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
June 30, 1996
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
0-22516
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)
90 Park Avenue, New York, New York 10016
(Address of principal executive offices) (Zip Code)
(212) 834-1711 41-60 Main Street, Flushing, New York
(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 August 13, 1996 there were 49,892,000 shares of common stock outstanding.
<PAGE>
GreenPoint Financial Corp.
FORM 10-Q
For the Quarter Ended
June 30, 1996
INDEX
<TABLE>
<S> <C>
PART I - FINANCIAL INFORMATION Page
Item 1 - Financial Statements
Consolidated Statements of Financial Condition (unaudited) as of June 30, 1996
and December 31, 1995 3
Consolidated Statements of Income (unaudited) for the quarters and six month
periods ended June 30, 1996 and 1995 4
Consolidated Statement of Changes in Stockholders' Equity (unaudited)
for the six month periods ended June 30, 1996 and 1995 5
Consolidated Statements of Cash Flows (unaudited) for the six month periods
ended June 30, 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 4 - Submission of Matters to a Vote of Security Holders 21
Item 6 - Exhibits and Reports on Form 8-K 22
</TABLE>
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------ ------------
ASSETS (In thousands, except share amounts)
<S> <C> <C>
Cash and due from banks $ 108,416 $ 153,679
Money market investments 1,234,400 1,550,700
Loans receivable held for sale 21,710 175,052
Securities available for sale 5,442,891 5,896,505
Securities held to maturity (estimated fair value of $3,699
and $4,361 respectively) 3,697 4,307
Loans receivable held for investment:
Mortgage loans 6,433,127 5,992,776
Other loans 25,650 29,669
Deferred loan fees and unearned discount (54,921) (58,297)
Allowance for possible loan losses (105,000) (105,500)
------------ ------------
Loans receivable held for investment, net 6,298,856 5,858,648
------------ ------------
Accrued interest receivable, net 79,325 72,944
Banking premises and equipment, net 119,761 113,673
Deferred income taxes, net 116,597 70,134
Other real estate owned, net 30,583 29,245
Excess of cost over fair value of net assets acquired, net 646,943 670,201
Other assets 47,415 75,375
------------ ------------
Total assets $ 14,150,594 $ 14,670,463
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
N.O.W. and checking $ 491,060 $ 501,842
Savings and club 1,994,751 2,034,669
Variable rate savings 1,959,895 1,995,292
Money market 591,048 635,696
Term certificates of deposit 7,120,688 7,730,824
------------ ------------
Total deposits 12,157,442 12,898,323
------------ ------------
Mortgagors' escrow 67,483 58,935
Securities sold under agreements to repurchase 284,850 ---
Accrued interest payable 9,872 2,353
Accrued income taxes payable 20,941 7,618
Other liabilities 143,752 151,917
------------ ------------
Total liabilities 12,684,340 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;
55,115,582 and 54,965,582 shares issued, respectively) 551 550
Additional paid-in capital 807,719 801,382
Unallocated Employee Stock Ownership Plan (ESOP) shares (120,370) (123,987)
Unearned stock plans shares (10,851) (9,838)
Retained earnings 987,625 942,137
Net unrealized (loss) gain on securities available for sale, net (52,435) 14,862
Treasury stock, at cost (5,191,517 and 2,748,200 shares, respectively) (145,985) (73,789)
------------ ------------
Total stockholders' equity 1,466,254 1,551,317
------------ ------------
Total liabilities and stockholders' equity $ 14,150,594 $ 14,670,463
============ ============
</TABLE>
(See the accompanying notes to the unaudited consolidated financial statements)
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
----------------------- ------------------------
1996 1995 1996 1995
--------- --------- --------- ---------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Interest income:
Mortgages $ 144,566 $ 130,067 $ 285,915 $ 259,481
Money market investments 21,356 8,040 44,746 12,103
Securities 79,872 7,032 165,583 15,983
Other loans 684 416 1,341 797
--------- --------- --------- ---------
Total interest income 246,478 145,555 497,585 288,364
--------- --------- --------- ---------
Interest expense:
Deposits 133,096 63,781 276,175 122,029
Short-term and other borrowing 1,153 --- 1,604 ---
--------- --------- --------- ---------
Total interest expense 134,249 63,781 277,779 122,029
--------- --------- --------- ---------
Net interest income 112,229 81,774 219,806 166,335
Provision for possible loan losses (3,701) (2,692) (7,347) (8,175)
--------- --------- --------- ---------
Net interest income after provision for possible loan losses 108,528 79,082 212,459 158,160
--------- --------- --------- ---------
Non-interest income:
Income from fees and commissions:
Mortgage loan operations fee income 2,979 2,862 7,542 5,648
Mortgage servicing fees 2,122 2,586 4,382 5,254
Banking services fees and commissions 3,998 778 8,059 1,481
Securities lending fees 805 90 1,117 201
Other income 1,832 1,071 1,849 1,676
Net gain (loss) on securities 81 35 354 (610)
Net gain on sales of loans 2,761 12 2,780 52
Gain on sale of branches 8,876 --- 8,876 ---
--------- --------- --------- ---------
Total non-interest income 23,454 7,434 34,959 13,702
--------- --------- --------- ---------
Non-interest expense:
General and administrative expenses:
Salaries and benefits 20,516 13,681 43,077 28,014
Employee Stock Ownership and stock plans expense 4,699 3,665 8,942 7,289
Net expense of premises and equipment 11,890 3,628 23,588 7,331
Advertising 2,208 1,141 4,199 2,282
Federal deposit insurance premiums 1,725 3,084 3,435 6,168
Charitable and educational foundation 1,419 575 2,412 1,150
Other administrative expenses 12,997 7,124 26,070 13,348
--------- --------- --------- ---------
Total general and administrative expenses 55,454 32,898 111,723 65,582
--------- --------- --------- ---------
Other real estate owned operating expense (income), net 165 (1,193) 50 (1,595)
Amortization of excess of cost over fair value of net assets acquired 11,630 46 23,258 93
