SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event
reported) April 16, 1998
COMMISSION FILE NO.: 0-23126
RELIANCE BANCORP, INC.
(Exact name of registrant as specified in its charter)
Delaware 11-3187176
-------- ----------
(State or other Jurisdiction of Incorporation (IRS Employer or
organization) Identification No.)
585 Stewart Avenue, Garden City, New York 11530
- ----------------------------------------- -----
(Address of principal executive officer) (Zip Code)
Registrant's telephone number, including area code: (516) 222-9300
--------------
<PAGE>
Item 5. Other Events
On April 16, 1998, Reliance Bancorp, Inc. reported net income of $4.7
million for the quarter ended March 31, 1998, an increase of $535,000, or 13.0%,
from $4.1 million for the quarter ended March 31, 1997. Diluted earnings per
share rose to $0.48 from $0.47 for the quarter ended March 31, 1997. Net income
for the nine months ended March 31, 1998 was $14.3 million as compared to $6.6
million for the nine months ended March 31, 1997. Net income for the nine months
ended March 31, 1997 reflects a one time charge to income of $8.25 million for
the Company's share of recapitalizing the Savings Association Insurance Fund
("SAIF"). Results of operations for the three and nine months ended March 31,
1998 reflect the acquisition of Continental Bank at the close of business on
October 17, 1997.
As of March 31, 1998, total assets were $2.2 billion, deposits were $1.6
billion and total stockholders' equity was $193.8 million. At March 31, 1998,
the Company had 9,627,726 common shares outstanding with a tangible book value
per share of common stock of $13.89.
Item 7 (c). Exhibits
Exhibit 99.1 Press Release reporting the Company's third quarter fiscal
year 1998 results.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
By: /s/ Raymond A. Nielsen
-----------------------
Raymond A. Nielsen
President and
Chief Executive Officer
Dated: April 16, 1998
EXHIBIT 99.1
RELIANCE BANCORP, INC.
585 STEWART AVENUE (516) 222-9300
GARDEN CITY, NY 11530 FAX: (516) 222-4559
NEWS RELEASE
FOR IMMEDIATE RELEASE: April 16, 1998
For Information Contact:
Paul D. Hagan
Senior Vice President and CFO
(516) 222-9308 extension 215
RELIANCE BANCORP, INC. REPORTS THIRD QUARTER
FISCAL YEAR 1998 RESULTS
Garden City, New York, April 16, 1998
Reliance Bancorp, Inc. (NASDAQ/NMS:RELY), the holding company for Reliance
Federal Savings Bank, today reported net income of $4.7 million for the quarter
ended March 31, 1998, an increase of $535,000, or 13.0%, from $4.1 million for
the quarter ended March 31, 1997. Diluted earnings per share rose to $0.48 from
$0.47 for the quarter ended March 31, 1997. Net income for the nine months ended
March 31, 1998 was $14.3 million as compared to $6.6 million for the nine months
ended March 31, 1997. Net income for the nine months ended March 31, 1997
reflects a one time charge to income of $8.25 million for the Company's share of
recapitalizing the Savings Association Insurance Fund ("SAIF"). Results of
operations for the three and nine months ended March 31, 1998 reflect the
acquisition of Continental Bank at the close of business on October 17, 1997.
Excluding the impact of the SAIF charge, the Company's earnings for the nine
months ended March 31, 1997 would have been $11.4 million, or diluted earnings
per share of $1.31 as compared to $14.3 million, or $1.53 per diluted share for
the nine months ended March 31, 1998, reflecting a 16.8% increase in earnings
per share. In addition, return on average tangible equity would have been 15.65%
for the nine months ended March 31, 1998, an increase of 9.9% from 14.24% in the
nine months ended March 31, 1997.
