UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 10-Q
|X| Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
----------
For the Quarter Ended
March 31, 1999
OR
| | Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
0-22516
Securities and Exchange Commission File Number
GreenPoint Financial Corp.
(Exact name of registrant as specified in its charter)
Delaware 06-1379001
(State or other jurisdiction of (I.R.S. employer identification number)
incorporation or organization)
90 Park Avenue, New York, New York 10016
(Address of principal executive offices) (Zip Code)
(212) 834-1711 Not Applicable
(Registrant's telephone number, (Former name, former address and former
including area code) fiscal year if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
|X| Yes | | No
As of May 11, 1999 there were 109,060,000 shares of common stock
outstanding.
<PAGE>
GreenPoint Financial Corp.
FORM 10-Q
For the Quarter Ended
March 31, 1999
INDEX
PART I - FINANCIAL INFORMATION Page
----
Item 1 - Financial Statements
Consolidated Statements of Financial Condition (unaudited) as of
March 31, 1999 and December 31, 1998 3
Consolidated Statements of Income (unaudited) for the quarters
ended March 31, 1999 and 1998 4
Consolidated Statements of Comprehensive Income (unaudited) for
the quarters ended March 31, 1999 and 1998 5
Consolidated Statements of Changes in Stockholders' Equity
(unaudited) for the quarters ended March 31, 1999 and 1998 6
Consolidated Statements of Cash Flows (unaudited) for the quarters
ended March 31, 1999 and 1998 7
Notes to the Unaudited Consolidated Financial Statements 8
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations 15
Item 3 - Quantitative and Qualitative Disclosure about Market Risk 27
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 30
Item 6 - Exhibits and Reports on Form 8-K 31
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------- -------------
ASSETS (In thousands, except share amounts)
<S> <C> <C>
Cash and due from banks $ 122,699 $ 164,197
Money market investments 1,327,343 924,175
Loans receivable held for sale 1,532,123 1,578,062
Securities available for sale 1,348,893 1,337,584
Retained interests in securitizations 52,407 67,327
Securities held to maturity (fair value of $3,012
and $3,287, respectively) 3,000 3,274
Loans receivable held for investment:
Mortgage loans 9,261,440 9,273,340
Other loans 109,272 127,238
Deferred loan fees and unearned discount (9,454) (14,278)
Allowance for possible loan losses (113,000) (113,000)
------------- ------------
Loans receivable held for investment, net 9,248,258 9,273,300
------------- ------------
Other interest-earning assets 119,729 118,284
Servicing assets 157,002 145,927
Accrued interest receivable, net 80,033 87,019
Banking premises and equipment, net 138,861 140,268
Deferred income taxes, net 39,583 47,400
Goodwill 1,000,645 1,014,349
Other assets 95,352 114,783
------------- ------------
Total assets $ 15,265,928 $ 15,015,949
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
N.O.W. and checking $ 522,828 $ 539,890
Savings 1,513,701 1,551,879
Variable rate savings 1,874,268 1,804,491
Money market 514,869 524,270
Term certificates of deposit 6,983,318 6,752,585
------------- ------------
Total deposits 11,408,984 11,173,115
------------- ------------
Mortgagors' escrow 122,724 128,091
Securities sold under agreements to repurchase 250,834 384,908
Notes payable 693,285 608,000
Long term debt 199,878 199,868
Guaranteed preferred beneficial interest in Company's junior subordinated
debentures 199,733 199,731
Accrued income taxes payable 45,458 56,958
Other liabilities 347,882 342,702
------------- ------------
Total liabilities 13,268,778 13,093,373
------------- ------------
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 855,959 1,278,795
Unallocated Employee Stock Ownership Plan (ESOP) shares (108,850) (110,101)
Unearned stock plans shares (4,166) (4,459)
Retained earnings 1,290,368 1,273,264
Accumulated other comprehensive income, net 1,970 4,699
Treasury stock, at cost (1,352,490 and 15,618,745 shares, respectively) (39,234) (520,725)
------------- ------------
Total stockholders' equity 1,997,150 1,922,576
------------- ------------
Total liabilities and stockholders' equity $ 15,265,928 $ 15,015,949
============= ============
</TABLE>
(See accompanying notes to the unaudited consolidated financial statements)
3
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Quarter Ended
March 31,
--------------------------------------
1999 1998
----------------- ------------------
<S> <C> <C>
Interest income: (In thousands, except per share amounts)
Mortgage loans held for investment $196,351 $198,661
Loans held for sale 30,786 16,067
Money market investments 11,306 16,210
Securities 19,628 27,872
Other 8,289 2,937
-------- --------
Total interest income 266,360 261,747
-------- --------
Interest expense:
Deposits 115,925 116,002
Trading liabilities 20 20
Securities sold under agreements to repurchase 6,569 10,870
Notes payable 7,398 2,429
Long-term debt 8,043 8,162
-------- --------
Total interest expense 137,955 137,483
-------- --------
Net interest income 128,405 124,264
Provision for possible loan losses (2,797) (4,012)
-------- --------
Net interest income after provision for possible loan losses 125,608 120,252
-------- --------
Non-interest income:
Income from fees and commissions:
Mortgage loan operations fee income 5,139 3,497
Loan servicing fees 22,776 1,117
Banking services fees and commissions 6,969 6,406
Other fee income 2,238 278
Net gain on securities 608 1,135
Net gain on sales of loans 57,988 30,858
Net unrealized loss in valuation of retained interests in securitizations -- (222)
Gain on sale of mortgage servicing rights -- 130
-------- --------
Total non-interest income 95,718 43,199
-------- --------
Non-interest expense:
Salaries and benefits 54,986 34,539
Employee Stock Ownership and stock plans expense 5,256 5,563
Net expense of premises and equipment 18,372 13,971
Advertising 1,725 1,761
Federal deposit insurance premiums 657 681
Charitable and educational foundation 1,875 1,875
Other administrative expenses 45,763 14,702
Other real estate owned operating income, net (1,948) (1,569)
Goodwill amortization 19,958 11,562
Restructuring charge 6,000 --
Non-recurring personnel expense -- 8,335
-------- --------
Total non-interest expense 152,644 91,420
-------- --------
Income before income taxes 68,682 72,031
Income taxes related to earnings 33,654 30,013
Income taxes related to S corporation conversion -- 18,488
-------- --------
Net income $ 35,028 $ 23,530
======== ========
Basic earnings per share $ 0.37 $ 0.29
======== ========
Diluted earnings per share $ 0.36 $ 0.28
======== ========
</TABLE>
(See accompanying notes to the unaudited consolidated financial statements)
4
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)
Quarter Ended
March 31,
-------------------
1999 1998
-------- --------
Net income $ 35,028 $ 23,530
-------- --------
Other comprehensive income, before tax:
Unrealized gain (loss) on securities:
Unrealized holding gain (loss) arising during period (4,124) 3,093
Less: reclassification adjustment for gains
included in net income 608 1,135
-------- --------
Other comprehensive income, before tax (4,732) 1,958
Income tax expense related to items of other
comprehensive income 2,003 (886)
-------- --------
Other comprehensive income, net of tax (2,729) 1,072
-------- --------
Total comprehensive income, net of tax $ 32,299 $ 24,602
======== ========
(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>
Quarter Ended
March 31,
-----------------------
1999 1998
---------- ----------
<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 1,278,795 830,561
Reissuance of treasury stock (428,380) 356
Issuance of common stock -- 62,453
Constructive recapitalization of S corporation undistributed earnings -- 30,583
Amortization of ESOP shares committed to be released 3,676 3,962
Amortization of stock plans shares 36 926
Tax benefit for vested stock plans shares 1,832 --
---------- ----------
Balance at end of period 855,959 928,841
---------- ----------
Unallocated ESOP shares
Balance at beginning of period (110,101) (114,939)
Amortization of ESOP shares committed to be released 1,251 1,210
---------- ----------
Balance at end of period (108,850) (113,729)
---------- ----------
Unearned stock plans shares
