EXHIBIT 99.1
RELIANCE BANCORP, INC.
585 STEWART AVENUE (516) 222-9300
GARDEN CITY, NY 11530 FAX: (516) 222-4559
NEWS RELEASE
FOR IMMEDIATE RELEASE July 24, 1997
For Information Contact:
Paul D. Hagan
Sr. V.P. - Chief Financial Officer
(516) 222-9300 extension 286
RELIANCE BANCORP, INC. REPORTS FOURTH QUARTER AND
FISCAL YEAR END 1997 RESULTS
Garden City, New York, July 24, 1997
Reliance Bancorp, Inc. (NASDAQ/NMS:RELY), the holding company for Reliance
Federal Savings Bank, today reported net income of $4.3 million for the quarter
ended June 30, 1997, an increase of $738,000, or 20.5%, from $3.6 million for
the quarter ended June 30, 1996. On a fully diluted per share basis, earnings
rose 20.0% to $0.48 from $0.40 for the quarter ended June 30, 1996. Return on
average tangible equity increased 15.3% to 15.49% from 13.44% for the quarter
ended June 30, 1996. Net income for the fiscal year ended June 30, 1997 was
$10.9 million, or $1.21 per fully diluted common share, as compared to $11.7
million, or $1.31 per fully diluted common share, for the fiscal year ended June
30, 1996. Net income for the fiscal year ended June 30, 1997 reflects a one-time
charge to income of $8.25 million for the Company's share of recapitalizing the
Savings Association Insurance Fund ("SAIF"). Excluding the impact of the SAIF
charge, the Company's earnings for the fiscal year ended June 30, 1997 would
have been $15.8 million, or $1.75 per fully diluted common share as compared to
$1.31 per common share for the fiscal year ended June 30, 1996 reflecting a
33.6% increase in earnings per share.
As of June 30, 1997, total assets were $2.0 billion, deposits were $1.4 billion
and total stockholders' equity was $162.7 million. At June 30, 1997, the Company
had 8,776,337 common shares outstanding with a tangible book value per share of
common stock of $13.35.
On June 18, 1997, the Board of Directors declared a regular cash dividend of
$0.16 per common share for the quarter ending June 30, 1997. The dividend was
paid on July 18, 1997 to stockholders of record on July 3, 1997.
Cash Earnings
Cash earnings for the quarter ended June 30, 1997 were $5.7 million, or $0.64
per share, which represents a cash return on average equity of 14.48%, an 18.5%
increase from 12.22% in the prior year quarter. For the fiscal year ended June
30, 1997, exclusive of the SAIF charge, cash earnings were $21.0 million, or
$2.36 per share. The Company's cash earnings are determined by adding back to
reported earnings the non-cash expenses related to the allocation of ESOP
("Employee Stock Ownership Plan") stock and the earned portion of RRP
("Recognition and Retention Plan") stock, net of associated tax benefits, and
amortization of excess of cost over fair value of net assets acquired
("goodwill").
Page 1 of 7
Continental Bank Merger
As previously announced, on May 5, 1997, the Company entered into a definitive
agreement pursuant to which Reliance will acquire Continental, a $177.0 million
commercial bank based in Garden City, New York. Upon completion of the
acquisition, Continental will merge into Reliance Federal Savings Bank,
Reliance's wholly owned thrift subsidiary. The transaction received the
unanimous approval of the Boards of Directors of Reliance Bancorp, Inc. and
Continental Bank. The acquisition is expected to be completed in the fourth
quarter of calendar year 1997, and is subject to the approval of the
stockholders of Continental Bank and regulatory authorities.
Quarterly Results
Reliance Bancorp, Inc. reported net income of $4.3 million for the quarter ended
June 30, 1997, which represents an annualized return on average assets and
average tangible equity of 0.90% and 15.49%, respectively. Net interest income
increased to $15.6 million for the quarter ended June 30, 1997, an increase of
$807,000, or 5.5%, from $14.8 million for the quarter ended June 30, 1996. The
increase in net interest income was attributable to the growth in average
interest-earning assets to $1.8 billion for the quarter ended June 30, 1997 from
$1.7 billion for the quarter ended June 30, 1996. The growth in average
interest-earning assets was from increased investments in mortgage-backed
securities and increased originations of multi-family loans. As a result of a
flattening of the yield curve and increased costs of interest-bearing
liabilities, the Bank's net interest spread declined from 3.31% to 3.13% and its
net interest margin declined from 3.52% to 3.40%. For the quarter ended June 30,
1997, the yield on interest-earning assets was 7.52% and the cost of
interest-bearing liabilities was 4.39% as compared to 7.41% and 4.10%,
respectively for the quarter ended June 30, 1996.
