EXHIBIT 13.0
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
December 31,
(In thousands) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Total assets $ 2,965,850 2,395,523 1,974,890 1,583,545 1,472,816
Loans receivable, net 1,790,126 1,296,702 1,138,253 836,882 560,385
Securities available for sale 937,299 889,251 499,380 370,105 503,058
Debt securities held to maturity - 66,404 97,307 127,796
Mortgage-backed securities held to maturity - - 163,057 197,940 190,714
Real estate owned, net 324 200 455 1,038 2,033
Deposits 2,080,613 1,722,710 1,365,012 1,137,788 1,083,446
FHLB advances 537,000 325,200 247,000 178,450 134,175
Other borrowed funds 212,232 115,146 219,794 147,983 136,408
Stockholders' equity 105,583 119,867 112,865 99,384 98,519
</TABLE>
SELECTED FINANCIAL RATIOS AND OTHER DATA
<TABLE>
<CAPTION>
At or For the Years Ended December 31,
(Dollars in thousands,
except share and per share data) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Performance Ratios:
Return on average assets 0.46% 0.37 0.62 0.62 0.63
Return on average assets excluding SAIF
assessment charge(1) 0.46 0.37 0.62 0.89 0.63
Return on average equity 11.03 6.92 10.41 9.83 9.27
Return on average equity excluding SAIF
assessment charge(1) 11.03 6.92 10.41 14.04 9.27
Stockholders' equity to total assets 3.56 5.00 5.72 6.28 6.69
Net interest spread 2.68 2.67 2.89 3.12 2.99
Net interest margin(2) 2.72 2.78 3.06 3.29 3.17
Average interest-earning assets to
average interest-bearing liabilities 101.01 102.28 104.02 103.95 104.23
Operating expenses to average assets(3) 2.95 3.49 2.54 2.04 2.18
Stockholders' equity per share(4) $ 11.73 13.53 12.85 11.49 10.92
Asset Quality Ratios:
Non-performing loans to total loans(5) 0.42% 0.64 1.09 1.64 2.97
Non-performing assets to total assets 0.27 0.36 0.66 0.94 1.28
Allowance for loan losses to non-
performing loans(5) 216.56 166.70 99.97 77.05 50.80
Allowance for loan losses to total loans 0.92 1.07 1.09 1.26 1.51
Other Data:
Number of deposit accounts 392,289 323,794 234,183 171,382 155,424
Mortgage loans serviced for others $ 271,705 269,089 174,866 197,017 219,752
Loan originations and purchases $ 1,381,653 1,221,526 471,338 363,576 143,329
Facilities:
Full service offices 71 65 40 14 9
</TABLE>
(1) Excludes the SAIF assessment charge in 1996 of $6.8 million.
(2) Calculation is based on net interest income before provision
for loan losses divided by average interest-earning assets.
(3) For purposes of calculating these ratios, operating expenses
equal non-interest expense less real estate operations, net, non-
performing loan (income) expense, amortization of goodwill, and
non-recurring expenses. Real estate operations, net was
($220,000), $8,000, $0.4 million, $0.3 million and $1.4 million for
the five years ended December 31, 1999, respectively. For the five
years ended December 31, 1999, non-performing loan expense (income)
was $166,000, ($1.0 million), $0.2 million, $0.4 million and $0.6
million, respectively. Amortization of goodwill for the five years
ended December 31, 1999 was $1.3 million, $0.8 million, $0.1
million, $0.1 million and $40,000, respectively. For the year
ended December 31, 1996, the SAIF assessment charge of $6.8 million
was also excluded.
(4) Based on 9,000,237, 8,859,692, 8,784,700, 8,650,814 and
9,022,914 shares outstanding at December 31, 1999, 1998, 1997, 1996
and 1995, respectively. For purposes of calculating these ratios,
non-performing loans consist of all non-accrual loans and
restructured loans.
SELECTED CONSOLIDATED OPERATING DATA
<TABLE>
<CAPTION>
Years Ended December 31,
(Dollars in thousands,
except per share data) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Interest income $183,863 151,685 126,306 109,253 96,434
Interest expense 112,906 93,776 74,400 61,368 55,115
Net interest income 70,957 57,909 51,906 47,885 41,319
Provision for loan losses 3,625 2,665 2,750 3,125 2,775
Net interest income after provision
for loan losses 67,332 55,244 49,156 44,760 38,544
Non-interest income:
Loan fees and servicing income 2,740 1,627 3,110 1,807 2,241
Mortgage banking income 3,734 3,000 - - -
Savings/checking fees 15,747 9,822 5,478 3,378 2,861
Net gain (loss) on sales of
interest-earning assets 750 2,926 (5) 140 126
Insurance, annuity and mutual fund fees 8,259 5,874 3,758 3,114 2,525
Other 3,138 2,596 1,571 1,115 1,269
Total non-interest income 34,368 25,845 13,912 9,554 9,022
Non-interest expense:
Compensation and benefits 44,687 36,935 24,251 15,737 14,889
Occupancy and equipment 12,988 11,005 6,334 3,478 3,334
Real estate operations, net (220) 8 352 277 1,405
SAIF recapitalization charge - - - 6,800 -
Federal deposit insurance premiums 1,065 870 736 2,327 2,653
Other 23,710 21,195 14,174 9,836 9,511
Total non-interest expense 82,230 70,013 45,847 38,455 31,792
Income before income
tax expense 19,470 11,076 17,221 15,859 15,774
Income tax expense 6,863 2,926 6,138 6,434 7,230
Net income $ 12,607 8,150 11,083 9,425(1) 8,544
Net income per common share:
Basic $ 1.44 0.95 1.32 1.13(1) 0.99
Diluted $ 1.38 0.89 1.24 1.08(1) 0.96
(1) Net income for 1996 excluding the SAIF assessment charge
would have been $13.5 million, or $1.62 per basic common share
($1.55 per share, diluted).
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Haven Bancorp, Inc. ("Haven Bancorp" or the "Company") is the
Holding Company for CFS Bank ("CFS" or the "Bank"), a federally
chartered stock savings bank. The Company is headquartered in
Westbury, New York and its principal business currently consists
of the operation of its wholly owned subsidiary, CFS Bank.
The Bank's principal business has been and continues to be
attracting retail deposits from the general public and investing
those deposits, together with funds generated from operations
primarily in one- to four-family, owner occupied residential
mortgage loans. In addition, the Bank will invest in debt, equity
and mortgage-backed securities to supplement its lending
portfolio. The Bank also invests, to a lesser extent, in multi-
family residential mortgage loans, commercial real estate loans
and other marketable securities.
The Bank's results of operations are dependent primarily on its
net interest income, which is the difference between the interest
income earned on its loan and securities portfolios and its cost
of funds, which consist of the interest paid on its deposits and
borrowed funds. The Bank's net income also is affected by its
non-interest income, its provision for loan losses and its
operating expenses consisting primarily of compensation and
benefits, occupancy and equipment, real estate operations, net,
federal deposit insurance premiums and other general and
administrative expenses. The earnings of the Bank are
significantly affected by general economic and competitive
conditions, particularly changes in market interest rates, and to
a lesser extent by government policies and actions of regulatory
authorities.
FINANCIAL CONDITION
The Company had total assets of $2.97 billion at December 31,
1999, compared to $2.40 billion at December 31, 1998, an increase
of $570.3 million, or 23.8%.
The Company's portfolio of debt and equity securities and
mortgage-backed securities ("MBSs") available for sale ("AFS")
totaled $937.3 million, an increase of $48.0 million, or 5.4% at
December 31, 1999, compared to $889.3 million at December 31,
1998. At December 31, 1999, $184.5 million of the AFS securities
portfolio were adjustable-rate securities and $752.8 million were
fixed-rate securities. The growth in the AFS portfolio in 1999
was primarily due to securities purchased with the investment of
deposit flows during the year not utilized for portfolio loan
originations. During 1999, the Company purchased $452.1 million
of debt and equity securities and MBSs for its AFS portfolio, of
which $103.5 million were adjustable-rate and $348.6 million were
fixed-rate. Principal repayments, calls and proceeds from sales
of AFS securities totaled $363.6 million.
Loans receivable, net, increased by $493.4 million, or 38.1%
during 1999 to $1.79 billion at December 31, 1999, from $1.30
billion at December 31, 1998. Loan originations and purchases
during 1999 totaled $1.38 billion (comprised of $1.20 billion of
residential one- to four-family mortgage loans, $158.7 million of
commercial and multi-family real estate loans, $11.2 million of
construction loans and $8.9 million of consumer loans).
Commercial and multi-family real estate loan originations were
$158.7 million in 1999, a slight increase over 1998 originations
of $156.8 million. Total loans increased substantially while the
Company continued towards its objective to invest in adjustable-
rate loans. At December 31, 1999, total loans were comprised of
$1.16 billion adjustable-rate loans and $646.2 million fixed-rate
loans. During 1999, principal repayments and satisfactions
totaled $259.1 million and $0.6 million was transferred to real
estate owned ("REO").
Loans held for sale increased by $28.5 million, or 52.6% from
$54.2 million at December 31, 1998, to $82.7 million at December
31, 1999. Loans originated for sale in 1999 totaled $634.8
million. During 1999, $561.7 million loans were sold to
investors on a servicing released basis, and $44.6 million in
loans previously originated for sale were transferred to the
Bank's portfolio.
Deposits totaled $2.08 billion at December 31, 1999, an increase
of $357.9 million, or 20.8% from $1.72 billion at December 31,
1998. Interest credited totaled $71.4 million in addition to
deposit growth of $286.5 million. As of December 31, 1999, the
Bank had sixty-three in-store branches with total deposits of
$842.3 million compared to fifty-seven locations with deposits
totaling $504.0 million at December 31, 1998. Total in-store
deposits increased $338.4 million, or 67.1% from December 31,
1998, to December 31, 1999. The in-store branches are located in
the New York City boroughs of Queens, Brooklyn, Manhattan, and
Staten Island, the New York State counties of Nassau, Suffolk,
Rockland and Westchester, and in Connecticut and New Jersey.
Core deposits, which includes savings, money market, NOW, and
demand accounts, equaled 46.7% of total in-store branch deposits,
compared to 44.1% in traditional branches. Overall, core
deposits represented 45.4% of total deposits at December 31,
1999, compared to 47.7% at December 31, 1998.
Borrowed funds increased 70.1% to $749.2 million at December 31,
1999, from $440.3 million at December 31, 1998. The increase in
borrowed funds were utilized primarily to fund real estate loan
originations. During 1999, the Company issued $25.3 million of
capital securities through Haven Capital Trust II. Additionally,
during 1999, the Bank completed a leverage program requiring
additional borrowings to fund purchases for the AFS portfolio to
offset the additional interest expense resulting from the capital
securities. In addition, at December 31, 1998, the Company had
$97.5 million in securities purchased, net of securities sold,
against commitments to brokers which was reflected as due to
broker in the statement of financial condition, with the related
securities included in securities AFS. These transactions settled
in January 1999, and the Company utilized borrowed funds to repay
the obligations to brokers. Including the effect of these
transactions, borrowed funds and due to broker increased by
$211.4 million, or 39.3%, from December 31, 1998 to December 31,
1999.
Stockholders' equity totaled $105.6 million, or 3.6% of total
assets at December 31, 1999, a decrease of $14.3 million, or
11.9% from $119.9 million, or 5.0% of total assets at December
31, 1998. The decrease is the result of the unrealized
depreciation in the value of securities AFS, net of tax, of $26.4
million, primarily as a result of the increase in market interest
rates, as well as dividends declared of $2.6 million. These were
partially offset by net income of $12.6 million, an increase of
$1.5 million related to the allocation of the Bank's Employee
Stock Ownership Plan ("ESOP") stock, amortization of awards of
shares of common stock by the Bank's Recognition and Retention
Plans and Trusts ("RRPs") and amortization of deferred
compensation plan benefits and $0.6 million related to stock
options exercised, and related tax effect.
ASSET/LIABILITY MANAGEMENT
As a financial institution, the Company's primary component of
market risk is interest rate volatility. Fluctuations in interest
rates will ultimately impact both the level of income and expense
recorded on a large portion of the Bank's assets and liabilities,
and the market value of all interest-earning assets, other than
those which possess a short term to maturity. Since virtually all
of the Company's interest-bearing liabilities and interest-
earning assets are held by the Bank, virtually all of the
Company's interest-rate risk exposure lies at the Bank level. As
a result, all significant interest rate risk management
procedures are performed at the Bank level. Based upon the Bank's
nature of operations, the Bank is not subject to foreign currency
exchange or commodity price risk. The Bank's real estate loan
portfolio, concentrated primarily within the New York
metropolitan area, is subject to risks associated with the local
economy. The Bank does not own any trading assets. The Bank's
interest rate management strategy is designed to stabilize net
interest income and preserve capital over a broad range of
interest rate movements.
The matching of assets and liabilities may be analyzed by
examining the extent to which such assets and liabilities are
"interest rate sensitive" and by monitoring an institution's
interest rate sensitivity "gap". An asset or liability is said to
be interest rate sensitive within a specific time period if it
will mature or reprice within that time period. The interest rate
sensitivity gap is defined as the difference between the amount
of interest-earning assets maturing or repricing within a
specific time period and the amount of interest-bearing
liabilities maturing or repricing within the same period. A gap
is considered positive when the amount of interest-earning assets
maturing or repricing exceeds the amount of interest-bearing
liabilities maturing or repricing within the same period. A gap
is considered negative when the amount of interest-bearing
liabilities maturing or repricing exceeds the amount of interest-
earning assets maturing or repricing within the same period.
Accordingly, in a rising interest rate environment, an
institution with a positive gap would be in a better position to
invest in higher yielding assets which would result in the yield
on its assets increasing at a pace closer to the cost of its
interest-bearing liabilities, than would be the case if it had a
negative gap. During a period of falling interest rates, an
institution with a positive gap would tend to have its assets
repricing at a faster rate than one with a negative gap, which
would tend to restrain the growth of its net interest income.
The Company closely monitors its interest rate risk as such risk
relates to its operational strategies. The Company's Board of
Directors has established an Asset/Liability Committee ("ALCO"),
responsible for reviewing its asset/liability policies and
interest rate risk position, which generally meets weekly and
reports to the Board on interest rate risk and trends on a
quarterly basis.
The following table ("gap table") sets forth the amounts of
interest-earning assets and interest-bearing liabilities
outstanding at December 31, 1999, which are anticipated by the
Company, based upon certain assumptions described below, to
reprice or mature in each of the future time periods shown.
Adjustable-rate assets and liabilities are included in the table
in the period in which their interest rates can next be adjusted.
For purposes of this table, prepayment assumptions for fixed
interest-rate assets are based upon industry standards as well as
the Company's historical experience and estimates. The
computation of the estimated one-year gap assumes that the
interest rate on savings account deposits is variable and,
therefore, interest sensitive. During the rising interest rate
environment throughout 1999, these funds were maintained at an
average rate of 3.14%. The Company has assumed that its savings,
NOW and money market accounts, which totaled $833.4 million at
December 31, 1999, are withdrawn at the annual percentages of
approximately 8%, 4% and 1%, respectively.
</TABLE>
<TABLE>
<CAPTION>
More Than More Than More Than More Than
Three One Year Three Five Years Ten Years
Months Three to to Years to to to More Than
(Dollars in thousands) or Less Twelve Months Three Years Five Years Ten Years Twenty Years Twenty Years Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Mortgage loans (1) $ 103,909 246,835 709,499 452,168 256,098 - - 1,768,509
Other loans (1) 9,089 6,787 1,390 1,652 2,337 4,072 - 25,327
Loans held for sale 82,709 - - - - - - 82,709
Securities available for sale 937,299 - - - - - - 937,299
Money market investments 1,238 - - - - - - 1,238
Total interest-earning assets 1,134,244 253,622 710,889 453,820 258,435 4,072 - 2,815,082
Premiums, net of unearned
discount and deferred fees(2) 3,171 709 1,988 1,269 723 11 - 7,871
Net interest-earning assets 1,137,415 254,331 712,877 455,089 259,158 4,083 - 2,822,953
Interest-bearing liabilities:
Savings accounts 13,124 39,373 178,178 116,244 147,492 101,995 28,561 624,967
NOW accounts 1,406 4,233 74,093 19,800 26,429 14,779 2,741 143,481
Money market accounts 175 513 33,693 15,839 12,394 2,249 131 64,994
Certificate accounts 312,951 664,277 137,745 18,663 1,797 - - 1,135,433
Borrowed funds 243,696 120,310 76,710 20,232 238,000 - 50,284 749,232
Total interest-bearing liabilities $571,352 828,706 500,419 190,778 426,112 119,023 81,717 2,718,107
Interest sensitivity gap $566,063 (574,375) 212,458 264,311 (166,954) (114,940) (81,717) 104,846
Cumulative interest sensitivity gap $566,063 (8,312) 204,146 468,457 301,503 186,563 104,846
Cumulative interest sensitivity gap
as a percentage of total assets 19.09% (0.28%) 6.88% 15.80% 10.17% 6.29% 3.54%
Cumulative net interest-earning
assets as a percentage of
interest-sensitive liabilities 199.07% 99.41% 110.74% 122.40% 111.98% 107.08% 103.86%
</TABLE>
(1) For purposes of the gap analysis, mortgage and other loans
are reduced for non-accural loans but are not reduced for the
allowance for loan losses.
(2) For purposes of the gap analysis, premiums, unearned discount
and deferred fees are pro-rated.
At December 31, 1999, the Company's total interest-bearing
liabilities maturing or repricing within one year exceeded its
total interest-earning assets maturing or repricing within the
same time period by $8.3 million, representing a one year
negative cumulative gap ratio of 0.28%.
In order to reduce its sensitivity to interest rate risk, the
Company's current strategy includes emphasizing the origination
or purchase for portfolio of adjustable-rate loans, debt
securities and MBSs and maintaining an AFS securities portfolio.
During 1999, the Company purchased $54.4 million of adjustable-
rate MBSs which are expected to help protect net interest margins
during periods of rising interest rates. In 1999, the Company
originated or purchased $613.5 million of adjustable-rate
mortgage loans for portfolio. Historically, the Company has been
able to maintain a substantial level of core deposits which the
Company believes helps to limit interest rate risk by providing a
relatively stable, low cost long-term funding base. At December
31, 1999, core deposits represented 45.4% of deposits compared to
47.7% of deposits at December 31, 1998. Core deposits included
$223.7 million and $158.8 million of "liquid asset" account
balances at December 31, 1999 and 1998, respectively. This
account was introduced in the second quarter of 1998 and
currently pays an initial rate of 4.25% for balances over $2,500.