Cash earnings for the quarter ended March 31, 1998 were $6.5 million, or $0.67
per share, an increase of $1.1 million, or 20.2%, from $5.4 million, or $0.62
per share recorded in the prior year quarter. The Company's cash earnings are
determined by adding back to reported earnings the non-cash expenses related to
the allocation of ESOP ("Employee Stock Ownership Plan") stock and the earned
portion of RRP ("Recognition and Retention Plan") stock, net of associated tax
benefits, and amortization of excess of cost over fair value of net assets
acquired ("goodwill").
As of March 31, 1998, total assets were $2.2 billion, deposits were $1.6 billion
and total stockholders' equity was $193.8 million. At March 31, 1998, the
Company had 9,627,726 common shares outstanding with a tangible book value per
share of common stock of $13.89.
On March 18, 1998, the Board of Directors declared a regular cash dividend of
$0.18 per common share for the quarter ending March 31, 1998, an increase of
$0.02 or 12.5% from the regular cash dividend paid for the second quarter of
fiscal year 1998. The dividend is payable on April 17, 1998 to stockholders of
record on April 3, 1998.
Page 1 of 7
<PAGE>
Quarterly Results
Reliance Bancorp, Inc. reported net income of $4.7 million for the quarter ended
March 31, 1998, which represents an annualized return on average assets and
average tangible equity of 0.85% and 14.72%, respectively.
Net interest income increased to $17.0 million for the quarter ended March 31,
1998, an increase of $1.3 million, or 8.5%, from $15.7 million for the quarter
ended March 31, 1997. The increase in net interest income was attributable to
the growth in average interest-earning assets to $2.1 billion for the quarter
ended March 31, 1998 from $1.8 billion for the quarter ended March 31, 1997. The
growth in average interest-earning assets was from increased investments in
mortgage-backed securities and from assets acquired from Continental Bank. As a
result of a flattening of the yield curve and the increased cost of
interest-bearing liabilities, the Bank's net interest spread declined from 3.27%
to 3.00% and its net interest margin declined from 3.51% to 3.31%. For the
quarter ended March 31, 1998, the yield on interest-earning assets was 7.47% and
the cost of interest-bearing liabilities was 4.47% as compared to 7.51% and
4.24%, respectively for the quarter ended March 31, 1997.
Non-interest income increased $1.0 million, or 114.3% from $897,000 in the prior
year quarter to $1.9 million in the quarter ended March 31, 1998. The increase
is mainly the result of additional fee income from the acquisition of
Continental Bank's check cashing operations and service charges on newly
acquired deposit accounts.
Non-interest expense totalled $10.2 million for the quarter ended March 31,
1998, a $1.7 million, or 20.5%, increase from $8.5 million recorded in the prior
year quarter. The increase is mainly the result of higher compensation expense,
goodwill amortization and other expenses associated with the Continental Bank
acquisition. For the quarter ended March 31, 1998, compensation and benefits
expense increased to $5.2 million, an increase of $1.1 million, or 26.9%, from
$4.1 million for the quarter ended March 31, 1997. The increase is due to the
addition of banking offices, check cashing and commercial lending personnel from
the Continental Bank acquisition, higher benefit expenses and normal salary
adjustments. For the quarter ended March 31, 1998, ESOP and RRP expenses were
$918,000, an increase of $266,000, or 40.8%, from $652,000 recorded in the prior
year quarter. Occupancy and equipment expense increased $284,000, or 19.0%, from
$1.5 million recorded for the quarter ended March 31, 1997 to $1.8 million for
the quarter ended March 31, 1998 due to the addition of two banking offices and
five check cashing facilities.
For the quarter ended March 31, 1998, real estate owned expense was $12,000, a
decrease of $102,000, or 89.5% from $114,000 in the prior year quarter. The
decrease relates to a lower provision for REO losses established during the
quarter March 31,1998 and gains resulting from the sale of certain REO
properties. For the quarter ended March 31, 1998, the Bank recorded a provision
for REO losses of $30,000 as compared to a $50,000 provision for REO losses in
the prior year quarter. For the quarter ended March 31, 1998, the Bank recorded
gain on the sale of REO properties of $79,000 as compared to $2,000 in the prior
year quarter.