Balance at beginning of period (4,459) (7,019)
Amortization of stock plans shares 293 1,681
---------- ----------
Balance at end of period (4,166) (5,338)
---------- ----------
Retained earnings
Balance at beginning of period 1,273,264 1,208,818
Net income 35,028 23,530
Constructive recapitalization of S corporation undistributed earnings -- (30,583)
Dividends declared (17,924) (11,368)
Accrued distribution to S corporation stockholders -- (12,520)
Reissuance of treasury stock -- (2,384)
---------- ----------
Balance at end of period 1,290,368 1,175,493
---------- ----------
Accumulated other comprehensive income, net
Balance at beginning of period 4,699 (3,555)
Net change in accumulated other comprehensive income, net (2,729) 1,072
---------- ----------
Balance at end of period 1,970 (2,483)
---------- ----------
Treasury stock, at cost
Balance at beginning of period (520,725) (578,835)
Reissuance of treasury stock 481,491 8,247
Purchase of treasury stock -- (27,238)
---------- ----------
Balance at end of period (39,234) (597,826)
---------- ----------
Total stockholders' equity $1,997,150 $1,386,061
========== ==========
</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>
Quarter Ended
March 31,
-------------------------
1999 1998
-------------------------
(In thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 35,028 $ 23,530
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for possible loan losses 2,797 4,012
Depreciation and amortization of premises and equipment 5,381 4,808
Goodwill amortization 19,958 11,562
Accretion of discount on securities, net of premium amortization (2,554) (1,575)
Net change in trading assets -- 24,951
Net change in retained interests in securitizations 14,887 (16,304)
Net change in trading liabilities -- (10,592)
ESOP and stock plans expense 5,256 5,563
Non-recurring personnel expense -- 8,335
Gain on securities transactions (608) (1,135)
Net change in loans held for sale 99,041 (80,633)
Net gain on loans held for sale (57,988) (30,858)
Net gain on sales of other real estate owned (2,240) (2,491)
Origination of mortgage servicing rights retained (25,918) (2,325)
Amortization and impairment of originated mortgage servicing rights 14,843 3,382
Deferred income taxes 9,820 30,244
Decrease (increase) in other assets 16,378 (10,948)
Increase in other liabilities 5,937 58,393
Other, net (9,137) (1,097)
---------- ----------
Net cash provided by operating activities 130,881 16,822
---------- ----------
Cash flows from investing activities:
Loan originations, net of principal repayments 23,560 (124,622)
Proceeds from sales of other real estate owned 7,120 6,508
Purchases of securities available for sale (1,221,046) (799,538)
Proceeds from maturities of securities available for sale 1,146,000 343,601
Proceeds from sales of securities available for sale 607 219,415
Principal repayments on securities 61,841 70,307
Purchases of premises and equipment (3,971) (5,706)
---------- ----------
Net cash provided by (used in) investing activities 14,111 (290,035)
---------- ----------
Cash flows from financing activities:
Net deposits (withdrawals) from depositors' accounts 235,647 (105,438)
Borrowing on notes payable 2,262,254 1,479,629
Payments on notes payable (2,177,793) (1,437,019)
Net increase (decrease) on lease payable 824 (776)
Payments for cash dividends (17,924) (11,368)
Stock offering 47,351 62,453
Exercise of stock options 5,760 6,219
Purchase of treasury stock -- (27,238)
Securities sold under agreements to repurchase (134,074) 67,970
Net (decrease) increase in mortgagors' escrow (5,367) 31,681
---------- ----------
Net cash provided by financing activities 216,678 66,113
---------- ----------
Net increase (decrease) in cash and cash equivalents 361,670 (207,100)
Cash and cash equivalents at beginning of period 1,088,372 1,157,503
---------- ----------
Cash and cash equivalents at end of period $1,450,042 $ 950,403
========== ==========
Non-cash activities:
Additions to other real estate owned, net $ 2,207 $ (4,982)
========== ==========
Loans to facilitate sales of other real estate $ -- $ 3,724
========== ==========
Unsettled trades $ -- $ 38,539
========== ==========
Supplemental disclosure of cash flow information:
Cash paid for income taxes $ 24,230 $ 18,912
========== ==========
Interest paid $ 134,489 $ 125,049
========== ==========
</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. Summary of Significant Accounting Policies
(a) 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 statement 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 should be read
in conjunction with the consolidated financial statements and notes included in
the Company's Annual Report to shareholders for the year ended December 31,
1998.
(b) Accounting for Loan Sales
The Company sells loans both in the whole loan market as well as through various
securitization vehicles.
When the Company sells mortgages on a whole loan basis, in some cases it retains
the servicing rights related to the loans. In instances where the Company does
not retain the servicing rights to the loans, the gain or loss on the sale is
equal to the difference between the proceeds received and the book basis of the
loans sold. In instances where the Company does retain the servicing rights, the
gain also depends in part on the fair value attributed to the servicing rights.
When the Company securitizes manufactured housing loans and mortgages it may
retain interest-only strips, one or more subordinated tranches, servicing rights
and in some cases a cash reserve account, all of which are retained interests in
the securitized assets. In addition, the Company may provide a corporate
guarantee issued by GreenPoint Bank (the "Bank") and backed by a letter of
credit. In calculating the gain or loss on the sale, the Company allocates the
previous cost basis of the loans sold between the assets sold and the retained
interests and servicing rights based on their relative fair values at the date
of sale. The corporate guarantee is recorded at its estimated fair value at the
date of sale. A gain or loss is recognized as the difference between the
proceeds from the sale and the allocated cost basis of the assets sold.
Subsequent to the sale, interest-only strips and subordinated tranches are
carried at fair value and the accounting for servicing rights and the corporate
guarantee is based in part on fair values. To obtain fair values, quoted market
prices are used if available.
Because fair market quotes are generally not available for retained interests,
servicing rights and corporate guarantees, the Company generally estimates fair
value based upon the present value of estimated future cash flows using
assumptions of prepayments, defaults, servicing costs, loss severity rates, and
discount rates that the Company believes market participants would use for
similar assets.
8
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
2. Business Combinations
On March 30, 1999, the Company completed the acquisition of Headlands Mortgage
Company ("Headlands"). The acquisition was accounted for as a tax-free pooling
of interests, with 0.62 shares of the Company's stock being exchanged for each
share of Headlands stock. Accordingly, the first quarter and all prior periods
and dates have been restated as if Headlands had been a part of GreenPoint. The
acquisition of GreenPoint Credit Corp. ("GreenPoint Credit") on September 30,
1998 was recorded as a purchase, and accordingly the prior period comparisons do
not include GreenPoint Credit results.
There were no transactions between GreenPoint and Headlands prior to the
acquisition. Certain reclassifications were made to the Headlands financial
statements to conform to GreenPoint's presentations.
The results of operations for the companies and the combined amounts presented
in the consolidated financial statements follow:
Quarter Ended
March 31, 1998
--------------
(In thousands)
Net interest income
GreenPoint $ 119,350
Headlands 4,914
---------
Combined $ 124,264
=========
Net income (loss)
GreenPoint $ 33,586
Headlands (10,056)
---------
Combined $ 23,530
=========
3. Stock Incentive Plan
For the quarter ended March 31, 1999, the Company granted options to purchase
1,566,000 shares of the Company's common stock to certain officers, at an
average exercise price of $32.43. These awards vest over two to three years on
the anniversary dates of the awards.