--------- --------- --------- ---------
Total non-interest expense 67,249 31,751 135,031 64,080
--------- --------- --------- ---------
Income before income taxes 64,733 54,765 112,387 107,782
Income taxes (27,578) (25,417) (47,880) (49,927)
--------- --------- --------- ---------
Net income $ 37,155 $ 29,348 $ 64,507 $ 57,855
========= ========= ========= =========
Earnings per share $ 0.83 $ 0.62 $ 1.43 $ 1.23
========= ========= ========= =========
Net income (excluding branch sale, net of tax) $ 32,060 $ 59,412
========= =========
Earnings per share (excluding branch sale, net of tax) $ 0.72 $ 1.32
========= =========
</TABLE>
(See the accompanying notes to the unaudited consolidated financial statements)
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------
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 3,693 ---
Amortization of ESOP shares committed to be released 2,387 1,352
Amortization of stock plans shares during the period 257 76
Exercise of stock options --- 598
Adjustment to initial public offering issuance costs --- 1,226
----------- -----------
Balance at end of period 807,719 797,867
----------- -----------
Unallocated ESOP shares
Balance at beginning of period (123,987) (131,039)
Amortization of ESOP shares committed to be released 3,617 3,526
----------- -----------
Balance at end of period (120,370) (127,513)
----------- -----------
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 2,681 2,335
----------- -----------
Balance at end of period (10,851) (11,972)
----------- -----------
Retained earnings
Balance at beginning of period 942,137 871,374
Net income for the period 64,507 57,855
Dividends declared (17,619) (18,617)
Exercise of stock options from treasury stock (1,400) ---
----------- -----------
Balance at end of period 987,625 910,612
----------- -----------
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 (67,297) ---
----------- -----------
Balance at end of period (52,435) ---
----------- -----------
Treasury stock, at cost
Balance at beginning of period (73,789) ---
Exercise of stock options from treasury stock 3,264 ---
Purchase of treasury stock (75,460) (10,029)
----------- -----------
Balance at end of period (145,985) (10,029)
----------- -----------
Total stockholders' equity $ 1,466,254 $ 1,559,514
=========== ===========
</TABLE>
(See accompanying notes to the unaudited consolidated financial statements)
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the
Six Months Ended
June 30,
--------------------------
1996 1995
----------- -----------
(In thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 64,507 $ 57,855
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for possible loan losses 7,347 8,175
Provision for potential declines in value of other real estate 923 126
Depreciation and amortization of premises and equipment 8,570 3,535
Accretion of discount, net of amortization of premium (42,653) (3,999)
ESOP and stock plans expense 8,942 7,289
Net change in loans held for sale 153,342 (205)
Net (gain) loss on securities (354) 610
Net gain on sales of loans (2,780) (52)
Net gain on sales of other real estate owned (3,243) (5,816)
Foreclosure expenses on other real estate (879) (1,134)
Amortization of excess of cost over fair value of net assets acquired 23,258 93
Decrease in other assets 30,471 9,837
Increase (decrease) in other liabilities 12,667 (55,325)
Other, net 4,855 (1,460)
----------- -----------
Net cash provided by operating activities 264,973 19,529
----------- -----------
Cash flows from investing activities:
Mortgage loan originations, net of principal repayments (373,467) (6,898)
Proceeds from sales of other real estate owned 7,595 15,929
Repurchases of loans sold with recourse (1,935) (8,923)
Other loan originations, net of principal repayments 4,019 (2,872)
Purchases of securities available for sale (4,365,166) ---
Purchase of securities held to maturity --- (526)
Proceeds from maturities of securities available for sale 3,188,263 ---
Proceeds from maturities of securities held to maturity --- 386,491
Sales of securities available for sale 1,185,042 ---
Principal repayments on securities available for sale 129,397 1,991
Purchases of premises and equipment (14,658) (4,328)
Net cash received on branch dispositions 8,876 ---
----------- -----------
Net cash (used in) provided by investing activities (232,034) 380,864
----------- -----------
Cash flows from financing activities:
Net (withdrawals from) deposits to depositors' accounts (596,685) 9,547
Securities sold under agreements to repurchase 284,850 ---
Payments for cash dividends (17,619) (18,617)
Net increase in mortgagors' escrow 8,548 7,162
Exercise of stock options 1,864 598
Purchase of treasury stock (75,460) (10,029)
----------- -----------
Net cash used in financing activities (394,502) (11,339)
----------- -----------
Net (decrease) increase in cash and cash equivalents (361,563) 389,054
Cash and cash equivalents at beginning of period 1,704,379 293,270
----------- -----------
Cash and cash equivalents at end of period $ 1,342,816 $ 682,324
=========== ===========
Supplemental disclosure of cash flow information
Cash paid for income taxes $ 16,255 $ 9,610
=========== ===========
Non-cash investing and financing activities:
Additions to other real estate owned, net $ 1,338 $ 10,821
=========== ===========
Loans to facilitate sales of other real estate $ 8,552 $ 18,044
=========== ===========
Interest credited on deposits $ 283,694 $ 124,635
=========== ===========
</TABLE>
(See accompanying notes to the unaudited consolidated financial statements)
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The unaudited consolidated 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 six months ended June 30, 1996, GreenPoint granted 375,000 shares of
the Company's common stock to certain executive officers pursuant to plans
approved by the Company's shareholders in 1994. These shares vest ratably over
five years on the anniversary dates of the awards. The market price at the grant
date was $24.63.
