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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, 1997
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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 28, 1997, 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 Tuesday,
October 28, 1997 announcing
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: November 3, 1997 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 Tuesday, October 28, 1997
announcing Registrant's third quarter earnings.
FOR IMMEDIATE RELEASE Contact: Augustine F. Jehle
October 28, 1997 201-795-4000
Anthony S. Cicatiello
732-382-1066, ext. 234
Statewide Financial Corp. Announces Third Quarter Earnings
of $0.33 Per Share
Jersey City, N.J., October 28, 1997 -- Statewide Financial Corp.
(Nasdaq: SFIN), the holding company for Statewide Savings Bank S.L.A.,
today reported net income for the third quarter of 1997 of $1,382,000,
or $0.33 per share, compared to $1,205,000, or $0.26 per share, for
the same quarter in 1996, as adjusted for a one-time charge, and
compared to $1,391,000, or $0.33 per share, for the preceding quarter
of this year. Earnings during the third quarter of 1996 were affected
by a one-time industry-wide assessment on thrift institutions to
recapitalize the Savings Association Insurance Fund (SAIF). The
impact of this charge has been added back to the prior-year results in
order to normalize these comparisons.
Net income for the nine months ended September 30, 1997 was
$4,157,000, or $0.98 per share, compared to net income of $3,564,000,
or $0.74 per share, for the same period in 1996, excluding the SAIF
assessment. Inclusive of the one-time SAIF assessment, Statewide
reported a net loss of $492,000, or $0.11 per share, and net income of
$1,867,000, or $0.39 per share, for the three and nine months ended
September 30, 1996.
"These results reflect our efforts to steadily grow the Statewide
franchise," stated Victor M. Richel, chairman, president and chief
executive officer. "We have kept focused in our efforts to profitably
penetrate our market more fully. Growth in interest-earning assets
continued, as originations of commercial real estate mortgages and
business loans move forward at a strong pace." Richel also noted
that, "the average balance of these portfolios increased almost 13%
during the quarter, partially offsetting principal amortization and
prepayments within the one-to-four family mortgage category, which has
been affected by refinancing caused by declining interest rates."
During the third quarter of 1997, the Company continued its emphasis
on originating quality commercial mortgages, business loans and
consumer loans, while growing core deposits. Low interest rates
during the quarter helped the Company toward its goal of reducing
higher-costing certificates of deposit, though low rates also
contributed to higher principal prepayments for loans and
mortgage-backed securities, thereby reducing yields for these assets.
The effect to net-interest margins was a reduction of 4 basis points
compared to the prior quarter, from 3.77% to 3.73%. However, because
of commercial mortgage and commercial and consumer loan growth during
the last year, net-interest margin for the quarter ended September 30,
1997 increased 38 basis points over the preceding year's quarter, from
3.35% to 3.73%, and for the nine months then ended, net interest
margin increased 37 basis points from 3.39% to 3.76% over the prior
year.
The Company's total assets were $703.1 million at September 30, 1997,
compared to $673.2 million at June 30, 1997, and $636.0 million at
December 31, 1996. The period-ended balances increased $29.9 million
between June 30, 1997 and September 30, 1997, principally because of
securities investments late in the quarter. The average balance of
interest-earning assets grew $3.5 million during this period,
including $3.0 million, or 12.8%, in the commercial-mortgage and
business-loan portfolios; $1.9 million, or 212.9%, in the construction
portfolio; $1.3 million, or 3.6%, in the consumer-loan portfolio; and
$1.9 million, or 0.6%, in the mortgage-backed and debt-investment
portfolios. Partially offsetting this was a decrease of $5.0 million,
or 1.9%, in the average balance of the residential one-to-four family
mortgage portfolio, due to principal amortization and prepayments.
Assets at September 30, 1997 were $67.1 million more than those at
December 31, 1996. The greatest portion of this increase was growth
in the investment portfolio, despite higher prepayments from these
securities, as the Company invested in securities which provided
better returns and durations than those that would have been provided
by originating one-to-four family residential real estate mortgages in
this tightened interest rate environment. During the nine-month
period, and also to a greater extent during the third quarter ending
September 30, 1997, the lower interest rate environment caused higher
prepayments in the residential mortgage, and other loan categories,
which slowed the growth in the loan portfolio.
Borrowed funds were $188.1 million at September 30, 1997. Of this
amount, $42.1 million mature within 30 days, and an additional $28.0
million, at an interest rate of 5.54%, is callable at the lender's
option within 90 days, and quarterly thereafter for three years.
