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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 2002
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 number 0-18121
MAF BANCORP, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-3664868
(State of Incorporation) (I.R.S. Employer
Identification No.)
55th Street & Holmes Avenue
Clarendon Hills, Illinois 60514
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number: (630) 325-7300
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 [ ]
The number of shares outstanding of the issuer's common stock, par value $.01
per share, was 23,128,111 at May 10, 2002.
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MAF BANCORP, INC. AND SUBSIDIARIES
FORM 10-Q
Index
- -----
Part I. Financial Information Page
- ------- --------------------- ----
Item 1. Financial Statements
Consolidated Statements of Financial Condition
as of March 31, 2002 and December 31, 2001 (unaudited)................... 3
Consolidated Statements of Operations for the Three
Months Ended March 31, 2002 and 2001 (unaudited)......................... 4
Consolidated Statement of Changes in Stockholders' Equity
for the Three Months Ended March 31, 2002 (unaudited).................... 5
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2002 and 2001 (unaudited)................... 6
Notes to Unaudited Consolidated Financial Statements (unaudited)......... 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................................... 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk............... 28
Part II. Other Information
- -------- -----------------
Item 1. Legal Proceedings........................................................ 29
Item 2. Changes in Securities.................................................... 29
Item 3. Defaults Upon Senior Securities.......................................... 29
Item 4. Submission of Matters to a Vote of Security Holders...................... 29
Item 5. Other Information........................................................ 29
Item 6. Exhibits and Reports on Form 8-K......................................... 30
Signature Page........................................................... 31
2
Part I. Financial Information
Item 1. Financial Statements
MAF BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
(Dollars in thousands)
(Unaudited)
March 31, December 31,
2002 2001
---------- ------------
Assets
- ------
Cash and due from banks $ 99,208 82,540
Interest-bearing deposits 112,348 29,367
Federal funds sold 167,360 112,765
---------- ---------
Total cash and cash equivalents 378,916 224,672
---------- ---------
Investment securities available for sale, at fair value 348,599 355,461
Stock in Federal Home Loan Bank of Chicago, at cost 133,994 132,081
Mortgage-backed securities available for sale, at fair value 219,191 142,158
Loans receivable held for sale 45,296 161,105
Loans receivable, net of allowance for losses of $19,554 and $19,607 4,206,391 4,286,470
Accrued interest receivable 27,511 28,761
Foreclosed real estate 2,170 1,405
Real estate held for development or sale 12,265 12,993
Premises and equipment, net 65,276 63,815
Other assets 74,622 80,448
Goodwill, net of accumulated amortization of $12,643 and $12,480 95,224 96,851
Core deposit intangibles, net of accumulated amortization of
$7,552 and $7,128 8,395 8,819
---------- ---------
$5,617,850 5,595,039
========== =========
Liabilities and Stockholders' Equity
- ------------------------------------
Liabilities:
Deposits $3,647,659 3,557,997
Borrowed funds 1,390,500 1,470,500
Advances by borrowers for taxes and insurance 41,366 38,484
Accrued expenses and other liabilities 88,113 92,185
---------- ---------
Total liabilities 5,167,638 5,159,166
---------- ---------
Stockholders' equity:
Preferred stock, $.01 par value; authorized 5,000,000
shares; none outstanding -- --
Common stock, $.01 par value;
authorized 80,000,000 shares; 25,420,650 shares issued;
23,093,274 and 22,982,634 shares outstanding 254 254
Additional paid-in capital 202,936 201,468
Retained earnings, substantially restricted 298,405 286,742
Stock in gain deferral plan; 223,453 shares 511 511
Accumulated other comprehensive income 2,534 3,672
Treasury stock, at cost; 2,550,829 and 2,661,469 shares (54,428) (56,774)
---------- ---------
Total stockholders' equity 450,212 435,873
---------- ---------
$5,617,850 5,595,039
========== =========
See accompanying notes to unaudited consolidated financial statements.
3
MAF BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
------------------
2002 2001
------- ------
Interest income:
Loans receivable $72,005 80,083
Mortgage-backed securities available for sale 2,372 1,660
Investment securities available for sale 5,816 4,930
Interest-bearing deposits and federal funds sold 1,363 2,474
------- ------
Total interest income 81,556 89,147
------- ------
Interest expense:
Deposits 25,546 31,510
Borrowed funds 20,046 25,139
------- ------
Total interest expense 45,592 56,649
------- ------
Net interest income 35,964 32,498
Provision for loan losses -- --
------- ------
Net interest income after provision for loan losses 35,964 32,498
Non-interest income:
Gain on sale of:
Loans receivable 2,340 691
Investment securities 465 170
Foreclosed real estate 27 175
Deposit account service charges 4,824 3,426
Income from real estate operations 2,897 3,349
Brokerage commissions 603 545
Loan servicing fee expense (40)
(263)
Other 2,558 1,766
------- ------
Total non-interest income 13,674 9,859
------- ------
Non-interest expense:
Compensation and benefits 14,226 11,341
Office occupancy and equipment 2,867 2,224
Advertising and promotion 1,187 1,248
Data processing 999 764
Federal deposit insurance premiums 174 155
Amortization of goodwill 163 811
Amortization of core deposit intangibles 424 340
Other 3,704 3,065
------- ------
Total non-interest expense 23,744 19,948
------- ------
Income before income taxes 25,894 22,409
Income tax expense 9,351 8,331
------- ------
Net income $16,543 14,078
======= ======
Basic earnings per share $ .72 .61
======= ======
Diluted earnings per share $ .70 .60
======= ======
See accompanying notes to unaudited consolidated financial statements.
4
MAF BANCORP, INC. AND SUBSIDIARIES
Consolidated Statement of Changes in Stockholders' Equity
(Dollars in thousands)
(Unaudited)
Three Months Ended March 31, 2002
------------------------------------------------------------------------------
Accumulated Stock in
Additional other gain
Common paid-in Retained comprehensive deferral Treasury
stock capital earnings income plan stock Total
------ ---------- -------- ------------- -------- -------- -------
Balance at December 31, 2001 $254 201,468 286,742 3,672 511 (56,774) 435,873
---- ------- ------- ------ --- ------- -------
Comprehensive income:
Net income -- -- 16,543 -- -- -- 16,543
Other comprehensive income, net of tax:
Unrealized holding loss during the period -- -- -- (841) -- -- (841)
Less: reclassification adjustment of gains
included in net income -- -- -- (297) -- -- (297)
---- ------- ------- ------ --- ------- -------
Total comprehensive income -- -- 16,543 (1,138) -- -- 15,405
---- ------- ------- ------ --- ------- -------
Exercise of 112,294 stock options and
reissuance of treasury stock -- -- (1,447) -- -- 2,397 950
Impact of exercise of acquisition carry-over
options -- 1,413 -- -- -- -- 1,413
Tax benefits from stock-related compensation -- 55 -- -- -- -- 55
Purchase of treasury stock -- -- -- -- -- (51) (51)
Cash dividends declared, ($.15 per share) -- -- (3,468) -- -- -- (3,468)
Dividends paid to gain deferral plan -- -- 35 -- -- -- 35
---- ------- ------- ------ --- ------- -------
Balance at March 31, 2002 $254 202,936 298,405 2,534 511 (54,428) 450,212
==== ======= ======= ====== === ======= =======
See accompanying notes to unaudited consolidated financial statements.
5
MAF BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
March 31,
--------------------
2002 2001
--------- --------
Operating activities:
Net income $ 16,543 14,078
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,344 1,201
FHLB of Chicago stock dividend (1,913) (1,700)
Deferred income tax benefit (8,139) (300)
Amortization of intangible assets 587 1,151
Amortization of premiums, discounts, and deferred loan fees 2,063 1,354
Net gain on sale of loans receivable (2,340) (691)
Net gain on sale of investment securities (465) (170)
Net gain on real estate held for development or sale (2,897) (3,349)
Increase in accrued interest receivable 1,250 249
Net decrease in other assets and liabilities 10,196 4,578
Loans originated for sale (248,363) (247,378)
Sale of loans originated for sale 363,710 125,987
--------- --------
Net cash provided by (used in) operating activities 131,576 (104,990)
--------- --------
Investing activities:
Loans receivable originated for investment (430,303) (267,196)
Principal repayments on loans receivable 511,278 350,032
Principal repayments on mortgage-backed securities 11,575 5,826
Proceeds from maturities of investment securities available for sale 32,199 13,318
Proceeds from sale of:
Investment securities available for sale 465 1,630
Real estate held for development or sale 8,028 12,183
Purchases of:
Investment securities available for sale (29,989) (56,143)
Mortgage-backed securities available for sale (86,037) (11,279)
Real estate held for development or sale (2,586) (1,104)
Premises and equipment (2,805) (1,192)
--------- --------
Net cash provided by investing activities $ 11,825 46,075
--------- --------
(continued)
6
MAF BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
March 31,
--------------------
2002 2001
-------- --------
Financing activities:
Proceeds from FHLB of Chicago advances $ -- 80,000
Proceeds from unsecured line of credit -- 6,000
Repayment of FHLB of Chicago advances (80,000) (130,000)
Proceeds from exercise of stock options 950 287
Purchase of treasury stock (51) (9,812)
Cash dividends (2,726) (2,288)
Net increase in deposits 89,788 93,018
Increase in advances by borrowers for taxes and insurance 2,882 6,870
-------- --------
Net cash provided by financing activities 10,843 44,075
-------- --------
Increase (decrease) in cash and cash equivalents 154,244 (14,840)
Cash and cash equivalents at beginning of period 224,672 270,520
-------- --------
Cash and cash equivalents at end of period $378,916 255,680
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest on deposits and borrowed funds $ 45,786 55,658
Income taxes 451 --
Summary of non-cash transactions:
Transfer of loans receivable to foreclosed real estate 1,029 877
Loans receivable swapped into mortgage-backed securities 13,624 19,668
Investments securities held-to-maturity transferred to available-for-sale -- 12,633
Mortgage-backed securities held-to-maturity transferred to
available-for-sale -- 80,301
======== ========
See accompanying notes to unaudited consolidated financial statements.
