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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 22, 1999
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ROSLYN BANCORP, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-28886 11-3333218
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(State or other Jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
1400 Old Northern Boulevard, Roslyn, New York 11576
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 621-6000
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Not Applicable
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(Former name or former address, if changed since last report.)
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ITEMS 1-4, 6, 8 AND 9. NOT APPLICABLE.
ITEM 5. OTHER EVENTS.
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On April 22, 1999, Roslyn Bancorp, Inc. (the "Company") issued a press
release reporting its combined results of operations for the quarter ended March
31, 1999. This information is provided to satisfy certain pooling-of-interests
accounting requirements relating to the Company's acquisition of T R Financial
Corp. effective February 16, 1999.
The press release announcing the combined results of operations for the
month ending March 31, 1999 is attached as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
------------------------------------------------------------------
Exhibit No. Description
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99.1 Press Release dated April 22, 1999.
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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 hereunto duly authorized.
ROSLYN BANCORP, INC.
Dated: April 23, 1999 By: /s/ Joseph L. Mancino
-------------------------------------
Joseph L. Mancino
Director, President and Chief
Executive Officer
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EXHIBIT 99.1 PRESS RELEASE
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ROSLYN BANCORP, INC.
1400 OLD NORTHERN BOULEVARD, ROSLYN, NY 11576-2154 TEL: (516) 621-6000
FOR IMMEDIATE RELEASE
Contact: Michael P. Puorro
Executive Vice President
Chief Financial Officer
(516) 621 - 6000 Ext. 1224
ROSLYN BANCORP, INC. REPORTS 25.9% INCREASE IN FIRST QUARTER
CORE EPS TO $0.34 FROM $0.27
ACHIEVED RECORD CORE EARNINGS OF $24.8 MILLION - UP 20.4% FROM $20.6 MILLION
COMPLETED ACQUISITION OF T R FINANCIAL CORP. ON FEBRUARY 16, 1999
PRODUCED AN EFFICIENCY RATIO OF 33.49% - RANKING AS AN INDUSTRY LEADER
ORIGINATED $398.7 MILLION OF LOANS IN THE FIRST QUARTER
ROSLYN, NEW YORK, APRIL 22, 1999 - Roslyn Bancorp, Inc. (NASDAQ:RSLN), the
holding company for The Roslyn Savings Bank, today reported record core earnings
of $24.8 million, or $0.34 diluted per share, for the quarter ended March 31,
1999, representing increases of 20.4% and 25.9%, respectively, from the $20.6
million in net income, or $0.27 diluted per share, reported for the comparable
prior year period. The quarters included, for the first time, the operating
results of T R Financial Corp. (TR), the parent of Roosevelt Savings Bank, which
was acquired on February 16, 1999 in a pooling-of-interests transaction.
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First quarter 1999 core results excluded special charges and non-recurring items
and their related tax effects. These included merger related costs associated
with the acquisition, net securities gains, a restructuring charge in connection
with the previously announced early retirement program for Roslyn employees, and
extraordinary charges related to financial liability repositioning. First
quarter securities and financial liability transactions were conducted in
connection with an overall redirection of the combined portfolios, taking
advantage of favorable market conditions and resulting in increased spreads and
reduced exposure to interest rate risk. First quarter 1998 core results excluded
net securities gains and related tax effects.
All prior period results have been restated to reflect the pooling-of-interests
accounting treatment applied with respect to the TR acquisition.
Excluding the effect of the aforementioned special charges and non-recurring
items, the Company's return on average equity and assets for the March 31, 1999
quarter was 12.51% and 1.36%, compared to 11.11% and 1.23% for the 1998 period.
Based on cash earnings, the return on average equity and assets was 13.28% and
1.44% for the quarter ended March 31, 1999. For the corresponding periods, the
Company's cash efficiency ratio was 30.84% and 35.68%.
Commenting on the Company's record results, Joseph L. Mancino, Chief Executive
Officer of Roslyn Bancorp, Inc. stated, "Roslyn's first quarter financial
performance clearly demonstrates the strategic benefits of the T R acquisition.
