<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
--------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------- -----------------
Commission File Number: 0-18126
-------
FINANCIAL BANCORP, INC.
-----------------------
(Exact name of registrant as specified in its charter)
Delaware 06-1391814
-------- ----------
(State or other jurisdiction of (I.R.S. Employer identification No.)
incorporation or organization)
42-25 Queens Boulevard, Long Island City, NY 11104
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
(718) 729-5002
--------------
(Registrant's telephone number, including area code)
Not Applicable
- - -------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed last report)
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. (1) X Yes No
--- ---
(2) X Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
There were 1,838,365 shares of the Registrant's common stock outstanding
as of May 13, 1996.
------------
<PAGE> 2
FINANCIAL BANCORP, INC.
Form 10-Q
Index
Part I - Financial Information Page
- - ------------------------------ ----
Item 1. Financial Statements
Consolidated Statements of Financial Condition
as of March 31, 1996 (Unaudited) and September 30, 1995 3
Consolidated Statements of Income for the
Three and Six Months ended March 31, 1996 and 1995
(Unaudited) 4
Consolidated Statement of Changes in
Stockholders' Equity for the Six Months
ended March 31, 1996 (Unaudited) 5
Consolidated Statements of Cash Flows for the
Six Months ended March 31, 1996 and 1995
Unaudited) 6-7
Notes to Consolidated Financial Statements 8-12
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13-19
Part II - Other Information
- - ---------------------------
Item 1. Legal Proceedings 20
Item 2. Changes in Securities
Not applicable. 20
Item 3. Defaults Upon Senior Securities
Not applicable. 20
Item 4. Submission of Matters to a Vote of Security
Holders 20-21
Item 5. Other Information 21
Item 6. Reports on Form 8-K
Not applicable. 21
Signature Page 22
Exhibits
Exhibit 11: Computation of per share earnings
Exhibit 27: Financial Data Schedule
<PAGE> 3
<TABLE>
<CAPTION>
FINANCIAL BANCORP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
Assets MARCH 31, SEPTEMBER 30,
- - ------ 1996 1995
-------------- ---------------
<S> <C> <C>
Cash and amounts due from
depository institutions $2,464,044 $2,395,316
Federal funds sold and securities
purchased under agreements to resell 3,900,000 5,458,000
-------------- ---------------
Total cash and cash equivalents 6,364,044 7,853,316
Investment securities available for sale 5,709,938 0
Investment securities held to maturity,
net; estimated fair value of $45,499,000
and $38,857,000 at March 31, 1996 and
September 30, 1995, respectively 46,074,979 38,935,960
Mortgage-backed securities held to
maturity, net; estimated fair value
of $56,134,000 and $62,544,000 at
March 31, 1996 and September 30,
1995, respectively 55,820,765 62,008,234
Loans receivable, net 126,405,296 110,061,579
Real estate owned, net 463,698 591,027
Investments in real estate, net 3,721,370 3,531,166
Premises and equipment, net 2,502,014 1,862,127
Federal Home Loan Bank of New York
stock, at cost 1,675,800 1,423,000
Accrued interest receivable, net 1,986,231 1,575,020
Other assets 1,148,584 981,927
------------- ---------------
Total assets $251,872,719 $228,823,356
============= ===============
Liabilities and stockholders' equity
- - ------------------------------------
Deposits $193,988,187 $186,491,588
Advance payments by borrowers for
taxes and insurance 1,099,645 954,080
Advances from Federal Home Loan
Bank of New York 10,375,000 5,375,000
Securities sold under agreements
to repurchase 13,100,000 7,126,250
Treasury tax and loan account and
other short term borrowings 4,867,356 0
Other liabilities 1,607,136 1,697,410
------------- ---------------
Total liabilities 225,037,324 201,644,328
------------- ---------------
Stockholders' equity
Preferred stock, $0.01 par value,
2,500,000 shares authorized;
none issued
Common stock, $0.01 par value,
6,000,000 shares authorized;
2,185,000 shares issued, 1,873,365
and 1,971,963 shares outstanding
at March 31, 1996 and September 30,
1995, respectively 21,850 21,850
Additional paid-in capital 20,155,454 20,130,021
Retained earnings - substantially
restricted 12,299,655 11,544,464
Common stock acquried by Employee
Stock Ownership Plan (ESOP) (1,254,350) (1,335,278)
Common stock acquired by Recognition
& Retention Plan (RRP) (522,354) (590,487)
Unrealized gains on investment
securities available for sale,
net of income taxes 12,868 0
Treasury stock, at cost; 311,635
and 213,037 shares at March 31,
1996 and at September 30, 1995,
respectively (3,877,728) (2,591,542)
------------- ---------------
Total stockholders' equity 26,835,395 27,179,028
------------- ---------------
Total liabilities and
stockholders' equity $251,872,719 $228,823,356
============= ===============
See accompanying notes to consolidated financial statements
</TABLE>
-3-
<PAGE> 4
<TABLE>
<CAPTION>
FINANCIAL BANCORP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------ -------------------------------
MARCH 31, MARCH 31,
------------------------ -------------------------------
1996 1995 1996 1995
----------- ----------- -------------------------------
<S> <C> <C> <C> <C>
Interest income:
Loans $2,500,456 $1,773,317 $4,839,087 $3,471,072
Mortgage-backed securities 1,014,461 1,055,872 2,084,692 1,973,719
Investments 870,042 482,360 1,661,998 819,194
Federal funds sold and securities purchased
under agreements to resell 8,232 76,634 19,235 102,590
---------- ---------- ---------- ----------
Total interest income 4,393,191 3,388,183 8,605,012 6,366,575
---------- ---------- ---------- ----------
Interest expense:
Deposits 1,881,737 1,425,381 3,790,913 2,493,675
Advances and other borrowed money 288,199 16,637 449,852 27,837
---------- ---------- ---------- ----------
Total interest expense 2,169,936 1,442,018 4,240,756 2,521,512
Net interest income 2,223,255 1,946,165 4,364,247 3,845,063
Provision for loan losses 76,000 35,792 130,000 65,792
---------- ---------- ---------- ----------
Net interest income after provision for loan losses 2,147,255 1,910,373 4,494,247 3,910,855
---------- ---------- ---------- ----------
Non-interest income:
Fees and service charges 83,772 63,773 171,844 127,570
Gain (Loss) on investment securities 20,020 0 20,020 (3,984)
(Loss) from real estate operations (19,438) (23,074) (42,048) (76,074)
Miscellaneous 7,590 4,113 19,288 9,517
---------- ---------- ---------- ----------
Total non-interest income 91,944 44,812 169,104 57,029
---------- ---------- ---------- ----------
Non-interest expenses:
Salaries and employee benefits 664,677 675,166 1,311,182 1,315,496
Net occupancy expense of premises 118,853 134,685 231,333 251,382
Equipment 138,760 124,154 276,410 240,169
Advertising 20,018 45,808 45,067 76,040
Loss from real estate owned 16,731 18,771 45,947 25,252
Federal insurance premium 98,636 97,486 187,781 185,400
Miscellaneous 295,607 287,852 557,017 554,927
---------- ---------- ---------- ----------
