<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
--------------------------
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 0-22767
-----------------------------------------
D&N Capital Corporation
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 31-1517665
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 Quincy Street, Hancock, Michigan 49930
------------------------------------------------------
(Address of principal executive offices)
(906) 482-2700
------------------------------------------------------
(Registrant's telephone number, including area code)
------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $300 par value 31,781
---------------------------- -----------------------------
Series A Preferred Shares, $25.00 par value 1,210,000
- ------------------------------------------- -----------------------------
(Class) (Shares Outstanding as of
April 30, 1998)
================================================================================
<PAGE> 2
D&N CAPITAL CORPORATION
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I Statement of Condition - March 31, 1998 and
December 31, 1997 3
Statement of Income - Three months ended
March 31, 1998 4
Statement of Changes in Stockholders' Equity -
Three months ended March 31, 1998 5
Statement of Cash Flows - Three months ended
March 31, 1998 6
Notes to Financial Statements 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II Other Information 13
</TABLE>
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<PAGE> 3
D&N CAPITAL CORPORATION
STATEMENT OF CONDITION
at March 31, 1998
(In thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
--------- ------------
(Unaudited)
<S> <C> <C>
ASSETS:
Loans receivable:
Residential mortgage loans $52,867 $52,784
Commercial mortgage loans 7,525 7,601
------- -------
Net loans receivable 60,392 60,385
Cash 2 2
Due from Parent 84 --
Other assets 20 --
Accrued interest receivable 363 358
------- -------
TOTAL ASSETS $60,861 $60,745
======= =======
LIABILITIES:
Due to Parent $ -- $ 202
Other liabilities 5 9
------- -------
TOTAL LIABILITIES 5 211
STOCKHOLDERS' EQUITY:
Preferred stock, par value $25.00; 2,500,000
authorized, 1,210,000 issued and outstanding 30,250 30,250
Common stock, par value $300.00 per share ;
250,000 shares authorized, 31,781 shares
issued and outstanding 9,534 9,534
Additional paid-in capital 20,716 20,716
------- -------
Total paid-in capital 60,500 60,500
Retained earnings 356 34
------- -------
TOTAL STOCKHOLDERS' EQUITY $60,856 $60,534
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $60,861 $60,745
======= =======
</TABLE>
See Notes to Financial Statements
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<PAGE> 4
D&N CAPITAL CORPORATION
STATEMENT OF INCOME (UNAUDITED)
For the Three Months Ended March 31, 1998
(In thousands)
<TABLE>
<S> <C>
INTEREST INCOME:
Loans:
Residential mortgage loans $ 884
Commercial mortgage loans 156
-------
Total loan interest income 1,040
Intercompany interest 2
-------
TOTAL INTEREST INCOME 1,042
NONINTEREST EXPENSE:
Advisory fees 31
Other expenses 8
-------
TOTAL NONINTEREST EXPENSE 39
NET INCOME $ 1,003
PREFERRED STOCK DIVIDEND REQUIREMENTS 681
-------
NET INCOME APPLICABLE TO COMMON SHARES 322
COMMON STOCK DIVIDENDS PAID --
-------
RETAINED EARNINGS INCREASE $ 322
=======
NET INCOME PER SHARE $ 10.14
=======
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 31,781
=======
</TABLE>
See Notes to Financial Statements
- 4 -
<PAGE> 5
D&N CAPITAL CORPORATION
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
For the Three Months Ended March 31, 1998
(In thousands)
<TABLE>
<S> <C>
PREFERRED STOCK:
Balance at beginning of period $ 30,250
--------
Balance at end of period 30,250
--------
COMMON STOCK:
Balance at beginning of period 9,534
--------
Balance at end of period 9,534
--------
ADDITIONAL PAID IN CAPITAL:
Balance at beginning of period 20,716
--------
Balance at end of period 20,716
--------
RETAINED EARNINGS:
Balance at beginning of period 34
Net Income 1,003
Preferred dividends (681)
Common dividends --
--------
Balance of end of period 356
--------
TOTAL STOCKHOLDERS' EQUITY $ 60,856
========
</TABLE>
See Notes to Financial Statements
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<PAGE> 6
D&N CAPITAL CORPORATION
STATEMENT OF CASH FLOW (UNAUDITED)
For the Three months ended March 31, 1998
(In thousands)
<TABLE>
<S> <C>
OPERATING ACTIVITIES:
Net Income $ 1,003