7
MAF BANCORP, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
Three Months Ended March 31, 2002 and 2001
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by accounting
principles generally accepted in the United States of America for complete
financial statements. In the opinion of management, all adjustments (consisting
of only normal recurring accruals) necessary for a fair presentation have been
included. The results of operations for the three months ended March 31, 2002
are not necessarily indicative of results that may be expected for the year
ending December 31, 2002.
The consolidated financial statements include the accounts of MAF Bancorp,
Inc. ("Company"), and its wholly-owned subsidiaries, Mid America Bank, fsb and
subsidiaries ("Bank") and MAF Developments, Inc. ("MAFD"), as of and for the
three month periods ended March 31, 2002 and 2001 and as of December 31, 2001.
All material intercompany balances and transactions have been eliminated in
consolidation.
(2) Earnings Per Share
Earnings per share is determined by dividing net income for the period by
the weighted average number of shares outstanding. Stock options are regarded as
potential common stock and are considered in the diluted earnings per share
calculations to the extent that they have a dilutive effect. Stock options are
the only adjustment made to average shares outstanding in computing diluted
earnings per share. Weighted average shares used in calculating earnings per
share are summarized below for the periods indicated:
Three Months Ended March 31,
---------------------------------------------------------------------------------
2002 2001
--------------------------------------- ---------------------------------------
Income Shares Per-Share Income Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- --------- ----------- ------------- ---------
(Dollars in thousands, except per share data)
Basic earnings per share:
Income available to
common shareholders $16,543 23,014,821 $.72 $14,078 23,018,672 $.61
======= ==== ======= ====
Effect of dilutive securities:
Stock options 561,199 474,394
---------- ----------
Diluted earnings per share:
Income available to common
shareholders plus assumed
conversions $16,543 23,576,020 $.70 $14,078 23,493,066 $.60
======= =========== ==== ======= ========== ====
8
(3) Commitments and Contingencies
At March 31, 2002, the Bank had outstanding commitments to originate and
purchase loans of $535.1 million, of which $290.8 million were fixed-rate loans
and $244.3 million were adjustable-rate loans. Prospective borrowers had locked
the interest rate on $203.0 million of these commitments, of which $95.0 million
were fixed rate loans, with rates ranging from 5.5% to 8.5% and $108.9 million
were adjustable rate loans with rates ranging from 4.75% to 8.25%. At March 31,
2002, commitments to sell loans were $94.7 million.
At March 31, 2002, the Bank had outstanding standby letters of credit
totaling $14.5 million, two of which totaled $13.3 million to enhance a
developer's industrial revenue bond financings of commercial real estate in the
Bank's market. These two letters of credit are collateralized by mortgage-backed
securities and U.S. Government and agency securities owned by the Bank.
Additionally, the Company had outstanding standby letters of credit totaling
$7.1 million related to real estate development improvements.
(4) Statement of Cash Flows
For purposes of reporting cash flows, cash and cash equivalents include
cash and due from banks, interest-bearing deposits and federal funds sold.
Generally, federal funds are sold for one-day periods and interest-bearing
deposits mature within one day to three months.
(5) Reclassifications
Certain reclassifications of 2001 amounts have been made to conform with
the current period presentation.
(6) Segment Information
The Company utilizes the "management approach" for segment reporting. This
approach is based on the way that a chief decision maker for the Company
organizes segments for making operating decisions and assessing performance.
The Company operates two separate lines of business. Our Bank segment
includes all of our banking activities. The Bank operates as a retail bank,
participating in primarily residential mortgage portfolio lending, deposit
gathering and offering other financial services mainly to individuals. Land
development consists primarily of developing raw land for residential use and
sale to builders. All goodwill has been allocated to the Banking segment.
Selected segment information is included in the tables below:
At or For the Three Months Ended March 31, 2002
-------------------------------------------------------
Land Consolidated
Banking Development Eliminations Total
---------- ----------- ------------ -------------
(In thousands)
Interest income $ 81,556 -- -- 81,556
Interest expense 45,562 30 -- 45,592
---------- ------ -- ---------
Net interest income 35,994 (30) -- 35,964
Non-interest income 10,777 2,897 -- 13,674
Non-interest expense 23,367 377 -- 23,744
---------- ------ -- ---------
Income before income taxes 23,404 2,490 -- 25,894
Income tax expense 8,366 985 -- 9,351
---------- ------ -- ---------
Net income $ 15,038 1,505 -- 16,543
========== ====== == =========
Average assets $5,571,154 15,475 -- 5,586,629
========== ====== == =========
9
(6) Segment Information (continued)
At or For the Three Months Ended March 31, 2001
--------------------------------------------------------
Land Consolidated
Banking Development Eliminations Total
--------- ----------- ------------ --------------
(In thousands)
Interest income $ 89,159 -- (12) 89,147
Interest expense 56,604 57 (12) 56,649
---------- ------ -- ---------
Net interest income 32,555 (57) -- 32,498
Non-interest income 6,510 3,349 -- 9,859
Non-interest expense 19,602 346 -- 19,948
---------- ------ -- ---------
Income before income taxes 19,463 2,946 -- 22,409
Income tax expense 7,162 1,169 -- 8,331
---------- ------ -- ---------
Net income $ 12,301 1,777 -- 14,078
========== ====== === =========
Average assets $5,114,236 14,421 -- 5,128,657
========== ====== === =========
(7) New Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Accounting Standards ("SFAS") No. 141, "Business Combinations,"
that eliminates the pooling of interests method of accounting for business
combinations with limited exceptions for combinations initiated prior to July 1,
2001. In addition, it clarifies the criteria for recognition of intangible
assets separately from goodwill. This statement is effective for business
combinations completed after June 30, 2001. The Company followed this
pronouncement in accounting for its acquisition of Mid Town Bancorp ("Mid Town")
in November 2001.
In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets," which discontinues the amortization of goodwill and indefinite lived
intangible assets and initiates an annual review for impairment, unless more
periodic reviews are warranted. Intangible assets with determinable useful lives
will continue to be amortized. The Company is continuing to evaluate the
impairment of goodwill, which will be finalized in the second quarter of 2002.
The Company does not expect to record an impairment charge upon completion of
the review. However, there can be no assurance that, at the time the review is
completed, a material impairment charge may not be recorded. In October 2001,
the FASB decided to undertake a limited-scope project to reconsider part of the
guidance in SFAS No. 72, "Accounting for Certain Acquisitions of Banking or
Thrift Institutions." In particular, the FASB decided to reconsider whether the
acquisition of a branch is a business combination and if goodwill recorded in
connection with a branch acquisition ("Statement 72 Goodwill") should continue
to be amortized. Currently, Statement 72 Goodwill is excluded from the scope of
SFAS No. 142. Pending further clarification from the FASB, the Company has
continued its amortization of goodwill related to branch acquisitions. The
Company's amortization of goodwill related to branch acquisitions amounted to
$163,000 before tax for the three months ended March 31, 2002 and 2001, and is
included in the consolidated statements of income under the caption
"amortization of goodwill." The unamortized balance as of March 31, 2002 was
$11.7 million and the total expected annual amortization is $653,000 for each of
the next five years.
10
The following is a summary of net income and earnings per share for the
three months ended March 31, 2002 and 2001 as adjusted to remove amortization of
goodwill:
Three Months Ended
March 31,
----------------------
2002 2001
------- ------
(Dollars in thousands,
except per share data)
Net income as reported $16,543 14,078
Add back: goodwill amortization -- 648
------- ------
Net income-adjusted 16,543 14,726
======= ======
Basis earnings per share of common stock:
Net income-as reported $ .72 .61
Goodwill amortization -- .03
------- ------
Net income-adjusted .72 .64
======= ======
Diluted earnings per share of common stock:
Net income-as reported $ .70 .60
Goodwill amortization -- .03
------- ------
Net income-adjusted .70 .63
======= ======
Amortization expense and net income of the Company for the three months
ended March 31, 2002 and 2001 are as follows:
Three Months Ended
March 31,
----------------------
2002 2001
------- ------
(Dollars in thousands)
Goodwill amortization on branch acquisitions $ 163 163
Goodwill amortization -- 811
Core deposit intangible amortization 424 340
Net income 16,543 14,078
======= ======
The changes in the carrying amount of goodwill, by segment, for the three
months ended March 31, 2002 are as follows:
Land
Banking Development Total
------- ----------- -----
(Dollars in
thousands)
Balance as of December 31, 2001 $ 96,851 -- 96,851
Amortization expense (163) -- (163)
Adjustment related to Mid Town acquisition (1,464) -- (1,464)
-------- -------- --------
Balance at March 31, 2002 95,224 -- 95,224
======== ======== ========
The following is a summary of intangible assets subject to amortization:
As of December 31, 2001 As of March 31, 2002
----------------------------- -----------------------------
Gross Carrying Accumulated Gross Carrying Accumulated
Amount Amortization Amount Amortization
-------------- ------------ -------------- ------------
(Dollars in thousands) (Dollars in thousands)
Core deposit intangibles $14,651 (5,832) $15,947 (7,552)
Mortgage servicing rights(1) 13,309 (2,778) 16,802 (3,845)
------- ------ ------- ------
Total 27,960 (8,610) 32,749 (11,397)
======= ====== ======= ======
- -------------------
/(1)/ Mortgage servicing rights are included in other assets in the consolidated
statements of financial condition.