The Company expects to attract a higher percentage of core
deposits from its in-store branch locations as these locations
continue to grow and mature. The Company is also attempting to
continue attracting long-term certificate accounts. During 1999,
the Company replaced $114.0 million of short-term borrowed funds
with ten-year, fixed-rate borrowed funds, which can be called
after three or five years of the borrowing date. The Company
intends to continue this strategy in 2000.
The Company's interest rate sensitivity is also monitored by
management through the use of a model which internally generates
estimates of the change in net portfolio value ("NPV") over a
range of interest rate change scenarios. NPV is the present
value of expected cash flows from assets, liabilities, and off-
balance sheet contracts. The NPV ratio, under any interest rate
scenario, is defined as the NPV in that scenario divided by the
market value of assets in the same scenario. The Office of
Thrift Supervision ("OTS") also produces a similar analysis using
its own model, based upon data submitted on the Bank's quarterly
Thrift Financial Reports, the results of which may vary from the
Company's internal model primarily due to differences in
assumptions utilized between the Company's internal model and the
OTS model, including estimated loan prepayment rates,
reinvestment rates and deposit decay rates. For purposes of the
NPV table, prepayment rates similar to those used in the gap
table were used. At December 31, 1999, the Company was operating
within its Board approved interest rate risk guidelines, as
established by its ALCO. The following table sets forth the
Company's NPV as of December 31, 1999.
<TABLE>
<CAPTION>
Changes Net Portfolio Value
in Rates Net Portfolio Value as a % of Assets
in Basis Dollar Percentage NPV Percentage
Points Amount Change Change Ratio Change(1)
Dollars in thousands)
<S> <C> <C> <C> <C> <C>
200 $ 7,737 $(147,623) (95.02)% 0.29% (94.74)%
100 85,578 (69,782) (44.92) 3.05 (41.79)
Base case 155,360 - - 5.33 -
(100) 239,801 84,441 54.35 7.93 63.10
(200) 305,875 150,515 96.88 9.82 108.04
</TABLE>
(1) Based on the portfolio value of the Company's assets in the
base case scenario.
As in the case with the gap table, certain shortcomings are
inherent in the methodology used in the above interest rate risk
measurements. Modeling changes in NPV require the making of
certain assumptions which may or may not reflect the manner in
which actual yields and costs respond to changes in market
interest rates. In this regard, the NPV model presented assumes
that the composition of the Company's interest-sensitive assets
and liabilities existing at the beginning of a period remains
constant over the period being measured and also assumes that a
particular change in interest rates is reflected uniformly across
the yield curve regardless of the duration to maturity or
repricing of specific assets and liabilities. Accordingly,
although the NPV measurements provide an indication of the
Company's interest rate risk exposure at a particular point in
time, such measurements are not intended to and do not provide a
precise forecast of the effect of changes in market interest
rates on the Company's net portfolio value and will differ from
actual results.
ANALYSIS OF CORE EARNINGS
The Company's profitability is primarily dependent upon net
interest income, which represents the difference between income
on interest-earning assets and expense on interest-bearing
liabilities. Net interest income is dependent on the average
balances and rates received on interest-earning assets, and the
average balances and rates paid on interest-bearing liabilities.
Net income is further affected by non-interest income, non-
interest expense, the provision for loan losses, and income
taxes.
The following table sets forth certain information relating to
the Company's average consolidated statements of financial
condition and consolidated statements of income for the three
years ended December 31, 1999, and reflects the average yield on
assets and average cost of liabilities for the periods indicated.
Such yields and costs are derived by dividing income or expense
by the average balance of assets or liabilities, respectively,
for the periods shown. Average balances are derived from average
daily balances. The average balance of loans includes loans on
which the Company has discontinued accruing interest. The yields
and costs include fees which are considered adjustments to
yields.
<TABLE>
<CAPTION>
1999 1998 1997
Average Average Average
Average Yield/ Average Yield/ Average Yield/
(Dollars in thousands) Balance Interest Cost Balance Interest Cost Balance Interest Cost
------- -------- ------- ------- -------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Interest-earning assets:
Mortgage loans $1,587,615 $116,409 7.33% $1,265,803 $96,146 7.60% $ 956,819 $75,266 7.87%
Other loans 36,767 3,004 8.17 33,444 3,303 9.88 32,639 3,220 9.87
MBSs(1) 781,552 50,854 6.51 628,556 42,040 6.69 482,523 32,755 6.79
Money market investments 2,072 142 6.85 3,499 186 5.32 5,743 343 5.97
Debt and equity securities (1) 197,122 13,454 6.83 151,217 10,010 6.62 215,926 14,722 6.82
Total interest-earning assets 2,605,128 183,863 7.06 2,082,519 151,685 7.28 1,693,650 126,306 7.46
Non-interest earning assets 143,944 133,494 88,231
Total assets 2,749,072 2,216,013 1,781,881
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Savings accounts 626,428 19,665 3.14 441,759 12,415 2.81 371,872 9,338 2.51
Certificate accounts 988,619 52,269 5.29 878,991 49,965 5.68 678,599 39,309 5.79
NOW accounts 239,614 1,674 0.70 187,297 1,364 0.73 134,546 1,130 0.84
Money market accounts 57,132 1,833 3.21 57,597 2,041 3.54 54,107 1,823 3.37
Borrowed funds 667,253 37,465 5.61 470,531 27,991 5.95 389,091 22,800 5.86
Total interest-bearing liabilities 2,579,046 112,906 4.38 2,036,175 93,776 4.61 1,628,215 74,400 4.57
Other liabilities 55,768 62,121 47,247
Total liabilities 2,634,814 2,098,296 1,675,462
Stockholders' equity 114,258 117,717 106,419
Total liabilities and stockholders'
equity $2,749,072 $2,216,013 $1,781,881
Net interest income/net interest
rate spread (2) $70,957 2.68% $57,909 2.67% $51,906 2.89%
Net interest-earning assets/net
interest margin (3) $26,082 2.72% $46,344 2.78% $65,435 3.06%
Ratio of interest-earning assets
to interest-bearing liabilities 101.01% 102.28% 104.02%
</TABLE>
(1) Includes AFS securities and, in 1997, securities held to
maturity.
(2) Net interest rate spread represents the difference between
the average yield on interest-earning assets and the average cost
of interest-bearing liabilities.
(3 Net interest margin represents net interest income before
provision for loan losses divided by average interest-earning
assets.
COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31,
1999 AND 1998
GENERAL
The Company reported net income of $12.6 million, or $1.44 per
basic common share for 1999, compared to $8.2 million or $0.95
per basic common share for 1998. The $4.4 million increase in net
income was attributable to a $13.0 million increase in net
interest income before the provision for loan losses and a $8.5
million increase in non-interest income. These increases were
substantially offset by increases of $12.2 million in non-
interest expense and $1.0 million in the provision for loan
losses.
NET INTEREST INCOME
Net interest income for 1999 increased by $13.0 million, or
22.5%, to $71.0 million, from $57.9 million for 1998. Interest
income increased $32.2 million, or 21.2%, from $151.7 million in
1998 to $183.9 million in 1999. The increase in interest income
was attributable to the $522.6 million, or 25.1%, increase in the
average outstanding balance of interest-earning assets from $2.08
billion in 1998 to $2.61 billion in 1999. The average yield on
interest-earning assets declined by 22 basis points from 7.28% in
1998 to 7.06% in 1999. The decline in the overall yield on
interest-earning assets is primarily the result of the decline in
market interest rates during 1998 and early 1999 which caused an
increase in prepayments of loans and MBSs. These funds were
reinvested primarily in lower yielding loans and securities. The
average cost of interest-bearing liabilities also declined by 23
basis points from 4.61% in 1998 to 4.38% in 1999. The net
interest rate spread remained virtually flat at 2.68%, while the
net interest margin declined by 6 basis points to 2.72%.
The increase in interest income was primarily the result of the
increase in interest income from mortgage loans, which increased
by $20.3 million, or 21.1%, from $96.1 million in 1998 to $116.4
million in 1999. The average outstanding balance of mortgage
loans increased by $321.8 million, or 25.4%, to $1.59 billion.
Mortgage loan originations and purchases in 1999 were $1.38
billion. These were partially offset by sales of loans in the
secondary market of $561.7 million and principal repayments of
$259.1 million. The growth in the average balance was partially
offset by a 27 basis point decrease in the average yield on
mortgage loans from 7.60% in 1998 to 7.33% in 1999. Interest
income from MBSs increased by $8.8 million, or 21.0%, from $42.0
million in 1998 to $50.9 million in 1999. The increase was
attributable to a $153.0 million increase in the average balance
of MBSs, partially offset by an 18 basis point decline in the
average yield. Interest income from debt and equity securities
increased by $3.4 million, or 34.4%, from $10.0 million in 1998
to $13.5 million in 1999. The average balance of debt and equity
securities increased by $45.9 million, while the average yield
increased by 21 basis points. During 1999, the Bank purchased
$452.1 million of securities. These purchases were substantially
offset by sales and redemptions of securities of $363.6 million.
The growth in interest-earning assets was primarily funded by
growth in interest-bearing liabilities consisting of deposits and
borrowed funds. Interest expense on deposits and borrowed funds
increased by $19.1 million, or 20.4% from $93.8 million in 1998
to $112.9 million in 1999. The average outstanding balance of
deposits and borrowed funds was $2.58 billion in 1999, a $542.9
million, or 26.7% increase over 1998.
Interest expense on savings accounts increased by $7.3 million,
or 58.4%, from $12.4 million in 1998 to $19.7 million in 1999.
The average outstanding balance of savings accounts increased by
$184.7 million, or 41.8%. The average cost also increased by 33
basis points to 3.14%. The increase in the average cost is due
in part to the "Liquid Asset" account which pays a 4.25% for the
first year on account balances of $2,500 or more. At December 31,
1999, the balance of these accounts was $223.7 million, an
increase of $64.9 million over the prior year. Interest expense
on certificate accounts increased by $2.3 million, or 4.6%, to
$52.3 million in 1999, from $50.0 million in 1998. This was
partially offset by a 39 basis point decline in the average yield
on certificate accounts. Interest expense on borrowed funds
increased by $9.5 million, or 33.8%, from $28.0 million in 1998
to $37.5 million in 1999. The average outstanding balance of
borrowed funds increased by $196.7 million, or 41.8%, in 1999.
The increase includes the issuance of $25.3 million in capital
securities in June 1999. The capital securities provided the Bank
with leverage to borrow an additional $80 million to purchase
securities for the AFS portfolio. The remaining increase in the
average outstanding balance was utilized to supplement the
increase in deposit accounts to fund mortgage loan originations
and purchases of securities AFS.
PROVISION FOR LOAN LOSSES
The provision for loan losses for 1999 was $3.6 million compared
to $2.7 million for 1998. The provision for loan losses is
established based on management's periodic review of the loan
portfolio and the related allowance for loan losses.
The increase in the provision for loan losses in 1999 was
primarily due to the overall growth in the Bank's loan portfolio.
At December 31, 1999, the allowance for loan losses was $16.7
million, or 0.92% of total loans, and 216.56% of non-performing
loans. At December 31, 1998, the allowance for loan losses was
$14.0 million, or 1.07% of total loans, and 166.70% of non-
performing loans.
NON-INTEREST INCOME
Excluding net gains on sales of interest-earning assets, non-
interest income increased by $10.7 million, or 46.7%, from $22.9
million in 1998 to $33.6 million in 1999. Savings and checking
fees increased by $5.9 million, or 60.3%, to $15.7 million in
1999. Insurance, annuity, and mutual fund fees increased by $2.4
million, or 40.6%, to $8.3 million in 1999. The increases in
these fees was due primarily to the continued growth and maturity
of the Bank's in-store banking program. During 1999, the Bank
opened six in-store branches and increased in-store branch
deposits by $338.4 million, or 67.1%, to $842.3 million at
December 31, 1999, from $504.0 million at December 31, 1998.
Approximately $1.2 million of the growth in insurance, annuity
and mutual fund fees was the result of the operations of CFS
Insurance Agency ("CIA"), a subsidiary of Haven Bancorp, which
was acquired on November 1, 1998, and operated for a full twelve
months in 1999.
Loan fees and servicing income increased by $1.1 million in 1999
to $2.7 million, compared to $1.6 million in 1998. The increase
was due to a one-time $1.0 million commercial real estate loan
fee received in the fourth quarter of 1999. This fee was received
by the Bank in exchange for releasing the borrower from the
equity sharing provision of the loan, and for waiving the pre-
payment penalty provision for the term of the loan. Mortgage
banking income was $3.7 million in 1999, a $734,000 increase over
1998, which reflected only eight months of operations following
the May 1, 1998, acquisition of the residential mortgage
production franchise of Intercounty Mortgage, Inc. ("IMI", now
known as CFS Mortgage). Mortgage banking income represents fee
income recognized on loans sold in the secondary market,
including servicing-released premiums, less the direct costs
associated with the acquisition and sale of these loans.
Residential mortgage loans sold servicing released was $561.7
million in 1999 compared to $515.8 million in 1998. Other income,
consisting primarily of retail banking related fees, increased
$542,000, or 20.9% in 1999.
NON-INTEREST EXPENSE
Non-interest expense increased by $12.2 million, or 17.4%, from
$70.0 million in 1998 to $82.2 million in 1999. The increase was
primarily attributable to compensation and benefit expenses,
which increased by $7.8 million, or 21.0%, from $36.9 million in
1998 to $44.7 million in 1999. Occupancy and equipment expenses
increased by $2.0 million, or 18.0%, to $13.0 million in 1999
from $11.0 million in 1998. Federal deposit insurance premiums
increased by $195,000, or 22.4%, due to the growth in deposits.
Data processing expenses increased by $0.7 million, or 26.0%, to
$3.4 million in 1999 from $2.7 million in 1998, due primarily to
the continued growth of the in-store banking program. Other
expenses totaling $20.3 million in 1999, experienced a net
increase of $1.8 million, or 9.8%, from $18.5 million in 1998.
Other expenses consist primarily of costs associated with
telephone, stationary, postage and delivery, consulting,
amortization of goodwill and other general and administrative
expenses. The increases in these expenses were primarily due to
the continued growth of the in-store banking program, including
the addition of six new branches, and a full year of operations
of CIA and CFS Mortgage.
INCOME TAX EXPENSE
Income tax expense was $6.9 million in 1999, compared to $2.9
million in 1998. The effective tax rate in 1999 was 35.2%
compared to 26.4% in 1998. The 1998 tax rate reflects an
adjustment to the Bank's tax accrual on filing the Company's
federal, New York state and New York city tax returns for 1997 in
September of 1998. In general, the Company's state and local tax
liability is limited to taxes based on its asset size.
RATE/VOLUME ANALYSIS
The following table presents the extent to which changes in
interest rates and changes in the volume of interest-earning
assets and interest-bearing liabilities have affected the
Company's interest income and interest expense during the periods
indicated. Information is provided in each category with respect
to (i) changes attributable to changes in volume (changes in
volume multiplied by prior rate), (ii) changes attributable to
changes in rate (changes in rate multiplied by prior volume), and
(iii) the net change. The changes attributable to the combined
impact of volume and rate have been allocated proportionately to
the changes due to volume and the changes due to rate.
<TABLE>
<CAPTION
Year Ended December 31, 1999 Year Ended December 31, 1998
Compared to Compared to
Year Ended December 31, 1998 Year Ended December 31, 1997
Increase (Decrease) Increase (Decrease)
In Net Interest Income In Net Interest Income
Due to Due to
(In thousands) Volume Rate Net Volume Rate Net
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Mortgage loans $23,777 (3,514) 20,263 23,545 (2,665) 20,880
Other loans 308 (607) (299) 80 3 83
MBSs (1) 9,974 (1,160) 8,814 9,775 (490) 9,285
Money market investments (89) 45 (44) (123) (34) (157)
Debt and equity securities (1) 3,118 326 3,444 (4,292) (420) (4,712)
Total 37,088 (4,910) 32,178 28,985 (3,606) 25,379
Interest-bearing liabilities:
Savings accounts 5,660 1,590 7,250 1,880 1,197 3,077
Certificate accounts 5,908 (3,604) 2,304 11,414 (758) 10,656
NOW accounts 368 (58) 310 397 (163) 234
Money market accounts (16) (192) (208) 123 95 218
Borrowed funds 11,150 (1,676) 9,474 4,836 355 5,191
Total 23,070 (3,940) 19,130 18,650 726 19,376
Net change in net interest income $14,018 (970) 13,048 10,335 (4,332) 6,003
</TABLE>
(1) Includes AFS securities and securities held to maturity.
COMPARISON OF OPERATING RESULTS FOR THE YEARS ENDED DECEMBER 31,
1998 AND 1997
GENERAL
The Company reported net income of $8.2 million, or $0.95 per
basic share for 1998 compared to net income of $11.1 million, or
$1.32 per basic share for 1997. The $2.9 million decrease in
earnings was primarily attributable to an increase of $31.5
million in non-interest expense and an increase of $19.4 million
in interest expense. These factors were substantially offset by
interest income which increased by $25.4 million and non-interest
income which increased by $19.2 million, combined with decreases
of $3.2 million in income tax expense and $85,000 in the
provision for loan losses.
NET INTEREST INCOME
Net interest income increased by $6.0 million, or 11.6% to $57.9
million in 1998 from $51.9 million in 1997. Interest income
increased by $25.4 million, or 20.1% to $151.7 million in 1998
from $126.3 million in 1997. The increase in interest income was
primarily attributable to a $388.9 million increase in average
interest-earning assets, partially offset by an 18 basis point
decrease in the overall average yield on interest-earning assets
from 7.46% in 1997 to 7.28% in 1998. The decrease was due to the
overall decline in market interest rates. The average cost of
interest-bearing liabilities increased by 4 basis points to 4.61%
in 1998 from 4.57% in 1997, primarily due to a shift to
certificate accounts and the introduction of the Liquid Asset
savings account in 1998.
