<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
June 30, 1998
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
incorporation or organization) identification number)
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)
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 11, 1998 there were 96,442,281 shares of common stock outstanding.
<PAGE>
GreenPoint Financial Corp.
FORM 10-Q
For the Quarter Ended
June 30, 1998
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION Page
----
<S> <C>
Item 1 - Financial Statements
Consolidated Statements of Financial Condition (unaudited) as of June 30, 1998
and December 31, 1997 3
Consolidated Statements of Income (unaudited) for the quarters and six month periods
ended June 30, 1998 and 1997 4
Consolidated Statements of Comprehensive Income (unaudited) for the quarters and
six month periods ended June 30, 1998 and 1997 5
Consolidated Statements of Changes in Stockholders' Equity (unaudited)
for the six month periods ended June 30, 1998 and 1997 6
Consolidated Statements of Cash Flows (unaudited) for the six month periods
ended June 30, 1998 and 1997 7
Notes to the Unaudited Consolidated Financial Statements 8
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 27
Item 4 - Submission of Matters to a Vote of Security Holders 28
Item 6 - Exhibits and Reports on Form 8-K 29
</TABLE>
2
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
--------------------- ------------------
ASSETS (In thousands, except share amounts)
------
<S> <C> <C>
Cash and due from banks $ 110,586 $ 93,173
Money market investments 778,119 1,060,007
Loans receivable held for sale 3,845 5,532
Securities available for sale 1,885,860 2,007,707
Securities held to maturity (fair value of $3,787
and $4,046, respectively) 3,774 4,009
Trading assets 74 24,951
Loans receivable held for investment:
Mortgage loans 9,122,776 8,905,651
Other loans 28,499 30,146
Deferred loan fees and unearned discount (21,659) (31,170)
Allowance for possible loan losses (111,000) (109,000)
--------------------- ------------------
Loans receivable held for investment, net 9,018,616 8,795,627
--------------------- ------------------
Other interest-earning assets 118,698 116,951
Accrued interest receivable, net 81,583 81,201
Banking premises and equipment, net 115,223 118,792
Deferred income taxes, net 64,420 71,359
Other real estate owned, net 16,482 24,036
Goodwill 554,018 577,141
Other assets 102,604 103,032
--------------------- ------------------
Total assets $ 12,853,902 $ 13,083,518
--------------------- ------------------
--------------------- ------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Liabilities:
Deposits:
N.O.W. and checking $ 492,281 $ 533,871
Savings 1,643,154 1,739,415
Variable rate savings 1,720,077 1,702,097
Money market 453,533 478,443
Term certificates of deposit 6,506,364 6,519,152
--------------------- ------------------
Total deposits 10,815,409 10,972,978
--------------------- ------------------
Mortgagors' escrow 138,571 117,806
Securities sold under agreements to repurchase -- 106,149
Trading liabilities -- 10,592
Long term debt 199,850 199,831
Guaranteed preferred beneficial interest in Company's junior subordinated
debentures 199,726 199,721
Accrued income taxes payable 54,091 67,723
Other liabilities 170,610 139,115
--------------------- ------------------
Total liabilities 11,578,257 11,813,915
--------------------- ------------------
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;
110,261,164 shares issued) 1,103 1,103
Additional paid-in capital 856,095 830,441
Unallocated Employee Stock Ownership Plan (ESOP) shares (112,518) (114,939)
Unearned stock plans shares (5,045) (7,019)
Retained earnings 1,187,616 1,142,407
Accumulated other comprehensive income, net 55 (3,555)
Treasury stock, at cost (29,441,878 and 27,192,578 shares, respectively) (651,661) (578,835)
--------------------- ------------------
Total stockholders' equity 1,275,645 1,269,603
--------------------- ------------------
Total liabilities and stockholders' equity $ 12,853,902 $ 13,083,518
--------------------- ------------------
--------------------- ------------------
</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 Six Months Ended
June 30, June 30,
------------------------------------ ------------------------------------
1998 1997 1998 1997
----------------- ----------------- ------------------ -----------------
Interest income: (In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Mortgages $ 200,164 $ 177,564 $ 398,788 $ 346,436
Money market investments 12,313 7,598 28,523 11,941
Securities 30,199 53,931 58,071 117,049
Other 2,041 2,254 4,420 4,266
----------------- ----------------- ------------------ -----------------
Total interest income 244,717 241,347 489,802 479,692
----------------- ----------------- ------------------ -----------------
Interest expense:
Deposits 116,009 117,336 232,011 233,982
Trading liabilities 15 73 35 73
Short-term and other borrowings 1,745 2,181 3,417 3,444
Long-term debt 8,041 1,423 16,082 1,423
----------------- ----------------- ------------------ -----------------
Total interest expense 125,810 121,013 251,545 238,922
----------------- ----------------- ------------------ -----------------
Net interest income 118,907 120,334 238,257 240,770
Provision for possible loan losses (3,170) (4,444) (7,182) (9,461)
----------------- ----------------- ------------------ -----------------
Net interest income after provision for possible
loan losses 115,737 115,890 231,075 231,309
----------------- ----------------- ------------------ -----------------
Non-interest income:
Income from fees and commissions:
Mortgage loan operations fee income 4,408 3,444 7,905 6,982
Mortgage servicing fees 1,230 1,787 2,588 3,612
Banking services fees and commissions 6,680 5,745 13,086 10,610
Other income 251 423 443 915
Net gain on securities 287 211 1,422 472
Net gain (loss) on sales of loans 38 (160) 232 (197)
Net gain on sale of assets -- -- -- 2,416
Gain on sale of branches -- -- -- 5,850
----------------- ----------------- ------------------ -----------------
Total non-interest income 12,894 11,450 25,676 30,660
----------------- ----------------- ------------------ -----------------
Non-interest expense:
Salaries and benefits 22,646 22,621 45,750 45,314
Employee Stock Ownership and stock plans expense 6,098 4,711 11,661 9,521
Net expense of premises and equipment 11,793 12,297 23,742 24,397
Advertising 1,686 2,238 3,368 4,478
Federal deposit insurance premiums 669 726 1,350 1,500
Charitable and educational foundation 1,875 2,373 3,750 4,358
Other administrative expenses 10,509 10,416 21,275 22,867
Other real estate owned operating income, net (2,035) (955) (3,604) (1,417)
Goodwill amortization 11,561 11,620 23,123 23,263
Restructuring charge -- 2,500 -- 2,500
Non-recurring personnel expense -- -- 8,335 --
----------------- ----------------- ------------------ -----------------
Total non-interest expense 64,802 68,547 138,750 136,781
----------------- ----------------- ------------------ -----------------
Income before income taxes 63,829 58,793 118,001 125,188
Income taxes 24,414 23,664 45,000 50,388
----------------- ----------------- ------------------ -----------------
Net income $ 39,415 $ 35,129 $ 73,001 $ 74,800
----------------- ----------------- ------------------ -----------------
----------------- ----------------- ------------------ -----------------
Basic earnings per share $ 0.56 $ 0.45 $ 1.03 $ 0.95
----------------- ----------------- ------------------ -----------------
----------------- ----------------- ------------------ -----------------
Diluted earnings per share $ 0.54 $ 0.43 $ 0.99 $ 0.90
----------------- ----------------- ------------------ -----------------
----------------- ----------------- ------------------ -----------------
Net income (excluding non-recurring items)* $ 39,415 $ 36,622 $ 78,169 $ 71,354
----------------- ----------------- ------------------ -----------------
----------------- ----------------- ------------------ -----------------
Diluted earnings per share (excluding non-
recurring items)* $ 0.54 $ 0.45 $ 1.06 $ 0.86
----------------- ----------------- ------------------ -----------------
----------------- ----------------- ------------------ -----------------
</TABLE>
*Non-recurring items include branch sales, asset sales, restructuring charge
and non-recurring personnel expense.
