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, 2000 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, 2000
Class C 222,633
(Common stock, $100.00 par value)
Class B 997,104
(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 - March 31,
2000 and December 31, 1999 ............ 3
Consolidated statements of income - for
the three months ended March 31, 2000
and 1999............................... 4
Consolidated statements of comprehensive
income - for the three months ended
March 31, 2000 and 1999................. 5
Consolidated statements of cash flows -
for the three months ended
March 31, 2000 and 1999................. 6-7
Condensed notes to the consolidated
financial statements - March 31,
2000.................................... 8-13
Item 2 Management's discussion and analysis
of financial condition and results of
operations - for the three months
ended March 31, 2000 and 1999........... 14-20
Item 3 Quantitative and qualitative disclosures
about market risk....................... 21
PART II OTHER INFORMATION
Item 4 Submission of Matters to a Vote of
Security Holders.................... 22
Item 6 Exhibits ........................... 23
Exhibit 27 - Financial Data Schedule
NATIONAL COOPERATIVE BANK
CONSOLIDATED BALANCE SHEETS
March 31, 2000 and December 31, 1999
(Unaudited)
March 31, December 31,
Assets 2000 1999
Cash and cash equivalents $ 40,338,572 $ 29,910,037
Restricted cash 4,887,213 4,887,213
Investment securities
Available-for-sale 43,894,287 46,283,045
Held-to-maturity 2,710,244 2,710,191
Loans held for sale 168,429,733 132,057,978
Loans and lease financing 889,254,904 815,840,439
Less: Allowance for loan losses (18,675,296) (18,693,670)
Net loans held for sale and
loans and lease financing 1,039,009,341 929,204,747
Other assets 42,112,472 43,514,663
Total assets $1,172,952,129 $1,056,509,896
Liabilities and Members' Equity
Liabilities
Deposits $ 134,266,817 $ 126,071,259
Patronage dividends payable in
cash 6,210,222 5,642,040
Other liabilities 36,891,454 25,041,359
Borrowings
Short-term 410,106,055 283,589,354
Long-term 254,321,611 286,262,870
664,427,666 569,852,224
Subordinated debt 182,592,571 182,620,212
Total borrowings 847,020,237 752,472,436
Total liabilities 1,024,388,730 909,227,094
Members' equity
Common stock
Class B 99,710,414 99,879,531
Class C 22,263,318 22,380,663
Class D 300 300
Retained earnings
Allocated 9,885,602 9,203,865
Unallocated 17,034,342 16,682,644
Accumulated other comprehensive
income (330,577) (864,201)
Total members' equity 148,563,399 147,282,802
Total liabilities and members'
equity $1,172,952,129 $1,056,509,896
NATIONAL COOPERATIVE BANK
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the three months ended March 31, 2000 1999
Interest income
Loans and lease financing $20,581,080 $17,013,818
Investment securities 1,241,412 1,488,772
Total interest income 21,822,492 18,502,590
Interest expense
Deposits 1,458,326 1,450,724
Short-term borrowings 4,705,757 3,583,426
Long-term debt, other borrowings
and subordinated debt 8,113,922 5,829,905
Total interest expense 14,278,005 10,864,055
Net interest income 7,544,487 7,638,535
Provision for loan losses 12,500 417,500
Net interest income after
provision for loan losses 7,531,987 7,221,035
Non-interest income
(Loss) gain on sale of loans (4,069) 64,470
Loan and deposit servicing fees 811,933 720,595
Other 616,312 856,162
Total non-interest income 1,424,176 1,641,227
Non-interest expense
Compensation and employee
benefits 4,253,232 3,613,886
Contractual services 1,053,472 1,067,046
Occupancy and equipment 1,241,590 1,049,780
Contribution to NCB
Development Corporation - 50,000
Other 529,795 606,380
Total non-interest expense 7,078,089 6,387,092
Net income before income taxes 1,878,074 2,475,170
Provision for income taxes 378,264 324,414
Net income $ 1,499,810 $ 2,150,756
Distribution of net income
Patronage dividends $ 1,499,810 $ 2,150,756
Retained earnings - -
$ 1,499,810 $ 2,150,756
NATIONAL COOPERATIVE BANK
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
For the three months ended March 31, 2000 1999
Net income $1,499,810 $2,150,756
