-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L5T+lteUhaJF9oWVoB8f7nIap6OUvHOshe99E1guW84YEEG5VHV3JVAnV/5baTI0 a6m+zroVRtsuVEh8OKOpTw== 0000950112-96-001486.txt : 19960625 0000950112-96-001486.hdr.sgml : 19960625 ACCESSION NUMBER: 0000950112-96-001486 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREENPOINT FINANCIAL CORP CENTRAL INDEX KEY: 0000911935 STANDARD INDUSTRIAL CLASSIFICATION: 6036 IRS NUMBER: 061379001 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-22516 FILM NUMBER: 96563841 BUSINESS ADDRESS: STREET 1: 41-60 MAIN ST CITY: FLUSHING STATE: NY ZIP: 11355 BUSINESS PHONE: 7186704355 FORMER COMPANY: FORMER CONFORMED NAME: GP FINANCIAL CORP DATE OF NAME CHANGE: 19930913 10-Q 1 GREENPOINT FINANCIAL CORP. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------------------ FORM 10-Q [ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 -------------------------------------- For the Quarter Ended March 31, 1996 OR [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 0-22516 ------- Securities and Exchange Commission File Number GreenPoint Financial Corp. -------------------------- (Exact name of registrant as specified in its charter) Delaware 06-1379001 -------- ---------- (State or other jurisdiction of (I.R.S. employer identification number) incorporation or organization) 41-60 Main Street, Flushing, New York 11355 - - ------------------------------------- ----- (Address of principal executive offices) (Zip Code) (718) 670-4355 Not Applicable --------------- -------------- (Registrant's telephone number, (Former name, former address and former including area code) fiscal year if changed since last report) 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 shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. X Yes No ----- --- As of May 10, 1996 there were 51,153,000 shares of common stock outstanding. GreenPoint Financial Corp. FORM 10-Q For the Quarter Ended March 31, 1996 INDEX PART I - FINANCIAL INFORMATION Page ---- Item 1 - Financial Statements Consolidated Statements of Financial Condition (unaudited) as of March 31, 1996 and December 31, 1995 3 Consolidated Statements of Income (unaudited) for the quarters ended March 31, 1996 and 1995 4 Consolidated Statement of Changes in Stockholders' Equity (unaudited) for the quarters ended March 31, 1996 and 1995 5 Consolidated Statements of Cash Flows (unaudited) for the quarters ended March 31, 1996 and 1995 6 Notes to the Unaudited Consolidated Financial Statements 7 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 10 PART II - OTHER INFORMATION Item 1 - Legal Proceedings 21 Item 6 - Exhibits and Reports on Form 8-K 21
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited) March 31, December 31, 1996 1995 ------------------- ------------------ ASSETS (In thousands, except share amounts) ------ Cash and due from banks $ 136,101 $ 153,679 Money market investments 2,014,400 1,550,700 Loans receivable held for sale 284,843 175,052 Securities available for sale 4,807,240 5,896,505 Securities held to maturity (estimated fair value of $4,387 and $4,361 respectively) 4,333 4,307 Loans receivable held for investment: Mortgage loans 6,027,814 5,992,776 Other loans 27,417 29,669 Deferred loan fees and unearned discount (57,567) (58,297) Allowance for possible loan losses (105,000) (105,500) ------------------ --------------- Loans receivable held for investment, net 5,892,664 5,858,648 ----------------- -------------- Accrued interest receivable, net 84,195 72,944 Banking premises and equipment, net 114,966 113,673 Deferred income taxes, net 102,488 70,134 Other real estate owned, net 28,763 29,245 Excess of cost over fair value of net assets acquired, net 658,572 670,201 Other assets 340,483 75,375 ----------------- -------------- Total assets $ 14,469,048 $ 14,670,463 ================= ============== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Liabilities: Deposits: N.O.W. and checking accounts $ 499,846 $ 501,842 Savings and club accounts 2,014,418 2,034,669 Variable rate savings accounts 2,017,136 1,995,292 Money market accounts 625,120 635,696 Term certificates of deposit accounts 7,541,447 7,730,824 ----------------- -------------- Total deposits 12,697,967 12,898,323 ----------------- -------------- Mortgagors' escrow 81,369 58,935 Accrued interest payable 11,785 2,353 Accrued income taxes payable 13,484 7,618 Other liabilities 133,955 151,917 ----------------- -------------- Total liabilities 12,938,560 13,119,146 ----------------- -------------- Commitments and Contingencies Stockholders' equity: Preferred stock ($0.01 par value; 50,000,000 shares authorized; none issued) --- --- Common stock ($0.01 par value; 220,000,000 shares authorized; 55,055,150 and 54,965,582 shares issued, respectively) 551 550 Additional paid-in capital 806,226 801,382 Unallocated Employee Stock Ownership Plan (ESOP) shares (122,178) (123,987) Unearned stock plans shares (12,250) (9,838) Retained earnings 959,651 942,137 Net unrealized (loss) gain on securities available for sale, net (29,859) 14,862 Treasury stock, at cost (2,658,632 and 2,748,200 shares, respectively) (71,653) (73,789) ----------------- --------------- Total stockholders' equity 1,530,488 1,551,317 ----------------- --------------- Total liabilities and stockholders' equity $ 14,469,048 $ 14,670,463 ================= ===============
(See the accompanying notes to the unaudited consolidated financial statements) 3
