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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) October 28, 1996
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Statewide Financial Corp.
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(Exact name of registrant as specified in its charter)
New Jersey 0-26546 22-3397900
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(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
70 Sip Avenue, Jersey City, New Jersey 07306
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 795-4000
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Item 1. Changes in Control of Registrant.
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Not Applicable.
Item 2. Acquisition or Disposition of Assets.
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Not Applicable.
Item 3. Bankruptcy or Receivership.
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Not Applicable.
Item 4. Changes in Registrant's Certifying Accountant.
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Not Applicable.
Item 5. Other Events.
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Registrant issued a press release on Tuesday,
October 22, 1996 announcing its third quarter
earnings.
Item 6. Resignations of Registrant's Directors.
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Not Applicable.
Item 7. Exhibits and Financial Statements.
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Exhibit No. Description
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99 Press Release dated October 22,
1996 announcing the Registrant's
third quarter earnings.
Item 8. Change in fiscal year
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Not Applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Statewide Financial Corp. has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
STATEWIDE FINANCIAL CORP.
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(Registrant)
Dated: October 28, 1996 By: Bernard F. Lenihan
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Senior Vice President and
Chief Financial Officer
EXHIBIT INDEX
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CURRENT REPORT ON FORM 8-K
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Exhibit No. Description
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99 Press Release dated October 22, 1996
announcing Registrant's third quarter
earnings.
FOR IMMEDIATE RELEASE CONTACT: Augustine F. Jehle
October 22, 1996 201-795-4000
Anthony S. Cicatiello
908-382-1066
Statewide Reports Third Quarter Results
Net Loss of $0.11 Per Share Reflects One-Time Assessment to
Recapitalize Savings Association Insurance Fund
Exclusive of Assessment, Net Income and Per Share Earnings
Increased from a Year Ago and Preceding Quarters
Stock Repurchase Plan Completed
Jersey City, N.J. (October 22, 1996) . . . Statewide Financial Corp
(Nasdaq: SFIN), the holding company for Statewide Savings Bank S.L.A.,
today reported a net loss of $492,000, or $0.11 per share, for the
quarter ended September 30, 1996, as a result of a pre-tax charge of
$2,651,000, representing the Company's portion of an industry-wide
assessment on thrift institutions to recapitalize the Savings
Association Insurance Fund (SAIF). The assessment reduced net income
by $1,697,000, or $0.37 per share. Exclusive of the SAIF assessment,
the net income of the Company for the three months ended September 30,
1996 would have been $1,205,000, or $0.26 per share, as compared to
$500,000, for the same quarter last year, and $1,154,000, or $0.24 per
share for the quarter ended June 30, 1996.
Nine-month earnings to date totaled $1,867,000 or $.39 per share.
Exclusive of the SAIF assessment, the net income of the Company for
the nine months ended September 30, 1996 would have been $3,564,000,
or $0.74 per share, compared to $2,018,000 for the nine months ended
September 30, 1995. The Company completed its initial public offering
on September 29, 1995. Accordingly, per share data did not exist for
the prior periods.
On September 30, 1996, omnibus spending legislation was enacted which,
among other effects, mitigated the disparity between insurance
premiums for deposits insured by the Savings Association Insurance
Fund (SAIF) and deposits insured by the Bank Insurance Fund (BIF).
Immediately preceding the legislation, the Company was incurring
deposit insurance expense at the rate of 23 cents per $100 of
deposits. The Company expects the rate to be reduced, effective
January 1, 1997, to approximately 6.4 cents per $100 of deposits. The
legislation requires all SAIF-member institutions, including the
Company, to pay a one-time fee of 65.7 basis points on the amount of
deposits held at March 31, 1995. Accordingly, during the third
quarter, the Company recognized $2.6 million additional FDIC insurance
expense. The effect to net income for the third quarter was a
reduction of $1.7 million or $0.37 per share.
Commenting on the industry-wide charge, Victor M. Richel, Chairman,
President and Chief Executive Officer, said, "We are pleased that the
legislative process has resolved the insurance premium disparity which
worked to the disadvantage of a healthy thrift industry. This is the
first step toward merging thrift and bank charters, so that community
banks, such as ours, can compete on equal ground."
With respect to the Company's results, Richel stated, "This quarter
marks continued progress toward our goals. Our loan growth has been
impressive, particularly to commercial borrowers, and our distribution
system continues to improve and provide us with core deposit growth so
that we continue to have access to lower cost of money despite the
increases in interest rates which have occurred during this past
quarter."
Richel also noted that during this past quarter, the Company
instituted a dividend policy, declared its first quarterly dividend,
and initiated and completed a stock repurchase program for five
percent of its outstanding stock. He added, "I am pleased that our
earnings growth has continued to improve over preceding quarters and
that our nine-month earnings of $0.74 per share before the SAIF
assessment demonstrate strong, sustained results."
