<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
Commission File Number 0-22278
QUEENS COUNTY BANCORP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 06-1377322
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
38-25 Main Street, Flushing, New York 11354
(Address of principal executive offices)
(Registrant's telephone number, including area code) 718: 359-6400
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. X Yes No
--- ---
10,305,332
Number of shares outstanding at
May 12, 1997
<PAGE> 2
QUEENS COUNTY BANCORP, INC. AND SUBSIDIARY
FORM 10-Q
THREE MONTHS ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
INDEX PAGE NO.
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Consolidated Statements of Condition as of
March 31, 1997 (unaudited) and December 31, 1996 1
Consolidated Statements of Income for the
Three Months Ended March 31, 1997
and 1996 (unaudited) 2
Consolidated Statement of Changes in Stockholders'
Equity for the Three Months Ended March 31, 1997
(unaudited) 3
Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 1997 and 1996
(unaudited) 4
Notes to Unaudited Consolidated Financial Statements 5
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 7
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS 18
Item 2. CHANGES IN SECURITIES 18
Item 3. DEFAULTS UPON SENIOR SECURITIES 18
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 18
Item 5. OTHER INFORMATION 19
Item 6. EXHIBITS AND REPORTS ON FORM 8-K 19
SIGNATURES 21
EXHIBITS 22
</TABLE>
<PAGE> 3
QUEENS COUNTY BANCORP, INC., AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CONDITION
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
(in thousands) (unaudited)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 13,576 $ 14,045
Money market investments 6,000 7,000
Securities held to maturity (estimated market value of
$78,623 and $86,483, respectively) 78,677 86,495
Mortgage-backed securities held to maturity (estimated market
value of $67,715 and $74,192, respectively) 67,225 73,732
Mortgage loans:
1-4 family 251,001 256,903
Multi-family 857,023 822,364
Commercial real estate 61,133 63,452
Construction 1,558 1,598
----------- -----------
Total mortgage loans 1,170,715 1,144,317
Other loans 12,078 12,276
Less: Unearned loan fees (969) (1,082)
Allowance for loan losses (9,405) (9,359)
----------- -----------
Loans, net 1,172,419 1,146,152
Premises and equipment, net 11,141 11,077
Deferred tax assets, net 5,559 3,312
Other assets 18,698 16,843
----------- -----------
Total assets $ 1,373,295 $ 1,358,656
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
NOW and money market accounts $ 69,099 $ 69,443
Savings accounts 277,119 277,783
Certificates of deposit 652,160 651,705
Non-interest-bearing accounts 24,225 24,999
----------- -----------
Total deposits 1,022,603 1,023,930
----------- -----------
Official checks outstanding 10,929 26,729
FHLB borrowings 106,024 81,393
Accounts payable and accrued expenses 2,096 1,169
Mortgagors' escrow 18,223 7,356
Other liabilities 7,702 6,650
----------- -----------
Total liabilities 1,167,577 1,147,227
----------- -----------
Stockholders' equity:
Preferred stock at par $0.01 (5,000,000 shares authorized;
none issued) -- --
Common stock at par $0.01 (30,000,000 shares authorized;
9,176,704 shares issued; 7,424,819 and 7,630,103 shares
outstanding at March 31, 1997 and December 31, 1996,
respectively) 92 92
Paid-in capital in excess of par 118,087 116,607
Retained earnings (substantially restricted) 159,334 154,886
Less: Treasury stock (1,751,885 and 1,546,601 shares,
respectively) (54,263) (42,397)
Unallocated common stock held by ESOP (14,495) (14,820)
Common stock held by SERP and Deferred
Compensation Plans (1,667) (1,411)
Unearned common stock held by RRPs (1,370) (1,528)
----------- -----------
Total stockholders' equity 205,718 211,429
----------- -----------
Total liabilities and stockholders' equity $ 1,373,295 $ 1,358,656
=========== ===========
</TABLE>
See accompanying notes to financial statements
1
<PAGE> 4
QUEENS COUNTY BANCORP, INC., AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
<TABLE>
<CAPTION>
FOR THE
THREE MONTHS ENDED
MARCH 31,
(in thousands, except per share data) 1997 1996
- ---------------------------------------------------------------------------
<S> <C> <C>
INTEREST INCOME:
Mortgage and other loans $24,789 $21,702
Securities held to maturity 1,164 1,053
Mortgage-backed securities held to maturity 1,092 1,430
Money market investments 60 330
------- -------
Total interest income 27,105 24,515
------- -------
INTEREST EXPENSE:
NOW and money market accounts 470 543
Savings accounts 1,633 1,705
Certificates of deposit 8,618 7,644
FHLB borrowings 1,187 812
Mortgagors' escrow 10 3
------- -------
Total interest expense 11,918 10,707
------- -------
Net interest income 15,187 13,808
Provision for loan losses -- --
------- -------
Net interest income after provision
for loan losses 15,187 13,808
------- -------
OTHER OPERATING INCOME:
Fee income 279 357
Other 25 129
------- -------
Total other operating income 304 486
------- -------
OPERATING EXPENSE:
Compensation and benefits 4,548 3,756
Occupancy and equipment 669 620
General and administrative 1,139 980
Other 156 101
------- -------
Total operating expense 6,512 5,457
------- -------
Income before income taxes 8,979 8,837
Income tax expense 1,847 3,578
Net income $ 7,132 $ 5,259
======= =======
Net income per common share $1.00 $0.68(a)
</TABLE>
(a) Reflects shares issued as a result of the four-for-three stock split on
August 22, 1996.
