period 142,045
---------------------------
EMPLOYEE STOCK OWNERSHIP PLAN:
Balance at beginning of period (10,324)
Amortization of earned portion of ESOP stock 350
---------------------------
Balance at end of period (9,974)
---------------------------
RECOGNITION AND RETENTION PLAN:
Balance at beginning of period (9,671)
Amortization of earned portion of RRP stock 528
---------------------------
Balance at end of period (9,143)
---------------------------
TREASURY STOCK:
Balance at beginning of period (27,703)
Purchase of 468,000 shares, at cost (8,928)
---------------------------
Balance at end of period (36,631)
---------------------------
RETAINED EARNINGS:
Balance at beginning of period 94,695
Net income for the period 2,838
---------------------------
Balance at end of period 97,533
---------------------------
UNREALIZED GAIN ON SECURITIES AVAILABLE FOR SALE, NET:
Balance at beginning of period 2,031
Change in unrealized gain on securities available for sale
during the period, net of deferred taxes 945
---------------------------
Balance at end of period $2,976
---------------------------
</TABLE>
See notes to consolidated financial statements
<PAGE>
-6-
DIME COMMUNITY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
FOR THE THREE MONTHS
ENDED SEPTEMBER 30,
1997 1996
-------------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES: (In THOUSANDS)
Net Income $2,838 $1,224
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Net loss on investment and mortgage backed securities sold 11 -
Net gain on investment and mortgage backed securities called (9) -
Net gain on sale of other assets - (19)
Net gain on sale of loans held for sale (18) (23)
Net depreciation and amortization (accretion) 260 (844)
ESOP and RRP compensation expense 1,206 463
Provision for loan losses 525 1,050
Goodwill amortization 601 594
Decrease (increase) in loans held for sale 117 (619)
Increase in other assets and other real estate owned (459) (193)
Increase in accrued postretirement benefit obligation 43 40
DECREASE IN PAYABLE FOR SECURITIES PURCHASED - (18,994)
INCREASE IN OTHER LIABILITIES 1,653 1,934
-------------------- -----------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 6,768 (15,387)
-------------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) decrease in Federal funds sold (18,658) 81,841
Proceeds from maturities of investment securities held to maturity 2,215 7,000
Proceeds from maturities of investment securities available for sale 3,500 227,460
Proceeds from calls of investment securities held to maturity 17,500 6,000
Proceeds from calls of investment securities available for sale 2,000 -
Proceeds from sales of investment securities available for sale 5,023 -
Proceeds from sales of mortgage backed securities available for sale 12,382 -
Purchases of investment securities held to maturity (26,574) (48,537)
Purchases of investment securities available for sale (4,440) (67,415)
Purchases of mortgage backed securities held to maturity - (8,936)
Purchases of mortgage backed securities available for sale (30,014) (36,981)
Principal collected on mortgage backed securities held to maturity 3,824 2,948
Principal collected on mortgage backed securities available for sale 7,544 6,879
Net increase in loans (50,357) (28,173)
Cash disbursed in acquisition of Conestoga Bancorp, net of cash acquired - (71)
Purchases of fixed assets (87) (40)
Purchase of Federal Home Loan Bank stock - 6
-------------------- -----------------
Net Cash used in Investing Activities (76,142) (141,981)
-------------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in Due to depositors 34,313 (8,297)
Net increase (decrease) in escrow and other deposits 2,278 (129,290)
Proceeds from Federal Home Loan Bank of New York Advances 12,795 -
Increase in securities sold under agreements to repurchase 23,186 6,288
Cash disbursed for expenses related to issuance of common stock - (178)
Purchase of common stock by the Recognition and Retention Plan - -
Purchase of treasury stock (8,928) -
-------------------- -----------------
Net Cash provided by (used in) Financing Activities 63,644 (131,477)
-------------------- -----------------
DECREASE IN CASH AND DUE FROM BANKS (5,730) (4,833)
CASH AND DUE FROM BANKS, BEGINNING OF PERIOD 19,198 17,055
-------------------- -----------------
CASH AND DUE FROM BANKS, END OF PERIOD $13,468 $12,172
==================== =================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes 1,674 352
==================== =================
Cash paid for interest 12,486 10,061
==================== =================
Transfer of loans to Other real estate owned 338 1,069
==================== =================
Change in unrealized gain on available for sale securities, net of deferred taxes 945 555
==================== ==================
</TABLE>
See Notes to consolidated financial statements
<PAGE>
-7-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
1. NATURE OF OPERATIONS
Dime Community Bancorp, Inc. (the "Company") is a Delaware
corporation organized in December, 1995 at the direction of the Board
of Directors of The Dime Savings Bank of Williamsburgh (the "Bank")
for the purpose of acquiring all of the capital stock of the Bank
issued in the Bank's conversion from mutual to stock form (the
"Conversion") on June 26, 1996, in exchange for $76.4 million (54%) of
the net proceeds of the offering of 14,547,500 shares of the Company's
common stock (the "Offering"). Presently, the only significant
assets of the Company are the capital stock of the Bank, the Company's
loan to the ESOP, and investments of the net proceeds retained by
the Company. A portion of the net proceeds retained by the Company
were utilized to fund the repurchase of common stock into treasury.
The Company is subject to the
financial reporting requirements of the Securities Exchange Act of
1934, as amended.
