<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
MARCH 31, 2000
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) 834-1730 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 5, 2000 there were 103,124,000 shares of common stock outstanding.
<PAGE>
GREENPOINT FINANCIAL CORP.
FORM 10-Q
FOR THE QUARTER ENDED
MARCH 31, 2000
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE
<S> <C>
Item 1 - Financial Statements
Consolidated Statements of Financial Condition (unaudited) as of March 31,
2000 and December 31, 1999 3
Consolidated Statements of Income (unaudited) for the three months ended
March 31, 2000 and 1999 4
Consolidated Statements of Comprehensive Income (unaudited) for the three
months ended March 31, 2000 and 1999 5
Consolidated Statements of Changes in Stockholders' Equity (unaudited) for
the three months ended March 31, 2000 and 1999 6
Consolidated Statements of Cash Flows (unaudited) for the three months ended
March 31, 2000 and 1999 7
Notes to the Unaudited Consolidated Financial Statements 8
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations 17
Item 3 - Quantitative and Qualitative Disclosure about Market Risk 29
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 33
Item 6 - Exhibits and Reports on Form 8-K 34
</TABLE>
2
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
------------ ------------
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<S> <C> <C>
ASSETS
Cash and due from banks $ 136,386 $ 179,462
Money market investments 470,102 1,052,840
Loans receivable held for sale 1,696,838 1,208,080
Securities available for sale 1,965,936 1,974,747
Federal Home Loan Bank of New York stock 96,284 91,791
Retained interests in securitizations 98,347 124,556
Securities held to maturity (fair value of $2,111 and $1,985, respectively) 2,101 1,974
Loans receivable held for investment:
Mortgage loans 8,631,053 8,648,765
Other loans 634,581 659,356
Deferred loan fees and unearned discount (11,726) (14,954)
Allowance for possible loan losses (113,000) (113,000)
------------ ------------
Loans receivable held for investment, net 9,140,908 9,180,167
------------ ------------
Other interest-earning assets 122,904 123,350
Servicing assets 187,755 180,629
Accrued interest receivable, net 79,333 72,173
Banking premises and equipment, net 126,242 129,006
Deferred income taxes, net 42,568 49,705
Goodwill 921,835 941,727
Other assets 88,216 90,870
------------ ------------
Total assets $ 15,175,755 $ 15,401,077
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
N.O.W. and checking $ 569,416 $ 540,406
Savings 1,346,155 1,369,852
Variable rate savings 2,005,317 1,981,441
Money market 441,115 459,577
Term certificates of deposit 7,097,610 7,208,850
------------ ------------
Total deposits 11,459,613 11,560,126
------------ ------------
Mortgagors' escrow 120,262 95,505
Securities sold under agreements to repurchase 122,945 260
Federal Home Loan Bank of New York advances 675,000 675,000
Notes payable 4,112 5,137
Long term debt 199,915 199,906
Guaranteed preferred beneficial interest in Company's junior subordinated debentures 199,743 199,740
Accrued income taxes payable 33,719 27,168
Other liabilities 341,687 651,573
------------ ------------
Total liabilities 13,156,996 13,414,415
------------ ------------
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 859,381 857,824
Unallocated Employee Stock Ownership Plan (ESOP) shares (103,809) (105,097)
Unearned stock plans shares (2,960) (3,288)
Retained earnings 1,443,200 1,408,219
Accumulated other comprehensive income, net (11,570) (11,834)
Treasury stock, at cost (6,429,364 and 6,058,244 shares, respectively) (166,586) (160,265)
------------ ------------
Total stockholders' equity 2,018,759 1,986,662
------------ ------------
Total liabilities and stockholders' equity $ 15,175,755 $ 15,401,077
============ ============
</TABLE>
(SEE ACCOMPANYING NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS)
3
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
2000 1999
--------- ---------
(IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C>
INTEREST INCOME:
Mortgage loans held for investment $ 187,529 $ 196,351
Securities 35,238 19,628
Loans held for sale 31,113 30,786
Money market investments 8,806 11,306
Other 25,581 8,289
--------- ---------
Total interest income 288,267 266,360
--------- ---------
INTEREST EXPENSE:
Deposits 124,253 115,925
Notes payable 10,727 7,398
Long-term debt 8,042 8,043
Securities sold under agreements to repurchase 1,857 6,569
Trading liabilities -- 20
--------- ---------
Total interest expense 144,879 137,955
--------- ---------
Net interest income 143,388 128,405
Provision for possible loan losses (8,344) (2,797)
--------- ---------
Net interest income after provision for possible loan losses 135,044 125,608
--------- ---------
NON-INTEREST INCOME:
Income from fees and commissions:
Loan servicing fees 32,067 25,569
Banking services fees and commissions 9,093 6,969
Other 2,713 3,045
Net gain on sale of loans 45,989 57,996
Net gain on securities 751 608
Provision for corporate guarantee (3,304) --
--------- ---------
Total non-interest income 87,309 94,187
--------- ---------
NON-INTEREST EXPENSE:
Salaries and benefits 51,124 53,455
Employee Stock Ownership and stock plans expense 3,516 5,256
Net expense of premises and equipment 20,534 18,372
Advertising 764 1,725
Federal deposit insurance premiums 627 657
Other administrative expenses 28,155 45,763
Other real estate owned operating income, net (346) (1,948)
Goodwill amortization 19,892 19,958
Charitable and educational foundation -- 1,875
Restructuring charge and non-recurring personnel expense -- 6,000
--------- ---------
Total non-interest expense 124,266 151,113
--------- ---------
Income before income taxes 98,087 68,682
Income taxes 40,216 33,654
--------- ---------
Net income $ 57,871 $ 35,028
========= =========
Basic earnings per share $ 0.63 $ 0.37
========= =========
Diluted earnings per share $ 0.63 $ 0.36
========= =========
</TABLE>
(SEE ACCOMPANYING NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS)
4
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------
2000 1999
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Net income $ 57,871 $ 35,028
-------- --------
Other comprehensive income, before tax:
Unrealized gain (loss) on securities:
Unrealized holding gain (loss) arising during period 1,130 (4,124)
Less: reclassification adjustment for gains included in net income 751 608
-------- --------
Other comprehensive income, before tax 379 (4,732)
Income tax (expense) benefit related to items of other comprehensive income
(115) 2,003
-------- --------
Other comprehensive income, net of tax 264 (2,729)
-------- --------
Total comprehensive income, net of tax $ 58,135 $ 32,299
======== ========
</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)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------
2000 1999
----------- -----------
(IN THOUSANDS)
<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 857,824 1,278,795
Reissuance of treasury stock (1,548) (428,380)
Amortization of ESOP shares committed to be released 1,656 3,676
Amortization of stock plans shares 241 36
Tax benefit for vested stock plans shares 1,208 1,832
----------- -----------
Balance at end of period 859,381 855,959
----------- -----------
UNALLOCATED ESOP SHARES
Balance at beginning of period (105,097) (110,101)
Amortization of ESOP shares committed to be released 1,288 1,251
----------- -----------
Balance at end of period (103,809) (108,850)
----------- -----------
UNEARNED STOCK PLANS SHARES
Balance at beginning of period (3,288) (4,459)
Amortization of stock plans shares 328 293
----------- -----------
Balance at end of period (2,960) (4,166)
----------- -----------
RETAINED EARNINGS
Balance at beginning of period 1,408,219 1,273,264
Net income 57,871 35,028
Dividends declared (22,890) (17,924)
----------- -----------
Balance at end of period 1,443,200 1,290,368
----------- -----------
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET
Balance at beginning of period (11,834) 4,699
Net change in accumulated other comprehensive income, net 264 (2,729)
----------- -----------
Balance at end of period (11,570) 1,970
----------- -----------
TREASURY STOCK, AT COST
Balance at beginning of period (160,265) (520,725)
Reissuance of treasury stock 2,210 481,491
Purchase of treasury stock (8,531) --
----------- -----------
Balance at end of period (166,586) (39,234)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY $ 2,018,759 $ 1,997,150
=========== ===========
</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>
THREE MONTHS ENDED
MARCH 31,
--------------------------
2000 1999
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 57,871 $ 35,028
Adjustments to reconcile net income to net cash provided by (used in) operating
activities:
Provision for possible loan losses 8,344 2,797
Depreciation and amortization of premises and equipment 8,376 5,381
Goodwill amortization 19,892 19,958
Accretion of discount on securities, net of premium amortization (1,524) (2,554)
