- - --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
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 0-17515
COLLECTIVE BANCORP, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2942769
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
716 West White Horse Pike
Cologne , New Jersey 08213
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (609) 625-1110
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for 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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common stock, par value $.01 per share, 20,421,524 shares outstanding as of
September 30, 1996.
================================================================================
<PAGE>
PART I
Item I
COLLECTIVE BANCORP, INC. AND SUBSIDIARY
STATEMENTS OF CONSOLIDATED FINANCIAL CONDITION
<TABLE>
<CAPTION>
September 30 June 30
1996 1996
-------------- --------------
<S> <C> <C>
ASSETS (Dollar amounts in thousands)
Cash $ 79,237 $ 65,084
Federal funds sold 3,647 3,646
-------------- --------------
Total cash and cash equivalents 82,884 68,730
Loans held for sale, at amortized cost, market
value of $2,996 and $5,231 2,957 5,186
Securities available for sale, at market value 162,367 162,284
Investment securities, at amortized cost, market
value of $283,878 and $271,650 287,059 276,171
Loans receivable, net 2,704,156 2,548,150
Mortgage-backed securities, at amortized cost,
market value of $1,834,870 and $1,896,831 1,903,685 1,973,642
Real estate acquired in settlement of loans, net 4,350 5,427
Land, office buildings and equipment, net 39,019 39,239
Other assets 42,747 42,335
Core deposit premium 7,640 8,191
Goodwill 15,619 16,116
-------------- --------------
Total assets $5,252,483 $5,145,471
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand deposits, non-interest bearing $ 103,161 $ 95,792
Demand deposits, interest bearing 528,375 508,295
Savings and investment accounts 845,587 845,199
Savings certificates 1,865,733 1,805,101
-------------- --------------
Total deposits 3,342,856 3,254,387
Borrowed funds 1,475,231 1,473,448
Advance payments by borrowers for
taxes and insurance 24,360 26,852
Other liabilities 45,987 26,480
-------------- --------------
Total liabilities 4,888,434 4,781,167
-------------- --------------
Stockholders' Equity:
Common stock, par value $.01 per share; authorized - 37,000,000 shares;
issued - 20,421,524 shares in September 1996 and 20,418,641 shares
in June 1996; outstanding - 20,372,024 shares in September
1996 and 20,374,141 shares in June 1996 204 204
Preferred stock, par value $.01 per share;
authorized - 2,500,000 shares; none
outstanding - -
Additional paid-in capital 59,768 59,699
Treasury stock, at cost; 49,500 shares in September 1996
and 44,500 shares in June 1996 (1,230) (1,093)
ESOP debt (5,546) (5,816)
Unrealized appreciation on available for sale securities,
net of tax 1,348 1,090
Retained earnings, substantially restricted 309,505 310,220
-------------- --------------
Total stockholders' equity 364,049 364,304
-------------- --------------
Total liabilities and stockholders' equity $5,252,483 $5,145,471
============== ==============
</TABLE>
2
<PAGE>
COLLECTIVE BANCORP, INC. AND SUBSIDIARY
STATEMENTS OF CONSOLIDATED OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
September 30
1996 1995
------------- --------------
(Dollar amounts in thousands except per share data)
<S> <C> <C>
INTEREST INCOME:
Interest on mortgage loans $47,369 $42,873
Interest on other loans 3,617 4,143
Interest on mortgage-backed securities 33,607 36,165
Interest and dividends on investments 6,204 5,687
------------- --------------
Total interest and dividend income 90,797 88,868
------------- --------------
INTEREST EXPENSE:
Interest on deposits 34,117 33,279
Interest on Federal Home Loan Bank
advances and other borrowed funds 19,803 21,884
------------- --------------
Total interest expense 53,920 55,163
------------- --------------
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES 36,877 33,705
PROVISION FOR LOAN LOSSES 715 286
------------- --------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 36,162 33,419
