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: April 30, 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.
(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
--------------------------------------------------
(Address of principal executive offices, zip code)
(201) 742-3060
----------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
- --------------------------------------------------------------------------------
(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: May 31, 1997
------------
Class Outstanding
- ---------------------------- ----------------
$2.00 par value common stock 2,267,465 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 April 30, 1997 and July 31, 1996 3
Unaudited Consolidated Statements of Income for the Three
Months Ended April 30, 1997 and 1996 4
Unaudited Consolidated Statements of Income for the Nine
Months ended April 30, 1997 and 1996 5
Unaudited Consolidated Statements of Cash Flows for the Nine
Months Ended April 30, 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
<PAGE>
LAKEVIEW FINANCIAL CORP. AND SUBSIDIARIES
- -----------------------------------------
CONSOLIDATED STATEMENTS OF CONDITION
AS OF APRIL 30, 1997 AND JULY 31, 1996
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------- ------------
(Unaudited) (Unaudited)
April 1997 July 1996
- ---------------------------------------------------------------------------------------- ------------
<S> <C> <C>
Assets
Cash on hand and in banks $6,663,844 $6,902,040
Federal funds sold, net 0 0
- ---------------------------------------------------------------------------------------- ------------
Total cash and cash equivalents 6,663,844 6,902,040
Investment securities held to maturity, net 41,343,102 40,821,195
Investment securities available for sale, net 82,559,057 89,967,424
Equity securities restricted for sale, market value of $18,695,880 and 7,806,358 7,806,358
$19,942,272 at April 30, 1997 and July 31, 1996.
Mortgage-backed securities held to maturity, net 106,382,267 121,461,936
Loans receivable, net 207,311,271 163,457,374
Real estate owned, net 1,709,776 1,666,533
Federal Home Loan Bank of New York stock, at cost 3,550,000 2,587,400
Accrued interest receivable, net 3,965,816 3,646,512
Office properties and equipment, net 4,074,368 4,182,639
Excess of cost over fair value of assets acquired 9,186,207 10,176,424
Other assets 7,093,947 5,184,150
- ---------------------------------------------------------------------------------------- ------------
Total assets $481,646,013 $457,859,985
- ---------------------------------------------------------------------------------------- ------------
- ---------------------------------------------------------------------------------------- ------------
Liabilities and Shareholders' Equity
- ------------------------------------
Deposits $373,514,304 $354,246,770
Borrowings 56,500,000 54,000,000
Borrowings - (ESOP) obligation 2,279,500 721,429
Advance payments by borrowers for taxes and insurance 2,131,202 1,711,930
Other liabilities 1,383,765 1,420,175
- ---------------------------------------------------------------------------------------- ------------
Total liabilities 435,808,771 412,100,304
Shareholders' Equity
- --------------------
Common stock: $2.00 par value; authorized 10,000,000
shares, issued 3,220,752 shares and outstanding
2,302,465 shares at April 30, 1997 6,441,504 5,856,152
Additional paid-in capital 32,923,911 26,186,633
Retained income substantially restricted 26,852,672 29,984,480
Unrealized loss on securities available for sale,
net of taxes (1,063,254) (1,884,921)
Treasury stock at cost (15,955,996) (10,655,120)
Common stock acquired by ESOP (2,158,747) (2,306,895)
Common stock acquired by MSBP (1,202,848) (1,420,648)
- ---------------------------------------------------------------------------------------- ------------
Total shareholders' equity 45,837,242 45,759,681
- ---------------------------------------------------------------------------------------- ------------
Total liabilities and shareholders' equity $481,646,013 $457,859,985
- ---------------------------------------------------------------------------------------- ------------
- ---------------------------------------------------------------------------------------- ------------
Stated book value per share $19.91 $18.36
Tangible book value per share $15.92 $14.28
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE>
LAKEVIEW FINANCIAL CORP. AND SUBSIDIARIES
- -----------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED APRIL 30, 1997 AND 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