For the six month period ended June 30, 1996, the Company granted options of
130,000 shares of the Company's common stock to certain officers, at an average
exercise price of $28.85. These awards vest ratably over five years on the
anniversary dates of the awards.
3. Common Stock Repurchase Program
During July, the Company completed the previously announced 5% stock repurchase
program, repurchasing approximately 2.6 million shares. The Company's Board,
after receipt of regulatory approval, has authorized a new repurchase program of
up to 5%, or 2.5 million, of its outstanding shares. The repurchase will be at
the Company's discretion, based on ongoing assessments of the capital needs of
the business and the market valuation of its stock.
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
4. Securities Available for Sale and Held to Maturity
Securities held at June 30, 1996 are summarized as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
----------- ----------- ----------- -----------
(In thousands)
<S> <C> <C> <C> <C>
Securities Available for Sale
U.S. Government and Federal Agency
Obligations:
U.S. Treasury notes/bills $2,615,826 $ -- $ (26,812) $2,589,014
Agency discount notes 113,538 30 --- 113,568
Mortgage-backed securities 2,322,888 57 (64,712) 2,258,233
Trust certificates collateralized by GNMA
securities 421,766 --- (3,285) 418,481
Other 64,039 --- (444) 63,595
---------- ---------- ---------- ----------
Total securities available for sale $5,538,057 $ 87 $ (95,253) $5,442,891
========== ========== ========== ==========
Securities Held to Maturity
Tax exempt municipals $ 660 $ 2 $ --- $ 662
Other 3,037 --- --- 3,037
---------- ---------- ---------- ----------
Total securities held to maturity $ 3,697 $ 2 $ --- $ 3,699
========== ========== ========== ==========
</TABLE>
Securities held at December 31, 1995 are summarized as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair 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 June 30, 1996, the Company sold available-for-sale
securities aggregating $786.9 million, resulting in gross realized gains of $0.1
million and no realized losses.
The average maturities of the securities available for sale and held to maturity
at June 30, 1996 are approximately 9.2 years and 13.6 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 6.5 years. The estimated
average life for all securities held for sale is approximately 4.0 years.
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
5. 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 June 30, 1996 the reserve balance associated with
this charge was approximately $5.9 million of which $0.6 million related to
severance and $5.3 million related to the disposition of certain facilities,
premises and equipment and termination of leases.
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
<TABLE>
<CAPTION>
Quarter Ended
-------------------------------------------------------------------
Jun. 30, Mar. 31, Dec. 31, Sept. 30,
1996 1996 1995 1995
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Performance Ratios (Annualized):
Return on average assets 0.90%(1) 0.75% 0.52% 1.59%
Return on average equity 8.64 (1) 7.04 5.00 7.74
Return on average tangible equity (2) 14.62 (1) 12.42 8.95 8.08
Net interest spread during period 3.20 2.87 2.68 3.59
Net interest margin 3.45 3.16 2.96 4.53
General and administrative expense to average
assets 1.56 1.53 1.64 1.77
Efficiency ratio (3) 43.7 (4) 47.3 53.4 36.5
Average interest-earning assets to average interest-
bearing liabilities 1.06x 1.07x 1.07x 1.24x
Capital Ratios:
Company:
Period-end stockholders' equity to ending total assets 10.36% 10.58% 10.57% 10.48%
Period-end stockholders' equity less intangible assets
to tangible assets 6.07 6.31 6.29 6.21
Bank Regulatory Capital Ratios:
Leverage capital (5) 6.31 6.33 6.11 12.30
Risk-based capital ratios (5):
Tier 1 16.35 16.73 16.05 15.40
Total capital 17.60 17.98 17.30 16.65
Per Share Data:
Earnings (excluding branch sale)* $ 0.72 $ 0.60 $ 0.42 $ 0.64
Book value** $33.65 $33.35 $34.25 $33.28
Tangible book value** $18.80 $18.99 $19.44 $18.82
* Average shares used in calculation 44,664,000 45,653,000 46,171,000 47,428,000
** Period-end shares used in calculation 43,573,000 45,898,000 45,298,000 47,445,000
Total shares issued and outstanding 49,924,000 52,457,000 52,217,000 54,337,000
Asset Quality Ratios:
Non-performing loans to total loans 5.77% 6.25% 6.49% 6.50%
Non-performing assets to total assets 2.86 2.94 2.94 2.84
Allowance for possible loans losses to:
Non-performing loans 28.07 26.49 26.24 26.62
Loans held for investment 1.63 1.73 1.75 1.78
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Quarter
Ended Six Months Ended
--------------- -------------- --------------
Jun. 30, Jun. 30, Jun. 30,
1995 1996 1995
-------------- -------------- --------------
<S> <C> <C> <C>
Performance Ratios (Annualized):
Return on average assets 1.69% 0.82%(1) 1.67%
Return on average equity 7.61 7.82 (1) 7.55
Return on average tangible equity (2) 7.62 13.52 (1) 7.55
Net interest spread during period 3.80 3.07 3.94
Net interest margin 4.84 3.33 4.94
General and administrative expense to average
assets 1.89 1.55 1.89
Efficiency ratio (3) 36.9 45.4 (4) 36.4
Average interest-earning assets to average interest-
bearing liabilities 1.27x 1.06x 1.27x
Capital Ratios:
Company:
Period-end stockholders' equity to ending total assets 22.42%
Period-end stockholders' equity less intangible assets
to tangible assets 22.42
Bank Regulatory Capital Ratios:
Leverage capital (5) 16.89
Risk-based capital ratios (5):
Tier 1 29.59
Total capital 30.84
Per Share Data:
Earnings (excluding branch sale)* $ 0.62
Book value** $33.09
Tangible book value** $33.08
* Average shares used in calculation 47,087,000
** Period-end shares used in calculation 47,135,000
Total shares issued and outstanding 54,514,000
Asset Quality Ratios:
Non-performing loans to total loans 6.87%
Non-performing assets to total assets 6.21
Allowance for possible loans losses to:
Non-performing loans 26.50
Loans held for investment 1.82
</TABLE>
(1) Excludes $5.1 million after tax gain on branch sale.
