FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1997 Commission file number
2-99779
National Consumer Cooperative Bank
(Exact name of registrant as specified in its charter)
United States of America 52-1157795
(12 U.S.C. Section 3001 et seq.) (I.R.S. Employer
(State or other jurisdiction of Identification No.)
incorporation or organization)
1401 Eye Street, NW, Suite 700, Washington, D.C. 20005
(Address of principal executive offices)
Registrant's telephone number, including area code (202)336-7700
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes x No________.
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Outstanding at June 30, 1997
Class C 217,531
(Common stock, $100.00 par value)
Class B 784,060
(Common stock, $100.00 par value)
Class D 3
(Common stock, $100.00 par value)
National Consumer Cooperative Bank
(doing business as National Cooperative Bank)
and Subsidiaries
INDEX
PART I FINANCIAL INFORMATION Page No.
Item 1 Consolidated balance sheets -
June 30, 1997 and December 31, 1996..... 3
Consolidated statements of income - for
the three and six months ended June 30,
1997 and 1996........................... 4
Consolidated statements of cash flows -
for the six months ended June 30, 1997
and 1996................................ 5-6
Condensed notes to the consolidated
financial statements - June 30, 1997.... 7-10
Item 2 Management discussion and analysis of
financial condition and results of operations
- for the three and six months ended June 30,
1997 and 1996................................ 11-21
PART II OTHER INFORMATION
Item 2 Changes in Securities......................... 22
Item 6 Exhibits and Reports on Form 8-K.............. 22
Exhibit 10.5 - Third Amended and Restated
Loan Agreement with Fleet Bank as Agent
Exhibit 10.8 - Master Shelf Agreement with
Prudential Insurance Co. of America et al
(June 1997)
Exhibit 27 - Financial Data Schedule
NATIONAL COOPERATIVE BANK
CONSOLIDATED BALANCE SHEETS
June 30, 1997 and December 31, 1996
(Unaudited)
1997 1996
Assets
Cash and cash equivalents $ 29,065,080 $ 17,150,534
Restricted cash 8,348,703 8,348,703
Investment securities
Available-for-sale 32,538,798 30,337,100
Held-to-maturity 2,795,783 2,946,425
Loans and lease financing 597,173,872 565,824,579
Loans held for sale 161,805,300 184,269,872
Less: Allowance for loan losses (16,882,700) (15,504,510)
742,096,472 734,589,941
Excess servicing 30,230,415 30,758,057
Premises and equipment, net 2,093,835 2,257,362
Other assets 10,783,376 12,947,458
Total assets $857,952,462 $839,335,580
Liabilities and Members' Equity
Liabilities
Deposits $ 79,890,436 $ 88,620,002
Patronage dividends payable in cash 6,800,765 4,721,600
Other liabilities 13,938,112 11,332,033
Borrowings
Short-term 223,700,000 224,500,000
Long-term 222,747,210 202,137,077
446,447,210 426,637,077
Subordinated debt 182,818,155 182,853,313
Total borrowings 629,265,365 609,490,390
Total liabilities 729,894,678 714,164,025
Members' equity
Common stock
Class B 78,406,021 78,600,416
Class C 21,753,074 21,751,584
Class D 300 300
Retained earnings
Allocated 8,320,163 5,770,844
Unallocated 19,682,724 19,113,185
Unrealized loss on investment
securities available-for-sale (104,498) (64,774)
Total members' equity 128,057,784 125,171,555
Total liabilities and members'
equity $857,952,462 $839,335,580
NATIONAL COOPERATIVE BANK
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Six Months Ended Three Months Ended
June 30, June 30,
1997 1996 1997 1996
Interest income
Loans and lease financing $30,888,106 $26,522,790 $15,516,939 $13,193,649
Investment securities 2,206,644 1,883,515 1,121,187 924,667
Total interest income 33,094,750 28,406,305 16,638,126 14,118,316
Interest expense
Deposits 2,017,134 2,036,792 984,181 1,001,913
Short-term borrowings 5,625,341 3,371,843 2,734,477 1,518,009
Long-term debt, other
borrowings and
subordinated debt 13,042,669 11,238,815 6,770,374 5,673,139
Total interest expense 20,685,144 16,647,450 10,489,032 8,193,061
Net interest income 12,409,606 11,758,855 6,149,094 5,925,255
Provision for loan losses 1,389,000 650,000 687,000 330,000
