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, 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 1-10264
COAST SAVINGS FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4196764
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 Wilshire Boulevard, Los Angeles, California 90017-2457
(Address of principal executive offices) (Zip Code)
(213) 362-2000
(Registrant's telephone number, including area code)
_________________________________________________________________
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Sections 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
As of November 4, 1995, the registrant had 18,578,997 shares
of common stock, $.01 par value, outstanding. The shares of
common stock represent the only class of common stock of the
registrant.
<PAGE>
COAST SAVINGS FINANCIAL, INC.
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Consolidated Statement of Financial Condition at
September 30, 1995 and December 31, 1994.
Consolidated Statement of Operations for the Three Months
Ended September 30, 1995 and 1994, and for the Nine Months
Ended September 30, 1995 and 1994.
Consolidated Statement of Cash Flows for the Nine Months
Ended September 30, 1995 and 1994.
Notes to Consolidated Financial Statements.
1<PAGE>
COAST SAVINGS FINANCIAL, INC.
<TABLE>
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
<CAPTION>
September 30, December 31,
1995 1994
Assets (In thousands)
<S> <C> <C> <C>
Cash and due from banks $ 260,017 $ 99,578
Federal funds sold and other short
term investments 4,663 2,443
Investment securities held to maturity
(fair value of $75.0 million and
$81.6 million) 74,701 82,477
Loans receivable, net 5,542,300 5,632,517
Loans receivable held for sale, at the
lower of cost or fair value (fair
value of $195.8 million and
$161.3 million) 191,552 160,665
Mortgage-backed securities held to
maturity (fair value of $1.59 billion
and $1.37 billion) 1,600,970 1,404,815
Mortgage-backed securities available
for sale, at fair value 358,965 328,913
Real estate held for sale 39,412 44,168
Federal Home Loan Bank stock 84,710 79,261
Land and depreciable assets 91,187 87,493
Interest receivable and other assets 184,320 262,683
Goodwill 7,609 11,504
$8,440,406 $8,196,517
Liabilities and Stockholders' Equity
Liabilities:
Deposits $6,179,215 $5,879,808
Federal Home Loan Bank advances 668,250 954,450
Other borrowings 1,018,906 809,616
Other liabilities 104,602 113,346
Income taxes 9,271 8,588
Capital notes 55,681 55,495
8,035,925 7,821,303
Stockholders' Equity:
Serial preferred stock, without par
value; 50,000,000 shares authorized,
none outstanding - -
Common stock, $.01 par value;
100,000,000 shares authorized,18,526,247
and 18,457,454 shares issued and
outstanding at September 30, 1995, and
December 31, 1994, respectively 185 185
Additional paid-in capital 264,162 263,161
Unrealized gain (loss) on securities
available for sale, net of taxes 3,387 (1,006)
Retained earnings 136,747 112,874
404,481 375,214
$8,440,406 $8,196,517
See accompanying Notes to Consolidated Financial Statements.<PAGE>
</TABLE>
COAST SAVINGS FINANCIAL, INC.
<TABLE>
CONSOLIDATED STATEMENT OF OPERATIONS
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
(In thousands except per share amounts)
Interest income:
<S> <C> <C> <C> <C>
Loans receivable $120,364 $ 98,606 $353,884 $278,388
Mortgage-backed securities 32,275 22,777 86,678 69,852
Investment securities 5,954 4,861 17,768 13,535
158,593 126,244 458,330 361,775
Interest expense:
Deposits 73,843 55,567 208,338 159,122
Borrowings 32,344 23,645 101,080 59,578
106,187 79,212 309,418 218,700
Net interest income 52,406 47,032 148,912 143,075
Provision for loan losses 10,000 14,000 30,000 60,000
Net interest income after
provision for loan losses 42,406 33,032 118,912 83,075
Noninterest income:
Gain on sale of subsidiary 7,549 - 7,549 -
Loan servicing fees and charges 3,382 3,458 10,175 12,130
Gain (loss) on sale of assets 12 (98) (95) 278
Other 9,422 9,629 26,872 29,229
20,365 12,989 44,501 41,637
Noninterest expense:
Compensation and benefits 17,553 19,068 55,247 58,740
Office occupancy, net 10,384 9,878 30,170 28,457
Federal deposit insurance premiums 4,348 4,290 12,942 12,025
Other general and administrative
expenses 7,670 6,878 24,407 21,231
Total general and
administrative expenses 39,955 40,114 122,766 120,453
Real estate operations, net 933 1,529 2,948 7,658
Amortization of goodwill 313 357 944 1,067
41,201 42,000 126,658 129,178
Earnings (loss) before income
tax (expense) benefit 21,570 4,021 36,755 (4,466)
Income tax (expense) benefit (6,808) (1,729) (12,882) 1,920
Net earnings (loss) $ 14,762 $ 2,292 $ 23,873 $ (2,546)
Net earnings (loss) per share of
common stock:
Primary $ .77 $ .12 $1.26 $(.14)
Fully diluted $ .77 $ .12 $1.25 $(.14)
See accompanying Notes to Consolidated Financial Statements. <PAGE>
COAST SAVINGS FINANCIAL, INC.
