Exhibit 99.1
News Release
[LOGO]
CHARTER ONE
FINANCIAL, INC.®
CONTACT: ELLEN BATKIE (800) 262-6301
CHARTER ONE REPORTS 1st QTR EPS OF $.64, UP 7%
Highlights for the quarter ended 3/31/03:
• | Net earnings of $.64 per share, up 7% over 1Q 2002 | |
• | Net interest income up 6% over 1Q 2002 | |
• | Retail banking revenue up 14% over 1Q 2002; deposit- related portion up 16% | |
• | Efficiency ratio of 39.8%, compared to 40.6% in 1Q 2002 | |
• | Excluding custodial balances, core deposits up an annualized 2% in 1Q 2003; noninterest checking up 58% (annualized) | |
• | Reserve to loans strengthened to 1.40%, up from 1.24% at 12/31/02 and 1.04% at 3/31/02 | |
• | NPAs of .45% of assets; underperforming assets of .58% of assets |
CLEVELAND, Ohio, April 16, 2003 — Charter One Financial, Inc. (NYSE:CF), the holding company of Charter One Bank, N.A., today reported net income of $147.5 million for the three months ended March 31, 2003, or $.64 per diluted share. This was up 6.7% from $.60 in net earnings per diluted share reported in the year ago quarter. All per share data in this release have been restated for the 5% stock dividend issued on September 30, 2002.
Net income for the quarter generated annualized returns of 1.38% on average assets, 18.48% on average equity, and 21.29% on average tangible equity. In the year ago quarter the returns were 1.52% on average assets, 19.71% on average equity and 22.50% on average tangible equity.
“We have indicated for some time that we strive for consistent earnings growth while maintaining a low-risk profile,” commented Charles John Koch, Charter One’s Chairman and Chief Executive Officer. “We believe the results of this first quarter of 2003 met that objective. Consistent with prior quarters, the current operating environment continues to provide elevated mortgage-related revenue, which has offset marginally higher credit costs coming out of the softening economy as well as adjustments to our mortgage servicing rights resulting from this low interest rate environment. Furthermore, the mortgage-related revenue is contributing to the funding of our retail expansion and enhanced marketing initiatives, both of which should create additional franchise value over time. Finally, looking ahead over the rest of the year, and assuming a continuation of the current operating environment, we are able to reaffirm our previous earnings guidance of $2.66 to $2.72 per share in 2003.”
Net interest income and net yield- Net interest income was $299.0 million for the three months ended March 31, 2003, up 5.6% from the year ago quarter. The increase in net interest income was driven by a $5.2 billion, or 14.9%, increase in average interest-earning assets. Net yield during the first quarter of 2003 was 2.99%, down 27 basis points from the first quarter of 2002 and down eight basis points from the fourth quarter of 2002. The reduction during the quarter
resulted from downward pressure on asset yields in the declining rate environment, offset in part by the benefits obtained from deposit repricing in the fourth quarter of 2002. It is important to note that the Company still has additional deposit repricing flexibility in the current interest rate environment. There was virtually no core deposit repricing initiated in the first quarter.
Retail banking revenue- Retail banking revenue is the largest component of recurring noninterest income and totaled $84.1 million for the three months ended March 31, 2003, up 14.0% from the comparable 2002 quarter. Retail banking revenue includes three separate components: deposit-related revenue ($72.2 million, up 16% over the year ago quarter), fees from retail brokerage activities ($8.3 million, up 6%), and other revenue related to retail operations ($3.6 million, up 6%).
Mortgage banking revenue- The mortgage banking category includes revenue associated with Charter One’s mortgage banking operations, offset by the amortization and valuation adjustments related to its mortgage servicing rights asset (“MSR”). During the first quarter, the Company increased the valuation allowance by $20.7 million to $123 million. The total mortgage banking revenue, excluding the additional allowance, was $20.6 million in the first quarter of 2003. This represented an 82.7% increase from the year ago quarter, when the revenue totaled $11.3 million. The increase was primarily attributable to an 18.0% growth over the past 12 months in the portfolio serviced for others, which totaled $18.7 billion at March 31, 2003. The related MSR is now at .74% of the portfolio at $139 million. With an average servicing spread of 36 basis points, that translates into an MSR valuation of 2.06 times the servicing spread.
Net gains- During the first quarter of 2003, the Company reported net gains of $76.7 million. The primary source of the gains was the sale of $2.5 billion of mortgage-backed securities. As of March 31, 2003, unrealized pretax gains in the mortgage-backed securities portfolio totaled $303 million, compared with $223 million at December 31, 2002.
Leasing operations- Other income from leasing operations was reflected as a loss of $6.9 million in the first quarter of 2003, compared with income of $270,000 in the first quarter of 2002 and a loss of $4.6 million in the fourth quarter of 2002. The loss in the first quarter of 2003 resulted from $8.7 million in residual adjustments, which were primarily related to Charter One’s aircraft leasing portfolio.
Operating expenses —Administrative expenses totaled $183.3 million in the three months ended March 31, 2003, up 3.6% from the previous quarter and up 13.0% from the year ago quarter. The efficiency ratio was 39.8% for the first quarter of 2003, compared to 39.3% for the fourth quarter of 2002 and 40.6% for the first quarter of 2002. Excluding net gains and the MSR-related adjustments results in an efficiency ratio of 45.3%, compared to 43.3% for the fourth quarter of 2002, and 42.9% for the first quarter of 2002. In general, the higher level of expenses in the quarter was attributed to increased health care and marketing costs, as well as expenses related to adding 27 banking centers over the past 12 months.
Lending production and portfolio growth —Loan and lease originations totaled $6.0 billion during the first quarter of 2003, compared to the record level of $6.5 billion during the fourth
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quarter of 2002 and $5.1 billion in the first quarter of 2002. Non-single family loan originations totaled $2.9 billion, or 48% of the total.
Loans and leases before reserves totaled $25.3 billion at March 31, 2003, compared to $26.5 billion at December 31, 2002. The underlying growth rate was masked by very large levels of agency securitizations during the quarter, which totaled $3.4 billion ($1.6 billion in one-to-four family and $1.8 billion in mortgage-related consumer loans). Without the securitization activity, the total portfolio would have increased at an annual rate of 33%, and the non-single family portion would have increased at an annual rate of 20%. Charter One retains essentially no credit risk in connection with these securitizations and does not utilize any special-purpose entities for the sale of mortgage-backed securities. At the end of March, non-single family loans totaled $16.9 billion, or 67% of the total portfolio. The total loan portfolio continues to be primarily consumer based, with 77% in consumer-oriented products and 23% in commercial lending.
