<PAGE>
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
September 30, 1997
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)
<TABLE>
<S> <C>
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 Not Applicable
-------------- --------------
(Registrant's telephone number, (Former name, former address and former
including area code) fiscal year if changed since last report)
</TABLE>
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 November 12, 1997 there were 42,311,000 shares of common stock
outstanding.
1
<PAGE>
GREENPOINT FINANCIAL CORP.
FORM 10-Q
FOR THE QUARTER ENDED
SEPTEMBER 30, 1997
INDEX
<TABLE>
<CAPTION>
PART I--FINANCIAL INFORMATION PAGE
-----
<S> <C>
Item 1--Financial Statements
Consolidated Statements of Financial Condition (unaudited) as of September 30, 1997 and December 31,
1996..................................................................................................... 3
Consolidated Statements of Income (unaudited) for the quarters and nine month periods ended September 30,
1997 and 1996............................................................................................ 4
Consolidated Statements of Changes in Stockholders' Equity (unaudited) for the nine month periods ended
September 30, 1997 and 1996.............................................................................. 5
Consolidated Statements of Cash Flows (unaudited) for the nine month periods ended September 30, 1997 and
1996..................................................................................................... 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.................................................................................. 24
Item 6--Exhibits and Reports on Form 8-K................................................................... 25
</TABLE>
2
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- -------------
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<S> <C> <C>
ASSETS
Cash and due from banks............................................................ $ 87,552 $ 81,914
Money market investments........................................................... 871,355 494,060
Loans receivable held for sale..................................................... 5,403 4,829
Securities available for sale...................................................... 2,440,011 4,355,432
Securities held to maturity (fair value of $4,073 and $4,016 respectively)......... 4,035 3,978
Loans receivable held for investment:
Mortgage loans................................................................... 8,608,203 7,423,993
Other loans...................................................................... 25,740 23,490
Deferred loan fees and unearned discount......................................... (36,242) (48,216)
Allowance for possible loan losses............................................... (108,000) (105,000)
------------- -------------
Loans receivable held for investment, net...................................... 8,489,701 7,294,267
------------- -------------
Other interest-earning assets...................................................... 111,894 --
Accrued interest receivable, net................................................... 85,717 89,460
Banking premises and equipment, net................................................ 120,559 128,207
Deferred income taxes, net......................................................... 60,464 80,202
Other real estate owned, net....................................................... 25,199 28,566
Goodwill........................................................................... 588,727 623,600
Other assets....................................................................... 203,368 141,070
------------- -------------
Total assets................................................................. $ 13,093,985 $ 13,325,585
------------- -------------
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
N.O.W. and checking.............................................................. $ 468,648 $ 524,181
Savings and club................................................................. 1,788,972 1,901,682
Variable rate savings............................................................ 1,720,032 1,853,683
Money market..................................................................... 490,862 561,331
Term certificates of deposit..................................................... 6,567,407 6,611,389
------------- -------------
Total deposits................................................................. 11,035,921 11,452,266
------------- -------------
Mortgagors' escrow................................................................. 108,602 66,929
Securities sold under agreements to repurchase..................................... 91,491 89,500
Long term debt..................................................................... 199,822 --
Guaranteed preferred beneficial interest in Company's junior subordinated
debentures....................................................................... 199,719 --
Accrued income taxes payable....................................................... 26,758 45,081
Other liabilities.................................................................. 159,258 208,383
------------- -------------
Total liabilities.............................................................. 11,821,571 11,862,159
------------- -------------
Commitments and Contingencies
Preferred shares of subsidiary..................................................... 3,638 3,623
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; 55,131,000 and
55,116,000 shares issued, respectively)........................................ 551 551
Additional paid-in capital....................................................... 824,868 810,170
Unallocated Employee Stock Ownership Plan (ESOP) shares.......................... (116,097) (119,573)
Unearned stock plans shares...................................................... (7,448) (8,317)
Retained earnings................................................................ 1,115,608 1,037,993
Net unrealized loss on securities available for sale, net........................ (8,774) (23,324)
Treasury stock, at cost (12,962,000 and 7,871,000 shares, respectively).......... (539,932) (237,697)
------------- -------------
Total stockholders' equity..................................................... 1,268,776 1,459,803
------------- -------------
Total liabilities and stockholders' equity..................................... $ 13,093,985 $ 13,325,585
------------- -------------
------------- -------------
</TABLE>
(See the accompanying notes to the unaudited consolidated financial statements)
3
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ----------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Interest income:
Mortgages...................................................... $ 187,384 $ 147,763 $ 533,820 $ 433,678
Money market investments....................................... 14,552 15,685 26,493 60,431
Securities..................................................... 43,655 74,966 160,704 240,549
Trading assets................................................. -- -- 71 --
Other interest-earning assets.................................. 1,798 -- 4,867 --
Other loans.................................................... 539 617 1,665 1,958
---------- ---------- ---------- ----------
Total interest income........................................ 247,928 239,031 727,620 736,616
---------- ---------- ---------- ----------
Interest expense:
Deposits....................................................... 119,224 126,779 353,206 402,954
Trading liabilities............................................ -- -- 73 --
Short-term and other borrowings................................ 3,574 127 7,018 1,731
Long-term debt................................................. 7,502 -- 8,925 --
---------- ---------- ---------- ----------
Total interest expense....................................... 130,300 126,906 369,222 404,685
---------- ---------- ---------- ----------
Net interest income.............................................. 117,628 112,125 358,398 331,931
Provision for possible loan losses............................... (5,376) (3,435) (14,837) (10,782)
---------- ---------- ---------- ----------
Net interest income after provision for possible loan losses..... 112,252 108,690 343,561 321,149
---------- ---------- ---------- ----------
Non-interest income:
Income from fees and commissions:
Mortgage loan operations fee income............................ 4,482 3,687 11,464 11,229
Mortgage servicing fees........................................ 1,623 1,993 5,235 6,375
Banking services fees and commissions.......................... 5,241 4,463 15,851 12,522
Other income................................................... 295 545 1,210 3,511
Net gain on securities......................................... 750 397 1,222 751
Net gain (loss) on sales of loans.............................. 14 104 (183) 2,884
Net gain on sale of assets..................................... -- -- 2,416 --
Gain on sale of branches....................................... -- -- 5,850 8,876
---------- ---------- ---------- ----------
Total non-interest income.................................... 12,405 11,189 43,065 46,148
---------- ---------- ---------- ----------
Non-interest expense:
Salaries and benefits.......................................... 23,255 21,801 68,569 64,878
Employee Stock Ownership and stock plans expense............... 4,941 2,872 14,462 11,814
Net expense of premises and equipment.......................... 11,544 11,179 35,941 34,767
Advertising.................................................... 2,000 1,799 6,478 5,998
Federal deposit insurance premiums............................. 692 1,748 2,192 5,183
Charitable and educational foundation.......................... 2,336 1,882 6,694 4,294
Other administrative expenses.................................. 10,232 12,538 33,099 38,608
Other real estate owned operating expense (income) , net....... 150 (501) (1,267) (451)
Goodwill amortization.......................................... 11,610 11,623 34,873 34,881
Restructuring charge........................................... -- -- 2,500 --
---------- ---------- ---------- ----------
Total non-interest expense................................... 66,760 64,941 203,541 199,972
---------- ---------- ---------- ----------
Income before income taxes....................................... 57,897 54,938 183,085 167,325
Income taxes..................................................... 21,804 20,891 72,192 68,771
---------- ---------- ---------- ----------
Net income....................................................... $ 36,093 $ 34,047 $ 110,893 $ 98,554
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Earnings per share............................................... $ 0.95 $ 0.79 $ 2.74 $ 2.22
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net income (excluding non-recurring items)*...................... $ 36,093 $ 34,047 $ 107,447 $ 93,459
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Earnings per share (excluding non-recurring items)*.............. $ 0.95 $ 0.79 $ 2.66 $ 2.10
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
*Non-recurring items include branch sales, asset sales and restructuring charge.
