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 June 30, 1999 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 June 30, 1999
Class C 221,996
(Common stock, $100.00 par value)
Class B 922,096
(Common stock, $100.00 par value)
Class D 3
(Common stock, $100.00 par value)
National Consumer Cooperative Bank
(doing business as National Cooperative Bank)
and Subsidiaries
INDEX
PART I FINANCIAL INFORMATION
Page No.
Item 1 Consolidated balance sheets - June 30,
1999 and December 31, 1998 ............ 4
Consolidated statements of income - for
the three and six months ended June 30, 1999
and 1998............................... 5
Consolidated statements of comprehensive
income - for the six months ended
June 30, 1999 and 1998................. 6
Consolidated statements of cash flows -
for the six months ended
June 30, 1999 and 1998................. 7-8
Condensed notes to the consolidated
financial statements - June 30,
1999.................................... 9-16
Item 2 Management's discussion and analysis
of financial condition and results of
operations - for the three and six months
ended June 30, 1999 and 1998........... 17-28
Item 3 Quantitative and qualitative disclosures
about market risk...................... 28
PART II OTHER INFORMATION
Item 6 Exhibits ............................. 28
Exhibit 10-21 - Amendment No. 2 to Third Amended and
Restated Loan Agreement with Fleet Bank as Agent
Exhibit 10-22 - First Amendment to Term Loan Agreement
with Greenwich Funding Corporation and Credit Suisse
First Boston
Exhibit 10-27 - Executive Long-Term Incentive Plan
Exhibit 27 - Financial Data Schedule
NATIONAL COOPERATIVE BANK
CONSOLIDATED BALANCE SHEETS
June 30, 1999 and December 31, 1998
(Unaudited)
June 30, December 31,
Assets 1999 1998
Cash and cash equivalents $ 40,898,668 $ 66,563,160
Restricted cash 5,690,096 13,202,725
Investment securities
Available-for-sale 32,994,837 39,127,948
Held-to-maturity 2,726,716 2,892,312
Loans held for sale 200,556,806 184,000,331
Loans and lease financing 793,019,180 611,174,140
Less: Allowance for loan losses (18,457,847) (17,426,450)
Net loans and lease financing 774,561,333 593,747,690
Other assets 40,012,268 33,881,044
Total assets $1,097,440,724 $933,415,210
Liabilities and Member's Equity
Liabilities
Deposits $ 118,961,902 $123,419,544
Patronage dividends payable in
cash 8,312,823 5,275,325
Other liabilities 18,413,916 29,872,655
Borrowings
Short-term 367,053,527 220,652,186
Long-term 256,283,953 231,193,174
623,337,480 451,845,360
Subordinated debt 182,667,320 182,706,417
Total borrowings 806,004,800 634,551,777
Total liabilities 951,693,441 793,119,301
Members' equity
Common stock
Class B 92,209,648 92,209,648
Class C 22,199,604 22,199,604
Class D 300 300
Retained earnings
Allocated 10,625,930 7,245,656
Unallocated 17,851,157 17,097,102
Accumulated other comprehensive
income 2,860,644 1,543,599
Total members' equity 145,747,283 140,295,909
Total liabilities and members'
equity $1,097,440,724 $933,415,210
NATIONAL COOPERATIVE BANK
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Six Months Ended Three Months Ended
June 30, June 30,
1999 1998 1999 1998
Interest income
Loans and lease financing $35,429,714 $32,257,380 $18,415,896 $16,395,484
Investments securities 2,706,871 3,014,790 1,218,099 1,500,049
Total interest income 38,136,585 35,272,170 19,633,995 17,895,533
Interest expense
Deposits 2,840,310 2,122,364 1,389,586 1,131,042
Short-term borrowings 7,178,910 6,689,079 3,595,484 3,567,391
Long-term debt, other
borrowings and
subordinated debt 13,319,661 13,170,918 7,489,756 6,760,332
Total interest expense 23,338,881 21,982,361 12,474,826 11,458,765
Net interest income 14,797,704 13,289,809 7,159,169 6,436,768
Provision for loan losses 835,036 782,881 417,536 430,002
Net interest income after
provision for loan losses 13,962,668 12,506,928 6,741,633 6,006,766
Non-interest income
Gain on sale of loans 3,756,363 3,921,355 3,691,893 291,233
Loan and deposit
servicing fees 1,319,608 1,252,183 599,013 638,218
Other 2,577,823 2,403,555 1,721,661 1,124,211
Total non-interest
income 7,653,794 7,577,093 6,012,567 2,053,662
Non-interest expense
Compensation and
employee benefits 7,478,528 7,840,291 3,864,642 4,021,268
Contractual services 2,105,342 1,938,536 1,038,296 1,021,556
Occupancy and equipment 2,281,927 2,133,897 1,232,147 1,184,866
Contribution to NCB
Development Corporation 200,000 - 150,000 -
Other 1,400,216 1,313,623 793,836 776,532
Total non-interest
expense 13,466,013 13,226,347 7,078,921 7,004,222
Income before income
taxes 8,150,449 6,857,674 5,675,279 1,056,206
Provision for income taxes 727,596 669,874 403,182 377,341
Net income $ 7,422,853 $ 6,187,800 $ 5,272,097 $ 678,865
Distribution of net income
Patronage dividends $ 7,422,853 $ 6,187,800 $ 5,272,097 $ 678,865
Retained earnings - - - -
$ 7,422,853 $ 6,187,800 $ 5,272,097 $ 678,865
NATIONAL COOPERATIVE BANK
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
For the six months ended June 30, 1999 1998
Net income $7,422,853 $6,187,800
Other comprehensive income, net of tax:
Net unrealized holding
gains before tax 1,317,045 193,517
Comprehensive income $8,739,898 $6,381,317
NATIONAL COOPERATIVE BANK
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the six months ended June 30, 1999 1998
Cash flows from operating activities
Net income $ 7,422,853 $ 6,187,800
Adjustments to reconcile net income to net cash
provided by (used in) operating activities
Provision for loan losses 835,035 782,881
Depreciation and amortization 2,802,052 2,516,843
Gain on sale of loans (4,345,651) (3,921,355)
Loans originated for sale (143,984,908) (315,866,638)
Proceeds from sale of loans
held for sale 131,774,082 230,613,858
Increase in other assets (6,868,407) (1,195,459)
(Decrease) increase in other
liabilities (11,458,739) 2,231,203
Net cash used in operating
activities (23,823,683) (78,650,867)
Cash flows from investing activities
Redemption of restricted cash 7,512,629 1,003,495
Purchases of premise and
equipment (421,096) -
Purchase of investment securities
Available-for-sale (1,000,000) -
Proceeds from maturities of investments
securities
Available-for-sale 6,558,083 10,913,301
Held-to-maturity 165,596 -
Net increases in loans and
lease financing (191,831,996) (14,525,039)
Proceeds from sale of portfolio
loans 10,483,123 8,156,400
Net cash (used in) provided by
investing activities (168,533,661) 5,548,157
Cash flows from financing activities
Net (decrease) increase
in deposits (4,457,641) 24,838,171
Net increase in short-term
borrowings 146,401,341 64,466,340
Proceeds from issuance of
long-term debt 45,000,000 34,800,078
Repayment on long term debt (20,000,000) (21,000,000)
Dividends paid (250,848) (250,112)
Net cash provided by financing
activities 166,692,852 102,854,477
(Decrease) increase in cash and
cash equivalents (25,664,492) 29,751,767
Cash and cash equivalents,
beginning of year 66,563,160 21,689,245
Cash and cash equivalents,
end of period $ 40,898,668 $ 51,441,012
NATIONAL COOPERATIVE BANK
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Supplemental schedule of investing and financing activities:
For the six months ended June 30, 1999 1998
Unrealized gain on investment
available-for-sale $ 1,317,045 $ 193,518
Interest paid $23,374,647 $21,502,177
Income taxes paid $ 614,694 $ 600,000
Loans charged off $ 52,739 $ 1,272,829
NATIONAL COOPERATIVE BANK
CONDENSED NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
June 30, 1999
(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 National
Cooperative Bank's (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 June 30, 1999, NCB's portfolios of investment
securities, cash and cash equivalents had an average adjusted
maturity of approximately two years with interest rates in those
portfolios varying from 4.15% to 8.38%.
Cash and Investments Investments
Cash Available- Held-to-
Equivalents for-Sale Maturity
Cash $ 7,760,031 $ - $ -
Federal funds 2,707,381 - -
Money market
securities 30,081,256 713,936 -
Private debt
security - - 784,404
Mutual funds - 1,520,587 -
Certificates of
deposits 350,000 - -
Mortgage-backed
securities - - 1,942,312
Corporate bonds - 4,278,226 -
U.S. Treasury and Agency
obligations - 1,484,060 -
Interest-only
receivables - 24,998,028 -
$40,898,668 $32,994,837 $ 2,726,716
At June 30, 1999, the investments in the available-for-sale
portfolio were recorded at aggregate fair value. Restricted cash
of $5,690,096 is held by a trustee for the benefit of certificate
holders in the event of a loss on certain loans sold in 1992 and
1993, the remaining balance of which totalled $41,936,184 and
$49,256,028, 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. In January 1999, $7,512,630
of the restricted cash account was replaced by a letter of
credit.
Interest-only receivables substantially pertain to blanket
loans to cooperative housing corporations.
2. Loans and Lease Financing
Loans and leases outstanding by category at June 30, 1999
were:
Commercial loans $481,353,150
Lease financing 51,266,948
Real estate loans
Residential 453,753,033
Commercial 7,202,855
$993,575,986
At June 30, 1999 and December 31, 1998 loans held for sale
were $200.6 million and $184.0 million, respectively.