The Bank, a New York State-chartered stock savings bank, has been, and
intends to continue to be, a community-oriented financial
institution providing financial services and loans for housing within
its market areas. The Bank and the Company maintain their
headquarters in the Williamsburgh section of the borough of
Brooklyn. Fourteen additional offices of the Bank are located in the
boroughs of Brooklyn, Queens, and the Bronx, and in Nassau County.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments necessary for a fair
presentation of the Company's financial condition as of
September 30, 1997, the results of operations for the three months
ended September 30, 1997 and 1996, cash flows for the three months
ended September 30, 1997 and 1996, and changes in stockholders'
equity for the three months ended September 30, 1997. In the opinion
of management, all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the information
contained herein have been made. The results of operations for the
three months ended September 30, 1997, are not necessarily indicative
of the results of operations to be expected for the remainder of the
year. Certain information and note disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting standards ("GAAP") have been omitted pursuant to the
rules and regulations of the Securities and Exchange Commission.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. Areas in the
accompanying financial statements where estimates are significant
include the allowance for loans losses and the carrying value of
other real estate.
These consolidated financial statements should be read in conjunction
with the audited consolidated financial statements as of and for the
year ended June 30, 1997 and notes thereto of the Company.
3. TREASURY STOCK
During the three months ended September 30, 1997, the Company
repurchased 468,000 shares of its common stock into treasury. The
average price of the treasury shares acquired was $19.08 per
share, and all shares have been recorded at the acquisition cost.
<PAGE>
-8-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
1. EARNINGS PER SHARE
Primary and fully diluted earnings per share for the three month
periods ended September 30, 1997, and 1996 are computed by
dividing net income by the weighted average number of common
shares outstanding during the period, adjusted for common stock
equivalents related to stock options granted. In accordance
with SOP 93-6, unallocated ESOP shares are not included in average
shares outstanding when calculating earnings per share. The
average shares utilized for primary and fully diluted earnings per
share were 12,184,099 and 12,234,689, respectively, for the three
months ended September 30, 1997, and 13,393,398 and 13,393,398,
respectively, for the three months ended September 30, 1996, See
"Recently Adopted Accounting Standards" for a discussion of new
standards for computing and presenting earnings per share.
2. RECENT ACCOUNTING STANDARDS
In February, 1997 the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings
Per Share'' ("SFAS 128"). SFAS 128 establishes new standards for
computing and presenting earnings per share. SFAS 128 is
applicable to all U.S. entities with publicly held common stock or
potential common stock, and requires disclosure of basic earnings per
share and diluted earnings per share, for entities with complex
capital structures, on the face of the income statement, along with a
reconciliation of the numerator and denominator of basic and diluted
earnings per share. SFAS 128 replaces APB Opinion No. 15, issued by
the American Institute of Certified Public Accountants in 1971, as the
authoritative guidance for calculation and disclosure of earnings
per share, but does not amend the provisions of SOP 93-6 related to
the inclusion of allocated and unallocated ESOP shares when
calculating average shares outstanding. SFAS 128 is effective for
financial statements issued for periods ending after December 15, 1997,
including interim periods. Early adoption is not permitted, and
restatement of prior periods is required. Basic and diluted earnings
per share, if computed under the standards of SFAS 128, would have
been $0.24 and $0.23, respectively, for the three months ended
September 30, 1997, and $0.09 and $0.09, respectively for the three
months ended September 30, 1996.
6 SAVINGS ASSOCIATION INSURANCE FUND ("SAIF") SPECIAL ASSESSMENT
During the quarter ended September 30, 1996, the Bank was assessed a
one-time special assessment of $2.0 million by the Federal Deposit
Insurance Corporation ("FDIC") in order to recapitalize the SAIF. The
special assessment was recorded in non-interest expense during the
quarter ended September 30, 1996.
<PAGE>
-9-
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
General
Dime Community Bancorp, Inc. (the "Company") is a Delaware
corporation organized in December, 1995 at the direction of the Board
of Directors of the Bank for the purpose of acquiring all of the
capital stock of the Bank issued in the conversion of the Bank from a
federal mutual savings bank to a federal stock savings bank. In
connection with the Conversion, the Company issued 14,547,500 shares
(par value $0.01) of common stock at a price of $10.00 per share to
the Bank's eligible depositors who subscribed for shares and to an
Employee Stock Ownership Plan ("ESOP") established by the Company. The
Company realized net proceeds of $141.4 million from the sale of its
common stock and utilized approximately $76.4 million of the
proceeds to purchase 100% of the Bank's common stock and $11.6 million
to fund a loan to the ESOP for its purchase of 1,163,800 shares,
or 8%, of the Company's common stock.
The primary business of the Company is the operation of its
wholly-owned subsidiary, the Bank. In addition to directing, planning
and coordinating the business activities of the Bank, the Company
retained proceeds of $53.4 million in connection with the
Conversion. A portion of these proceeds have been utilized to fund
the repurchase of common stock into treasury. All remaining proceeds
retained are invested in federal funds, short-term, investment grade
marketable securities and mortgage-backed securities. The Company also
holds a note evidencing the loan that it made to the ESOP to purchase
8% of its common stock issued in the Conversion.
