CHEVY CHASE
PREFERRED CAPITAL CORPORATION
FORM 10-Q
June 30, 1998
<PAGE>
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
Commission File Number: 333-10495
CHEVY CHASE PREFERRED CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
Maryland 52-1998335
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8401 Connecticut Avenue
Chevy Chase, Maryland 20815
(Address of principal executive offices) (Zip Code)
(301) 986-7000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
The number of shares outstanding of the registrant's sole class of common stock
was 100 shares, $1 par value, as of July 31, 1998.
- --------------------------------------------------------------------------------
<PAGE>
CHEVY CHASE PREFERRED CAPITAL CORPORATION
-----------------------------------------
TABLE OF CONTENTS
-----------------
PART I - FINANCIAL INFORMATION
Page
----
Item 1. Financial Statements:............................................ 1
(a) Statements of Financial Condition at June 30, 1998 and
December 31, 1997............................................ 2
(b) Statements of Operations for the Three and Six Months Ended
June 30, 1998 and 1997 ...................................... 3
(c) Statement of Stockholders' Equity for the Six Months Ended
June 30, 1998................................................ 4
(d) Statements of Cash Flows for the Six Months Ended
June 30, 1998 and 1997....................................... 5
(e) Notes to Financial Statements................................ 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................. 8
Item 3. Quantitative and Qualitative Disclosures about Market Risk....... 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings ............................................... 13
Item 2. Changes in Securities............................................ 13
Item 3. Defaults Upon Senior Securities.................................. 13
Item 4. Submission of Matters to a Vote of Security Holders.............. 13
Item 5. Other Information................................................ 13
Item 6. Exhibits and Reports on Form 8-K ................................ 13
i
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
The following unaudited financial statements and notes of Chevy Chase Preferred
Capital Corporation (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information. In
the opinion of management, all adjustments necessary for a fair presentation of
the financial position and the results of operations for the interim period
presented have been included. Such unaudited financial statements and notes
should be read in conjunction with the Company's financial statements and notes
for the year ended December 31, 1997, included in the Company's Annual Report on
Form 10-K (File No. 333-10495) filed with the Securities and Exchange
Commission on March 30, 1998.
1
<PAGE>
CHEVY CHASE PREFERRED CAPITAL CORPORATION
-----------------------------------------
STATEMENTS OF FINANCIAL CONDITION
---------------------------------
(Unaudited)
June 30, December 31,
1998 1997
------------- ------------
ASSETS
------
Cash and interest-bearing deposits $ 4,090,007 $ 3,894,269
Residential mortgage loans (net of allowance for
losses of $40,333 and $39,999, respectively) 290,988,445 290,382,131
Real estate acquired in settlement of loans, net 386,889 173,738
Accounts receivable from parent 9,156,287 10,374,891
Accrued interest receivable 1,713,919 1,562,478
Prepaid expenses 387,142 435,809
------------ ------------
Total assets $306,722,689 $306,823,316
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Accounts payable to parent $ 155,725 $ 163,793
Accounts payable - others - 3,749
Dividends payable to parent 1,000,000 2,850,000
Dividends payable - others 3,890,625 3,890,625
Accrued expenses 4,125 -
------------ ------------
Total liabilities $ 5,050,475 $ 6,908,167
------------ ------------
103/8% Noncumulative Exchangeable Preferred
Stock, Series A, $5 par value, 10,000,000
shares authorized, 3,000,000 shares
issued and outstanding (liquidation value
of $50 per share plus accrued and unpaid
dividends) 15,000,000 15,000,000
Common stock, $1 par value,
1,000 shares authorized, 100 shares
issued and outstanding 100 100
Capital contributed in excess of par 284,999,900 284,915,049
Retained earnings 1,672,214 -
------------ ------------
Total stockholders' equity 301,672,214 299,915,149
------------ ------------
Total liabilities and stockholders' equity $306,722,689 $306,823,316
============ ============
The Notes to Financial Statements are an integral part
of these statements.