See accompanying notes to financial statements
2
<PAGE> 5
QUEENS COUNTY BANCORP, INC., AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1997
(in thousands) (UNAUDITED)
- -----------------------------------------------------------------------------------
<S> <C>
COMMON STOCK (PAR VALUE: $0.01):
Balance at beginning of year $ 92
Shares issued --
---------
Balance at end of period 92
---------
PAID-IN CAPITAL IN EXCESS OF PAR:
Balance at beginning of year 116,607
Tax benefit effect on stock plans 416
Common stock acquired by SERP and
Deferred Compensation Plans 256
Allocation of ESOP stock 808
---------
Balance at end of period 118,087
---------
RETAINED EARNINGS:
Balance at beginning of year 154,886
Net income 7,132
Dividend paid on common stock (1,660)
Exercise of stock options (34,125 shares) (1,024)
---------
Balance at end of period 159,334
---------
TREASURY STOCK:
Balance at beginning of year (42,397)
Purchase of common stock (250,261 shares) (13,573)
Common stock acquired by SERP 256
Exercise of stock options (34,125 shares) 1,451
---------
Balance at end of period (54,263)
---------
EMPLOYEE STOCK OWNERSHIP PLAN:
Balance at beginning of year (14,820)
Allocation of ESOP stock 325
---------
Balance at end of period (14,495)
---------
SERP AND DEFERRED COMPENSATION PLANS:
Balance at beginning of year (1,411)
Common stock acquired by SERP and
Deferred Compensation Plans (256)
---------
Balance at end of period (1,667)
---------
RECOGNITION AND RETENTION PLANS:
Balance at beginning of year (1,528)
Earned portion of RRPs 158
---------
Balance at end of period (1,370)
---------
Total stockholders' equity $ 205,718
=========
</TABLE>
See accompanying notes to financial statements
3
<PAGE> 6
QUEENS COUNTY BANCORP, INC., AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1997 1996
(in thousands) (unaudited)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 7,132 $ 5,259
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 231 180
Amortization of premiums, net 80 72
Amortization (accretion) of net deferred loan origination fees 113 (122)
Net gain on redemption of securities and mortgage-backed
securities (1) (1)
Net (gain) loss on sale of foreclosed real estate (1) 22
Earned portion of RRPs 158 271
Earned portion of ESOP 1,133 925
Changes in assets and liabilities:
Increase in deferred income taxes (2,247) (113)
Increase in other assets (1,855) (1,493)
Increase in accounts payable and accrued expenses 927 2,020
Decrease in official checks outstanding (15,800) (14,556)
Increase (decrease) in other liabilities 1,052 (691)
-------- --------
Total adjustments (16,210) (13,486)
-------- --------
NET CASH USED IN OPERATING ACTIVITIES (9,078) (8,227)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from redemption of mortgage-backed
securities held to maturity 15,505 3,675
Proceeds from maturity of securities held to maturity 16,000 24,000
Purchase of securities held to maturity (17,258) (23,802)
Net increase in loans (26,771) (36,285)
Proceeds from sale of loans and foreclosed real estate 391 113
Purchase of premises and equipment, net (295) (81)
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (12,428) (32,380)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in mortgagors' escrow 10,867 8,115
Net (decrease) increase in deposits (1,327) 14,043
Net increase in FHLB borrowings 24,631 13,474
Cash dividends paid and options exercised, net (2,684) (1,384)
Purchase of Treasury stock, net of stock options exercised
and shares acquired by SERP (11,450) (8,873)
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 20,037 25,375
-------- --------
Net decrease in cash and cash equivalents (1,469) (15,232)
Cash and cash equivalents at beginning of period 21,045 38,990
-------- --------
Cash and cash equivalents at end of period $ 19,576 $ 23,758
======== ========
Supplemental information:
Cash paid for:
Interest $ 11,903 $ 10,702
Income taxes 2,417 1,430
Transfers to foreclosed real estate from loans -- 184
Transfers to real estate held for investment from
foreclosed real estate -- 222
</TABLE>
See accompanying notes to financial statements
4
<PAGE> 7
QUEENS COUNTY BANCORP, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include the
accounts of Queens County Bancorp, Inc. (the "Company") and its wholly-owned
subsidiary, Queens County Savings Bank (the "Bank").
The statements reflect all normal recurring adjustments which are, in the
opinion of management, necessary to present a fair statement of the results for
the periods presented. The results of operations for the three months ended
March 31, 1997 are not necessarily indicative of the results of operations that
may be expected for all of 1997.
Certain information and note disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted, pursuant to the rules and regulations of the
Securities and Exchange Commission.
These unaudited consolidated financial statements should be read in conjunction
with the audited consolidated financial statements and notes thereto included in
the Company's 1996 Annual Report to Shareholders and SEC Form 10-K.
NOTE 2. IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS
Accounting for Stock-Based Compensation
In October 1995, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 123, "Accounting for
Stock-Based Compensation." SFAS No. 123 defines a fair value-based method of
accounting for an employee stock option or similar equity instrument and
encourages all entities to adopt that method of accounting for all of their
employee stock compensation plans. However, it also allows an entity to continue
to measure compensation cost for those plans using the intrinsic value-based
method of accounting prescribed by Accounting Principles Board ("APB") Opinion
No. 25, "Accounting for Stock Issued to Employees." Entities electing to remain
with the accounting method prescribed in APB Opinion No. 25 must make a pro
forma disclosure of net income and, if presented, earnings per share, as if the
fair value-based method of accounting defined in this statement had been
applied.
SFAS No. 123 is effective for transactions entered into in fiscal years that
begin after December 15, 1995, though this statement may be adopted on issuance.
The disclosure requirements of this statement are effective for financial
statements for fiscal years beginning after December 15, 1995 or for an earlier
fiscal year for which this statement is initially adopted for recognizing
compensation cost. Pro forma disclosures required for entities that elect to
continue to measure compensation cost using APB Opinion No. 25 must include the
effects of all awards granted in fiscal years that begin after December 15,
1994.
During the first quarter of 1997, the Company initiated a stock option plan
which meets the criteria of SFAS No. 123. The Company is applying APB Opinion
No. 25 and related interpretations in its accounting for this plan; accordingly,
no compensation cost has been recognized. Pro forma disclosures of net income
and earnings per share reflecting the fair value-based method of accounting as
defined in SFAS No. 123 will be made in the Company's 1997 annual report.
5
<PAGE> 8
Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities
In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities." SFAS No. 125
provides accounting and reporting standards for transfers and servicing of
financial assets and extinguishments of liabilities based on consistent
application of a financial components approach focusing on control. Under this
approach, after a transfer of financial assets, an entity recognizes said assets
when control has been surrendered, and derecognizes liabilities when they have
been extinguished. In addition, SFAS No. 125 provides consistent standards for
distinguishing transfers of financial assets that are sales from transfers that
consist of secured borrowings.
In December 1996, the FASB issued SFAS No. 127, "Deferral of the Effective Date
of Certain Provisions of FASB Statement No. 125." SFAS No. 127 delays the
effective date of certain provisions of SFAS No. 125 until after December 31,
1997.
SFAS No. 125, as amended by SFAS No. 127, is effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring after
either December 31, 1996 or December 31, 1997, depending on the transaction, and
is to be applied prospectively. Earlier or retroactive application is not
permitted. SFAS No. 125 has had no impact, nor is it expected to have an impact,
on the Company's financial statements.
Earnings per Share
In February 1997, the FASB issued SFAS No. 128, "Earnings per Share." SFAS No.
128 simplifies the standards for computing earnings per share previously found
in APB Opinion No. 15, "Earnings per Share." It replaces the presentation of
primary EPS with a presentation of basic EPS. It also requires dual presentation
of basic and diluted EPS on the face of the income statement for all entities
with complex capital structures and requires a reconciliation of the numerator
and denominator of the basic EPS computation to the numerator and denominator of
the diluted EPS computation.
