<PAGE> 1
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 March 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _________________
Commission file number 0-17224
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First Financial Caribbean Corporation
--------------------------------------
(Exact name of registrant as specified in its charter)
Puerto Rico 66-0312162
- ------------------------------- --------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification
number)
1159 F.D. Roosevelt Avenue,
Puerto Nuevo
San Juan, Puerto Rico 00920-2998
- ------------------------------- --------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number,
including area code (809) 749-7100
--------------------
Former name, former address and
former fiscal year, if changed
since last report Not Applicable
--------------------
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
--- ---
Number of shares of Common Stock outstanding at March 31, 1996 - 9,019,192
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<PAGE> 2
2
FIRST FINANCIAL CARIBBEAN CORPORATION
INDEX
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PART I - FINANCIAL INFORMATION
<TABLE>
PAGE
<S> <C> <C>
Item 1 - Financial Statements
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Consolidated Balance Sheet as of March 31, 1996 and December 31, 1995 ................3
Consolidated Statement of Income and Retained Earnings -
Three month period ended March 31, 1996 and March 31, 1995 ...........................4
Consolidated Statement of Cash Flows - Three-month period
ended March 31, 1996 and March 31, 1995 ..............................................5
Notes to Consolidated Financial Statements............................................6
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 7
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PART II - OTHER INFORMATION
Item 1 - Legal Proceedings.....................................................................11
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Item 2 - Changes in Securities.................................................................11
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Item 3 - Defaults Upon Senior Securities.......................................................11
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Item 4 - Submission of Matters to a Vote of Security Holders...................................12
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Item 5 - Other Information.....................................................................13
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Item 6 - Exhibits and Reports on Form 8-K......................................................13
--------------------------------
SIGNATURES........................................................................................14
</TABLE>
<PAGE> 3
3
FIRST FINANCIAL CARIBBEAN CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS OF DOLLARS EXCEPT FOR SHARE INFORMATION)
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
(unaudited) (audited)
-------------- -----------------
ASSETS
- ------
<S> <C> <C>
Cash and cash equivalents $ 42,915 $ 59,872
Mortgage loans held for sale, net 254,642 245,484
Mortgage-backed securities held for trading, net 378,094 407,941
Securities held to maturity 101,803 77,945
Securities available for sale 7,714 14,579
Loans receivable, net 67,696 51,355
Accounts receivable and mortgage servicing advances, net 12,203 9,592
Accrued interest receivable 8,730 8,155
Mortgage servicing rights 13,744 11,164
Excess servicing fee receivable 12,640 10,407
Property, leasehold improvements and equipment, net 6,527 6,505
Cost in excess of fair value of net assets acquired 6,432 6,526
Real estate held for sale, net 2,268 2,085
Prepaid expenses and other assets 5,891 6,312
-------- --------
Total assets $921,299 $917,922
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Loans payable $193,560 $234,707
Securities sold under agreements to repurchase 367,999 363,728
Deposit accounts 121,184 95,740
Notes payable 57,056 51,682
Advances from Federal Home Loan Bank 15,404 10,407
Convertible Subordinated Debentures 10,000 10,000
Accounts payable and other liabilities 16,186 17,376
Income tax payable 27 388
Deferred tax liability 5,637 4,877
-------- --------
Total liabilities 787,053 788,905
-------- --------
Commitments and contingencies -------- --------
Stockholders' equity:
10.5% Cumulative Convertible Preferred Stock, Series A,
$1.00 par value, 2,000,000 shares authorized; 46,386
shares issued and outstanding (1994 - 108,397)
(liquidating preference of $10 per share, aggregating
$463,860 46 108
Common stock, $1.00 par value, 10,000,000 shares
authorized; 9,033,192 shares issued and outstanding
(1995 - 8,884,170) 9,033 8,884
Paid-in capital 38,723 38,331
Retained earnings 86,885 81,892
-------- --------
134,687 129,215
Unrealized (loss) gain on securities available for sale (258) 9
Treasury stock at par value, 14,000 shares (14) (14)
Unearned compensation under employment contracts (169) (193)
-------- --------
Total stockholders' equity 134,246 129,017
-------- --------
Total liabilities and stockholders' equity $921,299 $917,922
======== ========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 4
4
FIRST FINANCIAL CARIBBEAN CORPORATION
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
(In thousands of dollars, except for per share data)
Unaudited
<TABLE>
Quarter Ended
-----------------------------------
March 31, 1996 March 31, 1995
-------------- --------------
<S> <C> <C>
Revenues:
Mortgage loans sales and fees $ 6,883 $ 2,496
Servicing income 2,751 2,690
Interest income 16,247 15,374
Rental and other income 154 150
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26,035 20,710
------- -------
Expenses:
Interest 10,991 9,780
Employee cost, net (See Note I) 2,586 2,572
Taxes, other than payroll and income taxes 246 236
Maintenance 127 136
Advertising 825 455
Professional services 681 698
Telephone 471 411
Rent 531 503
Other, net (See Note I) 2,026 1,962
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18,484 16,753
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Income before income taxes 7,551 3,957
Income taxes:
Current 437 ---
Deferred 760 527
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1,197 527
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Net income 6,354 3,430
Retained earnings at beginning of period 81,892 66,706
Less cash dividends paid:
Convertible preferred stock 14 48
Common stock 1,347 935
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Retained earnings at end of period $86,885 $69,153
======= =======
Earnings per share:
Primary:
Net Income $ 0.71 $ 0.47
======= =======
Fully Diluted:
Net Income $ 0.67 $ 0.45
</TABLE> ======= =======
The accompanying notes are an integral part of this statement.
