FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1997 Commission file number
2-99779
National Consumer Cooperative Bank
(Exact name of registrant as specified in its charter)
United States of America 52-1157795
(12 U.S.C. Section 3001 et seq.) (I.R.S. Employer
(State or other jurisdiction of Identification No.)
incorporation or organization)
1401 Eye Street, NW, Suite 700, Washington, D.C. 20005
(Address of principal executive offices)
Registrant's telephone number, including area code (202)336-7700
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 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 .
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Outstanding at March 31, 1997
Class C 217,516
(Common stock, $100.00 par value)
Class B 785,885
(Common stock, $100.00 par value)
Class D 3
(Common stock, $100.00 par value)
<PAGE>
National Consumer Cooperative Bank
(doing business as National Cooperative Bank)
and Subsidiaries
INDEX
PART I FINANCIAL INFORMATION Page No.
Item 1 Condensed consolidated balance sheets
- March 31, 1997 and December 31, 1996 3
Condensed consolidated statements of
income - for the three months ended
March 31, 1997 and 1996............. 4
Condensed consolidated statements of
cash flows - for the three months
ended March 31, 1997 and 1996....... 5-6
Condensed notes to the consolidated
financial statements - March 31,
1997................................ 7-9
Item 2 Management's discussion and analysis
of financial condition and results of
operations - for the three months
ended March 31, 1997 and 1996....... 10-17
PART II OTHER INFORMATION
Item 2 Changes in Securitites.............. 18
Item 4 Submission of Matters to a Vote of
Security Holders.................... 18
Item 6 Exhibit and Reports on Form 8-K .... 19
Exhibit 10.2 - Fleet Loan Agreement
Exhibit 27 - Financial Data Schedule
NATIONAL COOPERATIVE BANK
CONSOLIDATED BALANCE SHEETS
March 31, 1997 and December 31, 1996
(Unaudited)
1997 1996
Assets
Cash and cash equivalents $ 24,128,735 $ 17,150,534
Restricted cash 8,348,703 8,348,703
Investment securities
Available-for-sale 29,815,426 30,337,100
Held-to-maturity 2,895,783 2,946,425
Loans and lease financing 569,742,387 565,824,579
Loans held for sale 132,807,300 184,269,872
Less: Allowance for loan losses (16,205,949) (15,504,510)
686,343,738 734,589,941
Excess servicing 31,747,959 30,758,057
Premises and equipment, net 2,187,278 2,257,362
Other assets 16,747,267 12,947,458
Total assets $802,214,889 $839,335,580
Liabilities and Members' Equity
Liabilities
Deposits $ 84,823,065 $ 88,620,002
Patronage dividends payable in cash 6,372,006 4,721,600
Other liabilities 17,781,385 11,332,033
Borrowings
Short-term 156,500,000 224,500,000
Long-term 226,907,210 202,137,077
383,407,210 426,637,077
Subordinated debt 182,834,993 182,853,313
Total borrowings 566,242,203 609,490,390
Total liabilities 675,218,659 714,164,025
Members' equity
Common stock
Class B 81,143,534 78,600,416
Class C 19,196,667 21,751,584
Class D 300 300
Retained earnings
Allocated 7,786,007 5,770,844
Unallocated 19,091,982 19,113,185
Unrealized (loss) on investment
securities available-for-sale (222,260) (64,774)
Total members' equity 126,996,230 125,171,555
Total liabilities and members'
equity $802,214,889 $839,335,580
<PAGE>
NATIONAL COOPERATIVE BANK
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the three months ended March 31, 1997 1996
Interest Income
Loans and lease financing $15,371,167 $13,329,141
Investment securities 1,085,457 958,848
Total interest income 16,456,624 14,287,989
Interest expense
Deposits 1,032,953 1,034,879
Short-term borrowings 2,890,864 1,853,834
Long-term debt, other borrowings
and subordinated debt 6,272,295 5,565,676
Total interest expense 10,196,112 8,454,389
Net interest income 6,260,512 5,833,600
Provision for loan losses 702,000 320,000
Net interest income after
provision for loan losses 5,558,512 5,513,600
Non-interest income
Gain on sale of loans 1,408,427 148,761
Loan and deposit servicing fees 555,196 488,395
Other 1,547,461 903,393
Total non-interest income 3,511,084 1,540,549
Non-interest expenses
Compensation and employee benefits 2,692,071 2,665,204
Contractual services 843,219 1,088,381
Occupancy and equipment 951,408 544,852
Contribution to NCB
Development Corporation 125,000 125,000
Other 472,399 640,640
Total non-interest expenses 5,084,097 5,064,077
Income before income taxes 3,985,499 1,990,072
Provision for income taxes 337,147 229,337
Net income $ 3,648,352 $ 1,760,735
Distribution of net income
Patronage dividends $ 3,648,352 $ 1,760,735
Retained earnings $ 3,648,352 $ 1,760,735
<PAGE>
NATIONAL COOPERATIVE BANK
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the three months ended March 31, 1997 1996
Cash flows from operating activities
Net income $ 3,648,352 $ 1,760,735
Adjustments to reconcile net income
to net cash (used in)provided by
operating activities
Provision for loan losses 702,000 320,000
Depreciation and amortization 1,400,901 1,560,954
Gain on sale of assets (1,408,427) (148,761)
Loans originated for sale (30,851,790) (75,013,963)
Proceeds from sale of loans held
for sale 97,016,540 459,833
Increase in other assets (4,719,625) (3,199,371)
Increase in other liabilities 7,351,569 2,895,615
Other - 144,635
Net cash provided by (used in)
operating activities 73,139,520 (71,220,323)
Cash flows from investing activities
Purchases of investment securities
Available-for-sale - (3,143,917)
Held-to-maturity - (5,180,000)
Proceeds from maturities and sale of
investment securities
Available-for-sale 237,132 3,135,515
Held-to-maturity - 99,000
Net (increase) decrease in loans
and lease financing (19,953,074) 13,656,809