2
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CHEVY CHASE PREFERRED CAPITAL CORPORATION
-----------------------------------------
STATEMENTS OF OPERATIONS
------------------------
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ -------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
Interest income
Residential mortgage loans $5,720,076 $5,813,882 $11,421,327 $11,465,351
Other 64,873 32,184 110,210 42,226
----------- ----------- ----------- -----------
Total interest income 5,784,949 5,846,066 11,531,537 11,507,577
Provision for loan losses - 19,254 - 19,254
----------- ----------- ----------- -----------
Total interest income after
Provision for loan losses 5,784,949 5,826,812 11,531,537 11,488,323
Gain on sale of real estate
acquired in settlement of
loans, net 3,991 - 4,951 -
----------- ----------- ----------- -----------
Total income 5,788,940 5,826,812 11,536,488 11,488,323
----------- ----------- ----------- -----------
Operating Expenses
Loan servicing fees paid
to parent 275,827 277,594 547,892 574,899
Advisory fees paid to parent 50,000 50,000 100,000 100,000
Directors fees 6,500 6,500 13,500 11,500
General and administrative 34,545 33,735 71,632 58,982
----------- ----------- ----------- -----------
Total operating expenses 366,872 367,829 733,024 745,381
----------- ----------- ----------- -----------
NET INCOME $ 5,422,068 $ 5,458,983 $10,803,464 $10,742,942
=========== =========== =========== ===========
PREFERRED STOCK DIVIDENDS 3,890,625 3,890,625 7,781,250 7,781,250
----------- ----------- ----------- -----------
EARNINGS AVAILABLE TO
COMMON STOCKHOLDER $ 1,531,443 $ 1,568,358 $ 3,022,214 $ 2,961,692
=========== =========== =========== ===========
EARNINGS PER COMMON SHARE $ 15,314.43 $ 15,683.58 $ 30,222.14 $ 29,616.92
=========== =========== =========== ===========
The Notes to Financial Statements are an integral
part of these statements.
3
<PAGE>
CHEVY CHASE PREFERRED CAPITAL CORPORATION
-----------------------------------------
STATEMENT OF STOCKHOLDERS' EQUITY
---------------------------------
(Unaudited)
<TABLE>
Capital
Contributed Total
Preferred Common in Excess Retained Stockholders'
Stock Stock of Par Earnings Equity
------------ ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 $ 15,000,000 $ 100 $ 284,915,049 $ - $ 299,915,149
Net income - - - 10,803,464 10,803,464
Capital contribution from
common stockholder - - 84,851 - 84,851
Dividends on 103/8%
Noncumulative Exchangeable
Preferred Stock, Series A - - - (7,781,250) (7,781,250)
Dividends on Common stock - - - (1,350,000) (1,350,000)
------------ ---------- ------------- ------------- -------------
Balance, June 30, 1998 $ 15,000,000 $ 100 $ 284,999,900 $ 1,672,214 $ 301,672,214
============ ========== ============= ============= =============
</TABLE>
The Notes to Financial Statements are an integral
part of this statement.
4
<PAGE>
CHEVY CHASE PREFERRED CAPITAL CORPORATION
-----------------------------------------
STATEMENTS OF CASH FLOWS
------------------------
(Unaudited)
Six Months Ended
June 30,
1998 1997
------------- -------------
Cash flows from operating activities:
Net income $ 10,803,464 $ 10,742,942
Adjustments to reconcile net income
to net cash provided by operating
activities:
Provision for loan losses - 19,254
Gain on sale of real estate acquired in
settlement of loans, net (4,951) -
Decrease in accounts receivable
from parent 1,218,604 3,223,527
Increase in accrued interest receivable (151,441) (109,619)
Decrease (increase) in prepaid expenses 48,667 (486,186)
Increase in accrued expenses 4,125 -
Decrease in accounts payable to parent (8,068) (331,740)
Decrease in accounts payable - others (3,749) (3,334)
------------- -------------
Net cash provided by operating activities 11,906,651 13,054,844
------------- -------------
Cash flows from investing activities:
Purchases of residential mortgage loans (81,762,466) (35,903,553)
Repayments of residential mortgage loans 80,593,458 32,208,292
Net proceeds on sale of real estate acquired
in settlement of loans 354,494 -
------------- -------------
Net cash used in investing activities (814,514) (3,695,261)
------------- -------------
Cash flows from financing activities:
Capital contribution from common stockholder 84,851 6,515
Dividends paid on preferred stock (7,781,250) (5,144,265)
Dividends paid on common stock (3,200,000) (584,749)
------------- -------------
Net cash used in financing activities (10,896,399) (5,722,499)
------------- -------------
Net increase in cash and cash equivalents 195,738 3,637,084
Cash and cash equivalents at beginning of period 3,894,269 365,175
------------- -------------
Cash and cash equivalents at end of period $ 4,090,007 $ 4,002,259
============= =============
Supplemental disclosures of non-cash activities:
Loans receivable transferred to real estate
acquired in settlement of loans $ 562,694 $ 220,941
============= =============
The Notes to Financial Statements are an integral part of
these statements.