</TABLE>
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
Nine Months Ended
September 30,
1995 1994
(In thousands)
Cash flows from operating activities:
<S> <C> <C>
Net earnings (loss) $ 23,873 $ (2,546)
Adjustments to reconcile net earnings to
net cash used by operating activities:
Net decrease in accounts receivable 40,634 3,693
Provision for losses on loans 30,000 60,000
Proceeds from the sale of loans held
for sale 15,105 27,079
Deferred income tax expense (benefit) 12,882 (1,920)
Net increase (decrease) in accounts
payable 1,765 (13,696)
Provision for losses on real estate
held for sale 198 2,003
Gain on sale of subsidiary (7,549)-
Loans originated for sale, net of
refinances and principal payments (119,121) (392,467)
Other (12,908) (12,355)
Total adjustments (38,994) (327,663)
Net cash used by operations (15,121) (330,209)
Cash flows from investing activities:
Loans originated for investment, net of
refinances (665,140) (827,605)
Repurchase of loans (15,533) (100,321)
Principal repayments on loans 308,884 304,727
Purchase of mortgage-backed securities
("MBS")- (18,574)
Principal repayments on MBS held to
maturity 119,291 214,633
Principal repayments on MBS available
for sale 20,307 62,232
Sale of MBS available for sale 16,532 212,304
Net decrease in short term investment
securities 2,060 15,666
Purchase of investment securities (143) (48,096)
Maturities and principal repayment on
investment securities 5,023 134
Sale of investment securities available
for sale- 450
Proceeds from sale of subsidiary 146,000 -
Purchase of land and depreciable assets,
net (10,651) (13,367)
Sale of real estate held for sale 28,388 30,563
Purchase of FHLB stock (2,450) (9,426)
Net cash used by investing
activities (47,432) (176,680)
Continued<PAGE>
COAST SAVINGS FINANCIAL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Nine Months Ended
September 30,
1995 1994
(In thousands)
Continued
Cash flows from financing activities:
Net increase in deposits 299,407 11,360
Net increase (decrease) in FHLB advances (286,200) 227,250
Net increase (decrease) in short-term
borrowings 211,004 (184,078)
Common stock options exercised 1,001 11
Net cash provided by financing
activities 225,212 54,543
Net increase (decrease) in cash and cash
equivalents 162,659 (452,346)
Cash and cash equivalents at beginning
of year 102,021 584,980
Cash and cash equivalents at end of
period $ 264,680 $ 132,634
Supplemental disclosures of cash flow
information:
Cash payments of interest $ 131,401 $ 87,468
Cash payments (refunds) of income taxes,
net (526) 57
Supplemental schedule of noncash investing
and financing activities:
Loans exchanged for MBS, net 373,516 180,359
Additions to loans resulting from the
sale of real estate acquired in
settlement of loans 26,816 64,350
Additions to real estate acquired in
settlement of loans 69,473 102,956
Reductions of real estate acquired
through in substance foreclosure, net - (2,217)
Increase (reduction) of unrealized gain
on securities available for sale 4,393 (9,481)
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
COAST SAVINGS FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Coast Savings Financial, Inc. (the "Company") is the holding
company for Coast Federal Bank, Federal Savings Bank ("Coast"
or "the Bank"). The unaudited consolidated financial
statements of the Company and subsidiaries included herein
reflect all adjustments, consisting only of normal recurring
adjustments, which are in the opinion of management necessary
to present a fair statement of the results for the interim
periods indicated. Certain reclassifications have been made
to the consolidated financial statements for 1994 to conform
to the 1995 presentation. Certain information and note
disclosures normally included in consolidated financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant
to the rules and regulations of the Securities and Exchange
Commission. The results of operations for the nine months
ended September 30, 1995, are not necessarily indicative of
the results of operations to be expected for the remainder of
the year.
These consolidated financial statements should be read in
conjunction with the consolidated financial statements and
notes thereto included in the Company's annual report on Form
10-K for the year ended December 31, 1994.
2. Cash and cash equivalents includes:
<TABLE>
<CAPTION>
September 30,
1995 1994
(In thousands)
<S> <C> <C>
Cash and due from banks $260,017 $110,732
Federal funds sold - 20,000
Commercial paper 4,663 1,902
$264,680 $132,634
</TABLE>
3. On September 30, 1995 the Bank terminated its asset-based
lending activity which it had conducted through its former
service corporation, CoastFed Business Credit Corporation
("CBCC"). At the date of sale, CBCC had a loan portfolio of
$135.8 million. The consolidated statement of operations for
the quarter ended September 30, 1995, includes a pretax gain
of $7.5 million resulting from the sale of CBCC.<PAGE>
COAST SAVINGS FINANCIAL, INC.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
The Company is the sole stockholder of Coast. Substantially
all of the Company's consolidated revenues are derived from the
operations of Coast, and Coast represented substantially all of
the Company's consolidated assets and liabilities at
September 30, 1995. Coast's business is that of a financial
intermediary and consists primarily of attracting deposits from
the general public and using such deposits, together with
borrowings and other funds, to make mortgage loans secured by
residential real estate located in California. At September 30,
1995, Coast operated 92 retail banking offices in California
providing consumer banking services as well as residential real
estate loans. Coast is subject to significant competition from
other financial institutions, and is also subject to regulation
by certain federal agencies and undergoes periodic examinations
by those regulatory agencies.
Results of Operations
The Company's net earnings for the nine months ended
September 30, 1995, were $23.9 million compared to a net loss of
$2.5 million for the first nine months of 1994. The loss in the
1994 period was largely due to greater than anticipated loss
provisions following damage to collateral properties resulting
from the January 1994 earthquake experienced in the Los Angeles
area. Net earnings for the third quarter of 1995 were $14.8
million compared to net earnings of $2.3 million for the third
quarter of 1994. The increase in net income from 1994 to 1995 was
due primarily to the reduced level of provision for loan losses,
increased net interest income and the $7.5 million pretax gain
resulting from the sale of CBCC, as described in Note 3 of Notes
to Consolidated Financial Statements. For the first nine months
of 1995, earnings per share were $1.26 and $1.25 on a primary
and fully diluted basis, respectively. For the third quarter,
earnings per share were $.77, on both primary and fully diluted
bases. For the first nine months of 1994, the net loss per share
was $.14 and net earnings per share for the third quarter of 1994
were $.12, on both primary and fully diluted bases.
<PAGE>
COAST SAVINGS FINANCIAL, INC.
Net interest income. The effect on net interest income of
changes in interest rates and balances of interest-earning assets
and interest-bearing liabilities is illustrated in the following
table. Information is provided on changes for the periods
indicated attributable to (i) changes in rates (changes in the
weighted average rate multiplied by the prior period average
portfolio balance), (ii) changes in volume (changes in the
average portfolio balance multiplied by the prior period weighted
average rate) and (iii) the combined effect of changes in rates
and volume (changes in the weighted average rate multiplied by
change in the average portfolio balance).