(See the accompanying notes to the unaudited consolidated financial statements)
4
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
<S> <C> <C>
1997 1996
------------ ------------
Common Stock
Balance at beginning of period........................................................ $ 551 $ 550
Issuance of common stock to stock plans............................................... -- 1
------------ ------------
Balance at end of period.............................................................. 551 551
------------ ------------
Additional Paid-in Capital
Balance at beginning of period........................................................ 810,170 801,382
Issuance of common stock to stock plans............................................... 832 3,693
Amortization of ESOP shares committed to be released.................................. 8,908 3,205
Amortization of stock plans shares during the period.................................. 376 402
Tax benefit for vested stock plans shares............................................. 4,582 --
------------ ------------
Balance at end of period.............................................................. 824,868 808,682
------------ ------------
Unallocated ESOP shares
Balance at beginning of period........................................................ (119,573) (123,987)
Amortization of ESOP shares committed to be released.................................. 3,476 4,127
------------ ------------
Balance at end of period.............................................................. (116,097) (119,860)
------------ ------------
Unearned stock plans shares
Balance at beginning of period........................................................ (8,317) (9,838)
Issuance of common stock to stock plans............................................... (833) (3,694)
Amortization of stock plans shares during the period.................................. 1,702 4,080
------------ ------------
Balance at end of period.............................................................. (7,448) (9,452)
------------ ------------
Retained earnings
Balance at beginning of period........................................................ 1,037,993 942,137
Net income for the period............................................................. 110,893 98,554
Dividends declared.................................................................... (28,942) (26,056)
Exercise of stock options from treasury stock......................................... (4,336) (1,707)
------------ ------------
Balance at end of period.............................................................. 1,115,608 1,012,928
------------ ------------
Net unrealized (loss) gain on securities available for sale, net
Balance at beginning of period........................................................ (23,324) 14,862
Net unrealized gain (loss) on securities available for sale........................... 14,550 (60,624)
------------ ------------
Balance at end of period.............................................................. (8,774) (45,762)
------------ ------------
Treasury stock, at cost
Balance at beginning of period........................................................ (237,697) (73,789)
Exercise of stock options from treasury stock......................................... 10,819 3,929
Purchase of treasury stock............................................................ (313,054) (158,767)
------------ ------------
Balance at end of period.............................................................. (539,932) (228,627)
------------ ------------
Total stockholders' equity............................................................ $ 1,268,776 $ 1,418,460
------------ ------------
------------ ------------
</TABLE>
(See the accompanying notes to the unaudited consolidated financial statements)
5
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------
1997 1996
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Cash Flows from Operating Activities:
Net income............................................................................. $ 110,893 $ 98,554
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for possible loan losses................................................... 14,837 10,782
Depreciation and amortization of premises and equipment.............................. 12,503 12,255
Goodwill amortization................................................................ 34,873 34,881
Accretion of discount on securities, net of premium amortization..................... (5,321) (56,117)
ESOP and stock plans expense......................................................... 14,462 11,814
Gain on securities transactions...................................................... (1,222) (751)
Net change in loans held for sale.................................................... (574) 168,272
Net gain on sales of other real estate owned......................................... (5,753) (4,999)
Net gain on sale of branches......................................................... (5,850) (8,876)
Deferred income taxes................................................................ 7,630 18,382
Decrease in other assets............................................................. 13,225 3,070
(Decrease) increase in other liabilities............................................. (49,125) 52,558
Other, net........................................................................... (16,895) 7,672
----------- -----------
Net cash provided by operating activities.......................................... 123,683 347,497
----------- -----------
Cash Flows from Investing Activities:
Loan originations, net of principal repayments....................................... (1,214,627) (931,190)
Proceeds from sales of other real estate owned....................................... 14,846 12,648
Purchases of securities available for sale........................................... (1,386,967) (5,444,177)
Purchase of securities held to maturity.............................................. (250) (931)
Proceeds from maturities of securities available for sale............................ 1,608,335 3,898,250
Proceeds from sales of securities available for sale................................. 1,367,851 2,707,838
Principal repayments on securities................................................... 194,518 194,566
Investment in corporate officer life insurance policy................................ (103,470) --
Purchases of premises and equipment.................................................. (7,634) (23,132)
----------- -----------
Net cash provided by investing activities.......................................... 472,602 413,872
----------- -----------
Cash Flows from Financing Activities:
Net withdrawals from depositors' accounts............................................ (285,816) (1,052,437)
Cash paid on transfer of deposit liabilities......................................... (124,781) (152,734)
Payments for cash dividends.......................................................... (28,942) (26,056)
Exercise of stock options............................................................ 6,483 2,222
Purchase of treasury stock........................................................... (313,054) (158,767)
Securities sold under agreements to repurchase....................................... 91,544 --
Long term debt....................................................................... 199,822 --
Guaranteed preferred beneficial interest in Company's junior subordinated
debentures......................................................................... 199,719 --
Net increase in mortgagors' escrow................................................... 41,673 21,798
----------- -----------
Net cash used in financing activities.............................................. (213,352) (1,365,974)
----------- -----------
Net increase (decrease) in cash and cash equivalents................................. 382,933 (604,605)
Cash and cash equivalents at beginning of period..................................... 575,974 1,704,379
----------- -----------
Cash and cash equivalents at end of period........................................... $ 958,907 $ 1,099,774
----------- -----------
----------- -----------
Non-cash investing and financing activities:
Additions to other real estate owned, net............................................ $ (22,835) $ (492)
----------- -----------
----------- -----------
Loans to facilitate sales of other real estate....................................... $ 15,679 $ 13,216
----------- -----------
----------- -----------
Unsettled trades..................................................................... $ 165,074 $ --
----------- -----------
----------- -----------
Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes........................................................... $ 75,991 $ 21,512
----------- -----------
----------- -----------
Interest paid........................................................................ $ 359,287 $ 407,489
----------- -----------
----------- -----------
</TABLE>
(See the 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 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, 1996.
2. STOCK INCENTIVE PLAN
During the nine months ended September 30, 1997, GreenPoint granted 15,000
shares of the Company's common stock to an executive officer pursuant to plans
approved by the Company's shareholders in 1994. These shares vest ratably over
four years on the anniversary dates of the award. The market price at the grant
date was $55.50.
For the nine months ended September 30, 1997, the Company granted options to
purchase 624,500 shares of the Company's common stock to certain officers, at an
average exercise price of $55.21. These awards vest ratably over three years on
the anniversary dates of the awards.
3. NON-EMPLOYEE DIRECTORS' STOCK OPTION GRANTS
During the nine months ended September 30, 1997, the Company granted options
to purchase 26,000 shares of the Company's common stock to non-employee
directors, at an average exercise price of $57.75. These awards vest after one
year on the anniversary date of the awards.
4. COMMON STOCK REPURCHASE PROGRAM
Under a stock repurchase program announced in June 1997, the Company has
repurchased 2.59 million shares of GreenPoint common stock through September 30,
1997. Repurchases of stock are at the Company's discretion based on ongoing
assessments of the capital needs of the business and the market valuation of its
stock.