Non-interest expense totalled $8.5 million for the quarter ended June 30, 1997,
a $315,000 decrease from the $8.8 million recorded in the prior year quarter.
The decrease in non-interest expense is primarily due to lower deposit insurance
premiums and real estate owned expenses offset by higher compensation and other
expenses. The operating expense to average assets ratio improved to 1.58% for
the quarter ended June 30, 1997 from 1.77% in the prior year quarter. For the
quarter ended June 30, 1997, compensation and benefits expense increased to $4.2
million, an increase of $125,000, or 3.1%, from $4.0 million for the quarter
ended June 30, 1996. The increase in compensation and benefits expense is mainly
due to increased costs of the ESOP benefit plan. For the quarter ended June 30,
1997, ESOP and RRP expenses were $716,000, an increase of $191,000, or 36.4%,
from $525,000 recorded in the prior year quarter. Excluding expenses related to
these benefit plans, the cash operating expenses to average assets improved to
1.43% for the quarter ended June 30, 1997 from 1.65% in the prior year quarter.
Federal deposit insurance premiums decreased $550,000, or 71.3%, from $771,000
recorded for the quarter ended June 30, 1996 to $221,000 for the quarter ended
June 30, 1997 due to the reduction in SAIF premiums. Other operating expenses
increased $148,000 or 11.3%, from $1.3 million during the quarter ended June 30,
1996 to $1.5 million for the quarter ended June 30, 1997 as a result of higher
professional fees.
For the quarter ended June 30, 1997, real estate owned expenses were $48,000, a
decrease of $101,000, or 67.8%, from $149,000 in the prior year quarter. The
decrease relates to the reduction of expenses on several REO properties which
were sold during the quarter as well as no provision for REO losses. For the
quarter ended June 30, 1996, the Bank established a provision for REO losses of
$50,000.
Page 2 of 7
Fiscal Year Ended Results
Net income for the fiscal year ended June 30, 1997 was $10.9 million as compared
to net income of $11.7 million for the fiscal year ended June 30, 1996.
Excluding the effect of the SAIF charge, the annualized return on average assets
and average tangible equity would have been 0.84% and 14.56%, respectively. Net
interest income increased to $61.6 million for the fiscal year ended June 30,
1997, an increase of $14.2 million, or 30.1%, from $47.4 million for the fiscal
year ended June 30, 1996. The increase in net interest income was attributable
to the growth in average interest-earning assets to $1.8 billion for the fiscal
year ended June 30, 1997 from $1.3 billion for the fiscal year ended June 30,
1996. The growth in interest-earning assets was primarily from assets acquired
in the Sunrise Bancorp, Inc. acquisition, increased purchases of mortgage-backed
securities and increased originations of multi-family loans. During the fiscal
year ended June 30, 1997, the Bank improved its net interest spread from 3.17%
to 3.22% primarily due to the upward repricing of adjustable rate
mortgage-backed securities. However, the net interest margin declined from 3.52%
for the year ended June 30, 1996 to 3.47% primarily due to increased leveraging
of the Bank's capital. For the fiscal year ended June 30, 1997, the yield on
interest-earning assets was 7.51%and the cost of interest-bearing liabilities
was 4.29% as compared to 7.45% and 4.28%, respectively for the fiscal year ended
June 30, 1996.
Non-interest income increased $302,000, or 9.7%, from $3.1 million for the
fiscal year ended June 30, 1996 to $3.4 million for the fiscal year ended June
30, 1997 due to increased deposit fee income offset by lower net gains on
securities.
Non-interest expense totalled $43.0 million for the fiscal year ended June 30,
1997 as compared to $28.1 million for the fiscal year ended June 30, 1996, an
increase of $14.9 million, or 53.1%. Included in non-interest expense for the
fiscal year ended June 30, 1997 is the special SAIF charge of $8.25 million.
Excluding the SAIF charge, non-interest expense increased $6.7 million, or
23.7%. This increase is mainly the result of banking office personnel, goodwill
amortization and other occupancy costs associated with the Sunrise Bancorp, Inc.
acquisition. Due to the increased asset base and the operational efficiencies
realized from the acquisition, the operating expense to average assets ratio
improved from 1.81% for the fiscal year ended June 30, 1996 to 1.66% for the
fiscal year ended June 30, 1997. For the fiscal year ended June 30, 1997,
compensation and benefits expense increased $3.1 million, or 23.2%, to $16.5
million from $13.4 million for the fiscal year ended June 30, 1996. The increase
in compensation and benefits expense is due to the addition of banking office
personnel from the Sunrise Bancorp, Inc. acquisition, higher benefit expenses
and normal salary adjustments. For the fiscal year ended June 30, 1997, ESOP and
RRP expense was $2.5 million as compared to $2.0 million in the prior year
period, an increase of $486,000, or 23.9%. Excluding expenses related to these
benefit plans, the cash operating expenses to average assets improved to 1.52%
for the fiscal year ended June 30, 1997 from 1.67% in the prior year period.