Deposits- Deposits totaled $27.4 billion at March 31, 2003, down slightly in the three-month period. Core deposits (checking, money market and savings accounts) accounted for $17.9 billion, or 65% of the total. Excluding a decrease in custodial balances, core deposits were up 2% (annualized) in the first quarter of 2003. At the beginning of this year, the Company indicated it would emphasize noninterest-bearing checking growth this year, as opposed to total deposits as in previous years. During the first three months, the sales force posted strong growth in noninterest bearing accounts, increasing active accounts by 27,600 and adding $212 million in deposits (excluding custodial balances). This translated into annualized growth rates for noninterest bearing deposits of 16% in the number of accounts and 58% in balances. Charter One ended the first quarter with 1,348,114 total checking accounts, up an annualized 5% from December 31, 2002. Custodial balances totaled $705 million at March 31, 2003, $721 million at December 31, 2002, and $427 million at March 31, 2002.
Separately, the push into small business banking continues to show impressive results. Business deposits, which are included in core deposits, increased to $1.6 billion at March 31, 2003, up $303 million, or 22.7% (91.1% annualized), during the three-month period. The Company now has 86,200 business deposit accounts, up from 72,900 at December 31, 2002.
Retail expansion update- In early 2003, Charter One announced plans for aggressive de novo expansion during 2003 and 2004. The expansion is expected to include 125 new banking centers, with 97 in-store and 28 traditional locations. The 2003 goal is to open approximately 85 new banking centers, with 69 in-store and 16 traditional locations. Previously announced in-store partnerships will drive much of the expansion activity. Those partnerships include Tops Friendly Markets (Ohio and Western New York), and Price Chopper Supermarkets (Eastern New York and New England). The Company opened 16 banking centers during the first quarter, the majority of which were in-store locations. Charter One’s in-store franchise now includes 64 banking centers. Total in-store deposits were $1.2 billion at March 31, 2003, up an annualized 11% during the quarter before realizing any significant benefit from its recently opened branches. In-store checking accounts increased by $54 million in the quarter, for an annualized growth rate of 43%.
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The Company is projecting approximately 36 new banking centers during the second quarter, in addition to the 14 banking centers included with the acquisition of Advance Bancorp. As previously announced, Charter One agreed to buy Advance Bancorp, a $600 million bank holding company headquartered in Chicago, for $72 million in common stock. Management believes the transaction is on track to be closed early in May 2003.
Credit quality and allowance for loan losses- During the first quarter of 2003, Charter One continued to strengthen its level of loan loss reserves in light of the current economic environment. Consistent with its announcement on March 18, 2003, the Company posted an additional provision for loan losses of $35 million to reflect weakness in the economy and, specifically, the airline industry. The total provision for the quarter exceeded net charge-offs by $28 million and the ratio of the allowance to total loans and leases increased to 1.40% from 1.24% at December 31, 2002 and 1.04 % at March 31, 2002.
The March 18, 2003 announcement also disclosed that two aircraft lessees had requested concessions and Charter One indicated it was unlikely the maximum loss that could result from those discussions would exceed $25 million. One of the two situations had been resolved as of March 31, 2003 through the sale of the related $20 million lease, and resulted in a charge-off of $6.1 million. The remaining situation, representing a $15 million leveraged lease, is unresolved. Charter One’s aircraft leasing portfolio totaled $379.5 million at March 31, 2003, or 1.5% of its total loan and lease portfolio. The portfolio includes $274.3 million to domestic air carriers, with the remainder on corporate jets and cargo planes leased to investment-grade corporations. At March 31, 2003, all aircraft leases were current except the one lease remaining in concession talks mentioned above. The Company has no direct exposure to US Air, United Airlines, American Airlines or Air Canada.
Net charge-offs during the first quarter of 2003 totaled $33.6 million, or .52% of average loans and leases, including $6.1 million related to previously disclosed aircraft leasing concerns. The allowance for loan and lease losses increased to $356 million at March 31, 2003, equivalent to 2.7 years of net charge-offs.
At March 31, 2003, nonperforming assets totaled $194 million, or .45% of total assets, essentially unchanged from .44% at December 31, 2002. Underperforming assets (including nonperforming assets, troubled debt restructuring and loans delinquent 90 days and still accruing) totaled $252 million, or .58% of total assets, compared to .59% at December 31, 2002. Nonperforming assets at the end of the first quarter 2003 included the $15 million aircraft leveraged lease referenced above, which was added to nonaccrual loans and leases during the quarter. Although many external influences, such as economic weakness and geopolitical risks, can affect credit quality and portfolio performance, management continues to believe its credit-related costs remain manageable and consistent with overall earnings expectations.
Stock repurchase update- On April 23, 2002, the Company authorized a new repurchase program that permits the repurchase of 10% of its outstanding shares, or approximately 22 million shares. The Company repurchased 602,600 shares under the authorization during the first quarter of 2003 at an average cost of $27.86 per share. This brought the total repurchased under the program to 8.5 million shares at an average cost of $30.76 per share.
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Company profile —Charter One has $43 billion in total assets, making it one of the 25 largest bank holding companies in the country. The Bank has 477 banking center locations in Ohio, Michigan, New York, Illinois, Massachusetts, and Vermont. The Company’s diverse product set includes: consumer banking, indirect auto finance, commercial leasing, business lending, commercial real estate lending, mortgage banking, and retail investment products. For additional information, including press releases, investor presentations, committee charters, and reports filed with the SEC, investors are directed to Charter One’s web site: www.charterone.com.
The Company has scheduled a conference call to discuss quarterly results for 2:00 p.m. eastern time on Wednesday, April 16, 2003. To participate in the call, dial (800) 230-1074 and ask for the Charter One 1st quarter earnings call. The call is available on a replay basis until April 26, 2003 by dialing (320) 365-3844, access code 679367. Alternatively, the call will be available through Charter One’s website, both on a live and a replay basis.
Forward-Looking Information
This release contains certain estimates of future operating trends for Charter One Financial, Inc., as well as estimates of financial condition and earnings, operating efficiencies, revenue creation, lending origination, loan sale volumes, charge-offs and loan loss provisions. These estimates constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995), which involve significant risks and uncertainties. Actual results may differ materially from the results discussed in these forward-looking statements. Factors that might cause such a difference include, but are not limited to: (1) revenue growth is lower than expected; (2) competitive pressures among depository institutions increase significantly; (3) changes in the interest rate environment reduce interest margins; (4) deterioration in the credit quality of the Company’s loan portfolio requires higher loss provisions ; (5) general economic conditions, either nationally or in the states in which the Company does business, are less favorable than expected; (6) legislation or regulatory changes adversely affect the businesses in which the Company is engaged; and (7) ongoing geopolitical conflicts add unexpected stress on the economy or customer base. Other factors that may affect these statements are identified in previous filings with the Securities and Exchange Commission.
