Exhibit 99.1
PRESS RELEASE
October 16, 2002
ANNOUNCEMENT: STATEN ISLAND BANCORP INC. REPORTS THIRD QUARTER RESULTS
Staten Island, New York - Staten Island Bancorp, Inc. (NYSE: SIB) announced
today that net income for the third quarter of 2002 was $44.1 million or $0.77
per diluted share. Net income for the nine months ended September 30, 2002 was
$72.9 million or $1.27 per diluted share. As previously disclosed, both the
third quarter and nine months results include an after-tax credit to earnings of
$3.8 million, or $0.07 per diluted share, reflecting the cumulative effect (to
June 30, 2002) of a change in accounting treatment for certain loan commitments
as derivative instruments. The third quarter results also include an after-tax
credit of $7.4 million, or $0.13 per diluted share, related to a revision in
accounting for the Company's stock option plan.
Net income per diluted share before the cumulative change in accounting for loan
commitments and excluding the adjustments relating to the stock option plan
effect, was $0.57 and $1.26, respectively, for the quarter and nine months ended
September 30, 2002, (which included $0.09 per share as a result of the ongoing
effect of accounting for loan commitments as described below). The Company
reported net income per diluted share (exclusive of stock option plan related
adjustments) of $0.31 and $0.78 (adjusted for the two-for-one split in November
2001), respectively, for the quarter and nine months ended September 30, 2001.
"We are pleased with our results this quarter," said Harry P. Doherty, Chairman
and Chief Executive Officer. "Our core retail banking and mortgage banking
businesses continued to be strong performers and asset quality continued to
improve in a most challenging economic climate. We saw a solid increase in core
deposits and mortgage banking originations were up 46% over the second quarter.
We are confident that the financial outlook for Staten Island Bancorp remains
strong," Mr. Doherty concluded.
Financial Highlights
- --------------------
o Net interest income increased $10.4 million, or 24.7%, to $52.3 million
over the third quarter of 2001. This increase was driven by the overall
lower interest rate environment over the past year and a $982.3 million
increase in average interest earning assets. On a linked quarter basis, net
interest income was relatively flat as a $354.9 million increase in average
interest earning assets was offset by a 41 basis point decrease in average
yield on interest earning assets in the third quarter. The net interest
rate spread and net interest margin decreased to 2.95% and 3.31%,
respectively, for the current quarter compared to 3.19% and 3.59%,
respectively, for the second quarter. Given the current level of interest
rates and the slope of the yield curve, the decreasing trends in
net-interest rate spread and net interest margin could continue. The
current low interest rate environment, however, is generally beneficial to
the mortgage-banking component of the Company's business and any decrease
in net interest income may be offset, in whole or in part, by increases in
net gains on the sale of loans.
o The mortgage banking business conducted by the Company's subsidiary, SIB
Mortgage, again had a solid quarter as loan originations were up 46.6% to a
record $2.2 billion, compared to $1.5 billion in the second quarter of
2002. SIB Mortgage shipped $2.1 billion of loans in the third quarter
compared to $1.6 billion in the second quarter and $0.9 billion in last
year's third quarter. Net gains on loan sales for SIB Mortgage were $69.7
million in the current quarter, including a $9.0 million increase in the
value of certain loan commitments during the quarter, as described below.
Exclusive of this adjustment, net gains on loan sales were $60.7 million
for the current quarter compared to $39.2 million for the previous quarter
and $26.9 million for the third quarter of 2001. The $30.5 million increase
in net gains on loan sales (excluding the adjustments) on a linked quarter
basis is due to the $500 million increase in volume of loans sold, as well
as an increase in the realized gross margin on loans sold of 18 basis
points to 2.72% in the current quarter, compared to 2.54% in the second
quarter.
For the quarter ended September 30, 2002, the mortgage-banking segment
contributed $0.29 per diluted share to the Company's net income (including
the cumulative effect of the accounting change). In the current interest
rate environment, loan origination volume remains strong and it is
anticipated that SIB Mortgage will close $2.7 billion in loans during the
fourth quarter of 2002. While loan origination volume at SIB Mortgage
continues to be positively impacted by the current low interest rate
environment, volume at SIB Mortgage in the future may, particularly with
respect to mortgage loan refinancings (which constitute approximately
three-quarters of SIB Mortgage's originations in recent periods), be
adversely affected by increases in interest rates.
o During the quarter ended September 30, 2002, the Company sold $314.2
million (including all $16.1 million of its collateralized bond
obligations) in securities as part of a restructuring program to reduce
exposure to prepayment risk, to generate funding for loan originations and
to improve the overall credit quality of the Company's investment
portfolio. The restructuring resulted in a net loss on securities
transactions of $0.5 million for the quarter.
2
o Deposit growth remained strong, as total deposits increased $180.0 million
or 5.5% for the quarter ended September 30, 2002. For the nine months ended
September 30, 2002, total deposits have increased $552.6 million or 19.0%.