Net change in trading assets (122) --
Net change in trading liabilities 2,134 --
Net change in retained interests in securitizations 35,706 14,887
ESOP and stock plans expense 3,516 5,256
Gain on securities transactions (751) (608)
Net change in loans held for sale (488,758) 36,168
Net gain on sales of other real estate owned (536) (2,240)
Capitalization of servicing assets (17,829) (25,918)
Amortization of servicing assets 10,703 14,843
Deferred income taxes 7,023 9,820
Increase in other assets 5,109 16,378
(Decrease) Increase in other liabilities (312,020) 5,937
Other, net 400 (4,252)
----------- -----------
Net cash (used in) provided by operating activities (662,466) 130,881
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan originations, net of principal repayments 26,015 23,560
Proceeds from sales of other real estate owned 2,272 7,120
Purchases of securities available for sale (439,362) (1,221,046)
Purchases of securities held to maturity (130) --
Proceeds from maturities of securities available for sale 342,400 1,146,000
Proceeds from sales of securities available for sale 49,738 607
Principal repayments on securities 50,931 61,841
Purchase of Federal Home Loan Bank stock (4,493) --
Purchases of premises and equipment (5,612) (3,971)
----------- -----------
Net cash provided by investing activities 21,759 14,111
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (withdrawals) deposits from depositors' accounts (100,765) 235,647
Borrowing on notes payable -- 2,262,254
Payments on notes payable -- (2,177,793)
Net (decrease) increase on lease payable (1,025) 824
Payments for cash dividends (22,890) (17,924)
Stock offering -- 47,351
Exercise of stock options 662 5,760
Purchase of treasury stock (8,531) --
Securities sold under agreements to repurchase 122,685 (134,074)
Net increase (decrease) in mortgagors' escrow 24,757 (5,367)
----------- -----------
Net cash provided by financing activities 14,893 216,678
----------- -----------
Net (decrease) increase in cash and cash equivalents (625,814) 361,670
Cash and cash equivalents at beginning of period 1,232,302 1,088,372
----------- -----------
Cash and cash equivalents at end of period $ 606,488 $ 1,450,042
=========== ===========
NON-CASH ACTIVITIES:
Additions to other real estate owned, net $ (3,709) $ 2,207
=========== ===========
Loans to facilitate sales of other real estate $ -- $ --
=========== ===========
Unsettled trades $ (2,256) $ --
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes $ 22,422 $ 24,230
=========== ===========
Interest paid $ 131,812 $ 134,489
=========== ===========
</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
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. Certain reclassifications have been made
to the prior period financial statements to conform to the current year
presentation. 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,
1999.
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 or manufactured housing loans 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 or loss 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 servicing rights and one or more retained interests. 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 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 liabilities associated with these guarantees are
reported as a component of other liabilities. A gain or loss is recognized as
the difference between the cash proceeds from the sale and the allocated cost
basis of the assets sold, less the estimated fair value of the corporate
guarantee.
8
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
RETAINED INTERESTS IN SECURITIZATIONS
Retained interests in securitizations include interest-only strips, subordinated
certificates and transferor interests, including overcollateralization accounts.
Retained interests in securitizations are amortized using the interest method.
The Company classifies its retained interests in securitizations as available
for sale and carries these securities at fair value. Unrealized gains and losses
are reported, net of applicable taxes, in accumulated other comprehensive
income, as a separate component of stockholders' equity.
To obtain fair values, quoted market prices are used if available. Because
market quotes are generally not available for retained interests, the Company
generally estimates fair value based upon the present value of estimated
future cash flows using assumptions of prepayments, defaults, loss severity
rates, interest rate spreads, and discount rates that the Company believes
market participants would use for similar assets and liabilities.
SERVICING ASSETS
Servicing assets are carried at the lower of cost or fair value and are
amortized in proportion to and over the period of net servicing income.
The Company stratifies its servicing assets based on the risk characteristics of
the underlying loan pools. Servicing assets are evaluated for impairment based
on the risk characteristics of these pools to determine whether any valuation
allowance is recognized through a charge to current earnings for servicing
assets that have an amortized balance in excess of the current fair value.
The fair value of servicing assets is determined by calculating the present
value of estimated future net servicing cash flows, using assumptions of
prepayments, defaults, servicing costs and discount rates that the Company
believes market participants would use for similar assets.
2. STOCK INCENTIVE PLAN
For the three months ended March 31, 2000, the Company granted options to
purchase 1,977,700 shares of the Company's common stock to certain officers, at
an average exercise price of $21.36. 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)
3. 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.
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
LOANS RECEIVABLE HELD FOR SALE:
Residential mortgage loans $ 911,855 $ 766,582
Home equity lines of credit 264,984 47,551
Manufactured housing loans 367,120 265,772
Manufactured housing land/home loans 148,913 130,553
Guaranteed student loans 2,794 2,450
Deferred loan origination fees and unearned discount 1,172 (4,828)
---------- -----------
Loans receivable held for sale $1,696,838 $ 1,208,080
========== ===========
</TABLE>
10
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
4. SECURITIES
Securities held at March 31, 2000 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:
Agency notes/Asset-backed securities $ 191,514 $ --- $ (2,822) $ 188,692
Mortgage-backed securities 895,688 29 (26,245) 869,472
Collateralized mortgage obligations 614,618 --- (9,674) 604,944
Trust certificates collateralized by GNMA 15,771 --- (39) 15,732
securities
Commercial paper 74,794 --- --- 74,794
Corporate bonds 33,832 --- (642) 33,190
Tax exempt municipals 64,739 --- (592) 64,147
Corporate asset-backed securities 25,000 --- (35) 24,965
Other 90,000 --- --- 90,000
------------- ------------- ------------- -------------
Total securities available for sale $ 2,005,956 $ 29 $ (40,049) $ 1,965,936
============= ============= ============= =============
SECURITIES HELD TO MATURITY
Tax exempt municipals $ 530 $ 10 $ --- $ 540
Other 1,571 --- --- 1,571
------------- ------------- ------------- -------------
Total securities held to maturity $ 2,101 $ 10 $ --- $ 2,111
============= ============= ============= =============
</TABLE>
Securities held at December 31, 1999 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:
Agency notes/Asset-backed securities $ 139,804 $ --- $ (1,708) $ 138,096
Mortgage-backed securities 918,116 2 (23,868) 894,250
Collateralized mortgage obligations 589,800 1 (6,308) 583,493
Trust certificates collateralized by GNMA 16,694 --- (41) 16,653
securities
Commercial paper 169,416 --- --- 169,416
Corporate bonds 33,823 130 (168) 33,785
Tax exempt municipals 64,732 25 (660) 64,097
Corporate asset-backed securities 25,000 --- (43) 24,957
Other 50,000 --- --- 50,000
------------- ------------- ------------- -------------
Total securities available for sale $ 2,007,385 $ 158 $ (32,796) $ 1,974,747
============= ============= ============= =============
SECURITIES HELD TO MATURITY
Tax exempt municipals $ 530 $ 11 $ --- $ 541
Other 1,444 --- --- 1,444
------------- ------------- ------------- -------------
Total securities held to maturity $ 1,974 $ 11 $ --- $ 1,985
============= ============= ============= =============
</TABLE>
o ESTIMATED FAIR VALUES FOR SECURITIES ARE BASED ON PUBLISHED MARKET OR
SECURITIES DEALERS' ESTIMATED PRICES.
o DURING THE QUARTER ENDED MARCH 31, 2000, THE COMPANY SOLD $49.0 MILLION
AVAILABLE FOR SALE SECURITIES RESULTING IN $0.53 MILLION IN GROSS REALIZED
GAINS AND $0.02 MILLION IN GROSS REALIZED LOSSES.
o DURING THE QUARTER ENDED MARCH 31, 2000, THE COMPANY SOLD NO TRADING
ASSETS.
o THE AVERAGE MATURITIES OF THE SECURITIES AVAILABLE FOR SALE AND HELD TO
MATURITY AT MARCH 31, 2000 ARE APPROXIMATELY 18.7 AND 7.0 YEARS,
RESPECTIVELY. THERE WERE NO TRADING SECURITIES AT MARCH 31, 2000.
o 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 6.0 YEARS.
