FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
or
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 5-43936
BANKUNITED FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
FLORIDA 65-0377773
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
255 ALHAMBRA CIRCLE, CORAL GABLES 33134
(Address of principal executive offices) (Zip Code)
(305) 569-2000
(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 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
The number of shares outstanding of the registrant's common stock at the close
of business on September 25, 1998 was 17,813,607 shares of Class A Common Stock,
$.01 par value, and 331,743 shares of Class B Common Stock, $.01 par value.
This Form 10-Q/A contains 34 pages.
The Index to Exhibits appears on page 33.
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BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
Form 10-Q/A Report for the Quarter Ended June 30, 1998
INDEX
PAGE NO.
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PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Consolidated Statements of Financial Condition as of
June 30, 1998 (unaudited) and September 30, 1997 3
Consolidated Statements of Operations (unaudited)
for the Three Months and Nine Months Ended June 30, 1998
and June 30, 1997 4-5
Consolidated Statements of Cash Flows (unaudited)
for the Nine Months Ended June 30, 1998
and June 30, 1997 6
Condensed Notes to Consolidated Financial
Statements (unaudited) 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 14
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 30
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K 31
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2
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BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (NOTE 1)
JUNE 30,
1998 SEPTEMBER 30,
(UNAUDITED) 1997
(DOLLARS IN THOUSANDS)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash $ 18,192 $ 10,571
Federal Home Loan Bank overnight deposits 21,081 79,413
Tax certificates (net of reserves of $514 at June 30, 1998 and
$697 at September 30, 1997) 50,335 49,283
Investments held to maturity (market value of approximately
$14,556 at June 30, 1998 and $14,613 at September 30, 1997) 14,485 14,494
Investments available for sale, at market 34,881 10,166
Mortgage-backed securities, held to maturity (market
value of approximately $233,490 at June 30, 1998
and $11,292 at September 30, 1997) (Note 2) 236,969 11,352
Mortgage-backed securities available for sale, at market 191,920 108,919
Loans receivable, net 2,761,177 1,661,381
Mortgage loans held for sale (market value of approximately $103,624
at June 30, 1998 and $105,980 at September 30, 1997) 103,412 104,342
Other interest earning assets 45,563 33,599
Office properties and equipment, net 12,227 7,371
Real estate owned, net 1,474 611
Accrued interest receivable 26,949 16,261
Mortgage servicing rights 7,565 4,783
Goodwill (Note 5) 29,989 14,278
Prepaid expenses and other assets 27,904 18,582
---------- ----------
Total assets $3,584,123 $2,145,406
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $2,017,244 $1,195,892
Advances from Federal Home Loan Bank 906,466 671,484
Securities sold under agreements to repurchase (Note 2) 192,610 30,000
Company obligated mandatorily redeemable trust preferred securities of
subsidiary trust holding solely junior subordinated deferrable interest
debentures of the Company (Note 3) 218,500 116,000
Interest payable (primarily on deposits and advances from Federal Home
Loan Bank) 8,474 3,844
Advance payments by borrowers for taxes and insurance 10,123 10,688
Accrued expenses and other liabilities 35,744 17,853
---------- ----------
Total liabilities 3,389,161 2,045,761
---------- ----------
STOCKHOLDERS' EQUITY:
Preferred stock, Series B, 1993, 1996 and 9%, $0.01 par value. Authorized shares
- 10,000,000; issued and outstanding shares - 926,697 at
June 30,1998 and 2,175,296 at September 30, 1997 (Note 4) 9 22
Class A Common Stock, $.01 par value. Authorized shares - 30,000,000;
issued and outstanding shares - 17,785,620 at June 30, 1998 and
9,257,098 at September 30, 1997 (Note 4) 178 92
Class B Common Stock, $.01 par value. Authorized shares - 3,000,000;
issued and outstanding shares - 316,499 at June 30, 1998 and 275,685
at September 30, 1997 (Note 4) 3 3
Additional paid-in capital 176,442 86,679
Retained earnings 16,908 11,988
Net unrealized gains on securities available for sale, net of tax 1,422 861
---------- ----------
Total stockholders' equity 194,962 99,645
---------- ----------
Total liabilities and stockholders' equity $3,584,123 $2,145,406
========== ==========
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SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (NOTE 1)
THREE MONTHS ENDED JUNE 30,
-------------------------------
(UNAUDITED)
1998 1997
------- -------
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<S> <C> <C>
Interest income:
Interest and fees on loans $43,317 $26,727
Interest on mortgage-backed securities (Note 2) 6,603 1,984
Interest on short-term investments 1,725 185
Interest and dividends on long-term investments
and other earning assets 2,036 1,341
------- -------
Total interest income 53,681 30,237
------- -------
Interest expense:
Interest on deposits 25,716 14,054
Interest on borrowings 14,526 5,193
Preferred dividends of Trust Subsidiary (Note 3) 5,288 2,148
------- -------
Total interest expense 45,530 21,395
------- -------
Net interest income before provision for loan losses 8,151 8,842
Provision for loan losses 300 280
------- -------
Net interest income after provision for loan losses 7,851 8,562
------- -------
Non-interest income:
Service fees, net 403 850
Gain on sale of loans and mortgage-backed securities 1,752 --
Other 348 66
------- -------
Total non-interest income 2,503 916
------- -------
Non-interest expenses:
Employee compensation and benefits 2,816 2,310
Occupancy and equipment 1,196 978
Insurance 284 230
Professional fees - legal and accounting 258 522
Other operating expenses 3,500 2,118
------- -------
Total non-interest expenses 8,054 6,158
------- -------
Income before income taxes and preferred stock dividends 2,300 3,320
Income taxes 949 1,329
------- -------
Net income before preferred stock dividends 1,351 1,991
Preferred stock dividends of the Company 185 718
------- -------
Net income after preferred stock dividends $ 1,166 $ 1,273
======= =======
Earnings Per Share (Note 7)
Basic $ 0.07 $ 0.14
======= =======
Diluted $ 0.07 $ 0.14
======= =======
Weighted average number of common shares assumed outstanding during the period:
Basic 16,667 8,856
======= =======
Diluted 17,395 9,591
======= =======
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SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
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BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (NOTE 1)
NINE MONTHS ENDED JUNE 30,
----------------------------------
(UNAUDITED)
1998 1997
-------- --------
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<S> <C> <C>
Interest income:
Interest and fees on loans $125,944 $ 64,405
Interest on mortgage-backed securities (Note 2) 12,560 4,844
Interest on short-term investments 3,696 1,318
Interest and dividends on long-term investments
and other earning assets 6,179 3,365
-------- --------
Total interest income 148,379 73,932
-------- --------
Interest expense:
Interest on deposits 65,916 34,823
Interest on borrowings 41,921 11,665
Preferred dividends of Trust Subsidiary (Note 3) 11,664 3,525
-------- --------
Total interest expense 119,501 50,013
-------- --------
Net interest income before provision for loan losses 28,878 23,919
Provision for loan losses 1,350 695
-------- --------
Net interest income after provision for loan losses 27,528 23,224
-------- --------
Non-interest income:
Service fees, net 1,360 2,298
Gain on sale of loans and mortgage-backed securities 3,291 --
Other 511 219
-------- --------
Total non-interest income 5,162 2,517
-------- --------
Non-interest expenses:
Employee compensation and benefits 7,990 6,745
Occupancy and equipment 3,290 2,594
Insurance 822 701
Professional fees - legal and accounting 1,449 1,063
Other operating expenses 9,698 5,611
-------- --------
Total non-interest expenses 23,249 16,714
-------- --------
Income before income taxes and preferred stock dividends 9,441 9,027
Income taxes 3,823 3,594
-------- --------
Net income before preferred stock dividends 5,618 5,433
Preferred stock dividends of the Company 699 2,167
-------- --------
Net income after preferred stock dividends $ 4,919 $ 3,266
======== ========
Earnings Per Share (Note 7)
Basic $ 0.33 $ 0.41
======== ========
Diluted $ 0.31 $ 0.39
======== ========
Weighted average number of common shares assumed outstanding during the period:
Basic 14,959 7,945
======== ========
Diluted 16,009 8,910
======== ========
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SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
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BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (NOTE 1)
NINE MONTHS ENDED JUNE 30,
-----------------------------------
(UNAUDITED)
1998 1997
--------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 5,618 $ 5,433
Adjustments to reconcile net income to net cash (used in)
operating activities:
Provision for loan losses 1,350 695
Provision for losses on tax certificates 176 48
Depreciation and amortization 1,132 858
Amortization of fees, discounts and premiums 4,223 (106)
