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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) April 20, 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,
April 20, 1999 announcing registrant's first
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, April 20, 1999
announcing registrant's first
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: April 23, 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, April 20, 1999 announcing
registrant's first quarter earnings.
FOR IMMEDIATE RELEASE Contact: Bernard F. Lenihan
April 20, 1999 201-795-4000
Tony Cicatiello
732-382-1066
Statewide Financial Corp. Report Increase
in First Quarter 1999 Earnings
First Quarter 1999 Net Income Rose 6%
First Quarter 1999 Diluted EPS Increased 16%
Jersey City, N.J. (April 20, 1999) -- Statewide Financial Corp.
(NASDAQ: SFIN), the holding company for Statewide Savings Bank S.L.A.
today reported net income of $1,362,000, or $0.36 per share, assuming
dilution, for the quarter ended March 31, 1999 as compared to
$1,304,000, or $0.31 per share, assuming dilution, for the same
quarter during 1998. This represents increases in net income and
diluted earnings per share of 4% and 16%, respectively over the same
period last year. Basic earnings per share were $0.37 for first
quarter 1999, as compared to $0.32 for the first quarter of 1998.
"We're pleased with our strong performance and strategic growth,
reflected in increased net interest income complemented with a rise in
service fees recorded during the quarter," stated Victor M. Richel,
chairman, president and chief executive officer of Statewide Financial
Corp. "Commercial loans, which include Statewide Funding warehouse
lines of credit to mortgage lenders, continue to fuel net interest
income along with additional investment security purchases."
The Company also noted that on April 13, 1999 it entered into a
definitive agreement to merge with Independence Community Bank Corp
("Independence"). Richel commented, "Independence's very strong
commitment to providing excellence in customer service and
satisfaction, coupled with a natural complement we have in serving
largely urban communities, are among the principal reasons we chose to
partner with them. Our very strong development of the commercial
market combined with the success of our Statewide Funding division,
will be significantly enhanced by Independence providing a larger
platform for expanding our growth and meeting customer needs. We are
also pleased to be able to join with Independence's other pending
acquisition, Broad National Bancorporation to form a formidable New
Jersey division of Independence. I believe this strategic combination
will clearly enhance Statewide's shareholder value, while providing
our customers and employees with local management committed to
delivering excellence in customer service."
Upon completion of the transaction, Mr. Richel will become a Vice
Chairman of the Board of Independence and Statewide's current Board of
Directors will serve as an Advisory Board.
With regard to the first quarter earnings, Richel highlighted,
"Commercial loan originations continued their strong pace.
Commercial, multi-family and construction loan and mortgage
originations totaled $16.1 million during the first quarter. In
addition, Statewide Funding increased its loans outstanding $5.0
million, or 10.4% to $52.7 million at March 31, 1999 from $47.7
million at December 31, 1998. Also, our new initiative in the SBA
lending arena is already well under way with originations of $1.0
million this quarter compared to the $900,000 in SBA loans originated
during the fourth quarter of 1998. Fees on these SBA loans and other
expected loan closings in subsequent quarters will contribute to our
earnings growth in the following quarters."
Richel added, "Our branch re-alignment and expansion plans are moving
ahead, as we are nearing completion of combining three of our Jersey
City branches into our newly refurbished PATH office in Journal
Square, Jersey City. In addition, our new Maplewood NJ branch is
expected to open mid-second quarter. This under-served banking
community has demographics similar to communities where our most
successful branches are located."
At March 31, 1999, the Company's total assets were $744.2 million
compared to $717.5 million at December 31, 1998. The period-ended
balances increased $26.7 million between these periods principally
from growth in the commercial and consumer loan portfolios and growth
in our mortgage-backed securities portfolio partially offset from
declines in one-to-four family mortgage loans and debt securities.
Loans at March 31, 1999 increased $6.9 million over December 31, 1998
as a result of a $7.5 million, or 9.3% increase in construction,
multi-family, commercial mortgage and business loans, along with a
$5.0 million, or 10.4% increase in the Statewide Funding portfolio. In
addition, consumer loans had a modest increase of $1.2 million, or
3.0% during the quarter. This growth was partially offset by
repayments in the one-to-four family mortgage loan portfolio, which
declined $6.8 million, or 3.4% despite originations of $7.8 million in
this portfolio during the period. Debt securities also decreased
during the quarter from the sale and maturity of approximately $5.8
million of corporate debt. Mortgage-backed securities increased $28.2
million between December 31, 1998 and March 31, 1999 as the Company
continued to leverage its balance sheet with the purchase of $54.9
million of securities which more than offset the $26.1 million of
normal amortization and accelerated prepayments recorded during the
period.