(See accompanying notes to the unaudited consolidated financial statements)
4
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
----------------------------------- -------------------------------
1998 1997 1998 1997
----------------- ---------------- ----------------- ------------
<S> <C> <C> <C> <C>
Net income $ 39,415 $ 35,129 $ 73,001 $ 74,800
----------------- ---------------- ----------------- ------------
Other comprehensive income, before tax:
Unrealized gains on securities:
Unrealized holding gains arising during
period 4,717 43,086 7,811 2,517
Less: reclassification adjustment for gains
included in net income (287) (211) (1,422) (472)
----------------- ---------------- ----------------- ------------
Other comprehensive income, before tax 4,430 42,875 6,389 2,045
Income tax expense related to items of other
comprehensive income
(1,892) (18,874) (2,779) (1,273)
----------------- ---------------- ----------------- ------------
Other comprehensive income, net of tax 2,538 24,001 3,610 772
----------------- ---------------- ----------------- ------------
Total comprehensive income, net of tax $ 41,953 $ 59,130 $ 76,611 $ 75,572
----------------- ---------------- ----------------- ------------
----------------- ---------------- ----------------- ------------
</TABLE>
(See accompanying notes to the unaudited consolidated financial statements)
5
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------
1998 1997
----------- -----------
<S> <C> <C>
Common stock
Balance at beginning of period $ 1,103 $ 1,103
----------- -----------
Balance at end of period 1,103 1,103
----------- -----------
Additional paid-in capital
Balance at beginning of period 830,441 809,618
Issuance of common stock to stock plans --- 832
Amortization of ESOP shares committed to be released 8,521 5,680
Amortization of stock plans shares during the period 963 257
Tax benefit for vested stock plans shares 16,170 4,582
----------- -----------
Balance at end of period 856,095 820,969
----------- -----------
Unallocated ESOP shares
Balance at beginning of period (114,939) (119,573)
Amortization of ESOP shares committed to be released 2,421 2,317
----------- -----------
Balance at end of period (112,518) (117,256)
----------- -----------
Unearned stock plans shares
Balance at beginning of period (7,019) (8,317)
Issuance of common stock to stock plans --- (832)
Amortization of stock plans shares during the period 1,974 1,267
----------- -----------
Balance at end of period (5,045) (7,882)
----------- -----------
Retained earnings
Balance at beginning of period 1,142,407 1,037,993
Net income for the period 73,001 74,800
Dividends declared (22,560) (19,814)
Reissuance of treasury stock (5,232) (3,027)
----------- -----------
Balance at end of period 1,187,616 1,089,952
----------- -----------
Accumulated other comprehensive income, net
Balance at beginning of period (3,555) (23,324)
Net change in accumulated other comprehensive income, net 3,610 772
----------- -----------
Balance at end of period 55 (22,552)
----------- -----------
Treasury stock, at cost
Balance at beginning of period (578,835) (237,697)
Reissuance of treasury stock 13,496 7,820
Purchase of treasury stock (86,322) (163,341)
----------- -----------
Balance at end of period (651,661) (393,218)
----------- -----------
Total stockholders' equity $ 1,275,645 $ 1,371,116
----------- -----------
----------- -----------
</TABLE>
(See accompanying notes to the unaudited consolidated financial statements)
6
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------
1998 1997
----------- -------------
(In thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 73,001 $ 74,800
Adjustments to reconcile net income to net cash provided by operating
activities:
Provision for possible loan losses 7,182 9,461
Depreciation and amortization of premises and equipment 8,608 8,323
Goodwill amortization 23,123 23,263
Accretion of discount on securities, net of premium amortization (3,291) (5,167)
Net change in trading assets 24,877 (29)
Net change in trading liabilities (10,592) ---
ESOP and stock plans expense 11,661 9,521
Non-recurring personnel expense 8,335 ---
Gain on securities transactions (1,422) (472)
Net change in loans held for sale 1,687 229
Net gain on sales of other real estate owned (5,088) (4,360)
Net gain on sales of branches --- (5,850)
Deferred income taxes 4,160 490
(Increase) decrease in other assets (8,349) 11,198
Increase (decrease) in other liabilities 42,728 (9,672)
Other, net (344) (13,552)
----------- -----------
Net cash provided by operating activities 176,276 98,183
----------- -----------
Cash flows from investing activities:
Loan originations, net of principal repayments (229,416) (853,148)
Proceeds from sales of other real estate owned 13,765 9,688
Purchases of securities available for sale (1,781,912) (564,649)
Purchase of securities held to maturity --- (100)
Proceeds from maturities of securities available for sale 1,407,622 720,000
Proceeds from sales of securities available for sale 351,911 807,758
Principal repayments on securities 146,126 133,091
Investment in corporate officer life insurance policy --- (101,794)
Purchases of premises and equipment (5,039) (5,532)
----------- -----------
Net cash (used in) provided by investing activities ( 96,943) 145,314
----------- -----------
Cash flows from financing activities:
Net withdrawals from depositors' accounts (157,806) (144,713)
Cash paid on transfer of deposit liabilities --- (124,781)
Payments for cash dividends (22,560) (19,814)
Exercise of stock options 8,264 4,793
Purchase of treasury stock (86,322) (163,341)
Securities sold under agreements to repurchase (106,149) 236,256
Guaranteed preferred beneficial interest in Company's junior subordinated
debentures --- 199,717
Net increase in mortgagors' escrow 20,765 11,311
----------- -----------
Net cash used in financing activities (343,808) (572)
----------- -----------
Net (decrease) increase in cash and cash equivalents (264,475) 242,925
Cash and cash equivalents at beginning of period 1,153,180 575,974
----------- -----------
Cash and cash equivalents at end of period $ 888,705 $ 818,899
----------- -----------
----------- -----------
Non-cash activities:
Additions to other real estate owned, net $ (9,690) $ 13,265
------------ -----------
------------ ------------
Loans to facilitate sales of other real estate $ 7,125 $ 11,907
------------ ------------
------------ ------------
Unsettled trades $ 59,379 $ 142,507
------------ ------------
------------ ------------
Supplemental disclosure of cash flow information:
Cash paid for income taxes $ 32,315 $ 53,575
------------ ------------
------------ ------------
Interest paid $ 248,438 $ 236,088
------------ ------------
------------ ------------
</TABLE>
(See accompanying notes to the unaudited consolidated financial statements)
7
<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
year ended December 31, 1997.
2. Stock Incentive Plan
For the six months ended June 30, 1998, the Company granted options to
purchase 1,094,000 shares of the Company's common stock to certain officers,
at an average exercise price of $33.65. These awards vest ratably over three
years on the anniversary dates of the awards.
3. Non-Employee Directors' Stock Option Grants
During the six months ended June 30, 1998, the Company granted options to
purchase 48,000 shares of the Company's common stock to non-employee
directors, at an average exercise price of $40.19. These awards vest after
one year on the anniversary dates of the awards.
4. Common Stock Repurchase Program
Under a stock repurchase program authorized in January 1998, the Company has
repurchased 2.25 million shares of GreenPoint common stock through June 30,
1998. 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.
5. Acquisition of BankAmerica Housing Services
On April 13, 1998, the Company announced the signing of a definitive
agreement to purchase the manufactured housing lending business of
BankAmerica Housing Services ("BAHS"), a division of Bank of America, FSB for
a cash premium of $603 million and a payment of approximately $100 million
for net tangible assets at fair value. The purchase includes BAHS' loan
origination and servicing platforms, its servicing portfolio and related
revenue stream, and a warehouse portfolio of loans to be originated prior to
closing, which is expected during the third quarter of 1998. The acquisition
will be treated as a purchase for accounting and financial reporting
purposes, resulting in approximately $468 million of tax-deductible goodwill,
which will be amortized over 15 years. The acquisition will be financed
through available capital and the use of the proceeds of a recently completed
offering of GreenPoint common stock.