11
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
5. RETAINED INTERESTS IN SECURITIZATIONS AND SERVICING ASSETS
SECURITIZATIONS
During the quarters ended March 31, 2000 and 1999, GreenPoint sold $590.0
million and $821.0 million of manufactured housing loans in two securitization
transactions each year for gains of $22.2 million and $19.3 million,
respectively. GreenPoint receives annual servicing fees approximating 1.0% for
manufactured housing loans and rights to future cash flows arising after the
investors in the securitization trusts receive the return for which they are
contracted.
The significant assumptions used in calculating the gain on sale were as
follows:
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31, 2000
--------------------
MANUFACTURED
HOUSING
--------------------
<S> <C>
Weighted average prepayment rate (1) 12.0%
Weighted average life (in years) 5.0
Weighted average default rate 3.8%
Loss severity rate 56.9%
Asset cash flows discounted at 14.0%
Liability cash flows discounted at 7.0%
</TABLE>
(1) EXCLUDES WEIGHTED AVERAGE DEFAULT RATE.
GreenPoint did not securitize any home equity or second mortgage loans during
the first quarter of 2000 and 1999. The draws on previously securitized home
equity lines of credit and sales of additional mortgage loans into
securitization trusts totaled $53.5 million and $115.8 million, resulting in
gains of $1.8 million and $0.7 million during the quarters ended March 31, 2000
and 1999, respectively. GreenPoint receives annual servicing fees approximating
0.5% of the principal balances for these mortgage loans and rights to future
cash flows arising after the investors in the securitization trusts receive the
return for which they are contracted.
The investors and the securitization trusts have no recourse to GreenPoint's
other assets for failure of debtors to pay when due, except for the
interest-only strip related to both mortgage and manufactured housing
securitizations and the liability under the corporate guarantee related to the
manufactured housing securitizations. GreenPoint has issued corporate guarantees
with respect to securitized manufactured housing loans with principal balances
of $3.5 billion at March 31, 2000. The maximum amount of recourse exposure under
these corporate guarantees amounts to $480.2 million and $397.9 million as of
March 31, 2000 and December 31, 1999, respectively. GreenPoint has established a
liability for these corporate guarantees of $24.6 million and $21.6 million as
of March 31, 2000 and December 31, 1999, respectively.
12
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
WHOLE LOAN SALES
During the quarters ended March 31, 2000 and 1999, GreenPoint sold as whole
loans certain mortgage loans with principal balances of $1.2 billion and $2.3
billion, respectively, for pre-tax gains of $22.0 million and $38.0 million,
respectively. GreenPoint retained servicing rights and provided limited recourse
on some of the mortgage loans sold.
At March 31, 2000, GreenPoint has provided limited recourse on mortgage loans
and recourse on manufactured housing loans with remaining principal balances
of $639.5 million and $346.8 million, respectively. GreenPoint has also
provided representations and warranties on mortgage and manufactured housing
loans with remaining principal balances of $4.3 billion and $346.8 million,
respectively. At March 31, 2000, GreenPoint has established liabilities
related to recourse and representations and warranties for mortgage and
manufactured housing loans of $6.3 million and $10.9 million, respectively.
RETAINED INTERESTS IN SECURITIZATIONS
The entire portfolio of retained interests in securitizations is summarized
as follows:
<TABLE>
<CAPTION>
MARCH 31, 2000
------------------------------------------------------------------
MANUFACTURED
HOUSING MORTGAGE (1) TOTAL
------------------ ------------------ ------------------
(IN THOUSANDS)
<S> <C> <C> <C>
Subordinated certificates $ --- $ 5,318 $ 5,318
Interest-only strip 14,726 29,438 44,164
Transferor interest (2) --- 48,865 48,865
------------------ ------------------ ------------------
$ 14,726 $ 83,621 $ 98,347
================== ================== ==================
<CAPTION>
DECEMBER 31, 1999
------------------------------------------------------------------
MANUFACTURED
HOUSING MORTGAGE (1) TOTAL
------------------ ------------------ ------------------
(IN THOUSANDS)
<S> <C> <C> <C>
Subordinated certificates $ 40,441 $ 5,111 $ 45,552
Interest-only strip 12,229 20,924 33,153
Transferor interest (2) --- 45,851 45,851
------------------ ------------------ ------------------
$ 52,670 $ 71,886 $ 124,556
================== ================== ==================
</TABLE>
(1) RETAINED INTERESTS ARE FROM HOME EQUITY, FIRST AND SECOND MORTGAGE
SECURITIZATIONS.
(2) INCLUDES OVERCOLLATERALIZATION ACCOUNTS.
13
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
SERVICING ASSETS
On a quarterly basis, GreenPoint reviews capitalized servicing rights for
impairment. This review is performed based on risk strata, which are determined
on a disaggregate basis given the predominant risk characteristics of the
underlying loans. For manufactured housing loans, the predominant risk
characteristics are loan type and interest rate type. For mortgage loans, the
predominant risk characteristics are loan type and interest rate. At March 31,
2000 and December 31, 1999, there were no valuation allowances on any of the
servicing rights risk strata.
Servicing assets relating to the entire servicing portfolio is summarized as
follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Manufactured housing $130,244 $126,325
Mortgage 57,511 54,304
-------- --------
$187,755 $180,629
======== ========
</TABLE>
During the quarter ended March 31, 2000, GreenPoint capitalized servicing
rights of $6.3 million and $11.5 million for mortgage and manufactured
housing loans, respectively. The significant assumptions used in estimating
the fair value of the servicing assets capitalized in the quarter ended
March 31, 2000 were as follows:
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31, 2000
----------------------------
MANUFACTURED
HOUSING MORTGAGE
--------------- ----------
<S> <C> <C>
Weighted average prepayment rate (1) 12.0% 13.7%
Weighted average life (in years) 5.0 7.7
Weighted average default rate 3.8% 3.1%
Cash flows discounted at 14.0% 9.4%
</TABLE>
(1) EXCLUDES WEIGHTED AVERAGE DEFAULT RATE
14
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
6. 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.
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31, 2000
-----------------------------------------------------------------------------------
MANUFACTURED SEGMENT CONSOLIDATED
MORTGAGE CONSUMER HOUSING TOTALS OTHER (1) TOTALS
----------- ----------- ---------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Net interest income $ 58,333 $ 57,349 $ 11,265 $ 126,947 $ 16,441 $ 143,388
Income from fees and (14) 9,320 2,482 11,788 18 11,806
commissions
Loan servicing fees 5,002 -- 27,065 32,067 -- 32,067
Net gain on sales of loans 23,812 7 22,170 45,989 -- 45,989
Depreciation and amortization 4,056 12,428 8,876 25,360 2,908 28,268
Segment income (loss) before 71,888 33,978 17,247 123,113 (25,026) 98,087
taxes
Other significant non-cash
items:
ESOP and stock plans expense 974 992 942 2,908 608 3,516
Total assets $ 9,994,550 $11,949,951 $1,700,926 $23,645,427 $(8,469,672)(2) $15,175,755
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31, 1999
-----------------------------------------------------------------------------------
MANUFACTURED 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 1,528 6,967 2,163 10,658 (644) 10,014
commissions
Loan servicing fees 3,299 -- 22,270 25,569 -- 25,569
Net gain on sales of loans 38,665 35 19,296 57,996 -- 57,996
Depreciation and amortization 3,041 12,363 9,040 24,444 252 24,696
Segment income (loss) before 61,474 25,550 10,381 97,405 (28,723) 68,682
taxes
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)(2) $15,265,928
</TABLE>
(1) REPRESENTS UNALLOCATED CORPORATE AMOUNTS.