During the third quarter, the Company borrowed $58.0 million for a
term of five years, callable at the lender's option after one year,
and quarterly thereafter, at an interest rate of 5.43%. Total
borrowed funds increased $34.2 million over the preceding quarter, and
$80.9 million over December 31, 1996. The increases were used to
support asset growth in line with the Company's strategy to leverage
its excess capital, and in part, to liquidate certificates of deposit
for holders who sought rates higher than the Company's alternate
borrowing rates. The Company's strategy is to not match aggressive
rates unless management believes that relationships with deposit
holders who have other deposit or loan relationships are in jeopardy.
Deposits totaled $442.5 million at September 30, 1997, as compared to
$448.5 million at June 30, 1997 and $457.1 million at December 31,
1996. These reductions occurred from higher-costing certificates of
deposit. Lower-costing core deposits increased $2.5 million, or 1.0%,
from June 30, 1997, and $6.5 million, or 2.6%, from December 31, 1996.
Core deposits continue to grow as marketing efforts and new customer
relationships develop, while controlled runoff of certificates of
deposit continue as a result of not aggressively pricing these
instruments.
Shareholders' equity increased $0.3 million during the quarter to
$65.8 million at September 30, 1997, from $65.5 million at June 30,
1997, but decreased $1.1 million from $66.9 million at December 31,
1996. The increase from the preceding quarter resulted primarily from
current quarter net income of $1.4 million, and an increase of $1.1
million (net of tax) in the September 30, 1997 market value of the
Company's investment portfolio over the prior quarter valuation,
partially offset by the repurchase and retirement of 111,000 shares of
the Company's stock and the payment of a quarterly dividend. The
decrease from December 31, 1996 resulted primarily from the repurchase
and retirement of 345,727 shares of the Company's stock and the
payment of three quarterly dividends, partially offset by net income
of $4.2 million, an increase of $1.0 million (net of tax) in the
market value of the Company's investment portfolio over the December
31, 1996 valuation and allocations of ESOP shares and other employee
benefit plans during the period.
The results of operations for the three and nine months ended
September 30, 1997 reflect increases in net-interest income, after
provisions for loan losses, of $0.6 million and $2.5 million
respectively, from the same periods a year ago. The increases reflect
growth in average loans and investment securities at higher yields,
partially offset by an increase in borrowing cost due to increased
borrowing levels. The net interest margin for the quarter ended
September 30, 1997 was 3.73%, an increase of 38 basis points over the
same period the previous year. For the nine months ended September
30, 1997, the net interest margin was 3.76%, compared to 3.39% for the
same period the previous year.
Net interest income after provisions for loan losses, for the three
months ended September 30, 1997, decreased $0.1 million, or 2.2%, from
the prior quarter. Higher volume of loan and mortgage-backed security
prepayments, partially offset by reductions in cost of core deposits
and decreases in higher-yielding certificates of deposit, primarily
contributed to this decrease and caused the slight constriction in the
current quarter net interest margin as compared to that of the prior
quarter. The net interest margin for the quarter ended September 30,
1997 was 3.73%, compared to 3.77% for the quarter ended June 30, 1997.
Non-interest income totaled $401,000 for the three months, and $1.2
million for the nine months, ended September 30, 1997, $31,000 and
$0.4 million less than the same periods the previous year. These
decreases resulted from unaccrued interest income being realized
during the preceding year's periods, with no like events occurring
during this current year. Excluding these items, non-interest income
increased $9,000, or 2%, and $117,000 or 11%, respectively, for the
three- and nine-month periods ended September 30, 1997, as compared to
the same periods the previous year. These increases for the periods
resulted primarily from increased deposit account maintenance, and
service fees and earnings related to annuity sales, partially offset
by lower mortgage late charges. During the third quarter of 1997,
non-interest income increased $11,000 over the preceding quarter of
1997 as a result of higher deposit account maintenance and service
fees, partially offset by lower mortgage late charges and annuity
fees.
Last year, 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 that period, and sold during the
fourth quarter of 1996. Proceeds from the sales were used to fund
loan growth, with the remaining amounts used to reduce borrowing
levels during those periods, until market conditions allowed for
redeployment. No like event occurred during this current year.
Non-interest expense for the three and nine months ended September 30,
1997 totaled $4.2 million and $12.7 million respectively, as compared
to $4.0 million and $11.8 million for the same periods the previous
year, exclusive of the one-time SAIF assessment. The current year
increases over the same periods the previous year reflect staffing and
support costs necessary to meet the Company's commercial, retail and
productivity targets, and to position the Company for continued growth
and increased profitability. Current year periods fully reflect
staffing costs for commercial and institutional loan officers and
support hired subsequent to September 30, 1996. In addition, expenses
in the current-year periods fully reflect the costs related to two new
branches opened during 1996, whereas there is limited or no expense
for these new offices in the prior-year periods. These periods also
reflect increased furniture, fixtures and equipment, data processing
and other operational costs incurred for the refurbishment of existing
facilities and installation of a new operating system, which were
performed during the second half of 1996. The current year nine-month
period also fully includes costs for the Recognition and Retention
Plans for Directors, Executive Officers and Employees, whereas it is
only partially reflected in the previous year's nine-month period, and
the current year, three-month period reflects higher costs related to
the Company's ESOP program over the same period the year before.