Net interest income after
provision for losses 11,020,606 11,108,855 5,462,094 5,595,255
Non-interest income
Gain on sale of loans 1,741,309 4,937,477 332,882 4,806,209
Loan and deposit
servicing fees 1,111,943 1,027,085 556,747 545,007
Other 2,883,305 2,321,370 1,335,844 1,394,167
Total non-interest
income 5,736,557 8,285,932 2,225,473 6,745,383
Non-interest expenses
Compensation and
employee benefits 5,708,107 5,311,691 3,016,036 2,646,487
Contractual services 1,726,286 2,069,113 883,067 980,732
Occupancy and equipment 1,887,376 1,754,839 935,968 1,209,987
Contribution to NCB
Development Corporation 250,000 250,000 125,000 125,000
Other 1,093,477 953,883 621,078 313,243
Total non-interest
expenses 10,665,246 10,339,526 5,581,149 5,275,449
Income before income taxes 6,091,917 9,055,261 2,106,418 7,065,189
Provision for income taxes 739,532 451,611 402,385 222,274
Net income $ 5,352,385 $ 8,603,650 $ 1,704,033 $ 6,842,915
Distribution of net income
Patronage dividends $ 5,352,385 $ 8,518,676 $ 1,704,033 $ 6,757,941
Retained earnings 84,974 84,974
$ 5,352,385 $ 8,603,650 $ 1,704,033 $ 6,842,915
NATIONAL COOPERATIVE BANK
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the six months ended June 30, 1997 1996
Cash flows from operating activities
Net income $ 5,352,385 $ 8,603,656
Adjustments to reconcile net income to net
cash provided by (used in) operating activities
Provision for loan losses 1,389,000 650,000
Depreciation and amortization 2,791,804 2,445,833
Gain on sale of assets (1,741,309) (4,816,579)
Loans originated for sale (85,561,715) (139,255,443)
Proceeds from sale of loans held for sale 134,011,720 118,777,927
Decrease (increase) in other assets 2,108,595 (6,625,828)
Increase in other liabilities 2,181,056 2,472,331
Net cash provided by (used in) operating
activities 60,531,536 (17,748,103)
Cash flows from investing activities
Purchases of investment securities
Available-for-sale (4,736,872) (7,044,371)
Held-to-maturity - (1,007,783)
Proceeds from maturities and sales
of investment securities
Available-for-sale 2,478,010 6,075,132
Held-to-maturity 150,642 -
Net(increase)in loans and lease financing (57,543,936) (2,256,647)
Proceeds from sale of portfolio loans - 18,812,435
Purchases of premises and equipment (225,418) (580,296)
Net cash (used in) provided by investing
activities (59,877,574) 13,998,470
Cash flows from financing activities
Net (decrease) increase in deposits (8,729,566) 3,587,917
Net (decrease) in short-term borrowings (800,000) (36,500,000)
Proceeds from issuance of long-term debt 40,000,000 32,500,000
Repayment on long-term debt (19,000,000) -
Sale of common stock 300 -
Redemption of common stock - (3,000)
Dividends paid (210,150) -
Net cash provided by (used in) financing
activities 11,260,584 (415,083)
Increase (decrease) in cash and cash equivalents 11,914,546 (4,164,716)
Cash and cash equivalents, beginning of year 17,150,534 21,289,376
Cash and cash equivalents, end of period $ 29,065,080 $ 17,124,660
NATIONAL COOPERATIVE BANK
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Supplemental schedule of noncash investing and financing activities:
For the six months ended June 30, 1997 1996
Unrealized loss on investment
available-for-sale $ (41,648) $ (622,968)
Interest paid 19,962,864 16,597,351
Income taxes paid 705,554 548,012
Loans charged off 22,327 708,052
NATIONAL COOPERATIVE BANK
CONDENSED NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
The accompanying financial statements have been prepared
without audit and reflect all adjustments (consisting only of
normal recurring adjustments) which were, in the opinion of
management, necessary to a fair statement of the results of the
interim period presented. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted. Accordingly, these condensed financial
statements should be read in conjunction with the financial
statements and the notes thereto included in NCB's most current
annual report. The results of operations for the interim periods
are not necessarily indicative of the results of the entire year.
