UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------
FORM 10-Q
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
--------------------------------------
For the Quarter Ended
March 31, 1996
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
0-22516
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Securities and Exchange Commission File Number
GreenPoint Financial Corp.
--------------------------
(Exact name of registrant as specified in its charter)
Delaware 06-1379001
-------- ----------
(State or other jurisdiction of (I.R.S. employer identification number)
incorporation or organization)
41-60 Main Street, Flushing, New York 11355
- - ------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(718) 670-4355 Not Applicable
--------------- --------------
(Registrant's telephone number, (Former name, former address and former
including area code) fiscal year if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for 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
----- ---
As of May 10, 1996 there were 51,153,000 shares of common stock outstanding.
<PAGE>
GreenPoint Financial Corp.
FORM 10-Q
For the Quarter Ended
March 31, 1996
INDEX
PART I - FINANCIAL INFORMATION Page
----
Item 1 - Financial Statements
Consolidated Statements of Financial Condition (unaudited)
as of March 31, 1996 and December 31, 1995 3
Consolidated Statements of Income (unaudited) for the quarters
ended March 31, 1996 and 1995 4
Consolidated Statement of Changes in Stockholders' Equity (unaudited)
for the quarters ended March 31, 1996 and 1995 5
Consolidated Statements of Cash Flows (unaudited) for the quarters
ended March 31, 1996 and 1995 6
Notes to the Unaudited Consolidated Financial Statements 7
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 21
Item 6 - Exhibits and Reports on Form 8-K 21
<PAGE>
<TABLE>
<CAPTION>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
March 31, December 31,
1996 1995
------------------- ------------------
ASSETS (In thousands, except share amounts)
------
<S> <C> <C>
Cash and due from banks $ 136,101 $ 153,679
Money market investments 2,014,400 1,550,700
Loans receivable held for sale 284,843 175,052
Securities available for sale 4,807,240 5,896,505
Securities held to maturity (estimated fair value of $4,387 and
$4,361 respectively) 4,333 4,307
Loans receivable held for investment:
Mortgage loans 6,027,814 5,992,776
Other loans 27,417 29,669
Deferred loan fees and unearned discount (57,567) (58,297)
Allowance for possible loan losses (105,000) (105,500)
------------------ ---------------
Loans receivable held for investment, net 5,892,664 5,858,648
----------------- --------------
Accrued interest receivable, net 84,195 72,944
Banking premises and equipment, net 114,966 113,673
Deferred income taxes, net 102,488 70,134
Other real estate owned, net 28,763 29,245
Excess of cost over fair value of net assets acquired, net 658,572 670,201
Other assets 340,483 75,375
----------------- --------------
Total assets $ 14,469,048 $ 14,670,463
================= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Liabilities:
Deposits:
N.O.W. and checking accounts $ 499,846 $ 501,842
Savings and club accounts 2,014,418 2,034,669
Variable rate savings accounts 2,017,136 1,995,292
Money market accounts 625,120 635,696
Term certificates of deposit accounts 7,541,447 7,730,824
----------------- --------------
Total deposits 12,697,967 12,898,323
----------------- --------------
Mortgagors' escrow 81,369 58,935
Accrued interest payable 11,785 2,353
Accrued income taxes payable 13,484 7,618
Other liabilities 133,955 151,917
----------------- --------------
Total liabilities 12,938,560 13,119,146
----------------- --------------
Commitments and Contingencies
Stockholders' equity:
Preferred stock ($0.01 par value; 50,000,000 shares authorized; none issued) --- ---
Common stock ($0.01 par value; 220,000,000 shares authorized;
55,055,150 and 54,965,582 shares issued, respectively) 551 550
Additional paid-in capital 806,226 801,382
Unallocated Employee Stock Ownership Plan (ESOP) shares (122,178) (123,987)
Unearned stock plans shares (12,250) (9,838)
Retained earnings 959,651 942,137
Net unrealized (loss) gain on securities available for sale, net (29,859) 14,862
Treasury stock, at cost (2,658,632 and 2,748,200 shares, respectively) (71,653) (73,789)
----------------- ---------------
Total stockholders' equity 1,530,488 1,551,317
----------------- ---------------
Total liabilities and stockholders' equity $ 14,469,048 $ 14,670,463
================= ===============
</TABLE>
(See the accompanying notes to the unaudited consolidated financial statements)
3
<PAGE>
<TABLE>
<CAPTION>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Quarter Ended
March 31,
-----------------------------------
1996 1995
----------------- --------------
(In thousands, except per share amounts)
<S> <C> <C>
Interest income:
Mortgages $ 141,349 $ 129,414
Money market investments 23,390 4,063
Securities 85,711 8,951
Other loans 657 381
-------------- ------------
Total interest income 251,107 142,809
-------------- ------------
Interest expense:
Deposits 143,079 58,248
Short-term and other borrowings 451 ---
-------------- ------------
Total interest expense 143,530 58,248
-------------- ------------
Net interest income 107,577 84,561
Provision for possible loan losses (3,646) (5,483)
-------------- ------------
Net interest income after provision for possible loan losses 103,931 79,078
-------------- ------------
Non-interest income:
Income from fees and commissions:
Mortgage loan operations fee income 4,563 2,786
Mortgage servicing fees 2,260 2,668
Banking services fees and commissions 4,061 703
Securities lending fees 312 111
Other income 17 605
Net gain (loss) on securities 273 (645)
Net gain on sales of loans 19 40
-------------- ------------
Total non-interest income 11,505 6,268
-------------- ------------
Non-interest expense:
General and administrative expenses:
Salaries and benefits 22,561 14,333
Employee Stock Ownership and stock plans expense 4,243 3,624
Advertising 1,991 1,141
Net expense of premises and equipment 11,698 3,703
Federal deposit insurance premiums 1,710 3,084
Charitable and educational foundation 993 575
Other administrative expenses 13,073 6,224
------------- ------------
Total general and administrative expenses 56,269 32,684
------------- ------------
Other real estate owned operating income, net (115) (402)
Amortization of excess of cost over fair value of net assets acquired 11,628 47
------------- ------------
Total non-interest expense 67,782 32,329
----------- ------------
