UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Transition period from to
Commission File No. 0-27650
CATSKILL FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 14-1788465
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
341 MAIN STREET, CATSKILL, NY 12414
(Address of principal executive offices)
Registrant's telephone number, including area code: (518)943-3600
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
(Title of Class)
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. Yes [X] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10K or any amendments to this
Form 10K. [X]
As of December 17, 1999, the aggregate market value of voting stock held by
non-affiliates (based upon reported beneficial ownership of all directors and
executive officers of the registrant; this determination does not however,
constitute an admission of affiliated status for any of these individual
stockholders) of the registrant, excluding unallocated ESOP shares, was
approximately $44.7 million.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common Shares, $.01 par value 3,789,211
(Title of class) (outstanding at December 17, 1999)
ANNUAL REPORT FOR 1999 ON FORM 10-K
TABLE OF CONTENTS
PART I
Item 1 Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
PART II
Item 5. Market for Registrant's Common Equity
and Related Shareholder Matters
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures about Market Risks
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
PART III
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial
Owners and Management
Item 13. Certain Relationships and Related Transactions
PART IV
Item 14. Exhibits and Financial Statement Schedules and Reports on
Reports on Form 8-K
SIGNATURES
DOCUMENTS INCORPORATED BY REFERENCE
Documents Part of 10-K into which incorporated
--------- ------------------------------------
Portions of the Annual Report to
Stockholders for fiscal year
ended September 30, 1999. Parts II and IV
Definitive Proxy Statement of the
Registrant dated January 14, 2000,
in connection with the Annual
Meeting of Stockholders to be
held February 15, 2000, which is
expected to be filed on/or about
January 14, 2000. Part III
PART I
ITEM 1. BUSINESS
General
Catskill Financial Corporation (the "Company" or "Catskill Financial") was
formed in December 1995 for the purpose of acquiring all of the common stock of
Catskill Savings Bank (the "Bank") upon the conversion of the Bank from the
mutual to the stock form of ownership. The Company is incorporated under the
laws of the state of Delaware, is qualified to do business in the state of New
York, and generally is authorized to engage in any activity that is permitted by
the Delaware General Corporation Law. On April 18, 1996, the Company converted
to the stock form of ownership, the Company acquired all of the issued and
outstanding shares of stock of the Bank, and the Company completed its initial
public stock offering, issuing 5,686,750 shares of $.01 par value common stock
at $10.00 per share. Net proceeds to the Company were $54.9 million after
conversion and stock offering costs, and $50.4 million excluding the shares
acquired by the Company's newly formed Employee Stock Ownership Plan (the
"ESOP").
The consolidated financial condition and operating results of the Company are
primarily dependent upon its wholly owned subsidiary, the Bank, and all
references to the Company and its financial data prior to April 18, 1996, except
where otherwise indicated, refer to the Bank and its financial data.
The Bank was organized in 1868, as a state chartered mutual savings bank. In
January 1996, the Bank converted to a federally chartered stock savings bank.
The Bank is a member of the Bank Insurance Fund ("BIF"), which is administered
by the Federal Deposit Insurance Corporation ("FDIC"). Accordingly, its deposits
are insured up to applicable limits by the FDIC, which insurance is backed by
the full faith and credit of the United States. The Company's primary market
area is comprised of Greene County and southern Albany and Schoharie Counties in
New York, serviced by the Bank's main office and five other banking offices.
The Bank has been and intends to continue to be a community-oriented financial
institution offering financial services to meet the needs of the communities it
serves. The Bank attracts deposits from the general public and uses such
deposits, together with other funds such as borrowings, to originate one to four
family residential mortgages and, to a lesser extent, consumer (including home
equity lines of credit), commercial and multi-family real estate and other loans
in the Bank's primary market area. The Bank offers deposit accounts having a
range of interest rates and terms. The Bank only solicits deposits in its
primary market area and does not have brokered deposits. The Bank is a member of
the Federal Home Loan Bank of New York ("FHLB").
Regulation
The following is a summary of certain statutes and regulations affecting the
Company and the Bank. The Bank, as a federally chartered, FDIC insured, savings
bank, derives its powers principally from federal law and is subject to
comprehensive regulation of virtually every aspect of its business operations.
The following summary is selective and should not be considered to be a complete
discussion of all regulation affecting the Company or the Bank.
General Bank Regulation. The Bank's primary federal bank regulator is the Office
of Thrift Supervision ("OTS"). The Bank is also subject to regulation by the
FDIC as the insurer of its deposits. The Bank must file periodic reports with
the OTS and is regularly examined by the OTS. As a result of these examinations,
the Bank can be required to adjust its loan classifications or allowance for
loan losses, take other actions to correct deficiencies found during the
examinations, or cease engaging in certain activities. The Bank is generally
permitted to open deposit-taking branches throughout the United States,
regardless of local laws regarding branching.
The OTS may institute enforcement action against the Bank for violations of law
or for unsafe and unsound banking practices. Enforcement actions can include the
issuance of cease and desist orders, the commencement of removal proceedings in
which an employee, officer or director can be removed from involvement with the
Bank, the assessment of civil monetary penalties, and injunctive relief. The
FDIC may terminate the insurance of deposits, after notice and hearing, upon a
finding that an institution has engaged in unsafe and unsound practices, cannot
continue operations because it is in an unsafe and unsound condition, or has
violated any applicable law, regulation, rule, order or condition imposed by the
OTS or FDIC. The FDIC may instead impose less severe sanctions. Neither the OTS
nor the FDIC (which was also the Bank's primary federal regulator before the
Bank became a federal savings bank in January 1996) has ever instituted any
enforcement action against the Bank.
Federal law and OTS regulations limit the percentage of the Bank's assets that
can be invested in certain investments. For example, commercial, corporate and
business loans, other than those secured by real estate collateral, are limited
in the aggregate to 10% of assets. The purchase of below investment grade debt
securities is prohibited. Loans secured by non-residential real property cannot,
in the aggregate, exceed 400% of capital. Consumer loans not secured by
residential real estate are generally limited, in the aggregate, to 35% of total
assets. Loans secured by residential real property, and many other types of
loans and investments, are not subject to any percentage of asset limit.
Generally, the Bank may not lend more than 15% of unimpaired capital and surplus
to one borrower, representing a lending limit of $7.8 million per borrower, with
an additional 10% of unimpaired capital and surplus being permitted if secured
by certain readily marketable collateral. The Bank is in compliance with all
these limits. The Bank's largest loan to one borrower at September 30, 1999, was
a $1.0 million participation loan secured by a motel in Albany County.
The OTS also imposes a semi-annual assessment on all OTS regulated institutions
to defer the cost of OTS regulation. For the semi-annual period ended December
31, 1999, the Bank's OTS assessment was $35,474.
The Company is a unitary savings and loan holding company, and its sole
FDIC-insured subsidiary, the Bank, is a qualified thrift lender ("QTL",
discussed in more detail below). Therefore, the Company generally has broad
authority to engage in all types of business activities. If the Company were to
acquire another insured institution as a separate subsidiary or if the Bank
fails to remain a QTL, the Company's activities will be similar to those
permitted of multiple savings and loan holding companies. In general, a multiple
savings and loan holding company (or subsidiary thereof that is not an insured
institution) may, subject to OTS approval in most cases, engage in activities
comparable to those permitted for bank holding companies, certain insurance
activities, and certain activities related to the operations of its FDIC-insured
subsidiaries.
New Legislation. After the end of our 1999 fiscal year, President Clinton signed
the Gramm-Leach-Bliley Act which makes substantial changes in the permitted
relationships between banks, securities firms, insurance companies and their
holding companies. The statute is too new to be able to fully evaluate its
effects on the Company and the Bank. However, the Company believes most of the
direct effects of the statute will be minimal because it primarily affects the
operations of much larger institutions.
One significant change in the law which could indirectly affect the Company is a
change in the ability to become a unitary savings and loan holding company. In
general, the Company, as a unitary savings and loan holding company, may engage,
through non-banking subsidiaries, in whatever activities it wants to engage in.
The new law protects the existing rights of the Company to engage in a wide
range of activities. However, there can be no new unitary savings and loan
holding companies and existing companies cannot take advantage of the old law by
acquiring a pre-existing unitary savings and loan holding company. This could
adversely affect the market price of the stock of existing savings and loan
holding companies because acquisitions of them could cause them to lose their
broad powers to engage in non-banking activities.
Capital Requirements. The Bank is subject to minimum capital requirements
imposed by the OTS. The Bank must maintain (i) tangible capital of 1.5% of
tangible assets, (ii) core capital of 4.0% of adjusted tangible assets, and
(iii) a risk-based capital requirement of 8.0% of risk-weighted assets. Under
current law and regulations, there are no capital requirements directly
applicable to the Company. The Bank substantially exceeds all minimum capital
standards imposed by the OTS. At September 30, 1999, the Bank had a tangible
capital ratio of 15.18%, a core capital ratio of 15.18% and a risk based capital
ratio of 31.75%. OTS regulations require that certain institutions with more
than normal interest rate risk must make a deduction from capital before
determining compliance with the minimum capital requirements. The Bank had
previously been exempt from the deduction requirement because it had total
assets less than $300 million and risk based capital in excess of 12%. However,
the Bank's capital ratios are high enough that even if the exemption is
withdrawn, the deduction would not have a material effect on the Bank's
compliance with OTS capital requirements.