Core deposits, which consist of Savings, NOW, DDA and Money Market
accounts, continued to increase and comprised 66.6% of the total deposit
base at September 30, 2002.
o As part of its capital management strategy, the Company repurchased 788,659
shares of common stock during the quarter ended September 30, 2002. These
shares were acquired as part of the Company's previously announced ninth
stock repurchase program. Approximately 2.3 million shares remain available
for repurchase under the current program.
o Service and fee income increased by $1.1 million, or 22.4%, in the third
quarter of 2002 compared to the third quarter of 2001. This increase is
primarily the result of higher banking fees, which reflect the expansion of
the Bank's retail branching network.
o Total other expenses for the third quarter of 2002 were $65.1 million
compared to $36.1 million for the restated third quarter of 2001. Excluding
credits to compensation expense related to the accounting treatment of
stock options of $13.6 million in the third quarter of 2002 and $7.3
million in the third quarter of 2001, other expenses for the third quarter
of 2002 were $78.7 million compared to $43.4 million for the third quarter
of 2001. The increase of $35.3 million is primarily due to an $8.3 million
increase in personnel expense, a $20.9 million increase in commission
expense, a $1.8 million increase in professional fees and a $3.8 million
increase in other expenses. The increase in personnel expense is primarily
due to a $5.4 million increase in personnel costs at SIB Mortgage due to
increased loan origination volumes and a $0.9 million increase in salary
expense at the Bank due to expansion of the Bank's branch office network
and normal merit pay increases. The increase in commissions, professional
fees and other expenses reflects the increased loan origination volumes at
SIB Mortgage.
Asset Quality
- -------------
Asset quality continued to improve in the third quarter. Non-accruing loans and
other real estate owned ("OREO") decreased $1.4 million to $23.8 million at
September 30, 2002 from $25.2 million at June 30, 2002. Of this amount, $16.0
million consisted of non-accruing loans and $7.8 million consisted of OREO,
compared to $16.6 million of non-accruing loans and $8.6 million of OREO at June
30, 2002. During the third quarter, the Company sold a previously reported
non-performing loan with a carrying value of $2.5 million and a previously
reported OREO property with a carrying value of $2.8 million at no additional
loss. Partially offsetting these sales was a net $3.9 million increase in
non-performing loans, primarily in the one-to-four residential category, which
is partially insured and as to which the Company does not anticipate any losses.
In addition, the Company has a contract to sell a previously reported OREO
property with a carrying value of $4.6 million at no additional loss. Net loan
charge-offs were $2.4 million for the quarter and were primarily the result of
$1.9 million in charge-offs related to mortgage banking operations.
3
In light of current economic conditions and increased lending activity at both
the Bank and SIB Mortgage, management deemed it prudent to make a $3.3 million
provision for loan losses for the third quarter of 2002, compared to $5.0
million for the quarter ended June 30, 2002 and $2.6 million for the quarter
ended September 30, 2001. The allowance for loan losses was $23.9 million or
149.5% of non-accruing loans at September 30, 2002, compared to $22.9 million or
137.7% of non-accruing loans at June 30, 2002 and $17.0 million or 117.3% of
non-accruing loans at September 30, 2001. While no assurance can be given that
future charge-offs or additional provisions will not be necessary, management
believes that, based on its current review and the level of non-accruing loans
and delinquencies, the current allowance for loan losses is adequate.
Accounting for Loan Commitments
- -------------------------------
Effective July 1, 2002, the Company implemented recent guidance issued by the
Financial Accounting Standards Board, which requires the recognition of loan
commitments where the initial rate of interest has been determined or "fixed"
(hereinafter "locked loan commitments") as derivative instruments. This guidance
represents a change in accounting principle and requires a cumulative adjustment
to record the value of those loan commitments outstanding at July 1, 2002. The
adoption of this new principle resulted in the recognition of an after-tax
credit of $3.8 million in the third quarter of 2002 reflecting the cumulative
adjustment which is the fair value of outstanding locked loan commitments at the
adoption date. In addition, growth of the mortgage pipeline of SIB Mortgage,
combined with a decreasing interest rate environment, resulted in an increase in
the value of locked loan commitments in the third quarter by $9.0 million, which
is reflected as a current period adjustment to earnings for the quarter ended
September 30, 2002. In the future, adjustments to the value of locked loan
commitments at SIB Mortgage will be reflected in the Company's income statement.
Generally, the value of locked loan commitments will increase in a falling
interest rate environment and will decrease in a rising interest rate
environment.
Stock Option Plan
- -----------------
As the Company previously disclosed, during its review of the third quarter,
management determined that certain cashless exercises of stock options were
conducted in such manner so as to require variable plan accounting for all
options issued under its stock option plan. This change in accounting requires
the restatement of earnings in prior periods to record the related non-cash
compensation expense. As a result, the Company will restate its financial
results for 2001 and the first two quarters of 2002 to reflect previously
unrecognized non-cash compensation expenses. The resulting non-cash after-tax
charge to earnings for 2001 is $14.7 million or $0.24 per diluted share. The
non-cash after-tax charge for the nine months ended September 30, 2002 is $3.4
million, or $0.06 per diluted share. This includes a non-cash charge of $10.8
million ($0.19 per diluted share) for the first quarter of 2002 (and no material
effect for the second quarter), and the previously mentioned credit of $7.4
million ($0.13 per diluted share) for the third quarter.
4
Also, as previously disclosed, the Company will amend its Annual Report on Form
10-K for the year ended December 31, 2001 as well as quarterly reports on Form
10-Q for the first three quarters of 2001, and the first two quarters of 2002,
and will file such amendments with the Securities and Exchange Commission as
promptly as practicable. The Company's financial statements at and for the year
ended December 31, 2001 to be included in the amended Annual Report on Form 10-K
will be subject to re-audit by the Company's new auditors.
