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)
March 11, 1999
BEAL FINANCIAL CORPORATION
(Exact name of Registrant as specified in its Charter)
Texas 33-93212 75-2583551
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification
incorporation) Number)
Suite 300, LB 66, 15770 North Dallas Parkway 75248
- ------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 404-4000
N/A
(Former name or former address, if changed since last report)
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Item 5. Other Events
Beal Financial Corporation, the holding company for Beal Bank, today
reported consolidated net income of $105.2 million for the year ending December
31, 1998, an increase of $18.6 million or 21.45% from the $86.6 million earned
during the prior year, principally due to increased gains realized on the sale
of real estate, which increased $25.5 million to $39.2 million for the year
ending December 31, 1998. Net interest income declined $9.2 million or 9.1% to
$92.2 million for the year ending December 31, 1998 as compared to $101.3
million during the prior year, primarily due to a decline in the average balance
of loans outstanding. During the fourth quarter, however, the Company was the
successful bidder on a $329.8 million, net, pool of primarily first lien,
performing, single family residential loans. The average age of the portfolio is
approximately 12 years with an average yield of 8.1%. These loans are located
nationwide, however, California, Florida and Texas represent 11.5%, 15.4% and
12.8%, respectively, of the pool.
Total assets remained unchanged at $1.4 billion at both December 31,
1998 and 1997. Loans receivable, net of loans in process, deferred fees and
discounts and the allowance for loan losses, increased $159.7 million or 17.8%
to $1.1 billion utilizing cash on hand and proceeds received from the sale of
real estate. Loans in process totaled $7.5 million at December 31, 1998.
Deferred fees and discounts totaled $193.5 million at December 31, 1998 as
compared to $231.8 million at December 31, 1997 due primarily to the recognition
of purchase discounts. Additional purchase discounts are being recorded in
smaller amounts as the Company has acquired loans with less purchase discount
than loans acquired in prior years.
Non-performing assets decreased to $173.2 million at December 31, 1998
as compared to $244.3 million at December 31, 1997. The allowance for loan
losses increased $2.0 million to $13.9 million at December 31, 1998 as compared
to $11.9 million at the same date a year ago primarily related to the loan
purchase referred to above. Real estate held for investment or sale declined
$70.3 million to $106.4 million at December 31, 1998, reflecting the successful
disposition of property previously purchased as a direct investment or
foreclosed upon.
Beal Bank remained well capitalized with stockholders' equity of $171.8
million at December 31, 1998, resulting in regulatory capital ratios as of
December 31, 1998 of Tier 1 capital of 17.31 percent, and Risk-based capital of
18.56 percent.
Beal Bank, headquartered in Dallas, also maintains branch offices in
Houston.
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BEAL FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
December 31, December 31,
1998 1997
------------ ------------
ASSETS
Cash 5,540 630
Interest bearing deposits 66,599 150,219
---------- ----------
CASH AND CASH EQUIVALENTS 72,139 150,849
Accrued interest receivable 12,983 13,071
Securities available for sale 89,581 111,376
Net loans receivable 1,059,413 899,745
Less allowance for losses (13,867) (11,912)
---------- ----------
1,045,546 887,833
Federal Home Loan Bank stock 9,877 10,203
Real estate held for investment or sale 106,353 176,682
Premises and equipment, net 5,699 6,351
Other assets 11,296 9,389
---------- ----------
1,353,474 1,365,754
========== ==========
LIABILITIES
Deposit accounts 1,005,617 1,001,476
Federal Home Loan Bank advances 80,000 110,000
Senior notes, net 57,295 57,188
Other borrowings 7,083 7,599
Other liabilities 12,253 28,673
---------- ----------
TOTAL LIABILITIES 1,162,248 1,204,936
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, par value $1 per share
authorized 375,000
issued and outstanding 300,000 300 300
Paid-In capital 2,740 2,740
Unrealized gain (loss) on available
for sale securities 3,909 3,722
Retained earings 184,277 154,056
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 191,226 160,818
---------- ----------
1,353,474 1,365,754
========== ==========
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<TABLE>
<CAPTION>
BEAL FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands)
Three Months ended Twelve Months Ended
December 31, December 31,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest income:
Loans, including fees $ 23,729 $ 23,411 $ 94,823 $112,785
Purchased discount accretion 10,089 8,327 44,633 44,673
Investment securities 2,508 2,524 10,510 11,723
-------- -------- -------- --------
TOTAL INTEREST INCOME 36,326 34,262 149,966 169,181
Interest expense:
Deposits 11,402 13,788 47,093 57,980
Federal Home Loan Bank
advances and other borrowings 1,566 541 2,647 1,890
Senior notes 2,028 1,999 8,077 7,986
-------- -------- -------- --------
TOTAL INTEREST EXPENSE 14,996 16,328 57,817 67,856
-------- -------- -------- --------
NET INTEREST INCOME 21,330 17,934 92,149 101,325
Provision for loan losses 4,337 1,764 5,577 3,410
-------- -------- -------- --------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 16,993 16,170 86,572 97,915
Other income
Gain on sale of loans (10) 6 0 550
Gain on real estate transactions 4,986 5,648 39,155 13,708
Other real estate operations, net 242 553 5,466 2,486
Other operating income 74 223 589 527
-------- -------- -------- --------
TOTAL NONINTEREST INCOME 5,292 6,430 45,210 17,271
Other expense
Salaries and employee benefits 1,883 2,701 8,083 8,318
Occupancy and equipment 495 566 2,185 2,392
SAIF deposit insurance premium 142 176 609 676
Other operating expenses 3,057 3,047 9,636 10,758
-------- -------- -------- --------
TOTAL NONINTEREST EXPENSES 5,577 6,490 20,513 22,144
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 16,708 16,110 111,269 93,042
Income Taxes 2,230 999 6,049 6,408
-------- -------- -------- --------
NET INCOME $ 14,478 $ 15,111 $105,220 $ 86,634
======== ======== ======== ========
Income per common share $48.26 $50.37 $350.73 $288.78
Weighted average number of common shares
outstanding 300 300 300 300
</TABLE>
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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.
BEAL FINANCIAL CORPORATION
Date: March 11, 1999 By: /s/ Molly Curl
------------------ ---------------------------
M. Molly Curl
Vice President
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