<PAGE> 5
5
FIRST FINANCIAL CARIBBEAN CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
<TABLE>
Three-month Period Ended
March 31,
1996 1995
----------- -----------
(unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................................................. $ 6,354 $ 3,430
--------- --------
Adjustments to reconcile net income to net cash used in operating activities:
Amortization of excess servicing fee receivable............................ 304 217
Amortization of cost in excess of fair value of net assets acquired........ 94 94
Amortization of purchased mortgage servicing rights........................ 224 228
Depreciation and amortization.............................................. 433 385
Allowances for losses...................................................... 138 78
Origination and purchases of mortgage loans held for sale.................. (181,503) (132,591)
Principal repayment and sales of loans held for sale....................... 130,283 76,078
Purchases of mortgage-backed securities held for trading................... (46,576) (41,964)
Principal repayments and sales of mortgage-backed securities held for trading 118,485 78,875
Principal repayments and sales of securities available for sale............ 6,598 ---
Increase in interest receivable............................................ (575) (1,472)
Decrease in loans payable.................................................. (41,147) (37,012)
Increase in interest payable............................................... 472 624
Increase in securities sold under agreements to repurchase................. 4,271 57,067
Decrease in payables and accrued liabilities............................... (1,661) (4,941)
Decrease in income tax payable............................................. (361) ---
Deferred tax provision..................................................... 760 527
Amortization of unearned compensation under employment contracts........... 24 16
-------- --------
Total adjustments................................................... (9,737) (3,791)
-------- --------
Net cash used in operating activities................................... (3,383) (361)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of mortgage-backed securities and investments held to maturity..... (24,043) ---
Principal repayments of investments held to maturity.......................... 186 503
Origination of loans receivable............................................... (18,448) (11,509)
Principal repayments of loans receivable...................................... 2,107 2,090
Increase in accounts receivable and mortgage servicing advances............... (2,750) (3,378)
Additions to excess servicing fee receivable.................................. (2,536) (801)
Purchase of property, leasehold improvements and equipment.................... (455) (78)
Additions to cost in excess of fair value of net assets acquired.............. --- (62)
Proceeds from disposal of real estate held for sale........................... 309 261
Acquisition of real estate held for sale...................................... (493) (310)
Increase in mortgage servicing rights......................................... (2,804) (305)
Decrease (increase) in other assets........................................... 420 (250)
-------- --------
Net cash used by investing activities..................................... (48,507) (13,839)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock..................................................... 480 ---
Increase in notes payable.................................................... 5,373 ---
Increase in deposits......................................................... 25,444 13,293
Dividends declared and paid.................................................. (1,361) (983)
Increase (decrease) in advances from FHLB.................................... 4,997 (3)
-------- --------
Net cash provided by financing activities................................. 34,933 12,307
-------- --------
Net decrease in cash and cash equivalents.................................... (16,957) (1,893)
Cash and cash equivalents at beginning of period............................. 59,872 35,916
-------- --------
Cash and cash equivalents at end of period................................... $ 42,915 $ 34,023
======== ========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Noncash financing activities-conversion of preferred stock.................. $ 620 $182
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash used to pay interest................................................... $ 10,519 $ 9,156
Cash used to pay income taxes............................................... $ 798 ---
</TABLE>
<PAGE> 6
6
FIRST FINANCIAL CARIBBEAN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
a. The Consolidated Financial Statements (unaudited) have been prepared in
conformity with the accounting policies stated in the Company's Annual
Audited Financial Statements included in the Company's 1995 Annual Report on
Form 10-K, and should be read in conjunction with the Notes to the
Consolidated Financial Statements appearing in that report. All adjustments
(consisting only of normal recurring accruals) which are, in the opinion of
management, necessary for a fair presentation of results for the interim
periods have been reflected.
b. The results of operations for the three-month period ended March 31, 1996
are not necessarily indicative of the results to be expected for the full
year.
c. Cash dividends per share paid for the three-month period ended March 31,
1996 and 1995 were as follows:
Three-month period ended
March 31,
-----------------------------
1996 1995
---- ----
Series A Preferred Stock $0.2625 $0.2625
Common Stock $ 0.15 $ 0.13
d. At March 31, 1996, escrow funds include approximately $26.2 million
deposited with Doral Federal Savings Bank ("Doral Federal"). These funds
are included in the Company's financial statements. Escrow funds also
include approximately $4.7 million deposited with other banks which are
excluded from the Company's assets and liabilities.
e. Certain reclassifications of prior year's data have been made to conform to
1996 classifications.
f. The number of average shares of common stock used for computing the primary
and fully diluted net income per share was as follows:
Three-month Period Ended
---------------------------------------
March 31, 1996 March 31, 1995
-------------- ---------------
Primary 8,948,665 7,185,011
Fully diluted 9,674,876 7,576,964
g. Employee costs and other expenses are shown in the Consolidated Statement of
Income and Retained Earnings net of direct loan origination costs which,
pursuant to SFAS-91, are capitalized as part of the carrying cost of mortgage
loans and are offset against mortgage loan sales and fees when the loans are
sold. Employee costs would have been $7.6 million and $5.7 million,
respectively, for the quarters ended March 31, 1996 and 1995, except for the
application of SFAS-91. Other expenses would have been $3.5 million and $2.8
million, respectively, for the quarters ended March 31, 1996 and 1995, except
for the application of SFAS-91.
<PAGE> 7
7
Set forth below is a breakdown of direct loan origination costs that were
deferred pursuant to SFAS-91.
Three-month Period Ended
-----------------------------------------
March 31, 1996 March 31, 1995
-------------- ---------------
Employee Costs $5,021 $3,128
Other Costs 1,434 831
----- -----
$6,455 $3,959
======= =======
h. On May 12, 1995, the Financial Accounting Standards Board issued Statement
of Financial Standards No. 122, "Accounting for Mortgage Servicing Rights"
(SFAS No. 122), an amendment to SFAS No. 65. The Company elected to adopt
this standard for its financial statement reporting in the second quarter of
1995. SFAS No. 122 prohibits retroactive application. Accordingly, the
Company's financial statement reporting for the first quarter of 1995,
was accounted for under the original SFAS No. 65 and such results are not
directly comparable to the results for the quarter ended March 31, 1996 with
respect to this specific matter.