7
<PAGE>
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 September 30, 1997 are summarized as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
------------ ------------- ----------- ------------
<S> <C> <C> <C> <C>
(IN THOUSANDS)
Securities available for sale
U.S. Government and Federal Agency
Obligations:
U.S. Treasury notes/bills.................................... $ 1,000,739 $ -- $ (8,833) $ 991,906
Agency discount notes/Asset backed securities................ 96,625 63 -- 96,688
Mortgage-backed securities................................... 1,118,656 -- (6,570) 1,112,086
Collateralized mortgage obligations.......................... 65,482 580 -- 66,062
Trust certificates collateralized by GNMA securities......... 144,166 -- (919) 143,247
Other........................................................ 30,017 5 -- 30,022
------------ ----- ----------- ------------
Total securities available for sale...................... $ 2,455,685 $ 648 $ (16,322) $ 2,440,011
------------ ----- ----------- ------------
------------ ----- ----------- ------------
SECURITIES HELD TO MATURITY
Tax exempt municipals........................................ $ 625 $ 38 $ -- $ 663
Other........................................................ 3,410 -- -- 3,410
------------ ----- ----------- ------------
Total securities held to maturity........................ $ 4,035 $ 38 $ -- $ 4,073
------------ ----- ----------- ------------
------------ ----- ----------- ------------
</TABLE>
Securities held at December 31, 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.................................... $ 1,944,272 $ 316 $ (16,178) $ 1,928,410
Agency discount notes/Asset backed securities................ 66,358 3 (40) 66,321
Mortgage-backed securities................................... 1,880,991 -- (23,091) 1,857,900
Collateralized mortgage obligations.......................... 32,432 -- (3) 32,429
Trust certificates collateralized by GNMA securities......... 409,859 -- (3,332) 406,527
Other........................................................ 63,852 255 (262) 63,845
------------ ----- ----------- ------------
Total securities available for sale...................... $ 4,397,764 $ 574 $ (42,906) $ 4,355,432
------------ ----- ----------- ------------
------------ ----- ----------- ------------
SECURITIES HELD TO MATURITY
Tax exempt municipals........................................ $ 640 $ 38 $ -- $ 678
Other........................................................ 3,338 -- -- 3,338
------------ ----- ----------- ------------
Total securities held to maturity........................ $ 3,978 $ 38 $ -- $ 4,016
------------ ----- ----------- ------------
------------ ----- ----------- ------------
</TABLE>
Estimated fair values for securities are based on published market or
securities dealers' estimated prices.
During the quarter ended September 30, 1997, the Company sold
available-for-sale securities aggregating $581.9 million, resulting in gross
realized gains of $1.4 million and gross realized losses of $0.2 million.
The average maturities of the securities available for sale and held to
maturity at September 30, 1997 are approximately 7.0 years and 12.9 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 5.4 years. The
estimated average life for all securities available for sale is approximately
4.0 years.
8
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
6. EARNINGS PER SHARE IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, FASB issued Statement of Financial Accounting Standards
No. 128, ("SFAS 128") "Earnings per Share". SFAS 128 establishes standards for
computing and presenting earnings per share and applies to entities with
publicly held common stock or potential common stock. SFAS 128 simplifies the
standards for computing earnings per share previously found in APB Opinion No.
15, "Earnings per Share", and makes them comparable to international EPS
standards. It replaces the presentation of primary EPS with a presentation of
basic EPS. It also requires dual presentation of basic and diluted EPS on the
face of the income statement for all entities with complex capital structures.
The statement is effective for financial statements issued for periods
ending after December 15, 1997, including interim periods, earlier application
is not permitted. This statement requires restatement of all prior-period EPS
data presented. The Company does not believe that implementation of SFAS 128
will have a material effect on the financial statements of the Company.
7. RESTRUCTURING CHARGE
In the second quarter of 1997, the Company recorded a pre-tax restructuring
charge of $2.5 million pertaining to the transfer of mortgage servicing from New
York to Georgia. At September 30, 1997 approximately $1.0 million remains of
this reserve which will be utilized to absorb $0.6 million of remaining
severance payments and $0.4 million relating to write-downs of software and
fixed assets.
9
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------------------
SEP. 30, JUN. 30, MAR. 31, DEC. 31, SEP. 30,
1997 1997 1997 1996 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Performance Ratios (Annualized):
Core cash earnings return on average assets (1) 1.58% 1.61%(2) 1.55%(3) 1.43%(2) 1.42%
Core cash earnings return on average equity (1) 16.62 15.13(2) 14.02(3) 13.25(2) 13.55
Return on average assets..................... 1.08 1.07 1.05(3) 1.02 1.00
Return on average equity..................... 11.39 10.04 9.51(3) 9.46 9.51
Net interest margin.......................... 3.86 3.99 3.97 3.82 3.61
Net interest spread during period............ 3.59 3.67 3.64 3.52 3.34
Operating expense to average assets (5)...... 1.65 1.69 1.73 1.61 1.58
Efficiency ratio (6)......................... 42.3 42.0 43.4(3) 42.7 43.6
Average interest-earning assets to average
interest-bearing liabilities............... 1.07x 1.08x 1.08x 1.07x 1.07x
---------- ---------- ---------- ---------- ----------
Regulatory capital ratios:
Company:
Leverage capital (7)......................... 7.00% 7.95% 6.90% 6.78% 6.38%
Risk-based capital (7):
Tier 1................................... 14.60 16.37 15.33 15.47 15.72
Total.................................... 15.85 17.62 16.58 16.72 16.90
Bank:
Leverage capital (7)....................... 6.95 6.66 6.20 6.64 6.26
Risk-based capital (7):
Tier 1................................... 14.45 13.92 13.76 15.15 15.42
Total.................................... 15.76 15.17 15.01 16.40 16.67
---------- ---------- ---------- ---------- ----------
Per share data:
Core cash earnings (1)*................... $ 1.38 $ 1.29(2) $ 1.21(3) $ 1.13(2) $ 1.13
Common book value**....................... $ 33.65 $ $34.27 $ 34.57 $ 34.77 $ 33.89
Tangible common book value**.............. $ 18.03 $ 19.27 $ 19.81 $ 19.92 $ 18.72
* Average shares used in calculation........ 38,193,000 40,930,000 42,235,000 42,069,000 43,138,000
** Period-end shares used in calculation..... 37,710,000 40,007,000 41,452,000 41,984,000 41,849,000
Total shares issued and outstanding.......... 42,826,000 45,044,000 46,888,000 47,481,000 47,656,000
---------- ---------- ---------- ---------- ----------
Asset quality ratios:
Non-performing loans to total loans.......... 4.07% 4.35% 4.45% 4.78% 5.21%
Non-performing assets to total assets...... 2.88 2.89 2.84 2.89 2.91
---------- ---------- ---------- ---------- ----------
Allowance for Possible Loan Losses to:
Non-performing loans....................... 30.73 29.69 30.32 29.48 29.05
Total loans................................ 1.25 1.29 1.35 1.41 1.51
---------- ---------- ---------- ---------- ----------
Earnings to combined fixed charges and
Preferred stock dividends (8):
Excluding interest on deposits............. 7.59x 23.09x 55.92x 44.04x 48.12x
Including interest on deposits............. 1.45x 1.49x 1.56x 1.46x 1.43x
<CAPTION>
NINE MONTHS ENDED
-------------------------
SEP. 30, SEP. 30,
1997 1996
-------- ----------
<S> <C> <C>
Performance Ratios (Annualized):
Core cash earnings return on average assets (1) 1.58%(4) 1.32 %(3)
Core cash earnings return on average equity (1) 15.20(4) 12.54 (3)
Return on average assets..................... 1.07(3) 0.88 (3)
Return on average equity..................... 10.27(3) 8.36 (3)
Net interest margin.......................... 3.94 3.41
Net interest spread during period............ 3.63 3.14
Operating expense to average assets (5)...... 1.69 1.56
Efficiency ratio (6)......................... 42.6(3) 44.8 (3)
Average interest-earning assets to average
interest-bearing liabilities............... 1.08x 1.07 x
------ -------
Regulatory Capital Ratios:
Company:
Leverage capital (7).........................
Risk-based capital (7):
Tier 1...................................
Total....................................
Bank:
Leverage capital (7).......................
Risk-based capital (7):
Tier 1...................................
Total....................................
------ -------
Per Share Data:
Core cash earnings (1)*....................
Common book value**........................
Tangible common book value**...............
* Average shares used in calculation.........
** Period-end shares used in calculation.....
Total shares issued and outstanding..........
------ -------
Asset Quality Ratios:
Non-performing loans to total loans..........
Non-performing assets to total assets......
------ -------
Allowance For Possible Loan Losses To:
Non-performing loans.......................
Total loans................................
------ -------
Earnings To Combined Fixed Charges And
Preferred Stock Dividends (8):
Excluding interest on deposits............. 15.46x 53.61 x
Including interest on deposits............. 1.50x 1.41 x
</TABLE>
- ------------------------
(1) Core cash earnings is net income, net of non-recurring items, adding back
goodwill amortization and Employee Stock Ownership and stock plans expense.
(2) Excludes restructuring charge (recovery).
(3) Excludes branch and asset sales.
(4) Excludes branch sales, asset sales and restructuring charge (recovery).
(5) Excludes goodwill expense, OREO (income) expense and restructuring charge
(recovery).