The OTS has the authority to require that an institution take prompt corrective
action to solve problems if the institution is undercapitalized, significantly
undercapitalized or critically undercapitalized. Because of the Bank's high
capital ratios, the prompt corrective action regulations are not expected to
have an effect on the Company.
Deposit Insurance Premiums. The FDIC's deposit insurance premiums are assessed
through a risk-based system under which all insured depository institutions are
placed into one of nine categories and assessed insurance premiums based upon
their level of capital and supervisory evaluation. Under the system,
institutions classified as well capitalized and considered healthy pay the
lowest premium. The Bank is in this category and currently pays no deposit
insurance premiums. If the Bank's capital ratios substantially deteriorate or if
the Bank is found to be otherwise unhealthy, the deposit insurance premiums
payable by the Bank could increase. The Bank must, however, pay a part of the
costs of the "FICO" bonds sold in the late 1980s to finance the savings and loan
bailout. The FICO bond assessment for fiscal 1999 was approximately .012% of
insured deposits.
Dividend Restrictions. OTS regulates the amount of dividends and other capital
distributions payable by the Bank to the Company. In general, if the Bank will
satisfy all OTS capital requirements both before and after the distribution, the
Bank may make capital distributions to the Company in any year equal to the
current year's net income plus retained net income for the preceding two
calendar years. However, the Bank must notify the OTS of the distribution and
the OTS may object on safety and soundness grounds.
If any capital distribution will exceed these limits, or if the OTS either
considers the Bank a troubled or problem institution or gives the Bank a rating
in less than the two highest rating categories, then the Bank must get OTS
approval before making a capital distribution. The Bank is not currently
required to obtain OTS approval unless it exceeds the dollar limits. The Bank
paid $8.0 million in dividends to the Company in calendar year 1998, and expects
to pay dividends of $9.0 million in calendar year 1999, $8.0 million of which
had already been paid by September 30, 1999. Since the dividends paid in
calendar year 1998 and 1999 will exceed net income earned during those years,
dividends payable to the Company in calendar year 2000 would be limited to that
year's net income, unless the Bank requests prior OTS approval.
Qualified Thrift Lenders. If the Bank fails to remain a QTL, as defined below,
it must either convert to a national bank charter or be subject to restrictions
on its activities specified by law and the OTS regulations, which restrictions
would generally limit activities to those permitted for national banks. Also,
three years after the savings institution ceases to be a QTL, it would be
prohibited from retaining any investment or engaging in any activity not
permissible for a national bank and would be required to repay any outstanding
borrowings from any Federal Home Loan Bank.
A savings institution will be a QTL if its qualified thrift investments equal or
exceed 65% of its portfolio assets on a monthly average basis in nine of every
12 months. Qualified thrift investments include, among others, (i) certain
housing-related loans and investments (notably including residential one to four
family mortgage loans), (ii) certain federal government and agency obligations,
(iii) loans to purchase or construct churches, schools, nursing homes and
hospitals (subject to certain limitations), (iv) consumer loans (subject to
certain limitations), (v) shares of stock issued by any Federal Home Loan Bank,
and (vi) shares of stock issued by the FHLMC or the FNMA (subject to certain
limitations). The Bank satisfied the QTL test at September 30, 1999, as well as
for every month during fiscal 1999.
Community Reinvestment Act. Under the Community Reinvestment Act (the "CRA"), as
implemented by OTS regulations, the Bank has a continuing and affirmative
obligation consistent with its safe and sound operation to help meet the credit
needs of its entire community, including low and moderate income neighborhoods.
The Bank is periodically examined by the OTS for compliance with the CRA. Under
recently adopted rules the Bank's CRA performance is now evaluated based upon
the lending, investment and service activities of the Company. The Bank received
a `satisfactory' CRA rating from the OTS under the new rules.
Federal Reserve Regulation. Under Federal Reserve Board regulations, the Bank
must maintain reserves against its transaction accounts (primarily
interest-bearing checking accounts) and non-personal time deposits. The effect
of the reserve requirements is to compel the Bank to maintain certain
low-yielding reserve deposits which are not available for investment in higher
yielding assets. However, at the present time, in light of the Bank's current
cash and due from banks, the reserve requirements do not have a material adverse
effect on the Company. The balances maintained to meet the reserve requirements
may be used to satisfy liquidity requirements imposed by the OTS. The Bank is in
compliance with its reserve requirements.
Taxation. The Company pays federal and New York State income taxes on its income
on terms substantially similar to other business corporations. Special rules
allowing the Bank a special deduction to create a tax bad debt reserve have been
abolished. Furthermore, the Bank must recapture, over a period of six years, any
additions to its tax bad debt reserves since 1988. The Bank had already
provided, as a provision for deferred taxes in accordance with SFAS No. 109, for
the tax consequences of the Bank's post-1987 additions to the tax bad debt
reserve. Therefore, the recapture requirement will not have a material financial
statement impact.
Market Area
Catskill (population of 11,965 in the 1990 census) is located approximately 30
miles south of Albany on the western banks of the Hudson River and is the
largest municipality in Greene County. Greene County extends from the Hudson
River west into the northern Catskill Mountains. The Company's primary market
area is heavily dependent on tourism, does not have a substantial commercial or
industrial base and has shown only limited economic and demographic growth in
recent years.
Overall, the population of Albany County has remained relatively steady in the
last decade while the more rural Greene County benefited from a population
expansion. In 1995, Greene County registered a 48,000 population count, a 10.1%
increase from 1985.
The business sectors in Greene County which account for the largest percentage
of earnings are state and local government, the service industry and wholesale
and retail trade. Manufacturing also accounts for a noteworthy percentage of
earnings in Greene County. The New York State Thruway, which runs through Greene
County, as well as the county's lower cost of living, are attractive features to
local employers, especially distributors such as United Stationers and
manufacturers such as Dynabil Industries. Major sources of employment in Greene
County include a state prison, the county government and various health care
facilities, as well as various manufacturing companies.
Based on the FDIC annual deposit summary as of June 30, 1999, which is the
latest available data, there are a total of 20 branch offices of commercial
banks and thrift institutions in Greene County and 116 in Albany County. The
Company's four offices in Greene County hold 30.1% of all deposits and 57.6% of
thrift institution deposits. In Albany County, with a much larger deposit base,
the Company's share of all deposits was approximately 0.8%.
The Company's newest office opened in August 1999, in Schoharie County. As of
June 30, 1999, Schoharie County had 12 offices with total deposits of $295.3
million.
Lending Activities
General. The Company's primary lending activity is the origination of fixed- and
adjustable rate, one to four family residential mortgage loans for retention in
its portfolio. The Company also originates fixed-rate consumer loans and
adjustable-rate home equity line of credit consumer loans. Adjustable rate
mortgage ("ARM") and consumer loans increase the percentage of the Company's
loans with more frequent terms to repricing or shorter maturities than
fixed-rate, one to four family mortgage loans. See "- Loan Portfolio
Composition" and "- One to Four Family Residential Real Estate Lending." In
addition, the Company originates multi-family and commercial real estate loans.
Loan originations are generated by the Company's marketing efforts, which
include print and radio advertising, lobby displays and direct contact with
local civic organizations, as well as by the Company's present customers,
walk-in customers and referrals from real estate agents and builders. At
September 30, 1999, the Company's gross loan portfolio totaled $153.0 million.
The approval of the Executive Committee of the Bank's Board of Directors is
required for all real estate loans in excess of $150,000, and consumer loans in
excess of $100,000. Company employees with the authority to approve such real
estate loans of $150,000 or less, and consumer loans of $100,000 or less are
designated, and their lending authority is defined, by the Executive Committee.
The Executive Committee acts in accordance with policies established at least
annually by the Board of Directors.
The aggregate amount of loans that the Company is permitted to make under
applicable federal regulations to any one borrower, including related entities,
is generally equal to 15% of unimpaired capital and surplus. At September 30,
1999, the maximum amount which the Company could have loaned to any one borrower
and the borrower's related entities was approximately $7.8 million. At that
date, the Company's largest lending relationship (representing less than 1% of
the Company's total loan portfolio) was a $1.0 million commercial real estate
loan secured by a motel located in Albany County, New York. At September 30,
1999, there were only thirteen other loans (or lending relationships) with
outstanding balances in excess of $250,000, aggregating $6.4 million, or less
than 4.2% of the Company's total loan portfolio.
Loan Portfolio Composition. The following table presents information concerning
the composition of the Company's loan portfolio in dollar amounts and in
percentages as of the dates indicated.