Adjustments to reconcile net income to net cash
provided by operating activities:
Net change in:
Accrued interest receivable (5)
Due from Parent (286)
Other assets (20)
Accounts payable (4)
-------
Net cash provided by operating activities 688
-------
INVESTING ACTIVITIES:
Purchase of mortgage loans (7,352)
Principal payments received 7,345
-------
Net cash used by investing activities (7)
-------
FINANCING ACTIVITIES:
Preferred stock dividends paid (681)
Common stock dividends paid --
Net cash used by financing activities (681)
-------
NET INCREASE (DECREASE) IN CASH --
CASH AT BEGINNING OF PERIOD 2
-------
CASH AT MARCH 31, 1998 $ 2
=======
</TABLE>
See Notes to Financial Statements
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<PAGE> 7
D&N CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION
D&N Capital Corporation (the "Company"), is a Delaware corporation
incorporated on March 18, 1997 and created for the purpose of acquiring, holding
and managing real estate assets. The Company is a wholly-owned subsidiary of D&N
Bank (the "Bank"), a federally chartered savings bank, which itself is wholly
owned by D&N Financial Corporation ("D&N"), a financial services holding company
organized under the laws of the state of Delaware.
All shares of common stock are held by the Bank. The Series A Preferred
Shares are traded on NASDAQ as DNFCP.
The Company used the net proceeds raised from the initial public offering
of the Series A Preferred Shares and the sale of the Common Stock to the Bank to
purchase from the Bank, the Company's initial portfolio of $60,524,000, of
residential and commercial mortgage loans ("Mortgage Loans") at their estimated
fair values.
The accompanying unaudited interim financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting solely of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the three month period ended March 31, 1998 are not necessarily indicative of
the results that may be expected for the full year.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Mortgage Loans:
Mortgage loans are carried at the principal amount outstanding, plus
premium or discount, upon purchase from the Bank. Interest income is recognized
using the interest method, which approximates a level rate of return over the
term of the loan.
Allowance for Loan Losses:
The allowance for possible losses on loans is maintained at a level
believed adequate by management to absorb potential losses from impaired loans
as well as losses from the remainder of the portfolio. Management's
determination of the
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<PAGE> 8
level of the allowance is based upon evaluation of the portfolio, past
experience, current economic conditions, size and composition of the portfolio,
collateral location and values, cash flow positions, industry concentrations,
delinquencies and other relevant factors. At March 31, 1998, there was no
allowance for losses on loans.
Accounts Receivable from Parent:
Accounts Receivable from parent at March 31, 1998 represents principal
and interest payments due the Company from the Bank, partially offset by prior
amounts due the Bank by the Company.
Accounts Payable to Parent:
Accounts payable to parent as of December 31, 1997, represents the Common
Stock Dividend due the Bank, plus advisory fees and other expenses paid by the
Bank for the Company, offset partially, by principal and interest payments due,
which the Bank owes to the Company.
Offering Costs:
Costs incurred in connection with the raising of capital through the sale
of preferred stock were charged against stockholders' equity upon the issuance
of Common Shares to the Bank.
Dividends:
Preferred Stock. Dividends on the Series A Preferred Shares are
noncumulative from issuance (July 17,1997) and are payable quarterly on the last
day of March, June, September and December at a rate of 9.00% per annum of the
liquidation preference ($25.00 per share).
Common Stock. The Bank, as shareholder, is entitled to receive dividends
when, as and if declared by the Board of Directors from funds legally available
after all preferred dividends have been paid. Net Income Per Common Share:
Net Income per Common Share:
Net income per share is computed by dividing net income after preferred
dividends by the weighted average number of common shares outstanding. Diluted
earnings per share is not presented, as there are no outstanding dilutive
securities.