(2) Average tangible equity has been calculated in accordance with regulatory
guidelines.
(3) 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.
(4) Excludes $8.9 million pre-tax gain on branch sale.
(5) 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").
<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
Second quarter's results include the following:
o GreenPoint Mortgage Corp. (GPMC) opened regional mortgage production
offices in Philadelphia and Chicago.
o Based on a careful evaluation of the attractive value of GPMC's No Doc loan
production, the Company has decided to retain such loans instead of selling
them to third parties. This will accelerate the Company's loan portfolio
growth in future periods.
o The decision to portfolio GPMC's No Doc loans resulted in an increase in
the deferrals of loan origination fees and expenses relating to GPMC's loan
originations during the second quarter, as required under Financial
Accounting Standard No. 91 (FAS 91).
o Asset quality improved as non-performing loans and non-performing assets
declined. The ratio of non-performing loans to total loans fell to the
lowest level in more than seven years.
o Principally as a result of the 1995 acquisition of 60 branch offices, the
Company was able to lower its average funding costs in the second quarter
by 47 basis points.
Net income for the quarter ended June 30, 1996 was $37.2 million, or $0.83 per
share, a 26.6% increase over the $29.3 million, or $0.62 per share, for the
comparable 1995 period. The quarter's results include an after-tax gain of $5.1
million on the sale of the Company's two banking offices in Rockland County, New
York. Excluding the branch sale gain, the quarter's results were $32.1 million,
or $0.72 per share, a 9.2% increase over the comparable 1995 period. Net income
in the first six months of 1996 was $64.5 million, or $1.43 per share, compared
to $57.9 million for the 1995 period.
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
Interest Rate Sensitivity
The Bank's cumulative one-year rate sensitivity gap was negative 1.8% of total
assets at June 30, 1996, compared to positive 6.4% at December 31, 1995. The
change reflects continued progress in investing the deposits associated with the
HSA acquisition.
Net Interest Income
Net interest income increased by $30.5 million, or 37.2%, in the second quarter
of 1996, and $53.5 million, or 32.1%, in the first six months of 1996, versus
the comparable periods in 1995. The increases reflect higher interest income of
$100.9 million in the second quarter of 1996, and $209.2 million in the first
six months of 1996, which was partially offset by increases of $70.5 million and
$155.8 million, respectively, in interest expense. The rise in net interest
income reflects increases in average interest earning assets of $6.40 billion in
the second quarter of 1996 versus the second quarter of 1995, and $6.68 billion
in the first six months of 1996, versus the comparable period in 1995, primarily
from the investment of the funds received in the HSA branch acquisition. The
rise in interest income was partially offset by a $7.08 billion related increase
in average interest bearing liabilities for the second quarter of 1996, and by
$7.30 billion in the first six months of 1996, compared to the same periods in
1995.
Interest income increased by $100.9 million, or 69.3%, to $246.5 million in the
second quarter of 1996, and $209.2 million, or 72.6%, to $497.6 million in the
first six months of 1996, from $145.6 million and $288.4 million, respectively
for the 1995 periods. The primary reason for the increases was the deployment of
funds received in the HSA branch acquisition into money market investments and
securities.
Interest income on securities rose by $72.9 million to $79.9 million for the
quarter ended June 30, 1996, and $149.6 million to $165.6 million in the first
six months of 1996, from $7.0 million and $16.0 million, respectively, for the
comparable periods of 1995. The increases are 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 $4.79 billion in the second quarter of 1996, and $4.91 billion in the first
six months of 1996, versus the same periods in 1995. A greater investment in
higher yielding securities resulted in a 38 basis point increase in the average
yield for the current quarter, and a 50 basis point increase in the first six
months of 1996, compared to 1995.
