<TABLE>
INTERCHANGE FINANCIAL SERVICES CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands)
<CAPTION>
MARCH 31, December 31,
1996 1995
---------- ------------
<S> <C> <C>
ASSETS
Cash and due from banks ................................ $ 21,765 $ 25,151
Federal funds sold ..................................... 30,200 --
-------- --------
Total cash and cash equivalents ........................ 51,965 25,151
-------- --------
Investment securities at amortized cost (approximate
market value of $73,439 and $75,611 ) ............ 73,043 74,688
-------- --------
Securities available for sale at estimated market value
(amortized cost of $36,313 and $66,604 ) ......... 37,356 67,545
-------- --------
Loans .................................................. 316,336 311,164
Less: Allowance for loan losses ....................... 3,714 3,647
-------- --------
Net loans .............................................. 312,622 307,517
-------- --------
Premises and equipment, net ............................ 5,405 5,510
Foreclosed real estate ................................. 1,324 1,213
Accrued interest receivable and other assets ........... 8,891 9,833
-------- --------
TOTAL ASSETS ........................................... $490,606 $491,457
======== ========
LIABILITIES
Deposits
Non-interest bearing ............................. $ 68,858 $ 69,213
Interest bearing ................................. 364,380 367,239
-------- --------
Total deposits ......................................... 433,238 436,452
Securities sold under agreements to repurchase ......... 7,482 1,704
Short-term borrowings .................................. 3,750 9,200
Accrued interest payable and other liabilities ......... 4,559 3,860
-------- --------
TOTAL LIABILITIES ...................................... 449,029 451,216
-------- --------
STOCKHOLDERS' EQUITY
Common stock ........................................... 4,733 4,495
Capital surplus ........................................ 14,941 12,110
Retained earnings ...................................... 21,194 22,990
Unrealized gain on securities available for sale,
net of income taxes ............................... 709 646
-------- --------
Total stockholders' equity ............................. 41,577 40,241
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............. $490,606 $491,457
======== ========
- ---------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
INTERCHANGE FINANCIAL SERVICES CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data)
<CAPTION>
Three months ended
March 31,
-------------------------
1996 1995
------ ------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans ......................... $7,066 $6,688
Interest on federal funds sold ..................... 228 72
Interest and dividends on securities
Taxable interest income ........................ 1,861 2,289
Interest income exempt from federal income taxes 14 15
Dividends ...................................... 38 30
------ ------
TOTAL INTEREST INCOME .............................. 9,207 9,094
------ ------
INTEREST EXPENSE
Interest on deposits ............................... 3,598 3,417
Interest on short-term borrowings .................. 150 145
Interest on long-term borrowings ................... -- 63
------ ------
TOTAL INTEREST EXPENSE ............................. 3,748 3,625
------ ------
NET INTEREST INCOME ................................ 5,459 5,469
Provision for loan losses .......................... 250 225
------ ------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES ................................... 5,209 5,244
------ ------
NON-INTEREST INCOME
Service fees on deposit accounts ................... 369 361
Net gain on sale of loans available for sale ....... -- 11
Net gain on sale of securities available for sale .. 235 --
Accretion of discount in connection with acquisition 190 190
Other .............................................. 445 454
------ ------
TOTAL NON-INTEREST INCOME .......................... 1,239 1,016
------ ------
NON-INTEREST EXPENSES
Salaries and benefits .............................. 1,902 1,838
Net occupancy ...................................... 545 510
Furniture and equipment ............................ 178 151
Advertising and promotion .......................... 158 190
Federal Deposit Insurance Corporation assessment ... 12 225
Foreclosed real estate expense ..................... 63 72
Other .............................................. 1,110 1,113
------ ------
TOTAL NON-INTEREST EXPENSES ........................ 3,968 4,099
------ ------
Income before income taxes ........................ 2,480 2,161
Income taxes ....................................... 868 756
------ ------
NET INCOME ......................................... $1,612 $1,405
====== ======
PER COMMON SHARE ................................... $ 0.57 $ 0.49
====== ======
- ----------------------------------------------------------------------------
See notes to consolidated financial statements
</TABLE>
<TABLE>
INTERCHANGE FINANCIAL SERVICES CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands)
<CAPTION>
Unrealized
Gain/(Loss)
on
Securities
Preferred Common Capital Retained Available Treasury
Stock Stock Surplus Earnings for Sale Stock Total
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1995 .................... $ 5,000 $ 4,495 $ 11,333 $ 18,737 $ (1,813) $ (2,623) $ 35,129
Net income .................................... 1,405 1,405
Dividends on common stock
at $0.171 per share (1) .................... (486) (486)
Dividends on preferred stock .................. (29) (29)
Increase in market valuation-securities
available for sale, net of income taxes .... 546 546
-------- -------- -------- -------- -------- -------- --------
Balance at March 31, 1995 ..................... 5,000 4,495 11,333 19,627 (1,267) (2,623) 36,565
Net income .................................... 4,875 4,875
Dividends on common stock
at $0.513 per share ........................ (1,456) (1,456)