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CHARTER ONE FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended | |||||||||||||||||||||||||||||||||
3/31/03 | 12/31/02 | 9/30/02 | 6/30/02 | 3/31/02 | |||||||||||||||||||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||||||||||||||||||||
Interest income: | |||||||||||||||||||||||||||||||||
Loans and leases | $ | 377,724 | $ | 418,711 | $ | 410,237 | $ | 415,057 | $ | 427,838 | |||||||||||||||||||||||
Mortgage-backed securities: | |||||||||||||||||||||||||||||||||
Available for sale | 149,311 | 131,821 | 135,099 | 141,773 | 111,128 | ||||||||||||||||||||||||||||
Held to maturity | 8,269 | 9,991 | 10,695 | 12,261 | 14,800 | ||||||||||||||||||||||||||||
Investment securities: | |||||||||||||||||||||||||||||||||
Available for sale | 3,043 | 2,969 | 2,939 | 2,625 | 2,962 | ||||||||||||||||||||||||||||
Held to maturity | 54 | 60 | 61 | 60 | 71 | ||||||||||||||||||||||||||||
Other interest-earning assets | 7,385 | 8,184 | 9,729 | 9,478 | 7,912 | ||||||||||||||||||||||||||||
Total interest income | 545,786 | 571,736 | 568,760 | 581,254 | 564,711 | ||||||||||||||||||||||||||||
Interest expense: | |||||||||||||||||||||||||||||||||
Deposits | 133,743 | 154,018 | 160,821 | 169,576 | 170,401 | ||||||||||||||||||||||||||||
Federal Home Loan Bank advances | 99,799 | 105,492 | 103,729 | 103,927 | 103,716 | ||||||||||||||||||||||||||||
Other borrowings | 13,203 | 13,627 | 13,943 | 9,884 | 7,497 | ||||||||||||||||||||||||||||
Total interest expense | 246,745 | 273,137 | 278,493 | 283,387 | 281,614 | ||||||||||||||||||||||||||||
Net interest income | 299,041 | 298,599 | 290,267 | 297,867 | 283,097 | ||||||||||||||||||||||||||||
Provision for loan and lease losses | 61,471 | 60,314 | 47,695 | 55,277 | 28,717 | ||||||||||||||||||||||||||||
Net interest income after provision for loan and lease losses | 237,570 | 238,285 | 242,572 | 242,590 | 254,380 | ||||||||||||||||||||||||||||
Other income: | |||||||||||||||||||||||||||||||||
Retail banking | 84,100 | 89,261 | 84,175 | 83,543 | 73,756 | ||||||||||||||||||||||||||||
Mortgage banking | (27 | ) | (1,992 | ) | (36,961 | ) | 9,168 | 11,290 | |||||||||||||||||||||||||
Leasing operations | (6,856 | ) | (4,566 | ) | 404 | 317 | 270 | ||||||||||||||||||||||||||
Net gains | 76,653 | 61,585 | 83,881 | 37,840 | 21,727 | ||||||||||||||||||||||||||||
Bank owned life insurance and other | 7,956 | 7,834 | 7,582 | 8,924 | 9,508 | ||||||||||||||||||||||||||||
Total other income | 161,826 | 152,122 | 139,081 | 139,792 | 116,551 | ||||||||||||||||||||||||||||
Administrative expenses: | |||||||||||||||||||||||||||||||||
Compensation and employee benefits | 87,056 | 81,827 | 81,443 | 80,645 | 77,252 | ||||||||||||||||||||||||||||
Net occupancy and equipment | 31,186 | 30,360 | 30,288 | 27,634 | 28,563 | ||||||||||||||||||||||||||||
Marketing expenses | 13,647 | 9,843 | 11,788 | 10,012 | 8,829 | ||||||||||||||||||||||||||||
Federal deposit insurance premiums | 1,142 | 1,142 | 1,104 | 1,106 | 1,211 | ||||||||||||||||||||||||||||
Other administrative expenses | 50,261 | 53,716 | 46,683 | 49,219 | 46,307 | ||||||||||||||||||||||||||||
Total administrative expenses | 183,292 | 176,888 | 171,306 | 168,616 | 162,162 | ||||||||||||||||||||||||||||
Income before income taxes | 216,104 | 213,519 | 210,347 | 213,766 | 208,769 | ||||||||||||||||||||||||||||
Income taxes | 68,613 | 67,793 | 66,785 | 67,871 | 66,284 | ||||||||||||||||||||||||||||
Net income | $ | 147,491 | $ | 145,726 | $ | 143,562 | $ | 145,895 | $ | 142,485 | |||||||||||||||||||||||
Basic earnings per share(1) | $ | .66 | $ | .65 | $ | .63 | $ | .63 | $ | .61 | |||||||||||||||||||||||
Diluted earnings per share(1) | $ | .64 | $ | .63 | $ | .61 | $ | .61 | $ | .60 | |||||||||||||||||||||||
Average common shares outstanding(1): | |||||||||||||||||||||||||||||||||
Basic | 224,997,398 | 225,561,551 | 228,765,954 | 231,197,406 | 231,684,629 | ||||||||||||||||||||||||||||
Diluted | 230,460,847 | 231,502,688 | 235,615,457 | 239,123,292 | 238,221,934 | ||||||||||||||||||||||||||||
Cash dividends declared per share(1) | $ | .22 | $ | .22 | $ | .21 | $ | .21 | $ | .19 | |||||||||||||||||||||||
(1) | Restated to reflect the 5% stock dividend issued September 30, 2002. |
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CHARTER ONE FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(unaudited)
3/31/03 | 12/31/02 | 9/30/02 | 6/30/02 | 3/31/02 | ||||||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Cash and deposits with banks | $ | 507,726 | $ | 446,701 | $ | 525,049 | $ | 592,571 | $ | 539,846 | ||||||||||||||
Federal funds sold and other | 1,350,513 | 512 | 1,105,511 | 800,509 | 815,509 | |||||||||||||||||||
Total cash and cash equivalents | 1,858,239 | 447,213 | 1,630,560 | 1,393,080 | 1,355,355 | |||||||||||||||||||
Investments securities: | ||||||||||||||||||||||||
Available for sale | 227,137 | 210,095 | 213,684 | 169,203 | 133,509 | |||||||||||||||||||
Held to maturity | 4,157 | 3,973 | 4,642 | 4,381 | 5,043 | |||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||
Available for sale | 12,799,506 | 11,536,608 | 8,805,687 | 9,634,674 | 8,067,946 | |||||||||||||||||||
Held to maturity | 445,207 | 540,781 | 648,153 | 728,003 | 830,032 | |||||||||||||||||||
Loans and leases, net | 24,685,258 | 25,852,846 | 25,351,352 | 24,382,986 | 24,355,261 | |||||||||||||||||||
Loans held for sale | 291,729 | 351,892 | 287,891 | 161,438 | 160,805 | |||||||||||||||||||