(Unaudited) (Unaudited)
April 1997 April 1996
- ----------------------------------------------------------------------- ------------
<S> <C> <C>
Interest income:
Loans receivable $4,495,467 $3,523,076
Mortgage-backed securities held to maturity 1,764,675 2,092,479
Investment securities held to maturity 855,368 308,059
Investment securities available for sale 1,256,577 1,772,832
- ----------------------------------------------------------------------- ------------
Total interest income 8,372,087 7,696,446
Interest expense:
Interest on deposits 3,450,719 3,484,840
Interest on borrowings 860,813 665,484
- ----------------------------------------------------------------------- ------------
Total interest expense 4,311,532 4,150,324
Net interest income before provision for loan losses 4,060,555 3,546,122
Provision for loan losses 300,000 184,043
- ----------------------------------------------------------------------- ------------
Net interest income after provision for loan losses 3,760,555 3,362,079
Other Income:
Loan fees and service charges 308,063 276,014
Gains (loss) on sale of investments (21,923) 738,400
Other operating income 685,811 682,635
- ----------------------------------------------------------------------- ------------
Total other income 971,951 1,697,049
Other expense:
Employee compensation 1,486,622 1,283,770
Office occupancy 229,370 235,301
Loss from REO operations 34,561 40,306
Other operating expense 766,315 726,170
Amortization of goodwill 330,072 330,072
- ----------------------------------------------------------------------- ------------
Total other expense 2,846,940 2,615,619
Net income before taxes 1,885,566 2,443,509
Federal and state income taxes 546,394 936,000
- ----------------------------------------------------------------------- ------------
Net Income $1,339,172 $1,507,509
- ----------------------------------------------------------------------- ------------
- ----------------------------------------------------------------------- ------------
Net income per share $0.54 $0.61
Weighted average numbers of shares 2,492,578 2,480,814
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
4
<PAGE>
LAKEVIEW FINANCIAL CORP. AND SUBSIDIARIES
- -----------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED APRIL 30, 1997 AND 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
(Unaudited) (Unaudited)
1997 1996
- ----------------------------------------------------------------------- -------------
<S> <C> <C>
Interest income:
Loans receivable $12,168,963 $10,293,064
Mortgage-backed securities held to maturity 5,609,043 7,546,557
Investment securities held to maturity 2,605,386 2,266,075
Investment securities available for sale 4,029,723 2,606,725
- ----------------------------------------------------------------------- -------------
Total interest income 24,413,115 22,712,421
Interest expense:
Interest on deposits 10,390,998 10,557,853
Interest on borrowings 2,486,544 1,695,107
- ----------------------------------------------------------------------- -------------
Total interest expense 12,877,542 12,252,960
Net interest income before provision for loan losses 11,535,573 10,459,461
Provision for loan losses 661,217 543,328
- ----------------------------------------------------------------------- -------------
Net interest income after provision for loan losses 10,874,356 9,916,133
Other Income:
Loan fees and service charges 882,403 837,172
Gain on sale of investments 3,157,157 2,622,561
Other operating income 1,711,900 912,743
- ----------------------------------------------------------------------- -------------
Total other income 5,751,460 4,372,476
Other expense:
Employee compensation 4,125,051 3,590,158
Office occupancy 693,110 649,228
Loss from REO operation 135,463 487,736
Other operating expense (1) 4,352,816 2,225,274
Amortization of goodwill 990,216 990,216
- ----------------------------------------------------------------------- -------------
Total other expense 10,296,656 7,942,612
Net income before taxes 6,329,160 6,345,997
Federal and state income taxes 2,174,394 2,317,998
- ----------------------------------------------------------------------- -------------
Net Income $4,154,766 $4,027,999
- ----------------------------------------------------------------------- -------------
- ----------------------------------------------------------------------- -------------
Net income per share $1.62 $1.54
Weighted average numbers of shares 2,562,385 2,612,999
</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.
See accompanying notes to unaudited consolidated financial statements.