At September 30, 1996, the Company's total assets were $662 million
compared to $559 million at December 31, 1995, and $678 million at
June 30, 1996. The reduction in total assets during the quarter was
the result of sales of mortgage-backed securities with proceeds used
to repay borrowings and to fund growth in the Company's net loan
portfolio, which increased $46.7 million, or 17%, to $315.5 million at
September 30, 1996 compared to $268.8 million at June 30, 1996. Of
this growth, one-to-four family residential mortgages increased 19%
over the June 30, 1996 balance, or $41.1 million, primarily in
adjustable rate mortgages with five-to-seven year initial reset
periods. In addition, commercial loans increased $5.6 million, or
63%, and consumer loans increased $371,000 or 1% compared to their
June 30, 1996 balances. Yields for the current quarter from the loan
portfolio averaged 7.91%.
Short-term borrowings at September 30, 1996 were $146.8 million, or
$102.1 million more than the balance outstanding at December 31, 1995
and $12.8 million less than the June 30, 1996 balance. The Company's
borrowings at September 30 will all mature before December 31, 1996.
Richel indicated that it is the Company's intention to keep its
borrowing maturities short term, subject to prevailing market interest
rates, at least into the first quarter of 1997. Costs for these
borrowings approximated 5.42% at September 30, 1996.
Deposits totaled $442.4 million at September 30, 1996, representing an
increase of 1% from December 31, 1995 and a decrease of 0.9% from June
30, 1996. However, core deposits grew $3.1 million, or 1.3% during
this quarter and $19.4 million, or 8.6% during the last nine months.
During both the quarter and the year to date, interest rates paid to
retail depositors have been rising within the Company's market area.
In response, the Company developed products which emphasized customer
relationships rather than matching the most aggressively priced
certificate of deposit offerings by its competition. As a result,
there has been runoff in certificates of deposits primarily from
depositors who do not have other accounts with the Company. Yet there
has been an increase in core deposits as a result of this product
development, and as a result of marketing efforts by the Company,
especially with respect to its newest branches and affinity groups
with whom it has established relationships.
Shareholders' equity decreased $1.8 million and $7.0 million during
the quarter and nine-month periods respectively, to $65.4 million at
September 30, 1996. The decrease from the preceding quarter was the
aggregation of five events. During the quarter the Company purchased
on the open market, and retired, 263,488 shares of its stock, for $3.1
million, at approximately $11.91 per share; also during the quarter
the Company declared its first quarterly dividend, decreasing equity
by $457,000; and incurred a net loss for the quarter, including the
SAIF assessment charge, of $492,000. Partially offsetting these
decreases were an increase of $2.0 million (net of tax) in the market
value of its investment portfolio, all of which it classifies as
available for sale, and an allocation of ESOP shares and other
employee benefit plans of $203,000.
The results of operations for the three and nine months ended
September 30, 1996 reflect increases in net interest income, after
provisions for loans losses, of $1.6 million and $3.7 million
respectively, from the same periods a year ago. These increases in
income were partially offset by increases of $0.3 million and $1.5
million in other non-interest expenses as the Company continued to
position itself for future growth. The increase in net interest
income between periods reflected increases in average interest earning
assets, primarily comprised of loan growth and growth in
mortgage-backed securities, from levels in place during the same
periods last year. The expense increases reflect, among other
factors, the increased staffing and support requirements necessary to
position the Company to achieve its marketing and operational
objectives, including staffing of the Company's three new branches
opened during the period since March 31, 1995. Additionally, the
increased expense reflects normal salary increases, and refurbishing
of existing facilities.
During the quarter ended September 30, 1996, the Company incurred a
loss of $21,000 on sales of mortgage-backed securities, and recognized
a charge of $1,074,000 for the reduction in value of securities
identified for sale during the quarter, and sold subsequent to quarter
end. Proceeds from the sale during the quarter approximated $53.3
million and were used primarily to fund loan growth. Securities
identified for sale during the quarter approximated $58.6 million and
had yields which approximated the Company's borrowing rates. Proceeds
from this sale will be used to reduce borrowing levels, until market
conditions allow for re-deployment. The effect of these losses was to
reduce earnings per share by $0.15 for the three and nine months ended
September 30, 1996.
Non-interest income for the three and nine months ended September 30,
1996 is $432,000 and $1,612,000. These amounts include income of
$40,000 and $565,000 respectively, from the collection of unaccrued
interest associated with loans whose principal had been repaid, as
compared with $347,000 in the prior year's similar periods. The
interest on one of these loans has been completely paid. The effect
of this non-recurring income to earnings per share for the three and
nine months ended September 30, 1996 was $.01 and $.08 respectively.
