<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended June 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from to
------------ ------------
Commission File Number 1-8930
------------------
H. F. AHMANSON & COMPANY
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 95-0479700
------------------------------ ---------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4900 Rivergrade Road, Irwindale, California 91706
------------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code. (818) 960-6311
-------------
Exhibit Index appears on page: 30
Total number of sequentially numbered pages: ___
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 and 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such 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 June 30, 1995: $.01 par value - 117,482,087 shares.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
--------------------
The financial statements included herein have been prepared by the
Registrant, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of the Registrant, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the results of operations for the periods covered have been
made. Certain information and note disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules
and regulations, although the Registrant believes that the disclosures are
adequate to make the information presented not misleading.
It is suggested that these condensed financial statements be read in
conjunction with the financial statements and the notes thereto included in
the Registrant's latest annual report on Form 10-K. The results for the
periods covered hereby are not necessarily indicative of the operating
results for a full year.
<PAGE>
H. F. AHMANSON & COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Assets June 30, 1995 December 31, 1994
- ------ ------------- -----------------
<S> <C> <C>
Cash and amounts due from banks $ 687,257 $ 782,678
Securities purchased under
agreements to resell 1,099,000 952,000
Other short-term investments 24,108 311,942
----------- -----------
Total cash and cash equivalents 1,810,365 2,046,620
Other investment securities held to
maturity [market value $259,463
(June 30, 1995) and $270,187
(December 31, 1994)] 259,332 276,945
Other investment securities available
for sale [amortized cost $9,197
(June 30, 1995) and $10,670
(December 31, 1994)] 9,159 10,117
Investment in stock of Federal Home
Loan Bank (FHLB) 472,872 439,891
Mortgage-backed securities (MBS)
held to maturity [market value
$17,604,863 (June 30, 1995) and
$10,013,827 (December 31, 1994)] 17,358,836 10,339,864
MBS available for sale [amortized cost
$879,860 (June 30, 1995) and
$2,539,504 (December 31, 1994)] 881,146 2,449,556
Loans receivable less allowance for
losses of $389,927 (June 30, 1995) and
$400,232 (December 31, 1994) 30,445,955 35,992,566
Loans held for sale [market value
$125,015 (June 30, 1995) and
$9,192 (December 31, 1994)] 123,415 9,179
Accrued interest receivable 153,699 212,947
Real estate held for development and
investment (REI) less allowance for
losses of $331,143 (June 30, 1995) and
$333,825 (December 31, 1994) 313,918 313,316
Real estate owned held for sale (REO)
less allowance for losses of
$35,824 (June 30, 1995) and
$44,726 (December 31, 1994) 191,524 161,948
Premises and equipment 624,988 614,817
Goodwill and other intangible assets 501,220 468,542
Other assets 289,926 314,853
Income taxes 35,761 74,621
----------- -----------
$53,472,116 $53,725,782
=========== ===========
Liabilities and Stockholders' Equity
- ------------------------------------
Deposits $42,988,665 $40,655,016
Short-term borrowings under agreements
to repurchase securities sold 526,389 2,253,805
Other short-term borrowings 3,452 100,000
FHLB and other borrowings 6,169,705 6,822,280
Other liabilities 722,460 930,080
----------- -----------
Total liabilities 50,410,671 50,761,181
Stockholders' equity 3,061,445 2,964,601
----------- -----------
$53,472,116 $53,725,782
=========== ===========
</TABLE>
<PAGE>
H. F. AHMANSON & COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(dollars in thousands except per share data)
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest income:
Interest on real estate loans $ 615,281 $ 548,572 $ 1,246,072 $ 1,135,715
Interest on MBS 294,383 160,406 514,470 284,572
Interest and dividends on investments 39,901 33,722 83,006 61,165
----------- ----------- ----------- -----------
Total interest income 949,565 742,700 1,843,548 1,481,452
----------- ----------- ----------- -----------
Interest expense:
Deposits 484,778 287,315 924,236 578,362
Short-term borrowings 45,143 52,441 94,661 95,776
FHLB and other borrowings 109,469 66,063 219,232 119,828
----------- ----------- ----------- -----------
Total interest expense 639,390 405,819 1,238,129 793,966
----------- ----------- ----------- -----------
Net interest income 310,175 336,881 605,419 687,486
Provision for loan losses 25,465 33,069 52,009 108,581
----------- ----------- ----------- -----------
Net interest income after
provision for loan losses 284,710 303,812 553,410 578,905
----------- ----------- ----------- -----------
Other income:
Gain on sales of MBS 8,677 - 9,280 4,868
Gain (loss) on sales of loans 1,779 (6,254) 2,010 (10,035)
Loan servicing income 14,896 14,994 27,862 31,018
Other fee income 26,382 27,414 50,354 54,299
Gain on sales of investment securities 102 - 112 -
Other operating income 1,584 725 (216) 2,150
----------- ----------- ----------- -----------
53,420 36,879 89,402 82,300
----------- ----------- ----------- -----------
Other expenses:
General and administrative expenses (G&A) 201,305 185,913 384,057 377,682
Operations of REI 2,621 4,775 3,708 10,292
Operations of REO 19,605 21,857 40,658 48,935
Amortization of goodwill and other
intangible assets 9,089 5,750 18,154 11,981
----------- ----------- ----------- -----------
232,620 218,295 446,577 448,890
----------- ----------- ----------- -----------
Earnings before provision for income taxes 105,510 122,396 196,235 212,315
Provision for income taxes 43,276 48,855 83,305 83,419
----------- ----------- ----------- -----------
Net earnings $ 62,234 $ 73,541 $ 112,930 $ 128,896
=========== =========== =========== ===========
Earnings per common share:
Primary $ 0.42 $ 0.52 $ 0.74 $ 0.88
Fully diluted 0.42 0.51 0.74 0.87
Common shares outstanding, weighted average:
Primary 118,054,317 117,198,628 117,742,947 117,205,981
Fully diluted 129,932,055 129,071,985 129,951,435 129,102,867
Return on average assets 0.45% 0.58% 0.41% 0.51%
Return on average equity 8.19 9.97 7.49 8.72
Return on average tangible equity* 11.05 12.51 10.27 11.12
Ratio of G&A expenses to average assets 1.47 1.46 1.40 1.49
<FN>
*Net earnings excluding amortization of goodwill and other intangible assets as a percentage of average equity
excluding goodwill and other intangible assets.
</TABLE>
<PAGE>
H. F. AHMANSON & COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands)
<TABLE>
<CAPTION>
For The Six
Months Ended June 30,
------------------------
1995 1994
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 112,930 $ 128,896
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Provision for losses on loans and real estate 71,533 136,495
Proceeds from sales of loans originated for sale 239,438 472,155
Loans originated for sale (312,334) (329,411)
Increase (decrease) in other liabilities (224,482) 74,171
Other, net 21,298 152,933
----------- -----------
Net cash provided by (used in) operating activities (91,617) 635,239
----------- -----------
Cash flows from investing activities:
Proceeds from sales of MBS available for sale 1,575,783 405,069
Proceeds from sales of nonaccrual loans - 57,700
Principal payments on MBS 487,583 574,186
Principal payments on loans 766,986 1,741,861
Loans originated for investment (net of refinances) (2,812,001) (4,413,198)
MBS purchased (458) (518,810)
Loans purchased (40,376) (1,898)
Proceeds from maturities of other investment securities 22,627 -
Proceeds from sales of investment securities available for sale 165 -
Other investment securities purchased (3,460) (332,630)
Proceeds from sales of REO 155,041 150,895
Other, net (75,087) 75,829
----------- -----------
Net cash provided by (used in) investing activities 76,803 (2,260,996)
----------- -----------
Cash flows from financing activities:
Net increase (decrease) in deposits 1,044,545 (387,110)
Net deposits purchased 1,289,104 -
Net increase (decrease) in borrowings maturing in 90 days or less (1,823,964) 450,884
Proceeds from other borrowings 122,176 2,110,162
Repayment of other borrowings (776,514) (1,549,564)
Dividends to stockholders (76,788) (76,654)
----------- -----------
Net cash provided by (used in) financing activities (221,441) 547,718
----------- -----------
Net decrease in cash and cash equivalents (236,255) (1,078,039)
Cash and cash equivalents at beginning of period 2,046,620 3,530,128
----------- -----------
Cash and cash equivalents at end of period $ 1,810,365 $ 2,452,089
=========== ===========
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BASIS OF PRESENTATION
The preceding Condensed Consolidated Financial Statements present
financial data of H. F. Ahmanson & Company and Subsidiaries. As used herein
"Ahmanson" means H. F. Ahmanson & Company, a Delaware corporation, and the
"Company" means Ahmanson and its subsidiaries. The Company is one of the
largest residential real estate-oriented financial services companies in the
United States, and is principally engaged in the savings bank business and
related financial service activities. Home Savings of America, FSB ("Home
Savings"), a wholly owned subsidiary of Ahmanson, is currently the largest
savings institution in the United States. Certain amounts in prior periods'
financial statements have been reclassified to conform to the current
presentation.
OVERVIEW
For the second quarter of 1995, the Company recorded net earnings of
$62.2 million, or $0.42 per fully diluted common share, a decline of $11.3
million from the second quarter of 1994, but an increase of $11.5 million from
the first quarter of 1995. Second quarter net earnings when compared to the
first quarter of 1995 reflected higher net interest income, due mainly to an
expansion of 11 basis points in the net interest margin, higher gains on sales
of loans and mortgage-backed securities and moderately lower credit costs.
Partially off-setting these factors were higher general and administrative
expenses.
In the first six months of 1995, the Company earned $112.9 million, or
$0.74 per fully diluted common share, compared to $128.9 million or $0.87 per
fully diluted common share in the first six months of 1994.
Net interest income totaled $310.2 million in the second quarter of 1995
compared to $336.9 million in the second quarter of 1994 and $295.2 million in
the first quarter of 1995. For the second quarter of 1995, the net interest
margin was 2.38% compared to 2.81% in the second quarter of 1994 and 2.27% in
the first quarter of 1995. At June 30, 1995 the net interest margin was
2.45%. The Company's funding costs have remained relatively stable, while the
11th District Cost of Funds Index, to which most of the Company's assets are
tied, continued to rise reflecting increases in funding costs in earlier
months. This has lessened the negative effect of the repricing of this
lagging index that the Company experienced late last year and in the first
quarter of 1995 when market rates were rising rapidly.
ASSET QUALITY
At June 30, 1995, nonperforming assets totaled $898.4 million, or 1.68%
of total assets, compared to $943.2 million or 1.83% of total assets at June
30, 1994, and $878.6 million, or 1.63% of total assets, at March 31, 1995.
Troubled debt restructurings totaled $141.3 million at June 30, 1995. The
Company's ratio of allowances for losses to nonperforming assets was 45.6% at
June 30, 1995, compared to 50.5% at June 30, 1994, and 46.7% at March 31,
1995.
During the second quarter of 1995, the Company provided $25.5 million for
loan losses, compared to $33.1 million in the second quarter of 1994 and $26.5
million in the first quarter of 1995. Net loan charge-offs for the second
quarter totaled $26.6 million, compared to $39.1 million in the second quarter
of 1994, and $35.7 million in the first quarter of 1995.
<PAGE>
Real estate development assets, net of the allowance for losses, totaled
$313.9 million at June 30, 1995, compared to $411.9 million at June 30, 1994,
and $323.2 million at March 31, 1995. The allowance for losses on real estate
development assets totaled $331.1 million, or 51.3% of gross real estate
assets at June 30, 1995.
OTHER INCOME
In the second quarter of 1995, other income was $53.4 million, compared
to $36.9 million in the second quarter of 1994, and $36.0 million in the first
quarter of 1995. The Company's other income was bolstered by $10.5 million
from the gains on the sale of loans and mortgage-backed securities. All fixed
rate loans are originated for sale. The Company sold $1.4 billion in
adjustable rate mortgage-backed securities available for sale at a gain of
$8.7 million, in preparation for the sale of its New York deposit franchise to
GreenPoint Bank.
Effective April 1, 1995, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 122, "Accounting for Mortgage Servicing
Rights, an Amendment to FASB No. 65." The overall impact on the Company's
financial statements of adopting SFAS No. 122 was an increase in net earnings
for the quarter and first six months of 1995 of $1.2 million, or $0.01 per
fully diluted common share. Results from prior periods have not been
restated.
OTHER EXPENSES
G&A expenses totaled $201.3 million in the second quarter of 1995,
compared to $185.9 million in the second quarter of 1994 and $182.8 million in
the first quarter of 1995. The majority of the increase in G&A, compared to
the first quarter of 1995, was due to costs associated with various new
business development efforts currently underway, the acquisition and operating
costs of new branch systems, and the fact that the first quarter of 1995
included a rebate of $5.7 million in Federal Deposit Insurance Corporation
("FDIC") premiums.
G&A expenses as a percentage of average assets were 1.47% in the second
quarter of 1995, compared to 1.46% in the second quarter of 1994 and 1.33% in
the first quarter of 1995. For the first six months of 1995, the G&A ratio
was 1.40% compared to 1.49% for the first six months of 1994. Expressed as an
efficiency ratio that measures G&A expenses as a percentage of net interest
income and loan servicing and other fee income, the operating efficiency ratio
was 57.3% in the second quarter of 1995, compared to 49.0% in the second
quarter of 1994 and 55.0% in the first quarter of 1995.
LOAN ORIGINATIONS
The Company originated $1.6 billion of residential mortgages in the
second quarter of 1995, compared to $2.8 billion in the second quarter of 1994
and $1.7 billion in the first quarter of 1995. Of the second quarter 1995
production, 82% were adjustable rate mortgage loans ("ARMs"), compared to 97%
in both the second quarter of 1994 and the first quarter of 1995. In the
second quarter of 1995, 13% of the Company's ARM originations were tied to
U.S. Treasury securities ("Treasury ARMs"), reflecting the Company's goal of
diversifying its mortgage portfolio.
Purchase loans represented 74.4% of the total second quarter 1995
originations, compared to 58.5% in the second quarter of 1994, and 73.2% in
the first quarter of 1995. The Company's pipeline of loans in process totaled
$1.2 billion at June 30, 1995, with 73.1% being ARMs.
<PAGE>
In late May 1995, the Company launched its consumer lending program and
took in over 600 home equity loan applications in the second quarter. The
average balance of applications received was $28,000. The Company funded
$544,000 in consumer home equity loans during the quarter. There were
approximately 550 loan applications totaling $15.6 million in the consumer
loan pipeline. A full menu of consumer loan products will be available
through all Home Savings' branches by year-end 1995.
DEPOSIT ACTIVITY
At the end of the second quarter of 1995, the Company had total deposits
of $43.0 billion. Included in that total was $1.2 billion of deposits
acquired from Household Bank on June 16, 1995. In that transaction Home
Savings also acquired 52 branches, 16 of which were consolidated with existing
Home Savings offices.
On May 15, 1995, the Company announced that Home Savings had agreed to
sell its New York retail deposit branch system, consisting of 60 branches and
$8.3 billion in deposits, to GreenPoint Bank for a premium of approximately
$660 million, or 8%. That transaction is subject to regulatory approval and
is expected to close in the third or fourth quarter of 1995.
CAPITAL
At June 30, 1995, Home Savings' federal capital ratios continued to
exceed regulatory requirements for well-capitalized institutions, the highest
regulatory standard.
<PAGE>
RESULTS OF OPERATIONS
NET INTEREST INCOME
Net interest income was $310.2 million in the second quarter of 1995, a
decrease of $26.7 million or 8%, and was $605.4 million in the first six
months of 1995, a decrease of $82.1 million or 12%, compared to the same
periods of 1994, reflecting compression of the net interest margin. The
compression began to abate in the first quarter of 1995 and the net interest
margin continued to expand during the second quarter of 1995 as yields
increased on the Company's ARM portfolio while the Company's funding costs
were relatively stable.
The following tables present the Company's Consolidated Summary of
Average Financial Condition and net interest income for the periods indicated.
Average balances on interest-earning assets and interest-costing liabilities
are computed on a daily basis and other average balances are computed on a
monthly basis. Interest income and expense and the related average balances
include the effect of discounts or premiums. Nonaccrual loans are included in
the average balances, and delinquent interest on such loans has been excluded
from interest income.
<TABLE>
<CAPTION>
Three Months Ended June 30,
---------------------------------------------------------------
1995 1994
------------------------------- -------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
----------- ---------- ------ ----------- ---------- ------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans $33,185,030 $ 615,281 7.42% $34,881,306 $ 548,572 6.29%
MBS 16,377,757 294,383 7.19 10,223,672 160,406 6.28
----------- --------- ----------- ---------
Total loans and MBS 49,562,787 909,664 7.34 45,104,978 708,978 6.29
Investment securities 2,617,970 39,901 6.10 2,875,652 33,722 4.69
----------- --------- ----------- ---------
Interest-earning assets 52,180,757 949,565 7.28 47,980,630 742,700 6.19
--------- ---------
Other assets 2,689,533 2,921,484
----------- -----------
Total assets $54,870,290 $50,902,114
=========== ===========
Interest-costing liabilities:
Deposits $41,829,971 484,778 4.64 $37,443,943 287,315 3.07
----------- --------- ----------- ---------
Borrowings:
Short-term 2,801,128 45,143 6.45 5,156,044 52,441 4.07
FHLB and other 6,331,260 109,469 6.92 4,250,717 66,063 6.22
----------- --------- ----------- ---------
Total borrowings 9,132,388 154,612 6.77 9,406,761 118,504 5.04
----------- --------- ----------- ---------
Interest-costing liabilities 50,962,359 639,390 5.02 46,850,704 405,819 3.46
--------- ---------
Other liabilities 867,614 1,101,692
Stockholders' equity 3,040,317 2,949,718
----------- -----------
Total liabilities and
stockholders' equity $54,870,290 $50,902,114
=========== ===========
Excess interest-earning assets/
Interest rate spread $ 1,218,398 2.26 $ 1,129,926 2.73
=========== ===========
Net interest income/
Net interest margin $ 310,175 2.38 $ 336,881 2.81
========= =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30,
---------------------------------------------------------------
1995 1994
------------------------------- -------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
----------- ----------- ------ ----------- ----------- ------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans $34,684,019 $1,246,072 7.19% $36,007,754 $1,135,715 6.31%
MBS 14,731,303 514,470 6.98 8,784,467 284,572 6.48
----------- --------- ----------- ----------
Total loans and MBS 49,415,322 1,760,542 7.13 44,792,221 1,420,287 6.34
Investment securities 2,724,663 83,006 6.09 2,889,313 61,165 4.23
----------- ---------- ----------- ----------
Interest-earning assets 52,139,985 1,843,548 7.07 47,681,534 1,481,452 6.21
---------- ----------
Other assets 2,771,997 2,960,618
----------- -----------
Total assets $54,911,982 $50,642,152
=========== ===========
Interest-costing liabilities:
Deposits $41,587,318 924,236 4.44 $37,614,200 578,362 3.08
----------- ---------- ----------- ----------
Borrowings:
Short-term 2,978,276 94,661 6.36 5,187,306 95,776 3.69
FHLB and other 6,441,765 219,232 6.81 3,806,168 119,828 6.30
----------- ---------- ----------- ----------
Total borrowings 9,420,041 313,893 6.66 8,993,474 215,604 4.79
----------- ---------- ----------- ----------
Interest-costing liabilities 51,007,359 1,238,129 4.85 46,607,674 793,966 3.41
---------- ----------
Other liabilities 889,589 1,079,717
Stockholders' equity 3,015,034 2,954,761
----------- -----------
Total liabilities and
stockholders' equity $54,911,982 $50,642,152
=========== ===========
Excess interest-earning assets/
Interest rate spread $ 1,132,626 2.22 $ 1,073,860 2.80
=========== ===========
Net interest income/
Net interest margin $ 605,419 2.32 $ 687,486 2.88
========= =========
</TABLE>
<PAGE>
The following table presents the changes for the second quarter and first
six months of 1995 from the respective periods of 1994 in the interest income
and expense attributable to various categories of assets and liabilities for
the Company as allocated to changes in average balances and changes in average
rates. Because of numerous and simultaneous changes in both balances and
rates from period to period, it is not possible to allocate precisely the
effects thereof. For purposes of this table, the change due to volume is
initially calculated as the current period change in average balance
multiplied by the average rate during the preceding year's period and the
change due to rate is calculated as the current period change in average rate
multiplied by the average balance during the preceding year's period. Any
change that remains unallocated after such calculations is allocated
proportionately to changes in volume and changes in rates.
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
-------------------------------- ----------------------------------
1995 Versus 1994 1995 Versus 1994
Increase/(Decrease) Due to Increase/(Decrease) Due to
--------------------------------- ----------------------------------
Volume Rate Total Volume Rate Total
--------- --------- --------- ---------- ---------- ----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest income on:
Loans $(31,295) $ 98,004 $ 66,709 $ (47,378) $ 157,735 $ 110,357
MBS 110,701 23,276 133,977 207,899 21,999 229,898
Investments (3,912) 10,091 6,179 (5,010) 26,851 21,841
-------- -------- --------- --------- --------- ---------
Total interest income 75,494 131,371 206,865 155,511 206,585 362,096
-------- -------- --------- --------- --------- ---------
Interest expense on:
Deposits 50,780 146,683 197,463 88,689 257,185 345,874
Short-term borrowings (37,989) 30,691 (7,298) (78,640) 77,525 (1,115)
FHLB and other borrowings 35,971 7,435 43,406 89,702 9,702 99,404
-------- -------- --------- --------- --------- ---------
Total interest expense 48,762 184,809 233,571 99,751 344,412 444,163
-------- -------- --------- --------- --------- ---------
Net interest income $ 26,732 $(53,438) $ (26,706) $ 55,760 $(137,827) $ (82,067)
======== ======== ========= ========= ========= =========
</TABLE>
Net interest income decreased $26.7 million, or 8%, in the second quarter
of 1995 as compared to the second quarter of 1994 due to a decrease of 43
basis points in the net interest margin to 2.38% for the second quarter of
1995 from 2.81% for the second quarter of 1994, partially offset by an
increase of $4.2 billion in average interest-earning assets. The decrease of
$82.1 million, or 12%, in net interest income for the first six months of 1995
as compared to the same period of 1994 reflects a decline of 56 basis points
in the net interest margin to 2.32% for the 1995 period from 2.88% for the
1994 period, partially offset by an increase of $4.5 billion in average
interest-earning assets. The increases in average interest-earning assets
were primarily funded with interest-costing liabilities.
In addition, provisions for losses of delinquent interest related to
nonaccrual loans of $12.9 million and $10.1 million in the second quarter of
1995 and 1994, respectively, had the effect of reducing the net interest
margin by ten basis points and eight basis points in the respective periods.
Such provisions came to $26.0 million in the first six months of 1995 and
$21.4 million in the first six months of 1994, reducing the net interest
margin by ten basis points and nine basis points, respectively.
<PAGE>
The compression in the net interest margin for the 1995 second quarter
and six month periods compared to the prior year's periods principally
reflects the lag between changes in the monthly weighted average cost of funds
for Federal Home Loan Bank ("FHLB") Eleventh District savings institutions as
computed by the FHLB of San Francisco ("COFI") to which a majority of the
Company's interest-earning assets are tied and changes in the repricing of the
Company's interest-costing liabilities in a period of rising interest rates,
and narrowing of the Company's funding advantage relative to COFI. However,
the net interest margin expanded 11 basis points to 2.38% in the second
quarter from 2.27% for the first quarter of 1995. During the second quarter
of 1995, the Company's funding costs remained relatively stable while the
yields on COFI-indexed assets continued to rise. The Company's cost of funds
was 11 basis points and 27 basis points below the average of COFI of 5.13% and
3.73% during the second quarter of 1995 and 1994, respectively. During the
first six months of 1995 and 1994, the Company's cost of funds was 16 basis
points and 30 basis points below the average of COFI of 5.01% and 3.71% for
the respective 1995 and 1994 periods.