5
<PAGE>
LAKEVIEW FINANCIAL CORP. AND SUBSIDIARIES
- -----------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED APRIL 30, 1997 AND 1996
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited)
1997 1996
- ------------------------------------------------------------------------------------------ --------------
<S> <C> <C>
Cash flows from operating activities:
Net Income $4,154,766 $4,027,999
Adjustment to reconcile net income to net cash provided
by operating activities :
Amortization of excess of cost over fair value of assets acquired 990,217 990,216
Amortization of discounts and premiums, net (289,971) (300,039)
Provision for losses on loans 661,217 543,328
Provision for losses on real estate owned 43,783 222,447
Gain on sale of loans (5,104) (9,598)
Gain on sale of real estate owned, net (37,624) (18,972)
Net realized gains on sale of investments available for sale (3,157,157) (2,622,561)
Increase in accrued interest receivable (319,304) (1,098,598)
Decrease in deferred loan fees (28,012) (51,923)
Increase in other assets (1,909,797) (2,121,391)
Decrease in other liabilities (498,196) (3,112,236)
Depreciation of office properties and equipment, net 200,190 219,178
- ------------------------------------------------------------------------------------------ --------------
Net cash used in operating activities: (194,992) (3,332,150)
Cash flows from investing activities:
Loan origination net of principal payments (45,142,766) (24,266,660)
Increase in Federal Home Loan Bank stock (962,600) 0
Purchase of investment securities available for sale (43,592,779) (34,879,462)
Proceeds from sale of investment securities available for sale 51,172,278 41,411,203
Proceeds from maturity of investment securities available for sale 3,000,000 10,250,000
Principal payments on investment securities available for sale 1,331,532 804,449
Purchase of investment securities (2,500,000) (90,953,530)
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 15,212,970 18,903,934
Proceeds from sale of real estate owned 684,074 1,393,274
Increase in office properties and equipment (91,919) (127,847)
- ------------------------------------------------------------------------------------------ --------------
Net cash used in investing activities (18,889,210) (39,141,736)
</TABLE>
6
<PAGE>
LAKEVIEW FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE NINE MONTHS ENDED APRIL 30, 1997 AND 1996
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited)
1997 1996
- ------------------------------------------------------------------------------------------ --------------
<S> <C> <C>
Cash flows from financing activities:
Increase in deposits, net 19,267,534 10,403,523
Increase in borrowings, net 4,058,071 33,846,875
Increase (decrease) in advance payments by borrowers for taxes, net 419,272 (31,806)
Purchase of treasury stock (5,300,876) (6,685,014)
Amortization of ESOP shares 562,238 377,624
Amortization of MSBP shares 285,038 365,267
Dividend paid (445,272) (440,966)
- ------------------------------------------------------------------------------------------ --------------
Net cash provided by financing activities 18,846,005 37,835,503
- ------------------------------------------------------------------------------------------ --------------
Net change in cash and cash equivalents (238,196) (4,638,383)
Cash and cash equivalents at beginning of period 6,902,040 8,021,666
- ------------------------------------------------------------------------------------------ --------------
Cash and cash equivalents at end of period $6,663,844 $3,383,283
- ------------------------------------------------------------------------------------------ --------------
- ------------------------------------------------------------------------------------------ --------------
Cash paid during period for:
Interest $10,390,998 $10,557,853
Income Taxes $1,735,153 $1,842,277
Supplemental disclosures of non-cash investing activities:
Transfer of loans receivable to real estate owned $733,476 $224,132
Transfer of securities to securities available for sale $0 $112,605,094
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
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 nine months
ended April 30, 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 nine month periods ended April 30,
1997 and 1996. The weighted average number of shares were adjusted for the 10%
stock dividend which was declared during the quarters ended January 31, 1995,
January 31, 1996, and October 31, 1996. At April 30, 1997 and 1996 respectively,
the weighted average number of shares outstanding include 87,471 and 45,144
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 April 30, 1997, and July 31, 1996, are as follows:
<TABLE>
<CAPTION>
April 30, 1997 July 31,1996
-------------- ------------
<S> <C> <C>
Loans delinquent 90 days or more $3,027,790 $2,910,953
As a percentage of total loans 1.5% 1.8%
</TABLE>
An analysis of the allowance for loan losses for the nine month periods ended
April 30, 1997 and 1996 is as follows:
For the nine For the nine
months ended months ended
April 30, 1997 April 30, 1996
--------------- --------------
Balance at beginning of period $3,073,158 $2,534,836
Provision charged to operations 661,217 543,328
Charge-offs, (602,543) (393,646)
Recoveries 30,225 272,407
--------- ---------
Balance at end of period $3,162,057 $2,956,925
========== ==========
(4) Employee Stock Ownership Plan (ESOP) Obligation
During the quarter ended April 30, 1997, the Savings Bank borrowed $2.3 million
from a third party lender, at an interest rate of 5.7%, for the purchase of
84,744 shares of Lakeview Financial Corp. common stock for the ESOP. The
interest rate for the loan changes monthly and interest payments are due
monthly.