Proceeds from sale of
portfolio loans - 11,075,444
Purchases of premises and
equipment (148,440) (469,485)
Net cash (used in) provided by
investing activities (19,864,382) 19,173,366
Cash flows from financing activities
Net (decrease) increase in
deposits (3,796,937) 2,791,882
Net (decrease) increase in short-
term borrowings (67,500,000) 10,500,002
Proceeds from issuance of
long-term debt 25,000,000 32,500,000
Repayment on long-term debt - (24,667)
Redemption of common stock - (3,000)
Net cash (used in) provided by
financing activities (46,296,937) 45,764,217
Increase (decrease) in cash and
cash equivalents 6,978,201 (6,282,740)
Cash and cash equivalents,
beginning of year 17,150,534 21,289,376
Cash and cash equivalents,
end of period $ 24,128,735 $ 15,006,636
NATIONAL COOPERATIVE BANK
CONSOLIDATED SATEMENTS OF CASH FLOWS
(Unaudited)
Supplemental schedule of noncash investing and financing activities:
For the three months ended March 31, 1997 1996
Unrealized loss on investment available
for sale $ 157,486 $ 414,162
Interest paid 5,698,684 4,993,135
Income taxes paid 135,339 102,113
<PAGE>
NATIONAL COOPERATIVE BANK
CONDENSED NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
March 31, 1997
(Unaudited)
The accompanying financial statements have been prepared
without audit and reflect all adjustments (consisting only of
normal recurring adjustments) which were, in the opinion of
management, necessary to a fair statement of the results of the
interim period presented. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted. Accordingly, these condensed financial
statements should be read in conjunction with the financial
statements and the notes thereto included in NCB's most current
annual report. The results of operations for the interim periods
are not necessarily indicative of the results of the entire year.
1. Cash, Cash Equivalents and Investment Securities
As of March 31, 1997, NCB's portfolios of investment securities,
cash and cash equivalents had an average adjusted maturity of 757
days with interest rates in those portfolios varying from 4.25% to
8.0%.
Cash and Investments Investments
Cash Available- Held-to-
Equivalents for-Sale Maturity
Cash $7,645,543 $ - $ -
Federal funds 2,356,992 - -
Money market
securities 14,126,200 - -
Mutual funds - 2,020,466 -
Certificates of deposit - - 100,000
Mortgage-backed
securities - - 2,795,783
Corporate bonds - 16,798,116 -
U.S. Treasury and Agency
obligations - 10,996,844 -
$24,128,735 $29,815,426 $2,895,783
At March 31, 1997, the investments in the available-for-sale
portfolio were recorded at aggregate fair value. Restricted cash
of $8,348,703 is held by a trustee for the benefit of certificate
holders in the event of loss on certain loans sold of $37,300,000
and $92,623,000 in 1993 and 1992, respectively. The restricted
cash will become available to NCB I, Inc., as the principal balance
of the respective loans decreases. The loans sold have original
maturities of ten to fifteen years.
2. Loans and Lease Financing
Loans and leases outstanding by category at March 31, 1997
were:
Commercial loans $357,112,384
Lease financing 14,597,634
Real estate loans
Residential 322,167,203
Commercial 8,672,466
$702,549,687
At March 31, 1997 and December 31, 1996 real estate loans held
for resale were $132.8 million and $184.3 million, respectively.
3. Impaired Assets
Loans that became impaired after January 1, 1996 totaled
$3,773,980 and $2,467,374 at March 31, 1997 and 1996, respectively.
The 1997 impaired loans are comprised of nonaccrual loans and a
restructured loan totaling $2,731,394 and $1,042,586, respectively.
The 1996 impaired loans are comprised of nonaccrual loans and a
restructured loan totaling $1,762,057 and $705,317, respectively.
A specific allowance of $1,271,000 and $247,000 has been set aside
for these loans at March 31, 1997 and 1996, respectively, as
management's best estimate of their fair value is less than the
recorded investment in the loans. During 1997 and 1996, the
interest collected on the nonaccrual loans was applied to reduce
the outstanding principal. Interest earned on the restructured
loans totaled $139,234 and $13,363 during the first three months
ended March 31, 1997 and 1996, respectively.
At March 31, 1997 there were no commitments to lend additional
funds to borrowers whose loans are non-performing.
At March 31, 1997 and 1996, NCB had real estate acquired through
foreclosure of $376,708 and $1,621,389, respectively, which are
classified as other assets.
4. Allowance for Loan Losses
The following is a summary of the activity in the allowance for
loan losses during the three months ended March 31, 1997:
Balance at January 1, 1997 $15,504,510
Provision for loan losses 702,000
Charge-offs (16,737)
Recoveries of loans previously
charged off 16,176
Balance at March 31, 1997 $16,205,949
The allowance for loan losses as a percentage of average loans
and lease financing at March 31, 1997 was 2.3%.
5. New Accounting Standards
Effective January 1, 1997, NCB will account for transfers and
servicing of financial assets in accordance with SFAS No. 125,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities." The statement provides standards
for distinguishing transfers of financial assets that are sales
from those that are secured borrowings, and provides guidance on
the recognition and measurement of asset servicing contracts and
on debt extinguishment. As a result of an amendment to SFAS No. 125
issused by the FASB in December, 1996, certain provisions of SFAS
No. 125 are deferred for an additional year. Although management
is continuing its analysis of SFAS No. 125, it currently anticipates
that impact will not be material.
