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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) July 27, 1999
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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,
July 27, 1999 announcing Registrant's second
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 Registrant issued a press release
on Tuesday, July 27, 1999
announcing Registrant's second
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: July 30, 1999 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 Registrant issued a press release on Tuesday,
July 27, 1999 announcing Registrant's second
quarter earnings.
FOR IMMEDIATE RELEASE CONTACT: Bernard F. Lenihan
July 27, 1999 201-795-4000
Tony Cicatiello
732-382-1066
Statewide Financial Corp. Reports Increase
In Second Quarter 1999 Earnings
Second Quarter 1999 Core Earnings Rose 20%
Second Quarter 1999 Diluted EPS on Core Earnings Increased 31%
Jersey City, N.J. (July 27, 1999). . . Statewide Financial Corp.
(NASDAQ: SFIN), the holding company for Statewide Savings Bank S.L.A.
today reported second quarter 1999 net income of $1,473,000, or $0.38
per share, assuming dilution, excluding pretax acquisition costs of
$484,000 incurred in connection with the Company's pending acquisition
by Independence Community Bank Corp, as compared to $1,214,000, or
$0.29 per share, assuming dilution, for the same quarter during 1998.
This represents net income and diluted earnings per share increases of
20% and 31%, respectively, over the same period last year. Including
acquisition costs, net income was $1,164,000, or $0.30 per share,
assuming dilution for second quarter of 1999. Basic earnings per
share were $0.40 for second quarter 1999, excluding acquisition costs,
as compared to $0.30 for the second quarter of 1998. Basic earnings
per share for second quarter 1999, including acquisition costs, were
$0.32 per share.
For the six months ended June 30, 1999, net income excluding pretax
acquisition costs totaled $2,835,000, or $0.74 per share, assuming
dilution, compared to $2,518,000, or $0.60 per share, assuming
dilution for the same period of the prior year. Including acquisition
costs, net income totaled $2,526,000, or $0.66 per share, assuming
dilution, for six months ended June 30, 1999. Basic earnings per
share for the six months ended June 30, 1999, were $0.77 per share,
excluding acquisition costs, compared to $0.63 per share for the same
period of the prior year. Basic earnings per share for the six months
ended June 30, 1999, including acquisition costs, were $0.69 per
share.
"Our continued earnings growth through the second quarter reflects the
momentum and successful implementation of past initiatives and of our
strategic goals which demonstrates our steady commitment to increase
shareholder value," stated Victor M. Richel, chairman, president and
chief executive officer of Statewide Financial Corp. "Statewide's
increased core earnings during the second quarter of this year
resulted from continued strong commercial loan growth and management
of its cost of deposits."
Richel continued, "Growth in commercial loans, which include Statewide
Funding's warehouse lines of credit to mortgage lenders, continues to
fuel core earnings. Our commercial business and mortgage, multi-family
and construction portfolio grew $13.0 million, or 16.2% this year. In
addition, Statewide Funding's originations increased its loans
outstanding $10.1 million, or 21.2% to $57.9 million at June 30, 1999
from $47.7 million at December 31, 1998 despite signs of a slowdown in
mortgage refinancing, because successful marketing efforts have
brought on more mortgage lenders; and loans to these new customers
more than offset decreases in usage of existing warehouse lines. As
Statewide Mortgage Funding continues its expansion through
relationship building efforts within the tri-state region, we expect
this portfolio to grow throughout the year 2000 and into 2001."
Richel also stated, "During the current quarter we have completed our
consolidation of three Jersey City branches into our newly refurbished
Jersey City "Path" branch at Journal Square and have successfully
opened our new Maplewood, NJ branch. These events continue to
strengthen our franchise and place us on solid footings to expand our
deposit gathering and relationship building efforts."