Dividends on preferred stock .................. (56) (56)
Purchase of 32,000 preferred shares ........... (1,600) (1,600)
Retirement of 100,000 shares of preferred stock (5,000) 777 4,223 --
Increase in market valuation-securities
available for sale, net of income taxes .... 1,913 1,913
-------- -------- -------- -------- -------- -------- --------
Balance at December 31, 1995 .................. -- 4,495 12,110 22,990 646 -- 40,241
Net income .................................... 1,612 1,612
Dividends on common stock
at $0.176 per share (1) .................... (500) (500)
5% common stock dividend ...................... 226 2,682 (2,908) --
Issued 7,498 shares of common stock
in connection with incentive plan .......... 12 149 161
Increase in market valuation-securities
available for sale, net of income taxes .... 63 63
-------- -------- -------- -------- -------- -------- --------
BALANCE AT MARCH 31, 1996 ..................... $ -- $ 4,733 $ 14,941 $ 21,194 $ 709 $ -- $ 41,577
======== ======== ======== ======== ======== ======== ========
<FN>
--------
(1) Restated for retroactive effect of 5% common stock dividend to be issued on
April 19, 1996 to shareholders of record on March 20, 1996 See notes to
consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
INTERCHANGE FINANCIAL SERVICES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<CAPTION>
For the three months ended
March 31,
------------------------
1996 1995
------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ......................................................... $1,612 $1,405
Non-cash items included in earnings
Depreciation and amortization of fixed assets ................... 254 192
Amortization of securities premiums ............................. 285 378
Accretion of securities discounts ............................... (12) (13)
Amortization of premiums in connection with acquisition ......... 111 111
Accretion of discount in connection with acquisition ............ (190) (190)
Provision for loan losses ....................................... 250 225
Net gain on sale of securities available for sale ............... (235) --
Net gain on sale of loans available for sale ................... -- (11)
Net gain on sale of foreclosed real estate ...................... (17) --
Decrease/(increase) in carrying value of loans available for sale 23 (30)
Loss on sale of fixed assets .................................... -- 26
(Increase) decrease in operating assets
Net origination of loans available for sale ..................... (119) (215)
Proceeds from sale of loans available for sale .................. -- 254
Accrued interest receivable ..................................... 408 289
Other ........................................................... 374 564
Increase in operating liabilities
Accrued interest payable ........................................ 107 103
Other ........................................................... 592 845
-------- --------
CASH PROVIDED BY OPERATING ACTIVITIES .............................. 3,443 3,933
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from (payments for)
Net (originations)/ repayment of loans .......................... (4,378) 3,512
Purchase of loans ............................................... (870) (356)
Purchase of securities available for sale ....................... (8,087) (363)
Maturities of securities available for sale ..................... 195 710
Sale of securities available for sale ........................... 38,349 122
Sale of foreclosed real estate .................................. 78 60
Purchase of investment securities ............................... (4,563) --
Maturities of investment securities ............................. 6,000 2,000
Net payments on foreclosed real estate .......................... 7 --
Purchase of fixed assets ....................................... (135) (559)
Sale of fixed assets ............................................ -- 2
-------- --------
CASH PROVIDED BY INVESTING ACTIVITIES .............................. 26,596 5,128
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from (payments for)
Deposits less than withdrawals .................................. (3,214) (2,783)
Securities sold under agreements to repurchase .................. 5,778 --
Other borrowings ................................................ (4,200) --
Retirement of securities sold under agreement
to repurchase ................................................. (1,250) (3,650)
Dividends ....................................................... (500) (515)
Common stock issued ............................................. 161 --
-------- --------
CASH USED FOR FINANCING ACTIVITIES ................................. (3,225) (6,948)
-------- --------
INCREASE IN CASH AND CASH EQUIVALENTS .............................. 26,814 2,113
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR ....................... 25,151 25,965
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD ........................... $51,965 $28,078
======== ========
- -------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information: Cash paid for:
Interest .................................................. $ 3,641 $ 3,523
Income taxes .............................................. 208 --
Supplemental disclosure of non-cash investing activities:
Loans transferred to foreclosed real estate ............... $ 179 $ 370
Increase-market valuation of securities available
for sale ............................................... (102) (846)
Amortization of valuation allowance-securities
transferred from availabe to sale to held to maturity .. 4 --
See notes to consolidated financial statements
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
1. FINANCIAL STATEMENTS
The consolidated financial statements should be read in conjunction with
the financial statements and schedules as presented in the Annual Report on Form
10-K of Interchange Financial Services Corporation (the "Company") for the year
ended December 31, 1995.