Income before income taxes 47,654 53,017
Income taxes 20,302 24,510
------------- ------------
Net income $ 27,352 $ 28,507
============= ============
Earnings per share $ 0.60 $ 0.60
============== ============
</TABLE>
(See the accompanying notes to the unaudited consolidated financial statements)
4
<PAGE>
<TABLE>
<CAPTION>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
(In thousands)
Quarter Ended
----------------------------------
March 31, March 31,
1996 1995
--------------- -------------
<S> <C> <C>
Common stock
Balance at beginning of period $ 550 $ 549
Issuance of common stock to stock plans 1 ---
-------------- --------------
Balance at end of period 551 549
-------------- --------------
Additional paid-in capital
Balance at beginning of period 801,382 794,615
Issuance of common stock to stock plans 3,692 ---
Amortization of ESOP shares committed to be released 1,042 656
Amortization of stock plans shares during the period 110 37
Exercise of stock options --- 153
Adjustment to initial public offering issuance costs --- 1,226
-------------- --------------
Balance at end of period 806,226 796,687
-------------- --------------
Unallocated ESOP shares
Balance at beginning of period (123,987) (131,039)
Amortization of ESOP shares committed to be released 1,809 1,763
-------------- --------------
Balance at end of period (122,178) (129,276)
-------------- --------------
Unearned stock plans shares
Balance at beginning of period (9,838) (14,307)
Issuance of common stock to stock plans (3,694) ---
Amortization of stock plans shares during the period 1,282 1,168
-------------- --------------
Balance at end of period (12,250) (13,139)
-------------- --------------
Retained earnings
Balance at beginning of period 942,137 871,374
Net income for the period 27,352 28,507
Dividends paid (8,979) (9,348)
Exercise of stock options from treasury stock (859) ---
-------------- --------------
Balance at end of period 959,651 890,533
-------------- --------------
Net unrealized gain (loss) on securities available for sale, net
Balance at beginning of period 14,862 ---
Net unrealized loss on securities available for sale (44,721) ---
-------------- --------------
Balance at end of period (29,859) ---
-------------- --------------
Treasury stock, at cost
Balance at beginning of period (73,789) ---
Exercise of stock options from treasury stock 2,136 ---
Purchase of treasury stock --- (10,029)
-------------- --------------
Balance at end of period (71,653) (10,029)
-------------- --------------
Total stockholders' equity $ 1,530,488 $ 1,535,325
============== ==============
</TABLE>
(See accompanying notes to the unaudited consolidated financial statements)
5
<PAGE>
<TABLE>
<CAPTION>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Quarter Ended
March 31,
1996 1995
------------------- -----------------
(In thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 27,352 $ 28,507
Adjustments to reconcile net income to net cash used in operating activities:
Provision for possible loan losses 3,646 5,483
Provision for (recovery of) potential declines in value of other real estate 787 (1)
Depreciation and amortization of premises and equipment 4,601 1,750
Accretion of discount, net of amortization of premium (24,685) (2,386)
ESOP and stock plans expense 4,243 3,624
Net change in loans held for sale (163,893) 68
Net (gain) loss on securities (273) 645
Net gain on sales of loans (19) (40)
Net gain on sales of other real estate owned (1,824) (3,095)
Foreclosure expenses on other real estate (66) (559)
Amortization of excess of cost over fair value of net assets acquired 11,628 47
Decrease (increase) in other assets 11,150 (2,266)
Decrease in other liabilities (2,664) (38,723)
Other, net 2,206 (1,624)
----------------- -----------------
Net cash used in operating activities (127,811) (8,570)
----------------- -----------------
Cash flows from investing activities:
Mortgage loan originations, net of principal repayments 11,081 (12,319)
Proceeds from sales of other real estate owned 4,047 8,119
Repurchases of loans sold with recourse (1,269) (7,075)
Other loan originations, net of principal repayments 2,252 (2,224)
Purchases of securities available for sale (2,793,988) ---
Purchase of securities held to maturity --- (273)
Proceeds from maturities of securities available for sale 3,088,263 ---
Proceeds from maturities of securities held to maturity --- 181,110
Sales of securities available for sale 398,140 ---
Principal repayments on securities available for sale 56,925 1,024
Purchases of premises and equipment (5,894) (2,999)
----------------- -----------------
Net cash provided by investing activities 759,557 165,363
----------------- -----------------
Cash flows from financing activities:
Net (withdrawals from) deposits to depositors' accounts (200,356) 19,657
Payments for cash dividends (8,979) (9,348)
Net increase in mortgagors' escrow 22,434 21,876
Exercise of stock options 1,277 153
Purchase of treasury stock --- (10,029)
----------------- -----------------
Net cash (used in) provided by financing activities (185,624) 22,309
----------------- -----------------
Net increase in cash and cash equivalents 446,122 179,102
Cash and cash equivalents at beginning of period 1,704,379 293,270
----------------- -----------------
Cash and cash equivalents at end of period $ 2,150,501 $ 472,372
----------------- -----------------
Supplemental disclosure of cash flow information
Cash paid for income taxes $ 2,265 $ ---
================= =================
Non-cash investing and financing activities:
Additions to other real estate owned, net $ 6,533 $ 3,594
================= =================
Loans to facilitate sales of other real estate $ 4,335 $ 9,507
================= =================
Interest credited on deposits $ 152,511 $ 57,966
================= =================
</TABLE>
(See accompanying notes to the unaudited consolidated financial statements)
6
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The unaudited financial statements of GreenPoint Financial Corp. and
Subsidiaries ("GreenPoint" or the "Company") are prepared in accordance with
generally accepted accounting principles for interim financial information. In
the opinion of management, all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation of the Company's interim financial
condition as of the dates indicated and the results of operations for the
periods presented have been included. The results of operations for the interim
periods shown are not necessarily indicative of results that may be expected for
the entire year.
