SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
----- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1997
OR
----- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________
Commission file number: 0-25106
Lakeview Financial Corp.
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(Exact name of registrant as specified in its charter)
New Jersey 22-3334052
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1117 Main Street Paterson, New Jersey 07503
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(Address of principal executive offices, zip code)
(201) 742-3060
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(Registrant's telephone number, including area code)
NOT APPLICABLE
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(Former name, former address, and former 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 of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such 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. Yes X No
-----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: February 28, 1997
-------------------
Class Outstanding
- ---------------------------- ----------------
$2.00 par value common stock 2,392,143 shares
<PAGE>
LAKEVIEW FINANCIAL CORP. and SUBSIDIARIES
CONTENTS
PART I - FINANCIAL INFORMATION Page
Item 1: Financial Statements
Unaudited Consolidated Statements of Financial Condition
as of January 31, 1997 and July 31, 1996 3
Unaudited Consolidated Statements of Income for the Three
Months Ended January 31, 1997 and 1996 4
Unaudited Consolidated Statements of Income for the Six
Months ended January 31, 1997 and 1996 5
Unaudited Consolidated Statements of Cash Flows for the Six
Months Ended January 31, 1997 and 1996 6
Notes to Unaudited Consolidated Financial Statements 8
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II - OTHER INFORMATION
Item 1: Legal Proceedings 16
Item 2: Changes in Securities 16
Item 3: Defaults Upon Senior Securities 16
Item 4: Submission of Matters to a Vote of Security Holders 16
Item 5: Other Information 16
Item 6: Exhibits and Reports on Form 8-K 16
Signatures 17
2
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LAKEVIEW FINANCIAL CORP. AND SUBSIDIARIES
- -----------------------------------------
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CONDITION
AS OF JANUARY 31, 1997 AND JULY 31, 1996
- -------------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited)
January 1997 July 1996
- --------------------------------------------------------------------------------------- --------------
Assets
- ------
<S> <C> <C>
Cash on hand and in banks $ 6,028,914 $ 6,902,040
Federal funds sold, net 0 0
- --------------------------------------------------------------------------------------- --------------
Total cash and cash equivalents 6,028,914 6,902,040
Investment securities held to maturity, net 40,835,800 40,821,195
Investment securities available for sale, net 81,146,085 89,967,424
Equity securities restricted for sale, market value of $41,546,400 and 7,806,358 7,806,358
$19,942,272 at January 31, 1997 and July 31, 1996.
Mortgage-backed securities held to maturity, net 111,783,302 121,461,936
Loans receivable, net 196,678,964 163,457,374
Real estate owned, net 1,387,717 1,666,533
Federal Home Loan Bank of New York stock, at cost 3,550,000 2,587,400
Accrued interest receivable, net 3,536,380 3,646,512
Office properties and equipment, net 4,084,456 4,182,639
Excess of cost over fair value of assets acquired 9,516,280 10,176,424
Other assets 5,444,246 5,184,150
- --------------------------------------------------------------------------------------- --------------
Total assets $471,798,502 $457,859,985
======================================================================================= ==============
Liabilities and Shareholders' Equity
Deposits $361,303,456 $354,246,770
Borrowings 57,250,000 54,000,000
Borrowings - (ESOP) obligation 2,293,000 721,429
Advance payments by borrowers for taxes and insurance 1,677,715 1,711,930
Other liabilities 1,446,615 1,420,175
- --------------------------------------------------------------------------------------- --------------
Total liabilities 423,970,786 412,100,304
Shareholders' Equity
Common stock: $2.00 par value; authorized 10,000,000
shares, issued 3,220,752 shares and outstanding
2,418,643 shares at January 31, 1997 6,441,504 5,856,152
Additional paid-in capital 32,827,206 26,186,633
Retained income substantially restricted 25,659,661 29,984,480
Unrealized loss in securities available for sale,
net of taxes (1,151,020) (1,884,921)
Treasury stock at cost (12,389,745) (10,655,120)
Common stock acquired by ESOP (2,284,442) (2,306,895)
Common stock acquired by MSBP (1,275,448) (1,420,648)
- --------------------------------------------------------------------------------------- --------------
Total shareholders' equity 47,827,716 45,759,681
- --------------------------------------------------------------------------------------- --------------
Total liabilities and shareholders' equity $471,798,502 $457,859,985
======================================================================================= ==============
Stated book value per share $19.77 $18.36
Tangible book value per share $15.84 $14.28
</TABLE>
See accompanying notes to consolidated financial statements.