3. Impaired Assets
Impaired loans, representing the nonaccrual loans at June 30,
1999 and December 31, 1998, totalled $700,669 and $2,384,691,
respectively, and averaged $1,535,670 and $3,097,000 during the
respective periods ending on these dates. Specific allowances of
$350,334 and $557,267 were established at June 30, 1999 and
December 31, 1998, respectively. During 1999 and 1998, the
interest collected on the nonaccrual loans was applied to reduce
the outstanding principal.
At June 30, 1999 and December 31, 1998, there were no
commitments to lend additional funds to borrowers whose loans are
impaired.
At June 30, 1999 and December 31, 1998, NCB had real estate
acquired through foreclosure of $3,334,465 and $4,342,739,
respectively, which is 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 six months ended June 30, 1999:
Balance at January 1, 1999 $17,426,450
Provision for loan losses 835,036
Charge-offs (52,739)
Recoveries of loans previously
charged-off 249,100
Balance at June 30, 1999 $18,457,847
The allowance for loan losses as a percentage of loans and
lease financing at June 30, 1999 was 1.9%.
5. Statement of Changes in Members' Equity
The following is a summary of the activity in members' equity at June 30,
1999:
<TABLE>
Retained Retained Total
Common Earnings Earnings Unrealized Members'
Stock Allocated Unallocated Gain(Loss) Equity
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1998 $114,409,552 $ 7,245,656 $17,097,102 $1,543,599 $140,295,909
Net income - - 7,422,853 - 7,422,853
Other dividends declared - - (250,885) - (250,885)
1999 patronage dividends
to be distributed in cash - - (3,037,639) - (3,037,639)
Retained in form of equity - 3,380,274 (3,380,274) - -
Unrealized gain on investment
securities available-for-
sale - - - 1,317,045 1,317,045
Balance, June 30, 1999 $114,409,552 $10,625,930 $17,851,157 $2,860,644 $145,747,283
</TABLE>
6. SEGMENT REPORTING
NCB's reportable segments are strategic business units that
provide diverse products and services within the financial
services industry. NCB has four reportable segments: commercial
lending, real estate lending, NCB Savings Bank and other. The
commercial lending segment provides financial services to
cooperative and member-owned businesses. The real estate lending
segment originates, sells and services real estate loans
nationally, with a concentration in New York City. NCB Savings
Bank segment provides traditional banking services such as
lending and deposit gathering to retail, corporate and
commercial customers. "Other" consists of NCB's unallocated
parent company income and expense, and net interest income from
investments and corporate debt after allocations to segments.
NCB evaluates segment performance based on net income before
taxes. The accounting policies of the segments are substantially
the same as those described in the summary of significant
accounting policies in the most recent annual report. Overhead
and support expenses are allocated to each operating segment
based on number of employees, and other factors relevant to
expenses incurred. Also included in overhead and support is
depreciation allocated based on equipment usage.
The following is the segment reporting for the six months
ended June 30, 1999 and 1998 (dollars in thousands):
1999 Commercial Real Estate NCBSB Other NCB
Lending Lending Consolidated
Net interest income
Interest income $ 17,382 $ 12,318 $ 5,279 $ 3,158
Allocated interest
expense 12,264 8,352 - (20,616)
Interest expense - - 3,052 20,287
Net interest
income 5,118 3,966 2,227 3,487 $ 14,798
Provision for
loan losses (1,342) 183 85 1,909 835
Non-interest income-
external 1,656 5,748 483 (234) 7,653
Non-interest expense
Direct expense 2,572 2,313 1,344 7,237 13,466
Overhead and
support 404 171 150 (725) -
Total non-interest
expense 2,976 2,484 1,494 6,512 13,466
Income (loss) before
taxes $ 5,140 $ 7,047 $ 1,131 $ (5,168) $ 8,150
Total average assets $396,804 $329,939 $141,576 $133,625 $1,001,944
1998 Commercial Real Estate NCB
Lending Leading NCBSB Other Consolidated
Net interest income
Interest income $ 14,432 $ 13,376 $ 4,076 $ 3,389
Allocated interest
expense 10,583 9,165 - (19,748)
Interest expense - - 2,124 19,859
Net interest income 3,849 4,211 1,952 3,278 $ 13,290
Provision for loan (505) 90 65 1,133 783
Non-interest
income-external 1,674 4,791 367 745 7,577
Non-interest expense
Direct expense 1,920 2,706 1,129 7,471 13,226
Overhead and
support 229 152 148 (529) -
Total non-interest
expense 2,149 2,858 1,277 6,942 13,226
Income (loss) before
taxes $ 3,879 $ 6,054 $ 977 $ (4,052) $ 6,858
Total average assets $350,081 $315,541 $ 99,346 $111,437 $876,405
The following is the segment reporting for the three months
ended June 30, 1999 and 1998 (dollars in thousands):
1999 Commercial Real Estate NCB
Lending Lending NCBSB Other Consolidated
Net interest income
Interest income $ 9,538 $ 5,071 $ 2,842 $ 2,183
Allocated interest
expense 6,777 3,873 - (10,650)
Interest expense - - 1,598 10,877
Net interest income 2,761 1,198 1,244 1,956 $ 7,159
Provision for loan
losses 727 (10) 42 (342) 417
Non-interest income-
external 1,047 5,543 232 (810) 6,012
Non-interest expense
Direct expense 1,424 1,202 682 3,771 7,079
Overhead and
support 287 83 75 (445) -
Total non-interest
expense 1,711 1,285 757 3,326 7,079
Income (loss) before
taxes $ 1,370 $ 5,466 $ 677 $ (1,838) $ 5,675
Total average assets $407,892 $306,668 $151,236 $149,448 $1,015,244
1998 Commercial Real Estate NCB
Lending Lending NCBSB Other Consolidated
Net interest income
Interest income $ 7,439 $ 6,789 $ 2,113 $ 1,556
Allocated interest
expense 5,487 4,906 - (10,393)
Interest expense - - 1,132 10,328
Net interest income 1,952 1,883 981 1,621 $ 6,437
Provision for loan
losses (279) (204) 30 884 431
Non-interest
income-external 801 643 204 406 2,054
Non-interest expense
Direct expense 978 1,635 549 3,842 7,004
Overhead and
support 102 68 98 (268) -
Total non-interest
expense 1,080 1,703 674 3,574 7,004
Income (loss) before
taxes $ 1,952 $ 1,027 $ 508 $ (2,431) $ 1,056
Total average assets $365,458 $319,252 $ 99,955 $114,094 $898,759
7. SUBSEQUENT EVENT
In July 1999, NCB sold approximately $122.7 million of
blanket mortgages. The gain on these sales will be reflected in
the third quarter results.
NATIONAL COOPERATIVE BANK
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
SUMMARY
NCB's net income for the six months ended June 30, 1999 was
$7.4 million. This was a 19.96% or $1.2 million increase
compared with $6.2 million for the six months ended June 30,
1998. The variance resulted primarily from $1.5 million and
$76.7 thousand increases in net interest income and non-interest
income, respectively, which was partially offset by a combined
increase in provision for loan losses and non-interest expense of
$291.8 thousand. For the three month period, net income increased
$4.6 million due primarily to an increase in non-interest income.
Total assets were $1.1 billion at June 30, 1999, up 17.6% or
$164.0 million from $933.4 million at December 31, 1998. This
resulted from an increase in loans held for sale, loans and lease
financing and other assets of $203.5 million partially offset by
a decrease in cash and cash equivalents, restricted cash and
investment securities of $39.5 million.
The annualized return on average total assets was 1.48% for
the first six months of 1999 compared with 1.41% for the same
period in 1998. The annualized return on average equity for the
periods ended June 30, 1999 and 1998 was 10.38% and 9.18%,
respectively.
NET INTEREST INCOME
Net interest income for the first six months of 1999 increased
11.3% or $1.5 million over the same period a year ago. As shown
on Table 1, the net interest spread increased 1 basis point to
2.20% from 2.19% for the six months ended June 30, 1999 while net
interest yield on interest earning assets was 3.07% and 3.12% for
the six months ended June 30, 1999 and 1998, respectively. Table
2 contains more detailed information on the $1.5 million
increase.
For the three months ending June 30, 1999, net interest income
increased 11.2% or $722.4 thousand from the same period in 1998.
As shown on Table 2A, the increase was largely due to an increase
in volume of loans and leases.
For the six months ending June 30, 1999, interest income
increased 8.1% or $2.9 million to $38.1 million from $35.3
million for the prior year's period. As shown on Table 2, an
increase in average volume which was due to growth in real estate
loans (most of which were held for sale) and in the commercial
loan and lease portfolio, was partially offset by a drop in
average yield on real estate loans.
For the three month period ended June 30, 1999, interest
income went up 9.7% or $1.74 million from $17.9 million to $19.6
million. The increase in interest income was mostly due to a
higher average balance of the interest earning assets for the
time period.
Interest expense increased $1.4 million to $23.3 million for
the six months ended June 30, 1999 compared with $22.0 million
for the six months ended June 30, 1998. The interest expense was
up as a result of higher levels of notes payable and deposits.
While interest expense was up due to the higher usage of notes
payable required to fund loan volume and higher level of
deposits, such increase was offset by lower interest rates on
them. As shown on Table 2, a $2.6 million increase in interest
expense was volume related while a $1.3 million decrease was due
to interest rates.
For the second quarter ended June 30, 1999, interest expense
increased 8.9% or $1.0 million to $12.5 million compared with
$11.5 million for the second quarter ended June 30, 1998 due to
increased funding of loans. The average rate on interest bearing
liabilities decreased to 5.96% compared with 6.20% in the same
quarter a year ago.
NON-INTEREST INCOME
Non-interest income for the six months ended June 30, 1999 of
$7.7 million increased 1% or $77.0 thousand from $7.6 million
for the same period last year. Non-interest income is composed of
gains from sales of blanket mortgages and share loans to
secondary market investors, servicing fees, origination fees,
management fees and advisory and debt placement fees. The
majority of the increase resulted from fees received on the
servicing of loans. Servicing fee income for the period ended
June 30, 1999 increased 5.4% or $67.4 thousand to $1.32 million
compared with $1.25 million for the six months ended June 30,
1998 based on loans serviced for others of $1.9 billion and $1.5
billion at June 30, 1999 and 1998, respectively.