(6) The efficiency ratio is calculated by dividing the Company's operating
expense excluding goodwill expense, OREO (income) expense and restructuring
charge (recovery) by the sum of net interest income and non-interest income.
(7) 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").
(8) For purposes of computing the ratio of earnings to combined fixed charges
and preferred stock dividend requirements, earnings represent net income
plus applicable income taxes, fixed charges and preferred stock dividend
requirements of a consolidated subsidiary. Fixed charges, excluding interest
expense on deposits, represent interest expense on long-term debt and
one-third (the portion deemed to be representative of the interest factor)
of rents. Fixed charges, including interest expense on deposits, represent
interest expense on long-term debt, one-third (the portion deemed to be
representative of the interest factor) of rents and interest expense on
deposits.
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 services 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 third quarter's results include the following:
- The Company's loan originations totaled $759 million, up 7% over the third
quarter of 1996, and up 6% over the prior quarter. The percentage of new
loans originated outside of New York was 64%, and ARMs as a percentage of
total originations were 36%.
- Asset quality continued to improve as non-performing loans and
non-performing assets declined. As a result of the decline in
non-performing loans and the growth of the loan portfolio, the ratio of
non-performing loans to total loans declined 114 basis points to 4.07%, a
21.9% decrease from September 30, 1996 and 28 basis points lower than the
second quarter.
- Net interest margin decreased to 3.86% primarily from the effect of the
$200 million Guaranteed Preferred Beneficial Interest in Company's Junior
Subordinated Debentures ("Capital Securities") Issue.
Net income for the quarter ended September 30, 1997 was $36.1 million, or
$0.95 per share, a 20.3% per share increase over the $34.0 million, or $0.79 per
share, for the comparable 1996 period. Net income in the first nine months of
1997 was $110.9 million, or $2.74 per share, compared to $98.6 million, or $2.22
per share, for the 1996 period.
11
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)
NET INTEREST INCOME
Net interest income increased by $5.5 million, or 4.9%, in the third quarter
of 1997, and $26.5 million, or 8.0%, in the first nine months of 1997, versus
the comparable periods in 1996. The improvements in both 1997 periods from the
prior year were primarily due to an improvement in net interest margin.
Interest income increased by $8.9 million, or 3.7%, to $247.9 million in the
third quarter of 1997, and decreased by $9.0 million, or 1.2%, to $727.6 million
in the first nine months of 1997, from $239.0 million and $736.6 million,
respectively, for the 1996 periods.
Interest income on money market investments declined by $1.1 million, or
7.2%, to $14.6 million in the third quarter of 1997, and by $33.9 million, or
56.2%, to $26.5 million in the first nine months of 1997, from $15.7 million and
$60.4 million, respectively, for the comparable 1996 periods. The decrease was
due to declines in the average money market investment balance of $134.5
million and $858.9 million, for the third quarter and nine months ended
September 30, 1997, respectively, from $1.2 billion and $1.5 billion for the
comparable 1996 periods.
Interest income on securities declined by $31.3 million, or 41.8%, to $43.7
million in the third quarter of 1997, and by $79.8 million, or 33.2%, to $160.7
million in the first nine months of 1997 from $75.0 million and $240.5 million,
respectively, for the comparable 1996 periods. The decrease was due to declines
in the average securities balance of $1.9 billion and $1.7 billion, for the
quarter and nine months ended September 30, 1997, respectively, from $4.8
billion and $5.3 billion for the comparable 1996 periods.
Interest income on mortgages rose by $39.6 million, or 26.8%, to $187.4
million, in the third quarter of 1997, and by $100.1 million, or 23.1%, to
$533.8 million in the first nine months of 1997 from $147.8 million and $433.7
million, respectively, for the comparable 1996 periods. The increase reflects
the growth in the Company's loan portfolio to average balances of $8.4 billion
and $8.0 billion, for the quarter and nine months ended September 30, 1997,
respectively, from $6.6 billion and $6.3 billion for the comparable 1996
periods.
Interest expense increased by $3.4 million, or 2.7%, to $130.3 million in
the third quarter of 1997, and declined by $35.5 million, or 8.8%, to $369.2
million in the first nine months of 1997, from $126.9 million and $404.7
million, respectively, for the comparable 1996 periods. The quarterly increase
reflects a 15 basis point rise in the average cost of funds from the comparable
1996 quarter, primarily due to the effect of the $200 million Capital Securities
Issue in the 1997 period. The decrease reflects a $882.6 million decline in
average interest bearing liabilities from the comparable 1996 nine month period
primarily due to deposit balance reductions resulting from the Company's deposit
pricing objectives.
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 decreased by $2.6 million, or 2.9%, to
$87.3 million in the third quarter of 1997, and by $36.5 million, or 12.5%, to
$254.5 million for the first nine months of 1997, from $89.9 million and $291.0
million for the comparable 1996 periods. The primary reason for the decline was
the decrease in average time deposits of $372.6 million in the third quarter of
1997, and of $771.8 million in the first nine months of 1997, resulting from a
net deposit outflow between the periods. The average cost of time deposits
increased by 12 basis points and declined by 11 basis points from the comparable
1996 periods.
Interest expense on savings accounts, which include money market and
variable rate savings, decreased by $4.8 million, or 13.8%, to $30.3 million in
the current quarter, and by $12.9 million, or 12.1%, to $93.7 million in the
first nine months of 1997, from $35.1 million and $106.6 million for the
comparable 1996 periods. The decline in interest expense reflects a decrease in
the average balance of $428.1 million and $413.9 million in the third quarter of
1997 and the first nine months of 1997, respectively, versus the comparable
periods in 1996.
Interest expense on Capital Securities of $4.6 million and $6.0 million were
incurred during the third quarter of 1997 and the first nine months of 1997,
respectively.
13
<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 September 30, 1997 and 1996, 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 that are considered adjustments to yields. Interest and yields are
presented on a taxable equivalent yield basis.
<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------------------------------
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
---------------------------------------- -------------------------------------
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST BALANCE INTEREST COST
------------- ------------- ---------- ------------ ---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Assets:
Interest-earning assets:
Mortgage loans (1)........................ $ 8,385,344 $ 187,384 8.94% $ 6,604,355 $ 147,763 8.95%
Other loans (1)........................... 27,460 539 7.85 29,710 617 8.31
Money market investments (2).............. 1,028,664 14,556 5.61 1,163,117 15,685 5.39
Securities (3)............................ 2,879,500 44,341 6.14 4,809,348 76,296 6.32
Other interest-earning assets............. 111,972 2,856 10.12 -- -- --
------------- ------------- ------------ ----------
Total interest-earning assets........... 12,432,940 249,676 8.02 12,606,530 240,361 7.62
------------- ----------
Non-interest earning assets (4)........... 899,789 1,040,635
------------- ------------
Total assets............................ $ 13,332,729 $ 13,647,165
------------- ------------
------------- ------------
Liabilities & Stockholders' Equity:
Interest-bearing liabilities:
Savings................................... $ 1,821,057 11,319 2.47% $ 1,967,639 13,840 2.80%
NOW....................................... 326,471 1,405 1.71 330,572 1,523 1.83
Money market and variable rate savings.... 2,239,351 18,950 3.36 2,520,898 21,256 3.35
Term certificates of deposit.............. 6,531,061 87,287 5.30 6,903,661 89,916 5.18
Mortgagors' escrow........................ 96,447 263 1.08 75,869 244 1.28
Repurchase agreements..................... 280,878 3,574 5.05 9,292 127 5.44
Long term debt............................ 169,737 2,929 6.90 -- -- --
Guaranteed preferred beneficial interest
in Company's junior subordinated
debentures.............................. 199,718 4,573 9.16 -- -- --
------------- ------------- ------------ ----------
Total interest-bearing liabilities...... 11,664,720 130,300 4.43 11,807,931 126,906 4.28
------------- ----------
Other liabilities (5)....................... 397,249 405,841
------------- ------------
Total liabilities.................. 12,061,969 12,213,772
Preferred shares of subsidiary.............. 3,637 685
Stockholders' equity........................ 1,267,123 1,432,708
------------- ------------
Total liabilities & stockholders'
equity................................ $ 13,332,729 $ 13,647,165
------------- ------------
------------- ------------
Net interest income/interest rate spread (6) $ 119,376 3.59% $ 113,455 3.34%
------------- ---------- ---------- ---
------------- ---------- ---------- ---
Net interest-earning assets/net interest
margin (7)................................ $ 768,220 3.86% $ 798,599 3.61%
------------- ---------- ------------ ---
------------- ---------- ------------ ---
Ratio of interest-earning assets to
interest-bearing liabilities.............. 1.07x 1.07x
------------- ----------
------------- ----------
</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) Securities available for sale are reported at average amortized cost.