3
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LAKEVIEW FINANCIAL CORP. AND SUBSIDIARIES
- -----------------------------------------
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTH ENDED JANUARY 31, 1997 AND 1996
- -----------------------------------------------------------------------------------
(Unaudited) (Unaudited)
January 1997 January 1996
- -------------------------------------------------------------------- -------------
Interest income:
<S> <C> <C>
Loans receivable $3,909,668 $3,439,987
Mortgage-backed securities held to maturity 1,877,210 2,606,966
Investment securities held to maturity 908,651 737,229
Investment securities available for sale 1,287,429 749,098
- -------------------------------------------------------------------- -------------
Total interest income 7,982,958 7,533,280
Interest expense:
Interest on deposits 3,514,209 3,535,714
Interest on borrowings 843,270 488,577
- -------------------------------------------------------------------- -------------
Total interest expense 4,357,479 4,024,291
Net interest income before provision for loan losses 3,625,479 3,508,989
Provision for loan losses 256,217 175,000
- -------------------------------------------------------------------- -------------
Net interest income after provision for loan losses 3,369,262 3,333,989
Other Income:
Loan fees and service charges 301,872 290,137
Gains on sale of investments 2,415,030 1,357,886
Other operating income 448,650 59,231
- -------------------------------------------------------------------- -------------
Total other income 3,165,552 1,707,254
Other expense:
Employee compensation 1,385,437 1,195,255
Office occupancy 234,941 218,274
Loss from REO operations 81,341 141,277
Other operating expense 616,579 793,773
Amortization of goodwill 330,072 330,072
- -------------------------------------------------------------------- -------------
Total other expense 2,648,370 2,678,651
Net income before taxes 3,886,444 2,362,592
Federal and state income taxes 1,417,000 862,998
- -------------------------------------------------------------------- -------------
Net Income $2,469,444 $1,499,594
==================================================================== =============
Net income per share $0.97 $0.58
Weighted average numbers of shares 2,534,559 2,598,108
</TABLE>
4
<PAGE>
LAKEVIEW FINANCIAL CORP. AND SUBSIDIARIES
- -----------------------------------------
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JANUARY 31, 1997 AND 1996
- -----------------------------------------------------------------------------------
(Unaudited) (Unaudited)
1997 1996
- -------------------------------------------------------------------- -------------
Interest income:
<S> <C> <C>
Loans receivable $7,673,496 $6,769,988
Mortgage-backed securities held to maturity 3,844,368 5,454,078
Investment securities held to maturity 1,750,018 1,958,016
Investment securities available for sale 2,773,146 833,893
- -------------------------------------------------------------------- -------------
Total interest income 16,041,028 15,015,975
Interest expense:
Interest on deposits 6,940,279 7,073,013
Interest on borrowings 1,625,731 1,029,623
- -------------------------------------------------------------------- -------------
Total interest expense 8,566,010 8,102,636
Net interest income before provision for loan losses 7,475,018 6,913,339
Provision for loan losses 361,217 359,285
- -------------------------------------------------------------------- -------------
Net interest income after provision for loan losses 7,113,801 6,554,054
Other Income:
Loan fees and service charges 574,340 561,158
Gain on sale of investments 3,179,080 1,884,161
Other operating income 1,026,089 230,108
- -------------------------------------------------------------------- -------------
Total other income 4,779,509 2,675,427
Other expense:
Employee compensation 2,638,429 2,306,388
Office occupancy 463,740 413,927
Loss from REO operation 100,902 447,430
Other operating expense (1) 3,586,501 1,499,104
Amortization of goodwill 660,144 660,144
- -------------------------------------------------------------------- -------------
Total other expense 7,449,716 5,326,993
Net income before taxes 4,443,594 3,902,488
Federal and state income taxes 1,628,000 1,381,998
- -------------------------------------------------------------------- -------------
Net Income $2,815,594 $2,520,490
==================================================================== =============
Net income per share $ 1.10 $ 0.95
Weighted average numbers of shares 2,568,978 2,641,426
</TABLE>
Note (1) Other expense, in fiscal 1997, includes a one time Federal Deposit
Insurance Corporation (FDIC) insurance assessment of $2,218,674, for
the quarter ended October 31, 1996.