The unaudited consolidated interim financial statements presented herein should
be read in conjunction with the consolidated financial statements and notes
thereto included in the Company's Annual Report to shareholders for the period
ended December 31, 1995.
2. Stock Incentive Plan
During the quarter ended March 31, 1996, GreenPoint granted 375,000 shares of
the Company's common stock to certain executive officers. These awards, which
were previously approved by the Company's shareholders in 1994, vest ratably
over five years on the anniversary dates of the awards. The market price at
the grant date was $ 24.625.
3. Common Stock Repurchase Program
On February 13, 1996 the Company announced a plan to repurchase up to
approximately 2.6 million shares of stock during 1996. This follows a stock
buyback program of 2.748 million shares completed in 1995. No share repurchases
were made during the quarter ended March 31, 1996.
4. Subsequent Event
On April 12, 1996 the Bank completed the sale of its two Rockland County, New
York banking offices to Pawling Savings Bank, a subsidiary of Progressive Bank,
Inc. Pawling assumed approximately $154 million of deposits within the two
branches. The Bank will report a pre-tax net gain of approximately $8.9 million
from the transaction in the second quarter of 1996.
7
<PAGE>
<TABLE>
<CAPTION>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
5. Securities Available for Sale and Held to Maturity
Securities held at March 31, 1996 are summarized as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------------- ------------- ------------ -----------
(In thousands)
<S> <C> <C> <C> <C>
Securities Available for Sale
U.S. Government and Federal Agency Obligations:
U.S. Treasury Notes/Bills $ 1,933,686 $ --- $ (19,651) $ 1,914,035
Agency Discount Notes 93,761 --- (28) 93,733
Mortgage-Backed Securities 2,388,284 --- (33,201) 2,355,083
Trust Certificates Collateralized
by GNMA Securities 426,751 --- (1,358) 425,393
Other 18,950 47 (1) 18,996
--------------- -------------- -------------- -----------
Total securities available for sale $ 4,861,432 $ 47 $ (54,239) $ 4,807,240
=============== ============== ============== ============
Securities Held to Maturity
Tax Exempt Municipals $ 675 $ 54 $ --- $ 729
Other 3,658 --- --- 3,658
--------------- -------------- -------------- ------------
Total securities held to maturity $ 4,333 $ 54 $ --- $ 4,387
=============== ============== ============== ============
Securities held at December 31, 1995 are summarized as follows:
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---------------- ---------- ---------- ------------
(In thousands)
<S> <C> <C> <C> <C>
Securities Available for Sale
U.S. Government and Federal Agency Obligations:
U.S. Treasury Notes/Bills $ 1,352,276 $ 4,004 $ --- $ 1,356,280
Agency Discount Notes 2,417,009 55 (88) 2,416,976
Mortgage-Backed Securities 1,668,847 24,979 --- 1,693,826
Trust Certificates Collateralized
by GNMA Securities 430,340 285 (1,753) 428,872
Other 550 1 --- 551
---------------- ---------------- ---------------- ------------
Total securities available for sale $ 5,869,022 $ 29,324 $ (1,841) $ 5,896,505
================ ================ ================ ============
Securities Held to Maturity
Tax Exempt Municipals $ 675 $ 54 $ --- $ 729
Other 3,632 --- --- 3,632
---------------- ---------------- ---------------- ------------
Total securities held to maturity $ 4,307 $ 54 $ --- $ 4,361
================ ================ ================ ============
</TABLE>
Estimated fair values for securities are based on published market or
securities dealers' estimated prices.
During the quarter ended March 31, 1996, the Company sold available-for-sale
securities aggregating $ 531.0 million, resulting in gross realized gains of
$ 1.9 million and gross realized losses of $ 1.6 million.
The average maturities of the securities available for sale and held to maturity
at March 31, 1996 are approximately 10.7 years and 14.2 years, respectively.
Mortgage-backed securities, almost all of which have contractual
maturities of more than 10 years, are subject to scheduled and non-scheduled
principal payments which shorten the average life to an estimated 6.3 years.
The estimated average life for all securities available for sale is
approximately 4.5 years.
8
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
6. Restructuring Reserve
In December 1995, the Company recorded a pre-tax restructuring charge of $8.0
million that reflects actions taken during the fourth quarter of 1995 and taken
and to be taken during 1996 to improve operating efficiency. The charge
included employee severance benefits, costs associated with planned branch
consolidations and fixed asset writedowns. At March 31, 1996 the reserve
balance associated with this charge was approximately $6.1 million of which $0.8
million related to severance and $5.3 million related to the disposition of
certain facilities premises and equipment and termination of leases.