* * *
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: Statements in this press release relating to plans, strategies, economic
performance and trends, projections of results of specific activities or
investments and other statements that are not descriptions of historical facts
may be forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-looking information
is inherently subject to risks and uncertainties, and actual results could
differ materially from those currently anticipated due to a number of factors,
which include, but are not limited to, factors discussed in the Company's Annual
Report on Form 10-K and in other documents filed by the Company with the
Securities and Exchange Commission from time to time. Forward-looking statements
may be identified by terms such are "may", "will", "should", "could", "expects",
"plans", "intends", "anticipates", "believes", "estimates", "predicts",
"forecasts", "potential", or "continue" or similar terms or the negative of
these terms. Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. The Company has no obligation
to update these forward-looking statements.
* * *
Staten Island Bancorp, Inc. is the holding company for SI Bank & Trust. SI Bank
& Trust was chartered in 1864 and currently operates 17 full service branches
and three limited service branches on Staten Island, New York, and two full
service branches in Brooklyn, New York; and 15 full service branches in New
Jersey. SI Bank & Trust also operates SIB Mortgage Corp., a wholly owned
subsidiary of SI Bank & Trust, which conducts business under the name of Ivy
Mortgage and has offices in 42 states. On September 30, 2002, Staten Island
Bancorp had $6.9 billion in total assets and $593.5 million of total
stockholders' equity.
Contacts: Investors: Donald Fleming
Staten Island Bancorp
(718) 697-2813
Media: Mike Pascale
The Abernathy MacGregor Group
(212) 371-5999
5
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
For the Three Months Ended September 30, For the Nine Months Ended September 30,
---------------------------------------------------------------------------------
Increase Increase
2002 2001(Restated) (Decrease) 2002 2001 (Restated) (Decrease)
---------------------------------------------------------------------------------
(000's omitted, except per share and share data)
Interest Income:
Loans $ 79,552 $ 66,721 $ 12,831 $ 225,190 $ 190,552 $ 34,638
Securities, available for sale 20,761 27,034 (6,273) 68,602 85,952 (17,350)
Federal funds sold 322 222 100 1,020 855 165
--------- --------- --------- --------- --------- ---------
Total interest income 100,635 93,977 6,658 294,812 277,359 17,453
--------- --------- --------- --------- --------- ---------
Interest Expense:
Savings and escrow 4,285 4,644 (359) 13,686 13,521 165
Certificates of deposits 9,837 13,101 (3,264) 29,994 41,237 (11,243)
Money market and NOW accounts 4,423 3,052 1,371 11,765 7,180 4,585
Borrowed funds 29,821 31,276 (1,455) 86,340 99,098 (12,758)
--------- --------- --------- --------- --------- ---------
Total interest expense 48,366 52,073 (3,707) 141,785 161,036 (19,251)
--------- --------- --------- --------- --------- ---------
Net interest income 52,269 41,904 10,365 153,027 116,323 36,704
Provision for Loan Losses 3,349 2,600 749 9,839 3,800 6,039
--------- --------- --------- --------- --------- ---------
Net interest income after provision for loan
losses 48,920 39,304 9,616 143,188 112,523 30,665
Other Income (Loss):
Service and fee income 5,865 4,793 1,072 19,445 14,384 5,061
Net gains on loan sales 69,255 25,851 43,404 139,903 52,252 87,651
Loan fees 7,252 4,311 2,941 19,095 10,505 8,590
Securities transactions (460) 61 (521) (7,611) 64 (7,675)
--------- --------- --------- --------- --------- ---------
81,912 35,016 46,896 170,832 77,205 93,627
Other Expenses:
Personnel 10,806 8,833 1,973 71,328 50,595 20,733
Commissions 33,735 12,802 20,933 75,479 27,535 47,944
Occupancy and equipment 4,085 3,248 837 11,520 9,504 2,016
Amortization of intangible assets 138 1,373 (1,235) 436 4,191 (3,755)
Data processing 1,643 1,528 115 5,016 4,518 498
Marketing 1,322 600 722 3,814 2,061 1,753
Professional fees 2,978 1,225 1,753 8,697 2,671 6,026
Other 10,363 6,539 3,824 28,135 16,677 11,458
--------- --------- --------- --------- --------- ---------
Total other expenses 65,070 36,148 28,922 204,425 117,752 86,673
--------- --------- --------- --------- --------- ---------
Income before provision for income taxes 65,762 38,172 27,590 109,595 71,976 37,619
Provision for Income Taxes 25,493 15,558 9,935 40,497 27,384 13,113
--------- --------- --------- --------- --------- ---------
Income before cumulative effect of accounting
change 40,269 22,614 17,655 69,098 44,592 24,506
Cumulative effect of change in accounting
for FAS #133 3,801 -- 3,801 3,801 -- 3,801
--------- --------- --------- --------- --------- ---------
Net Income $ 44,070 $ 22,614 $ 21,456 $ 72,899 $ 44,592 $ 28,307
========= ========= ========= ========= ========= =========
Earnings Per Share Before Cumulative
Effect of Accounting Change: (1)
Basic $ 0.72 $ 0.37 $ 1.23 $ 0.73
Fully Diluted $ 0.70 $ 0.37 $ 1.20 $ 0.72
Earnings Per Share After Cumulative
Effect of Accounting Change: (1)
Basic $ 0.79 $ 0.37 $ 1.30 $ 0.73
Fully Diluted $ 0.77 $ 0.37 $ 1.27 $ 0.72
Dividends Declared $ 0.13 $ 0.09 $ 0.36 $ 0.25
Weighted Average: Fully Diluted (1)
Common Shares 90,260,624 90,260,624 90,260,624 90,260,624
Less: Unallocated ESOP/RRP Shares 5,181,972 5,632,980 5,288,700 5,745,161
Less: Treasury Shares 28,349,135 24,117,073 27,407,373 22,972,249
----------- ----------- ----------- -----------
56,729,517 60,510,571 57,564,551 61,543,214
=========== =========== =========== ===========
(1) Prior period amounts have been adjusted to reflect the 2-for-1 stock split
on November 19, 2001.