<PAGE>
NATIONAL COOPERATIVE BANK
MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
SUMMARY
NCB's net income for the three months ended March 31, 1997 was
$3.6 million. This was a 107.2% or $2.0 million increase compared
with the three months ended March 31, 1996. The variance primarily
resulted from increases in non-interest income of $2.0 million and
in net interest margin of $427 thousand. These were, however,
partially offset by an increase in the provision for loan losses of
$382 thousand.
Total assets were $802.2 million at March 31, 1997, down 4.4%
from $839.3 million at December 31, 1996. A $75 million sale of
loans partially offset by new disbursements comprised most of the
decrease in assets.
NET INTEREST INCOME
Net interest income of $6.3 million for the first three months
of 1997 represents an increase of $427 thousand or 7.3% over the
same period a year ago. As shown on Table 2, there were positive
variances of $305 thousand and $121 thousand related to volume
and rates, respectively.
For the three months ending March 31,1997, interest income
increased $2.2 million to $16.5 million from $14.3 million in the
three months ended March 31,1996. As shown on Table 2, interest
income increased $2.2 million due to increased real estate
warehouse volume and decreased $10 thousand due to lower yields
earned on the commercial loan and lease portfolio. As shown on
Table 1, the average rate on interest earning assets increased
to 8.43% during the three months ended March 31,1997 compared
with 8.42% in the same time period in 1996.
Interest expense increased $1.7 million to $10.2 million for the
three months ended March 31, 1997 compared with $8.5 million for
the three months ended March 31, 1996. The increased interest expense
is largely a result of a higher volume of notes payable required to
fund loan volume. The average rate on interest-bearing liabilities
increased to 6.05% compared with 5.96% in the same period in 1996
due to the repricing of the subordinated debt. As shown on Table 2,
a $1.9 million increase in interest expense was volume related
while a $.1 million decrease was due to interest rates.
NON-INTEREST INCOME
Non-interest income for the three months ended March 31, 1997 of
$3.5 million increased 128% or $2 million from $1.5 million for the
same period last year. The majority of the increase was caused by
the gains on loans sold to the secondary market. During the first
quarter of 1997 and 1996, loans sold amounted to $75 million and
$459,833, respectively.
Gains recorded on the sale of blanket mortgages were $1.4 million
for the three months ended March 31, 1997 compared with $149
thousand for the same period in 1996. Commercial loan fees,
servicing fee income and amortization of excess servicing fees
receivable accounted for the remaining increase in non-interest
income.
NON-INTEREST EXPENSES
Non-interest expenses for the three months ended March 31, 1997
slightly increased .4% or $20 thousand to $5.1 million compared
with the three months ended March 31, 1996. Occupancy and equipment
expenses increased 75% to $951.4 thousand compared with $545
thousand of the prior period. The expense was low in the first
quarter of 1996 due to a positive adjustment to the headquarter's
rent. Partially offsetting this increase was a 22.5% or $245
thousand decrease in contractual services due to the timing of the
payments of various expenses such as process redesign, strategic
planning and compensation survey during the first quarter of 1996.
Non-interest expenses as a percentage of average assets were 2.5%
for the three months ended March 31, 1997 compared with 2.9% for
the same period a year ago.
<PAGE>
<TABLE>
Table 1
Rate Related Assets and Liabilities
(dollars in thousands)
Three Months Ended March 31,
1997 1996
ASSETS Average Income/ Yields/ Average Income/ Yields/
Balance Expense Rates Balance Expense Rates
<S> <C> <C> <C> <C> <C> <C>
Interest earning assets
Real estate loans $362,049 $ 7,791 8.61% $293,905 $ 6,393 8.70%
Commercial loans
and leases 354,643 7,580 8.55% 323,025 6,936 8.59%
Total loans and
leases 716,692 15,371 8.58% 616,930 13,329 8.64%
Investment securities
and cash equivalents 64,159 1,085 6.76% 61,913 959 6.19%
Total interest earning
assets 780,851 16,456 8.43% 678,843 14,288 8.42%
Allowance for loan
losses (15,776) (14,709)
Non-interest earning assets
Cash 4,079 4,266
Other assets 52,933 38,361
Total non-interest
earning assets 57,012 42,627
Total assets $822,087 $706,761
LIABILITIES AND MEMBERS' EQUITY
Interest bearing liabilities
Subordinated debt $182,542 $ 2,547 5.58% $183,001 $ 2,415 5.28%
Notes payable 404,776 6,616 6.54% 303,267 5,004 6.60%
Deposits 87,222 1,033 4.74% 80,923 1,035 5.12%
Total interest bearing
liabilities 674,540 10,196 6.05% 567,191 8,454 5.96%
Other liabilities 20,576 20,804
Members' equity 126,971 118,766
Total liabilities and
members' equity $822,087 $706,761
Net interest earning
assets $106,311 $111,652
Net interest revenues
and spread $ 6,260 2.38% $ 5,834 2.46%
Net yield on interest
earning assets 3.21% 3.44%
</TABLE>
<PAGE>
PROVISION FOR INCOME TAXES
The federal income tax provision is determined on the basis of
non-member income generated by NCB Savings Bank, FSB and reserves
set aside for the retirement of Class A notes and dividends on
Class C stock. NCB's subsidiaries are also subject to varying
levels of state taxation. The federal income tax provision for the
three months ended March 31, 1997 increased by $108 thousand
compared with the prior year's provision of $229 thousand.
CASH, CASH EQUIVALENTS AND INVESTMENT SECURITIES
Cash, cash equivalents and investment securities at March 31, 1997
increased $6.4 million or 10.9% from $58.8 million at year-end 1996
due to repayment on loans and outstanding lines of credit received
at the end of March. As a percentage of earning assets, cash, cash
equivalents and investment securities increased to 8.5% at March
31, 1997 from 7.3% at December 31, 1996.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses at March 31, 1997 increased 4.5% to
$16.2 million from $15.5 million at December 31, 1996. The
allowance during the period was impacted by loans charged off, net
of recoveries of loans previously charged off, amounting to $.6
thousand and the provision of $702 thousand. Overall, loan
portfolio quality remained both strong and stable at the end of the
first quarters of 1997 and 1996. NCB's provision for loan losses
as a percentage of average loans and leases outstanding was .4% and
.2% for the quarters ended March 31, 1997 and 1996, respectively.
