UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
--------------
COMMISSION FILE NUMBER 1-13157
-------
JSB FINANCIAL, INC.
-------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED ON ITS CHARTER)
DELAWARE 11-3000874
------------------------------- --------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
303 MERRICK ROAD, LYNBROOK, NEW YORK 11563
------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(516) 887-7000
--------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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 such 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.
[X] YES [ ] NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OF COMMON STOCK OUTSTANDING AT MAY 12, 1999
- --------------------- ---------------------------
$.01 PAR VALUE 9,310,116
2
INDEX
PART I - FINANCIAL INFORMATION
Page
Number
------
ITEM 1. Financial Statements - Unaudited
Consolidated Statements of Financial Condition at
March 31, 1999 and December 31, 1998 3
Consolidated Statements of Operations for the Three
Months Ended March 31, 1999 and March 31, 1998 4
Consolidated Statement of Stockholders' Equity for
the Three Months Ended March 31, 1999 5
Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 1999 and March 31, 1998 6 - 7
Notes to the Consolidated Financial Statements 8 - 9
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10 - 17
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 18 - 20
PART II - OTHER INFORMATION
ITEM 1 Legal Proceedings 21
ITEM 2. Changes in Securities 21
ITEM 3. Defaults Upon Senior Securities 21
ITEM 4. Submission of Matters to a Vote of Security Holders 21
ITEM 5. Other Information 21
ITEM 6. Exhibits and Reports on Form 8-K 21
Signatures 22
Exhibit Index 23
Exhibit 11.00 Statement Re: Computation of Per Share Earnings 24
Exhibit 27.00 Financial Data Schedule for the Three Months Ended March 31, 1999 25
3
JSB FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
MARCH 31, DECEMBER 31,
1999 1998
--------- ------------
ASSETS
- ------
Cash and due from banks $ 12,641 $ 13,849
Federal funds sold 46,000 99,000
---------- ----------
Cash and cash equivalents 58,641 112,849
Securities available-for-sale, at estimated fair value 80,196 83,592
Securities held-to-maturity, net (estimated fair value of
$246,458 and $208,906, respectively) 246,208 208,457
Other investments 10,833 8,922
Mortgage loans, net 1,156,725 1,146,915
Other loans, net 21,436 22,744
Premises and equipment, net 18,734 18,340
Interest due and accrued 8,998 8,773
Real estate held for sale and Other real estate ("ORE") 445 785
Other assets 10,932 10,272
---------- ----------
Total Assets $1,613,148 $1,621,649
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Deposits $1,119,444 $1,124,166
Federal Home Loan Bank of New York ("FHLB-NY") advances 50,000 50,000
Advance payments for real estate taxes and insurance 25,572 13,993
Official bank checks outstanding 6,238 11,604
Deferred tax liability, net 24,539 25,476
Accrued expenses and other liabilities 17,180 13,934
---------- ----------
Total Liabilities 1,242,973 1,239,173
---------- ----------
Commitments and Contingencies
STOCKHOLDERS' EQUITY
- --------------------
Preferred stock ($.01 par value, 15,000,000 shares authorized;
none issued) -- --
Common stock ($.01 par value, 65,000,000 shares authorized;
16,000,000 issued; 9,289,462 and 9,505,923 outstanding,
respectively) 160 160
Additional paid-in capital 169,802 168,663
Retained income, substantially restricted 340,189 337,474
Accumulated other comprehensive income:
Net unrealized gain on securities available-for-sale, net of tax 38,963 40,871
Common stock held by Benefit Restoration Plan Trust, at cost
(196,823 and 193,723 shares, respectively) (4,758) (4,477)
Common stock held in treasury, at cost (6,710,538 and 6,494,077
shares, respectively) (174,181) (160,215)
---------- ----------
Total Stockholders' Equity 370,175 382,476
---------- ----------
Total Liabilities and Stockholders' Equity $1,613,148 $1,621,649
========== ==========
<FN>
See accompanying notes to the consolidated financial statements.
</FN>
4
JSB FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED
MARCH 31,
------------------------
1999 1998
------------------------
Interest Income
- ---------------
Mortgage loans, net $22,957 $20,541
Debt and equity securities, net 1,928 3,605
Collateralized mortgage obligations and mortgage-backed securities, net 1,543 1,539
Other loans, net 370 508
Federal funds sold 876 1,205
------- -------
Total Interest Income 27,674 27,398
------- -------
Interest Expense
- ----------------
Deposits 8,719 9,642
FHLB-NY advances 693 -
------- -------
Total Interest Expense 9,412 9,642
------- -------
Net Interest Income 18,262 17,756
Provision for Loan Losses 7 14
------- -------
Net Interest Income After Provision for Loan Losses 18,255 17,742
------- --------
Non-Interest Income
- -------------------
Real estate operations, net 575 77
Loan fees and service charges 1,387 527
Recovery of prior period expenses for troubled loans - 1,000
Miscellaneous income 17 52
------- -------
Total Non-Interest Income 1,979 1,656
------- -------
Non-Interest Expense
- --------------------
Compensation and benefits 4,096 3,794
Occupancy and equipment expenses, net 1,379 1,286
Federal deposit insurance premiums 35 36
Other general and administrative 1,716 1,670
------- -------
Total Non-Interest Expense 7,226 6,786
------- -------
Income Before Provision for Income Taxes 13,008 12,612
Provision for Income Taxes 5,529 4,948
------- --------
Net Income $ 7,479 $ 7,664
======= ========
Earnings and Cash Dividends Per Common Share:
- ---------------------------------------------
Basic earnings per common share $ .80 $ .78
======= ========
Diluted earnings per common share $ .78 $ .75
======= ========
Basic weighted average common shares 9,385 9,886
======= ========
Diluted weighted average common & dilutive potential shares 9,613 10,202
======= ========
Cash dividends per common share $ .45 $ .40
======= ========
Comprehensive Income:
- ---------------------
Net Income $ 7,479 $ 7,664
Other comprehensive income, net of tax
Net unrealized (depreciation) appreciation in securities (1,908) 4,562
------- --------
Comprehensive Income $ 5,571 $ 12,226
======= ========
<FN>
See accompanying notes to the consolidated financial statements.