Interest income on mortgage loans increased by $20.9 million, or
27.7% to $96.1 million in 1998 from $75.3 million in 1997
primarily as a result of an increase in the average mortgage loan
balance of $309.0 million, partially offset by a decrease in the
average yield on mortgage loans of 27 basis points. During 1998,
the Bank originated or purchased $635.1 million of mortgage loans
for portfolio. The decline in the average rate was primarily due
to decreases in the rate indices used for residential and
commercial real estate loans and the increasing percentage of
relatively lower yielding residential mortgages. These indices,
which are the 30 year treasury bond and the 5 year treasury note,
declined 83 and 116 basis points, respectively, during 1998. In
addition, loan principal repayments and satisfactions during 1998
totaled $265.7 million in 1998 compared to $151.2 million in
1997. Also during 1998, the Bank sold approximately $104.7
million in loans previously held in portfolio, including $83.3
million of adjustable-rate mortgage loans in several bulk sale
transactions, and $14.0 million of cooperative apartment loans,
and securitized $105.7 million of one- to four-family mortgage
loans with Fannie Mae.
Interest income on MBSs was $42.0 million for 1998, an increase
of $9.3 million, or 28.3% over the $32.8 million earned in 1997.
This reflects a $146.0 million increase in the average balance of
MBSs for 1998 to $628.6 million from $482.5 for 1997, partially
offset by a decrease in the average yield on the MBS portfolio of
10 basis points to 6.69% for 1998 from 6.79% in 1997. During
1998, the Company purchased $687.9 million of MBSs for its AFS
portfolio which were partially offset by sales totaling $357.3
million and principal repayments of $199.6 million. Also during
1998, the Bank securitized $105.7 million in residential real
estate loans and retained the underlying securities in its AFS
portfolio.
Interest income on debt and equity securities decreased by $4.7
million, or 32.0% to $10.0 million in 1998 from $14.7 million in
1997, primarily as a result of a decrease in the average balance
of $64.7 million, coupled with a decrease in the average yield of
20 basis points. The decrease in the average balance of debt and
equity securities during 1998 is due primarily to sales of $97.7
million, partially offset by purchases of $36.1 million.
Interest expense increased by $19.4 million, or 26.0% to $93.8
million in 1998 from $74.4 million in 1997. The increase was
primarily attributable to an increase in interest on deposits of
$14.2 million, or 27.5% to $65.8 million in 1998 from $51.6
million in 1997. The increase in interest on deposits was due to
an increase of $326.5 million, or 26.3% in average deposits to
$1.57 billion in 1998 from $1.24 billion in 1997, coupled with a
4 basis point increase in the average cost of deposits. Interest
expense on borrowed funds increased by $5.2 million, or 22.8%
during 1998, due to an increase of $81.4 million in the average
balance, coupled with a 9 basis point increase in the average
cost of borrowed funds.
The increase in the average balance of deposits is primarily
attributable to the Bank's continuing expansion of the in-store
banking program. As of December 31, 1998, the Bank had fifty-
seven in-store branches with deposits totaling $504.0 million, as
compared to thirty-two branches with deposits totaling $157.2
million as of December 31, 1997. Interest expense on certificate
accounts increased by $10.7 million, or 27.1% from 1997 to 1998.
The in-store banking expansion contributed to the increase in the
average balance of certificate accounts of $200.4 million, or
29.5%, partially offset by an 11 basis point decrease in the
average cost of certificate accounts. Interest expense on
savings accounts increased by $3.1 million, or 33.0%, from 1997
to 1998. This increase was also due to the in-store banking
expansion, as well as the introduction of a "Liquid Asset"
account in the in-store branches during the second quarter of
1998. As of December 31, 1998, the balance of these accounts was
$158.8 million. This account currently pays 4.25% for the first
year on account balances of $2,500 or more. Overall, the average
balance of savings accounts experienced a net increase of $69.9
million, or 18.8%, coupled with a 30 basis point increase in the
average cost, which is attributable to the aforementioned Liquid
Asset account. Interest expense on NOW accounts and money market
accounts increased by $234,000 and $218,000, respectively, in
1998 over 1997, primarily as a result of the increase in the
average balance of such accounts. The average yield paid on
money market accounts increased by 17 basis points to 3.54% for
1998, primarily as a result of a shift in the average balance of
such deposits from traditional branches to the in-store
locations, which paid comparatively higher money market rates.
Interest expense on borrowed funds increased by $5.2 million, or
22.8%, primarily as a result of the increase in the average
balance of borrowed funds of $81.4 million, or 20.9%, coupled
with a 9 basis point increase in the average cost of borrowed
funds from 5.86% in 1997 to 5.95% in 1998. The increase in the
average balance of borrowed funds is due primarily to fund the
increase in residential loan originations and purchases by CFS
Mortgage, the Bank's residential lending division, as well as to
fund purchases of securities for the Company's AFS portfolio.
PROVISION FOR LOAN LOSSES
The Bank provided $2.7 million for loan losses in 1998, which was
virtually flat as compared to 1997. The provision for loan losses
reflects management's periodic review and evaluation of the loan
portfolio. Non-performing loans continued to decline to $8.4
million at December 31, 1998, from $12.5 million at December 31,
1997. As of December 31, 1998, the allowance for loan losses was
$14.0 million compared to $12.5 million at December 31, 1997. As
of December 31, 1998, the allowance for loan losses was 1.07% of
total loans compared to 1.09% of total loans at December 31,
1997. The slight decrease was attributable to the substantial
growth in the loan portfolio. The allowance for loan losses was
166.70% of non-performing loans at December 31, 1998, compared to
99.97% at December 31, 1997. The increase is the result of the
significant decline in non-performing loans from December 31,
1997 to December 31, 1998.
NON-INTEREST INCOME
Non-interest income increased by $11.9 million, or 85.8%, from
$13.9 million in 1997 to $25.8 million in 1998. Savings and
checking fees were $9.8 million in 1998, a $4.3 million, or 79.3%
increase over 1997. In 1998, the Bank recognized $3.0 million in
mortgage banking income related to loans sold servicing released
in the secondary market. Net gains on sales of interest-earning
assets were $2.9 million in 1998. In 1997, the Company reported
a net loss on such sales of $5,000. Insurance, annuity and mutual
fund fees generated in 1998 were $5.9 million, a $2.1 million, or
56.3% increase over the $3.8 million earned in 1997. Other non-
interest income increased by $1.0 million, or 65.2%, to $2.6
million in 1998, from $1.6 million in 1997, primarily as a result
of the Bank's in-store banking expansion.
On May 1, 1998, the Bank completed the purchase of the loan
production franchise of IMI. In 1998, the Bank originated $1.04
billion in residential mortgage loans, $570.0 million of which
were originated for sale in the secondary market. During 1998,
the Bank sold $515.8 million to investors in the secondary market
on a servicing-released basis, and recognized $3.0 million.
Mortgage banking income represents fee income recognized on the
sale of loans sold in the secondary market, including servicing-
released premiums, less the direct costs associated with the
acquisition and sale of those loans.
The increase in savings and checking fees and fees generated from
the sale of insurance, annuities, and mutual funds were primarily
a result of the Bank's in-store banking expansion. During 1998,
the Bank opened twenty-five in-store branches, contributing to
the increase in in-store deposits of $346.8 million, or 220.6%
from December 31, 1997, to December 31, 1998. During 1998, the
Company sold $453.7 million in securities AFS, resulting in net
gains of $1.2 million. During the third quarter of 1998, the
Bank sold $14.0 million of cooperative apartment loans in a bulk
transaction as part of its ongoing effort to divest itself of
this portion of the portfolio, resulting in a $1.0 million gain.
During the fourth quarter of 1998, the Bank realized $0.7 million
in gains on bulk sales of adjustable-rate residential mortgage
loans previously held in portfolio. The loans were sold in
response to the high level of prepayments experienced with these
loans. Other non-interest income, which consists substantially
of fees associated with retail banking, increased primarily as a
result of the Bank's in-store branch expansion.
NON-INTEREST EXPENSE
Non-interest expense increased by $24.2 million, or 52.7%, from
$45.8 million in 1997 to $70.0 million in 1998. Compensation and
benefits expense increased by $12.7 million, or 52.3%, from $24.3
million in 1997 to $36.9 million in 1998. Occupancy and
equipment expense increased by $4.7 million, or 73.7% from $6.3
million in 1997 to $11.0 million in 1998. The increases in
compensation and benefits, occupancy and equipment, and
advertising and promotion expenses were due primarily to the
Bank's in-store banking expansion, as well as the expansion of
the Bank's residential lending function with the acquisition of
the loan production franchise of IMI. During 1998, the Bank
opened twenty-five new in-store branches, while the acquisition
of the loan production franchise of IMI added 6 primary loan
origination offices and several smaller satellite offices to the
Company's facilities. Occupancy and equipment expense also
increased as a result of the purchase of the Company's new
headquarters, which was completed in the third quarter of 1998.
Federal deposit insurance premiums increased by $134,000, or
18.2%, from $736,000 in 1997 to $870,000 in 1998, due to the
increase in insurable deposits as a result of the in-store
banking expansion. Data processing expenses increased by $1.4
million, or 112%, to $2.7 million in 1998 from $1.3 million in
1997, due to the in-store banking expansion and the increase in
the number of transactions processed. Other non-interest expenses
increased by $5.6 million, or 43.3%, from $13.0 million in 1997
to $18.5 million in 1998 primarily as a result of the in-store
banking expansion. Advertising and promotion expense increased
by $1.1 million, or 64.7% from $1.7 million in 1997 to $2.8
million in 1998. Other items that contributed to the increase in
other non-interest expense were telephone expenses, which
increased by $925,000, stationary, printing, and office supply
expenses, which increased by $570,000, and ATM transaction
expenses, which increased by $540,000. These increases were
directly related to the in-store banking expansion and the
increase in the Bank's residential lending operations.
Amortization of goodwill increased by $710,000, primarily as a
result of the acquisition of IMI. The balance of the increase in
other non-interest expenses were generally related to the Bank's
in-store branch expansion and the expansion of the residential
lending operations as a result of the acquisition of IMI. These
increases were partially offset by a $1.2 million reduction in
non-performing loan expense due to the recapture of reserves
established for the bulk sales on REO and non-performing loans in
1994. The increase in non-interest expense was partially offset
by a $344,000 decrease in REO operations, net.
INCOME TAX EXPENSE
Income tax expense was $2.9 million in 1998, compared to $6.1
million in 1997. The effective tax rate for 1998 was 26.4%
compared to 35.6% in 1997. The decrease in the effective tax
rate was primarily due to the establishment of Columbia Preferred
Capital Corp. ("CPCC"), the Bank's real estate investment trust
("REIT") subsidiary, during the second quarter of 1997. The tax
provision for 1998 includes the effect of CPCC's operations for
the full year of 1998 compared to one quarter in 1997. The lower
tax rate was also due to an adjustment of the Bank's tax accrual
upon the filing of the Company's federal, New York State and New
York City tax returns for 1997 during September 1998, as well as
a state tax credit recognized for mortgage recording taxes paid
on loans originated in certain counties of New York State.
NON-PERFORMING ASSETS
The following table sets forth information regarding non-
performing assets which include all non-accrual loans (which
consist of loans 90 days or more past due and restructured loans
that have not yet performed in accordance with their modified
terms for the required six-month seasoning period), accruing
restructured loans and real estate owned.
December 31,
(In thousands) 1999 1998 1997
Non-accrual loans:
One- to four-family $3,663 3,779 3,534
Cooperative 206 367 698
Multi-family 1,139 308 2,531
Non-residential and other 1,986 2,074 3,633
Total non-accrual loans 6,994 6,528 10,396
Restructured loans:
One- to four-family 314 544 679
Cooperative 178 183 290
Multi-family 225 1,130 1,167
Total restructured loans 717 1,857 2,136
Total non-performing loans 7,711 8,385 12,532
REO, net:
One- to four-family 268 66 126
Cooperative 56 38 295
Non-residential and other - 121 121
Total REO 324 225 542
Less allowance for REO - (25) (87)
REO, net 324 200 455
Total non-performing assets $8,035 8,585 12,987
The Company's expanded loan workout/resolution efforts have
successfully contributed toward reducing non-performing assets to
manageable levels. Since year-end 1997, non-performing assets
have declined by $5.0 million, or 38.1%, from a level of $13.0
million to $8.0 million at year-end 1999. The decrease in non-
performing assets is reflected in the following ratios: the ratio
of non-performing loans to total loans ratio was 0.42% for 1999
compared to 0.64% for 1998 and 1.09% for 1997; the ratio of non-
performing assets to total assets was 0.27% for 1999 compared to
0.36% for 1998 and 0.66% for 1997; and the ratio of non-
performing loans to total assets was 0.26% for 1999 compared to
0.35% for 1998 and 0.63% for 1997. There can be no assurance that
non-performing assets will continue to decline.
The decrease in non-performing assets in 1999 was primarily due
to the continued decline in restructured loans. Since year-end
1997, restructured loans have declined by $1.4 million, or 66.4%
from a level of $2.1 million to $0.7 million at year-end 1999.
Total non-accrual loans increased by $0.5 million during 1999.
The decrease in non-performing assets in 1998 was primarily due
to the continued decline in non-performing loans and sales of REO
properties. During 1998, the Company sold 21 REO properties with
a fair value of $0.7 million. Total non-performing loans
decreased by $4.1 million during 1998.
LIQUIDITY
The Bank is required to maintain minimum levels of liquid assets
as defined by the OTS regulations. This requirement, which may be
varied by the OTS depending upon economic conditions and deposit
flows, is based upon a percentage of withdrawable deposits and
short-term borrowings. The required ratio is currently 4%. The
Bank's ratio was 4.31% at December 31, 1999, compared to 4.24% at
December 31, 1998.
The Company's primary sources of funds are deposits, principal
and interest payments on loans, debt securities and MBSs,
retained earnings and advances from the Federal Home Loan Bank of
New York ("FHLB") and other borrowings. Proceeds from the sale of
AFS securities and loans held for sale are also a source of
funding, as are, to a lesser extent, the sales of annuities,
insurance products and securities brokerage activities conducted
by the Bank's wholly owned subsidiary, CFS Investments, Inc. and
the Company's wholly owned subsidiary, CIA. While maturities and
scheduled amortization of loans and securities are somewhat
predictable sources of funds, deposit flows and mortgage
prepayments are greatly influenced by general interest rates,
economic conditions, competition and regulatory changes.
The Company's most liquid assets are cash and short-term
investments. The levels of these assets are dependent on the
Company's operating, financing, lending and investing activities
during any given period. At December 31, 1999 and December 31,
1998, cash and short-term investments totaled $42.7 million and
$44.8 million, respectively.
The Company and the Bank have other sources of liquidity which
include debt securities maturing within one year and AFS
securities. Other sources of funds include FHLB advances, which
at December 31, 1999, totaled $537.0 million. If needed, the Bank
may borrow an additional $13.5 million from the FHLB.
The Company's cash flows are comprised of three primary
classifications: cash flows from operating activities; investing
activities and financing activities. Net cash (used in) provided
by operating activities, consisting primarily of interest and
dividends received less interest paid on deposits was ($74.8
million), $16.2 million and $24.6 million for the years ended
December 31, 1999, 1998 and 1997, respectively. Net cash used in
investing activities, consisting primarily of disbursements of
loan originations and securities purchases, offset by principal
collections on loans, proceeds from maturities of securities held
to maturity or sales of AFS securities, and disposition of assets
including REO was $592.2 million, $340.7 million and $385.8
million for the years ended December 31, 1999, 1998 and 1997,
respectively. Net cash provided by financing activities,
consisting primarily of net activity in deposits and borrowings,
purchases of treasury stock, payments of common stock dividends
and proceeds from stock options exercised was $664.9 million,
$329.0 milliion and $365.7 million, respectively. See Note 14 to
Notes to Consolidated Financial Statements.
CAPITAL RESOURCES
See Note 15 to Notes to Consolidated Financial Statements.
INFLATION AND CHANGING PRICES
The consolidated financial statements and notes thereto presented
herein have been prepared in accordance with generally accepted
accounting principles, which require the measurement of financial
position and operating results in terms of historical dollars
without considering the changes in the relative purchasing power
of money over time and changes due to inflation. The impact of
inflation is reflected in the increased cost of the Bank's
operations. Unlike most industrial companies, nearly all the
assets and liabilities of the Bank are monetary. As a result,
interest rates have a greater impact on the Bank's performance
than do the effects of general levels of inflation. Interest
rates do not necessarily move in the same direction or to the
same extent as the price of goods and services.
COMPUTER ISSUES FOR THE YEAR 2000
The Company has not experienced any significant disruptions in
its financial or operating activities caused by year 2000 related
failure of computerized systems of the Company or it's service
organizations. The Company does not expect year 2000 issues to
have a material adverse effect on the Company's operations or
financial results in 2000.
IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS
See Note 1 to Notes to Consolidated Financial Statements.