The loan loss allowance as a percentage of total loans and
leases increased from 2.1% at December 31, 1996 to 2.3% at March
31, 1997. The increase is primarily due to the decreased level of
loans outstanding during the period. Management considers the
current allowance to be adequate to absorb known and inherent risks
in the loan portfolio.
As shown in Table 3, total nonperforming assets (restructured,
non-accruing loans and real estate owned) increased 1% from $8.1
million at December 31, 1996 to $8.2 million at March 31, 1997.
Nonperforming assets as a percentage of loans and leases
outstanding plus real estate owned increased to 1.2% at March 31, 1997
compared with 1.1% at year-end 1996. The allowance for loan losses
as a percentage of nonperforming assets increased to 197.5% at
March 31, 1997 from 190.8% at December 31, 1996.
<PAGE>
Table 2
Changes in Net Interest Income
(dollars in thousands)
For the three months ended March 31, 1997 compared to 1996
Increase (decrease) due to change in:
Average Average
Volume* Yield Net**
Interest income
Cash equivalents and
investment securities $ 36 $ 91 $ 127
Commercial loans and leases 676 (31) 645
Real estate loans 1,467 (70) 1,397
Total interest income 2,179 (10) 2,169
Interest expense
Deposits 78 (79) (1)
Notes payable 1,802 (190) 1,612
Subordinated debt (6) 138 132
Total interest expense 1,874 (131) 1,743
Net interest income $ 305 $ 121 $ 426
* Average monthly balances
** Changes in interest income and interest expense due to changes
in rate and volume have been allocated to "change in average
volume" and "change in average rate" in proportion to the
absolute dollar amounts in each.
<PAGE>
TABLE 3
Nonperforming assets
(dollars in thousands)
March 31, Dec. 31, Sept. 31, June 30, March 31,
1997 1996 1996 1996 1996
Real estate owned $ 377 $ 377 $ 518 $ 547 $1,621
Non-accruing $2,731 $2,601 $1,282 $1,370 $1,762
Restructured $5,098 $5,147 $4,115 $4,145 $4,124
<PAGE>
INTEREST BEARING LIABILITIES
Interest Bearing liabilities
(dollars in thousands)
3/31/97 12/31/96 % Change
Deposits $ 84,823 $ 88,620 (4.3%)
Lines of credit 156,500 224,500 (30.3%)
Term debt 226,907 202,137 12.3%
Subordinated debt 182,835 182,853 0.0%
Total $651,065 $ 698,110 (6.7%)
Interest-bearing liabilities decreased $47 million to $651.1 million at
March 31,1997 from $698.1 million at December 31, 1996.
For the first three months of 1997, deposits at NCB Saving Bank, FSB
dropped 4.3% to $84.8 million due to scheduled maturities of the certificates
of deposits. Average maturity of the remaining deposits is 13.0 months.
At March 31,1997, short term borrowings decreased 30.3% as a result of a
$67.5 million payoff against the revolving lines. The term debt increased
12.3% due to the issuance of $25 million under the new medium-term note
program. Included in these borrowings are NCB's short-term borrowings from
its cooperative customers which have an outstanding balance of $8.5 million
at March 31, 1997.
<PAGE>
Part II OTHER INFORMATION
Item 2. Changes in Securities
(c) During the period covered by this report, NCB sold one share
of its Class C stock without registration under the Securities
Act of 1933 Act (the "1933 Act") in reliance on the exemption
from registration provided by section 4(2) of the 1933 Act. The
stock was sold on January 2, 1997 for $100 a share in cash without
any underwriting discounts or commissions to cooperative
organizations eligible to obtain loans from NCB. The stock was not
offered to the general public; the purchasers had access to
essentially the same information that would be contained in a
registration statement and had the capability to evaluate the
merits of such an investment.
Item 4 Submission of Matters to a Vote of Security-Holders
NCB held its annual meeting on April 24, 1997. Shareholders elected the
following persons to serve as directors:
Kirby J. Erickson
Jackie Jenkins-Scott
Peter C. Young
Thomas K. Zaucha
The following directors continued in office after this meeting:
Leo H. Barlow
Harry J. Bowie
James L. Burns, Jr.
Joseph Cabral
Marilyn J. McQuiade
Michael J. Mercer (elected by the Board of Directors on January 31, 1997 to
replace Pete Crear who resigned on November 27, 1996)
Alfred A. Plamann
Mary Ann Rotham
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
Exhibit 10.2 - Fleet Loan Argeement
Exhibit 27 - Financial Data Schedule
(c) On February 11, 1997, the registrant filed a report on Form
8-K that reported and included as and exhibit a revised Form
of Floating Rate Note.
SIGNATURE
Pursant 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.