Amortization expense for the core deposits intangibles and mortgage
servicing rights for the three months ended March 31, 2002 and estimates for the
nine months ended December 31, 2002 and five years thereafter are as follows.
These estimates relate to the carrying value of the Bank's core deposit
intangibles and mortgage servicing rights as of March 31, 2002.
Core Deposit Mortgage
Intangibles Servicing Rights
----------- ----------------
(Dollars in thousands)
Aggregate Amortization Expense:
For the three months ended
March 31, 2002 $ 424 1,117
Estimated Amortization Expense:
For the Nine Months Ended
December 31, 2002 1,200 1,200
For the Year Ended December 31, 2003 1,500 1,700
For the Year Ended December 31, 2004 1,400 1,800
For the Year Ended December 31, 2005 1,300 1,800
For the Year Ended December 31, 2006 900 1,900
For the Year Ended December 31, 2007 600 2,000
11
In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." This statement addresses the financial accounting and
reporting for obligations related to the retirement of tangible long-lived
assets and the related asset retirement costs. The statement is effective for
financial statements issued for fiscal years beginning after June 15, 2002.
Adoption of this statement is not expected to have a material effect on the
Company's consolidated financial statements.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment and Disposal of Long-Term Assets." This Statement supercedes SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," as well as the accounting and reporting of the
Accounting Principles Board (APB) Opinion No. 30, "Reporting the Results of
Operations- Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions." This
statement eliminates the allocation of goodwill to long-lived assets to be
tested for impairment and details both a probability-weighted and
"primary-asset" approach to estimate cash flows in testing for impairment of
long-lived assets. The Company adopted SFAS No. 144 on January 1, 2002 and upon
adoption, this pronouncement did not have a material impact on the Company's
consolidated financial statements.
12
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Cautionary Statement Regarding Forward-Looking Information
This report, in Item 2. "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere, contains, and other periodic
reports and press releases of the Company may contain, certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The
Company intends such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995, and is including this statement for purposes of
invoking these safe harbor provisions. Forward-looking statements, which are
based on certain assumptions and describe future plans, strategies and
expectations of the Company, are generally identifiable by use of the words
"believe," "expect," "intend," "anticipate," "estimate," "project," "plan," or
similar expressions. The Company's ability to predict results or the actual
effect of future plans or strategies is inherently uncertain and actual results
may differ from those predicted. Factors which could have a material adverse
effect on the operations and future prospects of the Company and the
subsidiaries include, but are not limited to unanticipated changes in interest
rates, deteriorating economic conditions which could result in increased
delinquencies in the Company's loan portfolio, legislative/regulatory changes,
monetary and fiscal policies of the U.S. Government, including policies of the
U.S. Treasury and the Federal Reserve Board, the quality or composition of the
Company's loan or investment portfolios, demand for loan products and secondary
mortgage market conditions, deposit flows, competition, demand for financial
services and residential real estate in the Company's market area, unanticipated
slow downs in real estate lot sales or problems in closing pending real estate
contracts, delays in real estate development projects, the possible short-term
dilutive effect of potential acquisitions, and changes in accounting principles,
policies and guidelines. These risks and uncertainties should be considered in
evaluating forward-looking statements and undue reliance should not be placed on
such statements. The Company undertakes no obligation to update forward-looking
statements for the effect of future events.
General
MAF Bancorp, Inc. ("Company"), is a registered savings and loan holding
company incorporated under the laws of the state of Delaware and is primarily
engaged in the retail banking business through its wholly-owned subsidiary, Mid
America Bank, fsb ("Bank"), and secondarily, in the land development business
primarily through MAF Developments, Inc.
The Bank is a consumer-oriented financial institution offering various
financial services to its customers through 33 retail banking offices. The Bank
continues to expand its coverage of the greater Chicago Metropolitan area, now
with 11 locations on the north and northwest side of Chicago, a strong presence
in western Cook county and affluent DuPage County, and increasing penetration of
the rapidly-growing collar counties of Will and Kane Counties as well as the
southwest suburbs of Chicago. On November 30, 2001, the Company completed its
acquisition of Mid Town Bancorp, which added four branches, $307 million of
assets and $270 million in deposits to the Bank's branch network. In February
2002, a new branch office was opened in Burr Ridge, Illinois and management has
current plans to open another five branches within the next two years.
The Bank is principally engaged in the business of attracting deposits from
the general public and using such deposits, along with other borrowings, to make
loans secured by real estate, primarily one- to four-family residential mortgage
loans. To a lesser extent, the Bank also makes multi-family mortgage,
commercial, residential construction, land acquisition and development and a
variety of consumer loans. In 2001, the Bank formed a commercial business
lending unit to target lending and deposit relationships with small to medium
sized business in its primary market areas. Through two wholly-owned
subsidiaries, MAF Developments, and NW Financial, Inc., the Company and the Bank
are also engaged in primarily residential real estate development activities.
Additionally, the Bank operates an insurance agency, Mid America Insurance
Agency, Inc., which provides general insurance services, a title agency, Centre
Point Title Services, Inc., which provides general title services for the Bank's
loan customers, Mid America Investment Services, Inc., which offers investment
services and securities brokerage primarily to Bank customers through its
affiliation with INVEST, a registered broker-dealer, and MAF Realty Co., LLC
III, the holding company of MAF Realty Co., LLC IV, a real estate investment
trust that holds participation interests in certain mortgage loans owned by the
Bank. The Bank also operates Mid America Re, Inc., a wholly-owned captive
reinsurance company
13
which shares in a portion of mortgage insurance premiums received by certain
mortgage insurance companies. The Company acquired two wholly-owned subsidiaries
of Mid Town at the time of the acquisition in 2001, Mid Town Development
Corporation ("MTDC") and Equitable Finance Corporation ("EFC"). MTDC's primary
activity was making mezzanine loans on commercial real estate properties that
the Bank was making the first mortgage on. EFC's primary activity was making
various types of "sub-prime" loans, generally short-term unsecured personal
loans. The Company does not intend to continue the activities of these two
subsidiaries and will wind down their operations as the loans mature.
As it has in recent years, the Company expects to continue to search for
and evaluate potential acquisition opportunities that will enhance franchise
value and may periodically be presented with opportunities to acquire other
institutions, branches or deposits in the markets it serves, or which allow the
Company to expand outside its current primary market areas of DuPage County and
the City of Chicago. Management intends to review acquisition opportunities
across a variety of parameters, including the potential impact on its financial
condition as well as its financial performance in the future. It is anticipated
that future acquisitions, if any, will likely be valued at a premium to book
value, and generally at a premium to current market value. As such, management
anticipates that acquisitions made by the Company could involve some short-term
book value per share dilution and earnings per share dilution depending on the
Company's success in integrating the operations of businesses acquired and the
level of cost savings and revenue enhancements that may be achieved.
Regulation and Supervision
As a federally chartered savings bank, the Bank's deposits are insured up
to the applicable limits by the Federal Deposit Insurance Corporation ("FDIC").
The Bank is a member of the Federal Home Loan Bank ("FHLB") of Chicago, which is
one of the twelve regional banks for federally insured savings institutions
comprising the FHLB system. The Bank is regulated by the Office of Thrift
Supervision ("OTS") and the FDIC. The Bank is further regulated by the Board of
Governors of the Federal Reserve System as to reserves required to be maintained
against deposits and certain other matters. Such regulation and supervision
establishes a comprehensive framework of activities in which an institution can
engage and is intended primarily for the protection of the insurance fund and
depositors. The regulatory structure also gives the regulatory authorities
extensive discretion in connection with their supervisory and enforcement
activities. Any change in such regulation, whether by the OTS, the FDIC or
Congress could have a material impact on the Company and its operations.
Capital Standards. Savings associations must meet three capital requirements:
core and tangible capital to total assets ratios as well as a regulatory capital
to total risk-weighted assets ratio. The minimum level required for each of
these capital standards is established by regulation. The Company has managed
its balance sheet so as to reasonably exceed these minimums.
Core Capital Requirement
The core capital requirement, or the required "leverage limit," currently
requires a savings institution to maintain core capital of not less than 3% of
adjusted total assets. For the Bank, core capital generally includes common
stockholders' equity (including retained earnings), and minority interests in
the equity accounts of fully consolidated subsidiaries, less intangibles other
than certain servicing rights. Investments in and advances to subsidiaries
engaged in activities not permissible for national banks are also required to be
deducted in computing core capital.