SAVINGS ASSOCIATION INSURANCE FUND ("SAIF") SPECIAL ASSESSMENT
During the quarter ended September 30, 1996, the Bank was assessed a
one-time special assessment of $2.0 million by the Federal Deposit
Insurance Corporation ("FDIC") in order to recapitalize the SAIF. As
a member of the Bank Insurance Fund ("BIF"), the Bank pays most of its
deposit insurance assessments to the BIF. The SAIF primarily insures
the deposits of savings and loan associations, but also insures the
deposits acquired by a BIF-insured institution from a SAIF-insured
institution. With the consummation of the acquisition (the
"Acquisition") of Conestoga Bancorp, Inc. ("Conestoga") in June, 1996,
the Bank acquired the deposits of Conestoga's wholly-owned
subsidiary, Pioneer Savings Bank, FSB ("Pioneer"), a SAIF-insured
thrift, which deposits totaled approximately $394.3 million at
June 30, 1996. The Bank pays SAIF assessments with respect to the
Pioneer deposits. In addition, the Bank pays SAIF assessments on
deposits the Bank acquired in a prior branch acquisition. All
SAIF-insured deposits acquired by the Bank qualified as "Oakar
deposits," and were the basis for the one-time assessment, which was
recorded in non-interest expense during the quarter ended
September 30, 1996.
<PAGE>
-10-
Selected Financial Ratios and Other Data
<TABLE>
<CAPTION>
At or For the
Three Months Ended
September 30,
1997 1996
<S> <C> <C>
($ IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
PERFORMANCE RATIOS:
Return on average assets <F1> 0.84% 0.41%
Cash basis return on average assets <F2> 1.26 0.71
Return on average stockholders' equity <F1> 6.07 2.29
Return on average tangible stockholders'
equity <F1> 7.07 2.63
Cash basis return on average stockholders'
equity <F2> 9.07 3.96
Cash Basis Return on average tangible
stockholders' equity <F2> 10.57 4.55
Average stockholders' equity to average assets 13.91 17.83
Stockholders' equity to total assets at end of
period 13.49 17.55
Tangible equity to tangible assets at end of
period 11.65 15.56
Average interest rate spread 3.20 3.24
Net interest margin 3.76 3.95
Average interest-earning assets to average
interest-bearing liabilities 115.08 119.96
Non-interest expense to average assets <F1> 2.01 2.72
Efficiency ratio <F1> 52.00 68.55
PER SHARE DATA:
Primary earnings per share <F1> $0.23 $0.09
Primary cash basis earnings per share <F2> 0.35 0.16
Book value per share 14.81 14.79
Tangible book value per share 12.52 12.80
ASSET QUALITY RATIOS AND OTHER DATA:
Total non-performing loans $2,501 $5,197
Other real estate owned, net 1,084 2,790
RATIOS:
Non-performing loans to total loans 0.31% 0.85%
Non-performing loans and other real estate
owned to total assets 0.26 0.65
Allowance for loan losses to:
Non-performing loans 445.82 166.65
Total loans 1.39 1.41
REGULATORY CAPITAL RATIOS: (BANK ONLY)
Tangible capital 9.62% 10.58%
Core capital 9.62 10.59
Risk-based capital 19.44 21.64
<FN>
<F1> Adjusted EARNINGS AND RATIOS. Excluding the effects of the SAIF Special
Assessment, and the recapture of income taxes previously provided, return on
average assets, return on average stockholders' equity, return on average
tangible stockholders' equity, non-interest expense to average assets, the
efficiency ratio and primary earnings per share would have been 0.78%, 4.35%,
5.00%, 2.04%, 51.42% and $0.17, respectively, for the three months ended
September 30, 1996.
<F2> CASH EARNINGS. Excluding the effects of the SAIF Special Assessment, and
the recapture of income taxes previously provided, cash basis return on average
assets, cash basis return on average stockholders' equity, cash basis return on
average tangible stockholders' equity, and cash basis primary earnings per
share would have been 1.07%, 6.02%, 6.91%, and $.24, respectively, for the
three months ended September 30, 1996.
</TABLE>
<PAGE>
-11-
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of funds are deposits, proceeds from
principal and interest payments on loans, mortgage-backed securities and
investments, borrowings, and, to a lesser extent, proceeds from the sale
of fixed-rate mortgage loans to the secondary mortgage market. While
maturities and scheduled amortization of loans and investments are a
predictable source of funds, deposit flows, mortgage prepayments and
mortgage loan sales are influenced by interest rates, economic
conditions and competition.
The primary investing activities of the Bank are the origination of
multi-family and single-family mortgage loans, and the purchase of
mortgage-backed and other securities. During the three months ended
September 30, 1997, the Bank's loan originations totaled $76.1 million
compared to $54.6 million for the three months ended September 30, 1996.
Purchases of mortgage-backed and other securities totaled $61.0 million
for the three months ended September 30, 1997, compared to $161.9
million for the three months ended September 30, 1996. These activities
were funded primarily by principal repayments on loans and mortgage-
backed securities, maturities of investment securities, and borrowings
by means of repurchase agreements and FHLB advances. Principal
repayments on loans and mortgage-backed securities totaled $35.4 million
during the three months ended September 30, 1997, compared to $34.5
million for the three months ended September 30, 1996. Maturities of
investment securities totaled $5.7 million and $234.5 million,
respectively, during the three months ended September 30, 1997 and 1996.
Loan and security sales, which totaled $18.3 million and $890,000,
respectively, during the three months ended September 30, 1997 and 1996,
provided some additional cash flows.
