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) - October 13,
1998
NORTH FORK BANCORPORATION, INC.
(Exact name of Registrant as specified in its charter)
Delaware 1-10458 36-3154608
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
275 Broad Hollow Road
Melville, New York 11747
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 844-1004
<PAGE> 1
ITEM 5. OTHER EVENTS
North Fork Bancorporation, Inc. issued a press release
announcing a 22% increase in net income to $52.7 million, or
diluted earnings per share of $.37 for the quarter ended
September 30, 1998, as compared to $43.1 million and $.31
diluted earnings per share in 1997. Seperately, the Board of
Directors approved the repurchase of up to 14.3 million of the
Company's shares, or approximately 10% of its common shares
outstanding from time to time in the open market or through
private purchases, depending on market conditions. The press
release issued by the Registrant described herein is attached
hereto as Exhibit 99.1 and is hereby incorporated herein by
reference in its entirety.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
(a) Financial Statements of the Business Acquired.
Not Applicable
(b) Pro Forma Financial Information
Not Applicable
(c) Exhibits
99.1 Press Release dated October 13, 1998
<PAGE> 2
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Date: October 13, 1998
NORTH FORK BANCORPORATION, INC.
By: /s/ Daniel M. Healy
Daniel M. Healy
Executive Vice President and
Chief Financial Officer
<PAGE> 3
Exhibit 99.1
FOR IMMEDIATE RELEASE Contact: Daniel M. Healy
Executive Vice President
Chief Financial Officer
NORTH FORK BANCORP ANNOUNCES A 22% INCREASE
IN NET INCOME FOR THE 1998 THIRD QUARTER
AND A 10% COMMON STOCK REPURCHASE PROGRAM
Melville, N.Y. - October 13, 1998 - North Fork Bancorporation,
Inc. (NYSE: NFB) reported a 22% increase in net income to $52.7
million, or diluted earnings per share of $.37 for the quarter
ended September 30, 1998, as compared to $43.1 million and $.31
diluted earnings per share in 1997. Core earnings for the nine
months ended September 30, 1998 increased 22% to $150 million,
or core diluted earnings per share of $1.06, as compared to $123
million and $.87 core diluted earnings per share for the
comparable nine month period in the prior year.
In the current quarter, the Company's core return on average
equity and assets were 24.7% and 2.07%, respectively and were
24.9% and 2%, respectively for the nine month period ended
September 30, 1998. The Company acquired New York Bancorp
(NYB), the parent of Home Federal Savings Bank on March 27, 1998
in a pooling of interests transaction. The consolidated
financial statements and highlights for North Fork have been
retroactively restated for all periods to include NYB.
Principally in connection with the NYB transaction, the Company
recorded in its 1998 first quarter special charges and
non-recurring items of $38.6 million, net of taxes, (or $.28
diluted earnings per share) bringing its year to date results to
$111 million, or $.78 diluted earnings per share. In May 1998,
the Company split its common shares on a three-for-two basis,
which is reflected in all per share data.
Net interest income for the quarter ended September 30, 1998
was $106.4 million compared to $102.4 million for 1997. The net
interest margin for the current quarter was 4.46%, which
represents a modest increase over the prior year's comparable
quarter. On a linked quarter basis, the net interest margin
declined 19 basis points from its level at June 30, 1998 of
4.65%. This decline was caused substantially by the decrease in
yield on interest earning assets but was mitigated by strong
growth in commercial demand deposits. The Company continued to
de-emphasize loan growth in favor of investments in shorter
term, lower yielding securities and experienced an overall
decline in loan yields, as maturing loans reprice at lower
market interest rates, indicative of the recent trend
experienced throughout the industry. "We believe that the
incremental returns we could achieve by making loans do not
justify the potential risks assumed in this late stage of an
expansionary business cycle," said John Adam Kanas, Chairman,
President and Chief Executive Officer. "We have chosen to
concentrate our efforts in converting our two most recent thrift
acquisitions into thriving commercial banking enterprises, where
we focus on the control of deposit costs including the creation
of demand deposits, each and every key element of operating
expenses and pursuing all aspects of non-interest income
generation," he said. Demand deposit balances rose to $1.1
billion or 17% of total deposits at September 30, 1998 as
contrasted to $.9 billion, or 14% of total deposits at September
30, 1997. Non-interest income in the most recent quarter,
excluding the effects of net securities gains, increased to
$14.7 million, a 20% increase over the comparable quarter in
1997. The increase is reflective of North Fork's recently
completed banking and non-banking acquisitions. The Company
recorded a core efficiency ratio of approximately 34.5% in the
most recent quarter and approximately 35.7% for the nine months
ended September 30, 1998.