STOCK DATA
Haven common stock, listed under the symbol HAVN is publicly
traded on the Nasdaq Stock Market. As of March 22, 2000, the
Company had approximately 406 stockholders of record (not
including the number of persons or entities holding stock in
nominee or street name through various brokerage firms) and
9,019,911 outstanding shares of common stock (excluding treasury
shares). The common stock traded in a high and low range of
$18.813 and $11.125 during the year ended December 31, 1999.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31, December 31,
(Dollars in thousands,
except for share data) 1999 1998
ASSETS
Cash and due from banks $ 41,479 43,088
Money market investments 1,238 1,720
Securities available for sale 937,299 889,251
Loans held for sale 82,709 54,188
Federal Home Loan Bank of NY Stock, at cost 27,865 21,990
Loans receivable:
First mortgage loans 1,777,208 1,271,784
Cooperative apartment loans 3,669 3,970
Other loans 25,948 34,926
Total loans receivable 1,806,825 1,310,680
Less allowance for loan losses (16,699) (13,978)
Loans receivable, net 1,790,126 1,296,702
Premises and equipment, net 35,928 39,209
Accrued interest receivable 15,825 12,108
Other assets 33,381 37,267
Total assets $2,965,850 2,395,523
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $2,080,613 1,722,710
Borrowed funds 749,232 440,346
Due to broker - 97,458
Other liabilities 30,422 15,142
Total liabilities 2,860,267 2,275,656
Commitments and contingencies (Notes 5 and 14)
Stockholders' Equity:
Preferred stock, $.01 par value, 2,000,000
shares authorized, none issued - -
Common stock, $.01 par value, 30,000,000
shares authorized, 9,918,750 issued;
9,000,237 and 8,859,692 shares out-
standing in 1999 and 1998, respectively 100 100
Additional paid-in capital 52,336 51,383
Retained earnings, substantially restricted 89,083 79,085
Accumulated other comprehensive (loss) income:
Unrealized (loss) gain on securities
available for sale, net of tax effect (25,465) 945
Treasury stock, at cost (918,513
and 1,059,058 shares in 1999
and 1998, respectively) (8,934) (9,800)
Unallocated common stock held by ESOP (934) (1,222)
Unearned common stock held by Bank's
Recognition Plans and Trusts (231) (263)
Unearned compensation (372) (361)
Total stockholders' equity 105,583 119,867
Total liabilities and stockholders'
Equity $2,965,850 2,395,523
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31,
(Dollars in thousands,
except per share data) 1999 1998 1997
Interest income:
Mortgage loans $ 116,409 96,146 75,266
Other loans 3,004 3,303 3,220
Mortgage-backed securities 50,854 42,040 32,755
Money market investments 142 186 343
Debt and equity securities 13,454 10,010 14,722
Total interest income 183,863 151,685 126,306
Interest expense:
Deposits:
Savings accounts 19,665 12,415 9,338
NOW accounts 1,674 1,364 1,130
Money market accounts 1,833 2,041 1,823
Certificate accounts 52,269 49,965 39,309
Borrowed funds 37,465 27,991 22,800
Total interest expense 112,906 93,776 74,400
Net interest income before
provision for loan losses 70,957 57,909 51,906
Provision for loan losses 3,625 2,665 2,750
Net interest income after
provision for loan losses 67,332 55,244 49,156
Non-interest income:
Loan fees and servicing income 2,740 1,627 3,110
Mortgage banking income 3,734 3,000 -
Savings/checking fees 15,747 9,822 5,478
Net gain (loss) on sales of
interest-earning assets 750 2,926 (5)
Insurance, annuity and mutual
funds fees 8,259 5,874 3,758
Other 3,138 2,596 1,571
Total non-interest income 34,368 25,845 13,912
Non-interest expense:
Compensation and benefits 44,687 36,935 24,251
Occupancy and equipment 12,988 11,005 6,334
Real estate owned operations, net (220) 8 352
Federal deposit insurance
Premiums 1,065 870 736
Data processing 3,410 2,707 1,277
Other 20,300 18,488 12,897
Total non-interest expense 82,230 70,013 45,847
Income before income tax expense 19,470 11,076 17,221
Income tax expense 6,863 2,926 6,138
Net income $12,607 8,150 11,083
Net income per common share:
Basic $ 1.44 0.95 1.32
Diluted $ 1.38 0.89 1.24
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
The three years ended December 31, 1999
<TABLE>
<CAPTION>
Accumulated Unallocated Unearned
Additional Other Common Common
Common Paid-In Retained Comprehensive Treasury Stock Held Stock Held Unearned
Total Stock Capital Earnings Income Stock by ESOP by RRPs Compensation
(In thousands of dollars, except for share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 $99,384 100 48,794 65,092 (840) (11,049) (1,854) (267) (592)
Comprehensive income:
Net income 11,083 - - 11,083 - - - - -
Other comprehensive income,
net of tax
Net unrealized appreciation on
securities available for
sale, net of reclassification
adjustment (1) 2,511 - - - 2,511 - - - -
------
Comprehensive income 13,594
Dividends declared (2,608) - - (2,608) - - - - -
Treasury stock issued for RRP and
deferred compensation plan
(18,904 shares) - - 236 - - 113 - (206) (143)
Stock options exercised and related
tax effect (114,982 shares) 806 - 116 - - 690 - - -
Allocation of ESOP stock and
amortization of award of RRP
stock and related tax benefits 1,353 - 919 - - - 325 109 -
Amortization of deferred
compensation plan 336 - - - - - - - 336
------- ---- ------ ------- ------ ------- ------ -----
Balance at December 31, 1997 112,865 100 50,065 73,567 1,671 (10,246) (1,529) (364) (399)
Comprehensive income:
Net income 8,150 - - 8,150 - - - - -
Other comprehensive income,
net of tax
Net unrealized depreciation on
securities available for
sale, net of reclassification
adjustment (1) (1,607) - - - (1,607) - - - -
Net unrealized appreciation on
securities transferred from
held to maturity to available
for sale (note 3) 881 - - - 881 - - - -
------
Comprehensive income 7,424
Dividends declared (2,632) - - (2,632) - - - - -
Treasury stock issued for deferred
compensation plan (14,384 shares) - - 280 - - 86 - - (366)
Stock options exercised and related
tax effect (60,608 shares) 516 - 156 - - 360 - - -
Allocation of ESOP stock and
amortization of award of RRP
stock and related tax benefits 1,290 - 882 - - - 307 101 -
Amortization of deferred compensation
plan 404 - - - - - - - 404
------- ---- ------ ------- ------ ------- ------ -----
Balance at December 31, 1998 $119,867 100 51,383 79,085 945 (9,800) (1,222) (263) (361)
Comprehensive loss:
Net income 12,607 - - 12,607 - - - - -
Other comprehensive income,
net of tax
Net unrealized depreciation on
securities available for
sale, net of reclassification
adjustment (1) (26,410) - - - (26,410) - - - -
------
Comprehensive loss (13,803)
Dividends declared (2,609) - - (2,609) - - - - -
Treasury stock issued for deferred
compensation plan (34,357 shares) - - 338 - - 272 - (20) (590)
Stock options exercised and related
tax effect (106,188 shares) 568 - (26) - - 594 - - -
Allocation of ESOP stock and
amortization of award of RRP
stock and related tax benefits 981 - 641 - - - 288 52 -
Amortization of deferred compensation
plan 579 - - - - - - - 579
------- ---- ------ ------- ------ ------- ------ ----
Balance at December 31, 1999 $105,583 100 52,336 89,083 (25,465) (8,934) (934) (231) (372)
======= ==== ====== ======= ====== ======= ====== ====
</TABLE>
(1) Disclosure of reclassification adjustment:
For the years ended
(In thousands) 1999 1998 1997
Net unrealized holding
(losses) gains arising during the year $(26,392) (10) 2,499
Reclassificaton adjustment for net gains
(losses) included in net income 18 716 (12)
------ ---- -----
Net unrealized (losses) gains on securities
available for sale (26,410) (726) 2,511
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31,
(Dollars in thousands) 1999 1998 1997
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $12,607 8,150 11,083
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of cost of stock benefit plans 1,382 1,526 1,689
Amortization of net deferred loan origination fees (667) (1,546) (231)
Premiums and discounts on loans, mortgage-backed and
debt securities (237) (1,503) 210
Provision for loan losses 3,625 2,665 2,750
Provision for losses on real estate owned 51 35 251
Deferred income taxes 1,214 1,139 (1,540)
Net increase in loans held for sale (28,521) (54,188) -
Net (gain) loss on sales of interest-earning assets (750) (2,926) 5
Depreciation and amortization 4,802 3,087 1,592
(Increase) decrease in accrued interest receivable (3,717) 321 (257)
Decrease (increase) in other assets 17,560 (22,930) (1,265)
(Decrease) increase in due to broker (97,458) 87,458 9,000
Increase (decrease)in other liabilities 15,270 (5,077) 1,315
Net cash (used in) provided by operating activities (74,839) 16,211 24,602
Cash flows from investing activities:
Net increase in loans receivable (496,638) (264,136) (306,328)
Proceeds from disposition of assets (including REO) 330 721 2,785
Purchases of securities available for sale (452,104) (749,013) (511,075)
Principal repayments on securities available for sale 169,566 195,118 48,377
Proceeds from sales of securities available for sale 194,053 454,971 337,696
Principal repayments, maturities and calls on debt
securities held to maturity - 21,020 30,954
Principal repayment on mortgage-backed securities
held to maturity - 24,834 34,660
Purchases of Federal Home Loan Bank Stock, net (5,875) (9,105) (2,995)
Net increase in premises and equipment (1,521) (15,102) (19,834)
Net cash used in investing activities (592,189) (340,692) (385,760)
Cash flows from financing activities:
Net increase in deposits 357,903 357,698 227,224
Net increase (decrease) in short term borrowed funds 161,896 (227,138) 157,072
Issuance of capital securities 25,300 - 24,984
Increase in long term borrowed funds 121,690 200,690 (41,695)
Payment of common stock dividends (2,599) (2,627) (2,598)
Stock options exercised 747 360 760
Net cash provided by financing activities 664,937 328,983 365,747
Net (decrease) increase in cash and cash equivalents (2,091) 4,502 4,589
Cash and cash equivalents at beginning of year 44,808 40,306 35,717
Cash and cash equivalents at end of year $ 42,717 44,808 40,306
Supplemental information:
Cash paid during the year for:
Interest $ 111,803 93,751 73,757
Income taxes 5,203 1,699 5,893
Additions to real estate owned 622 623 1,695
Securities purchased not yet received, net - 97,458 10,000
Loans transferred from loans held for sale 44,569 - -
Loans securitized - 105,691 -
Mortgage-backed securities and debt securities
held to maturity transferred to securities
available for sale - 183,639 -
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Haven Bancorp, Inc.
("the Holding Company") and CFS Bank ("the Bank") and its
subsidiaries (collectively referred to herein as the "Company")
conform to generally accepted accounting principles and to
general practices within the banking industry. The following
summarizes the significant policies and practices:
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the
accounts of the Holding Company and its subsidiary, the Bank, and
its wholly owned subsidiaries. All significant intercompany
transactions and balances are eliminated in consolidation. In
preparing the consolidated financial statements, management is
required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of each
consolidated statement of financial condition and revenues and
expenses for the year then ended. Actual results could differ
from those estimates. Certain reclassification adjustments have
been made to prior year amounts to conform to the current year
presentation.
CASH AND CASH EQUIVALENTS
For purposes of reporting cash flows, cash and cash equivalents
include cash and due from banks and money market investments.
Money market investments represent instruments with maturities of
ninety days or less. These investments are carried at cost,
adjusted for premiums and discounts which are recognized in
interest income over the period to maturity.
DEBT, EQUITY AND MORTGAGE-BACKED SECURITIES
Debt and mortgage-backed securities ("MBSs") which the Company
has the positive intent and ability to hold until maturity are
carried at cost, adjusted for amortization of premiums and
accretion of discounts on a level yield method over the remaining
period to contractual maturity, adjusted, in the case of MBSs,
for actual prepayments. At December 31, 1999 and 1998, the
Company did not have any securities classified as held to
maturity. Debt and equity securities and MBSs to be held for
indefinite periods of time and not intended to be held to
maturity are classified as available for sale ("AFS") securities
and are recorded at fair value, with unrealized gains (losses),
net of tax, reported as accumulated other comprehensive income, a
separate component of stockholders' equity. Gains and losses on
the sale of securities are determined using the specific
identification method and are included in non-interest income.
LOANS RECEIVABLE AND LOANS HELD FOR SALE
Loans receivable are carried at their unpaid principal balances,
less unearned discounts and net deferred loan origination fees.
Loans held for sale are carried at the aggregate lower of cost or
market value. Loan origination fees, less certain direct loan
origination costs, are deferred and amortized as an adjustment of
the loan's yield over the life of the loan by the interest
method. When loans are sold, any remaining unaccreted net
deferred fees (costs) are recognized as income at the time of
sale. Purchased loans are recorded at cost. Related premiums or
discounts are amortized (accreted) to interest income using the
level-yield method over the estimated life of the loans.
The Company recognizes servicing assets on loans that have been
originated or purchased, and where the loans are subsequently
sold or securitized with the servicing rights retained. The total
cost of the mortgage loans is allocated between the loans and
the servicing assets based on their relative fair values. The
Company assesses servicing assets for impairment based on the
current fair values of those assets with any impairment
recognized through a valuation allowance.
Fees earned for servicing loans for others are reported as income
when the related mortgage loan payments are collected. Servicing
assets are amortized as a reduction to loan servicing fee income
using the interest method over the estimated remaining life of
the underlying mortgage loans.
MORTGAGE BANKING INCOME
The company sells loans on a servicing released basis to
investors in the secondary market. Generally, the sales of such
loans are arranged at the time of application through assignments
of trade or best effort commitments. Mortgage banking income
represents fee income, including servicing released premiums,
recognized on loans sold to investors, less the direct costs
associated with the acquisition and sale of those loans.
Mortgage banking income is recognized at the settlement date when
cash is received from the investor.
NON-ACCRUAL AND RESTRUCTURED LOANS
Loans are placed on non-accrual status when, in the opinion of
management, there is doubt as to the collectibility of interest
or principal, or when principal and interest are past due 90 days
or more, the loan is not well secured and in the process of
collection. Interest and fees previously accrued, but not
collected, are reversed and charged against interest income at
the time a loan is placed on non-accrual status. Interest
payments received on non-accrual loans are recorded as reductions
of principal if, in management's judgement, principal repayment
is doubtful. Loans may be reinstated to an accrual or performing
status if future payments of principal and interest are
reasonably assured and the loan has a demonstrated period of
performance.
Loans are classified as restructured loans when the Company has
granted, for economic or legal reasons related to the borrower's
financial condition, concessions to the borrower that it would
not otherwise consider. Generally, this occurs when the cash
flows of the borrower are insufficient to service the loan under
its original terms. Restructured loans are reported as such in
the year of restructuring. In subsequent reporting periods, if
the loan yields a market rate of interest, is performing in
accordance with the restructure terms, and management expects
such performance to continue, the loan is then removed from
restructured status.
The Company reviews commercial and multi-family mortgage loans,
and loans modified in a troubled-debt restructuring for
impairment. Specific factors utilized in the impaired loan
identification process include, but are not limited to,
delinquency status, loan-to-value ratio, the condition of the
underlying collateral, credit history, and debt coverage. At a
minimum, such loans are classified as impaired when they become
90 days past due. The Company generally measures impaired loans
based on the fair value of the underlying collateral. The amount
by which the recorded investment of an impaired loan exceeds the
measurement value is recognized by creating a valuation allowance
through a charge to the provision for loan losses. The Company's
impaired loan identification and measurement process is conducted
in conjunction with the Company's review of the adequacy of its
allowance for loan losses.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is estimated based on a periodic
analysis of the loan portfolio in accordance with SFAS No. 5,
"Accounting for Contingencies," and SFAS No. 114, "Accounting by
Creditors for Impairment of a Loan," and reflects an amount
which, in management's judgement, is adequate to provide for
losses inherent to the loan portfolio. In evaluating the
portfolio, management takes into consideration numerous factors,
such as present risks inherent in the loan portfolio, loan
growth, prior loss experience, current economic conditions and
periodic examinations conducted by regulatory agencies. While
management uses available information to estimate probable loan
losses, future additions to the allowance may be necessary based
on adverse changes in economic conditions.
PREMISES AND EQUIPMENT
Land is carried at cost. Buildings, leasehold improvements,
furniture, fixtures and equipment are carried at cost, less
accumulated depreciation and amortization. Premises and equipment
are depreciated using the straight-line method over the estimated
useful lives of the respective assets except for leasehold
improvements which are amortized over the related lease term or
estimated useful life.
REAL ESTATE OWNED
Real estate properties acquired through loan foreclosure are
recorded at the lower of cost or estimated fair value less
estimated selling costs at the time of foreclosure. Subsequent
valuations are periodically performed by management and the
carrying value may be adjusted by a valuation allowance,
established through charges to income and included in real estate
operations, net to reflect subsequent declines in the estimated
fair value of the real estate. Real estate owned ("REO") is shown
net of the allowance. Operating results of REO, including rental
income, operating expenses, and gains and losses realized from
the sales of properties owned, are also recorded in real estate
operations, net, as a separate component of non-interest expense.
REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements are accounted for as financing
transactions. Accordingly, the collateral securities continue to
be carried as assets and a borrowing liability is established for
the transaction proceeds.
INCOME TAXES
The Company utilizes the asset and liability method of accounting
for income taxes. Under the asset and liability method, deferred
income taxes are recognized for the tax consequences of
"temporary differences" by applying enacted statutory tax rates
applicable to future years to differences between the financial
statement carrying amounts and the tax bases of existing assets
and liabilities. The effect on deferred taxes of a change in tax
rates is recognized in income in the period that includes the
enactment date. Additionally, the recognition of net deferred tax
assets is based upon the likelihood of realization of tax
benefits in the future. A valuation allowance would be provided
for deferred tax assets which are determined more than likely not
to be realized.
The Company and certain of its subsidiaries file consolidated tax
returns with the Federal, state and local authorities. Other
subsidiaries file separate domestic tax returns as required.
BENEFIT PLANS
The Company maintains various pension, savings, employee stock
ownership and other benefit plans and programs for its employees,
including the Bank's Retirement Income Plan (the "Retirement
Plan") covering substantially all employees who have attained
minimum service requirements. The Bank's funding policy is to
make contributions to the plan at least equal to the amounts
required by applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") and the
Internal Revenue Code of 1986, as amended (the "Code"). The Bank
periodically evaluates the overall effectiveness and economic
value of such programs, in the interest of maintaining a
comprehensive benefit package for employees. Based on an
evaluation of the Retirement Plan in 1996, the Bank concluded
that future benefit accruals under the Retirement Plan would
cease, or "freeze" on June 30, 1996. Although the benefit
accruals are frozen, the Bank will continue to maintain and
provide benefits under its Employee Stock Ownership Plan ("ESOP")
and Employee 401(k) Thrift Incentive Savings Plan ("401(k)
Plan"). In connection with the Retirement Plan "freeze," the Bank
resumed its matching of contributions to the 401(k) Plan on July
1, 1996.
Post-retirement and post-employment benefits are recorded on an
accrual basis with an annual provision that recognizes the
expense over the service life of the employee, determined on an
actuarial basis.
STOCK COMPENSATION PLANS
Statement of Financial Accounting Standards ("SFAS") No. 123,
"Accounting for Stock-Based Compensation," permits either the
recognition of compensation cost for the estimated fair value of
employee stock-based compensation arrangements on the date of
grant, or the continued application of APB Opinion No. 25,
"Accounting for Stock Issued to Employees," in accounting for its
plans with disclosure in the notes to the financial statements of
the pro forma effects on net income and earnings per share,
determined as if the fair value-based method had been applied in
measuring compensation cost. The Company has adopted the
disclosure option. Accordingly, no compensation cost has been
recognized for the Company's stock option plans.
OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
The Company has utilized interest rate caps to manage its
interest rate risk. Generally, the net settlements on such
transactions used as hedges of non-trading liabilities are
accrued as an adjustment to interest expense over the life of the
agreements.
EARNINGS PER COMMON SHARE
Basic EPS excludes dilution and is computed by dividing income
available to common stockholders by the weighted average number
of common shares outstanding for the relevant period. The
weighted average number of shares outstanding does not include
the weighted-average number of unallocated shares by the ESOP.
Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were
exercised or converted into common stock that then shares in the
earnings of the entity.
COMPREHENSIVE INCOME
The Company's comprehensive income (or loss) for each period
represents net income plus the net change in unrealized gains or
losses on securities AFS, and is reported in the consolidated
statements of changes in stockholders' equity.
SEGMENT REPORTING
Operating segments are components of an enterprise that engage in
business activities from which it may earn revenues and incur
expenses, whose operating results are regularly reviewed by the
enterprise's chief operating decision maker in deciding how to
allocate resources and in assessing performance, and for which
discrete financial information is available. The Company
currently does not manage its various business activities as
separate operating segments and does not readily produce
meaningful discrete financial information for any such business
activity.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities." SFAS No. 133 establishes accounting and
reporting standards for derivative instruments and for hedging
activities. It requires that an entity recognize all derivatives
as either assets or liabilities in the statement of financial
condition and measure those instruments at fair value. The
accounting for changes in the fair value of a derivative (that
is, gains and losses) depends on the intended use of the
derivative and the resulting designation. SFAS No. 133 is
effective for fiscal years beginning after June 15, 1999 and does
not require restatement of prior periods. The implementation of
SFAS No. 133 has not had a material impact on the Company's
financial condition or results of operations.
In July 1999, the FASB issued SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of FASB Statement No. 133." SFAS No. 137 delays
the effective date of SFAS No. 133 for one year, to all fiscal
quarters of all fiscal years beginning after June 15, 2000.
Management of the Company currently believes the implementation
of SFAS No. 133 will not have a material impact on the Company's
financial condition or results of operations.
2. BUSINESS COMBINATIONS
ACQUISITION OF INTERCOUNTY MORTGAGE, INC.
On May 1, 1998, the Bank completed the purchase of the production
franchise of Intercounty Mortgage, Inc. ("IMI") from Resource
Bancshares Mortgage Group, Inc. The Bank paid approximately $5.6
million for IMI's production franchise and fixed assets. The
business operates as a division of the Bank under the name CFS
Mortgage originating and purchasing residential loans for the
Bank's portfolio and for sale in the secondary market, primarily
through six loan origination offices located in New York, New
Jersey, and Pennsylvania. Loan sales in the secondary market are
primarily on a servicing-released basis, for which the Company
earns servicing released premiums.
The transaction was accounted for under the purchase method. The
excess of cost over the fair value of net assets acquired
(goodwill) of approximately $5.1 million is being amortized over
5 years. The Company assesses the recoverability of goodwill by
determining whether the amortization of the goodwill over its
remaining life can be recovered through future operating cash
flow of the production franchise. The unamortized balance of
goodwill relating to the acquisition of IMI was approximately
$3.4 million and $4.4 million at December 31, 1999 and 1998,
respectively.
ACQUISITION OF CENTURY INSURANCE AGENCY
On November 2, 1998, the Company completed the purchase of 100%
of the outstanding common stock of Century Insurance Agency, Inc.
("CIA" or "CFS Insurance Agency") for approximately $1.2 million.
CIA, which is headquartered in Centereach, New York, provides
automobile, homeowners and casualty insurance to individuals and
various lines of commercial insurance to businesses. CIA operates
as a wholly owned subsidiary of the Company. The transaction was
accounted for under the purchase method. Goodwill of
approximately $1.6 million is being amortized over 10 years. The
Company assesses the recoverability of goodwill by determining
whether the amortization of the goodwill over its remaining life
can be recovered through future operating cash flow of CIA. The
unamortized balance of goodwill relating to the acquisition of
CIA was approximately $1.3 million and $1.6 million at December
31, 1999 and 1998, respectively.
3. SECURITIES AVAILABLE FOR SALE
The amortized cost and estimated fair values of securities
available for sale at December 31, are summarized as follows:
</TABLE>
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized unrealized unrealized fair
(In thousands) Cost gains losses value
<S> <C> <C> <C> <C>
1999
Debt and equity securities available for sale:
U.S. Government and agency obligations $ 96,189 - (4,047) 92,142
Preferred stock 10,650 - (1,197) 9,453
Corporate debt securities 94,287 10 (499) 93,798
201,126 10 (5,743) 195,393
MBSs available for sale:
GNMA Certificates 236 2 - 238
FNMA Certificates 124,507 250 (4,579) 120,178
FHLMC Certificates 32,430 291 (212) 32,509
CMOs and REMICs 618,177 959 (30,155) 588,981
775,350 1,502 (34,946) 741,906
Total $ 976,476 1,512 (40,689) 937,299
1998
Debt and equity securities available for sale:
U.S. Government and agency obligations $ 78,017 141 (453) 77,705
Preferred stock 11,700 30 (140) 11,590
Corporate debt securities 19,850 - (166) 19,684
------- ----- ----- -------
109,567 171 (759) 108,979
------- ----- ----- -------
MBSs available for sale:
GNMA Certificates 430 4 - 434
FNMA Certificates 177,495 1,530 (258) 178,767
FHLMC Certificates 51,590 689 (112) 52,167
CMOs and REMICs 548,644 2,218 (1,958) 548,904
------- ----- ----- -------
778,159 4,441 (2,328) 780,272
------- ----- ----- -------
Total $ 887,726 4,612 (3,087) 889,251
======= ===== ====== =======
</TABLE>
Gross gains of approximately $1.0 million, $1.7 million and $1.0
million for the years ended December 31, 1999, 1998 and 1997,
respectively, were realized on sales of securities available for
sale. Gross losses amounted to approximately $1.0 million, $0.5
million and $1.1 million for the years ended December 31, 1999,
1998, and 1997 respectively.
The Company's portfolio of MBSs available for sale has an
estimated weighted average expected life of approximately 7.1
years at December 31, 1999. At December 31, 1999, $184.5 million
of MBSs available for sale were adjustable-rate securities.
The Company's privately-issued CMOs and REMICs have generally
been underwritten by large investment banking firms with the
timely payment of principal and interest on these securities
supported (credit enhanced) in varying degrees by either
insurance issued by a financial guarantee insurer, letters of
credit or subordination techniques. Substantially all such
securities are rated AAA by one or more of the nationally
recognized securities rating agencies. These securities are
subject to certain credit-related risks normally not associated
with U.S. Government and agency MBSs. Among such risks is the
limited loss protection generally provided by the various forms
of credit enhancements as losses in excess of certain levels are
not protected. Furthermore, the credit enhancement itself is
subject to the credit worthiness of the enhancer. Thus, in the
event a credit enhancer does not fulfill its obligations, the MBS
holder could be subject to risk of loss similar to the purchaser
of a whole loan pool. Management believes that the credit
enhancements are adequate to protect the Company from losses, and
therefore the Company has not provided an allowance for losses on
its privately issued MBSs.
U.S. Government and agency obligations at December 31, 1999, had
contractual maturities between March 14, 2000 and June 25, 2024.
Accrued interest receivable on securities available for sale
amounted to approximately $6.9 million and $4.9 million at
December 31, 1999 and 1998, respectively.
Corporate debt securities at December 31, 1999, had contractual
maturities between February 18, 2004 and May 27, 2029.
On June 30, 1998, the Company transferred the then remaining
$138.2 million of MBSs and $45.4 million of debt securities held
to maturity to securities available for sale.
In August 1998, the Company securitized $105.7 million of
residential mortgage loans with Fannie Mae. The resulting MBSs
were retained and are included in securities available for sale
as of December 31, 1999.
4. LOANS receivable and loans held for sale
Loans receivable, net at December 31, are summarized as follows:
(In thousands) 1999 1998
First mortgage loans:
Principal balances:
One- to four-family $1,330,565 886,405
Multi-family 268,358 215,542
Commercial 167,518 163,935
Construction 3,168 2,731
Partially guaranteed by VA or
insured by FHA 1,604 2,205
1,771,213 1,270,818
Less net deferred loan origination
fees, unearned discounts and
unamortized premiums 5,995 966
Total first mortgage loans 1,777,208 1,271,784
Cooperative apartment loans, net 3,669 3,970
Other loans:
Consumer loans 12,721 17,473
Home equity loans 11,328 15,173
Other 1,899 2,280
Total other loans 25,948 34,926
1,806,825 1,310,680
Less allowance for loan losses (16,699) (13,978)
Total $1,790,126 1,296,702
Included in total loans are loans on which interest is not being
accrued and loans which have been restructured and for which
interest has been reduced or foregone. The principal balances of
these loans at December 31 are summarized as follows:
(In thousands) 1999 1998
Non-accrual loans $ 6,994 6,528
Restructured loans 717 1,857
Total $ 7,711 8,385
If interest income on non-accrual loans had been current in
accordance with the original terms, approximately $468,000,
$425,000 and $736,000 of interest income would have been recorded
for the years ended December 31, 1999, 1998 and 1997,
respectively. Approximately $144,000, $117,000 and $146,000 of
interest income was recognized on non-accrual loans for the years
ended December 31, 1999, 1998 and 1997, respectively. The Bank
has no obligation to fund any additional monies on these loans.
The amount of interest income that would have been recorded if
restructured loans had been performing in accordance with their
original terms (prior to being restructured) was approximately
$180,000, $396,000 and $197,000 for the years ended December 31,
1999, 1998 and 1997, respectively.
On June 30, 1999, the Company sold $20.5 million of adjustable-
rate mortgage ("ARM") loans previously held in portfolio in a
bulk sale transaction and recognized a gain of $261,000. The
Company retained the right to service the related loans and
accordingly recognized a servicing asset of $231,000.
In 1998, the Company sold $83.3 million of ARM loans previously
held in portfolio in two separate bulk sale transactions, which
settled on December 30, 1998. The Company recognized a net gain
of $670,000 as a result of these transactions. The Company sold
$68.6 million of the ARM loans servicing released, while $14.7
million of the ARM loans were sold servicing retained. In
connection with the latter transaction, the Company recognized a
servicing asset of $168,000.
In 1998, the Company securitized $105.7 million of residential
mortgage loans with Fannie Mae. The Company retained all of the
securities in its AFS portfolio, and is servicing the underlying
loans for Fannie Mae. During 1999, the Company sold a portion of
these securities and recognized a servicing asset of $242,000. In
1998, the Company also sold $14.0 million of cooperative
apartment loans as part of its ongoing efforts to dispose of this
portion of its portfolio. The Company recognized a $968,000 gain
as a result of this transaction.
At December 31, 1999 and 1998, the aggregate unamortized balance
of the Company's servicing assets was $517,000 and $168,000,
respectively. The amounts are included in other assets in the
Company's consolidated statements of financial condition. The
Company amortizes its servicing assets against service fee income
in proportion to and over the period of estimated net servicing
income. Servicing assets are periodically assessed for
impairment based on their fair value.
Loans held for sale, which consisted of, primarily fixed-rate,
one- to four-family loans, were $82.7 million and $54.2 million
at December 31, 1999 and 1998, respectively. The Bank originates
most fixed-rate loans for immediate sale, primarily to private
investors on a servicing released basis. During 1999 and 1998,
the Company sold $561.7 million and $515.8 million, respectively,
in residential mortgage loans to third party investors on a
servicing-released basis. During 1999 and 1998, the Company
recognized mortgage banking income of $3.7 million and $3.0
million, respectively. Mortgage banking income represents fee
income recognized on loans sold in the secondary market,
including servicing-released premiums, less the direct costs
associated with the acquisition and sale of these loans.
The Bank services for investors first mortgage loans which are
not included in the accompanying consolidated statements of
financial condition. The unpaid principal balances of such loans
were approximately $271.7 million and $269.1 million at December
31, 1999 and 1998, respectively.
The geographical location of the Bank's loan portfolio is
primarily within the New York City metropolitan area.
Accrued interest receivable on loans amounted to approximately
$8.9 million and $7.2 million at December 31, 1999 and 1998,
respectively.
5. ALLOWANCE FOR LOAN LOSSES
Impaired loans and related reserves have been identified and
calculated in accordance with the provisions of SFAS No. 114. The
total allowance for loan losses has been determined in accordance
with the provisions of SFAS No. 5. As such, the Company has
provided amounts for estimated probable losses that exceed the
immediately identified losses associated with loans that have
been deemed impaired. Provisions have been made and reserves
established accordingly, based upon experience and expectations,
for losses associated with the general population of loans,
specific industry and loan types, including residential and
consumer loans which are not subject to the provisions of SFAS
No. 114.
The following table summarizes information regarding the
Company's impaired loans at December 31:
<TABLE>
<CAPTION>
1999 1998
Related Related
Allowance Allowance
Recorded for Loan Net Recorded for Loan Net
(In thousands) Investment Losses Investment Investment Losses Investment
<S> <C> <C> <C> <C> <C> <C>
Residential loans:
With a related allowance $ - - - 982 51 931
Without a related allowance 3,761 - 3,761 3,164 - 3,164
----- --- ----- ----- --- -----
Total residential loans 3,761 - 3,761 4,146 51 4,095
----- --- ----- ----- --- -----
Multi-family and non-residential loans:
With a related allowance 825 78 747 1,128 247 881
Without a related allowance 1,639 - 1,639 1,254 - 1,254
----- --- ----- ----- --- -----
Total multi-family and non-residential
loans 2,464 78 2,386 2,382 247 2,135
----- --- ----- ----- --- -----
Total impaired loans $ 6,225 78 6,147 6,528 298 6,230
===== === ===== ===== === =====
</TABLE>
The Company's average recorded investment in impaired loans for
the years ended December 31, 1999 and 1998 was $8.5 million and
$7.9 million, respectively. Interest income recognized on
impaired loans, which was not materially different from cash-
basis interest income, amounted to approximately $144,000,
$117,000 and $146,000 for the years ended December 31, 1999, 1998
and 1997, respectively.
Activity in the allowance for loan losses for the years ended
December 31, is as follows:
(In thousands) 1999 1998 1997
Balance at beginning of year $ 13,978 12,528 10,704
Charge-offs:
One- to four-family (314) (435) (964)
Cooperative (34) (256) (370)
Multi-family - (708) -
Non-residential and other (1,002) (935) (352)
Total charge-offs (1,350) (2,334) (1,686)
Recoveries 446 1,119 760
Net charge-offs (904) (1,215) (926)
Provision for loan losses 3,625 2,665 2,750
Balance at end of year $16,699 13,978 12,528
6. PREMISES AND EQUIPMENT
Premises and equipment at December 31, are summarized as follows:
(In thousands) 1999 1998
Land $ 1,475 1,720
Buildings and improvements 14,006 18,679
Leasehold improvements 19,110 17,136
Furniture, fixtures and equipment 14,624 13,128
Accumulated depreciation and amortization (13,287) (11,454)
Total $ 35,928 39,209
In December 1997, the Company purchased an office building and
land in Westbury, New York for its new administrative
headquarters. The purchase was consummated under the terms of a
lease agreement and Payment-in-lieu-of-Tax ("PILOT") agreement
with the Town of Hempstead Industrial Development Agency ("IDA")
(see note 14). The Company completed improvements to the building
and began using the building as its corporate headquarters in
July 1998. The cost of the land and building, including
improvements was $12.8 million. The building and improvements
are being depreciated on a straight-line basis over thirty-nine
years.
During the first quarter of 1999, the Bank sold two
administrative offices, located in Woodhaven, New York, in two
separate transactions. These properties, which consist of land,
buildings and building improvements, had an aggregate net
carrying value of approximately $2.4 million at the time of sale.
The Bank leased back a portion of one of these buildings to
continue its current use as a traditional retail banking branch
office and for certain administrative functions. This transaction
was accounted for as a sale-leaseback, and the lease is being
accounted for as an operating lease. The gain resulting from the
sale-leaseback transaction was deferred and is being accreted
over the term of the lease as a reduction to the related
operating lease expense.
Depreciation and amortization of premises and equipment, included
in occupancy and equipment expense, was approximately $4.8
million, $3.1 million and $1.6 million for the years ended
December 31, 1999, 1998 and 1997, respectively.
7. OTHER ASSETS
Other assets at December 31, are summarized as follows:
(In thousands) 1999 1998
Remittances due from custodians $ 1,278 10,037
Net deferred tax asset 18,502 5,424
Excess of cost over the fair value
of net assets acquired 4,836 6,193
Other 8,765 15,613
Total $33,381 37,267
8. DEPOSITS
Deposits at December 31, are summarized as follows:
Weighted
average
(Dollars in thousands) Amount Percent rates
1999
Savings accounts $ 624,967 30.0% 3.07%
Money market 64,994 3.1 3.58
NOW 143,481 6.9 1.27
Demand 111,738 5.4 -
945,180 45.4 2.47
Certificates of deposit 1,135,433 54.6 5.58
Total $2,080,613 100.0% 4.17%
1998
Savings accounts $ 547,264 31.8% 3.30%
Money market 58,984 3.4 3.21
NOW 130,288 7.6 1.28
Demand 84,425 4.9 -
820,961 47.7 2.63
Certificates of deposit 901,749 52.3 5.60
Total $1,722,710 100.0% 4.18%
The aggregate amount of certificates of deposit in denominations
of $100,000 or more amounted to approximately $113.8 million and
$84.5 million at December 31, 1999 and 1998, respectively.
Scheduled maturities of certificates of deposit at December 31,
are summarized as follows:
1999 1998
(Dollars in thousands) Amount Percent Amount Percent
Within six months $ 661,719 58.3% 553,835 61.4%
Six months to one year 314,376 27.7 214,041 23.7
One to two years 93,497 8.2 62,756 7.0
Over two years 65,841 5.8 71,117 7.9
Total $1,135,433 100.0% $901,749 100.0%
9. BORROWED FUNDS
Borrowed funds at December 31, are summarized as follows:
(Dollars in thousands) 1999 1998
Fixed-rate advances from the FHLB of New York:
4.25% to 5.36% due in 1999 $ - 104,200
3.60% to 5.74% due in 2000 144,000 62,000
5.29% due in 2001 20,000 20,000
5.66% due in 2002 40,000 20,000
5.62% due in 2003 20,000 20,000
5.00% to 5.38% due in 2008 49,000 99,000
5.27% to 6.43% due in 2009 189,000 -
Adjustable-rate advances - FHLB of New York
5.37% due in 2000 75,000 -
537,000 325,200
Securities sold under agreements to repurchase:
Fixed rate agreements:
5.25% to 5.45% due in 1999 - 72,290
5.90% to 7.08% due in 2000 144,386 -
6.27% due in 2002 16,400 16,400
160,786 88,690
Holding Company Obligated Mandatorily
Redeemable Capital Securities of Haven
Capital Trust I at 10.46% due 02/01/27 24,984 24,984
Capital Trust II at 10.25% due 06/30/29 25,300 -
Debt of Employee Stock Ownership Plan
(note 12) 1,162 1,472
Total $ 749,232 440,346
At December 31, 1999 and 1998, pursuant to a physical pledge
collateral agreement, advances from the FHLB of New York were
collateralized by MBSs with an estimated fair value of
approximately $565.2 million and $467.6 million, respectively. At
December 31, 1999 and 1998, advances from the FHLB of New York
were also collateralized by U.S. Government and agency
obligations with an estimated fair value of approximately $61.5
million and $6.2 million, respectively. At December 31, 1999,
the Bank has unused lines of credit totalling $13.5 million with
the FHLB of New York.