Occupancy and equipment expense increased $1.2 million, or 27.6%, from $4.5
million for the fiscal year ended June 30, 1996 to $5.7 million for the fiscal
year ended June 30, 1997 due to costs associated with the operation of eleven
new banking offices as well as miscellaneous data processing costs. Federal
deposit insurance premiums decreased $586,000, or 24.4%, from $2.4 million
recorded for the year ended June 30, 1996 to $1.8 million for the year ended
June 30, 1997 due to the reduction in SAIF premiums. Other operating expenses
increased $1.6 million, or 38.6%, from $4.2 million for the fiscal year ended
June 30, 1996 to $5.8 million for the fiscal year ended June 30, 1997 primarily
as a result of general expenses related to the addition of eleven new banking
offices.
For the fiscal year ended June 30, 1997, real estate owned expenses were
$383,000, a decrease of $196,000, or 33.9%, from $579,000 in the prior year
period. The decrease primarily relates to a lower provision established during
the fiscal year ended June 30, 1997. During the fiscal year ended June 30,
Page 3 of 7
1997, the Bank established a provision for REO losses of $200,000 as compared to
$375,000 in the prior year period.
Financial Condition
As of June 30, 1997, total assets were $2.0 billion, deposits were $1.4 billion
and total stockholders' equity was $162.7 million. The mortgage-backed
securities portfolio increased $104.9 million, or 13.5%, from $776.2 million at
June 30, 1996 to $881.2 million at June 30, 1997 with the increase primarily due
to increased purchases of adjustable-rate and longer term fixed-rate
mortgage-backed securities and private label collateralized mortgage obligations
offset by amortization and prepayments. Mortgage loans increased $84.6 million
from $691.0 million at June 30, 1996 to $775.6 million at June 30, 1997. The
increase in mortgage loans is primarily due to increased multi-family loan
originations offset by amortizations. For the fiscal year ended June 30, 1997,
the Bank originated $115.9 million of multi-family loans.
Funding for the purchases of mortgage-backed securities and loans was through a
combination of new deposit growth, borrowings and cash flows. Deposits increased
$90.4 million, or 6.7% during the fiscal year ended June 30, 1997 as a result of
growth in new certificate of deposit products. Borrowings increased from $266.2
million at June 30, 1996 to $352.0 million at June 30, 1997, an increase of
$85.8 million, or 32.2%. The Bank continues to use borrowings to leverage its
capital and fund asset growth. Excess of cost over fair value of net assets
acquired decreased $4.0 million during the fiscal year ended June 30, 1997
primarily due to $3.4 million of amortization and approximately $562,000 of
acquisition related tax benefits currently realized and not previously
recognized.
Non-performing assets
Non-performing loans totalled $14.7 million, or 1.61% of total loans at June 30,
1997, as compared to $13.0 million, or 1.58% of total loans at June 30, 1996.
Non-performing loans at June 30, 1997 were comprised of $11.1 million of loans
secured by one- to four-family residences, $277,000 of guaranteed student loans
and $3.3 million of commercial real estate loans. For the quarter ended June 30,
1997, the Company experienced net recoveries of $3,000. For the fiscal year
ended June 30, 1997, the Company experienced net charge-offs of $263,000. As a
result of a decrease in REO and an increased asset base, the non-performing
assets to total assets ratio improved to 0.77% at June 30, 1997 from 0.82% at
June 30, 1996.
For the fiscal year ended June 30, 1997, the Company's loan loss provision was
$950,000 as compared to $725,000 in the prior year period. The Company's
allowance for loan losses totalled $5.2 million at June 30, 1997 and $4.5
million at June 30, 1996 which represents a ratio of allowance for loan losses
to non-performing loans and to total loans of 35.18% and 0.57% and 34.63% and
0.55%, respectively. The Company continues to increase its loan loss reserves
after analyzing non-performing loans as well as the need to increase general
valuation allowances on commercial real estate and multi-family loans.
Management believes the allowance for loan losses at June 30, 1997 is adequate
and sufficient reserves are presently maintained to cover losses on any
non-performing loans.