7. Impact of Recent Accounting Pronouncements
Accounting for Stock-Based Compensation
In October 1995, FASB issued Statement of Financial Accounting Standards No.
123, ("SFAS 123") "Accounting for Stock-Based Compensation." SFAS 123
establishes a fair value based method of accounting for stock-based compensation
arrangements with employees, rather than the intrinsic value based method that
is contained in APB Opinion No. 25 ("Opinion 25").
SFAS 123 allows two alternative accounting methods: (1) a fair-value-based
method, or (2) an intrinsic-value-based method which is already prescribed by
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB 25"). Both the accounting and disclosure requirements of SFAS
123 are effective for fiscal years beginning after December 15, 1995. The
Company intends to continue accounting for its employee stock compensation plans
under its current method (APB 25), and will adopt the disclosure requirements of
SFAS 123 in 1996.
9
<PAGE>
<TABLE>
<CAPTION>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Quarter Ended
--------------------------------------------------------------------------
Mar. 31, Dec. 31, Sept. 30, Jun. 30, Mar. 31,
1996 1995 1995 1995 1995
-------- -------- -------- -------- --------
Performance Ratios (Annualized):
<S> <C> <C> <C> <C> <C>
Return on average assets 0.75% 0.52% 1.59% 1.69% 1.65%
Return on average equity 7.04 5.00 7.74 7.61 7.48
Return on average tangible equity (1) 12.42 8.95 8.08 7.62 7.49
Net interest spread during period 2.87 2.68 3.59 3.80 4.10
Net interest margin 3.16 2.96 4.53 4.84 5.04
General and administrative expense to average
assets 1.53 1.64 1.77 1.89 1.90
Efficiency ratio (2) 47.25 53.36 36.47 36.88 35.98
Average interest-earning assets to average
interest-bearing liabilities 1.07x 1.07x 1.24x 1.27x 1.27x
Capital Ratios:
Period-end stockholders' equity to ending
total assets 10.58% 10.57% 10.48% 22.42% 22.01%
Period-end stockholders' equity less
intangible assets, to tangible assets 6.31 6.29 6.21 22.42 22.02
Leverage capital (3) 6.33 6.11 12.30 16.89 16.42
Risk-based capital ratios (3):
Tier 1 16.73 16.05 15.40 29.59 28.75
Total capital 17.98 17.30 16.65 30.84 30.00
Per Share Data:
Earnings per share * $ 0.60 $ 0.42 $ 0.64 $ 0.62 $ 0.60
Book value per share ** $ 33.35 $ 34.25 $ 33.28 $ 33.09 $ 32.70
Book value per share after deduction of $ 18.99 $ 19.44 $ 18.82 $ 33.08 $ 32.69
unamortized goodwill **
* Average shares used in calculation 45,653,000 46,171,000 47,428,000 47,087,000 47,230,000
** Period-end shares used in calculation 45,898,000 45,298,000 47,445,000 47,135,000 46,959,000
Total shares issued and outstanding 52,457,000 52,217,000 54,337,000 54,514,000 54,483,000
Asset Quality Ratios:
Non-performing loans to total loans 6.25% 6.49% 6.50% 6.87% 6.85%
Non-performing assets to total assets 2.94 2.94 2.84 6.21 6.29
Allowance for possible loan losses to:
Total non-performing loans 26.49 26.24 26.62 26.50 26.57
Total loans held for investment 1.73 1.75 1.78 1.82 1.82
</TABLE>
(1) Average tangible equity has been calculated in accordance with regulatory
guidelines.
(2) The efficiency ratio is calculated by dividing the Company's total general
and administrative expenses by the sum of net interest income and
non-interest income.
(3) These ratios are calculated using regulatory guidelines which exclude the
impact on stockholders' equity resulting from the adoption of Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities" ("SFAS 115").
10
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
1. General
The Bank has historically operated as a traditional consumer-oriented
institution serving the markets in which its branches are located.
Management's objective has been to become a major niche loan originator in the
national residential mortgage market and to become a major consumer banking
force within the attractive, rapidly consolidating New York metropolitan
consumer banking market.
GreenPoint regularly explores opportunities for acquisitions of and holds
discussions with financial institutions and related businesses, and also
regularly explores opportunities for acquisitions of liabilities and assets of
financial institutions, and other financial service providers. The Company
routinely analyzes its lines of business and from time to time may increase,
decrease or terminate one or more of its activities.
2. Operating Results
The first quarter's results are reflective of the following initiatives
which are expected to enhance the Company's financial performance in 1996 and
provide a solid foundation for earnings momentum in subsequent years.
- - - Improving net interest margin by increasing risk-adjusted yields on its
earning assets and by decreasing the effective interest expense of its
consumer deposits.
- - - Improving operating efficiency by prudently reducing its costs of doing
business as a percentage of the net revenues generated from operations.
- - - Expanding its No Doc residential mortgage loan origination business
through carefully planned movements into competitively attractive
regional mortgage markets in the U.S..
- - - Utilizing the funds received in 1995 from Home Savings of America to
internally fund:
- net mortgage loan portfolio growth;
- investment in Treasury, Agency and other investment securities for yield;
- maintenance of appropriate levels of funding liquidity and interest
sensitivity management.