Absent these credits, non-interest income increased 11.4% or $40,000
during the current quarter from a year ago and decreased 13.3% or
$160,000 during the nine months ended September 30, 1996 when compared
to the same nine-month period a year ago. The year-to-date decreases,
as compared to the prior year, occurred during the first quarter
primarily because of decreases in commissions from annuity sales, as
the Company prioritized its resources toward developing its new
branches and marketing its core products rather than selling
annuities.
Income tax expense for the three months ended September 30, 1996
reflects a tax benefit of $1.4 million, which is the result of the tax
effect of the loss incurred for the quarter then ended, and the result
of the reversal of a $702,000 tax liability, previously established,
which expired during the quarter. The effect of this reversal was to
increase earnings per share by $0.15 for the three and nine months
ended September 30, 1996.
Statewide Financial Corp, headquartered in Jersey City, N.J., is the
holding company for Statewide Savings Bank, which maintains 16
branches in Hudson, Union, Bergen and Passaic counties. Statewide
Savings Bank's deposits are insured by the Savings Association
Insurance Fund (SAIF) of the Federal Deposit Insurance Corporation
(FDIC).
SELECTED FINANCIAL CONDITION DATA Sept.30, Dec. 31,
(dollars in thousands) 1996 1995
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Total Assets $662,067 $559,049
Loans, Net $315,478 $195,773
Debt and Equity Securities $ 64,892 $ 80,126
Mortgage-Backed Securities $251,593 $260,107
Other Real Estate Owned, Net $ 755 $ 652
Total Deposits $442,353 $438,021
Borrowed Funds $146,798 $ 44,703
Shareholders' Equity $ 65,357 $ 72,315
Book Value Per Share $ 13.09 n/a
For the Three For the Nine
SELECTED OPERATING DATA Months Ended Months Ended
(dollars in thousands) September 30, September 30,
1996 1995 1996 1995
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Interest Income $11,853 $8,569 $34,135 $25,542
Interest Expense 6,365 4,697 18,033 13,298
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Net Interest Income 5,488 3,872 16,102 12,244
Provision for Loan Losses 125 125 375 264
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Net Interest Income After
Provision for Loan Losses 5,363 3,747 15,727 11,980
Non-Interest Income 432 699 1,612 1,554
Net (Loss) on Sales of
Investment Securities (1,095) 0 (1,095) 0
Foreclosed Real Estate
Expense, Net 17 (2) 74 124
FDIC SAIF Assessment 2,651 0 2,651 0
Other Non-Interest Expense 3,955 3,650 11,757 10,179
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(Loss) Income Before Income
Taxes (1,923) 798 1,762 3,231
Income Tax (Benefit) Expense (1,431) 298 (105) 1,213
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Net (Loss) Income $ (492) $ 500 $ 1,867 $ 2,018
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(Loss) Earnings Per Share $ (.11) n/a $ .39 n/a
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At or For the At or For the
Three Months Ended Nine Months Ended
SELECTED FINANCIAL RATIOS (1) September 30, September 30,
1996 1995 1996 1995
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Return on Average Assets (.29%) .41% .38% .56%
Return on Average Capital (3.07%) 8.64% 3.66% 12.13%
Capital to Assets 9.87% 13.08% 9.87% 13.08%
Net Interest Rate Spread (2) 2.93% 3.07% 2.93% 3.33%
Net Interest Margin (3) 3.35% 3.29% 3.39% 3.52%
Non-Interest Income to
Average Assets .26% .57% .33% .43%
Non-Interest Expense to
Average Assets, Exclusive
of SAIF Assessment Charge 2.36% 2.99% 2.42% 2.87%
Efficiency Ratio, Exclusive of
SAIF Assessment Charge (4) 69.02% 89.00% 70.53% 78.13%
Average Interest Earning
Assets to Average Interest
Earning Liabilities 110.98% 105.64% 112.09% 104.94%
Sept. 30, Dec. 31,
REGULATORY CAPITAL RATIOS 1996 1996
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Tangible Capital Ratio 9.87% 10.28%
Core Capital Ratio 9.87% 10.28%
ASSET QUALITY RATIOS
Non-Performing Loans to Total Net Loans 1.80% 2.87%
Non-Performing Loans to Total Assets .86% 1.01%
Non-Performing Assets to Total Assets .97% 1.12%
Allowance for Loan Losses to Non-Performing
Loans 61.42% 57.66%
Allowance for Loan Losses to Total Net Loans 1.11% 1.66%
OTHER DATA
Number of Deposit Accounts 51,448 50,062
Number of Offices 16 15
Notes to Selected Financial Ratios
(1) Ratios are annualized where appropriate.
(2) Interest rate spread represents the difference between the
weighted average yield on average interest-earning assets and the
weighted average costs of average interest-bearing liabilities.
(3) Net interest margin represents net interest income as a percent
of average interest-earning assets.
(4) Total non-interest expense divided by the sum of net interest
income after provision for loan losses, and recurring
non-interest income.<PAGE>