Basic EPS excludes dilution and is computed by dividing income available to
common stockholders by the weighted average number of shares outstanding for the
period. 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 or resulted in the issuance of common stock that would share
in the earnings of the entity.
SFAS No. 128 is effective for financial statements issued for periods ending
after December 15, 1997, including interim periods with earlier application not
permitted. SFAS No. 128 requires restatement of all prior-period EPS data
presented. The Company is currently evaluating the effects of SFAS No. 128.
Disclosure of Information About Capital Structure
In February 1997, the FASB issued SFAS No. 129, "Disclosure of Information about
Capital Structure," which establishes standards for disclosing information about
an entity's capital structure.
SFAS No. 129 is effective for financial statements issued for periods ending
after December 15, 1997 and will have no impact on the Company's financial
statements when it becomes effective.
6
<PAGE> 9
QUEENS COUNTY BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Overview
Queens County Bancorp, Inc. (the "Company") is the holding company for Queens
County Savings Bank (the "Bank"), the first savings bank chartered by the State
of New York in the New York City Borough of Queens. The primary business of the
Bank is gathering deposits from its customers in Queens and Nassau County and
investing these funds in the origination of residential mortgage loans
throughout metropolitan New York.
In the first quarter of 1997, the Company took several steps to enhance
shareholder value. On January 21, 1997, the Board of Directors authorized the
repurchase of up to one million shares of Common Stock, representing 13.1% of
outstanding shares at December 31, 1996. During the quarter, some 250,261 shares
were repurchased under the program.
On March 3, 1997, the Board declared a three-for-two stock split, effective at
the close of business on April 10, 1997. Pursuant to the split, shareholders
received one additional share for every two shares held, and cash in lieu of
fractional shares, based on the average of the high and low bid price on March
17, 1997, as adjusted for the split.
On April 15, 1997, the Board of Directors declared a 20 cents per share
dividend, payable on May 15, 1997 to shareholders of record at the close of
business on May 1st. The 20 cents per share is equivalent to 30 cents per share
on a pre-split basis, and represents an increase of 20%.
Balance Sheet Summary
The Company recorded total assets of $1.4 billion at March 31, 1997, up $14.6
million from the level recorded at year-end 1996. The increase was buoyed by a
$26.4 million rise in mortgage loans to $1.2 billion, representing 85.2% of
total assets and reflecting first quarter 1997 originations of $59.3 million.
Multi-family mortgage loans represented $857.0 million, or 73.2%, of mortgage
loans outstanding, rising $34.7 million after originations of $53.5 million in
the first three months of the year. The remainder of the mortgage loan portfolio
consisted of $251.0 million in loans secured by one-to-four family homes, $61.1
million in loans secured by commercial real estate properties, and $1.6 million
in construction loans.
The Company's asset mix at quarter's end also included $12.1 million in other
loans; $78.7 million in securities held to maturity ("securities"); $67.2
million in mortgage-backed securities held to maturity ("mortgage-backed
securities"); and $6.0 million in money market investments.
Non-performing assets totaled $10.3 million, including $8.8 million in
non-performing loans. Reflecting funds recovered through the disposition of a
non-performing loan, the allowance for loan losses rose to $9.4 million,
representing 107.21% of non-performing loans and 0.80% of loans, net at March
31st.
Deposits totaled $1.0 billion at March 31st, down $1.3 million from the year-end
1996 level, and included $652.2 million in certificates of deposit ("CDs"), a
$455,000 increase from the level at December 31st. Additional funding was
provided by Federal Home Loan Bank of New York ("FHLB") borrowings, which rose
to $106.0 million from $81.4 million at year-end.
7
<PAGE> 10
Stockholders' equity totaled $205.7 million, or 14.98% of total assets, and a
book value of $31.83 per share. As compared to $211.4 million at year-end
1996, the 1997 amount reflects a net increase in Treasury stock of
$11.9 million, offset by a $4.4 million net increase in retained earnings,
and $2.3 million relating to the amortization and appreciation of shares
in the Company's stock-related benefit plans and associated tax benefits.
At March 31, 1997, the Company continued to exceed the minimum regulatory
capital requirements imposed by the Federal Reserve Bank. In addition, the Bank
exceeded its minimum regulatory capital requirements and was classified as a
well-capitalized institution under applicable FDIC regulations.
Loans
The Company's asset growth continues to be driven by mortgage loan production.
Reflecting originations of $59.3 million, the mortgage loan portfolio grew to
$1.2 billion, representing a $26.4 million increase from the year-end 1996 level
and 85.2% of total assets at March 31st.
The rise in outstanding mortgage loans was fueled by a $34.7 million increase in
the portfolio of multi-family mortgage loans to $857.0 million, equivalent to
73.2% of total mortgage loans at quarter's end. In the first three months of
1997, the Company recorded $53.5 million in multi-family mortgage loan
originations, representing 90.2% of total mortgage loan originations for the
period.
The substantial majority of the Company's multi-family mortgage loans are
originated for terms of ten years at a rate of interest that adjusts to a point
over prime in each of years six through ten. In years one through five, the loan
may feature either a fixed rate of interest or a rate that steps up annually by
50 basis points.
At March 31, 1997, 96.2% of multi-family mortgage loans featured adjustable
rates, including $433.6 million in loans, the interest rates of which are
scheduled to step up over the next twelve months. Specifically, $95.9
million, $79.0 million, $111.1 million, and $147.6 million, respectively,
will reprice upward over the next four quarters.
In addition to loans secured by multi-family buildings, the mortgage loan
portfolio consisted of $251.0 million in loans secured by one-to-four family
homes (down from $256.9 million at year-end 1996 after originations of $4.0
million); $61.1 million in loans secured by commercial real estate (down from
$63.5 million after originations of $1.6 million); and $1.6 million in
construction loans (down $40,000 after originations of $220,000). More than 92%
of the mortgage portfolio, as a whole, feature adjustable rates, including
81.9% of one-to-four family mortgage loans.
In addition to mortgage loans, the Company originates a modest volume of
consumer loans. At March 31, 1997, this portfolio totaled $12.1 million, down
from $12.3 million at year-end 1996.
Of the $79.0 million in outstanding loan commitments at March 31, 1997, $77.8
million were commitments on multi-family mortgage loans. While competition for
such loans has intensified over the past few quarters, the Company believes that
its market presence in the multi-family real estate market may be able to expand
over the next twelve months. However, the Company's ability to originate these
and other types of loans could be adversely impacted by such factors as a marked
increase in interest rates, a further increase in competition, and a decline in
the demand for such loans.