Total non-interest expenses 1,353,282 1,383,922 2,654,737 2,648,666
---------- ---------- ---------- ----------
Income before income taxes 885,917 571,263 1,748,614 1,187,634
Income taxes 391,316 240,542 770,255 499,700
---------- ---------- ---------- ----------
Net income $494,601 $330,721 $978,359 $687,934
========== ========== ========== ==========
Net income per common share & common stock equivalents $0.27 $0.16 $0.53 $0.34
========== ========== ========== ==========
Weighted average number of common shares & common
stock equivalents 1,816,200 2,041,900 1,847,300 2,039,400
========== ========== ========== ==========
See accompanying notes to consolidated financial statements
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
FINANCIAL BANCORP. INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
Unrealized
Gain
on Investment
Retained Common Common Securities
Additional Earnings - Stock Stock Available for
Common Paid-in Substantially Acquired Acquired Sale Net of Treasury
Stock Capital Restricted By ESOP By RRP Income Taxes Stock Total
------ ------- ------------- -------- -------- ------------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1995 $21,850 $20,130,021 $11,544,464 ($1,335,278) ($590,487) $0 ($2,591,542) $27,179,028
Net Income for the six months
ended March 31, 1996 - - 978,359 - - - - 978,359
Reduction of ESOP debt - 25,433 - 80,928 - - - 106,361
Amortization of cost of
common stock acquired
by the RRP - - - - 68,133 - - $68,133
Unrealized gains on Investment
Securities available for sale
net of income taxes - - - - - 12,868 - $12,868
Purchase of 98,598 shares
of treasury stock - - - - - - (1,286,186) ($1,286,186)
Dividends paid - - (223,168) - - - - (223,168)
------- ----------- ----------- ---------- -------- ------- ---------- -----------
Balance at March 31, 1996 $21,850 $20,155,454 $12,299,655 ($1,254,350) ($522,354) $12,868 ($3,877,728) $26,835,395
======= =========== =========== ========== ======== ======= ========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
-5-
<PAGE> 6
<TABLE>
<CAPTION>
FINANCIAL BANCORP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
--------------------------------
MARCH 31,
--------------------------------
1996 1995
------------ ----------
<S> <C> <C>
Cash flow from operating activities:
Net income $978,359 $687,934
Adjustments to reconcile net income to net cash
provided by operating activities
Loss on write-down of investment securities 0 3,984
Loss (Gain) on sale of real estate owned (5,837) (6,611)
(Gain) on sale of securities available for sale (20,020) 0
Net amortization of premiums and accretion
of discounts on investment securities 7,010 10,883
Net amortization of premiums and accretion
of discounts on mortgage-backed securities 1,368 (7,656)
Accretion of deferred loan fees and discounts (34,565) (9,850)
Depreciation and amortization of premises
and equipment 150,565 153,152
Provision for loan losses 130,000 65,792
Provision for losses on real estate owned 8,436 5,021
Cost of ESOP and RRP 174,494 127,175
Deferred income taxes 18,827 --
(Increase) in accrued interest receivable, net (411,211) (446,194)
(Increase) decrease in refundable income taxes (134,452) 27,631
(Increase) decrease in other assets (61,142) (152,223)
(Decrease) increase in other liabilities (90,274) 812,488
------------ ----------
Net cash provided by operating activities 711,558 1,271,526
------------ ----------
Cash flows from investing activities:
Purchases of investment securities available for sale (5,686,719) 0
Purchases of investment securities (30,566,875) (16,413,729)
Proceeds from sales of investment securities
available for sale 2,010,625 0
Proceeds from maturities of investment securities 21,430,000 0
Purchases of mortgage-backed securities 0 (19,294,196)
Purchases of mortgage loans (7,960,066) 0
Proceeds from principal repayments on
mortgage-backed securities 6,186,101 2,871,178
Loan originations, net of repayments (8,377,946) (7,204,639)
Additions to premises and equipment (980,656) (356,737)
Proceeds from sale of and insurance recoveries
on real estate owned 25,066 442,131
Capitalized expenses on real estate owned (1,476) (49,325)
Purchase of FHLB of NY stock (252,800) (155,100)
Net cash received on acquisition of branch 0 14,678,227
Net (increase) in investments in real estate 0 (1,148,049)
------------- ------------
Net cash provided by investing activities (24,174,746) (26,630,239)
------------- ------------
See accompanying notes to consolidated financial statements.
</TABLE>
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<PAGE> 7
<TABLE>
<CAPTION>
FINANCIAL BANCORP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
SIX MONTHS ENDED
---------------------------
MARCH 31,
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from financing activities:
Net increase in deposits $ 7,496,599 $ 22,723,119
Proceeds from FHLB of NY advances 9,200,000 0
Net (decrease) in short-term borrowings from FHLB of NY (4,200,000) 0
Proceeds from reverse repurchase agreements 18,100,000 0
Repayments of reverse repurchase agreements (12,126,250) 0
Net increase in other short-term borrowings 4,867,356 0
Conversion expenses 0 (43,099)
Increase in advance payments by
borrowers for taxes and insurance 145,565 (86,709)
Dividends paid (223,168) (109,250)
Purchase of RRP shares 0 (681,331)
Purchase of treasury stock (1,286,186) (587,125)
------------ ------------
Net cash provided by financing activities 21,973,916 21,215,605
------------ ------------
Net increase (decrease) in cash and cash equivalents (1,489,272) (4,143,108)
Cash and cash equivalents - beginning 7,853,316 14,479,514
------------ ------------
Cash and cash equivalents - ending $ 6,364,044 $ 10,336,406
============ ============
Supplemental schedule of noncash investing and
financing activities:
Loans transferred to real estate owned $ 47,360 $ 432,850
============ ============
Loans to facilitate sale of real estate owned $ 148,500 $ 0
============ ============
Property transferred to investment in real estate $ 195,724 $ 0
============ ============
Transfer to investment securities available for sale
Investment securities $ 1,989,839 $ 0
============ ============
Unrealized gain on investment securities available for sale $ 22,978 $ 0
Deferred income taxes (10,110) 0
------------ ------------
$ 12,868 $ 0
============ ============
Supplemental disclosures of cash flow information:
Cash paid (net of refunds received) during the year for:
Federal, state and city income taxes 888,000 498,800
============ ============
Interest on deposits and borrowed funds $ 4,099,891 $ 2,541,101
============ ============
Assets acquired in connection with acquisition of branch:
Cash and cash equivalents - $ 14,678,227
Other assets - 8,539
------------ ------------
- $ 14,686,766
============ ============
Liabitlities assigned in connection with acquisition of branch:
Deposits - $ 14,813,335
============ ============
Excess of cost over assets acquired - $ 126,569
============ ============
See Accompanying notes to consolidated financial statements.
