<PAGE> 1
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, 1997
------------------
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 1-11356
-------
CMAC INVESTMENT CORPORATION
---------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 23-2691170
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1601 MARKET STREET, PHILADELPHIA, PA 19103
- ------------------------------------ -----
(Address of principal executive offices) (zip code)
(215) 564-6600
--------------
(Registrant's telephone number, including area code)
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 if such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: 22,533,524 shares of
Common Stock, $0.001 par value, outstanding on November 11, 1997.
<PAGE> 2
CMAC INVESTMENT CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE NUMBER
<S> <C>
Part I - Financial Information
Consolidated Balance Sheets - September 30, 1997 and
December 31, 1996..................................................... 3
Consolidated Statements of Income - For the three and nine month periods
ended September 30, 1997 and 1996..................................... 4
Consolidated Statement of Changes in Common Stockholders'
Equity - For the nine month period ended September 30, 1997........... 5
Consolidated Statements of Cash Flows - For the nine month periods ended
September 30, 1997 and 1996........................................... 6
Notes to Consolidated Financial Statements..................................... 7
Management's Discussion and Analysis of Results of
Operations and Financial Condition.................................... 8-9
Part II - Other Information, as applicable.............................................. 10
Signature............................................................................... 11
</TABLE>
-2-
<PAGE> 3
CMAC INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30 December 31
1997 1996
------------ ------------
(Unaudited)
(In thousands, except share amounts)
<S> <C> <C>
Assets
Investments
Fixed maturities held to maturity - at amortized cost (fair value
$486,490 and $409,675) .............................................. $ 462,876 $ 393,296
Fixed maturities available for sale - at fair value
(amortized cost $93,865 and $110,519) ............................... 98,156 114,666
Short-term investments ................................................ 8,463 5,196
Cash ...................................................................... 4,780 3,189
Deferred policy acquisition costs ......................................... 24,701 23,900
Other assets .............................................................. 70,633 52,501
------------ ------------
$ 669,609 $ 592,748
============ ============
Liabilities and Stockholders' Equity
Unearned premiums ......................................................... $ 45,434 $ 53,384
Reserve for losses ........................................................ 136,075 108,206
Deferred federal income taxes ............................................. 5,398 5,266
Accounts payable and accrued expenses ..................................... 32,596 29,548
------------ ------------
219,503 196,404
------------ ------------
Preferred stockholder's equity
Redeemable preferred stock, par value $.001 per share;
800,000 shares issued and outstanding - at
redemption value ...................................................... 40,000 40,000
------------ ------------
Common stockholders' equity
Common stock, par value $.001 per share; 80,000,000 shares authorized;
22,525,524 shares and 22,395,124 shares issued
and outstanding ....................................................... 22 22
Additional paid-in capital ................................................ 179,461 176,431
Retained earnings ......................................................... 227,834 177,195
Net unrealized gain on investments, net of tax ............................ 2,789 2,696
------------ ------------
410,106 356,344
------------ ------------
$ 669,609 $ 592,748
============ ============
</TABLE>
See notes to consolidated financial statements.
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<PAGE> 4
CMAC INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30 September 30
1997 1996 1997 1996
---------- ---------- ---------- ----------
(In thousands, except per-share amounts)
<S> <C> <C> <C> <C>
Revenues:
Premiums written:
Direct .................................. $ 66,174 $ 50,495 $ 180,268 $ 140,641
Assumed ................................. 3 31 132 146
Ceded ................................... (5,586) (4,175) (16,087) (12,352)
---------- ---------- ---------- ----------
Net premiums written ......................... 60,591 46,351 164,313 128,435
Decrease in unearned premiums ................ 763 2,347 9,125 8,060
---------- ---------- ---------- ----------
Premiums earned .............................. 61,354 48,698 173,438 136,495
Net investment income ........................ 8,426 7,623 24,938 22,088
Gain (loss) on sales of investments ......... 312 (2) 796 768
Other income ................................. 1,263 905 3,478 2,886
---------- ---------- ---------- ----------
71,355 57,224 202,650 162,237
---------- ---------- ---------- ----------
Expenses:
Provision for losses ......................... 30,194 23,808 85,213 65,746
Policy acquisition costs ..................... 7,992 6,775 23,183 19,904
Other operating expenses ..................... 6,689 5,281 18,966 15,768
---------- ---------- ---------- ----------
44,875 35,864 127,362 101,418
---------- ---------- ---------- ----------
Pretax income ......................................... 26,480 21,360 75,288 60,819
Provision for income taxes ............................ 7,192 5,403 20,154 15,164