The Company believes that its net interest income is somewhat insulated
from interest rate fluctuations within a fairly wide range primarily due to
the adjustable rate nature of its loan and MBS portfolio. However, increases
in rates could contribute to compression of the net interest margin. In
addition, substantially all ARMs originated since 1981 have maximum and
minimum interest rates and all ARMs originated after 1987 have a maximum
interest rate. In the event of sustained significant increases in rates, such
maximum interest rates could also contribute to compression of the net
interest margin. For information regarding the Company's strategies related
to COFI and limiting interest rate risk, see "Financial Condition -
Asset/Liability Management."
PROVISION FOR LOAN LOSSES
The provision for loan losses was $25.5 million in the second quarter of
1995, a decrease of $7.6 million or 23% from the $33.1 million provision for
the second quarter of 1994. The provision for loan losses was $52.0 million
in the first six months of 1995, a decrease of $56.6 million or 52% from the
$108.6 million provision for the first six months of 1994 which included $30
million representing the Company's estimated losses from real property damage
sustained by its borrowers in the Northridge, California earthquake in January
1994. For additional information regarding the allowance for loan losses, see
"Financial Condition - Asset Quality - Allowance for Loan Losses."
OTHER INCOME
GAIN ON SALES OF MBS. During the second quarter of 1995, MBS totaling
$1.4 billion were sold for a pre-tax gain of $8.7 million. There were no sales
of MBS in the second quarter of 1994. During the first six months of 1995,
MBS totaling $1.6 billion were sold for a pre-tax gain of $9.3 million,
compared to a pre-tax gain of $4.9 million on sales of MBS totaling $400.2
million in the first six months of 1994.
<PAGE>
GAIN (LOSS) ON SALES OF LOANS. During the second quarter of 1995, loans
originated for sale totaling $193.5 million were sold for a pre-tax gain of
$1.8 million as compared to such loans totaling $113.1 million sold for a pre-
tax loss of $6.3 million in the second quarter of 1994. In the first six
months of 1995, loans originated for sale totaling $236.8 million were sold
for a pre-tax gain of $2.0 million compared to such loans totaling $480.6
million sold for a pre-tax loss of $10.0 million in the first six months of
1994.
The Company adopted SFAS No. 122 effective April 1, 1995. Results from
prior periods have not been restated. In accordance with SFAS No. 122, the
Company capitalizes mortgage servicing rights ("MSR") related to mortgage
loans originated for sale. The total cost of the mortgage loans originated for
sale is allocated to the MSR and the mortgage loans without the MSR based on
their relative fair values. The MSR are amortized over the servicing period
as a component of net loan servicing income.
The adoption of SFAS No. 122 resulted in MSR of $3.2 million, which is
included in "Other assets" in the Consolidated Statement of Financial
Condition, and increased the "Gain on sale of loans" by $2.0 million for the
1995 second quarter and six month periods. The MSR are periodically evaluated
for impairment based on the fair value of the MSR. There was no impairment of
these MSR recognized at June 30, 1995.
LOAN SERVICING INCOME. During the first six months of 1995 loan
servicing income was $27.9 million, a decrease of $3.2 million or 10% from
$31.0 million in the first six months of 1994. The decrease was primarily due
to a $3.4 billion decline in the average portfolio of loans serviced for
investors, partially offset by an increase of six basis points in the retained
loan yield. The decline in the average portfolio of loans serviced for
investors was primarily due to the sale of servicing rights related to $2
billion of fixed-rate single family loans in the fourth quarter of 1994. At
June 30, 1995 and 1994, the portfolio of loans serviced for investors was
$12.1 billion and $14.2 billion, respectively.
OTHER FEE INCOME. Other fee income was $50.4 million for the first six
months of 1995, a decrease of $3.9 million or 7% from $54.3 million for the
same period of 1994. The decrease was primarily due to a decline of $3.6
million in investment and insurance services commissions.
OTHER OPERATING INCOME. During the first six months of 1995, other
operating income was a net loss of $0.2 million, a decrease of $2.4 million
from income of $2.2 million for the same period of 1994. The decrease was
primarily due to the loss on sale of the remaining Ohio branch amounting to
$1.6 million in the first quarter of 1995.
OTHER EXPENSES
G&A EXPENSES. G&A expenses were $201.3 million in the second quarter of
1995, an increase of $15.4 million or 8% from $185.9 million in the second
quarter of 1994 and were $384.1 million for the first six months of 1995, an
increase of $6.4 million or 2% from $377.7 million for the same period of
1994. The increases were primarily due to costs associated with various new
business development efforts currently underway, the acquisition and operating
costs of new retail deposit branch systems and lower net deferred loan
origination costs related to the lower volume of loans originated during the
1995 periods. The increase in the first six months of 1995 was partially
offset by a $5.7 million rebate of FDIC premiums recorded in the first quarter
of 1995 for the July 1, 1994 semi-annual assessment period.
<PAGE>
The ratio of G&A expenses to average assets (the "G&A ratio") was 1.47%
in the second quarter of 1995 compared to 1.46% in the second quarter of 1994,
an increase of one basis point reflecting the 8% increase in G&A expenses,
partially offset by an increase of 8% in average assets. The G&A ratios for
the first six months of 1995 and 1994 were 1.40% and 1.49%, respectively,
which reflects an 8% increase in average assets, partially offset by the 2%
increase in G&A expenses.
OPERATIONS OF REI. Losses from operations of REI were $2.6 million in
the second quarter of 1995, a decrease of $2.2 million or 45% from $4.8
million in the second quarter of 1994. The decrease reflects a net gain on
sales of REI of $0.7 million for the second quarter of 1995, compared to a net
loss on sales of $3.5 million for the second quarter of 1994, and a decrease
in provision for losses of $4.4 million, partially offset by an increase in
net operating expense of $6.4 million. Losses from operations of REI were
$3.7 million for the first six months of 1995, a decrease of $6.6 million or
64% from $10.3 million compared to the same period of 1994 primarily due to
the net gain on sales of $1.2 million for the first six months of 1995
compared to a net loss of $5.6 million for the same period of 1994.
The Company intends to continue its progress toward a withdrawal from
real estate development activities as soon as practicable. Although the
Company does not intend to acquire new properties, it intends to develop, hold
and/or sell its current properties depending on economic conditions. The
Company has certain projects with long-term holding and development periods.
No new projects have been initiated since 1990. Although management believes
the net realizable value ("NRV") of REI and the related allowance for losses
are fairly stated, declines in NRV and additions to the allowance for losses
could result from continued weakness in the specific project markets, changes
in economic conditions, changes in the Company's cost of funds and revisions
to project business plans, which may reflect decisions by the Company to
accelerate the disposition of the properties.
<PAGE>
OPERATIONS OF REO. Losses from operations of REO were $19.6 million in
the second quarter of 1995, a decrease of $2.3 million or 10% from $21.9
million for the second quarter of 1994. The decrease was primarily due to
declines of $1.6 million in net losses on sales. For the first six months of
1995, losses from operations of REO were $40.7 million, a decrease of $8.3
million or 17% from $48.9 million for the same period of 1994, reflecting
declines of $4.2 million in losses on sales of REO properties and $4.0 million
in the provision for losses.
AMORTIZATION OF GOODWILL AND OTHER INTANGIBLE ASSETS. Amortization of
goodwill and other intangible assets for the second quarter of 1995 was $9.1
million, an increase of $3.3 million or 58% from $5.8 million for the second
quarter of 1994. For the first six months of 1995 amortization of goodwill
and other intangible assets was $18.2 million, an increase of $6.2 million or
52% from $12.0 million for the same period of 1994, reflecting a net increase
in the core deposit premium related to deposits acquired in late 1994 and the
first six months of 1995.
PROVISION FOR INCOME TAXES. The changes in the provision for income
taxes primarily reflect the changes in pre-tax earnings between the comparable
periods. The effective tax rates for the second quarters of 1995 and 1994
were 41.0% and 39.9%, respectively. For the comparable six month periods, the
effective tax rates were 42.5% in 1995 and 39.3% in 1994, reflecting
management's estimate of the Company's full year tax provision.
FINANCIAL CONDITION
The Company's consolidated assets were $53.5 billion at June 30, 1995, a
decrease of $253.7 million or less than 1% from $53.7 billion at December 31,
1994. The Company's primary asset generation business continues to be the
origination of loans on residential real estate properties. The Company
originated $3.3 billion in loans in the first six months of 1995 compared to
$5.2 billion in the first six months of 1994. Loans on single family homes
(one-to-four units) accounted for 78% of the total loan origination volume in
the first six months of 1995, with the balance on multi-family residential
properties, and 89% of total originations were ARMs. In the first six months
of 1995, 8% of the Company's ARM originations were Treasury ARMs.
In the first six months of 1995, 66% of loan originations were on
properties located in California. At June 30, 1995, approximately 97% of the
loan and MBS portfolio was secured by residential properties, including 78%
secured by single family properties.
<PAGE>
The following table summarizes the Company's gross mortgage portfolio by
state and property type at June 30, 1995:
<TABLE>
<CAPTION>
Single Family Multi-Family Commercial and
Properties Properties Industrial Properties Total
---------------------- ---------------------- ----------------------- -----------------------
Gross Gross Gross Gross
Mortgage % of Mortgage % of Mortgage % of Mortgage % of
State Loans Portfolio Loans Portfolio Loans Portfolio Loans Portfolio
- ----- ----------- ---------- ----------- ---------- ------------ ---------- ----------- ----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
California $26,724,056 69.61% $8,330,033 91.72% $1,231,325 74.09% $36,285,414 73.85%
Florida 2,903,485 7.56 27,917 0.31 6,308 0.38 2,937,710 5.98
New York 2,165,806 5.64 285,632 3.15 208,909 12.57 2,660,347 5.41
Illinois 1,977,048 5.15 105,768 1.16 18,129 1.09 2,100,945 4.28
Texas 1,154,763 3.01 82,252 0.91 30,301 1.82 1,267,316 2.58
Other 3,465,014 9.03 250,039 2.75 166,999 10.05 3,882,052 7.90
----------- ---------- ---------- ----------- ------
$38,390,172 78.14 $9,081,641 18.48 $1,661,971 3.38 $49,133,784 100.00%
=========== ========== ========== =========== ======
</TABLE>
The loan and MBS portfolio includes approximately $6.8 billion in
mortgage loans that were originated with loan to value ("LTV") ratios
exceeding 80%, or 14% of the portfolio at June 30, 1995. Approximately 20% of
loans originated during the first six months of 1995 had LTV ratios in excess
of 80%, all of which were loans on single family properties including 6% with
LTV ratios in excess of 90%. The Company takes the additional risk of
originating loans with LTV ratios in excess of 80% into consideration in its
loan underwriting and pricing policies.
ASSET/LIABILITY MANAGEMENT
One of the Company's primary business strategies continues to be the
reduction of volatility in net interest income resulting from changes in
interest rates. This is accomplished by managing the repricing
characteristics of its interest-earning assets and interest-costing
liabilities. (Interest rate reset provisions of both assets and liabilities,
whether through contractual maturity or through contractual interest rate
adjustment provisions, are commonly referred to as "repricing terms.")
In order to manage the interest rate risk inherent in its portfolios of
interest-earning assets and interest-costing liabilities, the Company has
emphasized the origination of COFI ARMs for retention in the loan and MBS
portfolio. During late 1994 the Company began offering ARMs which provide for
interest rates that adjust based upon changes in the yields of U. S. Treasury
securities. The Company originated $236.5 million of these Treasury ARMs
during the first six months of 1995. At June 30, 1995, 95.1% of the Company's
$48.8 billion loan and MBS portfolio consisted of ARMs indexed primarily to
COFI, unchanged from 95.1% of the $48.8 billion loan and MBS portfolio at
December 31, 1994. The average factor above COFI on the Company's COFI ARM
portfolio was 247 basis points at June 30, 1995, up three basis points from
244 basis points at December 31, 1994.
Historically, the Company has maintained its cost of funds at a level
below COFI. In a period of rising market interest rates, the favorable
differential between the Company's cost of funds and COFI could decline, or
become negative, which could result in compression of the Company's interest
rate margin. Such a compression occurred in the rising interest rate
environment during 1994. The margin compression began to improve during the
first quarter of 1995, with continuing improvement in the second quarter of
1995 as the Company's cost of funds have remained relatively stable, while
COFI continued to rise.
<PAGE>
The Company's basic interest rate risk management strategy includes a
goal of having the combined repricing terms of its interest-costing
liabilities not differ materially from those of the FHLB Eleventh District
savings institutions in aggregate. The Company's approach to managing
interest rate risk in an environment where market interest rates are believed
to have the potential to rise includes the extension of repricing terms and
the spreading of clustered maturities on term deposits and other interest-
costing liabilities, combined with emphasis on more responsive assets,
including diversification away from COFI on certain interest-earning assets.
The following table presents the components of the Company's interest
rate sensitive asset and liability portfolios by repricing periods
(contractual maturity as adjusted for frequency of repricing) as of June 30,
1995:
<TABLE>
<CAPTION>
Repricing Periods
Percent -------------------------------------------------------------------
of Within
Balance Total 6 Months Months 7-12 1-5 Years 5-10 Years Years Over 10
----------- ------- ----------- ----------- ----------- ---------- -------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Investment securities $ 1,864,471 4% $ 1,607,635 $ - $ 256,836 $ - $ -
Impact of hedging (LIBOR-indexed
amortizing swaps) - - (124,419) - 124,419 - -
----------- --- ----------- ----------- ----------- --------- --------
Total investment securities 1,864,471 4 1,483,216 - 381,255 - -
----------- --- ----------- ----------- ----------- --------- --------
Loans and MBS
MBS
ARMs 17,122,105 34 17,122,105 - - - -
Other 1,117,877 2 21,329 62,206 560,206 44,625 429,511
Loans
ARMs 29,306,310 58 28,062,450 425,400 818,460 - -
Other 1,263,060 2 240,019 48,591 315,099 305,527 353,824
Impact of hedging (interest
rate swaps) - - 1,243,860 (425,400) (818,460) - -
----------- --- ----------- ----------- ----------- --------- --------
Total loans and MBS 48,809,352 96 46,689,763 110,797 875,305 350,152 783,335
----------- --- ----------- ----------- ----------- --------- --------
Total interest-earning assets $50,673,823 100% $48,172,979 $ 110,797 $ 1,256,560 $ 350,152 $783,335
=========== === =========== =========== =========== ========= ========
Interest-costing liabilities:
Deposits
Transaction accounts $12,775,073 26% $12,775,073 $ - $ - $ - $ -
Term accounts 30,213,592 61 17,375,497 8,898,165 3,924,253 15,636 41
----------- --- ----------- ----------- ----------- --------- --------
Total deposits 42,988,665 87 30,150,570 8,898,165 3,924,253 15,636 41
----------- --- ----------- ----------- ----------- --------- --------
Borrowings
Short-term 529,841 1 529,841 - - - -
FHLB and other 6,169,705 12 3,310,954 694,581 1,339,262 818,152 6,756
----------- --- ----------- ----------- ----------- --------- --------
Total borrowings 6,699,546 13 3,840,795 694,581 1,339,262 818,152 6,756
----------- --- ----------- ----------- ----------- --------- --------
Total interest-bearing
liabilities $49,688,211 100% $33,991,365 $ 9,592,746 $ 5,263,515 $ 833,788 $ 6,797
=========== === =========== =========== =========== ========= ========
Hedge-adjusted interest-earning
assets more/(less) than
interest-costing liabilities $ 985,612 $14,181,614 $(9,481,949) $(4,006,955) $(483,636) $776,538
=========== =========== =========== =========== ========= ========
Cumulative interest sensitivity gap $14,181,614 $ 4,699,665 $ 692,710 $ 209,074 $985,612
=========== =========== =========== ========= ========
Percentage of hedge-adjusted
interest-earning assets
to interest-costing liabilities 101.98%
Percentage of cumulative interest
sensitivity gap to total assets 1.84%
</TABLE>
<PAGE>
The following table presents the interest rates and spreads at the end of
the periods indicated:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
-------- ------------
<S> <C> <C>
Average yield on:
Loans 7.48% 6.74%
MBS 7.33 6.63
Total loans and MBS 7.42 6.71
Investment securities 6.01 5.85
Interest-earning assets 7.37 6.68
Average rate paid on:
Deposits 4.72 4.05
Borrowings:
Short-term 6.70 6.38
FHLB and other 6.99 6.65
Total borrowings 6.97 (1) 6.58 (1)
Interest-bearing liabilities 5.02 4.52
Interest rate spread 2.35 2.16
Net interest margin 2.45 2.24
<FN>
(1) Includes the effect of miscellaneous borrowing costs of approximately
0.32% and 0.27% as of June 30, 1995 and December 31, 1994, respectively.
</TABLE>
ASSET QUALITY
NONPERFORMING ASSETS AND POTENTIAL PROBLEM LOANS. A loan is generally
placed on nonaccrual status when the Company becomes aware that the borrower
has entered bankruptcy proceedings and the loan is delinquent, or when the
loan is past due 90 days as to either principal or interest. The Company
considers a loan to be impaired when, based upon current information and
events, it believes it is probable that the Company will be unable to collect
all amounts due according to the contractual terms of the loan agreement.
For the Company, loans collectively reviewed for impairment include all
single family loans and performing multi-family and commercial and industrial
real estate loans ("major loans") under $2 million, excluding loans which are
individually reviewed based on specific criteria, such as delinquency, debt
coverage, LTV ratio and condition of collateral property. The Company's
impaired loans within the scope of such individual review include nonaccrual
major loans (excluding those collectively reviewed for impairment), troubled
debt restructurings ("TDRs"), and performing major loans and major loans less
than 90 days delinquent ("other impaired major loans") which the Company
believes will be collected in full, but which the Company believes it is
probable will not be collected in accordance with the contractual terms of the
loans.
<PAGE>
The following table presents nonperforming assets (nonaccrual loans and
REO), TDRs and other impaired major loans, net of related specific loss
allowances, by type as of the dates indicated:
<TABLE>
<CAPTION>
June 30, December 31, Increase
1995 1994 (Decrease)
----------- ----------- -----------
(dollars in thousands)
<S> <C> <C> <C>
Nonaccrual loans:
Single family $ 570,577 $ 568,808 $ 1,769
Multi-family 101,217 69,856 31,361
Commercial and industrial
real estate 35,117 42,362 (7,245)
--------- --------- ---------
706,911 681,026 25,885
--------- --------- ---------
REO:
Single family 166,163 135,357 30,806
Multi-family 18,008 14,181 3,827
Commercial and industrial
real estate 7,353 12,410 (5,057)
--------- --------- ---------
191,524 161,948 29,576
--------- --------- ---------
Total nonperforming assets:
Single family 736,740 704,165 32,575
Multi-family 119,225 84,037 35,188
Commercial and industrial
real estate 42,470 54,772 (12,302)
--------- --------- ---------
Total $ 898,435 $ 842,974 $ 55,461
========= ========= =========
TDRs:
Single family $ 37,844 $ 21,885 $ 15,959
Multi-family 60,906 56,824 4,082
Commercial and industrial
real estate 42,516 42,656 (140)
--------- --------- ---------
Total $ 141,266 $ 121,365 $ 19,901
========= ========= =========
Other impaired major loans:
Multi-family $ 11,231 $ 10,652 $ 579
Commercial and industrial
real estate 4,820 1,506 3,314
--------- --------- ---------
$ 16,051 $ 12,158 $ 3,893
========= ========= =========
Ratio of nonperforming assets
to total assets 1.68% 1.57%
========= =========
Ratio of nonperforming assets
and TDRs to total assets
1.94% 1.79%
========= =========
Ratio of allowances for
losses on loans and REO to
nonperforming assets 45.57% 50.12%
========= =========
</TABLE>
The amount of the net recorded investment in impaired loans for which
there is a related specific allowance for losses was $104.8 million, net of an
allowance of $34.8 million, at June 30, 1995 and $71.0 million, net of an
allowance of $29.9 million, at December 31, 1994. The Company's total net
recorded investment in impaired loans (excluding those collectively reviewed
for impairment) was $245.8 million and $204.5 million at June 30, 1995 and
December 31, 1994, respectively.
<PAGE>
The following table presents nonperforming assets, TDRs and other
impaired major loans by state at June 30, 1995:
<TABLE>
<CAPTION>
Nonperforming Assets
----------------------------------------------------
Commercial Other
and Impaired
Single Family Multi-Family Industrial Major
Residential Residential Real Estate Total TDRs Loans
------------- ------------ ----------- --------- -------------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
California $598,390 $106,390 $30,814 $735,594 $ 78,185 $15,024
Florida 30,434 - 179 30,613 419 -
New York 42,990 4,109 2,358 49,457 40,281 -
Illinois 16,319 3,611 5,300 25,230 1,533 -
Texas 9,181 473 - 9,654 6,565 -
Other 39,426 4,642 3,819 47,887 14,283 1,027
-------- -------- ------- -------- -------- -------
$736,740 $119,225 $42,470 $898,435 $141,266 $16,051
======== ======== ======= ======== ======== =======
</TABLE>
Total nonperforming assets were $898.4 million at June 30, 1995, or a
ratio of nonperforming assets to total assets of 1.68%, an increase of $55.5
million or 7% during the first six months of 1995 from $843.0 million, or
1.57% of total assets, at December 31, 1994. Single family nonperforming
assets were $736.7 million at June 30, 1995, an increase of $32.6 million or
5% primarily due to increases in California REO of $26.5 million and
nonaccrual loans secured by California properties of $4.8 million.
Multi-family nonperforming assets were $119.2 million at June 30, 1995,
an increase of $35.2 million or 42% during the first six months of 1995
primarily due to increases in California ($27.9 million), Illinois ($3.1
million) and New Jersey ($1.5 million). Commercial and industrial real estate
nonperforming assets were $42.5 million at June 30, 1995, a decrease of $12.3
million or 22% during the first six months of 1995 primarily due to declines
in California ($7.5 million), New York ($3.3 million) and New Jersey ($1.1
million).
TDRs were $141.3 million at June 30, 1995, an increase of $19.9 million
or 16% from $121.4 million at December 31, 1994 primarily due to increases in
TDRs secured by properties in California ($18.5 million) and New Jersey ($1.1
million). Other impaired major loans totaled $16.1 million at June 30, 1995,
an increase of $3.9 million or 32% from $12.2 million at December 31, 1994
primarily due to a $7.1 million increase in such loans secured by properties
in California, partially offset by a decrease of $1.7 million in New York.
The Company is continuing its efforts to reduce the amount of its
nonperforming assets by aggressively pursuing loan delinquencies through the
collection, workout and foreclosure processes and, if foreclosed, disposing
rapidly of the REO. The Company sold $145.7 million of single family REO and
$40.2 million of multi-family and commercial and industrial REO in the first
six months of 1995. In addition, the Company may, from time to time, offer
packages of nonperforming assets for competitive bids.
ALLOWANCE FOR LOAN LOSSES. Management believes the Company's allowance
for loan losses is adequate at June 30, 1995. The Company's process for
evaluating the adequacy of the allowance for loan losses has three basic
elements: first, the identification of impaired loans; second, the
establishment of appropriate loan loss allowances once individual specific
impaired loans are identified; and third, a methodology for estimating loan
losses based on the inherent risk in the remainder of the loan portfolio.
Based upon this process, consideration of the current economic environment and
other factors, management determines what it considers to be an appropriate
allowance for loan losses.