5
<PAGE>
CHEVY CHASE PREFERRED CAPITAL CORPORATION
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Unaudited)
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION:
The Company is a Maryland corporation which acquires, holds and manages real
estate assets. Chevy Chase Bank, F.S.B. (the "Bank"), a federally insured stock
savings bank, owns all of the Company's common stock. The Bank is in compliance
with its regulatory capital requirements.
NOTE 2 - RESIDENTIAL MORTGAGE LOANS:
Residential mortgage loans consist of one-year adjustable rate mortgages
("ARMs"), three-year ARMs and five-year and ten-year fixed-rate loans with
automatic adjustment to one-year ARMs after the respective fixed rate period,
and 30 year fixed-rate mortgages. Each of the mortgage loans is secured by a
mortgage, deed of trust or other security instrument which created a first lien
on the residential dwellings located in their respective jurisdictions. The
following table shows the residential mortgage loan portfolio by type at the
dates indicated:
June 30, December 31,
1998 1997
--------------- ----------------
One-year ARMs $ 20,289,929 $ 27,657,820
Three-year ARMs 50,301,435 78,228,562
5/1 ARMs 129,220,221 165,785,490
10/1 ARMs 85,912,558 16,196,915
30 year fixed-rate 5,304,635 2,553,343
--------------- ---------------
Total 291,028,778 290,422,130
Less:
Allowance for loan losses 40,333 39,999
--------------- ---------------
Total $ 290,988,445 $ 290,382,131
=============== ===============
NOTE 3 - PREFERRED STOCK
Cash dividends on the Company's 103/8% Noncumulative Exchangeable Preferred
Stock, Series A ("the Series A Preferred Shares") are payable quarterly in
arrears. The liquidation value of each Series A Preferred Share is $50 plus
accrued and unpaid dividends. The Series A Preferred Shares are not redeemable
until January 15, 2007 (except upon the occurrence of certain tax events), and
are redeemable thereafter at the option of the Company. Except under certain
limited circumstances, the holders of the Series A Preferred Shares have no
voting rights. The Series A Preferred Shares are automatically exchangeable for
a new series of preferred stock of the Bank upon the occurrence of certain
events relating to the Bank.
6
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CHEVY CHASE PREFERRED CAPITAL CORPORATION
-----------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Unaudited)
NOTE 4 - DIVIDENDS:
During the three months ended June 30, 1998, the Company's Board of Directors
declared $3,890,625 and $1,000,000 of preferred stock and common stock
dividends, respectively, out of the retained earnings of the Company. These
dividends were paid in July 1998.
During the six months ended June 30, 1998, the Company's Board of Directors
declared $7,781,250 and $1,350,000 of preferred stock and common stock
dividends, respectively, out of the retained earnings of the Company.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Residential Mortgage Loans
At June 30, 1998, the Company had $290,988,445 invested in loans secured by
first mortgages or deeds of trust on single-family residential real estate
properties ("Residential Mortgage Loans"). The $606,314 increase from the
balance at December 31, 1997, resulted from Residential Mortgage Loan principal
collections of $80,593,458, which were offset by purchases of $81,762,466. The
Company transferred three loans with an aggregate principal balance of $562,694
to real estate acquired in settlement of loans during the six months ended June
30, 1998. In addition, the Company received proceeds of $354,494 on the sale of
three properties classified as real estate acquired in settlement of loans
during the six months ended June 30, 1998. Management intends to continue to
reinvest proceeds received from repayments of loans in additional Residential
Mortgage Loans to be purchased from either the Bank or its affiliates.