---------- ---------- ---------- ----------
Net income ............................................ $ 19,288 $ 15,957 $ 55,134 $ 45,655
========== ========== ========== ==========
Net income per share .................................. $ 0.79 $ 0.65 $ 2.25 $ 1.87
========== ========== ========== ==========
Average number of common and common equivalent
shares outstanding .................................... 23,473 23,128 23,365 23,068
========== ========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
-4-
<PAGE> 5
CMAC INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN COMMON STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Net Unrealized
Additional Gain
Common Paid-In Retained on Investments
Stock Capital Earnings (Net of Tax) Total
------------ ------------ ------------ ------------ ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 ............................ $ 22 $ 176,431 $ 177,195 $ 2,696 $ 356,344
Net income (unaudited) ......................... -- -- 55,134 -- 55,134
Change in net unrealized gain on
investments - net of tax (unaudited) ....... -- -- -- 93 93
Issuance of common stock (unaudited) ........... -- 3,030 -- -- 3,030
Dividends (unaudited) .......................... -- -- (4,495) -- (4,495)
------------ ------------ ------------ ------------ ------------
Balance, September 30, 1997 (unaudited) ............... $ 22 $ 179,461 $ 227,834 $ 2,789 $ 410,106
============ ============ ============ ============ ============
</TABLE>
See notes to consolidated financial statements.
-5-
<PAGE> 6
CMAC INVESTMENT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
1997 1996
------------ ------------
(In thousands)
<S> <C> <C>
Cash flows from operating activities ................................. $ 65,318 $ 60,339
------------ ------------
Cash flows from investing activities:
Proceeds from sales of investments available for sale ......... 18,995 6,382
Proceeds from redemptions of investments available for sale ... 11,175 11,775
Proceeds from redemptions of investments held to maturity ..... 4,235 660
Purchases of investments available for sale ................... (12,814) (15,018)
Purchases of investments held to maturity ..................... (72,834) (55,713)
Purchases of short-term investments - net ..................... (3,267) (3,961)
Other ......................................................... (7,752) (3,980)
------------ ------------
Net cash used in investing activities ................................ (62,262) (59,855)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of common stock ........................ 3,030 1,361
Dividends paid ................................................ (4,495) (4,149)
------------ ------------
Net cash used in financing activities ................................ (1,465) (2,788)
------------ ------------
Increase (decrease) in cash .......................................... 1,591 (2,304)
Cash, beginning of period ............................................ 3,189 3,646
------------ ------------
Cash, end of period .................................................. $ 4,780 $ 1,342
============ ============
Supplemental disclosures of cash flow information:
Income taxes paid .................................................... $ 19,250 $ 14,000
============ ============
Interest paid ........................................................ $ 0 $ 70
============ ============
</TABLE>
See notes to consolidated financial statements.
-6-
<PAGE> 7
CMAC INVESTMENT CORPORATION AND SUBSIDIARIES
(UNAUDITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1 - UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements include the accounts of CMAC
Investment Corporation (the "Company") and its subsidiaries including its
principal operating subsidiary, Commonwealth Mortgage Assurance Company
("CMAC"), and are presented on the basis of generally accepted accounting
principles.
The financial information for the interim periods included herein is
unaudited; however, such information reflects all normal and recurring
adjustments which are, in the opinion of management, necessary for a fair
presentation of the financial position, results of operations, and cash flows
for the interim periods. The results of operations for interim periods are not
necessarily indicative of results to be expected for the full year.
Net income per share is based on the average number of common shares
outstanding and common share equivalents which would arise from the exercise of
stock options. Preferred stock dividends are deducted from net income in the net
income per share computation.
For a summary of significant accounting policies and additional financial
information, see the CMAC Investment Corporation Annual Report on Form 10-K for
the year ended December 31, 1996.
2 - NEW ACCOUNTING STANDARDS
In March 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share" ("FAS 128"). FAS
128 requires the Company to disclose both "basic" earnings per share and
"dilutive" earnings per share for annual and interim periods ending after
December 15, 1997. The Company has determined that FAS 128 will not have a
significant effect on its net income per share calculation when such Standard is
adopted.
3 - STOCK SPLIT
On October 15, 1996, the Board of Directors authorized a stock split,
payable December 2, 1996, in the form of a dividend of one additional share of
the Company's common stock for each share owned by stockholders of record on
November 7, 1996. The dividend was accounted for as a two-for-one stock split
and par value remained at $.001 per share. Accordingly, all references to common
per share data have been adjusted to give effect to the stock split.