6
CONSOLIDATED STATEMENTS OF CONDITION (unaudited)
September 30, 2002 (Restated)
(unaudited) December 31, 2001 Increase (Decrease)
----------------- ----------------- ------------------
(000's omitted)
ASSETS:
Cash and due from banks $ 113,753 $ 116,846 $ (3,093)
Federal funds sold 395,000 38,000 357,000
Securities available for sale 1,202,182 1,528,639 (326,457)
Loans, net less allowance for loan losses of $23,908
in 2002 and $20,041 in 2001 3,287,367 2,806,619 480,748
Loans held for sale 1,526,620 1,187,373 339,247
Accrued interest receivable 32,803 28,601 4,202
Bank premises and equipment, net 45,540 38,939 6,601
Intangible assets, net 58,094 58,871 (777)
Other assets 219,680 201,609 18,071
----------------- ----------------- ------------------
Total assets $ 6,881,039 $ 6,005,497 $ 875,542
================= ================= ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Due Depositors-
Savings $ 1,012,470 $ 868,028 $ 144,442
Certificates of deposits 1,153,951 1,083,900 70,051
Money market 579,961 350,558 229,403
NOW accounts 132,892 115,349 17,543
Demand deposits 574,654 483,493 91,161
----------------- ----------------- ------------------
Total deposits 3,453,928 2,901,328 552,600
Borrowed funds 2,746,151 2,451,762 294,389
Advances from borrowers for taxes and insurance 26,602 17,495 9,107
Accrued interest and other liabilities 60,880 70,665 (9,785)
----------------- ----------------- ------------------
Total liabilities 6,287,561 5,441,250 846,311
----------------- ----------------- ------------------
STOCKHOLDERS' EQUITY:
Common stock, par value $.01 per share, 100,000,000 shares authorized,
90,260,624 issued and 60,227,107 outstanding at September 30, 2002 and
90,260,624 issued and
62,487,286 outstanding at December 31, 2001 902 902 -
Additional paid-in-capital 582,305 570,357 11,948
Retained earnings 379,328 325,088 54,240
Unallocated common stock held by ESOP (28,155) (30,215) 2,060
Unearned common stock held by RRP (9,052) (14,333) 5,281
Treasury stock (30,033,517 shares at September 30, 2002
and 27,773,338 at December 31, 2001), at cost (340,461) (289,469) (50,992)
----------------- ----------------- ------------------
584,867 562,330 22,537
Accumulated other comprehensive income, net of taxes 8,611 1,917 6,694
----------------- ----------------- ------------------
Total stockholders' equity 593,478 564,247 29,231
----------------- ----------------- ------------------
Total liabilities and stockholders' equity $ 6,881,039 $ 6,005,497 $ 875,542
================= ================= ==================
7
SELECTED DATA (unaudited)
At or For the Three Months At or For the Nine Months
Ended September 30, Ended September 30,
-------------------------------------- ------------------------------------
2002 2001 (Restated) 2002 2001 (Restated)
-------------------------------------- ------------------------------------
(Dollars in thousands, except per share data)
Performance Ratios:
Return on average assets 2.49% 1.57% 1.52% 1.08%
Return on average equity 27.18% 16.00% 16.86% 10.37%
Earnings per share before accounting change
Earnings per share - Fully diluted (1) $ 0.70 $ 0.37 $1.20 $ 0.72
Cash earnings per share - Fully diluted (1) $ 0.62 $ 0.35 $1.38 $ 0.92
Core earnings per share - Fully diluted (1) $ 0.70 $ 0.37 $1.28 $ 0.72
Core cash earnings per share - Fully diluted (1) $ 0.63 $ 0.35 $1.46 $ 0.92
Earnings per share after accounting change
Earnings per share - Fully diluted (1) $ 0.77 $ 0.37 $1.27 $ 0.72
Cash earnings per share - Fully diluted (1) $ 0.62 $ 0.35 $1.38 $ 0.92
Core earnings per share - Fully diluted (1) $ 0.70 $ 0.37 $1.28 $ 0.72
Core cash earnings per share - Fully diluted (1) $ 0.63 $ 0.35 $1.46 $ 0.92
Average interest-earning assets to
average interest-bearing liabilities 111.71% 114.70% 112.64% 115.25%
Interest rate spread 2.95% 2.57% 3.04% 2.38%
Net interest margin 3.31% 3.15% 3.44% 3.02%
Noninterest expenses, exclusive of
amortization of intangible assets, to
average assets 3.79% 2.42% 4.24% 2.74%
Efficiency ratio 47.77% 45.24% 61.52% 58.64%
Capital and Other Ratios:
Average equity to average assets 8.81% 10.02% 8.99% 10.37%
Tangible equity to assets at end of
period 7.67% 8.73% 7.67% 8.73%
Total capital to risk-weighted assets 14.00% 15.94% 14.00% 15.94%
Tangible book value per share (1) $ 8.89 $ 7.91 $8.89 $ 7.91
Asset Quality:
Non-accruing loans and real estate owned
to total assets at end of the period 0.35% 0.27% 0.35% 0.27%
Allowance for loan losses to
non-accruing loans at end of period 149.47% 117.29% 149.47% 117.29%
Allowance for loan losses to total loans
at end of period 0.50% 0.47% 0.50% 0.47%
Non-accruing loans $ 15,995 $ 14,531 $ 15,995 $ 14,531
Non-accruing loans and real estate owned $ 23,836 $ 15,631 $ 23,836 $ 15,631
Allowance for loan losses $ 23,908 $ 17,043 $ 23,908 $ 17,043
(1) Prior period amounts have been adjusted to reflect the 2-for-1 stock split
on November 19, 2001.