Deposits increased $34.3 million during the three months ended
September 30, 1997. The Bank experienced a net decrease in total
deposits of $8.3 million during the three months ended September 30,
1996. Deposit flows are affected by the level of interest rates, the
interest rates and products offered by local competitors, and other
factors. Certificates of deposit which are scheduled to mature in one
year or less from September 30, 1997, totaled $319.8 million. Based
upon the Company's current pricing strategy and deposit retention
experience, management believes that a significant portion of such
deposits will remain with the Company. On July 1, 1996, the Company
refunded $141.1 million in excess subscription proceeds related to its
conversion to a stock company in June, 1996. This refund was the
primary component of the decline in escrow and other deposits of $129.3
million during the three months ended September 30, 1997. Net
borrowings increased $36.0 million during the three months ended
September 30, 1997, comprised of growth of $23.2 million and $12.8
million, respectively, in securities sold under agreements to repurchase
("Repo") transactions and FHLBNY advances.
The Bank is required to maintain a minimum average daily balance of
liquid assets and short-term liquid assets as a percentage of net
withdrawable deposit accounts plus short-term borrowings as defined by
Office of Thrift Supervision regulations. The minimum required liquidity
and short-term liquidity ratios are currently 5.0% and 1.0%,
respectively. At September 30, 1997, the Bank's liquidity ratio and
short-term liquid asset ratio were 17.2% and 5.4%, respectively. The
levels of the Bank's short-term liquid assets are dependent on the
Bank's operating, financing and investing activities during any given
period.
The Bank monitors its liquidity position on a daily basis. Excess
short-term liquidity is invested in overnight federal funds sales and
various money market investments. In the event that the Bank should
require funds beyond its ability to generate them internally, additional
sources of funds are available through the use of the Bank's $166.4
million borrowing limit at the Federal Home Loan Bank of New York
("FHLBNY") . At September 30, 1997, the Bank had $145.2 million in short
and medium term borrowings outstanding at the FHLBNY, comprised of
outstanding advances of $76.0 million and securities sold under
agreement to repurchase of $69.2 million, and a remaining unused
borrowing capacity from the FHLBNY of $21.2 million.
<PAGE>
-12-
At September 30, 1997, the Bank was in compliance with all applicable
regulatory capital requirements. Tangible capital totaled $128.5
million, or 9.62% of total tangible assets, compared to a 1.50%
regulatory requirement; core capital, at 9.62%, exceeded the required
3.0% regulatory minimum, and total risk-based capital, at 19.44% of risk
weighted assets, exceeded the 8.0% regulatory requirement.
During the three months ended September 30, 1997, the Company
repurchased 468,000 shares of its common stock into treasury. The
aggregate cost of such repurchase was $8.9 million, for an average
price of $19.08 per share.
The Company did not declare nor pay any cash dividends during either
the three months ended September 30, 1997, or the three months ended
September 30, 1996. On October 9, 1997, the Company declared a cash
dividend of $0.06 per share to all shareholders of record as of the
close of business on October 29, 1997. The dividends will be paid on
November 17, 1997.
ASSET QUALITY
Non-performing loans (loans past due 90 days or more as to principal or
interest) totaled $2.5 million as compared to $3.2 million at June 30,
1997. In addition, the Bank had 37 loans totaling $654,000 delinquent
60-89 days at September 30, 1997, as compared to 33 such delinquent
loans totaling $603,000 at June 30, 1997.
Under GAAP, the Bank is required to account for certain loan
modifications or restructurings as ''troubled-debt restructurings.'' In
general, the modification or restructuring of a debt constitutes a
troubled-debt restructuring if the Bank, for economic or legal reasons
related to the borrower's financial difficulties, grants a concession to
the borrower that the Bank would not otherwise consider. Debt
restructurings or loan modifications for a borrower do not necessarily
always constitute troubled-debt restructurings, however, and troubled-
debt restructurings do not necessarily result in non-accrual loans. The
Bank had four loans classified as troubled-debt restructurings at
September 30, 1997, totaling $4.7 million, and all are currently
performing according to their restructured terms.
The recorded investment in loans for which impairment has been
recognized under the guidance of Statement of Financial Accounting
Standards No. 114 "Accounting for a Creditor for Impairment of a Loan,"
("SFAS 114") was approximately $4.1 million as of September 30, 1997,
compared to $4.3 million at June 30, 1997. The average balance of
impaired loans was $4.2 million for the three months ended September
30, 1997. The impaired portion of these loans is represented by specific
reserves totaling $122,000 allocated within the allowance for loan
losses at September 30, 1997. At September 30, 1997, one loan totaling
$2.7 million, was deemed impaired for which no reserves have been
provided. This loan, which is included in troubled-debt restructurings
at September 30, 1997, has performed in accordance with the provisions
of the restructuring agreement signed in October, 1995. The loan has
been retained on accrual status at September 30, 1997. At September 30,
1997, approximately $1.0 million of one-to-four family and cooperative
apartment loans on nonaccrual status are not deemed impaired under SFAS
114. All of these loans have outstanding balances less than $203,000,
and are considered a homogeneous loan pool not covered by SFAS 114.