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Quarter Ended March 31, ----------------------------------- 1996 1995 ----------------- -------------- (In thousands, except per share amounts) Interest income: Mortgages $ 141,349 $ 129,414 Money market investments 23,390 4,063 Securities 85,711 8,951 Other loans 657 381 -------------- ------------ Total interest income 251,107 142,809 -------------- ------------ Interest expense: Deposits 143,079 58,248 Short-term and other borrowings 451 --- -------------- ------------ Total interest expense 143,530 58,248 -------------- ------------ Net interest income 107,577 84,561 Provision for possible loan losses (3,646) (5,483) -------------- ------------ Net interest income after provision for possible loan losses 103,931 79,078 -------------- ------------ Non-interest income: Income from fees and commissions: Mortgage loan operations fee income 4,563 2,786 Mortgage servicing fees 2,260 2,668 Banking services fees and commissions 4,061 703 Securities lending fees 312 111 Other income 17 605 Net gain (loss) on securities 273 (645) Net gain on sales of loans 19 40 -------------- ------------ Total non-interest income 11,505 6,268 -------------- ------------ Non-interest expense: General and administrative expenses: Salaries and benefits 22,561 14,333 Employee Stock Ownership and stock plans expense 4,243 3,624 Advertising 1,991 1,141 Net expense of premises and equipment 11,698 3,703 Federal deposit insurance premiums 1,710 3,084 Charitable and educational foundation 993 575 Other administrative expenses 13,073 6,224 ------------- ------------ Total general and administrative expenses 56,269 32,684 ------------- ------------ Other real estate owned operating income, net (115) (402) Amortization of excess of cost over fair value of net assets acquired 11,628 47 ------------- ------------ Total non-interest expense 67,782 32,329 ----------- ------------ Income before income taxes 47,654 53,017 Income taxes 20,302 24,510 ------------- ------------ Net income $ 27,352 $ 28,507 ============= ============ Earnings per share $ 0.60 $ 0.60 ============== ============
(See the accompanying notes to the unaudited consolidated financial statements) 4
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) (In thousands) Quarter Ended ---------------------------------- March 31, March 31, 1996 1995 --------------- ------------- Common stock Balance at beginning of period $ 550 $ 549 Issuance of common stock to stock plans 1 --- -------------- -------------- Balance at end of period 551 549 -------------- -------------- Additional paid-in capital Balance at beginning of period 801,382 794,615 Issuance of common stock to stock plans 3,692 --- Amortization of ESOP shares committed to be released 1,042 656 Amortization of stock plans shares during the period 110 37 Exercise of stock options --- 153 Adjustment to initial public offering issuance costs --- 1,226 -------------- -------------- Balance at end of period 806,226 796,687 -------------- -------------- Unallocated ESOP shares Balance at beginning of period (123,987) (131,039) Amortization of ESOP shares committed to be released 1,809 1,763 -------------- -------------- Balance at end of period (122,178) (129,276) -------------- -------------- Unearned stock plans shares Balance at beginning of period (9,838) (14,307) Issuance of common stock to stock plans (3,694) --- Amortization of stock plans shares during the period 1,282 1,168 -------------- -------------- Balance at end of period (12,250) (13,139) -------------- -------------- Retained earnings Balance at beginning of period 942,137 871,374 Net income for the period 27,352 28,507 Dividends paid (8,979) (9,348) Exercise of stock options from treasury stock (859) --- -------------- -------------- Balance at end of period 959,651 890,533 -------------- -------------- Net unrealized gain (loss) on securities available for sale, net Balance at beginning of period 14,862 --- Net unrealized loss on securities available for sale (44,721) --- -------------- -------------- Balance at end of period (29,859) --- -------------- -------------- Treasury stock, at cost Balance at beginning of period (73,789) --- Exercise of stock options from treasury stock 2,136 --- Purchase of treasury stock --- (10,029) -------------- -------------- Balance at end of period (71,653) (10,029) -------------- -------------- Total stockholders' equity $ 1,530,488 $ 1,535,325 ============== ==============
(See accompanying notes to the unaudited consolidated financial statements) 5
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Quarter Ended March 31, 1996 1995 ------------------- ----------------- (In thousands) Cash flows from operating activities: Net income $ 27,352 $ 28,507 Adjustments to reconcile net income to net cash used in operating activities: Provision for possible loan losses 3,646 5,483 Provision for (recovery of) potential declines in value of other real estate 787 (1) Depreciation and amortization of premises and equipment 4,601 1,750 Accretion of discount, net of amortization of premium (24,685) (2,386) ESOP and stock plans expense 4,243 3,624 Net change in loans held for sale (163,893) 68 Net (gain) loss on securities (273) 645 Net gain on sales of loans (19) (40) Net gain on sales of other real estate owned (1,824) (3,095) Foreclosure expenses on other real estate (66) (559) Amortization of excess of cost over fair value of net assets acquired 11,628 47 Decrease (increase) in other assets 11,150 (2,266) Decrease in other liabilities (2,664) (38,723) Other, net 2,206 (1,624) ----------------- ----------------- Net cash used in operating activities (127,811) (8,570) ----------------- ----------------- Cash flows from investing activities: Mortgage loan originations, net of principal repayments 