</TABLE>
-7-
<PAGE> 8
FINANCIAL BANCORP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include the
accounts of Financial Bancorp, Inc. (the "Company"), its wholly owned
subsidiaries, 842 Manhattan Avenue Corp. which manages real property, and
Financial Federal Savings Bank (the "Bank") a federally chartered stock
association, and the Bank's wholly owned subsidiaries, Finfed Development Corp.,
which participates in a joint venture for the development of land and sale of
lots, Finfed Funding Ltd., which serves as a conduit for funding investments in
Finfed Development Corp., and F.S. Agency Inc., which is engaged in the sale of
annuities. All significant intercompany accounts and transactions have been
eliminated in consolidation.
The unaudited consolidated financial statements included herein reflect all
normal recurring adjustments which are, in the opinion of management, necessary
for a fair presentation of the results of operations for the interim period
presented. The results of operations for the three and six months ended March
31, 1996 are not necessarily indicative of results that may be expected for the
entire fiscal year.
ACCOUNTING STANDARDS
In May 1993, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 115 ("SFAS 115"), "Accounting for Certain
Investments in Debt and Equity Securities" which is effective for fiscal years
beginning after December 15, 1993. SFAS 115 establishes standards of financial
accounting and reporting for investments in equity securities that have readily
determinable fair values and for all investments in debt securities. Those
investments are required to be classified into one of three categories: held to
maturity, available for sale, or trading. Pursuant to SFAS 115, investments in
debt securities that the enterprise has the positive intent and ability to hold
to maturity are classified as held to maturity securities and reported at
amortized cost. Debt and equity Securities that are bought and held principally
for the purpose of selling them in the near term are classified as trading
securities and are reported at fair value, with unrealized gains and losses
included in earnings. Debt and equity securities not classified as trading
securities nor as held-to-maturity securities shall be classified as available
for sale securities and reported at fair value, with unrealized holding gains or
losses reported in a separate component of stockholders' equity. The initial
application of SFAS 115, effective October 1, 1994 did not result in any
reclassification of securities to the available for sale category, as the Bank
elected to maintain its original intent of holding its investments and
mortgage-backed securities until maturity.
As permitted by the FASB's "A Guide to Implementation of SFAS 115 on Accounting
for Certain Investments in Debt and Equity Securities", the Bank reassessed the
classification of its held to maturity portfolio during the quarter ended
December 31, 1995. As a result of such reassessment, the Bank transferred
investment securities with a book value of $1,989,839 and a fair value of
$2,005,630 from held to maturity to available for sale. In connection with such
transfer, the unrecognized gain, net of deferred income taxes, of $ 8,843 was
recognized and classified as a separate component of stockholders' equity.
-8-
<PAGE> 9
In May 1993, the FASB issued Statement of Financial Accounting Standards No.
114, ("SFAS 114"), "Accounting by Creditors for Impairment of a Loan. "SFAS 114
generally would require all creditors to account for impaired loans, except
those loans that are accounted for at fair value or at the lower of cost or fair
value, at the present value of the expected future cash flows discounted at the
loan's effective interest rate. SFAS 114 also provides that in-substance
foreclosed loans should not be included in real estate owned for financial
reporting purposes, but rather should be included in the loan portfolio. SFAS
114 is effective for fiscal years beginning after December 15, 1994, and earlier
application is encouraged. In October 1994, the FASB amended certain provisions
of SFAS 114 via the issuance of Statement of Financial Accounting Standards No.
118 ("SFAS 118"), "Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures." SFAS 118 amends SFAS 114 by eliminating provisions
describing how a creditor should report income on an impaired loan and
increasing disclosure requirements as to information on recorded investments in
certain impaired loans and how a creditor recognizes related interest income.
The effective date of SFAS 118 is the same as for SFAS 114. SFAS 114, as amended
by SFAS 118, was adopted effective October 1, 1995. Such adoption did not have a
material adverse effect on the Company's consolidated financial condition or
results of operations.
Certain amounts for the three and six months ended March 31, 1995 have been
reclassified to conform with the current period's presentation.
IMPACT OF NEW ACCOUNTING STANDARDS
In March 1995, the FASB issued Statement of Financial Accounting Standards No.
121 ("SFAS 121"), "Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed of." SFAS 121 establishes accounting standards
for the impairment of long-lived assets, certain identifiable intangibles, and
goodwill related to those assets to be held and used and for long-lived assets
and certain identifiable intangibles to be disposed of. SFAS 121 does not apply
to financial instruments, long-term customer relationships of a financial
institution (i.e. core deposit intangibles), mortgage and other servicing
rights, or deferred tax assets. SFAS 121 requires that long-lived assets and
certain identifiable intangibles to be held and used by an entity be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. In such cases, an impairment
loss is to be recognized if the carrying value of such asset exceeds its fair
value. In regard to long-lived assets to be disposed of either through sales or
abandonment, such assets are to be carried the lower of cost of fair value less
costs to sell. SFAS 121 is effective for fiscal years beginning after December
15, 1995 and restatement of previously issued financial statements is not
permitted. SFAS 121, when adopted, is not expected to have a material adverse
effect on the Company's consolidated financial condition or results of
operations.
In June 1995, the FASB issued Statement of Financial Accounting Standards No.