Certain prior year amounts have been reclassified to conform
to the 1997 presentation.
1. Cash, Cash Equivalents and Investment Securities
As of June 30, 1997, NCB's portfolio of investment securities,
cash and cash equivalents had an average adjusted maturity of 987
days with interest rates in those portfolios varying from 5.00% to
8.50%.
Cash and Investments Investments
Cash Available- Held-to-
Equivalents for-Sale Maturity
Cash $ 4,878,242 $ - $ -
Federal funds 4,337,990 - -
Money market securities 13,422,578 - -
Mutual funds - 2,054,169 -
Mortgage-backed securities - - 2,795,783
Eurodollar certificates
and repurchase agreements 6,426,270 - -
Corporate bonds - 11,587,180 -
U.S. Treasury and
Agency obligations - 18,897,449 -
$29,065,080 $32,538,798 $2,795,783
At June 30, 1997, the investments in the available-for-sale
portfolio were recorded at aggregate fair value. Restricted cash
of $8,348,703 is held by a trustee for the benefit of certificate
holders in the event of loss on certain loans sold of $37,300,000
and $92,623,000 in 1993 and 1992, respectively. The restricted
cash will become available to NCB I, Inc., as the principal balance
of the respective loans decreases. The loans sold have original
maturities of ten to fifteen years.
2. Loans and Lease Financing
Loans and leases outstanding by category at June 30, 1997 were:
Commercial loans $365,744,112
Lease financing 15,164,766
Real estate loans
Residential 371,085,871
Commercial 6,984,423
$758,979,172
At June 30, 1997 and December 31, 1996 real estate loans held
for sale were $161.8 million and $184.3 million, respectively.
3. Impaired Assets
Loans that became impaired after January 1, 1996 totaled
$6,616,343 and $2,071,399 at June 30, 1997 and 1996, respectively.
The 1997 impaired loans are comprised of nonaccrual loans and a
restructured loan totaling $5,577,108 and $1,039,235, respectively.
The 1996 impaired loans are comprised of nonaccrual loans and a
restructured loan totaling $1,370,097 and $701,302, respectively.
A specific allowance of $1,594,418 and $245,000 has been set aside
for these loans at June 30, 1997 and 1996, respectively, as
management's best estimate of their fair value is less than the
recorded investment in the loans. During 1997 and 1996, the
interest collected on the nonaccrual loans was applied to reduce
the outstanding principal. Interest earned on the restructured
loans totalled $143,522 and $26,856 during the first six months
ended June 30, 1997 and 1996, respectively.
At June 30, 1997 there were no commitments to lend additional
funds to borrowers whose loans are non-performing.
At June 30, 1997 and 1996, NCB had real estate acquired through
foreclosure of $208,338 and $546,559, respectively, which are
classified as other assets.
4. Allowance for Loan Losses
The following is a summary of the activity in the allowance for
loan losses during the six months ended June 30, 1997:
Balance at January 1, 1997 $15,504,510
Provision for loan losses 1,389,000
Charge-offs (22,329)
Recoveries of loans previously
charged off 11,519
Balance at June 30, 1997 $16,882,700
The allowance for loan losses as a percentage of average loans
and lease financing at June 30, 1997 was 2.4%.
5. New Financial Accounting Standards
In June, 1996, Statement of Financial Accounting Standards ("SFAS")
No. 125, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" was issued. SFAS No. 125 provides accounting
and reporting standards for transfers and servicing of financial assets and
extinguishments of liabilities, based on a financial-components approach
that focuses on control. Under this approach, after a transfer of financial
assets, financial and servicing assets are recognized if controlled or
liabilities are recognized if incurred. Financial and servicing assets are
removed from the statement of income when control has been surrendered and
liabilities are removed when extinguished. SFAS NO. 125 was effective and
adoptive on January 1, 1997 and was applied prospectively. The Corporation
did not experience any material effect on its financial position from this
implementation.