8
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
6. Securities
Securities held at June 30, 1998 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 $ 500,220 $ 38 $ (2,176) $ 498,082
Agency notes/Asset-backed securities 255,328 22 (110) 255,240
Mortgage-backed securities 706,409 2,609 (510) 708,508
Collateralized mortgage obligations 214,138 462 --- 214,600
Trust certificates collateralized by GNMA securities 39,781 --- (239) 39,542
Corporate asset-backed securities 25,000 27 --- 25,027
Commercial paper 114,835 --- --- 114,835
Other 30,017 10 (1) 30,026
---------- --------- --------- -----------
Total securities available for sale $1,885,728 $ 3,168 $ (3,036) $ 1,885,860
---------- --------- --------- -----------
---------- --------- --------- -----------
Securities Held to Maturity
Tax exempt municipals $ 585 $ 13 $ --- $ 598
Other 3,189 --- --- 3,189
---------- --------- --------- -----------
Total securities held to maturity $ 3,774 $ 13 $ --- $ 3,787
---------- --------- --------- -----------
---------- --------- --------- -----------
Trading Assets
Purchased call option $ 63 $ 11 $ --- $ 74
---------- --------- --------- -----------
Total trading assets $ 63 $ 11 $ --- $ 74
---------- --------- --------- -----------
---------- --------- --------- -----------
</TABLE>
Securities held at December 31, 1997 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 $ 700,564 $ --- $ (4,752) $ 695,812
Agency notes/Asset-backed securities 125,870 67 (147) 125,790
Mortgage-backed securities 780,600 806 (1,807) 779,599
Collateralized mortgage obligations 113,942 537 (52) 114,427
Trust certificates collateralized by GNMA securities 124,513 --- (951) 123,562
Corporate asset-backed securities 25,000 --- --- 25,000
Commercial paper 113,494 --- --- 113,494
Other 30,017 6 --- 30,023
---------- -------- ---------- ----------
Total securities available for sale $2,014,000 $ 1,416 $ (7,709) $2,007,707
---------- -------- ---------- ----------
---------- -------- ---------- ----------
Securities Held to Maturity
Tax exempt municipals $ 605 $ 37 $ --- $ 642
Other 3,404 --- --- 3,404
---------- -------- ---------- ----------
Total securities held to maturity $ 4,009 $ 37 $ --- $ 4,046
---------- -------- ---------- ----------
---------- -------- ---------- ----------
Trading Assets
U.S. Treasury notes/bills $ 24,960 $ --- $ (9) $ 24,951
---------- -------- ---------- ----------
Total trading assets $ 24,960 $ --- $ (9) $ 24,951
---------- -------- ---------- ----------
---------- -------- ---------- ----------
</TABLE>
Estimated fair values for securities are based on published market or
securities dealers' estimated prices.
During the quarter ended June 30, 1998, the Company sold available for sale
securities aggregating $191.6 million, resulting in gross realized gains of
$0.4 million and gross realized losses of $0.1 million.
During the quarter ended June 30, 1998, the Company sold trading account
securities aggregating $350.2 million, resulting in gross realized gains of
$0.3 million and gross realized losses of $0.2 million.
The average maturities of the securities available for sale and held to
maturity at June 30, 1998 are approximately 6.1 years and 11.0 years,
respectively. Mortgage-backed securities and collateralized mortgage
obligations, most 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 3.6 years.
9
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
7. Impact of Recent Accounting Pronouncement
On June 15, 1998, the Financial Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standards No. 133, Accounting for
Derivatives and Hedging Activities ("SFAS 133"). SFAS 133 is effective for
all fiscal quarters of all fiscal years beginning after June 15, 1999
(January 1, 2000 for the Company). SFAS 133 requires that all derivative
instruments be recorded on the balance sheet at fair value. Changes in the
derivative's fair value are recorded each period in current earnings or other
comprehensive income, depending on whether the derivative is designated as
part of a hedge transaction and, if it is, the type of hedge transaction.
Management of the Company anticipates that, due to its limited use of
derivative instruments, the adoption of SFAS 133 will not have a significant
effect on the Company's earnings or financial position.
8. Common Stock Offering
On June 10, 1998, the Company filed a Registration Statement on Form S-3 for
an offering of 15 million shares of GreenPoint common stock. The net proceeds
of the offering were $584 million. The Company intends to use the net
proceeds from the offering, together with available cash, to fund the
purchase price of the BAHS acquisition and for general working capital
purposes. In addition, the net proceeds of the offering will qualify as Tier
1 capital of the Company for regulatory purposes.
10
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
------------------------------------------------------------ --------------------
Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30, Jun. 30, Jun. 30,
1998 1998 1997 1997 1997 1998 1997
-------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Performance Ratios (Annualized):
Core cash earnings return on
average assets (1) 1.76% 1.71%(2) 1.64% 1.58% 1.61%(3) 1.73%(2) 1.58%(4)
Core cash earnings return on
average equity (1) 18.30 17.36 (2) 17.24 16.62 15.13 (3) 17.83 (2) 14.56 (4)
Return on average assets 1.21 1.19 (2) 1.13 1.08 1.07 1.20 (2) 1.06 (5)
Return on average equity 12.64 12.04 (2) 11.83 11.39 10.04 12.34 (2) 9.77 (5)
Net interest margin 3.95 3.93 3.91 3.86 3.99 3.94 3.98
Net interest spread during
period 3.65 3.65 3.64 3.59 3.67 3.65 3.65
Operating expense to average
assets (6) 1.70 1.70 1.71 1.65 1.69 1.70 1.71
Efficiency ratio (7) 41.9 42.1 42.9 42.3 42.0 42.0 42.7
Average interest-earning assets
to average interest-bearing
liabilities 1.07 x 1.07 x 1.06 x 1.07 x 1.08 x 1.07 x 1.08 x
Regulatory Capital Ratios:
Company:
Leverage capital (8) 7.40% 7.32% 7.19% 7.00% 7.95%
Risk-based capital (8):
Tier 1 14.71 14.78 14.29 14.60 16.37
Total 15.96 16.03 15.54 15.85 17.62
Bank:
Leverage capital (8) 7.32 7.23 7.08 6.95 6.66
Risk-based capital (8):
Tier 1 14.54 14.59 14.09 14.45 13.92
Total 15.79 15.84 15.34 15.76 15.17
Per Share Data:
Core cash earnings (1)* $ 0.78 $ 0.76 (2) $ 0.71 $ 0.69 $ 0.65 (3)
Common book value** $17.65 $17.43 $ 17.00 $16.82 $17.14
Tangible common book value** $ 9.99 $ 9.72 $ 9.27 $ 9.02 $ 9.63
Dividends $ 0.16 $ 0.16 $ 0.13 $ 0.13 $ 0.13
* Average shares used in
calculation 73,089,000 73,954,000 74,898,000 76,386,000 81,861,000
** Period-end shares used in
calculation 72,254,000 73,399,000 74,686,000 75,420,000 80,013,000
Total shares issued and
outstanding 83,383,000 84,469,000 84,640,000 85,652,000 90,089,000
Asset Quality Ratios:
Non-performing loans to
total loans 3.39% 3.77% 3.97% 4.07% 4.35%
Non-performing assets to
total assets 2.54 2.73 2.90 2.88 2.89
Allowance for possible loan
losses to:
Non-performing loans 35.79 32.23 30.70 30.73 29.69
Total loans 1.21 1.21 1.22 1.25 1.29
Earnings to combined fixed
charges and preferred
stock dividends (9):
Excluding interest on
deposits 8.01 x 7.02 x 7.90 x 7.59 x 23.09 x 7.52 x 33.34 x
Including interest on
deposits 1.51 x 1.43 x 1.46 x 1.45 x 1.49 x 1.47 x 1.53 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 non-recurring personnel expense, net of tax.
(3) Excludes restructuring charge, net of tax.
(4) Excludes gains on branch and asset sales, net of tax and restructuring
charge, net of tax.
(5) Excludes gains on branch and asset sales, net of
tax.
(6) Operating expense excludes goodwill expense, ORE (income) expense,
non-recurring personnel expense and restructuring charge.
(7) The efficiency ratio is calculated by dividing operating expense by the sum
of net interest income and non-interest income, excluding pre-tax gains on
branch and asset sales.
(8) 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").
(9) 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 represent interest
expense on long-term debt and one-third (the portion deemed to be
representative of the interest factor) of rents.
11
<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, to become a major consumer
banking force within the attractive, rapidly consolidating New York
metropolitan consumer banking market and to expand into other niche
consumer finance businesses. The Company believes that its pending
acquisition of the manufactured housing lending business of BAHS is
consistent with the Company's strategy of targeting under-served niche
markets.
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 second quarter's results include the following:
- The Company's loan originations totaled $700 million, down 2%
from the second quarter of 1997, but up 21% from the prior
quarter. The percentage of new loans originated outside of New
York was 60%, and ARMs as a percentage of total originations
were 24%.