Asset Quality
The Company continued to produce a consistent record of asset quality in the
first three months of 1997. In addition to recording no charge-offs for the
seventh consecutive quarter, the Company recovered $46,000 following the
disposition of a non-performing loan in March of this year. As a result, the
allowance for loan losses rose to $9.4 million, representing 107.21% of
non-performing loans and 0.80% of loans, net, at March 31, 1997.
8
<PAGE> 11
Non-performing assets totaled $10.3 million at the close of the quarter, as
compared to $10.3 million and $9.4 million at December 31 and March 31, 1996. As
a percentage of total assets, the Company's non-performing assets remained
stable from quarter to quarter, equaling 0.75%, 0.76%, and 0.75%, respectively,
at March 31, 1997, December 31, 1996, and March 31, 1996.
Included in non-performing assets at March 31, 1997 were non-performing loans of
$8.8 million, consisting of 43 non-accrual mortgage loans of $6.8 million and 41
loans 90 days or more delinquent totaling $2.0 million. The combined total
represented 0.75% of loans, net at the close of the current first quarter; at
December 31 and March 31, 1996, non-performing loans totaled $9.7 million and
$8.6 million, representing 0.84% and 0.83%, respectively, of loans, net.
Foreclosed real estate totaled $1.5 million at March 31, 1997, as compared to
$627,000 and $817,000 at December 31 and March 31, 1996. While all of the
Company's non-performing loans were secured by one-to-four family homes at the
close of the current first quarter, the Company's foreclosed real estate
consisted of six properties, including two commercial real estate properties
totaling $1.3 million. All of these properties are being actively marketed for
sale by the Bank. An additional nine properties, totaling $909,000, are included
in other assets as real estate investments; the rentals on these properties
currently provide an 8.0% rate of return to the Bank.
For additional information, see the Asset Quality Analysis that follows and the
discussion of the loan loss provision on page 15 of this report.
ASSET QUALITY ANALYSIS
<TABLE>
<CAPTION>
At or For the At or For the
Three Months Ended Year Ended
March 31, December 31,
1997 1996
(dollars in thousands) (unaudited)
- -------------------------------------------------------------------------------------------
<S> <C> <C>
ALLOWANCE FOR LOAN LOSSES:
Balance at beginning of period $ 9,359 $ 11,359
Loan recoveries 46 --
Reversal of loan losses -- (2,000)
------- --------
Balance at end of period $ 9,405 $ 9,359
======= ========
NON-PERFORMING ASSETS AT PERIOD-END:
Non-accrual mortgage loans $ 6,805 $ 6,861
Loans 90 days or more delinquent and still
accruing interest 1,967 2,798
------- --------
Total non-performing loans 8,772 9,659
Foreclosed real estate 1,535 627
------- --------
Total non-performing assets $10,307 $ 10,286
======= ========
RATIOS:
Non-performing loans to loans, net 0.75% 0.84%
Non-performing assets to total assets 0.75 0.76
Allowance for loan losses to non-performing loans 107.21 96.90
Allowance for loan losses to loans, net 0.80 0.82
Allowance for loan losses to net accumulated
charge-offs for the past 10 years 647.73 625.00
</TABLE>
Securities Held to Maturity and Money Market Investments
At March 31, 1997, the Company recorded securities and money market investments
of $78.7 million and $6.0 million, respectively, down $7.8 million and $1.0
million from $86.5 million and $7.0 million at year-end 1996.
9
<PAGE> 12
As a matter of policy, the Company generally limits its securities investments
to short-term U.S. Treasuries and FNMA securities and typically reinvests such
securities upon maturity. At March 31, 1997, U.S. Treasuries comprised $60.1
million of the Company's portfolio and FNMA securities comprised $7.0 million.
(The balance of the portfolio consisted of stock in the Federal Home Loan Bank
of New York.) The Company holds all of its securities to maturity;
the average maturity of the portfolio at March 31, 1997 was eight months.
The market value of the Company's securities equaled 99.9% and 100.0%,
respectively, of carrying value at March 31, 1997 and December 31, 1996.
Mortgage-Backed Securities Held to Maturity
At March 31, 1997, mortgage-backed securities totaled $67.2 million, down from
$73.7 million at year-end 1996. The $6.5 million reduction reflects both
prepayments and the absence of any new investments in such assets since the
first quarter of 1994. The Company categorizes all mortgage-backed securities as
"held to maturity"; the average maturity of the portfolio was 2.1 years at
quarter's end.
At March 31, 1997 and December 31, 1996, the market value of the Company's
mortgage-backed securities amounted to 100.7% and 100.6% of carrying value,
respectively.
Funding Sources
The Company's funding is derived primarily from deposits, loan interest and
principal payments, and the interest and maturity of securities investments.
Additional funding stems from FHLB borrowings.
At March 31, 1997, deposits totaled $1.0 billion, down $1.3 million from the
level recorded at December 31, 1996. Included in the 1997 amount were $652.2
million in CDs, up $455,000 from $651.7 million at year-end. CDs represented
63.8% of total deposits at the close of the quarter, as compared to 63.6% at
December 31st. The retention rate on CDs maturing during the twelve months ended
March 31, 1997 was 87.41%; the volume of CDs due to mature within one year of
this date totaled $548.2 million. Based on historic trends, the majority of the
Company's maturing CDs may be expected to be reinvested with the Company.
The higher balance of CDs extends a trend that began in the first quarter of
1996 and has been paralleled by a decline in the balance of other
interest-bearing depository accounts. At March 31, 1997 and December 31, 1996,
the balance of savings accounts equaled $277.1 million and $277.8 million, while
the balance of NOW and money market accounts totaled $69.1 million and $69.4
million. Non-interest bearing deposits totaled $24.2 million at the close of the
current first quarter, as compared to $25.0 million at year-end.
The latter reductions, like the rise in CDs, may be indicative of the interest
rate environment over the past five quarters, the stability of which has
rewarded customers for investing in longer-term, higher yielding products. While
no assurances may be provided by the Company, the recent increase in interest
rates may give rise to additional growth in the Company's CD balance and the
continued transfer of funds out of lower-yield savings products into higher
yield CDs.
In keeping with its policy of accessing its FHLB line of credit during periods
of extensive loan production, the Company increased the line of credit to $412.0
million in the first quarter of 1997 and increased its FHLB borrowings to $106.0
million at March 31, 1997 from $81.4 million at December 31, 1996. While
borrowings tend to cost more than other funding sources, the volume of loans
originated with these funds, and the yields generated by said loans, more than
offsets the higher interest expense.