(2) 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 $8.5 BILLION AND $8.2 BILLION
FOR THE QUARTERS ENDED MARCH 31, 2000 AND 1999, RESPECTIVELY. NET INTEREST
INCOME CORRESPONDING TO THE ASSUMED FUNDS TRANSFERS IS ALLOCATED
ACCORDINGLY.
15
<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 Derivative
and Hedging Activities ("SFAS 133"). As amended, SFAS 133 is effective for all
fiscal years beginning after June 15, 2000 (January 1, 2001 for the Company).
SFAS 133 requires that all derivative instruments be recorded on the balance
sheet at fair value. Changes in the fair value of derivatives are recorded in
each period in current earnings or 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 is in the process of
assessing the impact of the adoption of SFAS 133 on the Company's earnings and
financial position.
8. STOCK REPURCHASE PROGRAM
In March 2000, the Company's Board of Directors authorized a new share
repurchase program of up to 5%, or approximately 5.2 million, of its outstanding
shares. The repurchase will be at the Company's discretion, based on ongoing
assessments of the capital needs of the business and the market valuation of its
stock.
9. RESTRUCTURING RESERVE AND NON-RECURRING PERSONNEL EXPENSE
The Company recorded a $6.0 million restructuring charge in the first quarter of
1999 pertaining to the integration of Headlands Mortgage Company and GreenPoint
Mortgage Corp. The restructuring charge included accruals related to the
estimated severance expenses to be incurred. During the first quarter of 2000,
the Company reevaluated the remaining restructuring liability of $2.6 million.
Most of the actions under this plan are completed or near completion and have
resulted in expenses being less than originally anticipated. As a result, the
Company recognized a restructuring credit of $1.4 million during the first
quarter of 2000.
For the quarter ended March 31, 2000 the Company recorded a new restructuring
charge of $1.4 million that will be utilized to absorb severance expenses
pertaining to further integration of GreenPoint Mortgage Funding Corp. and
GreenPoint Credit.
The Company expects to have these restructuring programs completed in 2000.
16
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------------------
MARCH 31, DEC. 31, SEPT. 30, JUNE 30, MARCH 31,
2000 1999 1999 1999 1999
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PERFORMANCE RATIOS (ANNUALIZED)
Core cash earnings return on
average assets (1) 2.14% 2.16% 2.28% 2.31% 2.21%
Core cash earnings return on
average equity (1) 16.33 16.34 16.98 17.02 16.98
Core cash earnings return on
tangible equity (1) 30.14 30.47 32.04 33.46 35.12
Core return on average assets (1) 1.53 1.53 1.63 1.62 1.54
Core return on average equity (1) 11.63 11.57 12.12 11.95 11.81
Net interest margin 4.21 4.02 4.13 4.10 3.83
Net interest spread during 3.80 3.63 3.75 3.75 3.51
period
Operating expense to average 2.76 2.71 2.90 2.94 2.82
assets (4)
Efficiency ratio (5) 45.4 45.2 47.0 47.3 47.4
Average interest-earning assets
to average interest-bearing 1.10x 1.09x 1.10x 1.09x 1.08x
liabilities
REGULATORY CAPITAL RATIOS:
Company:
Leverage capital (6) 9.06% 8.64% 9.27% 9.04% 8.48%
Risk-based capital (6):
Tier I 10.44 10.77 12.38 12.21 12.68
Total 11.36 11.75 13.44 13.27 13.90
Bank:
Leverage capital (6) 8.98 8.32 8.17 7.80 7.08
Risk-based capital (6):
Tier I 10.35 10.37 10.89 10.48 10.58
Total 11.27 11.35 11.95 11.55 11.81
PER SHARE DATA:
Core cash earnings (1)* $ 0.88 $ 0.87 $ 0.88 $ 0.87 $ 0.86
Common book value** 21.87 21.40 21.26 20.75 20.39
Tangible common book value** 11.88 11.26 11.45 10.74 10.17
Shares used in
calculations - (In
thousands):
* Average 92,479 94,960 98,112 98,189 96,372
** Period - end 92,310 92,830 98,035 98,129 97,969
Total 103,832 104,203 109,469 109,027 108,909
ASSET QUALITY RATIOS:
Non-performing loans to total
loans held for investment 2.16% 2.36% 2.43% 2.72% 2.97%
Non-performing assets to total 1.39 1.47 1.55 1.76 1.88
assets
ALLOWANCE FOR POSSIBLE LOAN LOSSES
TO:
Non-performing loans 56.40 51.47 48.13 44.65 40.60
Total loans held for investment 1.22 1.21 1.17 1.21 1.21
EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(7):
Excluding interest on deposits 11.11x 10.76x 11.33x 11.02x 7.94x
Including interest on deposits 1.73x 1.73x 1.78x 1.78x 1.55x
</TABLE>
(1) Excludes Headlands acquisition expense, restructuring charge and
non-recurring personnel expense, one-time charitable foundation expense
and gain on sale of a lease.
(2) Excludes goodwill expense, ORE income, Headlands acquisition expense,
non-recurring personnel expense, restructuring charge and one-time
charitable foundation expense .
(3) The efficiency ratio is calculated by dividing operating expense by the sum
of net interest income and non-interest income, excluding pre-tax gain
on sale of a lease.
(4) 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.
17
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
1. GENERAL
GreenPoint Financial Corp. (the "Company" or "GreenPoint") is a leading national
specialty housing finance company with three principal businesses. GreenPoint
Mortgage ("GPM"), a national mortgage banking company headquartered in Larkspur,
California, is the leading national lender in no documentation ("NoDoc") and
alternative A ("Alt A") residential mortgages. GreenPoint Credit LLC
("GreenPoint Credit"), headquartered in San Diego, California, is the second
largest lender nationally in the manufactured housing finance industry.
GreenPoint Bank (the "Bank"), a New York State chartered savings bank, has $11
billion in deposits in 73 branches serving more than 400,000 households in the
Greater New York City area.
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 (on
both a GAAP and cash basis); revenue growth; origination volume in both the
Company's mortgage and manufactured housing finance businesses; tangible capital
generation; market share; 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
and related integration activities; prevailing economic conditions; changes in
interest rates, loan demand, real estate values, and competition, which can
materially affect origination levels in the Company's mortgage and manufactured
housing finance businesses; 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 timely basis or
at prices which are acceptable to the Company; 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.
18
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
ITEM - 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
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.
2. OPERATING RESULTS
The first quarter's results include the following:
o Net income was $57.9 million, an increase of 65% over the first quarter of
1999. Net income per diluted share was $0.63 for the quarter, an increase
of 75% over the first quarter of 1999.
o Total loan originations for the first quarter of 2000 were $2.7 billion, a
decrease of 29% from the first quarter of 1999, and a decrease of 6%
compared to the prior quarter. Mortgage originations for the same period
were $2.0 billion, a decrease of 36% from the first quarter of 1999, and a
decrease of 9% from the fourth quarter of 1999. Manufactured housing loan
originations were $731 million, an increase of 1% from the fourth quarter
of 1999 and 2% from a year ago.
o GreenPoint Credit recorded a gain of $22.2 million from a securitization
of $590 million of fixed and variable rate manufactured housing loans.
o GPM sold certain whole loan mortgages of $1.2 billion, recording a gain of
$22 million. Draws on previously securitized home equity lines of credit
totaling $53.5 million resulted in a gain of $1.8 million.
o Asset quality improved further in the mortgage portfolio, and the
credit performance of manufactured housing loans in the portfolio and
securitizations met expectations. Non-performing mortgage loans decreased
28% to $200.3 million, and total non-performing assets decreased 27% to
$210.2 million at March 31, 2000.
The March 31, 1999 quarterly results include the recognition of non-recurring
expenses of $27.6 million related to the acquisition of Headlands Mortgage
Company ("Headlands") and include a one-time restructuring charge related to
severance.
19
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
ITEM 2 - 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 exclude 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 and additional repurchases of the Company's stock.