- Asset quality continued to improve as non-performing loans and
non-performing assets declined. The ratio of non-performing
loans to total loans declined 96 basis points to 3.39%, a 22.1%
decrease from June 30, 1997 and 38 basis points lower than the
first quarter of 1998.
- Net interest margin was 3.95%, down 4 basis points from
the second quarter of 1997 and up 2 basis points from the
first quarter of 1998.
Net income for the quarter ended June 30, 1998 was $39.4 million, or $0.54
per diluted share, a 25.6% increase from the $0.43 per share for the
comparable 1997 period. Net income for the first six months of 1998 was
$73.0 million, or $0.99 per diluted share, compared to $74.8 million, or
$0.90 per diluted share, for the 1997 period.
12
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
Core Cash Earnings
Core cash earnings are net of non-recurring items, and include certain
non-cash charges related to goodwill and the Employee Stock Ownership Plan
("ESOP"). The non-cash expenses, unlike all other expenses incurred by the
Company, do not decrease the Company's tangible capital and enable the
Company to pursue increases in shareholder value through growth of earning
assets, increases in cash dividends and additional repurchases of the
Company's stock.
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
--------------------------------------------------- ---------------------------------
June 30, March 31, June 30, June 30, June 30,
1998 1998 1997 1998 1997
---------------- ---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
Net income $ 39,415 $ 33,586 $ 35,129 $ 73,001 $ 74,800
Non-recurring items, net of tax (1) --- 5,168 1,493 5,168 (3,446)
---------------- ---------------- ---------------- ---------------- ---------------
Core net income 39,415 38,754 36,622 78,169 71,354
Add back:
Goodwill expense 11,561 11,562 11,620 23,123 23,263
Employee stock plans expense 6,098 5,563 4,711 11,661 9,521
---------------- ---------------- ---------------- ---------------- ---------------
Core cash earnings $ 57,074 $ 55,879 $ 52,953 $ 112,953 $ 104,138
---------------- ---------------- ---------------- ---------------- ---------------
---------------- ---------------- ---------------- ---------------- ---------------
Core cash earnings per share (2) $ 0.78 $ 0.76 $ 0.65 $ 1.54 $ 1.25
---------------- ---------------- ---------------- ---------------- ---------------
---------------- ---------------- ---------------- ---------------- ---------------
</TABLE>
(1) Non-recurring items include branch sales, asset sales, restructuring
charge and non-recurring personnel expense.
(2) Based on the weighted average shares used to calculate diluted earnings
per share.
13
<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 on a taxable equivalent basis decreased by $2.0 million,
or 1.7%, in the second quarter of 1998, and by $3.9 million, or 1.6%, in the
first six months of 1998, versus the comparable periods in 1997. The decrease
primarily reflects additional expense resulting from the issuance of long term
debt and guaranteed preferred beneficial interest in Company's junior
subordinated debentures ("capital securities"), partially offset by a rise in
the average yield on interest-earning assets due to a reduction in the lower
yielding securities portfolio to fund the net growth in the higher yielding
loan portfolio.
Interest income on mortgages increased by $22.6 million, or 12.7%, to $200.2
million for the second quarter of 1998 and by $52.4 million, or 15.1%, to
$398.8 million in the first six months of 1998, from $177.6 million and $346.4
million, respectively, for the comparable 1997 periods. The increases reflect
average loan portfolio growth of $1.1 billion and $1.2 billion for the second
quarter and six months ended June 30, 1998, respectively, versus the
comparable 1997 periods. Interest income on securities and money market
investments fell by a combined $19.5 million, or 31.2%, to $43.0 million for
the second quarter of 1998 and by $43.7 million, or 33.3%, to $87.5 million in
the first six months of 1998, from $62.4 million and $131.2 million,
respectively, for the comparable 1997 periods. The decreases were primarily
the result of declines in the average securities and money market investments
portfolios of $1.1 billion and $1.3 billion for the second quarter and six
months ended June 30, 1998, respectively, versus the comparable 1997 periods.
The resulting shift in the Company's interest-earning asset mix into the
higher yielding loan portfolio primarily resulted in a 14 basis point increase
in the yield on average interest-earning assets in the second quarter of 1998
and a 20 basis point increase in the six months ended June 30, 1998, versus
the comparable 1997 periods.
Interest expense increased by $4.8 million, or 4.0%, to $125.8 million in the
second quarter of 1998, and by $12.6 million, or 5.3%, to $251.5 million in
the first six months of 1998, from $121.0 million and $238.9 million,
respectively, for the comparable 1997 periods. The rise is primarily the
result of increases in the average long term debt and capital securities
balance of $337.4 million in the second quarter of 1998 and $368.5 million for
the six months ended June 30, 1998, versus the comparable 1997 periods.
The average cost of funds increased 16 basis points in the second quarter of
1998 and 20 basis points in the first six months of 1998 from the comparable
1997 periods. The rise in the average cost of funds is primarily the result of
the higher average cost of long term debt and capital securities versus the
average cost of deposits and an increase in the average cost of time deposits
of 14 basis points in the second quarter of 1998 and 17 basis points in the
six months ended June 30, 1998 from the comparable 1997 periods. The Company
makes use of long term debt and capital securities as a means of managing its
liquidity and capital position.
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 quarters ended June 30, 1998 and 1997, 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
----------------------------------------------------------------------------------
June 30, 1998 June 30, 1997
-------------------------------------------- ------------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
--------------- ---------------- --------- ----------- ---------- --------
(Taxable-Equivalent Interest and Rates, in thousands) (1)
<S> <C> <C> <C> <C> <C> <C>
Assets:
Interest-earning assets:
Mortgage loans (2) $ 9,034,381 $ 200,164 8.86 % $ 7,973,607 $ 177,564 8.91%
Other loans (2) 29,452 579 7.86 26,027 564 8.67
Money market investments (3) 885,540 12,323 5.58 546,735 7,604 5.58
Securities (4) 2,073,318 30,635 5.91 3,559,060 54,834 6.17
Trading assets 1,662 23 5.55 1,950 32 6.58
Other interest-earning assets 120,077 2,205 7.37 111,217 2,582 9.31
----------- ----------- ----------- -----------
Total interest-earning assets 12,144,430 245,929 8.10 12,218,596 243,180 7.96
----------- -----------
Non-interest earning assets (5) 856,276 902,462
----------- -----------
Total assets $13,000,706 $13,121,058
----------- -----------
----------- -----------
Liabilities & Stockholders' Equity:
Interest-bearing liabilities:
Savings $ 1,671,787 10,180 2.42 % $ 1,863,335 12,297 2.65%
N.O.W 326,947 993 1.22 334,034 1,421 1.71
Money market and variable rate
savings 2,159,336 17,805 3.31 2,297,411 19,263 3.36
Term certificates of deposit 6,495,356 86,676 5.35 6,470,908 84,097 5.21
Mortgagors' escrow 149,867 355 0.95 93,638 258 1.11
Trading liabilities 1,201 15 5.01 4,911 73 5.96
Securities sold under agreements to 133,752 1,745 5.23 194,194 2,181 4.50
repurchase
Long term debt 199,844 3,469 6.94 -- -- --
Guaranteed preferred beneficial
interest in Company's junior
subordinated debentures 199,725 4,572 9.16 62,134 1,423 9.16
----------- ----------- ----------- -----------
Total interest-bearing
liabilities 11,337,815 125,810 4.45 11,320,565 121,013 4.29
----------- -----------
Other liabilities (6) 415,495 396,710
----------- -----------
Total liabilities 11,753,310 11,717,275
Preferred shares of subsidiary -- 3,626
Stockholders' equity 1,247,396 1,400,157
----------- -----------
Total liabilities, preferred
shares of subsidiary and
stockholders' equity $13,000,706 $13,121,058
----------- -----------
----------- -----------
Net interest income/interest rate
spread (7) $ 120,119 3.65% $ 122,167 3.67%
----------- ----------- ----------- ------
----------- ----------- ----------- ------
Net interest-earning assets/net interest
margin (8) $ 806,615 3.95% $ 898,031 3.99%
----------- ----------- ----------- ------
----------- ----------- ----------- ------
Ratio of interest-earning assets to
interest-bearing liabilities 1.07 x 1.08 x
----------- -----------
----------- -----------
</TABLE>
(1) The Company's incremental tax rate used to adjust tax-exempt interest to a
taxable-equivalent basis was 43.9% and 45.2% for the quarters ended June
30, 1998 and 1997.