For the three-month period ended March 31, 1996, the Company realized
additional net income of approximately $1 million as a result of the
adoption of SFAS No. 122. If the Company had not adopted SFAS No. 122 in
the second quarter of 1995, the Company would have reported a net income of
approximately $5.4 million for the three-month period ended March 31, 1996.
Earnings per common share would have been approximately $.59 and $.56 on a
primary and fully-diluted basis, respectively, for the three-month period
ended March 31, 1996.
SFAS No. 122 requires that a portion of the cost of originating a mortgage
loan be allocated to the mortgage servicing right based on its fair value
relative to the aggregate fair value of the loan and the related servicing
right taken as a whole. To determine the fair value of the servicing rights
created after the adoption of SFAS No. 122, the Company used the market
prices under comparable servicing sale contracts.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash requirements arise from loan originations and purchases,
repayments of debt upon maturity, payments of operating and interest expenses,
servicing advances and loan repurchases. The Company's primary sources of
liquidity are sales in the secondary mortgage market of the loans it originates
and purchases, short term borrowings under warehouse, gestation and repurchase
agreement lines of credit (secured by pledges of its loans and mortgage-backed
securities in most cases until such loans are sold and the lenders repaid) and
revenues from operations. In the past, the Company has also relied on
privately-placed financings and public offerings of preferred and common stock
as well as senior and subordinate debt.
Total liabilities were approximately 5.86 and 6.12 times stockholders' equity at
March 31, 1996 and December 31, 1995, respectively. The decreased leverage at
March 31, 1996 reflects a net increase in stockholders equity of $5.2 million
while liabilities remained slightly lower than in December 31, 1995.
The interim Consolidated Statement of Cash Flows reflect the working capital
needs of the Company. Operating activities used approximately $3.4 million of
net cash during the three-month period ended March 31, 1996, versus
approximately $361,000 in the comparable period of 1995.
Originations for the first quarter of 1996 increased by 39% as compared to the
1995 first quarter resulting in an increase in the use of cash that was
partially offset by increased sales of mortgage loans and mortgage-backed
securities.
<PAGE> 8
8
Investing activities used cash of approximately $48.5 million in the first
three months of 1996 due primarily to purchases of securities held to maturity
by Doral Federal of $24.0 million and originations of loans receivable of
approximately $18.4 million.
During the first three-months of 1996, financing activities provided
approximately $34.9 million of net cash due mainly to additional deposits
amounting to approximately $25.4 million received by Doral Federal, the
Company's thrift subsidiary. In relation with its interest rate risk
management, Doral Federal also obtained approximately $5 million in advances
from the Federal Home Loan Bank of New York (FHLB-NY) with a maturity of five
years.
As of March 31, 1996, Doral Federal exceeded all its regulatory capital
requirements (i.e., tangible and core capital of at least 1.5% and 3.0%,
respectively, of adjusted assets, and risk-based capital of at least 8% of
risk adjusted assets). As of March 31, 1996, Doral Federal had tangible
capital and core capital of $16.5 million or approximately 9.3% of adjusted
assets and risk-based capital of $16.9 million or 22.7% of risk adjusted
assets.
FFCC borrows money under warehousing lines of credit to fund its mortgage loan
commitments and repays the borrowings as the mortgages are sold. The
warehousing lines of credit then become available for additional borrowings.
Included among FFCC's warehousing line of credit facilities are gestation or
presale facilities which permit the Company to obtain more favorable rates once
mortgage loans are in the process of securitization but prior to the actual
issuance of the mortgage-backed securities as well as to finance such
mortgage-backed securities upon their issuance. At March 31, 1996 and December
31, 1995, FFCC had available warehousing lines of credit of $525 million. At
March 31, 1996 and December 31, 1995, FFCC had used approximately $166.3
million and $171.6 million, respectively, of credit available under its
warehousing lines of credit. FFCC's warehousing lines of credit are generally
subject to termination at the discretion of the lender.
FFCC also obtains short-term financing through repurchase agreement lines of
credit with financial institutions and investment banking firms. Under these
agreements, FFCC sells GNMA, FNMA or FHLMC-guaranteed mortgage-backed securities
or collateralized mortgage obligations and simultaneously agrees to repurchase
them at a future date at a fixed price. FFCC uses the proceeds of such sales to
repay borrowings under its warehousing lines of credit. The effective cost of
funds under repurchase agreements is typically lower than the cost of funds
borrowed under FFCC's warehousing lines of credit. At March 31, 1996, FFCC had
used approximately $367.9 million of credit under repurchase agreements. FFCC's
continued use of repurchase agreements will depend on the cost of repurchase
agreements relative to the cost of borrowing under its warehousing lines of
credit with banks and other financial institutions.
The monthly weighted average interest rate of FFCC's borrowings for warehousing
lines of credit and for repurchase agreement lines of credit was 6.8% and 5.5%
respectively, for the three-month period ended March 31, 1996 compared to 7.2%
for warehousing lines of credit and 5.9% for repurchase agreements in each case
for the year ended December 31, 1995.
Doral Federal obtains funding for its lending activities through the receipt of
deposits, FHLB-NY advances and from other borrowings, such as term notes backed
by FHLB-NY letters of credit and repurchase agreements with brokerage houses.
As of March 31, 1996, Doral Federal held $126.7 million in deposits at a
weighted average interest rate of 3.46%, approximately 31% of which consisted
of non-interest bearing deposits. Approximately $10.6 million of deposits
consisted of brokered certificates of deposit obtained through broker-dealers
with maturities ranging from three to five years. Doral Federal, as member of
FHLB-NY, has access to collateralized borrowings from the FHLB-NY up to a
maximum of 30% of all its total assets. Advances and reimbursement obligations
with respect to letters of credits must be secured by qualifying assets with a
market value equal to between 105% to 115% of the advances. At March 31, 1996,
Doral Federal had $15.4 million in outstanding advances from the FHLB-NY at a
weighted average interest rate cost of 6.28%. In addition, as of March 31,
1996, Doral Federal had $18.1 million outstanding in term notes secured by
FHLB-NY letters of credit at an average interest rate cost of 5.29%.