Amortization of loan servicing assets 1,069 976
Amortization of goodwill 677 510
Gain on sales of loans and mortgage-backed securities (3,291) --
Loans originated for sale (202,411) (8,635)
Increase in accrued interest receivable (2,782) (5,055)
Increase (decrease) in interest payable on deposits and FHLB advances 4,630 (397)
Increase in accrued taxes 3,266 60
Increase (decrease) in other liabilities 12,091 (5,077)
(Increase) decrease in prepaid expenses and other assets (9,322) 2,610
Proceeds from sale of loans 119,308 7,531
Other, net (455) (960)
--------- ----------
Net cash used in operating activities (64,721) (1,509)
--------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in loans (1,248,548) (500,027)
Proceeds from sale of real estate owned 918 1,260
Purchase of investment securities (15,063) (22,144)
Purchase of mortgage-backed securities (101,392) (56,499)
Purchase of other earning assets (36,215) (19,650)
Proceeds from repayments of mortgage-backed securities 163,523 12,039
Proceeds from repayments of other earning assets 24,924 12,776
Proceeds from repayments of investment securities 11,300 1,851
Proceeds from sale of mortgage-backed securities 16,641 --
Purchases of premises and equipment (5,887) (1,124)
Net increase in tax certificates (876) (23,457)
Purchase of Consumer's cash equivalents 13,995 --
Purchase of Central's cash equivalents 4,910 --
Purchase of Suncoast's cash equivalents -- 32,803
--------- ----------
Net cash used in investing activities (1,171,770) (562,172)
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 657,403 271,080
Net increase in other borrowings 371,948 157,984
Net proceeds from issuance of preferred stock (Note 4) 523 3
Net proceeds from issuance of common stock (Note 4) 58,712 944
Net proceeds from issuance of trust preferred securities (Note 3) 98,900 111,545
Preferred Stock purchase (43) --
Preferred Stock, Series 1996 called (85) --
Preferred Stock, Series 1993 called (314) --
Dividends paid on the Company's preferred stock (699) (2,166)
Decrease (increase) in advances from borrowers for taxes and insurance (565) 2,044
--------- ----------
Net cash provided by financing activities 1,185,780 541,434
--------- ----------
Decrease in cash and cash equivalents (50,711) (22,247)
Cash and cash equivalents at beginning of period 89,984 34,136
--------- ----------
Cash and cash equivalents at end of period $ 39,273 $ 11,889
========= ==========
SUPPLEMENTAL DISCLOSURES:
Transfer from loans to real estate owned $ 1,555 $ 2,074
========= ==========
Interest paid on deposits and borrowings $ 104,175 $ 46,417
========= ==========
Income taxes paid $ 1,764 $ 2,940
========= ==========
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SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6
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BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
The accompanying unaudited consolidated financial statements have been prepared
in conformity with Rule 10-01 of Regulation S-X of the Securities and Exchange
Commission and therefore do not include information or footnotes necessary for a
complete presentation of financial position, results of operations and cash
flows in conformity with generally accepted accounting principles ("GAAP").
However, all adjustments (consisting of normal recurring accruals) which, in the
opinion of management, are necessary for a fair presentation of the financial
statements of BankUnited Financial Corporation and its subsidiaries (the
"Company") have been included. Operating results for the three month and nine
month period ended June 30, 1998 are not necessarily indicative of the results
which may be expected for the year ended September 30, 1998. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K/A for the fiscal
year ended September 30, 1997.
2. MORTGAGE-BACKED SECURITIES, HELD TO MATURITY
During March 1998, the Company securitized certain portfolio residential
mortgage loans forming a publicly registered mortgage-backed security with an
initial principal balance of approximately $355 million. The resulting security
is classified as held-to-maturity and will be utilized primarily to serve as
collateral in certain collateralized borrowing arrangements. The securitization
transaction was accounted for as a transfer between loans and mortgage-backed
securities.
3. COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF
SUBSIDIARY TRUST HOLDING SOLELY JUNIOR SUBORDINATED DEFERRABLE INTEREST
DEBENTURES OF THE COMPANY.
On March 11, 1998, BankUnited Capital III, a special purpose wholly owned
financial subsidiary of the Company, issued $102.5 million of 9% Cumulative
Trust Preferred Securities (the "Trust Preferred Securities") and $4.1 million
of common securities, which common securities are also wholly owned by the
Company. BankUnited Capital III simultaneously purchased $106.6 million of 9%
Junior Subordinated Deferrable Interest Debentures issued by BankUnited
Financial Corporation, with terms similar to the Trust Preferred Securities,
which are the sole assets of BankUnited Capital III.
These securities mature March 31, 2028 and pay a preferential cumulative cash
distribution at an annual rate of 9%. BankUnited Financial Corporation and
BankUnited Capital III have the right to defer payment of interest at any time
or from time to time for up to 5 years with respect to each deferral period.
BankUnited Financial Corporation has guaranteed all of the obligations of the
Trust Preferred Securities.
7
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4. CAPITAL
During October 1997, the Company issued in a publicly underwritten offering
3,680,000 shares of Class A Common Stock for net proceeds of $43.9 million.
In September 1997, the Company called the outstanding 932,900 shares of its 8%
Noncumulative Convertible Preferred Stock, Series 1996 (the "Series 1996
Preferred Stock") effective October 10, 1997 at $15.00 per share. Holders of
shares of the Series 1996 Preferred Stock had the right, prior to redemption, to
convert them into shares of the Company's Class A Common Stock at a ratio of
1.67 for one. As of October 1, 1997, 545,191 shares of Series 1996 Preferred
Stock were still outstanding. Of this number, 539,495 shares were subsequently
converted, resulting in the issuance of 900,940 additional shares of Class A
Common Stock, and 5,696 shares were redeemed.
In January 1998, the Company called the outstanding 743,870 shares of its 8%
Noncumulative Convertible Preferred Stock, Series 1993 (the "Series 1993
Preferred Stock") effective February 20, 1998 at $10.00 per share. Holders of
shares of the Series 1993 Preferred Stock had the right to convert them into
shares of the Company's Class A Common Stock at a ratio of one for one. Holders
of 712,464 shares of Series 1993 Preferred Stock exercised their conversion
right, which resulted in the issuance of 712,464 additional shares of Class A
Common Stock, and 31,406 shares of Series 1993 Preferred Stock were redeemed.
During April 1998, the Company issued in a publicly underwritten offering and a
direct offering to certain directors and principal shareholders, 1,081,500
shares of Class A Common Stock, 30,000 shares of Class B Common Stock and 25,000
shares of Noncumulative Convertible Preferred Stock, Series B (the "Series B
Preferred Stock"), for net proceeds of $15.3 million.
In June 1998, holders of 42,655 warrants issued by Suncoast Savings and Loan
Association, FSA ("Suncoast") exercised their conversion rights, which resulted
in the issuance of 71,259 shares of Class A Common Stock. The 5,545 warrants
which remained unexercised after July 9, 1998 expired pursuant to the terms of
the warrant agreements.
The Office of Thrift Supervision ("OTS") requires that the Bank, a wholly owned
subsidiary, meet minimum regulatory, core and risk-based capital requirements.
Currently, the Bank exceeds all regulatory capital requirements. The Bank's
required, actual and excess regulatory capital levels as of June 30, 1998 were
as follows:
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REQUIRED ACTUAL EXCESS
------------------ ------------------ ------------------
% OF % OF % OF
AMOUNT ASSETS AMOUNT ASSETS AMOUNT ASSETS
------ ------ ------ ------ ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Core Capital $ 139,360 4.0% $ 307,793 8.8% $ 168,433 4.8%
Risk-Based Capital $ 138,739 8.0% $ 313,582 18.1% $ 174,843 10.1%
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5. ACQUISITIONS
On June 19, 1998, the Company acquired Central Bank (Central), for 1,386,000
shares of the Company's Class A Common Stock, and merged Central, which had
assets of $93.9 million and deposits of $65.9
8
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million as of June 19, 1998 into the Bank. This acquisition was accounted for
under the purchase method and resulted in goodwill of approximately $10.9
million as of June 30, 1998.
On January 23, 1998, the Company acquired Consumers Bancorp, Inc. ("Consumers"),
for approximately $11 million in a combination of cash and stock, and merged its
wholly-owned subsidiary, Consumers Savings Bank, which had assets of $104.4
million and deposits of $88.3 million as of January 23, 1998, into the Bank.
This acquisition was accounted for under the purchase method and resulted in
goodwill of approximately $5.0 million.
On November 15, 1996, the Company acquired Suncoast. The balance sheet and
results of operations of Suncoast have been included with those of the Company
as of and subsequent to that date.