Interest Rate Sensitivity
Given the extent to which changes in market interest rates may influence net
interest income, one of management's primary objectives is managing the
Company's interest rate risk. This is achieved by matching the maturities and
repricing dates of the Company's interest-earning assets with the maturities and
repricing dates of its interest-bearing liabilities.
10
<PAGE> 13
In order to enhance this match, management has emphasized the origination of
adjustable rate multi-family and one-to-four family mortgage loans, and has
generally confined its other investments to short-term securities with an
average maturity of under one year. On the liability side of the balance sheet,
management closely monitors the pricing of its depository products and has
limited its use of FHLB borrowings except when market conditions have been
particularly conducive to a high level of loan origination activity.
Despite the rising balance of CDs and the increased use of FHLB borrowings to
finance loan production, the Company recorded a positive gap of 4.92% between
its interest rate sensitive assets and interest rate sensitive liabilities
repricing within a one-year period. The presence of a positive gap indicates
that more assets than liabilities will be subject to repricing as a result of
changes in interest rates.
Liquidity and Capital Position
Liquidity
To ensure that its liquid resources are sufficient to fund its operations and
obligations, the Company maintains a portfolio of liquid money market
investments and invests in short-term securities with a maturity of less than
one year.
Money market investments, together with cash and due from banks, are the
Company's most liquid assets, totaling $19.6 million, collectively, at March 31,
1997. Securities, as previously indicated, totaled $78.7 million, including
$60.1 million in U.S. Treasuries and $7.0 million in FNMA securities with a
combined average maturity of eight months.
In the first quarter of 1997, funding for the Company's investments stemmed
primarily from deposits and, to a lesser extent, from principal and interest
payments on loans and proceeds from maturing mortgage-backed securities and
short-term securities. Funding was also accessed through the Company's
FHLB line of credit, which totaled $412.0 million at quarter's end. Additional
funds are available through two other sources: an $8.8 million line of credit
with the Federal Reserve Bank of New York and a $10.0 million line of credit
with a money center bank.
The Bank's cash flows are derived from operating, investing, and financing
activities. In the three months ended March 31, 1997 and 1996, the net cash used
in operating activities totaled $9.1 million and $8.2 million, respectively. The
$851,000 difference stemmed in part from a $2.2 million increase in deferred
income taxes, reflecting the first quarter 1997 reversal of a $1.3 million tax
charge that was recorded in the fourth quarter of 1996. The $2.2 million
increase was largely offset by a combination of factors, including a $15.8
million decrease in official checks outstanding (versus $14.6 million in the
year-earlier quarter) and a $1.1 million decrease in other liabilities (versus a
$691,000 decrease in the first quarter of 1996).
The net cash used in investing activities dropped to $12.4 million in the
current first quarter from $32.4 million in the first quarter of 1996. While
proceeds from the redemption of mortgage-backed securities rose $11.8 million to
$15.5 million, proceeds from maturities of securities declined $8.0 million to
$16.0 million. Meanwhile, the funds utilized to purchase securities totaled
$17.3 million in the current first quarter, down from $23.8 million in the
year-earlier three months. Similarly, the net increase in loans was $26.7
million, down from a net increase of $36.3 million in the first quarter of 1996.
The net cash provided by financing activities fell to $20.0 million from $25.4
million in the first quarter of 1996. The reduction was due to three primary
factors, including a $1.3 million decrease in deposits (versus a $14.0 million
increase in the year-earlier quarter); a $24.6 million increase in FHLB
borrowings (versus the year-earlier $13.5 million increase); and a $3.0 million
net increase in funds utilized to purchase Treasury stock to $11.5 million
(versus $8.9 million in the first three months of 1996).
11
<PAGE> 14
Capital
The Company recorded stockholders' equity of $205.7 million, or 14.98% of total
assets, at March 31, 1997, as compared to $211.4 million, or 15.56% of total
assets, at December 31, 1996. The 1997 amount reflects the allocation of $13.6
million for the purchase of 250,261 shares under the Company's stock repurchase
program, which was extended on January 21, 1997 with the Board of Directors'
authorization to buy back up to one million shares of Company stock.
Also included in stockholders' equity at March 31, 1997 was a $4.4 million
increase in retained earnings (net income of $7.1 million less dividends paid
and options exercised of $2.7 million) and $2.3 million relating to the
amortization and appreciation of shares in the Company's Employee Stock
Ownership Plan ("ESOP") and Recognition and Retention Plans ("RRPs") and the
associated tax benefits. Book value amounted to $31.83 per share at the close of
the current first quarter, based on 6,462,046 shares outstanding, after
excluding 962,773 in unallocated ESOP shares.
As indicated in the following regulatory capital analysis, the Bank's leverage,
Tier 1 risk-based,and total risk-based capital levels continued to exceed the
minimum Federal requirements at March 31st. In addition, the Bank continued to
exceed the requirements for classification as a well capitalized institution. As
defined by FDICIA, a well capitalized institution has a ratio of leverage
capital to adjusted total assets of 5.00% or more; a ratio of Tier 1 risk-based
capital to risk-weighted assets of 6.00% or more; and a ratio of total
risk-based capital to risk-weighted assets of 10.0% or more.
REGULATORY CAPITAL ANALYSIS (Bank Only)
<TABLE>
<CAPTION>
At March 31, 1997
Risk-Based Capital
--------------------------------------------------
(dollars in thousands) Leverage Capital Tier 1 Total
-------------------- -------------------- --------------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Total savings bank equity $135,753 10.09% $135,753 16.98% $145,158 18.16%
Regulatory capital
requirement 40,353 3.00 31,976 4.00 63,952 8.00
-------- ----- ======== ===== ======== -----
Excess $ 95,400 7.09% $103,777 12.98% $ 81,206 10.16%
======== ===== ======== ===== ======== =====
</TABLE>
The Company is required to meet minimum regulatory capital requirements, on a
consolidated basis, which are imposed by the Federal Reserve Board and are
similar to the requirements imposed on the Bank. At March 31, 1997, the
Company exceeded all applicable regulatory capital requirements on a
consolidated basis.
Comparison of the Three Months Ended March 31, 1997 and 1996
Net Income
The Company recorded net earnings of $7.1 million, or $1.00 per share, in the
first quarter of 1997, reflecting the recapture of $1.3 million following the
enactment of legislation re-establishing conformity between the New York City
and State tax codes in March. The recapture represents the bulk of a tax charge
against earnings which had been recorded in the trailing quarter as a result of
the then-existent tax code discrepancy.