11,081 (12,319) Proceeds from sales of other real estate owned 4,047 8,119 Repurchases of loans sold with recourse (1,269) (7,075) Other loan originations, net of principal repayments 2,252 (2,224) Purchases of securities available for sale (2,793,988) --- Purchase of securities held to maturity --- (273) Proceeds from maturities of securities available for sale 3,088,263 --- Proceeds from maturities of securities held to maturity --- 181,110 Sales of securities available for sale 398,140 --- Principal repayments on securities available for sale 56,925 1,024 Purchases of premises and equipment (5,894) (2,999) ----------------- ----------------- Net cash provided by investing activities 759,557 165,363 ----------------- ----------------- Cash flows from financing activities: Net (withdrawals from) deposits to depositors' accounts (200,356) 19,657 Payments for cash dividends (8,979) (9,348) Net increase in mortgagors' escrow 22,434 21,876 Exercise of stock options 1,277 153 Purchase of treasury stock --- (10,029) ----------------- ----------------- Net cash (used in) provided by financing activities (185,624) 22,309 ----------------- ----------------- Net increase in cash and cash equivalents 446,122 179,102 Cash and cash equivalents at beginning of period 1,704,379 293,270 ----------------- ----------------- Cash and cash equivalents at end of period $ 2,150,501 $ 472,372 ----------------- ----------------- Supplemental disclosure of cash flow information Cash paid for income taxes $ 2,265 $ --- ================= ================= Non-cash investing and financing activities: Additions to other real estate owned, net $ 6,533 $ 3,594 ================= ================= Loans to facilitate sales of other real estate $ 4,335 $ 9,507 ================= ================= Interest credited on deposits $ 152,511 $ 57,966 ================= =================
(See accompanying notes to the unaudited consolidated financial statements) 6 GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation The unaudited financial statements of GreenPoint Financial Corp. and Subsidiaries ("GreenPoint" or the "Company") are prepared in accordance with generally accepted accounting principles for interim financial information. In the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the Company's interim financial condition as of the dates indicated and the results of operations for the periods presented have been included. The results of operations for the interim periods shown are not necessarily indicative of results that may be expected for the entire year. The unaudited consolidated interim financial statements presented herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report to shareholders for the period ended December 31, 1995. 2. Stock Incentive Plan During the quarter ended March 31, 1996, GreenPoint granted 375,000 shares of the Company's common stock to certain executive officers. These awards, which were previously approved by the Company's shareholders in 1994, vest ratably over five years on the anniversary dates of the awards. The market price at the grant date was $ 24.625. 3. Common Stock Repurchase Program On February 13, 1996 the Company announced a plan to repurchase up to approximately 2.6 million shares of stock during 1996. This follows a stock buyback program of 2.748 million shares completed in 1995. No share repurchases were made during the quarter ended March 31, 1996. 4. Subsequent Event On April 12, 1996 the Bank completed the sale of its two Rockland County, New York banking offices to Pawling Savings Bank, a subsidiary of Progressive Bank, Inc. Pawling assumed approximately $154 million of deposits within the two branches. The Bank will report a pre-tax net gain of approximately $8.9 million from the transaction in the second quarter of 1996. 7
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 5. Securities Available for Sale and Held to Maturity Securities held at March 31, 1996 are summarized as follows: Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value --------------- ------------- ------------ ----------- (In thousands) Securities Available for Sale U.S. Government and Federal Agency Obligations: U.S. Treasury Notes/Bills $ 1,933,686 $ --- $ (19,651) $ 1,914,035 Agency Discount Notes 93,761 --- (28) 93,733 Mortgage-Backed Securities 2,388,284 --- (33,201) 2,355,083 Trust Certificates Collateralized by GNMA Securities 426,751 --- (1,358) 425,393 Other 18,950 47 (1) 18,996 --------------- -------------- -------------- ----------- Total securities available for sale $ 4,861,432 $ 47 $ (54,239) $ 4,807,240 =============== ============== ============== ============ Securities Held to Maturity Tax Exempt Municipals $ 675 $ 54 $ --- $ 729 Other 3,658 --- --- 3,658 --------------- -------------- -------------- ------------ Total securities held to maturity $ 4,333 $ 54 $ --- $ 4,387 =============== ============== ============== ============ Securities held at December 31, 1995 are summarized as follows: Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value ---------------- ---------- ---------- ------------ (In thousands) Securities Available for Sale U.S. Government and Federal Agency Obligations: U.S. Treasury Notes/Bills $ 1,352,276 $ 4,004 $ --- $ 1,356,280 Agency Discount Notes 2,417,009 55 (88) 2,416,976 Mortgage-Backed Securities 1,668,847 24,979 --- 1,693,826 Trust Certificates Collateralized by GNMA Securities 430,340 285 (1,753) 428,872 Other 550 1 --- 551 ---------------- ---------------- ---------------- ------------ Total securities available for sale $ 5,869,022 $ 29,324 $ (1,841) $ 5,896,505 ================ ================ ================ ============ Securities Held to Maturity Tax Exempt Municipals $ 675 $ 54 $ --- $ 729 Other 3,632 --- --- 3,632 ---------------- ---------------- ---------------- ------------ Total securities held to maturity $ 4,307 $ 54 $ --- $ 4,361 ================ ================ ================ ============