At December 31, 1999, all securities sold under agreements to
repurchase were delivered to primary dealers who arranged the
transactions. The securities will remain registered in the name
of the Bank and will be returned at maturity. During the years
ended December 31, 1999 and 1998, securities sold under
agreements to repurchase averaged $180.3 million and $142.3
million, respectively. The maximum amounts outstanding at any
month-end were $242.4 million and $191.3 million, respectively.
The average interest rate paid during the years ended December
31, 1999 and 1998 were 5.39% and 5.71%, respectively. MBSs with
an estimated fair value of approximately $132.4 million and
$100.0 million were pledged as collateral at December 31, 1999
and 1998, respectively. In addition, corporate bonds with an
estimated fair value of approximately $44.8 million were pledged
as collateral at December 31, 1999.
On February 12, 1997, Haven Capital Trust I, a trust formed under
the laws of the State of Delaware ("Trust I"), issued $25 million
of 10.46% capital securities. The Holding Company is the owner
of all the beneficial interests represented by common securities
of Trust I. Trust I exists for the sole purpose of issuing Trust
I securities (comprised of the capital securities and the common
securities) and investing the proceeds thereof in the 10.46%
junior subordinated deferrable interest debentures issued by the
Holding Company on February 12, 1997, which are scheduled to
mature on February 1, 2027. Interest on the capital securities
is payable in semi-annual installments, commencing on August 2,
1997. Trust I securities are subject to mandatory redemption (i)
in whole, but not in part upon repayment in full, at the stated
maturity of the junior subordinated debentures at a redemption
price equal to the principal amount of, plus accrued interest on,
the junior subordinated debentures, (ii) in whole but not in
part, at any time prior to February 1, 2007, contemporaneously
with the occurrence and continuation of a special event, defined
as a tax event or regulatory capital event, at a special event
redemption price equal to the greater of 100% of the principal
amount of the junior subordinated debentures or the sum of the
present values of the principal amount and premium payable with
respect to an optional redemption of the junior subordinated
debentures on the initial optional repayment date to and
including the initial optional prepayment date, discounted to the
prepayment date plus accrued and unpaid interest thereon, and
(iii) in whole or in part, on or after February 1, 2007,
contemporaneously with the optional prepayment by the Holding
Company of the junior subordinated debentures at a redemption
price equal to the optional prepayment price. Subject to prior
regulatory approval, if required, the junior subordinated
debentures are redeemable during the 12-month periods beginning
on or after February 1, 2007, at 105.23% of the principal amounts
outstanding, declining ratably each year thereafter to 100%, plus
accrued and unpaid interest thereon to the date of redemption.
Deferred issuance costs are being amortized over ten years.
On May 26, 1999, Haven Capital Trust II, a Delaware business
trust ("Trust II"), completed the offering of $22.0 million of
10.25% capital securities. On June 18, 1999, an additional $3.3
million of capital securities were issued in connection with the
exercise of the over-allotment option by the underwriters. The
Holding Company is the owner of all of the beneficial interests
represented by the common securities of Trust II. Trust II
exists for the sole purpose of issuing the Trust II securities
(comprised of the capital securities and the common securities)
and investing the proceeds thereof in the 10.25% junior
subordinated deferrable interest debentures, issued by the
Holding Company pursuant to an indenture, which are scheduled to
mature on September 30, 2029. The capital securities have a
mandatory redemption provision which is triggered by optional
prepayment of the junior subordinated debentures. The Chase
Manhattan Bank is the Property Trustee of TrustII. During the
second quarter, $21.5 million of the proceeds from the sale of
capital securities was contributed to the Bank to support the
Bank's in-store banking expansion. The remainder of the proceeds
was used for general corporate purposes.
10. FEDERAL, STATE AND LOCAL TAXES
FEDERAL INCOME TAXES
The Company and its subsidiaries file a consolidated Federal
income tax return on a calendar-year basis. Prior to January 1,
1997 thrift institutions such as the Bank which met certain
definitional tests primarily relating to their assets and the
nature of their business, were permitted to establish a tax
reserve for bad debts. Such thrift institutions were also
permitted to make annual additions to the reserve, to be deducted
in arriving at their taxable income within specified limitations.
The Bank's deduction was computed using an amount based on the
Bank's actual loss experience ("experience method"), or a
percentage equal to 8% of the Bank's taxable income ("PTI
method"). Similar deductions for additions to the Bank's bad
debt reserve were also permitted under the New York State Bank
Franchise Tax and the New York City Banking Corporation Tax;
however, for purposes of these taxes, the effective allowable
percentage under the PTI method was 32% rather than 8%.
Under the Small Business Job Protection Act of 1996 ("1996 Act"),
signed into law in August 1996, Section 593 of the Internal
Revenue Code ("Code"), the Bank is unable to make additions to
the tax bad debt reserves but is permitted to deduct bad debts as
they occur. Additionally, the 1996 Act requires institutions to
recapture (that is, include in taxable income), over a six-year
period, the excess of the balance of its bad debt reserves as of
December 31, 1995 over the balance of such reserves as of
December 31, 1987 ("base year"). The Bank's federal tax bad debt
reserves at December 31, 1995 exceeded its base year reserves by
$2.7 million. This recapture was frozen for 1996 and 1997,
whereas, two-sixths of the excess reserves were recaptured into
taxable income during the two-year period ended December 31,
1999. The remaining balance at December 31, 1999, to be
recaptured into taxable income was $1.8 million. The base year
reserves will be subject to recapture, and the Bank could be
required to recognize a tax liability, if (i) the Bank fails to
qualify as a "bank" for Federal income tax purposes; (ii) certain
distributions are made with respect to the stock of the Bank;
(iii) the Bank uses the bad debt reserves for any purpose other
than to absorb bad debt losses; and (iv) there is a change in
Federal tax law. Management is not aware of the occurrence of
any such event.
In response to the Federal legislation, the New York State and
New York City tax law has been amended to prevent the recapture
of existing tax bad debt reserves and to allow for the continued
use of the PTI method to determine the bad debt deduction in
computing New York State and New York City tax liability.
The components of the net deferred tax assets at December 31, are
as follows:
(In thousands) 1999 1998
Deferred tax assets:
Difference between financial statement
credit loss provision and tax
bad-debt deduction $ 7,054 5,952
Non-accrual interest and non-performing
loan expense 891 762
Securities marked to market for
financial statement purposes 13,712 -
Other 3,022 2,128
Total deferred tax assets 24,679 8,842
Deferred tax liabilities:
Recapture of Tax Bad Debt Reserve (625) (781)
Securities marked to market for
financial statement purposes - (580)
Basis difference of fixed assets (60) (131)
Deferred loan origination costs (5,421) (1,854)
Other (71) (72)
Total deferred tax liabilities (6,177) (3,418)
Net deferred tax assets $ 18,502 5,424
Income tax expense for the years ended December 31, are
summarized as follows:
(In thousands) 1999 1998 1997
Current:
Federal $ 5,157 1,486 6,433
State and local 492 301 1,245
5,649 1,787 7,678
Deferred:
Federal 1,194 741 (760)
State and local 20 398 (780)
1,214 1,139 (1,540)
Total income tax expense $ 6,863 2,926 6,138
The following is a reconciliation of statutory Federal income tax
expense to the combined effective tax expense for the years ended
December 31:
(In thousands) 1999 1998 1997
Statutory Federal income tax expense $ 6,815 3,877 6,027
State and local income taxes, net of
Federal income tax benefit 333 455 301
Reversal of prior years taxes - (785) -
Other, net (285) (621) (190)
Total income tax expense $ 6,863 2,926 6,138
The Company did not have a valuation allowance for its deferred
tax asset as of December 31, 1999 and 1998. The Company will
continue to review the recognition criteria as set forth in SFAS
No. 109, "Accounting for Income Taxes," on a quarterly basis and
determine the need for a valuation allowance accordingly.
STATE AND LOCAL TAXES
The Company and subsidiaries file combined New York State
franchise tax and New York City financial corporation tax returns
on a calendar-year basis. The Company's annual tax liability for
each year is the greater of a tax on (i) allocated entire net
income; (ii) allocated alternative entire net income; (iii)
allocated assets to New York State and/or New York City; or (iv)
a minimum tax. Operating losses cannot be carried back or carried
forward for New York State or New York City tax purposes. The
Company has provided for its 1999 New York State and New York
City tax liability based on allocated assets to New York State
and/or New York City. The Company has provided for New York State
and New York City taxes based on entire net income for the years
ended December 31, 1998 and 1997. The Company will also file a
New Jersey, Pennsylvania and Connecticut tax return for 1999 due
to the operation of in-store branches in those states.
11. EMPLOYEE BENEFIT PLANS AND POST-RETIREMENT BENEFITS
RETIREMENT PLAN
The Company's Retirement Plan is a qualified, non-contributory
defined benefit pension plan covering substantially all of its
eligible employees. The Company's policy is to fund pension costs
in accordance with the minimum funding requirements of the ERISA,
and to provide the Retirement Plan with sufficient assets with
which to pay pension benefits to plan participants. Based on an
evaluation of the Retirement Plan in 1996, the Bank concluded
that future benefit accruals under the Retirement Plan would
cease or "freeze" effective June 30, 1996. The Bank recognized a
curtailment gain of approximately $266,000 as of June 30, 1996.
The Bank made a cash contribution of $352,000 to the Retirement
Plan in 1997. There were no contributions to the Retirement Plan
in 1998 or 1999.
The following are disclosures related to the Retirement Plan as
determined by the Retirement Plan's actuary in accordance with
SFAS No. 87 and SFAS No. 132.
The following is a reconciliation of the projected benefit
obligation for the years ended December 31, 1999 and 1998,
respectively:
(In thousands) 1999 1998
Projected benefit obligation,
beginning of year $8,758 8,519
Interest cost 596 569
Actuarial (gain) loss (695) 202
Benefits paid (523) (532)
Projected benefit obligation, end of year $8,136 8,758
The following is a reconciliation of the change in fair value of
Retirement Plan assets for the years ended December 31, 1999 and
1998, respectively:
(In thousands) 1999 1998
Fair value of plan assets,
beginning of year $9,515 8,819
Actual return on plan assets 1,315 1,228
Benefits paid (523) (532)
Fair value of plan assets, end of year $10,307 9,515
The following is a reconciliation of the funded status of the
Retirement Plan as of December 31, 1999 and 1998,
respectively:
(In thousands) 1999 1998
Pension benefit obligation
Accumulated benefit obligation $8,136 8,758
Additional benefits based on
estimated future salary levels - -
Projected benefit obligation 8,136 8,758
Fair value of plan assets 10,307 9,515
Funded status 2,171 757
Unrecognized net gain (1,439) (261)
Prepaid pension cost $732 496
The following is a reconciliation of net periodic pension benefit
for the years ended December 31, 1999, 1998 and 1997:
(In thousands) 1999 1998 1997
Interest cost $596 569 557
Expected return on plan assets (832) (768) (746)
Net periodic pension benefit $(236) (199) (189)
Actuarial assumptions used to account for the Retirement Plan
include the following:
1999 1998 1997
Discount rate 7.75% 6.75% 6.75%
Expected long-term rate of return 9.00% 9.00% 9.00%
Rate of increase in compensation levels NA NA NA
THRIFT INCENTIVE SAVINGS PLAN
The Bank's 401(k) Plan provides for employee contributions on a
pre-tax basis up to a maximum of 16% of total compensation, with
matching contributions to be made by the Bank, not to exceed
employee contributions greater than 6% of total compensation. The
Bank matched employee contributions which totaled $357,000,
$234,000 and $199,000 for the years ended December 31, 1999, 1998
and 1997.
SUPPLEMENTAL EXECUTIVE RETIREMENT BENEFITS
In 1999, the Company entered into a Company Employment Agreement
setting forth the supplemental executive retirement benefits for
the Chairman and Chief Executive Officer. The Company Employment
Agreement restates, modifies and supersedes the Employment
Agreements, dated November 18, 1994 and September 21, 1995, the
Amendatory Agreement dated May 28, 1997 and the Bank Employment
Agreement, dated May 28, 1997. The Company Employment Agreement
entitles the Chairman and Chief Executive Officer, in addition to
the severance benefits contained within the agreement, to the
supplemental executive retirement benefits due to him under the
Retirement Plan, the 401(k) Plan, the ESOP and any other benefit
plan of which he is a participant, had the federal income tax law
limitations on the accrual of benefits under these plans not been
applicable. During 1999, 1998 and 1997, the Bank accrued
$190,000, $180,000 and $50,000, respectively, in supplemental
executive retirement benefits. On December 31, 1999 and 1998 the
accumulated supplemental executive retirement benefit obligation
was $56,000 and $58,000, respectively. On December 31, 1999 and
1998 the projected supplemental executive retirement benefit
obligation was $56,000 and $58,000, respectively. In 1999, the
Company decided not to reinstate future benefit accruals under
the Retirement Plan. As a result, the accumulated and projected
supplemental executive retirement benefit obligations as of
December 31, 1999, were substantially reduced. The accumulated
and projected supplemental executive retirement benefit
obligations as of December 31, 1998, were restated to conform
with the 1999 presentation.
The Bank also has a Supplemental Retirement Agreement for the
former Chairman of the Board. The Supplemental Retirement
Agreement is unfunded and provides for an annual retirement
benefit of $120,000 for 10 years after retirement which occurred
in 1995. The Supplemental Retirement Agreement also provides for
a lump sum benefit of $1.2 million payable to the estate of the
former Chairman of the Board in the event of his death prior to
retirement, or in the event of a hostile change in control after
retirement but prior to the payment of the entire benefit; any
unpaid benefit shall be paid in a lump sum. The Company had
accrued the entire $1.2 million liability under the unfunded plan
as of December 31, 1995.
POST-RETIREMENT LIFE INSURANCE BENEFITS
The Company provides life insurance coverage to retirees under an
unfunded plan ("Post-retirement Plan"). Life insurance coverage
in the first year of retirement is equal to three times annual
pay at retirement, reduced by 10% (the "reduction amount"). For
the next four consecutive years, life insurance coverage will be
reduced each year by the reduction amount. The maximum benefit
will be $50,000 on the earlier of: (a) the fifth anniversary of
retirement; or (b) attaining age 70.
The following are disclosures related to the Company's Post-
retirement Plan as provided by the Post-retirement Plan's actuary
in accordance with SFAS No.s 106 and 132.
The following is a reconciliation of the accumulated post-
retirement benefit obligation ("APBO") for the years ended
December 31, 1999 and 1998:
(In thousands) 1999 1998
APBO, beginning of year $ 1,445 1,268
Service cost 70 63
Interest cost 94 85
Actuarial (gain) loss (166) 38
Benefits paid (94) (9)
APBO, end of year $ 1,349 1,445
The following is a reconciliation of the funded status of the
Post-retirement Plan as of December 31, 1999 and 1998,
respectively:
(In thousands) 1999 1998
APBO - Retirees and dependents $ 540 632
APBO - Actives fully eligible to retire 382 278
APBO - Actives not yet fully eligible to retire 427 535
Projected benefit obligation 1,349 1,445
Fair value of plan assets - -
Funded status (1,349) (1,445)
Unrecognized transition liability 253 278
Unrecognized net loss 367 563
Unrecognized prior service cost (68) (78)
Accrued post-retirement benefit liability $(797) (682)
The following is a reconciliation of net periodic post-retirement
benefit cost for the years ended December 31, 1999, 1998 and
1997:
(In thousands) 1999 1998 1997
Service cost $ 70 63 55
Interest cost 94 85 77
Amortization of transition obligation 25 25 25
Amortization of unrecognized gain or loss 30 31 28
Amortization of unrecognized prior service
liability (10) (10) (4)
Net periodic post-retirement cost $ 209 194 181
Actuarial assumptions used to account for the plan include the
following:
1999 1998 1997
Discount rate 7.75% 6.50% 6.75%
Rate of increase in compensation levels 4.50% 4.50% 4.50%
12. STOCK PLANS
EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)
The Bank established for eligible employees an ESOP in connection
with the Conversion. The ESOP borrowed $3.5 million from an
unrelated third party lender and purchased 694,312 common shares
issued in the Conversion. The Bank is expected to make scheduled
cash contributions to the ESOP sufficient to service the amount
borrowed over a period not to exceed 10 years. The unpaid balance
of the ESOP loan is included in borrowed funds and the
unamortized balance of unearned compensation is shown as
unallocated common stock held by the ESOP reflected as a
reduction of stockholders' equity. As of December 31, 1999, total
contributions to the ESOP which were used to fund principal and
interest payments on the ESOP debt totaled approximately $3.4
million. On December 31, 1999, the loan had an outstanding
balance of $1.2 million and an interest rate of 7.81%. The loan,
as amended on December 29, 1995, is payable in thirty-two equal
quarterly installments beginning December 1995 and ending
September 2003. The loan bears interest at a floating rate based
on the federal funds rate plus 250 basis points. Dividends
declared on common stock held in a participant's ESOP account are
allocated to such participant's account. Dividends declared on
common stock held by the ESOP and not allocated to the account of
a participant are used to repay the ESOP loan. The Company
recorded $889,000, $922,000 and $1.2 million of ESOP expense,
based on the fair market value of the shares allocated, for the
years ended December 31, 1999, 1998 and 1997, respectively. On
December 31, 1999, there were 244,365 shares remaining for future
allocation, of which 57,604 shares will be allocated for the 1999
year in the first quarter of 2000.