9
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
4. Income Taxes Related to S Corporation Conversion
On January 31, 1998, Headlands converted from an S corporation to a C
corporation. As a C corporation, the Company bears the tax obligation relating
to the net income earned for federal and state tax purposes.
The accompanying consolidated statements of income for the quarter ended March
31, 1999 and 1998 reflect the income tax expense of the Company as if it had
been subject to federal and state C corporation income taxes for all periods
presented. The information also takes into consideration the one-time, non-cash
charge relating to deferred income taxes on historical earnings resulting from
termination of Headlands' S corporation status.
5. Loans Receivable Held for Sale
The following table sets forth the composition of the Company's loans receivable
held for sale, at the dates indicated.
March 31, December 31,
1999 1998
----------- ------------
(In thousands)
Loans receivable held for sale:
Residential mortgage loans $ 851,538 $ 838,026
Home equity lines of credit 125,053 68,135
Guaranteed student loans 2,936 3,340
Manufactured housing loans 473,712 535,237
Manufactured housing land/home loans 86,854 139,088
Deferred loan origination fees and
unearned discount (7,970) (5,764)
----------- ----------
Loans receivable held for sale, net $ 1,532,123 $1,578,062
=========== ==========
10
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
6. Securities
Securities held at March 31, 1999 are summarized as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
--------- ---------- ---------- ----------
(In thousands)
Securities Available for Sale
U.S. Government and Federal Agency
Obligations:
<S> <C> <C> <C> <C>
U.S. Treasury notes/bills $ 199,446 $ -- $ (46) $ 199,400
Agency notes/Asset-backed securities 147,310 -- (214) 147,096
Mortgage-backed securities 621,109 3,333 (858) 623,584
Collateralized mortgage obligations 190,211 1,562 (246) 191,527
Trust certificates collateralized by GNMA securities 23,014 -- (81) 22,933
Commercial paper 64,971 -- -- 64,971
Corporate bonds 24,269 106 -- 24,375
Corporate asset-backed securities 25,000 -- (16) 24,984
Other 50,017 6 -- 50,023
---------- -------- ------- ----------
Total securities available for sale $1,345,347 $ 5,007 $(1,461) $1,348,893
========== ======== ======= ==========
Securities Held to Maturity
Tax exempt municipals $ 575 $ 12 $ -- $ 587
Other 2,425 -- -- 2,425
---------- -------- ------- ----------
Total securities held to maturity $ 3,000 $ 12 $ -- $ 3,012
========== ======== ======= ==========
</TABLE>
Securities held at December 31, 1998 are summarized as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
--------- ---------- ---------- ----------
(In thousands)
Securities Available for Sale
U.S. Government and Federal Agency
Obligations:
<S> <C> <C> <C> <C>
Agency notes/Asset-backed securities $ 260,500 $ 123 $ (313) $ 260,310
Mortgage-backed securities 560,992 5,505 (52) 566,445
Collateralized mortgage obligations 206,246 3,414 (81) 209,579
Trust certificates collateralized by GNMA securities 26,611 -- (107) 26,504
Commercial paper 145,705 -- -- 145,705
Corporate bonds 24,268 22 (57) 24,233
Corporate asset-backed securities 25,000 -- (141) 24,859
Other 80,017 9 (77) 79,949
---------- -------- ------- ----------
Total securities available for sale $1,329,339 $ 9,073 $ (828) $1,337,584
========== ======== ======= ==========
Securities Held to Maturity
Tax exempt municipals $ 575 $ 13 $ -- $ 588
Other 2,699 -- -- 2,699
---------- -------- ------- ----------
Total securities held to maturity $ 3,274 $ 13 $ -- $ 3,287
========== ======== ======= ==========
</TABLE>
Estimated fair values for securities are based on published market or securities
dealers' estimated prices. During the quarter ended March 31, 1999, the Company
sold no available for sale securities, resulting in no gross realized gains and
no gross realized losses. Expired option contracts generated $0.6 million in
gains. During the quarter ended March 31, 1999, the Company sold trading account
securities aggregating $123.1 million, resulting in gross realized gains of $0.1
million and gross realized losses of $0.2 million. The average maturities of the
securities available for sale and held to maturity at March 31, 1999 are
approximately 9.0 years and 8.5 years, respectively. There were no trading
securities at March 31, 1999. 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 4.1 years.
11
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
7. Loan Sales
During the quarter ended March 31, 1999, the Company sold $821.3 million of
manufactured housing loans in two securitization transactions for a gain of
$19.3 million.
In all securitizations entered into during the quarters ended March 31, 1999 and
1998, the Company retained servicing responsibilities and subordinated
interests. The Company receives annual servicing fees approximating 1.0 percent
(for manufactured housing loans) and ranging from 0.25 percent to 0.5 percent
(for mortgage loans) of the outstanding balance, and rights to future cash flows
arising after the investors in the securitization trust receive the return for
which they are contracted. The investors and their securitization trusts have no
recourse to the Company's other assets for failure of debtors to pay when due
except for the liability under the corporate guarantee which totaled $6.0
million. In addition, most of the Company's retained interests are generally
restricted until investors have been fully paid and subordinate to investors'
interests.
During the quarters ended March 31, 1999 and 1998, the Company also sold as
whole loans certain mortgage loans with principal balances outstanding of $3.4
billion and $2.0 billion, respectively, for pretax gains of $38.7 million and
$30.9 million, respectively. The Company retained servicing on a portion of
those mortgages but did not retain any other interests in those mortgages.
Retained interests in securitizations consist of assets generated by the
Company's loan securitizations. These assets are summarized as follows:
March 31, December 31,
1999 1998
----------- ------------
(In thousands)
Subordinated certificates $ 7,243 $20,984
Interest-only strip 19,163 21,943
Transferor interest 26,001 24,400
------- -------
Total retained interests in securitizations $52,407 $67,327
======= =======
12
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Key economic assumptions used in measuring the significant retained interest
resulting from securitizations completed during the quarter ended March 31, 1999
were as follows:
Quarter Ended March 31, 1999
----------------------------
Manufactured Housing Loans
Fixed Rate Variable Rate
---------- -------------
Weighted average prepayment rate(1) 10.03% 14.80%
Weighted average life (in years) 5.5 4.3
Weighted average default rate 3.67% 4.00%
Loss severity rate 54.30% 49.50%
Cash flows discounted at 14% 14%
(1) Excludes weighted average default rate
8. Notes Payable
Notes payable consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------ ----------
(In thousands)
<S> <C> <C>
Warehouse line of credit with banks, expiring on
November 4, 1999, $715 million at March 31, 1999 and
$750 million at December 31, 1998, and interest bearing
variable interest rates, including a rate adjusted for
compensating balances. $ 686,084 $ 601,623
Master base agreement with a leasing company, secured
by fixed assets of the Company, bearing various interest
rates based on LIBOR. 7,201 6,377
----------- ----------
$ 693,285 $ 608,000
=========== ==========
</TABLE>
9. Restructuring Charge
For the quarter ended March 31, 1999, the Company recorded a pre-tax
restructuring charge of $6.0 million which will be utilized to absorb severance
expense related to the integration of Headlands and GreenPoint Mortgage.
13
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
10. Business Segments
The Company consists of three domestic business segments offering unique
products and services. The Mortgage Banking segment is in the business of
originating, selling, securitizing and servicing residential mortgage loans. The
Company has historically funded its mortgage portfolio with consumer deposits
raised through its Consumer Banking operations. The Consumer Banking segment
consists of 73 full service banking offices offering a variety of financial
services to the Greater New York City area. The Manufactured Housing segment
primarily originates, securitizes and services manufactured housing loans.