Approximately $5.0 million principal amount of such term notes bear interest
at a fluctuating rate based on the London Interbank bid rate for dollar
deposits. The interest rate of such floating rate note has effectively been
fixed pursuant to an interest rate swap agreement with a major brokerage house.
Servicing agreements relating to the mortgage-backed securities programs of
FNMA, FHLMC and GNMA and certain other investors as well as mortgage loans sold
to certain other purchasers, require FFCC to advance funds to make scheduled
payments of principal, interest, taxes and insurance, if such payments have not
been received from the borrowers. Funds advanced by FFCC pursuant to these
agreements are generally recovered by FFCC within 30 days. During the
three-month period ended March 31, 1996, the monthly average amount of funds
advanced by the Company under such servicing agreements was approximately $5.9
million.
During the three-month period ended March 31, 1996, the Company collected an
average of approximately $915,000 per month in net servicing fees, including
late charges. At March 31, 1996 and December 31, 1995, the servicing portfolio
amounted to approximately $2.8 billion and $2.7 billion, respectively. The
Company may, from time to time, determine to sell portions of its servicing
portfolio as well as to purchase servicing rights from third parties.
FFCC expects that it will continue to have adequate liquidity and financing
arrangements to finance its operations. The Company will continue to explore
alternative and supplementary methods of financing its operations, including
both debt and equity financing. There can be no assurance, however, that the
Company will be successful in consummating any such transactions.
<PAGE> 9
9
ASSETS AND LIABILITIES
At March 31, 1996, total assets were $921 million compared to $918 million at
December 31, 1995. This increase was due primarily to a net increase of $24
million in securities held to maturity acquired by Doral Federal offset by a
decrease of $20 million in mortgage loans held for sale and mortgage-backed
securities held for trading. Total liabilities were $787 million at March 31,
1996 compared to $789 million at December 31, 1995.
As of March 31, 1996, Doral Federal had $178.2 million in assets compared
to $160.2 million at December 31, 1995. This increase was due primarily
to an increase of $16.3 million and $24 million in loans receivable
and securities held to maturity, respectively, which was partially offset by
cash and call equivalents and securities available for sale of $1.6 million and
$7 million, respectively. At March 31, 1996, Doral Federal's deposit accounts
and $24 million totaled $126.7 million compared to $114.2 million at
December 31, 1995, these amounts include $5.5 million and $18.5 million,
respectively, in corporate accounts of the Company which are eliminated in the
preparation of the Company's Consolidated Financial Statements. Deposit
accounts include $26.2 million in non-interest bearing demand deposits
representing escrow funds and other servicing accounts from First Financial's
servicing operations. The increase in deposits is due to the offering of
competitive interest rates and the increased market recognition achieved by the
Savings Bank.
The Company's Mortgage Banking Business is subject to the risk that future
changes in interest rates may adversely affect the value of the Company's
portfolio of mortgage loans and mortgage-backed securities. Interest rate
fluctuations may also adversely affect net interest income. FFCC attempts to
minimize these risks through the use of forward commitments and other hedging
techniques.
The Company does not generally hedge conventional loans in the pipeline or in
the process of origination because these loans are generally offered to
customers at a certain spread over a prevailing rate that adjusts weekly rather
than a fixed rate. In the case of FNMA and FHLMC conforming loans and FNMA and
FHLMC mortgage-backed securities, the Company seeks to obtain commitments for
the purchase of such loans or mortgage-backed securities following the funding
of such loans. These loans are normally sold to institutional investors or at
the FNMA and FHLMC cash windows. To the extent the Company does engage in
offerings of mortgage products which lock-in the interest rate until the
closing date, it attempts to obtain forward commitments at the time it fixes
the rates for the loans.
In the case of GNMA securities, the Company normally holds such securities for
longer periods prior to sale in order to maximize its net interest income and
to take advantage of the tax exempt status of the interest on such securities
under Puerto Rico law. The Company has in place long-term repurchase
agreements secured by GNMA certificates with a principal amount of
approximately $18 million. The Company does not obtain forward commitments
for such GNMA certificates because they are financed pursuant to long-term
repurchase agreement. The Company has the right to substitute GNMA
certificates subject to the repurchase agreements with similar GNMA
certificates at any time. Prices for GNMA certificates in Puerto Rico tend to
be more stable than on the mainland U.S. because of the tax exempt status of
interest paid on these securities under Puerto Rico law. This relative
stability of prices for Puerto Rico GNMA securities allows the Company to
implement a less aggressive hedging strategy to attempt to protect the value of
these assets than what might otherwise be required.
In the case of nonconforming conventional loans and GNMA mortgage-backed
securities not subject to long term repurchase agreements, the Company seeks to
protect itself from interest rate risk by purchasing listed options on treasury
bond futures contracts and by purchasing puts and/or selling call options on
U.S. GNMA mortgage-backed securities and other interest rate sensitive
instruments. Contracts designated as trading hedges are marked-to-market on a
monthly basis with the resulting gains and losses charged to operations.
Changes in the market value of future contracts that qualify as hedges of
existing assets and liabilities are recognized as an adjustment to the value of
the asset or liability being hedged. The level of investment in such options
is increased or decreased in relation to interest rates changes and other
market factors.
The operations of the Company are also subject to interest rate risk because
its interest earning assets and interest-bearing liabilities reprice at
different times and varying amounts. FFCC's loans held for sale and
mortgage-backed securities held for trading inventories are fixed rate
interest-earning assets that are not subject to repricing (except for
replacement of assets through repayments, sales and new originations) while the
short-term borrowings used to finance these positions normally reprice on a
quarterly basis. To protect against major fluctuations in short-term interest
rates, the Company purchases listed put options on financial instruments,
including Eurodollars contracts. This policy attempts to ensure a relatively
stable short-term cost of funds with respect to the loans receivable
held by Doral Federal. FFCC attempts to obtain long term deposits and other
long-term debt financing and or advances from the FHLB-NY and term notes backed
by FHLB-NY letters of credit.