5
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LAKEVIEW FINANCIAL CORP. AND SUBSIDIARIES
- -----------------------------------------
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR SIX MONTHS ENDED JANUARY 31, 1997 AND 1996
- --------------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited)
1997 1996
- --------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
<S> <C> <C>
Net Income $2,815,594 $2,520,490
Adjustment to reconcile net income to net cash provided
by (used in) operating activities :
Amortization of excess of cost over fair value of assets acquired 660,144 660,144
Amortization of discounts and premiums, net (230,494) (222,082)
Provision for losses on loans 361,217 359,285
Provision for losses on real estate owned 43,783 172,447
Gain on sale of loans (3,043) (4,715)
(Gain) loss on sale of real estate owned, net (40,159) 25,443
Net realized gains on sale of investments available for sale (3,179,080) (1,884,161)
(Increase) decrease in accrued interest receivable 110,132 (414,026)
Decrease in deferred loan fees (27,867) (32,695)
(Increase) decrease in other assets (260,095) 852,874
Decrease in other liabilities (386,020) (4,855,008)
Depreciation of office properties and equipment, net 152,070 144,457
- ---------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities: 16,182 (2,677,547)
Cash flows from investing activities:
Loan origination net of principal payments (33,666,967) (17,661,657)
Purchase of Federal Home Loan Bank stock (962,600) 0
Purchase of investment securities available for sale (37,772,666) (28,614,578)
Proceeds from sale of investment securities available for sale 49,986,545 35,300,401
Principal payments on investment securities available for sale 981,738 0
Purchase of investment securities (2,000,000) (66,212,000)
Proceeds from maturity of investment securities 2,000,000 41,096,117
Purchase of mortgage-backed securities 0 (2,773,214)
Principal payments on mortgage-backed securities 9,778,254 13,789,264
Proceeds from sale of real estate owned 457,692 855,591
Increase in office properties and equipment (53,887) (126,146)
- ---------------------------------------------------------------------------------------------------------
Net cash used in investing activities (11,251,890) (24,346,222)
</TABLE>
6
<PAGE>
LAKEVIEW FINANCIAL CORP. AND SUBSIDIARIES
- -----------------------------------------
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR SIX MONTHS ENDED JANUARY 31, 1997 AND 1996
- ---------------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited)
1997 1996
- ---------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
<S> <C> <C>
Increase in deposits, net 7,056,686 4,914,219
Increase in borrowings, net 4,821,571 21,831,250
Decrease in advance payments by borrowers for taxes, net (34,215) (182,151)
Purchase of treasury stock (1,734,625) (4,046,841)
Amortization of ESOP shares 339,838 248,370
Amortization of MSBP shares 212,438 246,447
Dividend paid (299,111) (292,246)
- ---------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 10,362,582 22,719,048
- ---------------------------------------------------------------------------------------------------------
Net change in cash and cash equivalents (873,126) (4,304,721)
Cash and cash equivalents at beginning of period 6,902,040 8,021,666
- ---------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 6,028,914 $ 3,716,945
=========================================================================================================
Cash paid during period for:
Interest $6,940,279 $7,073,013
Income Taxes $1,500,000 $1,842,277
Supplemental disclosures of non-cash investing activities:
Transfer of loans receivable to real estate owned $182,500 $92,322
</TABLE>
7
<PAGE>
LAKEVIEW FINANCIAL CORP. and SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
(1) Basis of Presentation
The consolidated financial statements include the accounts of Lakeview Financial
Corp. (the "Company"), its wholly owned subsidiaries, Lakeview Savings Bank (the
"Savings Bank"), Branchview, Inc., and its 90% owned subsidiary, Lakeview
Mortgage Depot, Inc. All significant intercompany balances and transactions have
been eliminated in consolidation.
These consolidated financial statements were prepared in accordance with
instructions for Form 10-Q and therefore, do not include all disclosures
necessary for a complete presentation of the statement of financial condition,
statement of operations, and statement of cash flows in conformity with
generally accepted accounting principles. However, all adjustments which are, in
the opinion of management, necessary for the fair presentation of the interim
financial statements have been included and all such adjustments are of a normal
recurring nature. The results of operations for the three months and six months
ended January 31, 1997 are not necessarily indicative of the results that may be
expected for the fiscal year July 31, 1997 or any other interim period.