The accounting policies of the segments are the same as described in Note 1
"Summary of Significant Accounting Policies." The Company evaluates the
performance of its business segments based on income before income taxes.
Expenses under the direct control of each business segment and the expense of
premises and equipment incurred to support business operations are allocated
accordingly, by segment. The expenses relating to the executive, strategic
planning, information systems personnel, finance, audit and human resources
functions of the Company are not allocated to individual operating segments. As
the Company purchased the Manufactured Housing business segment on September 30,
1998, financial information pertaining to this segment is presented only for the
first quarter of 1999.
<TABLE>
<CAPTION>
Quarter Ended March 31, 1999
--------------------------------------------------------------------------------------
Manuf. Segment Consolidated
Mortgage Consumer Housing Totals Other (1) Totals
------------ ------------ ----------- ------------ ------------ ------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Net interest income $ 68,401 $ 50,603 $ 5,415 $ 124,419 $ 3,986 $ 128,405
Income from fees and commissions 5,860 6,966 2,163 14,989 (643) 14,346
Loan servicing fees 506 -- 22,270 22,776 -- 22,776
Net gain on sales of loans 38,657 35 19,296 57,988 -- 57,988
Depreciation and amortization 3,041 12,363 9,040 24,444 252 24,696
Segment income (loss) before taxes 61,474(2) 25,550 10,381 97,405 (28,723) 68,682
Other significant non-cash items:
ESOP and stock plans expense 1,149 1,175 1,982 4,306 950 5,256
- ------------------------------------------------------------------------------------------------------------------------
Total assets $10,351,300 $11,866,663 $1,287,738 $23,505,701 $(8,239,773)(3) $15,265,928
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended March 31, 1998
--------------------------------------------------------------------------------------
Manuf. Segment Consolidated
Mortgage Consumer Housing Totals Other (1) Totals
------------ ------------ ----------- ------------ ------------ ------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Net interest income $ 65,782 $ 54,363 $ -- $ 120,145 $ 4,119 $ 124,264
Income from fees and commissions 3,583 6,406 -- 9,989 192 10,181
Loan servicing fees 1,117 -- -- 1,117 -- 1,117
Net gain on sales of loans 30,725 29 -- 30,754 104 30,858
Depreciation and amortization 1,887 12,959 -- 14,846 1,896 16,742
Segment income (loss) before taxes 66,716 27,386 -- 94,102 (22,071) 72,031
Other significant non-cash items:
ESOP and stock plans expense 1,864 1,999 -- 3,863 1,700 5,563
- ------------------------------------------------------------------------------------------------------------------------
Total assets $10,101,903 $11,665,063 $ -- $21,766,966 $(7,669,784)(3) $14,097,182
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents unallocated corporate amounts.
(2) Segment income includes $13.9 million of expenses related to the Headlands
acquisition. Excluding this non-recurring charge, segment income would be
$75.4 million.
(3) For the purpose of internal management reporting, the Company records
intersegment funds transfers and eliminates these transfers on a
consolidated basis for GAAP reporting. Intersegment assets and liabilities
eliminated for consolidation purposes were $8.2 billion and $7.7 billion
for the quarters ended March 31, 1999 and 1998, respectively. Net interest
income corresponding to the assumed funds transfers is allocated
accordingly.
14
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Item 2 -Management's Discussion and Analysis of
Financial Condition and Results of Operations
<TABLE>
<CAPTION>
Quarter Ended
-----------------------------------------------------------------------
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31,
1999 1998 1998 1998 1998
------------- ----------- ------------ ----------- -----------
Performance Ratios (Annualized):
<S> <C> <C> <C> <C> <C>
Core cash earnings return on average assets (1) 2.22%(2) 1.65% 1.98% 1.88% 1.86%(3)
Core cash earnings return on average equity (1) 17.44 (2) 12.97 16.11 18.86 18.86 (3)
Core return on average assets 1.54 (2) 0.98 1.50 1.36 1.36 (3)
Core return on average equity 12.12 (2) 7.70 12.19 13.66 13.84 (3)
Net interest margin 3.83 3.97 4.03 3.89 3.86
Net interest spread during period 3.51 3.66 3.59 3.56 3.57
Operating expense to average assets (4) 2.87 2.88 2.17 2.23 2.11
Efficiency ratio (5) 47.8 56.6 43.6 46.2 43.6
Average interest-earning assets to average
interest bearing liabilities 1.08x 1.07x 1.11x 1.08x 1.07x
Regulatory Capital Ratios:
Company:
Leverage capital (6) 8.48% 7.90% 7.74% 7.86% 7.69%
Risk-based capital (6):
Tier 1 12.68 12.65 13.29 14.98 15.27
Total 13.90 13.90 14.54 16.24 16.53
Bank:
Leverage capital (6) 7.08 6.75 6.71 7.79 7.60
Risk-based capital (6):
Tier 1 10.58 10.74 10.90 14.83 15.10
Total 11.81 11.99 12.16 16.08 16.35
Per Share Data:
Core cash earnings (1)* $0.86 (2) $0.64 $0.75 $0.75 $0.76 (3)
Common book value** $20.39 $19.99 $19.91 $16.39 $16.19
Tangible common book value** $10.17 $9.45 $9.26 $9.85 $ 9.58
* Average shares used in calculation 96,372,000 96,070,000 93,397,000 85,538,000 84,671,000
** Period-end shares used in calculation 97,969,000 96,154,000 96,178,000 84,703,000 85,613,000
Total shares issued and outstanding 108,909,000 106,908,000 107,386,000 95,597,000 96,683,000
Asset Quality Ratios:
Non-performing loans to total loans held
for investment 2.97% 3.03% 3.16% 3.39% 3.77%
Non-performing assets to total assets 1.88 1.98 2.12 2.36 2.57
Allowance for possible loan losses to:
Non-performing loans 40.60 39.63 37.92 35.79 32.23
Total loans held for investment 1.21 1.20 1.20 1.21 1.21
Earnings to combined fixed charges and preferred
stock dividends (7):
Excluding interest on deposits 7.94x 7.09x 10.20x 9.17x 8.74x
Including interest on deposits 1.55x 1.47x 1.69x 1.61x 1.57x
</TABLE>
(1) Core cash earnings is net income, excluding non-recurring items net of
tax, adding back goodwill amortization and Employee Stock Ownership and
stock plans expense.
(2) Excludes Headlands acquisition expense and restructuring charge, net of
tax.
(3) Excludes non-recurring personnel expense.
(4) Excludes goodwill expense, ORE income, Headlands acquisition expense,
non-recurring personnel expense and restructuring charge.
(5) The efficiency ratio is calculated by dividing operating expense by the
sum of net interest income and non-interest income.
(6) 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").
(7) 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.
15
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
1. General
GreenPoint Financial Corp. (the "Company" or "GreenPoint") is a bank holding
company with four principal subsidiaries. GreenPoint Bank (the "Bank") is a New
York state chartered savings bank. The Bank has $11.4 billion in deposits in 73
branches serving more than 400,000 households in the Greater New York City area.
GreenPoint Mortgage Corp. ("GreenPoint Mortgage"), a national mortgage banking
company headquartered in Charlotte, North Carolina, is the leading national
lender in no documentation ("No Doc") residential mortgages. GreenPoint Credit
Corp. ("GreenPoint Credit"), headquartered in San Diego, California, is the
second largest lender nationally in the manufactured housing finance industry.