Page 2 of 7
<PAGE>
Nine Months Ended Results
Net income for the nine months ended March 31, 1998 was $14.3 million which
represents an annualized return on average assets and average tangible equity of
0.89% and 15.65%, respectively. Net interest income increased to $50.2 million
for the nine months ended March 31, 1998, an increase of $4.2 million, or 9.1%,
from $46.0 million for the nine months ended March 31, 1997. The increase in net
interest income was attributable to the growth in average interest-earning
assets to $2.0 billion for the nine months ended March 31, 1998 from $1.8
billion for the nine months ended March 31, 1997. The growth in interest-earning
assets was from assets acquired from the Continental Bank acquisition and
increased purchases of mortgage-backed securities. As a result of a flattening
of the yield curve and the increased cost of interest-bearing liabilities, the
Bank's net interest spread declined from 3.25% for the nine months ended March
31, 1997 to 3.05% for the nine months ended March 31, 1998. The yield on
interest-earning assets was 7.58% for the nine months ended March 31, 1998 and
the cost of interest-bearing liabilities was 4.53% as compared to 7.51% and
4.26%, respectively for the nine months ended March 31, 1997.
Non-interest income increased $3.3 million, or 125.5%, from $2.6 million for the
nine months ended March 31, 1997 to $5.9 million for the nine months ended March
31, 1998 due to a gain from a condemnation award received from an inactive joint
venture, additional fee income generated from the check cashing operations
acquired from Continental Bank and increased deposit fee income.
Non-interest expense totalled $29.2 million for the nine months ended March 31,
1998 as compared to $34.5 million for the nine months ended March 31, 1997, a
decrease of $5.3 million, or 15.4%. Noninterest expense for the nine months
ended March 31, 1997 reflects a one-time charge of $8.25 million for the
Company's share of recapitalizing the SAIF. Excluding the effect of the SAIF
charge, non-interest expense for the nine months ended March 31, 1997 would have
been $26.3 million and non-interest expense would have increased $2.9 million,
or 11.2%. This increase is mainly the result of higher compensation expense,
goodwill amortization and other occupancy costs associated with the Continental
Bank acquisition offset by a decrease in deposit insurance premiums. For the
nine months ended March 31, 1998, compensation and benefits expense increased
$2.4 million, or 19.5%, to $14.8 million from $12.4 million for the nine months
ended March 31, 1997. The increase in compensation and benefits expense is due
to the addition of banking offices, check cashing and commercial lending
personnel from the Continental Bank acquisition, higher benefit expenses and
normal salary adjustments. For the nine months ended March 31, 1998, ESOP and
RRP expenses were $2.7 million, an increase of $891,000, or 49.3%, from $1.8
million recorded in the prior year nine month period. Occupancy and equipment
expense increased $522,000, or 12.2%, from $4.3 million for the nine months
ended March 31, 1997 to $4.8 million for the nine months ended March 31, 1998
due to costs associated with the operation of two new banking offices and five
check cashing facilities. Other operating expenses increased $479,000, or 11.1%,
from $4.3 million during the nine months ended March 31, 1997 to $4.8 million
for the nine months ended March 31, 1998 as a result of general expenses related
to the addition of two new banking offices and five check cashing facilities.
For the nine months ended March 31, 1998, real estate operations, net was
$170,000 as compared to $335,000 in the prior year nine month period. The
decrease is the result of a lower provision for REO losses during the nine
months ended March 31, 1998. During the nine months ended March 31, 1998, the
Bank established a provision for REO losses of $110,000 as compared to $200,000
in the prior year nine month period.
Page 3 of 7
<PAGE>
Financial Condition
As of March 31, 1998, total assets were $2.2 billion, deposits were $1.6 billion
and total stockholders' equity was $193.8 million. The mortgage-backed
securities portfolio increased $101.8 million, or 11.6%, from $881.2 million at
June 30, 1997 to $983.0 million at March 31, 1998, with the increase primarily
due to securities acquired from Continental Bank and increased purchases of
private label collateralized mortgage obligations offset by amortization and
prepayments.