<TABLE>
<CAPTION>
Three Months Ended
September 30, 1995
versus
Three Months Ended
September 30, 1994
Amount of increase
(decrease) due to change in:
Average Average Average
Rate Volume Rate/Vol. Total
(In thousands)
Interest Income:
<S> <C> <C> <C> <C>
Loans $16,196 $ 4,777 $ 785 $21,758
MBS 5,544 3,180 774 9,498
Investment securities 787 264 42 1,093
Total interest income 22,527 8,221 1,601 32,349
Interest Expense:
Deposits 15,156 2,452 668 18,276
Borrowings 4,383 3,641 675 8,699
Total interest expense 19,539 6,093 1,343 26,975
Change in net interest
income $ 2,988 $ 2,128 $ 258 $ 5,374
</TABLE>
<PAGE>
COAST SAVINGS FINANCIAL, INC.
<TABLE>
<CAPTION>
Nine Months Ended
September 30, 1995
versus
Nine Months Ended
September 30, 1994
Amount of increase
(decrease) due to change in:
Average Average Average
Rate Volume Rate/Vol. Total
(In thousands)
Interest Income:
<S> <C> <C> <C> <C>
Loans $ 34,719 $36,256 $ 4,521 $75,496
MBS 16,446 307 73 16,826
Investment securities 4,224 7 2 4,233
Total interest income 55,389 36,570 4,596 96,555
Interest Expense:
Deposits 42,969 4,919 1,328 49,216
Borrowings 16,474 19,606 5,422 41,502
Total interest expense 59,443 24,525 6,750 90,718
Change in net interest
income $( 4,054) $12,045 $( 2,154) $ 5,837
</TABLE>
Interest income for the quarter ended September 30, 1995,
increased by $32.3 million from the amount reported for the third
quarter of 1994. This increase was caused by an increase in the
rate earned on interest-earning assets of 115 basis points to
7.72%, as well as an increase in the average balance of such
assets totaling approximately $533 million.
Interest expense recorded during the third quarter of 1995
increased by $27.0 million from the amount recorded during the
corresponding quarter of 1994. This increase resulted from an
increase in the average rate paid on interest-bearing liabilities
of 105 basis points, to 5.19%, and an increase in the average
balance of such liabilities of approximately $528 million. The
increase in the average balance of liabilities included an
increase in average deposits of approximately $262 million and an
increase in the average balance of borrowings totaling
approximately $266 million. The increases in deposits and
borrowings reflect the funding for the increase in interest-
earning assets.
Interest income for the nine months ended September 30, 1995,
increased by $96.6 million from the amount reported during the
corresponding period of 1994 principally resulting from two
factors: (i) the average balance of interest-earning assets
increased by approximately $692 million, and (ii) the yield
earned on interest-earning assets increased by 103 basis points
to 7.48% for the period.
Interest expense for the nine months ended September 30,
1995, increased by $90.7 million from the amount recorded in the
similar period of 1994 due to increases in both the average
balances and the interest rates associated with interest-bearing
liabilities. Average balances of interest-bearing liabilities
increased by approximately $694 million, comprised of an increase
in the average balance of deposits of approximately $182 million
and an increase in the average balance of borrowings totaling
approximately $512 million. The average rate paid on interest-
bearing liabilities increased by 115 basis points to 5.06% from
the 1994 period to the 1995 period.
Provision for loan losses. The provision for loan losses
recorded for the nine months ended September 30, 1995, was less
than that recorded during the corresponding period of 1994 by
$30.0 million. The decrease in the provision in the 1995 period
as compared with the year-earlier period was mainly the result of
two factors: (i) the $15.0 million provision in the 1994 period
related to damage to security properties resulting from the
January 17, 1994, earthquake experienced in the Los Angeles area,
and (ii) the higher level of losses experienced by the Bank in
1994, which was largely due to a higher level of nonperforming
assets. Nonperforming assets have since been reduced from $209.0
million at September 30, 1994 to $121.0 million at September 30,
1995.
The provision for loan losses recorded during the third
quarter of 1995 was less than that recorded during the third
quarter of 1994 by $4.0 million, again, generally reflecting the
reduced level of nonperforming assets at September 30, 1995.
Noninterest income. Noninterest income increased for the
nine and three months ended September 30, 1995, by $2.9 million
and $7.4 million, respectively, over the amounts recorded in the
corresponding periods of 1994 largely due to the $7.5 million
gain on sale of CBCC, as described in Note 3 of Notes to
Consolidated Financial Statements. For the nine months ended
September 30, 1995, the gain was partially offset by decreases of
$2.0 million and $2.4 million in loan servicing fees and charges
and other noninterest income, respectively. The decrease of
$2.0 million in loan servicing fees and charges for the first
nine months of 1995 was primarily the result of a decline in the
portfolio of loans serviced for investors, from $3.85 billion at
September 30, 1994, to $3.55 billion at September 30, 1995, and a
decrease in prepayment and other loan fees. The decrease in other
noninterest income was due to a number of factors, including the
mix and level of investment product sales.
<PAGE>
COAST SAVINGS FINANCIAL, INC.
Noninterest expense. Noninterest expense for the nine months
and quarter ended September 30, 1995, decreased by $2.5 million
and $.8 million from the respective periods of 1994. For the
nine-month period the reduction was due to a decrease of $4.7
million in real estate operations, net, offset by an increase of
$2.3 million in operating expenses. The reduction in real estate
operations, net was substantially due to decreased operating
costs for foreclosed properties as the balance of foreclosed real
estate has declined. The increase in operating expenses was due
to increases of $1.7 million in occupancy expenses, $.9 million
in deposit insurance premiums and $3.2 million in other expenses,
partially offset by a decrease in compensation expense of $3.5
million.
Income taxes. Income tax expense of $12.9 million and $6.8
million was recorded for the first nine months and third quarter
of 1995, respectively. This represented accruals of federal
income and California franchise taxes on adjusted pretax
earnings. The "effective income tax rate" (the ratio of income
tax expense to pretax earnings) was 32% and 43% for the third
quarters of 1995 and 1994, respectively. The lower 1995 tax rate
was due substantially to the income tax consequences of the sale
of CBCC.