Other income for the six months ended June 30, 1999 was up
7.2% to $2.6 million from $2.4 million for the same six months in
the prior year due to gain on sale of a real estate note and
increased excess yield amortization offset by a net decrease in
other loan fees.
For the three month period ended June 30, 1999, non-interest
income increased 192.8% or $3.96 million from $2.05 million for
the same period in 1998. The majority of the increase was
related to the sale of loans to the secondary markets. Loans sold
during the three month period ended June 30, 1999 and 1998 were
$154.0 million and $54.4 million, respectively.
NON-INTEREST EXPENSE
Non-interest expense for the six months ended June 30, 1999
increased 1.8% or $239.7 thousand to $13.5 million compared with
$13.2 million for the six months ended June 30, 1998.
Compensation and benefits, the largest component of non-interest
expense, decreased 4.6% or $361.8 thousand due to a lower
employee base and lower bonus accruals than in the year-earlier
period. Contractual services, occupancy and equipment, and other
expenses increased 7.5% or $401.4 thousand primarily due to
equipment and technology costs, corporate and marketing
development, placement and compensation survey fees.
Excluding the voluntary contributions to NCB Development
Corporation, which was $200 thousand and zero during the first
two quarters of 1999 and 1998, respectively, non-interest expense
as a percentage of average assets decreased to 1.3% for the six
months ended June 30, 1999 compared with 1.5% for the same period
a year ago.
For the three months ended June 30, 1999, non-interest expense
increased 1.1% or $74.7 thousand from $7.0 million for the same
period in 1998. The increase was primarily due to the voluntary
contributions to NCB Development Corporation of $150.0 thousand
partially offset by a decrease of $75.3 thousand of the other
components of non-interest expense.
Table 1
RATE RELATED ASSETS AND LIABILITIES
(dollars in thousands)
Six Months Ended June 30,
1999 1998
ASSETS Average Income/ Yields/ Average Income/ Yields/
Balance Expenses Rate Balance Expenses Rate
Interest earning
assets
Real estate loans $ 473,710 $17,678 7.46% $395,449 $16,498 8.34%
Commercial loans
and leases 402,231 17,752 8.83% 357,019 15,759 8.83%
Total loans and
leases 875,941 35,430 8.09% 752,468 32,257 8.57%
Investment securities
and cash equivalents 87,438 2,707 6.19% 99,367 3,015 6.07%
Total interest
earning assets 963,379 38,137 7.92% 851,835 35,272 8.28%
Allowance for loan
losses (18,037) (17,865)
Non-interest earning assets
Cash 10,955 2,636
Other assets 45,647 39,799
Total non-interest
earning assets 56,602 42,435
Total assets $1,001,944 $876,405
LIABILITIES AND MEMBER'S EQUITY
Interest bearing liabilities
Subordinated debt $ 182,668 $ 5,119 5.61% $182,542 $ 5,449 5.97%
Notes payable 507,913 15,379 6.06% 449,380 14,411 6.41%
Deposits 125,591 2,840 4.52% 89,624 2,122 4.74%
Total interest bearing
liabilities 816,172 23,338 5.72% 721,546 21,982 6.09%
Other liabilities 42,743 20,108
Members' equity 143,029 134,751
Total liabilities and
members' equity $1,001,944 $876,405
Net interest earning
assets $ 147,207 $130,289
Net interest revenues
and spread $14,799 2.20% $ 13,290 2.19%
Net yield on interest
earning assets 3.07% 3.12%
Table 1A
RATE RELATED ASSETS AND LIABILITIES
(dollars in thousands)
Three Months Ended June 30,
1999 1998
ASSETS Average Income/ Yields/ Average Income/ Yields/
Balance Expenses Rate Balance Expenses Rate
Interest earning
assets
Real estate loans $ 488,965 $ 8,973 7.34% $398,570 $ 8,209 8.24%
Commercial loans
and leases 413,230 9,443 9.14% 371,659 8,186 8.81%
Total loans and
leases 902,195 18,416 8.16% 770,229 16,395 8.51%
Investment securities
and cash equivalents 72,122 1,218 6.76% 94,540 1,500 6.35%
Total interest
earning assets 974,317 19,634 8.06% 864,769 17,895 8.28%
Allowance for loan
losses (18,355) (17,827)
Non-interest earning assets
Cash 11,038 3,215
Other assets 48,424 48,602
Total non-interest
earning assets 59,462 51,817
Total assets $1,015,244 $898,759
LIABILITIES AND MEMBER'S EQUITY
Interest bearing liabilities
Subordinated debt $ 182,694 $ 2,531 5.54% $182,542 $ 2,767 6.06%
Notes payable 529,676 8,554 6.46% 468,521 7,561 6.46%
Deposits 125,160 1,390 4.44% 88,250 1,131 5.13%
Total interest
bearing liabilities 837,530 12,475 5.96% 739,313 11,459 6.20%
Other liabilities 33,354 24,022
Members' equity 144,540 135,424
Total liabilities and
members' equity $1,015,424 $898,759
Net interest earning
assets $ 136,787 $125,456
Net interest revenues
and spread $ 7,159 2.10% $ 6,436 2.08%
Net yield on interest
earning 2.94% 2.98%
Table 2
Changes in Net Interest Income
(dollars in thousands)
For the six months ended June 30, 1999 compared to 1998
Increase (decrease) due to change in:
Average Average
Volume* Yield Net**
Interest Income
Cash equivalents and
investment securities $ (368) $ 60 $ (308)
Commercial loans and leases 1,996 (3) 1,993
Real estate loans 3,041 (1,861) 1,180
Total interest income 4,669 (1,804) 2,865
Interest expense
Deposits 817 (99) 718
Notes payable 1,803 (835) 968
Subordinated debt 4 (334) (330)
Total interest expense 2,624 (1,268) 1,356
Net interest income $2,045 $ (536) $1,509
* 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.
Table 2A
Changes in Net Interest Income
(dollars in thousands)
For the three months ended June 30, 1999 compared to 1998
Increase (decrease) due to change in:
Average Average
Volume* Yield Net**
Interest Income
Cash equivalents and
investment securities $ (374) $ 92 $ (282)
Commercial loans and leases 942 315 1,257
Real estate loans 1,725 (961) 764
Total interest income 2,293 (554) 1,739
Interest expense
Deposits 426 (167) 259
Notes payable 988 5 993
Subordinated debt 2 (238) (236)
Total interest expense 1,416 (400) 1,016
Net interest income $ 877 $ (154) $ 723
* 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.
PROVISION FOR INCOME TAXES
The federal income tax provision is determined on the basis of
non-member income generated by NCB Savings Bank, FSB(NCBSB) 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 income tax provision
for the six months ended June 30, 1999 was $727.6 thousand
compared with the prior year's provision of $669.9 thousand.
CASH, CASH EQUIVALENTS AND INVESTMENT SECURITIES
Cash, cash equivalents and investment securities totalling
$76.6 million at June 30, 1999 decreased $32.0 million or 29.4%
from $108.6 million at year-end 1998 due mostly to the funding of
loans and lease financing. As a percentage of earning assets,
cash, cash equivalents and investment securities decreased to
7.1% at June 30, 1999 from 13.5% at December 31, 1998.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses at June 30, 1999 increased 5.9%
to $18.5 million from $17.4 million at December 31, 1998. The
allowance during the period was impacted by loans charged-off
amounting to $52.7 thousand, recoveries of loans previously
charged-off of $249.1 thousand and the provision of $835.0
thousand. Overall, loan portfolio quality remained both strong
and stable at the end of the first six months of 1999 and 1998.
NCB's annualized provision for loan losses as a percentage of
average loans and leases outstanding remained at .2% for the six
months ended June 30, 1999 and 1998.
The loan loss allowance as a percentage of loans and leases
decreased to 1.9% at June 30, 1999 from 2.2% at December 31,
1998. Management considers the current allowance to be adequate
to absorb known and inherent risks in the loan portfolio.
As shown in Table 3, total impaired assets (non-accruing loans
and real estate owned) decreased 40.0% from $6.7 million at
December 31, 1998 to $4.0 million at June 30, 1999. Impaired
assets as a percentage of loans and leases outstanding plus real
estate owned decreased to .4% at June 30, 1999 compared with .8%
at year-end 1998. The allowance for loan losses as a percentage
of impaired assets increased to 457.4% at June 30, 1999 from 259%
at December 31, 1998.
INTEREST BEARING LIABILITIES
Interest Bearing liabilities
(dollars in thousands)
6/30/99 12/31/98 % Change
Deposits $118,962 $123,420 (3.6%)
Short-term debt 367,054 220,652 66.3%
Long-term debt 256,284 231,193 10.9%
Subordinated debt 182,677 182,706 0.0%
Total $924,977 $757,971 22.0%
Interest bearing liabilities increased $167.0 million to $925.0
million at June 30, 1999 from $758.0 million at December 31,
1998.
For the six months of 1999, deposits at NCBSB declined 3.6% to
$119.0 million compared with $123.4 million at December 31, 1998.
The decrease was due to the maturity of certificates of deposits
held by local and national depositors. Average maturity of the
certificates of deposits is 13.9 months. Although NCB relies
heavily on funds raised through the capital markets, deposits and
the short term borrowing program are a major portion of interest
bearing liabilities - 16.4% and 20.9% at June 30,1999 and
December 31,1998, respectively.