At June 30, 1999, the Company's total assets were $747.7 million
compared to $717.5 million at December 31, 1998. The period-ended
balances increased $30.2 million between these periods principally
from growth in the commercial and consumer loan portfolios and the
mortgage-backed securities portfolio, partially offset by declines in
debt securities and one-to-four family mortgage loans. Loans at June
30, 1999 increased $19.8 million over December 31, 1998 as a result of
a $13.0 million, or 16.2% increase in the construction, multi-family,
commercial mortgage and business loans, along with a $10.1 million, or
21.2% increase in the Statewide Funding portfolio. In addition,
consumer loans increased $2.4 million, or 5.8% during the current
year. This growth was partially offset by normal amortization and
accelerated prepayments in the one-to-four family mortgage loan
portfolio, which declined $5.2 million, or 2.6% despite originations
of $23.3 million during the period. Mortgage-backed securities
increased $27.5 million between December 31, 1998 and June 30, 1999 as
the Company continued leveraging as part of its growth strategy with
the purchase of $144.3 million of mortgage backed securities and
private label collateralized mortgage obligations which more than
offset the $62.0 million of sales and $48.1 million in normal
amortization and accelerated prepayments recorded during the period.
At June 30, 1999, the debt securities portfolio was $17.5 million less
than the investment at the beginning of the year, reflecting calls,
maturities and sales of U.S. Treasury, Agency and corporate debt. In
addition, during the current year Statewide purchased an additional
$2.3 million of FHLBNY stock.
Borrowed funds totaled $240.5 million at June 30, 1999 as compared to
$206.7 million at December 31, 1998. The increase of $33.8 million in
borrowed funds during the current year was used primarily to support
growth in loans and investment securities; to repurchase the Company's
common stock under its stock repurchase program, which was
subsequently terminated; and to fund maturities of certificates of
deposit for holders who sought rates higher than the Company's
alternate borrowing rates.
Borrowed funds consist of $31.5 million in overnight advances, $63.0
million of which mature within 30 days and $146.0 million of which
have final maturity dates ranging from July 2000 to September 2002,
but are callable earlier at the lender's option. Of this $146.0
million, $86.0 million have interest rates ranging from 5.43% to 5.54%
and are callable quarterly through maturity, and $60.0 million, have
an interest rate of 5.52% and are first callable in November 1999 and
quarterly thereafter.
Deposits totaled $446.1 million at June 30, 1999, as compared to
$443.7 million at December 31, 1998. The increase in total deposits
for the current year resulted primarily from growth in core deposits
of $6.0 million partially offset by a decrease of $3.6 million in
certificates of deposit as the Company continued with its strategy of
not matching competitors' most aggressive interest rates unless the
Company believes that a key relationship is in jeopardy. At June 30,
1999, core deposits were $278.6 million compared to $272.6 million at
December 31, 1998. Within core deposits, savings and demand accounts
increased $5.2 million and $4.7 million, respectively, reflecting the
Company's continued relationship building efforts in new and existing
market areas. Partially offsetting these increases were decreases in
NOW and money market accounts of $2.6 million and $1.3 million,
respectively.
Shareholders' equity decreased $5.3 million during the current year to
$55.2 million at June 30, 1999 from $60.5 million at December 31,
1998. The decrease during the first six months resulted primarily
from the repurchase and retirement of 112,000 shares of the Company's
common stock for $2.2 million during the first quarter of 1999, the
declaration of two quarterly cash dividends, and a decrease of $5.4
million (net of tax) in the June 30, 1999 market value of the
Company's investment portfolio from the valuation at December 31,
1998. Partially offsetting these decreases were the current year's
net income of $2.5 million and the allocation of shares under the
Company's Employee Stock Ownership Plan (ESOP) and other benefit
plans.
The results of operations for the three and six months ended June 30,
1999 reflect increases in net interest income, before provisions for
loans losses, of $0.9 million and $1.3 million respectively, from the
same periods a year ago. These increases during the periods reflect
growth in average loan and investment security balances and the change
in mix in deposits from higher rate certificates of deposit into lower
rate core deposits, partially offset by increased borrowing costs to
fund growth in assets and to repurchase the Company's common stock.