In June, 1997, SFAS Nos. 130 was issued-"Reporting Comprehensive Income."
SFAS No. 130 requires that certain financial activity typically disclosed in
members' equity be reported in the statements of income as an adjustment
to net income in determining comprehensive income. The only item applicable
to the Bank would include gain/loss on securities available for sale. Items
indentified as comprehensive income should be reported also in the statements
of income and the statements of changes in members' equity, under separate
captions. SFAS No. 130 is effective for the Corporation on January 1, 1998,
including the restatement of prior periods reported consistent with this
pronouncement. The Corporation does not anticipate any material financial
impact from the implementation of SFAS No. 130.
NATIONAL COOPERATIVE BANK
MANAGEMENT DISCUSSION AND ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
SUMMARY
NCB's net income for the six months ended June 30, 1997 was $5.4
million. This was a 37.8% or $3.3 million decrease compared with
$8.6 million for the six months ended June 30, 1996. The variance
resulted primarily from a decrease in non-interest income of $2.5
million and an increase in the provision for loan losses in the
amount of $739 thousand. For the three month period, net income
declined to $1.7 million from $6.8 million due primarily to a
decline in non-interest income.
Total assets were $858.0 million at June 30, 1997, representing
growth of $18.6 million or 2.2% from $839.3 million at December 31,
1996. This growth resulted from increases in loan originations and
cash and cash equivalents.
The return on average total assets was 1.29% for the first six
months of 1997 compared with 2.47% for the same period in 1996.
The return on average equity for the first six months of 1997 and
1996 was 8.41% and 14.33%, respectively.
NET INTEREST INCOME
Net interest income increased 5.5% or $651 thousand for the first
six months of 1997 compared with the same period a year ago. As
shown on Table 2, the increase in net interest income related to
volume was $604 thousand while the increase related to changes in
interest rates was $47 thousand.
For the three months ending June 30,1997, net interest income
increased 3.8% or $224 thousand from the same period in 1996. As
shown on Table 2A, there was a positive variance of $305 thousand
and a negative variance of $81 thousand related to yield and
volume, respectively.
For the six months ended June 30,1997, interest income went up
$4.7 million to $33.1 million. The average rate on interest
earning assets decreased to 8.46% during the six months ended June
30, 1997 compared with 8.53% in the same period in 1996. The
increase in interest income was mostly due to a higher average
balance of the interest earning assets for the time period. As
shown on Table 2, interest income increased $5.1 million due to
increased volume but decreased $376 thousand due to a drop in
interest rates.
Interest income increased $2.5 million to $16.6 million for the
three months ended June 30, 1997 compared with $14.1 million for
the prior year. The average rate on interest earning assets
increased to 8.54% during the three months ended June 30, 1997
compared with 8.52% in the same period in 1996. As shown on Table
2A, interest income increased $2.5 million due to increased volume
but decreased $12 thousand due to the decreasing rate environment.
Interest expense increased $4.0 million to $20.7 million for the
six months ended June 30, 1997 compared with $16.7 million for the
same period in 1996. The average rate on interest bearing
liabilities increased to 6.14% compared with 5.98%. As shown on
Table 2, a $4.5 million increase in interest expense was volume
related while a $423 thousand decrease was due to declining
interest rates.
For the three month period ended June 30, 1997, interest expense
increased $2.3 million to $10.5 million from $8.2 million a year
ago. The average rate on interest bearing liabilities increased to
6.25% compared with 5.91% in the same period in 1996. As shown on
Table 2A, an increase of $2.6 million in interest expense was
volume related which was partially offset by $317 thousand due to
a decrease in rates.
