-----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, QJrYlwlzUzeeIpPzMIxati7kzwrR8irp1/zFsfCx2XJzFxzOs4TpDUN2BVqMdllc enqbUo+ax+YbjmAMFsd0jA== 0000914317-99-000615.txt : 19991108 0000914317-99-000615.hdr.sgml : 19991108 ACCESSION NUMBER: 0000914317-99-000615 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19991105 FILER: COMPANY DATA: COMPANY CONFORMED NAME: R&G FINANCIAL CORP CENTRAL INDEX KEY: 0001016933 STANDARD INDUSTRIAL CLASSIFICATION: INVESTORS, NEC [6799] IRS NUMBER: 660532217 STATE OF INCORPORATION: PR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 000-21137 FILM NUMBER: 99742254 BUSINESS ADDRESS: STREET 1: 280 JESUS T. PINERO AVE CITY: HATO REY, SAN JUAN STATE: PR ZIP: 00918 MAIL ADDRESS: STREET 1: 280 JESUS T PINERO AVE CITY: HATO REY, SAN JUAN STATE: PR ZIP: 00918 10-Q/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A AMENDMENT NO. 1 [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________ TO _________________. Commission file number: 000-21137 R&G FINANCIAL CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Puerto Rico 66-0532217 - -------------------------------------------------------------------------------- (State of incorporation (I.R.S. Employer or organization) Identification No.) 280 Jesus T. Pinero Avenue Hato Rey, San Juan, Puerto Rico 00918 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (787) 758-2424 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by checkmark whether Registrant (a) 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 report(s) and (b) has been subject to such filing requirements for at least 90 days. YES [ X ] NO [ ] Number of shares of Class B Common Stock outstanding as of March 31, 1999: 10,185,691. (Does not include 18,440,556 Class A Shares of Common Stock which are exchangeable into Class B Shares of Common Stock at the option of the holder.) Explanatory Note: - ----------------- The undersigned registrant hereby amends and restates in its entirety Item 1 of Part I - Financial Information of its quarterly report on Form 10-Q for the quarter ended March 31, 1999. -2- PART 1 - FINANCIAL INFORMATION ------------------------------ Item 1: Consolidated Financial Statements - ------- ---------------------------------
R&G FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION March 31, December 31, 1999 1998 -------------- -------------- (Unaudited) ASSETS Cash and due from banks $ 35,700,762 $ 51,804,750 Money market investments: Securities purchased under agreements to resell 7,501,490 11,544,123 Time deposits with other banks 5,171,966 30,361,527 Federal funds sold -- 10,018,048 Mortgage loans held for sale, at lower of cost or market 109,990,674 117,126,040 Mortgage-backed securities held for trading, at fair value 25,216,189 450,546,034 Mortgage-backed securities available for sale, at fair value 528,757,067 95,040,331 Mortgage-backed securities held to maturity, at amortized cost (estimated market value: 1999 - $26,829,846; 1998 - $28,260,925) 26,834,199 28,255,518 Investment securities available for sale, at fair value 71,572,197 59,502,140 Investment securities held to maturity, at amortized cost (estimated market value: 1999- $ 6,367,577; 1998- $6,378,634) 6,348,172 6,343,929 Loans receivable, net 1,167,240,530 1,073,668,278 Accounts receivable, including advances to investors, net 12,233,705 9,665,290 Accrued interest receivable 13,748,392 12,505,431 Servicing Asset 61,944,250 58,221,052 Premises and equipment 13,549,816 12,962,435 Other assets 16,736,038 17,216,602 -------------- -------------- LIABILITIES AND STOCKHOLDERS' EQUITY $2,102,545,447 $2,044,781,528 Liabilities: ============== ============== Deposits $1,094,290,510 $1,007,297,304 Securities sold under agreements to repurchase 423,340,922 471,421,726 Notes payable 172,469,029 182,747,956 Advances from FHLB 141,000,000 121,000,000 Other borrowings 9,000,000 9,000,000 Accounts payable and accrued liabilities 26,674,448 28,020,080 Other liabilities 5,816,186 4,132,603
R&G FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION March 31, December 31, 1999 1998 -------------- -------------- (Unaudited) Preferred stock, $.01 par value, 10,000,000 shares authorized, 7.40% 1,872,591,095 1,823,619,669 Monthly Income -------------- -------------- Preferred Stock, Series A, $25 liquidation value, 2,000,000 shares authorized, issued and outstanding 50,000,000 50,000,000 Common stock: Class A - $.01 par value, 40,000,000 shares authorized, 18,440,556 issued and Outstanding 184,406 184,406 Class B - $.01 par value, 20,000,000 shares authorized, 10,185,691 issued and outstanding in 1999 and 10,146,091 in 1998 101,857 101,461 Additional paid-in capital 41,703,482 41,544,378 Retained earnings 133,700,796 124,418,278 Capital reserves of the Bank 3,547,798 3,547,798 Accumulated other comprehensive income 716,013 1,365,538 -------------- -------------- 229,954,352 221,161,859 -------------- -------------- $2,102,545,447 $2,044,781,528 ============== ==============