Bank owned life insurance | 837,660 | 829,043 | 819,664 | 814,429 | 809,356 | |||||||||||||||||||
Federal Home Loan Bank and Federal Reserve Bank stock | 679,339 | 681,923 | 676,927 | 668,905 | 618,969 | |||||||||||||||||||
Premises and equipment | 355,084 | 353,730 | 348,675 | 362,909 | 357,915 | |||||||||||||||||||
Accrued interest receivable | 149,989 | 154,962 | 155,543 | 165,262 | 155,479 | |||||||||||||||||||
Real estate and other collateral owned | 42,106 | 42,980 | 42,988 | 44,511 | 57,417 | |||||||||||||||||||
Loan servicing assets | 139,085 | 128,564 | 126,646 | 175,650 | 164,789 | |||||||||||||||||||
Goodwill | 386,372 | 386,372 | 386,372 | 385,808 | 351,040 | |||||||||||||||||||
Other assets | 347,735 | 375,090 | 351,682 | 299,303 | 285,366 | |||||||||||||||||||
Total assets | $ | 43,248,603 | $ | 41,896,072 | $ | 39,850,466 | $ | 39,390,542 | $ | 37,708,282 | ||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||
Checking accounts | $ | 9,652,845 | $ | 9,650,433 | $ | 8,619,130 | $ | 7,737,558 | $ | 7,934,769 | ||||||||||||||
Money market and savings accounts | 8,207,576 | 8,157,534 | 8,248,750 | 8,893,253 | 7,644,542 | |||||||||||||||||||
Certificates of deposit | 9,523,194 | 9,719,876 | 10,218,625 | 9,926,504 | 10,057,421 | |||||||||||||||||||
Total deposits | 27,383,615 | 27,527,843 | 27,086,505 | 26,557,315 | 25,636,732 | |||||||||||||||||||
Federal Home Loan Bank advances | 10,446,630 | 9,037,925 | 7,574,583 | 7,841,524 | 7,830,065 | |||||||||||||||||||
Federal funds purchased and repurchase agreements | 52,496 | 283,912 | 54,347 | 53,089 | 57,228 | |||||||||||||||||||
Other borrowings | 707,591 | 708,853 | 710,282 | 720,133 | 325,505 | |||||||||||||||||||
Advance payments by borrowers for taxes and insurance | 46,706 | 23,595 | 47,578 | 51,822 | 44,693 | |||||||||||||||||||
Accrued interest payable | 72,017 | 38,372 | 66,193 | 38,029 | 59,813 | |||||||||||||||||||
Accrued expenses and other liabilities | 1,307,416 | 1,191,747 | 1,295,185 | 1,089,899 | 894,327 | |||||||||||||||||||
Total liabilities | 40,016,471 | 38,812,247 | 36,834,673 | 36,351,811 | 34,848,363 | |||||||||||||||||||
Shareholders’ equity: | ||||||||||||||||||||||||
Preferred stock — $.01 par value per share; 20,000,000 shares authorized and unissued | — | — | — | — | — | |||||||||||||||||||
Common stock — $.01 par value per share; 360,000,000 shares authorized; 227,571,468, 227,571,468, 227,577,813, 224,853,682 and 224,854,600 shares issued | 2,276 | 2,276 | 2,276 | 2,249 | 2,249 | |||||||||||||||||||
Additional paid-in capital | 2,197,388 | 2,193,095 | 2,192,186 | 2,104,361 | 2,097,473 | |||||||||||||||||||
Retained earnings | 908,486 | 824,564 | 732,731 | 976,380 | 893,200 | |||||||||||||||||||
Less 2,539,076, 2,781,151, 1,158,700, 4,662,584, and 4,836,968, shares of common stock held in treasury at cost | (74,423 | ) | (82,610 | ) | (35,087 | ) | (135,378 | ) | (136,429 | ) | ||||||||||||||
Accumulated other comprehensive income | 198,405 | 146,500 | 123,687 | 91,119 | 3,426 | |||||||||||||||||||
Total shareholders’ equity | 3,232,132 | 3,083,825 | 3,015,793 | 3,038,731 | 2,859,919 | |||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 43,248,603 | $ | 41,896,072 | $ | 39,850,466 | $ | 39,390,542 | $ | 37,708,282 | ||||||||||||||
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CHARTER ONE FINANCIAL, INC.
SELECTED STATISTICAL DATA
(unaudited)
Three Months Ended | |||||||||||||||||||||
3/31/03 | 12/31/02 | 9/30/02 | 6/30/02 | 3/31/02 | |||||||||||||||||
Annualized returns and ratios based on net income: | |||||||||||||||||||||
Return on average assets | 1.38 | % | 1.40 | % | 1.46 | % | 1.51 | % | 1.52 | % | |||||||||||
Return on average equity | 18.48 | 19.11 | 18.89 | 19.85 | 19.71 | ||||||||||||||||
Average equity to average assets | 7.46 | 7.35 | 7.72 | 7.60 | 7.71 | ||||||||||||||||
Net interest income to administrative expenses | 1.63 | x | 1.69 | x | 1.69 | x | 1.77 | x | 1.75 | x | |||||||||||
Administrative expenses to average assets | 1.71 | % | 1.70 | % | 1.74 | % | 1.74 | % | 1.73 | % | |||||||||||
Efficiency ratio(1) | 39.77 | 39.25 | 39.90 | 38.53 | 40.58 | ||||||||||||||||
Annualized return on average tangible equity(2) | 21.29 | 22.18 | 21.70 | 22.84 | 22.50 |
(1) | Computed as the ratio of total administrative expenses to net interest income and total other income. | |
(2) | Computed as the ratio of net income, excluding the amortization of other intangible assets, to average tangible equity. |
3/31/03 | 12/31/02 | 9/30/02 | 6/30/02 | 3/31/02 | |||||||||||||||||
End of period capitalization: | |||||||||||||||||||||
Equity to assets | 7.47 | % | 7.36 | % | 7.57 | % | 7.71 | % | 7.58 | % | |||||||||||
Tangible equity to assets | 6.50 | 6.36 | 6.52 | 6.65 | 6.64 | ||||||||||||||||
Book value per share(1) | $ | 14.36 | $ | 13.72 | $ | 13.32 | $ | 13.14 | $ | 12.38 | |||||||||||
Tangible book value per share(1) | 12.50 | 11.86 | 11.47 | 11.33 | 10.84 | ||||||||||||||||
Miscellaneous end-of-period data: | |||||||||||||||||||||
Number of employees (full-time equivalents) | 7,198 | 6,997 | 6,837 | 6,914 | 6,874 | ||||||||||||||||
Number of full-service branches | 477 | 461 | 459 | 461 | 450 | ||||||||||||||||
Number of loan production offices | 26 | 26 | 26 | 27 | 27 | ||||||||||||||||
Number of ATMs | 918 | 913 | 920 | 928 | 913 |
(1) | Restated to reflect the 5% stock dividend issued September 30, 2002. |
COMPOSITION OF DEPOSITS
(unaudited)