<TABLE>
<CAPTION>
QUARTER ENDED
-------------------------------
MARCH 31, DEC. 31, MARCH 31,
2000 1999 1999
------- -------- -------
<S> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Net income $57,871 $ 58,940 $35,028
Non-recurring items, net of tax (1) -- (440) 22,503
------- -------- -------
Core net income 57,871 58,500 57,531
Add back:
Goodwill amortization 19,892 19,898 19,958
Employee Stock Ownership and stock
plans expense 3,516 4,245 5,256
------- -------- -------
Core cash earnings $81,279 $ 82,643 $82,745
======= ======== =======
Core cash earnings per share (2) $ 0.88 $ 0.87 $ 0.86
======= ======== =======
</TABLE>
(1) NON-RECURRING ITEMS INCLUDE HEADLANDS ACQUISITION EXPENSE, RESTRUCTURING
CHARGE AND NON-RECURRING PERSONNEL EXPENSE, GAIN ON SALE OF A LEASE AND ONE
TIME CHARITABLE FOUNDATION EXPENSE.
(2) BASED ON THE WEIGHTED AVERAGE SHARES USED TO CALCULATE DILUTED EARNINGS PER
SHARE.
20
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
NET INTEREST INCOME
Net interest income on a tax-equivalent basis increased by $15.7 million,
or 12%, over the first quarter of 1999. The improvement was due to an
increase in interest earning assets, a change in the mix of those assets and
an increase in the interest rate spread from 3.51% to 3.80%.
The increase in average earning assets of $345 million was attributed to
growth in investment securities (primarily mortgage-backed securities and
collateralized mortgage obligations) which was partially funded by a decline
in shorter-term money market investments. The average balance of loans held
for investment (both mortgage and manufactured housing) was essentially
unchanged from the 1999 first quarter. The yield on earning assets increased
to 8.45% from 8% in the first quarter of 1999 due to higher market interest
rates and the change in the shift to higher-yielding, longer-term earning
assets.
The cost of interest-bearing liabilities increased only 16 basis points
during this period from 4.49% to 4.65%. The increase reflects the rise in
market interest rates which was somewhat mitigated by a minimal increase in
the rates paid on savings, money market and variable rate savings deposits.
The growth in net interest income was also the result of a growing deposit
base as average deposits increased $148 million from the first quarter of
1999 to the first quarter of 2000.
21
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
ITEM 2 - 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, 2000 and 1999, 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, 2000 MARCH 31, 1999
----------------------------------------- -----------------------------------------
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 held for investment (2) $ 8,671,800 $ 187,529 8.65% $ 9,240,098 $ 196,351 8.50%
Other loans (2) 636,254 16,147 10.15 119,195 2,378 7.98
Loans held for sale 1,418,739 31,113 8.77 1,350,467 30,711 9.10
Money market investments (3) 598,426 8,810 5.92 931,555 11,309 4.92
Securities (4) 2,079,248 36,105 6.94 1,379,953 19,932 5.77
Trading assets --- --- --- 1,360 18 5.30
Other interest-earning assets 338,576 10,550 12.53 375,318 6,976 7.54
--------------- ------------- --------------- -------------
Total interest-earning assets 13,743,043 290,254 8.45 13,397,946 267,675 8.00
------------- -------------
Non-interest earning assets (5) 1,425,770 1,572,293
--------------- ---------------
Total assets $ 15,168,813 $ 14,970,239
=============== ===============
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Savings $ 1,355,757 7,283 2.16 $ 1,526,083 8,295 2.20
N.O.W. 296,687 725 0.98 321,334 775 0.98
Money market and variable rate savings 2,443,575 20,370 3.35 2,355,969 19,133 3.29
Term certificates of deposit 7,132,693 95,422 5.38 6,859,810 87,365 5.17
Mortgagors' escrow 102,494 455 1.79 120,709 357 1.20
Trading liabilities --- --- --- 1,656 20 4.90
Notes payable and other borrowings 688,540 11,033 6.39 543,185 7,398 5.52
Securities sold under agreements to
repurchase 111,939 1,549 5.57 318,499 6,569 8.36
Long term debt 199,909 3,468 6.94 199,872 3,468 6.94
Guaranteed preferred beneficial
interest in Company's junior 199,741 4,574 9.16 199,732 4,575 9.16
subordinated debentures
--------------- ------------- --------------- -------------
Total interest-bearing liabilities 12,531,335 144,879 4.65 12,446,849 137,955 4.49
------------- -------------
Other liabilities (6) 646,529 574,572
--------------- ---------------
Total liabilities 13,177,864 13,021,421
Stockholders' equity 1,990,949 1,948,818
--------------- ---------------
Total liabilities and stockholders'
equity $ 15,168,813 $ 14,970,239
=============== ===============
Net interest income/interest rate spread (7) $ 145,375 3.80% $ 129,720 3.51%
============= ========= ============= =========
Net interest=earning assets/net interest
margin (8) $ 1,211,708 4.21% $ 951,097 3.83%
=============== ========= =============== =========
Ratio of interest-earning assets to
interest-earning liabilities 1.10 x 1.08 x
=============== ===============
</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.
22
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
ITEM 2 - 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, 2000
COMPARED TO
QUARTER ENDED MARCH 31, 1999
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) $ (12,242) $ 3,420 $ (8,822)
Other loans (1) 12,956 813 13,769
Loans held for sale 1,520 (1,118) 402
Money market investments (2) (4,583) 2,084 (2,499)
Securities 11,561 4,612 16,173
Trading assets (18) --- (18)
Other interest-earning assets (741) 4,315 3,574
------------ ------------ -------------
Total interest earned on assets 8,453 14,126 22,579
------------ ------------ -------------
Interest-bearing liabilities:
Savings (916) (96) (1,012)
N.O.W. (60) 10 (50)
Money market and variable rate savings 722 515 1,237
Term certificate of deposit 3,553 4,504 8,057
Mortgagors' escrow (60) 158 98
Trading liabilities (20) -- (20)
Notes payable and other borrowings 2,190 1,445 3,635
Securities sold under agreements to
repurchase (3,330) (1,690) (5,020)
Long term debt -- -- --
Guaranteed preferred beneficial
interest in Company's junior
subordinated debentures -- (1) (1)
------------ ------------ -------------
Total interest paid on liabilities 2,079 4,845 6,924
------------ ------------ -------------
Net change in net interest income $ 6,374 $ 9,281 $ 15,655
============ ============ =============
</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.
23
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
PROVISION FOR POSSIBLE LOAN LOSSES
The provision for loan losses increased by $5.5 million, to $8.3 million for
the first quarter of 2000, from $2.8 million for the comparable 1999 period.
The increase is primarily attributable to charge-offs on the $604 million of
manufactured housing loans that were retained during the third quarter of
1999. Charge-offs for the quarter on the residential mortgage portfolio were
flat versus a year ago. The provision equaled net charge-offs for the quarter.
NON-INTEREST INCOME
Non-interest income was $87.3 million, a decrease of 7% versus the comparable
1999 period. The decrease for the quarter is a result of a decline in the net
gain on sale of whole loan mortgages of $16.0 million and an increase in the
provision for corporate guarantee of $3.3 million, partially offset by an
increase in the gain on mortgage and manufactured housing securitizations of
$4.0 million and increases in loan servicing fees and banking services fees and
commissions of $6.5 million and $2.1 million, respectively.
The decrease in gain on sale of mortgage loans is primarily due to lower
origination volume for the quarter versus a year ago, due to a rising interest
rate environment. The increase in gain on securitizations is a result of a
higher margin being earned on the variable rate manufactured housing
securitizations. Loan servicing fees increased as a result of an increase in the
servicing rights portfolio on GreenPoint Credit. The improvement in banking fees
is primarily due to increased annuity sales and consumer fees.
NON-INTEREST EXPENSE
Total non-interest expense was $124.3 million for the quarter, a decrease of
$26.8 million or 18% from the comparable 1999 period. The decrease is
primarily attributable to non-recurring expenses of $27.6 million incurred by
the Company relating to its acquisition of Headlands on March 30, 1999.
Excluding the non-recurring acquisition expense, total non-interest expense
was essentially unchanged reflecting the Company's continued emphasis on
tight expense controls.
The non-recurring acquisition expenses incurred in the first quarter of 1999
included $10.2 million in transaction fees, $1.9 million in stock option
acceleration expense, a $2.5 million increase in the recourse reserve for
sold loans, and a $5.0 million contingent liability reserve. The charges also
included $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.