Absent the $1.3 million recapture, the Company reported adjusted first quarter
1997 earnings of $5.8 million, or $0.82 per share, up from $5.3 million, or
$0.68 per share, in the year-earlier three months. In addition to the 20.6%
increase in adjusted earnings per share, the Company's adjusted first quarter
1997 earnings represented a return on average assets ("ROA") of 1.73% and a
return on average stockholders' equity ("ROE") of 11.61%.
12
<PAGE> 15
The Company's cash earnings rose to $9.4 million or $1.31 per share, in the
current first quarter from $6.5 million, or $0.84 per share, in the year-earlier
three months. Cash earnings are determined by adding to reported earnings the
non-cash expenses stemming from the amortization and appreciation of allocated
shares in the Company's stock-related benefit plans and the associated tax
benefits. In the first quarter of 1997, such non-cash expenses amounted to $2.3
million, or $0.31 per share. On the basis of its cash earnings, the Company's
ROA and ROE were 2.79% and 18.67%, respectively. Absent the $1.3 million tax
item, the Company's first quarter 1997 cash earnings adjust to $8.1 million, or
$1.13 per share, representing an ROA and ROE of 2.40% and 16.06%.
Net interest income rose $1.4 million, or 10.0%, to $15.2 million, as a $2.6
million increase in interest income offset a $1.2 million increase in interest
expense. The rise in net interest income was accompanied by a 5-basis point
increase in interest rate spread to 3.87% and a 3-basis point increase in
net interest margin to 4.64%.
The higher level of net interest income exceeded the combined impact of a
$182,000 decline in other operating income and a $1.1 million increase in
operating expense. Other operating income totaled $304,000 in the current first
quarter, while operating expense equaled $6.5 million. The higher level of
operating expense primarily stemmed from a $792,000 rise in compensation and
benefits expense to $4.5 million, reflecting $1.8 million relating to the
amortization and appreciation of shares in the Company's stock-related benefit
plans. These non-cash expenses, together with the related tax benefit of
$416,000, were added back to capital at March 31, 1997.
Income tax expense fell to $1.8 million from the year-earlier $3.6 million,
reflecting the reversal of $1.3 million in tax charges, as well as changes to
the tax structure of the Bank.
Interest Income
The Company derives interest income from its portfolio of interest-earning
assets, primarily comprised of mortgage and other loans. The balance of the
Company's interest-earning assets consists of securities, mortgage-backed
securities, and money market investments. In the first quarter of 1997, the
Company recorded interest income of $27.1 million, up $2.6 million from $24.5
million in the first quarter of 1996. The 10.6% increase stemmed from a $110.3
million rise in average interest-earning assets, coupled with a 10-basis point
rise in the average yield to 8.28%.
Average mortgage and other loans generated $24.8 million, or 91.5%, of total
interest income, up from $21.7 million, or 88.5%, in the year-earlier three
months. The $3.1 million increase stemmed from a $145.1 million rise in the
average balance to $1.2 billion, with an average yield of 8.58%, down one basis
point from the year-earlier 8.59%. Average mortgage and other loans represented
88.2% of interest-earning assets in the current first quarter, up from 84.2% in
the first quarter of 1996.
In the first quarter of 1997, average securities provided $1.2 million in
interest income, up from $1.1 million in the first quarter of 1996. The $111,000
increase stemmed from a $5.7 million rise in average securities to $78.2
million, together with a 14-basis point rise in the average yield to 5.96%.
Average securities represented 6.0% of interest-earning assets in the current
first quarter, comparable to the percentage in the year-earlier three months.
Mortgage-backed securities, furnished $1.1 million in interest income, as
compared to $1.4 million in the first quarter of 1996. The $338,000 decrease
reflects a $20.0 million decline in the average balance to $71.1 million,
together with a 13-basis point drop in the average yield to 6.14%. Average
mortgage-backed securities represented 5.4% of interest-earning assets, down
from 7.6% in the year-earlier period.
Average money market investments contributed $60,000 in interest income, down
from $330,000 in the first quarter of 1996. The $270,000 decline corresponded to
a $20.5 million reduction in the average balance to $4.8 million, coupled with a
14-basis point decrease in the average yield to 5.08%.
13
<PAGE> 16
Interest Expense
The Company's interest expense stems primarily from the interest paid on its
depository products and, to a lesser extent, from the interest paid on its FHLB
borrowings and mortgagors' escrow accounts.
Reflecting the stability of market interest rates over the past five quarters,
the majority of the Company's deposits consist of short- and medium-term CDs. In
the first quarter of 1997, CDs generated $8.6 million in interest expense, or
72.3% of the total, up from $7.6 million, or 71.4%, in the first quarter of
1996. The $974,000 increase corresponds to a $97.1 million increase in the
average balance to $649.1 million, tempered by a 17-basis point reduction in the
average cost to 5.38%. Average CDs represented 59.3% of average interest-bearing
liabilities in the current first quarter, as compared to 56.0% in the
year-earlier three months.
Savings accounts contributed $1.6 million in interest expense, or 13.7% of the
first quarter 1997 total, as compared to $1.7 million, or 15.9%, in the first
quarter of 1996. The $72,000 decline reflects a $10.4 million drop in the
average balance to $275.1 million, which offset a one-basis point increase in
the average cost to 2.41%. Average savings accounts represented 25.1% of average
interest-bearing liabilities in the current first quarter, down from 29.0% in
the first quarter of the prior year.
NOW and money market accounts generated $470,000 in interest expense, or 3.9% of
the first quarter 1997 total, down from $543,000, representing 5.1%, in the
year-earlier three months. The $73,000 decline stemmed from a $6.7 million drop
in the average balance to $69.2 million and a 12-basis point reduction in the
average cost to 2.75%. NOW and money market accounts represented 6.3% and 7.7%
of average interest-bearing liabilities in the first quarters of 1997 and 1996,
respectively.
FHLB borrowings generated $1.2 million in interest expense, or 10.0% of the
total, as compared to $812,000, or 7.6%, in the first quarter of 1996. The
$375,000 increase was the net result of a $28.7 million rise in the average
balance to $86.6 million, and a 7-basis point drop in the average cost to 5.56%.
Average FHLB borrowings represented 7.9% of average interest-bearing liabilities
in the current quarter, and 5.9% in the year-earlier three months.
Mortgagors' escrow provided $10,000 in interest expense in the current first
quarter, versus $3,000 in the year-earlier three months. The increase reflects a
$782,000 rise in the average balance to $14.8 million and an 18-basis point rise
in the average cost to 0.27%.
Net Interest Income
Net interest income is the Company's principal source of income; its level is
influenced significantly by the volume of the Company's interest-earning assets
and interest-bearing liabilities, and by the spread between the yield on such
assets and the cost of such liabilities.