Interest income on money market investments increased by $13.3 million to $21.3
million in the second quarter of 1996, and $32.6 million to $44.7 million in the
first six months of 1996, from $8.0 million and $12.1 million, respectively, for
the comparable 1995 periods. The increase is primarily due to the investment of
funds received in the HSA branch acquisition that resulted in higher average
balances of $1.07 billion in the second quarter of 1996, and $1.26 billion in
the first six months of 1996, versus the comparable periods in 1995. The
increase was partially offset by lower short-term interest rates, that resulted
in a 73 basis point decrease in the average yield for the current quarter, and a
63 basis point decrease in the first six months of 1996, versus the comparable
periods in 1995.
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
Interest income on mortgages increased by $14.5 million to $144.6 million in the
second quarter of 1996, and $26.4 million to $285.9 million in the first six
months of 1996, from $130.1 million and $259.5 million, respectively, for the
comparable 1995 periods. The increase reflects higher average balances of $531.4
million, or 9.3%, in the second quarter of 1996, and $492.9 million, or 8.6%, in
the first six months of 1996, principally as a result of retained no-doc loan
origination volume generated by GPMC. The higher volume in loan originations
during the first six months of 1996 outpaced scheduled amortizations and
prepayments. The improvement in interest income also reflects a 16 basis point
increase in the average yield in the second quarter of 1996, and a 13 basis
point increase in the first six months of 1996, due to a lower percentage of
non-performing loans and a higher yield on the Company's adjustable rate
mortgages in the second quarter of 1996 versus the second quarter of 1995.
Interest expense increased by $70.4 million to $134.2 million, in the second
quarter of 1996, and $155.8 million to $277.8 million in the first six months of
1996, from $63.8 million and $122.0 million, respectively, for the comparable
1995 periods. The higher interest expense is primarily the result of the
inclusion of the deposits assumed in the HSA branch acquisition in the quarterly
and six month ended average balances.
Interest expense on time deposits increased by $47.5 million to $96.0 million in
the second quarter of 1996, and $111.1 million to $201.1 million in the first
six months of 1996, from $48.5 million and $90.0 million, respectively, for the
comparable 1995 periods. The rise in interest expense reflects an increase in
the average balances of $4.01 billion in the second quarter of 1996, and $4.30
billion in the first six months of 1996, resulting from the HSA branch
acquisitions.
Interest expense on savings accounts increased by $9.6 million to $13.9 million
in the second quarter of 1996, and $19.1 million to $27.9 million in the first
six months of 1996, from $4.3 million and $8.8 million, respectively, for the
comparable 1995 periods. The rise in interest expense reflects an increase in
the average balances of $1.45 billion in the second quarter of 1996, and $1.44
billion in the first six months of 1996, which was partially offset by a 33
basis point decrease in the average cost during the quarter and a 35 basis point
decrease in the first six months of 1996, as a result of the inclusion of
deposits acquired in the HSA branch acquisition.
<PAGE>
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 June 30, 1996 and 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.
<TABLE>
<CAPTION>
Quarter Ended
------------------------------------------------------------------------
June 30, 1996 June 30, 1995
---------------------------------- ----------------------------------
Average Average Average Average
Balance Interest Yield/ Balance Interest Yield/
Cost Cost
----------- ---------- ----- ---------- -------- -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets:
Interest-earning assets:
Mortgage loans (1) $ 6,240,179 $144,566 9.27% $5,708,747 $130,067 9.11%
Other loans (1) 32,192 684 8.50 22,078 416 7.54
Money market investments (2) 1,604,158 21,356 5.35 530,022 8,040 6.08
Securities 5,269,745 81,399 6.21 483,894 7,032 5.83
----------- ---------- ---------- --------
Total interest-earning assets 13,146,274 248,005 7.56 6,744,741 145,555 8.63
---------- --------
Non-interest earning assets (3) 1,049,272 207,062
----------- ----------
Total assets $14,195,546 $6,951,803
=========== ==========
Liabilities & Stockholders' Equity:
Interest-bearing liabilities:
Savings $2,001,434 13,866 2.79% $553,228 4,302 3.12%
NOW 334,452 1,522 1.83 108,685 572 2.11
Money market and variable
rate savings 2,576,936 21,464 3.35 1,267,384 10,110 3.20
Term certificates of deposit 7,288,174 96,003 5.30 3,280,768 48,468 5.93
Mortgagors' escrow 81,111 241 1.20 82,552 329 1.60
Repurchase agreements 89,244 1,153 5.20 --- --- ---
----------- ---------- ---------- --------
Total interest-bearing liabilities 12,371,351 134,249 4.36 5,292,617 63,781 4.83
---------- --------
Other liabilities (4) 339,959 117,355
----------- ----------
Total liabilities 12,711,310 5,409,972
Stockholders' equity 1,484,236 1,541,831
----------- ----------
Total liabilities & stockholders' equity $14,195,546 $6,951,803
=========== ==========
Net interest income/interest rate spread (5) $113,756 3.20% $ 81,774 3.80%
========== ==== ========
Net interest-earning assets/net interest margin (6) $ 774,923 3.45% $1,452,124 4.84%
=========== ==== ========== ====
Ratio of interest-earning assets to interest-bearing
liabilities 1.06x 1.27x
==== ====
</TABLE>
- ----------
(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 interest-earning assets and the average cost of interest-bearing
liabilities.
(6) Net interest margin represents net interest income on a tax equivalent
basis before the provision for possible loan losses divided by average
interest-earning assets.
<PAGE>
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 six months ended June 30, 1996 and 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.