National Consumer Cooperative Bank
Date:
By: /s/ Richard L. Reed
Richard L. Reed
Managing Director,
Chief Financial Officer
By: /s/ Marietta J. Orcino
Marietta J. Orcino
Vice President,
Tax & Regulatory Compliance
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 7,645,543
<INT-BEARING-DEPOSITS> 14,126,200
<FED-FUNDS-SOLD> 2,356,992
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 29,815,426
<INVESTMENTS-CARRYING> 2,895,783
<INVESTMENTS-MARKET> 0
<LOANS> 702,549,687
<ALLOWANCE> 16,205,949
<TOTAL-ASSETS> 802,214,889
<DEPOSITS> 84,823,065
<SHORT-TERM> 156,500,000
<LIABILITIES-OTHER> 24,153,391
<LONG-TERM> 409,742,203
0
0
<COMMON> 100,340,501
<OTHER-SE> 222,260
<TOTAL-LIABILITIES-AND-EQUITY> 802,214,889
<INTEREST-LOAN> 15,371,167
<INTEREST-INVEST> 1,085,457
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 16,456,624
<INTEREST-DEPOSIT> 1,032,953
<INTEREST-EXPENSE> 10,196,112
<INTEREST-INCOME-NET> 6,620,512
<LOAN-LOSSES> 702,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 5,084,097
<INCOME-PRETAX> 3,985,499
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,648,352
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 145.40
<LOANS-NON> 2,731,394
<LOANS-PAST> 303,708
<LOANS-TROUBLED> 5,097,989
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 15,504,510
<CHARGE-OFFS> 16,737
<RECOVERIES> 16,176
<ALLOWANCE-CLOSE> 16,205,949
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 16,205,949
</TABLE>
FLEET LOAN AGREEMENT
AGREEMENT, made this 31st day of January, 1997, by and
between:
NATIONAL CONSUMER COOPERATIVE BANK, a corporation chartered by
Act of Congress of the United States which conducts business under
the trade name National Cooperative Bank (the "Borrower"); and
FLEET BANK, N.A., a national banking association, ("Fleet");
W I T N E S S E T H :
WHEREAS:
(A) The Borrower, the banks signatory thereto (the "Banks")
and Fleet Bank, N.A., as Agent for itself and the Banks entered
into a certain Second Amended and Restated Loan Agreement dated as
of December 15, 1993, which was amended pursuant to (i) Amendment
No. 1 to Second Amended and Restated Loan Agreement dated as of
December 12, 1994, (ii) Amendment No. 2 to Second Amended and
Restated Loan Agreement dated as of December 11, 1995, (iii)
Amendment No. 3 to Second Amended and Restated Loan Agreement dated
as of May 30, 1996, and (iv) Amendment No. 4 to Second Amended and
Restated Loan Agreement dated as of December 20, 1996 (as so
amended and as it may hereafter be further amended, modified or
supplemented, the "Banks' Loan Agreement") pursuant to which the
Banks made available to the Borrower a revolving credit facility in
the aggregate principal amount set forth therein;
(B) The Borrower wishes to have available to it a line of
credit from Fleet in the principal amount of up to Forty Million
($40,000,000) Dollars and Fleet is willing to make available to the
Borrower such a line of credit on the terms and conditions herein-
after set forth; and
(C) Unless the context otherwise requires, all capitalized
terms used in this Agreement without definition that are defined in
the Banks' Loan Agreement shall have the meanings provided therefor
in the Banks' Loan Agreement. Certain terms used herein are defined
for the purposes of this Agreement in Article 1 below.
<PAGE>
NOW, THEREFORE, the parties hereto agree as follows:
Article 1. Definitions.
As used in this Agreement, the following terms shall have the
following meanings:
Banks' Loan Agreement: as defined in Recital (A) hereof.
Fleet Commitment Fee: as defined in subsection 2.7(b) hereof.
Fleet Credit Period: the period commencing on the date of
this Agreement and ending on the Fleet Credit Termination Date.
Fleet Credit Termination Date: May 28, 1997.
Fleet Fee: as defined in subsection 2.7(a) hereof.
Fleet Loans: as defined in Section 2.1 hereof.
Fleet Loan Documents: collectively, this Agreement, the Fleet
Note, and all other documents executed and delivered in connection
herewith or therewith, including all amendments, modifications and
supplements of or to all such documents.
Fleet Note: as defined in Section 2.4 hereof.
Line of Credit Availability: $40,000,000 as such amount may
be reduced from time to time pursuant to the terms of this
Agreement.
Obligations: all of the indebtedness, liabilities and
obligations of the Borrower to Fleet, whether now existing or
hereafter arising, under the Fleet Loan Documents.
Article 2. Fleet Loans.
Section 2.1 Fleet Loans.
Subject to the terms and conditions of this Agreement, Fleet
hereby agrees to hold available for the use of the Borrower during
the Fleet Credit Period (to and including the Fleet Credit
Termination Date), a line of credit (the "Line of Credit") in an
aggregate principal amount at any one time outstanding up to, but
not exceeding, the Line of Credit Availability as then in effect.
The Line of Credit shall consist of short-term loans (individually,
a "Fleet Loan" and, collectively, the "Fleet Loans"). Subject to
the terms of this Agreement and the Banks' Loan Agreement, during
the Fleet Credit Period the Borrower may borrow, prepay (as
provided in Section 2.9 of the Banks' Loan Agreement and provided
further that prepayment of Fixed Rate Loans shall be subject to the
provisions of Section 2.24 of the Banks' Loan Agreement) and
reborrow up to the amount of the Line of Credit Availability as
then in effect by means of Prime Rate Loans, Fed Funds Loans or
Fixed Rate Loans, and during such period the Borrower may convert
Fleet Loans of one type into Fleet Loans of another type (as
provided in Section 2.8 of the Banks' Loan Agreement).
Section 2.2 Notices Relating to Fleet Loans.
The Borrower shall give Fleet written notice of each borrowing,
reborrowing, conversion and prepayment of each Fleet Loan and
of the duration of each Interest Period applicable to each Fixed
Rate Loan and the termination or reduction of the Line of Credit
Availability (in each case, a "Borrowing Notice"), all as provided
in Section 2.3 of the Banks' Loan Agreement (provided that each
reference in such Section 2.3 to the "Agent" shall be deemed herein
to be a reference to Fleet).
Section 2.3 Disbursement of Loan Proceeds.