Reliance Bancorp, Inc. and Reliance Federal Savings Bank are headquartered in
Garden City, New York. Reliance Federal Savings Bank now serves its customers
from 28 banking offices located in the New York counties of Queens, Nassau and
Suffolk.
Page 4 of 7
RELIANCE BANCORP, INC. and SUBSIDIARY
Consolidated Statements of Condition
(Unaudited)
(Dollars in thousands, except share and per share data)
June 30, June 30,
Assets 1997 1996
------ ---- ----
Cash and due from banks......................................................... $ 29,565 $ 22,420
Money market investments........................................................ 1,100 10,450
Debt and equity securities available-for-sale................................... 26,909 13,271
Debt and equity securities held-to-maturity..................................... 46,026 48,330
Mortgage-backed securities available-for-sale................................... 721,819 591,740
Mortgage-backed securities held-to-maturity..................................... 159,356 184,492
Loans receivable:
Mortgage loans............................................................. 775,612 690,967
Consumer and other loans................................................... 138,891 131,274
Less allowance for loan losses........................................... (5,182) (4,495)
----------- ----------
Loans receivable, net.............................................. 909,321 817,746
Accrued interest receivable, net................................................ 12,040 11,312
Office properties and equipment, net............................................ 14,089 13,821
Prepaid expenses and other assets............................................... 7,580 14,070
Mortgage servicing rights....................................................... 3,046 3,905
Excess of cost over fair value of net assets acquired........................... 45,463 49,429
Real estate owned, net.......................................................... 450 1,564
------------- -----------
Total assets....................................................... $1 ,976,764 $1,782,550
========== =========
Liabilities and Stockholders' Equity
Deposits........................................................................ $1,436,037 $1,345,626
FHLB advances................................................................... 40,000 3,000
Securities sold under agreements to repurchase.................................. 311,913 263,160
Advance payments by borrowers for taxes and insurance........................... 9,017 8,846
Accrued expenses and other liabilities.......................................... 17,127 8,299
---------- -----------
Total liabilities.................................................. 1,814,094 1,628,931
--------- ---------
Commitments
Stockholders' Equity
Preferred Stock, $.01 par value, 4,000,000 shares
authorized; none issued....................................................... -- --
Common stock, $.01 par value, 20,000,000 shares
authorized; 10,750,820 shares issued; 8,776,337 and 9,128,739
outstanding, respectively................................................... 108 108
Additional paid-in capital...................................................... 105,871 104,041
Retained earnings, substantially restricted..................................... 89,660 83,966
Unrealized appreciation (depreciation) on securities
available-for-sale, net of taxes............................................. 1,705 (5,281)
Less:
Unallocated common stock held by ESOP........................................... (5,382) (6,210)
Unearned common stock held by RRP............................................... (1,567) (2,392)
Unearned common stock held by SERP.............................................. (209) --
Treasury stock, at cost (1,974,483 and 1,622,081 shares, respectively).......... (27,516) (20,613)
----------- -----------
Total stockholders' equity................................................. 162,670 153,619
---------- ----------
Total liabilities and stockholders' equity.......................... $1,976,764 $1,782,550
========= =========
Page 5 of 7
RELIANCE BANCORP, INC. and SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
(In thousands,except per share data)
Three Months Ended Fiscal Year Ended
June 30, June 30,
-------- --------
1997 1996 1997 1996
---- ---- ---- ----
Interest income:
First mortgage loans................................ $14,806 $ 13,994 $56,948 $ 39,073
Consumer and other loans............................ 2,950 2,830 11,525 10,942
Mortgage-backed securities.......................... 15,356 13,222 59,392 46,084
Money market investments............................ 143 219 618 991
Debt and equity securities.......................... 1,290 863 4,806 3,282
------- ------- ------- -------
Total interest income............................ 34,545 31,128 133,289 100,372
------- ------- -------- --------
Interest expense:
Deposits............................................ 14,262 12,843 54,139 42,425
Borrowed funds...................................... 4,673 3,482 17,514 10,560
------- ------- ------- --------
Total interest expense........................... 18,935 16,325 71,653 52,985
------- ------- ------- -------
Net interest income before provision
for loan losses................................ 15,610 14,803 61,636 47,387