<TABLE>
<CAPTION>
Six Months Ended
------------------------------------------------------------------------
June 30, 1996 June 30, 1995
---------------------------------- ----------------------------------
Average Average Average Average
Balance Interest Yield/ Balance Interest Yield/
Cost Cost
----------- ----------- ----- ----------- ----------- -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets:
Interest-earning assets:
Mortgage loans (1) $ 6,199,401 $ 285,915 9.22% $ 5,706,501 $ 259,481 9.09%
Other loans (1) 33,942 1,341 7.90 21,665 797 7.36
Money market investments (2) 1,664,304 44,746 5.41 404,080 12,103 6.04
Securities 5,482,540 168,041 6.16 568,772 15,983 5.66
----------- ----------- ----------- -----------
Total interest-earning assets 13,380,187 500,043 7.49 6,701,018 288,364 8.61
----------- -----------
Non-interest earning assets (3) 1,051,508 222,463
----------- -----------
Total assets $14,431,695 $ 6,923,481
=========== ===========
Liabilities & Stockholders' Equity:
Interest-bearing liabilities:
Savings $ 2,008,635 27,852 2.79% $ 563,961 8,769 3.14%
NOW 336,177 3,070 1.84 107,950 1,129 2.11
Money market and variable
rate savings 2,601,140 43,691 3.38 1,356,778 21,482 3.19
Term certificates of deposit 7,462,874 201,058 5.42 3,166,512 90,006 5.73
Mortgagors' escrow 78,984 504 1.28 78,909 643 1.64
Repurchase agreements 87,270 1,604 3.70 -- -- --
----------- ----------- ----------- -----------
Total interest-bearing liabilities 12,575,080 277,779 4.42 5,274,110 122,029 4.67
----------- -----------
Other liabilities (4) 337,395 116,580
----------- -----------
Total liabilities 12,912,475 5,390,690
Stockholders' Equity 1,519,220 1,532,791
----------- -----------
Total liabilities & stockholders' equity $14,431,695 $ 6,923,481
=========== ===========
Net interest income/interest rate spread (5) $ 222,264 3.07% $ 166,335 3.94%
=========== ==== =========== ====
Net interest-earning assets/net interest margin (6) $ 805,107 3.33% $ 1,426,908 4.94%
=========== ==== =========== ====
Ratio of interest-earning assets to interest-bearing
liabilities 1.06x 1.27x
==== ====
</TABLE>
- ----------
(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 interest-earning assets and the average cost of interest-bearing
liabilities.
(6) Net interest margin represents net interest income on a tax equivalent
basis before the provision for possible loan losses divided by average
interest-earning assets.
<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 June 30, 1996 Six Months Ended June 30, 1996
Compared to Compared to
Quarter Ended June 30, 1995 Six Months Ended June 30, 1995
Increase/(Decrease) Increase/(Decrease)
---------------------------------- ----------------------------------
Due to Due to
--------------------- ----------------------
Average Average Net Average Average Net
Volume Rate Change Volume Rate Change
-------- -------- -------- -------- -------- --------
(In thousands) (In thousands)
<S> <C> <C>
Interest-earning assets:
Mortgage loans (1) $12,281 $ 2,218 $ 14,499 $ 22,687 $ 3,747 $ 26,434
Other loans (1) 210 58 268 481 63 544
Money market investments (2) 14,414 (1,098) 13,316 34,005 (1,362) 32,643
Securities 74,544 (177) 74,367 151,925 133 152,058
-------- -------- -------- -------- -------- --------
Total interest-earning assets 101,449 1,001 102,450 209,098 2,581 211,679
-------- -------- -------- -------- -------- --------
Interest-bearing liabilities:
Savings 10,082 (518) 9,564 20,131 (1,048) 19,083
NOW 1,037 (87) 950 2,101 (160) 1,941
Money market and variable rate savings 10,889 465 11,354 20,826 1,383 22,209
Term certificates of deposit 53,310 (5,775) 47,535 115,985 (4,933) 111,052
Mortgagors' escrow (6) (82) (88) 1 (140) (139)
Repurchase agreements 1,153 -- 1,153 1,604 -- 1,604
-------- -------- -------- -------- -------- --------
Total interest-bearing liabilities 76,465 (5,997) 70,468 160,648 (4,898) 155,750
-------- -------- -------- -------- -------- --------
Net change in net interest income $ 24,984 $ 6,998 $ 31,982 $ 48,450 $ 7,479 $ 55,929
======== ======== ======== ======== ======== ========
</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.
<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 increased by $1.0 million, or 37.5%, to
$3.7 million in the second quarter of 1996, from $2.7 million, in the
same period in 1995. For the first six months of 1996, the provision
for possible loan losses decreased by $0.8 million, or 10.1%, to
$7.3 million as compared to $8.1 million during the same period
in 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 level of the Company's non-performing loans and assets.