24
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
INCOME TAX EXPENSE
Total income tax expense increased $6.6 million, or 19%, to $40.2 million,
from $33.6 million for the comparable period of 1999. The rise in the current
quarter compared to 1999 was due to a $29.4 million increase in income
before income taxes partially offset by a decline in the effective tax rate
from 49.0% in the 1999 quarter to 41.0% in the 2000 quarter. The relatively
high effective tax rate reported in the first quarter of 1999 was due to
non-recurring charges, which included expenses of approximately $14.1 million
for which no tax benefit was recognized.
NON-PERFORMING ASSETS
The Company's asset quality improved during the three months ended March 31,
2000, as non-performing assets decreased by 7%. The ratio of non-performing
loans to mortgage loans held for investment fell to 2.32% at March 31, 2000 from
2.54% at December 31, 1999 while the ratio of non-performing assets to total
assets fell to 1.39% at March 31, 2000 from 1.47% at December 31, 1999.
Non-performing assets, net of related specific reserves, were as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Mortgage loans secured by:
Residential one-to four-family $161,292 $172,975
Residential multi-family 19,927 24,144
Commercial property 18,935 22,240
Other loans 185 171
-------- --------
Total non-performing loans (1) 200,339 219,530
-------- --------
Total other real estate owned, net 9,878 7,544
-------- --------
Total non-performing assets $210,217 $227,074
======== ========
</TABLE>
(1) INCLUDES $4.3 MILLION AND $5.9 MILLION OF NON-ACCRUAL MORTGAGE LOANS UNDER
90 DAYS PAST DUE AT MARCH 31, 2000 AND DECEMBER 31, 1999, RESPECTIVELY.
25
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
ALLOWANCE FOR POSSIBLE LOAN LOSSES
The following is a summary of the provision and allowance for possible loan
losses:
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31,
---------------------------
2000 1999
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Balance at beginning of period $ 113,000 $ 113,000
Provision charged to income 8,344 2,797
Charge-offs:
Residential mortgage (1,962) (2,098)
Manufactured housing (6,423) (813)
--------- ---------
Total Charge-offs (8,385) (2,911)
--------- ---------
Recoveries:
Residential mortgage 41 114
Manufactured housing -- --
--------- ---------
Total Recoveries 41 114
--------- ---------
Balance at end of period $ 113,000 $ 113,000
========= =========
</TABLE>
CAPITAL RATIOS
The Company's ratio of period-end stockholders' equity to ending total assets at
March 31, 2000 was 13.30% compared to 12.90% at December 31, 1999.
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, 2000, that the Company and
the Bank meet all capital adequacy requirements to which it is subject.
26
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
As of March 31, 2000, 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
-------------------------------- --------------------------------
AMOUNT RATIO AMOUNT RATIO
-------------- -------------- -------------- --------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
AS OF MARCH 31, 2000
Total Capital (to Risk Weighted Assets):
Company $ 1,402.5 11.36% $ 987.7 8.00%
Bank 1,390.0 11.27 987.1 8.00
Tier 1 Capital (to Risk Weighted Assets):
Company $ 1,289.5 10.44% $ 493.9 4.00%
Bank 1,277.0 10.35 493.6 4.00
Tier 1 Capital (to Average Assets):
Company $ 1,289.5 9.06% $ 569.6 4.00%
Bank 1,277.0 8.98 569.1 4.00
</TABLE>
<TABLE>
<CAPTION>
REQUIRED FOR CAPITAL
ACTUAL ADEQUACY PURPOSES
-------------------------------- --------------------------------
AMOUNT RATIO AMOUNT RATIO
-------------- -------------- -------------- --------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
AS OF DECEMBER 31, 1999
Total Capital (to Risk Weighted Assets):
Company $ 1,351.4 11.75% $ 920.0 8.00%
Bank 1,305.1 11.35 919.6 8.00
Tier 1 Capital (to Risk Weighted Assets):
Company $ 1,238.4 10.77% $ 460.0 4.00%
Bank 1,192.1 10.37 459.8 4.00
Tier 1 Capital (to Average Assets):
Company $ 1,238.4 8.64% $ 573.6 4.00%
Bank 1,192.1 8.32 573.3 4.00
</TABLE>
27
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
IMPACT OF THE YEAR 2000
As of the date of this quarterly report, the Company has not experienced any
disruption of operations or other material adverse consequences as a result of
its computers or those of its suppliers and service providers turning the
calendar to the Year 2000. The Company does not expect to experience such
disruptions or material adverse consequences in the future. The total cost of
the Year 2000 project was not material to the Company's financial statements and
was expensed as incurred.
28
<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 chaired by the Chief
Financial Officer, and includes the Treasurer, the Head of Risk Management and
the Company's senior business-unit and financial executives. Interest rate risk
management strategies are formulated and monitored by ALCO within policies and
limits approved by the Board of Directors. These policies and limits set forth
the maximum risk which the Board of Directors deems prudent, govern permissible
investment securities and off-balance sheet instruments and identify acceptable
counter-parties to securities and off-balance sheet transactions.
ALCO risk management strategies allow for the assumption of interest rate risk
within the Board approved limits. The strategies are formulated based upon
ALCO's assessments of likely market developments and trends in the Company's
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 and manufactured housing 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 table; 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.
29
<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
instruments are not reflected in the Company's balance sheet. These instruments
are included in the interest rate sensitivity table for purposes of analyzing
interest rate risk.
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.
30
<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,
2000. Allocations of assets and liabilities, including non-interest-bearing
sources of funds to specific periods, are based upon management's assessment of
contractual or anticipated repricing characteristics, adjusted periodically to
reflect actual experience. Those gaps are then adjusted for the net effect of
off-balance sheet financial instruments such as interest rate swaps.
<TABLE>
<CAPTION>
REPRICING PERIODS
--------------------------------------------------------------------------------------------
MORE THAN MORE THAN MORE THAN
THREE MONTHS THREE MONTHS SIX MONTHS ONE YEAR MORE THAN
OR LESS TO SIX MONTHS TO ONE YEAR TO THREE YEARS THREE YEARS TOTAL
-------------- -------------- -------------- -------------- -------------- ------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Total loans, net $ 2,539 $ 661 $ 1,091 $ 2,240 $ 4,307 $ 10,838
Money market investments (1) 470 -- -- -- -- 470
Securities held to maturity 1 -- -- -- 97 98
Securities available for sale 382 51 94 500 1,037 2,064
Other interest earning assets 123 -- -- -- -- 123
------------- ------------- ------------- ------------- ------------- -----------
Total interest earning assets 3,515 712 1,185 2,740 5,441 13,593
------------- ------------- ------------- ------------- ------------- -----------
Cash and due from banks 136 -- -- -- -- 136
Servicing assets 5 5 9 34 136 189
Goodwill 20 20 40 160 682 922
Other non-interest earning assets 336 -- -- -- -- 336
------------- ------------- ------------- ------------- ------------- -----------
Total assets $ 4,012 $ 737 $ 1,234 $ 2,934 $ 6,259 $ 15,176
============== ============== ============== ============== ============== ============
Term certificates of deposit $ 924 $ 1,182 $ 3,079 $ 1,784 $ 129 $ 7,098
Core deposits 332 294 580 1,983 1,173 4,362
------------- ------------- ------------- ------------- ------------- -----------
Total deposits 1,256 1,476 3,659 3,767 1,302 11,460
------------- ------------- ------------- ------------- ------------- -----------
Mortgagors' escrow 7 7 13 54 39 120
Securities sold under agreements
to repurchase 123 -- -- -- -- 123
Federal Home Loan Bank of New
York advances 225 -- -- 100 350 675
Long term debt -- -- -- 200 -- 200
Guaranteed preferred beneficial
interest in Company's junior
subordinated debentures -- -- -- -- 200 200
Notes payable 4 -- -- -- -- 4
Other liabilities 375 -- -- -- -- 375
Stockholders' equity -- -- -- -- 2,019 2,019
------------- ------------- ------------- ------------- ------------- -----------
Total liabilities and
stockholders' equity $ 1,990 $ 1,483 $ 3,672 $ 4,121 $ 3,910 $ 15,176
============== ============== ============== ============== ============== ============
Off balance sheet financial
instruments $ 350 $ -- $ -- $ (350) $ -- $ --
============== ============== ============== ============== ============== ============
Interest rate sensitivity gap $ 2,372 $ (746) $ (2,438) $ (1,537) $ 2,349
Cumulative gap $ 2,372 $ 1,626 $ (812) $ (2,349)
Interest rate sensitivity gap as
a percentage of total assets 15.63% (4.92)% (16.06)% (10.13)% 15.48%
Cumulative gap as a percentage of
total assets 15.63% 10.71% (5.35)% (15.48)%
</TABLE>
(1) CONSISTS OF INTEREST-BEARING DEPOSITS IN OTHER BANKS, FEDERAL FUNDS SOLD
AND SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL.