September 30,
---------------------------------------------------------------------------
1999 1998 1997
--------------------- -------------------- -------------------
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
(Dollars in thousands)
Real Estate Loans:
One to four family.................... $121,151 79.19% $113,423 81.02% $102,232 80.69%
Multi-family and commercial........... 7,940 5.19 6,389 4.56 4,691 3.70
Construction.......................... 3,176 2.07 1,182 0.85 1,306 1.03
-------- ------ -------- ------ -------- -----
Total real estate loans........... 132,267 86.45 120,994 86.43 108,229 85.42
-------- ------ -------- ------ -------- -----
Commercial Loans....................... 994 .65 602 .43 63 .05
-------- ------ -------- ------ -------- -----
Consumer Loans:
Automobile........................... 7,947 5.20 6,301 4.50 6,655 5.25
Home equity.......................... 3,064 2.00 3,490 2.49 3,709 2.93
Other secured........................ 3,289 2.15 2,912 2.08 3,385 2.67
Student.............................. 2,707 1.77 2,795 2.00 2,658 2.10
Other unsecured...................... 2,355 1.54 2,366 1.69 1,316 1.04
Mobile home.......................... 367 .24 535 .38 687 .54
-------- ------ -------- ------ -------- -----
Total consumer loans.............. 19,729 12.90 18,399 13.14 18,410 14.53
-------- ------ -------- ------ -------- -----
Total Loans............................ 152,990 100.00% 139,995 100.00% 126,702 100.00%
-------- ====== -------- ====== -------- ======
Less:
Net deferred fees..................... 76 260 476
Allowance for loan losses............. 2,093 1,950 1,889
-------- -------- --------
Total loans receivable, net........... $150,821 $137,785 $124,337
======== ======== ========
September 30,
------------------------------------------------
1996 1995
-------------------- -------------------
Amount Percent Amount Percent
------ ------- ------ -------
(Dollars in thousands)
Real Estate Loans:
One to four family.................... $100,383 80.34% $ 95,588 79.04%
Multi-family and commercial........... 5,115 4.09 5,132 4.24
Construction.......................... 423 .34 230 .19
-------- ------ -------- ------
Total real estate loans........... 105,921 84.77 100,950 83.47
-------- ------ -------- ------
Commercial Loans....................... --- --- --- ---
-------- ------ -------- ------
Consumer Loans:
Automobile........................... 7,029 5.63 6,652 5.50
Home equity.......................... 4,368 3.50 5,393 4.46
Other secured........................ 2,965 2.37 2,970 2.46
Student.............................. 2,450 1.96 2,373 1.96
Other unsecured...................... 1,430 1.15 1,415 1.17
Mobile home.......................... 782 .62 1,185 .98
-------- ------ -------- ------
Total consumer loans.............. 19,024 15.23 19,988 16.53
-------- ------ -------- ------
Total Loans............................ 124,945 100.00% 120,938 100.00%
-------- ====== ------- ======
Less:
Net deferred fees..................... 579 624
Allowance for loan losses............. 1,833 1,950
-------- --------
Total loans receivable, net........... $122,533 $118,364
======== ========
The following table presents the composition of the Company's loan portfolios by
fixed- and adjustable-rate at the dates indicated.
September 30,
-------------------------------------------------------------------------
(Dollars in thousands)
1999 1998 1997
-------------------- ------------------- -------------------
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
Fixed-Rate Loans:
Real estate:
One to four family......................... $97,428 63.68% $83,643 59.75% $67,782 53.50%
Multi-family and commercial................ 3,987 2.61 3,395 2.43 1,850 1.46
Construction............................... 3,060 2.00 1,079 .77 1,306 1.03
------- ------ ------- ------ ------- ------
Total real estate loans................. 104,475 68.29 88,117 62.95 70,938 55.99
------- ------ ------- ------ ------- ------
Consumer.................................... 13,958 9.12 12,114 8.65 14,638 11.55
------- ------ ------- ------ ------- ------
Total fixed-rate loans.................. 118,433 77.41 100,231 71.60 85,576 67.54
Adjustable-Rate Loans:
Real estate:
One to four family......................... 23,723 15.51 29,780 21.27 34,450 27.19
Multi-family and commercial................ 3,953 2.58 2,994 2.14 2,904 2.29
Construction............................... 116 .08 103 .07 --- ---
------- ------ ------- ------ ------- ------
Total real estate loans................. 27,792 18.17 32,877 23.48 37,354 29.48
------- ------ ------- ------ ------- ------
Consumer.................................... 5,771 3.77 6,285 4.49 3,709 2.93
------- ------ ------- ------ ------- ------
Commercial.................................. 994 .65 602 .43 63 .05
------- ------ ------- ------ ------- ------
Total adjustable-rate loans............. 34,557 22.59 39,764 28.40 41,126 32.46
------- ------ ------- ------ ------- ------
Total loans............................. 152,990 100.00% 139,995 100.00% 126,702 100.00%
------- ====== ------- ====== ------- ======
Less:
Net deferred fees........................... 76 260 476
Allowance for loan losses................... 2,093 1,950 1,889
------- ------- -------
Total loans receivable, net.............. 150,821 137,785 124,337
======= ======= =======
September 30,
------------------------------------------------
(Dollars in thousands)
1996 1995
-------------------- -------------------
Amount Percent Amount Percent
------ ------- ------ -------
Fixed-Rate Loans:
Real estate:
One to four family......................... $63,491 50.81% $53,993 44.65%
Multi-family and commercial................ 2,142 1.71 1,743 1.44
Construction............................... 423 0.34 230 .19
------- ------ ------- ------
Total real estate loans................. 66,056 52.86 55,966 46.28
------- ------ ------- ------
Consumer.................................... 14,656 11.73 14,595 12.06
------- ------ ------- ------
Total fixed-rate loans.................. 80,712 64.59 70,561 58.34
Adjustable-Rate Loans:
Real estate:
One to four family......................... 36,892 29.53 41,595 34.40
Multi-family and commercial................ 2,973 2.38 3,389 2.80
Construction............................... --- --- --- ---
------- ------ ------- ------
Total real estate loans................. 39,865 31.91 44,984 37.20
------- ------ ------- ------
Consumer.................................... 4,368 3.50 5,393 4.46
------- ------ ------- ------
Commercial.................................. --- --- --- ---
------- ------ ------- ------
Total adjustable-rate loans............. 44,233 35.41 50,377 41.66
------- ------ ------- ------
Total loans............................. 124,945 100.00% 120,938 100.00%
------- ====== ------- ======
Less:
Net deferred fees........................... 579 624
Allowance for loan losses................... 1,833 1,950
-------- --------
Total loans receivable, net.............. $122,533 $118,364
======== ========
The following table sets forth the contractual maturities of the Company's loan
portfolio at September 30, 1999. Loans which have adjustable or renegotiable
interest rates are shown as maturing in the period during which the final loan
payment is due without regard to rate adjustments. The table does not reflect
the effects of loan amortization, possible prepayments or enforcement of
due-on-sale clauses.
Due During Years Ending September 30,
-------------------------------------
2000(1) 2001 2002 2003-2004 2005-2009
---------------- ----------------- ---------------- ---------------- -----------------
Weighted Weighted Weighted Weighted Weighted
Average Average Average Average Average
Amount Rate Amount Rate Amount Rate Amount Rate Amount Rate
------ ---- ------ ---- ------ ---- ------ ---- ------ ----
(Dollars in thousands)
Real Estate
- ------------------------
One to Four Family $7,003 7.35% $ 7,481 7.34% $ 7,855 7.38% $16,294 7.35% $38,950 7.26%
Multi-family and 336 8.73 387 8.69 572 8.88 2,712 8.57 1,450 8.50
Commercial..............
Construction............ 3,078 7.82 --- --- --- --- --- --- --- ---
Commercial
- ------------------------
Lines of credit......... 994 9.64 --- --- --- --- --- --- --- ---
Consumer
- ------------------------
Consumer ............... 5,094 9.11 3,826 8.87 2,702 8.96 2,717 9.09 1,156 9.23
------- ------- ------- ------- -------
Total Loans........ $16,505 8.15% $11,694 7.89% $11,129 7.84% $21,723 7.72% $41,556 7.36%
======= ======= ======= ======= =======
Due During Years Ending September 30,
-------------------------------------
2010-2014 2015 and following Total
---------------- ----------------- -----------------
Weighted Weighted Weighted
Average Average Average
Amount Rate Amount Rate Amount Rate
------ ---- ------ ---- ------ ----
(Dollars in thousands)
Real Estate
- ------------------------
One to Four Family $27,353 7.24% $16,215 7.36% $121,151 7.30%
Multi-family and 1,340 8.75 1,143 8.59 7,940 8.63
Commercial..............
Construction............ --- --- 98 7.30 3,176 7.81
Commercial
- ------------------------
Lines of credit......... --- --- --- --- 994 9.64
Consumer
- ------------------------
Consumer ............... 1,723 7.72 2,511 8.60 19,729 8.86
------- ------- --------
Total Loans........ $30,416 7.34% $19,967 7.59% $152,990 7.60%
======= ======= ========
(1) Includes demand loans, loans having no stated maturity and line of credit
loans.
One to Four Family Residential Real Estate Lending
The Company's residential mortgage loan portfolio consists principally of loans
to purchase or refinance one to four family, owner-occupied residences and, to a
lesser extent, secondary residences. At September 30, 1999, $121.2 million, or
79.2%, of the Company's gross loans consisted of one to four family residential
mortgage loans. Approximately 80.4% of the Company's one to four family
residential mortgage loans provide for fixed rates of interest. The Company's
one to four family mortgage loans typically provide for repayment of principal
over a period not to exceed 30 years. The Company's one to four family
residential mortgage loans are priced competitively with the market.
Accordingly, the Company attempts to distinguish itself from its competitors
based on the quality of service.
The Company underwrites its one to four family residential mortgage loans using
Federal National Mortgage Association ("FNMA") secondary market standards. The
Company holds in its portfolio all of the one to four family residential
mortgage loans it originates. While the Company currently does not sell loans,
and presently has no intention to do so, management may consider selling loans
in the future depending on market conditions and the asset/liability management
of the Company. In underwriting one- to four-family residential mortgage loans,
the Company evaluates both the borrower's credit history and ability to make
monthly payments, and the value of the property securing the loan. Properties
securing ARM and all fixed-rate loans are appraised by independent appraisers.
The Company requires borrowers to obtain title insurance and hazard insurance
(including flood insurance, where appropriate) naming the Company as lienholder
in an amount not less than the amount of the loan, or the maximum insurable
value of the property.