Consolidated financial data for the three months ended March 31, 1996 and
1995, are unaudited but reflect all adjustments consisting of only normal
recurring adjustments which are, in the opinion of management, considered
necessary for a fair presentation of the financial condition and results of
operations for the interim periods. Results for interim periods are not
necessarily indicative of results to be expected for any other period or the
full year.
2. LEGAL PROCEEDINGS
On December 2, 1992, in the matter of Great American Mortgage, et al. v.
Robert Utter, et al, a lawsuit filed in the Superior Court of New Jersey against
Interchange State Bank (the "Bank"), a wholly owned subsidiary of the Company
for having paid checks drawn on the drawers' accounts at the Bank where the
checks bore forged or irregular endorsements, the Court directed judgment to be
entered against the Bank in the principal amount of $484,000, with pre-judgment
interest. On April 5, 1993, the Bank filed a notice of appeal of this judgment
and, by virtue of post-judgment motions, the amount was reduced to the principal
sum of $311,000, plus pre-judgment interest. The judgment was appealed and, by
virtue of this appeal, the amount was further reduced to $245,000. The matter
remained on appeal as to the other issues raised by the Bank therein until May
8, 1995, at which time, by Court Order, the claims of the drawers against the
Bank were adjusted and, by virtue thereof, the judgment entered against the bank
was vacated. The Bank has paid, in order to vacate the judgment, a total of
$89,212. The Bank continues to pursue various parties for recoupment of the
aforesaid monies under which it is likely that the Bank's liability for the
payment will either be reduced to it proportionate share under contribution
theories or it will be exonerated under indemnification theories.
The Bank has made various claims against various different parties in
related matters, including the matter of Trico Mortgage Company v. First Central
Mortgage Services, et al., in which the Bank has raised
indemnification/contribution claims against certain officers of Trico Mortgage
Company, United Jersey Financial Corporation , Thomas Zullo (a New Jersey
attorney) and others. With respect to the claims against Thomas Zullo, the Bank
has negotiated, in principal, a settlement of the Bank's claims against Mr.
Zullo for the aforesaid $89,212, with Mr. Zullo agreeing to pay the Bank $50,000
against that claim. In or about February 1996, the trial court dismissed the
Bank's claims against Trico, United Jersey Financial Corporation and certain of
it former officers. The Bank has taken under advisement appealing that
interlocutory order. The Bank continues to pursue various other parties in this
matter to recoup the balance of the monies expended by the Bank.
In another related matter, Interchange State Bank v. Veglia, the Bank filed
State-based RICO claims against Trico Mortgage Company, United Jersey Financial
Corporation, and various of its officers and employees. Therein, Trico Mortgage
Company filed a counterclaim against the Bank with respect to a check which
allegedly bore a forged endorsement. The trial court dismissed Interchange's
RICO claims and Interchange has filed an appeal of same with the New Jersey
Appellate Division. Additionally, the trial court granted a judgment against the
Bank in the principal sum of $120,000 with pre-judgment interest, in favor of
Trico. The Bank has appealed this judgment and a stay of execution has been
ordered. On December 26,1995 the Appellate Division affirmed the trial court's
determination. The Bank filed a Petition for Certification to the New Jersey
Supreme Court. A decision thereon is expected by Summer 1996.
In 1992, the Company accrued $500,000 as a provision for an adverse
judgment in this litigation. Based on the May 8, 1995 partial settlement of
these matters, plus the settlement with Mr. Zullo, the Company has reduced the
reserve by $250,000 to $161,000 which the Company and its legal counsel believe
is adequate to cover any remaining liabilities related to these matters.