------------- --------------
OTHER INCOME:
Loan servicing 1,006 950
Gain on sale of loans and securities 32 634
Financial service fees and other income 3,068 2,465
------------- --------------
Total other income 4,106 4,049
------------- --------------
Total income before other expense 40,268 37,468
------------- --------------
OTHER EXPENSE:
Compensation and employee benefits 7,034 6,979
Occupancy expense 2,636 2,679
Advertising 325 255
Deposit insurance 1,491 1,424
SAIF recapitalization assessment 16,653 -
Computer services 1,019 1,242
Loan expense 776 715
Real estate operations 81 (24)
Amortization of intangibles 1,048 1,205
Other expenses 2,777 2,477
------------- --------------
Total other expense 33,840 16,952
------------- --------------
INCOME BEFORE INCOME TAXES 6,428 20,516
INCOME TAXES 2,050 7,319
------------- --------------
NET INCOME $4,378 $13,197
============= ==============
PER SHARE DATA:
Primary and fully diluted net income per share $0.21 $0.65
Dividends per common share $0.25 $0.20
Average primary shares outstanding 20,432,072 20,430,540
Average fully diluted shares outstanding 20,451,149 20,444,438
</TABLE>
3
<PAGE>
COLLECTIVE BANCORP, INC. AND SUBSIDIARY
STATEMENTS OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
September 30
-----------------------------
1996 1995
------------ ------------
(Dollar amounts in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Interest received $ 89,337 $ 86,222
Interest paid (53,171) (54,846)
Operating expenses (18,144) (15,004)
Sales of trading securities - 13,328
Loan fees 1,262 1,457
Other income received 4,106 4,250
Income taxes paid (1,126) -
------------ ------------
Net cash provided by operating activities 22,264 35,407
------------ ------------
INVESTING ACTIVITIES:
Loan originations (268,876) (133,255)
Purchases of loans (500) (13,874)
Purchases of mortgage-backed securities (2) -
Repayment of loan principal 110,285 87,259
Repayment of mortgage-backed security principal 70,701 43,035
Sales of loans held for sale 13,139 33,866
Purchases of investment securities (16,974) (22,030)
Purchases of mortgage-backed securities available for sale (10,031) (30,333)
Sales of mortgage-backed securities available for sale 7,017 28,890
Repayment of principal on mortgage-backed securities available for sale 4,109 4,598
Maturities of investment securities 5,323 80,149
Net decrease in real estate owned 1,077 1,261
Net change in loans maturing in 3 months or less (7,500) (15,000)
Other investing, net 1,770 (12,881)
------------ ------------
Net cash (used for) provided by investing activities (90,462) 51,685
------------ ------------
FINANCING ACTIVITIES:
Net change in deposits 88,469 (92,242)
Net change in Federal Home Loan Bank advances - (395,000)
Net change in other borrowed funds 1,783 397,657
Net decrease in advance payments by borrowers
for taxes and insurance (2,492) (2,694)
Dividends paid (5,105) (4,073)
Other financing, net (303) (2,257)
------------ ------------
Net cash provided by (used for) financing activities 82,352 (98,609)
------------ ------------
Net increase (decrease) in cash and cash equivalents 14,154 (11,517)
Cash and cash equivalents, beginning of period 68,730 69,973
------------ ------------
Cash and cash equivalents, end of period $ 82,884 $ 58,456
============ ============
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED
BY OPERATING ACTIVITIES:
Net income $ 4,378 $ 13,197
Net change in trading securities - 13,328
Amortization and accretion of deferred charges and credits, net (273) (511)
Amortization of intangibles 1,048 1,205
Accrued income and expense 20,049 8,343
Deferred income and expense (5,069) (1,853)
Provision for loan and real estate owned losses 671 271
Depreciation and amortization 1,191 1,158
ESOP debt repayment 269 269
------------ ------------
Net cash provided by operations $ 22,264 $ 35,407
============ ============
</TABLE>
Note: Certain reclassifications have been made to the Statement of
Consolidated Cash Flows for the three months ended September 30, 1995 to conform
to the 1996 presentation.