8
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
*******************************QUARTER ENDED************************************
September 30, June 30, March 31, December 31, September 30,
--------------------------------------------------------------------------------
2002 2002 2002 2001 2001
--------------------------------------------------------------------------------
(000's omitted, except per share and share data)
(Restated) (Restated) (Restated) (Restated)
Interest Income:
Loans $ 79,552 $ 75,755 $ 69,883 $ 68,860 $ 66,721
Securities, available for sale 20,761 24,016 23,825 26,514 27,034
Federal funds sold 322 189 509 250 222
------------------------------------------------------------------------------
Total interest income 100,635 99,960 94,217 95,624 93,977
------------------------------------------------------------------------------
Interest Expense:
Savings and escrow 4,285 4,918 4,483 4,290 4,644
Certificates of deposits 9,837 9,811 10,346 11,834 13,101
Money market and NOW 4,423 3,985 3,357 3,129 3,052
Borrowed funds 29,821 28,379 28,140 30,289 31,276
------------------------------------------------------------------------------
Total interest expense 48,366 47,093 46,326 49,542 52,073
------------------------------------------------------------------------------
Net interest income 52,269 52,867 47,891 46,082 41,904
Provision for Loan Losses 3,349 4,990 1,500 4,957 2,600
------------------------------------------------------------------------------
Net interest income after provision for
loan losses 48,920 47,877 46,391 41,125 39,304
Other Income (Loss):
Service and fee income 5,865 8,528 5,052 4,958 4,793
Net gains on loan sales 69,255 35,793 34,855 40,337 25,851
Loan fees 7,252 5,063 6,780 6,155 4,311
Securities transactions (460) (6,818) (333) (171) 61
------------------------------------------------------------------------------
81,912 42,566 46,354 51,279 35,016
Other Expenses:
Personnel 10,806 21,353 39,169 38,150 8,833
Commissions 33,735 21,105 20,639 24,152 12,802
Occupancy and equipment 4,085 3,814 3,621 3,315 3,248
Amortization of intangible assets 138 153 145 1,152 1,373
FDIC Insurance 131 125 120 116 115
Data processing 1,643 1,667 1,706 1,497 1,528
Marketing 1,322 1,382 1,110 443 600
Professional fees 2,978 3,059 2,660 1,584 1,225
Other 10,232 9,249 8,278 7,643 6,424
------------------------------------------------------------------------------
Total other expenses 65,070 61,907 77,448 78,052 36,148
------------------------------------------------------------------------------
Income before provision for income taxes 65,762 28,536 15,297 14,352 38,172
Provision for Income Taxes 25,493 10,965 4,039 3,571 15,558
------------------------------------------------------------------------------
Income before cumulative effect of
accounting change 40,269 17,571 11,258 10,781 22,614
Cumulative effect of change in
accounting for FAS #133 3,801 -- -- -- --
------------------------------------------------------------------------------
Net Income $ 44,070 $ 17,571 $ 11,258 $ 10,781 $ 22,614
==============================================================================
Earnings Per Share Before Cumulative
Effect of Accounting Change: (1)
Basic $ 0.72 $ 0.31 $ 0.20 $ 0.19 $ 0.37
Fully Diluted $ 0.70 $ 0.31 $ 0.19 $ 0.19 $ 0.37
Earnings Per Share After Cumulative
Effect of Accounting Change: (1)
Basic $ 0.79 $ 0.31 $ 0.20 $ 0.19 $ 0.37
Fully Diluted $ 0.77 $ 0.31 $ 0.19 $ 0.19 $ 0.37
Dividends Declared Per Share (1) $ 0.13 $ 0.12 $ 0.11 $ 0.10 $ 0.09
Stock Closing Price 17.400 19.200 19.680 16.310 12.325
Weighted Average Shares - Fully Diluted (1)
Common Shares 90,260,624 90,260,624 90,260,624 90,260,624 90,260,624
Less: Unallocated ESOP/RRP Shares 5,181,972 5,296,410 5,390,001 5,501,952 5,632,980
Less: Treasury Shares 28,349,135 27,593,635 26,979,496 26,438,665 24,117,072
------------------------------------------------------------------------------
56,729,517 57,370,579 57,891,127 58,320,007 60,510,572
==============================================================================
(1) Prior period amounts have been adjusted to reflect the 2-for-1 stock split
on November 19, 2001.