<PAGE> 4
Loans at September 30, 1998 measured $5.7 billion approximating
their levels at the beginning of the year. The Company's
residential or 1-4 family mortgage loans have registered a
continuous run off throughout the year as customers refinance at
lower rates. North Fork has been able to offset the run off, in
part, by growth in consumer loans and selective additions in
other loan offerings. "Our emphasis has been to concentrate on
our existing customers to foster long-term meaningful
relationships, while always remaining vigilant in the
application of strict loan underwriting standards," said Mr.
Kanas. Non-performing assets continued its downward trend in
the most recent quarter as the reserve to non-performing loans
exceeded 400%. The Bank has no exposure to hedge funds, foreign
loans or what is commonly referred to as sub prime lending.
Separately, the Board of Directors approved the repurchase of
up to 14.3 million of the Company's shares, or approximately 10%
of its common shares outstanding from time to time in the open
market or through private purchases, depending on market
conditions. The repurchased shares will be used for general
corporate purposes. Commenting on the repurchase program, Mr.
Kanas stated, "The present uncertainty and volatility in the
financial markets make most acquisition opportunities
unattractive options. Therefore, we have chosen to utilize our
capital for this repurchase program as we believe that the
Company's current market price is not reflective of its true
long-term value and earnings potential." Among the
considerations by the Board of Directors in approving the share
repurchase program was North Fork's capital position. Its
leverage ratio at September 30, 1998 approximated 9.7%
representing an increase in excess of 30% from a year earlier.
Also, its regulatory capital ratios at September 30, 1998 were
well in excess of requirements. "Our extraordinary ability to
accumulate capital was a compelling reason to enact this
repurchase program," said Mr. Kanas.
North Fork, with total assets of approximately $10 billion,
operates over 100 branch locations throughout the New York
Metropolitan area and Connecticut.
<PAGE> 5
North Fork Bancorporation, Inc.
(NYSE: NFB)
(in thousands, except ratio and per share amounts)
<TABLE>
Three Months Ended Nine Months Ended
<C> <S> <S> <S> <S>
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
INCOME STATEMENT HIGHLIGHTS 1998 1997 (1) 1998 (2) 1997 (1)
Interest Income $188,110 $188,549 $560,984 $536,711
Interest Expense 81,735 86,171 245,888 239,334
Net Interest Income 106,375 102,378 315,096 297,377
Provision for Loan Losses 1,000 1,800 14,500 6,300
Net Interest Income after
Provision for Loan Losses 105,375 100,578 300,596 291,077
Non-Interest Income:
Fees & Service Charges on Deposit Accounts 6,583 6,101 19,703 17,522
Broker Commissions & Trust Fees 4,324 2,783 9,811 7,590
Mortgage Banking Operations 1,002 1,085 3,065 3,215
Other Operating Income 2,767 2,299 9,009 5,826
Interest on Tax Settlement (6) - - - 4,515
Net Securities Gains 3,116 56 2,318 2,624
Total Non-Interest Income 17,792 12,324 43,906 41,292
Non-Interest Expense:
Operating Expenses 35,742 38,410 111,681 117,421
Amortization & Write-down of Intangible Assets 2,188 1,817 12,403 5,483
Capital Securities Costs 4,211 2,192 12,633 6,572
Merger Related Restructure Charge - - 52,452 -
Total Non-Interest Expense 42,141 42,419 189,169 129,476
Income Before Income Taxes 81,026 70,483 155,333 202,893
Provision for Income Taxes 28,359 27,426 44,394 80,273
Net Income 52,667 43,057 110,939 122,620
Add: Non-Recurring Items and Special Charges,
net of taxes (2) - - 38,601 -
Core Earnings $52,667 $43,057 $149,540 $122,620
Core Earnings Per Share - Basic $0.37 $0.31 $1.06 $0.89
Core Earnings Per Share - Diluted $0.37 $0.31 $1.06 $0.87
Average Shares Outstanding - Basic 141,811 137,572 140,547 137,862
Average Shares Outstanding - Diluted 142,734 140,197 141,680 140,336
Cash Dividends per Share $0.125 $0.10 $0.375 $0.28
Return on Average Total Assets 2.07% 1.74% 2.00% 1.74%
Return on Average Stockholders' Equity (3) 24.68% 25.31% 24.86% 25.14%
Yield on Interest Earning Assets (4) 7.85% 7.98% 7.94% 8.01%
Cost of Funds 4.19% 4.26% 4.22% 4.16%
Net Interest Margin (4) 4.46% 4.37% 4.48% 4.47%
Core Efficiency Ratio (5) 34.47% 36.16% 35.67% 38.11%
</TABLE>
<PAGE> 7
North Fork Bancorporation, Inc.