Tangible Capital Requirement
Under OTS regulation, savings institutions are required to meet a minimum
tangible capital requirement of 1.5% of adjusted total assets. Tangible capital
is defined as core capital less any intangible assets, plus purchased mortgage
servicing rights in an amount includable in core capital.
14
Risk-Based Capital Requirement
The risk-based capital requirement provides that savings institutions
maintain total capital equal to not less than 8% of total risk-weighted assets.
For purposes of the risk-based capital computation, total capital is defined as
core capital, as defined above, plus supplementary capital, primarily general
loan loss reserves (limited to a maximum of 1.25% of total risk-weighted
assets.) In computing total capital, the supplementary capital included cannot
exceed 100% of core capital.
At March 31, 2002, the Bank was in compliance with all of its capital
requirements as follows:
March 31, 2002 December 31, 2001
----------------------- -----------------------
Percent of Percent of
Amount Assets Amount Assets
---------- ---------- ---------- ----------
(Dollars in thousands)
Stockholder's equity of the Bank $ 476,686 8.53% $ 462,707 8.32%
========== ===== ========== =====
Tangible capital $ 368,774 6.73% $ 350,825 6.44%
Tangible capital requirement 82,170 1.50 81,686 1.50
---------- ----- ---------- -----
Excess $ 286,604 5.23% $ 269,139 4.94%
========== ===== ========== =====
Core capital $ 368,774 6.73% $ 350,825 6.44%
Core capital requirement 164,340 3.00 163,372 3.00
---------- ----- ---------- -----
Excess $ 204,434 3.73% $ 187,453 3.44%
========== ===== ========== =====
Core and supplementary capital $ 382,237 11.98% $ 364,365 11.31%
Risk-based capital requirement 255,304 8.00 257,691 8.00
---------- ----- ---------- -----
Excess $ 126,933 3.98% $ 106,674 3.31%
========== ===== ========== =====
Total Bank assets $5,589,111 $5,559,787
Adjusted total Bank assets 5,477,996 5,445,742
Total risk-weighted assets 3,302,417 3,335,188
Adjusted total risk-weighted assets 3,191,302 3,221,143
========== ==========
A reconciliation of consolidated stockholder's equity of the Bank for
financial reporting purposes to capital available to the Bank to meet regulatory
capital requirements is as follows:
March 31, December 31,
2002 2001
--------- ------------
(In thousands)
Stockholder's equity of the Bank $476,686 462,707
Goodwill (95,224) (96,851)
Core deposit intangibles (8,395) (8,819)
Non-permissible subsidiary deduction (1,260) (2,055)
Non-includable purchased mortgage servicing rights (1,296) (1,052)
Regulatory capital adjustment for available for sale securities (1,737) (3,105)
-------- -------
Tangible and core capital 368,774 350,825
Recourse on loan sales (5,937) (5,901)
General loan loss reserves 19,400 19,441
-------- -------
Core and supplementary capital $382,237 364,365
======== =======
15
Changes in Financial Condition
Total assets of the Company were $5.62 billion at March 31, 2002, an
increase of $22.8 million, or .4% from $5.60 billion at December 31, 2001. The
current quarter modest growth rate in total assets is a direct result of a
higher level of mortgage prepayments, and borrowers preferring fixed-rate
mortgage loans, which the Bank sells into the secondary market. Currently,
management expects a continued moderate growth rate for the remainder of 2002 as
interest rates are not expected to change significantly.
Cash and short-term investments totaled a combined $378.9 million at March
31, 2002, an increase of $154.2 million from the combined balance of $224.7
million at December 31, 2001. The increase is due to the high level of loan
sales as well as deposit inflows during the quarter.
Investment securities available for sale decreased $6.9 million to $348.6
million at March 31, 2002. The decrease is primarily due to maturities and calls
of $32.2 million of asset-backed and U.S. Agency securities offset by $30.0
million in purchases of corporate debt and Bank trust preferred securities. The
Company recognized a gain of $465,000 on the sale of investment securities
available for sale during the three months ended March 31, 2002.
Mortgage-backed securities available for sale increased $77.0 million to
$219.2 million at March 31, 2002. The increase is due to $86.0 million in
purchases of Collaterized Mortgage Obligations ("CMO"), offset by normal
amortization and prepayments. The increase in CMO purchases is primarily a
result of the reinvestment of loan sale proceeds during the current quarter.
Included in mortgage-backed securities classified as available for sale are
$166.3 million of CMO securities at March 31, 2002, the majority of which are
collateralized by FNMA, FHLMC and GNMA mortgage-backed securities, and to a
lesser extent by whole loans.
Loans receivable, including loans held for sale, decreased $195.9 million,
or 4.4%, to $4.25 billion at March 31, 2002. The Bank originated $677.8 million
of loans during the three-month period ended March 31, 2002, compared to $515.5
million during the prior year period. The higher loan origination volume was
primarily due to an increase in mortgage refinance activity, including loan
modifications, as interest rates have decreased compared to the prior year
period. Offsetting this increase in loan balances were amortization and
prepayments totaling $511.3 million, as well as loan sales of $364.5 million.
Loans receivable held for sale decreased $115.8 million during the current
quarter. The large decrease in loans held for sale is due to the decrease in
fixed-rate loan originations during the quarter compared to the quarter ended
December 31, 2001. The Bank typically sells its long-term fixed-rate loan
originations into the secondary market.
The allowance for loan losses totaled $19.6 million at March 31, 2002, a
decrease of $53,000 from the balance at December 31, 2001, due to net
charge-offs for the period. The Bank's allowance for loan losses to total loans
outstanding was .46% at March 31, 2002, compared to .45% at December 31, 2001.
Non-performing loans increased $5.8 million to $25.2 million, or .59% of total
loans receivable at March 31, 2002, compared to $19.5 million, or .45% of total
loans receivable at December 31, 2001. See "Asset Quality" in this section for a
description of the increase in non-performing assets. The ratio of the allowance
for loan losses to non-performing loans was 77.5% at March 31, 2002 compared to
100.8% at December 31, 2001, and 102.3% at March 31, 2001.
16
In determining the allowance for loan losses and the related provision for
loan losses, management considers: (1) subjective factors, including local and
general economic business factors and trends, portfolio concentrations and
changes in the size and/or general terms of the loan portfolio, (2) historical
loss experience which has ranged from 1 to 14 basis points as a percentage of
outstanding loans over the last five years, and (3) specific allocations based
upon probable losses identified during the review of the portfolio.
Foreclosed real estate increased $765,000 to $2.2 million at March 31,
2002. The Bank's foreclosed real estate at March 31, 2002 consists of 13
single-family homes.
Real estate held for development or sale decreased $728,000 to $12.3
million at March 31, 2002 primarily due to lot sales in its Tallgrass
subdivision. A summary of the carrying value of real estate held for development
or sale follows:
March 31, December 31,
2002 2001
--------- ------------
(In thousands)
Tallgrass of Naperville $ 7,606 8,498
Shenandoah 4,659 4,495
------- ------
$12,265 12,993
======= ======
The Company had 46 lot sales in Tallgrass of Naperville during the three
months ended March 31, 2002. At March 31, 2002, 123 lots remain in Tallgrass,
with 37 under contract. The Shenandoah project is expected to be a 365-lot
development located in Plainfield, Illinois. The increase in balance is due to
engineering fees related to the project. Lot sales are expected to commence in
late 2002 or early 2003.
At March 31, 2002, MAFD has entered into multiple real estate purchase
contracts related to the acquisition of approximately 780 acres of vacant land
in a far western suburb of Chicago. The aggregate purchase price of these
contracts is $28.4 million. The contracts contain various contingencies
regarding soil tests, environmental testing, zoning etc., and provide for the
takedown of the land in staggered closings over a four-year period. The proposed
development is in its early planning stages and may entail the acquisition of
additional land in the future. The Company is actively pursuing and expects to
receive the required zoning and desired plat with the local planning commission
to develop this project with a joint venture partner. Assuming the Company
proceeds with this project, based on the existing purchase contracts, current
estimated total developments costs (including land acquisition) are
approximately $68 million. The project will include single-family residential
lots, multi family and commercial parcels along with various other amenities and
be developed in units over an eight-year period.
Deposits increased $89.7 million, to $3.65 billion at March 31, 2002. After
consideration of interest of $23.6 million credited to accounts during the three
months ended March 31, 2002, actual cash inflows were $66.2 million. The
increase is primarily due to a $97.9 million increase in core deposit accounts
offset by a $8.2 decrease in certificates of deposit.
Borrowed funds, which consist primarily of FHLB of Chicago advances,
decreased $80.0 million to $1.39 billion at March 31, 2002, attributable to the
repayment of FHLB of Chicago advances from available liquidity. Borrowings at
March 31, 2002 include $55.0 million of the Company's unsecured bank term loan
and $10.0 million drawn on the Company's $40.0 million revolving line of credit.
Stockholders' equity increased $14.3 million, or 3.29% at March 31, 2002,
primarily due to net income of $16.5 million and $2.4 million proceeds from the
exercise of stock options, offset by a decrease in accumulated other
comprehensive income of $1.1 million and cash dividends declared of $3.5
million.