Non-Interest Income
Non-interest income increased by $16.0 million in the second quarter of 1996 and
$21.3 million in the first six months of 1996, as compared to the same periods
in 1995. Banking services fees and commissions increased by $3.2 million in the
second quarter of 1996, and $6.6 million in the first six months of 1996, versus
comparable periods in 1995. This increase is primarily due to additional fee
income generated from the operations of GPMC and the 60 former HSA branches. Net
gain on the sale of loans rose by $2.8 million in the second quarter of 1996, as
compared to the same period in 1995, primarily as the result of loan sales
generated from GPMC operations. Mortgage loan operations fee income increased by
$0.1 million in the second quarter of 1996, and $1.9 million in the first six
months of 1996, as compared to the same periods in 1995. The increase in
mortgage loan operations fee income reflects a rise in loan originations which
was partially offset by the increase of $1.6 million in the second quarter of
1996, for loan origination fee and expense deferrals required under FAS 91. The
quarter's results included a pre-tax gain of $8.9 million on the sale of the
Company's two banking offices in Rockland County, New York.
Non-Interest Expense
Non-interest expense increased by $35.5 million to $67.2 million in the second
quarter of 1996, and $71.0 million to $135.0 million, in the first six months of
1996, as compared to the same periods in 1995. The 1995 BAM and HSA acquisitions
resulted in increases to operating expenses for the first six months of 1996.
Amortization of goodwill increased by $11.6 million in the second quarter of
1996, and $23.2 million in the first six months of 1996, as compared to the same
periods in 1995. Salaries and benefits increased by $6.9 million in the second
quarter of 1996, and $15.1 million, in the first six months of 1996, as compared
to the same periods in 1995, which was partially offset by a $1.7 million
reduction due to deferrals required by FAS 91. For the 1996 periods net expense
of premises and equipment increased by $8.3 million and $16.3 million,
respectively. Other administrative expenses increased by $5.9 million, or 82.4%,
in the second quarter of 1996, and $12.7 million, or 95.3%, in the first six
months of 1996 as compared to the same periods in 1995.
Income Tax Expense
Income tax expense increased by $2.2 million, or 8.5%, to $27.6 million in the
second quarter of 1996, from $25.4 million for the same period of 1995. The
increase in the quarter is primarily due to a $10.0 million, or 18.2%, increase
in income before income taxes, which was partially offset by the decrease in
the effective rate from 46.4% to 42.6%. For the six months ended June 30, 1996,
income tax expense decreased by $2.0 million, or 4.1% to $47.9 million from
$49.9 million for the comparable 1995 period. The decline in
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
income tax expense reflects a reduction in the effective rate to 42.6% for the
1996 period from 46.3% in the 1995 period.
3. Financial Condition
Total assets decreased by $519.9 million to $14.15 billion at June 30, 1996 from
$14.67 billion at December 31, 1995. Total loans held for investment, net, rose
$440.2 million to $6.30 billion at June 30, 1996 from $5.86 billion at December
31, 1995. The Company's loans held for sale portfolio decreased $153.3 million
during the current quarter as a result of the Company retaining its GPMC loans
in portfolio rather than holding them for sale to third parties. Securities
available for sale decreased $453.6 million to $5.44 billion at June 30, 1996
from $5.90 billion at December 31, 1995 primarily as a result of the usage of
proceeds from the maturities and sales of securities to fund deposit outflows.
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
-----------------------------
June 30, March 31, June 30,
1996 1996 1995
------- ------- -------
(In thousands, except per share amounts)
Net income $32,060* $27,352 $29,348
Add back:
Goodwill expense 11,630 11,628 46
Employee stock plans expense 4,699 4,243 3,665
------- ------- -------
Tangible Capital growth from operations (**) $48,389 $43,223 33,059
======= ======= =======
Amounts expressed per share (***) $ 1.11 $ 0.94 $ 0.70
======= ======= =======
* Excludes $5.1 million after-tax gain on branch sale.
** 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.
<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 six months ended June 30, 1996
as non-performing loans decreased by $28.1 million, or 7.0%, while
non-performing assets decreased by $26.8 million, or 6.2%. The ratio of
non-performing loans to total loans fell to 5.77% at June 30, 1996 from 6.49% at
December 31, 1995. The ratio of non-performing assets to total assets fell to
2.86% at June 30, 1996 from 2.94% at December 31, 1995.
Non-performing assets, net of related specific reserves, were as follows:
June 30, December 31,
1996 1995
-------- ------------
(In thousands)
Mortgage loans secured by:
Residential one-to-four family mortgages $275,810 $291,589
Residential multi-family mortgages 55,960 61,594
Commercial property mortgages 42,226 48,911
Other loans 4 4
-------- --------
Total non-performing loans (1) 374,000 402,098
-------- --------
Total other real estate owned, net 30,583 29,245
-------- --------
Total non-performing assets $404,583 $431,343
======== ========
(1) Includes $37.4 million and $42.3 million of non-accrual mortgage loans
under 90 days past due at June 30, 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:
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
------------------------------ -------------------------------
1996 1995 1996 1995
--------- --------- --------- ---------
(In thousands)
<S> <C> <C> <C> <C>
Balance beginning of period $ 105,000 $ 105,500 $ 105,500 $ 103,000
Provision charged to income 3,701 2,692 7,347 8,175
Charge-offs (4,043) (3,279) (8,632) (7,338)
Recoveries 342 587 785 1,663
--------- --------- --------- ---------
Balance end of period $ 105,000 $ 105,500 $ 105,000 $ 105,500
========= ========= ========= =========
</TABLE>
<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 June 30, 1996, the aggregate amount of loans sold to FNMA which were still
subject to the repurchase agreement was $129.8 million. During the quarter ended
June 30, 1996 a total of $0.2 million of loans was repurchased by the Bank from
FNMA pursuant to the repurchase agreement. At June 30, 1996, $0.5 million of the
FNMA servicing portfolio of loans sold with recourse were delinquent 90 days or
more.