</FN>
5
JSB FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED
MARCH 31, 1999
------------------
Common Stock (Par value: $.01)
- ------------------------------
Balance at beginning and end of period $ 160
-------------
Additional Paid-in Capital
- --------------------------
Balance at beginning of period 168,663
Net allocation of common stock for Benefit Restoration Plan 281
Tax benefit for stock plans 809
Issuance of common stock for Director's compensation 49
-------------
Balance at end of period 169,802
Retained Income, Substantially Restricted
- -----------------------------------------
Balance at beginning of period 337,474
Net income 7,479
Loss on reissuance of treasury stock (491)
Cash dividends on common stock ($.45) (4,273)
-------------
Balance at end of period 340,189
Accumulated Other Comprehensive Income:
- ---------------------------------------
Balance at beginning of period 40,871
Net unrealized depreciation in securities
available-for-sale, net of tax benefit of $1,487 (1,908)
-------------
Balance at end of period 38,963
-------------
Common Stock Held by Benefit Restoration Plan Trust, at Cost
- ------------------------------------------------------------
Balance at beginning of period (4,477)
Common stock acquired (359)
Common stock distributed 78
-------------
Balance at end of period (4,758)
Common Stock Held in Treasury, at Cost
- --------------------------------------
Balance at beginning of period (160,215)
Common stock reacquired (15,490)
Common stock reissued for options exercised 1,483
Common stock reissued for Director's compensation 41
-------------
Balance at end of period (174,181)
Total Stockholders' Equity $ 370,175
=============
<FN>
See accompanying notes to the consolidated financial statements.
</FN>
6
JSB FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
THREE MONTHS ENDED
MARCH 31,
------------------------------------------
1999 1998
------------------------------------------
Cash flows from operating activities
- ------------------------------------
Net income $ 7,479 $ 7,664
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses 7 14
Decrease in deferred loan fees and discounts, net (327) (27)
Accretion of discount less than (in excess of) amortization of
premium on mortgage-backed securities ("MBS") and collateralized
mortgage loans ("CMOs") 37 (30)
Accretion of discount in excess of amortization of premium
on debt securities (4) (45)
Depreciation and amortization of premises and equipment 622 489
Mortgage loans originated for sale (156) -
Proceeds from sale of mortgage loans originated for sale 251 -
Gain on sale of mortgage and other loans - (4)
Tax benefit for stock plans credited to capital 809 1,113
Increase in interest due and accrued (225) (457)
Decrease in official bank checks outstanding (5,366) (2,284)
Other, net 3,227 3,159
--------- ---------
Net cash provided by operating activities 6,354 9,592
--------- ---------
Cash flows from investing activities
- ------------------------------------
Loans originated:
Mortgage loans (40,825) (50,033)
Other loans (2,624) (4,314)
Purchases of CMOs held-to-maturity (40,224) (20,027)
Purchases of debt securities held-to-maturity and securities
available-for-sale (125,000) (75,000)
Principal payments on:
Mortgage loans 31,247 7,636
Other loans 3,895 4,864
CMOs 17,115 21,180
MBS 325 325
Proceeds from maturities of U.S. Government and
federal agency securities 110,000 110,000
Proceeds from sale of other loans 30 445
Purchases of FHLB-NY stock (1,911) (1,277)
Purchases of premises and equipment, net of disposals (1,016) (990)
Net decrease in investment in real estate holdings 340 371
--------- ---------
Net cash used by investing activities (48,648) (6,820)
--------- ---------
<FN>
Continued
</FN>
7
JSB FINANCIAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
(IN THOUSANDS)
THREE MONTHS ENDED
MARCH 31,
------------------------------------------
1999 1998
------------------------------------------
Cash flows from financing activities
- ------------------------------------
Net (decrease) increase in deposits (4,722) 6,420
Increase in advance payments for real estate
taxes and insurance 11,579 13,035
Proceeds upon exercise of common stock options 992 754
Cash dividends paid to common stockholders (4,273) (3,967)
Payments to repurchase common stock (15,490) (5,441)
--------- --------
Net cash (used by) provided by financing activities (11,914) 10,801
--------- --------
Net (decrease) increase in cash and cash equivalents (54,208) 13,573
Cash and cash equivalents at beginning of year 112,849 74,924
--------- --------
Cash and cash equivalents at end of quarter $ 58,641 $ 88,497
========= ========
<FN>
See accompanying notes to the consolidated financial statements.
</FN>
8
JSB FINANCIAL, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
- -------------------------
The financial information for JSB Financial, Inc. (the "Company") as
consolidated with its wholly owned subsidiary Jamaica Savings Bank FSB (the
"Bank") is prepared in conformity with generally accepted accounting principles
for interim financial statements and with instructions to Form 10-Q and Article
10 of Regulation S-X. Such principles are applied on a basis consistent with
those reflected in the 1998 Annual Report filed with the Securities and Exchange
Commission. The financial information included herein, other than the
consolidated statement of financial condition as of December 31, 1998, has been
prepared by management without an audit by independent certified public
accountants who do not express an opinion thereon. The consolidated statement of
financial condition as of December 31, 1998, has been derived from, but does not
include all the disclosures contained in, the audited consolidated financial
statements for the year ended December 31, 1998. The information furnished
includes all adjustments and accruals consisting only of normal recurring
accrual adjustments which are in the opinion of management, necessary for a fair
presentation of results for the interim periods. The foregoing interim results
are not necessarily indicative of the results of operations for the full year
ending December 31, 1999.
These consolidated financial statements should be read in conjunction with the
audited consolidated financial statements and notes thereto, included in the
Annual Report to Stockholders for JSB Financial, Inc. for the year ended
December 31, 1998.