17
Asset Quality
Non-Performing Assets. A loan (whether considered impaired or not) is
classified as non-accrual when collectibility is in doubt. Generally, when a
loan is 90 days or more past due, in the process of foreclosure, or in
bankruptcy, the full amount of previously accrued but unpaid interest is
deducted from interest income. Income is subsequently recorded to the extent
cash payments are received, or at the time when the loan is brought current in
accordance with its original terms. This policy is applied consistently for all
types of loans in the loan portfolio.
For the quarter ended March 31, 2002, interest on non-accrual loans that
would have been recorded as income, had they been performing according to their
original terms, amounted to $378,000, compared to $297,000 for the three months
ended March 31, 2001.
Non-performing assets increased $6.5 million to $27.4 million at March 31,
2002, from $20.9 million at December 31, 2001, primarily due to one commercial
real estate loan and a secured line of credit to the same borrower aggregating
$4.4 million. These two loans were placed on non-accrual status due to the
borrower being in violation of certain loan covenants. The Bank expects to be
repaid in full in the next 12 months from the net proceeds from the sale of the
property.
Delinquent Loans. Delinquencies in the Bank's portfolio at the dates
indicated were as follows:
61-90 Days 91 Days or More
----------------------------- -----------------------------
Principal Principal
Number Balance of Percent Number Balance of Percent
Of Delinquent Of Of Delinquent Of
Loans Loans Total Loans Loans Total
------ ---------- ------- ------ ---------- -------
(Dollars in thousands)
March 31, 2002 57 $6,367 .15% 174 $25,104 .58%
== ====== === === ======= ===
December 31, 2001 62 $8,058 .18% 158 $19,388 .42%
== ====== === === ======= ===
September 30, 2001 49 $6,002 .14% 155 $17,682 .41%
== ====== === === ======= ===
June 30, 2001 37 $3,465 .08% 125 $16,397 .37%
== ====== === === ======= ===
March 31, 2001 37 $4,745 .10% 123 $15,749 .35%
== ====== === === ======= ===
18
Loan Portfolio Composition. The following table sets forth the composition of
the Bank's loans receivable portfolio in dollar amounts at the dates indicated:
- ------------------------------------------------------------------------------------------------------------------
3/31/02 12/31/01 9/30/01 6/30/01 3/31/01 12/31/00
---------- ---------- ---------- ---------- ---------- ----------
(Dollars in thousands)
Real estate loans:
One- to four-family:
Held for investment $3,475,339 $3,559,466 $3,579,027 $3,635,457 $3,714,537 $3,807,980
Held for sale 45,297 161,105 108,931 87,036 162,355 41,074
Multi-family 197,422 197,685 171,516 166,777 171,883 173,072
Commercial 128,233 139,608 51,060 49,137 46,483 41,223
Construction 41,846 43,756 31,969 28,443 31,985 29,566
Land 41,152 44,494 31,968 37,962 40,752 40,497
---------- ---------- ---------- ---------- ---------- ----------
Total real estate loans 3,929,289 4,146,114 3,974,471 4,004,812 4,167,995 4,133,412
---------- ---------- ---------- ---------- ---------- ----------
Consumer loans:
Equity lines of credit 278,688 258,884 193,780 168,875 154,009 146,020
Home equity loans 46,249 52,216 56,778 57,977 60,551 64,465
Other 6,835 7,975 4,827 4,712 4,735 4,783
---------- ---------- ---------- ---------- ---------- ----------
Total consumer loans 331,772 319,075 255,385 231,564 219,295 215,268
Commercial business loans 24,440 19,116 10,958 4,362 3,162 3,528
---------- ---------- ---------- ---------- ---------- ----------
Total loans receivable 4,285,501 4,484,305 4,240,814 4,240,738 4,390,452 4,352,208
Loans in process 17,276 21,678 16,582 14,430 12,949 12,912
Unearned discounts, premiums
and deferred loan fees, net (3,016) (4,555) (4,787) (5,417) (6,416) (7,076)
Allowance for loan losses 19,554 19,607 18,210 18,221 18,279 18,258
---------- ---------- ---------- ---------- ---------- ----------
Loans receivable, net $4,251,687 $4,447,575 $4,210,809 $4,213,504 $4,365,640 $4,328,114
========== ========== ========== ========== ========== ==========
19
Non-performing assets. The following table sets forth information regarding the
amount of non-accrual loans, loans which at March 31, 2002 were 91 days or
more delinquent but on which the Bank was accruing interest, foreclosed real
estate and non-accrual investment securities of the Bank.
At
-----------------------------------------------------------
3/31/02 12/31/01 9/30/01 6/30/01 3/31/01 12/31/00
------- -------- ------- ------- ------- --------
(In thousands)
Non-performing loans:
One-to four-family and multi-family loans:
Non-accrual loans $18,743 17,985 16,442 15,431 16,627 14,023
Accruing loans 91 days or more overdue /1/ -- -- -- -- -- 1,732
------- ------ ------ ------ ------ ------
Total 18,743 17,985 16,442 15,431 16,627 15,755
------- ------ ------ ------ ------ ------
Commercial real estate, construction and land loans:
Non-accrual loans 5,330 544 342 343 321 269
Accruing loans 91 days or more overdue -- -- -- -- -- --
------- ------ ------ ------ ------ ------
Total 5,330 544 342 343 321 269
------- ------ ------ ------ ------ ------
Other loans:
Non-accrual loans 1,144 922 961 806 921 683
Accruing loans 91 days or more overdue -- -- -- -- -- 2
------- ------ ------ ------ ------ ------
Total 1,144 922 961 806 921 685
------- ------ ------ ------ ------ ------
Total non-performing loans:
Non-accrual loans 25,217 19,451 17,745 16,580 17,869 14,975
Accruing loans 91 days or more overdue /(1)/ -- -- -- -- -- 1,734
------- ------ ------ ------ ------ ------
Total $25,217 19,451 17,745 16,580 17,869 16,709
======= ====== ====== ====== ====== ======
Non-accrual loans to total loans .59% .45 .43 .40 .42 .35
Accruing loans 91 days or more overdue to total loans -- -- -- -- -- .04
------- ------ ------ ------ ------ ------
Non-performing loans to total loans .59% .45 .43 .40 .42 .39
======= ====== ====== ====== ====== ======
Foreclosed real estate:
One-to four-family $ 2,170 1,405 1,365 1,260 1,345 1,762
Commercial, construction and land -- -- -- -- -- 46
------- ------ ------ ------ ------ ------
Total $ 2,170 1,405 1,365 1,260 1,345 1,808
======= ====== ====== ====== ====== ======
Non-performing loans and foreclosed real estate
to total loans and foreclosed real estate .65% .48 .46 .43 .45 .43
======= ====== ====== ====== ====== ======
Total non-performing assets $27,387 20,856 19,110 17,840 19,214 18,517
======= ====== ====== ====== ====== ======
Total non-performing assets to total assets .49% .37 .37 .34 .37 .36
======= ====== ====== ====== ====== ======
- ----------
/1/ Consisted of loans in process of foreclosure or for which interest was
otherwise deemed uncollectible
20
Liquidity and Capital Resources
The Company's principal sources of funds are cash dividends paid by the
Bank and MAF Developments, and liquidity generated by borrowings or the issuance
of common stock. The Company's principal uses of funds are interest payments on
the Company's $55.0 million term loan, cash dividends to shareholders, loans to
and investments in MAF Developments, as well as investment purchases, stock
repurchases and debt repayment. The Company also maintains a one-year, $40.0
million unsecured revolving line of credit from a commercial bank, due and
renewable annually on November 30. At March 31, 2002, the Company had $10.0
million outstanding under this line of credit. For the three-month period ended
March 31, 2002, the Company declared common stock dividends of $.15 per share,
or $3.5 million.
The Bank's principal sources of funds are deposits, advances from the FHLB
of Chicago, principal repayments on loans and mortgage-backed securities,
proceeds from the sale of loans and funds provided by operations. While
scheduled loan and mortgage-backed securities amortization and maturing
investment securities are a relatively predictable source of funds, deposit
flows and loan and mortgage-backed securities prepayments are greatly influenced
by economic conditions, the general level of interest rates and competition. The
Bank utilizes particular sources of funds based on comparative costs and
availability. The Bank generally manages the pricing of its deposits to maintain
a steady deposit balance, but has from time to time decided not to pay rates on
deposits as high as its competition, and when necessary, to supplement deposits
with longer term and/or less expensive alternative sources of funds.
During the three months ended March 31, 2002, the Bank originated loans
totaling $677.8 million compared with $515.5 million during the same period a
year ago. Loan sales, and swaps of loans for securities backed by those loans,
for the three months ended March 31, 2002, were $364.5 million, compared to
$126.3 million for the prior year period. The Bank has outstanding commitments
to originate and purchase loans of $535.1 million and commitments to sell or
swap loans of $94.7 million at March 31, 2002. At March 31, 2002, the Company
believes that it has sufficient cash to fund its outstanding commitments or will
be able to obtain the necessary funds from outside sources to meet its cash
requirements. Please refer to "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations-Liquidity and Capital Resources"
of the Company's Form 10-K for the period ended December 31, 2001, for a
discussion of the Company's contractual obligations and off-balance sheet
commitments. There have been no material changes in these amounts since December
31, 2001.