<PAGE>
The changes in and a summary by type of the allowance for loan losses are
as follows:
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
1995 1994 1995 1994
--------- --------- --------- ---------
(dollars in thousands)
<S> <C> <C> <C> <C>
Beginning balance $391,105 $453,137 $400,232 $438,786
Provision for loan losses 25,465 33,069 52,009 108,581
-------- -------- -------- --------
416,570 486,206 452,241 547,367
-------- -------- -------- --------
Charge-offs:
Single family (19,441) (30,582) (44,163) (56,647)
Multi-family (13,211) (17,468) (23,340) (36,628)
Commercial and industrial
real estate (1,090) (4,931) (8,349) (26,121)
-------- -------- -------- --------
(33,742) (52,981) (75,852) (119,396)
Recoveries 7,099 13,873 13,538 19,127
-------- -------- -------- --------
Net charge-offs (26,643) (39,108) (62,314) (100,269)
-------- -------- -------- --------
Ending balance $389,927 $447,098 $389,927 $447,098
======== ======== ======== ========
Ratio of net charge-offs to average
loans and MBS outstanding during
the periods (annualized) 0.22% 0.35% 0.25% 0.45%
==== ==== ==== ====
</TABLE>
Gross charge-offs on commercial and industrial real estate loans for the
first six months of 1995 include $6.3 million resulting from the foreclosure
of one property in California. During the first six months of 1994, sales of
nonaccrual loans resulted in charge-offs of $6.0 million on single family
properties, $8.7 million on multi-family properties and $13.4 million on
commercial and industrial properties.
The following table sets forth the allocation of the Company's allowance
for loan losses by the percent of loans and MBS in each category at the dates
indicated:
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
-------------------- --------------------
% of Loan % of Loan
and MBS and MBS
Allowance Portfolio Allowance Portfolio
--------- --------- --------- ---------
(dollars in thousands)
<S> <C> <C> <C> <C>
Single family $175,000 0.45% $165,000 0.42%
Multi-family 154,999 1.71 160,232 1.88
Commercial and
industrial
real estate 59,928 3.62 75,000 4.34
-------- --------
$389,927 0.79 $400,232 0.81
======== ========
</TABLE>
<PAGE>
It is possible that the Company's delinquent loans, nonaccrual loans,
TDRs and other impaired major loans and REO may increase and that the Company
may experience additional losses with respect to its real estate loan
portfolio. Although the Company has taken this possibility into consideration
in establishing its allowance for loan losses, future events may warrant
changes to the allowance.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity consists of cash, cash equivalents and certain marketable
investment securities and MBS which are not committed, pledged or required to
liquidate specific liabilities. The liquidity portfolio, totaling
approximately $3.3 billion at June 30, 1995, increased $1.2 billion or 54%
from December 31, 1994 primarily due to a net increase of $2.3 billion in
deposits and the creation of $1.4 billion of liquidity-qualifying MBS,
partially offset by a net reduction in borrowings of $2.5 billion during the
first six months of 1995. Regulations of the Office of Thrift Supervision
("OTS") require each savings institution to maintain, for each calendar month,
an average daily balance of liquid assets equal to at least 5% of the average
daily balance of its net withdrawable accounts plus short-term borrowings
during the preceding calendar month. OTS regulations also require each
savings institution to maintain, for each calendar month, an average daily
balance of short-term liquid assets (generally those having maturities of 12
months or less) equal to at least 1% of the average daily balance of its net
withdrawable accounts plus short-term borrowings during the preceding calendar
month. For June 1995 the average liquidity and average short-term liquidity
ratios of Home Savings were 5.61% and 3.36%, respectively.
Sources of additional liquidity consist primarily of positive cash flows
generated from operations, the collection of principal payments and
prepayments on loans and MBS and increases in deposits and borrowings.
Positive cash flows are also generated through the sale of MBS, loans and
other assets for cash. Sources of borrowings may include borrowings from the
FHLB, commercial paper and public debt issuances, borrowings under reverse
repurchase agreements, commercial bank lines of credit and, under certain
conditions, direct borrowings from the Federal Reserve System. The principal
sources of cash inflows during the first six months of 1995 were an increase
in deposits, principal payments and prepayments on loans and MBS and proceeds
from sales of loans and MBS.
Each of the Company's sources of liquidity is influenced by various
uncertainties beyond the control of the Company. Scheduled loan payments are
a relatively stable source of funds, while loan prepayments and deposit flows
vary widely in reaction to market conditions, primarily market interest rates.
Asset sales are influenced by general market interest rates and other
unforeseeable market conditions. The Company's ability to borrow at
attractive rates is affected by its size, credit rating, the availability of
acceptable collateral and other market-driven conditions.
In order to manage the uncertainty inherent in its sources of funds, the
Company continually evaluates alternate sources of funds and maintains and
develops diversity and flexibility in the number and character of such
sources. The effect of a decline in any one source of funds generally can be
offset by use of an alternate source, although potentially at a different cost
to the Company.
<PAGE>
LOANS RECEIVABLE. The Company's primary use of cash is to fund
internally generated mortgage loans. During the first six months of 1995 cash
of $3.1 billion was used to originate loans. Gross loan originations of $3.3
billion in the first six months of 1995 included $2.7 billion of COFI ARMs
with an average factor of 277 basis points above COFI, $236.5 million of
Treasury ARMs and $347.2 million of fixed rate loans. Fixed rate loans
originated and designated for sale represented approximately 11% of single
family loan originations in the first six months of 1995. Principal payments
on loans were $767.0 million in the first six months of 1995, a decrease of
$974.9 million or 56% from $1.7 billion in the first six months of 1994.
During the first six months of 1995 the Company sold loans totaling
$236.8 million. The Company designates certain loans as held for sale,
including most of its fixed rate originations. At June 30, 1995 the Company
had $123.4 million of loans held for sale.
At June 30, 1995 the Company was committed to fund mortgage loans
totaling $589.3 million, of which $392.0 million or 66% were COFI ARMs, $39.4
million or 7% were Treasury ARMs and $157.9 million or 27% were fixed rate
loans. The Company expects to fund such loans from its liquidity sources.
MBS. During the first six months of 1995 the Company sold $1.6 billion
of MBS available for sale, comprised of $1.5 billion of ARM MBS and $27.9
million of fixed rate MBS. Such sales included $1.4 billion of ARM MBS sold
during the second quarter of 1995 in preparation for the pending sale of the
Company's New York deposit franchise to GreenPoint Bank. The Company
designates certain MBS as available for sale. At June 30, 1995 the Company
had $881.1 million of MBS available for sale.
In May 1995 the Company securitized $6.4 billion of COFI ARMs into
Federal Home Loan Mortgage Corporation collateralized mortgage obligations.
An additional $1.0 billion of ARMs were securitized into private placement
mortgage pass-through securities during the first quarter of 1995. These MBS
increase the Company's access to less expensive collateralized borrowings.
The Company has the intent and ability to hold these MBS until maturity.
DEPOSITS. Savings deposits were $43.0 billion at June 30, 1995, an
increase of $2.3 billion or 6% from $40.7 billion at December 31, 1994,
primarily reflecting deposits purchased of $1.3 billion and a net deposit
inflow of $1.0 billion. On June 16, 1995, the Company completed the purchase
of $1.2 billion in deposits from Household Bank, FSB for a deposit premium of
approximately 4%. As a result of this purchase, the Company acquired 52
retail branches in Southern California of which 16 were consolidated with
existing Home Savings branches. The Company also purchased deposits totaling
$64.3 million from three other California financial institutions, for an
average deposit premium of approximately 2%, and sold deposits totaling $10.2
million in its remaining Ohio branch during the first six months of 1995. In
addition, the net deposit inflow reflected the Company's strategy to increase
certain term and money market deposit accounts by increasing rates offered on
such deposits and reducing higher costing short-term borrowings.
On May 15, 1995, Home Savings announced that it had signed a definitive
agreement with GreenPoint Bank to sell its New York retail deposit branch
system, with deposits totaling approximately $8.3 billion in 60 branches as of
June 30, 1995. The purchase price represents a deposit premium of
approximately $660 million or 8%. Goodwill and other intangibles associated
with the branches, totaling approximately $110.3 million at June 30, 1995,
will be written off. The estimated after-tax gain, net of related expenses
and goodwill write-off, will be approximately $240 million.
<PAGE>
The Company intends to fund the sale with excess liquidity and a
combination of new borrowings and disposition of securities. The Company will
also utilize funds generated from the acquisition of the $1.2 billion in
deposits from Household Bank. As a result of the sale and related funding
transactions, the Company's total assets are expected to decline by
approximately $3.0 billion.
Excluding the after-tax gain on sale of the New York branch system, the
effect of the transactions on future operations is expected to be
approximately earnings neutral. Future deployment of capital generated by the
transaction is expected to be accretive to earnings per share. Reductions in
the Company's net interest income and fee income are expected to be offset by
reductions in G&A expenses and goodwill amortization. The sale is subject to
regulatory approval and is expected to be completed during the third or fourth
quarter of 1995.
The Company intends to continue consideration of branch purchases and
sales as opportunities to consolidate the Company's presence in its key
strategic markets. At June 30, 1995, 63% of the Company's total deposits were
in California, compared to 62% at December 31, 1994.
BORROWINGS. Borrowings totaled $6.7 billion at June 30, 1995, a decrease
of $2.5 billion or 27% from $9.2 billion at December 31, 1994 reflecting
reductions in short-term borrowings of $1.8 billion and FHLB and other
borrowings of $652.6 million.
In the first six months of 1995, the Company had three issuances of
medium term notes totaling $115 million. The notes will mature in three to
seven years and have a weighted average interest rate of 7.42%. Such
borrowings will be used for general corporate purposes.
CAPITAL. Stockholders' equity was $3.1 billion at June 30, 1995, an
increase of $96.8 million or 3% from December 31, 1994. The increase is
primarily due to net earnings of $112.9 million and a net change of $53.2
million to a net unrealized gain on securities available for sale, partially
offset by dividends paid to common and preferred stockholders of $76.8
million. The net unrealized gain on securities available for sale at June 30,
1995 was $0.7 million.
The OTS has adopted regulations that contain a three-part capital
standard requiring savings institutions to maintain "core" capital of at least
3% of adjusted total assets, tangible capital of at least 1.5% of adjusted
total assets and risk-based capital of at least 8% of risk-weighted assets.
Special rules govern the ability of savings institutions to include in their
capital computations investments in subsidiaries engaged in activities not
permissible for national banks, such as real estate development. In addition,
institutions whose exposure to interest-rate risk as determined by the OTS is
deemed to be above normal may be required to hold additional risk-based
capital. Home Savings believes it does not have above-normal exposure to
interest-rate risk.
Under OTS regulations which implement the "prompt corrective action"
system mandated by the Federal Deposit Insurance Corporation Improvement Act,
an institution is well capitalized if its ratio of total capital to risk-
weighted assets is 10% or more, its ratio of core capital to risk-weighted
assets is 6% or more, its ratio of core capital to total assets is 5% or more
and it is not subject to any written agreement, order or directive to meet a
specified capital level. At June 30, 1995 Home Savings met these standards.
<PAGE>
Home Savings is in compliance with the OTS capital regulations. The
following table shows the capital amounts and ratios of Home Savings at June
30, 1995:
<TABLE>
<CAPTION>
Balance Ratio
---------- -------
(dollars in thousands)
<S> <C> <C>
Tangible capital (to adjusted total assets) $2,768,863 5.26%
Core capital (to adjusted total assets) 2,780,690 5.28
Core capital (to risk-weighted assets) 2,780,690 8.41
Total risk-based capital 3,786,137 11.45
</TABLE>
The regulatory capital requirements applicable to Home Savings are
continuing to become more stringent as the amount of Home Savings' investment
in real estate development subsidiaries includable in capital is phased out
through July 1, 1996. Home Savings currently meets the requirements of the
OTS regulations assuming the present application of the full phase-out
provisions. At June 30, 1995 the capital ratios computed on this more
stringent, "fully phased-in" basis were 5.20% for tangible capital (to
adjusted total assets), 5.22% for core capital (to adjusted total assets),
8.33% for core capital (to risk-weighted assets) and 11.37% for risk-based
capital.
DEPOSIT INSURANCE
Deposits at Home Savings are insured in part by the Savings Association
Insurance Fund ("SAIF") and in part by the Bank Insurance Fund ("BIF").
During 1994 Home Savings paid deposit insurance premiums to the SAIF and the
BIF ratably based on 91% and 9% of total deposits, respectively. Although the
assessment rate for BIF deposits and SAIF deposits was the same, effective for
the period beginning July 1, 1995 the FDIC has reduced BIF assessment rates,
but not SAIF assessment rates, based on the BIF obtaining a reserve ratio of
1.25%. The lowest assessment rate for BIF deposits was reduced from 0.23% of
covered deposits to 0.04% of covered deposits. This reduction could provide
institutions whose deposits are exclusively or primarily BIF-insured (such as
most commercial banks) competitive advantages over institutions whose deposits
are primarily SAIF-insured (such as Home Savings).
At a Senate Banking Committee hearing held on July 28, 1995, a joint
proposal was presented by the Department of the Treasury, the FDIC and the OTS
regarding capitalizing SAIF so it would have a reserve ratio of 1.25%. The
proposal included a special assessment of approximately 85 to 90 basis points
on all SAIF deposits held as of March 31, 1995, which assessment would be due
on January 1, 1996. Upon payment of the special assessment, an institution's
assessment rate would decrease from 23 basis points to a rate comparable to
the rates for BIF assessments. Weaker institutions could be exempted from the
special assessment but would continue to pay at a higher assessment rate
(between 23 and 31 basis points) for calendar years 1996 through 1999. The
proposal also included a merger of the SAIF and the BIF no later than 1998.
Another key feature of the proposal was to expand the assessment base for
payments on Financing Corporation bonds to include BIF members and not just
SAIF members. The foregoing are proposals which require action by Congress
before they can become effective. There is uncertainly as to whether or when
Congress will act on any of these proposals.
<PAGE>
As part of the testimony at the hearing, there was reference to
eliminating distinctions between thrift and bank charters and to the effect
that the Department of the Treasury is developing a comprehensive proposal to
deal with this and related issues. It is too early to tell whether action
will be taken to eliminate charter distinctions or how such changes would be
implemented. If such changes were implemented, they could have a material
impact on the Company.
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 121
In March 1995 the Financial Accounting Standards Board issued SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of." SFAS No. 121 requires that long-lived assets and
certain identifiable intangibles to be held and used be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. In addition, SFAS No. 121
requires that long-lived assets and certain identified intangibles to be
disposed of be reported at the lower of carrying amount or fair value less
costs to sell. SFAS No. 121 must be adopted for financial statements for
fiscal years beginning after December 15, 1995. The impact on the Company of
adopting SFAS No. 121 is not expected to be material.
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
The Annual Meeting of Stockholders of Registrant was held
on May 9, 1995.
Proxies for the meeting were solicited pursuant to
Regulation 14A under the Securities Exchange Act of 1934,
there was no solicitation in opposition to management's
nominees as listed in the proxy statement and all of such
nominees were elected. The votes cast for and withheld
with respect to each nominee were as follows:
<TABLE>
<CAPTION>
Nominee For Withheld
------- --- --------
<S> <C> <C>
William H. Ahmanson 104,936,965 453,994
Byron Allumbaugh 105,170,571 220,388
Richard M. Bressler 105,089,496 301,463
Lodwrick M. Cook 105,165,621 225,338
Fredric J. Forster 104,953,657 437,302
Delia M. Reyes 105,035,520 355,439
Charles R. Rinehart 104,953,925 437,034
Elizabeth A. Sanders 105,173,863 217,096
Arthur W. Schmutz 104,709,137 681,822
William D. Schulte 105,171,356 219,603
</TABLE>
The votes cast for and against approval of the amendment of
Registrant's Short-Term Incentive Plan, and the number of
abstentions, were as follows:
<TABLE>
<CAPTION>
For Against Abstentions
--- ------- -----------
<S> <C> <C>
100,229,507 4,151,666 1,009,786
</TABLE>
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits.
2 Purchase of Assets and Liability Assumption Agreement, dated
as of May 12, 1995, between Home Savings of America, FSB
and GreenPoint Bank.
10 Consulting Agreement, dated as of November 1, 1994,
between H. F. Ahmanson & Company and Robert M. De Kruif.
11 Statement of Computation of Earnings per Share.
(b) Reports on Form 8-K.
The Registrant filed with the Commission a Current Report on Form
8-K on April 5, 1995 with respect to the commencement of the
Registrant's medium term note program.
The Registrant filed with the Commission a Current Report on Form
8-K on April 14, 1995 with respect to the Registrant's issuance
of medium term notes.
The Registrant filed with the Commission a Current Report on Form
8-K on May 25, 1995 with respect to the execution of a Purchase
of Assets and Liability Assumption Agreement, dated as of May 12,
1995, between Home Savings of America, FSB and GreenPoint Bank.
<PAGE>
SIGNATURES
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 thereunto duly authorized.
Date: August 11, 1995 H. F. Ahmanson & Company
/s/ Kevin M. Twomey
-------------------------------
Kevin M. Twomey
Senior Executive Vice President
and Chief Financial Officer
(Authorized Signer)
/s/ George Miranda
-------------------------------
George Miranda
First Vice President and
Principal Accounting Officer
<PAGE>
EXHIBIT INDEX
Exhibit Sequentially
Number Description Numbered Page
-------- ------------ ---------------
2 Purchase of Assets and Liability
Assumption Agreement, dated as of
May 12, 1995, between Home Savings
of America, FSB and GreenPoint Bank. 31
10 Consulting Agreement, dated as of
November 1, 1994, between H. F. Ahmanson
& Company and Robert M. De Kruif. 93
11 Statement of Computation of Earnings
per Share. 99
PURCHASE OF ASSETS AND LIABILITY ASSUMPTION AGREEMENT
by and between
HOME SAVINGS OF AMERICA, FSB,
a Federal Savings Bank
and
GREENPOINT BANK
a New York State Chartered Savings Bank
as of
May 12, 1995
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . 1
ARTICLE II
TERMS OF PURCHASE AND ASSUMPTION . . . . . . . . . . 9
2.1 Purchase and Sale of Assets . . . . . . . 9
2.2 Assumption of Liabilities . . . . . . . . 10
2.3 Purchase Price . . . . . . . . . . . . . 10
2.4 Consideration for Assumption of
Liabilities . . . . . . . . . . . . . . 11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HOME SAVINGS . . . 11
3.1 Organization and Related Matters . . . . 11
3.2 Authorization . . . . . . . . . . . . . . 11
3.3 No Breaches of Statute or Contract;
Required Consents . . . . . . . . . . . 12
3.4 Litigation and Related Matters . . . . . 12
3.5 Consents . . . . . . . . . . . . . . . . 12
3.6 Deposits . . . . . . . . . . . . . . . . 13
3.7 Personal Property . . . . . . . . . . . 13
3.8 Account Loans . . . . . . . . . . . . . . 13
3.9 Contracts . . . . . . . . . . . . . . . . 13
3.10 Branch Leases and Branch Tenant Leases . 14
3.11 Compliance with Laws and Regulations . . 14
3.12 Governmental Notices . . . . . . . . . . 14
3.13 Environmental . . . . . . . . . . . . . . 14
3.14 FIRPTA . . . . . . . . . . . . . . . . . 15
3.15 No Broker's or Finder's Fees . . . . . . 15
3.16 Community Reinvestment Act; Regulatory
Matters . . . . . . . . . . . . . . . . 15
3.17 Relationship with Deposit Customers . . . 15
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GREENPOINT . . . . 16
4.1 Organization and Related Matters . . . . 16
4.2 Authorization . . . . . . . . . . . . . . 16
4.3 No Breaches of Statute or Contract;
Required Consents . . . . . . . . . . . 16
i
<PAGE>
4.4 Litigation and Related Matters . . . . . 17
4.5 Consents . . . . . . . . . . . . . . . . 17
4.6 Compliance with Laws and Regulations . . 17
4.7 Governmental Notices . . . . . . . . . . 17
4.8 No Broker's or Finder's Fees . . . . . . 17
4.9 Community Reinvestment Act; Regulatory
Matters . . . . . . . . . . . . . . . . 18
ARTICLE V
UPDATING OF INFORMATION AND "AS IS"
CONDITION OF ASSETS AND LIABILITIES . . . . . . . . . 18
5.1 Cash on Hand . . . . . . . . . . . . . . 18
5.2 Deposits . . . . . . . . . . . . . . . . 18
5.3 Personal Property . . . . . . . . . . . . 18
5.4 Account Loans . . . . . . . . . . . . . . 18
5.5 Contracts . . . . . . . . . . . . . . . . 19
5.6 Branch Leases . . . . . . . . . . . . . . 19
5.7 Title to Real Property . . . . . . . . . 19
5.8 Destruction of or Damage to a Branch . . 21
5.9 "AS IS" Condition . . . . . . . . . . . . 22
ARTICLE VI
COVENANTS OF HOME SAVINGS . . . . . . . . . . . . . . 22
6.1 Operations in Ordinary Course. . . . . . 22
6.2 Deposits and Loans. . . . . . . . . . . . 23
6.3 Conditions to Closing . . . . . . . . . . 23
6.4 Contracts . . . . . . . . . . . . . . . . 23
6.5 Records . . . . . . . . . . . . . . . . . 24
6.6 Covenant Not to Compete. . . . . . . . . 24
ARTICLE VII
COVENANTS OF GREENPOINT . . . . . . . . . . . . . . . 25
7.1 Interference or Damage; Investigations . 25
7.2 Performance of Liabilities . . . . . . . 26
7.3 Account Loans . . . . . . . . . . . . . . 26
7.4 Safe Deposit Business . . . . . . . . . . 26
7.5 Fiduciary Relationships . . . . . . . . . 26
7.6 Conduct of Business . . . . . . . . . . . 27
7.7 Conditions to Closing . . . . . . . . . . 27
7.8 Records . . . . . . . . . . . . . . . . . 27
7.9 Cardholders . . . . . . . . . . . . . . . 27
ii
<PAGE>
ARTICLE VIII
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . 28
8.1 Regulatory Approvals . . . . . . . . . . 28
8.2 Reports and Information. . . . . . . . . 29
8.3 Further Assurances . . . . . . . . . . . 29
8.4 Employees . . . . . . . . . . . . . . . . 30
8.5 Confidentiality . . . . . . . . . . . . . 32
8.6 Publicity; Notices . . . . . . . . . . . 32
8.7 Tax Reporting . . . . . . . . . . . . . . 32
8.8 Interest Reporting . . . . . . . . . . . 33
8.9 Withholding . . . . . . . . . . . . . . . 33
8.10 Signs . . . . . . . . . . . . . . . . . . 34
8.11 Leasing of Branches; Excluded Branches . 34
8.12 Relocation of Certain Offices . . . . . . 36
8.13 Deposit Insurance Exit/Entrance Fees . . 36
8.14 42nd Street Branch . . . . . . . . . . . 37
8.15 SBLI . . . . . . . . . . . . . . . . . . 37
8.16 Home Office . . . . . . . . . . . . . . . 37
ARTICLE IX
CONDITIONS TO OBLIGATION OF GREENPOINT . . . . . . . 37
9.1 No Injunctions or Restraints . . . . . . 37
9.2 Conditions Performed . . . . . . . . . . 37
9.3 Representations . . . . . . . . . . . . . 38
9.4 Documentation . . . . . . . . . . . . . . 38
ARTICLE X
CONDITIONS TO OBLIGATION OF HOME SAVINGS . . . . . . 38
10.1 No Injunctions or Restraints . . . . . . 38
10.2 Conditions Performed . . . . . . . . . . 38
10.3 Representations . . . . . . . . . . . . . 38
10.4 Documentation . . . . . . . . . . . . . . 39
ARTICLE XI
CONDITIONS TO OBLIGATIONS OF BOTH PARTIES . . . . . . 39
11.1 Governmental Actions . . . . . . . . . . 39
11.2 Governmental Approvals . . . . . . . . . 39
ARTICLE XII
THE CLOSING . . . . . . . . . . . . . . . . . . . . . 40
12.1 Time and Place of Closing . . . . . . . . 40
12.2 Payment Due at Closing . . . . . . . . . 40
12.3 Closing Documents to be Delivered or
Actions to be Taken by Home Savings . . 40
iii
<PAGE>
12.4 Closing Documents to be Delivered or
Actions to be Taken by GreenPoint . . . 43
12.5 Post-Closing Adjustments . . . . . . . . 44
ARTICLE XIII
TRANSFER OF DEPOSIT ACCOUNTS . . . . . . . . . . . . 45
13.1 Notices . . . . . . . . . . . . . . . . . 45
13.2 Post-Closing Reconciliation . . . . . . . 45
13.3 Data Processing . . . . . . . . . . . . . 47
13.4 Effect of Transitional Action . . . . . . 47
ARTICLE XIV
TERMINATION . . . . . . . . . . . . . . . . . . . . . 47
14.1 Events of Termination . . . . . . . . . . 47
14.2 Manner of Termination . . . . . . . . . . 48
ARTICLE XV
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . 49
15.1 Indemnification by Both Parties . . . . . 49
15.2 Indemnification by Home Savings . . . . . 49
15.3 Indemnification by GreenPoint . . . . . 49
ARTICLE XVI
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . 50
16.1 Non-Survival . . . . . . . . . . . . . . 50
16.2 Taxes; Expenses and Prorations . . . . . 50
16.3 Notices . . . . . . . . . . . . . . . . . 51
16.4 Entire Agreement; Modifications; Waivers;
Headings; Ambiguities . . . . . . . . . 53
16.5 Successors and Assigns . . . . . . . . . 53
16.6 Counterparts . . . . . . . . . . . . . . 53
16.7 Governing Law . . . . . . . . . . . . . . 53
16.8 Time is of the Essence . . . . . . . . . 54
16.9 Remedies . . . . . . . . . . . . . . . . 54
16.10 Attorneys' Fees . . . . . . . . . . . . . 54
16.11 Severability . . . . . . . . . . . . . . 54
EXHIBIT A NEW YORK BRANCH OFFICES OF HOME SAVINGS OF
AMERICA, FSB
EXHIBIT B PRELIMINARY SETTLEMENT STATEMENT
EXHIBIT C LESSOR'S ESTOPPEL CERTIFICATE
EXHIBIT D CONSENT
EXHIBIT E LESSEE'S ASSIGNMENT AND ASSUMPTION
AGREEMENT
EXHIBIT F LESSOR'S ASSIGNMENT AND ASSUMPTION
AGREEMENT
EXHIBIT G DEED
iv
<PAGE>
EXHIBIT H CERTIFICATE OF NON-FOREIGN STATUS
EXHIBIT I BILL OF SALE AND ASSIGNMENT
EXHIBIT J GENERAL ASSIGNMENT
EXHIBIT K ASSUMPTION AGREEMENT
EXHIBIT L RETIREMENT ACCOUNT TRANSFER AGREEMENT
EXHIBIT M FORM OF OPINION OF COUNSEL TO HOME SAVINGS
EXHIBIT N FORM OF OPINION OF IN-HOUSE COUNSEL TO HOME
SAVINGS
EXHIBIT O FORM OF HOME SAVINGS' OFFICER'S CERTIFICATE
EXHIBIT P FORM OPINION OF COUNSEL TO GREENPOINT
EXHIBIT Q FORM OF GREENPOINT'S OFFICER'S CERTIFICATE
EXHIBIT R FINAL SETTLEMENT STATEMENT
Schedule A - Sample Calculation of Premium Adjustment
Schedule 3.6 - Deposit Accounts
Schedule 3.7 - Personal Property
Schedule 3.8 - Account Loans
Schedule 3.9 - Contracts
Schedule 3.10(a) - Leases
Schedule 3.10(b) - Branch Tenant Leases
Schedule 3.13 - Environmental Matters
Schedule 4.6 - GreenPoint's Regulatory Matters
Schedule 5.1 - Cash on Hand (to be provided at Closing)
Schedule 5.7(a) - Permitted Exceptions
Schedule 6.2 - Deposit Products
Schedule 8.11(d) - Excluded Branches
Schedule 8.14 - Terms of 42nd Street Branch Lease
Schedule 16.2 - Taxes
v
<PAGE>
PURCHASE OF ASSETS AND LIABILITY ASSUMPTION AGREEMENT
This Purchase of Assets and Liability Assumption
Agreement is made and entered into as of May 12, 1995, by and
between Home Savings of America, FSB, a federal savings bank
("Home Savings"), and GreenPoint Bank, a New York state chartered
savings bank ("GreenPoint"), with reference to the following
facts:
WHEREAS, Home Savings desires to transfer to GreenPoint
certain deposit liabilities and certain assets and other
liabilities associated with the sixty (60) Home Savings of
America branch offices more particularly described and defined on
EXHIBIT A hereto (each a "Branch" and collectively the
"Branches"); and
WHEREAS, GreenPoint desires to assume such liabilities
and purchase such assets;
NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged,
Home Savings and GreenPoint hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS.