<PAGE>
-13-
The following table sets forth information regarding the Bank's non-
performing loans, non-performing assets, impaired loans and troubled-
debt restructurings at the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
AT SEPTEMBER 30, AT JUNE 30,
1997 1997
($ In Thousands)
NON-PERFORMING LOANS: ------------------- ----------------
One- to four-family $907 $1,123
Multi-family and underlying cooperative 1,239 1,613
Non-residential - -
Cooperative apartment 312 415
Other loans 43 39
------------------ ---------------
TOTAL NON-PERFORMING LOANS 2,501 3,190
TOTAL OREO 1,084 1,697
----------------- --------------
TOTAL NON-PERFORMING ASSETS $3,585 $4,887
================= ==============
TROUBLED-DEBT RESTRUCTURINGS $4,671 $4,671
TOTAL NON-PERFORMING ASSETS AND TROUBLED-DEBT 8,256 9,558
RESTRUCTURINGS
IMPAIRED LOANS 4,140 4,294
TOTAL NON-PERFORMING LOANS TO TOTAL LOANS 0.31% 0.43%
TOTAL IMPAIRED LOANS TO TOTAL LOANS 0.52 0.57
TOTAL NON-PERFORMING ASSETS TO TOTAL ASSETS 0.26 0.37
TOTAL NON-PERFORMING ASSETS AND TROUBLED-DEBT
RESTRUCTURINGS TO TOTAL ASSETS 0.60 0.73
</TABLE>
Comparison of Financial Condition at September 30, 1997 and
June 30, 1997
ASSETS. The Company's assets totaled $1.4 billion at
September 30, 1997, an increase of $70.3 million from total
assets of $1.3 billion at June 30, 1997. The growth in
assets were experienced primarily in real estate loans,
mortgage-backed securities available for sale and federal
funds sold, which increased $50.5 million, $11.1 million,
and $18.7 million, respectively.
The increase in real estate loans resulted primarily from
originations of $75.3 million during the quarter ended
September 30, 1997, of which $74.4 million were multi-
family and underlying cooperative and non-residential
loans. The increase in mortgage backed securities
available for sale resulted from purchases of $30.0 million
during the quarter, offset by sales of $12.4 million and
principal repayments of $7.5 million. The increase in
federal funds sold resulted primarily from deposit gains
which occurred late in the quarter ended September 30,
1997.
LIABILITIES. Funding for the growth in real estate loans
was obtained primarily from increased deposits of $34.3
million and increased Federal Home Loan Bank of New York
advances of $12.8 million during the quarter. Funding for
the increase in mortgage-backed securities available for
sale was obtained primarily from increased securities sold
under agreement to repurchase transactions of $23.2
million.
<PAGE>
-14-
STOCKHOLDERS' EQUITY. Stockholders' equity declined $3.9
million during the three months ended September 30, 1997.
During the three months ended September 30, 1997, the
Company 468,000 shares of its common stock into treasury.
The aggregate cost of the shares repurchased was $8.9
million, at an average price of $19.08 per share.
Offsetting the share repurchases, was net income of $2.8
million and amortization of the Company's Stock Plans of
$1.2 million, and an increase of $945,000 of the unrealized
gain on investment and mortgage-backed securities available
for sale.
CAPITAL LEVERAGE STRATEGY. As a result of the initial
public offering in June, 1996, the Bank's capital level
significantly exceeded all regulatory requirements. A
portion of the "excess" capital generated by the initial
public offering has been deployed through the use of a
capital leverage strategy whereby the Bank invests in high
quality mortgage-backed securities ("leverage assets")
funded by short term borrowings from various third party
lenders under securities sold under agreement to repurchase
transactions. The capital leverage strategy generates
additional earnings for the Company by virtue of a positive
interest rate spread between the yield on the leverage
assets and the cost of the borrowings. Since the average
term to maturity of the leverage assets exceeds that of the
borrowings used to fund their purchase, the net interest
income earned on the leverage strategy would be expected to
decline in a rising interest rate environment. See "Market
Risk." To date, the capital leverage strategy has been
undertaken in accordance with limits established by the
Board of Directors, aimed at enhancing profitability under
moderate levels of interest rate exposure. Assets under
the capital leverage strategy were $118.2 million, on a net
basis, at September 30, 1997.
COMPARISON OF THE OPERATING RESULTS FOR THE THREE MONTHS
ENDED SEPTEMBER 30, 1997 AND 1996
GENERAL. Net income for the three months ended September
30, 1997, totaled $2.8 million compared to $1.2 million
during the three months ended September 30, 1996. Net
income for the three months ended September 30, 1996, was
affected by the one-time special assessment of $1.1
million, after taxes, for the recapitalization of the
Savings Association Insurance Fund ("SAIF") of the Federal
Deposit Insurance Corporation ("FDIC"). Net income for the
three months ended September 30, 1996, excluding this non-
recurring item, was $2.3 million.
The discussion of interest income and expense for the three
months ended September 30, 1997 and 1996, presented below,
should be read in conjunction with the following table,
which sets forth certain information relating to the
Company's consolidated statements of operations for the
three months ended September 30, 1997 and 1996, and
reflects the average yield on assets and average cost of
liabilities for the periods indicated. Such yields and
costs are derived by dividing income or expense by the
average balance of assets or liabilities, respectively, for
the periods shown. Average balances are derived from
average daily balances. The yields and costs include fees
which are considered adjustments to yields.