4
<PAGE>
COLLECTIVE BANCORP, INC. AND SUBSIDIARY
STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Unrealized
Appreciation
Additonal on Available
Common Paid-In Treasury ESOP for Sale Retained
Stock Capital Stock Debt Securities Earnings Total
----------------------------------------------------------------------------------------
(Dollar amounts in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE JUNE 30, 1995 $204 $59,299 - $(6,892) $2,136 $273,045 $327,792
Net income for the year - - - - - 54,500 54,500
Stock options exercised - 279 - - - - 279
Dividends on common
stock - $.85 per share - - - - - (17,325) (17,325)
Purchase of treasury stock - - (1,093) - - - (1,093)
ESOP debt repayment - - 1,076 - - 1,076
ESOP shares released - 121 - - - - 121
Securities valuation - - - - (1,046) - (1,046)
----------------------------------------------------------------------------------------
BALANCE JUNE 30, 1996 204 59,699 (1,093) (5,816) 1,090 310,220 364,304
Net income fiscal year to date - - - - - 4,378 4,378
Stock options exercised - 19 - - - - 19
Dividends on common
stock - $.25 per share - - - - - (5,093) (5,093)
Purchase of treasury stock - - (137) - - - (137)
ESOP debt repayment - - - 270 - - 270
ESOP shares released - 50 - - - - 50
Securities valuation - - - - 258 - 258
----------------------------------------------------------------------------------------
BALANCE SEPTEMBER 30, 1996 $204 $59,768 $(1,230) $(5,546) $1,348 $309,505 $364,049
========================================================================================
</TABLE>
5
<PAGE>
COLLECTIVE BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The unaudited interim consolidated financial statements of Collective
Bancorp, Inc. and subsidiary ("Collective") included herein should be read
in conjunction with the audited financial statements for the year ended
June 30, 1996 included in Collective's 1996 Annual Report and incorporated
by reference in the Form 10-K for that year. The unaudited interim
financial statements reflect all adjustments which are, in the opinion of
management, necessary for a fair presentation of the results for the
periods presented. Such adjustments consist only of normal recurring
accruals. The results of operations for the three-month period ended
September 30, 1996 are not necessarily indicative of the results to be
expected for the fiscal year ending June 30, 1997.
2. In connection with the enactment of the Deposit Insurance Funds Act of 1996
("DIFA") on September 30, 1996, Collective Bank, a wholly-owned subsidiary
of Collective Bancorp, Inc., will be required to pay a one-time special
assessment of $16.653 million to the Federal Deposit Insurance Corporation
("FDIC") to capitalize the Savings Association Insurance Fund ("SAIF") to
its required reserve ratio. The special assessment rate of 65.7 cents per
$100 was applied to SAIF-assessable deposits held as of March 31, 1995. The
assessment will be payable on November 27, 1996.
DIFA also requires the Financing Corporation ("FICO") bond obligation
to be shared by insured depository institutions pro rata beginning in the
year 2000. For the transition period from January 1, 1997 to December 31,
1999, banks will pay on their Bank Insurance Fund ("BIF") deposit base
one-fifth of the assessment rate imposed upon thrifts. During this period,
the FICO assessment rates are estimated to be 1.3 basis points for banks
and 6.4 basis points for thrifts, such as Collective Bank. From 2000 to
2019, when the FICO bonds are retired, the FICO assessment rate is
estimated to run under 2.5 basis points per $100 of each institution's
insured deposit base.
DIFA directs the Treasury Department to present a report to Congress
by March 31, 1997 regarding the development of a common charter for all
depository institutions. The report is to include a recommendation for
legislative and administrative action. DIFA requires that the BIF and the
SAIF be merged into a single new fund (the Deposit Insurance Fund) on
January 1, 1999, provided "no insured depository institution is a savings
association on that date".
3. On August 20, 1996, the Small Business Job Protection Act of 1996 ("SBJPA")
was enacted, which included a repeal of the thrift bad debt reserve method
(percentage-of-taxable income method) under section 593 of the Internal
Revenue Code. The repeal is effective for Collective's 1997 fiscal year.
Since 1993, Collective has used the percentage-of-taxable method in its
income tax returns. Effective July 1, 1996, Collective was required to
change from the reserve method to the specific charge-off method to
calculate its bad debt deduction. The change in bad debt tax accounting
methods has not had, nor is it expected to have, a material impact on
Collective's results of operations.
The SBJPA also provided for the recapture of a thrift's post-1987 excess
bad debt reserve resulting from the use of the reserve method for
calculating the bad debt deduction. Pre-1988 excess bad debt reserves are
not subject to recapture. The recaptured amount must be taken into taxable
6
<PAGE>
income ratably over a six-year period commencing with the thrift's tax year
beginning in 1996. The timing of the recapture may be delayed for a one-or
two-year period provided the residential loan requirement is met.