"AADA" shall mean the adjusted attributable deposit
amount as defined in 12 C.F.R. S 327.32(a)(3) relating to
deposits subject to assessments payable to the Savings
Association Insurance Fund.
"Account Loans" shall have the meaning set forth in
Section 5.4.
"ACH" shall have the meaning set forth in Section
13.2(b)(ii).
"Agency COFI Securities" shall mean up to $750
million of securities issued by either the Federal National
Mortgage Association or the Federal Home Loan Mortgage
Corporation backed by mortgages originated by Home Savings,
which mortgages have an interest rate linked to the 11th
District cost of funds index and are currently owned by Home
Savings.
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"Agreement" shall mean this Purchase of Assets and
Liability Assumption Agreement by and between Home Savings and
GreenPoint.
"Allocation Agreement" shall have the meaning set
forth in Section 8.7.
"Assets" shall have the meaning set forth in Section
2.1.
"Assumed Contracts" shall have the meaning set forth
in Section 5.5.
"Bank Card" shall mean a general purpose bank credit,
charge or travel and entertainment card, but does not include a
Debit Card.
"Baseline Demand Deposits" shall mean the aggregate
amount of the Demand Deposits as set forth on the Execution
Date Schedule 3.6.
"Bowery Name" shall mean the name "The Bowery Savings
Bank" or any variant thereof.
"Branch" shall mean one of the Home Savings of
America branch offices more particularly described and defined
on EXHIBIT A hereto and "Branches" shall mean all such branch
offices, which constitute all of Home Savings' branch offices
(other than loan offices) in the Noncompete Area.
"Branch Leases" shall have the meaning set forth in
Section 5.6.
"Branch Tenant Leases" shall have the meaning set
forth in Section 3.10(b).
"Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which federal savings banks
operating in the State of New York are authorized or obligated
by law or executive order to close.
"Cardholder" shall mean any person with an account
included in the Deposits domiciled at any of the Branches as of
the Close of Business on the Closing Date who also holds, on
the Closing Date, a Bank Card issued by Home Savings or
Citibank and bearing the name "Home Savings of America"
thereon.
"Cash on Hand" shall mean all cash on hand at the
Branches as of the Close of Business on the Closing Date,
including vault cash, ATM cash, petty cash, tellers' cash and
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prepaid postage, as determined by a cash count to be mutually
conducted by Home Savings and GreenPoint pursuant to Section
12.5(a) hereof.
"Cash Payment" shall have the meaning set forth in
Section 12.2.
"Citibank" shall mean Citibank (South Dakota), N.A.
"Close of Business" shall mean the local time that
the Branches close to the public.
"Closing" shall have the meaning set forth in Section
12.1.
"Closing Date" shall have the meaning set forth in
Section 12.1.
"CMOs" shall mean up to $700 million of
collateralized mortgage obligations currently owned by Home
Savings.
"COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended.
"Code" shall have the meaning set forth in Section
8.7.
"Conversion Date" shall mean the Final Expiration
Date (as defined in the Data Processing Servicing Agreement).
"Covenant Not to Compete" shall mean the covenants of
Home Savings set forth in Section 6.6.
"Data Processing Servicing Agreement" shall mean that
certain Transition Data Processing and Retail Support Services
Agreement by and between Home Savings and GreenPoint dated as
of even date herewith.
"Debit Card" shall mean any card that is established
to access funds on deposit in a deposit account domiciled at
one of the Branches, such as a MasterCard or Visa debit card,
including a deposit account which has a line of credit over-
draft facility linked to it, or a card which can access a line
of credit secured by a mortgage on the borrower's residence, a
personal line of credit or a secured automobile loan or similar
line of credit, provided such Debit Card is marketed as a cash
equivalent device to access such account or cash on deposit and
is not marketed, advertised or promoted as a general purpose
charging vehicle having a functionality of a Bank Card. It
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shall not be a violation of the foregoing marketing require-
ments to disclose that, with respect to a Visa or MasterCard
Debit Card, such Debit Card may be used at all locations at
which Visa and MasterCard logos are displayed, provided that
such disclosure is not prominently featured or emphasized in
the disclosure documentation.
"Demand Deposits" shall mean all deposits (other than
Excluded Deposits) domiciled at the Branches that may be drawn
on by the account holder without prior notice to Home Savings,
including all passbook, statement savings, checking and money
market checking accounts, but not including certificates of
deposit or any deposit with a fixed term.
"Deposits" shall mean the aggregate deposit
liabilities domiciled at the Branches as of the Closing Date,
including the amount of accrued but unpaid interest thereon,
other than Excluded Deposits.
"Deposit Premium" shall mean an amount equal to the
sum of:
(i) 7.75% of the aggregate deposit liabilities
listed on the Execution Date Schedule 3.6 (which excludes
Excluded Deposits) subject to the Premium Adjustment; plus
(ii) an amount equal to 0.5% of the amount of the
deposit liabilities included within the Deposits
transferred, if any, that is subject to the assessment of
premiums based upon the assessment schedule for the Bank
Insurance Fund, and not the assessment schedule for the
Savings Association Insurance Fund.
"Designated Officers" shall mean Home Savings' Senior
Vice President and Director of Environmental Risk, Senior Vice
President and Director of Retail Banking, and each of the
Regional Managers for the New York region.
"Designated Value" shall mean (i) with respect to the
Agency COFI Securities, the value as determined by applying to
all of such securities the average of the three bid prices,
after excluding the highest and lowest bid prices, obtained for
sixty-five percent (65%) of the amount of such securities from
the following dealers on a date no earlier than five (5) Busi-
ness Days prior to the Closing Date: Greenwich Capital, Gold-
man, Sachs & Co., Lehman Brothers Inc., Morgan Stanley & Co.
Incorporated and Smith Barney Inc., (ii) with respect to the
CMOs, the value as determined on the basis of the average of
the average of the three bid prices, after excluding the high-
est and lowest bid prices, obtained for such securities from
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the following dealers on a date no earlier than five (5) Busi-
ness Days prior to the Closing Date: Greenwich Capital, Gold-
man, Sachs & Co., Lehman Brothers Inc., Morgan Stanley & Co.
Incorporated and Smith Barney Inc., and (iii) with respect to
the Selected Securities, Home Savings' financial statement
(book) basis for such Selected Securities.
"Environmental Law" shall mean all applicable
federal, state, and local laws and regulations regulating
environmental hazards and/or Hazardous Substances.
"Excluded Branch" shall have the meaning set forth in
Section 8.11(d).
"Excluded Deposits" shall mean deposit liabilities
(i) beneficially owned by Home Savings or any of its corporate
affiliates, (ii) subject to escheat or litigation, or (iii)
subject to other legal restraint preventing assignment of such
deposit liabilities to GreenPoint.
"Execution Date Schedule 3.6" shall have the meaning
set forth in Section 3.6.
"FDIC" shall mean the Federal Deposit Insurance
Corporation.
"Final Payment Amount" shall have the meaning set
forth in Section 12.5(b).
"GreenPoint" shall mean GreenPoint Bank, a New York
state chartered savings bank.
"Ground Leased Branches" shall mean those Branches in
which Home Savings owns a leasehold interest pursuant to a
ground lease, as indicated on EXHIBIT A hereto.
"Hazardous Substances" shall mean chemicals,
pollutants, contaminants, wastes, and substances that have been
defined as toxic or hazardous by any applicable federal, state
or local law or regulation.
"Home Savings" shall mean Home Savings of America,
FSB, a federal savings bank.
"Inclearing Period" shall have the meaning set forth
in Section 13.2(a).
"IRS" shall mean the Internal Revenue Service.
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"Leased Branches" shall mean those Branches leased by
Home Savings as lessee or sublessee, as indicated on EXHIBIT A
hereto, and shall not include Ground Leased Branches.
"Lease Deposits" shall mean the aggregate amount of
deposits paid by Home Savings as lessee or sublessee to a
lessor pursuant to the Branch Leases.
"Liabilities" shall have the meaning set forth in
Section 2.2.
"Losses" shall mean any and all losses, liabilities,
damages, expenses, penalties, fines and other costs, including
court costs, costs of investigation and reasonable attorneys'
fees.
"Net Book Value" shall mean the net book value as
reflected in Home Savings' books and records, determined in
accordance with generally accepted accounting principles
consistently applied.
"Noncompete Area" shall mean Bronx, Kings, Nassau,
New York, Queens, Richmond, Rockland, Suffolk and Westchester
counties of New York.
"NY Banking Authority" shall mean the New York State
Banking Department, the New York State Banking Board or the
Superintendent of Banks of the State of New York, as
applicable.
"NYCRA" shall mean S 28-b of the New York Banking Law
and Part 76 of the Codes, Rules and Regulations of the State of
New York.
"OTS" shall mean the Office of Thrift Supervision.
"Owned Branches" shall mean the Branches owned by
Home Savings in fee, as indicated on EXHIBIT A hereto, other
than the 42nd Street Branch.
"Paper Items" shall have the meaning set forth in
Section 13.2(a).
"Permitted Exceptions" shall have the meaning set
forth in Section 5.7(a).
"Personal Property" shall have the meaning set forth
in Section 5.3.
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"Preliminary Purchase Price" shall mean the Purchase
Price calculated pursuant to Section 2.3 of this Agreement in
reliance upon updated SCHEDULES 3.6, 3.7, and 3.8 and upon
SCHEDULE 5.1, each as required to be delivered to GreenPoint at
the Closing.
"Preliminary Settlement Statement" shall have the
meaning set forth in Section 12.2.
"Premium Adjustment" shall mean one of the following,
if applicable:
(A) if the aggregate amount of Demand Deposits at
the Closing Date is greater than 110% of the amount of the
Baseline Demand Deposits, the product of (x) the dollar
amount of such excess of Demand Deposits over 110% of the
Baseline Demand Deposits, multiplied by (y) 7.75%, which
product shall be added to the Deposit Premium; or
(B) if the aggregate amount of Demand Deposits at
the Closing Date is less than 90% of the amount of the
Baseline Demand Deposits, the product of (x) the dollar
amount of the shortfall in the aggregate amount of Demand
Deposits that is less than 90% of the Baseline Demand
Deposits, multiplied by (y) 7.75%, which product shall be
subtracted from the Deposit Premium;
provided, that the following Demand Deposits shall be excluded
from the aggregate amounts of Demand Deposits at the Closing
Date and the amount of Baseline Demand Deposits for purposes of
the calculations set forth in (A) and (B) immediately above:
(i) Demand Deposits associated with any Excluded Branch, (ii)
Demand Deposits associated with any specifically identified
Branch that GreenPoint has publicly indicated prior to the
Closing Date that it may not operate at any time following the
Closing Date, and (iii) Demand Deposits of any customer (other
than an existing GreenPoint deposit customer) that Home Savings
is able to demonstrate have been moved by such customer to a
deposit account with GreenPoint. An example of this
calculation is set forth in SCHEDULE A.
"Prepaid FDIC Insurance Premium" shall mean the
aggregate amount of all insurance premiums paid by Home Savings
to the FDIC prior to the Closing Date with respect to the
Deposits for any period following the Closing Date based on (i)
the aggregate amount of the deposits domiciled at the Branches
at the dates used for computation of the FDIC insurance
assessment, and (ii) Home Savings' insurance assessment rate
effective at the date of computation of such assessment.
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"Purchase Price" shall have the meaning set forth in
Section 2.3(a).
"Real Property" shall mean the real property fee
interests associated with the Owned Branches and the real
property leasehold interests associated with the Ground Leased
Branches, including all improvements thereon and appurtenances
thereto, and all right, title and interest of Home Savings in
and to (x) any land lying in the bed of any streets, roads,
avenues or alleys, opened or proposed, in front of or adjoining
the Owned Branches, to the center lines thereof or any award
made or to be made in lieu thereof, and (y) any strips
abutting, adjoining or appurtenant to the Owned Branches, in
each case, subject to the provisions of Sections 5.6, 5.7(b),
and 8.11 hereof.
"Real Property Purchase Price" shall mean the sum, in
each case as of the Close of Business on the Closing Date, of
(i) the Net Book Value of the Real Property associated with the
Owned Branches, and (ii) the Net Book Value of the leasehold
improvements associated with the Ground Leased Branches.
"Records" shall have the meaning set forth in Section
6.5.
"Region Employees" shall mean the employees of Home
Savings employed at the Branches or otherwise employed by Home
Savings within the State of New York, other than persons
employed at the mortgage lending offices of Home Savings.
"Safe Deposit Business" shall mean the safe deposit
boxes located at the Branches and the safe deposit business
associated therewith.
"Selected Securities" shall mean:
(a) Marketable direct obligations issued or
unconditionally guaranteed by the United States of
America, or issued by an instrumentality or agency thereof
and guaranteed fully as to principal, premium (if any),
and interest by the United States of America, in each case
maturing within six months of the Closing Date;
(b) Subject to a maximum per issuer of $50 million,
commercial paper maturing within 180 days of the Closing
Date, issued by a corporation organized and existing under
the laws of any State of the United States of America and
rated, as of the Closing Date, in one of the two highest
categories for such paper by any two of the following
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statistical rating organizations: Moody's Investors Ser-
vice, Standard & Poor's Corporation, Duff & Phelps and
Fitch Investors Service, Inc.;
(c) Certificates of Deposit or other deposit
accounts of Home Savings with the Federal Home Loan Bank
of San Francisco, maturing not more than six months after
the Closing Date;
(d) Discount notes maturing within six (6) months of
the Closing Date issued or guaranteed by the Federal
National Mortgage Association, the Federal Home Loan
Mortgage Corporation, the Federal Farm Credit Bank, the
Student Loan Marketing Association, any Federal Home Loan
Bank, and the Tennessee Valley Authority; and
(e) Securities (listed in the foregoing clauses (a)
to (d) above) purchased by Home Savings from a securities
dealer under an agreement to resell within six months of
the Closing Date, whereby the securities are held by a
third party agent bank or custodian.
"Title Commitment" shall have the meaning set forth
in Section 5.7(a).
"Title Company" shall mean Lawyer's Title Insurance
Corporation.
"Title Policy" shall have the meaning set forth in
Section 12.3(r).
"Transferred Employee" shall mean each Region
Employee who is offered employment by GreenPoint and who
accepts such employment.
"WARN Act" shall mean the Worker Adjustment and
Retraining Act, as amended.
"Withholding Obligations" shall have the meaning set
forth in Section 8.9.
ARTICLE II
TERMS OF PURCHASE AND ASSUMPTION
2.1 PURCHASE AND SALE OF ASSETS.
(a) Pursuant to the terms of this Agreement, Home
Savings shall sell, transfer, convey and assign to GreenPoint,
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and GreenPoint shall purchase and acquire from Home Savings, as
of the Close of Business on the Closing Date, all of Home
Savings' right, title and interest in and to each of the
following, except as specifically provided herein, which are
collectively referred to herein as the "Assets":
(i) the Personal Property;
(ii) the Account Loans;
(iii) the Assumed Contracts;
(iv) the Real Property;
(v) the Branch Leases;
(vi) the Branch Tenant Leases;
(vii) the Safe Deposit Business;
(viii) the Records;
(ix) the Cash on Hand;
(x) the Bowery Name;
(xi) the customer lists delivered to GreenPoint
pursuant to the terms of the Agreement; and
(xii) rights of action related to liabilities
expressly assumed by GreenPoint pursuant to the terms of this
Agreement.
(b) In addition, Home Savings agrees to be bound,
effective upon consummation of the Closing, by the terms of the
Covenant Not to Compete.
2.2 ASSUMPTION OF LIABILITIES. Pursuant to the
terms of this Agreement, GreenPoint shall assume at the Close
of Business on the Closing Date the Deposits, and the
liabilities and obligations of Home Savings arising from and
after the Closing with respect to the Deposits, the Account
Loans, the Branch Leases, the Branch Tenant Leases, the Assumed
Contracts, the Safe Deposit Business, the Bowery Name, and the
ownership and operation of the Personal Property and the Real
Property, which are collectively referred to herein as the
"Liabilities."
2.3 PURCHASE PRICE. The purchase price (the "Pur-
chase Price") of the Assets and the Deposits, which shall be
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offset at the Closing against the amount owed to GreenPoint by
Home Savings pursuant to the terms of Section 2.4 as
consideration for the assumption by GreenPoint of the
Liabilities, will be an amount equal to the sum of the
following:
(i) the aggregate Net Book Value of the
Personal Property, determined as of the Close of Business
on the Closing Date;
(ii) the aggregate principal amount of the
Account Loans, plus accrued and unpaid interest thereon,
as of the Close of Business on the Closing Date;
(iii) the Real Property Purchase Price;
(iv) the amount of the Cash on Hand; and
(v) the Deposit Premium.
2.4 CONSIDERATION FOR ASSUMPTION OF LIABILITIES. As
consideration for the assumption of the Liabilities, Home
Savings shall pay to GreenPoint one hundred percent (100%) of
the amount of the Deposits as of the Close of Business on the
Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HOME SAVINGS
Home Savings represents, warrants and agrees as
follows:
3.1 ORGANIZATION AND RELATED MATTERS. Home Savings
is a federally chartered stock savings bank, duly organized,
validly existing, and in good standing under the laws of the
United States of America, and it has the requisite corporate
power and authority to own the Assets and carry on its business
at the Branches as currently conducted and execute, deliver and
perform this Agreement. Home Savings is duly authorized to
conduct a savings and loan business, is a member of the Federal
Home Loan Bank of San Francisco, and is duly authorized to
operate each of the Branches. The deposits of Home Savings are
insured by the FDIC, and the approximate total amount of
deposits and the AADA of Home Savings as of April 30, 1995 were
$42,129 million and $36,789 million, respectively.
3.2 AUTHORIZATION. The execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby by Home Savings have been duly
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and validly authorized and approved by all requisite corporate
action. This Agreement has been approved by Home Savings'
board of directors, and such approval is reflected in the
minutes of the board of directors. Home Savings shall
continuously maintain all components of this written agreement
as official records of Home Savings or any successor thereto.
This Agreement has been duly executed and delivered by Home
Savings. This Agreement is a valid and binding obligation of
Home Savings, enforceable in accordance with its terms, except
that the enforceability hereof may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights
generally and the rights of creditors of federal savings banks,
and that the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any
proceedings therefor may be brought.
3.3 NO BREACHES OF STATUTE OR CONTRACT; REQUIRED
CONSENTS. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, do not
and will not (i) conflict with any of the provisions of the
charter or bylaws of Home Savings; (ii) violate any applicable
laws, orders or regulations; (iii) conflict with or result in a
breach (with notice or lapse of time or both) of any judgment,
order, decree or ruling to which Home Savings is a party, or by
which it or any of its property is bound, or any injunction of
any court or governmental authority to which it or any of its
property is subject, or any material agreement to which it is a
party or by which it is bound; or (iv) require the affirmative
consent or approval of any governmental or nongovernmental
third party (other than as expressly contemplated by this
Agreement).
3.4 LITIGATION AND RELATED MATTERS. There is no
action, suit, claim, proceeding or investigation pending or, to
the best of its knowledge, threatened against Home Savings that
is reasonably likely to impair the consummation of the
transactions contemplated hereby or materially affect the
Assets or Liabilities as a whole or materially affect the
operations of the Branches as a whole after the Closing Date.
Home Savings is not aware of any facts that would reasonably
afford a basis for any such action, suit, proceeding, claim or
investigation.
3.5 CONSENTS. Other than the approval of the OTS
and the NY Banking Authority, as well as any applicable
approval or consent of the FDIC (including any approval or
consent required pursuant to that Assistance Agreement dated as
of August 7, 1985, among The Bowery Savings Bank, The New Bank
and the FDIC), and subject to the expiration of any applicable
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waiting period, no consent, approval or authorization of any
federal or state governmental authority or agency is required
for the execution, delivery and performance by Home Savings of
this Agreement and the consummation by it of the transactions
contemplated hereby.