122, ("SFAS 122") "Accounting for Mortgage Servicing Rights". SFAS 122 amends
FASB Statement No. 65, "Accounting for Certain Mortgage Banking Activities", to
require that a mortgage banking enterprise recognize as separate assets, rights
to service mortgage loans for others, however those servicing rights were
acquired, should such loans be sold or securitized and the related mortgage
servicing rights retained. The servicing rights are to be recorded based upon an
allocation of the total investment in related loans to the relative fair values
of the loans and the separated servicing rights retained, providing it is
practical to estimate those fair values. SFAS 122 is effective prospectively in
fiscal years beginning after December 15, 1995 and early application is
encouraged. Retroactive capitalization of mortgage servicing rights retained in
transactions in which a mortgage banking enterprise originates mortgage loans
and sells or
-9-
<PAGE> 10
securitizes those loans before the adoption of this statement is prohibited.
SFAS 122, when adopted, is not expected to have a material adverse effect on the
Company's consolidated financial condition or results of operations.
In October 1995, FASB issued Statement of Financial Accounting Standards No.
123, ("SFAS 123") "Accounting for Stock-Based Compensation". SFAS 123
establishes financial accounting and reporting standards for stock-based
employee compensation plans. Those plans include all arrangements by which
employees receive shares of stock or other equity instruments of the employer or
the employer incurs liabilities to employees in amounts based on the price of
the employer's stock. SFAS 123 defines a fair value based method of accounting
for an employee stock option or similar equity instrument and encourages all
entities to adopt that method of accounting for all their employee stock
compensation plans. However, it also allows an entity to continue to measure
compensation costs for those plans using the intrinsic valued based method of
accounting prescribed by APB Opinion No. 25, "Accounting for Stock Issued to
Employees". Entities electing to continue the use of the accounting method under
APB Opinion 25 must make pro forma disclosures of net income and, if presented,
earnings per share, as if the fair value based method of accounting defined in
SFAS 123 had been applied. SFAS 123 is effective for transactions entered into
during fiscal years that begin after December 15, 1995. SFAS 123, when adopted,
is not expected to have a material adverse effect on the Company's consolidated
condition or results of operations.
EARNINGS PER SHARE
Net income per common share and common stock equivalents is computed by dividing
net income by the weighted average number of shares of common stock outstanding
adjusted for the unallocated shares held by the ESOP. Stock options granted are
considered in earnings per share as common stock equivalents, if dilutive, using
the treasury stock method.
INVESTMENT SECURITIES
The following table sets forth information regarding the carrying and estimated
fair value of the Bank's investment securities at the dates indicated:
<TABLE>
<CAPTION>
MARCH 31, 1996 SEPTEMBER 30, 1995
---------------------- ---------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
--------- -------- --------- --------
(in thousands)
<S> <C> <C> <C> <C>
Investment Securities:
Held to maturity
U.S. Treasury securities and
other government agencies $46,060 $45,484 $38,921 $38,842
Other securities 15 15 15 15
--------- ------- ------- -------
Total investment securities
held to maturity $46,075 $45,499 $38,936 $38,857
========= ======= ======= =======
Available for sale
U.S. Treasury securities $4,987 $5,005 - -
Equity securities 700 705
Add: Unrealized gain 23 - - -
--------- ------- -------- -------
Total investment securities $5,710 $5,710 - -
available for sale ========= ======= ======== =======
</TABLE>
The Bank's investment securities held to maturity portfolio consists primarily
of medium-term U.S. Government Agency securities with various features such as
calls and/or interest rate "step-ups". As of March 31, 1996, the Company held
$40.0 million of various medium-term U.S. Government Agency securities, with
various call features and $3.6 million of similar securities with interest rates
that step-up and increase the coupon of the security if the security is not
called by the issuer.
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<PAGE> 11
The Bank's investment securities available for sale portfolio consists primarily
of short-term U.S. Treasury securities. Unrealized gains on investment
securities available for sale are recorded as an adjustment to the carrying
value of the securities and as a separate component of stockholders' equity, net
of the income tax effect. At March 31, 1996, the investment securities available
for sale portfolio had a net unrealized gain of $23,000, while increasing
increasing stockholders' equity by $13,000, net of income taxes.
MORTGAGE-BACKED SECURITIES HELD TO MATURITY
Mortgage-backed securities ("MBS's") consist of mortgage pass through
certificate securities that are issued or guaranteed by Government National
Mortgage Association ("GNMA"), Federal Home Loan Mortgage Corporation ("FHLMC")
Federal National Mortgage Association ("FNMA") and other privately issued
mortgage-backed securities. The following table sets forth information regarding
the carrying and estimated fair value of the Bank's MBS's at the dates
indicated:
<TABLE>
<CAPTION>
MARCH 31, 1996 SEPTEMBER 30, 1995
---------------------- ---------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
---------- -------- --------- --------
(in thousands)
<S> <C> <C> <C> <C>
Mortgage-backed securities:
GNMA certificates $29,816 $30,034 $33,144 $33,488
FHLMC certificates 20,748 20,863 22,979 23,191
FNMA certificates 2,984 2,964 3,388 3,368
Other pass-through certificates 2,273 2,273 2,497 2,497
-------- ------- ------- -------
Total mortgage-backed securities
held to maturity $55,821 $56,134 $62,008 $62,544
======== ======= ======= =======
</TABLE>
LOANS RECEIVABLE, NET
The following table sets forth the composition of the Bank's loan portfolio as
of the dates indicated:
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1996 1995
--------- -------------
(in thousands)
<S> <C> <C>
Real estate mortgages:
One-to-four family $106,120 $93,361
Equity and second mortgages 3,255 3,806
Multi-family 4,779 4,296
Commercial 11,410 8,031
--------- -------------
125,564 109,494
--------- -------------
Construction/land 3,147 3,080
--------- -------------
Consumer:
Passbook or certificate 174 152
Home improvement 9 10
Student education guaranteed by
the State of New York 207 214
Personal 31 28
--------- -------------
421 404
Commercial, including lines of credit 134 123
--------- -------------
Total loans 129,266 113,101
--------- -------------
Less: Loans in process 1,228 1,485
Allowance for loan losses 1,373 1,243
Deferred loan fees and discounts 260 311
--------- -------------
2,861 3,039
--------- -------------
Total loans receivable, net $126,405 $110,062
========= =============
</TABLE>
-11-
<PAGE> 12
ADVANCES FROM FEDERAL HOME LOAN BANK OF NEW YORK ("FHLB")
As a member of the FHLB, the Bank has access to a pre-approved overnight line of
credit for up to 5% of its total assets or $11,165,200 and the capacity to
borrow up to the value of the Bank's eligible collateral. The following table
sets forth the composition of the Bank's FHLB advances as of the dates
indicated:
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1996 1995
----------- -------------
(in thousands)
<S> <C> <C>
FHLB advances:
Fixed rate:
5.133% due February 1997 $1,200 $0
5.597% due December 1997 2,000 --
5.670% due December 1998 6,000 --
------- -------------
Total fixed rate 9,200 0
Overnight line of credit:
6.625% due October 1995 -- 5,375
5.440% due April 1996 1,175 --
------- -------------
Total overnight line of credit 1,175 5,375
------- -------------
Total FHLB advances $10,375 $5,375
======= =============
</TABLE>
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Securities sold under agreements to repurchase consist of borrowings
collateralized by investment securities. Information concerning the composition
of the Bank's borrowings collateralized by securities sold under agreements to
repurchase are summarized as follows:
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1996 1995
------------- -------------
(in thousands)
<S> <C> <C>
5.78% due November 1995 $0 $5,112
5.75% due January 1996 - 2,014
5.45% due April 1996 5,050 -
5.69% due April 1996 8,050 -
------------- ------------
Total securities sold under
agreements to repurchase $13,100 $7,126
============= ============
</TABLE>
These borrowings are collateralized by investment securities with carrying
values of $13,000,000 and $6,988,000 and estimated fair values of $12,922,000
and $7,047,000 at March 31, 1996 and September 30, 1995, respectively.