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 April 30, 1997 and
1996
- --------------------------------------------------------------------------------
Net Income: Net income decreased $168 thousand, or 11.2%, to $1.3 million, for
the three month period ended April 30, 1997, from $1.5 million, for the same
period last year. The decrease in net income was primarily the result of a
decrease in gains on the sale of investments, an increase in the provision for
loan losses and employee compensation, net of taxes of approximately $532,000,
$81,000, and $142,000, respectively. Offsetting the decreases was an increase in
net interest income of, net of taxes, approximately $360,000.
Interest Income: Total interest income increased $676 thousand to $8.4 million
for the quarter ended April 30, 1997, compared to $7.7 million for the quarter
ended April 30, 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 $19.5 million, or 4.7% to $436.5 million from $417.0 million
for the three months ended April 30, 1996.
Interest Expense: Total interest expense increased $161 thousand to $4.3 million
for the quarter ended April 30, 1997, compared to $4.2 million for the quarter
ended April 30, 1996. The increase was due to growth in the level of interest
bearing liabilities, primarily in deposits, offset by a modest decrease in the
average cost. Average interest bearing liabilities increased $22.9 million or
5.9% to $410.5 million for the quarter ended April 30, 1997, from $387.6 million
for the quarter ended April 30, 1996. The cost decreased 8 basis points to 4.20%
for the three months ended April 30, 1997 from 4.28% for the three months ended
April 30, 1996.
Net Interest Income: Net interest income before provision for loan losses
increased $514 thousand or 14.5%, to $4.1 million for the three months ended
April 30, 1997, from $3.5 million for the three months ended April 30, 1996.
10
<PAGE>
Provision For Loan Losses: For the comparison period, the provision for loan
losses increased $116,000, or 63.0%, to $300,000 compared to $184,000 for the
same period ended April 30, 1996, due to loan growth. 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 decreased $725 thousand during the comparison period
to $972 thousand or 42.8%, from $1.7 million. The Company realized gains on
investments available for sale of $738 thousand for the quarter ended April 30,
1996 and a loss of $22 thousand for the quarter ended April 30, 1997. This
decrease resulted from the sale of U. S. Government obligations. The loss on the
sale of securities for the quarter ended April 30, 1997, are not necessarily
indicative of the losses that may be expected for the entire fiscal year ending
July 31, 1997.
Other Expense: For the comparison period, other expense increased $231 thousand,
or 8.8%, to $2.8 million for the three months ended April 30, 1997, from $2.6
million for the three months ended April 30, 1996. The increase in other expense
was primarily the result of an increase in compensation expense. Compensation
expense increased $203 thousand, or 15.8%, to $1.5 million for the quarter ended
April 30, 1997, compared to $1.3 million for the quarter ended April 30, 1996.
The increase in compensation was primarily attributed to increased staffing of
the Company's subsidiary, Lakeview Mortgage Depot, Inc.
Comparison of Operating Results For The Nine Months Ended April 30, 1997 and
1996
- --------------------------------------------------------------------------------
Net Income: Net income increased $127 thousand, or 3.2% to $4.2 million, for the
nine month period ended April 30, 1997, from $4.0 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
$699 thousand and $896 thousand, respectively. Offsetting the increases was $1.4
million ($2.2 million before tax benefit) of a special assessment required to
recapitalize the Savings Association Insurance Fund (SAIF) of the FDIC.
Interest Income: Total interest income increased $1.7 million to $24.4 million
for the nine months ended April 30, 1997, compared to $22.7 million for the nine
months ended April 30, 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 7.44% to 7.52%. The average balance in interest
earnings assets for the nine months increased $26.2 million, or 6.4% to $433.1
million from $406.9 million for the nine months ended April
11
<PAGE>
30, 1996.
Interest Expense: Total interest expense increased $625 thousand to $12.9
million for the nine months ended April 30, 1997, compared to $12.3 million for
the nine months ended April 30, 1996. The increase was due to growth in the
level of interest bearing liabilities, primarily in deposits, offset by a
decrease in the cost. Average interest bearing liabilities increased $27.2
million or 7.2% to $404.7 million for the nine months ended April 30, 1997, from
$377.5 million for the nine months ended April 30, 1996. The cost decreased 9
basis points to 4.24% for the nine months ended April 30, 1997 from 4.33% for
the nine months ended April 30, 1996.