Asset/Liability Management
The majority of Coast's assets are loans, MBS and short-term
investment securities. The risks associated with such assets
generally can be categorized as credit risk, market risk and
interest rate risk. Credit risk is, generally, the risk that a
loan or other credit instrument will not be repaid in accordance
with its terms, and is discussed below in the section entitled
"Loan Portfolio and Off-balance Sheet Risk Elements and
Nonperforming Assets."
Market risk is, generally, the risk that the market value of
an asset could decline in response to changes in prevailing rates
of interest, market demand for that type of asset, or other
factors.
Coast is subject to interest rate risk to the degree that its
interest-bearing liabilities mature or reprice at different
frequencies, or on different bases, than its interest-earning
assets. In order to mitigate the impact of interest rate risk,
management places a significant emphasis on seeking to match the
maturities and repricing characteristics of the Company's
financial assets and liabilities (described below). At
September 30, 1995, the Company's estimated one-year gap between
interest rate sensitive assets and liabilities was approximately
<PAGE>
COAST SAVINGS FINANCIAL, INC.
a positive $573 million, or 7% of total assets, compared to
approximately a positive $478 million, or 6% of total assets, at
December 31, 1994.
The following table presents the interest repricing
characteristics of the Company's interest-earning assets and
interest-bearing liabilities ("financial assets" and "financial
liabilities," respectively) at September 30, 1995. For purposes
of this analysis, prepayment rates based upon the Bank's recent
experience are assumed in each period on the fixed rate loan and
fixed rate MBS portfolios. The interest rate sensitivity of the
Company's financial assets and financial liabilities illustrated
in the table could vary substantially if actual experience
differs from the assumptions used.
<TABLE>
<CAPTION>
Over Over
One Five Over
Within to Five to Ten Ten
One Year Years Years Years Total
(Dollars in millions)
Interest-earning assets:
Cash and investment
securities:
<S> <C> <C> <C> <C> <C>
Cash and due from banks $ 260 $ - $ - $ - $ 260
Investment securities 64 11 - 4 79
Loans and MBS:
ARMs 7,264 125 - - 7,389
Fixed rate 61 150 71 23 305
FHLB stock 85 - - - 85
Total $7,734 $ 286 $ 71 $ 27 $8,118
Interest-bearing
liabilities:
Deposits:
Checking accounts $ 600 $ - $ - $ - $ 600
Money market accounts 685 - - - 685
Certificates of deposit 4,295 599 - - 4,894
Borrowings:
FHLB advances 618 50 - - 668
Other 963 56 56 - 1,075
Total $7,161 $ 705 $ 56 $ - $7,922
Maturity gap $ 573 $ (419) $ 15 $ 27 $ 196
Cumulative maturity gap $ 573 $ 154 $ 169 $ 196 $ 196
Cumulative maturity gap
as a percentage of
total assets 7% 2% 2% 2% 2%
</TABLE>
<PAGE>
COAST SAVINGS FINANCIAL, INC.
Coast has matched interest rate sensitivities primarily
through the origination of adjustable rate mortgage loans
("ARMs"), the sale of fixed rate mortgage loans and the
acquisition of term funding. Historically, Coast's cost of funds
has closely matched the Eleventh District cost of funds index
("COFI"), with the result that increases in Coast's cost of funds
are accompanied by increases in interest rates on its COFI-based
loans. However, because of the inherent lag in the reset
mechanism of these loans, Coast's interest rate spreads generally
can be expected to increase during periods when COFI is declining
and to decrease during periods when COFI is rising. In an effort
to mitigate the lag in the reset mechanisms on COFI-based ARMs,
in 1992 Coast began offering ARM products tied to the six-month
London Interbank Offered Rate ("LIBOR") index. In 1992 and 1993,
a substantial portion of Coast's loan originations were such
LIBOR-based loans. This index generally responds more rapidly to
changes in prevailing market rates of interest and, as a result,
ARMs tied to LIBOR generally experience more rapid changes in
their interest rates than do ARMs tied to COFI.
With the increase in prevailing interest rates experienced
during 1994, consumer demand for LIBOR-based ARMs substantially
declined, and as a result, substantially all ARMs originated
during 1994 and 1995 have been COFI-based products. As of
September 30, 1995, the Company had $5.73 billion of loans and
$1.96 billion of MBS, which portfolios included $4.66 billion of
loans and $1.61 billion of MBS tied to COFI, and $355.4 million
of loans and $281.7 million of MBS tied to LIBOR. Changes in
interest rates also can affect the amount of loans originated by
an institution such as Coast, as well as the value of its loans
and other interest-earning assets and its ability to realize
gains on the sale of assets designated as held or available for
sale. Coast originated $875.4 million and $1.42 billion of ARMs
during the nine months ended September 30, 1995 and 1994,
respectively. At September 30, 1995, ARMs and adjustable rate MBS
totaled $5.54 billion and $1.92 billion, respectively, or a
combined 96% of the Company's total loans and MBS.
Coast's loan origination strategy focuses on residential
lending secured by one-to-four unit properties located in
California. Coast does not currently lend or anticipate lending
on other types of properties for the foreseeable future, except
to finance sales of foreclosed real estate or to facilitate the
assumption of loans as permitted by the respective mortgage
notes.
<PAGE>
COAST SAVINGS FINANCIAL, INC.
Management determines the appropriate portfolio designation
of loans receivable, MBS and investment securities at the time of
acquisition. If management has the intent and the Company has
the ability at the time of acquisition to hold the securities or
loans until maturity, they are carried at amortized historical
cost. Assets that are to be held for indefinite periods of time
and not necessarily held to maturity are classified as held or
available for sale. Such assets include those which management
intends to use as part of its asset/liability management
strategies and which may be sold in response to changes in
interest rates, prepayment experience and other factors. MBS and
investment securities identified as being available for sale are
carried at fair value, with any difference between fair value and
amortized historical cost, net of any income tax effect, being
shown as a separate component of stockholders' equity. Loans
identified as being held for sale are carried at the lower of
amortized historical cost or fair value, with any required
adjustment being reported in current operations.