6. NEW ACCOUNTING PRONOUNCEMENTS
In June 1996, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 125 "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities" and in
December 1996, the FASB issued a related Statement, SFAS No. 127, "Deferral of
the Effective Date of Certain Provisions of SFAS No. 125" (collectively "SFAS
No. 125"). SFAS No. 125 provides accounting and reporting standards for
transfers and servicing of financial assets and extinguishment of liabilities
based on a financial components approach that focuses on control. Portions of
SFAS No. 125 were effective for transactions entered into after December 31,
1996 with the remaining portions effective for transactions entered into after
December 31, 1997. The impact of adopting SFAS No. 125 has not been nor is it
currently expected to be material to the Company's financial position or the
results of operations.
The Company has adopted SFAS No. 128 "Earnings per Share" and as required,
restated all earnings per share to report "Basic" and "Diluted" earnings per
share.
In June 1997, the FASB issued SFAS No. 130 "Reporting Comprehensive Income"
("SFAS No. 130"), which requires that an enterprise report, by major components
and as a single total, the change in its net assets during the period from
non-owner sources; and SFAS No. 131 "Disclosures about Segments of an Enterprise
and Related Information" ("SFAS No. 131"), which establishes annual and interim
reporting standards for an enterprise's operating segments and related
disclosures about its products, services, geographic areas, and major customers.
Adoption of these statements will not impact the Company's consolidated
financial position, results of operations, or cash flows, and any effect will be
limited to the form and content of its disclosures. Both statements are
effective for fiscal years beginning after December 15, 1997, with earlier
application permitted.
In June 1998, the FASB issued SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS No. 133") which is effective for all
fiscal quarters of all fiscal years beginning after June 15, 1999 (October 1,
1999 for the Company). SFAS No. 133 requires that all derivative instruments be
recorded on the balance sheet at their fair value. Changes in the fair value of
derivative instruments are recorded each period in current earnings or other
comprehensive income, depending on whether a derivative instrument is designated
as part of a hedge transaction and, if it is, the type of hedge transaction as
set forth in the guidance. The Company currently utilizes derivative instruments
on a limited basis to hedge the interest rate risks of certain financial
instruments. Interest Rate Cap contracts have been acquired by the Company to
hedge the risk of an increase in market interest rates for variable rate sources
9
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of funds which are partially funding financial instruments which have interest
rate terms which are fixed for certain periods of time (see "Management's
Discussion and Analysis - Significant Factors Affecting the Company's
Business"). The Interest Rate Cap contracts will be treated as cash flow hedges
under SFAS No. 133 and it is anticipated that any change in their fair value
will be substantially offset by an opposite change in the fair value of the
financial instruments designated in the hedge transaction. Under SFAS No. 133,
the portion of change in fair value of any derivative instrument designated as a
hedge which is not effective will be recognized in current period earnings.
Management does not expect the adoption of SFAS No. 133 for its current
derivative instruments to have any material effect on the Company's financial
position or the results of operations.
10
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7. EARNINGS PER SHARE
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FOR THE THREE MONTHS ENDED
JUNE 30, 1998
---------------------------------------------------------
INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Net income before preferred stock
dividends....................................... $ 1,351
Less: Preferred stock dividends.................... (185)
----------
Basic EPS:
Income available to common
stockholders.................................... 1,166 16,667 $ 0.07
========
Effect of Dilutive Securities:
Warrants and options............................... 728
Convertible preferred stock........................ -- --(*)
--------- -------
Diluted EPS:
Income available to common
stockholders and assumed conversions............ $ 1,166 17,395 $ 0.07
========= ======= ========
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FOR THE THREE MONTHS ENDED
JUNE 30, 1997
---------------------------------------------------------
INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Net income before preferred stock
dividends ...................................... $ 1,991
Less: Preferred stock dividends.................... (718)
----------
Basic EPS:
Income available to common
stockholders.................................... 1,273 8,856 $ 0.14
========
Effect of Dilutive Securities:
Warrants and options............................... 459
Convertible preferred stock........................ 34 276(*)
--------- -------
Diluted EPS:
Income available to common
stockholders and assumed conversions............ $1,307 9,591 $ 0.14
========= ======= ========
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FOR THE NINE MONTHS ENDED
JUNE 30, 1998
---------------------------------------------------------
INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Net income before preferred stock
dividends ...................................... $ 5,618
Less: Preferred stock dividends.................... (699)
----------
Basic EPS:
Income available to common
stockholders.................................... 4,919 14,959 $ 0.33
========
Effect of Dilutive Securities:
Warrants and options............................... 733
Convertible preferred stock........................ 79 317(*)
--------- -------
Diluted EPS:
Income available to common
stockholders and assumed conversions............ $ 4,998 16,009 $ 0.31
========= ======= ========
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<CAPTION>
FOR THE NINE MONTHS ENDED
JUNE 30, 1997
---------------------------------------------------------
INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Net income before preferred stock
dividends ...................................... $ 5,433
Less: Preferred stock dividends.................... (2,167)
--------
Basic EPS:
Income available to common
stockholders.................................... 3,266 7,945 $ 0.41
========
Effect of Dilutive Securities:
Warrants and options............................... 432
Convertible preferred stock........................ 192 533(*)
-------- -----
Diluted EPS:
Income available to common
stockholders and assumed conversions............ $ 3,458 8,910 $ 0.39
======== ===== ========
</TABLE>
- ------------
(*) For the three months ended June 30, 1998 and 1997 there were 340,552
and 2,281,270 shares, respectively, of convertible preferred stock
outstanding that were not included in the computation of diluted
earnings per share because of their antidilutive effect. For the nine
months ended June 30, 1998 and 1997 there were 310,627 and 2,168,611
shares, respectively, of convertible preferred stock outstanding that
were not included in the computation of diluted earnings per share
because of their antidilutive effect.
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8. CONTINGENCIES AND OFF-BALANCE SHEET ACTIVITIES
The Company is a party to certain claims and litigation arising in the ordinary
course of business. In the opinion of management, the resolution of such claims
and litigation will not materially affect the Company's consolidated financial
position or results of operations.
During April and May 1998, the Company entered into a total of three interest
rate cap contracts with two major Wall Street firms, in an aggregate nominal
amount of $225 million, for the purpose of hedging a portion of the Company's
interest rate risk for rising interest rates. One of the contracts expires after
18 months and two after 24 months.
13
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis presents a review of the consolidated
operating results and financial condition of the Company for the three and nine
month periods ended June 30, 1998 and 1997. This discussion and analysis should
be read in conjunction with the Consolidated Financial Statements and Notes
thereto contained in the Company's Annual Report on Form 10-K/A for the year
ended September 30, 1997.
This Quarterly Report on form 10-Q/A contains forward looking statements.
Additional written or oral forward looking statements may be made by the Company
from time to time in filings with the Securities and Exchange Commission or
otherwise. Such forward looking statements are within the meaning of that term
in Section 27A of the Securities Act of 1933, as amended, (the "Securities Act")
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Such statements may include, but not be limited to, projections
of income, borrowing costs, prepayment rates, and plans for future operations or
acquisitions, as well as assumptions relating to the foregoing. The words
"believe," "expect," "anticipate," "estimate," "project," "intend," and similar
expressions identify forward looking statements that are inherently subject to
risks and uncertainties, some of which cannot be predicted or quantified. Future
events and actual results could differ materially from those set forth in,
contemplated by, or underlying the forward looking statements.
DISCUSSION OF FINANCIAL CONDITION CHANGES FROM SEPTEMBER 30, 1997 TO
JUNE 30, 1998.
ASSETS
Total assets increased by $1.5 billion, or 71.4%, from $2.1 billion at September
30, 1997, to $3.6 billion at June 30, 1998, principally due to the purchase of
$2.2 billion of residential mortgages as discussed more fully below and the
acquisitions of Consumers and Central which had $104.4 million and $93.9 million
in assets, respectively.
The Company's short-term investments, primarily consisting of Federal Home Loan
Bank ("FHLB") overnight deposits, decreased by $58.3 million, or 73.4%, to $21.1
million at June 30, 1998, from $79.4 million at September 30, 1997. Investments
available for sale increased by $24.7 million or 242.2% to $34.9 million at June
30, 1998, from $10.2 million at September 30, 1997, due primarily to $6.0
million and $12.9 million of investment securities acquired with the
acquisitions of Consumers and Central, respectively.
Mortgage-backed securities held-to-maturity increased by $225.6 million to
$237.0 million at June 30, 1998 from $11.4 million at September 30, 1997 due
primarily to the securitization of $355.8 million mortgage loans less repayments
of approximately $130.2 million. (See footnote No. 2 to the Consolidated
Financial Statements).
Mortgage-backed securities available-for-sale increased by $83.0 million or
76.2% to $191.9 million at June 30, 1998, from $108.9 million at September 30,
1997 due primarily to $17.2 million and $12.4 million of mortgage-backed
securities acquired with the acquisitions of Consumers and Central,
14
<PAGE>
respectively, the purchase of $101.4 million mortgage-backed securities less
sales of $16.6 million and repayments of approximately $31.4 million.