These statements should be read in conjunction with the consolidated statements
and related notes which are incorporated by reference in the Company's Annual
Report on Form 10-K for the year ended July 31, 1996.
(2) Net Income per Share
Net income per share was computed by dividing net income by the weighted average
number of total common stock shares and average number of common stock
equivalents outstanding during the three and six month periods ended January 31,
1997 and 1996. The weighted average number of shares includes an adjustment for
the 10% stock dividend during the quarters ended January 31, 1995, January 31,
1996, and October 31, 1996. The weighted average number of shares outstanding
include 73,027 shares committed to be released for the Savings Bank's ESOP.
8
<PAGE>
(3) Non Performing Loans and the Allowance for Loan Losses
Non performing loans at January 31, 1997, and July 31, 1996, are as follows:
January 31, 1997 July 31,1996
---------------- ------------
Loans delinquent 90 days or more $4,005,061 $2,910,953
As a percentage of total loans 2.0% 1.8%
An analysis of the allowance for loan losses for the six month period ended
January 31, 1997 and 1996 is as follows:
For the six For the six
months ended months ended
January 31, 1997 January 31, 1996
---------------- ----------------
Balance at beginning of period $3,073,158 $2,534,836
Provision charged to operations 361,217 359,285
Charge-offs, (342,811) (100,803)
Recoveries 18,277 157,352
--------- ---------
Balance at end of period $3,109,841 $2,950,670
========= =========
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
- --------
Lakeview Financial Corp. (the "Company") is organized as a unitary savings and
loan holding company and owns all of the outstanding capital stock of Lakeview
Savings Bank (the "Savings Bank"). The business of the Savings Bank and
therefore, the Company, is the acceptance of savings deposits from the general
public and the origination and purchase of mortgage loans in Northern New
Jersey. The Savings Bank has eight office locations located in Bergen and
Passaic Counties, New Jersey. The Company also has investments in two service
corporations, Branchview, Inc. and Lakeview Mortgage Depot, Inc.
Comparison of Operating Results For The Three Months Ended January 31, 1997 and
- -------------------------------------------------------------------------------
1996
- ----
Net Income: Net income increased $970 thousand, or 64.7%, to $2.5 million, for
the three month period ended January 31, 1997, from $1.5 million, for the same
period last year. The increase in net income was primarily the result of an
increase in gains on the sale of investments and other operating income, net of
taxes of approximately $677,000 and $249,000, respectively.
Interest Income: Total interest income increased $450 thousand to $8.0 million
for the quarter ended January 31, 1997, compared to $7.5 million for the quarter
ended January 31, 1996. The increase was mainly due to growth primarily in loans
receivable, net. The average balance in interest earning assets for the three
months increased $26.9 million, or 6.62% to $432.7 million from $405.8 million
for the three months ended January 31, 1996.
Interest Expense: Total interest expense increased $333 thousand to $4.4 million
for the quarter ended January 31, 1997, compared to $4.0 million for the quarter
ended January 31, 1996. The increase was due to growth in the level of interest
bearing liabilities, primarily in borrowings, as well as a modest increase in
the average cost. Average interest bearing liabilities increased $28.9 million
or 7.7% to $403.5 million for the quarter ended January 31, 1997, from $374.6
million for the quarter ended January 31, 1996. The cost increased 2 basis
points to 4.32% for the three months ended January 31, 1997 from 4.30% for the
three months ended January 31, 1996.
Net Interest Income: Net interest income before provision for loan losses
increased $116 thousand or 3.3%, to $3.6 million for the three months ended
January 31, 1997, from $3.5 million for the three months ended January 31, 1996.
10
<PAGE>
Provision For Loan Losses: For the comparison period, the provision for loan
losses increased $81,000, or 46.4%, to $256,000 compared to $175,000 for the
same period ended January 31, 1996, due to loan growth and increase in
non-performing loans. Management of the Savings Bank regularly accesses the
credit risk of the loan portfolio based on information available at such times,
including trends in the local real estate market and levels of the Savings
Bank's non-performing loans and assets. The assessment of the adequacy of the
allowance for loan losses involve subjective judgement regarding future events
and thus there can be no assurance that additional provision for loan losses
will not be required in future periods.