Asset/Liability Management
As part of its normal operations, the Bank is subject to interest-rate risk
on the interest-sensitive assets it invests in and the interest-sensitive
liabilities it borrows. The Bank's exposure to interest rate risk is reviewed at
least quarterly by the Bank's asset/liability management committee ("ALCO") and
the Board of Directors of the Company. The ALCO, which includes members of
senior management, monitors the rate and sensitivity repricing characteristics
of the individual asset and liability portfolios the Bank maintains and
determines risk management strategies.
The Bank utilizes an interest rate sensitivity gap analysis to monitor the
relationship of maturing or repricing interest-earning assets and
interest-bearing liabilities, while maintaining an acceptable interest rate
spread. Interest rate sensitivity gap is defined as the difference between the
amount of interest-earning assets maturing or repricing within a specific period
of time and the amount of interest-bearing liabilities maturing or repricing
within that same period of time, and is usually analyzed at a period of one
year. Generally, a negative gap, where more interest-bearing liabilities are
repricing or maturing than interest-earning assets, would tend to result in a
reduction in net interest income in a period of rising interest rates.
Conversely, during a period of falling interest rates, a negative gap would
likely result in an improvement in net interest income. Management's goal is to
maintain its cumulative one-year gap within the range of (15)% to 15%. The gap
ratio fluctuates as a result of market conditions and management's expectation
of future interest rate trends. The Bank's asset/liability management strategy
emphasizes, for its own portfolio, the origination of one- to four-family
adjustable-rate
21
loans and other loans which have shorter terms to maturity or reprice more
frequently than fixed-rate mortgage loans, yet provide a positive margin over
the Bank's cost of funds.
The Bank, except as noted below, has not used derivative financial
instruments such as interest rate swaps, caps, floors, options or similar
financial instruments to manage its interest rate risk. However, in conjunction
with its origination and sale strategy, management does hedge the Bank's
exposure to interest rate risk primarily by committing to sell fixed-rate
mortgage loans for future delivery. Under these commitments, the Bank agrees to
sell fixed-rate loans at a specified price and at a specified future date. The
sale of fixed-rate mortgage loans for future delivery has enabled the Bank to
continue to originate new mortgage loans, and to generate gains on sale of these
loans as well as loan servicing fee income, while maintaining its gap ratio
within the parameters discussed above. Most of these forward sale commitments
are conducted with FNMA and FHLMC with respect to loans that conform to the
requirements of these government agencies. The forward commitment of mortgage
loans presents a risk to the Bank if the Bank is not able to deliver the
mortgage loans by the commitment expiration date. If this should occur, the Bank
would be required to pay a fee to the buyer. The Bank attempts to mitigate this
risk by charging potential retail borrowers a 1% fee to fix the interest rate,
or by requiring the interest rate to float at market rates until shortly before
closing. In addition, the Bank uses U.S. Treasury bond futures contracts to
hedge some of the mortgage pipeline exposure. These futures contracts are used
to hedge mortgage loan production in those circumstances where loans are not
sold forward as described above.
The table on the next page sets forth the scheduled repricing or maturity
of the Bank's assets and liabilities at March 31, 2002. The table uses
management's assumptions regarding prepayment percentages on loans and
mortgage-backed securities, based on its current experience in these portfolios.
The Bank uses the withdrawal assumptions used by the FHLB of Chicago with
respect to NOW, checking and passbook accounts, which are 17.0%, 17.0%, 17.0%,
16.0%, and 33.0%, respectively. Investment securities and FHLB advances that
contain call provisions at the option of the issuer or lender are generally
shown in the category relating to their respective final maturities. However,
due to recent volatility in market interest rates, $40.8 million of investment
securities with final maturities ranging from 7 to 38 months, but callable in 6
months or less are categorized in the 6 months or less category and $15.2
million of investments with a final maturity of 48 months, but callable in 6
months to one year is categorized in the 6 months to one year category in
anticipation of their call. Additionally, $25.0 million of FHLB advances with a
final remaining maturity of 75 months, but callable in 6 months or less in
anticipation of their call by the lender is categorized in the 6 months or less
category and $25 million of FHLB advances with a final maturity of 46 months,
but callable in 6 months to one year is categorized in the 6 months to one year
category in anticipation of their call.
The effect of these assumptions is to quantify the dollar amount of items
that are interest-sensitive and may be repriced within each of the periods
specified. Certain shortcomings are inherent in using gap analysis to quantify
exposure to interest rate risk. For example, although certain assets and
liabilities may have similar maturities or repricings in the table, they may
react differently to actual changes in market interest rates. The interest rates
on certain types of assets and liabilities may fluctuate in advance of changes
in market interest rates, while interest rates on other types may lag behind
changes in market rates. This is especially true in circumstances where
management has a certain amount of control over interest rates, such as the
pricing of deposits. Additionally, certain assets such as hybrid adjustable-rate
mortgage loans have features that restrict changes in interest rates on a
short-term basis and over the life of the asset. Finally, as interest rates
change, loan prepayment rates will differ from those rates assumed by management
for presentation purposes in the table.
22
Management believes that its asset/liability management strategies mitigate
the potential effects of changes in interest rates on the Bank's operations, and
does not believe that the following table is particularly meaningful.
At March 31, 2002
------------------------------------------------------------------------
More Than More Than More Than
6 Months 6 Months 1 Year 3 Years to More Than
or Less to 1 Year to 3 Years 5 Years 5 Years Total
---------- --------- ---------- ---------- --------- ---------
(In thousands)
Interest-earning assets:
Loans receivable $ 869,128 475,518 879,838 765,080 1,281,677 4,271,241
Mortgage-backed securities 72,943 20,809 37,444 26,803 61,192 219,191
Interest-bearing deposits 112,348 -- -- -- -- 112,348
Federal funds sold 167,360 -- -- -- -- 167,360
Investment securities (1) 319,163 29,287 52,198 38,313 43,632 482,593
---------- -------- --------- -------- --------- ---------
Total interest-earning assets 1,540,942 525,614 969,480 830,196 1,386,501 5,252,733
Impact of hedging activity (2) 45,296 -- -- -- (45,296) --
---------- -------- --------- -------- --------- ---------
Total net interest-earning assets adjusted
for impact of hedging activities 1,586,238 525,614 969,480 830,196 1,341,205 5,252,733
---------- -------- --------- -------- --------- ---------
Interest-bearing liabilities:
NOW and checking accounts 29,182 26,702 97,728 60,706 129,001 343,319
Money market accounts 450,149 -- -- -- -- 450,149
Passbook accounts 76,842 70,310 257,336 159,851 339,684 904,023
Certificate accounts 985,695 409,636 270,279 36,413 6,716 1,708,739
FHLB advances 225,000 160,000 475,500 175,000 290,000 1,325,500
Other borrowings 65,000 -- -- -- -- 65,000
---------- -------- --------- -------- --------- ---------
Total interest-bearing liabilities 1,831,868 666,648 1,100,843 431,970 765,401 4,796,730
---------- -------- --------- -------- --------- ---------
Interest sensitivity gap $ (245,630) (141,034) (131,363) 398,226 575,804 456,003
========== ======== ========= ======== ========= =========
Cumulative gap $ (245,630) (386,664) (518,027) (119,801) 456,003
========== ======== ========= ======== =========
Cumulative gap assets as a percentage
of total assets (4.37)% (6.88) (9.22) (2.13) 8.12
Cumulative net interest-earning assets as
a percentage of interest-bearing liabilities 86.59% 84.52 85.61 97.03 109.51
At December 31, 2001
- --------------------
Cumulative gap $ (2,622) (199,920) (112,931) 197,155 459,797
========== ======== ========= ======== =========
Cumulative gap assets as a percentage
of total assets (0.05)% (3.57) (2.02) 3.52 8.22
Cumulative net interest-earning assets as
a percentage of interest-bearing liabilities 99.84% 91.61 96.71 104.99 109.62
- ----------
/(1)/ Includes $134.0 million of stock in FHLB of Chicago in 6 months or less.
/(2)/ Represents forward commitments to sell long-term fixed-rate mortgage
loans.
The Bank's one-year cumulative gap grew to (6.88)% at March 31, 2002
compared to (3.57)% at December 31, 2001 primarily due to 1) the growth in core
deposit accounts since December 31, 2001; 2) a slight shortening of maturities
in the Bank's certificate of deposit accounts; and 3) slower prepayments speeds
on loans receivable which slightly lengthened estimated loan maturities.
23
Average Balances/Rates
The following table sets forth certain information relating to the Bank's
consolidated statements of financial condition and reflects the average yield on
assets and average cost of liabilities for the periods indicated. Average yields
and costs are derived by dividing income or expense by the average balance of
assets or liabilities, respectively, for the periods shown. Average balances are
derived from average daily balances. The yield/cost at March 31, 2002 includes
fees which are considered adjustments to yield.