At June 30, 1999, total short-term and long-term borrowings
(including subordinated debt) increased 27.0% or $171.5 million
to $806.0 million in comparison to prior year-end 1998 of $634.6
million. Proceeds from the borrowings were used to fund growth
in loans and leases. At June 30, 1999, NCBSB had advances of
$28.0 million from the Federal Home Loan Bank and NCB had $339.1
million, net of discount, outstanding on its short-term
facilities. Included in the short-term borrowings were revolving
lines of credit of $181.5 million; commercial paper with a face
value of $125.0 million and $32.8 million in the short term
borrowing program, which are from NCD Development Corporation and
cooperative customers. Long-term debt increased $25.0 million or
10.9% from year-end 1998 due to the issuance of $45.0 million of
medium term notes and the maturity of $20.0 million under long-
term facilities. At June 30, 1999, there was unused capacity
under short-term facilities of approximately $58.2 million.
In April 1999, NCB received Board approval to increase the
size of several funding programs. The new maximum amounts under
NCB's programs are as follows:
Short term facilities to $500.0 million
Commercial paper program to $250.0 million*
Medium term note program to $300.0 million
Long term facilities to $275.0 million
In August 1999, NCB received Board approval for an additional
increase in the medium term note program from $300.0 million to
$400.0 million. NCB also received approval to issue up to $50
million in trust preferred securities, preferred stock or
subordinated debt.
* NCB maintains available committed capacity, under its short
term facilities, in an amount not less than the outstanding
commercial paper balance.
TABLE 3
Impaired assets
(dollars in thousands)
June 30, March 31, Dec. 31, Sept. 30, June 30,
1999 1999 1998 1998 1998
Real estate owned $3,334 $3,355 $4,343 $4,155 $4,272
Non-accruing 701 2,371 2,385 819 3,445
$4,035 $5,726 $6,728 $4,974 $7,717
YEAR 2000
A significant challenge facing NCB, its subsidiaries and
affiliate as well as all companies, is the readiness of its
computer systems for the next millennium. NCB is dependent upon
its internal computer systems and has external interdependencies
with other financial institutions and customers.
NCB has surveyed all mission critical internal software and
systems (See Table (A)) and has determined a remediation
strategy. Table (B) reflects the phase completion with respect
to all mission critical systems. All testing was completed by May
31, 1999.
With respect to "non-information technology items", NCB has
surveyed the vendors/providers with the results shown in Table
(C).
NCB has surveyed all associated banks and financial
institutions with which a mission critical interdependence
exists. Based upon the results of this survey, NCB took actions
which involved testing of key systems or transitioning to
alternative institutional systems. All associated respondents
indicated that they were already Year 2000 compliant by December
31, 1998.
To date, direct costs relative to the Year 2000 efforts have
totalled less than $100,000. NCB does not anticipate exceeding
this amount in addressing all associated Year 2000 issues. All
costs to date are and in the future will be funded through
operating income and are not considered material. NCB converted
to a new Year 2000 compliant loan accounting system in November
1998 which replaced its existing systems that were not Year 2000
compliant. The cost of this replacement was less than $500,000.
NCB has surveyed the major portion of its customer base to
determine the ability of its customers to continue debt service
coverage and will follow with a specific review of annual
financial statements for Year 2000 disclosure. A primary risk for
NCB lies in the ability of its customers to continue debt service
payment on schedule in the Year 2000. To date, survey results
indicated that the issue is being addressed.
NCB has substantially completed all core systems testing.
Test results to date have indicated the systems to be Year 2000
ready. Management completed and the Board approved a business
continuity plan in April 1999 which will be tested prior to
October 1, 1999 and updated as the year progresses.
Table (A)
Total Mission Critical Systems (MCS) 61
Number of MCS to be:
Repaired 6
Replaced 0
Retired 0
Vendor Upgraded 55
Tested Only 0
Outsourced 0
Table (B)
Phase Completion Status As of June 30, 1999:
Phase Percent Complete Estimate or Actual #of MCS in Phase
Awareness 100.0% A 61
Assessment 100.0% A 61
Renovation 100.0% A 61
Validation 100.0% A 61
Implementation 100.0% A 61
Table (C)
Non-Information Technology Items (Infrastructure Items)
Compliant (Y=Yes)
Kastle System Y
Montgomery Kone(HVAC) Y
TRANE(Elevators) Y
Willtel(Phone) Y
PEPCO Y
Sungard Business Recovery Y
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
No material changes in NCB's market risk profile occurred
from December 31, 1998 to June 30, 1999.
ITEM 6. EXHIBITS
(a) The following exhibits are filed as part of this report:
Exhibit 10-21 - Amendment No. 2 to Third Amended and
Restated Loan Agreement with Fleet Bank as Agent
Exhibit 10-22 - First Amendment to Term Loan Agreement with
Greenwich Funding Corporation and Credit Suisse First Boston
Exhibit 10-27 - Executive Long-Term Incentive Plan
Exhibit 27 - Financial Data Schedule
SIGNATURE
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 there unto duly authorized.
NATIONAL CONSUMER COOPERATIVE BANK
Date:
s/Richard L. Reed
By:
Richard L. Reed,
Managing Director,
Chief Financial Officer
s/Marietta J. Orcino
By:
Marietta J. Orcino
Vice President, Tax & Regulatory
Compliance
AMENDMENT NO, 2 TO THIRD AMENDED AND RESTATED LOAN AGREEMENT
AGREEMENT, made as of the 26th day of May, 1999, by and
among:
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");
The Banks which have executed this Agreement (individually,
a "Bank" and, collectively, the "Banks"); and
FLEET BANK, N.A., as Agent for the Banks (in such capacity,
together with its successors in such capacity, the "Agent");
W I T N E S E T H:
WHEREAS:
(A) The Borrower, the Agent and the banks signatory
thereto (the "Existing Banks") entered into a certain Third
Amended and Restated Loan Agreement dated as of May 28, 1997,
which was amended pursuant to Amendment No. 1 to Third Amended
and Restated Loan Agreement dated as of May 27, 1998 (as so
amended, the "Original Loan Agreement"; the Original Loan
Agreement, as amended hereby, and as it may hereafter be further
amended, modified or supplemented, is hereinafter referred as the
"Loan Agreement");
(B) The Borrower wishes to amend the Original Loan
Agreement to, among other things, (i) increase the aggregate
Total Commitment from $290,000,000 to $350,000,000, (ii) extend
the A Commitment Termination Date to May 24, 2002, and (iii)
extend the B Commitment Termination Date to May 24, 2000, and the
Banks and the Agent are willing to amend and supplement the
Original Loan Agreement on the terms and conditions hereinafter
set forth;
(C) Simultaneously with the execution and delivery hereof,
each of Comerica Bank and Bank Austria Aktiengesellschaft (each,
a "Withdrawing Bank" and together, the "Withdrawing Banks") is
terminating its Total Commitment under the Original Loan
Agreement and shall no longer be deemed a party thereto;
(D) Simultaneously with the execution and delivery hereof,
each of The First National Bank of Chicago and NationsBank, N.A.
(each, a "New Bank" and together, the "New Banks") has agreed to
make loans to the Borrower in the amounts set forth opposite its
name on its signature page hereto and the Borrower desires to
accept the Total Commitment of each New Bank and to cause the New
Banks to be added as a "Bank" to the Original Loan Agreement as
amended hereby, and the Agent and the Banks are agreeable to the
addition of the New Banks;
(E) Certain of the Existing Banks desire to increase their
respective Total Commitment to the amount set forth opposite its
name on its signature page hereto and the Borrower desires to
accept such increased Total Commitment;
(F) Certain of the Existing Banks desire to reallocate
their respective Total Commitment (as between its A Commitment
and B Commitment) to the amounts set forth opposite its name on
its signature page hereto and the Borrower desires to accept such
reallocation of the Total Commitment of each of them; and
(G) All capitalized terms used herein which are not other
wise defined herein shall have the respective meanings ascribed
thereto in the Original Loan Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
Article 1. Change in Total Commitments.
Section 1.1 Total Commitments. From and after the
date hereof, for purposes of the Loan Agreement, the Total
Commitment of each Bank shall be the sum of the amounts set forth
opposite each Bank's name on the signature pages hereto as the
same may be reduced pursuant to the terms of the Loan Agreement,
and, with respect to each Bank (other than the New Banks), such
amount shall supersede and be deemed to amend the amount of its
respective Total Commitment as set forth opposite its name on the
signature pages to the Original Loan Agreement.
Section 1.2 Withdrawing Banks. The parties hereto
acknowledge that the Total Commitment of the Withdrawing Banks
under the Original Loan Agreement has been terminated. The
Withdrawing Banks shall have no further duties or obligations
under the Original Loan Agreement after the date hereof. Each
Withdrawing Bank shall duly cancel and return to the Borrower the
promissory notes issued to it under the Original Loan Agreement
immediately after it receives payment in full of all amounts
owing to it under the Original Loan Agreement.
Section 1.3 New Banks. Each New Bank agrees with
the Borrower, the Banks and the Agent that (i) it will abide by
the terms of the Original Loan Agreement as amended hereby, and
(ii) the Loan Agreement shall be binding upon, inure to the
benefit of, and be enforceable by and against it.
Section 1.4 Adjustment of Outstanding Loans. If any
Loans are outstanding under the Original Loan Agreement on the
date hereof, the Banks shall on the date hereof, at the direction
of the Agent, make appropriate adjustments among themselves in
order to insure that the amount (and type) of the Loans
outstanding to the Borrower from each Bank under the Loan
Agreement (as of the date hereof) are proportionate to the
aggregate amount of all of the Total Commitments, after giving
effect to the additional Total Commitment of the New Banks, the
increased amount of the aggregate Total Commitments and the
reallocation of the amounts of the Total Commitment of certain of
the Banks. The Borrower agrees and consents to the terms of this
Section 1.4.
Article 2. Amendments to Original Loan Agreement;
Second Substituted Notes.