Sales of mortgage assets held or available for sale function
primarily to fund new loan originations, manage interest rate
risk and add to the loan servicing portfolio. The marketability
of loans, loan participations and MBS, however, depends on the
purchasers' investment limitations, general market and
competitive conditions, mortgage loan demand and other factors.
During the nine months ended September 30, 1995, Coast sold
$15.1 million of fixed rate, single family mortgage loans from
its held for sale portfolio and $16.5 million from its MBS
available for sale portfolio.
Coast is a party to certain off-balance sheet financial
instruments entered into in the normal course of business in
order to manage interest rate risk. These financial instruments
include interest rate exchange agreements ("Swaps") and interest
rate cap contracts ("Caps"), both of which are considered to be
derivative financial instruments held for purposes other than
trading. Swaps generally involve the exchange of fixed and
floating rate interest payment obligations without the exchange
of the underlying notional principal amounts. In that the credit
exposure of these Swaps is limited to the potential default of
the Swap counterparty, the potential credit risks associated with
such Swaps are substantially less than the notional principal
amounts of the Swaps.
<PAGE>
COAST SAVINGS FINANCIAL, INC.
At September 30, 1995, Coast had $195 million of Swaps on
which Coast paid a floating rate and received a fixed rate of
interest. These Swaps were entered into during 1994 and have
remaining maturities ranging from six to nine months. The Swaps
are matched with specific certificates of deposit and effectively
convert the matched fixed rate deposits to floating rate
liabilities. These Swaps are comprised of $115 million based on
LIBOR and $80 million based on COFI. These Swaps provide a
discrete funding source which directly matches portions of
Coast's earning asset base (COFI- and LIBOR-based loans), and
result in a fixed spread between the interest rates paid on the
Swaps and the yield on the related portion of the loan portfolio.
The following table summarizes certain information regarding
Swaps outstanding at September 30, 1995.
<TABLE>
<CAPTION>
Notional Weighted Average
Type Amount Interest Rate Maturity Dates
(Dollars in Paid Received
thousands)
Pay floating/
<S> <C> <C> <C> <S>
receive fixed $195,000 5.55 % 5.35 % March 1996 to
June 1996
As described above, these Swaps were entered into for the
purpose of converting the interest rate characteristics of
certain liabilities; therefore, "hedge accounting" rules apply
and any net cost or benefit is reflected as a periodic yield
adjustment. The fair values of Swaps represent the estimated
amounts Coast would receive or pay to terminate the agreements,
taking into consideration current interest rates. As of September
30, 1995, the estimated fair value of the receivable side of the
Swaps (including interest receivable) was $1.6 million, and the
estimated fair value of the payable side of the Swaps (including
interest payable) was $.7 million.
The net effect of the Swaps, exclusive of interest on the
related deposits, was to record $.6 million and $6.5 million of
interest expense during the first nine months of 1995 and 1994,
respectively, which is included in interest expense on deposits
in the accompanying consolidated statement of operations. During
the first nine months of 1994, Coast held $250 million in Swaps
outstanding which matured in September and October of 1994.
These Swaps resulted in $7.5 million of interest expense for the
nine months ended September 30, 1994. Swaps were collateralized
by $4.9 million of MBS at September 30, 1995. <PAGE>
COAST SAVINGS FINANCIAL, INC.
Loan Portfolio and Off-balance Sheet Risk Elements and
Nonperforming Assets
Coast defines its nonperforming assets to include (i) loans
on which it has ceased to accrue interest ("Nonaccrual Loans"),
(ii) foreclosed real estate owned, and (iii) those loans whose
terms have been modified such that the interest rates charged to
the borrowers have been reduced to levels below the original
contract rates and below market rates of interest at both the
time of modification and the reporting date ("Modified Loans").
Following is a table which sets forth the components of
nonperforming assets at the dates indicated.
</TABLE>
<TABLE>
<CAPTION>
September 30,1995 December 31,1994
(Dollars in thousands)
Percent Percent
Balance of Total Balance of Total
Nonaccrual Loans:
<S> <C> <C> <C> <C>
Single family residential $ 44,246 37% $ 53,421 38%
Multifamily residential 25,156 21 30,145 21
Commercial and other 11,125 9 13,147 9
80,527 67 96,713 68
Foreclosed real estate
owned:
Single family residential 13,609 11 21,295 15
Multifamily residential 5,044 4 7,443 5
Commercial and other 20,759 17 15,430 11
39,412 32 44,168 31
Modified Loans:
Commercial and other 1,020 1 1,020 1
Total nonperforming
assets $120,959 100% $141,901 100%
</TABLE>
<PAGE>
COAST SAVINGS FINANCIAL, INC.
At September 30, 1995, California nonperforming assets
represented 97% of total nonperforming assets, and California
residential nonperforming assets represented 75% of total
California nonperforming assets.
Following is a table which sets forth the components of
nonperforming assets at the dates indicated.
<TABLE>
<CAPTION>
Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
1995 1995 1995 1994 1994 1994 1994
(Dollars in millions)
<S> <C> <C> <C> <C> <C> <C> <C>
Nonaccrual Loans $ 81 $ 90 $ 82 $ 97 $ 134 $ 137 $ 134
Foreclosed real
estate owned 39 39 51 44 74 77 94
Modified Loans 1 1 1 1 1 1 1
Total
nonperforming
assets $ 121 $ 130 $ 134 $ 142 $ 209 $ 215 $ 229
Total assets $8,440 $8,585 $8,540 $8,197 $8,128 $8,030 $8,004
Ratio of total
nonperforming
assets to
total assets 1.43% 1.52% 1.57% 1.73% 2.57% 2.68% 2.86%
</TABLE>
As of September 30, 1995, Coast's ratios of Nonaccrual Loans
to total loans and nonperforming assets to total assets were
1.40% and 1.43%, respectively, which had improved from 1.67% and
1.73%, respectively, as of December 31, 1994. The improvement in
these ratios during the nine months ended September 30, 1995,
generally reflects Coast's continued emphasis on reducing
nonperforming assets and a slowly improving economy in
California. As of September 30, 1995, Coast's ratios of the
general valuation allowance (the "GVA," described in more detail
below) to Nonaccrual Loans and to total loans were 101.8% and
1.43%, respectively, and at December 31, 1994, were 88% and
1.47%, respectively. Management is committed to attaining
continued progress in reducing overall balance sheet risk,
nonperforming assets, and the resulting nonperforming asset
ratios; however, because the incidence of delinquencies and
foreclosures is influenced by many variables, including the
economic climate in Coast's service areas, management is unable
<PAGE>
COAST SAVINGS FINANCIAL, INC.
to predict the timing or amount of any further improvement in
nonperforming assets. Management believes the historical progress
in reducing nonperforming assets is generally attributable to a
slowly improving economy in California, stabilizing property
values in Coast's service areas and continuation of management's
policy of aggressively resolving delinquencies and disposing of
foreclosed real estate owned. Despite the apparently improving
economic outlook within California, there can be no assurance
that the economy will continue to improve or that Coast will not
experience increased levels of nonperforming assets.