- - - Taking actions to enable the Company to retain a higher percentage of its
pre-tax income.
Collectively such initiatives are expected to result in further improvements in
the Company's financial performance in each subsequent quarter during 1996.
11
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
Net income for the quarter ended March 31, 1996 was $27.4 million, or $0.60
per share, a 4.1% decrease over the $28.5 million, or $0.60 per share, for
the comparable 1995 period. The primary reasons for the decrease are an $85.3
million increase in interest expense and a $35.5 million higher non-interest
expense which was partially offset by a $108.3 million, or 75.8%, increase in
interest income, a $5.2 million, or 83.6%, increase in non-interest income, a
$1.8 million, or 33.5%, reduction in provision for possible loan losses, and
a $4.2 million, or 17.2%, decrease in income tax expense.
Interest Rate Sensitivity
The Bank's cumulative one-year rate sensitivity gap was negative 1.9% of total
assets at March 31, 1996, compared to positive 6.4% at December 31, 1995. The
change reflects continued progress toward investing the deposits associated with
the HSA acquisition.
Net Interest Income
Net interest income increased by $23.0 million, or 27.2%, in the first quarter
of 1996, versus the comparable period in 1995. The increase reflects higher
interest income of $108.3 million in the first quarter of 1996 which was
partially offset by an increase of $85.3 million in interest expense. The rise
in net interest income reflects a $6.96 billion increase in average interest-
earning assets resulting primarily from the investment of the funds received in
the HSA branch acquisition, which was partially offset by a $7.52 billion
related increase in average interest-bearing liabilities and a decrease in
interest rate spread to 2.87% in the current quarter from 4.10% in the 1995
quarter.
Interest income increased by $108.3 million, or 75.8%, to $251.1 million for the
first quarter of 1996 from $142.8 million for the first quarter of 1995. The
principal reason for the rise was the deployment of funds received in the HSA
branch acquisition into money market investments and securities.
Interest income on securities rose by $76.8 million to $85.7 million for the
1996 quarter from $8.9 million for the comparable 1995 quarter. The increase is
primarily the result of two factors: the investment of the majority of the funds
received in the HSA branch acquisition into various types of securities which
increased the average balance by $5.04 billion and greater investment in higher
yielding mortgage-backed securities which resulted in a 50 basis point increase
in the average yield for the current quarter.
Interest income on money market investments increased by $19.3 million to $23.4
million for the 1996 quarter from $4.1 million for the comparable 1995 quarter.
The increase is primarily due to the investment of funds received in the HSA
branch acquisition that resulted in higher average balances of $1.45 billion
which was partially offset by lower short-term interest rates during the 1996
quarter that resulted in a 49 basis point decrease in average yield versus the
first quarter of 1995.
Interest income on mortgages increased by $11.9 million to $141.3 million for
the 1996 quarter from $129.4 million for the comparable 1995 quarter. The
increase reflects higher average balances of $454.4 million, or 8.0%, as a
result of loan origination volume generated from the BarclaysAmerican/Mortgage
operation acquired in July 1995. The higher volume in loan originations in the
1996 quarter outpaced reductions in the average balance due to normal
amortization and prepayments. The improvement in interest income also reflects a
10 basis point increase in average yield which is the result of a lower
percentage of non-performing loans and upward repricing of the Company's
adjustable rate mortgages in the first quarter of 1996 versus the first quarter
of 1995.
Interest expense increased by $85.3 million to $143.5 million for the first
quarter of 1996 from $58.2 million for the first quarter of 1995. The higher
interest expense is primarily the result of the inclusion of the deposits
assumed in the HSA branch acquisition in the 1996 quarter's average balances.
12
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
Interest expense on time deposits increased by $63.5 million to $105.0 million
for the 1996 quarter from $41.5 million for the 1995 quarter. The rise in
interest expense reflects a $4.59 billion increase in the average time deposits
resulting from the HSA branch acquisitions.
Interest expense on money market and variable rate savings accounts increased by
$10.9 million to $22.2 million for the first quarter of 1996 from $11.3 million
for the first quarter of 1995. The rise in interest expense reflects a $1.18
billion increase in the average balance and a 22 basis point increase in average
cost as a result of the inclusion of deposits acquired in the aforementioned
HSA branch acquisitions.
Interest expense on savings accounts increased by $9.5 million to $14.0 million
for the 1996 quarter from $4.5 million in the 1995 quarter. The interest
expense reflects a $1.44 billion increase in the average balance which was
partially offset by a 36 basis point reduction in average cost as a result of
the inclusion of deposits acquired in the aforementioned HSA branch
acquisitions.
13
<PAGE>
<TABLE><CAPTION>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
Average Balance Sheets and Interest Yield/Cost
The following table sets forth certain information relating to the Company's
average statements of financial condition (unaudited) and statements of income
(unaudited) for the quarters ended March 31, 1996 and March 31, 1995,
and reflects the average yield on assets and average cost of
liabilities for the periods indicated. Such annualized 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. Average balances and yields include
non-accrual loans. The yields and costs include fees which are considered
adjustments to yields.