(2) In computing the average balances and average yield on loans, non-accruing
loans and loans held for sale have been included.
(3) Includes interest-bearing deposits in other banks, federal funds sold and
securities purchased under agreements to resell.
(4) The average yield does not give effect to changes in fair value that are
reflected as a component of stockholders' equity.
(5) Includes goodwill, banking premises and equipment, net, net deferred tax
assets, accrued interest receivable, and other miscellaneous
non-interest-earning assets.
(6) Includes accrued interest payable, accounts payable, official checks drawn
against the Bank, accrued expenses, and other miscellaneous
non-interest-bearing obligations of the Company.
(7) Net interest rate spread represents the difference between the average
yield on interest-earning assets and the average cost of interest-bearing
liabilities.
(8) Net interest margin represents net interest income on a taxable-equivalent
basis, 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)
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, 1998 and 1997, 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>
Six Months Ended
-----------------------------------------------------------------------------------------
June 30, 1998 June 30, 1997
---------------------------------------------- -----------------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
----------- ----------- ----------- --------------- ---------------- -----------
(Taxable-Equivalent Interest and Rates, in thousands) (1)
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Interest-earning assets:
Mortgage loans (2) $ 8,982,579 $ 398,788 8.88 % $ 7,770,651 $ 346,436 8.92 %
Other loans (2) 30,704 1,284 8.36 26,916 1,126 8.37
Money market investments (3) 1,026,410 28,539 5.61 438,103 11,954 5.50
Securities (4) 1,992,886 58,946 5.92 3,894,855 119,273 6.15
Trading assets 2,631 74 5.67 2,207 71 6.49
Other interest-earning assets 119,186 4,802 8.12 107,376 4,886 9.18
----------- ----------- ------------- ----------
Total interest-earning assets 12,154,396 492,433 8.11 12,240,108 483,746 7.91
----------- ----------
Non-interest earning assets (5) 879,971 913,046
----------- -------------
Total assets $13,034,367 $ 13,153,154
----------- -------------
----------- -------------
Liabilities & Stockholders' Equity:
Interest-bearing liabilities:
Savings $ 1,693,454 20,512 2.44 % $ 1,869,911 24,535 2.65 %
N.O.W. 329,860 2,025 1.24 334,690 2,830 1.71
Money market and variable rate savings 2,162,753 35,725 3.33 2,333,399 38,886 3.36
Term certificates of deposit 6,500,168 173,068 5.37 6,489,221 167,222 5.20
Mortgagors' escrow 144,011 681 0.95 89,724 509 1.14
Trading liabilities 1,338 35 5.27 2,469 73 5.96
Securities sold under agreements to
repurchase 139,530 3,417 4.94 169,396 3,444 4.10
Long term debt 199,839 6,937 6.94 --- --- ---
Guaranteed preferred beneficial
interest in Company's junior
subordinated debentures 199,724 9,145 9.16 31,067 1,423 9.16
----------- ----------- ------------- ----------
Total interest-bearing liabilities 11,370,677 251,545 4.46 11,319,877 238,922 4.26
----------- ----------
Other liabilities (6) 396,507 399,474
----------- -------------
Total liabilities 11,767,184 11,719,351
Preferred shares of subsidiary --- 3,625
Stockholders' equity 1,267,183 1,430,178
----------- -------------
Total liabilities, preferred shares of
subsidiary and stockholders' equity $13,034,367 $ 13,153,154
----------- -------------
----------- -------------
Net interest income/interest rate $ 240,888 3.65 % $ 244,824 3.65 %
spread (7)
----------- ----------- ----------- ------
----------- ----------- ----------- ------
Net interest-earning assets/net
interest margin (8) $ 783,719 3.94 % $ 920,231 3.98 %
----------- ----------- ------------- ------
----------- ----------- ------------- ------
Interest-earning assets to
interest-bearing liabilities 1.07 x 1.08x
----------- ------
----------- ------
</TABLE>
(1) The Company's incremental tax rate used to adjust tax-exempt interest to a
taxable-equivalent basis was 44.2% and 44.9% for the six months ended June
30, 1998 and 1997.
(2) In computing the average balances and average yield on loans, non-accruing
loans and loans held for sale have been included.
(3) Includes interest-bearing deposits in other banks, federal funds sold and
securities purchased under agreements to resell.
(4) The average yield does not give effect to changes in fair value that are
reflected as a component of stockholders' equity.
(5) Includes goodwill, banking premises and equipment, net, net deferred tax
assets, accrued interest receivable, and other miscellaneous
non-interest-earning assets.
(6) Includes accrued interest payable, accounts payable, official checks drawn
against the Bank, accrued expenses, and other miscellaneous non-interest-
bearing obligations of the Company.
(7) Net interest rate spread represents the difference between the average
yield on interest-earning assets and the average cost of interest-bearing
liabilities.
(8) Net interest margin represents net interest income on a taxable-equivalent
basis, divided by average interest-earning assets.
16
<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>
Quarter Ended June 30, 1998 Six Months Ended June 30, 1998
Compared to Compared to
Quarter Ended June 30, 1997 Six Months Ended June 30, 1997
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) $ 23,506 $ (906) $ 22,600 $ 53,810 $ (1,458) $ 52,352
Other loans (1) 70 (55) 15 158 --- 158
Money market investments (2) 4,715 4 4,719 16,354 231 16,585
Securities (22,208) (1,991) (24,199) (56,387) (3,940) (60,327)
Trading assets (5) (4) (9) 13 (10) 3
Other interest-earning assets 194 (571) (377) 507 (591) (84)
----------- ------------ ----------- ----------- ------------ ----------
Total interest earned on assets 6,272 (3,523) 2,749 14,455 (5,768) 8,687
----------- ------------ ----------- ----------- ------------ ----------
Interest-bearing liabilities:
Savings (1,208) (909) (2,117) (2,217) (1,806) (4,023)
N.O.W. (29) (399) (428) (40) (765) (805)
Money market and variable rate savings (1,143) (315) (1,458) (2,822) (339) (3,161)
Term certificates of deposit 653 1,926 2,579 1,066 4,780 5,846
Mortgagors' escrow 137 (40) 97 268 (96) 172
Trading liabilities (58) -- (58) (31) (7) (38)
Securities sold under agreements to
repurchase (751) 315 (436) (664) 637 (27)
Long term debt 3,469 -- 3,469 6,937 -- 6,937
Guaranteed preferred beneficial interest in
Company's junior subordinated debentures 3,150 (1) 3,149 7,722 -- 7,722
----------- ------------ ----------- ----------- ------------ ----------
Total interest paid on liabilities 4,220 577 4,797 10,219 2,404 12,623
----------- ------------ ----------- ----------- ------------ ----------
Net change in net interest income $ 2,052 $ (4,100) $ (2,048) $ 4,236 $ (8,172) $ (3,936)
---------- ---------- ---------- ---------- -------- ---------
---------- ---------- ---------- ---------- -------- ---------
</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 interest-bearing deposits in other banks, federal funds sold and
securities purchased under agreements to resell.
17
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
Provision for Possible Loan Losses
The provision for possible loan losses decreased by $1.3 million, or 28.7%,
to $3.2 million for the second quarter of 1998, and by $2.3 million, or
24.1%, to $7.2 million in the first six months of 1998, from $4.4 million and
$9.5 million, respectively, for the comparable 1997 periods. The provision
exceeded net charge-offs by $1.0 million for the second quarter of 1998 and
by $2.0 million for the first six months of 1998. The resulting increase to
the allowance for loan losses is made in recognition of the growth in the
loan portfolio.
Non-Interest Income
Non-interest income increased by $1.4 million, or 12.6%, to $12.9 million for
the second quarter of 1998 and decreased by $5.0 million, or 16.3%, to $25.7
million in the first six months of 1998 from $11.5 million and $30.7 million,
respectively, in the comparable 1997 periods. The six months ended June 30,
1997 results include a $5.9 million gain on the sale of two banking offices
and a $2.4 million gain on the sale of bank owned properties. Excluding these
non-recurring gains, non-interest income increased $3.3 million, or 14.7%,
for the 1998 period compared to the 1997 period.