NON-INTEREST INCOME
Non-interest income for the six months ended June 30, 1997 of
$5.7 million decreased 30.8% or $2.6 million from $8.3 million for
the same period last year. The majority of the decrease was caused
by a lesser amount of asset sales to the secondary market. The
fees and gains on sale of blanket mortgages totalled $4.9 million
in the first half of 1996 compared with $1.7 million in the same
period in 1997. This was partially offset by an increase of $646.8
thousand in servicing fees and other income.
For the three month period ended June 30, non-interest income
declined by $4.5 million from $6.7 million at June 30,1996 to $2.2
million for the same period in the current year. The majority of
the decrease was related to gains on the higher volume of
real estate loans sold during the second quarter of 1996 compared
with same quarter this year.
NON-INTEREST EXPENSES
Non-interest expenses for the six months ended June 30, 1997
increased 3.2% to $10.7 million from $10.3 million for the six
months ended June 30, 1996. Compensation and benefits, the largest
component of non-interest expenses, increased 7.5% or $.4 million
due to a higher employee base at the start of 1997. Occupancy and
equipment expenses increased 7.6% to $1.9 million compared with
$1.8 million of the prior year due to a positive adjustment to the
headquarter's rent in the first quarter of 1996. Non-interest expense,
excluding the voluntary contribution to NCB Development
Corporation, as a percentage of average assets, decreased slightly
to 1.3% for the six months ended June 30, 1997 from 1.5% for the
six months ended June 30,1996.
For the three months ended June 30, 1997, non-interest expenses
increased $306 thousand or 5.8% to $5.6 million from $5.3 million for
the same period in 1996. The increase was primarily attibutable to
the timing of new hires and more comissions paid to loan officers due
to higher loan production which was partially offset by a decrease in
contractual services.
Table 1
Rate Related Assets and Liabilities
(dollars in thousands)
Six Months Ended June 30,
ASSETS 1997 1996
Average Income/ Yields/ Average Income/ Yields/
Balance Expense Rates Balance Expense Rates
Interest earning assets
Real estate loans $346,845 $15,154 8.74% $278,540 $12,764 9.16%
Commercial loans
and leases 370,954 15,734 8.48% 322,475 13,758 8.53%
Total loans and leases 717,799 30,888 8.61% 601,015 26,522 8.83%
Investment securities
and cash equivalents 64,946 2,207 6.80% 64,926 1,884 5.81%
Total interest earning
assets 782,745 33,095 8.46% 665,941 28,406 8.53%
Allowance for loan losses (16,197) (14,784)
Non-interest earning assets
Cash 5,376 2,914
Other assets 55,831 43,136
Total non-interest
earning assets 61,207 46,050
Total assets $827,755 $697,207
LIABILITIES AND MEMBERS' EQUITY
Interest bearing liabilities
Subordinated debt $182,542 5,167 5.66% $182,989 4,690 5.13%
Notes payable 405,611 13,501 6.66% 291,875 9,920 6.80%
Deposits 85,307 2,017 4.73% 81,505 2,037 5.00%
Total interest bearing
liabilities 673,460 20,685 6.14% 556,369 16,647 5.98%
Other liabilities 26,999 20,837
Members' equity 127,296 120,001
Total liabilities and
members' equity $827,755 $697,207
Net interest earning
assets $109,285 $109,572
Net interest revenues and
spread $12,410 2.32% $11,759 2.55%
Net yield on
interest earning assets 3.17% 3.53%
Table 1A
Rate Related Assets and Liabilities
(dollars in thousands)
Three Months Ended June 30,
ASSETS 1997 1996
Average Income/ Yields/ Average Income/ Yields/
Balance Expense Rates Balance Expense Rates
Interest earning assets
Real estate loans $353,275 $ 7,364 8.34% $274,686 $ 6,370 9.28%
Commercial loans
and leases 360,997 8,153 9.03% 321,921 6,823 8.48%
Total loans and leases 714,272 15,517 8.69% 596,607 13,193 8.84%
Investment securities
and cash equivalents 64,917 1,121 6.91% 66,190 925 5.60%
Total interest earning
assets 779,189 16,638 8.54% 662,797 14,118 8.52%
Allowance for loan losses (16,620) (14,880)
Non-interest earning assets