The Bank is involved in a controversy with Cranoth Shopping Plaza
Associates, the landlord of the property upon which the Rochelle Park branch
office resides. The landlord claims that the Bank owes additional rent with
respect to this long-term lease arrangement: in response, the Bank claims that
it has overpaid its rental obligations and seeks a refund thereof. The total
amount in controversy, for both the claim against and by the Bank, is
approximately $200,000.
The Company is also a party to routine litigation involving various aspects
of its business, none of which, in the opinion of management, after consultation
with legal counsel, is expected to have a material, adverse impact on the
consolidated financial condition, results of operations or liquidity of the
Company.
3. EMPLOYEES' STOCK OPTION PLAN
In October 1995, the Financial Accounting Standards Board adopted Statement
No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"), which was
effective for the Company as of January 1, 1996. SFAS No. 123 requires expanded
disclosures of stock-based compensation arrangements with employees and
encourages, but does not require compensation cost to be measured based on the
fair value of the equity instrument awarded. Companies are permitted, however,
to continue to apply APB Opinion No. 25, which recognizes compensation cost
based on the intrinsic value of the equity instrument awarded. The Company will
continue to apply APB Opinion No. 25 to its stock-based compensation awards to
employees and will disclose the required pro forma effect on net income and
earnings per share in its annual financial statements.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion is an analysis of the consolidated financial
condition and results of operations of the Company for the three months ended
March 31, 1996 and 1995, and should be read in conjunction with the consolidated
financial statements and notes thereto included in Item 1 hereof.
RESULTS OF OPERATIONS
EARNINGS SUMMARY
For the first quarter of 1996 the Company reported net income of $1.6
million or $0.57 per share, as compared with $1.4 million or $0.49 per share for
the comparable 1995 period, an increase of $207 thousand or $0.08 per share. The
increase was primarily attributable to a $235 thousand net gain from the sale of
available for sale securities. The security sales were the culmination of a
restructuring plan to improve the risk/rewards attributes of the investment
portfolio.
Earnings for the 1996 period were positively affected by a $131 thousand or
3.2% decrease in non-interest expenses as compared to the same 1995 period. The
decrease was attributable to the reduction in the Federal Deposit Insurance
Corporation ("FDIC") assessment rate which resulted in a $213 thousand expense
savings for the Company. If the reduction in the FDIC assessment rate had not
occurred, non-interest expenses would have increased $82 thousand or 2% for the
1996 period. A $64 thousand or 3.5% increase in salaries and benefits due mostly
to annual salary increases constituted the largest element of that increase.
The Company's most important revenue source is net interest income which is
the difference between interest earned on its interest earning assets, such as
loans and investments, and the interest paid on its interest bearing
liabilities, primarily deposits. Changes in net interest income from period to
period result from increases or decreases in the average balances of interest
earning assets and interest bearing liabilities and increases or decreases in
the spread between the average rates earned on such assets and the average rates
paid on such liabilities.
For the three months ended March 31, 1996, the Company's net interest
income on a tax equivalent basis was $5.5 million and remained relatively
unchanged from the comparable 1995 period. This occurred despite a growth in
interest income resulting from a $24.2 million or 8.4 percent increase in
average loans. Also contributing to the growth in interest income was an
increase of $12.4 million or 251.4 percent in average federal funds sold. The
growth in federal funds sold is directly attributable to the proceeds from the
sale of securities. However, the growth in interest income was partially offset
by a $23.8 million or 16.2 percent decrease in average investment securities
resulting primarily from the sale of securities discussed above. The shift
between investments and federal funds sold is a transitory event while the
proceeds are pending reinvestment. The benefit derived from the increase and
positive shift in interest earning assets was offset by an increase in interest
expense. The increase in interest expense resulted primarily from a $5.8 million
or 4.1% increase in the average balance of certificates of deposits coupled with
a 42 basis points increase in the average rate paid on such deposits.
NONPERFORMING ASSETS
Nonperforming assets, consisting of nonaccrual loans, restructured loans
and foreclosed real estate, decreased $986 thousand from $6.8 million at March
31, 1995, to $5.8 million at March 31, 1996. For the first quarter 1996,
nonperforming assets increased $592 thousand from $5.2 million for the quarter
ended December 31, 1995. The ratio of nonperforming assets to total loans and
foreclosed real estate decreased from 2.4% at March 31, 1995, to 1.8% at March
31, 1996. The ratio at March 31, 1996, increased slightly as compared to 1.7% at
December 31, 1995.