Banking fees and commissions rose $0.9 million, or 16.3%, to $6.7 million for
the second quarter of 1998 and by $2.5 million, or 23.3%, to $13.1 million in
the first six months of 1998 from $5.7 million and $10.6 million,
respectively, in the comparable 1997 periods. The increases reflect a rise in
fee income generated from the further development of services and products,
such as the sales of annuities, mutual funds and credit cards.
Non-Interest Expense
Non-interest expense decreased by $3.7 million, or 5.5%, to $64.8 million in
the current quarter, and increased by $2.0 million, or 1.4 %, to $138.8
million in the first six months of 1998 as compared to $68.5 million and
$136.8 million for the comparable 1997 periods. The results from the first
six months of 1998 include a non-recurring charge of $8.3 million in
personnel expense related to the retirement of senior executives. The results
from the second quarter and first six 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 these non-recurring charges,
non-interest expense fell $1.2 million, or 1.9%, for the second quarter of
1998, and $3.9 million, or 2.9%, in the first six months of 1998, as compared
to the comparable 1997 periods.
The Company's emphasis on maintaining tight expense controls resulted in
reductions in advertising expense and other administrative expense and
essentially flat salary expense. Advertising expense fell by $0.6 million, or
24.7%, in the second quarter of 1998 and by $1.1 million, or 24.8%, in the
first six months of 1998 versus the comparable periods in 1997. Other
administrative expense remained flat at $10.5 million in the second quarter
of 1998 compared to $10.4 million in the second quarter of 1997 but fell by
$1.6 million, or 7.0%, in the first six months of 1998 as compared to the
comparable 1997 period. Salary expense remained unchanged at $22.6 million
for both the second quarter of 1998 and 1997, and increased by $0.4 million,
or 1.0%, in the first six months of 1998 versus the comparable 1997 period.
18
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
ORE income, net, increased by $1.1 million in the second quarter of 1998 and
by $2.2 million in the first six months of 1998 versus the comparable 1997
periods. The increase reflects a reduction in ORE operating expenses due to a
decline in the portfolio of foreclosed properties and a rise in the gains
recognized on the sales of ORE properties in the 1998 periods versus the 1997
periods.
ESOP and stock plans expense rose $1.4 million, or 29.4%, in the second
quarter of 1998 and $2.1 million, or 22.5%, in the first six months of 1998
primarily as a result of a higher average market price of the Company's stock
during the 1998 periods versus the 1997 periods.
Income Tax Expense
Income tax expense increased by $0.7 million, or 3.2%, to $24.4 million in
the current quarter and decreased by $5.4 million, or 10.7%, to $45.0 million
in the first six months of 1998, from $23.7 million and $50.4 million for the
comparable periods of 1997. The rise in the current quarter compared with
1997 is primarily due to a $5.0 million, or 8.6%, increase in income before
income taxes partially offset by a decrease in the effective tax rate from
40.25% in the 1997 quarter to 38.25% in the 1998 quarter. The decrease in the
first six months of 1998 compared with 1997 is primarily due to a $7.2
million, or 5.7%, decline in income before income taxes and a decrease in the
effective tax rate from 40.25% in the 1997 period to 38.14% in the 1998
period.
Financial Condition
Total assets were $12.85 billion at June 30, 1998 compared to $13.08 billion
at December 31, 1997. Net loans receivable held for investment rose $223.0
million to $9.02 billion at June 30, 1998 from $8.80 billion at December 31,
1997. The securities and money market portfolio decreased $404.0 million to
$2.67 billion at June 30, 1998 from $3.07 billion at December 31, 1997,
primarily as a result of the use of proceeds from the maturities and sales of
securities to fund loan originations and repurchases of the Company's stock.
19
<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 June 30,
1998. 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
Three More than More than one year
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 $ 1,008 $ 713 $ 1,119 $ 1,895 $ 4,287 $ 9,022
Money market investments (1) 778 -- -- -- -- 778
Securities held to maturity 2 -- -- -- 2 4
Securities available for sale 438 246 113 646 443 1,886
Other interest earning assets 119 -- -- -- -- 119
------------ ------------- ----------- ----------- ----------- ---------
Total interest earning assets 2,345 959 1,232 2,541 4,732 11,809
------------ ------------- ----------- ----------- ----------- ---------
Cash and due from banks 111 -- -- -- -- 111
Goodwill 10 10 21 84 429 554
Other non interest earning
assets 380 -- -- -- -- 380
------------ ------------- ----------- ----------- ----------- ---------
Total assets $ 2,846 $ 969 $ 1,253 $ 2,625 $ 5,161 $ 12,854
------------ ------------- ----------- ----------- ----------- ---------
------------ ------------- ----------- ----------- ----------- ---------
Term certificates of deposit $ 1,608 $ 1,225 $ 1,984 $ 1,473 $ 216 $ 6,506
Core deposits 256 256 503 1,836 1,458 4,309
------------ ------------- ----------- ----------- ----------- ---------
Total deposits 1,864 1,481 2,487 3,309 1,674 10,815
------------ ------------- ----------- ----------- ----------- ---------
Mortgagors' escrow 8 8 15 62 45 138
Long term debt -- -- -- -- 200 200
Guaranteed preferred beneficial
interest in Company's junior
subordinated debentures -- -- -- -- 200 200
Other liabilities 225 -- -- -- -- 225
Stockholders' equity -- -- -- -- 1,276 1,276
------------ ------------- ----------- ----------- ----------- ---------
Total liabilities and
stockholders' equity $ 2,097 $ 1,489 $ 2,502 $ 3,371 $ 3,395 $ 12,854
------------ ------------- ----------- ----------- ----------- ---------
------------ ------------- ----------- ----------- ----------- ---------
Off balance sheet financial
instruments $ 800 $ -- $ -- $ (300) $ (500) $ --
------------ ------------- ----------- ----------- ----------- ---------
------------ ------------- ----------- ----------- ----------- ---------
Interest rate sensitivity gap $ 1,549 $ (520) $ (1,249) $ (1,046) $ 1,266
Cumulative gap $ 1,549 $ 1,029 $ (220) $ (1,266)
Interest rate sensitivity
gap as a percentage of 12.05% (4.04)% (9.72)% (8.14)% 9.85%
total assets
Cumulative gap as a percentage
of total assets 12.05% 8.01% (1.71)% (9.85)%
</TABLE>
(1) Consists of interest-bearing deposits in other banks, federal funds sold
and securities purchased under agreements to resell.
20
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
Market Risk Management
The Company's primary market risk exposure is limited solely to interest rate
risk.
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.
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 Chief Operating Officer, the
Treasurer 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 counterparties 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.
The Company's income is affected by changes in the level of market interest
rates based upon mismatches between the repricing of its assets and
liabilities. One measure of interest rate sensitivity is provided by the
accompanying net gap analysis, which organizes assets and liabilities
according to the time period in which they reprice or mature. For many of the
Company's assets and liabilities, the maturity or repricing date is not
determinable with certainty. For example, the Company's mortgage loans and
its mortgage-backed securities can be prepaid before contractual
amortization and/or maturity. Also, repricing of the Company's non-time
deposits is subject to management's evaluation of the existing interest rate
environment, current funding and liquidity needs, and other factors
influencing the market competition for such deposits. The amounts in the
accompanying schedule reflect management's judgment of the most likely
repricing schedule; actual results could vary from those detailed herein.
The difference between assets and liabilities repricing in a given period is
one approximate measure of interest rate sensitivity. More assets than
liabilities repricing in a period (a positive gap) implies earnings will rise
as interest rates rise, and decline as interest rates decline. More
liabilities repricing than assets implies declining income as rates rise.
21
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
The use of interest rate instruments such as interest rate swaps is
integrated into the Company's interest rate risk management. The Bank enters
into interest rate swap contracts in managing the interest rate risk
associated with its fixed-rate mortgages and variable rate securities in its
investment portfolio. The notional amounts of these contracts approximate
$800 million and $475 million at June 30, 1998 and December 31, 1997,
respectively, and are not reflected in the Company's balance sheet. These
contracts have an average term of approximately four years. Under the terms
of these contracts, the Bank paid an average fixed rate of 6.08% and received
an average variable rate of 5.68% on the swaps hedging the fixed rate loan
portfolio. The notional amounts of derivatives do not represent amounts
exchanged by the parties and, thus, are not a measure of the Company's
exposure through its use of derivatives. The amounts exchanged are determined
by reference to the notional amounts and the other terms of the derivatives.