<PAGE>
-15-
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
-----------------------------------------------------------------------------------
1997 1996
------------------------------------------- --------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST BALANCE INTEREST COST
-------------- ------------- ------------- ------------ ----------- ------------
Assets: ($ IN THOUSANDS)
Interest-earning assets:
Real Estate Loans <F1> $772,837 $16,269 8.42% $591,422 $12,647 8.55%
Other loans 5,494 129 9.39 5,513 132 9.58
MORTGAGE-BACKED SECURITIES <F2> 303,872 5,193 6.84 209,508 3,698 7.06
INVESTMENT SECURITIES <F2> 162,602 2,684 6.60 266,060 3,918 5.89
FEDERAL FUNDS SOLD 33,834 453 5.36 57,859 817 5.65
--------------- ------- ------------- -----------
TOTAL INTEREST-EARNING ASSETS 1,278,639 $24,728 7.74% 1,130,362 $21,212 7.51%
--------------- ======= ------------- ======
NON-INTEREST EARNING ASSETS 65,483 66,667
--------------- -------------
TOTAL ASSETS $1,344,122 $1,197,029
=============== ============
LIABILITIES AND STOCKHOLDERS'
EQUITY:
INTEREST-BEARING LIABILITIES:
NOW, SUPER NOW AND
MONEY MARKET ACCOUNTS $49,138 $291 2.35% $59,991 $415 2.77%
SAVINGS ACCOUNTS 340,604 1,981 2.31 356,327 2,237 2.51
CERTIFICATES OF DEPOSIT 561,090 8,042 5.69 497,430 7,018 5.64
MORTGAGORS' ESCROW 3,664 18 1.95 3,441 19 2.21
BORROWED FUNDS 156,568 2,370 6.01 25,074 358 5.71
--------------- ------------- ------------- -----------
TOTAL INTEREST-BEARING
LIABILITIES 1,111,064 $12,702 4.54% 942,263 $10,047 4.27%
--------------- ======= ------------- ======
CHECKING ACCOUNTS 27,535 27,900
OTHER NON-INTEREST-BEARING
LIABILITIES 18,578 13,430
--------------- -------------
TOTAL LIABILITIES 1,157,177 983,593
STOCKHOLDERS' EQUITY 186,945 213,436
--------------- -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,344,122 $1,197,029
=============== ============
NET INTEREST INCOME/ INTEREST RATE
SPREAD <F3> $12,026 3.20% $11,165 3.24%
======= ======
NET INTEREST-EARNING ASSETS/NET
INTEREST MARGIN <F4> $167,575 3.76% $188,099 3.95%
========= ===========
RATIO OF INTEREST-EARNING ASSETS
TO INTEREST-BEARING LIABILITIES 115.08% 119.96%
<FN>
<F1> In computing the average balance of loans, non-accrual loans have
been included.
<F2> Includes securities classified "available for sale.
<F3> Net interest rate spread represents the difference between the
average rate on interest-earning assets and the average cost of
interest-bearing liabilities.
<F4> Net interest margin represents net interest income as a percentage
of average interest-earning assets.
</TABLE>
<PAGE>
-16-
RATE/VOLUME ANALYSIS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30, 1997
COMPARED TO
THREE MONTHS ENDED
SEPTEMBER 30, 1996
INCREASE/ (DECREASE)
DUE TO
VOLUME RATE TOTAL
<S> <C> <C> <C>
-------------- ------------ -------------
Interest-earning assets: ($ IN THOUSANDS)
Real Estate Loans $3,847 $(225) $3,622
Other loans - (3) (3)
Mortgage-backed securities 1,638 (143) 1,495
Investment securities (1,615) 381 (1,234)
Federal funds sold (330) (34) (364)
-------------- ------------ ------------
Total $3,540 $(24) $3,516
============== ============ ============
Interest-bearing liabilities:
NOW, Super Now and money market accounts $(67) $(57) $(124)
Savings accounts (88) (168) (256)
Certificates of deposit 933 91 1,024
Mortgagors' escrow 1 (2) (1)
Borrowed funds 1,943 69 2,012
-------------- ------------ ------------
Total 2,722 (67) 2,655
-------------- ------------ ------------
Net change in net interest income $818 $43 $861
============== ============ ============
</TABLE>
NET INTEREST INCOME. Net interest income for the three months
ended September 30,1997 increased $861,000 to $3.5 million
from $2.7 million during the three months ended September 30, 1996.
The increase was attributable primarily to an increase of
$3.5 million in interest earning assets, offset by a decline
in the net interest rate spread of 4 basis points. The net interest
margin declined 19 basis points from 3.95% for the three months
ended September 30, 1996 to 3.76% for the three months ended
September 30, 1997.
INTEREST INCOME. Interest income for the three months ended
September 30, 1997, was $24.7 million, an increase of $3.5 million
from $21.2 million during the three months ended September 30, 1996.
The increase in interest income was attributable to increased interest
income on real estate loans and mortgage-backed securities of $3.6
million and $1.5 million, respectively. The increase in interest
income on real-estate loans was attributable primarily to an increase
of $181.4 million in the average balance of real estate loans,
resulting primarily from $283.6 million of real estate loans
originated during the period October 1, 1996 through
September 30, 1997. The increases in interest income on mortgage-backed
securities was also attributable primarily to an increase in average
balances of $94.4 million, resulting from $118.1 million in
mortgage-backed securities purchased through the Bank's capital
leverage program. Offsetting these increases to interest income was a
decrease in interest income on investment securities of $1.2 million,
resulting from a decline in average balance of investment securities
of $103.5 million. The decline in average balance resulted from the
Bank utilizing funds from matured investment securities to fund loan
originations. Overall, the yield on interest earning assets increased
23 basis points from 7.51% during the three months ended September 30,
1996 to 7.74% during the three months ended September 30, 1997, due
<PAGE>
-17-
primarily to the movement of funds from matured investment securities
into higher yielding real estate loans and mortgage-backed securities.