PROVISION FOR LOAN LOSSES AND LOAN LOSS EXPERIENCE
The provision for loan losses represents management's determination of the
amount necessary to bring the allowance for loan losses to a level that
management considers adequate to reflect the risk of future losses inherent in
the Company's loan portfolio. In its evaluation of the adequacy of the allowance
for loan losses, management considers past loan loss experience, changes in the
composition of nonperforming loans, the condition of borrowers facing financial
pressure, the relationship of the current level of the allowance to the credit
portfolio and to nonperforming loans and existing economic conditions. However,
the process of determining the adequacy of the allowance is necessarily
judgmental and subject to changes in external conditions. Accordingly, there can
be no assurance that existing levels of the allowance will ultimately prove
adequate to cover actual loan losses.
The allowance for loan losses was $3.7 million at March 31, 1996, and
$3.6 million at December 31, 1995, representing 64.2% and 70.3% of nonperforming
assets at those dates, respectively.
<PAGE>
<TABLE>
SECURITIES
Investment securities and securities available for sale consist of the following: (in thousands)
<CAPTION>
March 31, 1996
----------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Investment securities
Obligations of U.S. Treasury ..... $ 63,019 $ 476 $ 26 $ 63,469
Obligations of U.S. Agencies ..... 4,036 -- 30 4,006
Obligations of state and political
subdivision ................... 1,276 1 12 1,265
Other debt securities ............ 4,712 -- 13 4,699
-------- -------- -------- --------
73,043 477 81 73,439
-------- -------- -------- --------
Securities available for sale
Obligations of U.S. Treasury ..... 25,791 626 291 26,126
Other debt securities ............ 7,934 714 6 8,642
Equity securities ................ 2,588 -- -- 2,588
-------- -------- -------- --------
36,313 1,340 297 37,356
-------- -------- -------- --------
Total securities .............. $109,356 $1,817 $ 378 $110,795
======== ======== ======== ========
December 31, 1995
----------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
----------- ----------- ---------- -----------
Investment securities
Obligations of U.S. Treasury .... $ 65,223 $ 942 $ 26 $ 66,139
Obligations of U.S. agencies .... 8,037 7 -- 8,044
Obligations of states & political
subdivisions ................. 1,278 -- -- 1,278
Other debt securities ........... 150 -- -- 150
-------- -------- -------- --------
74,688 949 26 75,611
-------- -------- -------- --------
Securities available for sale
Obligations of U.S. Treasury .... 40,888 1,466 184 42,170
Obligations of U.S. agencies .... 23,282 -- 341 22,941
Equity securities ............... 2,434 -- -- 2,434
-------- -------- -------- --------
66,604 1,466 525 67,545
-------- -------- -------- --------
Total securities ............. $141,292 $ 2,415 $551 $143,156
======== ======== ======== ========
</TABLE>
<PAGE>
<TABLE>
At March 31, 1996, the contractual maturities of investment securities and
securities available for sale are as follows: (in thousands)
<CAPTION>
Securities
Investment Securities Available for Sale
--------------------- ------------------
Amortized Market Amortized Market
Cost Value Cost Value
----------- -------- --------- --------
<S> <C> <C> <C> <C>
Within 1 year ............... $33,250 $33,404 $ -- $ --
After 1 but within 5 years .. 35,020 35,281 21,717 21,831
After 5 but within 10 years . 2,107 2,098 9,747 9,965
After 10 years .............. 2,666 2,656 2,261 2,972
Equity securities ........... -- -- 2,588 2,588
------- ------- ------- -------
Total $73,043 $73,439 $36,313 $37,356
======= ======= ======= =======
</TABLE>
<TABLE>
CAPITAL ADEQUACY
The table below presents the Company's capital position as of March 31, 1996: (dollars in thousands)
<S> <C>
Stockholders' equity $41,577
Intangible assets (1,866)
Unrealized gain-securities available for sale,
net of income taxes (709)
--------
Tier 1 capital 39,711
Allowable portion of allowance
for loan losses 3,704
-------
Total risk-based capital $43,415
=======
Risk weighted assets $296,341
========
<CAPTION>
Minimum
Actual Requirement
------------- -----------
<S> <C> <C>
Risk-based ratio
Tier 1 13.16% 4.00%
Total 14.41 8.00
Leverage capital ratio 8.08 3.00
</TABLE>
<PAGE>
LIQUIDITY
Liquidity is the ability to provide sufficient resources to meet all
financial obligations and finance prospective business opportunities. Liquidity
levels over any given period of time are a product of the Company's operating,
financing and investing activities. The extent of such activities are often
shaped by such external factors as competition for deposits and demand for
loans.