The rapid integration of TR into our existing franchise has established Roslyn
as an industry leader in operating efficiency. We believe Roslyn has all the
strategic tools necessary to make our Company one of the nation's premier
savings bank franchises."
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QUARTERLY CASH EARNINGS - $27.7 MILLION - EXCLUDING SPECIAL CHARGES AND NON-
RECURRING ITEMS.
Cash earnings represent the amount by which tangible equity changes each period
due to operating results. Cash earnings include reported earnings plus the
non-cash charges for goodwill amortization and amortization relating to certain
employee stock benefit plans. The Company's performance on a cash earnings basis
is an important analytical measure for investors or potential investors, since
tangible equity generation can be utilized to repurchase stock, pay dividends
and support greater asset and franchise growth. For the quarter ended March 31,
1999, the Company earned $27.7 million, or $0.37 diluted per share, in cash
earnings, increasing tangible equity by an additional $1.6 million, or 6.17%.
STRONG FIRST QUARTER LOAN PRODUCTION
For the quarter ended March 31, 1999, the Company's loan production reached
$398.7 million, including $293.9 million of residential originations. At March
31, 1999 and December 31, 1998, loans net of unearned income remained relatively
flat at $3.6 billion and $3.7 billion, respectively, reflecting management's
strategy of selling the bulk of its residential originations into the secondary
market in an effort to better manage its interest rate risk and increase its
income from mortgage banking operations. At March 31, 1999, the pipeline of
residential loan applications was approximately $434 million, reflecting strong
loan activity from Roslyn National Mortgage Corporation's expanded origination
network on Long Island and its recently opened offices in Virginia and Maryland.
SEVENTH CONSECUTIVE QUARTERLY DIVIDEND INCREASE
Roslyn's commitment to providing investor value, and its capacity for solid
earnings growth, has enabled the Board of Directors to increase the quarterly
dividend for the seventh consecutive quarter. The Board of Directors, at their
February 9, 1999 meeting, declared a quarterly dividend of $0.115 per share,
which was paid on March 12, 1999 to shareholders of record on March 2, 1999.
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BRANCH OPENINGS
In the fourth quarter of 1998, Roslyn opened full-service offices in Oceanside
and Smithtown, New York. Already, deposits aggregate in excess of $61 million in
these offices and continue to surpass expectations. It is expected that these
new offices will be at break even levels by the end of the third quarter. "We
will continue our successful de novo strategy with the second quarter opening of
a full service branch in Bayshore, New York. We anticipate that this strategy
will be an integral part of the Company's on-going growth initiatives," stated
Mr. Mancino.
Additionally, the mortgage company has continued to expand its geographic loan
origination network by opening a mortgage origination office in Tennessee. The
mortgage company intends to continue increasing its loan production capabilities
and market share by expanding its geographic reach through both internal growth
and possible acquisitions.
INTERNET BANKING STRATEGY
Building upon its early success with Internet delivery, the Company is
collaborating with BISYS, a premier service provider to build an Internet
banking solution. Roslyn is firmly committed to providing this essential
delivery channel to meet the ever-changing needs of our customers. The Internet
banking solution, expected to be complete over the next two quarters, will
provide an array of financial services in a fully interactive virtual bank.
FIRST QUARTER SPECIAL CHARGES AND NON- RECURRING ITEMS
The first quarter of 1999 included special charges and non-recurring items of
$96.8 million, or $83.5 million after-taxes: $88.0 million related to Roslyn's
first quarter acquisition of T R Financial Corp., $2.2 million in net securities
gains relating to balance sheet repositioning, $5.9 million in connection
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with the previously announced early retirement program, and $5.0 million
relating to financial liability restructuring. The financial liability
restructuring resulted from the repayment and replacement of $345.2 million of
reverse repurchase agreements and FHLB advances. These actions resulted in a
$2.9 million extraordinary after-tax charge to earnings during the first quarter
which will be offset in current and future periods through lower borrowing
costs. Furthermore, to enhance the Company's liquidity and interest rate risk
position, as of the merger date, remaining Held-to-Maturity securities were
reclassified to the Available-For-Sale category. Including the aforementioned
special charges and non-recurring items, the Company reported a net loss of
$58.7 million, or $0.79 diluted per share, for the first quarter of 1999.