Collective expects to meet the residential loan requirement for its 1996
and 1997 tax years. Therefore, its estimated tax liability of approximately
$5.5 million, resulting from the recapture, will be payable over a six-year
period commencing with Collective's 1999 fiscal year. The excess bad debt
reserve recapture is not expected to have a material impact on Collective's
results of operations or financial position because Collective has recorded
deferred income tax provisions on its excess bad reserves since 1987.
4. On October 1, 1996, Collective acquired the outstanding capital stock of
Continental Bancorporation for $25.7 million in cash pursuant to an
agreement entered into on May 21, 1996. Simultaneously with the
acquisition, Continental Bancorporation was liquidated and its subsidiary,
Continental Bank of New Jersey ("Continental") became a subsidiary of
Collective. Continental is a state-chartered, BIF-insured commercial bank
with total assets of $161.3 million and deposits of $129.5 million on the
date of acquisition. The acquisition will be accounted for by the purchase
method. It is not expected to have a material effect on Collective's
results of operations or financial position.
7
<PAGE>
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General Financial Institution Legislation and Regulation
Collective's primary subsidiary, Collective Bank (the "Bank"), is subject to
extensive regulation, supervision and examination by the Office of Thrift
Supervision ("OTS"), as its chartering authority and primary federal regulator,
and by the Federal Deposit Insurance Corporation ("FDIC"), which insures its
deposits up to applicable limits. Such regulation and supervision establish a
comprehensive framework of activities in which an institution can engage and are
intended primarily for the protection of the insurance fund and depositors. The
regulatory structure also gives the regulatory authorities extensive discretion
in connection with their supervisory and enforcement activities. Any change in
such regulation, whether by the OTS, FDIC or the Congress, could have a material
impact on the Bank and its operations. See Notes 2 and 3 to the consolidated
financial statements.
Assets
Total assets increased $107 million during the three months ended September 30,
1996. The net increase, primarily in interest-earning assets, was comprised of
increases in loans receivable, net of $156 million, cash of $14 million and
investment securities of $11 million and a decrease in mortgage-backed
securities of $70 million. All other assets combined decreased $4 million.
Loans receivable, net increased because loan originations and purchases exceeded
loan repayments. The increase occurred as Collective continued its strategy of
relying more on loans and less on collateralized mortgage obligations ("CMO's")
as investment vehicles. The elements of the increase were as follows
(in millions):
<TABLE>
<S> <C>
Residential first mortgage $ 75
Commercial 42
Home equity 20
Construction 14
Other 5
----
$156
====
</TABLE>
Collective's strategy to increase loans as percentage of total earning assets
(increased from 51.3% at June 30, 1996 to 53.4% at September 30, 1996) was
implemented through more aggressive advertising and marketing initiatives
combined with more competitive pricing. The growth in Collective's loan
portfolio was funded primarily by deposit growth and CMO principal repayments.
Cash and cash equivalents increased because cash provided by operating and
financing activities exceeded cash used in investing activities.
The increase in investment securities resulted from the addition of medium-term
U.S. agency structured notes.
Collective has the positive intent and ability to hold its investment and
mortgage-backed securities portfolios to maturity under all foreseeable economic
conditions. Therefore, it is not expected that any gains or losses will be
8
<PAGE>
realized from sales of securities from Collective's held-to-maturity portfolios.
In recent years, since authoritative guidance and/or accounting standards have
been developed for the definitive classification of securities, Collective has
not sold securities from its held-to-maturity portfolios. Collective has always
been able to satisfy its liquidity needs from the cash flows from operating and
financing activities, and there is no present indication that Collective will
not be able to do so in the future. Unrealized gains or losses in Collective's
held-to-maturity securities portfolios are primarily a function of the
interest-rate environment at any given point in time and, therefore, are only
temporary in nature. If presently unforeseen economic conditions should result
in the sale of those securities at some future date, any realized gain or loss
will be determined by their market value when sold.