In the first quarter of 1997, the Company's net interest income rose 10.0% to
$15.2 million, from $13.8 million in the first quarter of 1996. The growth in
net interest income was accompanied by improvements in the Company's interest
rate spread and net interest margin, which rose to 3.87% and 4.64%,
respectively, in the current year's first quarter, from 3.82% and 4.61%,
respectively, in the first quarter of 1996. In the fourth quarter of 1996, the
Company recorded net interest income of $14.9 million, supported by a spread and
margin of 3.93% and 4.62%.
While the recent uptick in interest rates may exert some pressure on spreads and
margins going forward, based on the current interest rate environment,
management believes that the Company's net interest income may continue to rise.
Higher funding costs are expected to be offset by a rise in interest-earning
assets,
14
<PAGE> 17
bolstered by the origination of multi-family mortgage loans. However, it should
also be stated that the level of net interest income could be adversely impacted
by a more significant increase in interest rates than is currently anticipated,
and by factors that could hamper the Company's ability to originate loans. Among
these would be a downturn in the real estate market and a substantial increase
in competition for both funding and loans.
NET INTEREST INCOME ANALYSIS
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------------------------------------------------------
1997 1996
---------------------------------- ----------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------- -------- ---- ------- -------- ----
<S> <C> <C> <C> <C> <C> <C>
Assets:
Interest-earning assets:
Mortgage and other loans, net $1,155,322 $24,789 8.58% $1,010,197 $21,702 8.59%
Securities held to maturity 78,156 1,164 5.96 72,415 1,053 5.82
Mortgage-backed securities held to maturity 71,143 1,092 6.14 91,156 1,430 6.27
Money market investments 4,791 60 5.08 25,305 330 5.22
---------- ------- ------- ---------- ------- ------
Total interest-earning assets 1,309,412 27,105 8.28% 1,199,073 24,515 8.18%
Non-interest-earning assets 36,921 40,496
---------- ----------
Total assets $1,346,333 $1,239,569
========== ==========
Liabilities and stockholders' equity:
Interest-bearing liabilities:
NOW and money market accounts $ 69,230 $ 470 2.75% $ 75,940 $ 543 2.87%
Savings accounts 275,119 1,633 2.41 285,492 1,705 2.40
Certificates of deposit 649,125 8,618 5.38 552,013 7,644 5.55
FHLB borrowings 86,611 1,187 5.56 57,862 812 5.63
Mortgagors' escrow 14,843 10 0.27 14,061 3 0.09
---------- ------- ------- ---------- ------- ------
Total interest-bearing liabilities 1,094,928 11,918 4.41% 985,368 10,707 4.36%
------- -------
Non-interest-bearing deposits 24,726 22,563
Other liabilities 25,646 18,631
---------- ----------
Total liabilities 1,145,300 1,026,562
Stockholders' equity 201,033 213,007
---------- ----------
Total liabilities and stockholders' equity $1,346,333 $1,239,569
========== ==========
Net interest income/interest rate spread $15,187 3.87% $13,808 3.82%
======= ======= ======= ======
Net interest-earning assets/net
interest margin $ 214,484 4.64 $ 213,705 4.61
========== ======= ========== ======
Ratio of interest-earning assets to interest-
bearing liabilities 119.59 121.69
======= ======
</TABLE>
Provision for Loan Losses
Reflecting the consistent quality of the Company's assets, the Company extended
its suspension of the loan loss provision for the seventh consecutive quarter.
The first quarter 1997 suspension, together with the net recovery of $46,000
following the disposition of a non-performing loan and the absence of any
charge-offs, increased the allowance for loan losses to $9.4 million at March
31st. The $9.4 million represented 107.21% of non-performing loans and 0.80% of
loans, net, up from 96.90% and 0.82%, respectively, at year-end 1996. The $9.4
million allowance also represented 647.73% of accumulated net charge-offs for
the ten years ended March 31, 1997.
15
<PAGE> 18
Non-performing assets totaled $10.3 million, or 0.75% of total assets, and
consisted of $8.8 million in non-performing loans and $1.5 million in foreclosed
real estate. While, based on currently available information, management
believes that the Company's allowance for loan losses is adequate and does not
anticipate making additional provisions to the loan loss allowance over the
short-term, no assurance can be made that a significant change in the quality of
the Company's assets or a significant downturn in the real estate market would
not result in additional provisions being made.
For more information regarding asset quality and the allowance for loan losses,
please see the discussion and analysis beginning on page 8 of this report.
Other Operating Income
The Company recorded other operating income of $304,000 in the current first
quarter, as compared to $486,000 in the year-earlier three months. The $182,000
reduction stemmed from a $78,000 decline in fee income to $279,000 and a
$104,000 decline in other sources of operating income to $25,000.
Operating Expense
Operating expense consists primarily of compensation and benefits expense,
together with occupancy and equipment and general and administrative ("G&A")
expenses.
In the first quarter of 1997, the Company recorded operating expense of $6.5
million (or 1.93% of average assets), up from $5.5 million (or 1.76% of average
assets) in the first quarter of 1996. The $1.0 million increase primarily
stemmed from a $792,000 increase in compensation and benefits expense to $4.5
million, including $1.8 million related to the amortization and appreciation of
shares in the Company's stock-related benefit plans. The average price of a
share of Company stock rose 70.2% over a twelve-month period, to $52.37 per
share in the current first quarter from $30.77 per share, as adjusted for the
August 22, 1996 stock split, in the first quarter of 1996. Together with the
related tax benefit of $416,000, the total impact on the balance sheet of these
non-cash expenses was $2.3 million, all of which was added back to capital at
March 31st.
The balance of the increase in operating expense stemmed from a $49,000 rise in
occupancy and equipment expense to $669,000; a $159,000 increase in G&A expense
to $1.1 million; and a $55,000 increase in other operating expense to $156,000.
Despite the rise in operating expense, the Company's efficiency ratio remained
stellar, amounting to 42.04% on the basis of reported earnings and 30.19% on the
basis of cash earnings.
The number of full-time equivalent employees at the close of the quarter was
283.
Income Tax Expense
Income tax expense, including Federal, state, and local income taxes, declined
to $1.8 million in the current first quarter from $3.6 million in the first
quarter of 1996.
The decline primarily reflects the reversal of $1.3 million in tax charges that
had been recorded in the trailing quarter, pursuant to the enactment of
legislation conforming the treatment of tax bad debt reserves under the New York
City tax code to the treatment permitted by the State. In addition, the decline
reflects changes to the Bank's tax structure that, in future quarters, will
result in the Company's effective tax rate approximating 45%.
16
<PAGE> 19
Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995
This report contains certain forward-looking statements which are based on
management's current expectations regarding economic, legislative, and
regulatory issues that may impact the Company's earnings in future periods.