3.6 DEPOSITS. Provided herewith as SCHEDULE 3.6 is
a schedule of the aggregate deposit liabilities (other than
Excluded Deposits) domiciled at the Branches, prepared as of
the close of business on the Friday immediately preceding the
date of this Agreement, listing by category and by Branch the
amount of such deposits, including the amount of accrued but
unpaid interest thereon (the "Execution Date Schedule 3.6").
3.7 PERSONAL PROPERTY. Provided herewith as
SCHEDULE 3.7 is a schedule of all furniture, fixtures,
equipment, data processing, teller servicing, and computer
equipment, alarm systems, supplies, improvements and other
tangible personal property (including safe deposit boxes and
ATMs, ATM surrounds, ATM kiosks, if any, and other related
equipment and Codex 2630 modems, if any, and all furniture and
equipment associated with the teleservicing unit located at 110
E. 42nd Street) owned by Home Savings and located at the
Branches, excluding (i) interior and exterior signs bearing, or
in the shape of, the Home Savings emblem, Home Savings sign
facings and Home Savings alphabetic signs and all related sign
cases (but not the structures, if any, supporting such sign
cases), (ii) other items that specifically identify Home
Savings by name or logo (other than ATM surrounds), (iii)
appreciated fine art, and (iv) furniture and equipment
associated with any Home Savings loan production office located
at a Branch, which schedule specifies the Net Book Value of
each such item as shown on the financial records of Home
Savings, computed as of the date indicated thereon.
3.8 ACCOUNT LOANS. Provided herewith as SCHEDULE
3.8 is a schedule of (i) all savings account loans that are
secured by deposits domiciled at the Branches, including
accrued and unpaid interest thereon, computed as of the date
indicated thereon, and (ii) all NOW, checking and other
transaction account lines of credit associated with deposits
domiciled at the Branches, including accrued and unpaid
interest thereon, computed as of the date indicated thereon.
3.9 CONTRACTS. Provided herewith as SCHEDULE 3.9 is
a schedule of contracts relating to the maintenance and physi-
cal operation of the Branches. To Home Savings' knowledge,
each party has performed in all material respects their obli-
gations thereunder to the extent that such obligations to per-
form have accrued and none of such contracts was entered into
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outside of the ordinary course of business or is materially
burdensome.
3.10 BRANCH LEASES AND BRANCH TENANT LEASES.
(a) Attached hereto as SCHEDULE 3.10(a) is a
schedule of each real property lease or sublease pursuant to
which Home Savings leases the premises of the Leased Branches
and the real property underlying the Ground Leased Branches.
True and complete copies of each such document have been
provided to GreenPoint. To Home Savings' knowledge, the lessor
and Home Savings have performed in all material respects their
obligations under such branch leases to the extent such
obligations to perform have accrued.
(b) Attached hereto as SCHEDULE 3.10(b) is a
schedule of each real property lease (the "Branch Tenant
Leases") pursuant to which Home Savings is the lessor of any
portion of the premises of a Branch. True and complete copies
of each such document have been provided to GreenPoint. To
Home Savings' knowledge, Home Savings has performed in all
material respects its obligations under such Branch Tenant
Leases to the extent such obligations to perform have accrued.
3.11 COMPLIANCE WITH LAWS AND REGULATIONS. Home
Savings has conducted and is conducting its business in all
material respects in compliance with all federal and state laws
and regulations, including, without limitation, all
regulations, orders and opinions of the OTS and the FDIC. Home
Savings is not subject to any order or ruling directed to it
by, or memorandum of understanding with, any governmental
agency, including the OTS and the FDIC.
3.12 GOVERNMENTAL NOTICES. Home Savings has not
received any notice from any federal, state, or other
governmental agency indicating that such agency would oppose or
not grant or issue its consent or approval, if requested, with
respect to the transactions contemplated hereby. There are no
facts known to Home Savings that could reasonably be expected
to have an adverse effect on the ability of Home Savings to
obtain all requisite regulatory consents or to perform its
obligations under this Agreement.
3.13 ENVIRONMENTAL. To the knowledge of the
Designated Officers, without conducting any independent
investigation, and except as indicated to the contrary on
SCHEDULE 3.13:
(a) No Hazardous Substances have been stored,
disposed of or released upon or below any of the Branches by
Home Savings in violation of any Environmental Law;
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(b) Home Savings has not received any written
communication from any governmental authority alleging a
violation of any Environmental Law with respect to any of the
Branches; and
(c) No person or entity has asserted any claim
arising out of, based upon, or resulting from (i) the presence
or release into the environment of any Hazardous Substance upon
or below any of the Branches in violation of any Environmental
Law, or (ii) the violation or alleged violation of any
Environmental Law with respect to any of the Branches.
3.14 FIRPTA. Home Savings is not a "foreign person"
within the meaning of Internal Revenue Code Section 1445.
3.15 NO BROKER'S OR FINDER'S FEES. No agent,
broker, investment banker, person or firm acting on behalf of
or under authority of Home Savings, other than CS First Boston
Corporation, is or will be entitled to any broker's or finder's
fee or any other commission or similar fee directly or
indirectly in connection with any of the transactions
contemplated by this Agreement.
3.16 COMMUNITY REINVESTMENT ACT; REGULATORY MATTERS.
Home Savings received a rating of "outstanding" in its most
recent examination or interim review with respect to the
Community Reinvestment Act. Home Savings has not been advised
of any supervisory concerns regarding its compliance with the
Community Reinvestment Act or, to the extent applicable, the
NYCRA. To Home Savings' knowledge there are no threatened or
pending actions, proceedings or allegations by any person or
regulatory agency which may cause the OTS, the NY Banking
Authority or the FDIC, to deny any application required to be
filed pursuant to Section 8.1.
3.17 RELATIONSHIP WITH DEPOSIT CUSTOMERS. The
material business relationships between Home Savings and the
customers holding accounts included within the Deposits consist
of: deposits, loans, credit cards, mutual funds, SBLI, safe
deposit box rentals, debit cards, notary services, ATM cards,
discount brokerage services, insurance products and services
and Silver Circle benefits.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GREENPOINT
GreenPoint represents, warrants and agrees as
follows:
4.1 ORGANIZATION AND RELATED MATTERS. GreenPoint is
a New York state chartered stock savings bank, duly organized,
validly existing, and in good standing under the laws of New
York and it has the requisite corporate power and authority to
own its assets and carry on its business as currently conducted
and execute, deliver and perform this Agreement. GreenPoint is
duly authorized to conduct a savings and loan business and,
upon receipt of the approval of the NY Banking Authority and
the FDIC, will be duly authorized to operate each of the
Branches. The deposits of GreenPoint are insured by the FDIC.
4.2 AUTHORIZATION. The execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby by GreenPoint have been duly
and validly authorized and approved by all requisite corporate
action. This Agreement has been approved by GreenPoint's board
of directors, and such approval is reflected in the minutes of
the board of directors. GreenPoint shall continuously maintain
all components of this written agreement as official records of
GreenPoint or any successor thereto. This Agreement has been
duly executed and delivered by GreenPoint. This Agreement is a
valid and binding obligation of GreenPoint, enforceable in
accordance with its terms, except that the enforceability
hereof may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and
the rights of creditors of New York state chartered savings
banks, and that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court before
which any proceedings therefor may be brought.
4.3 NO BREACHES OF STATUTE OR CONTRACT; REQUIRED
CONSENTS. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, do not
and will not (i) conflict with any of the provisions of the
charter or bylaws of GreenPoint; (ii) violate any applicable
laws, orders or regulations; (iii) conflict with or result in a
breach (with notice or lapse of time or both) of any judgment,
order, decree or ruling to which GreenPoint is a party, or by
which it or any of its property is bound, or any injunction of
any court or governmental authority to which it or any of its
property is subject, or any material agreement to which it is a
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party or by which it is bound; or (iv) require the affirmative
consent or approval of any governmental or nongovernmental
third party (other than as expressly contemplated by this
Agreement).
4.4 LITIGATION AND RELATED MATTERS. There is no
action, suit, claim, proceeding or investigation pending or, to
the best of its knowledge, threatened against GreenPoint that
is reasonably likely to impair the consummation of the
transactions contemplated hereby. GreenPoint is not aware of
any facts that would reasonably afford a basis for any such
action, suit, proceeding, claim or investigation.
4.5 CONSENTS. Other than the approval of the OTS
and the NY Banking Authority, as well as any applicable
approval of the FDIC, and subject to the expiration of any
applicable waiting period, no consent, approval or
authorization of any federal or state governmental authority or
agency is required for the execution, delivery and performance
by GreenPoint of this Agreement and the consummation by it of
the transactions contemplated hereby.
4.6 COMPLIANCE WITH LAWS AND REGULATIONS.
GreenPoint has conducted and is conducting its business in all
material respects in compliance with all federal and state laws
and regulations, including, without limitation, all
regulations, orders, and opinions of the NY Banking Authority
and the FDIC. GreenPoint is not subject to any order or ruling
directed to it by, or memorandum of understanding with, any
governmental agency, including the NY Banking Authority and the
FDIC, except as set forth on SCHEDULE 4.6.
4.7 GOVERNMENTAL NOTICES. GreenPoint has not
received any notice from any federal, state, or other
governmental agency indicating that such agency would oppose or
not grant or issue its consent or approval, if requested, with
respect to the transactions contemplated hereby. There are no
facts known to GreenPoint that could reasonably be expected to
have an adverse effect on the ability of GreenPoint to obtain
all requisite regulatory consents or to perform its obligations
under this Agreement.
4.8 NO BROKER'S OR FINDER'S FEES. No agent, broker,
investment banker, person or firm acting on behalf of or under
authority of GreenPoint, other than J.P. Morgan & Co. Incorpo-
rated, is or will be entitled to any broker's or finder's fee
or any other commission or similar fee directly or indirectly
in connection with any of the transactions contemplated by this
Agreement.
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4.9 COMMUNITY REINVESTMENT ACT; REGULATORY MATTERS.
GreenPoint received a rating of "outstanding" in its most
recent examination or interim review with respect to the
Community Reinvestment Act and the NYCRA. GreenPoint has not
been advised of any supervisory concerns regarding its
compliance with the Community Reinvestment Act or the NYCRA.
To GreenPoint's knowledge there are no threatened or pending
actions, proceedings or allegations by any person or regulatory
agency which may cause the OTS, the NY Banking Authority or the
FDIC, to deny any application required to be filed pursuant to
Section 8.1.
ARTICLE V
UPDATING OF INFORMATION AND "AS IS"
CONDITION OF ASSETS AND LIABILITIES
5.1 CASH ON HAND. At the Closing, Home Savings
shall deliver to GreenPoint a schedule ("SCHEDULE 5.1")
indicating the amount and location of the Cash on Hand as of
the Close of Business on the Business Day preceding the Closing
Date.
5.2 DEPOSITS. No less than two (2) days prior to
the Closing Date, Home Savings will provide GreenPoint with an
updated SCHEDULE 3.6 reflecting the aggregate deposit
liabilities (other than Excluded Deposits) domiciled at the
Branches, including accrued and unpaid interest thereon, as of
the Close of Business on a date no more than six (6) Business
Days prior to the Closing Date.
5.3 PERSONAL PROPERTY. GreenPoint shall have the
right by prior written notice to Home Savings to exclude from
SCHEDULE 3.7 items that are subject to any material lien, claim
or encumbrance as of the Closing, provided that Home Savings
shall deliver all ATMs free and clear of all material liens,
claims and encumbrances. An updated SCHEDULE 3.7 listing all
of the items of personal property remaining after any such
exclusions (collectively referred to herein as the "Personal
Property"), along with the Net Book Value of all of such items,
as of the end of the month preceding the Closing Date, shall be
delivered by Home Savings to GreenPoint at the Closing.
5.4 ACCOUNT LOANS. Home Savings shall provide to
GreenPoint at the Closing an updated SCHEDULE 3.8 listing all
of the savings account loans and NOW, checking and other
transaction account loans (collectively referred to herein as
the "Account Loans") secured by or associated with deposits
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domiciled at the Branches and reflecting the balance of the
Account Loans, including accrued and unpaid interest thereon,
as of the Close of Business on a date no more than five (5)
Business Days prior to the Closing Date.
5.5 CONTRACTS. Home Savings shall use its
reasonable efforts to obtain the consent of any third party
required to assign any of the contracts listed on SCHEDULE 3.9
to GreenPoint. GreenPoint may by written notice to Home Savings
prior to the Closing exclude from SCHEDULE 3.9 any contract
(i) that is not assignable by its terms, or that requires the
consent of a third party in order for such contract to be
assigned to GreenPoint, if, in each case, consent has not been
obtained prior to the Closing, or (ii) that contains materially
burdensome terms that are not ordinary or customary. An
updated SCHEDULE 3.9 listing all of the contracts remaining
after any such exclusions (collectively referred to herein as
the "Assumed Contracts") shall be delivered by Home Savings to
GreenPoint at the Closing.
5.6 BRANCH LEASES. Home Savings shall use its
reasonable efforts to obtain an Estoppel Certificate
substantially in the form of EXHIBIT C attached hereto from
each lessor of a Leased Branch or a Ground Leased Branch. Home
Savings shall use its reasonable efforts to obtain the consent
of any lessor (substantially in accordance with EXHIBIT D) or
third party required to assign to GreenPoint any of the leases
pursuant to which Home Savings leases the premises of the
Leased Branches, and the real property underlying the Ground
Leased Branches, provided that nothing herein shall require
Home Savings or GreenPoint to pay fees, or to offer other
consideration, to any such lessor or third party in order to
obtain such consent. GreenPoint may by written notice to Home
Savings prior to the Closing exclude from SCHEDULE 3.10(a) any
lease associated with a Branch that requires the consent of a
third party in order for such lease to be assigned to
GreenPoint or that is not assignable by its terms, unless, in
each case, all required consents have been obtained prior to
the Closing. An updated SCHEDULE 3.10(a) listing all of the
leases to be assumed by GreenPoint after any such exclusions
(collectively referred to herein as the "Branch Leases") shall
be delivered by Home Savings to GreenPoint at the Closing. In
the event a lease is excluded from SCHEDULE 3.10(a) pursuant to
this Section 5.6, the parties shall take such actions as are
set forth in Section 8.11.
5.7 TITLE TO REAL PROPERTY.
(a) Prior to the date of this Agreement, Home Sav-
ings has provided to GreenPoint, for each of the real property
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fee interests associated with an Owned Branch, and shall
provide as soon as practicable for each of the leasehold
estates associated with a Ground Leased Branch, a commitment
issued by the Title Company to issue the Title Policy (each, a
"Title Commitment" and collectively, the "Title Commitments"),
showing fee title or ground leasehold title, as appropriate, to
be vested in Home Savings free and clear of all liens or other
title exceptions, except for (i) taxes not then delinquent,
(ii) laws, ordinances and governmental regulations regulating
the use, or occupancy of the Branch, the character, dimensions
or locations of the improvements; provided that none of the
same are materially violated by the continued use of any
portion of the Branch for the purpose for which it has been
customarily used by Home Savings, (iii) printed standard
general exceptions listed in Schedule B, Part I of the Title
Commitments, (iv) matters created by Home Savings after the
date of this Agreement with the consent of GreenPoint, (v)
matters discovered by an inspection or survey that do not make
title unmarketable, (vi) such imperfections of title as are not
so substantial as to materially impair the value of or
interfere with the continued use of any portion of the Branch
for the purposes for which they have been customarily used by
Home Savings, or (vii) matters listed on SCHEDULE 5.7(a) to
this Agreement, other than any matters discovered by an
inspection or survey that make title unmarketable (matters
listed in (i) through (vii) are collectively referred to herein
as "Permitted Exceptions").
(b) Subject to the provisions of Section 5.7(a),
GreenPoint has approved the condition of title to the real
property fee interests associated with each Owned Branch as of
the date of this Agreement as shown on the Title Commitments.
Should any title exceptions other than the Permitted Exceptions
arise or be reported by the Title Company after the date hereof
and prior to the Closing Date with respect to any of the Owned
Branches, or if title exceptions, other than Permitted Excep-
tions, appear on a Title Commitment for a Ground Leased Branch,
Home Savings shall have until the Closing Date to take such
actions as are necessary to cause the Title Company to issue
the Title Policy without such exceptions. GreenPoint agrees to
take all action reasonably necessary to assist in the removal
or other disposition of such unpermitted exceptions and to co-
operate with Home Savings in negotiating reasonable accommoda-
tions with the holders of any unpermitted exceptions, but in no
event shall GreenPoint be obligated to agree to the payment or
transfer of money or other consideration to any such holder.
If Home Savings fails to remedy any unpermitted exception ob-
jected to by GreenPoint in accordance with the terms hereof,
GreenPoint may, at its option: (i) waive any such disapproval,
in which case Home Savings shall have no further liability to
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GreenPoint with respect to such unpermitted exception, and such
unpermitted exception shall constitute a Permitted Exception to
the Title Policy, or (ii) decline by written notice to Home
Savings to purchase the real property fee interests associated
with the Owned Branch, or to assume the real property leasehold
interests associated with the Ground Leased Branch, to which
the unpermitted exception relates, in which case such real
property interests and the related Branch shall be excluded
from the definition of Real Property in Section 1.1 hereof and
such Branch will be leased by GreenPoint from Home Savings
pursuant to Section 8.11 hereof.
(c) GreenPoint acknowledges and agrees that it will
look solely to the Title Policies, and not to Home Savings,
with regard to any claimed defects in title relating to any of
the Real Property conveyed hereunder.
(d) If any lease by Home Savings of a Leased Branch
or Ground Leased Branch is subject to any (i) superior lease,
(ii) mortgage, lien or security interest on the estate of Home
Savings in such Branch, or (iii) any mortgage, lien or security
interest on the estate of any landlord under the lease of a
Ground Leased Branch or a Leased Branch, with respect to which
any claim has been asserted which is reasonably likely to
result in the loss of the leasehold estate under a lease of a
Ground Leased Branch or of a Leased Branch prior to the
expiration date specified in such lease, then the branch
subject to such lease shall be an Excluded Branch under Section
8.11(d).
(e) Home Savings shall furnish to GreenPoint, upon
request, any authorization that may be required to enable it to
undertake violation and lien searches.
5.8 DESTRUCTION OF OR DAMAGE TO A BRANCH. From the
date of this Agreement through the Closing Date, Home Savings
shall maintain property insurance coverage upon each Branch in
an amount equal to the amount of coverage in effect as of the
date hereof. In the event any Branch is partially or totally
damaged or destroyed by fire, flood, earthquake or other casu-
alty, between the date hereof and the Closing Date, Home Sav-
ings shall use its reasonable efforts to repair such damage or
rebuild such destroyed Branch as soon as practicable through
the application of the proceeds of such insurance coverage,
provided that Home Savings shall obtain the prior consent of
GreenPoint, which consent shall not be unreasonably withheld,
regarding such repairs or rebuilding and regarding the settle-
ment of its insurance claim. If at the Closing Date the Branch
has not been fully repaired or replaced, Home Savings shall
assign any unexpended insurance proceeds to GreenPoint. In no
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event shall GreenPoint have the right to terminate this
Agreement, or to alter its obligation to purchase and assume
the Assets and Liabilities associated with such Branch upon the
terms set forth in this Agreement, by reason of any such damage
or destruction.
5.9 "AS IS" CONDITION. GreenPoint acknowledges that
it will, subject to the terms of this Agreement, purchase the
Assets and assume the Liabilities at the Closing in "AS IS"
condition, with all faults, in reliance upon GreenPoint's
inspection thereof. Except as otherwise expressly set forth in
this Agreement, Home Savings makes no representations or
warranty of any kind whatsoever with respect to any of the
Assets or the Liabilities, whether express or implied,
including, without limitation, any representations or
warranties concerning or with respect to (i) the value, nature,
quality of condition, or state of repair of any of the Assets;
(ii) the compliance of the Real Property or the Branches, or
the operation of the Branches, with any laws, rules, ordinances
or regulations of any applicable governmental authority; or
(iii) the habitability, merchantability, marketability,
profitability or fitness for a particular purpose of the
Personal Property, the Real Property or the Branches.
ARTICLE VI
COVENANTS OF HOME SAVINGS
During the period from the date hereof to the Closing
Date, Home Savings hereby covenants and agrees as follows:
6.1 OPERATIONS IN ORDINARY COURSE. Home Savings
shall: (i) not engage in any transaction related to any of the
Branches, except in the ordinary course of business or as
contemplated by this Agreement; (ii) maintain the Branches in a
condition substantially the same as on the date of this
Agreement, reasonable wear and use excepted; (iii) maintain its
books of accounts and records with respect to the Assets and
Liabilities in the usual, regular and ordinary manner; (iv)
duly maintain compliance in all material respects with all
laws, regulatory requirements and agreements to which it is
subject or by which it is bound with respect to the Assets, the
Liabilities and the Branches; (v) not close or sell any of the
Branches or open or acquire any permanent offices or branches
within the Noncompete Area; (vi) refrain from selling or
transferring any BIF-insured deposit liabilities such that to
the greatest extent possible the Deposits to be acquired by
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GreenPoint at Closing are BIF-insured, provided that Home
Savings shall be free to transfer up to $200 million in BIF-
insured deposit liabilities to its affiliates; (vii) cooperate
with GreenPoint to maintain and enhance the franchise value of
the Branches prior to Closing; (viii) not materially change the
compensation policies or practices applicable to the Region
Employees; (ix) not acquire personal property for, or make
capital expenditures at, the Branches in excess of $3 million
in the aggregate, or $25,000 individually; and (x) consult with
GreenPoint prior to renewing, amending or extending any
material Assumed Contract, Branch Lease or Branch Tenant Lease.
In addition, Home Savings shall not conduct its
business and operations in such a manner as to impair its
ability to consummate the transactions contemplated hereunder,
nor will it engage in any transaction, take any action, or omit
to take any action, which could reasonably be expected to
impair its ability to consummate the transactions contemplated
hereunder.
6.2 DEPOSITS AND LOANS. Home Savings shall not
materially alter its current method of establishing interest
rates for deposit products, or its current advertising, deposit
account or account loan practices at the Branches, as further
provided in SCHEDULE 6.2. Subject to the foregoing, Home
Savings agrees to take such actions as it shall reasonably deem
necessary to preserve the mix, type and aggregate amount of the
deposits domiciled at the Branches at approximately current
levels. Home Savings shall underwrite and administer the
account loans and transaction account loans domiciled at the
Branches in accordance with applicable laws and regulations.
6.3 CONDITIONS TO CLOSING. Home Savings shall use
its reasonable efforts to (i) satisfy, as expeditiously as
reasonably possible, all of the conditions to the obligations
of GreenPoint hereunder within Home Savings' control, and (ii)
obtain all consents of third parties required to assign the
branch leases set forth on SCHEDULE 3.10(a) and the contracts
set forth on SCHEDULE 3.9.
6.4 CONTRACTS. Subject to the provisions of Section
6.2, Home Savings shall not enter into any material contracts
related to the Branches, other than in the ordinary course of
business or as contemplated by the Data Processing Servicing
Agreement, without the written consent of GreenPoint, which
consent shall not be unreasonably withheld.
__________________________
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In addition to the foregoing, Home Savings hereby
covenants and agrees as follows, which covenants and agreements
shall remain in effect subsequent to the Closing Date:
6.5 RECORDS. Upon consummation of the Closing, Home
Savings shall deliver to GreenPoint its existing files and
records located at the Branches relating to the Assets
purchased and Liabilities assumed by GreenPoint pursuant to
this Agreement and those relating to the deposit taking
activities and Safe Deposit Business provided at the Branches
(collectively referred to herein as the "Records"), which,
together with the data processing records and transaction
reports maintained by Home Savings, which will be made
available to GreenPoint pursuant to the terms of the Data
Processing Servicing Agreement, constitute all of the books and
records necessary for the conduct of the business of the
Branches as currently conducted, to the extent such business
relates to the Assets and Liabilities. Following the Final
Expiration Date (as such term is defined in the Data Processing
Servicing Agreement), Home Savings shall deliver to GreenPoint
records relating to the retirement accounts and plans; and
provided further, that Section 13.3 hereof shall govern Home
Savings' obligations to provide tapes and supporting
documentation related to the Deposits, Account Loans and Safe
Deposit Business. Following the Closing Date, Home Savings
shall promptly provide such copies of such files and records
relating to the Assets and Liabilities in its possession as
GreenPoint shall reasonably request, provided that, from and
after 180 days following the Closing Date, GreenPoint shall
reimburse Home Savings for its actual out-of-pocket expenses
incurred in connection therewith.