On March 30, 1999 the Company completed its acquisition of Headlands Mortgage
Company ("Headlands"), a leading "Alt A" mortgage lender (Alt A borrowers have
strong credit backgrounds but need loan terms that do not meet other agency
criteria). The acquisition of Headlands was recorded as a pooling of interests.
Accordingly, the financial information has been restated as if Headlands had
always been part of the Company.
Forward Looking Statements
This Quarterly Report on Form 10-Q contains certain forward-looking statements
which are based on management's current expectations. These forward-looking
statements include information concerning possible or assumed future results of
operations and business plans, including those relating to earnings growth,
revenue growth, origination volume, expense levels, and other business
operations and strategies. For these statements, GreenPoint claims the
protection of the safe harbor for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995 to the extent provided by
applicable law. Forward-looking statements involve inherent risks and
uncertainties. We caution you that a number of important factors could cause
actual results to differ materially from those contained in any forward-looking
statement. Such factors include, but are not limited to: risks and uncertainties
related to acquisitions, including integration activities relating to the
recently consummated acquisition of Headlands Mortgage Company; prevailing
economic conditions; changes in interest rates, loan demand, real estate values,
and competition; the level of defaults and prepayments on loans made by the
Company and each of its affiliates; changes in accounting principles, policies,
and guidelines; adverse changes or conditions in capital or financial markets,
which could adversely affect the ability of the Company to sell or securitize
mortgage and manufactured housing originations on a favorable or timely basis;
changes in any applicable law, rule, regulation or practice with respect to tax
or legal issues; and other economic, competitive, governmental, regulatory, and
technological factors affecting the Company's operations, pricing, products, and
services. The forward-looking statements are made as of the date of this report,
and the Company assumes no obligation to update the forward-looking statements
or to update the reasons why actual results could differ from those projected in
the forward-looking statements.
The Company 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 activities.
16
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
2. Operating Results
The first quarter's results include the following:
o Net income, inclusive of the non-recurring costs and charges, was $35.0
million, an increase of 49% over the first quarter of 1998. Net income per
diluted share was $0.36 for the quarter, an increase of 29% over the first
quarter of 1998. The significant increase in net income reflects the full
impact of the GreenPoint Credit and Headlands acquisitions.
o Total loan originations for the first quarter of 1999 were $3.8 billion,
an increase of 46% over the first quarter of 1998. No Doc mortgage
originations for the same period were $731 million, an increase of 26%
over the first quarter of 1998. Headlands' loan originations totalled $2.4
billion during the first quarter, an increase of 57% from the first
quarter of 1998. Manufactured housing loan originations for the quarter
showed strong growth to a record $715 million.
o GreenPoint Credit securitized and sold $821.3 million of manufactured
housing loans for a gain of $19.3 million.
o Asset quality improved substantially over 1998, as non-performing loans
decreased 2% to $278.3 million, and non-performing assets decreased 3% to
$286.7 million at March 31, 1999.
o The first quarter results include the recognition of non-recurring
expenses of $27.6 million related to the acquisition of Headlands and
include a one-time restructuring charge related to severance.
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 GreenPoint's other expenses incurred by the Company,
do not reduce GreenPoint's tangible capital thereby enabling the Company to
increase shareholder value through the growth of earning assets and increases in
cash dividends.
Quarter Ended
-----------------------------------
March 31, December 31, March 31,
1999 1998 1998
--------- ------------ ---------
(In thousands, except per share amounts)
Net income $35,028 $36,294 $23,530
Non-recurring items, net of tax (1) 22,503 -- 23,656
------- ------- -------
Core net income 57,531 36,294 47,186
Add back:
Goodwill expense 19,958 19,677 11,562
Employee stock plans expense 5,256 5,177 5,563
------- ------- -------
Core cash earnings $82,745 $61,148 $64,311
======= ======= =======
Core cash earnings per share (2) $ 0.86 $ 0.64 $ 0.76
======= ======= =======
(1) Non-recurring items include Headlands acquisition expense, restructuring
charge and non-recurring personnel expense.
(2) Based on the weighted average shares used to calculate diluted earnings
per share.
17
<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 increased by $4.0 million, or
3%, over the first quarter of 1998. The improvement in net interest income
reflects mainly the shift in interest earning assets from short term investments
to higher yielding loans held for investment.
Interest income on mortgages held for investment decreased by $2.3 million, or
1%. The decrease is attributable to a 40 basis point drop in the average rate,
offset by an increase in the average balance of $309 million. The decline in
rate is attributable to a generally lower interest rate environment and
associated loan prepayments.
Interest income on loans held for sale increased by $14.7 million, or 92%. The
primary reason for the increase relates to the $493.3 million of GreenPoint
Credit manufactured housing loans, which earned $11.2 million. Interest income
on securities and money market investments fell by a combined $13.3 million, or
30%, to $31.2 million for the first quarter of 1999. The decreases were
primarily the result of declines in the average securities and money market
investment portfolios of $0.8 billion for the first quarter, versus the 1998
comparable period. The 19 basis point decline in the overall yield in
interest-earning assets is attributable to the 40 basis point drop in the
mortgage loans offset by the redeployment of funds from investments to higher
yielding loans.
Interest expense increased by $0.5 million, or less than 1%, to $138.0 million
in the first quarter of 1999 from $137.5 million for the first quarter a year
ago. The increase reflects a $393.1 million rise in average interest-bearing
liabilities, offset by a 13 basis point decline in the average cost of funds.
The cost of funds decreased primarily due to lower pricing on the money market
and certificate of deposit accounts.
18
<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 March 31, 1999 and 1998, 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
----------------------------------------------------------------------------------
March 31, 1999 March 31, 1998
---------------------------------------- ---------------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
----------- ----------- --------- ----------- ----------- --------
Assets: (Taxable-Equivalent Interest and Rates, in thousands) (1)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Mortgage loans held for investment (2) $ 9,240,098 $ 196,351 8.50% $ 8,930,752 $ 198,661 8.90%
Other loans (2) 119,195 2,303 7.73 31,970 705 8.82
Loans held for sale 1,350,467 30,786 9.12 672,426 16,067 9.56
Money market investments (3) 931,555 11,309 4.92 1,168,845 16,216 5.63
Securities (4) 1,379,953 19,932 5.77 1,911,561 28,311 6.00
Trading assets 1,360 18 5.30 3,611 51 5.73
Other interest-earning assets 375,318 6,976 7.54 154,332 3,155 8.29
----------- ----------- ----------- -----------
Total interest-earning assets 13,397,946 267,675 8.00 12,873,497 263,166 8.19
----------- -----------
Non-interest earning assets (5) 1,521,472 957,687
----------- -----------
Total assets $14,919,418 $13,831,184
=========== ===========
Liabilities & Stockholders' Equity:
Interest-bearing liabilities:
Savings $ 1,526,083 8,295 2.20% $ 1,715,362 10,332 2.44%
N.O.W. 321,334 775 0.98 332,806 1,032 1.26
Money market and variable rate savings 2,355,969 19,133 3.29 2,166,208 17,920 3.35
Term certificates of deposit 6,859,810 87,365 5.17 6,505,034 86,392 5.39
Mortgagors' escrow 120,709 357 1.20 138,091 326 0.96
Trading liabilities 1,656 20 4.90 1,477 20 5.49
Notes payable 543,185 7,398 5.52 193,990 2,429 5.08
Securities sold under agreements to repurchase 318,499 6,569 8.36 597,456 10,870 7.38
Long term debt 199,872 3,468 6.94 203,595 3,589 7.05
Guaranteed preferred beneficial interest in
Company's junior subordinated debentures 199,732 4,575 9.16 199,722 4,573 9.16
----------- ----------- ----------- -----------
Total interest-bearing liabilities 12,446,849 137,955 4.49 12,053,741 137,483 4.62
----------- -----------
Other liabilities (6) 574,572 413,794
----------- -----------
Total liabilities 13,021,421 12,467,535
Stockholders' equity 1,897,997 1,363,649
----------- -----------
Total liabilities and stockholders' equity $14,919,418 $13,831,184
=========== ===========
Net interest income/interest rate spread (7) $ 129,720 3.51% $ 125,683 3.57%
=========== ======== =========== ========
Net interest-earning assets/net interest
margin (8) $ 951,097 3.83% $ 819,756 3.86%
=========== ======== =========== ========
Ratio of interest-earning assets to
interest-bearing liabilities 1.08x 1.07x
======== ========
</TABLE>
(1) Net interest income is calculated on a taxable-equivalent basis.