Funding for the purchases of mortgage-backed securities was through a
combination of new deposit growth, borrowings and cash flows. Deposits increased
$156.9 million, or 10.9% during the nine month period ended March 31, 1998 as a
result of growth in new certificate of deposit products and deposits acquired
from Continental Bank. Borrowings increased from $351.9 million at June 30, 1997
to $360.3 million at March 31, 1998, an increase of $8.4 million, or 2.4%. The
Bank had been using borrowings to leverage its capital and fund asset growth.
Treasury stock decreased from $27.5 million at June 30, 1997 to $21.2 million at
March 31, 1998 as a result of approximately 1 million shares issued to purchase
Continental Bank.
Non-performing assets
Non-performing loans totalled $12.3 million, or 1.25% of total loans at March
31, 1998, as compared to $14.7 million, or 1.61% of total loans at June 30,
1997. Non-performing loans at March 31, 1998 were comprised of $8.6 million of
loans secured by one- to four-family residences, $2.1 million of commercial real
estate loans, $1.1 million of commercial loans and $475,000 of guaranteed
student loans. As a result of a decrease in non-performing loans and an
increased asset base, the non-performing assets to total assets ratio improved
to 0.63% at March 31, 1998 from 0.77% at June 30, 1997.
For the nine months ended March 31, 1998, the Company's loan loss provision was
$1.5 million as compared to $650,000 in the prior year period. The Company
increased its provision for loan losses to continue to increase its loan loss
coverage ratios. The Company's allowance for loan losses totalled $8.9 million
at March 31, 1998 as compared to $5.2 million at June 30, 1997 which represents
a ratio of allowance for loan losses to non-performing loans and to total loans
of 72.24% and 0.90% and 35.18% and 0.57%, respectively. The significant increase
in the loan loss coverage ratios is the result of $2.7 million of allowances
acquired from Continental Bank. For the quarter and nine months ended March 31,
1998, the Company experienced net charge-offs of $104,000 and $538,000,
respectively. Management believes the allowance for loan losses at March 31,
1998 is adequate and sufficient reserves are presently maintained to cover
losses on non-performing loans.
Reliance Bancorp, Inc. and Reliance Federal Savings Bank are headquartered in
Garden City, New York. Reliance Federal Savings Bank now serves its customers
from 30 banking offices located in the New York counties of Queens, Nassau and
Suffolk.
Page 4 of 7
<PAGE>
RELIANCE BANCORP, INC. and SUBSIDIARY
Consolidated Statements of Condition
(Unaudited)
(Dollars in thousands, except share and per share data)
<TABLE>
<CAPTION>
March 31, June 30,
Assets 1998 1997
------ -------------- -------
<S> <C> <C>
Cash and due from banks........................................................... $ 34,351 $ 29,565
Money market investments.......................................................... 14,000 1,100
Debt and equity securities available-for-sale..................................... 30,522 26,909
Debt and equity securities held-to-maturity....................................... 40,186 46,026
Mortgage-backed securities available-for-sale..................................... 791,491 721,819
Mortgage-backed securities held-to-maturity....................................... 191,462 159,356
Loans receivable:
Mortgage loans............................................................... 792,432 775,612
Commercial loans............................................................. 48,696 --
Consumer and other loans..................................................... 141,347 138,891
Less allowance for loan losses............................................. (8,888) (5,182)
----------- -----------
Loans receivable, net................................................ 973,587 909,321
Accrued interest receivable, net.................................................. 13,573 12,040
Office properties and equipment, net.............................................. 15,463 14,089
Prepaid expenses and other assets................................................. 11,068 7,580
Mortgage servicing rights......................................................... 2,551 3,046
Excess of cost over fair value of net assets acquired............................. 60,077 45,463
Real estate owned, net............................................................ 1,423 450
--------- -------------
Total assets......................................................... $ 2,179,754 $ 1,976,764
========= =========