9
AVERAGE BALANCES, NET INTEREST INCOME, YIELDS EARNED AND RATES PAID (unaudited)
Three Months Ended September 30,
-------------------------------------------------------------------------
2002 2001 (Restated)
----------------------------------- -------------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------------- ----------- --------- ------------- ------------ ---------
(000's omitted)
Interest-earning assets:
Loans receivable (1):
Real estate loans $ 4,576,827 $ 77,382 6.71% $ 3,445,149 $ 64,162 7.39%
Other loans 106,516 2,170 8.09% 113,393 2,559 8.95%
------------- ----------- ------------- ------------
Total loans 4,683,343 79,552 6.74% 3,558,542 66,721 7.44%
Securities 1,496,641 20,761 5.50% 1,680,739 27,034 6.38%
Other interest-earning assets (2) 81,017 322 1.57% 39,428 222 2.24%
------------- ----------- ------------- ------------
Total interest-earning assets 6,261,001 100,635 6.38% 5,278,709 93,977 7.06%
----------- ------------
Noninterest-earning assets 537,595 420,060
------------- -------------
Total assets $ 6,798,596 $ 5,698,769
============= =============
Interest-bearing liabilities:
Deposits:
NOW and money market deposits $ 685,731 4,423 2.56% $ 358,101 3,052 3.38%
Savings and escrow accounts 1,032,947 4,285 1.65% 820,782 4,644 2.24%
Certificates of deposits 1,136,876 9,837 3.43% 1,013,335 13,101 5.13%
------------- ----------- ------------- ------------
Total deposits 2,855,554 18,545 2.58% 2,192,218 20,797 3.76%
Total Other Borrowings 2,748,914 29,821 4.30% 2,410,145 31,276 5.15%
------------- ----------- ------------- ------------
Total interest-bearing liabilities 5,604,468 48,366 3.42% 4,602,363 52,073 4.49%
----------- ------------
Noninterest-bearing liabilities (3) 594,869 525,278
------------- -------------
Total liabilities 6,199,337 5,127,641
Stockholders' equity 599,259 571,128
------------- -------------
Total liabilities and stockholders'
equity $6,798,596 $ 5,698,769
============= =============
Net interest-earning assets $ 656,533 $ 676,346
============= =============
Net interest income/interest rate spread $ 52,269 2.95% $ 41,904 2.57%
=========== ========= ============ =========
Net interest margin 3.31% 3.15%
========= =========
Ratio of average interest-earning assets
to average interest-bearing liabilities 111.71% 114.70%
========= =========
Nine Months Ended September 30,
-------------------------------------------------------------------------
2002 2001 (Restated)
----------------------------------- -------------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------------- ----------- --------- ------------- ------------ ---------
(000's omitted)
Interest-earning assets:
Loans receivable (1):
Real estate loans $ 4,180,795 $ 218,563 6.99% $ 3,231,687 $ 182,406 7.55%
Other loans 106,172 6,627 8.35% 116,791 8,146 9.33%
------------- ----------- ------------- ------------
Total loans 4,286,967 225,190 7.02% 3,348,478 190,552 7.61%
Securities 1,575,795 68,602 5.82% 1,772,115 85,952 6.48%
Other interest-earning assets (2) 88,063 1,020 1.55% 35,381 855 3.23%
------------ ----------- ------------- ------------
Total interest-earning assets 5,950,825 294,812 6.62% 5,155,974 277,359 7.19%
----------- ------------
Noninterest-earning assets 479,564 387,833
------------- -------------
Total assets $ 6,430,389 $ 5,543,807
============= =============
Interest-bearing liabilities:
Deposits:
NOW and money market deposits $ 609,746 11,765 2.58% $ 297,520 7,180 3.23%
Savings and escrow accounts 982,074 13,686 1.86% 804,935 13,521 2.25%
Certificates of deposits 1,106,180 29,994 3.63% 1,004,515 41,237 5.49%
------------- ----------- ------------- ------------
Total deposits 2,698,000 55,445 2.75% 2,106,970 61,938 3.93%
Total Other Borrowings 2,584,847 86,340 4.47% 2,366,795 99,098 5.60%
------------- ----------- ------------- ------------
Total interest-bearing liabilities 5,282,847 141,785 3.59% 4,473,765 161,036 4.81%
----------- ------------
Noninterest-bearing liabilities (3) 569,328 494,998
------------- -------------
Total liabilities 5,852,175 4,968,763
Stockholders' equity 578,214 575,044
------------- -------------
Total liabilities and stockholders'
equity $6,430,389 $ 5,543,807
============= =============
Net interest-earning assets $ 667,978 $ 682,209
============= =============
Net interest income/interest rate spread $ 153,027 3.04% $ 116,323 2.38%
=========== ========= ============ =========
Net interest margin 3.44% 3.02%
========= =========
Ratio of average interest-earning assets
to average interest-bearing liabilities 112.64% 115.25%
========= =========
- ------------------
(1) The average balance of loans receivable includes nonperforming loans,
interest on which is recognized on a cash basis.
(2) Includes money market accounts and Federal Funds sold.
(3) Consists primarily of demand deposit accounts.