Borrowed funds increased $31.3 million to $238.0 million at March 31,
1999 from $206.7 million at December 31, 1998. The increase in
borrowed funds during the quarter was used to support asset growth in
line with the Company's leveraging strategy; to repurchase the
Company's common stock under its stock repurchase program; and to fund
maturities of certificates of deposit for holders who sought rates
higher than the Company's alternate borrowing rates. Borrowed funds
of $27.0 million are in overnight advances, $65.0 million mature
within 30 days and the remaining $146.0 million have final maturity
dates ranging from July 2000 to September 2002. All of the $146.0
million 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 $441.4 million at March 31, 1999, as compared to
$443.7 million at December 31, 1998. The decrease in total deposits
for the quarter resulted primarily from a decrease of $3.4 million in
certificates of deposit as the Company continues with its strategy of
not matching competitors' most aggressive interest rates. Partially
offsetting this decline was an increase in core deposits of $1.1
million to $273.7 million at March 31, 1999 reflecting the Company's
continued successful cross selling and relationship building efforts.
Growth in savings accounts of $1.1 million coupled with a $0.7 million
increase in demand and NOW accounts were partially offset by a
decrease in money market deposit accounts of $0.7 million. "As the
Company continues its relationship selling efforts, core deposits
continue to grow," Richel stated.
Shareholders' equity decreased $1.6 million during the quarter to
$58.9 million at March 31, 1999 from $60.5 million at December 31,
1998. The decreases during the current quarter resulted primarily
from the repurchase and retirement of 112,000 shares of the Company's
common stock, the payment of the quarterly dividend, and a decrease of
$0.7 million (net of tax) in the March 31, 1999 market value of the
Company's investment portfolio from the valuation at December 31,
1998. Partially offsetting these decreases were the current quarter
net income of $1.4 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 months ended March 31, 1999
reflect an increase in net interest income, before provisions for
loans losses, over the same period a year ago, of $0.5 million. This
increase reflects growth in average loans and investment security
balances partially offset by increased borrowing cost to fund growth
in assets and repurchase the Company's common stock. In addition, the
net interest margin declined 11 basis points to 3.61% for the quarter
ended March 31, 1999 as compared to 3.72% for the same quarter last
year despite both volume and yield growth in the mortgage loan
portfolio, because yields on securities were lower this quarter versus
a year ago quarter, as they tracked the lower interest rate
environment.
Interest income on loans and securities increased $0.7 million and
$0.2 million respectively, during the current quarter over the same
quarter last year. Interest income on commercial loans including
Statewide Funding warehouse lines of credit increased $1.5 million, or
125% during the current quarter which more than offset a decline of
$0.8 million in one-to-four family loans resulting from continued
prepayments. Interest income from securities increased because the
average of the Company's mortgage-backed and debt portfolios was
11.2%, or $34.1 million, more during the current quarter resulting
from purchases made since the fourth quarter of 1998 when the Federal
Reserve lowered its Federal Funds rate, allowing leverage to again be
a viable growth strategy.
The average cost of deposits and borrowed funds decreased 16 basis
points during the current quarter compared to the same quarter a year
ago, as a result of lower costs for both deposits and borrowings,
partially offset by a change in mix towards borrowed funds. As
general interest rates decreased since March 31, 1998, the Company has
periodically lowered its rates paid to depositors. Consequently, its
costs of deposits decreased 45 basis points from the March 31, 1998
quarter to 3.05% for the quarter ended March 31, 1999. Similarly, the
costs of borrowings for the quarter ended March 31, 1999 decreased,
from 5.57% for the prior-year quarter to 5.35% for the current
quarter, despite additional borrowings to fund loan and securities
asset growth since the year-ago quarter. 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. These increased borrowings, partially offset by
lower rates paid on interest bearing liabilities, have resulted in an
interest expense increase of $0.5 million during the quarter ended
March 31, 1999, as compared to the same quarter last year.
Provision for loan losses increased $99,000 to $249,000 for the three
months ended March 31, 1999 from $150,000 for the same quarter 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 totaled $718,000 for the three months ended March
31, 1999, an increase of $184,000, or 34.5% over the same period of
the prior year. Richel stated, "Continued benefits are being realized
from our fee enhancement initiative implemented during mid 1998 along
with increased fees from growth in existing and new products."