The Company has elected to be treated as a Real Estate Investment Trust
("REIT") pursuant to provision of the Internal Revenue Code of 1986, as amended
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<PAGE> 9
(the "Code"). As a result, the Company will not be subject to federal income tax
on its taxable income to the extent it distributes at least 95% of its taxable
income to its shareholders and it meets certain other requirements as defined in
the Code. The Company intends to maintain its qualification as a REIT for
federal income tax purposes. The Company intends to make qualifying dividends
(for federal income tax purposes) of all of its taxable income to its Common and
Preferred Stock shareholders, a portion of which may be in the form of "consent"
dividends, as defined under the Code. As a result, the Company has made no
provision for income taxes in the accompanying financial statements.
NOTE 3 - MORTGAGE LOANS
Mortgage loans consist of both residential and commercial mortgage loans.
Residential mortgage loans consist of Adjustable Rate Mortgages ("ARMs") and
Fixed Rate Mortgages ("FRMs"). The commercial mortgage loans consist of Fixed
and Variable Rate loans, a majority of which have balloon payments.
The following represents the Mortgage Loan portfolio (in thousands):
<TABLE>
<CAPTION>
3/31/98 12/31/97
--------- ---------
<S> <C> <C>
Residential mortgage loans $ 52,867 $ 52,784
Commercial mortgage loans 7,525 7,601
--------- ---------
$ 60,392 $ 60,385
========= =========
</TABLE>
Each of the Mortgage Loans are secured by a mortgage, deed of trust or
other security instrument which created a first lien on the residential dwelling
and/or commercial property.
NOTE 4 - DIVIDENDS
For the three months ended March 31, 1998, the Company paid dividends on
Series A Preferred Shares in the amount of $680,625.
NOTE 5 - RELATED PARTY TRANSACTION
The Company has entered into an Advisory Agreement (the "Advisory
Agreement") with the Bank (the "Advisor") requiring an annual payment of
$125,000. The Advisor provides advice to the Board of Directors and manages the
operations of the Company as defined in the Agreement. The Agreement has an
initial term of five years commencing on September 9, 1997 and automatically
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<PAGE> 10
renews for additional five year periods, unless the Company delivers a notice of
nonrenewal to the Advisor as defined in the Advisory Agreement. Advisory fees
incurred for the three months ended March 31, 1998 totaled approximately
$31,000.
The Company also entered into two servicing agreements with the Bank for
the servicing of the commercial and residential mortgage loans. Pursuant to each
servicing agreement, the Bank performs the servicing of the Mortgage Loans owned
by the Company, in accordance with normal industry practice. The Servicing
Agreements can be terminated without cause upon a thirty day advance notice
given to the Servicer. The servicing fee is 0.375% of the outstanding principal
balance for the residential mortgage loans and commercial mortgage loans. The
servicing fees are netted out of interest, prior to remittance by the Bank to
the Company.
NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value is defined as the amount at which a financial instrument could
be exchanged in a current transaction between willing parties, other than in a
forced sale or liquidation, and is best evidenced by a quoted market price, if
one exists. The calculation of estimated fair value is based on market condition
at a specific point in time and may not be reflective of future fair values.
Certain financial instruments and all nonfinancial instruments are
excluded from the scope of SFAS 107. Accordingly, the fair value disclosures
required by SFAS 107 may provide only a partial estimate of the fair value of
the Company. Fair values among REITs are not comparable due to the wide-range of
limited valuation techniques and numerous estimates which must be made. This
lack of an objective valuation standard, introduces a great degree of
subjectivity to the derived or estimated fair value. Therefore, readers are
cautioned against using this information for purposes of evaluating the
financial condition of the Company compared with the other REITs.
Loans were valued using methodologies suitable for each loan type. These
methodologies and the key assumption made are discussed below.