Quarter Ended
-------------------------------------------------------------------------
March 31, 1996 March 31, 1995
----------------------------------- ---------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
--------- ---------- ----- ------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Interest-earning
assets:
Mortgage loans (1) $ 6,158,622 $ 141,349 9.18% $ 5,704,181 $ 129,414 9.08%
Other loans (1) 35,693 657 7.36 21,247 381 7.17
Money market
investments (2) 1,724,449 23,390 5.46 276,739 4,063 5.95
Securities 5,695,334 85,711 6.04 654,593 8,951 5.54
------------- ---------- ------------ -------
Total
interest-earning
assets 13,614,098 251,107 7.39 6,656,760 142,809 8.59
---------- -------
Non-interest
earning assets (3) 1,053,743 238,081
------------ ------------
Total assets $ 14,667,841 $ 6,894,841
============ ============
Liabilities &
Stockholders' Equity:
Interest-bearing
liabilities:
Savings accounts $ 2,015,837 13,986 2.79% $ 574,814 4,467 3.15%
NOW accounts 337,902 1,548 1.84 107,207 557 2.11
Money market and
variable rate
savings accounts 2,625,344 22,227 3.41 1,447,165 11,372 3.19
Term certificates
of deposit accounts 7,637,573 105,055 5.53 3,050,986 41,538 5.52
Mortgagors' escrow 76,858 263 1.38 75,224 314 1.69
Repurchase
agreements 85,295 451 2.13 --- --- ---
------------ ---------- ----------- --------
Total
interest-bearing
liabilities 12,778,809 143,530 4.52 5,255,396 58,248 4.49
---------- --------
Other liabilities (4) 334,830 115,794
------------- -----------
Total liabilities 13,113,639 5,371,190
Stockholders' equity 1,554,202 1,523,651
------------- -----------
Total liabilities $ 14,667,841 $ 6,894,841
& stockholders' ============= ==============
equity
Net interest
income/interest
rate spread (5) $ 107,577 2.87% $ 84,561 4.10%
=========== ====== ======== =====
Net interest-earning
assets/net interest
margin (6) $ 835,289 3.16% $ 1,401,364 5.04%
============= ===== ============= =====
Ratio of
interest-earning
assets to
interest-bearing
liabilities 1.07 x 1.27 x
====== ======
</TABLE>
14
<PAGE>
(1) In computing the average balances and average yield on loans, non-accruing
loans and loans held for sale have been included.
(2) Includes overnight federal funds sold and securities purchased under
resale agreements.
(3) Includes banking premises and equipment - net, net deferred tax assets,
accrued interest receivable, and other miscellaneous non-interest earning
assets.
(4) Includes accrued interest payable, accounts payable, official checks
drawn against the bank, accrued expenses, and other miscellaneous
non-interest-bearing obligations of the Company.
(5) Net interest rate spread represents the difference between the average
yield on average interest-earning assets and the average cost of
interest-bearing liabilities.
(6) Net interest margin represents net interest income divided by average
interest-earning assets.
15
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
Rate/Volume Analysis
The following table presents the effects of changes in interest rates and
changes in volume of interest-earning assets and interest-bearing liabilities on
the Company's interest income and interest expense during the periods indicated.
Information is provided in each category on changes (I) 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 volume and rate.
<TABLE>
<CAPTION>
Quarter Ended March 31, 1996
Compared to
Quarter Ended March 31, 1995
Increase/(Decrease)
------------------------------------------
Due to
----------------------------
Average Average Net
Volume Rate Change
------------------------------------------
(in thousands)
<S> <C> <C> <C>
Interest-earning assets:
Mortgage loans (1) $ 10,415 $ 1,520 $ 11,935
Other loans (1) 266 10 276
Money market investments (2) 19,659 (332) 19,327
Securities 76,609 151 76,760
--------- ---------- ----------
Total interest-earning assets 106,949 1,349 108,298
---------- ----------- ----------
Interest-bearing liabilities:
Savings accounts 10,047 (528) 9,519
NOW accounts 1,064 (73) 991
Money market and other variable rate
savings accounts 9,913 942 10,855
Term certificates of deposit accounts 63,085 432 63,517
Mortgagors' escrow 7 (58) (51)
Repurchase agreements 451 --- 451
------------ ----------- ----------
Total interest-bearing liabilities 84,567 715 85,282
------------ ----------- ----------
Net change in net interest income $ 22,382 $ 634 $ 23,016
========== ============ ==========
</TABLE>
(1) In computing the volume and rate components of net interest income
for loans, non-accrual loans and loans held for sale have been
included.
(2) Includes overnight federal funds and securities purchased under resale
agreements.
16
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
Provision for Possible Loan Losses
The provision for possible loan losses decreased by $1.8 million, or 33.5%, to
$3.6 million for the first quarter of 1996 from $5.4 million for the first
quarter of 1995. The provision is the result of management's assessment of the
loan portfolio in view of the state of the regional and national economies,
trends in the real estate market of the Company's primary lending areas and
trends in the levels of the Company's non-performing loans and assets.
Non-Interest Income
Non-interest income increased by $5.2 million, or 83.6%, to $11.5 million for
the first quarter of 1996 from $6.3 million for the first quarter of 1995. The
increase is primarily due to additional fee income generated from the operations
of GPMC and the 60 former HSA branches reflected in the 1996 quarter's operating
results.
Non-Interest Expense
Non-interest expense increased by $35.5 million to $67.8 million for the first
quarter of 1996 from $32.3 million for the first quarter of 1995. The 1995 BAM
and HSA acquisitions resulted in increases to operating expenses for the first
quarter of 1996. The rise in non-interest expense is primarily the result of
an $11.6 million increase in amortization of goodwill, an $8.2 million increase
in salaries and benefits, an $8.0 million increase in net expense of premises
and equipment and a $6.8 million increase in other administrative expense,
partially offset by a $1.4 million reduction in Federal deposit insurance
premiums.