These instruments are included in the interest rate sensitivity table for
purposes of analyzing interest rate risk. However, these relationships do not
consider the impact that rate movements might have on other components of the
Bank's risk profile; for example, an increase in interest rates, while
implying that earnings will rise in a positive gap period, might also result
in higher credit or default risk due to a higher probability of borrowers
being unable to pay the contractual payments on loans. Likewise, a decrease
in rates might result in an increase in the risk that funds received from
loan prepayments cannot be reinvested at rates and spreads earned on earlier
investments and loan originations.
As of June 30, 1998, the cumulative volume of liabilities maturing or
repricing within one year exceeded assets by $220.3 million, or 1.71% of
assets, implying modest current-year income sensitivity to movements in the
level of interest rates.
The static gap analysis is an incomplete representation of interest rate risk
for several reasons. It fails to account for changes in prepayment speeds on
the Company's mortgage loan and mortgage backed securities portfolios. The
behavior of deposit balances will vary with changes in the general level of
interest rates and management's pricing strategies. The gap analysis does not
provide a clear presentation of the risks to income arising from options
embedded in the balance sheet.
Accordingly, ALCO makes extensive use of an earnings simulation model in the
formulation of its market risk management strategy. The model gives effect to
management assumptions concerning the repricing of assets, liabilities and
off-balance sheet financial instruments, as well as business volumes, under a
variety of hypothetical interest rate scenarios. These hypothetical scenarios
incorporate interest rate increases and decreases of 200 basis points. Actual
interest rate changes during the past three years have fallen within this
range and management expects that any changes over the next year will not
exceed this range.
Management's assumptions, particularly those concerning prepayments in the
loan portfolio and pricing of the Company's deposit products, are based on
frequent historical analyses of the behavior patterns of the Company's
customers in response to changes in both general market interest rates and
rates offered by GreenPoint. These assumptions represent management's
estimate of the likely effect of changes in interest rates and do not
necessarily reflect actual results. The earnings simulation model takes into
account interest rate caps and floors, call options and balloon payments
embedded in certain mortgage loans, and mortgage backed securities, in
determining the earnings at risk.
At June 30, 1998, based on this model, the Company's potential earnings at
risk to a gradual, parallel 200 basis point rise in market interest rates
over the next 12 months on instruments held for other than trading purposes
was approximately 3.7% of projected 12 month earnings.
22
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
Non-Performing Assets
The Company's asset quality improved during the six months ended June 30,
1998, as non-performing assets decreased by 13.8%. The ratio of
non-performing loans to total loans fell to 3.39% at June 30, 1998 from 3.97%
at December 31, 1997 while the ratio of non-performing assets to total assets
fell to 2.54% at June 30, 1998 from 2.90% at December 31, 1997.
Non-performing assets, net of related specific reserves, were as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------------------ ------------------
(In thousands)
<S> <C> <C>
Mortgage loans secured by:
Residential one-to-four family $ 239,031 $ 271,029
Residential multi-family 40,582 45,985
Commercial property 30,399 37,977
Other loans 152 95
------------------ ------------------
Total non-performing loans (1) 310,164 355,086
------------------ ------------------
Total other real estate owned, net 16,482 24,036
------------------ ------------------
Total non-performing assets $ 326,646 $ 379,122
------------------ ------------------
------------------ ------------------
</TABLE>
(1) Includes $13.2 million and $24.3 million of non-accrual mortgage loans
under 90 days past due at June 30, 1998 and December 31, 1997,
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,
---------------------------- -----------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance beginning of period $ 110,000 $ 106,000 $ 109,000 $ 105,000
Provision charged to income 3,170 4,444 7,182 9,461
Charge-offs (2,225) (3,562) (5,423) (7,715)
Recoveries 55 118 241 254
----------- ----------- ----------- -----------
Balance end of period $ 111,000 $ 107,000 $ 111,000 $ 107,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
23
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
Capital Ratios
The Company's ratio of period-end stockholders' equity to ending total assets
at June 30, 1998 was 9.92% compared to 9.70% at December 31, 1997.
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.
Management believes, as of June 30, 1998, that the Company and the Bank meet
all capital adequacy requirements to which it is subject.
24
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
As of June 30, 1998, 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
- -----------------------------------------------------------------------------------------------------------------------
(In millions) Amount Ratio Amount Ratio
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
As of June 30, 1998
Total Capital
(to Risk Weighted Assets):
Company $ 999.4 15.96% $ 500.8 8.00%
Bank 988.1 15.79% 500.5 8.00%
Tier 1 Capital
(to Risk Weighted Assets):
Company $ 920.8 14.71% $ 250.4 4.00%
Bank 909.5 14.54% 250.3 4.00%
Tier 1 Capital
(to Average Assets):
Company $ 920.8 7.40% $ 497.8 4.00%
Bank 909.5 7.32% 497.3 4.00%
</TABLE>
<TABLE>
<CAPTION>
Required For Capital
Actual Adequacy Purposes
- -----------------------------------------------------------------------------------------------------------------------
(In millions) Amount Ratio Amount Ratio
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
As of December 31, 1997
Total Capital
(to Risk Weighted Assets):
Company $ 974.1 15.54% $ 501.3 8.00%
Bank 959.6 15.34% 500.6 8.00%
Tier 1 Capital
(to Risk Weighted Assets):
Company $ 895.8 14.29% $ 250.6 4.00%
Bank 881.4 14.09% 250.3 4.00%
Tier 1 Capital
(to Average Assets):
Company $ 895.8 7.19% $ 498.5 4.00%
Bank 881.4 7.08% 497.7 4.00%
</TABLE>
25
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
Impact of the Year 2000
The Year 2000 issue is the result of many computer programs that were
written using two digits rather than four to define an applicable year.
Any of the computer programs used by the Company, its suppliers or
outside service providers that have date-sensitive software may recognize
a date using "00" as the year 1900 rather than the year 2000. This could
result in a system failure or miscalculations, causing disruption of
operations, including, among other things, a temporary inability to
process transactions or engage in normal business activities.
The Company has determined that it will be required to modify or replace
portions of its software so that its computer system will properly utilize
dates beyond December 31, 1999. The Company presently believes that, with
modifications to existing software and conversions to new software, the
Year 2000 issue will be mitigated. However, if such modifications and
conversions are not made, or are not completed on a timely basis, the Year
2000 issue could have a material impact on the operations of the Company.
The Company has also initiated formal communications with all of its
suppliers and service providers (including hardware, software, processing,
voice and data communication, facility components and services) to determine
the extent to which the Company is vulnerable to those third parties' failure
to remediate their respective Year 2000 issue. The Company is working with
each of these third parties to facilitate remediation of the Year 2000 issue
and will actively participate in testing of each system to ensure Year 2000
compliance. However, there can be no guarantee that the systems of third
parties, upon which the Company relies, will be timely remediated, or that a
failure to remediate by a third party would not have a materially adverse
effect on the Company. The Company will utilize both internal and external
resources for the Year 2000 project.
The Company's total Year 2000 project cost includes estimated costs and time
associated with the impact of a third party's Year 2000 issue, together with
the costs of outside consultants and the purchase of replacement programs.
The total cost of the Year 2000 project is estimated to be immaterial to the
Company's financial statements. Such costs will be funded through operating
cash flows and expensed as incurred. The current status and costs of the
project are based on management's best estimates, which were derived
utilizing numerous assumptions of future events, including the continued
availability of certain resources, third party modification plans and other
factors. However, there can be no guarantee that these estimates will be
achieved and actual results could differ materially from those plans.
Specific factors that might cause such material differences include, but are
not limited to, the availability and cost of personnel trained in this area,
the ability to locate and correct all relevant computer codes, the failure of
outside third parties to remediate their Year 2000 issue on a timely basis,
and similar uncertainties.
26
<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 seventeen unrelated legal complaints which assert
that infant plaintiffs sustained personal injuries from the ingestion of lead
based paint, chips or dust. Additionally there are ten 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 and results of operations.