The fair value of the Company's commercial loans was estimated by
assessing the two main risk components: credit risk and interest rate risk. The
estimated cash flows were discounted, using rates appropriate for each maturity
that incorporates the effects of interest rate changes.
For residential mortgage loans for which market rates for comparable
loans are readily available, the fair value was estimated by discounting
expected cash flows, adjusted for prepayments. The discount rates used for
residential
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<PAGE> 11
mortgages were secondary market yields for comparable mortgage-backed
securities, adjusted for risk. These discount rates incorporated the effects of
interest rate changes only, since the estimated cash flows were previously
adjusted for credit risk.
The book value and fair value of Mortgage Loans at March 31, 1998, is as
follows (in thousands):
<TABLE>
<S> <C> <C>
Residential Mortgage Loans $ 52,867 $ 52,951
Commercial Mortgage Loans 7,525 7,525
--------- --------
Total Portfolio $ 60,392 $ 60,476
========= ========
</TABLE>
Assets and liabilities in which carrying value approximates fair value:
The carrying values of certain financial assets and liabilities,
including cash, accrued interest receivable, due-from-parent, due-to-parent and
other assets and liabilities, are considered to approximate their respective
fair value due to their short-term nature and negligible exposure to credit
losses.
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<PAGE> 12
D&N CAPITAL CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The principal business of the Company is to acquire and hold and manage
residential and commercial mortgage loans ("Mortgage Loans") that will generate
net income for distribution to stockholders. The Company currently intends to
continue to acquire all its Mortgage Loans from The Bank consisting of whole
loans secured by first mortgages or deeds of trust on single-family residential
real estate properties or on commercial real estate properties.
All shares of common stock are held by the D&N Bank. The Series A
preferred shares are traded on NASDAQ as DNFCP.
The Bank administers the day-to-day activities of the Company in its role
as Advisor under the Advisory Agreement. The Bank also services the Company's
Mortgage Loans under each of the Servicing Agreements.
It is the intention of the Company and the Bank that any agreements and
transactions between the Company, and the Bank, are consistent with market
terms, including the price paid and received for Mortgage Loans, upon their
acquisition or disposition by the Company, or in connection with the servicing
of such Mortgage Loans. The requirement in the Certificate of Designation
establishing the Series A Preferred Shares that certain actions of the Company
be approved by a majority of the Independent Directors is also intended to
ensure fair dealing between the Company and the Bank.
RESULTS OF OPERATIONS
The Company reported net interest income for the quarter ended March
31, 1998 of approximately $1,042,000. Interest income from residential and
commercial mortgage loans was $884,000 and $156,000, respectively. After a
deduction of approximately $31,000 in advisory fees and $8,000 in other
administrative expenses, the Company reported net income of approximately
$1,003,000 for the quarter ended March 31, 1998.
The Company reported net income per common share of $10.14 for the
quarter ended March 31, 1998.
For the quarter ended March 31, 1998, the Company paid $680,625 in
preferred stock dividends. Dividends on the common stock are paid to the Bank
when, as and if declared by the Board of Directors of the Company out of funds
available. The Company expects to pay common stock dividends at least annually
in amounts necessary to continue to preserve its status as a real estate
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<PAGE> 13
investment trust ("REIT") under the Internal Revenue Code of 1986, as amended
(the "Code").
MORTGAGE LOANS
Residential mortgage loans consist of Adjustable Rate Mortgages ("ARMs"),
and Fixed Rate Mortgages ("FRM's"). The commercial mortgage loans consist of
fixed and variable rate loans, a majority of which have balloon payments.
Reinvestments in mortgage loans have been and will continue to be consistent in
maintaining an approximate 90% and 10% ratio between residential and commercial
mortgage loans, respectively. All Mortgage Loans are purchased from the Bank.
For the quarter ended March 31, 1998, the Company purchased replacement
mortgage loans having an outstanding principal balance of approximately
$7,352,000 from the Bank. In addition, the Company received approximately
$7,345,000 of principal payments on its portfolio from the Servicer.