The results of operations for current year periods also include higher
non-interest expense, partially offset by growth in recurring
non-interest income. The net interest margin equaled 3.75% and 3.68%
for the three and six months ended June 30, 1999, respectively, as
compared to 3.70% and 3.72% for the three and six months ended June
30, 1998, respectively.
Interest income for the three and six months ended June 30, 1999
increased $1.5 million and $2.4 million, respectively, as compared to
the same periods of the prior year. Interest income on loans
increased $0.8 million and $1.5 million during the three and six
months ended June 30, 1999, respectively, over the same periods of the
prior year. The increase in interest on loans primarily resulted from
increased lending to mortgage bankers by Statewide Funding and growth
in commercial loans of $78.6 million and $77.0 million for the three
months and six months ended June 30, 1999, respectively, over the same
periods of the prior year. Also, during the current year three- and
six-month periods, the average consumer loan portfolio increased $3.9
million and $3.4 million, respectively. Growth in these portfolios
was partially offset by a decline in the average one-to-four family
loan portfolio for the current year three- and six-month periods ended
June 30, 1999 of $38.1 million and $40.4 million, respectively, over
the same periods last year. Interest income on securities increased
during the current quarter and the current year-to-date period over
the same periods of the prior year by $0.7 million and $0.9 million,
respectively, reflecting purchases in the investment securities
portfolio since the fourth quarter of 1998 as greater spreads between
funding rates and yields on securities once again allowed leveraging
to be a viable growth strategy.
The average cost of deposits and borrowed funds decreased 21 basis
points and 18 basis points during the three months and six months
ended June 30, 1999, respectively, as compared to the same periods a
year ago. These decreases were a result of lower costs for both
deposits and borrowings, partially offset by an increase in short-term
borrowed funds. As general interest rates decreased during 1998 and
remained at those levels during the early part of 1999, the Company
had periodically lowered its rates paid to depositors. In addition,
new branch openings and continued emphasis on gathering core deposits
contributed to the decline in deposit costs during the current year
periods. As a result, the cost of deposits decreased 51 basis points
from the June 30, 1998 quarter, to 2.97% for the quarter ended June
30, 1999. Similarly, the cost of deposits for the current year
six-month period decreased 48 basis points to 3.01% as compared to the
same period last year. Also, during the current year quarter and
current year-to-date period the costs of borrowings decreased 26 basis
points and 24 basis points, respectively, as compared to the
prior-year period. The current year periods reflect higher borrowing
levels which were used to fund asset growth. These additional
borrowings, incurred since the fall 1998 Federal Funds reduction, have
been short term, and similar to the duration or repricing
characteristic inherent in the asset growth. The increased borrowing
levels, partially offset by costs paid on deposits and borrowed funds
resulted in an interest expense increase of $0.6 million and $1.0
million during the three and six months ended June 30, 1999,
respectively, as compared to the same period of the prior year.
Provision for loan losses totaled $249,000 and $498,000 for the three
and six months ended June 30, 1999, an increase of $99,000 and
$198,000 over the three and six-month periods of the prior year. The
increase in provision for loan losses was determined by management
after review of, among other things, the Company's loan portfolio, the
risk inherent in the Company's lending activities, changes in the
composition and volume of the Company's loan portfolio, and the local
economy in the Company's market area.
Non-interest income for the three and six months ended June 30, 1999
totaled $935,000 and $1,653,000, respectively, as compared to $947,000
and $1,481,000 for the same periods of the prior year. Recurring
non-interest income, which excludes net security gains and a $0.3
million gain recorded on the sale of the Passaic branch in the second
quarter 1998, grew $0.3 million, or 41.3%, and $0.5 million, or 38.5%,
respectively for the three and six months ended June 30, 1999 over the
same periods of the prior year. "Year over year growth in service
fees reflects the Company's fee enhancement initiative implemented
during mid 1998 along with fees earned from our mortgage funding
division and from entrance into the SBA lending business," Richel
stated. Current quarter and year-to-date growth over the same periods
of the prior year reflect increased deposit account fees for returned
check assessment charges, recurring maintenance fees on checking and
savings products, ATM surcharges for non-customer service usage,
safe-deposit and other branch service fees, higher annuity sales
generated in the retail branches and earnings from SBA activity. In
addition, wholesale mortgage funding transaction fees earned during
the three and six month ended June 30, 1999 totaled $66,000 and
$110,000, respectively, with no like fees earned during the preceding
year periods.