As of March 31, 2000, the cumulative volume of liabilities maturing or repricing
within one year exceeded assets by $812 million, or 5.35% of assets.
31
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURE
ABOUT MARKET RISK - (CONTINUED)
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 and manufactured housing loans 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, 2000, 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 1.3% of projected 2000 net income.
Conversely, a gradual 200 basis point increase in interest rates over the
next twelve months on instruments held for other than trading purposes would
result in net income decreasing by 1.5%. GreenPoint does not have significant
exposure to such risk on instruments held for trading purposes.
Management has included all derivative and other financial instruments that have
a material effect in calculating the Company's potential earning at risk.
32
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The Company is not involved in any pending legal proceedings other than
routine proceedings occurring in the ordinary course of business which, in
the aggregate, involve amounts that are believed by management to be
immaterial to the consolidated financial statements of the Company.
33
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
PART II - OTHER INFORMATION
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
34
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
PART II - OTHER INFORMATION
EXHIBITS AND REPORTS ON FORM 8-K - (CONTINUED)
(b) REPORTS ON FORM 8-K
On January 5, 2000, GreenPoint Mortgage Securities Inc., a subsidiary of
Headlands Mortgage Company, a wholly owned subsidiary of GreenPoint Bank, filed
a current report on Form 8-K in connection with its previous issuance of
Headlands Home Equity Loan Trust 1999-2 Revolving Home Equity Loan Asset-Backed
Notes Series, 1999-2.
On January 6, 2000, GreenPoint Credit, LLC, the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) a Pooling and Servicing Agreement, dated as of
February 1, 1999, between GreenPoint Credit, LLC, as Contract Seller and
Servicer and The First National Bank of Chicago as Trustee; and (ii) the
required Monthly Investor Servicing Report.
On January 6, 2000, GreenPoint Credit, LLC, 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, LLC, 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,
LLC, as Contract Seller and Servicer and The First National Bank of Chicago as
Trustee; and (iii) the required Monthly Investor Servicing Report.
On January 6, 2000, GreenPoint Credit, LLC, the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) a Pooling and Servicing Agreement, dated as of
May 1, 1999, between GreenPoint Credit, LLC, as Contract Seller and Servicer and
The First National Bank of Chicago as Trustee; and (ii) the required Monthly
Investor Servicing Report.
On January 6, 2000, GreenPoint Credit, LLC, the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) a Pooling and Servicing Agreement, dated as of
September 1, 1999, between GreenPoint Credit, LLC, as Contract Seller and
Servicer and The First National Bank of Chicago as Trustee; and (ii) the
required Monthly Investor Servicing Report.
On January 6, 2000, GreenPoint Credit, LLC, the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) a Pooling and Servicing Agreement, dated as of
November 1, 1999, between GreenPoint Credit, LLC, as Contract Seller and
Servicer and The First National Bank of Chicago as Trustee; and (ii) the
required Monthly Investor Servicing Report.
35
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
PART II - OTHER INFORMATION
EXHIBITS AND REPORTS ON FORM 8-K - (CONTINUED)
On January 6, 2000, GreenPoint Credit, LLC, the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) a Pooling and Servicing Agreement, dated as of
March 1, 1999, between GreenPoint Credit, LLC, as Contract Seller and Servicer
and The First National Bank of Chicago as Trustee; and (ii) the required Monthly
Investor Servicing Report.
On January 25, 2000, GreenPoint Credit, LLC, the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) a Pooling and Servicing Agreement, dated as of
February 1, 1999, between GreenPoint Credit, LLC, as Contract Seller and
Servicer and The First National Bank of Chicago as Trustee; and (ii) the
required Monthly Investor Servicing Report.
On January 25, 2000, GreenPoint Credit, LLC, 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, LLC, 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,
LLC, as Contract Seller and Servicer and The First National Bank of Chicago as
Trustee; and (iii) the required Monthly Investor Servicing Report.
On January 25, 2000, GreenPoint Credit, LLC, the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) a Pooling and Servicing Agreement, dated as of
March 1, 1999, between GreenPoint Credit, LLC, as Contract Seller and Servicer
and The First National Bank of Chicago as Trustee; and (ii) the required Monthly
Investor Servicing Report.
On January 25, 2000, GreenPoint Credit, LLC, the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) a Pooling and Servicing Agreement, dated as of
December 1, 1999, between GreenPoint Credit, LLC, as Contract Seller and
Servicer and The First National Bank of Chicago as Trustee; and (ii) the
required Monthly Investor Servicing Report.
On January 25, 2000, GreenPoint Credit, LLC, the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) a Pooling and Servicing Agreement, dated as of
September 1, 1999, between GreenPoint Credit, LLC, as Contract Seller and
Servicer and The First National Bank of Chicago as Trustee; and (ii) the
required Monthly Investor Servicing Report.
On January 25, 2000, GreenPoint Credit, LLC, the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) a Pooling and Servicing Agreement, dated as of
May 1, 1999, between GreenPoint Credit, LLC, as Contract Seller and Servicer and
The First National Bank of Chicago as Trustee; and (ii) the required Monthly
Investor Servicing Report.
36
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
PART II - OTHER INFORMATION
EXHIBITS AND REPORTS ON FORM 8-K - (CONTINUED)
On January 25, 2000, GreenPoint Credit, LLC, the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) a Pooling and Servicing Agreement, dated as of
November 1, 1999, between GreenPoint Credit, LLC, as Contract Seller and
Servicer and The First National Bank of Chicago as Trustee; and (ii) the
required Monthly Investor Servicing Report.
On March 13, 2000, GreenPoint Credit, LLC 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 2000-1 (the "Publicly Offered Certificates"), which
contains Orrick's consent to use of its name in the Prospectus Supplement
("Prospectus Supplement") dated March 2, 2000 together with the related
Prospectus dated December 9, 1999; (ii) External Computational Materials
prepared by First Union Securities, Inc.
On March 21, 2000, GreenPoint Credit, LLC 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 2000-2 (the "Publicly Offered Certificates"), which
contains Orrick's consent to use of its name in the Prospectus Supplement
("Prospectus Supplement") dated March 17, 2000 together with the related
Prospectus dated December 9, 1999; (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 22, 2000, GreenPoint Credit, LLC, the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following document: a Pooling and Servicing Agreement dated March 1,
2000 between GreenPoint, as Contract Seller and as Servicer and Bank One,
National Association as the Trustee in connection with the sale of approximately
$340,000,000 of GreenPoint Credit Manufactured Housing Contract Trust
Pass-Through Certificates, Series 2000-1, on March 16, 2000.
On March 28, 2000, GreenPoint Credit, LLC, 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, LLC, 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,
LLC, as Contract Seller and Servicer and The First National Bank of Chicago as
Trustee; and (iii) the required Monthly Investor Servicing Report.
On March 28, 2000, GreenPoint Credit, LLC, the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) a Pooling and Servicing Agreement, dated as of
September 1, 1999, between GreenPoint Credit, LLC, as Contract Seller and
Servicer and The First National Bank of Chicago as Trustee; and (ii) the
required Monthly Investor Servicing Report.