Section 2.1 The Original Loan Agreement is hereby
amended as follows:
(a) The phrase "the amount set forth opposite
such Bank's name on the signature pages hereto" appearing in the
definition of the terms "A Commitment" and "B Commitment" in
Article 1 of the Original Loan Agreement shall be deemed to refer
to the amounts set forth opposite each Bank's name on the
signature pages hereto.
(b) The definition of "A Commitment Termination
Date" appearing in Article 1 is amended by deleting the date "May
26, 2001 and substituting therefor the date "May 24, 2002".
(c) The chart appearing in the definition of
"Applicable Margin" appearing in Article 1 is deleted in its
entirety and the following chart is substituted therefor:
"'Applicable Margin' - on any date, with respect to LIBOR Loans,
the applicable percentage set forth below based upon the Ratings
in effect on such date:
Category 1 A Loans B Loans
A2 or higher by Moody's; .28% .30%
A or higher by S&P
Category 2
A3 by Moody's; .35% .375%
A- by S&P
Category 3
Baal by Moody's; .40% .425%
BBB+ by S&P
Category 4
Baa2 by Moody's .45% .475%
BBB by S&P
Category 5
Baa3 by Moody's .525% .60%
BBB- by S&P
Category 6
Lower than Baa3 by Moody's .775% .825%"
Lower than BBB-by S&P
-or -
No Rating by S&P or Moody's
(d) The definition of "B Commitment Termination
Date" appearing in Article 1 is amended by deleting the date "May
26, 1999" and substituting therefor the date "May 24, 2000".
(e) The chart appearing in the definition of
"Commitment Fee Percentage" appearing in Article 1 is deleted in
its entirety and the following chart is substituted therefor:
"'Commitment Fee Percentage' - on any date, the
applicable percentage set forth below based upon the Ratings in
effect on such date:
Category 1 A Loans B Loan
A2 or higher by Moody's; .12% .10%
A or higher by S&P
Category 2
A3 by Moody's; .15% .125%
A- by S&P
Category 3
Baal by Moody's; .175% .15%
BBB+ by S&P
Category 4
Baa2 by Moody's .20% .175%
BBB by S&P
Category 5
Baa3 by Moody's .275% .20%
BBB- by S&P
Category 6
Lower than Baa3 by Moody's .35% .30%"
Lower than BBB-by S&P
-or -
No Rating by S&P or Moody's
(f) Subsection 2.12(c) (re Additional Interest) is
amended by deleting the amount "$174,000,000" in each place it
appears therein and substituting therefor the amount
"$140,000,000".
(g) Section 2.13 is deleted in its entirety and there
is substituted therefor the following:
"(a) The A Loans made by each Bank shall be
evidenced by a single promissory note of the Borrower (each, a
"Second Substituted A Note" and, collectively, the "Second
Substituted A Notes") in substantially the form of Exhibit A-1
annexed to Amendment No. 2 to Third Amended and Restated Loan
Agreement dated as of May 26, 1999 by and among the Borrower, the
banks signatory thereto and the Agent ("Amendment No. 2"). Each
Second Substituted A Note shall be dated the date of Amendment
No. 2, shall be payable to the order of such Bank in a principal
amount equal to such Bank's A Commitment as in effect on the date
of Amendment No. 2 and shall otherwise be duly completed. All A
Loans made by each Bank hereunder and all payments and
prepayments made on account of the principal thereof, and all
conversions of such A Loans shall be recorded by such Bank on the
schedule attached to the relevant Second Substituted A Note
(provided that any failure by such Bank to make any such
endorsement shall not affect the obligations of the Borrower
hereunder or under such Second Substituted A Note in respect of
such A Loans).
(b) The B Loans made by each Bank shall be
evidenced by a single promissory note of the Borrower (each, a
"Second Substituted B Note" and, collectively, the "Second
Substituted B Notes") in substantially the form of Exhibit A-2
annexed to Amendment No. 2. Each Second Substituted B Note shall
be dated the date of Amendment No. 2, shall be payable to the
order of such Bank in a principal amount equal to such Bank's B
Commitment as in effect on the date of Amendment No. 2 and shall
otherwise be duly completed. All B Loans made by each Bank
hereunder and all payments and prepayments made on account of the
principal thereof, and all conversions of such B Loans shall be
recorded by such Bank on the schedule attached to the relevant
Second Substituted B Note (provided that any failure by such Bank
to make any such endorsement shall not affect the obligations of
the Borrower hereunder or under such Second Substituted B Note in
respect of such B Loans).
(c) The Swing Line Loans made by
the Swing Line Lender shall be evidenced
by a single promissory note of the Borrower
(the "Second Substituted Swing Line Note")
substantially in the form of Exhibit A-3
annexed to Amendment No. 2. The Second
Substituted Swing Line Note shall be dated
the date of Amendment No. 2, shall be payable
to the order of the Swing Line Lender in a
principal amount equal to the Swing Line Loan
Commitment and shall be otherwise duly
completed. All Swing Line Loans made by the
Swing Line Lender hereunder and all payments
and prepayments on account of the principal
thereof shall be recorded by the Swing Line
Lender on the schedule attached to the Second
Substituted Swing Line Note (provided, that
any failure by the Swing Line Lender to make
such endorsement shall not affect the
obligations of the Borrower hereunder or
under the Second Substituted Swing Line
Note)."
(h) Schedule 3.1 is amended by deleting all references
to "Cooperative Funding Corporation" and "NCB Investment
Advisers, Inc.", which were dissolved by the Borrower.
Section 2.2 In order to evidence the Loans and the
Swing Line Loan, as amended hereby, the Borrower shall execute
and deliver to each Bank, as the case may be, simultaneously with
the execution and delivery hereof, promissory notes payable to
the order of such Bank in substantially the form of Exhibits A-1,
A-2 and A-3 (in the case of the Swing Line Lender) annexed hereto
(hereinafter referred to individually as a "Second Substituted
Note" and collectively as the "Second Substituted Notes"). Each
of the Banks (other than the New Banks) shall, upon the execution
and delivery by the Borrower of its applicable Second Substituted
Notes as herein provided, mark the Substituted Notes delivered to
it in connection with the Original Loan Agreement "Replaced by
Second Substituted Note" and return them to the Borrower.
Section 2.3 (a) All references in the Original Loan
Agreement or any other Loan Document to the "Loan(s)", the "A
Note(s)", the "B Note(s)", the "Swing Line Note", the "Note(s)"
and the "Loan Documents" shall be deemed to refer respectively,
to the Loan(s) as amended hereby, the Second Substituted A
Note(s), the Second Substituted B Note(s), the Second Substituted
Swing Line Note, the Second Substituted Note(s) and the Loan
Documents as defined in the Original Loan Agreement together
with, and as amended by, this Amendment No. 2, the Second
Substituted Notes and all agreements, documents and instruments
delivered pursuant thereto or in connection therewith.
(b) All references in the Original Loan Agreement
and the other Loan Documents to the "Loan Agreement", and also in
the case of the Original Loan Agreement to "this Agreement",
shall be deemed to refer to the Original Loan Agreement, as
amended hereby.
Section 2.4 The Original Loan Agreement and the
other Loan Documents shall each be deemed amended and
supplemented hereby to the extent necessary, if any, to give
effect to the provisions of this Agreement.
Article 3. Representations and Warranties.
The Borrower hereby confirms, reaffirms and restates to each
of the Banks and the Agent all of the representations and
warranties set forth in Article 3 of the Original Loan Agreement
as if such representations and warranties were made 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.
Article 4. Conditions to Effectiveness of this Agreement.
This Amendment No. 2 to Third Amended and Restated Loan
Agreement shall become effective on the date of the fulfillment
(to the satisfaction of the Agent) of the following conditions
precedent:
(a) This Amendment No. 2 shall have been executed
and delivered to the Agent by a duly authorized representative of
the Borrower, the Agent and each Bank.
(b) The Borrower shall have executed and
delivered to each Bank its Second Substituted A Note and Second
Substituted B Note and with respect to the Swing Line Lender, the
Second Substituted Swing Line Note.
(c) The Agent 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 Amendment
No. 2, 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 the Agent, in form and
substance satisfactory to the Agent and its counsel.
(e) The Agent shall have received copies of the
following:
(i) Copies of all corporate action taken by
the Borrower to authorize the execution, delivery and performance
of this Amendment No. 2, the Substituted Notes and the trans
actions 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 the Agent pursuant to the Original 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 the Agent and its counsel.
Article 5. Miscellaneous.
Section 5.1 Article 10 of the Original Loan
Agreement. The miscellaneous provisions under Article 10 of the
Original Loan Agreement, together with the definition of all
terms used therein, and all other sections of the Original Loan
Agreement to which Article 10 refers are hereby incorporated by
reference as if the provisions thereof were set forth in full
herein, except that (i) the terms "Loan Agreement", "Note(s)" and
"Loan", shall be deemed to refer, respectively, to the Original
Loan Agreement, as amended hereby, the Second Substituted Note(s)
and the Loans, as amended hereby; (ii) the term "this Agreement"
shall be deemed to refer to this Agreement; and (iii) the terms
"hereunder" and "hereto" shall be deemed to refer to this
Agreement.
Section 5.2 Continued Effectiveness. Except as
amended hereby, the Original Loan Agreement and the other Loan
Documents are hereby ratified and confirmed in all respects and
shall remain in full force and effect in accordance with their
respective terms.
Section 5.3 Counterparts. This Agreement may be
executed by the parties hereto in one or more counterparts, each
of which shall be an original and all of which shall constitute
one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on the date first above written.