The Company currently offers residential ARM loans with interest rates that
adjust either annually, or every three years with adjustments based on the
change in the comparable Treasury index. In addition, ARM loans originated prior
to 1990 were adjusted based upon a Federal Home Loan Bank Board index, which has
been converted to a Federal Housing Finance Board index. One-year ARM loans
provide for a 2.0% periodic cap and three year ARM loans provide for a 2.0%
periodic cap and both have lifetime caps of 6.0% over the initial rate. As a
consequence of using caps, the interest rates on these loans may not be as rate
sensitive as is the Company's cost of funds. Borrowers of residential ARM loans
are generally qualified at the maximum increase in rate which could occur at the
first adjustment period, which may be lower than the fully indexed rate. The
Company's residential ARM loans are not convertible into fixed-rate loans. ARM
loans generally pose greater credit risks than fixed-rate loans, primarily
because as interest rates rise, the required periodic payment by the borrower
rises, increasing the potential for default. As of September 30, 1999, however,
the Company had not experienced default rates on these loans materially higher
than on similar fixed rate loans.
The Company's one to four family mortgage loans do not contain prepayment
penalties and do not permit negative amortization of principal. Real estate
loans originated by the Company generally contain a "due on sale" clause
allowing the Company to declare the unpaid principal balance due and payable
upon the sale of the mortgaged property. The Company may waive the due on sale
clause on loans held in its portfolio to permit assumptions of loans by
qualified borrowers.
The Company does not currently originate residential mortgage loans if the ratio
of the loan amount to the lower of appraised value, or the purchase price of the
property securing the loan (i.e., the "loan-to-value" ratio) exceeds 95%. If the
loan-to-value ratio exceeds 90%, the Company requires that borrowers obtain
private mortgage insurance in amounts intended to reduce the Company's exposure
to 80% or less of the lower of the appraised value or the purchase price of the
real estate security.
The Company also offers construction loans to individuals for the construction
of their residences. The Company has occasionally made loans to builders for the
construction of homes including a limited amount of housing construction loans
to builders where the home has not been pre-sold. Generally, no construction
loan is approved unless there is evidence of a commitment for permanent
financing upon completion of the residence, whether through the Company or
another financial institution. Construction loans generally require construction
stage inspections before funds may be released to the borrower. At September 30,
1999, the Company's construction loan portfolio totaled $3.2 million, or
approximately 2.1% of its gross loan portfolio. Although no construction loans
were classified as non-performing as of September 30, 1999, these loans do
involve a higher level of risk than conventional one- to four-family residential
mortgage loans. For example, if construction is not completed and the borrower
defaults, the Company may have to hire another contractor to complete the
project at a higher cost, or completion could be delayed.
Multi-Family and Commercial Real Estate Lending
The Company has engaged in multi-family and commercial real estate lending
secured primarily by small offices, retail establishments and apartment
buildings located in the Company's primary market area. At September 30, 1999,
the Company had multi-family and commercial real estate loans totaling $8.0
million, which represented 5.2% of the Company's gross loan portfolio.
Multi-family and commercial real estate loans originated by the Company
generally have a variety of rate adjustment features and other terms. The
Company's multi-family and commercial real estate loans typically are for
amounts less than $250,000, and generally do not exceed 70% of the appraised
value of the property securing the loan. The term of such loans does not
generally exceed 20 years. The Company analyzes the financial condition of the
borrower, the borrower's credit history, the sufficiency and reliability of the
net income generated by the property securing the loan and the value of the
property itself. The Company generally requires personal guarantees of the
borrowers in addition to the secured property as collateral for such loans.
Appraisals on properties securing multi-family and commercial real estate loans
are performed by independent appraisers.
Multi-family and commercial real estate loans generally present a higher level
of risk than loans secured by one to four family residences. This greater risk
is due to several factors, including the concentration of principal in a limited
number of loans and borrowers, the effect of general economic conditions on
income producing properties and the increased difficulty of evaluating and
monitoring these types of loans. Furthermore, the repayment of loans secured by
multi-family and commercial real estate is typically dependent upon the
successful operation of the related real estate project. If the cash flow from
the project is reduced (for example, if leases are not obtained or renewed, or a
bankruptcy court modifies a lease term, or a major tenant is unable to fulfill
lease obligations), the borrower's ability to repay the loan may be impaired and
the value of the property may be reduced.
Consumer Lending
The Company currently originates substantially all of its consumer loans in its
primary market area. Management believes that offering consumer loan products
helps expand the Company's customer base and creates stronger ties to its
existing customer base. In addition, because consumer loans generally have
shorter terms to maturity or adjustable rates and may carry higher rates of
interest than do residential mortgage loans, they can be useful asset/liability
and interest rate spread management tools. The Company originates consumer loans
principally on a direct basis, in which the Company extends credit directly to
the borrower. At September 30, 1999, the Company's consumer loan portfolio
totaled $19.7 million, or 12.9% of the gross loan portfolio. Of consumer loans
at September 30, 1999, 70.7% were fixed-rate loans and 29.3% were
adjustable-rate loans.
The Company offers consumer loans for a variety of purposes. Consumer loan terms
vary according to the type and value of collateral, contractual maturity and
creditworthiness of the borrower. Terms to maturity range up to 25 years for
home equity lines of credit and 15 years for all other types of consumer loans.
Unsecured consumer lines of credit are extended to borrowers through their
checking account maintained at the Company. These credit lines currently bear
interest at 18.0% and are generally limited to $10,000.
Underwriting standards for consumer loans include a determination of the
applicant's payment history on other debts and an assessment of ability to meet
existing obligations and payments on the proposed loan. Although
creditworthiness of the applicant is a primary consideration, the underwriting
process also includes a comparison of the value of the security, if any, in
relation to the proposed loan amount.
At September 30, 1999, automobile loans, the largest component of the Company's
consumer loan portfolio, totaled $7.9 million, or 40.3% of the Company's total
consumer loan portfolio and 5.2% of the Company's gross loan portfolio. The
Company originates loans to purchase both new and used automobiles at fixed
rates of interest and terms of up to six years. Generally, the Company's maximum
loan-to-value ratio on new and used automobile loans is 100% of the borrower's
cost, which includes such items as dealer options and sales tax. In June 1998,
the Company began originating consumer loans, principally auto loans, on an
indirect basis through a very limited number of dealers. The terms are
substantially the same as its direct loans, with the Company generally
underwriting the loans consistent with its existing credit standards. At
September 30, 1999, the Company had $2.6 million of indirect loans, representing
32.3% of the $7.9 million automobile loans and less than 1.7% of the Company's
gross loan portfolio.
Advances on home equity lines of credit represent the second largest component
of the Company's consumer loan portfolio. The Company's home equity lines of
credit are secured by a lien on the borrower's residence and are generally
originated in amounts which, together with all prior liens on such residence, do
not exceed 90.0% of the appraised value of the property securing the loan. The
interest rates for home equity lines of credit float at a stated margin over
and/or under the prime rate. Home equity lines of credit generally require
interest only payments on the outstanding balance for the first ten years of the
loan, after which the outstanding balance may be converted into a fully
amortizing, adjustable-rate loan with a term not in excess of 15 years. As of
September 30, 1999, the Company had $3.1 million in outstanding advances on home
equity lines of credit, with an additional $1.9 million of unused home equity
lines of credit.
Consumer loans may entail greater credit risk than do residential first mortgage
loans, particularly in the case of consumer loans which are unsecured or are
secured by rapidly depreciable assets, such as automobiles. In such cases, any
repossessed collateral for a defaulted consumer loan may not provide an adequate
source of repayment of the outstanding loan balance as a result of high initial
loan-to-value ratios, repossession, rehabilitation, carrying costs, and the
greater likelihood of damage, loss or depreciation of the underlying collateral.
Home equity line of credit loans are generally secured by subordinate mortgages
which present greater risks than first mortgage liens. At September 30, 1999,
$148,000, or .75% of the Company's consumer loan portfolio was non-performing,
approximately 46% of which were government guaranteed student loans. There can
be no assurances that additional delinquencies will not occur in the future.
Commercial Business Lending
Federal regulations authorize federally-chartered savings banks, such as the
Company, to make non-real estate secured or unsecured loans for commercial,
corporate, business and agricultural purposes, up to a maximum of 10% of total
assets. The Company engages in such commercial business lending principally
through secured and unsecured lines of credit as well as through the New York
Business Development Corporation (the "NYBDC"), a privately owned corporation
which provides loans, management assistance, counseling and a variety of other
financial programs to small and medium sized businesses located in New York.
Loans made through the NYBDC may be to businesses located within or outside the
Company's primary market area. The Company is one of 119 participating
commercial and savings banks. At September 30, 1999, the Company had
approximately $994,000 in commercial business loans outstanding, representing
less than 1.0% of its loan portfolio. In addition, certain commercial borrowers,
including the NYBDC, had unused lines of credit totaling $894,000 as of
September 30, 1999. At September 30, 1999, all of the Company's commercial
business loans were performing in accordance with their terms.
Loan Originations
Loan originations are developed from continuing business with depositors and
borrowers, referrals from real estate agents, advertising and walk-in customers.
All of the Company's loans are originated by its salaried employees, except for
certain auto loans, which are generated on an indirect basis.
The Company's ability to originate loans is dependent upon demand for loans in
its market. Demand is affected by the local economy and the interest rate
environment. The Company retains all new fixed-rate and adjustable-rate real
estate loans in its portfolio. The Company does not sell loans and has not
purchased any loans since fiscal 1993.