The Company's net loans receivable (including loans held for sale) increased by
$1.1 billion, or 61.1%, to $2.9 billion at June 30, 1998, from $1.8 billion at
September 30, 1997, primarily due to the purchase of $2.2 billion of residential
mortgage loans, loan originations of $202.4 million, and $66.3 million and $44.2
million of loans acquired with the acquisitions of Consumers and Central,
respectively, less repayments of approximately $1.1 billion. Of the loans
purchased, $1.7 billion, or 77.3%, were one year adjustable rate mortgages with
an initial or "teaser" rate below the fully indexed rate. These loans were
purchased primarily to invest the proceeds received from deposits, borrowings
and loan repayments, and to leverage the additional capital ($59.2 million in
net proceeds) obtained from the issuance of 3.68 million shares of Class A
Common Stock during the quarter ended December 31, 1997, the issuance of 1.08
million shares of Class A Common Stock, 30,000 shares of Class B Common Stock
and 25,000 shares of Series B Preferred Stock during the quarter ended June 30,
1998 and the issuance of $102.5 million of Trust Preferred Securities and $4.1
million of common securities. (See "Capital" below).
During the nine months ended June 30, 1998, the Company sold $119.3 million of
loans and recorded a gain of $2.9 million on the sales.
Non-performing assets as of June 30, 1998 were $16.6 million which represents an
increase of $2.3 million or 16.1% from $14.3 million as of September 30, 1997.
Non-performing assets as a percentage of total assets declined 21 basis points
from 0.67% as of September 30, 1997 to 0.46% as of June 30, 1998 due to the
increase in total assets.
The allowance for loan losses increased by $2.5 million from $3.7 million as of
September 30, 1997 to $6.2 million as of June 30, 1998. The increase was
attributable to additional provisions for loan losses resulting primarily from
the growth of the loan portfolio and $362,000 and $906,000 in allowance for loan
losses acquired with the acquisitions of Consumers and Central, respectively.
15
<PAGE>
The following table sets forth information concerning the Company's
non-performing assets as of the dates indicated.
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1998 1997
-------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Non-accrual loans $ 12,917 $ 10,866
Restructured loans 933 1,888
Loans past due 90 days and still accruing -- -
-------- ---------
Total non-performing loans 13,850 12,754
Non-accrual tax certificates 1,323 958
REO and repossessed assets 1,474 611
-------- ---------
Total non-performing assets $ 16,647 $ 14,323
======== =========
Allowance for tax certificates losses $ 514 $ 697
Allowance for loan losses 6,164 3,693
-------- ---------
Total allowance $ 6,678 $ 4,390
======== =========
Non-performing assets as a percentage of
total assets 0.46% 0.67%
Non-performing loans as a percentage of
total loans 0.48% 0.72%
Allowance for loan losses as a percentage of
total loans 0.21% 0.21%
Allowance for loan losses as a percentage of
non-performing loans 44.50% 28.96%
Net charge-offs as a percentage of
average total loans 0.01% 0.04%
</TABLE>
LIABILITIES
Deposits increased by $800.0 million, or 66.7%, to $2.0 billion at June 30, 1998
from $1.2 billion at September 30, 1997. Management believes this increase is
attributable to the Company's opening of additional branch offices, the offering
of competitive interest rates and personalized service in a market area
dominated by super-regional banks and continued industry consolidation. Of this
growth, $88.3 million and $65.9 million in deposits were acquired with the
acquisitions of Consumers and Central, respectively.
The Company has opened four de novo branch offices during the nine months ended
June 30, 1998. The Company has announced that it has signed leases for two
additional de novo branch offices and has plans to open as many as six more
during the next twelve months.
FHLB advances were $906.5 million at June 30, 1998, up $235.0 million from
$671.5 million at September 30, 1997. This increase was used to fund, together
with deposits and other sources, the loan
16
<PAGE>
purchases. (See "Discussion of Financial Condition Changes from September 30,
1997 to June 30, 1998 - Assets").
Securities sold under agreements to repurchase increased $162.6 million to
$192.6 million at June 30, 1998 from $30.0 million at September 30, 1997. This
increase resulted from the Company's strategy of securitizing residential
mortgage loans and was used to fund loan purchases. See Footnote No. 2 to the
Consolidated Financial Statements. The Company has plans to securitize
additional residential mortgage loans to create additional collateral for
possible future borrowings.
During the quarter ended March 31, 1998, BankUnited Capital III issued $102.5
million of Trust Preferred Securities and $4.1 million of common securities. The
net proceeds from the transaction have been used to provide additional capital
to the Bank to enable the Bank to continue its asset growth. (See Footnote No. 3
to the Consolidated Financial Statements).
CAPITAL
The Company's total stockholders' equity was $195.0 million at June 30, 1998, an
increase of $95.4 million, or 95.8%, from $99.6 million at September 30, 1997.
The increase is due primarily to: the issuance of 3.68 million shares of Class A
Common Stock during October 1997 pursuant to a public stock offering with net
proceeds of $43.9 million; the issuance of 501,360 shares of Class A Common
Stock with an approximate value of $7.0 million in connection with the Consumers
acquisition during January 1998; the issuance of 1,386,000 shares of Class A
Common Stock with an approximate value of $21.0 million in connection with the
Central acquisition during June 1998; and the issuance of 1.08 million shares of
Class A Common Stock, 30,000 shares of Class B Common Stock and 25,000 shares of
Series B Preferred Stock in a publicly underwritten offering and a direct
offering to certain directors and principal stockholders' during April 1998 with
net proceeds of $15.3 million.
In September 1997, the Company called the outstanding 932,900 shares of its 8%
Noncumulative Convertible Preferred Stock, Series 1996 (the "Series 1996
Preferred Stock") effective October 10, 1997 at $15.00 per share. Holders of
shares of the Series 1996 Preferred Stock had the right, prior to redemption, to
convert them into shares of the Company's Class A Common Stock at a ratio of
1.67 for one. As of October 1, 1997, 545,191 shares of Series 1996 Preferred
Stock were still outstanding. Of this number, 539,495 shares were subsequently
converted, resulting in the issuance of 900,940 additional shares of Class A
Common Stock, and 5,696 shares were redeemed.
In January 1998, the Company called the outstanding 743,870 shares of its Series
1993 Preferred Stock effective February 20, 1998 at $10.00 per share. Holders of
shares of the Series 1993 Preferred Stock had the right to convert them into
shares of the Company's Class A Common Stock at a ratio of one for one. Holders
of 712,464 shares of Series 1993 Preferred Stock exercised their conversion
right, which resulted in the issuance of 712,464 additional shares of Class A
Common Stock, and 31,406 shares of Series 1993 Preferred Stock were redeemed.
In June 1998, holders of 42,655 warrants issued by Suncoast exercised their
conversion rights which resulted in the issuance of 71,259 shares of Class A
Common Stock. (See Footnote No. 4 to the Consolidated Financial Statements). The
5,545 warrants which remained unexercised after July 9, 1998 expired pursuant to
the terms of the warrant agreements.
17
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
OTS regulations require that savings institutions, such as the Bank, maintain
specified levels of liquid investments in cash, United States government
securities and other qualifying investments. Regulations currently in effect
require the Bank to maintain average liquid assets, as defined, of not less than
4.0% of its net withdrawal deposit accounts plus short term borrowings. For the
three months ended June 30, 1998 the Bank maintained average liquid assets which
was in compliance with this requirement.
The Company periodically has discussions with and reviews financial information
on other financial institutions which may lead to the acquisition of all or part
of that financial institution by the Company.
YEAR 2000
The Company utilizes extensive electronic data processing hardware and software
in its banking operations, among other things, to process and record customer
transactions, determine and collect revenue to be earned and expenses to be paid
in connection with customer transactions, maintain and report customer
transaction information, record and manage the Company's short-term and
long-term investments, accounting and financial management, and risk management.
The Company also relies on certain vendors to provide critical services to the
Company's banking operations, including telecommunications and correspondent
banking. Failure of the electronic data processing hardware or software of the
Company, its third party service bureaus, or certain vendors to properly
recognize the Year 2000 could result in a significant disruption of the
Company's banking operations.