NATIONAL CONSUMER COOPERATIVE BANK,
D/B/A NATIONAL COOPERATIVE BANK
By_________________________________
Title
A Commitment FLEET BANK, N.A.,
as Agent and as a Bank,
$18,000,000 and as Swing Line Lender
By_________________________
Name: Thomas J. Levy
Title: Vice President
B Commitment Lending Office for Prime Rate
Loans and LIBOR Loans and
$27,000,000 Address for Notices:
1185 Avenue of the Americas
New York, New York 10036
Attn: Mr. Thomas J. Levy
Vice President
Telephone No.: 212-819-5751
Telecopier No.: 212-819-4112
Telex No. 62610 NBNA UW
A Commitment FIRST UNION NATIONAL BANK, as
Syndication Agent and as a Bank
$16,000,000
By:__________________________
Name:
Title:
B Commitment Lending Office for Prime Rate
Loans and LIBOR Loans and
$24,000,000 Address for Notices:
First Union National Bank
Non-Profit Financial Services
Group
1970 Chain Bridge Road
McLean, Virginia 22102
Attn.: Mr. David Ryder
Senior Vice
President
Telephone No.: 703-760-6183
Telecopier No.: 703-760-5779
A Commitment COOPERATIEVE CENTRALE RAIFFEISEN
BOERENLEENBANK B.A.,
Rabobank
$16,000,000 International, New York Branch
By:_____________________________
Name:
Title:
B Commitment Lending Office for Prime Rate
Loans and LIBOR Loans and
$24,000,000 Address for Notices:
245 Park Avenue
New York, New York 10167
Attn: Mr. Timothy O'Brien
Vice President
Telephone No.: 212-916-7826
Telecopier No.: 212-808-2585
With a copy to:
c/o Rabo Support Services
10 Exchange Place
Jersey City, New Jersey 07302
Attention: Corporate Services
A Commitment PNC BANK, NATIONAL ASSOCIATION
$14,000,000
By:___________________________
Name:
Title:
B Commitment Lending Office for Prime Rate
Loans and LIBOR Loans and
$21,000,000 Address for Notices:
PNC Bank, National Association
1600 Market Street/21st Floor
Philadelphia, Pennsylvania
19103
Attn.: Brennan Danile
Assistant Vice President
Telephone No.: 215-585-8523
Telecopier No.: 215-585-5972
A Commitment NATIONSBANK, N.A.
$13,000,000
By:_______________________________
Name:
Title:
B Commitment Lending Office for Prime Rate
Loans and LIBOR Loans and
$19,500,000 Address for Notices:
NationsBank, N.A.
901 Main Street/66th Floor
Dallas, Texas 75202
Attn.: Mary Pat Riggins
Vice President
Telephone No.: 214-209-0585
Telecopier No.: 214-209-0604
A Commitment THE FIRST NATIONAL BANK OF
CHICAGO
$13,000,000
By:_______________________________
Name:
B Commitment Title:
$19,500,000
By:_______________________________
Name:
Title:
Lending Office for Prime Rate
Loans and LIBOR Loans and
Address for Notices:
The First National Bank of
Chicago
One First National Plaza/
Suite 0155
Chicago, Illinois 60670
Attn.: Eric Wiedelman
Corporate Banking
Officer
Telephone No.: 312-732-6222
Telecopier No.: 312-732-5294
A Commitment DG BANK DEUTSCHE
GENOSSENSCHAFTBANK A.G
CAYMAN ISLANDS BRANCH
$8,000,000
By:________________________________
Name:
Title:
B Commitment
$12,000,000
By:________________________________
Name:
Title:
Lending Office for Prime Rate
Loans and LIBOR Loans and
Address for Notices:
DG Bank Deutsche
Genossenschaftbank AG
Cayman Islands Branch
609 Fifth Avenue
New York, New York 10017
Attn: Edward Thome
Assistant Vice President
Telephone No.: 212-745-146
Telecopier No.: 212-745-
1422/1566
A Commitment UNION BANK OF CALIFORNIA, N.A.
$8,000,000
B Commitment
By______________________________
Name: James L. Chappel
$12,000,000 Title: Vice President
Lending Office for Prime Rate
Loans and LIBOR Loans and
Address for Notices:
Union Bank of California, N.A.
445 So. Figueroa Street
Los Angeles, California 90071
Attn: James L. Chappel
Vice President
Telephone No.: 213-236-4086
Telecopier No.: 213-236-5548
A Commitment FIRST NATIONAL BANK OF
MARYLAND, a division of FMB
Bank
$7,000,000
By:___________________________
Name:
Title:
B Commitment Lending Office for Prime Rate
Loans and LIBOR Loans and
$10,500,000 Address for Notices:
FMB Bank
Financial Institutions
Division
P.O. Box 1596 (101-710)
Baltimore, Maryland 21203
Attn: Ms. Florence Jenkins
Financial Institutions Officer
Telephone No.: 410-244-4437
Telecopier No.: 410-244-4234
EXHIBITS
A-1 Form of Second Substituted A Note
A-2 Form of Second Substituted B Note
A-3 Form of Second Substituted Swing Line Note
EXHIBIT A-1
TO AMENDMENT NO. 2
TO THIRD AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
NATIONAL CONSUMER COOPERATIVE BANK
AND
CERTAIN BANKS NAMED THEREIN
AND
FLEET BANK, N.A., AS AGENT FOR THE BANKS
FORM OF SECOND SUBSTITUTED A NOTE
[A Commitment Amount] Due May 24, 2002
FOR VALUE RECEIVED, NATIONAL CONSUMER COOPERATIVE BANK D/B/A
NATIONAL COOPERATIVE BANK,(the "Borrower"), hereby promises to
pay to the order of [ ] (the "Bank") by payment to the
Agent for the account of the Bank the principal sum of [amount of
A Commitment] ($ ) Dollars (or such lesser amount as shall
equal the aggregate unpaid principal amount of the A 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 24, 2002.
The Borrower further promises to pay to the order of the
Bank by payment to the Agent for the account of the Bank interest
on the unpaid principal amount of each Loan from the date such
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 A Note (or on any continuation
thereof) the amount, type, due date and interest rate of each A
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 A 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
Loans. Such notations shall be deemed correct, absent manifest
error.
This A Note is one of the Notes referred to in the Third
Amended and Restated Loan Agreement dated as of May 28, 1997, as
amended by Amendment No. 1 to Third Amended and Restated Loan
Agreement dated as of May 27, 1998 and Amendment No. 2 to Third
Amended and Restated Loan Agreement dated as of May 26, 1999 (as
so amended, the "Loan Agreement")among the Borrower, the Banks
and Fleet Bank, N.A., as Agent for the Banks and evidences the A
Loans made by the Bank thereunder. (This Second Substituted A
Note supersedes and is given in substitution for the Substituted
A Note dated May 27, 1998 made by the Borrower to the order of
the Bank in the original principal amount of $ but does not
constitute a novation, extinguishment or termination of the
obligations evidenced thereby.] Capitalized terms used in this A
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 A Note before maturity upon and subject to the
terms provided in the Loan Agreement.
The Borrower agrees to pay costs of collection and reason
able attorneys, fees in case default occurs in the payment of
this A Note.
Presentment for payment, notice of dishonor, protest and
notice of protest are hereby waived.
This A Note has been executed and delivered this 26th day of
May, 1999 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
SCHEDULE TO SECOND SUBSTITUTED A NOTE
MADE BY NATIONAL CONSUMER COOPERATIVE BANK
IN FAVOR OF _________________
This Note evidences the Loans made under the within
described Agreement, in the principal amounts, of the types
(Prime Rate Loans or LIBOR Loans) and on the dates set forth
below, subject to the payments or prepayments set forth below:
Principal Interest
Amount of Due Date Rate on Amount of Balance Notarion
Date Made Loan of Loan Loan Payment Outstanding Made By
EXHIBIT A-2
TO AMENDMENT NO. 2
TO THIRD AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
NATIONAL CONSUMER COOPERATIVE BANK
AND
CERTAIN BANKS NAMED THEREIN
AND
FLEET BANK, N.A., AS AGENT FOR THE BANKS
FORM OF SECOND SUBSTITUTED B NOTE
[B Commitment Amount] Due May 24, 2000
FOR VALUE RECEIVED, NATIONAL CONSUMER COOPERATIVE BANK D/B/A
NATIONAL COOPERATIVE BANK (the "Borrower"), hereby promises to
pay to the order of E I (the "Bank") by payment to the
Agent for the account of the Bank the principal sum of [amount of
B Commitment] ($ ) Dollars (or such lesser amount as shall
equal the aggregate unpaid principal amount of the B 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 24, 2000.
The Borrower further promises to pay to the order of the
Bank by payment to the Agent for the account of the Bank interest
on the unpaid principal amount of each Loan from the date such
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 B Note (or on any continuation
thereof) the amount, type, due date and interest rate of each B
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 B 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
Loans. Such notations shall be deemed correct, absent manifest
error.
This B Note is one of the Notes referred to in the Third
Amended and Restated Loan Agreement dated as of May 28, 1997, as
amended by Amendment No. 1 to Third Amended and Restated Loan
Agreement dated as of May 27, 1998 and Amendment No. 2 to Third
Amended and Restated Loan Agreement dated as of May 26, 1999 (as
so amended, the "Loan Agreement") among the Borrower, the Banks,
and Fleet Bank, N.A., as Agent for the Banks and evidences the B
Loans made by the Bank thereunder. [This Second Substituted B
Note supersedes and is given in substitution for the Substituted
B Note dated May 27, 1998 made by the Borrower to the order of
the Bank in the original principal amount of $ but does
not constitute a novation, extinguishment or termination of the
obligations evidenced thereby.] Capitalized terms used in this B
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 B Note before maturity upon and subject to the
terms provided in the Loan Agreement.
The Borrower agrees to pay costs of collection and reason
able attorneys' fees in case default occurs in the payment of
this B Note.
Presentment for payment, notice of dishonor, protest and
notice of protest are hereby waived.