RECOGNITION AND RETENTION PLANS
The Bank has established several Recognition and Retention Plans
("RRPs") which purchased in the aggregate 297,562 shares of
common stock in the Conversion. The Bank contributed $1.5 million
to fund the purchase of the RRP shares. In 1995, the RRP for
officers and other key employees was amended to increase the
number of shares of common stock which may be granted by 19,836
shares and such shares were contributed to the RRP from treasury
stock. During 1996, the remaining previously unallocated shares
totaling 17,202 were awarded to directors and officers. In 1998,
the RRP for directors was amended to increase the number of
shares of common stock which may be granted by 9,916 shares and
such shares were contributed to the RRP from treasury stock. The
fair market value of these shares at the dates of the awards will
be amortized as compensation expense as participants become
vested. Participants generally become vested over a three or
five year period beginning on the date of the award. The
unamortized cost, which is comparable to deferred compensation,
is reflected as a reduction of stockholders' equity. For the
years ended December 31, 1999, 1998 and 1997, respectively,
$92,000, $200,000 and $168,000 of expense has been recognized.
STOCK OPTION AND INCENTIVE PLANS
In 1993, the Holding Company adopted the Haven Bancorp, Inc. 1993
Stock Option Plan for Outside Directors (the "1993 Directors
Plan") and the Haven Bacorp, Inc. 1993 Incentive Stock Option
Plan (the "1993 Stock Plan") of the Bank. The number of shares of
common stock reserved for issuance under the stock option plans
was equal to 10% of the total number of shares of common stock
issued pursuant to the Bank's Conversion to the stock form of
ownership. In 1995, the 1993 Stock Plan was amended to increase
the number of shares for which stock options may be granted by
69,430 shares. All options awarded to employees vest over a three
year period beginning one year from the date of grant. The stock
options awarded to directors become excercisable one year from
the date of grant. The option exercise price cannot be less than
the fair market value of the underlying common stock as of the
date of the option grant, and the maximum option term cannot
exceed ten years from the date of grant. In 1998, the 1993
Directors Plan was amended to increase the number of shares for
which stock options may be granted by 29,754 shares. None of
these shares have been granted as of December 31, 1999.
In 1996, the Holding Company adopted the 1996 Stock Incentive
Plan which provided 420,000 shares for the grant of options and
restricted stock awards. In 1998, effective upon shareholder
approval, the 1996 Stock Incentive Plan was amended to increase
the number of shares for which options and restricted stock
awards may be granted by 41,998 shares. During 1998 and 1997,
respectively, an aggregate of 14,384 and 8,988 shares of
restricted stock were granted to directors, officers and
employees. No shares of restricted stock were granted in 1999.
Shares of restricted stock granted to directors vest six months
from the date of grant. Shares granted to officers and employees
vest over a three year period beginning one year from the date of
grant. All shares were recorded as unearned compensation at
their fair market value on the date of the award (which is
reflected as a reduction of stockholders' equity), to be
amortized to expense over the vesting period. During 1999, 1998
and 1997, an aggregate of 206,500, 134,200 and 34,100 options,
respectively, were granted to directors and officers under the
1996 Stock Incentive Plan, which vest over a three year period
beginning one year from the date of grant. During 1999, an
aggregate of 42,903 shares of restricted stock were granted to
directors, officers and employees.
The following table summarizes certain information regarding the
stock option plans:
<TABLE>
<CAPTION>
Number of shares of
Non- Non- Weighted
Incentive Statutory Qualified Average
Stock Stock Options to Exercise
Options Options Directors Price
<S> <C> <C> <C> <C>
Balance outstanding at December 31, 1996 427,764 487,232 409,562 7.54
Granted 14,100 - 20,000 17.09
Forfeited - - (12,000) 12.14
Exercised (16,594) - (98,388) 6.61
Balance outstanding at December 31, 1997 425,270 487,232 319,174 7.90
Granted 134,200 - - 22.91
Forfeited - - - -
Exercised (23,414) - (37,194) 8.01
Balance outstanding at December 31, 1998 536,056 487,232 281,980 9.44
Granted 156,500 - 50,000 13.80
Forfeited (18,000) - - 20.47
Exercised (14,994) - (91,194) 7.05
Balance outstanding at December 31, 1999 659,562 487,232 240,786 10.13
Shares exercisable at December 31, 1999 423,562 487,232 184,119 8.44
</TABLE>
The fair value of each share grant is estimated on the date of
grant using the Black-Scholes option-pricing model with the
following weighted-average assumptions used for grants in 1999,
1998 and 1997, respectively: dividend yield of 2.14% in 1999 and
1998 and 1.45% in 1997; expected volatility rates of 42.17% to
43.51% in 1999, 28.05% to 39.24% in 1998, and 26.95% in 1997;
risk-free interest rates of 6.29% in 1999, 4.59% in 1998 and
5.68% to 5.81% in 1997; and expected lives of 3 years for the
1993 Stock Plan, 8 years for the 1993 Directors Plan, 3 years for
grants to officers and employees under the 1996 Stock Incentive
Plan and 8 years for grants to directors under that plan.
Had compensation cost for the Company's three stock-based
compensation plans been determined consistent with SFAS No. 123,
the Company's net income and net income per common share would
have been reduced to the pro forma amounts indicated below for
the years ended December 31:
(In thousands, except per share data) 1999 1998 1997
Net income: As reported $ 12,607 8,150 11,083
Pro forma 12,095 7,560 10,557
Net income per common share:
Basic As reported $ 1.44 0.95 1.32
Pro forma 1.38 0.88 1.25
Diluted As reported $ 1.38 0.89 1.24
Pro forma 1.32 0.83 1.18
13. EARNINGS PER SHARE
The computation of basic and diluted EPS for the years ended
December 31, is presented in the following table.
(In thousands, except share and
per share data) 1999 1998 1997
Numerator for basic and diluted
earnings per share-net income $ 12,607 8,150 11,083
Denominator for basic earnings per
share"weighted-average shares 8,749,336 8,596,884 8,420,321
Effect of dilutive options 416,526 561,919 493,437
Denominator for diluted earnings
per share"weighted-average number
of common shares and dilutive
potential common shares 9,165,862 9,158,803 8,913,758
Basic earnings per share $ 1.44 0.95 $1.32
Diluted earnings per share $ 1.38 0.89 $1.24
14. COMMITMENTS and CONTINGENCIES
LEASE COMMITMENTS
At December 31, 1999, the Company was obligated under several
noncancelable operating leases on property used for office space
and banking purposes. Several of the leases contain escalation
clauses which provide for increased rentals, primarily based upon
increases in real estate taxes. Rent expense under these leases
was approximately $5.2 million, $4.2 million and $1.7 million for
the years ended December 31, 1999, 1998 and 1997, respectively.
The projected minimum rental payments under the terms of the
noncancelable leases at December 31, 1999 are as follows:
Years ending December 31, (In thousands)
2000 $ 5,130
2001 4,704
2002 3,569
2003 2,092
2004 1,516
Thereafter 12,772
$ 29,783
Sixty-three in-store branches have opened through December 31,
1999, and the leases related thereto are reflected in the table
above.
Under the IDA and PILOT agreements discussed in note 6, the Bank
assigned the building and land at its Westbury headquarters to
the IDA, is subleasing it for $1 per year for a 10 year period
and will repurchase the building for $1 upon expiration of the
lease term in exchange for IDA financial assistance.
LOAN COMMITMENTS
The Company had outstanding commitments totaling $258.4 million
to originate loans at December 31, 1999, of which $112.0 million
were fixed-rate loans and $146.4 million were variable rate
loans. For fixed-rate loan commitments at December 31, 1999, the
interest rates on mortgage loans ranged from 4.00% to 12.75%. The
standard commitment term for these loans is 45 days. Loan
commitments are made at current rates and no material difference
exists between book and market values of such commitments.
For commitments to originate loans, the Company's maximum
exposure to credit risk is represented by the contractual amount
of those instruments. Those commitments represent ultimate
exposure to credit risk only to the extent that they are
subsequently drawn upon by customers. The Company uses the same
credit policies and underwriting standards in making loan
commitments as it does for on-balance-sheet instruments. For loan
commitments, the Company would generally be exposed to interest
rate risk from the time a commitment is issued with a defined
contractual interest rate.
The Company delivers, primarily fixed-rate, one- to four-family
mortgage loans to investors in the secondary market under "best
efforts" commitments. Loans to be sold are generally committed
at the time the borrower's mortgage interest rate is "locked-in".
At December 31, 1999, the Company had $109.3 million of "locked-
in" fixed rate one- to four-family mortgage loans. The best
efforts commitment term is generally 70 days from the "lock-in"
date.
In connection with the securitization and sale of $48.6 million
of cooperative apartment loans in 1994, a letter of credit
totaling $6.8 million was established with the FHLB. The letter
of credit provides a level of protection of approximately 14% to
the buyer against losses on the cooperative apartment loans sold
behind a pool insurance policy the Bank purchased which provides
a level of protection of approximately 20%. The letter of credit
totalled $6.8 million at December 31, 1999.
LITIGATION AND LOSS CONTINGENCY
In February, 1983, a burglary of the contents of safe deposit
boxes occurred at a branch office of the Bank. At December 31,
1999, the Bank has a class action lawsuit related thereto
pending, whereby the plaintiffs are seeking recovery of
approximately $12.9 million in actual damages and an additional
$12.9 million of unspecified damages. The Bank's ultimate
liability, if any, which might arise from the disposition of
these claims cannot presently be determined. Management believes
it has meritorious defenses against these actions and has and
will continue to defend its position. Accordingly, no provision
for any liability that may result upon adjudication has been
recognized in the accompanying consolidated financial statements.
The Company is involved in various legal actions arising in the
ordinary course of business, which in the aggregate, are believed
by management to be immaterial to the financial position of the
Company.
15. STOCKHOLDERS' EQUITY
At the time of its conversion to a stock savings bank, the Bank
established a liquidation account in an amount equal to its total
retained earnings as of June 30, 1993. The liquidation account
will be maintained for the benefit of eligible account holders
who continue to maintain their accounts at the Bank, after the
conversion. The liquidation account will be reduced annually to
the extent that eligible account holders have reduced their
qualifying deposits. Subsequent increases will not restore an
eligible account holder's interest in the liquidation account. In
the event of a complete liquidation, each eligible account holder
will be entitled to receive a distribution from the liquidation
account in an amount proportionate to the current adjusted
qualifying balances for accounts then held. The balance of the
liquidation account was approximately $13.0 million at December
31, 1999.
The Bank may not declare or pay cash dividends on or repurchase
any of its shares of common stock, if the effect would cause
stockholders' equity to be reduced below the amount required for
the liquidation account, applicable regulatory capital
maintenance requirements or if such declaration and payment would
otherwise violate regulatory requirements. Office of Thrift
Supervision ("OTS") regulations limit all capital distributions
by the Bank to the Company, including dividend payments. As the
subsidiary of a savings and loan holding company, the Bank must
file a notice with the OTS prior to making a capital
distribution. In addition, if the total amount of all capital
distributions for a calendar year would exceed net income for
that year to date plus the retained net income for the preceding
two years, then, prior to making a capital distribution, the Bank
would be required to apply for the prior approval of the OTS.
Unlike the Bank, the Company is not subject to these regulatory
restrictions on the payment of dividends to its stockholders.
However, the source of future dividends may depend upon dividends
from the Bank.
REGULATORY CAPITAL
As required by regulation of the OTS, savings institutions are
required to maintain regulatory capital in the form of a
"tangible capital requirement," a "core capital requirement,"
and a "risk- based capital requirement."
The Bank must meet specific capital guidelines that involve
quantitative measures of the Bank's assets, liabilities, and
certain off-balance sheet items as calculated under regulatory
accounting practices. The Bank's capital amounts are also subject
to qualitative judgments by the regulators about components, risk
weightings, and other factors.
As of December 31, 1999, the Bank has been categorized as "well
capitalized" by the OTS under the regulatory framework for prompt
corrective action. There are no conditions or events since that
notification that management believes have changed the
institution's category. The following table sets forth the
required ratios and amounts, and the Bank's actual capital
amounts, and ratios at December 31:
<TABLE>
<CAPTION>
To Be Well Capitalized
For Capital Under Prompt Corrective
Actual Adequacy Purposes Action Provisions
(Dollars in thousands) Amount Ratio(3) Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
1999
Tangible Capital $168,926 5.62% $ 60,073 2.00% N/A N/A
Core Capital (1) 168,926 5.62 120,147 4.00 150,183 5.00
Risk-based Capital (2) 184,485 11.83 124,707 8.00 155,884 10.00
1998
Tangible Capital $130,597 5.43% $ 48,087 2.00% N/A N/A
Core Capital (1) 130,597 5.43 96,173 4.00 $120,216 5.00%
Risk-based Capital (2) 144,104 11.96 96,404 8.00 120,505 10.00
</TABLE>
(1) Under the OTS's prompt corrective action regulations (i) the
tangible capital requirement was effectively increased from 1.50%
to 2.00%, because under these regulations an institution with
less than 2.00% tangible capital is classified as "critically
undercapitalized" and (ii) the core capital requirement was
effectively increased from 3.00% to 4.00% because under these
regulations an institution with less than 4.00% core capital is
classified as "undercapitalized."
(2) The OTS requirement that an interest rate risk component be
incorporated into its existing risk-based capital standard has
been indefinitely deferred by the OTS. However, the Bank does not
believe that its risk-based capital requirement would be
materially affected as a result of the interest rate risk
component.
(3) For tangible and core capital, the ratio is to adjusted
total assets. For risk-based capital, the ratio is to total risk-
weighted assets.
STOCKHOLDER RIGHTS PLAN
On January 26, 1996, the Board of Directors of the Holding
Company adopted a Stockholder Rights Plan (the "Rights Plan").
Under the Rights Plan, which expires in February, 2006, the Board
declared a dividend of one right on each outstanding share of the
Holding Company's common stock, which was paid on February 5,
1996 to stockholders of record on that date (the "Rights"). Until
it is announced that a person or group has acquired 10% or more
of the outstanding common stock of the Holding Company (an
"Acquiring Person") or has commenced a tender offer that could
result in the ownership of 10% or more of such common stock, the
Rights are initially redeemable for $.01 each, are evidenced
solely by the Holding Company's common stock certificates,
automatically trade with the Holding Company's common stock and
are not exercisable. Following any such announcement, separate
Rights would be distributed, with each Right entitling its owner
to purchase participating preferred stock of the Holding Company
having economic and voting terms similar to those of one share of
the Holding Company's common stock for an exercise price of $45.
Upon announcement that any person or group has become an
Acquiring Person and unless the Board acts to redeem the Rights,
then twenty business days thereafter (the "Flip-in Date"), each
Right (other than Rights beneficially owned by any Acquiring
Person or transferee thereof, which become void) will entitle the
holder to purchase, for the $45 exercise price, a number of
shares of the Holding Company's common stock having a market
value of $90. In addition, if after an Acquiring Person gains
control of the Board, the Holding Company is involved in a merger
or sells more than 50% of its assets or assets generating more
than 50% of its operating income or cash flow, or has entered
into an agreement to do any of the foregoing (or an Acquiring
Person is to receive different treatment than all other
stockholders), each Right will entitle its holder to purchase,
for the $45 exercise price, a number of shares of common stock of
the Acquiring Person having a market value of $90. If any person
or group acquires more than 50% of the outstanding common stock
of the Holding Company, the Board may, at its option, exchange
one share of such common stock for each Right. The Rights may
also be redeemed by the Board for $0.01 per Right prior to the
Flip-in Date.
16. FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107, "Disclosures About Fair Value of Financial
Instruments" requires the Company to disclose estimated fair
values for substantially all of its financial instruments. The
fair value of a financial instrument is the amount at which the
asset or obligation could be exchanged in a current transaction
between willing parties, other than in a forced or liquidation
sale. Fair value estimates are made at a specific point in time
based on relevant market information and information about the
financial instrument. These estimates do not reflect any premium
or discount that could result from offering for sale at one time
the entire holdings of a particular financial instrument. Because
no market value exists for a significant portion of the financial
instruments, fair value estimates are based on judgments
regarding future expected loss experience, current economic
conditions, risk characteristics of various financial
instruments, and other factors. These estimates are subjective in
nature, involve uncertainties and matters of judgment and,
therefore, cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.
Fair value estimates are determined for on and off-balance sheet
financial instruments, without attempting to estimate the value
of anticipated future business and the value of assets and
liabilities that are not considered financial instruments.
Additionally, tax consequences related to the realization of the
unrealized gains and losses can have a potential effect on fair
value estimates and have not been considered in many of the
estimates.
The following table summarizes the carrying values and estimated
fair values of the Company's on-balance sheet financial
instruments at December 31:
<TABLE>
<CAPTION>
1999 1998
Estimated Estimated
Carrying Fair Carrying Fair
(In thousands) Value Value Value Value
<S> <C> <C> <C> <C>
Financial Assets:
Cash and cash equivalents $ 42,717 42,717 44,808 44,808
Securities available for sale 937,299 937,299 889,251 889,251
Loans held for sale 82,709 82,709 54,188 54,188
FHLB-NY stock 27,865 27,865 21,990 21,990
Loans receivable, net 1,790,126 1,727,837 1,296,702 1,313,057
Accrued interest receivable 15,825 15,825 12,108 12,108
Financial Liabilities:
Deposits 2,080,613 2,075,948 1,722,710 1,727,676
Borrowed funds 749,232 746,259 440,346 446,813
Due to broker - - 97,458 97,458
Accrued interest payable 2,774 2,774 1,670 1,670
</TABLE>
The methods and significant assumptions used to estimate fair
values for different categories of financial instruments are as
follows:
Cash and cash equivalents - The estimated fair values of cash and
cash equivalents are assumed to equal the carrying values as
these financial instruments are either due on demand or mature
within 90 days.
Securities available for sale - Estimated fair value for
substantially all of the Company's bonds, notes and equity
securities are based on market quotes as provided by an
independent pricing service. For MBSs, the Company obtains bids
from broker dealers to estimate fair value. For those occasional
securities for which a market price cannot be obtained, market
prices of comparable securities are used.
Loans held for sale - The estimated fair value is based on
current prices established in the secondary market.
FHLB-NY stock - The estimated fair value of the Company's
investment in FHLB-NY stock is deemed to be equal to its carrying
value which represents the price at which it may be redeemed.
Residential loans - Residential loans include one-to four-family
mortgages and individual cooperative apartment loans. Estimated
fair value is based on discounted cash flow analysis. The
residential loan portfolio is segmented by loan type (fixed
conventional, adjustable products, etc.) with weighted average
coupon rate, remaining term, and other pertinent information for
each segment. A discount rate is determined based on the U.S.