Factors that could cause future results to vary from current management
expectations include, but are not limited to, general economic conditions;
changes in interest rates, deposit flows, loan demand, real estate values, and
competition; changes in accounting principles, policies, or guidelines; changes
in legislation and regulation; and other economic, competitive, governmental,
regulatory, and technological factors affecting the Company's operations,
pricing, products, and services.
17
<PAGE> 20
QUEENS COUNTY BANCORP, INC.
PART 2 - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company held its annual meeting of shareholders on April 16, 1997.
Proxies were solicited with respect to such meeting under Regulation 14A of
the Securities Exchange Act of 1934 pursuant to proxy materials dated March
19, 1997. Of the 7,578,714 shares eligible to vote at the annual meeting,
6,279,728 were represented in person or by proxy.
(b) There was no solicitation in opposition to the Board's nominees for
director, and all of such nominees were elected, as follows:
<TABLE>
<CAPTION>
No. of Votes No. of Votes Broker
For Withheld Non-Votes
--- -------- ---------
<S> <C> <C> <C>
Donald M. Blake 6,264,688 15,040 --
Joseph G. Chisholm 6,259,422 20,306 --
Joseph R. Ficalora 6,262,463 17,265 --
</TABLE>
The following directors are serving terms of office that continue through 1998
and 1999, as noted:
<TABLE>
<CAPTION>
Director* Year Term Expires
--------- -----------------
<S> <C>
Harold E. Johnson 1998
Luke D. Lynch 1998
Henry E. Froebel 1998
Howard C. Miller 1998
Max L. Kupferberg 1999
</TABLE>
18
<PAGE> 21
<TABLE>
<CAPTION>
Director (continued) Year Term Expires
-------------------- -----------------
<S> <C>
Dominick Ciampa 1999
Richard H. O'Neill 1999
</TABLE>
* On April 26, 1997, Daniel C. Maher, a member of the Board of Directors and
Chairman of Queens County Savings Bank, died following a lengthy illness.
Mr. Maher had served the Bank for 55 years, including 13 years as the
Bank's President and Chief Executive Officer.
(c) Two additional proposals were submitted for a vote, with the following
results:
<TABLE>
<CAPTION>
No. of Votes No. of Votes No. of Votes Broker
For Against Abstaining Non-Votes
--- ------- ---------- ---------
<S> <C> <C> <C> <C>
1. Ratification of the
Queens County
Bancorp, Inc. 1997
Stock Option Plan 5,713,809 471,135 78,004 16,780
2. Ratification of the
Appointment of
KPMG Peat Marwick,
LLP as Independent
Auditors for the
Fiscal Year Ending
December 31, 1997 6,250,605 21,702 7,421 --
</TABLE>
ITEM 5. OTHER INFORMATION
On January 21, 1997, the Board of Directors of Queens County Bancorp authorized
the repurchase of up to one million shares of Company stock under its Stock
Repurchase Program.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibit is filed as part of this report:
Regulation S-K Exhibit
Reference No. 11
Statement re: Computation of Per Share Earnings
19
<PAGE> 22
(b) Reports on Form 8-K
On March 11, 1997, Queens County Bancorp, Inc. filed a Current Report
on Form 8-K with the Securities Exchange Commission reporting the Board of
Directors' declaration of a three-for-two stock split in the form of a 50% stock
dividend, payable on April 10, 1997 to shareholders of record on March 17, 1997.
The Form 8-K also indicated that cash in lieu of fractional shares would be
based on the average of the high and low bids on the date of record, as adjusted
for the split.
20
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Queens County Bancorp, Inc.
(Registrant)
DATE: May 12, 1997 BY: /s/ Joseph R. Ficalora
----------------------
Joseph R. Ficalora
Chairman, President, and
Chief Executive Officer
(Duly Authorized Officer)
DATE: May 12, 1997 BY: /s/ Robert Wann
---------------
Robert Wann
Senior Vice President,
Comptroller, and
Chief Financial Officer
(Principal Financial Officer)
21
<PAGE> 24
EXHIBIT INDEX
-------------
Exhibit 11 Statement re: Computation of Per Share Earnings
Exhibit 27 Financial Data Schedule
<PAGE> 1
Reference Number 11
QUEENS COUNTY BANCORP, INC.
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS (1)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------
1997 1996
------ ------
(in thousands, except per share data)
- -------------------------------------------------------------------------------------
<S> <C> <C>
Net income $7,132 $5,259
------ ------
Weighted average common shares outstanding 6,612 7,198
Common stock equivalents due to dilutive effect
of stock options 557 500
------ ------
Total weighted average common shares and
common share equivalents outstanding 7,169 7,698
====== ======
Earnings per common share and common share
equivalents $1.00 $0.68
====== ======
Total weighted average common shares and
common share equivalents outstanding 7,169 7,698
Additional dilutive shares using ending period
market value versus average market value for
the period when utilizing the treasury stock
method regarding stock options 16 23
------ ------
Total shares for fully diluted earnings per share 7,185 7,721
====== ======
Fully diluted earnings per common share
and common share equivalents $0.99 $0.68
====== ======
</TABLE>
(1) Reflects shares issued as a result of the four-for-three stock split on
August 22, 1996.
22
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 13,576
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 6,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 145,902
<INVESTMENTS-MARKET> 146,338
<LOANS> 1,181,824
<ALLOWANCE> 9,405
<TOTAL-ASSETS> 1,373,295
<DEPOSITS> 1,022,603
<SHORT-TERM> 106,024
<LIABILITIES-OTHER> 7,702
<LONG-TERM> 0
0
0
<COMMON> 92
<OTHER-SE> 205,626
<TOTAL-LIABILITIES-AND-EQUITY> 1,373,295
<INTEREST-LOAN> 24,789
<INTEREST-INVEST> 2,256
<INTEREST-OTHER> 60
<INTEREST-TOTAL> 27,105
<INTEREST-DEPOSIT> 10,731
<INTEREST-EXPENSE> 11,918
<INTEREST-INCOME-NET> 15,187
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 1
<EXPENSE-OTHER> 6,209
<INCOME-PRETAX> 8,979
<INCOME-PRE-EXTRAORDINARY> 8,979
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,132
<EPS-PRIMARY> 1.00
<EPS-DILUTED> .99
<YIELD-ACTUAL> 8.28
<LOANS-NON> 6,805
<LOANS-PAST> 1,967
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 9,359
<CHARGE-OFFS> 0
<RECOVERIES> 46
<ALLOWANCE-CLOSE> 9,405
<ALLOWANCE-DOMESTIC> 9,405
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 9,405
</TABLE>