This B Note has been executed and delivered this 26th day of
May, 1999 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
SCHEDULE TO SECOND SUBSTITUTED B NOTE
MADE BY NATIONAL CONSUMER COOPERATIVE BANK
IN FAVOR OF _____________________
This Note evidences the Loans made under the within
described Agreement, in the principal amounts, of the types
(Prime Rate Loans or LIBOR Loans) and on the dates set forth
below, subject to the payments or prepayments set forth below:
Principal Interest
Amount of Due Date Rate on Amount of Balance Notarion
Date Made Loan of Loan Loan Payment Outstanding Made By
EXHIBIT A-3
TO AMENDMENT NO. 2
TO THIRD AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
NATIONAL CONSUMER COOPERATIVE BANK
CERTAIN BANKS NAMED THEREIN
AND
FLEET BANK, N.A.,
As AGENT FOR THE BANKS
FORM OF SECOND SUBSTITUTED SWING LINE NOTE
$20,000,000 Due May 24, 2000
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") by payment to
the Bank the principal sum of TWENTY MILLION DOLLARS
($20,000,000) (or such lesser amount as shall equal the aggregate
unpaid principal amount of the Swing Line 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 avail
able funds on the date or dates determined as provided in the
Loan Agreement but in no event later than May 24, 2000.
The Borrower further promises to pay to the order of the
Bank by payment to the Bank interest on the unpaid principal
amount of each Swing Line Loan from the date such Swing Line 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 Swing Line Note (or on any
continuation thereof) the amount, due date and interest rate of
each Swing Line Loan made by the Bank under the Loan Agreement
and the amount of each payment of principal and the amount of
each payment of interest of each such Swing Line 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 Swing Line Loans. Such notations shall be
deemed correct, absent manifest error.
This Swing Line Note is the Swing Line Note referred to in
the Third Amended and Restated Loan Agreement dated as of May 28,
1997, as amended by Amendment No. 1 to Third Amended and Restated
Loan Agreement dated as of May 27, 1998 and Amendment No. 2 to
Third Amended and Restated Loan Agreement dated as of May 26,
1999 (as so amended, the "Loan Agreement") among the Borrower,
the Banks and Fleet Bank, N.A., as Agent for the Banks and
evidences the Swing Line Loans made by the Bank thereunder.
Capitalized terms used in this Swing Line 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 agrees to pay costs of collection and reason
able attorneys' fees in case default occurs in the payment of
this Swing Line Note.
Presentment for payment, notice of dishonor, protest and
notice of protest are hereby waived.
This Swing Line Note has been executed and delivered this
26th day of May, 1999 in New York, New York, and shall be
construed in accordance with and governed by the laws of the
State of New York.
NATIONAL CONSUMER COOPERATIVE BANK
D/B/A NATIONAL COOPERATIVE BANK
By:________________________________
Title
SCHEDULE TO SECOND SUBSTITUTED SWING LINE NOTE
MADE BY NATIONAL CONSUMER COOPERATIVE BANK
IN FAVOR OF FLEET BANK, N.A.
This Swing Line Note evidences the Swing Line Loans made
under the within described Agreement, in the principal amounts,
and on the dates set forth below, subject to the payments set
forth below:
Principal Interest
Amount of Due Date Rate on Amount of Balance Notarion
Date Made Loan of Loan Loan Payment Outstanding Made By
FIRST AMENDMENT TO TERM LOAN
AGREEMENT DATED AS OF MARCH 25, 1998
This First Amendment ("Amendment") is entered into as of
this 3rd day of May, 1999, for the purpose of amending that
certain Term Loan Agreement, dated as of March 28, 1998
(hereinafter the "Existing Agreement") to which National Consumer
Cooperative Bank, which also conducts business as National
Cooperative Bank (hereinafter the "Company"), Greenwich Funding
Corporation (hereinafter "GFC"), and Credit Suisse First Boston
(hereinafter "CSFB") are parties.
Recitals
The Company, GFC and CSFB are parties to the Existing
Agreement, pursuant to which the Company issued the Note in the
principal amount of $20,000,000. Capitalized terms used and not
defined herein have the meanings stated in the Existing
Agreement. The Company, by an Amendment No. 1 to Third Amended
and Restated Loan Agreement, dated as of May 27, 1998, amended
the Fleet Loan Agreement in certain respects, and the Company has
requested that the GFC and CSFB agree to amendments to the
Existing Agreement and to consider other amendments to make the
covenants in the Existing Agreement conform to the Fleet Loan
Agreement as amended from time to time. Each of GFC and CSFB is
agreeable to the Company's request, subject to the terms of this
Amendment.
NOW THEREFORE, upon the satisfaction of the conditions
precedent to the effectiveness of this Amendment set forth in
Section 3 hereof, and for good and valuable consideration the
receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
1. The Recitals are incorporated by reference herein.
2. Amendments to the Existing Agreement.
A. Section 7.9 at page 25 of the Existing Agreement is
amended by deleting subsection (h) and changing "(i)" to "(h)".
B. Section 7.12 at page 25 of the Existing Agreement
is amended by deleting the period at the end, adding a semicolon,
and adding "provided that, 30 days after receipt by GFC and CSFB
of a written request from the Company for GFC and CSFB's consents
to deletion, replacement, amendment, supplementation or
modification (collectively "Modification") of a covenant in the
Existing Agreement to conform with a Modification in the Fleet
Loan Agreement, such Modification to the Existing Agreement will
become effective unless the Company within that 30- period
receives notice from GFC or CSFB that it objects to such
Modification.
C. Section 8.9 at page 29 of the Existing Agreement is
amended by deleting the period at the end of subsection (xviv),
adding a semicolon, and adding
"(xv) Equity Investments provided that (i) the
aggregate amount of such Equity Investments (on a cumulative
basis) does not exceed an amount equal to ten (10%) percent of
Consolidated Adjusted Net Worth as at any date of determination
hereof, after giving effect to any such Equity Investment, and
(ii) no single Equity Investment in any Person may be greater
than $2,000,000. For purposes hereof, Equity Investment(s) shall
mean the amount paid or committed to be paid in connection with
the acquisition of any stock (common or preferred) or other
equity securities of any Person or any obligation convertible
into or exchangeable for a right, option or warrant to acquire
such equity securities."
3. Effectiveness. The provisions of Section 1 of this
Amendment shall become effective and binding upon the parties
hereto on the Effective Date upon the satisfaction in full of
each of the following conditions:
(a) The Company and each of GFC and CSFB shall have
executed and delivered a counterpart of this Amendment;
(b) the Company shall have executed and delivered an
Officer's Certificate as to the absence of any Event of Default
under the Existing Agreement; and
(c ) the Company shall have paid in full all costs and
expenses, including without limitation fees and disbursements of
outside special counsel, if any, incurred by each of GFC and CSFB
in connection with review and implementation of this Amendment.
Upon the effectiveness of this Amendment on and after the date
hereof, each reference in the Existing Agreement to "this
Agreement", "hereunder", "herein" or words of like import, and
each reference in the Notes to the Existing Agreement, shall mean
and be a reference to the Existing Agreement as amended hereby.
4. Duplicate Originals; Execution in Counterpart. Two or
more duplicate originals of this Amendment may be signed by the
parties hereto, each of which shall be an original but all of
which together shall constitute one and the same instrument.
This Amendment may be executed in one or more counterparts and
shall be effective when at least one counterpart shall have been
executed by each party hereto, and each set of counterparts
which, collectively, show execution by each party hereto shall
constitute one duplicate original.
5. Limitation of Amendment. The terms of this Amendment
shall not operate as or constitute a waiver by GFC or CSFB of, or
otherwise prejudice, GFC's or CSFB's rights, remedies or powers
under the Existing Agreement or the Note or under applicable law.
Except as expressly provided herein,
(i) no other terms and provisions of the Existing Agreement
are modified or changed by this Amendment, and
(ii) the terms and provisions of the Existing
Agreement shall continue in full force and effect.
The Company hereby acknowledges, confirms, reaffirms and ratifies
all of its obligations and duties under the Amended Agreement and
the Notes.
6. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS
OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their authorized officers as of the
date first above written.
NATIONAL CONSUMER COOPERATIVE BANK
s/William E. Seas III
BY: ______________________________
Name: William E. Seas, III
Title: Treasurer
GREENWICH FUNDING CORPORATION
By Credit Suisse First Boston, New York
Branch, its attorney-in-fact
s/Mary E. Connors s/Thomas Meier
BY:____________________________________
Name:Mary E. Connors Thomas Meier
Title: Vice President Vice President
CREDIT SUISSE FIRST BOSTON,
NEW YORK BRANCH
s/Jay Chall s/Andrea E. Shkane
By:_____________________________________
Name: Jay Chall Andrea e. Shkane
Title: Director Vice President
NATIONAL COOPERATIVE BANK
EXECUTIVE LONG-TERM INCENTIVE PLAN
Introduction
The National Cooperative Bank Long-Term Incentive Plan (the
"Plan") is designed to foster and promote the long-term growth
and performance of the Bank by enhancing the Bank's ability to
attract and retain qualified and key employees and motivating key
employees through performance-based incentives. To achieve this
purpose, this Plan provides authority for the grant of
performance-based cash awards.
Article 1 - Definitions
1.1 Award. A performance-based cash award granted to a
Participant pursuant to Article 4.
1.2 Award Agreement. An agreement between the Bank and a
Participant that sets forth terms, conditions, and restrictions
applicable to an Award.
1.3 Bank. The National Consumer Cooperative Bank and its
direct and indirect subsidiaries.
1.4 Board of Directors. The Board of Directors of the
Bank.
1.5 Change in Control. A change in the ownership or
effective control of the Bank within the meaning of Section 280G
of the Code.
1.6 Code. The Internal Revenue Code of 1986, or any law
that supersedes or replaces it, as amended from time to time.
1.7 Committee. The Compensation Committee of the Board of
Directors, or any other committee of the Board of Directors that
the Board of Directors authorizes to administer this Plan.
1.8 Disability. Medically determined physical or mental
impairment that would qualify a Participant for coverage under
the Bank's long-term disability program.
1.9 Measurement Period. A period of three consecutive
calendar years or any other period selected and established by
the Committee at the time the corresponding Award Agreements are
entered into.