Liabilities
The increase in liabilities of $107 million from June 30, 1996 to September 30,
1996 was comprised primarily of increases in deposits of $88 million and other
liabilities of $20 million. The increase in deposits resulted from more
aggressive marketing and pricing initiatives as Collective sought to fund asset
growth with lower cost deposits rather than borrowings. The deposit increase
occurred in the following categories (in millions):
<TABLE>
<S> <C>
Non-interest bearing demand $ 7
Interest bearing demand 20
Savings certificates 61
----
$ 88
====
</TABLE>
The increase in non-interest bearing demand deposits consisted of commercial
checking accounts and the increase in interest bearing demand deposits was
comprised of cash management accounts, primarily with municipalities. Municipal
jumbo certificates of deposit (in excess of $100,000) comprised the increase in
savings certificates.
The increase in other liabilities consisted primarily of the accrual for the
SAIF recapitalization assessment discussed in note 2 to the consolidated
financial statements (page 6).
Stockholders' Equity
Retained earnings decreased during the three-month period ended September 30,
1996 because dividends on common stock exceeded net income.
Liquidity and Capital Resources
The Bank is required by regulation to maintain certain levels of liquidity.
Regulations currently in effect require the Bank to maintain liquid assets of
not less than 5% of its net withdrawable deposits and short-term borrowings, of
which at least 1% must be short-term liquid assets. Throughout the three months
ended September 30, 1996, the Bank was in compliance with that regulation and at
that date had an overall liquidity ratio of 5.12 % and a short-term ratio of
2.19%.
At September 30, 1996, capital resources were sufficient to meet outstanding
loan origination commitments of $144 million and commitments on unused lines of
credit of $127 million. Loans originated or purchased during the three months
ended September 30, 1996 were funded from normal sources including investment
9
<PAGE>
security maturities, amortization of the existing loan and mortgage-backed
securities portfolios, and borrowings.
The Bank is subject to capital requirements mandated by the Financial
Institutions Reform, Recovery and Enforcement Act ("FIRREA"). Under FIRREA,
thrift institutions must have tangible capital equal to 1.5% of tangible assets,
core capital equal to 3% of adjusted tangible assets and risk-based capital
equal to 8% of risk-weighted assets. At September 30, 1996, the Bank exceeded
those requirements as follows:
<TABLE>
Tangible Capital: (In Thousands) Percent
<S> <C> <C>
Actual $ 320,409 6.03%
Required 79,648 1.50%
----------- -----
Excess $ 240,761 4.53%
----------- -----
Core Capital:
Actual $ 320,409 6.03%
Required 159,297 3.00%
----------- -----
Excess $ 161,112 3.03%
----------- -----
Risk-based Capital:
Actual $ 327,657 15.76%
Required 166,271 8.00%
----------- ------
Excess $ 161,386 7.76%
----------- ------
</TABLE>
Three Months Ended September 30, 1996
Compared to Three Months Ended September 30, 1995
Net income for the three months ended September 30, 1996 decreased $8.819
million compared to net income for the three months ended September 30, 1995.
Without the SAIF recapitalization assessment (See note 2 to the consolidated
financial statements), which reduced net income by $10.500 million, net income
would have been $14.878 for the 1996 quarter, an increase of $1.681 million over
the 1995 quarter. The actual decrease in net income was comprised of a $3.172
million increase in net interest income, a $429,000 increase in the provision
for loan losses, a $57,000 increase in other income, a $16.888 million increase
in other expense and a $5.269 million decrease in income taxes.
The increase in net interest income resulted from an increase in net interest
spread (the difference between the weighted average yield on interest-earning
assets and the weighted average rate paid on interest-bearing liabilities) from
2.63% for the 1995 period to 2.76% for the 1996 period, combined with an
increase in average interest-earning assets of $141 million. The combination of
the increases in net interest spread and interest-earning assets caused net
interest margin (net interest income divided by average interest-earning assets)
to rise from 2.82% for the 1995 period to 2.97% for the 1996 period. The
increase in net interest spread consisted of a 6 basis point decrease in the
yield on interest-earning assets coupled with a 19 basis point decrease in the
cost of funds. The decline in yield on interest-earning assets occurred because
Collective's yields on loans, mortgage-backed securities and investment
securities all were lower in the 1996 period compared to the 1995 period because
shorter-term interest rates were generally lower throughout the intervening
twelve-month period. A greater portion of Collective's loan originations during
that period were adjustable rate products which have a lower (teaser) rate
during the initial period to their first repricing. This was offset by rising
longer-term rates during the second half of the intervening period. The lower
10
<PAGE>
cost of funds in the 1996 quarter resulted from a 50 basis point reduction in
the cost of borrowings compared to 1995. Collective's borrowings are primarily
short-term and changes in the cost of its borrowings usually correlate with
changes in the federal funds rate. The federal funds rate was approximately 50
basis points lower in the 1996 quarter than it was in the 1995 quarter. The
average cost of deposits was 4.09% for the 1996 period compared to 4.11% for the
1995 quarter, also contributing to the lower cost of funds in 1996.