Funding for the Company's loans and investments is derived primarily from
deposits, along with interest and principal payments on loans and investments.
At March 31, 1996, total deposits decreased by $3.2 million from $436.5 million
at December 31, 1995. However, total deposits increased by $11.9 million from
$421.4 million at March 31, 1995.
In 1995, loan production continued to be the Company's principal investing
activity. Net loans at March 31, 1996 amounted to $312.6 million, compared to
$307.5 million at December 31, 1995, an increase of $5.1 million for the
quarter.
The Company's most liquid assets are cash and due from banks and federal
funds sold. At March 31, 1996, the total of such assets amounted to $51.9
million compared to $25.1 million at December 31, 1995, an increase of $26.8
million. The increase resulted from the sale of $38.3 million of securities in
which the proceeds were temporarily placed in federal funds pending
reinvestment.
The Company's available for sale ("AFS") securities portfolio is also a
significant source of liquidity. At March 31, 1996, the Company's AFS portfolio
amounted to $37.4 million or 34% of total investment down from $67.5 million or
47% at December 31, 1995. The decrease is attributable to the aforementioned
sale of securities in which the proceeds are pending reinvestment.
In addition to the aforementioned sources of liquidity, the Company derives
liquidity from various other sources, including federal funds purchased from
other banks, the Federal Reserve discount window and sales of securities under
repurchase agreements. The Bank also has a $47.5 million line of credit
available through its membership in the Federal Home Loan Bank of New York.
Management believes that the Company's sources of funds are sufficient to
meet its funding requirements.
<PAGE>
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Form 10-K filed for the year ended December 31, 1995.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibit is furnished herewith:
EXHIBIT NO.
11 Statement Re: Computation of Per Share Earnings
(b) No reports on Form 8-K have been filed during the quarter ended March
31, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERCHANGE FINANCIAL SERVICES CORPORATION
by: /S/ROBERT N. HARRIS
Robert N. Harris
Executive Vice President
<TABLE>
EXHIBIT 11
COMPUTATION OF PER SHARE EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
Three months ended
March 31,
---------------------------
1996 1995
----------- -----------
<S> <C> <C>
Net income $ 1,612 $ 1,405
Preferred dividend requirements $ - $ 29
Weighted average common shares outstanding 2,834 2,832
--------- ---------
NET INCOME PER COMMON SHARE $0.57 $0.49
========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-Mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Mar-31-1996
<CASH> 21,765
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 30,200
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 37,356
<INVESTMENTS-CARRYING> 73,043
<INVESTMENTS-MARKET> 73,439
<LOANS> 316,336
<ALLOWANCE> 3,714
<TOTAL-ASSETS> 490,606
<DEPOSITS> 433,238
<SHORT-TERM> 11,232
<LIABILITIES-OTHER> 4,559
<LONG-TERM> 0
<COMMON> 4,733
0
0
<OTHER-SE> 36,844
<TOTAL-LIABILITIES-AND-EQUITY> 490,606
<INTEREST-LOAN> 7,066
<INTEREST-INVEST> 1,913
<INTEREST-OTHER> 228
<INTEREST-TOTAL> 9,207
<INTEREST-DEPOSIT> 3,598
<INTEREST-EXPENSE> 3,748
<INTEREST-INCOME-NET> 5,459
<LOAN-LOSSES> 250
<SECURITIES-GAINS> 235
<EXPENSE-OTHER> 3,968
<INCOME-PRETAX> 2,480
<INCOME-PRE-EXTRAORDINARY> 2,480
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,612
<EPS-PRIMARY> 0.57
<EPS-DILUTED> 0.57
<YIELD-ACTUAL> 4.779
<LOANS-NON> 3,732
<LOANS-PAST> 0
<LOANS-TROUBLED> 1,463
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,647
<CHARGE-OFFS> 240
<RECOVERIES> 57
<ALLOWANCE-CLOSE> 3,714
<ALLOWANCE-DOMESTIC> 3,714
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 383
</TABLE>