Cash 6,584 3,760
Other assets 53,934 45,299
Total non-interest
earning assets 60,518 49,059
Total assets $823,087 $696,976
LIABILITIES AND MEMBERS' EQUITY
Interest bearing liabilities
Subordinated debt $182,542 2,619 5.74% $182,977 2,275 4.97%
Notes payable 402,500 6,886 6.84% 290,051 4,916 6.78%
Deposits 86,243 984 4.56% 81,935 1,002 4.89%
Total interest bearing
liabilities 671,285 10,489 6.25% 554,963 8,193 5.91%
Other liabilities 24,708 21,023
Members' equity 127,094 120,990
Total liabilities and
members' equity $823,087 $696,976
Net interest earning
assets $107,904 $107,834
Net interest revenues and
spread $ 6,149 2.29% $ 5,925 2.61%
Net yield on
interest earning assets 3.16% 3.58%
Table 2
Change in Net Interest Income
(dollars in thousands)
For the six months ended June 30, 1997 compared to 1996
Increase (decrease) due to changes
in:
Average Average
Volume* Yield Net**
Interest Income
Cash equivalents and
investment securities $ 2 $ 321 $ 323
Commercial loans and leases 2,057 (80) 1,977
Real estate loans 3,007 (617) 2,390
Total interest income 5,066 (376) 4,690
Interest Expense
Deposits 93 (112) (19)
Notes payable 4,380 (799) 3,581
Subordinated debt (11) 488 477
Total interest expense 4,462 (423) 4,039
Net interest income $ 604 $ 47 $ 651
* Average monthly balances
** Changes in interest income and interest expense due to changes
in rate and volume have been allocated to "change in average
volume" and "change in average rate" in proportion to the
absolute dollar amounts in each.
Table 2A
Change in Net Interest Income
(dollars in thousands)
For the three months ended June 30, 1997 compared to 1996
Increase (decrease) due to changes in:
Average Average
Volume* Yield Net**
Interest Income
Cash equivalents and
investment securities $ (17) $ 213 $ 196
Commercial loans and leases 862 468 1,330
Real estate loans 1,687 (693) 994
Total interest income 2,532 (12) 2,520
Interest Expense
Deposits 51 (69) (18)
Notes payable 2,568 (598) 1,970
Subordinated debt (6) 350 344
Total interest expense 2,613 (317) 2,296
Net interest income $ (81) $ 305 $ 224
* Average monthly balances
**Changes in interest income and interest expense due to changes
in rate and volume have been allocated to "change in average
volume" and "change in average rate" in proportion to the
absolute dollar amounts in each.
PROVISION FOR INCOME TAXES
The federal income tax provision is determined on the basis of
non-member income generated by NCB Savings Bank, FSB and reserves
set aside for the retirement of Class A notes and dividends on
Class C stock. NCB's subsidiaries are also subject to varying
levels of state taxation. The federal income tax provision for the
six months ended June 30, 1997 increased by $288 thousand compared
with the prior year's provision of $452 thousand.
CASH, CASH EQUIVALENTS AND INVESTMENT SECURITIES
Cash, cash equivalents and investment securities at June 30, 1997
increased $14.0 million or 23.8% from $58.8 million at year-end
1996 due to margin requirements and loan principal paydowns received
at the end of the month. As a percentage of interest earning assets,
cash, cash equivalents and investment securities increased to 8.7%
at June 30, 1997 from 7.3% at December 31, 1996.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses at June 30, 1997 increased 8.9% to
$16.9 million from $15.5 million at December 31, 1996. The
allowance during the period was impacted by loans charged off, net
of recoveries of loans previously charged off, amounting to $10.8
thousand and the provision of $1.39 million. NCB's provision for
loan losses as a percentage of average loans and leases outstanding
increased to .4% at June 30, 1997 compared with .1% for the same period
in 1996. The increase in the provision is the result of two factors:
1) growth in the real estate and commercial portfolio from the
prior year, and 2) management's assessment that additional
provisions should be recorded due to the current economic
environment.