<TABLE>
<CAPTION>
The following table sets forth the reconciliation from net loss, as reported, to
core earnings for the period ended March 31, 1999 (in thousands).
<S> <C> <C>
REPORTED NET LOSS FOR PERIOD $ (58,682)
ITEMS EXCLUDED FROM CORE EARNINGS:
-Merger related charges $ 87,987
-Net Securities gains(1) (2,185)
-Enhanced retirement program 5,903
-Financial liability restructuring charge$(2) 5,048
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$ 96,753
Less related tax effect (13,237) 83,516
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CORE EARNINGS $ 24,834
CORE EARNINGS PER SHARE - BASIC $ 0.35
CORE EARNINGS PER SHARE - DILUTED $ 0.34
</TABLE>
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Notes:
1) Certain U.S. Government Bonds and common stock held by the former TR were
sold and replaced with higher yielding agency MBS.
2) Certain short-to-medium term borrowings totaling $345.2 million were prepaid
and replaced with other borrowings of similar maturities. The weighted
average cost of the borrowings, exclusive of prepayment penalties incurred,
was reduced by approximately 100 basis points.
<TABLE>
<CAPTION>
The nature of the current quarter's merger-related charges is detailed below (in
thousands).
<S> <C>
Merger-related charges:
Transactions costs $ 16,917
Severance and other compensation costs 39,927
T R Financial ESOP termination (1) 24,626
Other costs to combine operations 6,517
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$ 87,987
</TABLE>
(1) T R Financial Corp. ESOP loan of approximately $ 4.5 million was paid off on
March 30, 1999, through the sale of approximately 244,000 shares of Roslyn
common stock. The remaining shares held by the ESOP trustee were released for
allocation to the former TR employees. The merger related charge of $24.6
million represents the allocation of the shares to the former employees of TR at
the average sale price associated with the sold shares. This transaction
represents a non-cash charge to equity, as the shares were acquired by the
former TR at its IPO.
REVIEW OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1999
NET INTEREST INCOME
Net interest income for the quarter ended March 31, 1999 was $51.6 million
compared to $52.8 million in the corresponding prior year quarter, reflecting
accelerated discount income in the 1998 quarter on callable debentures. The
interest rate spread and margin for the quarter was 2.22% and 2.75%,
respectively.
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On a linked quarter basis, the spread and margin increased 11 and 4 basis
points, respectively, primarily due to the Company's financial liability
repositioning and a decline in deposit costs as certificates renewed in the
current interest rate environment, coupled with an overall increase in core
accounts.
POSITIVE TREND IN NON-INTEREST INCOME
Non-interest income, excluding securities gains, totaled $5.0 million for the
quarter ended March 31, 1999, an $840,000 increase over the $4.1 million
reported for the prior year's corresponding quarter. The increase was primarily
the result of a $1.4 million increase in income from mortgage banking operations
in connection with management's decision to increase sales of newly originated
loans into the secondary market.
Due to the current low rate environment, the Company expects to continue to sell
the majority of its residential originations into the secondary market in an
effort to manage its interest rate risk and increase its income from mortgage
banking operations.
OUTSTANDING OPERATING EFFICIENCY
General and administrative expenses decreased $5.5 million, or 22.4%, to $18.9
million for the quarter ended March 31, 1999. The decrease primarily reflects
cost savings achieved in connection with the TR acquisition. As previously
reported on March 8, 1999, Roslyn announced that 85% of its originally
anticipated cost savings had been effectuated, and that the Company increased
its original annual cost savings projection by $600,000, to $18.3 million,
reflecting greater than anticipated savings relating to the elimination of
certain employee benefit plans. Based on TR's normalized operating expenses for
1998, this represents cost savings of 45%. Since the merger was completed in
mid-February, first
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quarter expenses included an interval of full operating expenses for both
institutions. The upcoming quarter will reflect a full quarter of efficiencies
gained to date.