Provision For Loan Losses: For the comparison period, the provision for loan
losses increased $118,000, or 21.7%, to $661,000 compared to $543,000 for the
same period ended April 30, 1996, due to loan growth. 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.
Net Interest Income: Net interest income before provision for loan losses
increased $1.1 million or 10.3%, to $11.5 million for the nine months ended
April 30, 1997 from $10.5 million for the nine months ended April 30, 1996.
Other Income: Other income increased $1.4 million during the comparison period
to $5.8 million or 31.5 %, from $4.4 million. The Company realized gains on
investments available for sale of $2.6 million for the nine months ended April
30, 1996 and $3.2 million for the nine months ended April 30, 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 nine months ended
April 30, 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 $799 thousand, or 87.6%, to $1.7 million for the nine months ended
April 30, 1997, compared to $913 thousand for the nine months ended April 30,
1996, primarily attributed to the operations of the Company's subsidiary
Lakeview Mortgage Depot, Inc.
Other Expense: For the comparison period, other expense increased $2.4 million,
or 29.6%, to $10.3 million for the nine months ended April 30, 1997, from $7.9
million for the nine months ended April 30, 1996. Compensation increased $535
thousand or 14.9% to $4.1 million for the nine months ended April 30, 1997, from
$3.6 million for the nine months ended April 30, 1996, primarily attributed to
increased staffing of the Company's subsidiary, Lakeview Mortgage Depot, Inc.
Other operating expense increased $2.1 million, or 95.7% to $4.4 million at
April 30, 1997 as compared to $2.2 million at April 30, 1996. The increase was
primarily the result of a $2.2 million special assessment required
12
<PAGE>
to recapitalize the SAIF. Offsetting these increases was a decrease in the net
loss on real estate owned operations of $352 thousand for the comparison period.
Management will continue to liquidate real estate owned whenever possible.
Comparison of Financial Condition at April 30, 1997 and July 31, 1996
- ---------------------------------------------------------------------
Total assets increased $23.7 million, or 5.2%, to $481.6 million at April 30,
1997, from $457.9 million at July 31, 1996. The increase was primarily due to
increases in loans receivable, net, of $43.9 million and $963 thousand in
Federal Home Loan Bank Stock, offsetting declines of $15.1 million in
mortgage-backed securities held to maturity, and $7.4 million in investment
securities available for sale.
Investment securities available for sale ("investment securities") decreased
$7.4 million to $82.6 million at April 30, 1997 from $90.0 million at July 31,
1996. The decrease was mainly attributable to the sale of investment securities
in the amount of $48.0 million, $3.0 million in maturities, and principal
payments of $1.3 million offset by an increase in market value of $1.3 million
(before tax), and purchases of $43.6 million. The funds were primarily used to
fund the growth in loans receivable. 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 $15.1 million, or 12.4%,
to $106.4 million at April 30, 1997, from $121.5 million at July 31, 1996. This
was attributed to principal repayments of $15.1 million. The funds were
primarily used to fund the growth in loans receivable.
Through the Company's wholly owned subsidiary, Branchview, Inc., a New Jersey
service corporation, the Company has an 6.02% equity investment in Industry
Mortgage, Inc., ("IMC") which consists of 1,661,856 shares of restricted common
stock. In accordance with SFAS 115, Accounting for Certain Investments in Debt
and Equity Securities, due to restrictions on the sale or transfer of these
shares of common stock under Rule 144 of the Securities Act of 1933, the Company
is required to value 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. At April 30,
1997, the market value of the investment, based on the quoted market price per
share of unrestricted stock, was approximately $18.7 million as compared to
$41.5 million for the quarter ended January 31, 1997. The decrease in market
value was the result of unfavorable market conditions in the non-conforming
mortgage loan industry.
The market trading value of the equity investment in IMC common stock has an
indirect effect on the market value of the Company's 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
13
<PAGE>
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.
Loans receivable increased $43.8 million, or 26.8%, to $207.3 million at April
30, 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 $19.3 million, or 5.4%, to $373.5
million at April 30, 1997, from $354.2 million at July 31, 1996. The increase
was attributed to interest credited to deposits of $10.4 million and a net
increase in deposits before interest of $8.9 million.