In the future, FFCC may utilize alternative hedging techniques including
futures, options or other hedge vehicles to help mitigate interest rate and
market risk. However, there can be no assurance that any of the above hedging
techniques will be successful. To the extent they are not successful, the
Company's profitability may be adversely affected. For the three months ended
March 31, 1996, the Company experienced hedging gains of $1.7 million, while
for the quarter ended March 31, 1995, the Company experienced hedging losses of
$985,000.
<PAGE> 10
10
RESULTS OF OPERATIONS FOR QUARTERS ENDED MARCH 31, 1996 AND 1995
Net income for the quarter ended March 31, 1996 increased to $6.4 million from
$3.4 million for the comparable period of 1995. Results for the first quarter
of 1995 do not reflect the adoption by the Company as of April 1, 1995 of SFAS
No. 122. Since SFAS No. 122 prohibits retroactive application results for the
first quarter of 1996 are not directly comparable to the quarter ended March
31, 1995. See note H to "Notes to Consolidated Financial Statements
(Unaudited) herein." The adoption of this new accounting standard resulted in
the Company reporting additional net income of approximately $1.0 million in
the first quarter of 1996. Doral Federal contributed approximately $526,000 in
net income for the first quarter of 1996 compared to $263,000 for the first
quarter of 1995.
Revenues from mortgage loan sales and origination fees increased to
$6.9 million for the quarter ended March 31, 1996 from $2.5 million for the
comparable period of 1995. This increase was due to higher volume of loans
originations and sales, the market effect of SFAS No. 122, as previously
discussed, hedging gains and increased value in the portfolio holding of
mortgage-backed securities held for trading. The total volume of loans
originated and purchased was $200 million for the three-month period ended
March 31, 1996 compared to $144 million for the three-month period ended March
31, 1995. The total volume of loans purchased was approximately $21 million
for the three-month period ended March 31, 1996, compared to $20 million for
the three-month period ended March 31, 1995. The increase in loan originations
was the result of increased demand for mortgage loans, especially refinancing
loans due to decreases in mortgage interest rates.
Net interest income decreased by $338,000 for the three-month period ended
March 31, 1996 versus the comparable period of 1995. The 1996 first quarter
includes, however, approximately $500,000 of interest expense attributable to
additional financing costs not directly related to interest earnings assets.
The weighted average interest rate spread was 327 basis points during the first
quarter of 1996 compared to 315 basis points for the comparable period of 1995.
When FFCC sells the mortgage loans it has originated or purchased, it generally
retains the rights to service such loans and receives the related servicing
fees. Mortgage loan servicing fees are based on a percentage of the principal
balances of the mortgages serviced and are credited to income as mortgage
payments are collected. Loan servicing income increased 2% to $2.8 million
for the quarter ended March 31, 1996 compared to $2.7 million for the same
period in 1995. The Company's servicing portfolio at March 31, 1996 increased
$142,000 over the December 31, 1995 level.
Amortization of excess servicing fee receivable for each of the quarters ended
March 31, 1996 and 1995 was approximately $304,000 and $217,000, respectively.
The amortization of excess servicing fee receivable is recorded as a reduction
of servicing income.
At March 31, 1996, the unamortized balance of mortgage servicing rights
approximates their fair value. The amortization of mortgage servicing rights
for the quarters ended March 31, 1996 and 1995 was $224,000 and $228,000,
respectively, and is recorded in the accompanying Consolidated Statement of
Income and Retained Earnings under "Other Expenses." The Company capitalized
approximately $370,000 in mortgage servicing rights during the first quarter
of 1996 related to loans purchased and, in addition, as a result of the
adoption of SFAS No. 122 during the second quarter of 1995, the Company
capitalized approximately $2.4 million of originated mortgage servicing rights
in the first quarter of 1996.
Aggregate expenses for the quarter ended March 31, 1996, increased by
approximately $1.7 million compared to the first quarter of 1995, primarily as
a result of higher interest expense associated with the financing of the
Company's mortgage loans and mortgage-backed securities portfolios. Loan
origination, general and administrative expenses increased marginally to $7.5
million in the first quarter of 1996 from $7.0 million a year ago due to higher
volume offset by cost reduction initiatives.
Prospective Trends
Market Trends. During the last quarter of 1995 and the first quarter
of 1996, particularly the initial part of the first quarter, interest rates on
mortgage loans declined. However, during the later part of the first quarter
and the beginning of the second quarter of 1996, interest rates began to rise.
To the extent interest rates continue to increase during 1996, demand and
prices for mortgage loans and mortgage-backed securities could be adversely
effected thereby adversely impacting gain on sale of mortgage loans and the
level of mortgage originations, especially refinancing loans. Effective April
1996, Puerto Rico governmental authorities eliminated the regulations that set
forth the maximum interest rates that could be charged on non-federal
government guaranteed mortgage loans. This deregulation of interest rates may
help compensate, in part, for any adverse effect that the increase in interest
rates may have on the level of mortgage originations by expanding the market of
potential borrowers.
The Company intends to continue to increase the assets of Doral Federal by
increasing the amount of loans funded and held by Doral Federal as well as to
increase its deposit base and branch network. The Company expects that as
Doral Federal continues to increase the amount of its interest earning assets,
the net interest income earned by Doral Federal will continue to increase as
well as the relative contribution of Doral Federal to the consolidated earnings
of the Company.
<PAGE> 11
11
Possible Repeal of Section 936. In connection with ongoing efforts to adopt
Federal budget legislation, various proposals have been made to eliminate the
tax benefits available to U.S. corporations operating and investing in Puerto
Rico under Section 936 of the Internal Revenue Code ("Section 936"). The
Omnibus Budget Reconciliation Act of 1993 effective for taxable years
beginning in 1994 reduced the benefits previously available under Section 936.