At June 30, 1998, the Company had one non-accrual loan (contractually past due
90 days or more or with respect to which other factors indicate that full
payment of principal and interest is unlikely) with a principal balance of
$283,059.
At June 30, 1998, the Company had nine loans which were delinquent 30-89 days
with an aggregate principal balance of $1,433,484 (or 0.49% of loans).
Allowance for Loan Losses
An analysis is performed periodically to determine whether an allowance for loan
losses is required. An allowance may be provided after considering such factors
as the economy in lending areas, delinquency statistics and past loss
experience. The allowance for loan losses is based on estimates, and ultimate
losses may vary from current estimates. As adjustments to the allowance become
necessary, provisions for loan losses are reported in operations in the periods
they are determined to be necessary. The activity in the allowance for loan
losses is as follows:
Six Months
Ended Three Months
June 30, Ended
1998 1997 June 30, 1998
---------- --------- ---------------
Balance at beginning of period $ 39,999 $ - $ 40,333
Provision for loan losses - 19,254 -
Charge-offs (364) (8,595) -
Recoveries 698 - -
---------- ---------- ---------------
Balance at end of period $ 40,333 $ 10,659 $ 40,333
========== ========== ===============
8
<PAGE>
Interest Rate Risk
The Company's income consists primarily of interest payments on Residential
Mortgage Loans. If there is a decline in interest rates (as measured by the
indices upon which the interest rates of the ARMs are based), then the Company
will experience a decrease in income available to be distributed to its
stockholders. In addition, certain ARM products which the Company holds allow
borrowers to convert an adjustable rate mortgage to a fixed rate mortgage, thus
"locking in" a fixed interest rate at a time when interest rates have declined.
In recent periods, primarily as a result of a decline in interest rates, the
Company has experienced an increase in prepayments on its Residential Mortgage
Loans. In response, the Company has begun to alter the mix of the loans that it
purchases. Specifically, the Company has purchased more 10/1 ARMs from the Bank,
which typically have higher yields than other adjustable rate loan types.
Based on the outstanding balance of the Company's Residential Mortgage Loans at
June 30, 1998 and the interest rate on such loans, anticipated annual interest
income, net of servicing fees, on the Company's loan portfolio was approximately
138.5% of the projected annual dividend on the Series A Preferred Shares. There
can be no assurance that an interest rate environment in which there is a
continued decline in interest rates would not adversely affect the Company's
ability to pay dividends on the Series A Preferred Shares. The Company, to date,
has not used any derivative instruments to manage its interest rate risk.
Significant Concentration of Credit Risk
Concentration of credit risk arises when a number of customers engage in similar
business activities, or activities in the same geographical region, or have
similar economic features that would cause their ability to meet contractual
obligations to be similarly affected by changes in economic conditions.
Concentration of credit risk indicates the relative sensitivity of the Company's
performance to both positive and negative developments affecting a particular
industry.
The Company's exposure to geographic concentrations directly affects the credit
risk of the Residential Mortgage Loans within the portfolio. Substantially all
of the Company's Residential Mortgage Loans are secured by residential real
estate properties located in the Washington, D.C. metropolitan area.
Consequently, these loans may be subject to a greater risk of default than other
comparable residential mortgage loans in the event of adverse economic,
political or business developments and natural hazards in the region that may
affect the ability of residential property owners in the region to make payments
of principal and interest on the underlying mortgages.
Liquidity and Capital Resources
The objective of liquidity management is to ensure the availability of
sufficient cash flows to meet all of the Company's financial commitments. In
managing liquidity, the Company takes into account various legal limitations
placed on a real estate investment trust (a "REIT"), as discussed below in "Tax
Status of the Company."
9
<PAGE>
The Company's principal liquidity need will be to fund the acquisition of
additional mortgage assets as mortgage assets held by the Company are repaid and
to pay dividends on the Series A Preferred Shares. The acquisition of such
additional mortgage assets held by the Company will be funded with the proceeds
of principal repayments on its current portfolio of mortgage assets. The Company
does not anticipate that it will have any other material capital expenditures.