2. Impact of New Accounting Standard Not Yet Adopted
- -----------------------------------------------------
In June of 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("Statement 133"). Statement 133 establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, (collectively referred to as
derivatives) and for hedging activities. Statement 133 requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. The accounting
for changes in the fair value of a derivative depends on the intended use of the
derivative and the resulting designation. If certain conditions are met, a
derivative may be specifically designated as (a) a hedge of the exposure to
changes in the fair value of a recognized asset or liability or an unrecognized
firm commitment, (b) a hedge of the exposure to variable cash flows of a
forecasted transaction, or (c) a hedge of the foreign currency exposure of a net
investment in a foreign operation, an unrecognized firm commitment, an
available-for-sale security, or a foreign-currency-denominated forecasted
transaction.
Statement 133 is effective for all fiscal quarters of fiscal years beginning
after June 15, 1999. Initial application of this Statement should be as of the
beginning of an entity's fiscal quarter. When implemented, hedging relationships
must be designated anew and documented pursuant to the provisions of Statement
133. Earlier application of all of the provisions of Statement 133 is
encouraged, but it is permitted only as of the beginning of any fiscal quarter
that begins after the issuance of this Statement. Statement 133 should not be
applied retroactively to financial statements of prior periods. The Company does
not expect the adoption of Statement 133 to have a material affect on its
financial condition or results of operations.
9
3. Debt and Equity Securities
- ------------------------------
The following tables set forth information regarding the Company's debt and
equity securities as of:
March 31, 1999 December 31, 1998
------------------------------- ------------------------
Amortized Cost/ Estimated Amortized Cost/ Estimated
Carrying Value Fair Value Carrying Value Fair Value
-------------- ---------- -------------- ----------
(In Thousands)
Held-to-Maturity
- ----------------
U.S. Government and federal
agency securities $125,000 $124,986 $109,996 $110,026
CMOs, net 118,862 118,941 95,790 95,997
MBS, net 2,346 2,531 2,671 2,883
-------- -------- -------- --------
Total Securities held-to-maturity $246,208 $246,458 $208,457 $208,906
======== ======== ======== ========
Estimated Estimated
Fair Value/ Fair Value/
Cost Carrying Value Cost Carrying Value
---- -------------- ---- --------------
(In Thousands)
Available-for-Sale
- ------------------
Marketable equity securities $ 10,869 $ 80,196 $ 10,869 $ 83,592
======== ======== ======== =========
4. Subsequent Events
- ---------------------
On April 13, 1999, the Company's Board of Directors declared a $.45 per share
dividend on its common stock. The dividend is to be paid on May 19, 1999, to
stockholders of record on May 5, 1999, and will total approximately $4.2
million.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
---------------------------------------------------------------
General/Financial Condition
- ---------------------------
JSB Financial, Inc. is a Delaware-chartered savings and loan holding company,
which owns 100% of the outstanding common stock of Jamaica Savings Bank FSB. The
Company's assets, including the assets of the Bank, totaled $1.61 billion at
March 31, 1999. In addition to the Company's investment in the Bank, at March
31, 1999, the Company had $16.0 million in money market investments and $25.0
million in short-term federal agency securities.
Asset Quality
- -------------
The Bank's non-performing assets may include: (1) loans which are 90 days or
more in arrears; (2) loans which have been placed on non-accrual status; (3)
ORE; and (4) any other investments on which the collection of contractual
principal and interest is questionable. At March 31, 1999, the Bank's
non-performing assets, which totaled $676,000, included: non-performing loans of
$456,000 and ORE of $220,000. The ratio of non-performing assets to total assets
was .04% at both March 31, 1999 and December 31, 1998, respectively. The ratio
of non-performing loans to total loans at both March 31, 1999 and December 31,
1998 was .04%, well below industry averages. (See Non-performing/Non-accrual
Table, herein.)
Year 2000 Issues
- ----------------
The following discussion and tables contain certain forward-looking information
with respect to management's expectations for implementation and compliance with
year 2000 ("Y2K") issues and requirements. Management has analyzed the Company's
internal and outsourced computer hardware, operating systems and applications,
both information technology systems and non-information technology systems, such
as telephone, air conditioning, electrical, etc. The actual readiness of these
systems may differ materially from what is presented below. Factors that may
cause differences between anticipated Y2K readiness and actual Y2K readiness
include failure of outside vendors to provide upgrades on a timely basis, and/or
failure of the Bank's hardware, operating systems and applications to meet Y2K
readiness requirements as planned. In addition, the actions of depositors and
borrowers in anticipation of Y2K complications may adversely impact the Company,
regardless of the Company's actual state of Y2K readiness.
The Company completed its assessment of all of its critical computer systems by
September 30, 1997, which included both information technology systems and
non-information technology systems. In January 1999, for reasons unrelated to
Y2K, the Bank substantially replaced its mainframe system with a Windows NT(R)
Client/Server system. This new system had Y2K capabilities built into its
design. All of the Bank's system upgrades and/or programming changes have been
made within the normal course of business, therefore, no material costs specific
to attaining Y2K capability have been incurred. In accordance with Y2K
disclosure requirements, the Company has analyzed the cost impact of Y2K
compliance issues and does not expect related future costs to be material to the
Company's future results of operations or financial condition.
A member of the Bank's senior management has inventoried all of the Bank's
hardware and software programs and has contacted all outside vendors inquiring
as to the status of Y2K compliance. Management is not aware of any vendor who
does not expect to be Y2K compliant and will continue to require updates from
all vendors who are not yet Y2K compliant. The Bank has many non-critical
applications, which will be tested for Y2K compliance during 1999, encompassing
the majority of the dates outlined by the Federal Financial Institutions
Examination Council.