The Company's customer transactions are processed through a network of
electronic data processing workstations in its branch offices and loan servicing
department and are recorded on electronic data processing hardware and software,
a substantial portion of which are maintained by two third party service
bureaus. The Company is in the process of replacing any hardware or software in
its branch offices to ensure compliance with Year 2000 issues, while one of the
Company's third party service bureaus is working with the Company to convert its
customer transaction hardware and software to a more advanced version which is
expected to be completed in February 1999 and which will also be Year 2000
compliant. The third party service bureau which processes the Company's loan
servicing transactions is also expected to be Year 2000 compliant. The Company
is in the process of replacing any other hardware and software used in its
operations as necessary for Year 2000 compliance. The Company is also seeking
Year 2000 compliance certifications from its major telecommunications and
correspondent banking vendors. While a portion of the Company's financial assets
and liabilities are with commercial businesses and government sponsored
entities, the Company's loans and deposits consist primarily of individuals. As
a result, the Company does not expect any significant disruptions resulting from
customers that may not be Year 2000 compliant.
The Company has designated a Year 2000 task force under the direction of a
senior officer of the Company which is identifying and coordinating the
Company's efforts to become Year 2000 compliant. Additionally, the Company and
its banking subsidiary are subject to regulation and supervision by the OTS
which regularly conducts reviews of the safety and soundness of the Company's
operations, including the Company's progress in becoming Year 2000 compliant.
Failure by the Company to adequately prepare for Year 2000 issues could
negatively impact the Company's banking operations resulting in restrictions on
its banking operations by the OTS. No such restrictions exist at this time, nor
does the Company expect any such restrictions resulting from failure to address
Year 2000 issues.
The Company is in the process of preparing a budget of the costs associated with
becoming Year 2000 compliant. The Company is unable at this time to estimate the
amount of such costs.
18
<PAGE>
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND
1997.
NET INCOME AFTER PREFERRED STOCK DIVIDENDS
The Company had net income after preferred stock dividends of $1.2 million for
the three months ended June 30, 1998, compared to net income after preferred
stock dividends of $1.3 million for the three months ended June 30, 1997. All
major categories of income and expense increased significantly in the three
months ended June 30, 1998 as compared to the three months ended June 30, 1997
and reflect the significant growth the Company has experienced in the last year.
Below is a more detailed discussion of each major category of income and
expenses.
NET INTEREST INCOME
Net interest income before provision for loan losses decreased by $700,000, or
8%, to $8.1 million for the three months ended June 30, 1998 from $8.8 million
for the three months ended June 30, 1997. There was an increase in average
earning assets of $1.7 billion, or 106%, to $3.3 billion for the three months
ended June 30, 1998 from $1.6 billion for the three months ended June 30, 1997.
The increase in average earning assets is due primarily to loan purchases. The
decline in the interest rate spread of 123 basis points from 1.98% for the three
months ended June 30, 1997 to 0.75% for the three months ended June 30, 1998 is
due to a decline in the yield on interest earning assets of 106 basis points and
an increase in the rate paid on interest bearing liabilities of 17 basis points,
each for the reasons discussed below.
The increase in interest income of $23.5 million, or 78%, to $53.7 million for
the three months ended June 30, 1998 from $30.2 million for the three months
ended June 30, 1997, reflects increases in interest and fees on loans of $16.6
million and a $4.6 million increase in interest on mortgage-backed securities.
This increase in interest and fees on loans is due to an increase in average
loans outstanding of $1.2 billion, or 86% to $2.6 billion for the three months
ended June 30, 1998 from $1.4 billion for the three months ended June 30, 1997
which resulted primarily from purchases of residential mortgage loans in the
secondary mortgage market. The results of operations for the three months ended
June 30, 1998 reflect an acceleration in the amortization of purchase premiums
on loans and mortgage-backed securities which increased from $408,000 for the
three months ended June 30, 1997 to $2.9 million for the three months ended June
30, 1998. The increase in premium amortization was largely a result of increased
prepayments on purchased mortgage loans. Prepayments on purchased mortgage loans
also negatively affect interest income since such loans are generally serviced
by other entities who only remit funds received from prepayments on a monthly
basis, which results in a loss of interest income from the delay in remittance
and use of the funds from such prepayments (see "Significant Factors Affecting
the Company's Business--Refinancing Risks"). As a result of prepayments and
because many of the loans purchased are adjustable-rate mortgages in the
"teaser" period, the yield on loans declined from 7.74% for the three months
ended June 30, 1997 to 6.72% for the three months ended June 30, 1998. This 102
basis point drop in the yield earned on loans was a significant factor in the
decline of the yield on all interest earning assets by 106 basis points from
7.63% to 6.57%.
The increase in interest expense of $24.1 million, or 113%, to $45.5 million for
the three months ended June 30, 1998 from $21.4 million for the three months
ended June 30, 1997 primarily reflects an increase in interest expense on
interest bearing deposits of $11.7 million, or 84%, from $14.0 million for the
three months ended June 30, 1997, to $25.7 million for the three months ended
June 30, 1998, an increase in interest expense on FHLB advances and other
borrowings of $9.3 million from $5.2 million for the three months ended June 30,
1997 to $14.5 million for the three months ended June 30, 1998 and an increase
in Preferred Dividends of Trust Subsidiaries of $3.2 million to $5.3 million for
the three months ended
19
<PAGE>
June 30, 1998 from $2.1 million for the three months ended June 30, 1997. The
increase in each of these categories reflects significant increases in the
average balance for each category during the period. Of the $808 million growth
in average interest bearing deposits, $713.0 million, or 88% was in certificates
of deposits. Because the growth in interest bearing liabilities was concentrated
in the higher costing categories of certificates of deposits, FHLB advances and
other borrowings, and Preferred Dividends of the Trust Subsidiaries, the rate
paid on interest bearing liabilities increased 17 basis points from 5.65% for
the three months ended June 30, 1997 to 5.82% for the three months ended June
30, 1998.
PROVISION FOR LOAN LOSSES
The provision for loan losses for the three months ended June 30, 1998 was
$300,000 as compared to $280,000 for the three months ended June 30, 1997. Based
on management's analysis and review this allocation was sufficient to support
the loan growth for the three months ended June 30, 1998. (See "Discussion of
Financial Condition Changes from September 30, 1997 to June 30, 1998 - Assets").
The provision for loan losses represents management's estimate of the charge to
operations after reviewing the nature, volume, delinquency status, and inherent
risk in the loan portfolio in relation to the allowance for loan losses.
NON-INTEREST INCOME
Non-interest income for the three months ended June 30, 1998 was $2.5 million
compared with $916,000 for the three months ended June 30, 1997. The gain on
sale of loans and mortgage-backed securities was $1.8 million for the three
months ended June 30, 1998 while there was no gain for the three months ended
June 30, 1997. Service fee income decreased by $447,000 primarily due to the
acceleration of amortization of mortgage servicing rights resulting from an
increase in prepayments.
NON-INTEREST EXPENSES
Operating expenses increased $1.9 million, or 31%, to $8.0 million for the three
months ended June 30, 1998 compared to $6.1 million for the three months ended
June 30, 1997. The increase in expenses is attributable to the growth and branch
office expansion the Company has experienced. Total expenses, as a percentage of
average assets, decreased from 1.49% for the three months ended June 30, 1997 to
0.95% for the three months ended June 30, 1998.
INCOME TAXES
The income tax provision was $949,000 for the three months ended June 30, 1998,
compared to $1.3 million for the three months ended June 30, 1997. The decrease
in income taxes is the result of the Company's lower pre-tax earnings during the
three months ended June 30, 1998, compared to the three months ended June 30,
1997.
PREFERRED STOCK DIVIDENDS
Preferred stock dividends for the three months ended June 30, 1998 were
$185,000, a decrease of $533,000, as compared to $718,000 for the three months
ended June 30,1997. This decrease is the result of the conversion to Class A
Common Stock of the Noncumulative Convertible Preferred Stock, Series C and
C-II, the conversion to common stock and redemption of outstanding shares of the
Series 1996 and Series 1993 Preferred Stock, a decrease in the dividend rate on
the Series B Preferred Stock, as well as the redemption by the Company of
452,883 shares of the 9% Noncumulative Perpetual Preferred Stock.