Income Tax Expense
Income tax expense decreased by $4.2 million, or 17.2%, to $20.3 million for the
first quarter of 1996 from $24.5 million for the first quarter of 1995. The
decrease was due to a $5.4 million, or 10.1%, reduction in income before income
taxes, and a decline in the effective rate to 42.60% for the 1996 period from
46.23% in the 1995 period, which resulted from several business initiatives
implemented in 1996 by the Company.
17
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
3. Financial Condition
Total assets decreased by $201.4 million to $14.469 billion at March 31, 1996
from $14.670 billion at December 31, 1995. Total loans held for investment,
net, increased $34.0 million to $5.893 billion at March 31, 1996 from $5.859
billion at December 31, 1995 primarily as a result of a rise in residential
1-4 family loans of $13.6 million and an increase in commercial loans of
$12.7 million. The Company's loans held for sale portfolio rose $109.8 million
during the current quarter primarily as a result of loans originated for sale
by GreenPoint Mortgage Corp. Securities available for sale decreased $1.090
billion to $4.807 billion at March 31, 1996 from $5.897 billion at December
31, 1995 due to the usage of proceeds from the maturities and sales of
securities to fund deposit outflows and to reinvest in money market investments.
Tangible Capital Growth from Operations
GreenPoint's operating results include significant amortization of goodwill and
employee stock compensation plans expense. These non-cash expenditures, unlike
all other expenses reported by the Company, result in net increases in
GreenPoint's tangible capital (total stockholders' equity less intangible
assets).
Quarter Ended
--------------------------------------------------------------
March 31, 1996 December 31, 1995 March 31, 1995
------------------ ------------------- -------------------
(In thousands,
except per share
amounts)
Net income $ 27,352 $ 19,410 $ 28,507
Add back:
Goodwill expense 11,628 12,084 47
Employee stock
plans expense 4,243 3,882 3,624
----------- --------------- ---------------
Tangible Capital
growth from
operations (*) $ 43,223 $ 35,376 $ 32,178
=========== ============== ===============
Amounts expressed
per share (**) $ 0.94 $ 0.78 $ 0.69
============ ============== ===============
* Tangible Capital consists of Total Stockholders' Equity less the excess of
cost over fair value of net assets acquired (Goodwill).
** Based on the share amounts used to calculate book and tangible book values
per share, as of each respective period-end date.
18
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
Non-Performing Assets
The Company improved its asset quality during the first quarter of 1996 as
non-performing loans decreased by $5.7 million, or 1.4%, while non-performing
assets decreased by $6.1 million, or 1.4%. The ratio of non-performing loans
to total loans fell to 6.25% at March 31, 1996 from 6.49% at December 31, 1995.
The ratio of non-performing assets to total assets was 2.94% at both March
31, 1996 and December 31, 1995.
Non-performing assets, net of related specific reserves, were as follows:
March 31, December 31,
1996 1995
------------ --------------
(In thousands)
Mortgage loans secured by:
Residential one-to four-family mortgages $ 288,206 $ 291,589
Residential multi-family mortgages 61,173 61,594
Commercial property mortgages 47,059 48,911
Other loans 4 4
-------------- --------------
Total non-performing loans (1) 396,442 402,098
-------------- --------------
Total other real estate owned, net 28,763 29,245
-------------- --------------
Total non-performing assets $ 425,205 $ 431,343
============== ==============
(1) Includes $43.6 million and $42.3 million of non-accrual mortgage loans
under 90 days past due at March 31, 1996 and December 31, 1995,
respectively.
Allowance for Possible Loan Losses
The following is a summary of the provision and allowance for possible loan
losses:
Quarter Ended
March 31,
----------------------------------
1996 1995
----------------- -------------
(In thousands)
Balance beginning of period $ 105,500 $ 103,000
Provision charged to income 3,646 5,483
Charge-offs (4,589) (4,059)
Recoveries 443 1,076
------------- -------------
Balance end of period $ 105,000 $ 105,500
============= =============
19
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
Loans Sold with Recourse
GreenPoint is subject to an agreement with the Federal National Mortgage
Association ("FNMA") whereby the Company will repurchase, through 1996,
mortgages sold to FNMA during the period January 1, 1990 through March 31, 1991,
which become 90 days delinquent during 1995 and 1996. In addition, the Company
will be obligated to repurchase, until the later of December 1997 or five years
from the date of delivery, certain mortgages sold to FNMA which become 90 days
delinquent during that period. Serviced loans repurchased from FNMA by
GreenPoint are included within the Company's loan portfolio.
At March 31, 1996, the aggregate amount of loans sold to FNMA which are still
subject to the repurchase agreement was $135.5 million. During the quarter
ended March 31, 1996 a total of $1.3 million of loans were repurchased by the
Bank from FNMA pursuant to the repurchase agreement. At March 31, 1996, $0.4
million of the FNMA servicing portfolio of loans sold with recourse were
delinquent 90 days or more.
During the first quarter of 1996, all mortgages sold by GPMC were sold without
recourse.
Capital Ratios
The Company's ratio of period-end stockholders' equity to ending total assets at
March 31, 1996 was 10.58% compared to 10.57% at December 31, 1995.