Liabilities and Stockholders' Equity
Deposits.......................................................................... $ 1,592,954 $ 1,436,037
FHLB advances..................................................................... 109,200 40,000
Securities sold under agreements to repurchase.................................... 251,110 311,913
Advance payments by borrowers for taxes and insurance............................. 13,946 9,017
Accrued expenses and other liabilities............................................ 18,745 17,127
---------- ----------
Total liabilities.................................................... 1,985,955 1,814,094
--------- ---------
Commitments
Stockholders' Equity
Preferred Stock, $.01 par value, 4,000,000 shares
authorized; none issued......................................................... -- --
Common stock, $.01 par value, 20,000,000 shares
authorized; 10,750,820 shares issued; 9,627,726 and 8,776,337
outstanding, respectively..................................................... 108 108
Additional paid-in capital........................................................ 118,283 105,871
Retained earnings, substantially restricted....................................... 98,569 89,660
Unrealized appreciation on securities
available-for-sale, net of taxes............................................... 4,040 1,705
Less:
Unallocated common stock held by ESOP............................................. (4,761) (5,382)
Unearned common stock held by RRP................................................. (909) (1,567)
Common stock held by SERP......................................................... (373) (209)
Treasury stock, at cost (1,123,094 and 1,974,483 shares, respectively)............ (21,158) (27,516)
--------- -----------
Total stockholders' equity................................................... 193,799 162,670
-------- ----------
Total liabilities and stockholders' equity............................ $ 2,179,754 $ 1,976,764
========= =========
</TABLE>
Page 5 of 7
<PAGE>
RELIANCE BANCORP, INC. and SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
---------------------- --------------------
1998 1997 1998 1997
-------- -------- --------- --------
Interest income:
<S> <C> <C> <C> <C>
First mortgage loans......................................... $ 15,966 $ 14,306 $ 47,693 $ 42,142
Commercial loans............................................. 1,334 -- 2,524 --
Consumer and other loans..................................... 3,017 2,859 9,172 8,575
Mortgage-backed securities................................... 16,714 15,057 50,189 44,036
Money market investments..................................... 58 127 338 475
Debt and equity securities................................... 1,357 1,247 3,979 3,516
--------- --------- --------- ---------
Total interest income..................................... 38,446 33,596 113,895 98,744
-------- -------- -------- --------
Interest expense:
Deposits..................................................... 15,990 13,426 47,153 39,877
Borrowed funds............................................... 5,434 4,478 16,518 12,841
--------- --------- -------- --------
Total interest expense.................................... 21,424 17,904 63,671 52,718
--------- -------- -------- --------
Net interest income before provision for loan losses...... 17,022 15,692 50,224 46,026
Provision for loan losses.................................... 300 300 1,500 650
--------- -------- -------- ---------
Net interest income after provision for loan losses....... 16,722 15,392 48,724 45,376
-------- ------- -------- --------
Non-interest income:
Loan fees and service charges................................ 345 160 718 568
Other operating income....................................... 948 671 2,474 1,866
Income from Money Centers.................................... 637 -- 1,207 --
Condemnation award on joint venture.......................... -- -- 1,483 --
Net (loss) gain on securities................................ (8) 66 (5) 172
---------- --------- ---------- ---------
Total non-interest income................................. 1,922 897 5,877 2,606
------- -------- ------- --------
Non-interest expense:
Compensation and benefits.................................... 5,191 4,091 14,764 12,351
Occupancy and equipment...................................... 1,776 1,492 4,785 4,263
Federal deposit insurance premiums........................... 237 220 690 1,592
Advertising.................................................. 208 225 912 842
Other operating expense...................................... 1,675 1,511 4,799 4,320