In May 1993, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards No.
114, Accounting by Creditors for Impairment of a Loan ("SFAS
114"). Under SFAS 114, a loan is impaired when it is probable
that a creditor will be unable to collect all amounts due
according to the contractual terms of the loan agreement. Loans
are evaluated for impairment as part of Coast's normal internal
asset review process. If a loan is determined to be impaired, a
writedown is recorded based upon the difference between Coast's
investment in the loan and the fair value of the loan's
underlying collateral. At September 30, 1995, Coast had a gross
investment in impaired loans of $152.8 million, including $116.8
million for which writedowns of $24.3 million had been recorded
and $36.0 million for which no writedowns were required. During
the nine months ended September 30, 1995, Coast's average
investment in impaired loans was $103.5 million and income
recorded on impaired loans totaled $6.9 million, substantially
all of which was recorded utilizing the cash-basis method of
accounting. Payments received on impaired loans which are
performing under their contractual terms are allocated to
principal and interest in accordance with the terms of the loans.
Impaired loans totalling $36.3 million were not performing in
accordance with their contractual terms at September 30, 1995 and
have been included in Nonaccrual loans at that date.
At September 30, 1995, Coast had $31.6 million of troubled
debt restructurings which were modified prior to the
implementation of SFAS 114 and which were performing in
accordance with their modified terms. Coast accounts for such
loans under the provisions of Statement of Financial Accounting
Standards No. 15 entitled Accounting by Debtors and Creditors for
Troubled Debt Restructurings. Interest income from such loans for
the nine months ended September 30, 1995, was $1.9 million, and
would have been $2.5 million under the loans' original
contractual terms.
<PAGE>
COAST SAVINGS FINANCIAL, INC.
At September 30, 1995, Coast had letters of credit
outstanding aggregating $386.9 million. The letters of credit
were issued primarily in 1984 and 1985 to enhance the rating of
$394.6 million of housing revenue bonds issued to finance the
construction of multifamily residential projects. The risks to
Coast under the letters of credit are generally similar to those
of permanent financing of multifamily residential properties. At
September 30, 1995, the loans payable to the housing revenue bond
trustee associated with two of the letters of credit were in
default. During October 1995, Coast foreclosed on one of the
properties which increased nonperforming assets by approximately
$4 million. In regard to the other default, Coast has
successfully installed a court-appointed receiver to manage the
property. In the event the default is not remedied by the
borrowing entity and Coast forecloses on the property, it would
become a component of Coast's foreclosed real estate owned and
would increase nonperforming assets by approximately $32 million.
If foreclosure on both properties had occurred during the third
quarter of 1995, Coast's nonperforming assets at September 30,
1995, would have been increased by approximately $36 million.
Coast maintains a GVA to absorb possible future losses that
may be realized on its loan portfolio and off-balance sheet
items. The GVA is periodically reviewed and adjusted based upon
a number of factors, including asset classifications, economic
trends, industry experience, industry and geographic
concentrations, estimated collateral values, management's
assessment of credit risk inherent in the portfolio, delinquency
migration analysis, historical loss experience, ratio analysis
and Coast's underwriting practices. As a result of weaknesses in
certain real estate markets, including California, increases in
the GVA may be required in future periods. In addition, the OTS,
as an integral part of the examination process, periodically
reviews Coast's GVA and may require Coast to increase the GVA
based on its judgment of the information available at the time of
such examination.
<PAGE>
COAST SAVINGS FINANCIAL, INC.
At September 30, 1995, the GVA totaled $82 million and
included $65 million allocated to loans and $17 million
attributable to off-balance sheet items. The $3 million reduction
in the GVA from $85 million at December 31, 1994, to $82 million
at September 30, 1995, reflects the sale of CBCC and accompanying
elimination of credit exposure on $135.8 million of asset-based
loans. The portion of the GVA attributable to off-balance sheet
items is included in other liabilities in the accompanying
consolidated statement of financial condition, and relates to the
letters of credit discussed above and to loans sold with
recourse. The transfers between on-balance sheet portfolio
sectors and off-balance sheet items were based on a number of
considerations including the composition and credit performance
of the on and off-balance sheet credit extensions as of September
30, 1995. The following table sets forth the amount, allocation
and activity in the GVA for the nine months ended September 30,
1995.
<TABLE>
<CAPTION>
Loans
Commercial Off-
Residential Real Estate Balance
Real Estate Mortgage Sheet
Mortgage and Other Items Total
(In millions)
GVA allocation at
December 31,
<S> <C> <C> <C> <C>
1994 $ 49 $28 $ 8 $ 85
Additions charged
to operations 30 - - 30
Recoveries 3 2 - 5
Losses charged (30) (8) - (38)
Transfers (4) (5) 9 -
GVA allocation at
September 30,
1995 $ 48 $17 $17 $ 82
</TABLE>
<PAGE>
COAST SAVINGS FINANCIAL, INC.