-7-
<PAGE> 8
CMAC INVESTMENT CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Net income for the first nine months of 1997 was $55.1 million, a 20.8%
increase compared to $45.7 million for the first nine months of 1996 and net
income for the quarter ended September 30, 1997 was $19.3 million, a 20.9%
increase compared to $16.0 million for the same period in 1996. These
improvements were a result of significant growth in premiums earned and net
investment income, partially offset by a higher provision for losses, policy
acquisition costs and other operating expenses.
Premiums earned for the first nine months of 1997 were $173.4 million, a
27.1% increase compared to $136.5 million for the first nine months of 1996 and
premiums earned for the quarter ended September 30, 1997 were $61.4 million, a
26.0% increase compared to $48.7 million for the same period of 1996. These
increases reflect the insurance in force growth resulting from strong new
insurance volume and a continuation of high persistency levels. CMAC's direct
primary insurance in force for the first nine months of 1997 increased 14.6%,
from $39.4 billion at December 31, 1996 to $45.2 billion at September 30, 1997.
Direct pool risk in force also grew to $493.4 million at September 30, 1997 from
$341.9 million at the end of 1996, an increase of 44.3% for the nine months
ended September 30, 1997. Persistency, which is defined as the percentage of
policies in force that are renewed in any given year, was 88.1% for the year
ended September 30, 1997 as compared to 84.4% for the year ended September 30,
1996. New primary insurance written in the first nine months of 1997 was $9.6
billion, a 2.8% increase compared to $9.4 billion for the first nine months of
1996 and for the third quarter of 1997, new primary insurance written of $3.6
billion was 13.9% higher than the $3.2 billion written in the third quarter of
1996. New insurance written volume in the private mortgage insurance market
declined by 10.3% in the first nine months of 1997 and less than 1% for the
quarter ended September 30, 1997. However, CMAC's volume rose slightly due to an
increase in market share to 10.9% for the first nine months of 1997, compared to
9.5% for the same period of 1996 and 10.7% in the third quarter of 1997 compared
to 9.3% for the same quarter of 1996. The volume in the first six months of 1997
was negatively impacted by higher interest rates which declined in the third
quarter of 1997. Refinanced loans represented 16% of new primary insurance
written during the first six months of 1997 as compared to 22% in the same
period of 1996. However, for the third quarter of 1997, refinanced loans
represented 15% of new primary insurance written as compared to only 9% for the
third quarter of 1996 as higher interest rates toward the end of the second
quarter of 1996 caused refinance activity to slow significantly in the third
quarter. Additionally, in the first nine months of 1997, CMAC wrote pool
insurance which represented an addition to risk of $183.2 million as compared to
$85.5 million for the first nine months of 1996 and $72.1 million for the third
quarter of 1997 as compared to $16.1 million for the same quarter of 1996. Most
of this pool insurance volume related to a group of structured transactions
composed primarily of Fannie Mae- and Freddie Mac-eligible conforming mortgage
loans that are geographically dispersed throughout the United States and that
have lower loan-to-value ratios than CMAC's primary business. Under a pool
insurance transaction, the exposure to CMAC on each individual loan is uncapped;
however, the aggregate stop-loss percentage is the most that can be paid out in
losses before the insurer's exposure terminates. The Company expects its pool
insurance activity to continue at this same level throughout the remainder of
1997 and in 1998. Premium rates on such pool insurance are significantly lower
than on primary insurance loans due to the low stop-loss levels, which limit the
overall risk exposure to CMAC, and the focus of such product on high quality
primary insurance customers. The average stop-loss on pool insurance written
during the first nine months of 1997 was 1.6%. Standard & Poor's has recently
determined that the capital requirements to support such pool insurance will be
significantly more stringent than on primary insurance due to the low premium
rates.
CMAC has recently begun an initiative to provide insurance on
"Alternative A" mortgage product, which is non-conforming to Fannie Mae and
Freddie Mac standards due to documentation or credit issues, but is acceptable
to be insured based on analysis by CMAC's proprietary mortgage scoring model.
CMAC will generally charge a higher premium rate on such loans to compensate for
the additional risk, and will restrict the program to loans that meet the
standards set by CMAC's credit policy. Many such loans will be priced on a
"risk-based" method which takes many borrower, property and loan characteristics
into account in order to arrive at an acceptable pricing level. CMAC expects to
insure no more than 10% of its primary insurance business in this Alternative A
product in 1998 and the business will be closely monitored for quality and
performance.