Other comprehensive income, net of tax:
Net unrealized holding
gain (losses) before tax 533,624 (316,537)
Comprehensive income $2,033,434 $1,834,219
NATIONAL COOPERATIVE BANK
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the three months ended March 31, 2000 1999
Cash flows from operating activities
Net income $ 1,499,810 $ 2,150,756
Adjustments to reconcile net
income to net cash used in
operating activities
Provision for loan losses 12,500 417,500
Depreciation and amortization 1,688,537 1,461,790
Loss (gain) on sale of loans 4,069 (64,470)
Loans originated for sale (39,968,174) (70,837,217)
Proceeds from sale of loans
held for sale 3,592,351 7,201,898
Increase in other assets (553,308) (1,141,324)
Increase(decrease) in other
liabilities 11,850,095 (15,534,766)
Net cash used in operating
activities (21,874,120) (76,345,833)
Cash flows from investing activities
Redemption of restricted cash - 7,512,629
Purchase of investment securities
Available-for-sale (650,000) (1,000,000)
Proceeds from maturities of
investment securities
Available-for-sale 2,055,341 1,337,832
Held-to-maturity - 165,596
Net increase in loans and lease
financing (79,713,118) (110,753,344)
Proceeds from sale of portfolio
loans 7,950,098 -
Purchases of premises and
equipment (51,925) (201,259)
Net cash used in investing
activities (70,409,604) (102,938,546)
Cash flows from financing activities
Net increase in deposits 8,195,558 3,569,061
Net increase in short-term
borrowings 126,516,701 165,542,250
Repayment on long-term debt (32,000,000) (20,000,000)
Net cash provided by financing
activities 102,712,259 149,111,311
Increase (decrease) in cash and
cash equivalents 10,428,535 (30,173,068)
Cash and cash equivalents,
beginning of year 29,910,037 66,563,160
Cash and cash equivalents, end
of period $ 40,338,572 $ 36,390,092
NATIONAL COOPERATIVE BANK
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Supplemental schedule of investing and financing activities:
For the three months ended March 31, 2000 1999
Unrealized gain (loss) on investment
available-for-sale $ 533,624 $ (316,537)
Interest paid $11,667,706 $9,772,836
Income taxes paid $ 970 $ 1,494
NATIONAL COOPERATIVE BANK
CONDENSED NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
March 31, 2000
(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, 2000, NCB's portfolios of investment
securities, cash and cash equivalents had an average adjusted
maturity of 1,062 days with interest rates in those portfolios
varying from 5.20% to 8.38%.
Cash and Investments Investments
Cash Available- Held-to-
Equivalents for-Sale Maturity
Cash $ 2,602,874 $ - $ -
Federal funds 10,071,611 - -
Money market
securities 27,314,087 742,012 -
Private debt security - - 769,932
Mutual funds - 1,535,681 -
Certificates of
deposits 350,000 - -
Mortgage-backed
securities - - 1,942,312
Corporate bonds - 4,099,092 -
U.S. Treasury and Agency
obligations - 17,530,555 -
Interest-only
receivables - 19,986,947 -
$40,338,572 $43,894,287 $2,710,244
As of December 31, 1999, NCB's portfolios of investment
securities, cash and cash equivalents were comprised of the
following:
Cash and Investments Investments
Cash Available- Held-to-
Equivalents for-Sale Maturity
Cash $ 3,407,537 $ - $ -
Federal funds 11,763,202 - -
Money market
securities 14,389,298 1,039,318 -
Private debt
security - - 767,878
Mutual funds - 1,221,719 -
Certificates of
deposit 350,000 - -
Mortgage-backed
securities - - 1,942,313
Corporate bonds - 4,721,038 -
U.S. Treasury and Agency
obligations - 18,447,345 -
Interest-only
receivables - 20,853,625 -
$29,910,037 $46,283,045 $2,710,191
At March 31, 2000 and December 31, 1999, the investments in
the available-for-sale portfolio were recorded at aggregate fair
value.
Restricted cash of $4,887,213 at March 31, 2000 and December
31,1999 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. At March 31, 2000 and December 31, 1999, the combined
remaining balances of 1992 and 1993 loans totaled $43,405,002 and
$56,967,101, 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.
Interest-only receivables substantially pertain to blanket
loans to cooperative housing corporations.