(4) Includes goodwill, banking premises and equipment--net, net deferred tax
assets, accrued interest receivable, and other miscellaneous
non-interest-earning assets.
(5) Includes accrued interest payable, accounts payable, official checks drawn
against the Bank, accrued expenses, and other miscellaneous
non-interest-bearing obligations of the Company.
(6) Net interest rate spread represents the difference between the average yield
on interest-earning assets and the average cost of interest-bearing
liabilities.
(7) 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.
14
<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 nine months ended September 30, 1997 and 1996, 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 that are considered adjustments to yields. Interest and yields are
presented on a taxable equivalent yield basis.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
--------------------------------------------------------------------------------
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
----------------------------------------- -------------------------------------
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST BALANCE INTEREST COST
------------- ------------- ----------- ------------ ---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Assets:
Interest-earning assets:
Mortgage loans (1)....................... $ 7,977,800 $ 533,820 8.92% $ 6,335,371 $ 433,678 9.13%
Other loans (1).......................... 27,099 1,665 8.19 32,521 1,958 8.03
Money market investments (2)............. 637,120 26,510 5.56 1,496,022 60,431 5.40
Securities (3)........................... 3,552,685 163,614 6.15 5,256,504 244,336 6.22
Trading assets........................... 1,463 71 6.49 -- -- --
Other interest-earning assets............ 108,925 7,742 9.50 -- -- --
------------- ------------- ------------ ----------
Total interest-earning assets.......... 12,305,092 733,422 7.95 13,120,418 740,403 7.53
------------- ----------
Non-interest earning assets (4)............ 908,578 1,047,857
------------- ------------
Total assets........................... $ 13,213,670 $ 14,168,275
------------- ------------
------------- ------------
Liabilities & Stockholders' Equity:
Interest-bearing liabilities:
Savings.................................. $ 1,853,448 35,854 2.59% $ 1,994,870 41,692 2.79%
NOW...................................... 331,920 4,235 1.71 334,295 4,593 1.84
Money market and variable rate savings... 2,301,705 57,836 3.36 2,574,198 64,947 3.37
Term certificates of deposit............. 6,503,322 254,509 5.23 7,275,109 290,974 5.34
Mortgagors' escrow....................... 91,990 772 1.12 77,938 748 1.28
Trading liabilities...................... 1,637 73 5.96 -- -- --
Repurchase agreements.................... 206,965 7,018 4.53 61,087 1,731 3.79
Long term debt........................... 56,579 2,929 6.90 -- -- --
Guaranteed preferred beneficial interest
in Company's junior subordinated
debentures............................. 87,284 5,996 9.16 -- -- --
------------- ------------- ------------ ----------
Total interest-bearing liabilities..... 11,434,850 369,222 4.32 12,317,497 404,685 4.39
------------- ----------
Other liabilities (5)...................... 399,962 360,376
------------- ------------
Total liabilities................. 11,834,812 12,677,873
Preferred shares of subsidiary............. 3,629 344
Stockholders' equity....................... 1,375,229 1,490,058
------------- -----------
Total liabilities & stockholders'
equity............................... $ 13,213,670 $ 14,168,275
------------- -----------
------------- -----------
Net interest income/interest rate spread
(6)...................................... $ 364,200 3.63% $ 335,718 3.14%
------------- ----------- ---------- ---
------------- ----------- ---------- ---
Net interest-earning assets/net interest
margin (7)............................... $ 870,242 3.94% $ 802,921 3.41%
------------- ----------- ------------ ---
------------- ----------- ------------ ---
Ratio of interest-earning assets to
interest-bearing liabilities............. 1.08x 1.07x
------------- ----------
------------- ----------
</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) Securities available for sale are reported at average amortized cost.
(4) Includes goodwill, banking premises and equipment--net, net deferred tax
assets, accrued interest receivable, and other miscellaneous
non-interest-earning assets.
(5) Includes accrued interest payable, accounts payable, official checks drawn
against the Bank, accrued expenses, and other miscellaneous
non-interest-bearing obligations of the Company.
(6) Net interest rate spread represents the difference between the average yield
on interest-earning assets and the average cost of interest-bearing
liabilities.
(7) 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.
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 on a tax equivalent basis 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>
NINE MONTHS ENDED SEPTEMBER 30,
1997
QUARTER ENDED SEPTEMBER 30, 1997 COMPARED TO
COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
QUARTER ENDED SEPTEMBER 30, 1996 1996
INCREASE/(DECREASE) INCREASE/(DECREASE)
------------------------------------ ---------------------------------
DUE TO DUE TO
------------------------- ---------------------
AVERAGE AVERAGE NET AVERAGE AVERAGE NET
VOLUME RATE CHANGE VOLUME RATE CHANGE
-------------- --------- --------- ---------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Mortgage loans (1).............................. $ 39,798 $ (177) $ 39,621 $ 110,101 $ (9,959) $ 100,142
Other loans (1)................................. (45) (33) (78) (332) 39 (293)
Money market investments (2).................... (1,876) 747 (1,129) (35,686) 1,765 (33,921)
Securities...................................... (29,350) (2,605) (31,955) (77,090) (3,632) (80,722)
Trading assets.................................. -- -- -- 71 -- 71
Other interest-earning assets................... 2,856 -- 2,856 7,742 -- 7,742
-------------- --------- --------- ---------- --------- ----------
Total interest-earning assets................. 11,383 (2,068) 9,315 4,806 (11,787) (6,981)
-------------- --------- --------- ---------- --------- ----------
Interest-bearing liabilities:
Savings......................................... (984) (1,537) (2,521) (2,849) (2,989) (5,838)
NOW............................................. (19) (99) (118) (33) (325) (358)
Money market and variable rate savings.......... (2,383) 77 (2,306) (6,848) (263) (7,111)
Term certificates of deposit.................... (4,563) 1,934 (2,629) (29,776) (6,689) (36,465)
Mortgagors' escrow.............................. 60 (41) 19 125 (101) 24
Trading liabilities............................. -- -- -- 73 -- 73
Repurchase agreements........................... 3,457 (10) 3,447 4,885 402 5,287
Long term debt.................................. 2,929 -- 2,929 2,929 -- 2,929
Guaranteed preferred beneficial interest in
Company's junior subordinated debentures...... 4,573 -- 4,573 5,996 -- 5,996
-------------- --------- --------- ---------- --------- ----------
Total interest-bearing liabilities............ 3,070 324 3,394 (25,498) (9,965) (35,463)
-------------- --------- --------- ---------- --------- ----------
Net change in net interest income............... $ 8,313 $ (2,392) $ 5,921 $ 30,304 $ (1,822) $ 28,482
-------------- --------- --------- ---------- --------- ----------
-------------- --------- --------- ---------- --------- ----------
</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 increased by $1.9 million, or 56.5%,
to $5.4 million for the third quarter of 1997, and increased by $4.1 million, or
37.6%, to $14.9 million in the first nine months of 1997, from $3.5 million and
$10.8 million for the comparable 1996 periods. The provision exceeded net
charge-offs by $1.0 million for the third quarter of 1997 and by $3.0 million
for the first nine months of 1997, in response to loan portfolio growth. The
quality of the loan portfolio and level of loan reserves increased over the
comparable 1996 quarterly and nine month periods.
NON-INTEREST INCOME
Non-interest income increased by $1.2 million, or 10.9%, to $12.4 million in
the third quarter of 1997, and decreased by $3.1 million, or 6.7%, to $43.1
million in the first nine months of 1997, from $11.2 million and $46.2 million,
respectively in the comparable 1996 periods. The third quarter increase results
primarily from a $0.8 million, or 21.6%, rise in mortgage operations fee income.