Estimated fair values for securities are based on published market or securities dealers' estimated prices. During the quarter ended March 31, 1996, the Company sold available-for-sale securities aggregating $ 531.0 million, resulting in gross realized gains of $ 1.9 million and gross realized losses of $ 1.6 million. The average maturities of the securities available for sale and held to maturity at March 31, 1996 are approximately 10.7 years and 14.2 years, respectively. Mortgage-backed securities, almost all of which have contractual maturities of more than 10 years, are subject to scheduled and non-scheduled principal payments which shorten the average life to an estimated 6.3 years. The estimated average life for all securities available for sale is approximately 4.5 years. 8 GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 6. Restructuring Reserve In December 1995, the Company recorded a pre-tax restructuring charge of $8.0 million that reflects actions taken during the fourth quarter of 1995 and taken and to be taken during 1996 to improve operating efficiency. The charge included employee severance benefits, costs associated with planned branch consolidations and fixed asset writedowns. At March 31, 1996 the reserve balance associated with this charge was approximately $6.1 million of which $0.8 million related to severance and $5.3 million related to the disposition of certain facilities premises and equipment and termination of leases. 7. Impact of Recent Accounting Pronouncements Accounting for Stock-Based Compensation In October 1995, FASB issued Statement of Financial Accounting Standards No. 123, ("SFAS 123") "Accounting for Stock-Based Compensation." SFAS 123 establishes a fair value based method of accounting for stock-based compensation arrangements with employees, rather than the intrinsic value based method that is contained in APB Opinion No. 25 ("Opinion 25"). SFAS 123 allows two alternative accounting methods: (1) a fair-value-based method, or (2) an intrinsic-value-based method which is already prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"). Both the accounting and disclosure requirements of SFAS 123 are effective for fiscal years beginning after December 15, 1995. The Company intends to continue accounting for its employee stock compensation plans under its current method (APB 25), and will adopt the disclosure requirements of SFAS 123 in 1996. 9
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations Quarter Ended -------------------------------------------------------------------------- Mar. 31, Dec. 31, Sept. 30, Jun. 30, Mar. 31, 1996 1995 1995 1995 1995 -------- -------- -------- -------- -------- Performance Ratios (Annualized): Return on average assets 0.75% 0.52% 1.59% 1.69% 1.65% Return on average equity 7.04 5.00 7.74 7.61 7.48 Return on average tangible equity (1) 12.42 8.95 8.08 7.62 7.49 Net interest spread during period 2.87 2.68 3.59 3.80 4.10 Net interest margin 3.16 2.96 4.53 4.84 5.04 General and administrative expense to average assets 1.53 1.64 1.77 1.89 1.90 Efficiency ratio (2) 47.25 53.36 36.47 36.88 35.98 Average interest-earning assets to average interest-bearing liabilities 1.07x 1.07x 1.24x 1.27x 1.27x Capital Ratios: Period-end stockholders' equity to ending total assets 10.58% 10.57% 10.48% 22.42% 22.01% Period-end stockholders' equity less intangible assets, to tangible assets 6.31 6.29 6.21 22.42 22.02 Leverage capital (3) 6.33 6.11 12.30 16.89 16.42 Risk-based capital ratios (3): Tier 1 16.73 16.05 15.40 29.59 28.75 Total capital 17.98 17.30 16.65 30.84 30.00 Per Share Data: Earnings per share * $ 0.60 $ 0.42 $ 0.64 $ 0.62 $ 0.60 Book value per share ** $ 33.35 $ 34.25 $ 33.28 $ 33.09 $ 32.70 Book value per share after deduction of $ 18.99 $ 19.44 $ 18.82 $ 33.08 $ 32.69 unamortized goodwill ** * Average shares used in calculation 45,653,000 46,171,000 47,428,000 47,087,000 47,230,000 ** Period-end shares used in calculation 45,898,000 45,298,000 47,445,000 47,135,000 46,959,000 Total shares issued and outstanding 52,457,000 52,217,000 54,337,000 54,514,000 54,483,000 Asset Quality Ratios: Non-performing loans to total loans 6.25% 6.49% 6.50% 6.87% 6.85% Non-performing assets to total assets 2.94 2.94 2.84 6.21 6.29 Allowance for possible loan losses to: Total non-performing loans 26.49 26.24 26.62 26.50 26.57 Total loans held for investment 1.73 1.75 1.78 1.82 1.82
(1) Average tangible equity has been calculated in accordance with regulatory guidelines. (2) The efficiency ratio is calculated by dividing the Company's total general and administrative expenses by the sum of net interest income and non-interest income. (3) These ratios are calculated using regulatory guidelines which exclude the impact on stockholders' equity resulting from the adoption of Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("SFAS 115"). 