3/31/03 | 12/31/02 | 9/30/02 | 6/30/02 | 3/31/02 | ||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Checking accounts: | ||||||||||||||||||||||||
Interest-bearing | $ | 7,267,602 | $ | 7,460,530 | $ | 6,588,045 | $ | 5,917,228 | $ | 6,121,320 | ||||||||||||||
Noninterest-bearing | 2,385,243 | 2,189,903 | 2,031,085 | 1,820,330 | 1,813,449 | |||||||||||||||||||
Total checking accounts | 9,652,845 | 9,650,433 | 8,619,130 | 7,737,558 | 7,934,769 | |||||||||||||||||||
Money market and savings accounts | 8,207,576 | 8,157,534 | 8,248,750 | 8,893,253 | 7,644,542 | |||||||||||||||||||
Total transaction accounts | 17,860,421 | 17,807,967 | 16,867,880 | 16,630,811 | 15,579,311 | |||||||||||||||||||
Certificates of deposit: | ||||||||||||||||||||||||
Retail | 9,523,194 | 9,719,876 | 10,198,753 | 9,886,732 | 10,017,629 | |||||||||||||||||||
Brokered | — | — | 19,872 | 39,772 | 39,792 | |||||||||||||||||||
Total certificates of deposit | 9,523,194 | 9,719,876 | 10,218,625 | 9,926,504 | 10,057,421 | |||||||||||||||||||
Total deposits | $ | 27,383,615 | $ | 27,527,843 | $ | 27,086,505 | $ | 26,557,315 | $ | 25,636,732 | ||||||||||||||
8
CHARTER ONE FINANCIAL, INC.
AVERAGE BALANCE SHEET, YIELDS AND COSTS
(unaudited)
Three Months Ended | ||||||||||||||||||||||||
3/31/03 | 12/31/02 | 9/30/02 | 6/30/02 | 3/31/02 | ||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Average balance sheet data: | ||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
Loans and leases | $ | 25,851,471 | $ | 26,690,752 | $ | 25,460,404 | $ | 24,838,010 | $ | 25,530,842 | ||||||||||||||
Mortgage-backed securities | 13,137,545 | 11,218,473 | 10,041,928 | 10,127,245 | 8,257,013 | |||||||||||||||||||
Investment securities | 210,920 | 212,698 | 186,249 | 156,998 | 150,619 | |||||||||||||||||||
Other interest-earning assets | 762,760 | 725,937 | 979,454 | 1,028,371 | 846,552 | |||||||||||||||||||
Total interest-earning assets | 39,962,696 | 38,847,860 | 36,668,035 | 36,150,624 | 34,785,026 | |||||||||||||||||||
Allowance for loan and lease losses | (327,090 | ) | (292,981 | ) | (267,486 | ) | (257,591 | ) | (255,109 | ) | ||||||||||||||
Noninterest-earning assets(1) | 3,150,359 | 2,946,801 | 2,968,951 | 2,767,624 | 2,954,656 | |||||||||||||||||||
Total assets | $ | 42,785,965 | $ | 41,501,680 | $ | 39,369,500 | $ | 38,660,657 | $ | 37,484,573 | ||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
Checking accounts | $ | 7,541,679 | $ | 6,801,571 | $ | 6,283,029 | $ | 5,883,423 | $ | 6,137,213 | ||||||||||||||
Money market and savings accounts | 7,929,274 | 8,579,110 | 8,378,267 | 8,519,541 | 6,780,737 | |||||||||||||||||||
Certificates of deposit | 9,562,013 | 9,898,021 | 9,831,050 | 10,093,412 | 10,448,328 | |||||||||||||||||||
Total interest-bearing deposits | 25,032,966 | 25,278,702 | 24,492,346 | 24,496,376 | 23,366,278 | |||||||||||||||||||
Federal Home Loan Bank advances | 10,410,188 | 9,026,637 | 7,944,811 | 7,878,506 | 8,071,957 | |||||||||||||||||||
Other borrowings | 866,495 | 945,945 | 929,957 | 584,882 | 460,700 | |||||||||||||||||||
Total interest-bearing liabilities | 36,309,649 | 35,251,284 | 33,367,114 | 32,959,764 | 31,898,935 | |||||||||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||||||||
Demand deposit accounts | 2,017,036 | 2,024,854 | 1,789,713 | 1,743,736 | 1,695,741 | |||||||||||||||||||
Other noninterest-bearing liabilities | 1,266,385 | 1,175,213 | 1,173,108 | 1,017,623 | 997,966 | |||||||||||||||||||
Total noninterest-bearing liabilities | 3,283,421 | 3,200,067 | 2,962,821 | 2,761,359 | 2,693,707 | |||||||||||||||||||
Total liabilities | 39,593,070 | 38,451,351 | 36,329,935 | 35,721,123 | 34,592,642 | |||||||||||||||||||
Shareholders’ equity | 3,192,895 | 3,050,329 | 3,039,565 | 2,939,534 | 2,891,931 | |||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 42,785,965 | $ | 41,501,680 | $ | 39,369,500 | $ | 38,660,657 | $ | 37,484,573 | ||||||||||||||
Yields and costs during period: | ||||||||||||||||||||||||
Weighted average yield: | ||||||||||||||||||||||||
Loans and leases(2) | 5.86 | % | 6.26 | % | 6.43 | % | 6.69 | % | 6.73 | % | ||||||||||||||
Mortgage-backed securities | 4.80 | 5.06 | 5.81 | 6.08 | 6.10 | |||||||||||||||||||
Investment securities | 5.87 | 5.70 | 6.44 | 6.84 | 8.05 | |||||||||||||||||||
Other interest-earning assets | 3.87 | 4.41 | 3.89 | 3.65 | 3.74 | |||||||||||||||||||
Total interest-earning assets | 5.48 | 5.88 | 6.19 | 6.43 | 6.51 | |||||||||||||||||||
Weighted average cost(3): | ||||||||||||||||||||||||
Checking accounts | 1.65 | 1.92 | 2.13 | 2.08 | 2.40 | |||||||||||||||||||
Money market and savings accounts | 1.55 | 1.93 | 2.12 | 2.37 | 2.23 | |||||||||||||||||||
Certificates of deposit | 3.09 | 3.19 | 3.32 | 3.53 | 3.76 | |||||||||||||||||||
Total interest-bearing deposits | 2.17 | 2.42 | 2.61 | 2.78 | 2.96 | |||||||||||||||||||
Federal Home Loan Bank advances | 3.88 | 4.64 | 5.18 | 5.29 | 5.21 | |||||||||||||||||||
Other borrowings | 6.10 | 5.74 | 5.97 | 6.74 | 6.51 | |||||||||||||||||||
Total interest-bearing liabilities | 2.75 | 3.07 | 3.31 | 3.45 | 3.58 | |||||||||||||||||||
Interest rate spread | 2.73 | 2.81 | 2.88 | 2.98 | 2.93 | |||||||||||||||||||
Net yield on interest-earning assets | 2.99 | 3.07 | 3.17 | 3.30 | 3.26 |
(1) | Includes mark-to-market adjustments on securities available for sale. | |
(2) | Excludes impact of related tax benefits. | |
(3) | Includes the annualized effect of interest rate risk management instruments. |
9
CHARTER ONE FINANCIAL, INC.