2. Loans and Lease Financing
Loans and leases outstanding, including loans held for sale,
by category, were as follows:
March 31, 2000 December 31, 1999
Commercial loans $ 516,353,741 $470,913,210
Lease financing 58,550,265 60,104,256
Real estate loans
Residential 472,789,836 408,204,055
Commercial 9,990,795 8,676,896
$1,057,684,637 $947,898,417
At March 31, 2000 and December 31, 1999 loans held for resale
were $168.4 million and $132.1 million, respectively.
3. Impaired Assets
Impaired loans, representing the nonaccrual loans at March 31,
2000 and December 31, 1999, totaled $795,483 and $580,311,
respectively, and averaged $797,307 and $1,084,000 during the
respective periods ending on these dates. Specific allowances of
$397,742 and $239,911 were established at March 31, 2000 and
December 31, 1999, respectively. During the first quarters of
2000 and 1999, the interest collected on the nonaccrual loans was
applied to reduce the outstanding principal.
At March 31, 2000 and December 31, 1999, there were no
commitments to lend additional funds to borrowers whose loans are
impaired.
At March 31, 2000 and December 31, 1999, NCB had real estate
acquired through foreclosure for both periods of $2,686,747,
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 three months ended March 31, 2000:
Balance at January 1, 2000 $18,693,670
Provision for loan losses 12,500
Charge-offs (334,870)
Recoveries of loans previously
charged-off 303,996
Balance at March 31, 2000 $18,675,296
The allowance for loan losses as a percentage of average loans
and lease financing and loans held for sale at March 31, 2000 was
1.86%.
5. Statement of Changes in Members' Equity
The following is a summary of the activity in members' equity for the three
months ended March 31, 2000:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Retained Retained Total
Common Earnings Earnings Unrealized Members'
Stock Allocated Unallocated Gain(Loss)
Equity
Balance, December 31, 1999 $122,260,494 $ 9,203,865 $16,682,644 $(864,201) $147,282,802
Net income - - 1,499,810 - 1,499,810
Cancellation and
redemption of stock (286,462) - 91,409 - (195,053)
2000 patronage dividends
To be distributed in cash - - (557,784) - (557,784)
Retained in form of equity - 681,737 (681,737) - -
Unrealized gain on investment
securities available-for-
sale - - - 533,624 533,624
Balance, March 31, 2000 $121,974,032 $ 9,885,602 $17,034,342 $(330,577) $148,563,399
</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 three months
March 31, 2000 and 1999 (dollars in thousands):
2000 Commercial Real Estate NCB
Lending Lending NCBSB Other Consolidated
Net interest income
Interest income $ 11,423 $ 6,569 $ 2,933 $ 898
Allocated interest
expense 8,873 4,461 - (13,334)
Interest expense - - 1,703 12,575
Net interest income 2,550 2,108 1,230 1,657 $ 7,545
Provision (credit)
for loan losses 5,949 70 13 (6,019) 13
Non-interest
income-external 657 652 226 (111) 1,424
Non-interest expense
Direct expense 1,219 1,152 554 4,153 7,078
Overhead and support 287 252 274 (813) -
Total non-interest
expense 1,506 1,404 828 3,340 7,078
Income (loss) before
taxes $ (4,248) $ 1,286 $ 615 $ 4,225 $ 1,878
Total average assets $555,690 $296,137 $158,034 $ 75,436 $1,085,297
1999 Commercial Real Estate NCB
Lending Lending NCBSB Other Consolidated
Net interest income
Interest income $ 7,844 $ 7,247 $ 2,437 $ 975
Allocated interest
expense 5,487 4,479 - (9,966)
Interest expense - - 1,454 9,410
Net interest income 2,357 2,768 983 1,531 $ 7,639
Provision (credit)
for loan losses (2,069) 193 43 2,251 418
Non-interest
income-external 609 205 251 576 1,641
Non-interest expense
Direct expense 1,148 1,111 662 3,466 6,387
Overhead and support 117 88 75 (280) -
Total non-interest
expense 1,265 1,199 737 3,186 6,387
Income (loss)
before taxes $ 3,770 $ 1,581 $ 454 $ (3,330) $ 2,475
Total average assets $385,674 $353,477 $131,822 $107,581 $978,554
NATIONAL COOPERATIVE BANK
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
SUMMARY
NCB's net income for the three months ended March 31, 2000 was
$1.5 million. This was a 30.3% or $650.9 thousand decrease
compared with $2.2 million for the three months ended March 31,
1999. The variance resulted from a decrease of 1.2% or $94.0
thousand in net interest income, a decrease of 13.2% or $217.1
thousand in non-interest income and an increase of 10.8% or
$691.0 thousand in non-interest expense which was partially
offset by a decrease of 97% or $405.0 thousand in provision for
loan losses.