INTEREST RATE RISK
The Company's income consists primarily of interest payments on Mortgage
Loans. If there is a decline in interest rates (as measured by the indices upon
which the interest rates of the residential ARM and variable rate commercial
mortgage loans are based), then the Company will experience a decrease in income
available to be distributed to its shareholders. There can be no assurance that
an interest rate environment in which there is a significant decline in interest
rates over an extended period of time would not adversely affect the Company's
ability to pay dividends on the Series A Preferred Shares.
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.
Approximately 90% of the Company's total Mortgage Loan portfolio are
loans secured by residential real estate properties located in Michigan.
Consequently, these residential mortgage loans may be subject to a greater risk
of default than other comparable, geographically diverse, residential mortgage
loans in the event of adverse economic, political or business developments and
natural hazards in Michigan.
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<PAGE> 14
In addition, the majority of the commercial mortgage properties
underlying the Company's commercial mortgage loans are located in the Detroit
metropolitan area. Consequently, these commercial mortgage loans may be subject
to greater risk of default in the event of adverse economic, political or
business developments in the Detroit metropolitan area.
LIQUIDITY RISK MANAGEMENT
The objective of liquidity management is to ensure the availability of
sufficient cash flows to meet all of the Company's financial commitments and to
capitalize on opportunities for the Company's business expansion. In managing
liquidity, the Company takes into account various legal limitations placed on a
REIT as discussed below in Other Matters.
The Company's principal liquidity needs are to maintain the current
portfolio size through the acquisition of additional Mortgage Loans as Mortgage
Loans currently in the portfolio mature, or prepay, and to pay dividends on the
Series A Preferred Shares. The acquisition of additional Mortgage Loans is
intended to be funded with the proceeds obtained from the repayment of principal
balances by individual borrowers. The Company does not have and does not
anticipate having any material capital expenditures.
YEAR 2000 COMPLIANCE
D&N utilizes various electronic computer systems for the delivery of its
financial services products, for the maintenance of its financial and other
business records, and for general management purposes. Some of these systems
include legacy procedures that may have been designed and historic data that may
have been stored in such a manner that inconsistences or failures might occur
when dates from the new millennium are considered. Commonly known as the Year
2000 problem, a myriad of related potential computing difficulties face entities
that rely extensively upon computer systems. D&N's major computer systems
include financial control applications provided by M&I Data Services, Inc;
mortgage lending applications provided by ALLTEL Information Services, Inc. and
FiTech, Inc.; and internally maintained micro-computer and network systems which
support management functions and communications. D&N is working closely with its
data services vendors to ascertain that their applications, upon which the Bank
relies, will be certifiable as compliant by the end of 1998.
D&N has determined that its internally maintained systems, consisting
primarily of a Lotus Notes server array and various workstation-based business
suite software, are Year 2000 compliant as currently installed.
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<PAGE> 15
D&N's duty is to monitor the progress of its vendors toward the
attainment of compliance and to test for compliance. At this time, D&N deems the
progress attained by each of its service bureau vendors to achieve Year 2000
compliance in a timely fashion to be acceptable.
OTHER MATTERS
As of March 31, 1998, the Company believed that it was in full compliance
with the REIT tax rules and that it will continue to qualify as a REIT under the
provision of the Code. The Company calculates that:
* its Qualified REIT Assets, as defined in the Code, are approximately 100%
of its total assets, as compared to the federal tax requirements that at
least 75% of its total assets must be Qualified REIT assets.
* 97% of its revenues qualify for the 75% source of income test and 100% of
its revenues qualify for the 95% source of income test under the REIT
rules.
* none of the revenue was subject to the 30% income limitation under the
REIT rules.
The Company also met all REIT requirements regarding the ownership of its
common and preferred stocks and anticipates meeting the 1998 annual distribution
and administrative requirements.
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<PAGE> 16
D&N CAPITAL CORPORATION
PART II - OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
None
ITEM 2: CHANGES IN SECURITIES
None
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of stockholders was held on February 27,
1998.