11
The Company believes the required upgrades and testing will ensure completion of
the Y2K project by September 1999. However, given the broad spectrum of
potential Y2K problems, including the ultimate state of readiness of the
Company's local utilities and other third parties, including governmental and
quasi-governmental agencies on which the Company relies, a vast amount of
uncertainty remains with respect to the actual affect of Y2K. Like all other
financial institutions, a failure to correct a material Y2K problem could result
in an interruption in, or a failure of, certain normal business activities or
operations of the Company. Such failures could materially and adversely affect
the Company's results of operations and financial condition. In addition, the
long term effect of poorly managing Y2K problems that may arise, or failure of
critical computer systems to be Y2K compliant could result in a decline in
business, depositors and confidence in the Company. The Company's Y2K project
was designed and is expected to significantly reduce the Company's level of
uncertainty about internal and external Y2K implications. Should the Company
face Y2K liability, the Company's Directors and Officers Errors and Omissions
Insurance Policy may provide some indemnification.
The following table presents the Company's Y2K renovation and testing status
indicating the Company's state of readiness regarding its critical computer
systems, as they pertain to the Company as of May 11, 1999.
Hardware Operating Systems Application
-------- ----------------- -----------
System Renovated Tested Renovated Tested Renovated Tested
- ------ --------- ------ --------- ------ --------- ------
Relational Data Base(1) Yes Yes Yes Yes Yes Yes
Local Area Network Yes Yes Yes Yes Yes In Progress
Accounting Systems Yes Yes Yes Yes Yes Yes
Check Processing Yes In Progress Yes In Progress Yes In Progress
ATMs Yes Yes Yes Yes Yes Yes
NYCE Yes Yes Yes Yes Yes Yes
<FN>
(1) During January 1999, the Company replaced its mainframe with a relational
data base system, which now supports all of the critical applications
previously supported by the mainframe system. Only non-critical
applications remain supported by the mainframe system.
</FN>
The following table presents the Company's Y2K contingency plan for the Bank's
systems which are identified as critical, should they fail to meet Y2K
compliance deadlines, or ultimately fail to be Y2K compliant in the future.
System Contingency Plan
- ------ ----------------
Relational Data Base No contingency plan is considered necessary
Local Area Network No contingency plan is considered necessary
Accounting system Use manual system
Check Processing Manual processing
ATMs Customers to use branches
NYCE Customers to use the Bank's ATM's or branches
Loan Delinquency Table
- ----------------------
At March 31, 1999 and December 31, 1998, delinquencies in the loan portfolios
were as follows:
61-90 Days 90 Days and Over
---------- ----------------
Number Principal Number Principal
of balance of balance
loans of loans loans of loans
----- -------- ----- --------
(Dollars in Thousands)
At March 31, 1999:
- ------------------
Delinquent loans:
Guaranteed(1) 3 $ 96 9 $ 237
Non-guaranteed 1 19 3 219
--- ------ --- ---------
4 $ 115 12 $ 456
=== ====== === =========
Ratio of delinquent loans
to total loans .01% .04%
At December 31, 1998:
- ---------------------
Delinquent loans
Guaranteed(1) 11 $ 212 10 $ 233
Non-guaranteed 5 63 5 216
--- ------ --- ---------
16 $ 275 15 $ 449
=== ====== === =========
Ratio of delinquent loans
to total loans .02% .04%
<FN>
(1) Loans which are Federal Housing Administration ("FHA"), Veterans
Administration ("VA") or New York State Higher Education Services
Corporation guaranteed.
</FN>
13
Non-performing/Non-accrual Table
- --------------------------------
The following table sets forth information regarding non-accrual loans and loans
which were delinquent 90 days or more on which the Bank was accruing interest at
the dates indicated:
March 31, December 31,
1999 1998
---- ----
(In Thousands)
Mortgage loans:
Non-accrual loans $ 213 $ 213
Accruing loans 90 or more days overdue (1) 237 233
--------- ---------
Total 450 446
--------- ---------
Other loans:
Non-accrual loans -- --
Accruing loans 90 or more days overdue:
Student loans -- --
Consumer loans 6 3
--------- ---------
Total 6 3
--------- ---------
Total non-performing loans:
Non-accrual 213 213
Accruing loans 90 days or more overdue 243 236
--------- ---------
Total $ 456 $ 449
========= =========
Non-accrual loans to total loans .02% .02%
Accruing loans 90 or more days overdue
to total loans .02 .02
Non-performing loans to total loans .04 .04
<FN>
(1) Represents only seasoned FHA and VA loans, which are guaranteed.
Management does not believe that these loans, including those in
arrears, present any significant collection risk to the Bank.
</FN>
Information regarding impaired loans at or for the year to date periods
indicated is as follows:
March 31, March 31, December 31,
1999 1998 1998
---- ---- ----
(Dollars in Thousands)
Impaired loans
- --------------
Number of loans 1 1 1
Balance of impaired loans 213 12,754 213
Average balance for the year to date period ended 213 12,754 5,491
Interest income recorded for the year to date periods ended 0 197 397
Unrecorded interest on impaired loans 4 98 509
There were no loans included in the above table that were modified in a trouble
debt restructure ("TDRs"). TDRs other than those classified as impaired and/or
non-accrual loans, were $1,859,000 and $1,842,000 at March 31, 1999 and December
31, 1998, respectively. Interest forfeited attributable to these loans was
$20,600 and $15,500 for the three months ended March 31, 1999 and 1998,
respectively.
14
Loan Loss Activity Table
- ------------------------
Activity in the allowance for loan losses for the mortgage loan portfolio and
the other loan portfolio are summarized for the three months ended March 31,
1999 and the year ended December 31, 1998, as follows:
March 31, December 31,
1999 1998
---- ----
(Dollars in Thousands)
Mortgage Portfolio Loan Loss Allowance:
- ---------------------------------------
Balance at beginning of period $ 5,741 $ 5,741
Provision for loan losses -- --
Loans charged off -- --
Recoveries of loans previously charged off -- --
-------- --------
Balance at end of period $ 5,741 $ 5,741
======== ========
Ratios for Mortgage Portfolio:
- ------------------------------
Net charge-offs to average mortgages --% --%
Allowance for loan losses to
net mortgage loans .50 .50
Allowance for loan losses to
mortgage loans delinquent 90 days or more 12.76x 12.87x
Other Loan Portfolio Loss Allowance:
- ------------------------------------
Balance at beginning of period $ 183 $ 139
Provision for loan losses 7 51
Loans charged off (3) (25)
Recoveries of loans previously charged off 14 18
-------- --------
Balance at end of period $ 201 $ 183
======== ========
Ratios for Other Loan Portfolio:
- --------------------------------
Net charge-offs to average other loans (.05)% .03%
Allowance for loan losses to
net other loans .94 .80
Allowance for loan losses to
other loans delinquent 90 days or more 33.50x 61.00x
15
Liquidity and Capital Resources
- -------------------------------
The Company's funds are primarily obtained through dividends paid by the Bank.