Capital Resources and Liquidity
OTS regulations presently require a savings association to
maintain, on a monthly basis, an average daily balance of liquid
assets (including cash, certain time deposits, bankers'
acceptances, specified United States government, state or federal
agency obligations, and certain other short-term investment
securities) equal to at least 5% of the average net withdrawable
accounts and short-term borrowings during the preceding calendar
month. This liquidity requirement may be changed from time to
time by the OTS to any amount within the range of 4% to 10% of
such accounts and borrowings, depending upon economic conditions
and the deposit flows of savings associations. Federal
regulations also require each savings association to maintain, on
a monthly basis, 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 and short-term borrowings during the
preceding calendar month. Monetary penalties may be imposed for
failure to meet these liquidity requirements. Coast's liquidity
and short-term liquidity ratios for the calculation period ended
September 30, 1995, were 5.22% and 4.58%, respectively, each of
which exceeded the applicable requirements.
Principal repayments on and sales of loans and MBS represent
a primary source of funds for Coast. For the nine months ended
September 30, 1995 and 1994, principal repayments on loans and
MBS amounted to $458.6 million and $601.0 million, respectively,
and sales proceeds totaled $31.6 million and $239.4 million,
respectively, for the same periods. In addition, proceeds from
the sale of CBCC on September 30, 1995, were $146.0 million. (See
"General", above, for further discussion of sale of subsidiary.)
A primary use of funds was the origination of loans (net of
refinances of loans in Coast's portfolios) of $794.4 million and
$1.24 billion for these two periods, respectively.
At September 30, 1995, the total of approved commitments to
originate loans amounted to $114.4 million, and there were $.8
million of commitments to sell loans. There were no commitments
to sell MBS or investment securities and there were no
commitments to purchase loans, MBS or investment securities. At
September 30, 1995, outstanding letters of credit totaled
$386.9 million. Scheduled repayments of FHLB of San Francisco
advances for the twelve months ending September 30, 1996, totaled
$518.2 million.
<PAGE>
COAST SAVINGS FINANCIAL, INC.
For the nine months ended September 30, 1995 and 1994, Coast
experienced net increases in deposits of $299.4 million and $11.4
million, respectively.
Other potential sources of funds available to Coast include
securities sold under agreements to repurchase, a line of credit
with the FHLB of San Francisco and direct access to borrowings
from the Federal Reserve System. At September 30, 1995, the
amount of additional credit available from the FHLB of San
Francisco was approximately $1.31 billion. In addition, the
Company and Coast have access to the capital markets for issuing
debt or equity securities; however, access can be limited from
time to time by various factors including market conditions,
Coast's credit ratings and general economic conditions.
The OTS has identified three tests to determine compliance
with minimum capital requirements. First, the tangible capital
requirement mandates that a savings association's stockholder's
equity less certain intangible assets must be at least 1.5% of
adjusted total assets as defined in the regulation. Second, the
core capital requirement currently mandates that a savings
association's core capital (tangible capital) must be at least 3%
of adjusted total assets as defined in the regulation. Third,
the risk-based capital requirement, which assigns specific risk
weightings to assets and off-balance sheet items, presently
mandates that a savings association's core capital plus
supplementary capital as defined must be at least 8% of risk-
weighted assets as defined in the regulation.
The following table reflects, in both dollars and ratios,
Coast's regulatory capital positions as of September 30, 1995,
the minimum requirements at that date, and the amounts by which
such capital exceeded the required amounts.
<TABLE>
<CAPTION>
Minimum
Actual Requirement Excess
Amount Ratio Amount Ratio Amount Ratio
(Dollars in millions)
<S> <C> <C> <C> <C> <C> <C>
Risk-based $554 10.51% $422 8.00% $132 2.51%
Core 435 5.18 252 3.00 183 2.18
Tangible 435 5.18 126 1.50 309 3.68
<PAGE>
COAST SAVINGS FINANCIAL, INC.
The Federal Deposit Insurance Corporation Improvement Act of
1991 ("FDICIA") contains "prompt corrective action" provisions
pursuant to which insured depository institutions are to be
classified into one of five categories based primarily upon
capital adequacy, ranging from "well capitalized" to "critically
undercapitalized." The OTS regulations implementing these
provisions define the five capital categories as follows: (i) a
savings institution is "well capitalized" if it has a total risk-
based capital ratio of 10% or greater, has a Tier 1 risk-based
capital ratio (Tier 1 capital to total assets) of 6% or greater,
has a core capital ratio of 5% or greater and is not subject to
any written capital order or directive to meet and maintain a
specific capital level or any capital measure; (ii) a savings
institution is "adequately capitalized" if it has a total risk-
based capital ratio of 8% or greater, has a Tier 1 risk-based
capital ratio of 4% or greater and has a core capital ratio of 4%
or greater (3% for certain highly rated institutions); (iii) a
savings institution is "undercapitalized" if it has a total risk-
based capital ratio of less than 8% or has either a Tier 1 risk-
based or a core capital ratio that is less than 4%; (iv) a
savings institution is "significantly undercapitalized" if it has
a total risk-based capital ratio that is less than 6%, or has
either a Tier 1 risk-based or a core capital ratio that is less
than 3%; and (v) a savings institution is "critically
undercapitalized" if its "tangible equity" (defined in the prompt
corrective action regulations to mean core capital plus
cumulative perpetual preferred stock) is equal to or less than
2% of its total assets. The OTS also has authority, after an
opportunity for a hearing, to downgrade a savings institution
from "well capitalized" to "adequately capitalized," or to
subject an "adequately capitalized" or "undercapitalized" savings
institution to the supervisory actions applicable to the next
lower category, for supervisory concerns. At September 30, 1995,
Coast's regulatory capital was in excess of the thresholds
necessary to be classified as a "well capitalized" institution.