During the year ended September 30, 1999, the Company originated $38.7 million
of loans, compared to $38.9 million and $21.2 million in fiscal 1998 and 1997,
respectively. Management attributes the increase in originations during fiscal
1999 and 1998 to the low interest rate environment, in which interest rates on
fixed rate loans were at the lowest levels since 1993.
In periods of economic uncertainty, the Company's ability to originate
sufficient real estate loans with acceptable underwriting characteristics may be
substantially reduced or restricted. This could decrease net interest income, as
assets may have to be invested in lower-yielding securities or similar
investments. While the Company has no present intention to sell loans,
management may consider selling loans in the future depending on market
conditions and the asset/liability management requirements of the Company.
The following table shows the loan originations, purchases, sales, and repayment
activities of the Company for the periods indicated. The Company did not
purchase or sell any loans during the periods presented.
Years Ended September 30,
-----------------------------------
1999 1998 1997
-------- -------- --------
(In thousands)
Originations by type:
One to four family and construction.............. $ 24,133 $ 24,051 $ 12,588
Multi-family and commercial....................... 3,684 5,184 110
Consumer.......................................... 10,839 9,683 8,584
-------- -------- --------
Total loans originated..................... 38,656 38,918 21,282
-------- -------- --------
Purchases:
Total............................................. --- --- ---
Sales:
Total............................................. --- --- ---
Repayments:
Principal repayments.............................. (25,629) (25,373) (18,705)
Increase (decrease) in other items, net........... (32) (252) (820)
-------- -------- --------
Net increase (decrease).................... $ 12,995 $ 13,293 $ 1,757
======== ======== =======
Asset Quality
Generally, when a borrower fails to make a required payment on a loan secured by
residential real estate, the Company initiates collection procedures by mailing
a delinquency notice after the account is 15 days delinquent. At 30 days
delinquent, the Company attempts to contact the customer by telephone to
investigate the delinquency and a personal letter is sent to the customer
requesting him or her to make arrangements to bring the loan current. If the
delinquency is not cured by the 45th day, the Company again attempts to contact
the customer by telephone and another personal letter is sent. After 60 days
delinquent, the Company may commence foreclosure proceedings.
With respect to consumer loans, when a borrower fails to make a required
payment, the Company initiates collection procedures by mailing a delinquency
notice after the account is 10-15 days delinquent, and again at 20 days
delinquent. At 25 days delinquent, the Company attempts to contact the customer
by telephone to investigate the delinquency. At 30 days delinquent, a personal
letter is sent to the customer requesting him or her to make arrangements to
bring the loan current. At 45 days delinquent, the Company again attempts to
contact the customer by telephone to secure payment. If the delinquency is not
cured by the 60th day, the Company refers the loan to its attorney, who sends
another personal letter notifying the customer that no further payments will be
accepted by the Company absent a meeting between the customer and a Company loan
officer. If no satisfactory arrangements have been made by the last business day
of the fourth month, repossession of collateral, if possible, is undertaken and,
if necessary, legal proceedings are generally commenced to collect the loan.
The following table sets forth the Company's loan delinquencies by type, by
amount and by percentage of that type at September 30, 1999.
Loans Delinquent For:
-----------------------------------------------------------------
60-89 Days 90 Days and Over Total Delinquent Loans
--------------------------------------------------------------------------------------------------
Percent Percent Percent
of Loan of Loan of Loan
Number Amount Category Number Amount Category Number Amount Category
------ ------ -------- ------ ------ -------- ------ ------ --------
(Dollars in thousands)
One to four family real
estate................... 5 $ 300 .25% 7 $ 396 .33% 12 $696 .57%
Multi-family and -- -- -- -- -- -- -- -- --
Commercial real estate... -- -- -- -- -- -- -- -- --
Commercial................ -- -- -- -- -- -- -- -- --
Consumer.................. 13 47 .24 15 148 .75 28 195 .99
---- ----- ---- ----- ---- ----
Total................ 18 $ 347 .23% 22 $ 544 .36% 40 $891 .58%
==== ===== ==== ===== ==== ====
Non-Performing Assets. The table below sets forth the amounts and categories of
the Company's non-performing assets. Loans are placed on non-accrual status when
the loan is more than 90 days delinquent (except for FHA insured, VA guaranteed
loans and government guaranteed student loans) or when the collection of
principal and/or interest in full becomes doubtful. When loans are designated as
non-accrual, all accrued but unpaid interest is reversed against current period
income and subsequent cash receipts generally are applied to reduce the unpaid
principal balance. Foreclosed assets include assets acquired in settlement of
loans.
September 30,
----------------------------------------------------------
1999 1998 1997 1996 1995
------ ------ ------ ------ ------
(Dollars in thousands)
Non-performing loans:
One to four family real estate ........ $ 396 $ 520 $ 780 $1,008 $ 784
Multi-family and commercial real estate -- -- -- 78 --
Consumer .............................. 148 71 137 283 251
------ ------ ------ ------ ------
Total .............................. $ 544 $ 591 $ 917 $1,369 $1,035
------ ------ ------ ------ ------
Troubled debt restructured loans:
Total .............................. -- -- -- -- --
------ ------ ------ ------ ------
Foreclosed assets, net:
One to four family real estate ........ -- 53 225 334 326
Multi-family and commercial real estate -- -- 23 23 158
------ ------ ------ ------ ------
Total .............................. -- 53 248 357 484
------ ------ ------ ------ ------
Total non-performing assets ............. $ 544 $ 644 $1,165 $1,726 $1,519
====== ====== ====== ====== ======
Total as a percentage of total assets ... .16% .20% .40% .61% .66%
====== ====== ====== ====== ======
For the years ended September 30, 1999, 1998 and 1997, the additional gross
interest income which would have been recorded had the non-accruing loans been
current in accordance with their original terms amounted to $31,091, $28,053 and
$49,948, respectively.
Non-Accruing Loans. As of September 30, 1999, the Company had $396,000 in
non-accruing loans, which consisted of 7 one- to four-family residential
mortgage loans and represented .26% of the Company's gross loan portfolio.
Foreclosed Assets. As of September 30, 1999, the Company had no foreclosed
assets.
Other Loans of Concern. As of September 30, 1999, there were $299,337 of other
loans (consisting of four one to four family real estate loans totaling $272,087
and five consumer loans totaling $27,250) not included in nonperforming loans
above where known information about the possible credit problems of borrowers
caused management to have doubts as to the ability of the borrower to comply
with present loan repayment terms. These loans have been considered by
management in conjunction with the analysis of the adequacy of the allowance for
loan losses.
Classified Assets. Federal regulations provide for the classification of loans
and other assets, such as debt and equity securities considered to be of lesser
quality, as `substandard,' `doubtful' or `loss.' An asset is considered
`substandard' if it is inadequately protected by the current net worth and
paying capacity of the obligor or of the collateral pledged, if any.
`Substandard' assets include those characterized by the `distinct possibility'
that the insured institution will sustain `some loss' if the deficiencies are
not corrected. Assets classified as `doubtful' have all of the weaknesses
inherent in those classified `substandard,' with the added characteristic that
the weaknesses present make `collection or liquidation in full,' on the basis of
currently existing facts, conditions, and values, `highly questionable and
improbable.' Assets classified as `loss' are those considered `uncollectible'
and of such little value that their continuance as assets without the
establishment of a specific loss reserve is not warranted.
When an insured institution classifies problem assets as either substandard or
doubtful, it may increase general allowances for loan losses in an amount deemed
prudent by management to address the increased risk of loss on such assets.
General allowances represent loss allowances which have been established to
recognize the inherent risk associated with lending activities, but which,
unlike specific allowances, have not been allocated to particular problem
assets. When an insured institution classifies problem assets as "loss," it is
required either to establish a specific allowance for losses equal to 100% of
that portion of the asset so classified or to charge-off such amount. An
institution's determination as to the classification of its assets and the
amount of its valuation allowances is subject to review and adjustment by the
OTS and the FDIC, which may order increases in general or specific loss
allowances.
In accordance with its classification of assets policy, the Company regularly
reviews the problem assets in its portfolio to determine whether any assets
require classification in accordance with applicable regulations. On the basis
of management's review of its assets, at September 30, 1999, the Company had
classified $571,000 as substandard and none as doubtful or loss.
Allowance for Loan Losses. At September 30, 1999, the Company had a total
allowance for loan losses of $2,093,000, representing 384.7% of total
non-performing loans. The allowance for loan losses is established through a
provision for loan losses based on management's evaluation of the risk inherent
in its loan portfolio and changes in the nature and volume of its loan activity,
including those loans which are being specifically monitored by management. Such
evaluation, which includes a review of loans for which full collectibility may
not be reasonably assured, considers among other matters, the loan
classifications discussed above, the estimated fair value of the underlying
collateral, economic conditions, historical loan loss experience, and other
factors that warrant recognition in providing for an adequate loan loss
allowance.
Real estate properties acquired through foreclosure are recorded at fair value,
less estimated selling costs. If fair value, less selling costs, at the date of
foreclosure is lower than the book balance of the related loan, the difference
will be charged to the allowance for loan losses at the time of transfer.
Valuations of the property are periodically updated by management and if the
value declines, a specific provision for losses on such property is charged to
operations.
The determination of the adequacy of the allowance is necessarily speculative,
and is based upon future loan performance outside the control of the Company.