20
<PAGE>
YIELDS EARNED AND RATES PAID
The following table sets forth certain information relating to the categories of
the Company's interest-earning assets and interest-bearing liabilities for the
periods indicated. All yield and rate information is calculated on an annualized
basis. Yield and rate information for a period is average information for the
period calculated by dividing the income or expense item for the period by the
average balances during the period of the appropriate balance sheet item. Net
interest margin is net interest income divided by average interest-earning
assets. Non-accrual loans are included in asset balances for the appropriate
period, whereas recognition of interest on such loans is discontinued and any
remaining accrued interest receivable is reversed, in conformity with federal
regulations. The yields and net interest margins appearing in the following
table have been calculated on a pre-tax basis.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
-------------------------------------------------------------------------
1998 1997
----------------------------------- ---------------------------------
AVERAGE AVERAGE
BALANCE INTEREST YIELD/RATE BALANCE INTEREST YIELD/RATE
------- -------- ---------- ------- -------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable, net $ 2,576,474 $ 43,317 6.72% $ 1,379,182 $ 26,727 7.74%
Mortgage-backed securities 453,535 6,603 5.82 115,444 1,984 6.87
Short-term investments (1) 120,343 1,725 5.67 11,501 185 6.36
Tax certificates 30,041 565 7.52 39,014 669 6.86
Long-term investments and
FHLB stock, net 83,921 1,471 7.02 38,398 672 7.01
------------ --------- ---- ------------ --------- ----
Total interest-earning assets $ 3,264,314 $ 53,681 6.57 $ 1,583,539 $ 30,237 7.63
------------ --------- ---- ------------ --------- ----
Interest-bearing liabilities:
NOW/money market $ 151,584 $ 1,445 3.82 $ 95,796 $ 602 2.52
Savings 187,753 2,240 4.79 148,689 1,693 4.57
Certificates of deposit 1,543,507 22,031 5.73 830,027 11,759 5.68
Trust Preferred securities 218,500 5,288 9.68 83,143 2,148 10.33
FHLB advances and other
borrowings 1,025,291 14,526 5.62 355,527 5,193 5.78
------------ --------- ---- ------------ --------- ----
Total interest-bearing
liabilities $ 3,126,635 $ 45,530 5.82 $ 1,513,182 $ 21,395 5.65
------------ --------- ---- ------------ --------- ----
Excess of interest-earning assets
over interest-bearing liabilities $ 137,679 $ 70,357
============ ============
Net interest income $ 8,151 $ 8,842
========= =========
Interest rate spread 0.75% 1.98%
===== =====
Net interest margin 1.00% 2.23%
===== =====
Ratio of interest-earning assets to
interest-bearing liabilities 104.40% 104.65%
======= =======
</TABLE>
- ----------------------
(1) Short-term investments include FHLB overnight deposits, securities
purchased under agreements to resell, federal funds sold and
certificates of deposit.
21
<PAGE>
RATE/VOLUME ANALYSIS
The following table presents, for the periods indicated, the change in interest
income and the changes in interest expense attributable to the changes in
interest rates and the changes in the volume of interest-earning assets and
interest-bearing liabilities. For each category of interest-earning assets and
interest-bearing liabilities, information is provided on changes attributable
to: (i) changes in volume (change in volume multiplied by prior year rate); (ii)
changes in rate (change in rate multiplied by prior year volume); (iii) changes
in rate/volume (change in rate multiplied by change in volume); and (iv) total
changes in rate and volume.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
-------------------------------------------------------------
1998 VS. 1997
-------------------------------------------------------------
INCREASE (DECREASE) DUE TO
-------------------------------------------------------------
CHANGES CHANGES CHANGES TOTAL
IN IN IN INCREASE/
VOLUME RATE RATE/VOLUME (DECREASE)
------ ------- ----------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Interest income attributable to:
Loans $ 22,180 $ (2,896) $ (2,694) $ 16,590
Mortgage-backed securities 5,810 (303) (888) 4,619
Short-term investments (1) 1,751 (20) (191) 1,540
Tax certificates (154) 65 (15) (104)
Long-term investments and FHLB
stock 803 (1) (3) 799
-------- ---------- --------- --------
Total interest income 30,390 (3,155) (3,791) 23,444
-------- ---------- --------- --------
Interest expense attributable to:
NOW/money market 351 311 181 843
Savings 445 81 21 547
Certificates of deposit 10,108 88 76 10,272
Trust Preferred securities 3,497 (136) (221) 3,140
FHLB advances and other
borrowings 11,291 (162) (1,796) 9,333
-------- ---------- --------- --------
Total interest expense 25,692 182 (1,739) 24,135
-------- --------- --------- --------
Increase (decrease) in net interest income $ 4,698 $ (3,337) $ (2,052) $ (691)
======== ========== ========= =========
</TABLE>
- ------------
(1) Short-term investments include FHLB overnight deposits, securities
purchased under agreements to resell, federal funds sold and
certificates of deposit.
22
<PAGE>
COMPARISON OF OPERATING RESULTS FOR THE NINE MONTHS ENDED JUNE 30, 1998 AND
1997.
NET INCOME AFTER PREFERRED STOCK DIVIDENDS
The Company had net income after preferred stock dividends of $4.9 million for
the nine months ended June 30, 1998, compared to net income after preferred
stock dividends of $3.3 million for the nine months ended June 30, 1997. All
major categories of income and expense increased significantly in the nine
months ended June 30, 1998 as compared to the nine months ended June 30, 1997
and reflect the significant growth the Company has experienced in the last year.
Below is a more detailed discussion of each major category of income and
expenses.
NET INTEREST INCOME
Net interest income before provision for loan losses increased by $5.0 million,
or 21%, to $28.9 million for the nine months ended June 30, 1998 from $23.9
million for the nine months ended June 30, 1997. This increase is attributable
to an increase in average earning assets of $1.6 billion, or 123%, to $2.9
billion for the nine months ended June 30, 1998 from $1.3 billion for the nine
months ended June 30, 1997, offset by a decline in the net interest spread of
117 basis points. The increase in average earning assets is due primarily to
loan purchases. The decline in the interest rate spread of 117 basis points from
2.25% for the nine months ended June 30, 1997 to 1.08% for the nine months ended
June 30, 1998 is due to a decline in the yield on interest earning assets of 82
basis points and an increase in the rate paid on interest bearing liabilities of
35 basis points, each for the reasons discussed below.
The increase in interest income of $74.5 million, or 101%, to $148.4 million for
the nine months ended June 30, 1998 from $73.9 million for the nine months ended
June 30, 1997, reflects increases in interest and fees on loans of $61.5 million
and increases in interest on mortgage-backed securities of $7.8 million. This
increase in interest and fees on loans is due to an increase in average loans
outstanding of $1.3 billion, or 122% to $2.4 billion for the nine months ended
June 30, 1998 from $1.1 billion for the nine months ended June 30, 1997 which
resulted primarily from purchases of residential mortgage loans in the secondary
mortgage market. The results of operations for the nine months ended June 30,
1998 reflect an acceleration in the amortization of purchase premiums on loans
and mortgage-backed securities which increased from $457,000 for the nine months
ended June 30, 1997 to $4.7 million for the nine months ended June 30, 1998. The
increase in premium amortization was largely a result of increased prepayments
on purchased mortgage loans. Prepayments on purchased mortgage loans also
negatively affect interest income since such loans are generally serviced by
other entities who only remit funds received from prepayments on a monthly
basis, which results in a loss of interest income from the delay in remittance
and use of the funds from such prepayments (see "Significant Factors Affecting
the Company's Business-Refinancing Risks"). As a result of prepayments, and
because many of the loans purchased are adjustable-rate mortgages in the
"teaser" period, the yield on loans declined from 7.87% for the nine months
ended June 30, 1997 to 6.94% for the nine months ended June 30, 1998. This 93
basis point drop in the yield earned on loans was a significant factor in the
decline of the yield on all interest earning assets by 82 basis points from
7.70% to 6.88%.
The increase in interest expense of $69.5 million, or 139%, to $119.5 million
for the nine months ended June 30, 1998 from $50.0 million for the nine months
ended June 30, 1997 primarily reflects an increase in interest expense on
interest bearing deposits of $31.1 million, or 89%, from $34.8 million for the
nine months ended June 30, 1997, to $65.9 million for the nine months ended June
30, 1998, an increase in interest expense on FHLB advances and other borrowings
of $30.2 million from $11.7 million for the nine
23
<PAGE>
months ended June 30, 1997 to $41.9 million for the nine months ended June 30,
1998, and an increase in Preferred Dividends of Trust Subsidiaries of $8.2
million to $11.7 million for the nine months ended June 30, 1998 from $3.5
million for the nine months ended June 30, 1997. The increase in each of these
categories reflects significant increases in the average balance for each
category during the period. Of the $705 million growth in average interest
bearing deposits, $627 million, or 89% was in certificates of deposits. Because
the growth in interest bearing liabilities was concentrated in the higher
costing categories of certificates of deposits, FHLB advances and other
borrowings, and Preferred Dividends of the Trust Subsidiaries, the rate paid on
interest bearing liabilities increased 35 basis points from 5.45% for the nine
months ended June 30, 1997 to 5.80% for the nine months ended June 30, 1998.
PROVISION FOR LOAN LOSSES
The provision for loan losses for the nine months ended June 30, 1998 was
$1,350,000 as compared to $695,000 for the nine months ended June 30, 1997. This
increase is related to the strong loan growth in the nine months ended June 30,
1998. (See "Discussion of Financial Condition Changes from September 30, 1997 to
June 30, 1998 - Assets").