On April 10, 1987, Coast acquired substantially all of the
assets and liabilities of Central Savings and Loan Association
from the Federal Savings and Loan Insurance Corporation ("FSLIC")
in a supervisory-assisted transaction. As part of the
transaction, Coast entered into a contractual agreement with the
FSLIC under which the FSLIC made a cash contribution to Coast of
approximately $299 million which, pursuant to the agreement, was
to be reflected as a permanent addition to Coast's regulatory
capital. The Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA") eliminated the FSLIC and
replaced it (and the Federal Home Loan Bank Board) for
<PAGE>
COAST SAVINGS FINANCIAL, INC.
supervisory and regulatory purposes with the OTS. The OTS has
taken the position that the FSLIC contribution should be
classified as supervisory goodwill, thereby excluding it from
regulatory capital. In June 1992, Coast filed an action in the
United States Court of Federal Claims seeking monetary damages
for breach of the contractual agreement with the FSLIC. In three
cases with similar issues the Court of Federal Claims ruled in
favor of the plaintiff thrift institutions on the issue of
liability of the federal government for breach of contract. The
Court of Appeals for the Federal Circuit, sitting en banc,
recently affirmed the Court of Federal Claims ruling in these
cases. The federal government has announced that it will seek a
review of the Court of Appeals decision by the United States
Supreme Court. While Coast contends that its damages
substantially exceed the $299 million capital contribution
excluded from regulatory capital, no prediction can be made as to
whether Coast's lawsuit will be successful, or if successful,
what damages might be awarded to Coast.
On August 8, 1995, the FDIC substantially reduced the deposit
insurance premium assessment rate paid by commercial banks and
other institutions whose deposits are insured by the Bank
Insurance Fund (the "BIF") but did not reduce the rates for
savings institutions, such as Coast, whose deposits are insured
by the FDIC's Savings Association Insurance Fund (the "SAIF").
The current deposit rate premium disparity between BIF-
insured institutions and SAIF-insured institutions resulting from
the recently implemented BIF premium reduction places SAIF-
insured institutions at a competitive disadvantage due to higher
premium costs and could worsen the financial condition of the
SAIF by leading to a shrinkage in its deposit base. The separate
bills passed by the United States House of Representatives and by
the Senate as part of the budget reconciliation process each
contain provisions that would require SAIF-insured institutions
to pay a one-time special assessment on deposits to increase
SAIF's reserves and provide for pro rata sharing by all federally
insured institutions of the obligation, now borne solely by SAIF-
insured institutions, to pay the interest on bonds that were
issued to obtain the government funding required to resolve
failed savings institutions. The House bill and other proposals
would also enact further changes, including merger of the SAIF
and the BIF, elimination of the separate federal thrift charter
and other provisions intended to combine the savings and banking
industries. Such provisions raise numerous industry-wide issues,
such as the amount and timing of any special assessment<PAGE>
COAST SAVINGS FINANCIAL, INC.
and whether the investment and operating powers of thrifts and
thrift holding companies and current capital rules applicable to
such entities will be conformed to those applicable to banks and
bank holding companies. The Company cannot predict whether or in
what form any of these proposals will be adopted or the effects
that such developments would have on the Company's operations.
<PAGE>
COAST SAVINGS FINANCIAL, INC.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
For information regarding legal proceedings involving the
Company, see the Annual Report and the Company's Report on Form
10-Q for the quarters ended March 31, 1995 and June 30, 1995.
Items 2 through 5 are not applicable or the answers are negative.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits Required
Exhibit
Number Exhibit
11.1 Computation of Earnings Per Share
Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for
which this report is filed.
<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.
COAST SAVINGS FINANCIAL, INC.
(Registrant)
Date: November 10, 1995 /s/ Ray Martin
Ray Martin
Chairman of the Board and
Chief Executive Officer
(Authorized Officer)
Date: November 10, 1995 /s/ James F. Barritt
James F. Barritt
Senior Executive Vice
President and
Chief Financial Officer
(Principal Financial Officer)
<PAGE>
EXHIBIT INDEX
Sequentially
Exhibit No. Description Numbered Page
11.1 Computation Of Earnings Per Share
<PAGE>
Exhibit 11.1
COAST SAVINGS FINANCIAL, INC.
COMPUTATION OF EARNINGS PER SHARE
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended September 30,
1995 1994
Fully Fully
Primary Diluted Primary Diluted
(In thousands except per share amounts)
Net earnings applicable to
common stock and common
<S> <C> <C> <C> <C>
stock equivalents ("CSEs") $14,762 $14,762 $ 2,292 $ 2,292
Common shares outstanding 18,520 18,520 18,457 18,457
CSEs on stock options 578 608 447 447
Weighted average shares 19,098 19,128 18,904 18,904
Net earnings $ .77 $ .77 $ .12 $ .12
Nine Months Ended September 30,
1995 1994
Fully Fully
Primary Diluted Primary Diluted
(In thousands except per share amounts)
Net earnings (loss) applicable
to common stock and CSEs $23,873 $23,873 $(2,546) $(2,546)
Common shares outstanding 18,491 18,491 18,457 18,457
CSEs on stock options 508 608 - -
Weighted average shares 18,999 19,099 18,457 18,457
Net earnings (loss) $1.26 $1.25 $(.14) $(.14)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000841074
<NAME> COAST SAVINGS FINANCIAL INC
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 260,017
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 4,663
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 74,701
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 5,733,852
<ALLOWANCE> 0
<TOTAL-ASSETS> 8,440,406
<DEPOSITS> 6,179,215
<SHORT-TERM> 1,463,765
<LIABILITIES-OTHER> 113,873
<LONG-TERM> 279,072
<COMMON> 185
0
0
<OTHER-SE> 404,481
<TOTAL-LIABILITIES-AND-EQUITY> 8,440,406
<INTEREST-LOAN> 353,884
<INTEREST-INVEST> 17,768
<INTEREST-OTHER> 86,678
<INTEREST-TOTAL> 458,330
<INTEREST-DEPOSIT> 208,338
<INTEREST-EXPENSE> 101,080
<INTEREST-INCOME-NET> 148,912
<LOAN-LOSSES> 30,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 126,658
<INCOME-PRETAX> 36,755
<INCOME-PRE-EXTRAORDINARY> 23,873
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,873
<EPS-PRIMARY> 1.26
<EPS-DILUTED> 1.25
<YIELD-ACTUAL> 0
<LOANS-NON> 80,527
<LOANS-PAST> 0
<LOANS-TROUBLED> 31,600
<LOANS-PROBLEM> 120,959
<ALLOWANCE-OPEN> 85,000
<CHARGE-OFFS> 8,000
<RECOVERIES> 5,000
<ALLOWANCE-CLOSE> 82,000
<ALLOWANCE-DOMESTIC> 82,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