10 GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations - (Continued) 1. General The Bank has historically operated as a traditional consumer-oriented institution serving the markets in which its branches are located. Management's objective has been to become a major niche loan originator in the national residential mortgage market and to become a major consumer banking force within the attractive, rapidly consolidating New York metropolitan consumer banking market. GreenPoint regularly explores opportunities for acquisitions of and holds discussions with financial institutions and related businesses, and also regularly explores opportunities for acquisitions of liabilities and assets of financial institutions, and other financial service providers. The Company routinely analyzes its lines of business and from time to time may increase, decrease or terminate one or more of its activities. 2. Operating Results The first quarter's results are reflective of the following initiatives which are expected to enhance the Company's financial performance in 1996 and provide a solid foundation for earnings momentum in subsequent years. - - - Improving net interest margin by increasing risk-adjusted yields on its earning assets and by decreasing the effective interest expense of its consumer deposits. - - - Improving operating efficiency by prudently reducing its costs of doing business as a percentage of the net revenues generated from operations. - - - Expanding its No Doc residential mortgage loan origination business through carefully planned movements into competitively attractive regional mortgage markets in the U.S.. - - - Utilizing the funds received in 1995 from Home Savings of America to internally fund: - net mortgage loan portfolio growth; - investment in Treasury, Agency and other investment securities for yield; - maintenance of appropriate levels of funding liquidity and interest sensitivity management. - - - Taking actions to enable the Company to retain a higher percentage of its pre-tax income. Collectively such initiatives are expected to result in further improvements in the Company's financial performance in each subsequent quarter during 1996. 11 GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations - (Continued) Net income for the quarter ended March 31, 1996 was $27.4 million, or $0.60 per share, a 4.1% decrease over the $28.5 million, or $0.60 per share, for the comparable 1995 period. The primary reasons for the decrease are an $85.3 million increase in interest expense and a $35.5 million higher non-interest expense which was partially offset by a $108.3 million, or 75.8%, increase in interest income, a $5.2 million, or 83.6%, increase in non-interest income, a $1.8 million, or 33.5%, reduction in provision for possible loan losses, and a $4.2 million, or 17.2%, decrease in income tax expense. Interest Rate Sensitivity The Bank's cumulative one-year rate sensitivity gap was negative 1.9% of total assets at March 31, 1996, compared to positive 6.4% at December 31, 1995. The change reflects continued progress toward investing the deposits associated with the HSA acquisition. Net Interest Income Net interest income increased by $23.0 million, or 27.2%, in the first quarter of 1996, versus the comparable period in 1995. The increase reflects higher interest income of $108.3 million in the first quarter of 1996 which was partially offset by an increase of $85.3 million in interest expense. The rise in net interest income reflects a $6.96 billion increase in average interest- earning assets resulting primarily from the investment of the funds received in the HSA branch acquisition, which was partially offset by a $7.52 billion related increase in average interest-bearing liabilities and a decrease in interest rate spread to 2.87% in the current quarter from 4.10% in the 1995 quarter. Interest income increased by $108.3 million, or 75.8%, to $251.1 million for the first quarter of 1996 from $142.8 million for the first quarter of 1995. The principal reason for the rise was the deployment of funds received in the HSA branch acquisition into money market investments and securities. Interest income on securities rose by $76.8 million to $85.7 million for the 1996 quarter from $8.9 million for the comparable 1995 quarter. The increase is primarily the result of two factors: the investment of the majority of the funds received in the HSA branch acquisition into various types of securities which increased the average balance by $5.04 billion and greater investment in higher yielding mortgage-backed securities which resulted in a 50 basis point increase in the average yield for the current quarter. Interest income on money market investments increased by $19.3 million to $23.4 million for the 1996 quarter from $4.1 million for the comparable 1995 quarter. The increase is primarily due to the investment of funds received in the HSA branch acquisition that resulted in higher average balances of $1.45 billion which was partially offset by lower short-term interest rates during the 1996 quarter that resulted in a 49 basis point decrease in average yield versus the first quarter of 1995. Interest income on mortgages increased by $11.9 million to $141.3 million for the 1996 quarter from $129.4 million for the comparable 1995 quarter. The increase reflects higher average balances of $454.4 million, or 8.0%, as a result of loan origination volume generated from the BarclaysAmerican/Mortgage operation acquired in July 1995. The higher volume in loan originations in the 1996 quarter outpaced reductions in the average balance due to normal amortization and prepayments. The improvement in interest income also reflects a 10 basis point increase in average yield which is the result of a lower percentage of non-performing loans and upward repricing of the Company's adjustable rate mortgages in the first quarter of 1996 versus the first quarter of 1995. Interest expense increased by $85.3 million to $143.5 million for the first quarter of 1996 from $58.2 million for the first quarter of 1995. The higher interest expense is primarily the result of the inclusion of the deposits assumed in the HSA branch acquisition in the 1996 quarter's average balances. 