For the first nine months, the decrease relates to a $5.9 million
non-recurring gain on branch sales in the first nine months of 1997 versus $8.9
million in the first nine months of 1996.
NON-INTEREST EXPENSE
Non-interest expense increased by $1.8 million, or 2.8%, to $66.8 million in
the current quarter, and by $3.6 million, or 1.8%, to $203.6 million in the
first nine months as compared to $65.0 million and $200.0 million for the
comparable 1996 periods. The results from the first nine months of 1997 include
a pre-tax restructuring charge of $2.5 million relating to the transfer of
mortgage servicing from New York to Georgia. Excluding the non-recurring
restructuring charge, non-interest expense increased by $1.1 million, or 0.5%,
for the first nine months of 1997 as compared to the comparable 1996 period.
FDIC premiums decreased by $1.1 million in the current quarter and $3.0
million in the first nine months of 1997 due to the reduction in assessment
rates and the recapitalization of the Savings Association Insurance Fund in
1996. Other administrative expense decreased by $2.3 million in the third
quarter of 1997 and $5.5 million in the first nine months of 1997. The decreases
were partially offset by an increase in salaries and benefits of $1.5 million in
the third quarter of 1997 and $3.7 million in the first nine months of 1997 and
an increase in ESOP and stock plans expense of $2.1 million in the third quarter
of 1997 and $2.6 million in the first nine months of 1997 due to a higher
average stock price as compared with the comparable 1996 periods.
17
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)
INCOME TAX EXPENSE
Income tax expense increased by $0.9 million, or 4.4%, to $21.8 million in
the current quarter, and increased by $3.4 million, or 5.0%, to $72.2 million in
the first nine months of 1997 from $20.9 million and $68.8 million for the
comparable periods of 1996. The rise in the current quarter compared with 1996
is primarily due to a $3.0 million, or 5.4%, increase in income before income
taxes partially offset by the decrease in the effective tax rate from 38.03% in
the 1996 period to 37.66% in the 1997 period. The increase in the first nine
months of 1997 compared with 1996 is primarily due to the $15.8 million, or
9.4%, increase in income before income taxes partially offset by the decrease in
the effective tax rate from 41.10% in 1996 to 39.43% in the 1997 period.
3. FINANCIAL CONDITION
Total assets decreased by $231.6 million, to $13.09 billion at September 30,
1997 from December 31, 1996. Total loans held for investment, net, rose $1.20
billion to $8.49 billion at September 30, 1997, from $7.29 billion at December
31, 1996. Securities available for sale decreased $1.92 billion, to $2.44
billion at September 30, 1997, from $4.36 billion at December 31, 1996,
primarily as a result of the usage of proceeds from the maturities and sales of
securities to fund loan originations.
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 and related core cash earnings. Additional core
cash earnings enable the Company to pursue increases in shareholder value
through growth of earning assets, increases of cash dividends, and additional
repurchases of the Company's stock.
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
----------------------------------------- ------------------------------
SEPTEMBER 30, JUNE 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1997 1997 1996 1997 1996
------------- ----------- ------------- ------------- ---------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Net income................................. $ 36,093 $ 35,129 $ 34,047 $ 110,893 $ 98,554
Non-recurring items, net of tax (1)........ -- 1,493 -- (3,446) (5,095)
------------- ----------- ------------- ------------- ---------------
Core net income............................ 36,093 36,622 34,047 107,447 93,459
Add back:
Goodwill expense......................... 11,610 11,620 11,623 34,873 34,881
Employee stock plans expense............. 4,941 4,711 2,872 14,462 11,814
------------- ----------- ------------- ------------- ---------------
Core cash earnings....................... $ 52,644 $ 52,953 $ 48,542 $ 156,782 $ 140,154
------------- ----------- ------------- ------------- ---------------
------------- ----------- ------------- ------------- ---------------
Core cash earnings per share (2)......... $ 1.38 $ 1.29 $ 1.13 $ 3.88 $ 3.15
------------- ----------- ------------- ------------- ---------------
------------- ----------- ------------- ------------- ---------------
</TABLE>
- ------------------------
(1) Non-recurring items include branch sales, asset sales and restructuring
charge.
(2) Based on the weighted average shares used to calculate earnings per share.
18
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)
INTEREST RATE SENSITIVITY GAP ANALYSIS
The table below depicts the Company's interest rate sensitivity as of
September 30, 1997. Allocations of assets and liabilities, including non
interest-bearing sources of funds, to specific periods are based upon
management's assessment of contractual or anticipated repricing
characteristics, adjusted periodically to reflect actual experience. Those
gaps are then adjusted for the net effect of off-balance sheet financial
instruments such as interest rate swaps.
<TABLE>
<CAPTION>
REPRICING PERIODS
--------------------------------------------------------------------------------
MORE THAN
MORE THAN MORE THAN ONE YEAR
THREE MONTHS THREE MONTHS SIX MONTHS TO THREE MORE THAN
OR LESS TO SIX MONTHS TO ONE YEAR YEARS THREE YEARS TOTAL
------------- ------------- ----------- ------------- ----------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Total loans, net.......................... $ 1,204 $ 709 $ 1,290 $ 1,548 $ 3,744 $ 8,495
Money market investments (1).............. 871 -- -- -- -- 871
Securities held to maturity............... -- -- -- -- 4 4
Securities available for sale............. 516 47 89 753 1,035 2,440
Trading assets............................ -- -- -- -- -- --
Other interest-earning assets............. 112 -- -- -- -- 112
--------- --------- ----------- ------------- ----------- ---------
Total interest-earning assets............. 2,703 756 1,379 2,301 4,783 11,922
--------- --------- ----------- ------------- ----------- ---------
Cash and due from banks................... 88 -- -- -- -- 88
Goodwill.................................. 11 11 21 84 462 589
Other non-interest-earning assets......... 495 -- -- -- -- 495
--------- --------- ----------- ------------- ----------- ---------
TOTAL ASSETS............................ $ 3,297 $ 767 $ 1,400 $ 2,385 $ 5,245 $ 13,094
--------- --------- ----------- ------------- ----------- ---------
--------- --------- ----------- ------------- ----------- ---------
Term certificates......................... $ 1,243 $ 1,121 $ 2,341 $ 1,594 $ 268 $ 6,567
Core deposits............................. 256 250 509 1,868 1,586 4,469
--------- ------ ----------- ------------- ----------- ---------
Total deposits............................ 1,499 1,371 2,850 3,462 1,854 11,036
--------- ------ ----------- ------------- ----------- ---------
Securities sold under agreements to
repurchase.............................. 91 -- -- -- -- 91
Long term debt............................ -- -- -- -- 200 200
Guaranteed preferred beneficial interest
in Company's junior subordinated
debentures.............................. -- -- -- -- 200 200
Other liabilities......................... 294 -- -- -- -- 294
Preferred shares of subsidiary............ -- -- -- -- 4 4
Stockholders' equity...................... -- -- -- -- 1,269 1,269
--------- --------- ----------- ------------- ----------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY.............................. $ 1,884 $ 1,371 $ 2,850 $ 3,462 $ 3,527 $ 13,094
--------- ------ ----------- ------------- ----------- ---------
--------- ------ ----------- ------------- ----------- ---------
OFF BALANCE SHEET FINANCIAL INSTRUMENTS... $ 400 $ -- $ -- $ (300) $ (100) $ --
--------- ------ ----------- ------------- ----------- ---------
--------- ------ ----------- ------------- ----------- ---------
Interest rate sensitivity gap............. $ 1,813 $ (604) $ (1,450) $ (1,377) $ 1,618
Cumulative gap............................ $ 1,813 $ 1,209 $ (241) $ (1,618)
Interest rate sensitivity gap as a
percentage of total assets.............. 13.85% (4.61%) (11.07%) (10.52%) 12.36%
Cumulative gap as a percentage of total
assets.................................. 13.85% 9.23% (1.84%) (12.36%)
</TABLE>
- ------------------------
(1) Consists of overnight federal funds sold and securities purchased under
agreements to resell.