Total assets were $1.17 billion at March 31, 2000, up 11% or
$116.4 million from $1.06 billion at December 31, 1999. This
resulted primarily from increases in loans held for sale and
loans and lease financing of $109.8 million and in cash and cash
equivalents, restricted cash and investment securities of $8.04
million.
The annualized return on average total assets was .55% for the
first three months of 2000 compared with .88% for the same period
in 1999. The annualized return on average equity for the period
ended March 31, 2000 and 1999 was 4.05% and 6.11%, respectively.
NET INTEREST INCOME
Net interest income for the first three months of 2000
decreased 1.2% or $94.0 thousand over the same period a year ago.
Table 2 contains more detailed information about the $94.0
thousand decrease.
As shown on Table 1, the net interest spread decreased 61
basis points to 1.7% from 2.31% for the three months ended March
31, 1999 while net interest yield on interest earning assets was
2.78% and 3.21% for the three months ended March 31, 2000 and
1999, respectively. The decrease was mainly due to increased
cost to borrow on the short-term facilities. For the three months
ended March 31, 2000, the yield on average loans and
leases and on investment securities and cash equivalents was
up 18 basis points and 53 basis points, respectively, compared
with the first quarter of 1999.
For the three months ending March 31, 2000, interest income
increased 17.9% or $3.3 million to $21.8 million from $18.5
million of the prior year's quarter. As shown on Table 2, the
increase in interest income was due mostly to growth in the
commercial loan and lease portfolio.
Interest expense increased $3.4 million or 31.4% to $14.3
million for the three months ended March 31, 2000 compared with
$10.9 million for the three months ended March 31, 1999. The
interest expense was up as a result of higher levels of notes
payable to fund loan volume. At March 31, 2000, the average rate
on interest-bearing liabilities increased to 6.35% compared with
5.46% in the same period in 1999. As shown on Table 2, the total
increase in interest expense of $3.4 million was volume and
interest rate related.
NON-INTEREST INCOME
Non-interest income for the three months ended March 31, 2000
of $1.4 million decreased 13.2% or $217.1 thousand from $1.6
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, net origination
fees on loans sold, management fees, advisory and debt placement
fees and other income. The majority of the decrease resulted
from a loss on a commercial loan sale and the reduced
yield of interest-only receivables. Loans sold during the
first quarter of 2000 were $11.7 million compared with $7.1
million in the year-earlier period.
Servicing fee income for the quarter ended March 31, 2000
increased 12.7% or $91.3 thousand to $811.9 thousand compared
with $720.6 thousand for the three months ended March 31, 1999.
At March 31, 2000 and 1999, NCB serviced single and multi-family
real estate and commercial loans for investors in the amounts of
$2.05 billion and $1.74 billion, respectively.
Other income was down 28% to $616.3 thousand from $856.2
thousand due to lower commercial and real estate loan fees
received and yield of interest-only receivables and higher expenses
maintaining a real estate property owned.
NON-INTEREST EXPENSE
Non-interest expense for the three months ended March 31, 2000
increased 10.8% or $691.0 thousand to $7.1 million compared with
$6.4 million for the three months ended March 31, 1999.
Compensation and employee benefits, remaining by far the single
largest component of non-interest expense, increased 17.7% or
$639.3 thousand due to a higher employee base and bonus accruals
than in the year-earlier period. Compensation and employee
benefits accounted for 60.1% and 56.6% of non-interest expense
for the three months ended March 31, 2000 and 1999, respectively.
Occupancy and equipment expenses went up 18.3% or $191.8 thousand
due to increases in computer and internet services and equipment
and software maintenance.
Excluding the voluntary contributions to NCB Development
Corporation, which was zero and $50 thousand during the first
quarters of 2000 and 1999, respectively, non-interest expense as
a percentage of average assets was 2.6% for both the three months
ended March 31, 2000 and the same period a year ago.
Table 1
RATE RELATED ASSETS AND LIABILITIES
(dollars in thousands)
<TABLE>
Table 2
RATE RELATED ASSETS AND LIABILITIES
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
For the years ended December 31,
2000 1999
Ave. Ave.