6.6 COVENANT NOT TO COMPETE.
(a) For a period of three (3) years commencing as of
the Closing Date, Home Savings shall not open any temporary or
permanent offices or branches for deposit gathering activities
or otherwise solicit retail deposits within the Noncompete
Area, other than any office or branch acquired by Home Savings
that is incidental to an acquisition of the business or deposit
liabilities of another financial institution the offices or
branches of which are not primarily located in the Noncompete
Area, provided, that under no circumstances, including those
set forth immediately above, shall Home Savings use the names
"Home Savings of America," "Savings of America," or "The Bowery
Savings Bank" (or any similar name) with respect to deposit
gathering activities within the Noncompete Area for a period of
three (3) years following the Closing Date.
(b) During the three (3) year period following the
Closing Date, Home Savings shall not (i) use any proprietary
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customer list, or other similar record of the holders of
accounts that constitute Deposits on the Closing Date, other
than lists or other records, unrelated to the Deposits, of such
holders that remain or become customers of Home Savings after
the Closing Date, to solicit deposits, loans, or other products
or services, or (ii) solicit for hire any Region Employee of
Home Savings who becomes an employee of GreenPoint as of the
Closing Date.
(c) Notwithstanding the foregoing, during the three
(3) year period following the Closing Date, Home Savings shall
be permitted to engage in general media advertising within the
Noncompete Area, provided such advertising is not intended to
solicit deposits primarily from customers within the Noncompete
Area.
(d) Subject to the provisions of Section 6.6(b)(i),
GreenPoint acknowledges that Home Savings will continue to
originate and service loans and otherwise engage in the lending
business in the Noncompete Area, and agrees that,
notwithstanding this Section 6.6, Home Savings shall be
permitted to engage in such business, including any
solicitation by Home Savings of such business.
(e) The restrictions set forth in this Section 6.6
shall apply to Home Savings and its affiliates, provided that
none of such restrictions shall apply to any bona fide third
party that by any means acquires Home Savings, or all, or
substantially all, of its business, assets and liabilities as
long as such entity does not solicit deposits under the names
"Home Savings of America," "Savings of America," or "The Bowery
Savings Bank" (or any similar name) within the Noncompete Area
during the three (3) year period following the Closing Date.
ARTICLE VII
COVENANTS OF GREENPOINT
7.1 INTERFERENCE OR DAMAGE; INVESTIGATIONS. Prior
to the Closing, GreenPoint shall not interfere with Home Sav-
ings' normal operations or its customer or employee relations
at the Branches. Subject to the foregoing, Home Savings shall
afford GreenPoint access, at reasonable times and upon reason-
able notice, to the Branches for purposes of transition plan-
ning and to conduct such environmental investigations as
GreenPoint shall reasonably deem appropriate, provided that
GreenPoint shall, and shall cause its consultants and other
agents to, conduct and complete such investigations as expedi-
tiously as reasonably possible. GreenPoint hereby agrees to
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indemnify, reimburse, defend and hold harmless Home Savings
for, from and against all Losses arising out of or related to
the activities of GreenPoint, its agents or contractors on or
about the Branches in conducting such inspections or transition
planning as Home Savings shall allow prior to the Closing.
7.2 PERFORMANCE OF LIABILITIES. From and after the
Closing Date, GreenPoint shall perform and be bound by the
terms and provisions of the deposit agreements governing the
terms of the accounts included within the Deposits, until such
terms and provisions are properly modified by GreenPoint.
Subject to the provisions of Section 13.2 hereof, from and
after the Closing Date, GreenPoint shall pay, to the extent of
sufficient available funds on deposit, all properly drawn
checks, drafts, and non-negotiable withdrawal orders timely
presented to it by mail, over its counters, or through
clearings by depositors whose deposits or accounts on which
such items are drawn are included within the Deposits, whether
drawn on the check or draft forms provided by Home Savings or
by GreenPoint, all in accordance with applicable law, customary
banking practices and the provisions of such accounts in effect
as of the Closing Date, until such provisions are properly
modified or canceled by GreenPoint. GreenPoint shall forward
to the last known address of all customers of the Branches
within five (5) days following the Closing Date a reasonable
amount of checks, drafts and withdrawal orders bearing its own
imprint for use by such customers.
7.3 ACCOUNT LOANS. From and after the Closing Date,
GreenPoint shall continue to honor and provide credit in
accordance with applicable law, customary banking practices and
the terms and provisions of the Account Loans transferred under
this Agreement, until such terms and provisions are properly
modified by GreenPoint.
7.4 SAFE DEPOSIT BUSINESS. From and after the
Closing Date, GreenPoint shall perform and discharge all of
Home Savings' liabilities with respect to the Safe Deposit
Business, including maintaining all necessary facilities and
providing all necessary services for the use of safe deposit
boxes by the renters thereof, in accordance with the terms and
provisions of the applicable leases or other agreements
relating to such boxes, until such terms and provisions are
properly modified by GreenPoint.
7.5 FIDUCIARY RELATIONSHIPS. From and after the
Closing Date, GreenPoint shall perform all of the fiduciary
relationships of Home Savings arising out of any retirement
accounts included within the Deposits, and with respect to such
accounts, GreenPoint shall assume, subject to the receipt of
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any required consents, all of the obligations and duties of
Home Savings as fiduciary and succeed to all such fiduciary
relationships of Home Savings as fully and to the same extent
as if GreenPoint had originally acquired, incurred or entered
into such fiduciary relationship.
7.6 CONDUCT OF BUSINESS. Between the date hereof
and the Closing Date, GreenPoint and its affiliates shall not
undertake any marketing or advertising efforts specifically
targeted to Home Savings' customers or take any other action
specifically intended to reduce the amount of the Deposits as
of the Closing Date. Notwithstanding the foregoing, GreenPoint
shall be permitted to continue to conduct its current business
in the ordinary course and shall be permitted to (i) engage in
general media advertising not specifically targeted to
customers of the Branches and not using Home Savings' name, and
(ii) originate and service loans and otherwise engage in the
lending business, including any solicitation of such business.
GreenPoint shall not, between the date of this Agreement and
the Closing Date, conduct its business and operations in such a
manner as to impair its ability to consummate the transactions
contemplated hereunder, nor will it engage in any transaction,
take any action or omit to take any action, which could be
expected to impair its ability to consummate the transactions
contemplated hereunder.
7.7 CONDITIONS TO CLOSING. GreenPoint shall use its
reasonable efforts to (i) satisfy, as expeditiously as
reasonably possible, all of the conditions to the obligations
of Home Savings hereunder within GreenPoint's control, and (ii)
obtain all consents of third parties required to assign the
branch leases set forth on SCHEDULE 3.10(a) and the contracts
set forth on SCHEDULE 3.9.
7.8 RECORDS. GreenPoint shall maintain the Records
in accordance with applicable law and regulation and
GreenPoint's record retention policy and, in any case, for not
less than seven (7) years following the Closing Date.
Following the Closing Date, GreenPoint shall promptly provide
such copies of the Records transferred to GreenPoint by Home
Savings as Home Savings shall reasonably request, provided
that, from and after 180 days following the Closing Date, Home
Savings shall reimburse GreenPoint for its actual out-of-pocket
costs incurred in connection therewith.
7.9 CARDHOLDERS. Home Savings shall arrange for
Citibank to provide to GreenPoint after the Closing Date a list
of all Cardholders. GreenPoint shall not at any time use or
transfer the Cardholder names on such list for the purpose of
soliciting, directly or indirectly, any Cardholder for any Bank
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Card. If GreenPoint makes or conducts any solicitation for a
Bank Card, it shall purge the names of all Cardholders whose
names appear on the list provided by Citibank to GreenPoint
from any list of persons to be solicited. Citibank is hereby
designated as a third party beneficiary of the obligations
stated in this Section 7.9 with a direct right of enforcement
against GreenPoint without regard to or defense based upon any
action or omission of Home Savings. GreenPoint acknowledges
that Home Savings has granted to Citibank the right to solicit
customers with accounts domiciled at the Branches as of the
date prior to the Closing Date (including customers who are not
Cardholders) for Bank Cards, for an indefinite period,
including the period following the Closing Date, and that
GreenPoint does not have exclusive rights to solicit such
customers. GreenPoint's obligations under this Section 7.9
shall be limited to those obligations required to be imposed
upon GreenPoint pursuant to the terms of that certain Purchase
and Sale Agreement by and between Home Savings and Citibank
dated as of December 14, 1993. The number of Cardholders as of
March 31, 1995 was approximately 11,500.
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.1 REGULATORY APPROVALS.
(a) Home Savings and GreenPoint shall cooperate in
preparing, submitting, filing, updating and publishing (as
applicable), as expeditiously as possible, all applications,
notification and report forms, and notices as may be required
by applicable law, with respect to the transactions
contemplated by this Agreement, including, without limitation,
those of the OTS, the NY Banking Authority, the FDIC, the
Federal Trade Commission, the Department of Justice and any
other applicable state or federal regulatory agency, and Home
Savings and GreenPoint will use their reasonable efforts to
obtain such approvals and accomplish such actions as
expeditiously as possible. On or prior to June 1, 1995 each
party shall file in draft or final form each application,
notification or similar form required to obtain the regulatory
approval or consent necessary to consummate the transactions
contemplated by this Agreement.
(b) Each party represents, warrants and agrees that
any information furnished by it for inclusion in any regulatory
application will be true and complete as of the date so
furnished.
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8.2 REPORTS AND INFORMATION. Home Savings has
provided to GreenPoint the Phase I environmental reports,
asbestos reports and other reports, documents and information
with respect to the environmental condition of the Branches
listed on SCHEDULE 3.13 hereto. Home Savings has no reason to
believe that such reports contain any material misstatement or
omit information that makes the statements made therein
misleading in any material respect. Subject to the foregoing,
Home Savings makes no representations and warranties whatsoever
with respect to the form or content of such reports and hereby
disclaims responsibility for the information underlying the
reports, the scope of examination undertaken in connection with
the reports, the fitness of the reports for GreenPoint's
purposes, or the qualifications and expertise of the preparers
of the reports. GreenPoint acknowledges that all reports and
other documents obtained from Home Savings, including, but not
limited to, the Phase I and asbestos reports, shall remain the
property of Home Savings until the consummation of the Closing
and GreenPoint will not disseminate any of such materials to
any other individual or entity, except its attorneys and
environmental consultants. In the event the Closing Date does
not occur or this Agreement is terminated, GreenPoint shall
return to Home Savings all documents delivered by Home Savings
to GreenPoint or its agents, together with copies of all
reports, studies, analyses and other written work product
(other than attorney work product) prepared by GreenPoint or
its agents or contractors relating to the Branches. If
GreenPoint shall specifically identify to Home Savings in
writing prior to the Closing any environmental problem
requiring remediation at any of the Owned Branches or Ground
Leased Branches, GreenPoint shall bear the first $250,000 of
costs related to the remediation thereof per Branch, and Home
Savings shall bear all costs related to such remediation
thereafter; provided, that each party shall use its reasonable
efforts to cooperate in conducting any such remediation, which
shall be completed as expeditiously as possible and at the
lowest possible cost.
8.3 FURTHER ASSURANCES. Home Savings and GreenPoint
each shall do all things reasonably necessary or desirable and
within its control to effect the consummation of the transac-
tions contemplated hereby as soon as possible, and at any time
and from time to time after the Closing Date shall, upon the
request of the other, do or cause to be done such further acts
and execute such documents as may be necessary or desirable to
vest in GreenPoint the Assets (other than the Real Property for
which GreenPoint will look solely to the Title Policies), and
to evidence GreenPoint's assumption of the Liabilities, in-
cluding, among others, obtaining all necessary consents and
substitutions necessary to substitute GreenPoint as trustee for
all retirement deposit accounts included in the Deposits.
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8.4 EMPLOYEES.
(a) Within five (5) Business Days of the date
hereof, Home Savings shall deliver to GreenPoint a true and
complete list of all Region Employees by name, date of hire and
position in the Branches as of a recent date and shall promptly
provide to GreenPoint the most recent performance evaluation,
current salary and other compensation information for any
Region Employee who consents in writing to the provision of
such information to GreenPoint. GreenPoint shall use all
reasonable efforts to interview each Region Employee for
employment effective as of the Closing and use all reasonable
efforts to hire as many of the Region Employees as possible
consistent with, and subject to, GreenPoint's requirements and
employment policies. Home Savings shall permit GreenPoint to
interview Region Employees, at times and locations acceptable
to each of Home Savings and GreenPoint. No later than ninety
(90) days from the date of this Agreement, GreenPoint shall
provide to Home Savings a list of the Region Employees it
intends to employ following the Closing. Home Savings shall
permit GreenPoint to communicate with the Region Employees, at
reasonable times and upon reasonable notice, concerning
GreenPoint's plans, operations, business, customer relations
and general personnel matters, provided that such contacts
shall be conducted in a manner as is reasonably acceptable to
Home Savings.
(b) GreenPoint shall recognize each Transferred
Employee's original date of hire with Home Savings for
determining eligibility and vesting, and give each Transferred
Employee credit for all purposes (other than benefit accrual),
under each employee benefit plan, program or arrangement of
GreenPoint other than (x) GreenPoint's Employee Stock Ownership
Plan (a true and complete copy of which has been provided to
Home Savings) and (y) post-retirement health benefit plan.
Home Savings shall transfer to GreenPoint, at the Closing Date,
cash in the amount of its post-retirement health benefit
accrual for the Transferred Employees, in the approximate
amount of $200,000. GreenPoint shall also give credit to each
Transferred Employee under GreenPoint's welfare benefit plans
for deductible and co-payments made by the Transferred Employee
under Home Savings' welfare benefit plans during the period
prior to the Closing Date to the extent applicable under the
terms of such plans to any period following the Closing Date.
GreenPoint shall waive any pre-existing condition limitation
under each of GreenPoint's welfare benefit plans for any
condition of a Transferred Employee that would have been
covered under such plan had service of such Transferred
Employee with Home Savings been service with GreenPoint.
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(c) GreenPoint shall provide retirement and welfare
benefits (including, without limitation, medical, hospital,
dental, accidental death and dismemberment, life, disability,
401(k) plan and other similar benefits) to Transferred
Employees for claims incurred and benefits earned on or after
the Closing Date under and subject to this Section 8.4 and the
generally applicable terms and conditions of GreenPoint's
employee benefit plans, programs and arrangements as amended
from time to time; provided that Transferred Employees shall
become eligible under such welfare benefit plans upon the
Closing Date.
(d) GreenPoint agrees to maintain, for a period of
at least one year following the Closing Date, severance benefit
plans for Transferred Employees that provide each Transferred
Employee with (i) a severance pay benefit equal to that which
an employee at a comparable employment level of each such
Transferred Employee would receive under the severance benefit
plan of GreenPoint, provided such severance pay benefit shall
be calculated based on the highest salary paid by Home Savings
or GreenPoint to such Transferred Employee during the 18-month
period preceding the termination of such Transferred Employee,
and (ii) the opportunity to make contributions to medical,
hospital and dental plans following termination of employment
under COBRA. Without limiting the generality of Section 8.4(b)
hereof, GreenPoint will give each Transferred Employee credit
under GreenPoint's severance pay plans for service rendered by
such Transferred Employee to Home Savings. GreenPoint agrees
to act as successor employer for purposes of COBRA, so that the
Transferred Employees will not, as a result, be deemed to have
had a termination of employment for purposes of COBRA and that
any COBRA notices or coverage required to be given or made
available to any such employee shall be given or made by
GreenPoint, not Home Savings.
(e) GreenPoint agrees to credit Transferred
Employees with all earned and/or accrued vacation days for the
current year, to which they are entitled under Home Savings'
vacation policy (a true and complete copy of which has been
provided to GreenPoint) upon their employment with GreenPoint,
and with length of service affecting the rate of accrual of
vacation days, and to advise those employees of same.
(f) In reliance on the agreements of GreenPoint set
forth in this Section 8.4, GreenPoint and Home Savings agree
that Home Savings shall not deliver any notice to Region Em-
ployees pursuant to the WARN Act. GreenPoint further agrees
that it shall be responsible for providing a timely notifica-
tion if required by the WARN Act for any employee terminations
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or layoffs following the Closing Date and Home Savings shall
cooperate with GreenPoint with respect to the foregoing.
(g) This Agreement is not intended to create and
does not create any contractual or legal rights in or
enforceable by any Region Employee. GreenPoint agrees to
obtain the prior approval of Home Savings before sending any
written communications to any Home Savings employee concerning
the subject matter of this Section 8.4, which approval shall
not be unreasonably withheld. Home Savings agrees to use its
reasonable efforts to incorporate GreenPoint's comments in any
written communications to the Region Employees concerning the
subject matter of this Section 8.4.
8.5 CONFIDENTIALITY. Except to the extent
disclosure is required by law, or in response to any
governmental or regulatory authority, or in connection with any
litigation relating to an alleged breach of this Agreement,
each party shall maintain the confidentiality of all
information obtained from the other party hereto that is not
publicly available and shall use such information only for
purposes reasonably related to this Agreement and the
transactions contemplated hereby. If this Agreement is
terminated, each of the parties hereto agrees to return
promptly upon request all documents received from the other
party that contain or embody information subject to this
paragraph.
8.6 PUBLICITY; NOTICES. Until consummation of the
Closing, GreenPoint and Home Savings each shall coordinate with
each other in advance as to (i) the form and content of any
communication intended for dissemination to the public or the
customers of the Branches regarding the transactions
contemplated by this Agreement, (ii) the form and content of
any communication from GreenPoint to the employees of Home
Savings, and (iii) the form and content of any application made
to any regulatory authority, or similar agency, relating to the
transactions contemplated hereby. Neither party shall
disseminate any such communication without the prior approval
of the other, which approval shall not be unreasonably withheld
or delayed, except that nothing contained in this Agreement
shall prevent Home Savings or GreenPoint from making any and
all public disclosures that either of them shall believe is
advisable to make, based upon the advice of counsel, to comply
with any applicable securities laws or regulations or requests
of governmental agencies or authorities.
8.7 TAX REPORTING. The parties shall use their best
efforts to enter into an agreement (the "Allocation Agreement")
as soon as practicable after the Closing Date concerning the
allocation of the Purchase Price among the Assets in accordance
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with Section 1060 of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder (the
"Code"). GreenPoint shall deliver to Home Savings a proposed
Allocation Agreement which will allocate the Purchase Price
among the Assets within 120 days after the Closing Date. If
Home Savings has not objected to such Allocation Agreement
within 30 days of receipt, such agreement shall be deemed
accepted and shall be the Allocation Agreement. If Home
Savings objects to GreenPoint's proposed Allocation Agreement,
Home Savings shall give GreenPoint notice of its objections and
GreenPoint and Home Savings shall use all reasonable efforts to
resolve their differences. If, 60 days after the date on which
Home Savings has given GreenPoint notice of its objections, the
parties have not adopted the Allocation Agreement, any disputes
related thereto shall be referred to a "big six" accounting
firm mutually agreed on by the parties having no material
relationship with either party and shall be resolved within 30
days after such referral. The costs, expenses and fees of such
accounting firm shall be borne equally by the parties.
The Parties shall file all applicable tax returns and
other documents in accordance with the Allocation Agreement (as
finally determined) and will not adopt or otherwise assert tax
positions inconsistent therewith (unless required to do so
under applicable law). GreenPoint shall deliver to Home
Savings a completed Internal Revenue Service Form 8594 as soon
as practicable following the Closing Date but in any event not
later than 60 days prior to the due date, including extension,
for filing the federal income tax return for the year of the
sale. The parties shall file such Form 8594 with their
respective tax returns for the year in which the Closing
occurs.
8.8 INTEREST REPORTING. Home Savings shall report
from January 1, 1995 (or from January 1, 1996, if the Closing
Date is in 1996) through the Closing Date, and GreenPoint shall
report from the Closing Date through December 31, 1995 (or
through December 31, 1996, if the Closing Date is in 1996), all
interest credited to, interest premiums paid on, interest
withheld from, and early withdrawal penalties charged to,
accounts included within the Deposits. Such reports shall be
made to the holders of such deposit accounts and to the
applicable federal and state regulatory agencies.
8.9 WITHHOLDING. No later than 6:00 p.m. Pacific
Time on the day following the Closing Date, Home Savings shall
provide to GreenPoint information regarding all "B" notices
(TINs do not match) and "C" notices (underreporting/IRS imposed
withholding) received by it from the IRS regarding any of the
accounts included within the Deposits and for a period of 180
days following the Closing Date, Home Savings shall provide
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information regarding all notices received by Home Savings from
the IRS releasing withholding restrictions on the accounts
related to the Deposits. Any amounts required by any
governmental agency to be withheld from any of any of the
accounts included within the Deposits (the "Withholding
Obligations") or any penalties imposed by any governmental
agency will be handled as follows:
(a) Any Withholding Obligations required to be
remitted to the appropriate governmental agency on or prior to
the Closing Date will be withheld and remitted by Home Savings,
and any other sums withheld by Home Savings pursuant to
Withholding Obligations prior to the Closing Date shall also be
remitted by Home Savings to the appropriate governmental agency
on or prior to the time they are due; and
(b) Any Withholding Obligations required to be
remitted to the appropriate governmental agency after the
Closing Date with respect to Withholding Obligations after the
Closing Date and not withheld by Home Savings shall be withheld
and remitted by GreenPoint.
Any penalties described in "B" notices from the IRS or any
similar penalties that relate to accounts opened by Home
Savings prior to the Closing Date will, subject to this Section
8.9, be paid by Home Savings promptly upon receipt of the
notice providing such penalty assessment resulted from Home
Savings' acts, policies or omissions. Home Savings shall pay
such penalties only after exhausting all administrative and
judicial remedies which Home Savings deems appropriate.
GreenPoint shall cooperate with Home Savings in providing
copies of penalty notices on a timely basis and other
information which Home Savings may request in order to
challenge such penalties.
8.10 SIGNS. Home Savings may remove any and all
interior and exterior signs bearing, or in the shape of, the
Home Savings emblem, and any other signs and sign casings
excluded from SCHEDULE 3.7, at any time until and including the
tenth (10th) day following the Closing Date. With respect to
all signs identifying such branches as Home Savings branches,
GreenPoint and Home Savings shall mutually agree upon one or
more sign companies to simultaneously remove said signs, sign
facings, and sign casings at Home Savings' cost and install
GreenPoint's signage at GreenPoint's cost.
8.11 LEASING OF BRANCHES; EXCLUDED BRANCHES.
(a) In the event GreenPoint excludes any branch
lease under which Home Savings is the lessee or sublessee from
SCHEDULE 3.10(a) pursuant to the terms of Section 5.6 then, if
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permitted by the lease, GreenPoint shall sublease any such
Leased Branch or Ground Leased Branch from Home Savings
following the Closing for the same rent and term, and subject
to the same terms and conditions, as the existing lease for
such Branch, provided, that GreenPoint shall indemnify Home
Savings for any breach by GreenPoint of the terms of such
sublease. If such sublease is permitted, all other provisions
of this Agreement relating to the purchase of the Assets and
the assumption of the Liabilities shall be unaffected. If the
consent of the lessor is required for such sublease, and such
consent cannot be obtained prior to the Closing Date, then such
branch shall be deemed an "Excluded Branch" in accordance with
the provisions of Section 8.11(d).