Collective's net interest income tends to increase in periods of declining
interest rates because its interest-bearing liabilities generally reprice faster
than its interest-earning assets. (See the "Maturity and Rate Sensitivity
Analysis", page 12.) Conversely, Collective's net interest income tends to
decrease in periods of rising interest rates. The lower short-term interest
rates discussed above, combined with a steeper yield curve, when compared to the
three months ended September 30, 1995, caused the increased net interest spread
and margin in the 1996 quarter.
Although Collective's classified asset ratio decreased from .42% at September
30, 1995 to 0.33% at September 30, 1996, the loan loss provision was higher
during the 1996 quarter because of increased general loss provisions for the
growing commercial loan portfolio.
Gain on sale of loans and securities decreased from $634,000 in the 1995 period
to $32,000 in the 1996 period. Because longer-term interest rates were higher in
the 1996 quarter than they were in the comparable 1995 period, the percentage of
loan originations that met the criteria for long-term investment increased from
71% in the 1995 period to 95% in the 1996 quarter. Another contributing factor
was that 82% of total loan originations were adjustable rate loans in the 1996
period compared to 50% in 1995. All adjustable rate loan originations are placed
in the held-to-maturity portfolio. Therefore sales of loans and securitized
loans decreased from $63 million in 1995 to $20 million in 1996. The increase in
financial service fees and other income resulted primarily from increased fee
income from the growth in demand deposit balances and a more aggressive strategy
in charging and collecting fees related to deposit accounts.
The increase in other expense resulted primarily from the SAIF recapitalization
assessment previously discussed. Collective's ratio of operating expenses to
assets was 1.23% in the 1996 quarter, excluding the SAIF assessment, compared to
1.24% for the 1995 period.
The decrease in income taxes resulted from the reduced pre-tax income. The
effective income tax rate was 31.9% for the three months ended September 30,
1996 compared to 35.7% for the three months ended September 30, 1995. The lower
effective rate for the 1996 period resulted because the marginal tax benefit
rate for the SAIF assessment deduction was higher than Collective's effective
tax rate without such deduction.
11
<PAGE>
COLLECTIVE BANCORP, INC. AND SUBSIDIARY
MATURITY AND RATE SENSITIVITY ANALYSIS (1)
<TABLE>
<CAPTION>
September 30, 1996
---------------- --------------- --------------- ----------------
1 Year 1 Year Over
or Less to 5 Years 5 Years Total
---------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Assets: (Dollar amounts in thousands)
Mortgage loans:
Balloon & adjustable rate first
mortgages $ 722,138 $ 549,210 $ 204,858 $ 1,476,206
Fixed rate mortgages 228,089 (2) 439,651 395,352 1,063,092
Mortgage-backed securities 393,622 (3) 1,200,590 403,544 1,997,756
Consumer and commercial loans 129,620 35,821 2,374 167,815
Federal funds sold 3,647 - - 3,647
Investment securities 355,170 (4) - 185 355,355
---------------- --------------- --------------- ----------------
Total rate sensitive assets $ 1,832,286 $ 2,225,272 $ 1,006,313 $ 5,063,871
================ =============== =============== ================
Liabilities:
Fixed maturity deposits $ 1,434,191 $ 417,562 $ 13,979 $ 1,865,732
NOW accounts - 528,375 - 528,375
Money market demand accounts 294,765 - - 294,765
Passbook accounts 102,533 230,383 217,907 550,823
Other borrowings $ 1,475,231 - - 1,475,231
---------------- --------------- --------------- ----------------
Total rate sensitive liabilities $ 3,306,720 $ 1,176,320 $ 231,886 $ 4,714,926
================ =============== =============== ================
Dollar gap (5) $(1,474,434) $ 1,048,952 $ 774,427 $ 348,945
================ =============== =============== ================
<FN>
(1) As presented in the above table, the Bancorp calculates interest rate
sensitivity information employing techniques developed by the Office of
Thrift Supervision.