Adverse local, regional or national economic conditions, changes in interest
rates, population, products and other factors can all adversely affect future
loan delinquency rates. Unforeseen conditions could require adjustments to the
allowance through additional loan loss provisions. Net income could be
significantly affected if circumstances differ substantially from the
assumptions used in determining the level of the allowance. In addition, federal
regulatory agencies, as an integral part of the examination process,
periodically review the Company's allowance for loan losses. Such agencies may
require the Company to increase the allowance based upon their judgment of the
information available to them at the time of their examination.
The following table sets forth an analysis of the Company's allowance for loan
losses.
Year Ended September 30,
-------------------------------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
(Dollars in thousands)
Balance at beginning of year ............ $ 1,950 $ 1,889 $ 1,833 $ 1,950 $ 1,746
Charge-offs:
One to four family real estate ........ (6) (58) (162) (237) (12)
Multi-family and commercial real estate -- -- (30) -- --
Consumer .............................. (89) (90) (90) (86) (50)
------- ------- ------- ------- -------
Total charge-offs .............. (95) (148) (282) (323) (62)
------- ------- ------- ------- -------
Recoveries:
One to four family real estate ........ 2 -- 4 -- 1
Consumer .............................. 46 20 34 11 10
------- ------- ------- ------- -------
Total recoveries ............... 48 20 38 11 11
------- ------- ------- ------- -------
Net charge-offs ......................... (47) (128) (244) (312) (51)
Provisions charged to operations ........ 190 189 300 195 255
------- ------- ------- ------- -------
Balance at end of year .................. $ 2,093 $ 1,950 $ 1,889 $ 1,833 $ 1,950
======= ======= ======= ======= =======
Ratio of net charge-offs to average loans
outstanding during the year ............. .03% .10% .19% .26% .04%
======= ======= ======= ======= =======
Ratio of net charge-offs to average
non-performing loans .................... 7.83% 21.39% 17.73% 18.60% 4.46%
======= ======= ======= ======= =======
The distribution of the Company's allowance for loan losses at the dates
indicated is summarized as follows:
September 30,
--------------------------------------------------------------------------------------------
1999 1998 1997
----------------------------- ----------------------------- ------------------------------
Percent Percent Percent
of Loans of Loans of Loans
Loan in Each Loan in Each Loan in Each
Amount of Amounts Category Amount of Amounts Category Amount of Amounts Category
Loan Loss By to Total Loan Loss By to Total Loan Loss by to Total
Allowance Category Loans Allowance Category Loans Allowance Category Loans
--------- -------- ----- --------- -------- ----- --------- -------- -----
(Dollars in thousands)
One to four family $1,110 $121,151 79.19% $ 947 $113,423 81.02% $ 573 $102,232 80.69%
real estate.........
Multi-family and
Commercial real
Estate............. 201 7,940 5.19 196 6,389 4.56 470 4,691 3.70
Construction......... 16 3,176 2.07 24 1,182 .85 --- 1,306 1.03
Commercial........... 12 994 .65 12 602 .43 --- 63 .05
Consumer............. 335 19,729 12.90 293 18,399 13.14 288 18,410 14.53
Unallocated.......... 419 --- --- 478 --- --- 558 --- ---
------ -------- ------ ------ -------- ------ ------ -------- ------
Total........... $2,093 $152,990 100.00% $1,950 $139,995 100.00% $1,889 $126,702 100.00%
====== ======== ====== ====== ======== ====== ====== ======== ======
September 30,
------------------------------------------------------------
1996 1995
----------------------------- -----------------------------
Percent Percent
of Loans of Loans
Loan in Each Loan in Each
Amount of Amounts Category Amount of Amounts Category
Loan Loss by to Total Loan Loss by to Total
Allowance Category Loans Allowance Category Loans
--------- -------- ----- --------- -------- -----
(Dollars in thousands)
One to four family $ 496 $100,383 80.34% $ 737 $ 95,588 79.04%
real estate.........
Multi-family and
Commercial real
Estate............. 528 5,115 4.09 443 5,132 4.24
Construction......... --- 423 .34 --- 230 .19
Commercial........... --- --- --- --- --- ---
Consumer............. 250 19,024 15.23 220 19,988 16.53
Unallocated.......... 559 --- --- 550 --- ---
------ -------- ------ ------ -------- ------
Total........... $1,833 $124,945 100.00% $1,950 $120,938 100.00%
====== ======== ====== ====== ======== ======
Investment Activities
General. The Company must maintain minimum levels of investments that qualify as
liquid assets under OTS regulations. Liquidity may increase or decrease
depending upon the availability of funds and comparative yields on investments
as compared to the return on loans. Historically, the Company has maintained
liquid assets at levels above the minimum requirements imposed by the OTS
regulations and above levels believed adequate to meet the requirements of
normal operations, including potential deposit outflows. For September 1999, the
Company's average regulatory liquidity ratio (liquid assets as a percentage of
net withdrawable deposits and current borrowings excluding those whose remaining
maturity exceeds one year) was 37.8%.
Securities. Federally chartered savings institutions have the authority to
invest in various types of liquid assets, including United States Treasury
obligations, securities of various federal agencies, obligations of states and
political subdivisions, certain certificates of deposits of insured Banks and
savings institutions, certain bankers' acceptances, repurchase agreements and
federal funds. Subject to various restrictions, federally chartered savings
institutions also may invest their assets in investment grade commercial paper
and corporate debt securities and mutual funds whose assets conform to the
investments that a federally chartered savings institution is otherwise
authorized to make directly. At September 30, 1999, the Company's securities
portfolio, all of which is classified as available for sale, had an amortized
cost of $98.8 million, or 29.2% of total assets.
Generally, the investment policy of the Company is to invest funds not needed to
fund loans, among various categories of investments and maturities based upon
the Company's need for liquidity, to achieve the proper balance between its
desire to minimize risk and maximize yield, to provide collateral for borrowings
and to fulfill the Company's asset/liability management policies. Prior to the
Company's initial public offering and the Company's conversion to a stock
institution, the Company's investment strategy had been directed toward
high-quality assets (primarily U.S. Government securities and federal agency
obligations and high grade corporate debt securities) with short and
intermediate terms (five years or less) to maturity. After the conversion, the
Company has extended the duration of its portfolio by purchasing longer term
municipal and corporate debt securities with maturities up to twenty years to
decrease its asset sensitivity, leverage its capital and increase interest
income. Corporate debt securities generally are considered of higher risk than
U.S. Government securities and federal agency obligations. At September 30,
1999, the weighted average term to maturity of the security portfolio, excluding
other marketable equity securities, was 15.51 years. See Note 5 of the Notes to
Consolidated Financial Statements for information regarding the maturities of
the Company's securities available for sale portfolio.
Mortgage-Backed Securities. In order to supplement loan production and achieve
its asset/liability management goals, the Company invests in mortgage-backed
securities. All of the mortgage-backed securities owned by the Company are
issued, insured or guaranteed either directly or indirectly by a federal agency.
At September 30, 1999, the Company had $71.5 million in mortgage-backed
securities, or 21.1% of total assets, all of which, are classified as available
for sale. See Note 5 of the Notes to Consolidated Financial Statements for
information regarding the maturities of the Company's mortgage-backed securities
portfolio.
The following table sets forth at amortized cost the composition of the
Company's investment securities, mortgage-backed securities and other
interest-earning assets at the dates indicated.
September 30,
-------------------------------------------------------------------
1999 1998 1997
-------------------------------------------------------------------
Amortized % of Amortized % of Amortized % of
Cost Total Cost Total Cost Total
---- ----- ---- ----- ---- -----
(Dollars in thousands)
Investment securities:
U.S. government and federal
agency obligations.............. $7,987 8.09% $21,954 29.33% $61,833 87.39%
Corporate bonds.................... 34,895 35.33 16,230 21.69 6,042 8.54
State and municipal obligations.... 53,354 54.02 34,414 45.98 194 .28
Other.............................. 2,532 2.56 2,242 3.00 2,682 3.79
------- ------ ------- ------ ------- ------
Total investment securities..... $98,768 100.00% $74,840 100.00% $70,751 100.00%
======= ====== ======= ====== ======= ======
Average remaining contractual
life of securities.................. 15.51 years 15.45 years 5.80 years
Federal Home Loan Bank of New York
stock, required by law............... $ 2,634 100.00% $ 1,954 100.00% $ 1,762 100.00%
======= ====== ======= ====== ======= ======
Mortgage-backed securities:
GNMA............................... $37,632 52.62% $41,828 47.12% $41,450 49.41%
FNMA............................... 23,441 32.77 31,151 35.09 29,920 35.67
FHLMC.............................. 9,561 13.37 15,691 17.68 12,416 14.80
Other.............................. 884 1.24 96 .11 97 .12
------- ------ ------- ------ ------- ------
Total mortgage-backed
securities..................... $71,518 100.00% $88,766 100.00% $83,883 100.00%
======= ====== ======= ====== ======= ======
The composition and maturities of the investment securities portfolio by
contractual maturity are indicated in the following table.