The accompanying notes are an integral part of these statements. -3-
R&G FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF INCOME Three month period ended March 31, ------------------------------ 1999 1998 ------------ ------------ (Unaudited) Interest income: Loans $ 26,616,509 $ 18,656,942 Money market and other investments 733,461 1,428,203 Mortgage-backed securities 8,035,385 7,691,106 ------------ ------------ Total interest income 35,385,355 27,776,251 ------------ ------------ Interest expense: Deposits 11,460,159 8,345,253 Securities sold under agreements to repurchase 5,374,542 5,693,530 Notes payable 3,729,187 2,969,761 Other 1,587,320 781,866 ------------ ------------ Total interest expense 22,151,208 17,790,410 ------------ ------------ Net interest income 13,234,147 9,985,841 Provision for loan losses (1,300,000) (1,500,000) ------------ ------------ Net interest income after provision for loan losses 11,934,147 8,485,841 ------------ ------------ Other income: Net gain on origination and sale of loans 10,478,205 7,392,555 Net profit on trading account -- 14,580 Net gain on sales of investments available for sale 19,531 149,468 5,760,770 3,687,057 Loan administration and servicing fees Service charges, fees and other 1,485,172 1,184,384 ------------ ------------ 17,743,678 12,428,044 ------------ ------------ Total revenues 29,677,825 20,913,885 ------------ ------------
R&G FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF INCOME Three month period ended March 31, ------------------------------ 1999 1998 ------------ ------------ (Unaudited) Operating expenses: Employee compensation and benefits 4,770,004 3,558,222 Office occupancy and equipment 2,389,800 1,824,971 Other administrative and general 7,677,815 4,794,354 ------------ ------------ 14,837,619 10,177,547 ------------ ------------ Income before income taxes 14,840,206 10,736,338 ------------ ------------ Income tax expense: Current 1,924,408 1,860,651 Deferred 1,764,920 1,395,852 ------------ ------------ 3,689,328 3,256,503 ------------ ------------ Net income $ 11,150,878 $ 7,479,835 ============ ============ Earnings per common share - Basic $ 0.36 $ 0.26 ------------ ------------ - Diluted $ 0.35 $ 0.26 ------------ ------------ Weighted average number of shares outstanding - Basic 28,600,647 28,289,504 - Diluted 29,342,647 29,045,504
The accompanying notes are an integral part of these statements. -4-
R&G Financial Corporation Consolidated Statements of Comprehensive Income Three Month period ended March 31, ------------------------------ 1999 1998 ------------ ------------ (Unaudited) Net Income $ 11,150,878 $ 7,479,835 ------------ ------------ Other comprehensive income, before tax: Unrealized gains (losses) on securities: Arising during period (1,045,264) (238,609) Less: Reclassification adjustments for gains included in net income (19,531) (149,468) ------------ ------------ (1,064,795) (388,077) ------------ ------------ Income tax benefit related to items of other comprehensive income 415,270 151,350 ------------ ------------ Other comprehensive (loss) income, net of tax (649,525) (236,727) ------------ ------------ Comprehensive income, net of tax $ 10,501,353 $ 7,243,108 ============ ============
The accompanying notes are an integral part of these statements. -5-
R&G FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Three month period ended March, 31 ------------------------------------ 1999 1998 ------------- ------------- (Unaudited) Cash flows from operating activities: Net income $ 11,150,878 $ 7,479,835 ------------- ------------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 891,342 644,587 Amortization of premium (accretion of discount) on investments and mortgage-backed securities, net 39,462 (21,695) Amortization of deferred loan origination (fees) costs, net (391,574) 71,678 Amortization of servicing rights 1,634,426 614,327 Provision for loan losses 1,300,000 1,500,000 Provision for bad debts in accounts receivable 100,000 75,000 Gain on sales of loans (2,578,960) (1,089,913) Loss (gain) on sales of mortgage-backed and investment securities available for sale 136,102 (149,468) Unrealized loss (profit) on trading securities 181,718 (743,970) Increase in mortgage loans held for sale (42,955,011) (9,311,286) Net increase in mortgage-backed securities held for trading (2,260,268) (8,690,211) (Increase) decrease in receivables (3,911,376) 508,360 Decrease in other assets 310,741 2,200,838 (Decrease) increase in notes payable (10,278,927) 15,191,328 (Decrease) increase in accounts payable and accrued