Three Months Ended March 31,
----------------------------------------------------------------- At March 31,
2002 2001 2002
------------------------------- ------------------------------- -------------------
Average Average
Average Yield/ Average Yield/ Yield/
Balance Interest Cost Balance Interest Cost Balance Cost
---------- -------- ------- ---------- -------- ------- ---------- ------
(Dollars in Thousands)
Assets:
Interest-earning assets:
Loans receivable $4,353,404 72,005 6.62% $4,368,240 80,083 7.34% $4,271,241 6.70%
Mortgage-backed securities 176,549 2,372 5.37 100,853 1,660 6.58 219,191 5.40
Interest-bearing deposits (1) 84,047 436 2.10 30,927 510 6.69 112,348 1.65
Federal funds sold (1) 181,223 927 2.07 109,306 1,964 7.29 167,360 1.62
Investment securities (2) 473,387 5,974 5.12 289,321 4,967 6.96 482,593 4.71
---------- ------ ---------- ------ ----------
Total interest-earning assets 5,268,610 81,714 6.22 4,898,647 89,184 7.29 5,252,733 6.19
Non-interest earning assets 318,019 230,010 365,117
---------- ---------- ----------
Total assets $5,586,629 $5,128,657 $5,617,850
========== ========== ==========
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Deposits 3,352,212 25,546 3.09 2,839,382 31,510 4.50 3,406,230 3.00
Borrowed funds 1,440,437 20,046 5.64 1,659,578 25,139 6.14 1,390,500 5.67
---------- ------ ---------- ------ ----------
Total interest-bearing liabilities 4,792,649 45,592 3.86 4,498,960 56,649 5.11 4,796,730 3.77
------ ---- ------ ---- ----
Non-interest bearing deposits 222,417 134,146 241,429
Other liabilities 129,027 105,382 129,479
---------- ---------- ----------
Total liabilities 5,144,093 4,738,488 5,167,638
Stockholders' equity 442,536 390,169 450,212
---------- ---------- ----------
Liabilities and stockholders' equity $5,586,629 $5,128,657 $5,617,850
========== ========== ==========
Net interest income/interest rate spread 36,122 2.36% 32,535 2.18% 2.42%
====== ==== ====== ==== ====
Net earning assets/net yield on
average interest-earning assets $ 475,961 2.74% $ 399,687 2.66% $ 456,003 N/A
========== ==== ========== ==== ========== ====
Ratio of interest-earning assets to
interest-bearing liabilities 109.93% 108.88% 109.51%
====== ====== ==========
- ----------
/(1)/ Includes pro-rata share of interest income received on outstanding drafts
payable.
/(2)/ Income and yields are stated on a taxable equivalent basis.
24
Rate/Volume Analysis of Net Interest Income
The following table describes the extent to which changes in interest rates
and changes in the volume of interest-earning assets and interest-bearing
liabilities have affected the Bank's interest income and interest expense during
the periods indicated, on a taxable equivalent basis. Information is provided in
each category with respect to (i) changes attributable to changes in volume
(changes in volume multiplied by prior rate), (ii) changes attributable to
changes in rates (changes in rates multiplied by prior volume), and (iii) the
net change. Changes attributable to the combined impact of volume and rate have
been allocated proportionately to the changes due to volume and the changes due
to rate.
Three Months Ended March 31, 2002
Compared to
Three Months Ended March 31, 2001
Increase (Decrease)
---------------------------------
Volume Rate Net
------- ------- -------
(In thousands)
Interest-earning assets:
Loans receivable $ (271) (7,807) (8,078)
Mortgage-backed securities 1,062 (350) 712
Interest bearing deposits 454 (528) (74)
Federal funds sold 868 (1,905) (1,037)
Investment securities 2,595 (1,588) 1,007
------- ------- -------
Total 4,708 (12,178) (7,470)
------- ------- -------
Interest-bearing liabilities:
Deposits 5,139 (11,103) (5,964)
Borrowed funds (3,153) (1,940) (5,093)
------- ------- -------
Total 1,986 (13,043) (11,057)
------- ------- -------
Net change in net interest income $ 2,722 865 3,587
======= ======= =======
Comparison of the Results of Operations for the Three Months Ended March 31,
2002 and 2001
General - Net income for the three months ended March 31, 2002 was $16.5
million, or $.70 per diluted share, compared to net income of $14.1 million, or
$.60 per diluted share for the three months ended March 31, 2001. On November
30, 2001, the Company completed its acquisition of Mid Town Bancorp in a
transaction that was accounted for under the purchase accounting method for
financial purposes. As a result, the current period's results, other than per
share amounts and ratio analyses, are not generally comparable to the results
for the corresponding prior year's quarter. The increase in earnings per share
is primarily due to higher net interest income and most areas of non-interest
income, offset by higher non-interest expense. Additionally, the elimination of
goodwill amortization resulting from the implementation of SFAS No. 142 (adopted
January 1, 2002) added $648,000 or $.03 to diluted earnings per share for the
current quarter.
Net interest income - Net interest income was $36.0 million for the current
quarter, compared to $32.5 million for the quarter ended March 31, 2001, an
increase of $3.5 million or 10.7%. The Company's average interest-earning assets
increased to $5.27 billion for the three months ended March 31, 2002, compared
to $4.90 billion for the three months ended March 31, 2001, while the Company's
net interest margin increased to 2.74% for the current three month period,
compared to 2.66% in the prior year period. The improved margin is attributable
to a greater decline in the Bank's average cost of funds compared to the decline
in the yield on interest-earning assets, due to the shorter-term nature of the
Bank's deposit accounts and higher level of core deposit accounts.
25
Interest income on loans receivable decreased $8.1 million as a result of a
$14.8 million decrease in average loans receivable, and a 72 basis point
decrease in the average yield. The decrease in the average balance of loans
receivable is due to the predominance of long-term fixed rate originations over
the past 12 months, of which the Bank sold a majority to control its interest
rate risk. The decline in the average rate is a function of current originations
being at lower interest rates, the downward repricing of ARM loans, and
prepayments of higher-rate loans due to declining interest rates. Interest
income on mortgage-backed securities increased $712,000 to $2.4 million for the
current quarter, due primarily to a $75.7 million increase in average balances,
while interest income on investment securities increased $886,000 to $5.8
million, due to a $184.1 million increase in the average balance of this
portfolio. The increase in investment and mortgage-backed securities balances is
primarily due to purchases during the quarter as a result of higher cash flows
from loan sales as well as the acquisition of Mid Town.
The average balance of interest bearing deposits and federal funds
increased $125.0 million for the three months ended March 31, 2002 compared to
the prior year period offset by a 508 basis point decrease in average yield.
This increase in balances is due to the high level of loan prepayments and fixed
rate loan sale activity which is holding down loan portfolio growth, as well as
the strong deposit flows in the current quarter. The decrease in yield is due to
the 475 basis points of Federal Reserve Board easings in the last 15 months. The
Company currently has a historically high level of liquidity, and currently
expects to redeploy the excess amounts into ARM loans, investments and
mortgage-backed securities as well as to repay maturing advances and meet
seasonal real estate tax payments for mortgage loan customers.
Interest expense on deposit accounts decreased $6.0 million to $25.5
million for the first quarter of 2002, due to a $512.8 million increase in
average deposits compared to the prior year quarter, and a 141 basis point
decrease in the average cost of deposits compared to the prior year's
three-month period. Approximately $267.5 million of the growth in average
deposits is attributable to the acquisition of Mid Town Bank in November 2001.
The decrease in average cost of deposits is primarily due to the downward
repricing of maturing certificates of deposit, an increase in low-cost core
deposits through acquisition and internal growth and the lower rates paid on
these deposits as short-term rates have declined. The Bank expects the average
cost of deposits trend lower in 2002.
Interest expense on borrowed funds decreased $5.1 million to $20.0 million,
as a result of a $219.1 million decrease in the average balance of borrowed
funds, and a 50 basis point decrease in the average cost of borrowed funds. The
decrease in the average balance was primarily due to a $250.3 million decrease
in the average balance of FHLB advances as maturities were not refinanced by the
Bank, but rather repaid from deposit inflows and loan prepayments. Most of the
repayments and maturities were high cost FHLB advances, which led to a decline
in the average rate of borrowed funds.
Provision for loan losses - The Bank provided no provision for loan losses
during the first quarter of 2002 or the 2001 first quarter. Net chargeoffs
during the 2002 quarter were $53,000 compared to net recoveries of $21,000 for
the three months ended March 31, 2001. The lack of a provision this quarter is
due to an assessment of a number of factors, including the stable composition of
the loan portfolio, good historical loss experience as evidenced by net
recoveries for the quarter, and the low level of non-performing assets, which is
expected to continue. There were no changes in estimation method or assumptions
that impacted the provision for loan loss during the quarter.
Non-interest income - Non-interest income increased $3.8 million, or 38.7%,
to $13.7 million for the three months ended March 31, 2002, compared to $9.9
million for the three months ended March 31, 2001. The increase is due to
increased gains on sales of loans and investment securities, higher fee income
from deposit accounts and continued positive results in real estate development
operations.
Gain on sale of loans increased to $2.3 million for the three months ended
March 31, 2002, compared to $691,000 for the three months ended March 31, 2001.