September 30, 1999
---------------------------------------------------------------------------------
Less Than 1 to 5 5 to 10 Over Total
1 Year Years Years 10 Years Investment Securities
Amortized Amortized Amortized Amortized Amortized Fair
Cost Cost Cost Cost Cost Value
---- ---- ---- ---- ---- -----
(Dollars in thousands)
U.S. government and federal
agency obligations................. $ --- $ --- $ 7,987 $ --- $7,987 $ 7,991
Corporate bonds..................... --- 6,292 14,677 13,926 34,895 33,762
State and municipal obligations..... --- 178 23 53,153 53,354 50,213
Other............................... --- --- --- 2,532 2,532 2,593
------ ------- ------- ------- ------- -------
Total investment securities....... $ --- $ 6,470 $22,687 $69,611 $98,768 $94,559
====== ======= ======= ======= ======= =======
Weighted average tax equivalent
yield.............................. --- 7.68% 7.45% 7.57% 7.56%
The Company's securities portfolio at September 30, 1999, did not contain
securities of any issuer with an aggregate book value in excess of 10% of the
Company's equity, excluding those issued by the United States Government or its
agencies.
The following table sets forth the final contractual maturities of the Company's
mortgage-backed securities at amortized cost, at September 30, 1999.
Due in September 30,
------------------------------------------------------------ 1999
3 Years 3 to 5 5 to 10 10 to 20 Over 20 Amortized
or Less Years Years Years Years Cost
------- ----- ----- ----- ----- ----
(In thousands)
GNMA........................... $ 7 $ --- $ 136 $3,400 $34,089 $37,632
FNMA........................... --- 726 --- 9,233 13,482 23,441
FHLMC.......................... --- --- 17 5,956 3,588 9,561
Other.......................... --- --- --- --- 884 884
---- ----- ----- ------- ------- -------
Total..................... $ 7 $ 726 $ 153 $18,589 $52,043 $71,518
==== ===== ===== ======= ======= =======
Sources of Funds
General. The Company's primary sources of funds are deposits and borrowings,
amortization and prepayment of loan principal, maturities and prepayments of
securities, short-term investments, and funds provided from operations.
Deposits. The Company offers deposit accounts having a range of interest rates
and terms. The Company offers passbook and statement savings accounts, money
market savings accounts, both interest bearing and non-interest bearing
transaction accounts, and certificate of deposit accounts currently ranging in
terms from three months to ten years. The Company only solicits deposits from
its primary market area and does not have brokered deposits. The Company relies
primarily on competitive pricing policies, advertising and customer service to
attract and retain these deposits. The Company generally does not utilize
premiums or promotional gifts for new accounts, although one existing program
for senior citizens does provide certain enumerated benefits, such as discounts
on loans and safe deposit boxes, free travelers checks, money orders and a
variety of other services.
The flow of deposits is influenced significantly by general economic conditions,
changes in money market and prevailing interest rates, and competition. The
variety of deposit accounts offered by the Company has allowed it to be
competitive in obtaining funds and to respond with flexibility to changes in
consumer demand. In recent years, the Company has become more susceptible to
short-term fluctuations in deposit flows, as customers have become more interest
rate conscious. The Company manages the pricing of its deposits in keeping with
its asset/liability management, liquidity and profitability objectives. Based on
its experience, the Company believes that its passbook, statement savings
accounts, money market savings accounts and transaction accounts are relatively
stable sources of deposits. However, the ability of the Company to attract and
maintain certificates of deposits and the rates paid on those deposits has been
and will continue to be significantly affected by market conditions.
The following table sets forth the deposit flows at the Company during the
periods indicated.
Year Ended September 30,
--------------------------------------
1999 1998 1997
-------- -------- --------
(Dollars in thousands)
Opening balance............................... $209,977 $200,912 $196,753
Deposits...................................... 379,260 310,108 254,977
Withdrawals................................... (378,633) (309,896) (259,424)
Interest credited............................. 8,460 8,853 8,606
-------- -------- --------
Ending balance................................ $219,064 $209,977 $200,912
======== ======== ========
Net increase.................................. $ 9,087 $ 9,065 $ 4,159
======== ======== ========
Percent increase.............................. 4.33% 4.51% 2.11%
======== ======== ========
The following table sets forth the dollar amount of deposits in the various
deposit programs offered by the Company for the periods indicated.
Year Ended September 30,
----------------------------------------------------------------
1999 1998 1997
------------------ ------------------ ------------------
Percent Percent Percent
Amount of Total Amount of Total Amount of Total
------ -------- ------ -------- ------ --------
(Dollars in thousands)
Non-Certificate Deposits(1):
Statement savings accounts 3.05%...... $16,365 7.47% $11,867 5.65% $8,388 4.17%
Non-interest bearing demand accounts.. 8,918 4.07 6,009 2.86 4,370 2.18
Passbook savings accounts 2.96%....... 65,529 29.91 66,208 31.53 71,060 35.37
NOW accounts 1.98%.................... 14,833 6.77 12,396 5.91 10,438 5.20
Money market accounts 2.96%........... 6,435 2.94 5,949 2.83 7,115 3.54
-------- ------ -------- ------ -------- ------
Total non-certificates................ 112,080 51.16 102,429 48.78 101,371 50.46
-------- ------ -------- ------ -------- ------
Certificates of Deposits:
2.00 - 3.99%........................ --- --- --- --- 20 .01
4.00 - 5.99%........................ 101,433 46.30 106,990 50.95 88,416 44.00
6.00 - 7.99%........................ 5,551 2.54 558 .27 11,105 5.53
-------- ------ -------- ------ -------- ------
Total certificates.................... 106,984 48.84 107,548 51.22 99,541 49.54
-------- ------ -------- ------ -------- ------
Total deposits........................ $219,064 100.00% $209,977 100.00% $200,912 100.00%
======== ====== ======== ====== ======== ======
(1) Interest rates shown are the Bank's stated rates as of September 30, 1999.
The following table shows rate and maturity information for the Company's
certificates of deposits as of September 30, 1999.
4.00- 6.00- Percent
5.99% 7.99% Total of Total
----- ----- ----- --------
(Dollars in thousands)
Certificate accounts maturing
in quarter ending:
- -------------------------------
December 31, 1999.............. $23,370 $ --- $23,370 21.84%
March 31, 2000................. 25,509 --- 25,509 23.84
June 30, 2000.................. 16,055 --- 16,055 15.01
September 30, 2000............. 12,133 --- 12,133 11.34
December 31, 2000.............. 9,022 --- 9,022 8.43
March 31, 2001................. 5,129 --- 5,129 4.79
June 30, 2001.................. 2,226 --- 2,226 2.08
September 30, 2001............. 3,040 --- 3,040 2.84
December 31, 2001.............. 1,916 --- 1,916 1.79
March 31, 2002................. 1,578 --- 1,578 1.47
June 30, 2002.................. 2,223 --- 2,223 2.08
September 30, 2002............. 376 449 825 .77
Thereafter..................... 3,940 18 3,958 3.72
-------- ----- -------- ------
Total....................... $106,517 $ 467 $106,984 100.00%
======== ===== ======== ======
Percent of total............ 99.56% .44%
======== =====
The following table indicates the amount of the Company's certificates of
deposits by time remaining until maturity as of September 30, 1999.
Maturity
-----------------------------------------------
Over Over
3 Months 3 to 6 6 to 12 Over
or Less Months Months 12 months Total
------- ------ ------ --------- -----
(In thousands)
Certificates of deposits less than $100,000..... $20,707 $22,970 $24,582 $26,192 $94,451
Certificates of deposits of $100,000 or more.... 2,663 2,539 3,606 3,725 12,533
------- ------- ------- ------- --------
Total certificates of deposits.................. $23,370 $25,509 $28,188 $29,917 $106,984
======= ======= ======= ======= ========
Borrowings. Although deposits are the Company's primary source of funds, the
Company may utilize borrowings as a funding source. As a member of the FHLB, the
Company has access to overnight funds of approximately $15.6 million, along with
an additional line of $15.6 million for one-month advances. At September 30,
1999, the Company had borrowings of $13.1 million under its overnight line and
$8.0 million under its one-month advance line.
In January 1998, the Company began converting a portion of its short-term
borrowings to long-term borrowings principally through convertible (callable)
advances with the FHLB. The borrowings are secured by mortgage-backed
securities, and have contractual maturities of ten years, however, they include
options which give the lender the right to call the debt after a specified
lock-out period. The Company had $25 million of such borrowings at September 30,
1999, which had remaining lockout periods ranging from one month to five years.
For further detail, see Notes #15 and #16 to the Consolidated Financial
Statements.
Subsidiary and Other Activities
As a federally chartered savings association, the Company is permitted by OTS
regulations to invest up to 2% of its assets or $6.7 million at September 30,
1999, in the stock of, or loans to, service corporation subsidiaries. The
Company may invest an additional 1% of its assets in service corporations where
such additional funds are used for inner-city or community development purposes
and up to 50% of its total capital in conforming loans to service corporations
in which it owns more than 10% of the capital stock. Federal associations also
are permitted to invest an unlimited amount in operating subsidiaries engaged
solely in activities which a federal association may engage in directly. As of
September 30, 1999, the Company had one subsidiary, Catskill Financial Services,
Inc., which commenced operations in January 1998, principally selling Savings
Bank Life Insurance.
The Company, as a unitary savings and loan holding company, is generally
permitted under federal law to engage, through non-banking subsidiaries, in
whatever business activities it may choose to pursue. The Company currently has
no such subsidiaries.
Competition
The Company faces strong competition, both in originating real estate and other
loans and in attracting deposits. Competition in originating real estate loans
comes primarily from other savings institutions, commercial banks, credit unions
and mortgage bankers making loans secured by real estate located in the
Company's primary market area. Other savings institutions, commercial banks,
credit unions and finance companies provide vigorous competition in consumer
lending.