Treasury yield curve plus a pricing spread. The discount rate for
fixed rate products is based on the FNMA yield curve plus a
pricing spread. Expected principal prepayments, consistent with
empirical evidence and management's future expectations, are used
to modify the future cash flows. For potential problem loans, the
present value result is separately adjusted downward consistent
with management's assumptions in evaluating the adequacy of the
allowance for loan losses.
Commercial real estate and other loans - Estimated fair value is
based on discounted cash flow analysis which takes into account
the contractual coupon rate and maturity date of each loan. A
discount rate is determined based on the U.S. Treasury yield
curve, the prime rate or LIBOR plus a pricing spread, depending
on the index to which the product is tied. For potential problem
loans, the present value result is separately adjusted downward
consistent with management's assumptions regarding the value of
any collateral underlying the loans.
Deposits - Certificates of deposit are valued by performing a
discounted cash flow analysis of the remaining contractual
maturities of outstanding certificates. The discount rates used
are wholesale secondary market rates as of the valuation date.
For all other deposits, fair value is deemed to be equivalent to
the amount payable on demand as of the valuation date.
Borrowed funds - Borrowings are fair valued based on rates
available to the Company in either public or private markets for
debt with similar terms and remaining maturities.
Accrued interest receivable, accrued interest payable, and due to
broker - The fair values are estimated to equal the carrying
values of short-term receivables and payables, including accrued
interest, mortgage escrow funds and due to broker.
The estimated fair value of commitments to extend credit is
estimated using the fees charged to enter into similar
agreements, taking into account the remaining terms of the
agreements and the present credit worthiness of the
counterparties. Generally, for fixed-rate loan commitments, fair
value also considers the difference between current levels of
interest rates and the committed interest rates. The estimated
fair value of these off-balance sheet financial instruments
resulted in no unrealized gain or loss at December 31, 1999 and
1998.
17. PARENT COMPANY ONLY CONDENSED FINANCIAL STATEMENTS
The condensed financial statements of the Holding Company (parent
company only) are as follows:
Parent Company Condensed Statements of Financial Condition
December 31,
(In thousands) 1999 1998
Assets:
Cash and money market investments $ 3,809 1,730
Securities available for sale 1,445 2,569
Other assets 3,980 3,826
Investment in net assets of Bank 147,028 137,217
Investment in net assets of other subsidiaries 4,404 2,073
Total assets 160,666 147,415
Liabilities:
Junior subordinated debt issued to Haven
Capital Trust I 25,774 25,774
Capital Trust II 26,083 -
Other liabilities, net 3,226 1,774
Total liabilities 55,083 27,548
Total stockholders' equity 105,583 119,867
Total liabilities and stockholders' equity $ 160,666 147,415
Parent Company Only Condensed Statements of Operations
Years Ended December 31,
(In thousands) 1999 1998 1997
Dividend from Bank $ - 2,500 -
Dividend from Trust 134 81 72
Interest income 216 345 514
Interest expense (4,285) (2,697) (2,389)
Other operating expenses, net (1,317) (1,148) (935)
(Loss) before income tax
benefit and equity in undistributed
net income of Bank (5,252) (919) (2,738)
Income tax benefit (142) (1,403) (1,277)
Net (loss) income before equity in
undistributed net income of Bank (5,110) 484 (1,461)
Equity in undistributed net income of
Bank 17,717 7,666 12,544
Net income $12,607 8,150 11,083
Parent Company Only Condensed Statements of Cash Flows
<TABLE>
<CAPTION>
Years Ended December 31,
(In thousands) 1999 1998 1997
<S> <C> <C> <C>
Operating activities:
Net income $12,607 8,150 11,083
Adjustments to reconcile net income to net cash
used in operating activities:
Equity in undistributed net income of the Bank (17,717) (7,666) (12,544)
Gain on sale of interest earning assets - (109) -
Increase in other assets (154) (3) (3,462)
Increase (decrease) in other liabilities 1,452 (1,878) 3,189
Net cash used in operating activities (3,812) (1,506) (1,734)
Investing activities:
Purchases of securities available for sale - (2,135) (4,095)
Proceeds from sales of securities available for sale 1,067 3,704 -
Additional investment in the Bank (21,737) - (14,007)
Investment in net assets of other subsidiaries 2,331 (1,283) -
Net cash (used in) provided by investing activities (18,339) 286 (18,102)
Financing activities:
Proceeds from issuance of debt 26,083 - 24,984
Payment of common stock dividends (2,599) (2,627) (2,598)
Exercise of stock options 747 360 760
Net cash (used in) provided by financing activities 24,231 (2,267) 23,146
Net increase (decrease) in cash 2,080 (3,487) 3,310
Cash at beginning of year 1,730 5,217 1,907
Cash at end of year $ 3,810 1,730 5,217
</TABLE>
18. QUARTERLY FINANCIAL DATA (Unaudited)
The following table is a summary of financial data by quarter for
the years ended December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
(Dollars in thousands, 1st 2nd 3rd 4th 1st 2nd 3rd 4th
except for share data) Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest income $ 40,480 44,236 48,478 50,669 34,963 36,732 39,979 40,011
Interest expense 24,274 26,316 29,926 32,390 21,469 22,582 25,041 24,684
Net interest income before
provision for loan losses 16,206 17,920 18,552 18,279 13,494 14,150 14,938 15,327
Provision for loan losses 675 880 1,035 1,035 670 650 670 675
Net interest income after
provision for loan losses 15,531 17,040 17,517 17,244 12,824 13,500 14,268 14,652
Non-interest income 8,798 9,028 8,115 8,427 4,459 4,406 7,763 9,217
Non-interest expense 20,126 20,729 20,792 20,583 14,067 16,204 19,389 20,353
Income before income
tax expense 4,203 5,339 4,840 5,088 3,216 1,702 2,642 3,516
Income tax expense 1,603 2,011 1,890 1,359 1,067 471 402 986
Net income $ 2,600 3,328 2,950 3,729 2,149 1,231 2,240 2,530
Net earnings per common share:
Basic $ 0.30 0.38 0.34 0.42 0.25 0.14 0.26 0.29
Diluted $ 0.29 0.37 0.32 0.40 0.24 0.13 0.24 0.28
Weighted average number of
shares outstanding:
Basic 8,634,171 8,723,706 8,760,665 8,791,511 8,526,864 8,567,111 8,590,777 8,611,172
Diluted 9,021,614 9,076,293 9,212,577 9,226,025 9,129,745 9,247,139 9,207,719 9,014,489
</TABLE>
Independent Auditors' report
To The Board of Directors and Stockholders of
Haven Bancorp, Inc.:
We have audited the accompanying consolidated statements of
financial condition of Haven Bancorp, Inc. and subsidiaries as of
December 31, 1999 and 1998, and the related consolidated
statements of income, changes in stockholders' equity and cash
flows for each of the years in the three-year period ended
December 31, 1999. These consolidated financial statements are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Haven Bancorp, Inc. and subsidiaries as of December
31, 1999 and 1998, and the results of their operations and their
cash flows for each of the years in the three-year period ended
December 31, 1999 in conformity with generally accepted
accounting principles.
KPMG LLP
Melville, New York
January 27, 2000
Directors and officers
Directors
Haven Bancorp, Inc. and CFS Bank
Philip S. Messina
Chairman of the Board
George S. Worgul
Former Chairman of the Board and Retired President of Haven
Bancorp, Inc. and CFS Bank
Robert M. Sprotte
President, Schmelz Bros., Inc.
President, RDR Realty Corp.
President, Three Rams Realty
Michael J. Fitzpatrick
C.P.A., Financial Consultant
Retired, former Vice President, National Thrift Director,
E.F. Hutton & Co.
William J. Jennings II
President and Chief Operating Officer
Michael J. Levine
President, Norse Realty Group Inc. & Affiliates
Partner, Levine & Schmutter, CPAs
Msgr. Thomas J. Hartman
Director of Radio and Television for the Diocese of Rockville
Centre
Michael A. McManus, Jr.
President and Chief Executive Officer, Misonex, Inc.
Hanif Dahya
President and Chief Executive Officer, Farah Ashley Capital
Executive Officers
Haven Bancorp, Inc. and CFS Bank
Philip S. Messina
Chairman of the Board and Chief Executive Officer
William J. Jennings II
President and Chief Operating Officer
Thomas J. Seery
Executive Vice President, Operations
Catherine Califano
Senior Vice President and Chief Financial Officer
Mark A. Ricca
Senior Vice President, Residential and Consumer Lending and
Secretary
Dennis Hodne
Senior Vice President, Retail Banking
James J. Carpenter
Senior Vice President, Commercial Real Estate Lending
Stockholder Information
Administrative Headquarters
Haven Bancorp, Inc.
615 Merrick Avenue
Westbury, NY 11590
(516) 683-4100
Annual Meeting
The annual meeting of stockholders will be held on Wednesday, May
17, 2000 at 9:00 A.M., at the Huntington Hilton, 598 Broadhollow
Road, Melville, New York, 11747. A notice of the meeting, a proxy
statement and a proxy form are included with this mailing to
stockholders of record as of March 29, 2000.
Common Stock Information
Haven Bancorp common stock is traded on the Nasdaq National
Market under the symbol HAVN. The table below shows the reported
high and low sales prices of the common stock during the periods
indicated in 1999 and 1998.
1999 1998
High Low High Low
First Quarter 16 1/8 12 3/4 25 19 7/8
Second Quarter 16 1/2 10 1/2 28 3/4 24 3/4
Third Quarter 19 14 9/16 26 2/4 14 3/8
Fourth Quarter 17 1/8 14 3/8 17 5/8 10 3/8
As of March 22, 2000, the Company had approximately 406
stockholders of record, not including the number of persons or
entities holding stock in nominee or street name through various
brokers and banks. At December 31, 1999, there were 9,000,237
shares of common stock outstanding.
Transfer Agent and Registrar
Inquiries regarding stockholder administration and
services should be directed to:
ChaseMellon Shareholder Services, L.L.C.
Overpeck Center
85 Challenger Road
Ridgefield Park, NJ 07660
1-800-851-9677
**World Wide Web Site: http://www.chasemellon.com
Independent Auditors
KPMG LLP
1305 Walt Whitman Road, Suite 200
Melville, NY 11747
Legal Counsel
Thacher Proffitt & Wood
Two World Trade Center
New York, NY 10048
Investor Relations
Inquiries regarding Haven Bancorp, Inc.
should be directed to:
Catherine Califano
Haven Bancorp, Inc.
615 Merrick Avenue
Westbury, NY 11590
(516) 683-4100
Annual Report on Form 10-K
A copy of the annual report on Form 10-K for the year ended
December 31, 1999, as filed with the Securities and Exchange
Commission, is available to stockholders (excluding exhibits) at
no charge, upon written requests to:
Investor Relations
Haven Bancorp, Inc.
615 Merrick Avenue
Westbury, NY 11590
** World Wide Web Site: http://www.cfsb.com
Locations
Administrative Headquarters
Haven Bancorp, Inc.
615 Merrick Avenue, Westbury, NY 11590
CFS Bank Locations
Woodhaven
93-22 Jamaica Avenue, Woodhaven, NY 11421
Forest Parkway
80-35 Jamaica Avenue, Woodhaven, NY 11421
Forest Hills
106-19 Continental Avenue, Forest Hills, NY 11375
Ozone Park
98-16 101st Avenue, Ozone Park, NY 11416
Howard Beach
82-10 153rd Avenue, Howard Beach, NY 11414
Rockaway
104-08 Rockaway Beach Boulevard, Rockaway, NY 11694
Bellerose
244-19 Braddock Avenue, Bellerose, NY 11426
Snug Harbor
343 Merrick Road, Amityville, NY 11701
CFS Bank Supermarket Branches
NEW YORK
ATLANTIC TERMINAL in Pathmark Supermarket
625 Atlantic Avenue and Fort Green Pl., Brooklyn, NY 11217
BALDWIN in Pathmark Supermarket
1764 Grand Avenue, Baldwin, NY 11510
BAY SHORE in ShopRite Supermarket
1905 Sunrise Hwy., Bayshore, NY 11706
BORO PARK in Pathmark Supermarket
1245 61st Street, Boro Park, NY 11219
BRENTWOOD in Pathmark Supermarket
101 Wicks Road, Brentwood, NY 11717
CENTEREACH in Pathmark Supermarket
2150 Middle Country Road, Centereach, NY 11746
COMMACK in Pathmark Supermarket
6070 Jericho Turnpike, Commack, NY 11725
EAST ISLIP in Edwards Super Food Stores
2650 Sunrise Highway, East Islip, NY 11730
EAST MEADOW in Pathmark Supermarket
1897 Front Street, East Meadow, NY 11554
EAST ROCKAWAY in Pathmark Supermarket
492 East Atlantic Ave., East Rockaway, NY 11518
FARMINGVILLE in Edwards Super Food Store
2350 North Ocean Ave., Farmingville, NY 11738
FLUSHING in Pathmark Supermarket
155-15 Aguilar Ave, Flushing, NY 11367
FRANKLIN SQUARE in Pathmark Supermarket
460 Franklin Ave., Franklin Square, NY 11010
GOWANUS in Pathmark Supermarket
1-37 12th St., Brooklyn, NY 11205
GREENVALE in Pathmark Supermarket
130 Wheatley Plaza, Greenvale, NY 11548
HAUPPAUGE in ShopRite Supermarket
335 Nesconset Highway, Hauppauge, NY 11788
HOLBROOK in Pathmark Supermarket
5801 Sunrise Highway, Sayville, NY 11741
ISLIP in Pathmark Supermarket
155 Islip Avenue, Islip, NY 11751
JERICHO in Pathmark Supermarket
360 North Broadway, Jericho, NY 11753
LEVITTOWN in Pathmark Supermarket
3535 Hempstead Turnpike, Levittown, NY 11756
LONG ISLAND CITY in Pathmark Supermarket
42-02 Northern Blvd., Long Island City, NY 11100
MASSAPEQUA in Grand-Union Mini-branch
941 Carmans Road, Massapequa, NY 11758
MEDFORD in Edwards Super Food Stores
700-60 Patchogue-Yaphank Road, Medford, NY 11763
MONSEY in Pathmark Supermarket
45 Route 59, Monsey, NY 10952
MT. VERNON in Pathmark Supermarket
1 Pathmark Plaza, East 2nd & 3rd Ave., Mount Vernon, NY 10550
NANUET in Pathmark Supermarket
195 Rockland Center, Route 59 East, Nanuet, NY 10954
NEW HYDE PARK in Pathmark Supermarket
2335 New Hyde Park Road, New Hyde Park, NY 11040
NORTH BABYLON in Pathmark Supermarket
1251 Deer Park Avenue, North Babylon, NY 11703
NORTH YONKERS in Pathmark Supermarket
2540 Central Park Avenue, North Yonkers, NY 10710
OZONE PARK in Pathmark Supermarket
92-10 Atlantic Avenue, Ozone Park, NY 11416
PATCHOGUE in Pathmark Supermarket
395 Route 112, Patchogue, NY 11772
PIKE SLIP in Pathmark Supermarket
227 Cherry Street, New York, NY 10002
PORT CHESTER in Pathmark Supermarket
130 Midland Avenue, Port Chester, NY 10573
PORT JEFFERSON in Pathmark Supermarket
5145 Nesconset Hwy., Port Jefferson, NY 11776
SEAFORD in Pathmark Supermarket
4055 Merrick Road, Seaford, NY 11783
SHIRLEY in Pathmark Supermarket
800 Montauk Highway, Shirley, NY 11967
SPRINGFIELD GARDENS in Pathmark Supermarket
134-40 Springfield Blvd. Springfield Gardens, NY 11413
STARRETT CITY in Pathmark Supermarket
111-10 Flatlands Avenue, Brooklyn, NY 11207
STATEN ISLAND in Pathmark Supermarket
1351 Forest Avenue, Staten Island, NY 10302
STATEN ISLAND in Pathmark Supermarket
2875 Richmond Avenue, Staten Island, NY 10306
STATEN ISLAND in ShopRite Supermarket
2424 Hylan Blvd, Staten Island, NY 10306
UNIONDALE in ShopRite Supermarket
1121 Jerusalem Avenue, Uniondale, NY 11553
WEST BABYLON in Pathmark Supermarket
531 Montauk Highway, West Babylon, NY 11704
WEST BABYLON in Edwards Super Food Store
575 Montauk Highway, West Babylon, NY 11704
WHITESTONE in Pathmark Supermarket
31-06 Farrington Street, Whitestone, NY 11357
WOODBURY in Pathmark Supermarket
81-01 Jericho Turnpike, Woodbury, NY 11797
YONKERS in Pathmark Supermarket
1757 Central Park Avenue, Yonkers, NY 10710
New JERSEY
BOUND BROOK in ShopRite Supermarket
Route 28 & Union Avenue, Bound Brook, NJ 08805
BRICKTOWN in ShopRite Supermarket
Rt. 70 & Chambers Bridge Road, Bricktown, NJ 08723
HACKENSACK in ShopRite Supermarket
S. River St. & E. Main Moonachie Rd.,Hackensack, NJ 07601
HILLSIDE in Shoprite Supermarket
367 Highway 22 West, Hillside, NJ 07205
PALISADES PARK in ShopRite Supermarket
201 Roosevelt Place, Palisades Park, NJ 07650
WAYNE in ShopRite Supermarket
625 Hamburg Turnpike, Wayne, NJ 07470
WEST LONG BRANCH in ShopRite Supermarket
145 Highway 36, West Long Branch, NJ 07764
WEST MILFORD in ShopRite Supermarket
23 Marshall Hill Road, West Milford, NJ 07480
CONNECTICUT
ANSONIA In Big Y Supermarket
404 Main Street, Ansonia, CT 06401
BRIDGEPORT in Shaws Supermarket
500 Sylvan Avenue, Bridgeport, CT 06610
MERIDAN in ShopRite Supermarket
533 South Broad Street, Meridan, CT 06450
MILFORD in ShopRite Supermarket
157 Cherry Street, Milford, CT 06460
NEWTOWN in Big Y Supermarket
6 Queen Street, Newtown, CT 06470
WATERBURY in ShopRite Supermarket
650 Wolcott Street, Waterbury, CT 06705
WEST HAVEN in ShopRite Supermarket
1131 Campbell Avenue, West Haven, CT 06516
CFS INSURANCE LOCATIONS
Centereach
2100 Middle Country Road, Centereach, NY 11720
Holbrook
941 Main Street, Holbrook, NY 11741
Huntington
850 East Jericho Turnpike, Huntington, NY 11743