The Bank's primary source of funds is deposits. Liquidity is provided by
proceeds from maturities of and interest payments on debt securities, principal
and interest payments on mortgage loans, CMOs and other loans. Overall liquidity
is affected by the Company's operating, financing and investing activities, as
well as the interest rate environment, economic conditions and competition.
The Company's overall asset/liability structure and level of non-performing
assets affects interest rate spreads and margins, which are considered key
measures of the Company's financial performance. As deposits continue to
decrease and migrate into higher cost term accounts, and if additional long-term
advances from the FHLB-NY are taken, interest rate spreads and margins are
likely to decline. In determining whether additional advances will be taken,
management will assess deposit levels and trends, loan demand, the Company's
overall liquidity and other market conditions in the future.
During the three months ended March 31, 1999, the $125.0 million of purchases of
U.S. Government and federal agency securities represented the most significant
use of funds in investing activities. Mortgage originations for the portfolio,
substantially all of which were at fixed rates, for the three months ended March
31, 1999 were $40.8 million, compared to $50.0 million for the three months
ended March 31, 1998. CMO purchases for the first quarter of 1999 were $40.2
million, compared to $20.0 million for the first quarter of 1998. During the
first quarter of 1999, maturities of U.S. Government and federal agency
securities generated $110.0 million, the most significant cash inflow from
investment activities, followed by principal payments on mortgage loans and CMOs
of $31.2 million and $17.1 million, respectively. The $15.5 million cost of
repurchasing the Company's common stock represented the most significant use of
funds in financing activities for the first quarter of 1999. The increase in
cash used for dividend payments reflected the increase in dividends paid per
share to $.45 for the first three months of 1999, compared to $.40 per share for
the first three months of 1998.
Management monitors deposit levels and interest rates in conjunction with asset
structure and has evaluated and implemented various strategies to meet targeted
objectives in various interest rate scenarios. Interest rate spread, net
interest margin, liquidity, and related asset quality are some of the key
measures of financial performance that management considers. The Bank's assets
are structured such that the gradual decline in deposits has not materially
affected the Company. The Bank's liquidity ratios continue to exceed all short
and long term minimum regulatory requirements. Management remains focused on
providing quality customer service as its primary strategy for maintaining its
relationships with its depositors.
The Bank attempts to influence deposit levels and composition through its
interest rate structure. Management believes that the relatively low level of
interest rates and the strong performance and growth of the capital markets are
the primary contributors for the continued decline in deposits over the past
several years. Management decided to allow deposits to decline, rather than
offer rates that would result in lowering net income or necessitate modifying
the Bank's existing investment structure and credit quality standards. Rates
offered on the Bank's deposit accounts are competitive with those rates offered
by other financial institutions in its market area. Historically the highest
percentage of the Bank's deposits have been in passbook accounts; however, the
trend of deposit shifts has continued to be out of passbook accounts and into
certificate of deposit accounts ("CDs"). At March 31, 1999, deposits were
comprised as follows: passbook accounts 46.0%, CDs 39.1%, money market accounts
6.6%, negotiable order of withdrawal ("NOW") accounts 3.2%, non-interest bearing
checking accounts 3.2% and lease security accounts 1.9%. While the Company
cannot predict the future direction of deposits, management expects the current
trend to continue provided that, among other factors, the low interest rate
environment continues.
The net decrease in deposits of $4.7 million to $1.119 billion at March 31,
1999, from $1.124 billion at December 31, 1998, reflected decreases of $10.6
million in non-interest bearing checking accounts, $8.2 million in passbook
accounts and $1.6 million in NOW accounts, partially offset by increases in
money market accounts, CDs and lease security accounts of $11.1 million, $4.3
million and $258,000, respectively.
The Company repurchased 277,300 shares of its common stock during the three
months ended March 31, 1999, pursuant to its eleventh stock repurchase program
(the "Eleventh Program"), which began on October 16, 1998. Under the Eleventh
Program, 412,400 shares of the 900,000 shares targeted for repurchase were
acquired at an aggregate cost of $22.6 million, or an average price of $54.76
per share through March 31, 1999. The Company reissued 59,183 shares of treasury
stock for common stock options exercised and reissued 1,656 shares of treasury
stock for Director's compensation during the three months ended March 31, 1999.
16
On January 5, 1999, the Company's Board of Directors declared a cash dividend of
$.45 per share to stockholders of record on February 3, 1999. The dividend
payment, which totaled $4.3 million, was made on February 17, 1999.
Regulations
- -----------
As a condition of deposit account insurance, Office of Thrift Supervision
("OTS") regulations require that the Bank calculate three regulatory net worth
requirements on a quarterly basis, and satisfy each requirement at the
calculation date and throughout the ensuing quarter. The three requirements are:
tangible capital ratio of 1.50%, leverage ratio (or "core capital") of 3.00%
(4.00%, pursuant to the OTS Prompt Corrective Action Regulations), and a
risk-based assets capital ratio of 8.00%. The Bank's capital ratios at March 31,
1999 were as follows:
Percentage Dollars
---------- -------
(In Thousands)
TANGIBLE CAPITAL
Required 1.50% $ 22,859
Actual 18.66 284,310
----- ---------
Excess 17.16% $ 261,451
===== =========
CORE CAPITAL
Required 3.00% $ 45,718
Actual 18.66 284,310
----- ---------
Excess 15.66% $ 238,592
===== =========
RISK BASED CAPITAL
Required 8.00% $ 99,270
Actual 24.93 309,353
----- ---------
Excess 16.93% $ 210,083
===== =========
Comparison of Operating Results for the Three Months Ended
March 31, 1999 and 1998
- --------------------------------------------------------------------------------
Net income for the three months ended March 31, 1999, was $7.5 million, or $.80
per basic share ($.78 per diluted share) compared with $7.7 million, or $.78 per
basic share ($.75 per diluted share), for the three months ended March 31, 1998.