The Company attracts all of its deposits through its branch offices, primarily
from the communities in which those branch offices are located; therefore,
competition for those deposits is principally from other savings institutions,
commercial banks and credit unions located in the same communities. The Company
competes for these deposits by offering a variety of deposit accounts at
competitive rates, convenient business hours, and convenient branch locations
with interbranch deposit and withdrawal privileges. Automated teller machine
facilities are also available at five of the Company's offices. At September 30,
1999, the Company held approximately 30% of total financial institution deposits
and 57% of total thrift deposits in Greene County, New York, and approximately
.09% of total financial institution deposits in Albany County, New York.
Employees
At September 30, 1999, the Company had a total of 79 employees, including six
part-time employees. The Company's employees are not represented by any
collective bargaining group. Management considers its employee relations to be
good.
ITEM 2. PROPERTIES
The Company conducts its business at its main office and five other banking
offices in its primary market area. The Company does not own or lease any other
premises and operates principally from the Company's main office. The following
table sets forth information relating to each of the Company's offices as of
September 30, 1999. The Company also owns a parking lot located at 313-317 Main
Street, Catskill, New York, which is used to service the main office. The net
book value of the Company's premises and equipment (including land, building and
leasehold improvements and furniture, fixtures and equipment) at September 30,
1999, was $3.3 million. See Note 9 of Notes to Consolidated Financial
Statements. The Company believes that its current facilities are adequate to
meet the present and foreseeable needs of the Bank and the Company, subject to
possible future expansion.
Total Net Book
Owned Approximate Value or Leasehold
Date or Square Improvement at
Location Acquired Leased Footage September 30, 1999
-------- -------- ------ ------- ------------------
(In thousands)
Main Office:
341 Main Street
Catskill, New York Prior to 1950 Owned 11,750 $ 687
Branch Offices:
Route 9-W
Ravena, New York 1972 Owned 2,822 326
Route 9-W
Corner Boulevard Avenue
Catskill, New York 1978 Owned 2,900 667
Route 296
Windham, New York 1996 Owned 3,620 690
Route 30(1)
Middleburgh, New York 1999 Owned 2,025 676
Supermarket Branch:
Bryant's Supermarket(2)
Route 32
Greenville, New York 1998 Leased 592 251
------
$3,297
======
- ----------------
(1) Branch opened August 1999
(2) Branch opened April 1998 and lease term expires in April 2013
ITEM 3. LEGAL PROCEEDINGS
The Company is involved as plaintiff or defendant in various legal actions
arising in the normal course of its business. While the ultimate outcome of
these proceedings cannot be predicted with certainty, it is the opinion of
management, after consultation with counsel representing the Company, that the
resolution of these proceedings should not have a material effect on the
Company's financial condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of fiscal 1999, there were no matters submitted to a
vote of shareholders of Catskill Financial Corporation.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The following information included in the Annual Report to Shareholders for the
fiscal year ended September 30, 1999, (the "Annual Report"), is incorporated
herein by reference: "SHAREHOLDER INFORMATION", which appears on page 59 of the
Annual Report.
ITEM 6. SELECTED FINANCIAL DATA
The following information included in the Annual Report is incorporated herein
by reference: "SELECTED CONSOLIDATED FINANCIAL INFORMATION" which appears on
pages 3 and 4 of the Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following information included in the Annual Report is incorporated herein
by reference: "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS", which appears on pages 6 through 26 of the Annual
Report.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
The following information included in the Annual Report is incorporated herein
by reference: "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - Asset/Liability Management", which appears on pages 9
through 13 of the Annual Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following information included in the Annual Report is incorporated herein
by reference: The consolidated statements of financial condition of Catskill
Financial Corporation and Subsidiary as of September 30, 1999 and 1998, and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the years in the three-year period ended September 30, 1999,
together with the related notes and the independent auditors' report thereon,
all of which appears on pages 27 through 58 of the Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following information included in the Proxy Statement is incorporated herein
by reference a copy of which is expected to be filed within 120 days of
September 30, 1999 ("the Proxy Statement"): `ELECTION OF DIRECTORS', and
`INFORMATION CONCERNING THE BOARD OF DIRECTORS AND EXECUTIVE OFFICERS', which
appears on pages 2 through 5 of the Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
The information included on pages 8 through 14 of the Proxy Statement is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following information included in the Proxy Statement is incorporated herein
by reference: "VOTING SECURITIES AND CERTAIN HOLDERS THEREOF" which appears on
pages 6 through 8 of the Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information included on page 16 of the Proxy Statement is incorporated
herein by reference: "TRANSACTIONS WITH DIRECTORS AND OFFICERS."
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Listed below are all financial statements and exhibits filed as
part of this report:
(1) The consolidated statements of financial condition of Catskill
Financial Corporation and subsidiary as of September 30, 1999 and 1998, and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the years in the three-year period ended September 30, 1999,
together with the related notes and the independent auditors' report thereon,
appearing in the Annual Report on pages 27 through 58 are incorporated herein by
reference.
(2) Schedules omitted as they are not applicable
(3) Exhibits
The following exhibits are either filed as part of this report or
are incorporated herein by reference:
Regulation S - K Exhibit
Reference Number Description
---------------- -----------
3.1 Certificate of Incorporation of Catskill Financial
Corporation (incorporated by reference to Exhibit 3.1 to the
Registration Statement on Form S-1 No. #33-81019, of Catskill
Financial Corporation, filed on February 5, 1996,
(hereinafter "Form S-1")
3.2 By laws of Catskill Financial Corporation (incorporated by
reference to Exhibit 3.2 to Form S-1)
4 Specimen Stock Certificate (incorporated by reference to
Exhibit 4 to Form S-1.)
10.1 Catskill Financial Corporation 1996 Stock Option and
Incentive Compensation Plan (incorporated by reference to
Proxy Statement for Special Meeting of Stockholders of
Catskill Financial Corporation held on October 24, 1996.)
10.2 Employment agreement dated April 1, 1998, by and between
Catskill Savings Bank and Wilbur J. Cross. (incorporated by
reference to Exhibit 10.2 to Form 10Q for the nine month
period ended June 30, 1998.)
10.3 Catskill Financial Corporation Employee Stock ownership
Plan (incorporated by reference to Exhibit 10.3 to Form S-1.)
10.4 Catskill Financial Corporation Management Recognition Plan
(incorporated by reference to Proxy Statement for Special
Meeting of Stockholders of Catskill Financial Corporation
held on October 24, 1996.)
10.5 Trustees Deferred Compensation Plan of Catskill Savings
Bank (incorporated by reference to Exhibit 10.7 to Form S-1.)
10.6 Employment agreement dated April 1, 1998, by and between
Catskill Financial Corporation and Wilbur J. Cross.
(Incorporated by reference to Exhibit 10.1 to Form 10Q for
the nine month period ended June 30, 1998.)
10.7 Catskill Financial Corporation Supplemental Executive
Retirement Plan. (Incorporated by reference to Exhibit 10.3
to Form 10Q for the nine month period ended June 30, 1998.)
10.8 Catskill Financial Corporation Supplemental Executive
Retirement Plan Trust (incorporated by reference to Exhibit
10.4 to Form 10Q for the nine month period ended June
30, 1998.)
10.9 Employment Agreement dated August 1, 1998, by and between
Catskill Savings Bank and David J. DeLuca (Incorporated by
reference to Exhibit 10.9 to Form 10K for the year ended
September 30, 1998.)
10.10 Schedule pursuant to instruction #2 of Item 601 of Regulation
SK. There is an employment agreement with Keith Lampman, an
executive officer of the registrant, which is substantially
identical to the agreement included as Exhibit 10.9. The
only differences are that the agreement is with Mr. Lampman,
contains his residence address, refers to his title as "Vice
President" and does not contain section 1(e)(3) as contained
in the agreement included as Exhibit 10.9.
10.11 Employment Agreement dated February 1, 1999, by and between
Catskill Savings Bank and Deborah S. Henderson.
(Incorporated by reference to Exhibit 10.1 to Form 10Q for
the six month period ended March 31, 1999.)
10.12 Catskill Savings Bank Director Death Benefit Plan
(Incorporated by reference to Exhibit 10.1 to Form 10Q for
the nine month period ended June 30, 1999.)
11 Computation of Net Income per Common Share
13 1999 Annual Report to security holders
21 Subsidiaries of the registrant
23 Consent of KPMG LLP
27 Financial Data Schedule
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CATSKILL FINANCIAL CORPORATION
------------------------------
(Registrant)
By: /s/ Wilbur J. Cross
-------------------
Wilbur J. Cross
Director & Chairman of the Board,
President & Chief Executive Officer
Date: December 17, 1999
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.
Signature Title Date
--------- ----- ----
/s/ Wilbur J. Cross Director & Chairman of the Board,
- -------------------- President and Chief
Wilbur J. Cross Executive Officer December 17, 1999
/s/ David J. DeLuca Chief Financial Officer
- -------------------- (Principal Financial Officer
David J. DeLuca & Principal Accounting
Officer) December 17, 1999
/s/ George P. Jones
- --------------------
George P. Jones Director December 17, 1999
/s/ Richard A. Marshall
- ------------------------
Richard A. Marshall Director December 17, 1999
/s/ Allan D. Oren
- -----------------
Allan D. Oren Director December 17, 1999
/s/ Hugh J. Quigley
- --------------------
Hugh J. Quigley Director December 17, 1999
/s/ Edward P. Stiefel
- ----------------------
Edward P. Stiefel, Esq. Director December 17, 1999