(b) The matters approved by the sole common shareholder, D&N Bank,
at the annual meeting, were as follows:
Number of Directors:
To enhance and broaden the base of expertise and professional
oversight that D&N Capital Corporation's Board of Directors may
provide to the Company, the number of directors which shall
constitute the whole board is increased from five to six.
Election of Directors:
The following directors were elected for the ensuing year:
George J. Butvilas Gail A. Mroz
James S. Bogan Kenneth R. Janson
William J. McGarry Richard E. West
ITEM 5: OTHER INFORMATION
Filings on Statements with the Securities and Exchange Commission
On April 16, 1998 D&N Capital Corporation and D&N Financial
Corporation, filed a registration statement (S-8) with the Securities
and Exchange commission relating to 20,000 shares of D&N Capital
- 16 -
<PAGE> 17
D&N CAPITAL CORPORATION
PART II - OTHER INFORMATION (CONTINUED)
Corporation's Preferred Stock, par value $25 per share and 160,000
shares of D&N Financial Corporation's Common Stock, par value $.01 per
share, to be offered to pursuant to the D&N Bank 401(k) Plan and Trust.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibit is included herein:
12 (a) Computation of Ratio of Earnings to Fixed Charges
12 (b) Computation of Ratio of Earnings to Fixed Charges
and Preferred Stock Dividend Requirements
(27) Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed during the
quarter Ended March 31, 1998.
- 17 -
<PAGE> 18
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.
D&N CAPITAL CORPORATION
/s/ Kenneth R. Janson
--------------------------------------
Kenneth R. Janson, President and
Chief Executive Officer
/s/ Daniel D. Greenlee
--------------------------------------
Daniel D. Greenlee,
Chief Financial Officer and Treasurer
Date: May 15, 1998
------------------------
<PAGE> 19
INDEX TO EXHIBITS
Exhibit No. Exhibits
----------- --------
12 (a) Computation of Ratio of Earnings to Fixed Charges
12 (b) Computation of Ratio of Earnings to Fixed Charges and
Preferred Stock Dividend Requirements
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 12(a)
D&N CAPITAL CORPORATION
Computation of ratio of earnings to fixed charges
<TABLE>
<CAPTION>
For the Quarter Ended
March 31, 1998
(In thousands, except ratio):
-----------------------------
<S> <C>
Net income $ 1,003
Fixed charges:
Advisory fees 31
Total fixed charges 31
Earnings before fixed charges $ 1,034
Fixed charges, as above $ 31
Ratio of earnings to fixed charges 33.4
</TABLE>
<PAGE> 1
EXHIBIT 12(b)
D&N CAPITAL CORPORATION
Computation of ratio on earnings to fixed charges
and preferred stock dividend requirements
<TABLE>
<CAPTION>
For the Quarter
March 31, 1998
(In thousands, except ratio):
-----------------------------
<S> <C>
Net income $1,003
Fixed charges:
Advisory fees 31
Total fixed charges 31
Earnings before fixed charges 1,034
Fixed charges, as above 31
Preferred stock dividend requirements 681
Fixed charges including preferred
stock dividends 712
Ratio of earnings to fixed charges and
preferred stock dividend requirements 1.45
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 2
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 60,392
<ALLOWANCE> 0
<TOTAL-ASSETS> 60,861
<DEPOSITS> 0
<SHORT-TERM> 0
<LIABILITIES-OTHER> 5
<LONG-TERM> 0
0
30,250
<COMMON> 30,250
<OTHER-SE> 356
<TOTAL-LIABILITIES-AND-EQUITY> 60,861
<INTEREST-LOAN> 1,040
<INTEREST-INVEST> 0
<INTEREST-OTHER> 2
<INTEREST-TOTAL> 1,042
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 0
<INTEREST-INCOME-NET> 1,042
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 39
<INCOME-PRETAX> 1,003
<INCOME-PRE-EXTRAORDINARY> 1,003
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,003
<EPS-PRIMARY> 10.14
<EPS-DILUTED> 10.14
<YIELD-ACTUAL> 7.53
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