The Borrower shall give Fleet notice of each borrowing
hereunder as provided in Section 2.2 hereof. Fleet shall disburse
such sums to the Borrower by depositing in immediately available
funds the amount thereof in an account of the Borrower designated
by the Borrower maintained with Fleet.
Section 2.4 Fleet Note.
The Fleet Loans shall be evidenced by a single promissory note
of the Borrower payable to the order of Fleet and dated the date of
this Agreement. The promissory note shall be in the principal
amount of Forty Million ($40,000,000) Dollars and shall be in the
form of Exhibit A annexed hereto (the "Fleet Note").
Section 2.5 Repayment of Principal of Fleet Loans.
The aggregate outstanding principal amount of the Fleet Loans
shall be payable, together with all accrued interest thereon, in a
single installment on the Fleet Credit Termination Date.
Section 2.6 Interest.
(a) The Borrower shall pay to Fleet interest on the unpaid
principal amount of the Fleet Loans for the period commencing on
the date that each Fleet Loan is made until such Fleet Loan is paid
in full, at the rates per annum (including, if applicable, the
Post-Default Rate) and on the dates set forth in, and as calculated
in, the Banks' Loan Agreement; provided, however, notwithstanding
the penultimate paragraph of Section 2.12 of the Banks' Loan
Agreement, the Borrower shall, regardless of the aggregate amount
of all outstanding Fleet Loans, pay to the Bank Additional Interest
at the rate of 0.5% per annum with respect to all outstanding Fleet
Loans which are Fed Fund Loans or Fixed Rate Loans.
(b) Anything in this Agreement or the Fleet Note to the
contrary notwithstanding, the obligation of the Borrower to make
payments of interest shall be subject to the limitation that
payments of interest shall not be required to be made to Fleet to
the extent that Fleet's receipt thereof would not be permissible
under the law or laws applicable to Fleet limiting rates of inter-
est which may be charged or collected by Fleet. Any such payments
of interest which are not made as a result of the limitation
referred to in the preceding sentence shall be made by the Borrower
to Fleet on the earliest interest payment date or dates on which
the receipt thereof would be permissible under the laws applicable
to Fleet limiting rates of interest which may be charged or
collected by Fleet. Such deferred interest shall not bear
interest.
Section 2.7 Fleet Fees.
(a) Simultaneously with the execution and delivery of this
Agreement, the Borrower shall pay to Fleet a facility fee (the
"Fleet Fee") as set forth in a separate written agreement between
the Borrower and the Bank.
(b) The Borrower shall pay to Fleet a commitment fee (the
"Fleet Commitment Fee") on the amount of the Line of Credit
Availability from the date hereof to and including the earlier of
the date the Line of Credit Availability is terminated or the Fleet
Credit Termination Date, at the rate of .125% per annum on the Line
of Credit Availability. The accrued Fleet Commitment Fee shall be
payable quarterly commencing on March 31, 1997 and on the Fleet
Credit Termination Date.
Section 2.8 Use of Proceeds of Fleet Loans.
The proceeds of the Fleet Loans shall be used by the Borrower
for general corporate and working capital purposes.
Section 2.9 Computations.
Interest on the Fleet Loans and the Fleet Commitment Fee shall
be computed on the basis of a year of 360 days and actual days
elapsed (including the first day but excluding the last) occurring
in the period for which payable.
Section 2.10 Minimum Amounts of Borrowings,
Conversions and Prepayments.
Except for borrowings, conversions and prepayments which
exhaust the full remaining amount of the Line of Credit Availability
(in the case of borrowings) or result in the conversion or
prepayment of all Fleet Loans of a particular type (in the case of
conversions or prepayments) or conversions made pursuant to Section
2.23 of the Banks' Loan Agreement, each borrowing, each conversion
of Fleet Loans of one type into Fleet Loans of another type and
each prepayment of principal of Fleet Loans hereunder shall be in
an amount at least equal to One Million ($1,000,000) Dollars or a
multiple of $1,000,000 (borrowings, conversions and prepayments of
different types of Fleet Loans at the same time hereunder to be
deemed separate borrowings, conversions and prepayments for
purposes of the foregoing, one for each type).
Section 2.11 Time and Method of Payments.
All payments of principal, interest, fees and other charges
(including indemnities) payable by the Borrower hereunder shall be
made in Dollars, in immediately available funds, to Fleet as set
forth in the Banks' Loan Agreement (and Fleet may, but shall not be
obligated to, debit the amount of any such payment that is not made
as provided in the Banks' Loan Agreement to any ordinary deposit
account of the Borrower with Fleet). Additional provisions
relating to payments are set forth in Section 10.3 of the Banks'
Loan Agreement and are incorporated by reference herein.
Section 2.12 Reductions in Line of Credit Availability.
The Borrower shall be entitled to reduce or termi-nate the
Line of Credit Availability provided that the Borrower shall give
notice of such reduction or termination to the Bank as provided in
Section 2.3 of the Banks' Loan Agreement and any partial reduction
of the Line of Credit Availability shall be in an aggregate amount
equal to Ten Million ($10,000,000) Dollars or an integral multiple
thereof. Any such reduction shall be permanent and irrevocable.
Section 2.13 Incorporation of Certain Provisions.
The provisions of Sections 2.19 through 2.24 inclusive of the
Banks' Loan Agreement and all other sections of the Banks' Loan
Agreement to which such Sections 2.19 through 2.24 refer are hereby
incorporated by reference as if the provisions thereof were set
forth in full herein.
Article 3. Representations and Warranties.
The Borrower hereby represents and warrants to Fleet that:
Section 3.1 Article 3 of Banks' Loan
Agreement; No Defaults.
(a) Each and every one of the representations and warranties
set forth in Article 3 of the Banks' Loan Agreement is true in all
respects as of the date hereof, except for changes in the ordinary
course of business, which, either singly or in the aggregate, are
not materially adverse to the business or financial condition of
the Borrower.