Other Income: Other income increased $1.5 million during the comparison period
to $3.2 million or 85.4%, from $1.7 million. The Company realized gains on
investments available for sale of $1.4 million for the quarter ended January 31,
1996 and $2.4 million for the quarter ended January 31, 1997. This increase
resulted from the sale of U. S. Government obligations, FNMA and other equity
securities. The gains on the sale of securities for the quarter ended January
31, 1997, are not necessarily indicative of the gains that may be expected for
the entire fiscal year ending July 31, 1997. Other operating income increased
$389 thousand, or 657.5%, to $449 thousand for the quarter ended January 31,
1997, compared to $59 thousand for the quarter ended January 31, 1996, primarily
attributed to the operations of the Company's subsidiary Lakeview Mortgage
Depot, Inc. Such subsidiary began operations in October 1995.
Other Expense: For the comparison period, other expense decreased $30 thousand,
or 1.1%, to $2.6 million for the three months ended January 31, 1997, from $2.7
million for the three months ended January 31, 1996. Other operating expense
decreased $177 thousand or 22.3% to $617 thousand for the quarter ended January
31, 1997, from $794 thousand for the quarter ended January 31, 1996, primarily
attributable to the decrease in Federal Deposit Insurance expense. Net loss on
real estate owned operations decreased $60 thousand for the comparison period.
Management will continue to liquidate real estate owned whenever possible.
Offsetting these decreases was a increase in compensation of $190 thousand for
the comparison period. Compensation primarily attributed to increased staffing
of the Company's subsidiary, Lakeview Mortgage Depot, Inc.
Comparison of Operating Results For The Six Months Ended January 31, 1997 and
- --------------------------------------------------------------------------------
1996
- ----
Net Income: Net income increased $295 thousand, or 11.8% to $2.8 million, for
the six month period ended January 31, 1997, from $2.5 million, for the same
period last year. The increase in net income was primarily the result of
increases in net interest income and other operating income, net of taxes, of
approximately $360 thousand and $1.3 million, respectively. Offsetting the
increase was $1.4 million ($2.2 million before tax benefit) of a special
assessment required to recapitalize the Savings Association Insurance Fund
11
<PAGE>
(SAIF) of the FDIC.
Interest Income: Total interest income increased $1.0 million to $16.0 million
for the six months ended January 31, 1997, compared to $15.0 million for the six
months ended January 31, 1996. The increase was due to growth in interest
earning assets, primarily in loans receivable, net and an increase in the
average yield on interest earning assets from 7.46% to 7.48%. The average
balance in interest earnings assets for the six months increased $26.7 million,
or 6.6% to $429.1 million from $402.4 million for the six months ended January
31, 1996.
Interest Expense: Total interest expense increased $463 thousand to $8.6 million
for the six months ended January 31, 1997, compared to $8.1 million for the six
months ended January 31, 1996. The increase was due to growth in the level of
interest bearing liabilities, primarily in borrowings, offset by a decrease in
the cost. Average interest bearing liabilities increased $29.1 million or 7.8%
to $401.3 million for the six months ended January 31, 1997, from $372.2 million
for the six months ended January 31, 1996. The cost decreased 8 basis points to
4.27% for the six months ended January 31, 1997 from 4.35% for the six months
ended January 31, 1996.
Net Interest Income: Net interest income before provision for loan losses
increased $562 thousand or 8.1%, to $7.5 million for the six months ended
January 31, 1997 from $6.9 million for the six months ended January 31, 1996.
Other Income: Other income increased $2.1 million during the comparison period
to $4.8 million or 78.6 %, from $2.7 million. The Company realized gains on
investments available for sale of $1.8 million for the six months ended January
31, 1996 and $3.2 million for the six months ended January 31, 1997. This
increase resulted from the sale of U. S. Government obligations, FNMA and other
equity securities. The gains on the sale of securities for six months ended
January 31, 1997, are not necessarily indicative of the gains that may be
expected for the entire fiscal year ending July 31, 1997. Other operating income
increased $796 thousand, or 345.9%, to $1.0 million for the six months ended
January 31, 1997, compared to $230 thousand for the six months ended January 31,
1996, primarily attributed to the operations of the Company's subsidiary
Lakeview Mortgage Depot, Inc.