Net interest income for the three months ended March 31, 1999, was $18.3
million, compared to $17.8 million for the three months ended March 31, 1998.
The increase in net interest income reflects a $276,000 increase in interest
income and a $230,000 decrease in interest expense. Comparing the quarter ended
March 31, 1999 to the quarter ended March 31, 1998, the annualized yield on
interest earning assets decreased to 7.41%, from 7.60%; average interest earning
assets increased by $51.4 million; the cost of interest bearing deposits
decreased to 3.25% from 3.55%; the $50.0 million of funds borrowed from the
FHLB-NY resulted in a 3.35% cost of funds for the current quarter. Average
interest bearing deposits were $1.072 billion for the quarter ended March 31,
1999, compared to $1.087 billion for the quarter ended March 31, 1998. For the
quarter ended March 31, 1999, the interest rate spread remained relatively
unchanged at 4.06%, compared to 4.05% for the quarter ended March 31, 1998. The
net interest margin decreased to 4.89% for the current quarter, compared to
4.92% for the first quarter of 1998.
Income earned on mortgage loans increased by 11.8%, to $23.0 million for the
three months ended March 31, 1999, compared to $20.5 million for the first
quarter of 1998, reflecting continued growth in the mortgage loan portfolio.
This increase was partially offset by a decrease in the mortgage portfolio yield
to 8.00% for the quarter ended March 31, 1999, from 8.28% for the quarter ended
March 31, 1998, reflecting originations at the lower market rates.
17
For the three months ended March 31, 1999 income from debt and equity securities
decreased by $1.7 million, or 46.5%, to $1.9 million from $3.6 million for the
three months ended March 31, 1998. This decrease was the result of a decrease in
the average investment in U.S. Government and federal agency securities and
other investments of $91.5 million, or 39.0%, to $143.2 million, compared to
$234.7 million for the three months ended March 31, 1998. The annualized yield
on the debt and equity securities portfolio decreased to 5.39% for the three
months ended March 31, 1999 from 6.14% for the three months ended March 31,
1998. The debt and equity securities portfolio activity for the current period
included purchases of $125.0 million and maturities of $110.0 million, compared
with purchases of $75.0 million and maturities of $110.0 million for the quarter
ended March 31, 1998.
For the quarter ended March 31, 1999, income on CMOs increased slightly, by
2.6%, to $1.5 million, with an annualized yield of 5.72%, from income of $1.4
million with an annualized yield of 6.16% for the quarter ended March 31, 1998.
During the first quarter of 1999, the Bank received principal payments of $17.1
million on CMOs, compared with principal payments of $21.2 million for the
quarter ended March 31, 1998. CMO purchases during the quarter ended March 31,
1999 totaled $40.2 million, compared to purchases of $20.0 million for the
quarter ended March 31, 1998. The Bank did not sell any CMOs during either
period.
Income on federal funds sold decreased by $329,000, or 27.3%, to $876,000 for
the quarter ended March 31, 1999 from $1.2 million for the quarter ended March
31, 1998. This decrease resulted from a decrease in the average investment in
federal funds of $14.6 million to $75.0 million for the current period, compared
with $89.6 million for the quarter ended March 31, 1998. The annualized yield on
federal funds sold decreased to 4.67% for the current quarter, compared to 5.38%
for the quarter ended March 31, 1998.
Interest expense on deposits decreased by $923,000 to $8.7 million for the
quarter ended March 31, 1999, compared to $9.6 million for the quarter ended
March 31, 1998. Average interest bearing deposits decreased by $14.6 million, to
$1.072 billion for the three months ended March 31, 1999, compared to $1.087
billion for the three months ended March 31, 1998, and the average rate paid on
interest bearing deposits decreased to 3.25% from 3.55% for the comparative
quarter in 1998.
On December 8, 1998, the Bank borrowed $50.0 million from the FHLB-NY, in the
form of a fixed rate ten year non-amortizing advance. Interest expense on the
FHLB-NY advance for the first quarter of 1999 was $693,000, reflecting an
interest rate of 5.62%. The Bank did not have any borrowed funds during the
first quarter of 1998.
The provision for loan losses for the quarter ended March 31, 1999 was $7,000,
compared to $14,000 for the first quarter of 1998, comprised entirely of
provisions against the other loan portfolio. Based on management's internal loan
review analysis, no additions to the mortgage allowance were considered
necessary during the first quarter of 1999 or the year ending December 31, 1998.
Management will continue to monitor the performance of the loan portfolios and
may adjust allowances accordingly.
Total non-interest income for the three months ended March 31, 1999, increased
to $2.0 million from $1.7 million for the three months ended March 31, 1998, a
net increase of $323,000, or 19.5%. Non-interest income for the 1998 period
included a $1.0 million recovery of prior period expenses, received as part of a
settlement on a $12.8 million underlying cooperative mortgage loan. Loan fees
and service charges increased by $860,000, to $1.4 million for the first quarter
of 1999, compared to $527,000 for the first quarter of 1998, primarily
reflecting an increase in mortgage loan prepayment penalties for large mortgage
loan satisfactions. Real estate operations increased by $498,000, or 6.5 times,
to $575,000 for the three months ended March 31, 1999, compared to $77,000 for
the three months ended March 31,1998, reflecting gains of $443,000 on
condominium apartments sold, which were carried at zero value.
Non-interest expense increased to $7.2 million, or 6.5%, during the quarter
ended March 31, 1999, from $6.8 million for the quarter ended March 31, 1998.