The Company believes that cash generated from the payment of principal and
interest on its mortgage asset portfolio will provide sufficient funds to meet
its operating requirements and to pay dividends in accordance with the
requirements to be treated as a REIT for income tax purposes for the foreseeable
future. The Company may borrow funds as it deems necessary.
Tax Status of the Company
The Company has elected to be taxed as a REIT under Sections 856 through 860 of
the Internal Revenue Code of 1986, as amended. As a REIT, the Company generally
will not be subject to Federal income tax on its net income (excluding capital
gains) provided that it distributes annually 100 percent of its annual REIT
taxable income to its stockholders, and meets certain organizational, stock
ownership and operational requirements. If in any taxable year the Company fails
to qualify as a REIT, the Company would not be allowed a deduction for
distributions to stockholders in computing its taxable income and would be
subject to Federal and state income tax (including any applicable alternative
minimum tax) on its taxable income at regular corporate rates. In addition, the
Company would also be disqualified from treatment as a REIT for the four taxable
years following the year during which qualification was lost.
RESULTS OF OPERATIONS
Three Months Ended June 30, 1998 Compared to Three Months Ended June 30, 1997
During the three months ended June 30, 1998 and 1997, the Company reported net
income of $5,422,068 and $5,458,983, respectively.
Interest income on Residential Mortgage Loans totaled $5,720,076 and $5,813,882
for the three months ended June 30, 1998 and 1997, respectively, which
represents an average yield on such loans of 7.93% and 7.87%, respectively. The
average loan balance of the Residential Mortgage Loan portfolio was $288,494,139
and $295, 577,912 for the three months ended June 30, 1998 and 1997,
respectively. The Company would have recorded an additional $5,987 and $2,081 in
interest income for the three months ended June 30, 1998 and 1997, respectively,
had its non-accrual loans been current in accordance with their original terms.
Other interest income of $64,873 and $32,184 was recognized on the Company's
interest bearing deposits during the three months ended June 30, 1998 and 1997,
respectively.
No provision for loan losses was recorded for the three months ended June 30,
1998. The Company recorded provision for loan losses of $19,254 for the three
months ended June 30, 1997.
The Company recognized a gain of $3,991 on the sale of two properties classified
as real estate acquired in settlement of loans during the three months ended
June 30, 1998.
10
<PAGE>
Operating expenses totaling $366,872 and $367,829 for the three months ended
June 30, 1998 and 1997, respectively, were comprised of loan servicing fees paid
to parent, advisory fees paid to parent, directors fees and general and
administrative expenses. Loan servicing fees paid to parent of $275,827 and
$277,594, for the three months ended June 30, 1998 and 1997, respectively, were
based on a servicing fee rate of 0.375% per annum of the outstanding principal
balances of Residential Mortgage Loans, pursuant to a servicing agreement
between the Company and the Bank. Advisory fees paid to parent for the three
months ended June 30, 1998 and 1997 totaled $50,000 for each period. Directors
fees totaled $6,500 for each period and represent compensation to the two
independent members of the Board of Directors. General and administrative
expenses consist primarily of the amortization of organizational costs.
On June 17, 1998, the Company declared, out of the retained earnings of the
Company, a cash dividend of $1.296875 per share on the outstanding shares of
Series A Preferred Stock. Dividends of $3,890,625 were subsequently paid on July
15, 1998.
The Company also declared on June 17, 1998, out of the retained earnings of the
Company, a cash dividend of $10,000 per share of common stock. The $1,000,000
dividend was paid on July 15, 1998.
Six Months Ended June 30, 1998 Compared to Six Months Ended June 30, 1997
During the six months ended June 30, 1998 and 1997, the Company reported net
income of $10,803,464 and $10,742,942, respectively.
Interest income on Residential Mortgage Loans totaled $11,421,327 and
$11,465,351 for the six months ended June 30, 1998 and 1997, respectively, which
represents an average yield on such loans of 7.94% and 7.76%, respectively. The
average loan balance of the Residential Mortgage Loan portfolio was $287,840,901
and $295,310,825 for the six months ended June 30, 1998 and 1997, respectively.
The Company would have recorded an additional $24,421 and $6,983 in interest
income for the six months ended June 30, 1998 and 1997, respectively, had its
non-accrual loans been current in accordance with their original terms.