Other Expense: For the comparison period, other expense increased $2.1 million,
or 39.8%, to 7.4 million for the six months ended January 31, 1997, from $5.3
million for the six months ended January 31, 1996. Compensation increased $332
thousand or 14.4% to $2.6 million for the six months ended January 31, 1997,
from $2.3 million for the six months ended January 31, 1996, primarily
attributed to increased staffing of the Company's subsidiary, Lakeview Mortgage
Depot, Inc. Other operating expense increased $2.1 million, or 139.2% to $3.6
million at January 31, 1997 as compared to $1.5 million at January 31, 1996. The
increase was primarily the result of a $2.2 million special
12
<PAGE>
assessment required to recapitalize the SAIF. Offsetting these increases was a
decrease in the net loss on real estate owned operations of $347 thousand for
the comparison period. Management will continue to liquidate real estate owned
whenever possible.
Comparison of Financial Condition at January 31, 1997 and July 31, 1996
- -----------------------------------------------------------------------
Total assets increased $13.9 million, or 3.0%, to $471.8 million at January 31,
1997, from $457.9 million at July 31, 1996. The increase was primarily due to
increases in loans receivable, net, of $33.2 million and $963 thousand in
Federal Home Loan Bank Stock, offsetting declines in cash and cash equivalents
of $873 thousand, $9.7 million in mortgage-backed securities held to maturity,
and $8.8 million in investment securities available for sale.
Investment securities available for sale ("investment securities") decreased
$8.8 million to $81.1 million at January 31, 1997 from $90.0 million at July 31,
1996. The decrease was mainly attributable to the sale of investment securities
in the amount of $46.8 million and principal payments of $982 thousand offset by
an increase in market value of $1.1 million (before tax), and purchases of $37.8
million. Pursuant to SFAS 115, investment securities available for sale are
reported at fair value, with unrealized gains and losses excluded from earnings
and reported net of income tax, as a separate component of equity.
Mortgage backed securities held to maturity decreased $9.7 million, or 8.7%, to
$111.8 million at January 31, 1997, from $121.5 million at July 31, 1996. This
was attributed to principal repayments of $9.8 million.
Loans receivable increased $33.2 million, or 16.9%, to $196.7 million at January
31, 1997, from$163.5 million at July 31, 1996. The increase is the result of the
expansion of the Savings Bank's operations and the resultant higher volume of
loan originations.
Deposits, after interest credited, increased $7.1 million, or 2.0%, to $361.3
million at January 31, 1997, from $354.2 million at July 31, 1996. The increase
was mainly attributed to interest credited to deposits of $6.9 million and a net
increase in deposits before interest of $200 thousand.
Borrowings increased $3.2 million, or 5.7%, to $57.2 million at January 31,
1997, from $54.0 million at July 31, 1996. During the period ended January 31,
1997, the Savings Bank used borrowings, deposits, and investment securities
available for sale ("investment securities") to fund the growth in loans
receivable.
Shareholders' equity increased $2.1 million, or 4.3%, during the six months
ended January 31, 1997, to $47.8 million. This was primarily due to a decrease
in the unrealized loss on securities available for sale, net of tax, of $734
thousand, amortization of ESOP shares of
13
<PAGE>
$340 thousand, and net income of $2.8 million, offset by cash dividends of $299
thousand, and $1.7 million in purchase of common stock.
Non-Performing Assets
- ---------------------
Loans delinquent 90 days or more increased $1.1 million, or 37.6%, from $2.9
million at July 31, 1996. Delinquent loans 90 days or more past due totaled
2.04% of gross loans at January 31, 1997, compared to 1.78% of gross loans at
July 31, 1996. This increase is mainly attributed to a $1.2 million increase in
90 day or more delinquent loans, offset by $183 thousand transferred to Real
Estate Owned. The increase is related to first mortgage loans with the largest
being approximately $320 thousand, which was paid-off in February 1997. The
Savings Bank's allowance for loan losses totaled $3,109,841 at January 31, 1997,
as compared to $3,073,158, at July 31, 1996.