-12-
<PAGE> 13
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
Financial Bancorp, Inc. ("Company") is the holding company for Financial Federal
Savings Bank ("Financial Federal" or "Bank"), which converted to a federally
chartered stock savings association on August 17, 1994 and to a federally
chartered stock savings bank on October 20, 1994. The Bank is headquartered in
Long Island City, New York and operates four full service branches in Queens and
one in Brooklyn. Deposits of the Bank are insured up to the applicable limits of
Federal Deposit Insurance Corporation ("FDIC). The Bank is subject to regulation
by the Office of Thrift Supervision ("OTS") and the FDIC. The Company is listed
on The Nasdaq Stock Market under the symbol "FIBC".
The Company's results of operations are generally dependent on the Bank. The
Bank's sources of earnings primarily consist of net interest income, which is
the difference between the income earned on interest earning assets and the
expenses paid on interest bearing liabilities. The results of operations are
also affected, to a lesser extent, by non-interest income, which includes loan
servicing fees and charges, and other miscellaneous income. In addition,
operations are impacted by non-interest expenses such as employee salaries and
benefits, office occupancy, data processing and federal deposit insurance
premiums.
The Bank is primarily engaged in the origination of one-to-four family
residential mortgage loans, and to a lesser extent multi-family and commercial
real estate mortgage loans, and residential and commercial construction loans.
As a community-oriented institution, the Bank is generally engaged in attracting
retail deposits from the areas surrounding its branch offices. To a lesser
extent, the Bank may borrow funds from the FHLB or through reverse repurchase
agreements. These funds are then generally concentrated in lending activities
throughout the New York City metropolitan area.
FINANCIAL CONDITION
As of March 31, 1996, the Company's total assets were $251.9 million,
representing a $23.1 million, or a 10.1% increase from $228.8 million as of
September 30, 1995. During the same period, deposits increased by $7.5 million,
or 4.0%, to $194.0 million as of March 31, 1996, from $186.5 million as of
September 30, 1995. Furthermore, advances from the FHLB increased by $5.0
million to $10.4 million, at March 31, 1996, as compared to $5.4 million at
September 30, 1995. Securities sold under agreements to repurchase increased by
$6.0 million, to $13.1 million at March 31, 1996, from $7.1 million at September
30, 1995. The treasury tax and loan account and other short-term borrowings
increased to $4.9 million at March 31, 1996, from zero at September 30, 1995.
Asset growth was primarily funded by the $7.5 million increase in deposits, the
$5.0 million increase in FHLB advances, in addition to the $10.9 million
increase in securities sold under agreements to repurchase and other short-term
borrowings.
-13-
<PAGE> 14
Investment securities available for sale increased to $5.7 million at March 31,
1996, as compared to zero at September 30, 1995. In accordance with an
implementation guide for SFAS 115, "Accounting for Certain Investments in Debt
and Equity Securities," released by FASB on November 15, 1995, which permitted a
one-time reassessment and related reclassification, no later than December 31,
1995, the Bank, during this window period, realigned its investment securities
portfolio by transferring $2.0 million of U.S. Treasury securities from the held
to maturity to available for sale portfolio. The Bank realigned its investment
securities portfolio in order to provide greater flexibility and to maximize its
total rate of return. In addition, during the quarter ended March 31, 1996, the
Bank purchased a 5.0 million U.S. Treasury note and classified it as available
for sale.
As of March 31, 1996, investment securities, held to maturity, primarily
consisted of medium-term U.S. Government Agency securities, with features such
as calls and/or interest rate "step-ups", increased $7.1 million, or 18.3%, to
$46.1 million from $38.9 million, exclusive of $5.7 million in investment
securities which are classifed as available for sale. Mortgage-backed securities
decreased $6.2 million, or 10.0%, to $55.8 million as of March 31, 1996 from
$62.0 million as of September 30, 1995, due to the continuing acceleration of
repayment as interest rates decrease. Loans receivable increased by $16.3
million, or 14.8%, to $126.4 million as of March 31, 1996 from $110.1 million as
of September 30, 1995. This 14.8% increase in loans receivable primarily
resulted from the purchase of $7.9 million of residential one-to-four family
mortgage loans, and $8.4 million of loan originations, net of repayments.
Real estate held for investment increased $190,000, or 5.7%, to $3.7 million as
of March 31, 1996 from $3.5 million as of September 30, 1995. This increase is
attributable to the transfer of a building, a former branch office, owned by the
Bank, to a subsidiary of the Company, during its first fiscal quarter of 1996.
Non-performing loans totaled $2.1 million, or 1.65% of total loans at March
31,1996 as compared to $1.9 million, or 1.7% of total loans at September 30,
1995. At March 31, 1996, non-performing assets totalled $6.1 million, or 2.4% of
total assets, as compared to $6.1 million, or 2.7% of total assets as of
September 30, 1995. The Company's allowance for loan losses totalled $1.4
million at March 31, 1996, which represents a ratio of allowance for loan losses
to non-performing assets and to total loans of 22.42% and 1.06%, respectively,
as compared to 20.5% and 1.1.%, respectively, at September 30, 1995. Of the $1.4
million in allowance for loan losses, $717,000 is attributable to two loan
participations with the Thrift Association Service Corporation.