Assets Average Income/ Rate/ Average Income/ Rate/
Balance* Expense Yield Balance* Expense Yield
Interest earning assets
Real estate loans $ 442,086 $ 8,636 7.81% $458,737 $ 8,705 7.59%
Commercial loans and
leases 563,528 11,945 8.48% 391,192 8,309 8.50%
Total loans and leases 1,005,614 20,581 8.19% 849,929 17,014 8.01%
Investment securities
and cash equivalents 78,663 1,241 6.31% 103,106 1,489 5.78%
Total interest earning
assets 1,084,277 21,822 8.05% 953,035 18,503 7.77%
Allowance for loan losses (18,694) (17,719)
Non-interest earning assets
Cash 2,912 10,528
Other 16,802 32,710
Total non-interest earning
assets 19,714 43,238
Total assets $1,085,297 $978,554
Liabilities and members' equity
Interest bearing liabilities
Subordinated debt $ 182,610 $ 2,646 5.80% $182,641 $ 2,588 5.67%
Note payable 590,111 10,173 6.90% 486,578 6,825 5.61%
Deposits 126,889 1,459 4.60% 126,018 1,451 4.61%
Total interest bearing
liabilities 899,610 14,278 6.35% 795,237 10,864 5.46%
Other liabilities 37,540 42,443
Members' equity 148,147 140,874
Total liabilities and
members' equity $1,085,297 $978,554
Net interest earning
assets $ 184,667 $157,798
Net interest revenues and
spread $ 7,544 1.70% $ 7,639 2.31%
Net yield on interest
earning assets 2.78% 3.21%
</TABLE>
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 income tax provision for the three
months ended March 31, 2000 was $378 thousand compared with the
prior year's provision of $324 thousand.
CASH, CASH EQUIVALENTS AND INVESTMENT SECURITIES
Cash, cash equivalents and investment securities totaling $86.9
million at March 31, 2000 increased $8.0 million or 10.2% from
$78.9 million at year-end 1999 due to repayments on loans and
leases received at the end of March. As a percentage of earning
assets, cash, cash equivalents and investment securities
decreased to 7.6% at March 31, 2000 from 8.1% at December 31,
1999.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses at March 31, 2000 was $18.7
million, down slightly by .1% from December 31, 1999. The
allowance during the period was impacted by loans charged-off of
$334.9 thousand, recoveries of loans previously charged-off of
$304.0 thousand and the provision of $12.5 thousand. Overall,
loan portfolio quality remained both strong and stable at the end
of the first quarters of 2000 and 1999. NCB's annualized
provision for loan losses as a percentage of average loans and
leases outstanding was less than .1% for the quarter ended March
31, 2000 and .2% for the quarter ended March 31, 1999.
The loan loss allowance as a percentage of average loans and
leases decreased to 1.9% at March 31, 2000 from 2.0% at December
31, 1999. 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) increased 6.6% from $3.3 million at
December 31, 1999 to $3.5 million at March 31, 2000. Impaired
assets as a percentage of loans and leases outstanding plus real
estate owned was .33% at March 31, 2000 compared with .34% at
year-end 1999. The allowance for loan losses as a percentage of
impaired assets decreased to 536.3% at March 31, 2000 from 572.2%
at December 31, 1999.
Table 2
Changes in Net Interest Income
(dollars in thousands)
For the three months ended March 31, 2000 compared to 1999
Increase (decrease) due to change
in:
Average Average
Volume* Yield Net**
Interest Income
Cash equivalents and
investment securities $ (377) $ 129 $ (248)
Commercial loans and leases 3,653 (17) 3,636
Real estate loans (321) 252 (69)
Total interest income 2,955 364 3,319
Interest expense
Deposits 10 (2) 8
Notes payable 1,612 1,735 3,347
Subordinated debt 0 58 58
Total interest expense 1,622 1,791 3,413
Net interest income $1,333 $(1,427) $ (94)
* 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.
INTEREST BEARING LIABILITIES
Interest Bearing liabilities
(dollars in thousands)
3/31/00 12/31/99 % Change
Deposits $134,267 $126,071 6.5%
Short-term debt 410,106 283,589 44.6%
Long-term debt 254,322 286,263 (11.2%)
Subordinated debt 182,593 182,620 0.0%
Total $981,288 $878,543 11.7%
Interest bearing liabilities increased $102.7 million to $981.3
million at March 31, 2000 from $878.5 million at December 31,
1999.