Net investment income for the first nine months of 1997 was $24.9
million, a 12.9% increase compared to $22.1 million for the first nine months of
1996 and for the third quarter of 1997, net investment income was $8.4 million
as compared to $7.6 million in the same period of 1996, a 10.5% increase. These
increases were a result of continued growth in invested assets primarily due to
positive operating cash flow. The Company continues to invest new operating cash
flow in tax-advantaged securities, primarily municipal bonds, but is examining a
more optimal portfolio allocation that could include a limited percentage of
investments in equities, convertible securities or other types of bonds.
The provision for losses in the first nine months of 1997 was $85.2
million, an increase of 29.6% compared to $65.7 million in 1996, and for the
third quarter of 1997, the provision was $30.2 million as compared to $23.8
million for the third quarter of 1996, an increase of 26.8%. These increases
reflect the significant growth and maturation of CMAC's book of business over
-8-
<PAGE> 9
CMAC INVESTMENT CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
(CONTINUED)
the past several years, the continued adverse experience of California loans,
and the relatively poor early experience of certain "affordable housing" program
loans insured starting in 1994. Although the ultimate performance of the books
of business that originated since 1994 cannot yet be determined, it appears that
the ultimate loss levels will be higher than average, partially due to the
presence of these "affordable housing" loans. Certain underwriting changes were
implemented near the end of 1996 to compensate for the factors that contributed
to the early default experience on these "affordable housing" loans; however, it
is too early to determine the impact of such changes. CMAC's overall default
rate at September 30, 1997 was 1.9% as compared to 2.1% at December 31, 1996.
The number of defaults rose from 10,127 at December 31, 1996 to 11,606 at
September 30, 1997 and the average loss reserve per default rose from $10,685 at
the end of 1996 to $11,725 at September 30, 1997. This increase in average loss
reserve per default reflected the Company's continued implementation of a more
conservative reserve calculation for certain loans in default perceived as
having a higher risk of claim incidence. In addition, an increase in the
coverage percentage on loans originated beginning in 1995 has necessitated a
higher reserve balance on loans in a default status due to the increased
ultimate exposure on these loans. The default rate in California declined to
3.8% (including pool) at September 30, 1997 as compared to 4.0% at December 31,
1996 and claims paid in California for the first nine months of 1997 were $36.3
million, representing approximately 58.7% of total claims.
Policy acquisition costs in the first nine months of 1997 were $23.2
million, an increase of 16.5% compared to $19.9 million in the same period of
1996. For the third quarter of 1997, these expenses were $8.0 million, an
increase of 18.0% compared to $6.8 million for the second quarter of 1996. This
reflects increases in sales- and underwriting-related expenses relating to the
Company's continued market share expansion and the development of the Company's
marketing infrastructure needed to support a focus on larger, national mortgage
lenders in order to take advantage of the widespread consolidation occurring in
the mortgage lending industry. Other operating expenses for the nine months
ended September 30, 1997 were $19.0 million, an increase of 20.3% compared to
$15.8 million for the same period in 1996, and these expenses were $6.7 million
for the third quarter of 1997 as compared to $5.3 million for the third quarter
of 1996, an increase of 26.7%. Much of the increase continued to result from an
expansion of the Company's technology efforts and an increase in expenses
associated with the company's ancillary services, specifically contract
underwriting. Some of these additional contract underwriting expenses were
correspondingly offset by increases to other income, which rose 20.5% from $2.9
million for the nine months ended September 30, 1996 to $3.5 million for the
same period in 1997, although the main purpose of the contract underwriting
effort is to support the sales effort by generating incremental mortgage
insurance business. During the first nine months of 1997, loans underwritten via
contract underwriting accounted for 29% of applications, 25% of insurance
commitments, and 22% of certificates issued by CMAC.
The effective tax rate for the nine months ended September 30, 1997 was
26.8% and this rate was 27.2% for the quarter ended September 30, 1997. This
compares to 24.9% and 25.3%, respectively, for the nine months and quarter ended
September 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
CMAC's sources of funds consist primarily of premiums and investment
income. Funds are applied primarily to the payment of CMAC's claims and
operating expenses.
Cash flows from operating activities for the nine months ended September
30, 1997 were $65.3 million as compared to $60.3 million for the same period of
1996. This increase consisted of an increase in net premiums written and
investment income received, partially offset by an increase in claims paid and
operating expenses. Monthly premiums, which now constitute about 95% of new
business, have negatively impacted cash flow in the short term although
long-term cash flow is not expected to be materially affected. Positive cash
flows are invested pending future payments of claims and other expenses; cash
flow shortfalls, if any, are funded through sales of short-term investments and
certain other investment portfolio securities.