1.10 Participant. Any person with whom an Award Agreement
has been entered into under this Plan.
1.11 Performance Goals. Performance goals established
pursuant to Article 4.2 upon which the payment of an Award to a
Participant is conditioned.
1.12 Retirement. Termination of employment with the Bank on
or after attainment of age 65.
1.13 Termination of Employment. A termination of employment
with the Bank (other than by reason of death, disability or
retirement).
Article 2 - Eligibility
All key employees of the Bank, including officers, are
eligible for the grant of Awards. The selection of key employees
to receive Awards will be within the discretion of the Committee.
Article 3 - Administration
3.1 Committee. The Committee will administer this Plan.
Upon the recommendation of the Chief Executive Officer, the
Committee will, subject to the terms of this Plan, have the
authority to (a) select the eligible employees who will be
entitled to receive Awards, (b) enter into Award Agreements, (c)
determine the amount of Awards that can be earned by employees,
(d) determine the terms, conditions, and restrictions applicable
to Awards, (e) adopt, alter, and repeal administrative rules and
practices governing this Plan, (f) interpret the terms and
provisions of this Plan and any Award Agreements entered into
under this Plan, (g) prescribe the form of any Award Agreement or
other instruments relating to Awards, and (h) otherwise supervise
the administration of this Plan. All decisions by the Committee
will be made with the approval of not less than a majority of its
members.
3.2 Delegation. The Committee may delegate any of its
authority to any other person or persons that it deems
appropriate.
3.3 Decisions Final. All decisions by the Committee, and
by any other person or persons to whom the Committee has
delegated authority, will be final and binding on all persons.
Article 4 - Award Agreements and Awards
4.1 Award Agreements and Awards.
(a) Designation of Participants. The Committee may,
in its discretion, designate any key employee of the Bank as a
Participant. Designation of an individual as a Participant for
any Measurement Period shall not require designation of such
individual as a Participant for any other Measurement Period, nor
shall designation of one individual as a Participant require
designation at any time of any other individual as a Participant.
(b) Award Agreements. Award Agreements shall be
entered into with Participants not later than 90 days after the
beginning of a Measurement Period, except that (i) in the case of
the initial Award Agreements, such agreements may be entered into
not later than 90 days after the approval of the Plan by the
Board of Directors, and (ii) if an employee becomes eligible to
participate in the Plan during a Measurement Period, the
Committee may enter into an Award Agreement with such employee on
such terms as the Committee shall prescribe that will entitle the
employee to an Award measured with reference to the remaining
portion of the Measurement Period. Each Award Agreement will
state the percentage of a Participant's base salary that a
Participant may be paid for the applicable Measurement Period.
The percentage of base salary may vary based on the degree to
which the target performance goals for the Measurement Period are
satisfied. The formula for determining the percentage of base
salary earned and the level of performance for a Measurement
Period shall be established in writing by the Committee at the
time the performance goals are determined. Once entered into, the
Committee will not have discretion to modify the terms of an
Award Agreement except as otherwise provided under this Plan.
(c) Payment of Awards. Not later than 90 days after
the end of the Measurement Period the Committee shall pay a
specified Award to each Participant with respect to that
Measurement Period. Prior to the payment of any Award, the
Committee must certify the degree of attainment of the applicable
performance goals. Payment shall be made in a lump sum or
deferred in accordance with Section 6.1 hereof.
4.2 Performance Goals. Not later than 90 days after the
beginning of a Measurement Period, or approval of the Plan by the
Board of Directors, whichever is later, the Committee will
establish in writing the target level of Performance Goals that
must be satisfied at the end of the Measurement Period. The
Committee also may, in its discretion, establish other levels of
Performance Goals, such as threshold or minimum levels and
superior or maximum levels, on which varying Awards will be
based. Performance Goals must be based on objective measures of
the Bank's performance. For any given Measurement Period, the
Committee may use more than one performance measure and assign a
weight to each performance measure to be taken into account in
determining the Award earned by a Participant for such
Measurement Period. Once established, the Committee will not
have discretion to modify the Performance Goals except as
otherwise provided under this Plan.
4.3 Forfeitability of the Award.
(a) General. Except as provided in Section 4.3(b) and
Article 7, a Participant must remain employed by the Bank until
the end of the applicable Measurement Period to be paid his or
her Award. If the Participant has a Termination of Employment
prior to the end of the applicable Measurement Period that is for
Cause or is involuntary, the Award shall be forfeited.
(b) Death, Disability or Retirement. In the event of
a Participant's death, Disability or Retirement before the end of
the applicable Measurement Period then the Participant or the
Participant's Designated Beneficiary shall be entitled to a
prorated Award for that Measurement Period, based on the ratio of
the number of full months the Participant was employed during the
Measurement Period to the total number of months in the
Measurement Period. For purposes of determining a Participant's
Award under this Section 4.3(b), it shall be assumed that (1) for
the remainder of the Measurement Period the Participant received
the same base salary he or she was receiving at the date of his
or her death, Disability or Retirement, and (2) regardless of the
actual level of performance achieved, the Bank has achieved the
target level of performance it established for the entire
Measurement Period. Payment of the Award under this Section
4.3(b), if any, will be made as soon as practicable after the end
of the calendar year in which the Participant's death, Disability
or Retirement occurs. Payment shall be made in cash.
Article 5 - Change of Control
5.1 Effect of Change of Control. In the event that a
Change of Control occurs, all conditions applicable to an Award
will be deemed to have been satisfied at the target level as of
the date of the Change in Control provided that, if the level of
Performance Goals that has already been achieved as of such date
exceeds the target level established for the entire Measurement
Period, all conditions applicable to the Award will be deemed to
have been satisfied at such higher level. Subject to Section
5.2, a Participant's Award shall be paid in cash as soon as
practicable after the Change of Control.
5.2 Limits on Payments in the Event of a Change of Control.
Notwithstanding anything else herein, to the extent a Participant
would be subject to the excise tax under Section 4999 of the Code
on the amounts in Section 5.1 and such other amounts or benefits
he received from the Bank required to be included in the
calculation of parachute payments for purposes of Sections 280G
and 4999 of the Code, the amounts otherwise payable under Section
5.1 shall be automatically reduced to an amount one dollar less
than that amount which, when combined with such other amounts and
benefits required to be included, would subject the Participant
to the excise tax under Section 4999 of the Code; provided,
however, such reduction will be made if, and only if, the
reduced amount received by the Participant would be greater than
the unreduced amount received by the Participant minus the excise
tax payable under Section 4999 of the Code on such unreduced
amount and other amounts and benefits received by the Participant
and required to be included in the calculation of a parachute
payment for purposes of Sections 280G and 4999 of the Code.
Article 6 - Deferral of Award Payment
6.1 Election to Defer Award Payment. Each Participant may
elect to defer all or a portion of his or her Award payment in
increments of 25 percent up to a maximum of 100 percent. Such
deferrals will be credited to a Deferred Compensation Account
maintained under the Bank's Deferred Compensation Plan. Any such
deferral will be credited to the Participant's existing Deferred
Compensation Account if an account already is maintained for the
Participant, and, if not, to a newly established Deferred
Compensation Account. The deferral shall be effected by
executing a Performance Base Cash Award Deferral Election Form as
set forth in Exhibit A to this Plan before January 1 of the last
calendar year in the Measurement Period.
6.2 Treatment of Deferred Amounts. Amounts which a
Participant elects to defer and which are credited to the
Participant's Deferred Compensation Account pursuant to Section
6.1 will be subject thereafter to the terms of the Bank's
Deferred Compensation Plan.
Article 7 - General
7.1 Nonassignability of Awards. No Award under the Plan
shall be subject to anticipation, sale, assignment, encumbrance
or transfer other than by will or the laws of interstate
succession.
7.2 Unsecured Interest. A Participant shall have no
interest in any fund or specified asset of the Bank. Any amounts
which are or may be set aside under the provisions of this Plan
shall continue for all purposes to be a part of the general
assets of the Bank, and no person or entity other than the Bank
shall, by virtue of the provisions of this Plan, have any
interest in such assets. No right to receive payments from the
Bank pursuant to this Plan shall be greater than the right of any
unsecured creditor of the Bank.
7.3 No Right or Obligation of Continued Employment.
Nothing contained in the Plan shall require the Bank or a related
company to continue to employ a Participant, nor shall the
Participant be required to remain in the employment of the Bank
or a related company.
7.4 Withholding. The Bank shall withhold all required
federal, state and local taxes from any Award.
7.5 Amendment and Termination of the Plan. The Plan may be
amended or terminated at any time by the Board or by the
Committee as delegated by the Board, provided that such
termination or amendment shall not, without the consent of the
Participant, affect such Participant's rights with respect to
Award Agreements previously entered into. With the consent of
the Participant affected, the Board, or by delegation of
authority by the Board, the Committee, may amend outstanding
Award Agreements in a manner not inconsistent with the Plan.
7.6 Binding on Successors. The obligations of the Bank
under the Plan shall be binding upon any organization which shall
succeed to all or substantially all of the assets of the Bank,
and the term "Bank," whenever used in the Plan, shall mean and
include any such organization after the succession.
7.7 References. In this Plan, unless there is something in
the subject or context inconsistent with such construction, words
importing the plural number shall be deemed to include the
singular number and vice versa; the masculine shall include the
feminine and vice versa; and the masculine or feminine shall
include the neuter and vice versa.
7.8 Applicable Law. The Plan shall be governed by and
construed in accordance with the laws of the District of
Columbia.
The foregoing is a true and correct copy of the National
Cooperative Bank Executive Long-Term Incentive Plan as approved
by the Board of Directors of the Bank as of the ________ day of
_______________, 1999.
NATIONAL CONSUMER COOPERATIVE BANK
By:______________________________
_____________________________
Secretary
[Corporate Seal]
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