12 GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations - (Continued) Interest expense on time deposits increased by $63.5 million to $105.0 million for the 1996 quarter from $41.5 million for the 1995 quarter. The rise in interest expense reflects a $4.59 billion increase in the average time deposits resulting from the HSA branch acquisitions. Interest expense on money market and variable rate savings accounts increased by $10.9 million to $22.2 million for the first quarter of 1996 from $11.3 million for the first quarter of 1995. The rise in interest expense reflects a $1.18 billion increase in the average balance and a 22 basis point increase in average cost as a result of the inclusion of deposits acquired in the aforementioned HSA branch acquisitions. Interest expense on savings accounts increased by $9.5 million to $14.0 million for the 1996 quarter from $4.5 million in the 1995 quarter. The interest expense reflects a $1.44 billion increase in the average balance which was partially offset by a 36 basis point reduction in average cost as a result of the inclusion of deposits acquired in the aforementioned HSA branch acquisitions. 13
GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations - (Continued) Average Balance Sheets and Interest Yield/Cost The following table sets forth certain information relating to the Company's average statements of financial condition (unaudited) and statements of income (unaudited) for the quarters ended March 31, 1996 and March 31, 1995, and reflects the average yield on assets and average cost of liabilities for the periods indicated. Such annualized 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. Average balances and yields include non-accrual loans. The yields and costs include fees which are considered adjustments to yields. Quarter Ended ------------------------------------------------------------------------- March 31, 1996 March 31, 1995 ----------------------------------- --------------------------- Average Average Average Yield/ Average Yield/ Balance Interest Cost Balance Interest Cost --------- ---------- ----- ------- ---------- -------- Assets: Interest-earning assets: Mortgage loans (1) $ 6,158,622 $ 141,349 9.18% $ 5,704,181 $ 129,414 9.08% Other loans (1) 35,693 657 7.36 21,247 381 7.17 Money market investments (2) 1,724,449 23,390 5.46 276,739 4,063 5.95 Securities 5,695,334 85,711 6.04 654,593 8,951 5.54 ------------- ---------- ------------ ------- Total interest-earning assets 13,614,098 251,107 7.39 6,656,760 142,809 8.59 ---------- ------- Non-interest earning assets (3) 1,053,743 238,081 ------------ ------------ Total assets $ 14,667,841 $ 6,894,841 ============ ============ Liabilities & Stockholders' Equity: Interest-bearing liabilities: Savings accounts $ 2,015,837 13,986 2.79% $ 574,814 4,467 3.15% NOW accounts 337,902 1,548 1.84 107,207 557 2.11 Money market and variable rate savings accounts 2,625,344 22,227 3.41 1,447,165 11,372 3.19 Term certificates of deposit accounts 7,637,573 105,055 5.53 3,050,986 41,538 5.52 Mortgagors' escrow 76,858 263 1.38 75,224 314 1.69 Repurchase agreements 85,295 451 2.13 --- --- --- ------------ ---------- ----------- -------- Total interest-bearing liabilities 12,778,809 143,530 4.52 5,255,396 58,248 4.49 ---------- -------- Other liabilities (4) 334,830 115,794 ------------- ----------- Total liabilities 13,113,639 5,371,190 Stockholders' equity 1,554,202 1,523,651 ------------- ----------- Total liabilities $ 14,667,841 $ 6,894,841 & stockholders' ============= ============== equity Net interest income/interest rate spread (5) $ 107,577 2.87% $ 84,561 4.10% =========== ====== ======== ===== Net interest-earning assets/net interest margin (6) $ 835,289 3.16% $ 1,401,364 5.04% ============= ===== ============= ===== Ratio of interest-earning assets to interest-bearing liabilities 1.07 x 1.27 x ====== ======
14 (1) In computing the average balances and average yield on loans, non-accruing loans and loans held for sale have been included. (2) Includes overnight federal funds sold and securities purchased under resale agreements. (3) Includes banking premises and equipment - net, net deferred tax assets, accrued interest receivable, and other miscellaneous non-interest earning assets. (4) Includes accrued interest payable, accounts payable, official checks drawn against the bank, accrued expenses, and other miscellaneous non-interest-bearing obligations of the Company. (5) Net interest rate spread represents the difference between the average yield on average interest-earning assets and the average cost of interest-bearing liabilities. (6) Net interest margin represents net interest income divided by average interest-earning assets. 15 GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations - (Continued) Rate/Volume Analysis The following table presents the effects of changes in interest rates and changes in volume of interest-earning assets and interest-bearing liabilities on the Company's interest income and interest expense during the periods indicated. Information is provided in each category on changes (I) attributable to changes in volume (changes in volume multiplied by prior rate), (ii) changes attributable to changes in rate (changes in rate multiplied by prior volume), and (iii) the net change. The changes attributable to the combined impact of volume and rate have been allocated proportionately to volume and rate.