This increase was primarily the result of a $302,000 increase in compensation
and benefit expense, reflecting salary adjustments and increases in the cost of
benefits.
The provision for income taxes increased by $581,000, or 11.7%, to $5.5 million
for the three months ended March 31, 1999, from $4.9 million for the three
months ended March 31, 1998. This increase reflected the $396,000 increase in
pre-tax income accompanied by an increase in the Company's effective tax rate to
42.5% for the quarter ended March 31, 1999, from 39.2% for the quarter ended
March 31, 1998. During 1998, the Company realized tax benefits in connection
with an operating subsidiary, which were not realized during the first quarter
of 1999, as the subsidiary was liquidated.
18
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- --------------------------------------------------------------------------------
Interest Rate Sensitivity Analysis
The matching of assets and liabilities may be analyzed by examining the extent
to which such assets and liabilities are "interest rate sensitive" and by
monitoring an institution's interest rate sensitivity "gap". An asset or
liability is said to be interest rate sensitive within a specific time period if
it will mature or reprice within that time period. The interest rate sensitivity
gap is defined as the difference between the amount of interest earning assets
maturing or repricing within a specific time period and the amount of interest
bearing liabilities maturing or repricing within that time period. A gap is
considered positive when the amount of interest rate sensitive assets exceeds
the amount of interest rate sensitive liabilities. A gap is considered negative
when the amount of interest rate sensitive liabilities exceeds the amount of
interest rate sensitive assets. During a period of rising interest rates, a
negative gap would tend to adversely affect net interest income while a positive
gap would tend to result in an increase in net interest income. During a period
of declining interest rates, a negative gap would tend to result in an increase
in net interest income while a positive gap would tend to adversely affect net
interest income.
The following table sets forth, as of March 31, 1999, repricing information on
earning assets and interest bearing liabilities. The data reflects estimated
principal amortization and prepayments on mortgage loans based on historical
performance. Approximate prepayment rate assumptions for fixed rate one-to
four-family mortgage loans and MBS are based upon the remaining term to
contractual maturity as follows: (a) 26% if less than six months; (b) 11% if six
months to one year, three to five years and for five to ten years; (c) 8% if one
to three years; (d) 9% if ten to twenty years; and (e) 17% if beyond 20 years.
Adjustable-rate mortgages are assumed to prepay at 15% and second mortgages at
18%. All other fixed rate first mortgage loans are assumed to prepay at 3%. All
deposit accounts, which are subject to immediate withdrawal/repricing, except
CDs, are assumed to reprice in the earliest period presented. Marketable equity
securities and other investments which do not have a fixed maturity date or a
stated yield, are reflected as repricing in the more than five years category.
The table does not necessarily indicate the impact of general interest rate
movements on the Company's net interest income because the repricing of certain
categories of assets and liabilities, is beyond the Company's control. As a
result, certain assets and liabilities indicated as repricing within a stated
period may in fact reprice at different times and at different rate levels.
While management regularly reviews the Company's gap analysis, the gap is
considered an analytical tool, which has limited value.
19
At March 31, 1999
-----------------
More More More More
Than Than Than Than
1 Year 2 Years 3 Years 4 Years More
1 Year to to to to Than
or Less 2 Years 3 Years 4 Years 5 Years 5 Years Total
---------------------------------------------------------------------------------
(Dollars in Thousands)
Interest earning assets:
Mortgage loans, net 1 $ 49,151 $ 65,182 $ 68,482 $ 104,139 $ 71,345 $ 804,167 $1,162,466
Average interest rate 8.58% 8.66% 8.80% 8.15% 8.01% 7.47%
U.S. Government and federal
agency securities, net 125,000 - - - - - 125,000
Average interest rate 4.76% - - - - -
Marketable equity securities
and other investments, net 2 - - - - - 91,029 91,029
Average interest rate - - - - - N/A
CMOs, net - - - - 4,181 114,681 118,862
Average interest rate - - - - 5.75% 5.98%
MBS, net 6 372 - - - 1,968 2,346
Average interest rate 12.25% 10.50% - - - 9.64%
Other loans, net 1 8,647 1,273 1,534 1,524 1,367 7,292 21,637
Average interest rate 4.68% 8.26% 8.02% 7.81% 7.72% 8.19%
Federal funds sold 46,000 - - - - - 46,000
Average interest rate 4.96% - - - - -
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total interest earning assets 228,804 66,827 70,016 105,663 76,893 1,019,137 1,567,340
---------- ---------- ---------- ---------- ----------- ---------- ----------
Interest bearing deposit accounts:
Passbook 514,497 - - - - - 514,497
Average interest rate 2.22% - - - - -
Lease security accounts 21,289 - - - - - 21,289
Average interest rate 2.22% - - - - -
CDs 366,598 40,517 12,082 8,957 9,724 - 437,878
Average interest rate 4.72% 5.31% 5.62% 5.86% 5.37% -
Money market accounts 73,814 - - - - - 73,814
Average interest rate 2.32% - - - - -
NOW accounts 35,455 - - - - - 35,455
Average interest rate 1.24% - - - - -
FHLB-NY advances - - - - - 50,000 50,000
Average interest rate - - - - - 5.62%
---------- ---------- ----------- ---------- ----------- ---------- ----------
Interest bearing liabilities 1,011,653 40,517 12,082 8,957 9,724 50,000 1,132,933
---------- ---------- ----------- ---------- ----------- ---------- ----------
Interest sensitivity gap
per period $(782,849) $ 26,310 $ 57,934 $ 96,706 $ 67,169 $ 969,137 $ 434,407
========= ========= ========== ========= =========== ========== ==========
Cumulative interest
sensitivity gap $(782,849) $(756,539) $ (698,605) $(601,899) $ (534,730)$ 434,407 $ -
========= ========= ========== ========= =========== ========== ==========
Percentage of gap per period
to total assets (48.53%) 1.63% 3.59% 5.99% 4.16% 60.08%
Percentage of cumulative gap
to total assets (48.53%) (46.90%) (43.31%) (37.32%) (33.16%) 26.92%
<FN>
N/A - Does not apply, as none of the securities in the marketable equity
securities portfolio carry a stated rate of return.