(b) As of the date hereof, there exists no Event of Default
under the Banks' Loan Agreement, and no event which, with the
giving of notice or lapse of time or both, would constitute such an
Event of Default.
Section 3.2 Power, Authority, Consents.
The Borrower has the power to execute, deliver and perform the
Fleet Loan Documents to be executed by it. The Borrower has the
power to borrow hereunder and has taken all necessary action to
authorize the borrowing hereunder on the terms and conditions of
this Agreement. The Borrower has taken all necessary action,
corporate or otherwise, to authorize the execution, delivery and
performance of the Fleet Loan Documents to be executed by it. No
consent or approval of any Person (including, without limitation,
any stockholder of the Borrower), no consent or approval of any
landlord or mortgagee, no waiver of any Lien or right of distraint
or other similar right and no consent, license, approval, authorization
or declaration of any governmental authority, bureau or
agency, is or will be required in connection with the execution,
delivery or performance by the Borrower, or the validity or
enforcement of the Fleet Loan Documents.
Section 3.3 No Violation of Law or Agreements.
The execution and delivery by the Borrower of each Fleet Loan
Document and performance by it hereunder and thereunder, will not
violate any provision of law and will not, conflict with or result
in a breach of any order, writ, injunction, ordinance, resolution,
decree, or other similar document or instrument of any court or
governmental authority, bureau or agency, domestic or foreign, or
any certificate of incorporation or by-laws of the Borrower or
create (with or without the giving of notice or lapse of time, or
both) a default under or breach of any agreement, bond, note or
indenture to which the Borrower is a party, or by which the
Borrower is bound or any of its properties or assets is affected,
or result in the imposition of any Lien of any nature whatsoever
upon any of the properties or assets owned by or used in connection
with the business of the Borrower.
Section 3.4 Due Execution, Validity, Enforceability.
This Agreement and each other Fleet Loan Document has been
duly executed and delivered by the Borrower and each constitutes
the valid and legally binding obligation of the Borrower, enforceable
in accordance with its terms, except as such enforcement may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or other similar laws, now or hereafter in effect,
relating to or affecting the enforcement of creditors' rights
generally and except that the remedy of specific performance and
other equitable remedies are subject to judicial discretion.
Article 4. Conditions Precedent to the Fleet Loans.
The obligation of Fleet to make the Fleet Loans hereunder
shall be subject to the fulfillment (to the satisfaction of Fleet)
of the following conditions precedent:
(a) The Borrower shall have executed and delivered to Fleet
this Agreement and the Fleet Note.
(b) Fleet shall have received the Fleet Fee.
(c) Fleet shall have received a Compliance Certificate from
the Borrower dated the date hereof and the matters certified
therein, including, without limitation, that after giving effect to
the terms and conditions of this Agreement, no Default or Event of
Default shall exist, shall be true.
(d) Shea & Gardner, counsel to the Borrower, shall have
delivered its legal opinion to Fleet, in form and substance
satisfactory to Fleet and its counsel.
(e) Fleet shall have received copies of the following:
(i) All corporate action taken by the Borrower to
authorize the execution, delivery and performance of this
Agreement, the Fleet Note and the transactions contemplated hereby,
certified by its secretary;
(ii) A certificate from the secretary of the Borrower to
the effect that the By-laws of the Borrower delivered to Fleet
Bank, N.A., as Agent pursuant to the Banks' Loan Agreement have not
been amended since the date of such delivery and that such document
is in full force and effect and is true and correct as of the date
hereof; and
(iii) An incumbency certificate (with specimen signatures)
with respect to the Borrower.
(f) All legal matters incident hereto shall be satisfactory
to Fleet and its counsel.
Article 5. Covenants.
From the date hereof and so long as this Agreement shall be
outstanding and until payment in full of all of the Obligations,
the Borrower agrees to comply with and perform each and every
covenant and condition set forth in Articles 5, 6 and 7 of the
Banks' Loan Agreement, which Articles 5, 6 and 7 are hereby
incorporated herein by reference.
Article 6. Events of Default.
If any one or more of the following events ("Events of
Default") shall occur and be continuing, the entire unpaid balance
of the principal of and interest on the Fleet Note and all other
Obligations and indebtedness of the Borrower to Fleet arising
hereunder and under the other Fleet Loan Documents shall
immediately become due and payable upon written notice to that effect
given to the Borrower by Fleet (except that in the case of the
occurrence of any Event of Default described in Section 8.7
of the Banks' Loan Agreement, as such Section 8.7 is hereinafter
incorporated herein by reference, no such notice shall be required),
without presentment or demand for payment, notice of non-payment,
protest or further notice or demand of any kind, all of
which are expressly waived by the Borrower; provided, however, that
in the case of the occurrence of an Event of Default described in
Section 6.1 below, no such notice shall be required after the
passage of ten (10) days after the Grace Period provided for
therein:
Section 6.1 Payments.
Failure to make any payment of principal or interest upon the
Fleet Note or any fee pursuant to this Agreement within three (3)
Business Days after the due date thereof (the "Grace Period"); or
Section 6.2 Other Covenants.
Failure by the Borrower to perform or observe any other term,
condition or covenant of this Agreement or of any of the other
Fleet Loan Documents to which it is a party, which shall remain
unremedied for a period of fifteen (15) days after notice thereof
shall have been given to the Borrower by Fleet; or
Section 6.3 Other Events of Default.