The provision for loan losses represents management's estimate of the charge to
operations after reviewing the nature, volume, delinquency status, and inherent
risk in the loan portfolio in relation to the allowance for loan losses.
NON-INTEREST INCOME
Non-interest income for the nine months ended June 30, 1998 was $5.2 million
compared with $2.5 million for the nine months ended June 30, 1998, an increase
of $2.7 million. This increase is primarily due to the gain on sale of loans and
mortgage-backed securities of $3.3 million recorded in the nine months ended
June 30, 1998 while there was no gain for the same period in 1997.
NON-INTEREST EXPENSES
Operating expenses increased $6.5 million, or 39%, to $23.2 million for the nine
months ended June 30, 1998 compared to $16.7 million for the nine months ended
June 30, 1997. The increase in expenses is attributable to the growth and branch
office expansion the Company has experienced. Total expenses, as a percentage of
average assets, decreased from 1.67% for the nine months ended June 30, 1997 to
1.04% for the nine months ended June 30, 1998.
INCOME TAXES
The income tax provision was $3.8 million for the nine months ended June 30,
1998, compared to $3.6 million for the nine months ended June 30, 1997. The
increase in income taxes is the result of the Company's higher pre-tax earnings
during the nine months ended June 30, 1998, compared to the nine months ended
June 30, 1997.
PREFERRED STOCK DIVIDENDS
Preferred stock dividends for the nine months ended June 30, 1998 were $699,000,
a decrease of $1.5 million, as compared to $2.2 million for the nine months
ended June 30, 1997. This decrease is the result of the conversion to Class A
Common Stock of the Noncumulative Convertible Preferred Stock, Series C and
C-II, the conversion to common stock and redemption of outstanding shares of the
Series 1996 and
24
<PAGE>
Series 1993 Preferred Stock, a decrease in the dividend rate on the Series B
Preferred Stock, as well as the redemption by the Company of 452,883 shares of
the 9% Noncumulative Perpetual Preferred Stock.
YIELDS EARNED AND RATES PAID
The following table sets forth certain information relating to the categories of
the Company's interest-earning assets and interest-bearing liabilities for the
periods indicated. All yield and rate information is calculated on an annualized
basis. Yield and rate information for a period is average information for the
period calculated by dividing the income or expense item for the period by the
average balances during the period of the appropriate balance sheet item. Net
interest margin is net interest income divided by average interest-earning
assets. Non-accrual loans are included in asset balances for the appropriate
period, whereas recognition of interest on such loans is discontinued and any
remaining accrued interest receivable is reversed, in conformity with federal
regulations. The yields and net interest margins appearing in the following
table have been calculated on a pre-tax basis.
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30,
-------------------------------------------------------------------------
1998 1997
----------------------------------- ---------------------------------
AVERAGE AVERAGE
BALANCE INTEREST YIELD/RATE BALANCE INTEREST YIELD/RATE
------- -------- ---------- ------- -------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable, net $ 2,417,931 $ 125,944 6.94% $1,089,582 $ 64,405 7.87%
Mortgage-backed securities 252,385 12,560 6.64 95,671 4,844 6.75
Short-term investments (1) 85,972 3,696 5.67 30,943 1,318 5.62
Tax certificates 36,597 2,004 7.30 35,253 1,966 7.44
Long-term investments and
FHLB stock, net 78,722 4,175 7.08 26,876 1,399 6.95
------------ ---------- ---- ---------- --------- ----
Total interest-earning assets $ 2,871,607 $ 148,379 6.88 $1,278,325 $ 73,932 7.70
------------ ---------- ---- ---------- --------- ----
Interest-bearing liabilities:
NOW/money market $ 119,827 $ 3,331 3.72 $ 88,953 $ 1,602 2.41
Savings 179,657 6,361 4.73 132,438 4,543 4.59
Certificates of deposit 1,308,987 56,224 5.74 682,330 28,678 5.62
Trust Preferred securities 158,051 11,664 9.84 45,150 3,525 10.41
FHLB advances and other
borrowings 975,987 41,921 5.67 272,974 11,665 5.64
------------ ---------- ---- ---------- --------- ----
Total interest-bearing
liabilities $ 2,742,509 $ 119,501 5.80 $1,221,845 $ 50,013 5.45
------------ ---------- ---- ---------- --------- ----
Excess of interest-earning assets
over interest-bearing liabilities $ 129,098 $ 56,480
============ ==========
Net interest income $ 28,878 $ 23,919
========== =========
Interest rate spread 1.08% 2.25%
===== =====
Net interest margin 1.34% 2.48%
===== =====
Ratio of interest-earning assets to
interest-bearing liabilities 104.71% 104.62%
======= =======
</TABLE>
- -----------------
(1) Short-term investments include FHLB overnight deposits, securities
purchased under agreements to resell, federal funds sold and
certificates of deposit.
25
<PAGE>
RATE/VOLUME ANALYSIS
The following table presents, for the periods indicated, the change in interest
income and the changes in interest expense attributable to the changes in
interest rates and the changes in the volume of interest-earning assets and
interest-bearing liabilities. For each category of interest-earning assets and
interest-bearing liabilities, information is provided on changes attributable
to: (i) changes in volume (change in volume multiplied by prior year rate); (ii)
changes in rate (change in rate multiplied by prior year volume); (iii) changes
in rate/volume (change in rate multiplied by change in volume); and (iv) total
changes in rate and volume.
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30,
-------------------------------------------------------------
1998 VS. 1997
-------------------------------------------------------------
INCREASE (DECREASE) DUE TO
-------------------------------------------------------------
CHANGES CHANGES CHANGES TOTAL
IN IN IN INCREASE/
VOLUME RATE RATE/VOLUME (DECREASE)
------ ------- ----------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Interest income attributable to:
Loans $ 75,342 $ (5,720) $ (8,083) $ 61,539
Mortgage-backed securities 7,935 (83) (136) 7,716
Short-term investments (1) 2,344 12 22 2,378
Tax certificates 76 (36) (2) 38
Long-term investments and FHLB
stock 2,726 20 30 2,776
-------- --------- -------- --------
Total interest income 88,423 (5,807) (8,169) 74,447
-------- ---------- --------- --------
Interest expense attributable to:
NOW/money market 556 871 302 1,729
Savings 1,620 146 52 1,818
Certificates of deposit 26,338 630 578 27,546
Trust Preferred securities 8,815 (193) (483) 8,139
FHLB advances and other
borrowings 32,037 61 (1,842) 30,256
-------- --------- --------- --------
Total interest expense 69,366 1,515 (1,393) 69,488
-------- --------- --------- --------
Increase (decrease) in net interest income $ 19,057 $ (7,322) $ (6,776) $ 4,959
======== ========== ========= ========
</TABLE>
- ------------
(1) Short-term investments include FHLB overnight deposits, securities
purchased under agreements to resell, federal funds sold and
certificates of deposit.
26
<PAGE>
SIGNIFICANT FACTORS AFFECTING THE COMPANY'S BUSINESS
The future operating results of the Company may be affected by a number of
factors, including the matters discussed below:
POTENTIAL IMPACT OF CHANGES IN INTEREST RATES. The Company's profitability is
dependent to a large extent on its net interest income, which is the difference
between its income on interest-earning assets and its expense on
interest-bearing liabilities. The Company is affected by changes in general
interest rate levels and by other economic factors beyond its control.
Interest rate risk results when the maturity or repricing intervals and interest
rate indices of the interest-earning assets, interest-bearing liabilities, and
off-balance sheet financial instruments are different, creating a risk that
changes in the level of market interest rates will result in disproportionate
changes in the value of, and the net earnings generated from, the Company's
interest-earning assets, interest-bearing liabilities, and off-balance sheet
financial instruments. The Company's exposure to interest rate risk is managed
primarily through the Company's strategy of selecting the types and terms of
interest-earning assets and interest-bearing liabilities which generate
favorable earnings, while limiting the potential negative effects of changes in
market interest rates.
In addition to periodic gap reports comparing the sensitivity of
interest-earning assets and interest-bearing liabilities to changes in interest
rates, management also utilizes a quarterly report ("model") prepared for the
Bank by the OTS based on information provided by the Bank which measures the
Bank's exposure to interest rate risk. The model calculates the present value of
assets, liabilities, off-balance sheet financial instruments, and equity ("net
portfolio value" or "NPV") at current interest rates, and at hypothetical higher
and lower interest rates at one percent intervals.
The following table presents the Bank's exposure to interest rate risk
calculated as a percentage change in NPV to the present value of total assets as
of March 31, 1998, as calculated by the OTS model based on information provided
to the OTS by the Company.