(2) In computing the average balances and average yield on loans, non-accruing
loans 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.
19
<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 March 31, 1999
Compared to
Quarter Ended March 31, 1998
Increase/(Decrease)
------------------------------
Due to
-------------------
Average Average Net
Volume Rate Change
-------- -------- --------
(In thousands)
<S> <C> <C> <C>
Interest-earning assets:
Mortgage loans held for investment (1) $ 6,747 $ (9,057) $ (2,310)
Other loans (1) 1,695 (97) 1,598
Loans held for sale 15,489 (770) 14,719
Money market investments (2) (3,038) (1,869) (4,907)
Securities (7,695) (684) (8,379)
Trading assets (30) (3) (33)
Other interest-earning assets 4,131 (310) 3,821
-------- -------- --------
Total interest earned on assets 17,299 (12,790) 4,509
-------- -------- --------
Interest-bearing liabilities:
Savings (1,081) (956) (2,037)
N.O.W (35) (222) (257)
Money market and variable rate savings 1,546 (333) 1,213
Term certificates of deposit 4,601 (3,628) 973
Mortgagors' escrow (44) 75 31
Trading liabilities 2 (2) --
Notes payable 4,738 231 4,969
Securities sold under agreements to repurchase (5,602) 1,301 (4,301)
Long term debt (65) (56) (121)
Guaranteed preferred beneficial interest in Company's
junior subordinated debentures -- 2 2
-------- -------- --------
Total interest paid on liabilities 4,060 (3,588) 472
-------- -------- --------
Net change in net interest income $ 13,239 $ (9,202) $ 4,037
======== ======== ========
</TABLE>
- ----------
(1) In computing the volume and rate components of net interest income for
loans, non-accrual loans have been included.
(2) Includes 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)
Provision for Possible Loan Losses
The provision for loan losses decreased by $1.2 million, or 30.3%, to $2.8
million for the first quarter of 1999, from $4.0 million for the comparable 1998
period. The provision equaled net charge-offs and reflects continued improvement
in delinquencies and non-performing loans.
Non-Interest Income
Non-interest income was $95.7 million, up 122% over the first quarter of 1998.
The increase was due to the addition of GreenPoint Credit's net servicing income
of $22.3 million, a $19.3 million gain from the securitization of $821.3 million
manufactured housing loans, a $7.9 million increase in the gain from whole loan
mortgage sales, an increase of $1.6 million in mortgage fees and a $2.5 million
increase in banking and other fees. The increase in gain on sale of mortgage
loans is due to higher volume of loans sold offset by slightly tighter pricing.
The increase in mortgage loan fees is due to the collection of prepayment
penalties and late fees associated with curing non-performing loans. The
improvement in banking fees is primarily due to increased annuity sales. The
increase in other fee income is attributable to manufactured housing insurance
related fee income.
Non-Interest Expense
Total non-interest expense was $152.6 million for the first quarter of 1999, an
increase of 67% over the first quarter of 1998. Exclusive of one time and
restructuring charges, non-interest expense was $125.0 million, an increase of
50% over the first quarter of 1998.
The increase was primarily due to the addition of the operating expenses of
GreenPoint Credit ($37.9 million) and a 35% increase in the operating expenses
of Headlands associated with the growth of its business since the first quarter
of 1998. The GreenPoint Credit expenses included salaries and benefits of $15.2
million, premises and equipment expense of $3.0 million, $9.1 million in other
administrative expenses and goodwill expense of $8.4 million. Headlands expanded
its operations during 1998, increasing staff by approximately 470 people since
March of 1998. The most significant increase in Headlands expense relates to
total salaries and benefits for the Headlands operation, which were $17 million,
$5.2 million higher than first quarter 1998.
Non-Recurring Expenses and Restructuring Charge
The Company incurred non-recurring expenses of $27.6 million related to the
acquisition of Headlands Mortgage Company on March 30, 1999. The expenses
directly associated with the acquisition consisted of $10.2 million in
transaction fees and $1.9 million in stock option acceleration expense. In
addition, the Company supplemented the recourse reserve for sold loans,
increasing the reserve by $2.5 million. Lastly, the Company recorded a $5.0
million contingent liability reserve. The $27.6 million in non-recurring charges
also includes $2.0 million in relocation expense and $6.0 million in
restructuring charges for severance expense related to the integration of
Headlands and GreenPoint Mortgage.
21
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations - (Continued)
Income Tax Expense
Total income tax expense declined $14.8 million, or 30.6%, to $33.7 million for
the current quarter. Included in total taxes for the first quarter of 1998 is
$18.5 million in non-recurring income tax expense related to Headlands'
conversion from a nontaxable subchapter S corporation to a taxable corporation.
Income taxes related to earnings increased by $3.6 million in the first quarter
of 1999. While income before income taxes declined by $3.3 million,
approximately $14.1 million in non-recurring charges for which no tax benefit
has been recognized served to increase the effective tax rate.
Financial Condition
Total assets were $15.3 billion at March 31, 1999 compared to $15.0 billion at
December 31, 1998. Money market investments rose $0.4 billion to $1.3 billion at
March 31, 1999 from $0.9 billion at December 31, 1998. Total deposits increased
$0.2 billion to $11.4 billion from $11.2 billion at December 31, 1998. The
decrease in treasury stock and additional paid in capital reflect the issuance
of 12.3 million shares of the Company's stock in exchange for the stock of
Headlands.
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 quarter ended March 31, 1999, as
non-performing assets decreased by 3.3%. The ratio of non-performing loans to
total loans held for investment fell to 2.97% at March 31, 1999 from 3.03% at
December 31, 1998 while the ratio of non-performing assets to total assets fell
to 1.88% at March 31, 1999 from 1.98% at December 31, 1998.
Non-performing assets, net of related specific reserves, were as follows:
March 31, December 31,
1999 1998
--------- ------------
(In thousands)
Mortgage loans secured by:
Residential one-to-four family $221,248 $225,934
Residential multi-family 32,351 33,904
Commercial property 24,648 25,219
Other loans 70 108
-------- --------
Total non-performing loans (1) 278,317 285,165
-------- --------
Total other real estate owned, net 8,392 11,445
-------- --------
Total non-performing assets $286,709 $296,610
======== ========
(1) Includes $13.6 million and $12.3 million of non-accrual mortgage loans
under 90 days past due at March 31, 1999 and December 31, 1998,
respectively.
Allowance for Possible Loan Losses
The following is a summary of the provision and allowance for possible loan
losses:
Quarter Ended
March 31,
---------------------------
1999 1998
--------- ---------
(In thousands)
Balance beginning of period $ 113,000 $ 109,000
Provision charged to income 2,797 4,012
Charge-offs (2,911) (3,198)
Recoveries 114 186
--------- ---------
Balance end of period $ 113,000 $ 110,000
========= =========
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
March 31, 1999 was 13.08% compared to 12.80% at December 31, 1998.