An Event of Default (as defined in the Banks' Loan Agreement)
shall occur and be continuing under the Banks' Loan Agreement,
(provided in the event the Banks' Loan Agreement is terminated for
any reason whatsoever or the indebtedness thereunder is paid in
full, the covenants contained in Articles 5, 6 and 7 of the Banks'
Loan Agreement and the Events of Default defined in Article 8 of
the Banks' Loan Agreement, together with the definitions of all of
the defined terms used therein and all other portions of the Banks'
Loan Agreement to which reference is made in such Articles, will be
incorporated by reference and the same shall be applicable herein,
mutatis mutandis, and will be deemed to continue in effect until
this Agreement is terminated and all of the Obligations under this
Agreement are fully paid and performed).
Article 7. Miscellaneous Provisions.
Section 7.1 Miscellaneous Provisions
Incorporated by Reference.
The miscellaneous provisions under Article 10 of the Banks'
Loan Agreement and all other sections of the Banks' Loan Agreement
to which Article 10 refers are hereby incorporated by reference as
if the provisions thereof were set forth in full herein.
<PAGE>
Section 7.2 References in the Banks' Loan Agreement.
All references in the Banks' Loan Agreement to the "Agent" or
the "Banks", to the extent that such references are incorporated
herein, shall be deemed references hereunder to Fleet.
Section 7.3 Incorporation of Banks' Loan Agreement.
Any term or provision of the Banks' Loan Agreement, as in
effect on the date of this Agreement, which has been incorporated
herein by reference and which is hereafter amended or modified,
shall unless the parties hereto otherwise agree in writing,
automatically be incorporated herein as so amended, from and after
the effective date of any such amendment, without the necessity of
the execution and delivery of any instrument or document or the
taking of any action.
Section 7.4 Counterparts.
This Agreement may be signed in any number of counterparts
with the same effect as if the signatures thereto and hereto were
upon the same instrument.
Section 7.5 Binding Effect; No Assignment or Delegation.
This Agreement shall be binding upon and inure to the benefit
of the Borrower and its successors and to the benefit of Fleet and
its successors and assigns. The rights and obligations of the
Borrower under this Agreement shall not be assigned
or delegated without the prior written consent of Fleet, and any
purported assignment or delegation without such consent shall be
void.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
<PAGE>
NATIONAL CONSUMER COOPERATIVE BANK,
D/B/A NATIONAL COOPERATIVE BANK
By:________________________________
Title
FLEET BANK, N.A.
By
Title
<PAGE>
EXHIBIT A
TO FLEET LOAN AGREEMENT
BY AND BETWEEN
NATIONAL CONSUMER COOPERATIVE BANK
AND
FLEET BANK, N.A.
FORM OF FLEET NOTE
$40,000,000 Due May 28, 1997
New York, New York
FOR VALUE RECEIVED, NATIONAL CONSUMER COOPERATIVE BANK D/B/A
NATIONAL COOPERATIVE BANK (the "Borrower"), hereby promises to pay
to the order of FLEET BANK, N.A. (the "Bank") the principal sum of
FORTY MILLION ($40,000,000) DOLLARS (or such lesser amount as shall
equal the aggregate unpaid principal amount of the Fleet Loans made
by the Bank under the Loan Agreement hereinafter defined, shown on
the schedule annexed hereto and any continuation thereof), in
lawful money of the United States of America and in immediately
available funds on the date or dates determined as provided in the
Loan Agreement but in no event later than May 28, 1997.
The Borrower further promises to pay to the order of the Bank
interest on the unpaid principal amount of each Fleet Loan from the
date such Fleet Loan is made until paid in full, payable at such
rates and at such times as provided for in the Loan Agreement.
The Bank has been authorized by the Borrower to record on the
schedules annexed to this Note (or on any continuation thereof) the
amount, type, due date and interest rate of each Fleet Loan made by
the Bank under the Loan Agreement and the amount of each payment or
prepayment of principal and the amount of each payment of interest
of each such Fleet Loan received by the Bank, it being understood,
however, that failure to make any such notation shall not affect
the rights of the Bank or the obligations of the Borrower hereunder
or under the Loan Agreement in respect of such Fleet Loans. Such
notations shall be deemed correct, absent manifest error.
This Note is the Fleet Note referred to in the Fleet Loan
Agreement dated as of the date hereof (the "Loan Agreement")
between the Borrower and the Bank and evidences the Fleet Loans
made by the Bank thereunder. Capitalized terms used in this Note
have the respective meanings assigned to them in the Loan Agreement.
Upon the occurrence of an Event of Default under the Loan
Agreement, the principal hereof and accrued interest hereon shall
become, or may be declared to be, forthwith due and payable in the
manner, upon the conditions and with the effect provided in the
Loan Agreement.
The Borrower may at its option prepay all or any part of the
principal of this Note before maturity upon and subject to the
terms provided in the Loan Agreement.
The Borrower agrees to pay costs of collection and reasonable
attorneys' fees in case default occurs in the payment of this Note.
Presentment for payment, notice of dishonor, protest and
notice of protest are hereby waived.
This Note has been executed and delivered this ____ day of
January, 1997 in New York, New York, and shall be construed in
accordance with and governed by the internal laws of the State of
New York.
NATIONAL CONSUMER COOPERATIVE BANK
D/B/A NATIONAL COOPERATIVE BANK
By:________________________________
Title
<PAGE>
SCHEDULE TO FLEET NOTE
MADE BY NATIONAL CONSUMER COOPERATIVE BANK
IN FAVOR OF FLEET BANK, N.A.
This Note evidences the Fleet Loans made under the within
described Agreement, in the principal amounts, of the types (Prime
Rate Loans, Fed Funds Loans, CD Loans or LIBOR Loans) and on the
dates set forth below, subject to the payments or prepayments set
forth below:
<TABLE>
Prin. Int. Amt of
<S> <C> <C> <C> <C> <C> <C> <C>
Date Made Amt of Type of Due Date Rate on Payment or Balance Notation
or Converted Loan Loan of Loan Loan Prepayment Outstanding made by
</TABLE>