37
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
PART II - OTHER INFORMATION
EXHIBITS AND REPORTS ON FORM 8-K - (CONTINUED)
On March 28, 2000, GreenPoint Credit, LLC, the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) a Pooling and Servicing Agreement, dated as of
May 1, 1999, between GreenPoint Credit, LLC, as Contract Seller and Servicer and
The First National Bank of Chicago as Trustee; and (ii) the required Monthly
Investor Servicing Report.
On March 28, 2000, GreenPoint Credit, LLC, the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) a Pooling and Servicing Agreement, dated as of
February 1, 1999, between GreenPoint Credit, LLC, as Contract Seller and
Servicer and The First National Bank of Chicago as Trustee; and (ii) the
required Monthly Investor Servicing Report.
On March 28, 2000, GreenPoint Credit, LLC, 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, LLC, 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,
LLC, as Contract Seller and Servicer and The First National Bank of Chicago as
Trustee; and (iii) the required Monthly Investor Servicing Report.
On March 28, 2000, GreenPoint Credit, LLC, the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) a Pooling and Servicing Agreement, dated as of
September 1, 1999, between GreenPoint Credit, LLC, as Contract Seller and
Servicer and The First National Bank of Chicago as Trustee; and (ii) the
required Monthly Investor Servicing Report.
On March 28, 2000, GreenPoint Credit, LLC, the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) a Pooling and Servicing Agreement, dated as of
November 1, 1999, between GreenPoint Credit, LLC, as Contract Seller and
Servicer and The First National Bank of Chicago as Trustee; and (ii) the
required Monthly Investor Servicing Report.
On March 28, 2000, GreenPoint Credit, LLC, the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) a Pooling and Servicing Agreement, dated as of
December 1, 1999, between GreenPoint Credit, LLC, as Contract Seller and
Servicer and The First National Bank of Chicago as Trustee; and (ii) the
required Monthly Investor Servicing Report.
On March 28, 2000, GreenPoint Credit, LLC, the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) a Pooling and Servicing Agreement, dated as of
March 1, 1999, between GreenPoint Credit, LLC, as Contract Seller and Servicer
and The First National Bank of Chicago as Trustee; and (ii) the required Monthly
Investor Servicing Report.
38
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
PART II - OTHER INFORMATION
EXHIBITS AND REPORTS ON FORM 8-K - (CONTINUED)
On March 28, 2000, GreenPoint Credit, LLC, the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) a Pooling and Servicing Agreement, dated as of
May 1, 1999, between GreenPoint Credit, LLC, as Contract Seller and Servicer and
The First National Bank of Chicago as Trustee; and (ii) the required Monthly
Investor Servicing Report.
On March 28, 2000, GreenPoint Credit, LLC, the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) a Pooling and Servicing Agreement, dated as of
February 1, 1999, between GreenPoint Credit, LLC, as Contract Seller and
Servicer and The First National Bank of Chicago as Trustee; and (ii) the
required Monthly Investor Servicing Report.
On March 28, 2000, GreenPoint Credit, LLC, the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) a Pooling and Servicing Agreement, dated as of
December 1, 1999, between GreenPoint Credit, LLC, as Contract Seller and
Servicer and The First National Bank of Chicago as Trustee; and (ii) the
required Monthly Investor Servicing Report.
On March 28, 2000, GreenPoint Credit, LLC, the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) a Pooling and Servicing Agreement, dated as of
March 1, 1999, between GreenPoint Credit, LLC, as Contract Seller and Servicer
and The First National Bank of Chicago as Trustee; and (ii) the required Monthly
Investor Servicing Report.
On March 28, 2000, GreenPoint Credit, LLC, the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following documents: (i) a Pooling and Servicing Agreement, dated as of
November 1, 1999, between GreenPoint Credit, LLC, as Contract Seller and
Servicer and The First National Bank of Chicago as Trustee; and (ii) the
required Monthly Investor Servicing Report.
On March 29, 2000, GreenPoint Credit, LLC, the manufactured housing finance
subsidiary of GreenPoint Bank, filed a current report on Form 8-K in order to
file the following document: a Pooling and Servicing Agreement dated March 1,
2000 between GreenPoint, as Contract Seller and as Servicer and Bank One,
National Association as the Trustee in connection with the sale of approximately
$250,096,268 of GreenPoint Credit Manufactured Housing Contract Trust
Pass-Through Certificates, Series 2000-2, on March 23, 2000.
39
<PAGE>
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES
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 12, 2000
40
<PAGE>
EXHIBIT 11.1
Statement Regarding Computation of Per Share Earnings
(In millions, except per share amounts )
<TABLE>
<CAPTION>
Quarter Ended March 31,
-------------------------------
2000 1999
-------------- --------------
<S> <C> <C>
Net income $ 57.9 $ 35.0
Weighted average number of common shares
outstanding during each year - basic 91.4 94.0
Weighted average number of common shares
and common stock equivalents outstanding during
each year - diluted 92.5 96.4
-------------- --------------
Basic earnings per share $ 0.63 $ 0.37
-------------- --------------
Diluted earnings per share $ 0.63 $ 0.36
-------------- --------------
</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
------------------------------------------------------------------
Mar. 31 Dec. 31 Sep. 30 Jun. 3 Mar. 31
2000 1999 1999 1999 1999
---- ---- ---- ---- ----
<S> <C> <C>
Income before income taxes $ 98.1 $ 98.6 $ 103.3 $ 100.2 $ 68.7
Combined fixed charges and preferred stock dividends:
Interest expense on deposits 124.3 125.4 121.6 118.5 115.9
Interest expense on long-term debt 3.4 3.4 3.5 3.5 3.5
Interest expense on guaranteed preferred beneficial
interest in Company's junior subordinated debentures 4.6 4.6 4.6 4.6 4.6
Appropriate portion (1/3) of rent expense 1.7 2.1 1.9 1.9 1.8
--------- --------- --------- --------- -------
Total combined fixed charges and
preferred stock dividends $ 134.0 $ 135.5 $ 131.6 $ 128.5 $ 125.8
========= ========= ======== ======== =======
Total combined fixed charges and
preferred stock dividends (excluding interest
expense on deposits) $ 9.7 $ 10.1 $ 10.0 $ 10.0 $ 9.9
========= ========= ======== ======== =======
Earnings before income taxes and combined fixed
charges and preferred stock dividends $ 232.1 $ 234.1 $ 234.9 $ 228.7 $ 194.5
========= ========= ======== ======== =======
Ratio of earnings to combined fixed charges and
preferred stock dividends (including interest expense
on deposits) 1.73 x 1.73 x 1.78 x 1.78 x 1.55 x
========= ========= ======== ======== =======
Ratio of earnings to combined fixed charges and
preferred stock dividends (excluding interest expense
on deposits) 11.11 x 10.76 x 11.33 x 11.02 x 7.94 x
========= ========= ======== ======== =======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 136
<INT-BEARING-DEPOSITS> 4
<FED-FUNDS-SOLD> 466
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 3,663
<INVESTMENTS-CARRYING> 2
<INVESTMENTS-MARKET> 2
<LOANS> 10,951
<ALLOWANCE> (113)
<TOTAL-ASSETS> 15,176
<DEPOSITS> 11,460
<SHORT-TERM> 679
<LIABILITIES-OTHER> 375
<LONG-TERM> 400
0
0
<COMMON> 1
<OTHER-SE> 2,018
<TOTAL-LIABILITIES-AND-EQUITY> 15,176
<INTEREST-LOAN> 235
<INTEREST-INVEST> 44
<INTEREST-OTHER> 9
<INTEREST-TOTAL> 288
<INTEREST-DEPOSIT> 124
<INTEREST-EXPENSE> 145
<INTEREST-INCOME-NET> 143
<LOAN-LOSSES> (8)
<SECURITIES-GAINS> 1
<EXPENSE-OTHER> 124
<INCOME-PRETAX> 98
<INCOME-PRE-EXTRAORDINARY> 58
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 58
<EPS-BASIC> 0.63
<EPS-DILUTED> 0.63
<YIELD-ACTUAL> 4.21
<LOANS-NON> 200
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> (113)
<CHARGE-OFFS> (8)
<RECOVERIES> 0
<ALLOWANCE-CLOSE> (113)
<ALLOWANCE-DOMESTIC> (113)
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