Provision for loan losses........................... 300 100 950 725
-------- -------- -------- --------
Net interest income after provision for
loan losses.................................... 15,310 14,703 60,686 46,662
------- ------- ------- -------
Non-interest income:
Loan fees and service charges....................... 115 336 683 826
Other operating income.............................. 691 664 2,557 1,606
Net gain on securities.............................. -- -- 172 678
--------- -------- -------- --------
Total non-interest income........................ 806 1,000 3,412 3,110
------- ------ ------- -------
Non-interest expense:
Compensation and benefits........................... 4,158 4,033 16,509 13,395
Occupancy and equipment............................. 1,456 1,352 5,719 4,481
Federal deposit insurance premiums.................. 221 771 1,813 2,399
Advertising......................................... 326 357 1,168 1,152
Other operating expense............................. 1,458 1,310 5,778 4,169
------- ------- ------- -------
Total general and administrative expenses........ 7,619 7,823 30,987 25,596
Real estate operations, net......................... 48 149 383 579
Amortization of excess of cost over fair value
of net assets acquired........................... 846 856 3,404 1,928
SAIF recapitalization charge........................ -- -- 8,250 --
--------- ---------- ------- ----------
Total non-interest expense....................... 8,513 8,828 43,024 28,103
------- ------- ------- -------
Income before income taxes ............................ 7,603 6,875 21,074 21,669
Income tax expense .................................... 3,265 3,275 10,138 9,946
------- ------- ------- -------
Net income............................................. $ 4,338 $ 3,600 $ 10,936 $ 11,723
====== ====== ======= =======
Net income per common share :
Primary......................... $ 0.49 $ 0.40 $ 1.24 $ 1.31
======= ====== ======= ======
Fully Diluted................... $ 0.48 $ 0.40 $ 1.21 $ 1.31
======= ====== ======= ======
Page 6 of 7
RELIANCE BANCORP, INC. & SUBSIDIARY
Selected Financial Ratios
(Unaudited)
At or for the At or for the
Three Months Ended Fiscal year ended
June 30, June 30,
-------- --------
1997 1996 1997 1996
---- ---- ---- ----
Performance ratios:
Return on average assets............................... 0.90% 0.81% 0.58% 0.83%
Cash return on average assets.......................... 1.18% 1.09% 0.86% 1.06%
Return on average equity (3)........................... 10.98% 9.16% 7.02% 7.58%
Cash return on average equity (3)...................... 14.48% 12.22% 10.36% 9.68%
Return on average tangible equity (3).................. 15.49% 13.44% 10.10% 9.18%
Average equity to average assets (3).................. 8.09% 8.60% 8.24% 10.92%
Equity to total assets................................. 8.23% 8.62% 8.23% 8.62%
Tangible equity to tangible assets..................... 6.07% 6.01% 6.07% 6.01%
Core deposits to total deposits........................ 37.40% 41.68% 37.40% 41.68%
Net interest spread.................................... 3.13% 3.31% 3.22% 3.17%
Net interest margin.................................... 3.40% 3.52% 3.47% 3.52%
Operating expenses to average assets (1)............... 1.58% 1.77% 1.66% 1.81%
Cash operating expenses to average assets.............. 1.43% 1.65% 1.52% 1.67%
Operating income to average assets (2)................. 0.17% 0.18% 0.17% 0.16%
Average interest-earning assets to average
interest-bearing liabilities......................... 1.07X 1.05X 1.06X 1.09X
Cash net income per share.............................. $0.64 $0.54 $1.81 $1.68
Selected Performance Ratios
(Excluding Special SAIF Assessment):
Return on average assets............................... 0.90% 0.81% 0.84% 0.83%
Cash return on average assets.......................... 1.18% 1.09% 1.12% 1.06%
Return on average equity (3)........................... 10.98% 9.16% 10.12% 7.58%
Cash return on average equity (3)...................... 14.48% 12.22% 13.45% 9.68%
Return on average tangible equity (3).................. 15.49% 13.44% 14.56% 9.18%
Net income per common share ........................... $0.48 $0.40 $1.75 $1.31
Cash net income per share.............................. $0.64 $0.54 $2.36 $1.68
At At
June 30, June 30,
1997 1996
---- ----
Assets quality ratios:
Non-performing loans to total loans........................................ 1.61% 1.58%
Non-performing loans to total assets....................................... 0.75% 0.73%
Non-performing assets to total assets...................................... 0.77% 0.82%
Allowance for loan losses to total loans................................... 0.57% 0.55%
Allowance for loan losses to non-performing loans.......................... 35.18% 34.63%
(1) Operating expense represents total non-interest expense less real estate
operations, net, amortization of excess of cost over fair value of net
assets acquired and SAIF recapitalization charge.
(2) Operating income represents non-interest income less net gain on securities.
(3) For purposes of these calculations, average equity and average tangible
equity exclude the effect of changes in the unrealized appreciation
(depreciation) on securities available for sale, net of taxes.
Page 7 of 7