The Seven-Year Balanced Budget Revenue Reconciliation Bill of 1995 (the "Budget
Bill"), passed by the United States Congress on November 20, 1995 and
subsequently vetoed by President Clinton provided for the repeal of Section
936, subject to a ten-year grandfather rule that would have benefited
corporations electing the benefits of Section 936 ("936 Corporations") that
were engaged in the active conduct of trade or business on October 13, 1995 and
that qualified for and elected the benefits of Section 936 for taxable years
beginning before October 13, 1995 and that qualified for and elected the
benefits of Section 936 for taxable years beginning before December 31, 1995.
Under the bill, during the grandfather period, the amount of income that would
benefit from the credit available under Section 936 derived from the active
conduct of a trade or business would be subject to varying caps. The credit
available for investment income would not have been subject to the grandfather
rule and would have been eliminated for taxable years beginning after December
31, 1995. As noted above, the Budget Bill was vetoed by President Clinton on
December 6, 1995.
On May 14, 1996, the Ways and Means Committee of the House of
Representatives reported favorably on a bill (the "Small Business Tax Bill")
that contains various tax incentives designed primarily to help small
businesses. These tax incentives would be financed, in part, from the savings
to be derived from the repeal of Section 936. The proposed legislation would
repeal Section 936 subject to a ten year grandfather rule similar to that
contained in the Budget Bill. As with the Budget Bill, the proposed
legislation would not extend the grandfather period to the credit for
investment income. Before becoming law, the proposed bill must be appoved by
the full House of Representatives and the Senate and signed into law by the
President.
It is not possible to predict what changes will be made to Section 936 as
part of the consideration of the Small Business Tax Bill, the ongoing Federal
budget negotiations or otherwise. While the final impact of a repeal of
Section 936 cannot be determined at this time, the repeal of Section 936 could
have an adverse effect on the general economic condition of Puerto Rico, the
Company's predominant service area, by reducing incentives for investment in
Puerto Rico. Any such adverse effect on the general economy of Puerto could
lead to an increase in mortgage delinquencies and a reduction in the level of
residential construction and demand for mortgage loans. The elimination of
Section 936, particularly the elimination of the credit for investment income,
could also lead to a decrease in the amount of funds invested in the Puerto
Rico financial market by 936 Corporations ("936 Funds"), thereby increasing
funding costs and decreasing liquidity for Puerto Rico mortgage products. The
magnitude of the impact of any such changes on the Company's profitability or
financial condition cannot be determined at this time. The Company has taken
steps to attempt to reduce the impact of any such adverse change by
diversifying its sources of funding and identifying additional investors for
its mortgage products. During recent periods, the disparity between the cost
of 936 Funds and other sources of funding such as the Euro-dollar market have
decreased, thereby reducing the adverse effect that the loss of such funding
could have on the profitability of the Company.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
In the opinion of the Company's management, the pending and threatened
legal proceedings of which management is aware will not have a material adverse
effect on the financial condition of the Company.
ITEM 2 - CHANGES IN SECURITIES
Not Applicable.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
<PAGE> 12
12
Not Applicable.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Stockholders Meeting of First Financial Caribbean Corporation
was held on April 17, 1996. A quorum was obtained with 6,725,977 votes
represented in person or by proxy, which represented approximately 71.6% of all
votes eligible to be cast at the meeting. Eight directors of the Company,
Salomon Levis, Zoila Levis, Richard F. Bonini, Edgar M. Cullman, Jr., Frederick
M. Danziger, John L. Ernst, A. Brean Murray and Victor M. Pons, Jr., were
reelected for additional one-year terms. Two amendments to the Corporation's
Certificate of Incorporation were also approved at the Annual Meeting. Set
forth below is a summary of the proposals that were voted upon at the meeting
and thereof results:
Proposal 1: Election of Directors
<TABLE>
Nominees for one-year term Votes for Votes Withheld
-------------------------- ---------- --------------
<S> <C> <C>
Salomon Levis 6,444,067 281,910
Richard F. Bonini 6,444,367 281,610
Edgar M. Cullman, Jr. 6,444,367 281,610
Frederick M. Danziger 6,444,066 281,910
John L. Ernst 6,444,657 281,710
Zoila Levis 6,443,667 282,310
A. Brean Murray 6,435,767 290,210
Victor M. Pons, Jr. 6,441,927 284,050
</TABLE>
Proposal 2: Approval of an amendment to the Certificate of Incorporation of the
Corporation to increase the number of authorized shares of Common
Stock from 10,000,000 to 20,000,000.
For: 6,123,038
Against: 565,860
Abstain: 37,079
Broker Non-Votes: 0
Proposal 3: Approval of an amendment to the Corporation's Certificate
of Incorporation to eliminate the personal liability of directors
to the Corporation and its shareholders to the extent permitted by
the Puerto Rico General Corporation Law:
For: 5,967,707
Against: 658,732
Abstain: 46,118
Broker Non-Votes: 53,420
Proposal 4: Ratification of the Appointment of Price Waterhouse as the
Company's Independent Accountants for 1996.
For: 6,451,114
Against: 33,546
Abstain: 241,317
Broker Non-Votes: 0
<PAGE> 13
13
ITEM 5 - OTHER INFORMATION
Dividend declaration
On April 17, 1996, the Board of Directors declared a quarterly $0.17
per share cash dividend on the Company's Common Stock to be paid on June 3,
1996. to shareholders of record as of May 16, 1996. The Common Stock dividend
reflected a $0.02 per share increase over the prior quarterly dividend.
Redemption of Series A Preferred Stock
All outstanding shares of the Company's 10 1/2% Cumulative Convertible
Preferred Stock, Series A, that had been not previously converted into shares
of Common Stock, were redeemed on May 10, 1996, at redemption price of $10.90
per share plus accrued and unpaid dividends to the redemption date.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 3.6 - Amendment to the Certificate of Incorporation of FFCC
filed with the Department of the State of the Commonwealth of Puerto
Rico on April 22, 1996.