Partially offsetting the decreases in operating expenses was additional
commission and other compensation costs associated with the increased volume of
loan originations and to a lesser extent an increase in office occupancy
expense. The efficiency ratio for the quarter ended March 31, 1999, was 33.49%,
as compared with 42.82% for the comparable 1998 quarter. Roslyn's efficiency
ratio ranks as one of the best in the financial services industry.
STRONG ASSET QUALITY
Credit quality remained strong during the quarter. Non-performing assets totaled
$18.7 million at March 31, 1999, resulting in a non-performing assets ratio of
.50 % and .25% when compared to total loans and assets at quarter-end. In
addition, the Company experienced net charge-offs of $17,000 for the three
months ended March 31, 1999. At March 31, 1999, the allowance for possible loan
losses was $40.3 million, resulting in a non-performing loans coverage ratio of
225.4%. The Company did not provide a loan loss provision for the quarter ended
March 31, 1999. Management assesses the level and adequacy of the allowance for
possible loan losses based on an evaluation of known and inherent risks in the
loan portfolio and upon continuing analysis of the factors underlying the
quality of the loan portfolio.
With assets of $7.6 billion, Roslyn is among the five largest publicly traded
thrift institutions in New York. The bank operates 25 full service branches and
14 mortgage origination offices of Roslyn National Mortgage Corporation (a
wholly-owned subsidiary of The Roslyn Savings Bank) operating in New York, New
Jersey, Connecticut, Delaware, Pennsylvania, Virginia, Maryland and Tennessee.
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Roslyn Bancorp, Inc.'s press releases are available by fax at no charge through
Business Wire's News-On-Demand service. For an index of Roslyn Bancorp, Inc.'s
press releases or to obtain a specific release, call (888) 329-4697 or visit us
on the worldwide web at: http://www.roslynsavings.com.
STATEMENTS CONTAINED IN THIS NEWS RELEASE WHICH ARE NOT HISTORICAL FACTS ARE
FORWARD-LOOKING STATEMENTS, AS THAT TERM IS DEFINED IN THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING STATEMENTS ARE SUBJECT TO
RISKS AND UNCERTAINTIES WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THOSE CURRENTLY ANTICIPATED DUE TO A NUMBER OF FACTORS, WHICH INCLUDE, BUT
ARE NOT LIMITED TO, FACTORS DISCUSSED IN DOCUMENTS FILED BY THE COMPANY WITH THE
SECURITIES AND EXCHANGE COMMISSION FROM TIME TO TIME.
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<TABLE>
<CAPTION>
ROSLYN BANCORP, INC.
(NASDAQ:RSLN)
(IN THOUSANDS, EXCEPT RATIOS AND SHARE AMOUNTS)
MARCH 31, DECEMBER 31,
SELECTED FINANCIAL CONDITION DATA 1999 1998(1)
- --------------------------------- -------------- --------------
<S> <C> <C>
Money market investments........................ $ 35,500 $ 38,079
Securities available-for-sale................... 3,783,085 2,591,195
Securities held-to-maturity..................... - 1,277,231
Loans, net of unearned income (2)............... 3,629,033 3,705,674
Allowance for possible loan losses.............. 40,272 40,207
Total loans, net (2)............................ 3,588,761 3,665,467
Intangible assets............................... 2,331 2,449
Total assets.................................... 7,628,266 7,799,719
Deposits........................................ 4,226,465 4,218,982
Borrowed funds.................................. 2,372,960 2,527,847
Total stockholders' equity...................... 797,944 853,366
Book value per share............................ 10.37 11.16
ASSET QUALITY RATIOS AND DATA:
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Non-performing assets as a percent of total
assets........................................ 0.25 % 0.25 %
Non-performing loans as a percent of loans...... 0.50 % 0.51 %
Allowance for possible loan losses as a percent
of loans...................................... 1.13 % 1.11 %
Allowance for possible loan losses as
a percent of total non-performing loans....... 225.35 % 215.55 %
Total non-performing loans...................... $ 17,871 $ 18,653
Real estate owned, net.......................... 873 1,176
</TABLE>
(1) Restated to include T R Financial Corp.
(2) Includes loans held-for-sale.
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<TABLE>
<CAPTION>
ROSLYN BANCORP, INC.