LOAN AND LEASE ACTIVITY
(unaudited)
Three Months Ended | ||||||||||||||||||||||||
3/31/03 | 12/31/02 | 9/30/02 | 6/30/02 | 3/31/02 | ||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Originations: | ||||||||||||||||||||||||
Real estate: | ||||||||||||||||||||||||
Permanent: | ||||||||||||||||||||||||
One-to-four family | $ | 3,095,718 | $ | 3,440,287 | $ | 2,481,022 | $ | 1,974,839 | $ | 2,657,994 | ||||||||||||||
Multifamily | 51,440 | 48,281 | 49,187 | 23,979 | 35,719 | |||||||||||||||||||
Commercial | 90,213 | 62,335 | 48,601 | 34,686 | 92,088 | |||||||||||||||||||
Total permanent loans | 3,237,371 | 3,550,903 | 2,578,810 | 2,033,504 | 2,785,801 | |||||||||||||||||||
Construction: | ||||||||||||||||||||||||
One-to-four family | 3,499 | 7,996 | 5,748 | 7,941 | 14,031 | |||||||||||||||||||
Multifamily | 19,283 | 40,408 | 13,950 | — | 24,988 | |||||||||||||||||||
Commercial | 10,830 | 53,469 | 29,385 | 15,489 | 66,234 | |||||||||||||||||||
Total construction loans | 33,612 | 101,873 | 49,083 | 23,430 | 105,253 | |||||||||||||||||||
Total real estate loans originated | 3,270,983 | 3,652,776 | 2,627,893 | 2,056,934 | 2,891,054 | |||||||||||||||||||
Retail consumer | 1,079,290 | 1,205,611 | 948,632 | 938,328 | 998,727 | |||||||||||||||||||
Automobile | 981,114 | 916,539 | 1,012,926 | 781,763 | 684,045 | |||||||||||||||||||
Consumer finance | 101,927 | 100,568 | 73,931 | 55,338 | 56,083 | |||||||||||||||||||
Leases | 101,571 | 200,083 | 110,428 | 117,544 | 93,041 | |||||||||||||||||||
Corporate banking | 448,326 | 451,915 | 512,600 | 399,173 | 353,640 | |||||||||||||||||||
Total loans and leases originated | 5,983,211 | 6,527,492 | 5,286,410 | 4,349,080 | 5,076,590 | |||||||||||||||||||
Acquired through business combinations and purchases | 3,765 | 4,316 | 2,637 | 206,640 | 4,715 | |||||||||||||||||||
Sales and principal reductions: | ||||||||||||||||||||||||
Loans sold | 763,051 | 742,255 | 527,011 | 481,161 | 644,097 | |||||||||||||||||||
Loans exchanged for mortgage-backed securities | 3,419,116 | 1,600,962 | 809,167 | 1,539,682 | 2,717,271 | |||||||||||||||||||
Principal reductions | 2,993,773 | 3,554,745 | 2,894,793 | 2,447,093 | 2,921,080 | |||||||||||||||||||
Total sales and principal reductions | 7,175,940 | 5,897,962 | 4,230,971 | 4,467,936 | 6,282,448 | |||||||||||||||||||
Increase (decrease) before net items | $ | (1,188,964 | ) | $ | 633,846 | $ | 1,058,076 | $ | 87,784 | $ | (1,201,143 | ) | ||||||||||||
LOAN AND LEASE PORTFOLIO
(unaudited)
3/31/03 | 12/31/02 | 9/30/02 | 6/30/02 | 3/31/02 | ||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Loan and lease portfolio, net(1): | ||||||||||||||||||||||||
One-to-four family: | ||||||||||||||||||||||||
Permanent: | ||||||||||||||||||||||||
Fixed rate | $ | 5,506,314 | $ | 5,869,554 | $ | 5,942,919 | $ | 5,556,239 | $ | 5,695,007 | ||||||||||||||
Adjustable rate | 2,546,426 | 2,437,166 | 2,694,956 | 2,584,413 | 2,816,726 | |||||||||||||||||||
Construction | 412,973 | 427,729 | 427,871 | 414,716 | 397,838 | |||||||||||||||||||
8,465,713 | 8,734,449 | 9,065,746 | 8,555,368 | 8,909,571 | ||||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||
Multifamily | 920,295 | 953,688 | 1,017,393 | 1,036,049 | 1,119,565 | |||||||||||||||||||
Commercial | 1,340,272 | 1,307,593 | 1,313,243 | 1,321,438 | 1,311,263 | |||||||||||||||||||
2,260,567 | 2,261,281 | 2,330,636 | 2,357,487 | 2,430,828 | ||||||||||||||||||||
Consumer: | ||||||||||||||||||||||||
Retail | 4,173,080 | 5,494,453 | 5,008,393 | 4,855,164 | 4,747,254 | |||||||||||||||||||
Automobile | 5,934,502 | 5,606,329 | 5,281,731 | 4,826,370 | 4,582,136 | |||||||||||||||||||
Consumer finance | 1,005,077 | 984,772 | 973,981 | 976,446 | 1,012,168 | |||||||||||||||||||
11,112,659 | 12,085,554 | 11,264,105 | 10,657,980 | 10,341,558 | ||||||||||||||||||||
Business: | ||||||||||||||||||||||||
Leases | 2,125,905 | 2,133,468 | 2,028,687 | 2,026,955 | 2,022,104 | |||||||||||||||||||
Corporate banking | 1,368,069 | 1,318,003 | 1,242,869 | 1,213,789 | 1,070,610 | |||||||||||||||||||
3,493,974 | 3,451,471 | 3,271,556 | 3,240,744 | 3,092,714 | ||||||||||||||||||||
Loans and leases before allowance for loan and lease losses | 25,332,913 | 26,532,755 | 25,932,043 | 24,811,579 | 24,774,671 | |||||||||||||||||||
Allowance for loan and lease losses | (355,926 | ) | (328,017 | ) | (292,800 | ) | (267,155 | ) | (258,605 | ) | ||||||||||||||
Loans and leases, net(1) | $ | 24,976,987 | $ | 26,204,738 | $ | 25,639,243 | $ | 24,544,424 | $ | 24,516,066 | ||||||||||||||
Portfolio of loans serviced for others | $ | 18,713,649 | $ | 16,893,609 | $ | 16,840,025 | $ | 16,889,298 | $ | 15,855,010 |
(1) | Includes loans held for sale. |
10
CHARTER ONE FINANCIAL, INC.