Common stockholders' equity increased from $356.3 million at December 31,
1996 to $410.1 million at September 30, 1997. This increase was primarily a
result of net income of $55.1 million and common stock of $3.0 million issued
due to the exercise of stock options, partially offset by dividends of $4.5
million.
As of September 30, 1997, the Company and its subsidiaries had purchased
computer equipment designed to upgrade and enhance their computer systems and
technological capabilities totaling $1.3 million. These upgraded computer
systems were needed to support CMAC's newly structured centralized processing
operations as well as the redesigned disaster recovery plan that was implemented
in conjunction with the centralized system.
-9-
<PAGE> 10
CMAC INVESTMENT CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings - None
ITEM 2. Changes in Securities - None
ITEM 3. Defaults upon Senior Securities - None
ITEM 4. Submission of Matters to a Vote of Security Holders - None
ITEM 5. Other Information - None
ITEM 6. a. Exhibits -
*Exhibit 11.1 - Statement Re: Computation of Per Share Earnings
b. Reports on Form 8-K - None
*Filed Herewith
-10-
<PAGE> 11
SIGNATURE
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.
CMAC INVESTMENT CORPORATION
Date: November 14, 1997 C. Robert Quint
----------------------------------------------
C. Robert Quint
Senior Vice President, Chief Financial Officer
(Principal Accounting Officer)
-11-
<PAGE> 1
CMAC INVESTMENT CORPORATION
SCHEDULE OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
QUARTER ENDED SEPTEMBER 30 NINE MONTHS ENDED SEPTEMBER 30
------------------------------- -------------------------------
1997 1996 (1) 1997 1996(1)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
(In thousands, except per-share amounts and market prices)
Net income ................................................... $ 19,288 $ 15,957 $ 55,134 $ 45,655
Preferred stock dividend adjustment .......................... (825) (825) (2,475) (2,475)
------------ ------------ ------------ ------------
Adjusted net income .......................................... $ 18,463 $ 15,132 $ 52,659 $ 43,180
Average dilutive stock options outstanding ................... 1,499.3 1,485.7 1,540.8 1,511.6
Average exercise price per share ............................. 17.12 14.36 16.48 14.17
Average market prices - primary basis ........................ 48.58 30.13 41.12 27.97
Average market price - fully diluted basis ................... 53.63 31.75 44.92 29.52
Average common share outstanding ............................. 22,491 22,350 22,450 22,325
Increase in shares due to exercise of options -
primary basis ............................................... 982 778 915 743
Increase in shares due to exercise of options -
fully diluted basis ......................................... 1,031 814 955 784
Adjusted shares outstanding - primary ........................ 23,473 23,128 23,365 23,068
Adjusted shares outstanding - fully diluted .................. 23,522 23,164 23,405 23,109
Net income per share - primary ............................... $ 0.79 $ 0.65 $ 2.25 $ 1.87
============ ============ ============ ============
Net income per share - fully diluted ......................... $ 0.78 $ 0.65 $ 2.25 $ 1.87
============ ============ ============ ============
</TABLE>
(1) All share and per-share data have been restated to reflect the stock split.
See Note 3.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 4,780
<SECURITIES> 569,495
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 95,334
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 669,609
<CURRENT-LIABILITIES> 219,503
<BONDS> 0
40,000
0
<COMMON> 22
<OTHER-SE> 410,084
<TOTAL-LIABILITY-AND-EQUITY> 669,609
<SALES> 0
<TOTAL-REVENUES> 202,650
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 42,149
<LOSS-PROVISION> 85,213
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 75,288
<INCOME-TAX> 20,154
<INCOME-CONTINUING> 55,134
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 55,134
<EPS-PRIMARY> 2.25
<EPS-DILUTED> 2.25
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 4,780
<SECURITIES> 569,495
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 95,334
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 669,609
<CURRENT-LIABILITIES> 219,503
<BONDS> 0
40,000
0
<COMMON> 22
<OTHER-SE> 410,084
<TOTAL-LIABILITY-AND-EQUITY> 669,609
<SALES> 0
<TOTAL-REVENUES> 71,355
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 14,681
<LOSS-PROVISION> 30,194
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 26,480
<INCOME-TAX> 7,192
<INCOME-CONTINUING> 19,288
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,288
<EPS-PRIMARY> 0.79
<EPS-DILUTED> 0.78
</TABLE>