Current quarter growth over the same period of the prior year reflects
increased deposit account fees for returned check assessment charges,
recurring maintenance fees on checking and savings products, safe-
deposit and other branch service fees and higher annuity sales
generated in the retail branches. In addition wholesale mortgage
funding transaction fees earned during the current quarter totaled
$44,000 with no like fees earned during the preceding year period.
Non-interest expense for the three months ended March 31, 1999 totaled
$4.8 million, an increase of $0.4 million over the same period of the
prior year. This change primarily reflects increases in salaries and
benefits costs, occupancy, insurance, correspondence and
communications costs. Salary and benefits costs reflect staff
additions during the second quarter of 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. In addition, normal annual merit increases, incentive plan
accruals, education and recruitment costs contributed to the rise
during the current year period. 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 improvements related to the opening of the North
Arlington branch, the creation of Statewide Funding, and operating
systems enhancements. Other higher operating costs related to product
development and data processing were incurred during the current year
period. In addition, the prior year ago period reflected expense
reductions from increases in the cash surrender value of insurance
policies maintained for benefit programs. Offsetting the increases
stated above were lower professional, marketing and real estate owned
costs incurred during the current year quarter.
Under the terms of the Independence merger agreement, which is subject
to approval by Statewide's shareholders and by regulatory authorities,
Statewide Financial Corp. holders 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 be completed during the fourth calendar
quarter of 1999.
Headquartered in Jersey City, New Jersey, Statewide Savings Bank is a
state chartered stock savings and loan association that conducts
business from 16 locations in Hudson, Union 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 March 31, December 31,
1999 1998
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dollars in thousands, except per
share data
Total Assets $744,225 $717,517
Loans, Net $373,145 $366,458
Debt and Equity Securities $ 61,842 $ 68,312
Mortgage-backed Securities $276,239 $248,035
Other Real Estate Owned, Net $ 591 $ 523
Total Deposits $441,424 $443,705
Borrowed Funds $237,986 $206,681
Shareholders' Equity $ 58,850 $ 60,499
Book Value per share $ 14.57 $ 14.57
SELECTED OPERATING DATA For the Three Months
Ended March 31,
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dollars in thousands, except per share data 1999 1998
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Interest Income $12,897 $11,967
Interest Expense 6,377 5,905
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Net Interest Income 6,520 6,062
Provision for Loan Losses 249 150
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Net Interest Income After Provision For
Loan Losses 6,271 5,912
Non-interest Income 720 534
Net Loss on Sale of Investment Securities (2) -
Foreclosed Real Estate Expense, Net 2 20
Other Non-interest Expense 4,771 4,344
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Income Before Income Taxes 2,216 2,082
Income Tax Expense 854 778
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Net Income $ 1,362 $ 1,304
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Earnings per share:
Basic $0.37 $0.32
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Diluted $0.36 $0.31
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Weighted Average Number of Shares:
Basic 3,678,980 4,029,523
Diluted 3,808,081 4,229,757
SELECTED FINANCIAL RATIOS (1): At or For the
Three Months Ended
March 31,
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1999 1998
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Return on Average Assets 0.74% 0.78%
Return on Average Equity 9.37% 8.09%
Capital to Assets 7.91% 9.83%
Net Interest Rate Spread (2) 3.38% 3.42%
Net Interest Margin (3) 3.61% 3.72%
Non-interest Income to Average Assets 0.39% 0.32%
Non-interest Expense to Average Assets 2.59% 2.62%
Efficiency Ratio (4) 68.27% 66.46%
Average Interest-earning Assets to Average
Deposits and Borrowings 106.40% 108.30%
REGULATORY CAPITAL RATIOS: March 31, December 31,
1999 1998
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Tangible Capital Ratio 7.87% 7.95%
Core Capital Ratio 7.87% 7.95%
ASSET QUALITY RATIOS: 0.58% 0.68%
Non-performing Loans to Total Net Loans 0.29% 0.35%
Non-performing Loans to Total Assets 0.37% 0.42%
Allowance for Loan Losses to Non-performing
Loans 147.91% 122.73%
Allowance for Loan Losses to Total Net Loans 0.86% 0.83%
OTHER DATA
Number of Deposit Accounts 52,016 52,272
Number of Offices 16 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.