<TABLE>
<CAPTION>
CHANGE IN INTEREST RATES RATIO OF NPV
IN BASIS POINTS PRESENT VALUE OF TO THE PRESENT VALUE OF
(RATE SHOCK) NPV TOTAL ASSETS TOTAL ASSETS CHANGE
------------------------ --- ---------------- ----------------------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
+200 $239,572 $3,177,314 7.54% (2.95)%
+100 301,930 3,249,667 9.29 (1.20)
Static 346,730 3,304,679 10.49 -
-100 373,419 3,342,159 11.17 0.68
-200 387,884 3,368,205 11.52 1.02
</TABLE>
While the above table reflects a small increase in exposure to interest rate
risk from the December 31, 1997 period, such exposure can change significantly
upon changes in balance sheet composition and other variables including market
interest rates and prepayments.
RISKS ASSOCIATED WITH THE COMPANY'S ADJUSTABLE RATE MORTGAGE LOANS. The Company
has purchased and intends to continue to purchase a significant amount of
residential mortgage loans. During the nine months ended June 30, 1998 and the
year ended September 30, 1997, the Company purchased $2.2 billion and
27
<PAGE>
$913.7 million, respectively, of one-to-four family residential loans, of which
$ 1.9 billion and $728.2 million, respectively, were adjustable rate mortgage
loans ("ARMs"). At June 30, 1998 the Company's residential loan portfolio
included $2.0 billion of ARMs (80% of the Company's gross loan portfolio). The
ARMs purchased by the Company generally have annual interest rate adjustment
caps that limit rate increases or decreases to 2% per year. Further, the ARMs
purchased by the Company generally provide for initial rates of interest below
the rates which would prevail were the contractual index and margin used for
repricing applied initially (the "teaser rate period").
If market interest rates rise rapidly, the annual and lifetime interest rate
adjustment caps on the ARMs may limit the increase in the interest rates on the
ARMs relative to the increase in market interest rates, and yields on ARMs with
teaser rates may be limited to repricing at interest rates below the contractual
index plus the margin. At June 30, 1998, $1.3 billion of the Company's ARM loans
(44% of the Company's gross loan portfolio) were in the teaser rate period with
an average teaser rate of 6.55% and an average fully indexed rate of 8.26%.
Rapid increases in market interest rates may not be fully reflected in loans
which are in the teaser rate period and may, accordingly, have a negative impact
on the Company's net interest margin.
REFINANCING RISKS. A significant portion of the Company's loans receivable are
single-family residential mortgages that generally have an imbedded option that
allows the borrower to prepay the loan at any time without penalty. A
substantial portion of these loans have been purchased by the Company in the
secondary mortgage market at a premium.
In the current interest rate environment, when long-term interest rates are
generally low on a historical basis and the spread between short-term rates and
long-term rates is relatively narrow, prepayments of ARMs and higher fixed-rate
mortgages tend to accelerate. In addition, at June 30, 1998, $1.3 billion of the
Company's ARMs had teaser rates, substantially all of which will be subject to
interest rate adjustments within the next twelve months. Teaser rate loans may
tend to be prepaid near the end of the teaser period in the current interest
rate environment, creating higher levels of prepayments on loans overall which
the Company may not be able to reinvest quickly enough and at sufficient
interest rates to mitigate the effect on its net interest margin.
Premiums, net of discount and deferred origination costs, which at June 30, 1998
were $41.9 million, are recognized as a reduction to interest income using the
interest method over the contractual life of the loans adjusted for estimated
prepayments, based on the Company's historical prepayment experience. As
prepayments accelerate, the Company's historical prepayment experience changes,
resulting in a shortening of the estimated life of the loan portfolio, and an
increase in the rate at which premiums are expensed, resulting in a greater
reduction in interest income. Accelerated prepayments could, therefore, have a
material adverse effect on the Company's results of operations. Based on a
continuation of the current interest rate environment, a significant portion of
the premium may be expensed in a relatively short term period.
In addition, the Company would likely apply a portion of the proceeds of any
prepaid loans to the purchase of ARMs with teaser rates (possibly with lower
teaser rates), thereby increasing the duration of the teaser period for the
Company's loan portfolio. Also, no assurance can be given that the Company will
be able to reinvest, on satisfactory terms, the proceeds of loan prepayments.
28
<PAGE>
AVAILABILITY OF MORTGAGE LOANS. The Company's net income depends significantly
on its ability to acquire mortgage loans on acceptable terms and at favorable
spreads over the Company's borrowing costs. If the Company is unable to acquire
mortgage loans, its results of operations will be adversely affected.
In acquiring mortgage loans, the Company will compete with REITs, investment
banking firms, savings and loan associations, banks, mortgage bankers, insurance
companies, mutual funds, other lenders, FNMA, FHLMC, GNMA and other entities
purchasing mortgage loans, some of which have greater financial resources than
the Company. Increased competition for the acquisition of eligible mortgage
loans or a diminution in the supply could result in higher prices and, thus,
lower yields on such mortgage loans that could further narrow the yield spread
over borrowing costs.
The availability of mortgage loans meeting the Company's criteria is dependent
upon, among other things, the size and level of activity in the residential real
estate lending market, which depend on various factors, including the level of
interest rates, regional and national economic conditions and changes in
residential real estate values. To the extent the Company is unable to acquire a
sufficient volume of mortgage loans meeting its criteria, the Company's results
of operations would be adversely affected.
RISKS ASSOCIATED WITH INVESTMENTS AND MORTGAGE-BACKED SECURITIES. The Company
purchases fixed and adjustable rate mortgage-backed and other securities for
liquidity, yield and risk management purposes. The Company has also, and will
continue to, securitize whole loans in its loan portfolio primarily for
liquidity and collateral purposes. Such securities provide liquidity through the
ability of the Company to dispose of certain securities from time to time and
the ability of the Company to use securities as collateral for borrowings,
thereby adding leverage capability and lower borrowing costs. Certain securities
are purchased for risk management purposes when the terms of those securities
mitigate interest rate, credit, prepayment or basis risk within the Company's
balance sheet. Certain purchases of securities may increase risk in one area
while decreasing risk in another, or may not mitigate any existing risk. The
Company manages its exposure to risk in its acquisition of securities through
its selection of prices, collateral and terms. Changes in market interest rates
and/or prepayment rates associated with the Company's investments and
mortgage-backed securities could negatively impact the Company's net interest
margin.
29
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The market value of the Company's assets and liabilities are subject to change
primarily from risk of change in market interest rates, prepayments, and
non-parallel changes in interest rate indices (basis risk). See "Significant
Factors Affecting the Company's Business" for a further discussion.
30
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
27.1 Financial Data Schedule
(b) Reports on Form 8-K.
The Company filed the following current reports on
Form 8-K during the quarter for which this report is
filed:
(i) Current Report on Form 8-K dated June 19,
1998 reporting the
Company's acquisition of Central Bank.
31
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
BANKUNITED FINANCIAL CORPORATION
By: /s/ CLIFFORD A. HOPE
-----------------------------
Clifford A. Hope
Executive Vice President
and Chief Financial Officer
Date: September 29, 1998
32
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
Form 10-Q/A for the Quarter Ended June 30, 1998
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NO. NUMBERED PAGE
- ----------- -------------
<S> <C> <C>
27.1 Financial Data Schedule...............................
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF BANK UNITED, FSB FOR THE NINE MONTHS ENDED JUNE 30, 1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> JUN-30-1998
<CASH> 18,192
<INT-BEARING-DEPOSITS> 21,081
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 226,801
<INVESTMENTS-CARRYING> 301,789
<INVESTMENTS-MARKET> 0
<LOANS> 2,870,753
<ALLOWANCE> 6,164
<TOTAL-ASSETS> 3,584,123
<DEPOSITS> 2,017,244
<SHORT-TERM> 1,317,576
<LIABILITIES-OTHER> 54,341
<LONG-TERM> 0
0
9
<COMMON> 181
<OTHER-SE> 194,772
<TOTAL-LIABILITIES-AND-EQUITY> 3,584,123
<INTEREST-LOAN> 125,944
<INTEREST-INVEST> 22,435
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 148,379
<INTEREST-DEPOSIT> 65,916
<INTEREST-EXPENSE> 119,501
<INTEREST-INCOME-NET> 28,878
<LOAN-LOSSES> 1,350
<SECURITIES-GAINS> 3,291
<EXPENSE-OTHER> 23,249
<INCOME-PRETAX> 9,441
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,919
<EPS-PRIMARY> .33
<EPS-DILUTED> .31
<YIELD-ACTUAL> 1.34
<LOANS-NON> 12,917
<LOANS-PAST> 0
<LOANS-TROUBLED> 933
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,693
<CHARGE-OFFS> 180
<RECOVERIES> 11
<ALLOWANCE-CLOSE> 6,164
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