19
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)
INTEREST RATE RISK MANAGEMENT
Interest rate risk is defined as the sensitivity of the Company's current
and future earnings to changes in the level of market interest rates. It arises
in the ordinary course of the Company's business, as the repricing
characteristics of its mortgage loans do not match those of its deposit
liabilities. The resulting interest rate risk is managed by adjustments to the
Company's investment portfolio and through the use of off balance sheet
instruments such as interest rate swaps and options.
Management responsibility for interest rate risk resides with the Asset and
Liability Management Committee ("ALCO"). The committee is comprised of the
Chairman and Chief Executive Officer, the President and Chief Operating Officer
and the Company's senior business-unit and financial executives. Interest rate
risk management strategies are formulated and monitored by ALCO within policies
and limits approved by the Board of Directors. These policies and limits set
forth the maximum risk which the Board of Directors deems prudent, govern
permissible investment securities and off balance sheet instruments and identify
acceptable counter parties to securities and off balance sheet transactions.
ALCO risk management strategies allow for the assumption of interest rate
risk within the Board approved limits. The strategies are formulated based upon
ALCO's assessments of likely market developments and trends in the Company's
mortgage and consumer banking businesses. Strategies are developed with the aim
of enhancing the Company's net income and capital, while ensuring the risks to
income and capital from adverse movements in interest rates are acceptable.
In assessing various interest rate risk strategies, ALCO makes use of a
variety of risk measures. One such measure is the consolidated gap analysis
reported above as of September 30, 1997. Assets and liabilities are allocated to
the various maturities in accordance with the earlier of their contractual
maturity or repricing dates. For mortgage loans and mortgage-backed securities,
estimates of scheduled amortization plus prepayments are used, rather than
contractual maturity. For assets and liabilities with indefinite repricing
schedules, notably core deposits, the gap analysis reflects ALCO's judgments of
likely repricing behavior.
As indicated in the gap analysis, the twelve-month cumulative gap,
representing the total net assets and liabilities that are projected to reprice
over the next twelve months, was liability sensitive $241 million at September
30, 1997. A liability sensitive interest rate gap would tend to increase
earnings over a period of declining interest rates, where rising rates would
decrease earnings. The cumulative one-year sensitivity gap was negative 1.84% of
total assets at September 30, 1997, compared to negative 0.08% at December 31,
1996.
The use of interest rate instruments such as interest rate swaps are
integrated into the Company's interest rate risk management. The notional
amounts of these instruments are not reflected in the Company's balance sheet.
However, these instruments are included in the interest rate sensitivity table
for purposes of analyzing interest rate risk.
20
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)
The Company has entered into interest rate swaps, with a total notional
amount of $400 million, to reduce the Company's overall interest rate risk
arising from its origination of fixed rate mortgages. These instruments are
considered derivative financial instruments held for purposes other than trading
and the effects of these instruments are reported as an adjustment to mortgage
loan income. The unrealized gains or losses on these instruments are not
recorded on the balance sheet, since they are used as a hedge against
held-to-maturity loans. For the quarter ended September 30, 1997, the interest
rate swaps had a negative $0.5 million impact on mortgage loan income. The
interest rate swaps require the Company to pay a weighted average fixed rate of
6.37% and receive three month LIBOR. As of September 30, 1997, the weighted
average LIBOR rate that the Company will receive is 5.73%. All agreements will
expire by the second quarter of 2002. As of the quarter ended September 30, 1997
the interest rate swaps had a gross negative market value of $2.1 million. The
Company has a policy to enter into mutual collateral agreements with each
counter party, which requires either party to submit U.S. Government or U.S.
Government Agency collateral when the market value of the instrument reaches a
predetermined threshold.
NON-PERFORMING ASSETS
The Company's asset quality improved during the nine months ended September
30, 1997, as non-performing assets decreased by 2.1%. The ratio of
non-performing loans to total loans fell to 4.07% at September 30, 1997 from
4.78% at December 31, 1996 while the ratio of non-performing assets to total
assets at September 30, 1997 fell to 2.88% from 2.89% at December 31, 1996.
Non-performing assets, net of related specific reserves, were as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
(IN THOUSANDS)
<S> <C> <C>
Mortgage loans secured by:
Residential one-to-four family.................................................. $ 270,028 $ 271,192
Residential multi-family........................................................ 46,312 48,270
Commercial property............................................................. 34,385 36,515
Other loans......................................................................... 684 170
------------- ------------
Total non-performing loans (1)...................................................... 351,409 356,147
------------- ------------
Total other real estate owned, net.................................................. 25,199 28,566
------------- ------------
Total non-performing assets..................................................... $ 376,608 $ 384,713
------------- ------------
------------- ------------
</TABLE>
- ------------------------
(1) Includes $28.4 million and $31.6 million of non-accrual mortgage loans under
90 days past due at September 30, 1997 and December 31, 1996, respectively.
21
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)
ALLOWANCE FOR POSSIBLE LOAN LOSSES
The following is a summary of the provision and allowance for possible loan
losses:
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ----------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Balance beginning of period...................................... $ 107,000 $ 105,000 $ 105,000 $ 105,500
Provision charged to income...................................... 5,376 3,435 14,837 10,782
Charge-offs...................................................... (4,691) (3,759) (12,406) (12,391)
Recoveries....................................................... 315 324 569 1,109
---------- ---------- ---------- ----------
Balance end of period............................................ $ 108,000 $ 105,000 $ 108,000 $ 105,000
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
CAPITAL RATIOS
The Company's ratio of period-end stockholders' equity to ending total
assets at September 30, 1997 was 9.69% compared to 10.95% at December 31, 1996.
The decrease in this ratio results solely from the Company's share repurchase
activity during the nine month period.
The Company and the Bank are subject to various regulatory capital
requirements administered by the Federal and state banking agencies. The Board
of Governors of the Federal Reserve System establishes minimum capital
requirements for the consolidated bank holding company, as well as for the Bank.
Under capital adequacy guidelines and the regulatory framework for prompt
corrective action, the Bank must meet specific capital guidelines that involve
quantitative measures of its assets, liabilities, and certain off balance sheet
items as calculated under regulatory accounting practices. These guidelines
require minimum ratios of risk-based capital to risk adjusted assets of 4% for
Tier 1 capital and 8% for total capital. The Federal Reserve Board also has
guidelines for a leverage ratio that is designed to complement the risk-based
capital ratios in determining the overall capital adequacy of banks and bank
holding companies. A minimum leverage ratio of Tier 1 capital to average total
assets of 3% is required for banks and bank holding companies, with an
additional 100 to 200 basis points required for all but the highest rated
institutions. As of September 30, 1997, the Company and the Bank are considered
to be well capitalized under all capital requirements to which they are subject.
22
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)
As of September 30, 1997, the most recent notification from the FDIC
categorized the Bank as well capitalized under the regulatory framework for
prompt corrective action. To be categorized as well capitalized, the Bank must
maintain minimum Tier 1 capital, total capital and leverage ratios of 6%, 10%
and 5%, respectively. There have been no conditions or events since that
notification that management believes have changed the Company's or Bank's
category.
<TABLE>
<CAPTION>
REQUIRED FOR CAPITAL
ACTUAL ADEQUACY PURPOSES
-------------------- ----------------------
<S> <C> <C> <C> <C>
(IN MILLIONS) AMOUNT RATIO AMOUNT RATIO
- ------------------------------------------------------------------------------ --------- --------- --------- -----
AS OF SEPTEMBER 30, 1997
Total Capital
(to Risk Weighted Assets):
Company..................................................................... $ 968.6 15.85% $ 488.9 8.00%
Bank........................................................................ 962.9 15.76% 488.8 8.00%
Tier 1 Capital................................................................