10
Segment Reporting Table
For The Three Months Ended September 30, 2002 and 2001
---------------------------------------------------------------
Quarter to Date
September 30, 2002
(000's omitted)
unaudited
---------------------------------------------------------------
Elimination of
Community Intersegment
Mortgage Banking Banking Items Totals
---------------------------------------------------------------
Interest income $ 22,800 $ 93,433 $ (15,598) $ 100,635
---------------------------------------------------------------
Interest expense 17,026 46,938 (15,598) 48,366
---------------------------------------------------------------
Net Interest income 5,774 46,495 - 52,269
Provision for loan losses 3,119 230 - 3,349
Other income (loss):
Service and fee income - 5,865 - 5,865
Net gains (losses) on loan sales 69,743 792 (1,280) 69,255
Loan fees 7,153 99 - 7,252
Securities transactions - (460) - (460)
---------------------------------------------------------------
Total other income (loss) 76,896 6,296 (1,280) 81,912
Other expenses 57,937 7,133 - 65,070
---------------------------------------------------------------
Income before provision for income taxes 21,614 45,428 (1,280) 65,762
Provision for income taxes 8,970 16,997 (474) 25,493
---------------------------------------------------------------
Income before cumulative effect of accounting change 12,644 28,431 (806) 40,269
Cumulative effect of change in accounting for FAS #133 3,801 - - 3,801
---------------------------------------------------------------
Net income $ 16,445 $ 28,431 $ (806) $ 44,070
===============================================================
---------------------------------------------------------------
Quarter to Date
September 30, 2001
(000's omitted)
unaudited/restated
---------------------------------------------------------------
Elimination of
Community Intersegment
Mortgage Banking Banking Items Totals
---------------------------------------------------------------
Interest income $ 16,327 $ 89,861 $ (12,211) $ 93,977
---------------------------------------------------------------
Interest expense 11,028 53,256 (12,211) 52,073
---------------------------------------------------------------
Net Interest income 5,299 36,605 - 41,904
Provision for loan losses 1,166 1,434 - 2,600
Other income (loss):
Service and fee income - 4,793 - 4,793
Net gains (losses) on loan sales 26,948 (621) (476) 25,851
Loan fees 4,012 299 - 4,311
Securities transactions - 61 - 61
---------------------------------------------------------------
Total other income (loss) 30,960 4,532 (476) 35,016
Other expenses 23,634 12,514 - 36,148
---------------------------------------------------------------
Income before provision for income taxes 11,459 27,189 (476) 38,172
Provision for income taxes 4,751 10,983 (176) 15,558
---------------------------------------------------------------
Income before cumulative effect of accounting change 6,708 16,206 (300) 22,614
---------------------------------------------------------------
Net income $ 6,708 $ 16,206 $ (300) $ 22,614
===============================================================
11
Segment Reporting Table
For The Nine Months Ended September 30, 2002 and 2001
---------------------------------------------------------------
Year to Date
September 30, 2002
(000's omitted)
unaudited
---------------------------------------------------------------
Elimination of
Community Intersegment
Mortgage Banking Banking Items Totals
---------------------------------------------------------------
Interest income $ 68,074 $ 270,194 $ (43,456) $ 294,812
---------------------------------------------------------------
Interest expense 46,397 138,844 (43,456) 141,785
---------------------------------------------------------------
Net Interest income 21,677 131,350 - 153,027
Provision for loan losses 7,709 2,130 - 9,839
Other income (loss):
Service and fee income - 19,445 - 19,445
Net gains (losses) on loan sales 148,501 347 (8,945) 139,903
Loan fees 18,466 629 - 19,095
Securities transactions - (7,611) - (7,611)
---------------------------------------------------------------
Total other income (loss) 166,967 12,810 (8,945) 170,832
Other expenses 138,961 65,464 - 204,425
---------------------------------------------------------------
Income before provision for income taxes 41,974 76,566 (8,945) 109,595
Provision for income taxes 17,419 26,388 (3,310) 40,497
---------------------------------------------------------------
Income before cumulative effect of accounting change 24,555 50,178 (5,635) 69,098
Cumulative effect of change in accounting for FAS #133 3,801 - - 3,801
---------------------------------------------------------------
Net income $ 28,356 $ 50,178 $ (5,635) $ 72,899
===============================================================
---------------------------------------------------------------
Year to Date
September 30, 2001
(000's omitted)
unaudited/restated
---------------------------------------------------------------
Elimination of
Community Intersegment
Mortgage Banking Banking Items Totals
---------------------------------------------------------------
Interest income $ 39,961 $ 263,210 $ (25,812) $ 277,359
---------------------------------------------------------------
Interest expense 25,812 161,036 (25,812) 161,036
---------------------------------------------------------------
Net Interest income 14,149 102,174 - 116,323
Provision for loan losses 1,501 2,299 - 3,800
Other income (loss):
Service and fee income - 14,384 - 14,384
Net gains (losses) on loan sales 54,474 (1,555) (667) 52,252
Loan fees 9,833 672 - 10,505
Securities transactions - 64 - 64
---------------------------------------------------------------
Total other income (loss) 64,307 13,565 (667) 77,205
Other expenses 56,090 61,662 - 117,752
---------------------------------------------------------------
Income before provision for income taxes 20,865 51,778 (667) 71,976
Provision for income taxes 8,659 18,972 (247) 27,384
---------------------------------------------------------------
Income before cumulative effect of accounting change 12,206 32,806 (420) 44,592
---------------------------------------------------------------
Net income $ 12,206 $ 32,806 $ (420) $ 44,592
===============================================================
12
The Mortgage Company sells various types of loans in the secondary market.
The following table summarizes loans shipped and gross margins realized by type
of loan excluding the effect of market value changes on loan commitments
(unaudited).