------- ------- -------- --------
Total general and administrative expenses................. 9,087 7,539 25,950 23,368
Real estate operations, net.................................. 12 114 170 335
Amortization of excess of cost over fair value
of net assets acquired.................................... 1,141 846 3,077 2,558
SAIF recapitalization charge................................. -- -- -- 8,250
---------- ---------- ---------- ---------
Total non-interest expense................................... 10,240 8,499 29,197 34,511
------- ------- ------- --------
Income before income taxes...................................... 8,404 7,790 25,404 13,471
Income tax expense ............................................. 3,746 3,667 11,118 6,873
------- ------- ------- -------
Net income...................................................... $ 4,658 $ 4,123 $ 14,286 $ 6,598
===== ===== ======= =====
Net income per common share:
Basic.......................................... $ 0.51 $ 0.50 $ 1.62 $ 0.79
===== ===== ===== =====
Diluted........................................ $ 0.48 $ 0.47 $ 1.53 $ 0.76
===== ===== ===== =====
</TABLE>
Page 6 of 7
<PAGE>
RELIANCE BANCORP, INC. & SUBSIDIARY
Selected Financial Ratios
(Unaudited)
<TABLE>
<CAPTION>
At or for the At or for the
Three Months Ended Nine Months Ended
March 31, March 31,
--------------------- ----------------------
1998 1997 1998 1997
--------- -------- -------- --------
Performance ratios:
<S> <C> <C> <C> <C>
Return on average assets........................................ 0.85% 0.87% 0.89% 0.48%
Cash return on average assets................................... 1.19% 1.15% 1.22% 0.75%
Return on average equity (2).................................... 9.94% 10.61% 10.79% 5.67%
Cash return on average equity (2)............................... 13.96% 14.00% 14.72% 8.96%
Return on average tangible equity (2)........................... 14.72% 15.18% 15.65% 8.22%
Average equity to average assets............................... 8.74% 8.24% 8.48% 8.28%
Equity to total assets.......................................... 8.89% 8.04% 8.89% 8.04%
Tangible equity to tangible assets.............................. 6.31% 5.78% 6.31% 5.78%
Core deposits to total deposits................................. 37.08% 38.58% 37.08% 38.58%
Net interest spread............................................. 3.00% 3.27% 3.05% 3.25%
Net interest margin............................................. 3.31% 3.51% 3.34% 3.50%
General and Administrative expenses to average assets........... 1.65% 1.59% 1.62% 1.68%
Cash general and administrative expenses
to average assets.............................................. 1.48% 1.46% 1.45% 1.55%
Operating income to average assets (1).......................... 0.35% 0.18% 0.27% 0.18%
Average interest-earning assets to average
interest-bearing liabilities................................... 1.07X 1.06X 1.07X 1.06X
Cash net income per diluted common share........................ $ 0.67 $ 0.62 $ 2.09 $ 1.20
Selected Performance Ratios
(Excluding Special SAIF Assessment):
Return on average assets........................................ 0.85% 0.87% 0.89% 0.82%
Cash return on average assets................................... 1.19% 1.15% 1.22% 1.10%
Return on average equity (2).................................... 9.94% 10.61% 10.79% 9.82%
Cash return on average equity (2)............................... 13.96% 14.00% 14.72% 13.11%
Return on average tangible equity (2)........................... 14.72% 15.18% 15.65% 14.24%
Diluted earnings per share...................................... $ 0.48 $ 0.47 $ 1.53 $ 1.31
Cash net income per diluted common share........................ $ 0.67 $ 0.62 $ 2.09 $ 1.75
At At
March 31, June 30,
1998 1997
--------- --------
Assets quality ratios:
<S> <C> <C>
Non-performing loans to total loans............................................... 1.25% 1.61%
Non-performing loans to total assets.............................................. 0.56% 0.75%
Non-performing assets to total assets............................................. 0.63% 0.77%
Allowance for loan losses to total loans.......................................... 0.90% 0.57%
Allowance for loan losses to non-performing loans................................. 72.24% 35.18%
(1) Operating income represents non-interest income less net gain on securities
and condemnation award from joint venture.
(2) For purposes of these calculations, average equity and average tangible
equity exclude the effect of changes in the unrealized appreciation
(depreciation) on securities available for sale, net of taxes.
Page 7 of 7
</TABLE>