(NYSE: NFB)
(in thousands, except ratio and per share amounts)
<TABLE>
<C> <S> <S> <S> <S>
Sept. 30, June 30, Dec. 31, Sept. 30,
BALANCE SHEET HIGHLIGHTS 1998 1998 1997 (1) 1997 (1)
Loans, net of unearned income $5,655,875 $5,752,171 $5,739,131 $5,533,847
Allowance for Loan Losses 73,606 74,331 74,393 74,224
Securities Available-for-Sale 3,188,063 2,907,898 2,156,624 2,219,049
Securities Held-to-Maturity 988,814 859,274 1,763,308 1,769,764
Intangible Assets 92,579 94,607 96,398 76,692
Total Assets 10,224,071 9,917,046 10,073,632 9,899,273
Deposits - Demand 1,113,162 1,103,184 948,458 879,099
Deposits - Other 5,356,111 5,383,228 5,389,481 5,279,885
Federal Funds Purchased & Securities Sold
Under Agreements to Repurchase 2,435,096 2,165,096 2,104,036 2,244,865
Other Borrowings 35,000 85,000 449,600 518,389
Capital Securities 199,283 199,276 199,264 99,646
Stockholders' Equity 873,027 845,368 770,889 705,153
Book Value Per Share $6.09 $5.90 $5.53 $5.13
CAPITAL:
Risk Based Capital
Tier 1 16.58% 16.06% 15.33% 13.12%
Total 17.83% 17.31% 16.58% 14.37%
Leverage Ratio 9.68% 9.64% 8.74% 7.33%
Actual Shares Outstanding 143,295 143,193 139,478 137,521
ASSET QUALITY:
Non-Performing Loans 17,123 18,618 37,645 45,081
Other Real Estate 3,269 3,717 5,943 7,553
Total Non-Performing Assets $20,392 $22,335 $43,588 $52,634
Restructured, Accruing Loans $4,298 $4,319 $14,567 $17,580
Allowance for Loan Losses to
Non Performing Loans 430% 400% 198% 165%
Allowance for Loan Losses to Total
Loans, net of unearned income 1.30% 1.29% 1.30% 1.34%
Non-Performing Loans to Total Loans, net
of unearned income 0.30% 0.32% 0.66% 0.81%
</TABLE>
<PAGE> 8
Notes to September 30, 1998 Earnings Release
(1) Restated to include New York Bancorp acquired March 27, 1998
on a pooling-of-interests basis.
(2) Non-Recurring and Special Charges are comprised of a $52.5
million merger related restructure charge, an additional $11.5
million loan loss provision, a $6 million write-down of
intangible assets, securities losses of $2.5 million, and $1.8
million of other operating expenses (net of $20.7 million
related tax benefit). Tax items include a charge of $5 million
related to the recapture of Home Federal's bad debt reserve for
State and Local tax purposes and a benefit of $20 million, which
resulted from the restructuring of one of the bank's operating
subsidiaries. Diluted earnings per share including these items
was $0.78.
(3) Excludes the effect of the SFAS No. 115 adjustment.
(4) Presented on a tax equivalent basis.
(5) The core efficiency ratio is defined as the ratio of
non-interest expense, net of other real estate expenses and
other nonrecurring charges, to net interest income on a tax
equivalent basis and other non-interest income net of
securities gains/(losses).
(6) Represents interest received on a tax settlement by New York
Bancorp from the Internal Revenue Service.