Non-interest expense for the three and six months ended June 30, 1999
totaled $5.1 million and $9.9 million, respectively, excluding
acquisition costs, as compared to $4.7 million and $9.1 million for
the same periods of the prior year. This change primarily reflects
increases in salaries and benefits costs, occupancy, correspondence
and communications costs. Salary and benefit costs for the current
year three-month and six-month periods fully reflect staff additions
during 1998 for the newly formed Statewide Funding division, for the
opening of the North Arlington, New Jersey branch and for expansion
within the commercial lending division, whereas there is limited
related expense for these staff additions in the prior year periods.
In addition, normal annual merit increases, incentive plan accruals,
employee training and education and the opening of the Maplewood, New
Jersey branch late in the second quarter this year contributed to the
rise during the current year periods. Higher occupancy costs occurred
from increased capital improvements related to furnishings and repairs
and maintenance costs from past and ongoing renovations throughout the
Company, along with capital improvements and rent expense related to
the opening of the North Arlington branch, operating systems
enhancements, and the refurbishment of the Jersey City Path branch
this year. Higher other operating costs related to data processing,
ATM and MAC service costs, postage and supplies related to customer
notification of the consolidation of three Jersey City branches and
other branch charges recorded along with an increase in the net cost
of insurance to employees were realized during the current year
periods. Offsetting the increases stated above were lower director
costs from the reduction of certain benefit plans implemented during
the third quarter of 1998.
Non-interest expense for the three months ended June 30, 1999 includes
$484,000 of acquisition costs incurred in connection with the
Company's pending acquisition by Independence Community Bank Corp.
These costs primarily consisted of professional fees paid during the
current quarter. These costs were not included in the comparative
analysis for the periods discussed in the preceding paragraph.
The Company announced on April 13, 1999 that it had entered into a
definitive agreement to merge with Independence Community Bank Corp
("Independence"). Under the terms of the agreement, which is subject
to approval by regulatory authorities and by Statewide shareholders,
the Company's shareholders will receive a combination of stock and
cash subject to election, proration and allocation procedures. Based
on Independence's closing price on April 12, 1999, the transaction has
an implied per share value of $25.31 per Statewide Financial Corp.
share. The transaction will be accounted for as a purchase and is
expected to close in the fourth quarter of calendar 1999 or by January
31, 2000.
Headquartered in Jersey City, New Jersey, Statewide Savings Bank is a
state chartered stock savings and loan association that conducts
business from 15 locations in Hudson, Union, Essex and Bergen
counties. Statewide's deposits are insured by the Savings Association
Insurance Fund (SAIF) of the Federal Deposit Insurance Corporation
(FDIC).
This news release contains forward-looking statements within the
meaning of section 21E of the Securities Exchange Act of 1934, as
amended regarding the Company's Future performance during 1999.
Forward looking statements can be identified by the use of words as
"believes", "expects", "estimate" and "anticipated" or similar
expressions. Such statements are not historical facts and involve
certain risk and uncertainties. The company believes such statements
to be reasonable and makes them in good faith, however, such
forward-looking statements almost always vary from actual results, and
the differences between assumptions underlying such statements and
actual results can be material. Factors which may make actual results
differ from anticipated results include, but are not limited to,
change in market interest rates; unforeseen competition; changes in
customer economic activity which may effect loan activity; changes in
economy of the Company's market area, and other uncertainties, all of
which are difficult to predict and beyond control of the Company.
Accordingly, investors should not rely upon these forward-looking
statements in making investment decisions.