Partially offsetting these expense increases for the three-and
nine-month periods ending September 30, 1997 was a lower assessment
rate for deposit insurance.
Non-interest expense for the current quarter was $0.1 million less
than the $4.3 million incurred for the three months ended June 30,
1997. Reductions in the current quarter, as compared to the preceding
quarter, reflected lower salary and benefit expenses due to increased
deferred costs related to the origination of loans during the period,
lower benefit plan expenses, professional fees and data processing
expenses.
Income tax expense for the three and nine months ended September 30,
1997 reflects the tax on those periods' income at the Company's
effective tax rate. The tax benefit received for the three and nine
months ended September 30, 1996 reflects the tax effect of the loss
incurred for the third quarter of 1996, along with a reversal of a
$702,000 tax liability previously established, which expired during
the third quarter of 1996.
Statewide Financial Corp., headquartered in Jersey City, is the
holding company for Statewide Savings Bank S.L.A., 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
dollars in thousands, except
per share data
September 30, December 31,
1997 1996
Total Assets $ 703,112 $ 636,042
Loans, Net $ 329,059 $ 325,470
Debt and Equity Securities $ 26,956 $ 40,243
Mortgage-backed Securities $ 316,412 $ 240,974
Other Real Estate Owned, Net $ 236 $ 563
Total Deposits $ 442,456 $ 457,056
Borrowed Funds $ 188,050 $ 107,200
Shareholder's Equity $ 65,812 $ 66,935
Book Value per share $ 14.34 $ 13.63
SELECTED OPERATING DATA
dollars in thousands, except per
share data
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
1997 1996 1997 1996
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Interest Income $12,569 $11,853 $37,746 $34,135
Interest Expense 6,447 6,365 19,116 18,033
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Net Interest Income 6,122 5,488 18,630 16,102
Provision For Loan Losses 125 125 375 375
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Net Interest Income After
Provision For Loan Losses 5,997 5,363 18,255 15,727
Non-interest Income 401 432 1,164 1,612
Net-Loss on Sale of Investment
Securities 0 (1,095) 0 (1,095)
Foreclosed Real Estate Expense,
Net 11 17 25 74
FDIC SAIF Assessment 0 2,651 0 2,651
Other Non-interest Expense 4,162 3,955 12,715 11,757
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Income (Loss) Before Income
Taxes 2,225 (1,923) 6,679 1,762
Income Tax Expense (Benefit) 843 (1,431) 2,522 (105)
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Net Income (Loss) $ 1,382 $ (492) $ 4,157 $ 1,867
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Earnings (Loss) per share $ .33 $ (.11) $ .98 $ .39
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Weighted Average Number of
Shares Outstanding 4,170,202 4,658,450 4,251,976 4,788,980
SELECTED FINANCIAL RATIOS(1):
At or For At or For
the Three the Nine
Months Ended Months Ended
September 30, September 30,
1997 1996 1997 1996
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Return on Average Assets .81% (.29%) .82% .38%
Return on Average Equity 8.62% (3.07%) 8.65% 3.66%
Equity to Assets 9.36% 9.87% 9.36% 9.87%
Net Interest Rate Spread (2) 3.27% 2.93% 3.31% 2.93%
Net Interest Margin (3) 3.73% 3.35% 3.76% 3.39%
Non-Interest Income to Average
Assets .23% .26% .23% .33%
Non-Interest Expense to Average
Assets, Exclusive of SAIF
Assessment Charge 2.44% 2.36% 2.50% 2.42%
Efficiency Ratio, Exclusive of
SAIF Assessment Charge (4) 65.22% 69.02% 65.61% 70.53%
Average Interest-Earning Assets
to Average Interest-Bearing
Liabilities 112.03% 110.98% 111.53% 112.09%
September 30, December 31,
1997 1996
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REGULATORY CAPITAL RATIOS:
Tangible Capital Ratio 8.37% 9.41%
Core Capital Ratio 8.37% 9.41%
ASSET QUALITY RATIOS:
Non-Performing Loans to Total
Net Loans .74% .84%
Non-Performing Loans to Total
Assets .35% .43%
Non-Performing Assets to Total
Assets .38% .52%
Allowance for Loan Losses to
Non-Performing Loans 114.08% 95.43%
Allowance for Loan Losses to
Total Net Loans .85% .80%
OTHER DATA:
Number of Deposit Accounts 54,667 53,695
Number of Offices 16 16
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.