INTEREST EXPENSE. Interest expense increased $2.7 million, to $12.7
million during the three months ended September 30, 1997, from $10.0
million during the three months ended September 30, 1996. This increase
resulted primarily from increased interest expense of $1.0 million
and $2.0 on certificate of deposit accounts and borrowed funds,
respectively, which resulted from increased average balances of $63.7
million and $131.5 million, respectively during the three months ended
September 30, 1997, compared to the three months ended September 30,
1996. The increase in the average balance on certificates of deposit
resulted primarily from increased deposit flows due to higher rates
offered on selected certificate accounts during 1997. The increase in
average balance of borrowed funds resulted primarily from $115.1
million of borrowed funds added during the period October 1, 1996 to
September 30, 1997, under the capital leverage program. In addition to
the growth in average balances, the average cost of interest bearing
liabilities increased 27 basis points to 4.54% during the quarter ended
September 30, 1997, from 4.27% during the quarter ended
September 30, 1996. The increase in average cost resulted from an
increase of $63.7 million in the average balance of certificate of
deposit accounts, which generally have a higher average cost than other
deposits, the increase of 5 basis points in average cost on certificate
of deposit accounts resulting from a recent rate promotion offer, and
an increase of 30 basis points in average cost on borrowed funds
resulting from longer-term borrowings undertaken during the three
months ended September 30, 1997, whose average cost exceeded the
average cost of previous borrowings.
PROVISION FOR LOAN LOSSES. The Provision for Loan Losses decreased
$525,000 to $525,000 for the three months ended September 30,
1997, from $1,050,000 for the three months ended September 30, 1996.
The decline in the provision for loan losses reflects the
improvement in non-performing loans. See "Asset Quality" The
Allowance for loan losses increased to $11.2 million at
September 30, 1997, from $10.7 million at June 30, 1997, as the
loan loss provision of $525,000 was offset by net charge-offs of
$101,000. Non-performing loans decreased to $2.5 million during the
three months ended September 30, 1997, from $3.2 million at
June 30, 1997. In management's judgment, it was prudent to
continue the loan loss provision to supplement the loan loss
allowance, based upon the Bank's growing volume of multi-family loan
originations and the composition of its loan portfolio.
See "Asset Quality."
NON-INTEREST INCOME. Non-interest income increased $224,000 to
$981,000 during the three months ended September 30, 1997,
compared to $757,000 during the three months ended September 30,
1996. This increase was attributable primarily to an increase of
$208,000 in service charges and other fees, which resulted from
an increase of $156,000 in loan commitment fee income from
increased origination activity.
NON-INTEREST EXPENSE. Non-interest expense decreased $1.4
million to $6.7 million during the three months ended
September 30, 1997, from $8.1 million during the three months
ended September 30, 1996. This decrease resulted from the SAIF Special
Assessment of $2.0 million incurred during the three months
ended September 30, 1996. Excluding the SAIF Special Assessment,
non-interest expense increased $646,000, primarily as a result of
increased compensation expense related to the Company's ESOP and
RRP plans of $743,000. A portion of this increased compensation
expense resulted from the RRP, which was not recorded during the
three months ended September 30, 1996, since the plan was not
approved by the shareholders until December, 1996. The remaining
increase in the compensation expense resulted from the increased
ESOP expense attributable to the increase in the Company's stock
price, as compensation expense related to the ESOP is recorded
based upon the market value of the Company's stock. Offsetting
the increase in compensation expense were declines of $165,000 and
$138,000, respectively, in federal deposit insurance premiums and
provision for losses on other real estate owned during the three
months ended September 30, 1997, compared to 1996. The reduction in
federal deposit insurance premiums resulted from lower insurance
premium rates established by the FDIC as a result of the 1996
legislation to recapitalize the SAIF. The reduced provision for
losses on other real estate owned reflects a reduction in other real
estate owned balance from $2.8 million at September 30, 1996,
to $1.1 million at September 30, 1997. The decrease in other expenses
resulted primarily from a reduction of $109,000 in professional
services expenses, which were higher in the previous year due to the
Company being in its initial days as a public company.
<PAGE>
-18-
INCOME TAX EXPENSE. Income tax expense for the quarter ended
September 30, 1997, was $2.9 million, resulting in an effective tax
rate of 50.52%, compared to 51.36% (excluding the effects of the
SAIF recapitalization charge) for the quarter ended September 30,
1996. The Company's generally higher effective tax rate is caused
by certain non-deductible recurring expenses such as goodwill.
Excluding these non-deductible items, the Company's effective tax rate
for the quarter ended September 30, 1997, would have been 43.47%.
For the quarter ended September 30, 1996, the SAIF recapitalization
charge caused pre-tax income to be much lower, thereby increasing the
significance of non-deductible expenses in determining the
effective tax rate, which was 55.33%.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Quantitative and qualitative disclosure about market risk is
presented at June 30, 1997 in Exhibit 13.1 to the Company's Annual
Report on Form 10-K, filed with the Securities and Exchange Commission
on September 26, 1997. There have been no material changes in the
Company's market risk at September 30, 1997 compared to June 30, 1997.
The following is an update of the discussion provided therein:
General. The Company's largest component of market risk continues to
be interest rate risk. Virtually all of this risk continues to reside
at the Bank level. The Bank still is not subject to foreign currency
exchange or commodity price risk. At September 30, 1997, neither the
Company nor the Bank owned any trading assets, nor did they utilize
hedging transactions such as interest rate swaps and caps.