SELECTED FINANCIAL CONDITION DATA June 30, December 31,
dollars in thousands, except per 1999 1998
share data ---- ----
Total Assets $747,697 $717,517
Loans, Net $386,289 $366,458
Debt and Equity Securities $50,830 $68,312
Mortgage-backed Securities $275,506 $248,035
Other Real Estate Owned, Net $561 $523
Total Deposits $446,108 $443,705
Borrowed Funds $240,500 $206,681
Shareholders' Equity $55,249 $60,499
Book Value per Share $13.68 $14.57
SELECTED OPERATING DATA For the Three For the Six
dollars in thousands, except Months Ended Months Ended
per share data June 30, June 30,
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1999 1998 1999 1998
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Interest Income $13,230 $11,773 $26,127 $23,740
Interest Expense 6,443 5,866 12,820 11,771
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Net Interest Income 6,787 5,907 13,307 11,969
Provision For Loan Losses 249 150 498 300
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Net Interest Income After
Provision For Loan Losses 6,538 5,757 12,809 11,669
Non-interest Income 907 947 1,627 1,481
Net Gain on Sale of
Investment Securities 28 - 26 -
Foreclosed Real Estate
Expense, Net 7 6 9 26
Other Non-interest Expense 5,598 4,733 10,369 9,077
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Income Before Income Taxes 1,868 1,965 4,084 4,047
Income Tax Expense 704 751 1,558 1,529
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Net Income $ 1,164 $ 1,214 $ 2,526 $ 2,518
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Earnings per share:
Basic $ 0.32 $ 0.30 $ 0.69 $ 0.63
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Diluted $ 0.30 $ 0.29 $ 0.66 $ 0.60
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Weighted Average Number of
Shares:
Basic 3,674,897 4,002,384 3,676,927 4,015,878
Diluted 3,864,279 4,203,942 3,836,169 4,216,774
At or For the At or For the
Three Months Six Months
Ended June 30, Ended June 30,
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1999 1998 1999 1998
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SELECTED FINANCIAL RATIOS (1):
Return on Average Assets 0.63% 0.74% 0.68% 0.76%
Return on Average Equity 7.87% 7.46% 8.61% 7.77%
Capital to Assets 7.39% 9.72% 7.39% 9.72%
Net Interest Rate Spread (2) 3.54% 3.40% 3.46% 3.42%
Net Interest Margin (3) 3.75% 3.70% 3.68% 3.72%
Non-Interest Income to Average
Assets 0.49% 0.58% 0.44% 0.45%
Non-Interest Expense to Average
Assets 3.01% 2.88% 2.80% 2.75%
Efficiency Ratio (4) 75.29% 72.37% 71.89% 69.57%
Average Interest Earning Assets
to Average Deposits and
Borrowings 105.91% 108.21% 106.15% 108.26%
June 30, December 31,
1999 1998
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REGULATORY CAPITAL RATIOS:
Tangible Capital Ratio 7.35% 7.95%
Core Capital Ratio 7.35% 7.95%
ASSET QUALITY RATIOS:
Non-Performing Loans to Total Net Loans 0.42% 0.68%
Non-Performing Loans to Total Assets 0.22% 0.35%
Non-Performing Assets to Total Assets 0.29% 0.42%
Allowance for Loan Losses to Non-Performing
Loans 207.63% 122.73%
Allowance for Loan Losses to Total Net Loans 0.88% 0.83%
OTHER DATA:
Number of Deposit Accounts 52,179 52,272
Number of Offices (5)(6) 15 16
Notes to Selected Financial Ratios
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(1) Ratios are annualized where appropriate.
(2) Interest rate spread represents the difference between
weighted average yield on average interest-earning assets
and weighted average costs of average deposits and borrowed
funds.
(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.
(5) The 70 Sip Avenue and Martin Luther King branches were
consolidated into the Path branch during the second quarter
of 1999, and on June 5, 1999 the Maplewood branch opened for
business.
(6) The Passaic branch was sold as of the close of business on
April 10, 1998, and the North Arlington branch opened for
business on May 9, 1998.