Borrowings increased $2.5 million, or 4.6%, to $56.5 million at April 30, 1997,
from $54.0 million at July 31, 1996. During the period ended April 30, 1997, the
Savings Bank used borrowings, deposits, and investment securities available for
sale ("investment securities") to fund the growth in loans receivable.
The Employee Stock Option Plan (the "ESOP") obligation increased $1.6 million,
or 216.0%, to $2.3 million at April 30, 1997, from $721 thousand at July 31,
1997. During the period ended April 30, 1997, the Savings Bank borrowed $2.3
million from a third party lender to fund the purchase of 87,744 shares of
Lakeview Financial Corp. common stock for the ESOP.
Shareholders' equity increased $78 thousand during the nine months ended April
30, 1997, to $45.8 million. This was primarily due to a decrease in the
unrealized loss on securities available for sale, net of tax, of $822 thousand,
amortization of ESOP shares of $562 thousand, and net income of $4.2 million,
offset by cash dividends of $445 thousand, and the repurchase of $5.3 million in
common stock.
Non-Performing Assets
- ---------------------
Loans delinquent 90 days or more increased $117 thousand, or 4.0%, from $2.9
million at July 31, 1996. Delinquent loans 90 days or more past due totaled
1.46% of gross loans at April 30, 1997, compared to 1.78% of gross loans at July
31, 1996. This increase is mainly attributed to a $850 thousand increase in 90
day or more delinquent loans, offset by $733 thousand transferred to Real Estate
Owned. The Savings Bank's allowance for loan losses totaled $3,162,057 at April
30, 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 $4.7 million or .98% of
total assets at April
14
<PAGE>
30, 1997, as compared to $4.6 million or 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 April 30, 1997, cash and cash equivalents
totaled $6,664,000.
The Savings Bank anticipates that it will have sufficient funds available to
meet its current commitments. As of April 30, 1997, the Savings Bank had
commitments to fund loans of $3,257,900.
The Savings Bank had leverage, Tier 1 and risk-based capital ratios of 7.6%,
14.5%, and 15.8% at April 30, 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 April 30, 1997.
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 as of April 30, 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 May 20, 1997, the Company announced a declaration of a cash
dividend of $.0625 per share to shareholders of record on June
3, 1997, payable on June 17, 1997.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27. 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: June 9, 1997 /s/ Kevin J. Coogan
------------ ------------------------
Kevin J. Coogan
President and CEO
(Principal Executive Officer)
Date: June 9, 1997 /s/ Anthony G. Gallo
------------ ------------------------
Anthony G. Gallo
Vice President and CFO
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> APR-30-1997
<CASH> 6,663,844
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 82,559,057
<INVESTMENTS-CARRYING> 159,081,727
<INVESTMENTS-MARKET> 168,237,962
<LOANS> 210,473,328
<ALLOWANCE> 3,162,057
<TOTAL-ASSETS> 481,646,013
<DEPOSITS> 373,514,304
<SHORT-TERM> 58,779,500
<LIABILITIES-OTHER> 3,514,967
<LONG-TERM> 0
0
0
<COMMON> 6,441,504
<OTHER-SE> 39,395,738
<TOTAL-LIABILITIES-AND-EQUITY> 481,646,013
<INTEREST-LOAN> 4,495,467
<INTEREST-INVEST> 3,876,620
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 8,372,087
<INTEREST-DEPOSIT> 3,450,719
<INTEREST-EXPENSE> 4,311,532
<INTEREST-INCOME-NET> 4,060,555
<LOAN-LOSSES> 300,000
<SECURITIES-GAINS> (21,923)
<EXPENSE-OTHER> 2,846,940
<INCOME-PRETAX> 1,885,566
<INCOME-PRE-EXTRAORDINARY> 1,339,172
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,339,172
<EPS-PRIMARY> .54
<EPS-DILUTED> .54
<YIELD-ACTUAL> 7.42
<LOANS-NON> 3,027,790
<LOANS-PAST> 3,027,790
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,109,841
<CHARGE-OFFS> 259,731
<RECOVERIES> 11,948
<ALLOWANCE-CLOSE> 3,162,057
<ALLOWANCE-DOMESTIC> 3,162,058
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