Lower interest rates, and a higher level of fixed-rate loan originations led to
increased profits from loan sales for the three months ended March 31, 2002,
compared to 2001. A $130,000 mark-to-market adjustment is included in gain on
sale of loans as a result of valuation of loan
26
commitments and forward loan sale contracts accounted for as derivative
instruments. Current quarter loan sale volume was $364.5 million, including
$13.6 million of current quarter originations that were swapped into
mortgage-backed securities and sold. For the three months ended March 31, 2001,
loan sale volume was $126.3 million. The Company currently expects loan
originations to be strong throughout 2002, although trending toward more
adjustable-rate loans. Because the Company generally retains adjustable rate
loans in portfolio, this expected change in loan originations will result in
lower mortgage banking profits, as well as contribute to more moderate balance
sheet growth in 2002 as compared in 2001.
Income from real estate operations decreased $452,000 to $2.9 million for
the three months ended March 31, 2002 compared to the prior year quarter. The
Company sold 46 lots in Tallgrass of Naperville project during the three months
ended March 31, 2002, compared to 85 lots for the prior year quarter. However,
there was a significant increase in profit per lot is primarily due to higher
lot prices on current year sales compared to the prior year, without any
appreciable increase in development costs. There are 123 lots remaining to be
sold in this 952-lot subdivision at March 31, 2002, of which 37 are under
contract. Based on the strong lot demand in Tallgrass, as well as the expected
bulk sales of commercial and multi-family acreage in this project. Management
currently expects that pre-tax income from real estate development for the
twelve months ended December 31, 2002 should be in the range of $10.5-$12.0
million.
Deposit account service charges increased $1.4 million, or 40.8%, to $4.8
million for the three months ended March 31, 2002 compared to $3.4 million for
the prior year quarter, due to continued growth in the number of checking
accounts through acquisition and internal sales efforts, as well as fee
increases. At March 31, 2002, the Bank had approximately 144,400 checking
accounts, compared to 118,400 at March 31, 2001.
Brokerage commissions increased $58,000, or 10.6%, to $603,000 for the
three months ended March 31, 2002 compared to the prior year quarter. The
increase in commission income is due to higher sales volumes and more seasoned
brokers.
Loan servicing fee expense improved $223,000 to a net expense of $(40,000)
for the three months ended March 31, 2002, compared to $(263,000) for the prior
year quarter. The average balance of loans serviced for others increased 91.0%
to $1.32 billion for the current three-month period compared to $797.9 million
for the prior year three-month period. Amortization of mortgage servicing rights
was $1.1 million for the three months ended March 31, 2002, compared to $614,000
for the prior year three-month period due to higher prepayments in the current
quarter. The prior year quarter included a $215,000 impairment writedown on
mortgage servicing rights as a result of expected higher prepayment speeds at
that time.
Other non-interest income increased $792,000, or 45.0% to $2.6 million for
the three months ended March 31, 2002, compared to $1.8 million for the prior
year quarter. The increase is due primarily to increased income from loan
modification fee income from refinance transactions as well as income from the
Bank's mortgage reinsurance subsidiary, which began operations in 2001.
Non-interest expense - Non-interest expense increased $3.8 million or 19.0%
compared to prior year period, to $23.7 million for the three months ended March
31, 2002.
Compensation and benefits increased 25.4% or $2.9 million to $14.2 million
for the three months ended March 31, 2002, compared to the three months ended
March 31, 2001. The increase is primarily due to increased employee costs from
the Mid Town acquisition and two new branches, normal salary increases, higher
medical costs, and increased staffing costs due to increased loan origination
volume and the Bank's new business banking division.
Occupancy expense increased $643,000, or 28.9% to $2.9 million for the
three months ended March 31, 2002 compared to the prior year period, primarily
due to increased operating expenses from the four branch sites acquired from Mid
Town as well as the two new branches opened since November 2001.
27
Data processing expense increased $235,000 or 30.8% to $1.0 million for the
three months ended March 31, 2002 compared to the prior year period. The
increase is primarily due to increased depreciation expense related to
additional computer equipment at new and acquired branches.
Amortization of intangibles decreased $564,000 to $587,000 for the three
months ended March 31, 2002. The amortization relates to goodwill and core
deposit intangibles from transactions accounted for under the purchase method of
accounting. The decrease in expense over the prior period was attributable to
the elimination of certain goodwill amortization expense resulting from the
implementation of SFAS 142, which was adopted January 1, 2002.
Other non-interest expense increased $639,000 to $3.7 million for the three
months ended March 31, 2002 compared to the prior year period. Costs increased
due to higher check losses and increased stationery and supplies expense
resulting from the addition of two new branches and four acquired branches since
the prior year period.
Income taxes - For the three months ended March 31, 2002, income tax
expense totaled $9.4 million, or an effective income tax rate of 36.1%, compared
to $8.3 million, or an effective income tax rate of 37.2%, for the three months
ended March 31, 2001. The lower effective income tax rate in the current period
is primarily the result of the decrease in goodwill amortization expense
resulting from implementation of SFAS No. 142 (effective January 1, 2002). Most
of the Company's goodwill amortization expense in prior periods has not been tax
deductible.
Outlook for 2002
As previously stated in the Company's December 31, 2001 10-K, management
currently expects earnings per share for 2002 to be in the range of $3.00-$3.05
per diluted share, or an increase of 17%-19% over 2001. For the quarter ending
June 30, 2002, management currently expects to report results in the range of
$.71-$.73 per share, including income from real estate operations of $2.1-$2.4
million.
The Company's 2002 projections assume moderate balance sheet growth in the
7-9% range and a relatively steep U.S. Treasury yield curve, which is expected
to result in an increase in the interest rate spread and a corresponding modest
improvement in the net interest margin. Management indicates that it is looking
for its real estate development operation to contribute $10.5-$12.0 million in
pre-tax earnings in 2002 and also reports continued strong growth in fee income.
The projections also assume housing and mortgage activity in the Bank's markets
remain strong and credit quality remains good.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
A comprehensive qualitative and quantitative analysis regarding market risk
is disclosed in the Company's December 31, 2001 Form 10-K. There have been no
material changes in the assumptions used or results obtained regarding market
risk since December 31, 2001.
28
Part II - Other Information
- ---------------------------
Item 1. Legal Proceedings. Not applicable.
Item 2. Changes in Securities. Not applicable.
Item 3. Defaults Upon Senior Securities. Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Company held its Annual Meeting of Shareholders on May 1,
2002.
(b) The names of each director elected at the Annual Meeting for
three-year terms and votes received are as follows:
For Withheld
------------ ----------
Allen H. Koranda 20,163,727 409,629
Robert Bowles, MD 20,078,184 495,172
David Burba 20,222,038 351,318
The names of the other directors, whose terms of office continued
after the Annual Meeting, are as follows:
Terry A. Ekl Jerry A. Weberling
Joe F. Hanauer Lois Vasto
Kenneth Koranda Andrew Zych
F. William Trescott
The name of the director who is retiring after the Annual Meeting is
as follows:
Henry Smogolski
(c) In addition to the election of directors, the following matter
was voted upon at the Annual Meeting. The number of affirmative
votes and negative votes cast is shown below.
(i) Ratification of the appointment of KPMG LLP as the
Company's independent auditors for the year ending
December 31, 2002:
For Against Abstain Broker Non-votes
---------- ------- ------- ----------------
20,440,629 96,718 36,009 --
(d) None.
Item 5. Other Information. None.
29
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit No. 3. Certificate of Incorporation and By-laws.
(i) Restated Certificate of Incorporation. (Incorporated herein
by reference to Exhibit 3.1 to Registrant's Form 8-K dated
December 19, 2000).
(ii) Amended and Restated By-laws of Registrant.
Exhibit No. 10. Material Contracts
(i) Amendment dated March 27, 2001 to the Mid America Bank, fsb
Supplemental Executive Retirement Plan, as amended. *
(ii) Amendment dated March 27, 2001 to the MAF Bancorp, Inc.
Stock Option Gain Deferral Plan. *
----------
* Indicates management contracts or compensatory plans or
arrangements required to be filed as an exhibit.
Exhibit No. 11. Statement re: Computation of per share earnings.
Quarter Ended
March 31, 2002
--------------
Net income $16,543,000
===========
Weighted average common shares outstanding 23,014,821
===========
Basic earnings per share $ .72
===========
Weighted average common shares outstanding 23,014,821
Common stock equivalents due to dilutive
effect of stock options 561,199
-----------
Total weighted average common shares and equivalents
outstanding for diluted computation 23,576,020
===========
Diluted earnings per share $ .70
===========
(b) Reports on Form 8-K.
A Form 8-K was filed to report that on January 28, 2002, MAF Bancorp,
Inc. announced its 2001 fourth quarter earnings results, and a copy of
the press release was included as an exhibit.
A Form 8-K was filed to report that on February 22, 2002, MAF Bancorp,
Inc. announced its participation in the Midwest 2002 Super-Community
Bank Conference, and a copy of the press release was included as an
exhibit.
A Form 8-K was filed to report that in February 25, 2002, MAF Bancorp,
Inc. announced the opening of a new branch and reiterated its earnings
estimate for 2002. A copy of the press release was included as an
exhibit.
30
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MAF Bancorp. Inc.
--------------------------------------
(Registrant)
Date: May 13, 2002 By: /s/ Allen H. Koranda
- -------------------- --------------------------------------
Allen H. Koranda
Chairman of the Board and
Chief Executive Officer
Date: May 13, 2002 By: /s/ Jerry A. Weberling
- ------------------- --------------------------------------
Jerry A. Weberling
Executive Vice President and
Chief Financial Officer
31