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 March 31, 1999, 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 March 31, 1999, 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.
Required For Capital
Actual Adequacy Purposes
- --------------------------------------------------------------------------------
(In millions) Amount Ratio Amount Ratio
- --------------------------------------------------------------------------------
As of March 31, 1999
Total Capital
(to Risk Weighted Assets):
Company $1,292.6 13.90% $743.8 8.00%
Bank 1,095.5 11.81% 742.3 8.00%
Tier 1 Capital
(to Risk Weighted Assets):
Company $1,178.6 12.68% $371.9 4.00%
Bank 981.4 10.58% 371.1 4.00%
Tier 1 Capital
(to Average Assets):
Company $1,178.6 8.48% $556.0 4.00%
Bank 981.4 7.08% 554.4 4.00%
Required For Capital
Actual Adequacy Purposes
- --------------------------------------------------------------------------------
(In millions) Amount Ratio Amount Ratio
- --------------------------------------------------------------------------------
As of December 31, 1998
Total Capital
(to Risk Weighted Assets):
Company $1,196.4 13.90% $688.6 8.00%
Bank 1,029.7 11.99% 687.2 8.00%
Tier 1 Capital
(to Risk Weighted Assets):
Company $1,088.7 12.65% $344.3 4.00%
Bank 922.3 10.74% 343.6 4.00%
Tier 1 Capital
(to Average Assets):
Company $1,088.7 7.90% $551.0 4.00%
Bank 922.3 6.75% 546.8 4.00%
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. To the
extent that the Company does not receive adequate response from its suppliers
and service providers, it will develop contingency plans intended to mitigate
the possible disruption of critical business operations. These contingency plans
will be completed no later than June 30, 1999. 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
Item 3 - Quantitative and Qualitative Disclosure about Market Risk
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 loans do not match those of its 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
lending 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.
27
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Item 3 - Quantitative and Qualitative Disclosure
about Market Risk - (Continued)
The use of interest rate instruments such as interest rate swaps is integrated
into the Company's interest rate risk management. The notional amounts of these
contracts approximate $1.40 billion at March 31, 1999 and December 31, 1998 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 pays an average fixed rate of 5.96% and receives an average variable
rate of 5.01% 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 March 31, 1999, the cumulative volume of liabilities maturing or repricing
within one year exceeded assets by $28.0 million, or 0.18% of assets.
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 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.
The most crucial management assumptions concern prepayments on the Company's
mortgage loan portfolio and the pricing of consumer deposits in various interest
rate environments. As interest rates decline, mortgage prepayments tend to
increase, reducing loan portfolio growth and lowering the portfolio's average
yield. Rates on non-maturity deposits rise and fall with the general level of
interest rates, but tend to move less than proportionately. Rates offered on
consumer certificates of deposits tend to move in close concert with market
rates, though history suggests they increase less rapidly when market rates
rise. Analysis shows that the Company's deposit volumes are relatively
insensitive to interest rate movements within the range encompassed in the
scenarios.
At March 31, 1999, based on this model, the Company's potential earnings at risk
to a gradual, parallel 200 basis point decline in market interest rates over the
next twelve months on instruments held for other than trading purposes was a
decline of approximately 5.8% of projected 1999 net income. Conversely, a
gradual 200 basis point increase in interest rates would result in net income
being higher by 3.2% than would be the case if rates remain constant. GreenPoint
does not have significant exposure to such risk on instruments held for trading
purposes due to the Company's limited use of these instruments.
28
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Item 3 - Quantitative and Qualitative Disclosure
about Market Risk - (Continued)
Interest Rate Sensitivity Gap Analysis
The table below depicts the Company's interest rate sensitivity as of March 31,
1999. 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
------------------------------------------------------------------------
Three More than More than More than
months three months six months one year to More than
or less to six months to one year three years three years Total
-------- ------------- ----------- ----------- ----------- ------
(in millions)
<S> <C> <C> <C> <C> <C> <C>
Total loans, net $2,530 $ 841 $1,251 $2,442 $ 3,716 $10,780
Money market investments (1) 1,327 -- -- -- -- 1,327
Securities held to maturity 2 -- -- -- 1 3
Securities available for sale 515 66 122 305 393 1,401
Other interest earning assets 120 -- -- -- -- 120
------ ------ ------ ------ ------- -------
Total interest earning assets 4,494 907 1,373 2,747 4,110 13,631
------ ------ ------ ------ ------- -------
Cash and due from banks 123 -- -- -- -- 123
Servicing assets 7 7 13 43 87 157
Goodwill 21 20 40 160 760 1,001
Other non interest earning assets 354 -- -- -- -- 354
------ ------ ------ ------ ------- -------
Total assets $4,999 $ 934 $1,426 $2,950 $ 4,957 $15,266
====== ====== ====== ====== ======= =======
Term certificates of deposit $1,341 $1,575 $3,029 $ 874 $ 164 $ 6,983
Core deposits 352 276 549 1,920 1,329 4,426
------ ------ ------ ------ ------- -------
Total deposits 1,693 1,851 3,578 2,794 1,493 11,409
------ ------ ------ ------ ------- -------
Mortgagors' escrow 7 7 14 55 40 123
Securities sold under agreements
to repurchase 201 -- 50 -- -- 251
Long term debt -- -- -- -- 200 200
Guaranteed preferred beneficial
interest in
Company's junior subordinated
debentures -- -- -- -- 200 200
Notes payable 693 -- -- -- -- 693
Other liabilities 393 -- -- -- -- 393
Stockholders' equity -- -- -- -- 1,997 1,997
------ ------ ------ ------ ------- -------
Total liabilities and
stockholders' equity $2,987 $1,858 $3,642 $2,849 $ 3,930 $15,266
====== ====== ====== ====== ======= =======
Off balance sheet financial instruments
$1,400 $ (300) $ -- $ -- $(1,100) $ --
====== ====== ====== ====== ======= =======
Interest rate sensitivity gap $ 3,412 $(1,224) $ (2,216) $ 101 $ (73)
Cumulative gap $ 3,412 $ 2,188 $ (28) $ 73
Interest rate sensitivity gap as a 22.35% (8.02)% (14.52)% 0.66% (0.48)%
percentage of total assets
Cumulative gap as a percentage of 22.35% 14.33% (0.18)% 0.48%
total assets
</TABLE>
(1) Consists of interest-bearing deposits in other banks, federal funds sold
and securities purchased under agreements to resell.
29
<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 sixteen
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. 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.
30
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Item 6 - Exhibits and Reports on Form 8-K
(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 January 22, 1999, GreenPoint Credit Corp., the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) the Underwriting Agreement, dated November 17,
1998, between GreenPoint Credit Corp., as Contract Seller and Credit Suisse
First Boston, as the representative of the several underwriters; (ii) a Pooling
and Servicing Agreement, dated as of November 1, 1998, between GreenPoint Credit
Corp., as Contract Seller and Servicer and The First National Bank of Chicago as
Trustee; and (iii) the required Monthly Investor Servicing Report.
On January 22, 1999, GreenPoint Credit Corp., the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) the Underwriting Agreement, dated November 17,
1998, between GreenPoint Credit Corp., as Contact Seller and Credit Suisse First
Boston, as the representative of the several underwriters; (ii) a Pooling and
Servicing Agreement, dated as of November 1, 1998, between GreenPoint Credit
Corp., as Contract Seller and Servicer and The First National Bank of Chicago as
Trustee; and (iii) the required Monthly Investor Servicing Report. This Form 8-K
filing was for the period December 31, 1998.