The Bank is a defendant in a recently filed 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 and results of operations of
the Company.
27
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Item 4 - Submission of Matters to a Vote of Security Holders
At the Company's annual meeting of shareholders held on May 1, 1998,
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:
<TABLE>
<CAPTION>
For Withheld
---------- --------
<S> <C> <C>
Bharat B. Bhatt 77,362,496 760,484
Robert M. McLane 77,553,283 569,697
Edward C. Schmults 77,623,748 499,232
Wilfred O. Uhl 77,569,608 553,372
Robert F. Vizza 77,622,272 500,708
</TABLE>
The following sets forth the names of Directors continuing in office
after the annual meeting:
<TABLE>
<CAPTION>
<S> <C>
Dan F. Huebner Charles B. McQuade
William M. Jackson Alvin N. Puryear
Thomas S. Johnson Robert P. Quinn
Susan J. Kropf Jules Zimmerman
</TABLE>
2. Ratification of the appointment of PricewaterhouseCoopers LLP as
the Company's independent accountants for the year ending
December 31, 1998.
<TABLE>
<CAPTION>
<S> <C>
For: 77,496,040
Against: 360,501
Abstain: 266,439
</TABLE>
28
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Item 6 - Exhibits and Reports on Form 8-K
<TABLE>
<CAPTION>
<S> <C>
(a) Exhibits
Exhibit
Number
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
(b) Reports on Form 8-K
On April 21, 1998, GreenPoint Financial Corp.
filed a current report on Form 8-K reporting the
execution of a Stock Purchase Agreement, dated as of
April 11, 1998, between GreenPoint Bank and
BankAmerica Corporation ("BankAmerica"), providing
for the purchase by the Bank of the manufactured
housing lending business of BankAmerica Housing
Services, a division of Bank of America, FSB, a
wholly-owned subsidiary of BankAmerica.
On July 6, 1998, GreenPoint Financial Corp. filed a
current report on Form 8-K reporting anticipated
earnings for the quarter ended June 30, 1998 and the
intent to release full earnings information for the
quarter on July 10, 1998.
On July 10, 1998, GreenPoint Financial Corp. filed a
current report on Form 8-K reporting the Company's
earnings for the quarter ended June 30, 1998.
</TABLE>
29
<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/ Jeffrey R. Leeds
----------------------------------------
Jeffrey R. Leeds
Executive Vice President, Finance
Dated August 11, 1998
30
<PAGE>
Exhibit 11.1
Statement Regarding Computation of Per Share Earnings
(In millions, except share and per share amounts)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
------------------------------------ -------------------------------------
1998 1997 1998 1997
------------ ------------- -------------- -------------
<S> <C> <C> <C> <C>
Net income $ 39.4 $ 35.1 $ 73.0 $ 74.8
Weighted average number of common shares
outstanding during each year - basic 70.2 77.8 70.6 79.1
Weighted average number of common shares
and common stock equivalents outstanding during
each year - diluted 73.1 81.9 73.5 83.2
------------- ------------- ------------- -------------
Basic earnings per share $ 0.56 $ 0.45 $ 1.03 $ 0.95
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Diluted earnings per share $ 0.54 $ 0.43 $ 0.99 $ 0.90
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
<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
-----------------------------------------------------------------
June 30, March 31, December 31, September 30, June 30,
1998 1998 1997 1997 1997
--------- --------- ------------ ------------- ---------
<S> <C> <C> <C> <C> <C>
Income before income taxes $ 63.8 $ 54.2 $ 58.9 $ 57.9 $ 58.8
Combined fixed charges and preferred stock dividends:
Interest expense on deposits 116.0 116.0 119.5 119.2 117.3
Interest expense on long-term debt 3.5 3.4 3.4 3.0 --
Interest expense on guaranteed preferred beneficial
interest in Company's junior subordinated debentures 4.5 4.6 4.8 4.5 1.4
Appropriate portion (1/3) of rent expense 1.1 1.0 0.2 1.1 1.1
Preferred stock dividend requirements -- -- 0.1 0.1 0.1
--------- -------- --------- -------- ----------
Total combined fixed charges and
preferred stock dividends $ 125.1 $125.0 $ 128.0 $127.9 $ 119.9
--------- -------- --------- -------- ----------
--------- -------- --------- -------- ----------
Total combined fixed charges and
preferred stock dividends (excluding interest
expense on deposits) $ 9.1 $ 9.0 $ 8.5 $ 8.7 $ 2.6
--------- -------- --------- -------- ----------
--------- -------- --------- -------- ----------
Earnings before income taxes and combined fixed
charges and preferred stock dividends $ 188.9 $179.2 $ 186.9 $185.8 $ 178.7
--------- -------- --------- -------- ----------
--------- -------- --------- -------- ----------
Ratio of earnings to combined fixed charges and
preferred stock dividends (including interest expense
on deposits) 1.51x 1.43x 1.46x 1.45x 1.49x
--------- -------- --------- -------- ----------
--------- -------- --------- -------- ----------
Ratio of earnings to combined fixed charges and
preferred stock dividends (excluding interest expense
on deposits) 8.01x 7.02x 7.90x 7.59x 23.09x
--------- -------- --------- -------- ----------
--------- -------- --------- -------- ----------
<CAPTION>
Six Months Ended
----------------
June 30, June 30,
1998 1997
-------- --------
<S> <C> <C>
Income before income taxes $118.0 $ 125.2
Combined fixed charges and preferred stock dividends:
Interest expense on deposits 232.0 234.0
Interest expense on long-term debt 6.9 --
Interest expense on guaranteed preferred beneficial
interest in Company's junior subordinated debentures 9.1 1.4
Appropriate portion (1/3) of rent expense 2.1 2.2
Preferred stock dividend requirements -- 0.2
--------- ----------
Total combined fixed charges and
preferred stock dividends $250.1 $ 237.8
--------- ----------
--------- ----------
Total combined fixed charges and
preferred stock dividends (excluding interest
expense on deposits) $18.1 $ 3.8
--------- ----------
--------- ----------
Earnings before income taxes and combined fixed
charges and preferred stock dividends $368.1 $ 363.0
--------- ----------
--------- ----------
Ratio of earnings to combined fixed charges and
preferred stock dividends (including interest expense
on deposits) 1.47x 1.53x
--------- ----------
--------- ----------
Ratio of earnings to combined fixed charges and
preferred stock dividends (excluding interest expense
on deposits) 7.52x 33.34x
--------- ----------
--------- ----------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 108,866
<INT-BEARING-DEPOSITS> 1,720
<FED-FUNDS-SOLD> 778,119
<TRADING-ASSETS> 74
<INVESTMENTS-HELD-FOR-SALE> 1,885,860
<INVESTMENTS-CARRYING> 3,774
<INVESTMENTS-MARKET> 3,787
<LOANS> 9,133,461
<ALLOWANCE> (111,000)
<TOTAL-ASSETS> 12,853,902
<DEPOSITS> 10,815,409
<SHORT-TERM> 0
<LIABILITIES-OTHER> 363,272
<LONG-TERM> 399,576
0
0
<COMMON> 1,103
<OTHER-SE> 1,274,542
<TOTAL-LIABILITIES-AND-EQUITY> 12,853,902
<INTEREST-LOAN> 400,073
<INTEREST-INVEST> 86,668
<INTEREST-OTHER> 3,061
<INTEREST-TOTAL> 489,802
<INTEREST-DEPOSIT> 232,011
<INTEREST-EXPENSE> 251,545
<INTEREST-INCOME-NET> 238,257
<LOAN-LOSSES> (7,182)
<SECURITIES-GAINS> 1,422
<EXPENSE-OTHER> 138,750
<INCOME-PRETAX> 118,001
<INCOME-PRE-EXTRAORDINARY> 73,001
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 73,001
<EPS-PRIMARY> 1.03
<EPS-DILUTED> 0.99
<YIELD-ACTUAL> 3.94
<LOANS-NON> 310,164
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> (109,000)
<CHARGE-OFFS> (5,423)
<RECOVERIES> 241
<ALLOWANCE-CLOSE> (111,000)
<ALLOWANCE-DOMESTIC> (111,000)
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