Total deposits at March 31, 1996, increased by $7.5 million, or 4.0%, to $194.0
million from $186.5 million at September 30, 1995. Furthermore, advances from
the FHLB, increased by $5.0 million, or 93.0%, to $10.4 million at March 31,
1996. During the six month period ended March 31, 1996, securities sold under
agreements to repurchase increased by $6.0 million, to $13.1 million from $7.1
million at September 30, 1995. The treasury tax and loan account and other short
term borrowings increased to $4.9 million at March 31, 1996, from zero at
September 30, 1995. The increase in borrowings enabled the Bank to fund new loan
originations, purchases of one-to-four family adjustable rate loans, and the
purchase of investment securities.
-14-
<PAGE> 15
Total stockholders' equity was $26.8 million at March 31, 1996, reflecting a
$344,000, or a 1.3%, decrease from $27.2 million at September 30, 1995. The
decrease in stockholders' equity was the result of the Company completing its
third repurchase program. During the six month period ended March 31, 1996, the
Company repurchased 98,598 common shares, at an aggregate cost of $41.3 million,
or at an average price per common share of $13.04. At March 31, 1996, the
Company had 1,873,365 common shares outstanding and the book value per share was
$14.32.
ANALYSIS OF OPERATIONS
COMPARISON OF THE THREE MONTHS AND SIX MONTHS ENDED MARCH 31, 1996 AND 1995
Net income for the three months ended March 31, 1996 totalled $494,601, or $0.27
per share as compared to $330,721, or $0.16 per share for the quarter ended
March 31, 1995. The $163,880 or 49.6% increase was primarily attributable to a
$1.0 million, or a 29.7% increase in interest income and a $47,132 increase in
non-interest income, offset in part by an $727,918 increase in interest expense,
during the quarter ended March 31, 1996. For the six month period ended March
31, 1996, net income increased $290,425, or 42.2% to $978,359, or $0.53 per
share, from $687,934, or $0.34 per share for the same period in 1995.
The return on average assets equalled 0.82% and 0.83% for the quarter and the
six months ended March 31, 1996, respectively, as compared to 0.66% and 0.74%
for the quarter ended and the six months ended March 31, 1995, respectively. The
Company's return on average equity equalled 7.35% and 7.22%, for the quarter and
six months ended March 31, 1996, respectively, compared with 4.49% and 4.67%,
for the quarter and the six months ended March 31, 1995, respectively.
The Company's net interest income increased $277,090, or 14.2%, to $2.2 million
for the quarter ended March 31, 1996, from $1.9 million for the quarter ended
March 31, 1995. For the six month period ended March 31, 1996, net interest
income increased $519,184, or 13.5%, to $4.4 million, from $3.8 million for the
same period in 1995. The increase in net interest income for the quarter and six
months ended March 31, 1996, was primarily due to the continued leveraging of
the balance sheet and investing the proceeds from borrowings and deposit growth
in new loan purchases and originations and purchases of investment securities.
As a result, for the quarter ended March 31, 1996, average interest earning
assets increased by $44.8 million, or 24.2%, to $230.3 million from $185.5
million the same quarter last year. The increase in average interest earning
assets was offset by a $46.9 million, or a 29.2% increase in interest bearing
liabilities to $207.6 million for the quarter ended March 31, 1996, from $160.7
million for the same quarter last year. For the six months ended March 31, 1996,
average interest earning assets increased by $49.2 million, or 27.9%, to $225.3
million, or 27.9%, from $176.1 million for the same period last year. The
increase in average interest earning assets was offset by a $49.7 million
increase in interest bearing liabilities to $201.3 million for the six months
ended March 31, 1996, as compared to $151.6 million for the same six month
period in 1995.
-15-
<PAGE> 16
The Company's net interest margin decreased by 31 basis points to 3.86%, for the
quarter ended March 31, 1996, as compared to 4.17% for the quarter ended March
31, 1995. For the six month period ended March 31, 1996, the net interest margin
decreased by 48 basis points to 3.87%, as compared to 4.35% for the same period
in 1995. The Company's net interest spread decreased 20 basis points and 46
basis points to 3.44% and 3.43%, for the quarter and the six months ended March
31, 1996, respectively, compared with 3.64% and 3.89% for the same periods in
1995, respectively. The narrowing of the interest rate spread is primarily
caused by the Bank's competitive deposit pricing in an effort to attract new
certificate of deposits during the middle of fiscal 1995 and the leveraging of
the balance sheet in an effort to increase net interest income. The average
yield on interest earning assets was 7.63% for the quarter ended March 31, 1996,
as compared to 7.30% for the quarter ended March 31, 1995, and the average cost
of interest bearing liabilities was 4.19% for the quarter ended March 31, 1996,
as compared to 3.66% for the quarter ended March 31, 1995. For the six month
period ended March 31, 1996, the average yield on interest earning assets was
7.63%, as compared to 7.23% for the same period in 1995, and the average cost of
interest bearing liabilities was 4.20%, as compared to 3.34% for the same period
in 1995.
The Company's provision for loan losses for the quarter ended March 31, 1996 and
the six months ended March 31, 1996 increased by $40,208 and $64,208, to $76,000
and $130,000, respectively. The increase in provisions for loan losses reflects
management's on-going effort to maintain adequate allowances, given the
significant increase in loan originations and the purchase of one-to-four family
residential mortgage loans.
Non-interest income, for the quarter ended March 31, 1996, increased $47,132, or
105.2%, to $91,944, as compared to $44,812 for the quarter ended March 31, 1995.
For the six month period ended March 31, 1996, non-interest income increased
$112,075, or 196.5%, to $169,104 from $57,029 for the six month period ended
March 31, 1995. The increase in non-interest income for the quarter ended March
31, 1996, is primarily attributable to the $20,020 gain on sale of U.S. Treasury
securities and the increase of $19,999 in income realized from fees and service
charges. The $112,075 increase in non-interest income for the six months ended
March 31, 1996, is primarily attributable to the $20,020 gain on sale of U.S.
Treasury securities and the $44,274 increase in income realized from fees and
service charges. In addition, non-interest income increased during the six month
period ended March 31, 1996, due to the $34,026 decrease in loss from the
operation of the Bank's real estate joint venture, as compared to the same
period in 1995.
Non-interest expenses decreased, marginally, by $30,640, or 2.2%, for the
quarter ended March 31, 1996, from $1.4 million for the same period in 1995.