Exhibit 10.66 - First Amendment to Master Servicing and Collection
Agreement, dated as of March 1, 1996, between FFCC and Doral Federal
Savings Bank.
Exhibit 10.67 - First Amendment to Amended and Restated Master
Production Agreement, dated as of March 1, 1996, between FFCC, Doral
Mortgage Corporation and Doral Federal Savings Bank, respectively.
Exhibit 27 - Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K dated March 20,
1996, reporting under Item 5 "Other Events" the calling for redemption
of all of the Company's outstanding 10 1/2% Cumulative Convertible
Preferred Stock, Series A.
<PAGE> 14
14
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.
FIRST FINANCIAL CARIBBEAN CORPORATION
(Registrant)
Date: May 14, 1996 /s/ Salomon Levis
------------------------------
Salomon Levis
Chairman of the Board
and Chief Executive Officer
Date: May 14, 1996 /s/ Richard F. Bonini
-----------------------------
Richard F. Bonini
Senior Executive Vice President
and Chief Financial Officer
Date: May 14, 1996 /s/ Ricardo Melendez
-----------------------------
Ricardo Melendez
Vice President and Controller,
Principal Accounting Officer
<PAGE> 15
15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
- ------- -------------------------------------------------------------------- ------------
<S> <C> <C>
Exhibit 3.6 - Amendment to the Certificate of Incorporation of FFCC filed with the
Department of the State of the Commonwealth of Puerto Rico on
April 22, 1996.
Exhibit 10.66 - First Amendment to Master Servicing and Collection Agreement, dated
as of March 1, 1996, between FFCC and Doral Federal Savings Bank.
Exhibit 10.67 - First Amendment to Amended and Restated Master Production Agreement,
dated as of March 1, 1996, between FFCC, Doral Mortgage Corporation and
Doral Federal Savings Bank, respectively.
Exhibit 27 - Financial Data Schedule (for SEC use only).
</TABLE>
<PAGE> 1
EXHIBIT 3.6
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
FIRST FINANCIAL CARIBBEAN CORPORATION
First Financial Caribbean Corporation (the "Corporation"), a corporation
organized and existing under the laws of the Commonwealth of Puerto Rico, does
hereby certify:
FIRST: That at a meeting or the Board of Directors of the Corporation,
duly held and convened, resolutions were duly adopted approving the following
proposed amendments (the "Amendments") to the Certificate of Incorporation of
the Corporation and declaring said Amendments advisable.
SECOND: That the first paragraph of Article FOURTH of the Certificate of
Incorporation shall be amended to read in its entirety as follows:
"FOURTH: The total number of shares of all classes of stock
which the Corporation is authorized to issue is 22,000,000 shares,
consisting of 20,000,000 shares of Common Stock, $1.00 par value,
and 2,000,000 shares of Serial Preferred Stock, $1.00 par value."
THIRD: That a new Article EIGHTH be added to the Certificate of
Incorporation to read in its entirety as follows:
"EIGHTH: A director of this Corporation shall not be
personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director,
except to the extent such exemption from liability or limitation
thereof is not permitted under the Puerto Rico General Corporation
Law of 1995 as the same exists or may hereafter be amended. Any
repeal or modification of the foregoing provisions of this Article
EIGHTH shall not adversely affect any right or protection of a
director of the Corporation existing hereunder with respect to any
act or omission occurring prior to or at the time of such repeal
or modification."
<PAGE> 2
2
FOURTH: That the existing Article EIGHTH of the Certificate of
Incorporation be renumbered as Article NINTH.
FIFTH: That at the Annual Meeting of Shareholders of the Corporation held
on April 17, 1996, the inspectors of election appointed for the purpose of
conducting and tabulating the votes of the shareholders for and against the
adoption of the Amendments, executed and delivered a certificate to the effect
that more than a majority of the issued and outstanding stock of the
Corporation entitled to vote on the Amendments voted in favor of each of said
Amendments.
SIXTH: That the Amendments have been adopted in accordance with the
provisions of Article 8.01 of the General Corporation Law of the Commonwealth
of Puerto Rico.
IN WITNESS WHEREOF, First Financial Caribbean Corporation has caused its
corporate seal to be hereunto affixed and this Certificate to be signed by
Mario S. Levis, its Vice President and Richard F. Bonini, its Secretary, this
18th day of April, 1996.
/s/ Mario S. Levis
------------------------------
Mario S. Levis
Executive Vice President
[Corporate Seal]
/s/ Richard F. Bonini
------------------------------
Richard F. Bonini
Secretary
<PAGE> 1
EXHIBIT 10.66
FIRST AMENDMENT TO
MASTER SERVICING AND COLLECTION AGREEMENT
This First Amendment dated as of March 1, 1996 to MASTER SERVICING AND
COLLECTION AGREEMENT, dated as of October 1, 1995, by and between FIRST
FINANCIAL CARIBBEAN CORPORATION ("FFCC"), a corporation organized under the
laws of the Commonwealth of Puerto Rico, and DORAL FEDERAL SAVINGS BANK, a
federally-chartered stock savings bank (the "Savings Bank").
WITNESSETH:
WHEREAS, FFCC and the Savings Bank are parties to a Master Servicing and
Collection Agreement, dated as of October 1, 1995 (the "Existing Agreement").
WHEREAS, the Savings Bank has recently increased its production of
personal loans secured by mortgages as described in paragraph S of Section 1 of
Regulation 26-A ("Personal Mortgage Loans");
WHEREAS, the average principal amount of Personal Mortgage Loans being
funded by the Savings Bank is $22,500 which is considerably below the average
balance of mortgage loans being serviced by FFCC;
WHEREAS, because of the small average balance of the Personal Mortgage
Loans, the servicing fee presently being paid to FFCC by the Savings Bank does
not adequately compensate them for the cost of administering such Personal
Mortgage Loans;
WHEREAS, FFCC and the Savings Bank desire to enter into this First
Amendment in order to make certain amendments and modifications to the Existing
Agreement.