For the first three months of 2000, deposits at NCB Saving
Bank, FSB (NCBSB) grew 6.5% to $134.3 million compared with
$126.1 million at December 31, 1999. The growth was attributable
to local and national deposit accounts and deposits from
cooperative customers. Average maturity of the certificates of
deposits is 13.6 months. Funds generated by the increased deposit
activity were used to originate single-family loans and increase
liquidity.
At March 31, 2000, total short-term and long-term borrowings
(including subordinated debt) increased 12.6% or $94.5 million to
$847.0 million in comparison to prior year-end 1999 of $752.5
million. Proceeds from the borrowings were used to fund growth
in loans and leases. At March 31, 2000 and December 31, 1999,
NCBSB had advances of $23.0 million and $15.0 million,
respectively, from the Federal Home Loan Bank and NCB had $387.1
million, net of discount and $268.6 million, net of discount,
respectively, outstanding on its short-term facilities. At March
31, 2000, included in the short-term borrowings were revolving
lines of credit of $146.5 million; commercial paper with a face
value of $225.4 million and $16.0 million in borrowings from a
related entity and cooperative customers. At December 31, 1999,
included in the short-term borrowings were revolving lines of
credit of $79.5 million; commercial paper with a face value of
$172.4 million and $17.2 million in borrowings from a related
entity and cooperative customers. Long-term debt decreased 11.2%
from year-end 1999 due to a payment of $32.0 million under the
long-term facilities. At March 31, 2000, there was unused
capacity under the short-term and long-term facilities of
approximately $64.6 million and $350.0 million, respectively. At
December 31, 1999, unused capacity under the short-term and long-
term facilities was $183.3 million and $350.0 million,
respectively.
TABLE 3
Impaired assets
(dollars in thousands)
March 31, Dec. 31, Sept. 30, June 30, March 31,
2000 1999 1999 1999 1999
Real estate owned $2,687 $2,687 $2,893 $3,334 $3,355
Non-accruing 795 580 685 701 2,371
$3,482 $3,267 $3,578 $4,035 $5,726
YEAR 2000
NCB undertook many actions intended to assure that its
computer systems and other equipment were capable of functioning
in, and processing for, periods for the Year 2000 and beyond.
NCB experienced no operational problems as a result of the
changeover of the date 1999 to 2000. NCB has not incurred to
date, and does not expect to incur in the future, any material
expenditures in connection with identifying, evaluating or
remediating Year 2000 compliance issues. Most of its
expenditures to date have related to the opportunity cost of time
spent by NCB's employees evaluating and remediating Year 2000
issues for the hardware and software products purchased, the
information technology used in its operations and its non-IT
Systems or embedded technology, such as building security, phone
system and other systems. Direct costs incurred by NCB have
totaled approximately $55,000. NCB did not incur any Year 2000
expenses in the first quarter ended March 31, 2000.
As of March 31, 2000, NCB has not experienced any material
consequences of failure of Year 2000 compliance, either by the
Company, its suppliers, and customers. However, Year 2000
compliance has many elements and potential consequences, some of
which may not be foreseeable or may be realized in future
periods. Therefore, there can be no assurance that unforseen
circumstances could still not arise, or that NCB will not in the
future identify equipment or systems which are not Year 2000
compliant.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
No material changes in NCB's market risk profile occurred from
December 31, 1999 to March 31, 2000.
Part II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
NCB held its annual meeting on April 27, 2000. Shareholders
elected the following persons to serve as directors:
Kirby J. Erickson(re-elected)
Jackie Jenkins-Scott(re-elected)
Peter C. Young(re-elected)
Thomas K. Zaucha (re-elected)
The following directors continued in office after this meeting:
James L. Burns, Jr.
Harry J. Bowie
Joseph Cabral
Eben Hopson, Jr.
Marilyn J. McQuiade
Michael J. Mercer
Alex N. Miller
Alfred A. Plamann
Stuart M. Saft
Shiela A. Smith
Item 6. Exhibits
(a) The following exhibit is filed as part of this report:
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:
By:
Richard L. Reed,
Managing Director,
Chief Financial Officer
By:
Marietta J. Orcino
Vice President, Tax &
Regulatory Compliance
<TABLE> <S> <C>
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-2000
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