(b) In the event GreenPoint declines to purchase the
real property fee interest associated with an Owned Branch or
to assume the real property leasehold interest associated with
a Ground Leased Branch pursuant to the terms of Section 5.7(b),
then:
(i) GreenPoint shall lease or sublease any such
Branch from Home Savings following the Closing pursuant to
the terms of a commercial lease prepared by Home Savings,
which commercial lease shall provide for (A) a term of
five years, (B) a base rent determined by an independent
commercial leasing agent selected jointly by Home Savings
and GreenPoint which rent shall represent a fair market
rental amount for the premises when compared to similar
properties in similar locations, on a triple net basis,
with utilities and taxes to be paid for or reimbursed by
GreenPoint, (C) a requirement that GreenPoint obtain and
maintain public liability insurance with a minimum
$5,000,000 combined single limit coverage naming Home
Savings as an additional named insured, and (D) such other
commercially reasonable terms and conditions as may be
determined by the parties; provided, however, that if the
consent of the lessor is required for a sublease of a
Ground Leased Branch, and such consent cannot be obtained
prior to the Closing Date, then such branch shall be
deemed an "Excluded Branch" in accordance with the
provisions of Section 8.11(d); and
(ii) the Real Property Purchase Price shall be
reduced by (A) the Net Book Value of the real property fee
interest associated with such Branch, if the Branch is an
Owned Branch, or (B) the Net Book Value of the leasehold
improvements associated with such Branch, if the Branch is
a Ground Leased Branch.
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(c) Notwithstanding the foregoing, if a Ground
Leased Branch is excluded from SCHEDULE 3.10(a) pursuant to the
terms of Section 5.6, and if GreenPoint declines to assume the
leasehold interest associated with such Ground Leased Branch
pursuant to the terms of Section 5.7(b), then GreenPoint shall,
if permitted by the terms of such ground lease, sublease such
Ground Leased Branch premises from Home Savings in accordance
with the provisions of Section 8.11(b), or, if the consent of
the lessor is required for such sublease, and such consent
cannot be obtained prior to the Closing Date, such Ground
Leased Branch shall be deemed an "Excluded Branch" in
accordance with the terms of Section 8.11(d).
(d) If the consent of the lessor is required for a
sublease pursuant to Section 8.11(a), (b) or (c) above, and
such consent cannot be obtained prior to the Closing Date, or
if a branch is excluded pursuant to Section 5.7(a), each such
affected branch shall be referred to herein as an "Excluded
Branch." GreenPoint shall have no obligation to assume the
lease associated with an Excluded Branch or to assume and/or
purchase the Personal Property, the Assumed Contracts, the Cash
on Hand or the leasehold improvements associated with an
Excluded Branch, but GreenPoint shall nevertheless assume
and/or purchase the Deposits, Account Loans, Records and Safe
Deposit Business associated with an Excluded Branch on the same
terms and conditions otherwise provided herein, subject to
SCHEDULE 8.11(d).
8.12 RELOCATION OF CERTAIN OFFICES. Home Savings
shall use its reasonable efforts to relocate its loan
production offices located at the Bayside and Massapequa Park
Branches as soon as practicable following the Closing Date, but
in any case, no later than one hundred twenty (120) days
following the Closing Date. GreenPoint shall use its
reasonable efforts to relocate the teleservicing unit located
at the 42nd Street Branch as soon as practicable following the
Closing Date, but in any case, no later than one hundred twenty
(120) days following the Closing Date. After the Closing Date,
the relocating party shall not unnecessarily or materially
interfere with the other's operations, and shall conduct such
relocation in an orderly manner and the other shall cooperate
with the relocating party in its efforts to conduct such
relocation.
8.13 DEPOSIT INSURANCE EXIT/ENTRANCE FEES. The
parties hereby agree that each shall use its reasonable efforts
to obtain all necessary regulatory approvals to consummate the
transfer of the Deposits as contemplated by this Agreement
without the assessment of exit or entrance fees by the FDIC,
including, without limitation, seeking approval pursuant to
Section 5(d)(3) of the Federal Deposit Insurance Act.
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8.14 42ND STREET BRANCH. GreenPoint shall lease the
42nd Street Branch from Home Savings following the Closing
pursuant to the terms of a full service gross commercial lease,
which lease shall provide for (i) a term of three years, (ii)
an annual rent equal to $1,700,000 per year, (iii) a
requirement that GreenPoint obtain and maintain public
liability insurance with a minimum $5,000,000 combined single
limit coverage naming Home Savings as an additional named
insured, (iv) acceptance of the premises on an "as is" basis,
and (v) such other terms and conditions as set forth on
SCHEDULE 8.14 hereto.
8.15 SBLI. Home Savings and GreenPoint shall
cooperate to effect a transfer from Home Savings to Greenpoint
of the assets and liabilities associated with the savings bank
life insurance business associated with the Branches on fair
and reasonable terms.
8.16 HOME OFFICE. Home Savings and GreenPoint will
cooperate to ensure that GreenPoint can purchase and assume the
Assets and Liabilities associated with each of the Branches in
compliance with the provisions of Section 240 of the Banking
Law of the State of New York, provided, however, that
notwithstanding any other term or provision of this Agreement,
GreenPoint shall in no event be excused from its obligation to
purchase and assume any of the Assets and Liabilities on
account of any violation or potential violation of such statute
that may arise out of or relate to such purchase and
assumption.
ARTICLE IX
CONDITIONS TO OBLIGATION OF GREENPOINT
The obligation of GreenPoint to close the
transactions contemplated hereunder is subject to the
satisfaction on or before the Closing of the following
conditions:
9.1 NO INJUNCTIONS OR RESTRAINTS. No order,
injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing
the consummation of the Closing of the transactions
contemplated by this Agreement shall be in effect.
9.2 CONDITIONS PERFORMED. Each of the terms, cov-
enants and conditions of this Agreement to be complied with and
performed by Home Savings on or before the Closing shall have
been duly complied with and performed in all material respects,
or GreenPoint shall have waived such compliance or performance,
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and all documents to be delivered or actions to be taken by
Home Savings pursuant to Sections 12.2 and 12.3 shall have been
delivered or performed.
9.3 REPRESENTATIONS. Each of the representations
and warranties made by Home Savings herein shall be true and
correct as of the date hereof and as of the Closing with the
same force and effect as though such representations and
warranties had been made as of the Closing, except that the
representations and warranties made regarding SCHEDULES 3.6,
3.7, 3.8, 3.9, 3.10(a) and 3.10(b) shall be true and correct as
of the Closing Date with respect to such Schedules as updated
and delivered at the Closing in accordance with the terms of
this Agreement.
9.4 DOCUMENTATION. The form and substance of all
instruments of transfer and other documents required to be
delivered pursuant to this Agreement by Home Savings shall be
reasonably satisfactory in all respects to GreenPoint.
ARTICLE X
CONDITIONS TO OBLIGATION OF HOME SAVINGS
The obligation of Home Savings to close the
transactions contemplated hereunder is subject to the
satisfaction on or before the Closing of the following
conditions:
10.1 NO INJUNCTIONS OR RESTRAINTS. No order,
injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing
the consummation of the Closing of the transactions
contemplated by this Agreement shall be in effect.
10.2 CONDITIONS PERFORMED. Each of the terms,
covenants and conditions of this Agreement to be complied with
and performed by GreenPoint on or before the Closing shall have
been duly complied with and performed in all material respects,
or Home Savings shall have waived such compliance or
performance, and all documents to be delivered or actions to be
taken by GreenPoint pursuant to Section 12.4 shall have been
delivered or performed.
10.3 REPRESENTATIONS. Each of the representations
and warranties made by GreenPoint herein shall be true and
correct as of the date hereof and as of the Closing with the
same force and effect as though such representations and
warranties had been made as of the Closing.
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10.4 DOCUMENTATION. The form and substance of all
instruments of assumption and other documents required to be
delivered pursuant to this Agreement by GreenPoint shall be
reasonably satisfactory in all respects to Home Savings.
ARTICLE XI
CONDITIONS TO OBLIGATIONS OF BOTH PARTIES
The obligations of both parties to close the
transactions contemplated by this Agreement are subject to the
satisfaction on or before the Closing Date of each of the
following conditions:
11.1 GOVERNMENTAL ACTIONS. Neither the Department
of Justice, the Federal Trade Commission nor any other agency
of the United States of America (or any political subdivision
thereof) shall have issued any order or taken or threatened to
take any action which would or could have the effect of
preventing the consummation of the transactions contemplated by
this Agreement or asserting any liability as a result of such
transactions. No governmental action or proceeding shall have
been instituted or, in the reasonable opinion of Home Savings
or GreenPoint, be imminent, and, at what would be the Closing,
remain imminent or pending by or before a court or other
governmental body, agency or authority to restrain or prohibit
the transactions contemplated by this Agreement or assert any
material liability in connection herewith.
11.2 GOVERNMENTAL APPROVALS. To the extent required
by applicable law or regulation, the OTS, the NY Banking
Authority, the FDIC and/or such other state or federal agencies
whose approval of the transactions contemplated by this
Agreement is so required, shall have approved or authorized all
of the transactions contemplated by this Agreement. Any such
approval required to be obtained by Home Savings or GreenPoint
shall have been granted without the imposition of conditions
that are reasonably deemed by the affected party to be
materially burdensome. All other statutory or regulatory
requirements for the valid consummation of the transactions
contemplated by this Agreement shall have been satisfied and
all other required governmental consents and approvals shall
have been obtained.
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ARTICLE XII
THE CLOSING
12.1 TIME AND PLACE OF CLOSING. Unless this
Agreement is earlier terminated pursuant to Section 14.1, the
consummation of the transactions provided for herein (the
"Closing") will take place in a mutually acceptable manner and
on a mutually acceptable day and place (the "Closing Date"),
which shall be a Friday and, unless the parties mutually agree
otherwise, shall be as soon as reasonably practicable and no
later than the last Business Day of the month immediately
following the month in which all required regulatory approvals
have been received (or no later than December 14, 1995 in the
event such required regulatory approvals are received prior to
such date and the Closing can be reasonably facilitated by such
date) and all applicable waiting periods have expired, but in
no event shall the Closing Date be (i) later than January 31,
1996, (ii) on a date between December 15, 1995 and January 15,
1996, inclusive, (iii) during the last three (3) days or the
first ten (10) days of any fiscal quarter of Home Savings or
GreenPoint, or (iv) on a date on or between September 1-4, 1995
or September 29 - October 2, 1995.
12.2 PAYMENT DUE AT CLOSING. Home Savings shall pay
to GreenPoint at the Closing an amount (the "Cash Payment") in
United States dollars equal to one hundred percent (100%) of
the aggregate amount of the Deposits, as reflected on the
updated SCHEDULE 3.6 delivered to GreenPoint at the Closing
pursuant to Section 5.2 of this Agreement, minus the
Preliminary Purchase Price, minus the aggregate Designated
Value of the Agency COFI Securities, CMOs, and Selected
Securities, if any, delivered by Home Savings to GreenPoint at
the Closing, minus the Lease Deposits, minus the Prepaid FDIC
Insurance Premium, and plus or minus the net taxes and expenses
to be paid by Home Savings or GreenPoint pursuant to Section
16.2 (to the extent such amounts are calculable at Closing).
Home Savings shall prepare and deliver to GreenPoint at the
Closing a statement (the "Preliminary Settlement Statement")
supported by appropriate exhibits, substantially in the form of
EXHIBIT B hereto, showing the computation of the Cash Payment.
12.3 CLOSING DOCUMENTS TO BE DELIVERED OR ACTIONS TO
BE TAKEN BY HOME SAVINGS. At the Closing, Home Savings shall:
(a) Deliver to GreenPoint updated SCHEDULES 3.6,
3.7, 3.8, 3.9, 3.10(a), 3.10(b) and SCHEDULE 5.1;
(b) Deliver to GreenPoint the Preliminary Settlement
Statement and any exhibits thereto;
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(c) Deliver the Cash Payment by wire transfer in
immediately available funds to an account designated in writing
by GreenPoint;
(d) Deliver to GreenPoint each and every executed
Lessor's Estoppel Certificate Home Savings was able to obtain,
substantially in the form attached hereto as EXHIBIT C, with
respect to each Branch Lease under which Home Savings is a
lessee or sublessee;
(e) Deliver to GreenPoint an executed Consent to
Assignment substantially in the form attached hereto as EXHIBIT
D with respect to each Branch Lease under which Home Savings is
a lessee or sublessee that requires the consent of any party to
the assignment thereof;
(f) Execute and deliver to GreenPoint a Lessee's
Assignment and Assumption Agreement substantially in the form
attached hereto as EXHIBIT E with respect to each Branch Lease;
(g) Execute and deliver to GreenPoint a Lessor's
Assignment and Assumption Agreement substantially in the form
attached hereto as EXHIBIT F with respect to each Branch Tenant
Lease;
(h) Execute and deliver real property deeds to the
Title Company, in the form attached hereto as EXHIBIT G,
conveying to GreenPoint fee title to the Real Property
associated with each Owned Branch and deliver all filings to
local and state authorities necessary to transfer such Real
Property;
(i) Execute and deliver to GreenPoint a certificate
of non-foreign status in the form of EXHIBIT H hereto;
(j) Execute and deliver to GreenPoint a Bill of Sale
and Assignment in the form attached hereto as EXHIBIT I;
(k) Execute and deliver to GreenPoint a General
Assignment in the form attached hereto as EXHIBIT J;
(l) Deliver to GreenPoint possession of the Assets;
(m) Acknowledge and deliver to GreenPoint an
Assumption Agreement in the form attached hereto as EXHIBIT K;
(n) Execute and deliver to GreenPoint a Retirement
Account Transfer Agreement in the form attached hereto as
EXHIBIT L;
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(o) Deliver to GreenPoint an opinion of counsel to
Home Savings dated as of the Closing Date substantially in the
form attached hereto as EXHIBIT M and an opinion of in-house
counsel substantially in the form attached hereto as EXHIBIT N;
(p) Deliver to GreenPoint a certificate of a Senior
Vice President of Home Savings, or of another officer
acceptable to GreenPoint, dated as of the Closing Date,
substantially in the form attached hereto as EXHIBIT O;
(q) Deliver or cause to be delivered to GreenPoint
all other documents and instruments necessary to transfer to
GreenPoint all of Home Savings' right, title and interest in
and to the Assets (other than the Real Property for which
GreenPoint will only receive the applicable Title Policy and
either the real property deed or the Assignment and Assumption
Agreement, as applicable, delivered pursuant to Sections
12.3(f) and (g) hereof);
(r) Cause to be issued, at GreenPoint's option, an
Owner's Policy of Title Insurance (a "Title Policy", and
together, the "Title Policies") issued by the Title Company (or
an unconditional commitment, dated as of the Closing Date, to
issue such Title Policy promptly following the Closing), the
expense of which shall be borne and paid by GreenPoint,
together with any endorsements reasonably requested by
GreenPoint, insuring GreenPoint's fee title or ground leasehold
title interest, as appropriate, for any or all of the parcels
of Real Property, subject only to the Permitted Exceptions.
Any surveys desired by GreenPoint or required by the Title
Company in connection with the issuance of the Title Policies
pursuant to this Section 12.3(r) or any endorsements reasonably
requested by GreenPoint hereunder, shall be obtained by
GreenPoint at GreenPoint's sole cost and expense;
(s) Execute as lessor or sublessor, and deliver to
GreenPoint a lease or sublease relating to each Branch that
GreenPoint shall lease from Home Savings pursuant to Section
8.11 hereof;
(t) Deliver or cause to be delivered such documents
evidencing the corporate authority and existence of Home Sav-
ings as GreenPoint shall reasonably request, including (i) a
copy of all resolutions duly adopted by the Board of Directors
of Home Savings authorizing the execution, delivery and per-
formance of this Agreement by Home Savings, certified by the
Secretary or an Assistant Secretary of Home Savings as being in
full force and effect as of the Closing, (ii) certified copies
of the charter and bylaws of Home Savings as in full force and
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effect as of the Closing, (iii) a certificate of existence
issued by the Office of Thrift Supervision, and (iv) a
certificate of the Secretary or an Assistant Secretary of Home
Savings as to the incumbency and signatures of the officers of
Home Savings executing the Agreement and any other documents
delivered by Home Savings at the Closing; and
(u) Deliver to GreenPoint the Selected Securities,
the Agency COFI Securities and the CMOs, endorsed or in a form
appropriate for transfer.
12.4 CLOSING DOCUMENTS TO BE DELIVERED OR ACTIONS TO
BE TAKEN BY GREENPOINT. At the Closing, GreenPoint shall:
(a) Execute and deliver to Home Savings a Lessee's
Assignment and Assumption Agreement in the form attached hereto
as EXHIBIT E with respect to each Branch Lease;
(b) Execute and deliver to Home Savings a Lessor's
Assignment and Assumption Agreement substantially in the form
attached hereto as EXHIBIT F with respect to each Branch Tenant
Lease;
(c) Execute and deliver to Home Savings an
Assumption Agreement in the form attached hereto as EXHIBIT K;
(d) Execute and deliver to Home Savings a Retirement
Account Transfer Agreement in the form attached hereto as
EXHIBIT L;
(e) Deliver to Home Savings an opinion of counsel to
GreenPoint dated as of the Closing Date substantially in the
form attached hereto as EXHIBIT P.
(f) Deliver to Home Savings the certificate of the
Chief Financial Officer of GreenPoint, or of another officer
acceptable to Home Savings, dated as of the Closing Date,
substantially in the form attached hereto as EXHIBIT Q;
(g) Deliver or cause to be delivered to Home Savings
all other documents and instruments necessary to evidence
GreenPoint's assumption of the Liabilities;
(h) Execute as lessee or sublessee, and deliver to
Home Savings a lease or sublease relating to each Branch that
GreenPoint shall lease from Home Savings pursuant to Sections
8.11 and 8.14 hereof; and
(i) Deliver or cause to be delivered such documents
evidencing the corporate authority and existence of GreenPoint
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as Home Savings shall reasonably request, including (i) a copy
of all resolutions duly adopted by the Board of Directors of
GreenPoint authorizing the execution, delivery and performance
of this Agreement by GreenPoint, certified by the Secretary or
an Assistant Secretary of GreenPoint as being in full force and
effect as of the Closing, (ii) certified copies of the charter
and bylaws of GreenPoint as in full force and effect as of the
Closing, (iii) a certificate of existence issued by the New
York State Banking Authority, and (iv) a certificate of the
Secretary or an Assistant Secretary of GreenPoint as to the
incumbency and signatures of the officers of GreenPoint
executing the Agreement and any other documents delivered by
GreenPoint at the Closing.
12.5 POST-CLOSING ADJUSTMENTS.
(a) As soon as reasonably practicable after the
Closing Date, but no later than ten (10) Business Days
thereafter, Home Savings shall provide GreenPoint with: (i)
final SCHEDULES 3.6 and 3.8 that shall accurately reflect the
related balances, including accrued and unpaid interest
thereon, as of the Close of Business on the Closing Date, and
(ii) a final SCHEDULE 5.1 that shall accurately reflect the
amount of Cash on Hand as of the Close of Business on the
Closing Date, which schedule shall be prepared by Home Savings
based upon a cash count to be mutually conducted by Home
Savings and GreenPoint at the Close of Business on the Closing
Date.
(b) No later than ten (10) Business Days following
the Closing Date, Home Savings shall prepare and deliver to
GreenPoint a final settlement statement substantially in the
form of EXHIBIT R, which shall show the calculation of the
final payment amount (the "Final Payment Amount") based upon
the final schedules delivered pursuant to this Section 12.5.
(c) If the Final Payment Amount is different from
the Cash Payment, then a payment shall be made in the following
manner: if the Cash Payment shall have been greater than the
Final Payment Amount, GreenPoint shall refund to Home Savings
the difference between such amounts; if the Cash Payment shall
have been less than the Final Payment Amount, Home Savings
shall pay to GreenPoint the difference between such amounts.
Such refund or payment shall be made promptly by wire transfer
in immediately available collected funds, together with inter-
est thereon for the number of days from and including the
Closing Date to such settlement date, but excluding such set-
tlement date, at the rate per annum equal to the average during
such period of the average of the daily high and low rates for
federal funds on each Business Day during such period, as such
rates are published in the Western Edition of the Wall Street
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Journal, computed on the basis of actual days elapsed over a
365-day year.
ARTICLE XIII
TRANSFER OF DEPOSIT ACCOUNTS
13.1 NOTICES. Each of Home Savings and GreenPoint
shall obtain the prior approval of the other of its written
notification to holders of deposits domiciled at any of the
Branches of the transfer of the Deposits from Home Savings to
GreenPoint. Neither Home Savings nor GreenPoint shall
unreasonably withhold such approval. Such notification shall
be made on such date as the parties hereto shall mutually
agree, provided that such notification shall be made in
compliance with relevant federal and state laws and
regulations.
13.2 POST-CLOSING RECONCILIATION.
(a) INCLEARING ITEMS. As of the opening of business
on the day following the Conversion Date, Home Savings shall
advise the Federal Reserve Bank of New York that the routing
transit numbers associated with the Branches should be
reassigned to GreenPoint and shall further provide such other
information necessary to expedite the clearing and sorting of
all checks, drafts, instruments and other commercial paper
relating to the Deposits (collectively referred to herein as
the "Paper Items"). GreenPoint shall bear all charges and
costs imposed by the Federal Reserve in connection with
reassignment of account number ranges for sorting the Paper
Items. For a period of sixty (60) days following the
Conversion Date (the "Inclearing Period"), in the event the
Federal Reserve fails or refuses to direct sort such Paper
Items for delivery to GreenPoint with the result that such
Paper Items are presented to Home Savings, Home Savings shall
continue to process checks or drafts drawn on deposit accounts
included within the Deposits that are not intercepted by the
Federal Reserve. During the Inclearing Period, Home Savings
shall by 3:00 p.m. Eastern Time transmit by facsimile or
electronic transmission a list of each inclearing item equal to
or greater than $2,500 setting forth the amount and the Home
Savings account number of each item received by Home Savings
for payment that day.
By 6:00 p.m. Eastern time on each Business Day during
the Inclearing Period, Home Savings shall make available to
GreenPoint all inclearing items received for payment on the
prior Business Day. By 2:00 p.m. Eastern Time on the day fol-
lowing the receipt of the inclearing items, GreenPoint shall
reimburse Home Savings for the amount of the checks presented
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by wire transfer of immediately available funds. Upon
expiration of the Inclearing Period, Home Savings shall cease
honoring inclearing items presented against deposit accounts
included within the Deposits and such items shall be returned
marked "Refer to Maker". Following the Conversion Date, if
GreenPoint receives any of Home Savings' bank or escrow checks
bearing any of the routing transit numbers transferred to
GreenPoint, GreenPoint shall outsort such items and forward
them to Home Savings' Servicing Center in Irwindale (or such
other location as Home Savings shall specify) by overnight mail
for a period of one (1) year following the Closing Date. By
2:00 p.m. Eastern Time on the day following receipt of the
inclearing items, Home Savings shall reimburse GreenPoint for
the amount of such checks presented by wire transfer of
immediately available funds. Home Savings shall determine
whether to pay or reject such checks.
(b) ACH TRANSACTIONS. (i) Losses due to reclamation
requests against assumed accounts are closed or have
insufficient funds to cover a reclamation request will be
absorbed by Home Savings if the reclamation is against a credit
received on or prior to the Closing Date, and by GreenPoint if
against a credit received after the Closing Date.