(to Risk Weighted Assets):
Company..................................................................... $ 892.2 14.60% $ 244.4 4.00%
Bank........................................................................ 882.9 14.45% 244.4 4.00%
Tier 1 Capital
(to Average Assets):
Company..................................................................... $ 892.2 7.00% $ 509.8 4.00%
Bank........................................................................ 882.9 6.95% 508.1 4.00%
</TABLE>
<TABLE>
<CAPTION>
REQUIRED FOR CAPITAL
ACTUAL ADEQUACY PURPOSES
-------------------- ----------------------
<S> <C> <C> <C> <C>
(IN MILLIONS) AMOUNT RATIO AMOUNT RATIO
- ------------------------------------------------------------------------------ --------- --------- --------- -----
AS OF DECEMBER 31, 1996
Total Capital
(to Risk Weighted Assets):
Company..................................................................... $ 932.8 16.72% $ 446.2 8.00%
Bank........................................................................ 914.2 16.40% 445.8 8.00%
Tier 1 Capital
(to Risk Weighted Assets):
Company..................................................................... $ 863.1 15.47% $ 223.1 4.00%
Bank........................................................................ 844.5 15.15% 222.9 4.00%
Tier 1 Capital
(to Average Assets):
Company..................................................................... $ 863.1 6.78% $ 509.0 4.00%
Bank........................................................................ 844.5 6.64% 508.4 4.00%
</TABLE>
23
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
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
fourteen unrelated legal complaints which assert that infant plaintiffs
sustained personal injuries from the ingestion of lead based paint, chips or
dust. Additionally there are eleven other instances of threatened litigation.
The complaints are in various early stages of discovery. Outside 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 this time. The Company currently believes that such liability exposure, if
any, would not be material to the Bank's financial condition.
The Bank is a defendant in a purported class action lawsuit titled Joseph
Sabbatino and Jean Sabbatino, and all others similarly situated, v. GreenPoint
Savings Bank, CV-97 -1838, United States District Court, Eastern District of New
York, in which plaintiffs allege that the Bank collected monthly mortgage escrow
reserves in excess of the amounts it is entitled to collect under applicable law
and the mortgage contract. Plaintiffs seek, among other things, treble damages
and injunctive relief under breach of contract theories and alleged violation of
the Federal Racketeer Influenced and Corrupt Organization Act ("RICO"), and a
judgment based upon alleged breach of contract, breach of fiduciary duty and
intentional and/or negligent misrepresentation. The Bank has filed an answer
denying all of the Plaintiff's claims, believes its mortgage loan servicing
practices with respect to escrow deposits comply in all material respects with
applicable requirements, and intends to defend vigorously this action. While the
ultimate outcome of this lawsuit, whether by judgment or a satisfactory
settlement, cannot be predicted, management does not believe that the outcome of
this litigation is likely to have a material adverse effect on the consolidated
financial condition of the Company.
24
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
ITEM 6--EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-----------
<C> <S>
11.1 Statement Regarding Computation of Per Share Earnings
12.1 Ratios of Earnings to Combined Fixed Charges and Preferred Stock Dividends
27.1 Financial Data Schedule
</TABLE>
(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 September 30, 1997.
25
<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
and Chief Executive Officer
By: /s/ Charles P. Richardson
---------------------------------
Charles P. Richardson
Executive Vice President and
Chief Financial Officer
Dated November 12, 1997
26
<PAGE>
Exhibit 11.1
Statement Regarding Computation of Per Share Earnings
(In thousands, except per share amounts )
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- ---------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
--------- --------- ---------- ---------
Net income.................................................. $ 36,093 $ 34,047 $ 110,893 $ 98,554
Net income (excluding non-recurring items)*................. 36,093 34,047 107,447 93,459
Weighted average number of common stock and common stock
equivalents outstanding during each period--primary....... 38,193 43,138 40,438 44,454
Weighted average number of common stock and common stock
equivalents outstanding during each period--fully
diluted................................................... 38,213 43,397 40,599 45,006
Net earnings per share--primary............................. $ 0.95 $ 0.79 $ 2.74 $ 2.22
--------- --------- ---------- ---------
--------- --------- ---------- ---------
Net earnings per share (excluding non-recurring
items)*--primary.......................................... $ 0.95 $ 0.79 $ 2.66 $ 2.10
--------- --------- ---------- ---------
--------- --------- ---------- ---------
Net earnings per share--fully diluted....................... $ 0.94 $ 0.78 $ 2.73 $ 2.19
--------- --------- ---------- ---------
--------- --------- ---------- ---------
Net earnings per share (excluding non-recurring items)*
fully diluted............................................. $ 0.94 $ 0.78 $ 2.65 $ 2.08
--------- --------- ---------- ---------
--------- --------- ---------- ---------
</TABLE>
*--Non-recurring items include branch sales, asset sales and restructuring
charge.
<PAGE>
EXHIBIT 12.1
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(DOLLARS IN MILLIONS)
The Company's consolidated ratios of earnings to combined fixed charges and
preferred stock dividends for each of the periods indicated are set forth below:
<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------------------------------------------------
SEPTEMBER 30, JUNE 30, MARCH 31, DECEMBER 31, SEPTEMBER 30,
1997 1997 1997 1996 1996
--------------- ----------- ----------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Income before income taxes..................... $ 57.9 58.8 $ 66.4 $ 57.2 $ 54.9
Combined fixed charges and preferred stock
dividends:
Interest expense on deposits................. 119.2 117.3 116.7 122.8 126.8
Interest expense on long-term debt........... 7.5 1.4 -- -- --
Appropriate portion (1/3) of rent expense.... 1.1 1.1 1.1 1.2 1.1
Preferred stock dividend requirements........ 0.1 0.1 0.1 0.1 0.1
Total combined fixed charges and preferred
stock dividends.......................... 127.9 119.9 117.9 124.1 128.0
Earnings before income taxes and combined fixed
charges and preferred stock dividends........ 185.8 178.7 184.3 181.3 182.9
Ratio of earnings to combined fixed charges and
preferred stock dividends.................... 1.45x 1.49x 1.56x 1.46x 1.43x
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
----------------------------
SEPTEMBER 30, SEPTEMBER 30,
1997 1996
------------- -------------
<S> <C> <C>
Income before income taxes.......................................................... $ 183.1 $ 167.3
Combined fixed charges and preferred stock dividends:
Interest expense on deposits...................................................... 353.2 403.0
Interest expense on long-term debt................................................ 8.9 --
Appropriate portion (1/3) of rent expense......................................... 3.3 3.1
Preferred stock dividend requirements............................................. 0.3 0.1
Total combined fixed charges and preferred stock dividends...................... 365.7 406.2
Earnings before income taxes and combined fixed charges and preferred stock
dividends......................................................................... 548.8 573.5
Ratio of earnings to combined fixed charges and preferred stock dividends........... 1.50x 1.41x
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 85,807
<INT-BEARING-DEPOSITS> 1,745
<FED-FUNDS-SOLD> 871,355
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,440,011
<INVESTMENTS-CARRYING> 4,035
<INVESTMENTS-MARKET> 4,073
<LOANS> 8,603,104
<ALLOWANCE> (108,000)
<TOTAL-ASSETS> 13,093,985
<DEPOSITS> 11,035,921
<SHORT-TERM> 91,491
<LIABILITIES-OTHER> 294,618
<LONG-TERM> 399,541
0
0
<COMMON> 551
<OTHER-SE> 1,268,225
<TOTAL-LIABILITIES-AND-EQUITY> 13,093,985
<INTEREST-LOAN> 535,485
<INTEREST-INVEST> 187,268
<INTEREST-OTHER> 4,867
<INTEREST-TOTAL> 727,620
<INTEREST-DEPOSIT> 353,206
<INTEREST-EXPENSE> 369,222
<INTEREST-INCOME-NET> 358,398
<LOAN-LOSSES> (14,837)
<SECURITIES-GAINS> 1,222
<EXPENSE-OTHER> 203,541
<INCOME-PRETAX> 183,085
<INCOME-PRE-EXTRAORDINARY> 110,893
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 110,893
<EPS-PRIMARY> 2.74
<EPS-DILUTED> 2.73
<YIELD-ACTUAL> 3.94
<LOANS-NON> 351,409
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> (105,000)
<CHARGE-OFFS> (12,406)
<RECOVERIES> 569
<ALLOWANCE-CLOSE> (108,000)
<ALLOWANCE-DOMESTIC> (108,000)
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