Other interest income of $110,210 and $42,226 was recognized on the Company's
interest bearing deposits during the six months ended June 30, 1998 and 1997,
respectively.
No provision for loan losses was recorded for the six months ended June 30,
1998. The Company recorded provision for loan losses of $19,254 for the six
months ended June 30, 1997.
The Company recognized a gain of $4,951 on the sale of three properties
classified as real estate acquired in settlement of loans during the six months
ended June 30, 1998.
Operating expenses totaling $733,024 and $745,381 for the six months ended June
30, 1998 and 1997, respectively, were comprised of loan servicing fees paid to
parent, advisory fees paid to parent, directors fees and general and
administrative expenses. Loan servicing fees paid to parent of $547,892 and
$574,899, for the six months ended June 30, 1998 and 1997, respectively, were
based on a servicing fee
11
<PAGE>
rate of 0.375% per annum of the outstanding principal balances of Residential
Mortgage Loans, pursuant to a servicing agreement between the Company and the
Bank. Advisory fees paid to parent for the six months ended June 30, 1998 and
1997 totaled $100,000 for each period. Directors fees totaled $13,500 and
$11,500 for the six months ended June 30, 1998 and 1997, respectively, and
represent compensation to the two independent members of the Board of Directors.
General and administrative expenses consist primarily of the amortization of
organizational costs.
During the six months ended June 30, 1998, the Company's Board of Directors
declared $7,781,250 and $1,350,000 of preferred stock and common stock
dividends, respectively, out of the retained earnings of the Company.
12
<PAGE>
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
The Company is not the subject of any material litigation. None of the Company,
the Bank or any affiliate of the Bank is currently involved in nor, to the
Company's knowledge, is currently threatened with any material litigation with
respect to the Residential Mortgage Loans included in the portfolio, other than
routine litigation arising in the ordinary course of business, most of which is
covered by liability insurance.
ITEM 2. Changes in Securities
None.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
None.
ITEM 5. Other Information
None.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-K are set forth below.
Exhibit
No. Exhibit
- ------- -------------
11 Computation of Earnings Per Common Share included in Part I,
Item 1 of this report
27 Financial Data Schedule
(b) No reports on Form 8-K were issued during the three months ended June 30,
1998.
13
<PAGE>
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.
CHEVY CHASE PREFERRED CAPITAL CORPORATION
(Registrant)
August 14, 1998 By: /s/ Stephen R. Halpin, Jr.
---- --------------------------
Stephen R. Halpin, Jr.
Director,
Executive Vice President, Treasurer and
Chief Financial Officer
(Principal Financial Officer)
August 14, 1998 By: /s/ Joel A. Friedman
--- --------------------
Joel A. Friedman
Senior Vice President and
Controller
(Principal Accounting Officer)
14
<PAGE>
Exhibit Index
-------------
Exhibit
No. Exhibit
- ------- ----------
11 Computation of Earnings Per Common Share included in Part I, Item 1
of this report.
27 Financial Data Schedule.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 8,433
<INT-BEARING-DEPOSITS> 4,081,574
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 290,988,445
<ALLOWANCE> 40,333
<TOTAL-ASSETS> 306,722,689
<DEPOSITS> 0
<SHORT-TERM> 5,046,350
<LIABILITIES-OTHER> 4,125
<LONG-TERM> 0
0
15,000,000
<COMMON> 100
<OTHER-SE> 284,999,900
<TOTAL-LIABILITIES-AND-EQUITY> 306,722,689
<INTEREST-LOAN> 11,421,327
<INTEREST-INVEST> 0
<INTEREST-OTHER> 110,210
<INTEREST-TOTAL> 11,531,537
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 0
<INTEREST-INCOME-NET> 11,531,537
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 733,024
<INCOME-PRETAX> 10,803,464
<INCOME-PRE-EXTRAORDINARY> 10,803,464
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,803,464
<EPS-PRIMARY> 30,222.14
<EPS-DILUTED> 0
<YIELD-ACTUAL> 0
<LOANS-NON> 283,059
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 39,999
<CHARGE-OFFS> (364)
<RECOVERIES> 698
<ALLOWANCE-CLOSE> 40,333
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