(ii) Home Savings shall provide to GreenPoint no
later than forty-five (45) days prior to the Conversion Date,
the customer name, customer account number, and the originator
identification number for each automated clearinghouse ("ACH")
entry for the deposit accounts domiciled at the Branches, and
shall further provide, within seven (7) days following the
Conversion Date, an updated list as of the Close of business on
the Conversion Date. Prior to closing, Home Savings and
GreenPoint will develop a methodology by which ACH items re-
ceived by Home Savings after Conversion will be electronically
redirected to GreenPoint. For a period of one hundred eighty
(180) days following the Conversion Date, Home Savings agrees
to continue to accept and immediately forward to GreenPoint all
automated clearinghouse entries and corresponding funds. Home
Savings also agrees to include the originator identification
number, and GreenPoint agrees to immediately notify and in-
struct the originator of the ACH to reroute the entries di-
rectly to GreenPoint. Home Savings shall use its reasonable
efforts to telecopy or deliver to GreenPoint by 1:00 p.m. Pa-
cific Time (4:00 Eastern Time) of each Business Day, a summary
of ACH items received during such Business Day including claim
number, suffix, if applicable, source name, trade ID, company
ID, client name and effective date. GreenPoint shall be re-
sponsible for processing and responding to any reclamation
against deposit accounts that were transferred to GreenPoint
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that are open and have sufficient funds to cover the
reclamation request. After the 180-day period, Home Savings
may discontinue accepting and forwarding ACH entries and return
them to the originators marked "Account Sold to Another DFI".
GreenPoint shall indemnify Home Savings against any Losses
arising out of or related to any account overdrafts that may
thereby be created.
(c) OVER-THE-COUNTER RETURNED ITEMS. Over-the-
counter returned items are those items that are included within
the deposit accounts transferred to GreenPoint but that are
returned unpaid to Home Savings after the Closing Date. On the
Business Day after any over-the-counter returned item is
received by Home Savings, GreenPoint shall transmit to Home
Savings, GreenPoint shall transmit to Home Savings by 5:00 p.m.
Eastern Time in immediately available funds by wire transfer,
the sum of the over-the-counter returned items GreenPoint deems
acceptable. After the Conversion Date, GreenPoint shall
process all over-the-counter returned items relating to
accounts included within the Deposits.
(d) INDEMNIFICATION. Each party shall indemnify the
other for any Losses incurred by such other party as a result
of such other party's compliance with instructions from the
first party pursuant to this Section 13.2 or as a result of the
failure of the first party to instruct such other party to take
action as required by this Section 13.2.
13.3 DATA PROCESSING. Home Savings shall, subject
to the provisions of Section 13.2, provide data processing
support to GreenPoint following the Closing in accordance with
the terms of the Data Processing Servicing Agreement that is
being entered into by the parties simultaneously with the
execution and delivery of this Agreement.
13.4 EFFECT OF TRANSITIONAL ACTION. Except as and
to the extent expressly set forth in this Article XIII, nothing
contained in this Article XIII shall be construed to be an
abridgement or nullification of the rights, customs, and
established practices under applicable banking laws and
regulations as they affect any of the matters addressed in this
Article XIII.
ARTICLE XIV
TERMINATION
14.1 EVENTS OF TERMINATION. This Agreement shall be
terminable and, if so terminated, shall be of no further force
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or effect between the parties hereto, except (i) as to any li-
ability for breach of any duty, representation, warranty, cov-
enant or obligation arising prior to the date of termination,
or (ii) as to any post-termination obligations under Article 15
or Sections 7.1, 8.2, and 8.5, upon the occurrence of any of
the following events:
(a) By mutual written consent of Home Savings and
GreenPoint;
(b) By Home Savings, if any of the conditions set
forth in Article X or in Article XI have not been satisfied by
January 31, 1996;
(c) By GreenPoint, if any of the conditions set
forth in Article IX or in Article XI have not been satisfied by
January 31, 1996;
(d) By either party, if the other party has failed
to disclose in writing pursuant to Section 3.12 or Section 4.7,
as the case may be, facts known to it that could have an ad-
verse effect on its ability to obtain all requisite regulatory
consents or to perform its obligations under this Agreement;
(e) By either party if a representation or warranty
of the other party is or becomes false or inaccurate or if the
other party fails to comply with a covenant in a timely manner,
provided that such breach is material to the value or condition
of the Branches, the Assets or the Liabilities or such breach
has a material impact on the other party's ability to consum-
mate the transactions contemplated hereby; or
(f) By either party, if the OTS, the NY Banking Au-
thority, the FDIC, or any other governmental agency having ju-
risdiction over the transactions contemplated by this Agreement
notifies Home Savings or GreenPoint in writing of its final
determination that it will refuse to grant an approval or
consent to any material element of the transaction necessary to
the consummation thereof.
14.2 MANNER OF TERMINATION. Notwithstanding any-
thing to the contrary herein contained, neither party hereto
shall have the right to terminate this Agreement on account of
its own breach or any immaterial breach by the other party
hereto. If a party hereto desires to terminate this Agreement
pursuant to any right under this Article, such termination
shall be ineffective unless notice is given in writing to the
other party five (5) Business Days prior to the date of termi-
nation.
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ARTICLE XV
INDEMNIFICATION
15.1 INDEMNIFICATION BY BOTH PARTIES. GreenPoint
and Home Savings mutually agree to indemnify and hold each
other harmless from, and to reimburse each other promptly for,
any and all Losses that one party may suffer as the result of
(i) the material breach of any provision of this Agreement by
the other, (ii) prior to the Closing, the inaccuracy of the
other party's representations or warranties; or (iii) any
liabilities of the other not expressly assumed hereunder or
pursuant to any agreement or other document delivered at the
Closing.
15.2 INDEMNIFICATION BY HOME SAVINGS. Home Savings
shall indemnify, hold harmless and defend GreenPoint from and
against any and all Losses arising out of any actions, suits,
or other proceedings, claims or demands brought by any bona
fide third party unaffiliated with GreenPoint, which arise out
of, or are in any way related to, any of the Assets or
Liabilities, provided that the injury or loss underlying such
action, suit, proceeding, claim or demand was actually suffered
or incurred by such third party prior to the Closing, and
provided further that Home Savings shall have no obligation to
indemnify GreenPoint with respect to any matter described in
Section 15.3(b). Home Savings shall indemnify, hold harmless
and defend GreenPoint from and against any and all Losses from
any claim for payment of a broker's or finder's fee or any
other commission or similar fee to any agent, broker,
investment banker, person or firm acting on behalf of or under
authority of Home Savings, including CS First Boston
Corporation, or acting pursuant to any statement,
representation or agreement of Home Savings.
15.3 INDEMNIFICATION BY GREENPOINT.
(a) GreenPoint shall indemnify, hold harmless and
defend Home Savings from and against any and all Losses arising
out of any actions, suits or other proceedings, claims or de-
mands which arise out of, or are in any way related to, any of
the Assets or Liabilities, other than actions, suits or other
proceedings, claims or demands based upon injuries or losses
actually suffered or incurred prior to the Closing by any bona
fide third party unaffiliated with GreenPoint. GreenPoint
shall indemnify, hold harmless and defend Home Savings from and
against any and all Losses from any claim for payment of
broker's or finder's fee or any other commission or similar fee
49
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to any agent, broker, investment banker, person or firm acting
on behalf of or under authority of GreenPoint, including J.P.
Morgan & Co. Incorporated, or acting pursuant to any statement,
representation or agreement of GreenPoint.
(b) Notwithstanding the foregoing, GreenPoint shall
indemnify, hold harmless and defend Home Savings from and
against any and all Losses arising out of any actions, suits or
other proceedings, claims or demands, which arise out of, or
are in any way related to, (i) the existence of Hazardous Sub-
stances in, on, upon, about, beneath or migrating or threaten-
ing to migrate to or from any of the Branches, or (ii) condi-
tions at any of the Branches that constitute a violation of any
Environmental Law; provided, however, that this provision shall
not require indemnification of any amounts Home Savings is re-
quired to pay to GreenPoint pursuant to Section 8.2.
(c) GreenPoint shall indemnify, hold harmless and
defend Home Savings from and against any and all Losses
suffered as a result of any failure to give any notice to
Region Employees pursuant to the WARN Act.
ARTICLE XVI
MISCELLANEOUS
16.1 NON-SURVIVAL. The representations and warran-
ties of GreenPoint and Home Savings set forth herein shall not
survive the Closing. Notwithstanding any other provision of
this Agreement, neither Home Savings nor GreenPoint shall have
any liability to the other following the Closing for any breach
of any representation or warranty set forth herein.
16.2 TAXES; EXPENSES AND PRORATIONS.
(a) Each party hereto shall pay its own expenses,
including attorneys' fees and filing or other fees payable in
connection with all applications, notification and report forms
and notices to be filed pursuant to Section 8.1.
(b) All prepaid expenses, property taxes and as-
sessments with respect to the Assets and Liabilities shall be
prorated between the parties based on the full amount of the
latest available property tax or other expense bills on the
basis of a three hundred and sixty-five (365) day year as of
the Close of Business on the Closing Date. All operating ex-
penses related to the Branches, including, but not limited to,
utility, maintenance and service expenses attributable to op-
erations until the Close of Business on the Closing Date shall
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be paid by Home Savings; all such expenses (or reimbursement
for items prepaid by Home Savings) attributable to operations
after the Close of Business on the Closing Date shall be paid
by GreenPoint.
(c) All fees for the Title Commitments and Title
Policies and other title or survey fees, expenses or charges,
shall be paid by GreenPoint.
(d) All recording and documentary transfer taxes,
sales, transfer, use, stamp, excise, and similar taxes payable
or arising as a result of this Agreement or the consummation of
the transactions contemplated hereby, including, without
limitation, the New York State Real Estate Transfer Tax and New
York City Real Property Transfer Tax, if any, payable in
connection with the transfer of the Owned Branches, Leased
Branches, Real Property and other Assets to GreenPoint at the
Closing, shall be paid by Home Savings, subject to Schedule
16.2. The New York State Real Property Transfer Gains Tax, if
any, payable in connection with the transfer of the Owned
Branches, Leased Branches, Real Property and other Assets to
GreenPoint at the Closing, shall be paid by Home Savings.
GreenPoint shall respond to Home Savings' written request for a
New York State Real Property Transfer Gains Tax Transferee
Questionnaire within five business days or as soon as
practicable after receipt of such request.
(e) The party customarily responsible for taxes set
forth in subsection (d) under applicable law for the filing of
related returns shall file such returns and provide the other
with copies of all relevant tax filings and related documents
and the other party shall cooperate relating thereto. The
party responsible for the payment of such taxes shall indemnify
and hold harmless the other (pursuant to the procedures of
Article XV) from and against any such taxes due, including
those arising upon subsequent audit by a taxing authority,
including interest and penalties.
(f) This Section shall survive the consummation of
the transactions contemplated by this Agreement.
16.3 NOTICES. Any notice or other communication
required or permitted hereunder shall be sufficiently given if
sent by registered, certified or first class United States
mail, postage prepaid, by reputable overnight private delivery
service generally used for business purposes, or by personal
delivery, addressed as follows:
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If to Home Savings:
Home Savings of America, FSB
4900 Rivergrade Road
Irwindale, California 91706
Attention: Verne Kline
Corporate Development
With copies to:
Legal Department
Home Savings of America, FSB
4900 Rivergrade Road
Irwindale, California 91706
Attention: General Counsel
Munger, Tolles & Olson
355 South Grand Avenue
35th Floor
Los Angeles, California 90071-1560
Attention: John B. Frank, Esq.
If to GreenPoint:
GreenPoint Bank
41-60 Main Street
Flushing, New York 11355
Attention: General Counsel
With a copy to:
Watchell, Lipton, Rosen & Katz
512 West 52nd Street
New York, New York 10019
Attention: Craig M. Wasserman, Esq.
or such other address as shall be furnished in writing by
either party, and such notice or communication shall be deemed
to have been received as of three (3) Business Days after the
date so mailed if sent by United States mail, one (1) Business
Day after the date sent if sent by overnight delivery service,
or on the date so delivered if delivered in person.
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16.4 ENTIRE AGREEMENT; MODIFICATIONS; WAIVERS;
HEADINGS; AMBIGUITIES. This Agreement, including all exhibits
and schedules hereto, and the Data Processing Servicing
Agreement constitute the entire agreement between the parties
hereto pertaining to the subject matter hereof and supersede
all prior agreements and understandings of the parties, whether
oral or written, in connection therewith. No modification of
this Agreement shall be binding unless executed in writing by
the parties hereto. No waiver of any provision of this
Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver. Article, section and
subsection headings are not considered part of this Agreement,
are solely for convenience of reference, and are not intended
to be full or accurate descriptions of the contents of any
section or subsection. Each party hereto has been represented
by legal counsel in the review and revision of this Agreement
and each party agrees that any rule of construction to the
effect that ambiguities are to be resolved against the drafting
party shall not apply in interpreting this Agreement.
16.5 SUCCESSORS AND ASSIGNS. All of the terms,
obligations and provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
respective transferees, successors and assigns, but rights
under this Agreement may not be assigned and duties hereunder
may not be delegated by either party without the written
consent of the other, and any such assignment or delegation
shall be void and of no force or effect.
Notwithstanding the foregoing, GreenPoint may at any
time designate one or more of its affiliates (whether now
existing or hereafter organized) to acquire the Assets
hereunder in lieu of GreenPoint; provided, however, that no
such change shall adversely affect, in the reasonable opinion
of Home Savings, the tax treatment to Home Savings of the
transactions contemplated hereby, or materially delay receipt
of or require any different or additional regulatory approvals
necessary for the consummation of the transactions contemplated
hereby; provided, further, that no such change shall discharge
GreenPoint from any obligations or liabilities to Home Savings
hereunder.
16.6 COUNTERPARTS. This Agreement may be executed
in counterparts, all of which taken together shall constitute
one original instrument.
16.7 GOVERNING LAW. This Agreement shall be gov-
erned by federal law, including laws and regulations governing
the operation of federal savings institutions. To the extent
federal law is not applicable, the governing law applicable to
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this Agreement shall be the law of the State of New York
applicable to contracts made and to be performed within the
State of New York by residents of the State of New York.
16.8 TIME IS OF THE ESSENCE. Time is of the essence
of this Agreement.
16.9 REMEDIES. Each party acknowledges that the
other will have no adequate remedy at law if the first party
fails to perform its obligations hereunder, and each party
therefore confirms that the other's right to specific
performance of the terms of this Agreement is essential to
protect the rights and interests of the other. Accordingly, in
addition to any other remedies that the parties may have at law
or in equity, each party shall have the right to have the
other's obligations under this Agreement specifically performed
by the other, and shall have the right to obtain preliminary
and permanent injunctive relief to secure specific performance
and to prevent a breach or contemplated breach of this
Agreement.
16.10 ATTORNEYS' FEES. If any action at law or in
equity, including an action for declaratory relief, is brought
to enforce or interpret the provisions of this Agreement, the
prevailing party shall be entitled to recover reasonable
attorneys' fees from the other party, which fees shall be in
addition to any other relief which may be awarded.
16.11 SEVERABILITY. If any provision of this
Agreement or the application of any such provision to any per-
son or circumstance shall be held invalid, illegal or unen-
forceable in any respect by a court of competent jurisdiction,
such
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invalidity, illegality or unenforceability shall not affect any
other provision hereof.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their duly authorized officers
as of the day and year first above written.
GREENPOINT BANK HOME SAVINGS OF AMERICA, FSB
By: /s/ Thomas S. Johnson By: /s/ Kevin M. Twomey
Its: Chairman Its: Chief Financial Officer
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[Exhibits and schedules omitted]
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT is entered into as of
November 1, 1994 between ROBERT M. DE KRUIF ("Consultant") and
H. F. AHMANSON & COMPANY, a Delaware corporation (the "Company").
In consideration of the mutual covenants set forth herein, the
parties agree as follows:
1. ENGAGEMENT. The Company hereby engages
Consultant, and Consultant hereby accepts engagement, as a
consultant to the Company for a term from the date hereof through
October 31, 1995.
2. DUTIES. Consultant shall provide the Company with
professional services regarding the matters listed on Exhibit A
attached hereto. Consultant shall also provide consultation and
advice to the Company and its subsidiaries on such matters
regarding government affairs as the Chief Executive Officer or
the General Counsel of the Company may from time to time request
in writing.
a. REPORTING. Consultant shall report to and be
subject to the supervision and control of the Chief Executive
Officer of the Company or any person designated by the Chief
Executive Officer and shall provide such officer, at such times
and in such form and detail as such officer shall require, with
reports of his performance and accomplishments and of
developments and progress in the matters and projects which he
undertakes pursuant to this agreement. Consultant shall meet
with the Chief Executive Officer of the Company or his designee
<PAGE>
at least monthly with respect to all consulting services provided
by Consultant to the Company hereunder.
b. COMPLIANCE. In performing services for the
Company pursuant to this agreement, Consultant shall use his best
efforts to cause the Company to comply with all applicable laws
and regulations.
3. COMPENSATION. During the term of this agreement
the Company shall pay to Consultant as compensation in full for
his services hereunder a monthly retainer of $8,333.33, payable
at the end of each month. For purposes of Section 1 of the
Employment Agreement between the Company and Consultant dated
March 1, 1975, as amended, the monthly retainer payments
specified in the foregoing sentence shall not be considered
"direct compensation paid to Executive" [as defined in the
Employment Agreement] by the Company and, therefore, shall not be
aggregated in determining whether Executive has received the
minimum annual salary provided for under the Employment
Agreement.
4. OFFICE SERVICES. For the purpose of enabling
Consultant to render services hereunder, the Company shall
provide Consultant with an office and all necessary business
equipment and supplies needed to perform his duties under this
agreement.
5. EXPENSES. The Company shall reimburse Consultant
for all reasonable expenses necessarily incurred by Consultant in
providing consulting services to the Company. Consultant shall
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<PAGE>
obtain prior approval of the Chief Executive Officer of the
Company of any reimbursable expense in excess of $500.
6. INDEPENDENT CONTRACTOR. Consultant is an
independent contractor and will not be treated as an employee
with respect to services performed for the Company for any
purposes, including, but not limited to, federal, state or local
tax purposes, or for the purposes of worker's compensation or
unemployment benefit laws. No amounts will be withheld from fees
payable to Consultant under this agreement for the purposes of
Federal Insurance Contribution Act (Social Security), or for
other federal, state or local tax withholding laws. Consultant
alone is responsible for the payment of all income and employment
taxes and estimates thereof on all fees received from the
Company. Consultant shall not have authority to (a) execute any
document in the name or on behalf of the Company, (b) enter into
any oral or written commitments involving the Company, or
(c) otherwise obligate the Company in any manner whatsoever.
7. NOTICES. Any notice required or permitted
hereunder shall be in writing, shall be deemed given only upon
receipt and shall be mailed or delivered addressed as follows:
a. If to the Company:
H. F. Ahmanson & Company
4900 Rivergrade Road
Irwindale, California 91706
Attention: Chief Executive Officer
3
<PAGE>
b. If to Consultant:
Mr. Robert M. De Kruif
900 Oxford Road
San Marino, California 91108
or to such other address as either party shall provide for such
purpose pursuant to this section.
8. PERSONAL SERVICES. No rights or obligations of
Consultant hereunder may be assigned or delegated without the
prior written consent of the Company. Any attempted assignment
or delegation without such consent shall be void.
9. ARBITRATION. In the event of a dispute arising
over the interpretation or enforcement of any of the provisions
of this agreement, or any other controversy or claim arising out
of or relating to the agreement, Consultant and the Company agree
to submit such dispute to arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association. Consultant and the Company agree that the
arbitration shall occur in Los Angeles, California.
4
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this
Consulting Agreement effective as of the date first set forth
above.
H. F. AHMANSON & COMPANY
By /s/ Merrill S. Wall
Merrill S. Wall
First Vice President
/s/ Robert M. De Kruif
Robert M. De Kruif
5
<PAGE>
Exhibit A
AHMANSON RANCH PROJECT: Help the Company obtain entitlements and
building permits on whatever development plan is ultimately put
forward.
SUTTER BAY PROJECT: Help the Company obtain entitlements and
building permits on whatever development plan is ultimately put
forward.
OTHER DEVELOPMENT PROJECTS: Help the Company from time to time
in working with local governments and agencies.
CALIFORNIA STATE GOVERNMENT: Maintain and develop relationships
with state government to permit access if needed by the Company.
CALIFORNIA AND FEDERAL LEGISLATIVE BRANCHES: Arrange meetings
for Company officers with appropriate members of these bodies in
pursuit of our legislative agenda.
6
H. F. Ahmanson & Company and Subsidiaries
Statement of Computation of Earnings Per Share
Exhibit 11
Common stock equivalents identified by the Company in determining its
primary earnings per common share are stock options and stock appreciation
rights. In addition, common stock equivalents used in the determination of
fully diluted earnings per common share include the effect, when such effect
is not anti-dilutive, of the 6% Cumulative Convertible Preferred Stock,
Series D which is convertible into 11.8 million shares of Common Stock at
$24.335 per share of Common Stock. The following is a summary of the
calculation of earnings per common share:
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
(dollars in thousands, except per share data)
Primary earnings per common share:
<S> <C> <C> <C> <C>
Net earnings $ 62,234 $ 73,541 $ 112,930 $ 128,896
Less accumulated dividends on preferred stock (12,607) (12,607) (25,215) (25,215)
----------- ----------- ----------- -----------
Net earnings attributable to common shares $ 49,627 $ 60,934 $ 87,715 $ 103,681
=========== =========== =========== ===========
Weighted average number of common shares
outstanding 117,296,534 116,917,744 117,329,168 116,930,554
Dilutive effect of outstanding common stock
equivalents 757,783 280,884 413,779 275,427
----------- ----------- ----------- -----------
Weighted average number of common shares as
adjusted for calculation of primary
earnings per share 118,054,317 117,198,628 117,742,947 117,205,981
=========== =========== =========== ===========
Primary earnings per common share $ 0.42 $ 0.52 $ 0.74 $ 0.88
=========== =========== =========== ===========
Fully diluted earnings per common share:
Net earnings $ 62,234 $ 73,541 $ 112,930 $ 128,896
Less accumulated dividends on nonconvertible
preferred stock (8,295) (8,295) (16,590) (16,590)
----------- ----------- ----------- -----------
Net earnings attributable to common shares $ 53,939 $ 65,246 $ 96,340 $ 112,306
=========== =========== =========== ===========
Weighted average number of common shares
outstanding 117,296,534 116,917,744 117,329,168 116,930,554
Dilutive effect of outstanding common stock
equivalents 12,635,521 12,154,241 12,622,267 12,172,313
----------- ----------- ----------- -----------
Weighted average number of common shares as
adjusted for calculation of fully diluted
earnings per share 129,932,055 129,071,985 129,951,435 129,102,867
=========== =========== =========== ===========
Fully diluted earnings per common share $ 0.42 $ 0.51 $ 0.74 $ 0.87
=========== =========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from Form 10-Q of
H.F. Ahmanson & Company for the six months ended June 30, 1995 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 687,257
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 1,099,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 890,305
<INVESTMENTS-CARRYING> 17,618,168
<INVESTMENTS-MARKET> 17,864,326
<LOANS> 30,569,370
<ALLOWANCE> 389,927
<TOTAL-ASSETS> 53,472,116
<DEPOSITS> 42,988,665
<SHORT-TERM> 529,841
<LIABILITIES-OTHER> 722,460
<LONG-TERM> 6,169,705
<COMMON> 0
0
0
<OTHER-SE> 3,061,445
<TOTAL-LIABILITIES-AND-EQUITY> 53,472,116
<INTEREST-LOAN> 1,246,072
<INTEREST-INVEST> 597,476
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 1,843,548
<INTEREST-DEPOSIT> 924,236
<INTEREST-EXPENSE> 1,238,129
<INTEREST-INCOME-NET> 605,419
<LOAN-LOSSES> 52,009
<SECURITIES-GAINS> 9,392
<EXPENSE-OTHER> 446,577
<INCOME-PRETAX> 196,235
<INCOME-PRE-EXTRAORDINARY> 196,235
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 112,930
<EPS-PRIMARY> 0.74
<EPS-DILUTED> 0.74
<YIELD-ACTUAL> 2.32
<LOANS-NON> 706,911
<LOANS-PAST> 0
<LOANS-TROUBLED> 141,266
<LOANS-PROBLEM> 16,051
<ALLOWANCE-OPEN> 400,232
<CHARGE-OFFS> 75,852
<RECOVERIES> 13,538
<ALLOWANCE-CLOSE> 389,927
<ALLOWANCE-DOMESTIC> 389,927
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