The loan loss allowance as a percentage of average loans and
leases increased to 2.4% at June 30, 1997 from 2.1% at December 31,
1996. Overall, credit quality remained strong and management
considers the current allowance to be adequate to absorb known and
inherent risks in the loan portfolio.
As shown in Table 3, total nonperforming assets (restructured
and non-accruing loans and real estate owned) increased from $8.1
million at December 31, 1996 to $10.8 million at June 30, 1997.
The increase was caused by two loans that went on non-accrual
during the first six months in 1997. Nonperforming assets as a
percentage of loans and leases outstanding plus real estate owned
were 1.4% at June 30, 1997 compared with 1.1% at year-end 1996.
The allowance for loan losses as a percentage of nonperforming
assets decreased to 156.1% at June 30,1997 from 190.8% at
December 31, 1996.
TABLE 3
Nonperforming assets
(dollars in thousands)
June 30, March 31, Dec. 31, Sept. 31, June 30,
1997 1997 1996 1996 1996
Real estate owned $ 208 $ 377 $ 377 $ 518 $ 547
Non-accruing 5,577 2,731 2,601 1,282 1,370
Restructured 5,028 5,098 5,147 4,115 4,145
Total $10,813 $8,206 $8,125 $5,915 $6,062
INTEREST BEARING LIABILITIES
Interest bearing liabilities
(dollars in thousands)
6/30/97 12/31/96 % Change
Deposits $ 79,890 $ 88,620 (9.8%)
Short term debt 223,700 224,500 (.4%)
Long term debt 222,747 202,137 10.2%
Subordinated debt 182,818 182,853 0.0%
Total $709,155 $698,110 1.6%
Interest bearing liabilities increased by 1.6% to $709.2 million
at June 30, 1997 from $698.1 million at December 31, 1996.
For the first six months of 1997, deposits at NCB Saving Bank,
FSB dropped 9.8% to $79.9 million. The decrease was attributable to
scheduled maturities of certificate of deposits. Average maturity
of these deposits is one year.
At June 30, 1997, total short term and long term borrowings
(including the subordinated debt) increased 4.6% from year-end 1996.
Proceeds from the borrowings were used to fund asset growth.
NCB had approximately $223.7 million outstanding on its short
term facilities. Included in the short term borrowings is $3.7
million from an affiliate and a cooperative customer. Long term
debt increased 10.2% from year-end 1996 due to the issuance of
$40.0 million under the new medium-term note program which was
partially offset by a paydown of $19.0 million in long-term notes.
Unused capacities under the short term and long term facilities of
approximately $85.0 million and $90.0 million, respectively, are
sufficient to meet anticipated commitments during 1997.
Part II Other Information
Item 2. Changes in Securities
(c) During the period covered by this report, NCB sold three
shares of its Class C stock without registration under the
Securities Act of 1933 (the "1933 Act") in reliance on the
exemption from registration provided by section 4 (2) of the 1933
Act. The stock was sold for $100 a share in cash without any
underwriting discounts or commissions to cooperative organizations
eligible to obtain loans from NCB. The stock was not offered to the
general public; the purchasers had access to essentially the same
information that would be contained in a registration statement and
had the capability to evaluate the merits of such an investment.
Item 6. Exhibits and Reports on Form 8-k
(a) The following exhibits are filed as part of this report:
Exhibit 10.5 - Third Amended and Restated Loan Agreement
with Fleet Bank as Agent
Exhibit 10.8 - Master Shelf Agreement with Prudential
Insurance Co. of America et al(June 1997)
Exhibit 27 - Financial Data Schedule
(b) On May 13, 1997, the registrant filed a report on Form 8-K
that reported a change in the Registrant's Certifying Accountant
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
NATIONAL CONSUMER COOPERATIVE BANK
Date:
By: /s/ Richard L. Reed
Richard L. Reed,
Managing Director,
Chief Financial Officer
By: /s/ Marietta J. Orcino
Marietta J. Orcino
Vice President,
Tax & Regulatory Compliance