Assets, Deposit Liabilities and Wholesale Funds. There has been no
material change in the composition of assets, deposit liabilities
and wholesale funds from June 30, 1997 to September 30, 1997.
GAP Analysis. The one-year and five-year cumulative interest
sensitivity gap as a percentage of total assets still fall within 2% of
their levels at June 30, 1997 utilizing the same assumptions as at
June 30, 1997.
Interest Rate Risk Compliance. The Bank continues to monitor the
impact of interest rate volatility upon net interest income and net
portfolio value in the same manner as at June 30, 1997. There have
been no changes in the board approved limits of acceptable variance
in net interest income and net portfolio value at September 30, 1997,
compared to June 30, 1997, and the projected changes continue to fall
within the board approved limits at all levels of potential interest
rate volatility.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On December 5, 1996, Dime Bancorp, Inc. and its wholly-owned
subsidiary, Dime Savings Bank of New York, FSB (together
"Dime of New York,") filed a complaint in the United States District
Court, Southern District of New York against the Company and the
Bank. Dime of New York alleges violations of New York State and
federal trademark law and unfair competition law. Dime of New York
seeks injunctive relief in the form of an order requiring the Bank
to use its full name with identical type-size and type-style in
marketing and advertising materials, or in the alternative requiring
the Bank to change its name, due to alleged inequitable conduct. The
complaint also seeks an order requiring the Company to change its
corporate name and change its Nasdaq Stock Market trading symbol
"DIME." Dime of New York does not seek monetary damages.
<PAGE>
-19-
The Company and the Bank have answered the complaint and filed
counterclaims in which they seek to enjoin the Dime of New York from
employing service marks that are confusingly similar to the
Company's and the Bank's service marks. The action is in discovery.
The Company and the Bank intend to defend vigorously these claims made
against them and pursue their counterclaims.
The Bank is involved in various other legal actions arising in
the ordinary course of its business which, in the aggregate,
involve amounts which are believed to be immaterial to the
financial condition and results of operations of the Bank.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
Exhibit 11. Statement Re: Computation of Per Share Earnings
Exhibit 27. Financial Data Schedule (included only with
EDGAR filing).
(B) REPORTS ON FORM 8-K
None.
<PAGE>
-20-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
Dime Community Bancorp, Inc.
Dated: November 13, 1997 By: /s/ VINCENT F. PALAGIANO
_________________________
Vincent F. Palagiano
Chairman of the Board and Chief
Executive Officer
/s/ KENNETH J. MAHON
Dated: November 13, 1997 By: __________________________
Kenneth J. Mahon
Executive Vice President, Chief
Financial Officer and Secretary
EXHIBITS
========
REFERENCE NUMBER 11
DIME COMMUNITY BANCORP, INC. AND SUBSIDIARY
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
<S> <C> <C>
FOR THE FOR THE
THREE MONTHS THREE MONTHS
ENDED ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
Net income $2,838 $1,224
Weighted average common shares outstanding 11,833 13,393
Common stock equivalents due to dilutive effect
of stock options 351 -
------------ -----------
Total weighted average common shares and
common share equivalents 12,184 13,393
============ ==========
Earnings per common share and common share
equivalents $0.23 $0.09
============ ==========
Total weighted average common shares and
common share equivalents 12,184 13,393
Additional dilutive shares using ending period
market value versus average market value for
the period when utilizing the treasury stock
method regarding stock options 51 -
------------ ----------
Total shares for fully diluted earnings per share 12,235 13,393
============ ==========
Fully diluted earnings per common share and
common share equivalents $0.23 $0.09
============ ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-30-1997
<CASH> 13,468
<INT-BEARING-DEPOSITS> 971,768
<FED-FUNDS-SOLD> 37,560
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 288,824
<INVESTMENTS-CARRYING> 183,027
<INVESTMENTS-MARKET> 184,656
<LOANS> 800,741
<ALLOWANCE> 11,150
<TOTAL-ASSETS> 1,385,356
<DEPOSITS> 997,708
<SHORT-TERM> 106,089
<LIABILITIES-OTHER> 25,173
<LONG-TERM> 69,435
0
0
<COMMON> 145
<OTHER-SE> 186,806
<TOTAL-LIABILITIES-AND-EQUITY> 1,385,356
<INTEREST-LOAN> 16,398
<INTEREST-INVEST> 7,877
<INTEREST-OTHER> 453
<INTEREST-TOTAL> 24,728
<INTEREST-DEPOSIT> 10,332
<INTEREST-EXPENSE> 12,702
<INTEREST-INCOME-NET> 12,026
<LOAN-LOSSES> 525
<SECURITIES-GAINS> (2)
<EXPENSE-OTHER> 6,746
<INCOME-PRETAX> 5,736
<INCOME-PRE-EXTRAORDINARY> 2,838
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,838
<EPS-PRIMARY> 0.23
<EPS-DILUTED> 0.23
<YIELD-ACTUAL> 7.74
<LOANS-NON> 2,501
<LOANS-PAST> 0
<LOANS-TROUBLED> 4,671
<LOANS-PROBLEM> 2,693
<ALLOWANCE-OPEN> 10,726
<CHARGE-OFFS> 102
<RECOVERIES> 1
<ALLOWANCE-CLOSE> 11,150
<ALLOWANCE-DOMESTIC> 11,150
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