Quarter Ended March 31, 1996 Compared to Quarter Ended March 31, 1995 Increase/(Decrease) ------------------------------------------ Due to ---------------------------- Average Average Net Volume Rate Change ------------------------------------------ (in thousands) Interest-earning assets: Mortgage loans (1) $ 10,415 $ 1,520 $ 11,935 Other loans (1) 266 10 276 Money market investments (2) 19,659 (332) 19,327 Securities 76,609 151 76,760 --------- ---------- ---------- Total interest-earning assets 106,949 1,349 108,298 ---------- ----------- ---------- Interest-bearing liabilities: Savings accounts 10,047 (528) 9,519 NOW accounts 1,064 (73) 991 Money market and other variable rate savings accounts 9,913 942 10,855 Term certificates of deposit accounts 63,085 432 63,517 Mortgagors' escrow 7 (58) (51) Repurchase agreements 451 --- 451 ------------ ----------- ---------- Total interest-bearing liabilities 84,567 715 85,282 ------------ ----------- ---------- Net change in net interest income $ 22,382 $ 634 $ 23,016 ========== ============ ==========
(1) In computing the volume and rate components of net interest income for loans, non-accrual loans and loans held for sale have been included. (2) Includes overnight federal funds and securities purchased under resale agreements. 16 GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations - (Continued) Provision for Possible Loan Losses The provision for possible loan losses decreased by $1.8 million, or 33.5%, to $3.6 million for the first quarter of 1996 from $5.4 million for the first quarter of 1995. The provision is the result of management's assessment of the loan portfolio in view of the state of the regional and national economies, trends in the real estate market of the Company's primary lending areas and trends in the levels of the Company's non-performing loans and assets. Non-Interest Income Non-interest income increased by $5.2 million, or 83.6%, to $11.5 million for the first quarter of 1996 from $6.3 million for the first quarter of 1995. The increase is primarily due to additional fee income generated from the operations of GPMC and the 60 former HSA branches reflected in the 1996 quarter's operating results. Non-Interest Expense Non-interest expense increased by $35.5 million to $67.8 million for the first quarter of 1996 from $32.3 million for the first quarter of 1995. The 1995 BAM and HSA acquisitions resulted in increases to operating expenses for the first quarter of 1996. The rise in non-interest expense is primarily the result of an $11.6 million increase in amortization of goodwill, an $8.2 million increase in salaries and benefits, an $8.0 million increase in net expense of premises and equipment and a $6.8 million increase in other administrative expense, partially offset by a $1.4 million reduction in Federal deposit insurance premiums. Income Tax Expense Income tax expense decreased by $4.2 million, or 17.2%, to $20.3 million for the first quarter of 1996 from $24.5 million for the first quarter of 1995. The decrease was due to a $5.4 million, or 10.1%, reduction in income before income taxes, and a decline in the effective rate to 42.60% for the 1996 period from 46.23% in the 1995 period, which resulted from several business initiatives implemented in 1996 by the Company. 17 GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations - (Continued) 3. Financial Condition Total assets decreased by $201.4 million to $14.469 billion at March 31, 1996 from $14.670 billion at December 31, 1995. Total loans held for investment, net, increased $34.0 million to $5.893 billion at March 31, 1996 from $5.859 billion at December 31, 1995 primarily as a result of a rise in residential 1-4 family loans of $13.6 million and an increase in commercial loans of $12.7 million. The Company's loans held for sale portfolio rose $109.8 million during the current quarter primarily as a result of loans originated for sale by GreenPoint Mortgage Corp. Securities available for sale decreased $1.090 billion to $4.807 billion at March 31, 1996 from $5.897 billion at December 31, 1995 due to the usage of proceeds from the maturities and sales of securities to fund deposit outflows and to reinvest in money market investments. Tangible Capital Growth from Operations GreenPoint's operating results include significant amortization of goodwill and employee stock compensation plans expense. These non-cash expenditures, unlike all other expenses reported by the Company, result in net increases in GreenPoint's tangible capital (total stockholders' equity less intangible assets). Quarter Ended -------------------------------------------------------------- March 31, 1996 December 31, 1995 March 31, 1995 ------------------ ------------------- ------------------- (In thousands, except per share amounts) Net income $ 27,352 $ 19,410 $ 28,507 Add back: Goodwill expense 11,628 12,084 47 Employee stock plans expense 4,243 3,882 3,624 ----------- --------------- --------------- Tangible Capital growth from operations (*) $ 43,223 $ 35,376 $ 32,178 =========== ============== =============== Amounts expressed per share (**) $ 0.94 $ 0.78 $ 0.69 ============ ============== =============== * Tangible Capital consists of Total Stockholders' Equity less the excess of cost over fair value of net assets acquired (Goodwill). ** Based on the share amounts used to calculate book and tangible book values per share, as of each respective period-end date. 18 GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations - (Continued) Non-Performing Assets The Company improved its asset quality during the first quarter of 1996 as non-performing loans decreased by $5.7 million, or 1.4%, while non-performing assets decreased by $6.1 million, or 1.4%. The ratio of non-performing loans to total loans fell to 6.25% at March 31, 1996 from 6.49% at December 31, 1995. The ratio of non-performing assets to total assets was 2.94% at both March 31, 1996 and December 31, 1995. Non-performing assets, net of related specific reserves, were as follows: March 31, December 31, 1996 1995 ------------ -------------- (In thousands) Mortgage loans secured by: Residential one-to four-family mortgages $ 288,206 $ 291,589 Residential multi-family mortgages 61,173 61,594 Commercial property mortgages 47,059 48,911 Other loans 4 4 -------------- -------------- Total non-performing loans (1) 396,442 402,098 -------------- -------------- Total other real estate owned, net 28,763 29,245 -------------- -------------- Total non-performing assets $ 425,205 $ 431,343 ============== ============== (1) Includes $43.6 million and $42.3 million of non-accrual mortgage loans under 90 days past due at March 31, 1996 and December 31, 1995, respectively. Allowance for Possible Loan Losses The following is a summary of the provision and allowance for possible