NOW, THEREFORE, intending to be legally bound, the parties agree as
follows:
1. AMENDMENT. Effective as of Effective Date (as defined below) the
Existing Agreement is amended by amending subsection 1.2 to read in its
entirety as follows:
"1.2 FEES. Except as otherwise provided in the second sentence of
this subsection, the Savings Bank shall pay FFCC a fee per month for servicing
the Loans equal to 0.25% of the outstanding principal balance of each Loan. In
the case of personal loans secured by mortgages as described in paragraph S of
Section 1 of Regulation 26-A ("Personal Mortgage Loans"), the
<PAGE> 2
2
applicable servicing fee shall be equal to .50% of the outstanding principal
balance of each Personal Mortgage Loan."
2. EFFECTIVENESS. This Amendment shall become effective as of March 1, 1996
(the "Effective Date").
3. EXISTING AGREEMENT TO REMAIN IN FULL FORCE AND EFFECT. Except as
specifically amended pursuant to Section 1 hereof, the terms and conditions of
the Existing Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the Savings Bank and FFCC have caused their names to
be signed hereto by their respective officers thereunto duly authorized as of
the day and year first above written.
DORAL FEDERAL SAVINGS BANK
By: /s/ Jose G. Vigoreaux
------------------------------------
Name: Jose G. Vigoreaux
Title: Vice President
FIRST FINANCIAL CARIBBEAN CORPORATION
By: /s/ Zoila Levis
------------------------------------
Name: Zoila Levis
Title: President
Agreed and Accepted as of
the date first above written:
DORAL MORTGAGE CORPORATION
By:
Name: /s/ Edison Velez
-----------------------------
Edison Velez
Title: President
<PAGE> 1
EXHIBIT 10.67
FIRST AMENDMENT TO
AMENDED AND RESTATED MASTER PRODUCTION AGREEMENT
This First Amendment dated as of March 1, 1996 to AMENDED AND RESTATED
MASTER PRODUCTION AGREEMENT, dated as of October 1, 1995, by and between FIRST
FINANCIAL CARIBBEAN CORPORATION ("FFCC"), DORAL MORTGAGE CORPORATION ("Doral"),
both corporations organized under the laws of the Commonwealth of Puerto Rico,
and DORAL FEDERAL SAVINGS BANK, a federally-chartered stock savings bank (the
"Savings Bank").
WITNESSETH:
WHEREAS, FFCC, Doral and the Savings Bank are parties to an Amended and
Restated Master Production Agreement, dated as of October 1, 1995 (the
"Existing Agreement").
WHEREAS, FFCC, Doral and the Savings Bank desire to enter into this First
Amendment in order to make certain amendments and modifications to the Existing
Agreement.
NOW, THEREFORE, intending to be legally bound, the parties agree as
follows:
1. AMENDMENT. Effective as of Effective Date (as defined below) the
Existing Agreement is amended as follows:
(a) The introductory paragraph to Section 3 is hereby amended to read
as follows:
"3. FEES. In consideration of the mutual covenants and agreements
contained herein, and other valuable considerations, the Savings Bank shall pay
to FFCC and Doral, as applicable, a fee, which in the case of those mortgages
described in 3.1 and 3.2 below will be equal to a percentage of the processing
or origination fees charged to the borrowers under Loan Agreements, as
follows:"
(b) Section 3 is hereby amended by adding a new subsection 3.3 to read
as follows:
"3.3 PERSONAL LOANS SECURED BY MORTGAGES. In the case of
personal loans up to $40,000 secured by mortgages as described in paragraph S
of Section 1 of Regulation 26-A, with respect to which loans Regulation 26A
does not permit the collection of origination or processing fees, the Savings
Bank agrees to reimburse FFCC and Doral, as applicable, a fixed amount per
loan to
<PAGE> 2
2
compensate such entities for the services provided by them under this
Agreement. As of the Effective Date, such amount shall be equal to $495 per
loan. The amount to be reimbursed per loan will be reviewed, from time to
time, not less than on an annual basis."
(c) Section 4.1 is hereby amended to read as follows:
"4.1 FEE PAYMENT. The applicable fees payable to FFCC or Doral
pursuant to Section 3 hereof will be payable on the closing date of the
respective loan; provided, that fees payable pursuant to Subsection 3.3 will
be payable on a monthly basis in arrears not later than the 10th day of the
following month".
2. EFFECTIVENESS. This Amendment shall become effective as of March 1,
1996 (the "Effective Date").
3. EXISTING AGREEMENT TO REMAIN IN FULL FORCE AND EFFECT. Except as
specifically amended pursuant to Section 1 hereof, the terms and conditions of
the Existing Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the Savings Bank, FFCC and Doral have caused their
names to be signed hereto by their respective officers thereunto duly
authorized as of the day and year first above written.
DORAL FEDERAL SAVINGS BANK
By: /s/ Jose G. Vigoreaux
---------------------------
Name: Jose G. Vigoreaux
Title: Vice President
FIRST FINANCIAL CARIBBEAN CORPORATION
By: /s/ Zoila Levis
----------------------------
Name: Zoila Levis
Title: President
DORAL MORTGAGE CORPORATION
By: /s/ Edison Velez
------------------------------------
Name: Edison Velez
Title: President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF FIRST FINANCIAL CARIBBEAN CORPORATION FOR THE
QUARTER ENDED MARCH 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 42,915
<SECURITIES> 487,611
<RECEIVABLES> 20,933
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 11,867
<DEPRECIATION> 5,340
<TOTAL-ASSETS> 921,299
<CURRENT-LIABILITIES> 0
<BONDS> 10,000
0
46
<COMMON> 9,033
<OTHER-SE> 125,167
<TOTAL-LIABILITY-AND-EQUITY> 921,299
<SALES> 0
<TOTAL-REVENUES> 26,035
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,493
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,991
<INCOME-PRETAX> 7,551
<INCOME-TAX> 1,197
<INCOME-CONTINUING> 6,354
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,354
<EPS-PRIMARY> .71
<EPS-DILUTED> .67
</TABLE>