ALLOWANCE FOR LOAN AND LEASE LOSSES
(unaudited)
Three Months Ended | |||||||||||||||||||||||||
3/31/03 | 12/31/02 | 9/30/02 | 6/30/02 | 3/31/02 | |||||||||||||||||||||
�� | (Dollars in thousands) | ||||||||||||||||||||||||
Allowance for loan and lease losses: | |||||||||||||||||||||||||
Balance, beginning of period | $ | 328,017 | $ | 292,800 | $ | 267,155 | $ | 258,605 | $ | 255,478 | |||||||||||||||
Provision for loan and lease losses | 61,471 | 60,314 | 47,695 | 55,277 | 28,717 | ||||||||||||||||||||
Acquired through business combination | — | — | — | 3,184 | — | ||||||||||||||||||||
Loans and leases charged off: | |||||||||||||||||||||||||
One-to-four family | (670 | ) | (1,127 | ) | (643 | ) | (3,056 | ) | (976 | ) | |||||||||||||||
Commercial real estate | (500 | ) | (144 | ) | (290 | ) | (117 | ) | (801 | ) | |||||||||||||||
Retail consumer | (3,478 | ) | (3,004 | ) | (2,308 | ) | (5,530 | ) | (2,258 | ) | |||||||||||||||
Automobile | (16,450 | ) | (15,941 | ) | (16,429 | ) | (29,675 | ) | (16,920 | ) | |||||||||||||||
Consumer finance | (4,537 | ) | (5,785 | ) | (5,160 | ) | (11,628 | ) | (3,822 | ) | |||||||||||||||
Leases | (6,061 | ) | (88 | ) | (519 | ) | (1,801 | ) | (460 | ) | |||||||||||||||
Corporate banking | (7,245 | ) | (5,799 | ) | (4,776 | ) | (2,014 | ) | (4,023 | ) | |||||||||||||||
Total charge-offs(1) | (38,941 | ) | (31,888 | ) | (30,125 | ) | (53,821 | ) | (29,260 | ) | |||||||||||||||
Recoveries: | |||||||||||||||||||||||||
One-to-four family | 17 | 42 | 881 | 32 | 2 | ||||||||||||||||||||
Commercial real estate | 148 | 41 | 488 | 9 | 121 | ||||||||||||||||||||
Retail consumer | 433 | 588 | 484 | 359 | 403 | ||||||||||||||||||||
Automobile | 4,115 | 3,582 | 3,574 | 3,123 | 2,408 | ||||||||||||||||||||
Consumer finance | 105 | 191 | 238 | 32 | 63 | ||||||||||||||||||||
Leases | 393 | 1,897 | 430 | — | — | ||||||||||||||||||||
Corporate banking | 168 | 450 | 1,980 | 355 | 673 | ||||||||||||||||||||
Total recoveries | 5,379 | 6,791 | 8,075 | 3,910 | 3,670 | ||||||||||||||||||||
Net loan and lease charge-offs(1) | (33,562 | ) | (25,097 | ) | (22,050 | ) | (49,911 | ) | (25,590 | ) | |||||||||||||||
Balance, end of period | $ | 355,926 | $ | 328,017 | $ | 292,800 | $ | 267,155 | $ | 258,605 | |||||||||||||||
Net charge-offs to average loans and leases (annualized)(1) | .52 | % | .38 | % | .35 | % | .80 | % | .40 | % |
NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES
(unaudited)
Three Months Ended | |||||||||||||||||||||||
3/31/03 | 12/31/02 | 9/30/02 | 6/30/02 | 3/31/02 | |||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||
Average loans and leases: | |||||||||||||||||||||||
Mortgage | $ | 11,083,170 | $ | 11,659,164 | $ | 11,265,962 | $ | 11,088,463 | $ | 12,137,744 | |||||||||||||
Retail consumer | 4,510,460 | 5,264,728 | 4,969,219 | 4,827,223 | 4,817,681 | ||||||||||||||||||
Automobile | 5,763,289 | 5,447,392 | 5,035,920 | 4,740,267 | 4,479,405 | ||||||||||||||||||
Consumer finance | 995,653 | 980,524 | 972,843 | 1,002,306 | 1,024,748 | ||||||||||||||||||
Leases | 2,145,022 | 2,085,474 | 2,029,779 | 2,036,604 | 2,011,255 | ||||||||||||||||||
Corporate banking | 1,353,877 | 1,253,470 | 1,186,681 | 1,143,147 | 1,060,009 | ||||||||||||||||||
Total average loans and leases | $ | 25,851,471 | $ | 26,690,752 | $ | 25,460,404 | $ | 24,838,010 | $ | 25,530,842 | |||||||||||||
Net charge-offs to average loans and leases (annualized)(1): | |||||||||||||||||||||||
Mortgage | .04 | % | .04 | % | (.02 | )% | .11 | % | .05 | % | |||||||||||||
Retail consumer | .27 | .18 | .15 | .43 | .15 | ||||||||||||||||||
Automobile | .86 | .91 | 1.02 | 2.24 | 1.30 | ||||||||||||||||||
Consumer finance | 1.78 | 2.28 | 2.02 | 4.63 | 1.47 | ||||||||||||||||||
Leases | 1.06 | (.35 | ) | .02 | .35 | .09 | |||||||||||||||||
Corporate banking | 2.09 | 1.71 | .94 | .58 | 1.26 | ||||||||||||||||||
Total | .52 | % | .38 | % | .35 | % | .80 | % | .40 | % | |||||||||||||
(1) | Includes $27.3 million in net charge-offs recorded in the second quarter of 2002 in conjunction with Charter One’s adoption of a new loan charge-off policy in which consumer loans are charged off based upon delinquency, repossession and in certain cases, at the point of bankruptcy discharge. Previously, Charter One’s policy was to record charge-offs of loans secured by one-to-four family real estate at the point of foreclosure and automobile loans at the point of repossessed collateral disposition. This new policy will neither increase nor decrease ultimate net loan charge-offs. It simply accelerates the timing of the recognition of the loss on these consumer loans. This new policy was implemented prospectively and as such, prior periods have not been restated. Management believes the changes to this policy conforms Charter One’s charge-off methodology to that of its commercial banking peers. |
11
CHARTER ONE FINANCIAL, INC.