loan losses: Quarter Ended March 31, ---------------------------------- 1996 1995 ----------------- ------------- (In thousands) Balance beginning of period $ 105,500 $ 103,000 Provision charged to income 3,646 5,483 Charge-offs (4,589) (4,059) Recoveries 443 1,076 ------------- ------------- Balance end of period $ 105,000 $ 105,500 ============= ============= 19 GREENPOINT FINANCIAL CORP. AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations - (Continued) Loans Sold with Recourse GreenPoint is subject to an agreement with the Federal National Mortgage Association ("FNMA") whereby the Company will repurchase, through 1996, mortgages sold to FNMA during the period January 1, 1990 through March 31, 1991, which become 90 days delinquent during 1995 and 1996. In addition, the Company will be obligated to repurchase, until the later of December 1997 or five years from the date of delivery, certain mortgages sold to FNMA which become 90 days delinquent during that period. Serviced loans repurchased from FNMA by GreenPoint are included within the Company's loan portfolio. At March 31, 1996, the aggregate amount of loans sold to FNMA which are still subject to the repurchase agreement was $135.5 million. During the quarter ended March 31, 1996 a total of $1.3 million of loans were repurchased by the Bank from FNMA pursuant to the repurchase agreement. At March 31, 1996, $0.4 million of the FNMA servicing portfolio of loans sold with recourse were delinquent 90 days or more. During the first quarter of 1996, all mortgages sold by GPMC were sold without recourse. Capital Ratios The Company's ratio of period-end stockholders' equity to ending total assets at March 31, 1996 was 10.58% compared to 10.57% at December 31, 1995. In accordance with the requirements of the Federal Deposit Insurance Corporation ("FDIC") and the New York State Banking Department ("Banking Department"), the Bank must meet certain measures of capital adequacy with respect to leverage and risk-based capital. As of both March 31, 1996 and December 31, 1995, the Bank exceeded those requirements. The Bank's leverage capital ratios were 6.33% and 6.11% at March 31, 1996 and December 31, 1995, respectively. The Bank's Tier-1 risk-based capital ratios were 16.73% and 16.05% at March 31, 1996 and December 31, 1995, respectively. The Bank's total risk-based capital ratios were 17.98% and 17.30% at March 31, 1996 and December 31, 1995, respectively. 20 PART II - OTHER INFORMATION Item 1 - Legal Proceedings With the exception of the matters set forth below, the Company is not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business which, in the aggregate, involve amounts which are believed by management to be immaterial to the consolidated financial statements of the Company. The Bank has been named as a defendant in ten unrelated legal complaints which assert that infant plaintiffs sustained personal injuries from the ingestion of lead based paint, chips or dust. Additionally there are eight other instances of threatened litigation. The injuries are alleged to have occurred in residential properties for which the Bank was a first mortgagee and for which the Bank may be or may have been an owner, through foreclosure proceedings. The complaints are in various early stages of discovery. The defense of three of the claims has been assumed by an insurer. Defense of the other seven claims was (or is anticipated to be) rejected by an insurer on the basis of pollution coverage exclusions. The Bank referred the rejected claims to a special environmental counsel. Counsel has advised the Bank that because discovery on these claims has only recently begun, counsel is not yet in a position to express an opinion as to the Bank's liability or to quantify the Bank's potential exposure, if any, in dollar terms at the time. Because of the absence of both a determination of liability and a reasonable estimate of an associated liability exposure in dollar terms, if any, the Bank has not established a contingency reserve for these complaints. Accordingly, in the event that one or more of these actions are subsequently determined to represent an accruable liability for the Bank, such accruals will be funded through charges to be made against the Bank's operating income for the period or periods in which such determinations may occur. The Company currently believes that such liability exposure, if any, would not be material to the Banks' financial condition. Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits Exhibit Number ------ 11.1 Statement Regarding Computation of Per Share Earnings. 27.1 Financial Data Schedule (b) Reports on Form 8-K On March 6, 1996, GreenPoint Financial Corp. filed a current report on Form 8-K reporting that on February 22, 1996 broker search cards were mailed on behalf of GreenPoint to certain holders of record of the Company's common stock setting forth March 25, 1996 as the record date and May 10, 1996 as the meeting date, for the Company's 1996 Annual Meeting of Stockholders. On March 16, 1996, GreenPoint Financial Corp. filed a current report of Form 8-K reporting the appointment of Price Waterhouse LLP as the Company's principal accountant to audit its financial statements. On March 27, 1996, GreenPoint filed Form 8-K/A relating to the appointment of Price Waterhouse LLP to amend certain information. 21 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. GreenPoint Financial Corp. By:/s/ Thomas S. Johnson -------------------------------- Thomas S. Johnson Chairman of the Board, President and Chief Executive Officer By:/s/ Charles P. Richardson --------------------------------- Charles P. Richardson Executive Vice President and Chief Financial Officer Dated May 13, 1996 22 EX-11.1 2 Exhibit 11.1 Exhibit 11.1 Statement Regarding Computation of Per Share Earnings (In thousands, except per share amounts) Quarter Ended March 31, -------------------------- 1996 1995 -------------------------- Net Income $ 27,352 $ 28,507 Weighted average number of common stock and common stock equivalents outstanding during each period-primary 45,653 47,230 Weighted average number of common stock and common stock equivalents outstanding during each period-fully diluted 45,782 47,253 Net earnings per common share-primary $ 0.60 $ 0.60 =========== =========== Net earnings per common share-fully diluted $ 0.60 $ 0.60 =========== =========== EX-27 3
9 0000911935 GREENPOINT FINANCIAL CORP. 1,000 3-MOS DEC-31-1996 MAR-31-1996 135,601 500 2,014,400 0 4,807,240 4,333 4,387 6,282,507 (105,000) 14,469,048 12,697,967 0 240,593 0 0 0 551 1,529,937 14,469,048 142,006 109,101 0 251,107 143,079 143,530 107,577 (3,646) 273 67,782 47,654 27,352 0 0 27,352 0.60 0.60 3.16 396,442 43,553 0 0 (105,500) (4,589) 443 (105,000) (105,000) 0 0
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