In accordance with the requirements of the Federal Deposit Insurance Corporation
("FDIC") and the New York State Banking Department ("Banking Department"), the
Bank must meet certain measures of capital adequacy with respect to leverage and
risk-based capital. As of both March 31, 1996 and December 31, 1995, the Bank
exceeded those requirements. The Bank's leverage capital ratios were 6.33% and
6.11% at March 31, 1996 and December 31, 1995, respectively. The Bank's Tier-1
risk-based capital ratios were 16.73% and 16.05% at March 31, 1996 and December
31, 1995, respectively. The Bank's total risk-based capital ratios were 17.98%
and 17.30% at March 31, 1996 and December 31, 1995, respectively.
20
<PAGE>
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
With the exception of the matters set forth below, the Company is not involved
in any pending legal proceedings other than routine legal proceedings occurring
in the ordinary course of business which, in the aggregate, involve amounts
which are believed by management to be immaterial to the consolidated financial
statements of the Company. The Bank has been named as a defendant in ten
unrelated legal complaints which assert that infant plaintiffs sustained
personal injuries from the ingestion of lead based paint, chips or dust.
Additionally there are eight other instances of threatened litigation. The
injuries are alleged to have occurred in residential properties for which the
Bank was a first mortgagee and for which the Bank may be or may have been an
owner, through foreclosure proceedings. The complaints are in various early
stages of discovery. The defense of three of the claims has been assumed by an
insurer. Defense of the other seven claims was (or is anticipated to be)
rejected by an insurer on the basis of pollution coverage exclusions. The Bank
referred the rejected claims to a special environmental counsel. Counsel has
advised the Bank that because discovery on these claims has only recently begun,
counsel is not yet in a position to express an opinion as to the Bank's
liability or to quantify the Bank's potential exposure, if any, in dollar terms
at the time. Because of the absence of both a determination of liability and a
reasonable estimate of an associated liability exposure in dollar terms, if any,
the Bank has not established a contingency reserve for these complaints.
Accordingly, in the event that one or more of these actions are subsequently
determined to represent an accruable liability for the Bank, such accruals will
be funded through charges to be made against the Bank's operating income for the
period or periods in which such determinations may occur. The Company currently
believes that such liability exposure, if any, would not be material to the
Banks' financial condition.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number
------
11.1 Statement Regarding Computation of Per Share
Earnings.
27.1 Financial Data Schedule
(b) Reports on Form 8-K
On March 6, 1996, GreenPoint Financial Corp. filed a current report on Form 8-K
reporting that on February 22, 1996 broker search cards were mailed on behalf of
GreenPoint to certain holders of record of the Company's common stock setting
forth March 25, 1996 as the record date and May 10, 1996 as the meeting date,
for the Company's 1996 Annual Meeting of Stockholders.
On March 16, 1996, GreenPoint Financial Corp. filed a current report of Form 8-K
reporting the appointment of Price Waterhouse LLP as the Company's principal
accountant to audit its financial statements. On March 27, 1996, GreenPoint
filed Form 8-K/A relating to the appointment of Price Waterhouse LLP to amend
certain information.
21
<PAGE>
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.
GreenPoint Financial Corp.
By:/s/ Thomas S. Johnson
--------------------------------
Thomas S. Johnson
Chairman of the Board, President
and Chief Executive Officer
By:/s/ Charles P. Richardson
---------------------------------
Charles P. Richardson
Executive Vice President and
Chief Financial Officer
Dated May 13, 1996
22
Exhibit 11.1
Exhibit 11.1
Statement Regarding Computation of Per Share Earnings
(In thousands, except per share amounts)
Quarter Ended
March 31,
--------------------------
1996 1995
--------------------------
Net Income $ 27,352 $ 28,507
Weighted average number of common stock
and common stock equivalents outstanding during
each period-primary 45,653 47,230
Weighted average number of common stock
and common stock equivalents outstanding during
each period-fully diluted 45,782 47,253
Net earnings per common share-primary $ 0.60 $ 0.60
=========== ===========
Net earnings per common share-fully diluted $ 0.60 $ 0.60
=========== ===========
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000911935
<NAME> GREENPOINT FINANCIAL CORP.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 135,601
<INT-BEARING-DEPOSITS> 500
<FED-FUNDS-SOLD> 2,014,400
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 4,807,240
<INVESTMENTS-CARRYING> 4,333
<INVESTMENTS-MARKET> 4,387
<LOANS> 6,282,507
<ALLOWANCE> (105,000)
<TOTAL-ASSETS> 14,469,048
<DEPOSITS> 12,697,967
<SHORT-TERM> 0
<LIABILITIES-OTHER> 240,593
<LONG-TERM> 0
0
0
<COMMON> 551
<OTHER-SE> 1,529,937
<TOTAL-LIABILITIES-AND-EQUITY> 14,469,048
<INTEREST-LOAN> 142,006
<INTEREST-INVEST> 109,101
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 251,107
<INTEREST-DEPOSIT> 143,079
<INTEREST-EXPENSE> 143,530
<INTEREST-INCOME-NET> 107,577
<LOAN-LOSSES> (3,646)
<SECURITIES-GAINS> 273
<EXPENSE-OTHER> 67,782
<INCOME-PRETAX> 47,654
<INCOME-PRE-EXTRAORDINARY> 27,352
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,352
<EPS-PRIMARY> 0.60
<EPS-DILUTED> 0.60
<YIELD-ACTUAL> 3.16
<LOANS-NON> 396,442
<LOANS-PAST> 43,553
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> (105,500)
<CHARGE-OFFS> (4,589)
<RECOVERIES> 443
<ALLOWANCE-CLOSE> (105,000)
<ALLOWANCE-DOMESTIC> (105,000)
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