During the six month period ended March 31, 1996, non-interest expenses modestly
increased by $6,071, or 0.23%, from $2.6 million for the six month period ended
March 31, 1995. For the quarter and six months ended March 31, 1996, the ratio
of operating expenses to average assets decreased 58 basis points and 56 basis
points, to 2.21% and 2.22%, respectively, as compared to 2.79% and 2.78% for the
same periods in 1995.
During the quarter ended March 31, 1996, salaries and employee benefits
decreased by $10,489, or 1.6%, to $664,677 from $675,166 for the same period in
1995. This modest decrease in
-16-
<PAGE> 17
salaries and employee benefits was partially due to the postponement of salary
increases for officers and a reduction in officer and employee staffing by means
of attrition. For the six month period ended March 31, 1996, salaries and
employee benefits decreased by $4,314, or 0.33%, to $1,311,182 from $1,315,486
for the same period in 1995. For the quarter ended March 31, 1996, occupancy
expense decreased by $15,832 to $118,853 from $134,685 for the same period last
year. For the six months ended March 31, 1996, occupancy expense decreased by
$20,049, to $231,333 from $251,382 for the same period in 1995. The decrease was
primarily attributable to the collection of rental income on its newly purchased
Brooklyn branch building. Equipment expense for the quarter and six months ended
March 31, 1996, increased by $14,606 and $36,241, to $138,760 and $276,410,
respectively, from $124,154 and $240,169, respectively for the same periods in
1995. The increase in equipment expense for the quarter and six months ended
March 31, 1996, represents costs associated with the Bank's demand deposit and
check processing servicing fees and and other vendor related services and
contracts. Advertising expense, for the quarter and six months ended March 31,
1996, decreased by $25,790 and $30,973, to $20,018 and $45,067, respectively.
The Company has limited its advertising expenditures in an effort to improve
earnings.
For the quarter ended March 31, 1996, income tax expense increased by $150,774
to $391,316 as compared to $240,542 for the same quarter in 1995, as a result of
the increase in income before taxes. For the six month period ended March 31,
1996, income tax expense increased by $270,555 to $770,255 as compared to
$499,700 for the same period in 1995, as a result of the increase in income
before taxes.
INSURANCE OF DEPOSITS
Deposits of the Bank are presently insured by the SAIF. Both the SAIF and the
Bank Insurance Fund ("BIF"), the deposit insurance fund that covers most
commercial bank deposits, are statutorily required to be recapitalized to a
1.25% of insured reserve deposits ratio. In view of the BIF's achieving the
1.25% ratio, the FDIC adopted a new assessment rate schedule of 4 to 31 basis
points for BIF members for the second half of 1995. Most recently, the FDIC has
voted to reduce the BIF assessment schedule further for the first half of 1996
so that most BIF members will pay the statutory minimum semiannual assessment of
$1,000. With respect to SAIF member institutions, the FDIC adopted a final rule
retaining the existing assessment rate schedule applicable to SAIF member
institutions of 23 to 31 basis points. As long as the premium differential
continues, it may have adverse consequences for SAIF members, including reduced
earnings and an impaired ability to raise funds in capital markets. In addition,
SAIF members, such as the Bank, could be placed at a substantial competitive
disadvantage to BIF members with respect to pricing of loans and deposits and
the ability to achieve lower operating costs.
Under the legislation pending in Congress, a special assessment would be imposed
on the amount of deposits held by SAIF-member institutions, including the Bank,
to recapitalize the SAIF fund. The amount of the special assessment would be
left to the discretion of the FDIC but is generally estimated at between 79 to
85 basis points of insured deposits. Management cannot predict whether the
legislation imposing such a fee will be enacted, or, if enacted, the amount of
any special assessment or when and whether ongoing SAIF premiums will be reduced
-17-
<PAGE> 18
to a level equal to that of BIF premiums. Management can also not predict
whether or when the BIF and SAIF will merge.
The Bank's assessment rate for the fiscal year ended September 30, 1995 was 23.7
basis points and the premium paid for this period was $390,000. A significant
increase in SAIF insurance premiums or a significant special assessment to
recapitalize the SAIF would likely have an adverse effect on the operating
expenses and results of operations of the Bank. Based on the Bank's deposit
insurance assessment base as of March 31, 1995, an 79 to 85 basis point fee to
recapitalize the SAIF would result in a $773,000 to $832,000 payment on an
after-tax basis.
THRIFT RECHARTERING LEGISLATION
Bills have been introduced into Congress which would eliminate the federal
thrift charter, These bills would require that all federal savings associations
convert to national banks or state banks no later than January 1, 1998 and would
treat all sate savings associations as state banks as of that date. All savings
and loan holding companies would become bank holding companies under the
legislative proposals and would be subject to the activities restrictions (with
some activities grandfathered) applicable to bank holding companies. The
legislative proposals would also abolish the OTS; savings associations would be
regulated by the bank regulators depending on the type of bank charter selected.
The Board of Governors of the Federal Reserve Board would be responsible for the
regulation of savings and loan holding companies. Management cannot predict
whether or when this legislation will be enacted. However, any such future
legislation could eliminate the institution's ability to engage in certain
activities, have significant adverse tax effects and otherwise disrupt
operations.
LIQUIDITY AND CAPITAL RESOURCES
The Bank is required to maintain an average daily balance of liquid assets (as
defined in the regulations) equal to a monthly average of not less than the
specified percentage of its net withdrawable deposit accounts plus short-term
borrowings. This liquidity requirement is currently 5%. OTS regulations also
require each member savings institution to maintain an average daily balance of
short-term liquid assets at a specified percentage (currently 1%) of the total
of its net withdrawable deposit accounts and borrowings payable in one year or
less. Monetary penalties may be imposed for failure to meet these liquidity
requirements. The liquidity of the Bank at March 31, 1996 was 8.7%, which
exceeded the then applicable 5% liquidity requirement. It's short-term liquidity
ratio at March 31, 1996, was 3.1%.
The primary investment activities of the Bank are the origination of mortgage
loans and the purchase of investment securities and mortgage-backed securities.
The Company's primary sources of funds are the Bank's deposit accounts, proceeds
from principal and interest payments on loans and investments, and to a lesser
extent, advances and overnight borrowings from the FHLB, as well as reverse
repurchase agreements. While maturities and scheduled amortization of loans,
mortgage-backed securities and investment securities are predictable sources of
funds, deposit flows, mortgage prepayments and callable investment securities
are greatly influenced by market interest rates, general economic conditions and
competition within the financial industry.