1 Balance includes non-performing loans, as amount is immaterial and is not
reduced for the allowance for loan losses.
2 Securities available-for-sale are shown including the market value
appreciation of $69.3 million, before tax.
</FN>
20
The Company's interest rate sensitivity is also monitored by management through
the use of a model which internally generates estimates of the net portfolio
value ("NPV") over a range of interest rate change scenarios. NPV is the present
value of expected cash flows from assets, liabilities and off-balance sheet
contracts. The NPV ratio, under any interest rate scenario, is defined as the
NPV in that scenario divided by the market value of assets in the same scenario.
Based upon data submitted on the Bank's quarterly Thrift Financial Reports,
which does not include the assets, liabilities or off-balance sheet contracts of
the Company, the OTS produces a similar analysis using its own model and
assumptions. Due to differences in assumptions applied in the Bank's internal
model and the OTS model, including estimated loan prepayment rates, reinvestment
rates and deposit decay rates, the results of the OTS model may vary from the
Bank's internal model. For purposes of the NPV table, the Company applied
prepayment speeds similar to those used in the Gap table. Reinvestment rates
applied were rates offered for similar products at the time the NPV was
calculated. The discount rates applied for CDs and borrowings were based on
rates that approximate the rates offered by the Bank for deposits and borrowings
of similar remaining maturities. The following table sets forth the Company's
NPV as of March 31, 1999, as calculated by the Company.
Net Portfolio Value Portfolio Value of Assets
Rate Changes in ------------------- -------------------------
Basis Points Dollar Dollar Percent NPV Percent
(Rate Shock) Amount Change Change Ratio Change1
- ------------ ------ ------ ------ ----- -------
(Dollars in Thousands)
+200 $367,043 $(59,811) (14.01)% 23.01% (4.31)%
+100 395,259 (31,595) (7.40) 24.26 (2.27)
0 426,854 - - 25.60 -
-100 472,242 45,388 10.63 27.46 3.15
-200 523,785 96,931 22.71 29.44 6.72
<FN>
1 Reflects the percentage change in the portfolio value of the Company's assets
for each rate shock compared to the portfolio value of the Company's assets
under the zero rate change scenario.
Note: As in the case with the Gap table, certain shortcomings are inherent in
the methodology used in the above interest rate risk measurements. Modeling
changes in NPV require certain assumptions which may or may not reflect the
manner in which actual yields and costs respond to changes in market interest
rates. In this regard, the NPV model presented assumes that the composition of
the Company's interest sensitive assets and liabilities existing at the
beginning of a period remains constant over the period being measured and also
assumes that a particular change in interest rates is reflected uniformly across
the yield curve regardless of the duration to maturity or repricing of specific
assets and liabilities. Accordingly, although the NPV measurements and net
interest income models provide an indication of the Company's interest rate risk
exposure at a particular point in time, such measurements are not intended to
and do not provide a precise forecast of the effect of changes in market
interest rates on the Company's net interest income, as actual results will
differ.
</FN>
Private Securities Litigation Reform Act Safe Harbor Statement
- --------------------------------------------------------------
In addition to historical information, this Form 10-Q may contain certain
forward looking statements and may be identified by the use of such words as
"believe(s)", "expect(s)", "anticipate(s)", "should", "planned", "estimated" and
"potential". The Company's discussion regarding the anticipated future direction
of its net interest margin and interest rate spread are considered forward
looking statements, which are subject to various factors which could cause
actual results to differ materially from those statements made. These factors
include, but are not limited to, the actual impact of Y2K, general economic
conditions, changes in interest rates, deposit flows, loan demand, real estate
values, and other economic, competitive, governmental, regulatory and
technological factors affecting the Company's operations, pricing, products and
services. Further description of the risks and uncertainties to the business are
included in detail in Item 1, BUSINESS, in the Company's 1998 Form 10-K.
21
PART II - OTHER INFORMATION
ITEM 1. Legal proceedings
The Bank is a defendant in several lawsuits arising out of the normal
conduct of business. In the opinion of management, after consultation
with legal counsel, the ultimate outcome of these matters is not
expected to have a material adverse effect on the Company's results of
operations, business operations or the consolidated financial condition
of the Company.
ITEM 2. Changes in Securities (Not Applicable)
ITEM 3. Defaults upon Senior Securities (Not Applicable)
ITEM 4. Submission of Matters to a Vote of Security Holders (Not Applicable)
ITEM 5. Other Information (Not Applicable)
ITEM 6. Exhibits and Reports on Form 8-K
Page
Number
------
(a) Exhibits
3.01 Articles of Incorporation (1)
3.02 By-laws (2)
11.00 Statement Re: Computation of Per Share Earnings 24
27.00 Financial Data Schedule for the Three Months Ended March 31, 1999 25
(b) Reports on Form 8-K (Not Applicable)
<FN>
(1) Incorporated herein by reference to Exhibits filed with the Registration
Statement on Form S-1, Registration No. 33-33821.
(2) Incorporated herein by reference to Exhibits filed with the Form 10-K
for the Year Ended December 31, 1997.
</FN>
22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Quarterly Report on the Form
10-Q for the quarter ended March 31, 1999, to be signed on its behalf by the
undersigned, thereunto duly authorized.
JSB Financial, Inc.
(By)
/s/ Park T. Adikes
--------------
Park T. Adikes
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
DATE: May 13, 1999 /s/ Park T. Adikes
------------ --------------
Park T. Adikes
Chairman of the Board and
Chief Executive Officer
DATE: May 13, 1999 /s/ Thomas R. Lehmann
------------ -----------------
Thomas R. Lehmann
Chief Financial Officer
Executive Vice President
(Principal Accounting Officer)
23
Exhibit Index
-------------
Exhibit No. Identification of Exhibit
----------- -------------------------
11.00 Statement Re: Computation of Per Share Earnings
27.00 Financial Data Schedule for the Three Months Ended March 31, 1999