NONPERFORMING AND UNDERPERFORMING ASSETS
(unaudited)
3/31/03 | 12/31/02 | 9/30/02 | 6/30/02 | 3/31/02 | ||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Nonperforming assets(1): | ||||||||||||||||||||||||
Nonaccrual loans and leases: | ||||||||||||||||||||||||
Real estate mortgage loans: | ||||||||||||||||||||||||
One-to-four family(2) | $ | 27,867 | $ | 27,904 | $ | 31,528 | $ | 34,641 | $ | 82,721 | ||||||||||||||
Multifamily and commercial | 5,591 | 5,369 | 6,621 | 4,640 | 15,178 | |||||||||||||||||||
Construction and land | 8,015 | 9,885 | 10,598 | 11,273 | 12,713 | |||||||||||||||||||
Total real estate mortgage loans | 41,473 | 43,158 | 48,747 | 50,554 | 110,612 | |||||||||||||||||||
Retail consumer(2) | 12,046 | 13,937 | 14,128 | 12,092 | 17,323 | |||||||||||||||||||
Automobile | — | — | — | — | — | |||||||||||||||||||
Consumer finance(2) | 42,562 | 40,227 | 38,403 | 40,313 | 69,259 | |||||||||||||||||||
Leases | 15,264 | 6,211 | 7,964 | 8,958 | 2,256 | |||||||||||||||||||
Corporate banking | 42,068 | 39,098 | 37,230 | 19,807 | 21,548 | |||||||||||||||||||
Total nonaccrual loans and leases | 153,413 | 142,631 | 146,472 | 131,724 | 220,998 | |||||||||||||||||||
Less government guaranteed loans(1) | — | — | — | — | 21,789 | |||||||||||||||||||
Total nonaccrual loans net of government guaranteed loans | 153,413 | 142,631 | 146,472 | 131,724 | 199,209 | |||||||||||||||||||
Restructured real estate mortgage loans | 494 | 501 | 1,149 | 1,159 | 1,169 | |||||||||||||||||||
Total nonperforming loans and leases | 153,907 | 143,132 | 147,621 | 132,883 | 200,378 | |||||||||||||||||||
Real estate and other collateral owned(3) | 40,020 | 40,776 | 40,270 | 40,186 | 53,291 | |||||||||||||||||||
Total nonperforming assets | $ | 193,927 | $ | 183,908 | $ | 187,891 | $ | 173,069 | $ | 253,669 | ||||||||||||||
Ratio of (excluding government guaranteed loans): | ||||||||||||||||||||||||
Nonperforming loans and leases to total loans and leases | .62 | % | .55 | % | .58 | % | .54 | % | .82 | % | ||||||||||||||
Nonperforming assets to total assets | .45 | .44 | .47 | .44 | .67 | |||||||||||||||||||
Nonperforming assets to total loans, leases and real estate and other collateral owned | .78 | .70 | .73 | .70 | 1.03 | |||||||||||||||||||
Allowance for loan and lease losses to: | ||||||||||||||||||||||||
Nonperforming loans and leases | 231.26 | 229.17 | 198.35 | 201.05 | 129.06 | |||||||||||||||||||
Total loans and leases before allowance | 1.40 | 1.24 | 1.13 | 1.08 | 1.04 | |||||||||||||||||||
Accruing loans and leases delinquent more than 90 days(1): | ||||||||||||||||||||||||
Real estate mortgage loans: | ||||||||||||||||||||||||
One-to-four family | $ | 23,507 | $ | 25,643 | $ | 24,854 | $ | 21,781 | $ | — | ||||||||||||||
Multifamily and commercial | — | — | — | 944 | — | |||||||||||||||||||
Construction and land | — | — | — | — | — | |||||||||||||||||||
Total real estate mortgage loans | 23,507 | 25,643 | 24,854 | 22,725 | — | |||||||||||||||||||
Retail consumer | 3,229 | 4,758 | 5,630 | 4,362 | 3,734 | |||||||||||||||||||
Automobile | 3,579 | 3,621 | 2,595 | 2,211 | 5,756 | |||||||||||||||||||
Consumer finance | 27,395 | 26,739 | 25,269 | 19,470 | — | |||||||||||||||||||
Leases | 181 | 19 | — | 219 | 716 | |||||||||||||||||||
Corporate banking | 471 | 1,536 | 1,955 | 3,330 | 966 | |||||||||||||||||||
Total accruing loans and leases delinquent more than 90 days | 58,362 | 62,316 | 60,303 | 52,317 | 11,172 | |||||||||||||||||||
Less government guaranteed loans(1) | — | — | — | — | 1,600 | |||||||||||||||||||
Total accruing loans and leases delinquent more than 90 days | $ | 58,362 | $ | 62,316 | $ | 60,303 | $ | 52,317 | $ | 9,572 | ||||||||||||||
Total underperforming assets | $ | 252,289 | $ | 246,224 | $ | 248,194 | $ | 225,386 | $ | 263,241 | ||||||||||||||
Ratio of (excluding government guaranteed loans): | ||||||||||||||||||||||||
Underperforming assets to total assets | .58 | % | .59 | % | .62 | % | .57 | % | .70 | % | ||||||||||||||
Underperforming assets to total loans, leases and real estate and other collateral owned | 1.01 | .94 | .97 | .92 | 1.07 |
(1) | Effective June 30, 2002, amounts exclude loans guaranteed by the Federal Housing Administration or Veterans’ Administration. Prior periods have not been restated. | |
(2) | Effective June 30, 2002, Charter One adopted a new accrual policy in which consumer loans secured by residential real estate are placed on nonaccrual at six payments past due as long as the loan is well secured and in the process of collection. This new policy was implemented prospectively and as such, prior periods have not been restated. The change in the accrual policy did not have a material impact on interest income. Management believes the changes to this policy conforms Charter One’s accrual methodology to that of its commercial banking peers. | |
(3) | Effective for the period ended June 30, 2002, Charter One adopted a new loan charge-off policy in which automobile loans are charged off based upon repossession and in certain cases, at the point of bankruptcy discharge. Any automobile loan reaching 120 days delinquent will be charged off completely. Previously, Charter One’s policy was to record charge-offs of loans secured by automobiles at the point of repossessed collateral disposition. This new policy was implemented prospectively and as such, prior periods have not been restated. Management believes the changes to this policy conforms Charter One’s charge-off methodology to that of its commercial banking peers. |
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