Capital Ratios
The Company's ratio of period-end stockholders' equity to ending total assets at
June 30, 1996 was 10.36% 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 June 30, 1996 and December 31, 1995, the Bank
exceeded those requirements. The Bank's leverage capital ratios were 6.31% and
6.11% at June 30, 1996 and December 31, 1995, respectively. The Bank's Tier-1
risk- based capital ratios were 16.35% and 16.05% at June 30, 1996 and December
31, 1995, respectively. The Bank's total risk-based capital ratios were 17.60%
and 17.30% at June 30, 1996 and December 31, 1995, respectively.
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
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 or one of its subsidiaries has been named as
a defendant in eleven unrelated legal complaints which assert that infant
plaintiffs sustained personal injuries from the ingestion of lead based paint,
chips or dust. Additionally there are twelve 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 two of the claims has been
assumed by an insurer. Defense of four claims was (or is anticipated to be)
rejected by an insurer on the basis of pollution coverage exclusions. The
remaining claims are awaiting a determination by the insurance carriers. 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
Bank's financial condition.
Item 4 - Submission of Matters to a Vote of Security Holders
At the Company's annual meeting of shareholders held on May 10, 1996, the
following matters were voted upon with the results of the voting on such matters
indicated:
1. Election of the following five directors of the Company to three-year
terms:
For Withheld
Bernard S. Berman 43,035,959 2,207,873
Dan F. Huebner 43,058,137 2,185,695
Thomas S. Johnson 41,877,785 3,366,047
Susan J. Kropf 43,072,988 2,170,844
Jules Zimmerman 43,054,743 2,189,089
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
The following sets forth the names of Directors continuing in office after
the annual meeting:
Edward C. Bessey Innis O'Rourke, Jr.
William M. Jackson Edward C. Schmults
Charles B. McQuade Wilfred O. Uhl
Alvin N. Puryear Robert F. Vizza
Robert P. Quinn
Robert M. McLane
2. Ratification of the appointment of Price Waterhouse LLP as the Company's
independent auditors for the year ending December 31, 1996.
For: 44,731,156
Against: 321,517
Abstain: 191,159
3. Approval of a Stockholder Proposal, set forth as Item 3 in the proxy
statement distributed in connection with the annual meeting.
For: 7,929,529
Against: 28,415,221
Abstain: 849,245
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
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
(b) Reports on Form 8-K
No current reports on Form 8-K were filed by the Company with the
Securities and Exchange Commission during the quarter ended June 30, 1996.
<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 August 13, 1996
Exhibit 11.1
Exhibit 11.1
Statement Regarding Computation of Per Share Earnings
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
--------------------------- ------------------------
1996 1995 1996 1995
---------- ---------- ---------- -------
<S> <C> <C> <C> <C>
Net Income $ 37,155 $ 29,348 $ 64,507 $57,855
Net Income (excluding branch sale) 32,060 N/A 59,412 N/A
Weighted average number of common stock
and common stock equivalents outstanding
during each period - primary 44,664 47,087 45,161 47,157
Weighted average number of common stock
and common stock equivalents outstanding
during each period - fully diluted 44,675 47,135 45,302 47,240
Net earnings per share - primary $ 0.83 $ 0.62 $ 1.43 $ 1.23
========== ========== ========== =======
Net earnings per share (excluding branch
sale) - primary $ 0.72 N/A $ 1.32 N/A
========== ========== ========== =======
Net earnings per share - fully diluted $ 0.83 $ 0.62 $ 1.42 $ 1.23
========== ========== ========== =======
Net earnings per share (excluding branch
sale) - fully diluted $ 0.72 N/A $ 1.31 N/A
========== ========== ========== =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE>9
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> 6-Mos
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 107,281
<INT-BEARING-DEPOSITS> 1,135
<FED-FUNDS-SOLD> 1,234,400
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 5,442,891
<INVESTMENTS-CARRYING> 3,697
<INVESTMENTS-MARKET> 3,699
<LOANS> 6,425,566
<ALLOWANCE> (105,000)
<TOTAL-ASSETS> 14,150,594
<DEPOSITS> 12,157,442
<SHORT-TERM> 284,850
<LIABILITIES-OTHER> 242,048
<LONG-TERM> 0
0
0
<COMMON> 551
<OTHER-SE> 1,465,703
<TOTAL-LIABILITIES-AND-EQUITY> 14,150,594
<INTEREST-LOAN> 287,256
<INTEREST-INVEST> 210,329
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 497,585
<INTEREST-DEPOSIT> 276,175
<INTEREST-EXPENSE> 277,779
<INTEREST-INCOME-NET> 219,806
<LOAN-LOSSES> (7,347)
<SECURITIES-GAINS> 354
<EXPENSE-OTHER> 135,031
<INCOME-PRETAX> 112,387
<INCOME-PRE-EXTRAORDINARY> 64,507
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 64,507
<EPS-PRIMARY> 1.43
<EPS-DILUTED> 1.42
<YIELD-ACTUAL> 3.33
<LOANS-NON> 374,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> (105,500)
<CHARGE-OFFS> (8,632)
<RECOVERIES> 785
<ALLOWANCE-CLOSE> (105,000)
<ALLOWANCE-DOMESTIC> (105,000)
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