(2) Includes $2,957 of loans classified as held for sale.
(3) Includes $94,071 of mortgage-backed securities classified as available for
sale.
(4) Includes $68,296 of securities classified as available for sale.
(5) Rate sensitive assets less rate sensitive liabilities.
</FN>
</TABLE>
Part II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(11) Statement Re Computation of Per Share Earnings
(27) Financial Data Schedule
12
<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.
COLLECTIVE BANCORP, INC.
EDWARD J. MCCOLGAN
--------------------------------------
Date November 14, 1996 Edward J. McColgan
Vice Chairman & Chief Financial Officer
BENARD H. BERKMAN
-------------------------------------------
Date November 14, 1996 Bernard H.Berkman
Executive Vice President & Chief Accounting
13
EXHIBIT (11)
COLLECTIVE BANCORP, INC.
COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK
<TABLE>
<CAPTION>
Three Months Ended
September 30
PRIMARY 1996 1995
---------------------------------------------
<S> <C> <C>
EARNINGS:
Net income...................................... $4,378,262 $13,197,324
=============================================
SHARES:
Weighted average number of
common shares outstanding..................... 20,186,176 20,143,166
Assuming exercise of options reduced by the number of shares which could have
been purchased with the proceeds from exercise
of such options (1)........................... 245,896 287,374
---------------------------------------------
Weighted average number of common
shares outstanding as adjusted................ 20,432,072 20,430,540
=============================================
Primary earnings per share of
common stock.................................... $0.21 $0.65
=============================================
ASSUMING FULL DILUTION
EARNINGS:
Net income...................................... $4,378,262 $13,197,324
=============================================
SHARES:
Weighted average number of
common shares outstanding..................... 20,186,177 20,143,166
Assuming exercise of options reduced by the number of shares which could have
been purchased with the proceeds from exercise
of such options (2)........................... 264,972 301,272
---------------------------------------------
Weighted average number of common
shares outstanding as adjusted................ 20,451,149 20,444,438
=============================================
Fully diluted earnings per share of
common stock.................................... $0.21 $0.65
=============================================
<FN>
(1) Assumes the proceeds obtained from the exercise of options were used to
purchase common shares at the average market price during the quarter.
(2) Assumes the proceeds obtained from the exercise of stock options were used
to purchase common shares at the market price at the close of the quarter
if such price was higher than the average price during the quarter.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
Statements of Consolidated Financial Condition as of September 30, 1996
(Unaudited) and the Statements of Consolidated Operations for the three months
ended September 30, 1996 (Unaudited) and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 79237
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 3647
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 165324
<INVESTMENTS-CARRYING> 2190744
<INVESTMENTS-MARKET> 2118748
<LOANS> 2704156
<ALLOWANCE> 0
<TOTAL-ASSETS> 5252483
<DEPOSITS> 3342856
<SHORT-TERM> 1475231
<LIABILITIES-OTHER> 70347
<LONG-TERM> 0
0
0
<COMMON> 204
<OTHER-SE> 363845
<TOTAL-LIABILITIES-AND-EQUITY> 5252483
<INTEREST-LOAN> 50986
<INTEREST-INVEST> 39811
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 90797
<INTEREST-DEPOSIT> 34117
<INTEREST-EXPENSE> 19803
<INTEREST-INCOME-NET> 36877
<LOAN-LOSSES> 715
<SECURITIES-GAINS> 32
<EXPENSE-OTHER> 33840
<INCOME-PRETAX> 6428
<INCOME-PRE-EXTRAORDINARY> 6428
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4378
<EPS-PRIMARY> 0.21
<EPS-DILUTED> 0.21
<YIELD-ACTUAL> 7.21
<LOANS-NON> 20235
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 12891
<CHARGE-OFFS> 824
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 12782
<ALLOWANCE-DOMESTIC> 12782
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