Non-performing assets (loans 90 days or more delinquent, non-accrual loans, real
estate owned and other non-performing assets) totaled $5.4 million or 1.1% of
total assets at January 31, 1997, as compared to 1.0% of total assets at July
31, 1996.
Liquidity and Capital Resources
- -------------------------------
The Savings Bank's primary sources of funds includes savings deposits, loan
repayments and prepayments, cash flow from operations and borrowings from the
Federal Home Loan Bank of New York ("FHLB"). The Savings Bank uses its capital
resources principally to fund loan origination and purchases, repay maturing
borrowings, purchase of securities, and for short and long-term liquidity needs.
The Savings Bank expects to be able to fund or refinance, on a timely basis, its
commitments and long-term liabilities.
The Savings Bank's liquid assets consist of cash and cash equivalents, which
include investments in highly liquid short-term investments. The level of these
assets are dependent on the Savings Bank's operating, financing and investment
activities during any given period. At January 31, 1997, cash and cash
equivalents totaled $6,028,914.
The Savings Bank anticipates that it will have sufficient funds available to
meet its current commitments. As of January 31, 1997, the Savings Bank had
commitments to fund loans of $3,750,500.
The Savings Bank had leverage, Tier 1 and risk-based capital ratios of 7.5%,
14.6%, and 15.8% at January 31, 1997, which exceeded the FDIC's respective
minimum requirements of 4.00%, 4.00% and 8.00%. The Savings Bank was classified
as a "well capitalized" institution by the FDIC as of January 31, 1997.
14
<PAGE>
Impact of Inflation and Changing Prices
- ---------------------------------------
The financial statements of the Company and notes thereto, presented elsewhere
herein, have been prepared in accordance with generally accepted accounting
principles, which require the measurement of financial position and operating
results in terms of historical dollars without considering the change in the
relative purchasing power of money over time and due to inflation. The impact of
inflation is reflected in the increased cost of the Company's operations. Unlike
most industrial companies, nearly all the assets and liabilities of the Company
are monetary. As a result, interest rates have a greater impact on the Company's
performance than do the effects of general levels of inflation. Interest rates
do not necessarily move in the same direction or to the same extent as the price
of goods and services.
15
<PAGE>
LAKEVIEW FINANCIAL CORP. AND SUBSIDIARIES
PART II
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Savings Bank is a party to legal proceedings
in the ordinary course of business wherein it enforces its security
interest in loans. Neither the Registrant nor the Savings Bank was
engaged in any legal proceeding of a material nature at January 31,
1997.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER MATERIALLY IMPORTANT EVENTS
On February 19, 1997, the Company announced a declaration of a cash
dividend of $.0625 per share to shareholders of record on March 5,
1997, payable on March 19, 1997.
Lakeview Financial Corp., through its subsidiary Branchview, Inc.,
received 545,455 shares of IMC common stock in exchange for its
partnership interest. This investment was further increased through
the purchase of an additional 285,473 shares of common stock of IMC.
As of January 31, 1997, these shares had a value in excess of $41.5
million. Due to a restriction on the sale or transfer of these
shares of common stock, Lakeview is required to carry the stock at
the historical cost basis of $7.8 million, until the restrictions
are removed, or within one year of the restriction expiring, at
which time the shares will be carried at fair value. The market
trading value of this equity investment, IMC common stock, has an
indirect effect on the market value of Lakeview Financial Corp.
common stock. However, this is not based on the performance of IMC,
but on the market value of IMC common stock. The investment in IMC
(whose purpose is to originate and securitize equity mortgage
products) offers opportunity for high rates of return in a high
growth industry, however there is no assurance that such high rates
of return or the volume of loan originations will be attained. In
addition there is no assurance that the market value of IMC common
stock will be maintained or increase subsequent to the sale or
transfer restrictions being removed.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27.0. Financial Data Schedule (included in electronic filing
only).
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Lakeview Financial Corp.
Date: March 10, 1997
/s/ Kevin J. Coogan
------------------------
Kevin J. Coogan
President and CEO
(Principal Executive Officer)
/s/ Anthony G. Gallo
------------------------
Anthony G. Gallo
Vice President and CFO
(Principal Financial Officer)
17
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<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> JAN-31-1997
<CASH> 6,028,914
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<INCOME-PRETAX> 3,886,444
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