----------------------------------------------- ---------------------------------------------------
Quarter Ended September 30, 2002 Year to Date September 30, 2002
----------------------------------------------- ---------------------------------------------------
Type Volume Gain Gross Margin Volume Gain Gross Margin
- --------------------------------------------------------------------------------------------------------------------------
Agency $ 926,538 $ 24,819 2.68% $ 2,285,067 $ 53,846 2.36%
Government 197,130 5,797 2.94% 831,727 21,521 2.59%
Jumbo 161,747 3,069 1.90% 375,403 6,425 1.71%
ALT-A 768,788 21,491 2.80% 1,615,005 52,221 3.23%
Sub Prime 62,204 2,348 3.78% 89,910 3,519 3.91%
----------------------------------------------- ---------------------------------------------------
Total $ 2,116,407 $ 57,524 2.72% $ 5,197,112 $ 137,532 2.65%
=============================================== ===================================================
Quarter Ended September 30, 2001 Year to Date September 30, 2001
----------------------------------------------- ---------------------------------------------------
Type Volume Gain Gross Margin Volume Gain Gross Margin
- --------------------------------------------------------------------------------------------------------------------------
Agency $ 396,699 $ 10,923 2.75% $ 1,004,866 $ 23,725 2.36%
Government 207,207 7,384 3.56% 367,276 12,023 3.27%
Jumbo 95,609 1,723 1.80% 196,373 3,061 1.56%
ALT-A 145,124 6,679 4.60% 338,794 15,020 4.43%
Sub Prime 8,549 239 2.79% 22,158 645 2.91%
----------------------------------------------- ---------------------------------------------------
Total $ 853,188 $ 26,948 3.16% $ 1,929,467 $ 54,474 2.82%
=============================================== ===================================================
13
Loan Portfolio Composition: The following table sets forth the composition of
the Bank's held for investment loans at the dates indicated. (unaudited)
September 30, 2002 December 31, 2001 Increase (Decrease)
-------------------------------------------------------------------------
(000's omitted)
Mortgage loans: (1)
Single-family residential $ 2,528,621 $ 2,062,336 $ 466,285
Multi-family residential 54,184 48,783 5,401
Commercial real estate 413,891 335,821 78,070
Construction and land 175,487 245,515 (70,028)
Home equity 18,015 12,815 5,200
--------------------- --------------------- ---------------------
Total mortgage loans 3,190,198 2,705,270 484,928
Other loans:
Student loans 162 288 (126)
Passbook loans 8,794 7,477 1,317
Commercial business loans 43,128 42,962 166
Other consumer loans 54,536 60,292 (5,756)
--------------------- --------------------- ---------------------
Total other loans 106,620 111,019 (4,399)
--------------------- --------------------- ---------------------
Total loans receivable 3,296,818 2,816,289 480,529
Less:
Premium (discount) on loans purchased 4,107 5,135 (1,028)
Allowance for loan losses (23,908) (20,041) (3,867)
Deferred loan costs (fees) 10,350 5,236 5,114
--------------------- --------------------- ---------------------
Loans receivable, net $ 3,287,367 $ 2,806,619 $ 480,748
===================== ===================== =====================
- ------------------
(1) Mortgage loans held for sale, net at September 30, 2002 and December 31,
2001, of $1.5 billion and $1.2 billion, respectively, are not included in
this table.
14
Delinquent Loans: The following table sets forth information concerning
delinquent loans at the dates indicated. The amounts presented represent the
total outstanding principal balances of the related held for investment and held
for sale loans, rather than the actual payment amounts that are past due.
September 30, 2002 December 31, 2001
(unaudited) (unaudited)
------------------------- -------------------------
(000's Omitted)
90 Days or More
- ---------------
Mortgage loans:
Single-family residential $ 942 $ 5,432
Multi-family residential - -
Commercial real estate - -
Construction and land 102 509
Home equity 30 30
------------------------- -------------------------
Total mortgage loans 1,074 5,971
Other loans:
Commercial business loans - 774
Other loans 301 468
------------------------- -------------------------
Total other loans 301 1,242
------------------------- -------------------------
Total $ 1,375 $ 7,213
========================= =========================
September 30, 2002 December 31, 2001
(unaudited) (unaudited)
------------------------- -------------------------
60-89 Days
- ----------
Mortgage loans:
Single-family residential $ 5,631 $ 5,945
Multi-family residential - 162
Commercial real estate 69 1,510
Construction and land 191 5,339
Home equity 297 258
------------------------- -------------------------
Total mortgage loans 6,188 13,214
Other loans:
Commercial business loans 1,015 42
Other loans 524 586
------------------------- -------------------------
Total other loans 1,539 628
------------------------- -------------------------
Total $ 7,727 $ 13,842
========================= =========================
September 30, 2002 December 31, 2001
(unaudited) (unaudited)
------------------------- -------------------------
30-59 Days
- ----------
Mortgage loans:
Single-family residential $ 13,961 $ 15,634
Multi-family residential - 567
Commercial real estate 3,043 3,848
Construction and land 3,013 9,113
Home equity 120 62
------------------------- -------------------------
Total mortgage loans 20,137 29,224
Other loans:
Commercial business loans 3,422 1,257
Other loans 1,388 2,645
------------------------- -------------------------
Total other loans 4,810 3,902
------------------------- -------------------------
Total $ 24,947 $ 33,126
========================= =========================
15