-18-
<PAGE> 19
At March 31, 1996, the Bank had outstanding loan commitments to originate
mortgage loans of $7.2 million and $3.0 million in commitments to purchase
investment securities. Management anticipates that it will have sufficient funds
available and borrowing capability to meet its current loan originations and
commitments to purchase investment securities. Certificates of deposit, which
are scheduled to mature in one-year or less from March 31, 1996 totalled $60.3
million, of which $13.3 million represent "Silver Certificate of Deposit"
accounts, which allow one withdrawal of principal per quarter without an early
withdrawal penalty for direct deposit customers 62 years of age or older.
The Bank generally maintains competitive pricing of its deposits in order to
maintain a steady deposit growth balance and to a lesser extent, when necessary
supplements its deposit base with advances and overnight borrowings from the
FHLB, as well as reverse repurchase agreements.
Although the OTS capital regulations require savings institutions to meet a 1.5%
tangible capital ratio and a 3.0% leverage (core) capital ratio, the prompt
corrective action standards also establish, in effect, a minimum 2.0% tangible
capital standard, a 4.0% leverage (core) capital ratio (3.0% for institutions
receiving the highest rating on the CAMEL financial institution rating system).
The Bank's tangible capital and core capital totalled $18.2 million, or 7.43% at
March 31, 1996, far in excess of the regulatory requirements. The Bank's
risk-based capital ratio as of March 31, 1996 was $18.2 million, or 19.50%, also
well in excess of the regulatory capital requirement of 8.0%.
-19-
<PAGE> 20
FINANCIAL BANCORP, INC.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not presently engaged in any legal
proceeding of a material nature.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote
of Security-Holders
The Company held its Annual Meeting of Shareholders on January 17,
1996. At the said meeting 1,971,963 shares of Common Stock were
eligible to vote, of which, 1,592,973 shares were present in person
or by proxy. The following matters were voted upon at the Annual
Meeting and the number of affirmative votes, negative votes and
abstentions with respect to the matters are as follows:
1. At the Annual Meeting, two directors were elected for three year
terms. The nominees were Stuart G. Hoffer and Richard J. Hickey.
FOR WITHHELD
--- --------
Stuart G. Hoffer 1,589,773 3,200
Richard J. Hickey 1,589,773 3,200
The names of each of the directors whose term of office continued
after the Annual Meeting and their respective term expirations are
as follows:
Peter S. Russo 1997
Irene C. Greco 1997
Frank S. Latawiec 1997
Dominick L. Segrete 1998
2. Amendments to the Financial Bancorp, Inc. 1995 Stock Option Plan for
Outside Directors.
FOR AGAINST ABSTAIN BROKER
--- ------- ------- ------
NON-VOTES
---------
1,414,619 131,091 12,314 34,949
-20-
<PAGE> 21
3. Amendments to the Financial Federal Savings Bank Recognition and
Retention Plan.
FOR AGAINST ABSTAIN BROKER
--- ------- ------- ------
NON-VOTES
---------
1,427,839 120,932 10,550 33,652
4. The appointment of Radics & Co., LLC as independent auditors of
Financial Bancorp, Inc. for the fiscal year ending September 30, 1996,
was ratified and approved in all respects.
FOR AGAINST ABSTAIN
--- ------- -------
1,592,120 853 -0-
Item 5. Other information
On April 12, 1996, the Company announced that it received regulatory
approval from the Office of Thrift Supervision to repurchase up to
5%, or 93,668 shares of its common stock through open-market
transactions through August 17, 1996. As of May 13, 1996, the
Company repurchased 35,000 shares as part of its fourth repurchase
program.
On April 24, 1996, the Holding Company declared its regular
quarterly cash dividend for the period ended March 31, 1996, of
$0.075 per share, payable on May 20, 1996 to stockholders of record
on May 6, 1996.
Item 6.(B) Reports on Form 8-K
None.
-21-
<PAGE> 22
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.
Financial Bancorp, Inc.
(Registrant)
Date: May 13, 1996 By: /s/Stuart G. Hoffer
-------------------
Stuart G. Hoffer
President and Chief
Executive Officer
Date: May 13, 1996 By: /s/P. James O'Gorman
--------------------
P. James O'Gorman
Senior Vice President and
Chief Financial Officer
<PAGE> 1
Item 6.
Exhibit 11
----------
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
COMPUTATION OF PER SHARE EARNINGS MARCH 31, 1996 MARCH 31, 1996
-------------- --------------
<S> <C> <C>
Net income $494,601 $978,359
========== ==========
Weighted average common shares outstanding 1,773,000 1,804,100
Common stock equivalents due to dilutive effect of stock options 43,200 43,200
------ ------
Total weighted average common shares and equivalents outstanding 1,816,200 1,847,300
========= =========
Earnings per common share and common share equivalent $0.27 $0.53
===== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary information extracted from the Form 10-Q and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000855932
<NAME> FINANCIAL BANCORP INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> MAR-31-1996
<CASH> 2,464,044
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 3,900,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 5,709,938
<INVESTMENTS-CARRYING> 46,074,979
<INVESTMENTS-MARKET> 45,499,000
<LOANS> 126,405,296
<ALLOWANCE> 1,373,068
<TOTAL-ASSETS> 251,872,719
<DEPOSITS> 193,988,187
<SHORT-TERM> 19,142,356
<LIABILITIES-OTHER> 2,706,781
<LONG-TERM> 9,200,000
0
0
<COMMON> 21,850
<OTHER-SE> 26,813,546
<TOTAL-LIABILITIES-AND-EQUITY> 251,872,719
<INTEREST-LOAN> 4,839,087
<INTEREST-INVEST> 1,661,998
<INTEREST-OTHER> 2,103,927
<INTEREST-TOTAL> 8,605,012
<INTEREST-DEPOSIT> 3,790,913
<INTEREST-EXPENSE> 4,240,765
<INTEREST-INCOME-NET> 4,364,247
<LOAN-LOSSES> 130,000
<SECURITIES-GAINS> 20,020
<EXPENSE-OTHER> 2,654,737
<INCOME-PRETAX> 1,748,614
<INCOME-PRE-EXTRAORDINARY> 1,748,614
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 978,359
<EPS-PRIMARY> 0.53
<EPS-DILUTED> 0.53
<YIELD-ACTUAL> 7.63
<LOANS-NON> 1,882,000
<LOANS-PAST> 248,000
<LOANS-TROUBLED> 0
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<ALLOWANCE-OPEN> 1,243,068
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<ALLOWANCE-CLOSE> 1,373,068
<ALLOWANCE-DOMESTIC> 1,373,068
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 653,932
</TABLE>