On February 24, 1999, GreenPoint Credit Corp. filed a current report on Form 8-K
in order to file the following documents: (i) the opinion of Orrick, Herrington
& Sutcliffe LLP ("Orrick") relating to certain tax matters in connection with
the offering of GreenPoint Credit Manufactured Housing Contract Trust
Pass-Through Certificates, Series 1999-1 (the "Publicly Offered Certificates"),
which contains Orrick's consent to use of its name in the Prospectus Supplement
("Prospectus Supplement") dated February 17, 1999 together with the related
Prospectus dated November 17, 1998; (ii) the consent of PricewaterhouseCoopers
LLP to the use of its name in the "Experts" section of the Prospectus
Supplement; and (iii) External Computational Materials prepared by Bear, Stearns
& Co. Inc., Credit Suisse First Boston and NationsBank Montgomery Securities
LLC.
31
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
Item 6 - Exhibits and Reports on Form 8-K - (Continued)
On March 1, 1999, GreenPoint Credit Corp. filed a current report on Form 8-K in
order to file the following document: a Pooling and Servicing Agreement dated
February 1, 1999 between GreenPoint Credit Corp. as Contract Seller and The
First National Bank of Chicago as the Trustee in connection with the sale of
approximately $631,659,215 of GreenPoint Credit Manufactured Housing Contract
Trust Pass-Through Certificates, Series 1999-1, on February 25, 1999.
On March 11, 1999, GreenPoint Credit Corp. filed a current report on Form 8-K in
order to file the following documents: (i) the opinion of Orrick, Herrington &
Sutcliffe LLP ("Orrick") relating to certain tax matters in connection with the
offering of GreenPoint Credit Manufactured Housing Contract Trust Pass-Through
Certificates, Series 1999-2 (the "Publicly Offered Certificates"), which
contains Orrick's consent to use of its name in the Prospectus Supplement
("Prospectus Supplement") dated March 10, 1999 together with the related
Prospectus dated November 17, 1998; (ii) the consent of PricewaterhouseCoopers
LLP to the use of its name in the "Experts" section of the Prospectus
Supplement; and (iii) External Computational Materials prepared by Salomon Smith
Barney Inc.
On March 26, 1999, GreenPoint Credit Corp. filed a current report on Form 8-K in
order to file the following document: a Pooling and Servicing Agreement dated
March 1, 1999, between GreenPoint Credit Corp. as Contract Seller and The First
National Bank of Chicago as Trustee in connection with the sale of approximately
$189,637,432 of GreenPoint Credit Manufactured Housing Contract Trust
Pass-Through Certificates, Series 1999-2, on March 18, 1999.
On March 31, 1999, GreenPoint Credit Corp., the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) the Underwriting Agreement, dated November 17,
1998, between GreenPoint Credit Corp., as Contract Seller and Credit Suisse
First Boston, as the representative of the several underwriters; (ii) a Pooling
and Servicing Agreement, dated as of November 1, 1998, between GreenPoint Credit
Corp., as Contract Seller and Servicer and The First National Bank of Chicago as
Trustee; and (iii) the required Monthly Investor Servicing Report.
On March 31, 1999, GreenPoint Credit Corp., the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) the Underwriting Agreement, dated November 17,
1998, between GreenPoint Credit Corp., as Contract Seller and Credit Suisse
First Boston, as the representative of the several underwriters; (ii) a Pooling
and Servicing Agreement, dated as of November 1, 1998, between GreenPoint Credit
Corp., as Contract Seller and Servicer and The First National Bank of Chicago as
Trustee; and (iii) the required Monthly Investor Servicing Report. This Form 8-K
filing was for the period February 28, 1999.
32
<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 and
Chief Financial Officer
Dated May 11, 1999
33
Exhibit 11.1
Statement Regarding Computation of Per Share Earnings
(In millions, except share and per share amounts)
Quarter Ended March 31,
-----------------------
1999 1998
-------- --------
Net income $ 35.0 $ 23.5
Weighted average number of common shares
outstanding during each year - basic 94.0 81.7
Weighted average number of common shares
and common stock equivalents outstanding during
each year - diluted 96.4 84.7
-------- --------
Basic earnings per share $ 0.37 $ 0.29
======== ========
Diluted earnings per share $ 0.36 $ 0.28
======== ========
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
----------------------------------------------------
Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31
1999 1998 1998 1998 1998
-------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Income before income taxes $ 68.7 $ 59.1 $ 86.5 $ 76.0 $ 72.0
Combined fixed charges and preferred stock dividends:
Interest expense on deposits 115.9 116.7 116.8 116.0 116.0
Interest expense on long-term debt 3.5 3.4 3.5 3.5 3.5
Interest expense on guaranteed preferred beneficial
interest in Company's junior subordinated debentures 4.6 4.5 4.6 4.6 4.6
Appropriate portion (1/3) of rent expense 1.8 1.8 1.3 1.2 1.2
Preferred stock dividend requirements -- -- -- -- --
------- ------- ------- ------- -------
Total combined fixed charges and
preferred stock dividends $ 125.8 $ 126.4 $ 126.2 $ 125.3 $ 125.3
======= ======= ======= ======= =======
Total combined fixed charges and
preferred stock dividends (excluding interest
expense on deposits) $ 9.9 $ 9.7 $ 9.4 $ 9.3 $ 9.3
======= ======= ======= ======= =======
Earnings before income taxes and combined fixed
charges and preferred stock dividends $ 194.5 $ 185.5 $ 212.7 $ 201.3 $ 197.3
======= ======= ======= ======= =======
Ratio of earnings to combined fixed charges and
preferred stock dividends (including interest
expense on deposits) 1.55 x 1.47 x 1.69 x 1.61 x 1.57 x
======= ======= ======= ======= =======
Ratio of earnings to combined fixed charges and
preferred stock dividends (excluding interest
expense on deposits) 7.94 x 7.09 x 10.20 x 9.17 x 8.74 x
======= ======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 120,247
<INT-BEARING-DEPOSITS> 15,867
<FED-FUNDS-SOLD> 1,313,900
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,348,893
<INVESTMENTS-CARRYING> 3,000
<INVESTMENTS-MARKET> 3,012
<LOANS> 10,893,381
<ALLOWANCE> (113,000)
<TOTAL-ASSETS> 15,265,928
<DEPOSITS> 11,408,984
<SHORT-TERM> 944,119
<LIABILITIES-OTHER> 516,064
<LONG-TERM> 399,611
0
0
<COMMON> 1,103
<OTHER-SE> 1,996,047
<TOTAL-LIABILITIES-AND-EQUITY> 15,265,928
<INTEREST-LOAN> 229,437
<INTEREST-INVEST> 30,952
<INTEREST-OTHER> 5,971
<INTEREST-TOTAL> 266,360
<INTEREST-DEPOSIT> 115,925
<INTEREST-EXPENSE> 137,955
<INTEREST-INCOME-NET> 128,405
<LOAN-LOSSES> (2,797)
<SECURITIES-GAINS> 608
<EXPENSE-OTHER> 152,644
<INCOME-PRETAX> 68,682
<INCOME-PRE-EXTRAORDINARY> 35,028
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,028
<EPS-PRIMARY> .37
<EPS-DILUTED> .36
<YIELD-ACTUAL> 3.83
<LOANS-NON> 278,317
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> (113,000)
<CHARGE-OFFS> (2,911)
<RECOVERIES> 114
<ALLOWANCE-CLOSE> (113,000)
<ALLOWANCE-DOMESTIC> (113,000)
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