(NASDAQ:RSLN)
(IN THOUSANDS, EXCEPT RATIOS AND SHARE AMOUNTS)
FOR THE THREE MONTHS
ENDED MARCH 31,
----------------------
SELECTED OPERATING DATA 1999 1998(1)
- ----------------------- ---------- --------
<S> <C> <C>
Interest income............................. $ 129,681 $ 134,557
Interest expense............................ 78,091 81,716
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Net interest income before provision for
possible loan losses....................... 51,590 52,841
Provision for possible loan losses.......... - 550
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Net interest income after provision for
possible loan losses....................... 51,590 52,291
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Non-interest income:
- --------------------
Fees and service charges.................... 1,350 1,751
Mortgage banking operations................. 3,217 1,835
Net gains on securities..................... 2,185 4,269
Real estate operations, net................. 290 244
Other non-interest income................... 118 305
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Total non-interest income............... 7,160 8,404
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Non-interest expense:
- ---------------------
General and administrative expenses......... 18,851 24,306
Amortization of excess of cost over fair
value of net assets acquired.............. 118 117
Merger related costs........................ 87,987 -
Restructuring charge........................ 5,903 -
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Total non-interest expense................ 112,859 24,423
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(Loss) income before income tax expense and
extraordinary item...................... (54,109) 36,272
Provision for income taxes.................. 1,657 13,213
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(Loss) income before extraordinary item..... (55,766) 23,059
Extraordinary item, net of tax (2)......... (2,916) -
---------- --------
Net (loss) income........................... $ (58,682) $ 23,059
========== ========
Basic (loss) earnings per share............. $ (0.82) $ 0.31
Diluted (loss) earnings per share........... $ (0.79) $ 0.31
Basic core earnings per share............... $ 0.35 $ 0.28
Diluted core earnings per share............. $ 0.34 $ 0.27
</TABLE>
(1) Restated to include T R Financial Corp.
(2) Prepayment penalties on debt extinguishment.
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<TABLE>
<CAPTION>
ROSLYN BANCORP, INC.
(NASDAQ:RSLN)
(IN THOUSANDS, EXCEPT RATIOS AND SHARE AMOUNTS)
FOR THE THREE MONTHS
ENDED MARCH 31,
---------------------
SELECTED FINANCIAL RATIOS EXCLUDING NON-RECURRING 1999 1998(1)
CHARGES -------- ---------
<S> <C> <C>
Return on average assets......................... 1.36 % 1.23 %
Return on average stockholders' equity (2)....... 12.51 % 11.11 %
Net interest rate spread ........................ 2.22 % 2.27 %
Net interest margin ............................. 2.75 % 2.89 %
Operating expenses to average assets............. 0.98 % 1.29 %
Net interest income to operating expenses........ 273.67 % 217.40 %
Efficiency Ratio ................................ 33.49 % 42.82 %
</TABLE>
(1) Restated to include T R Financial Corp.
(2) Excludes the effect of the SFAS No. 115 adjustment.
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<TABLE>
<CAPTION>
ROSLYN BANCORP, INC.
(NASDAQ:RSLN)
(IN THOUSANDS, EXCEPT RATIOS AND SHARE AMOUNTS)
THREE MONTHS ENDED
MARCH 31,
----------------------
ACTUAL CONTRIBUTIONS TO STOCKHOLDERS' EQUITY AND
RESULTANT CASH EARNINGS DATA EXCLUDING
NON-RECURRING CHARGES: 1999 1998 (1)
--------- ---------
<S> <C> <C>
Return on average assets......................... 1.44 % 1.45 %
Return on average stockholders' equity (2)....... 13.28 % 13.12 %
Operating expenses to average assets............. 0.90 % 1.08 %
Net interest income to operating expenses........ 297.21 % 260.89 %
Efficiency ratio................................. 30.84 % 35.68 %
Basic earnings per share......................... $ 0.39 $ 0.37
Diluted earnings per share....................... $ 0.37 $ 0.36
</TABLE>
(1) Restated to include T R Financial Corp.
(2) Excludes the effect of the SFAS No. 115 adjustment.