liabilities (381,350) 1,225,264 Increase in other liabilities 1,683,583 163,602 ------------- ------------- Total adjustments (56,480,092) 2,188,441 ------------- ------------- Net cash (used in) provided by operating activities (45,329,214) 9,668,276 ------------- ------------- Cash flows from investing activities: Purchases of investment securities (29,600,000) (23,842,120) Proceeds from sales and maturities of securities available for sale 63,388,697 25,553,791 Proceeds from maturities of securities held to maturity -- 4,405,420 Proceeds from sales of loans 49,660,184 24,399,022 Net originations of loans (143,461,903) (107,919,577) Purchases of FHLB stock, net -- (1,693,500) Acquisition of premises and equipment (1,308,900) (1,246,796) Acquisition of servicing rights (5,357,624) (3,126,207) ------------- ------------- Net cash used by investing activities (66,679,546) (83,469,967) ------------- -------------
R&G FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Three month period ended March, 31 ------------------------------------ 1999 1998 ------------- ------------- (Unaudited) Cash flows from financing activities: Increase in deposits - net 86,444,194 40,912,577 Decrease in federal funds purchased -- (10,000,000) (Decrease) increase in securities sold under agreements to repurchase - net (48,080,804) 10,603,178 Advances from FHLB 20,000,000 20,000,000 Proceeds from issuance of common stock 159,500 -- Cash dividends on common stock (1,868,360) (707,238) ------------- ------------- Net cash provided by financing activities 56,654,530 60,808,517 ------------- ------------- Net decrease in cash and cash equivalents (55,354,230) (12,993,174) Cash and cash equivalents at beginning of period 103,728,448 68,365,723 ------------- ------------- Cash and cash equivalents at end of period $ 48,374,218 $ 55,372,549 ============= ============= Cash and cash equivalents include: Cash and due from banks $ 35,700,762 $ 21,371,646 Securities purchased under agreements to resell 7,501,490 21,292,213 Time deposits with other banks 5,171,966 12,708,690 Federal funds sold -- -- ------------- ------------- $ 48,374,218 $ 55,372,549 ============= =============
The accompanying notes are an integral part of these statements. -6- R&G FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - REPORTING ENTITY AND BASIS OF PRESENTATION Reporting entity The accompanying unaudited consolidated financial statements include the accounts of R&G Financial Corporation (the Company) and its wholly owned subsidiaries, R&G Mortgage Corp. ("R&G Mortgage"), a Puerto Rico corporation, and R-G Premier Bank of Puerto Rico (the "Bank"), a commercial bank chartered under the laws of the Commonwealth of Puerto Rico. R&G Mortgage is engaged primarily in the business of originating FHA-insured, VA-guaranteed, and privately insured first and second mortgage loans on residential real estate. R&G Mortgage pools loans into mortgage-backed securities and collateralized mortgage obligation certificates for sale to investors. After selling the loans, it retains the servicing function. R&G Mortgage is also a seller-servicer of conventional loans. R&G Mortgage is licensed by the Secretary of the Treasury of Puerto Rico as a mortgage company and is duly authorized to do business in the Commonwealth of Puerto Rico. The Bank provides a full range of banking services, including residential, commercial and personal loans and a diversified range of deposit products through twenty branches located mainly in the northern part of the Commonwealth of Puerto Rico. The Bank also provides private banking and trust and other financial services to its customers. The Bank is subject to the regulations of certain federal and local agencies, and undergoes periodic examinations by those regulatory agencies. Basis of presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles. However, in the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (principally consisting of normal recurring accruals) necessary for a fair presentation of the Company's financial condition as of March 31, 1999 and the results of operations and changes in its cash flows for the three months ended March 31, 1999 and 1998. The results of operations for the three month period ended March 31, 1999 are not necessarily indicative of the results to be expected for the year ending December 31, 1999. The unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 1998. Certain reclassifications (not affecting income before income taxes or net income) have been made to the consolidated statements of income for the quarter ended March 31, 1998 to conform to the presentation for the quarter ended March 31, 1999. -7- Basis of consolidation All significant intercompany balances and transactions have been eliminated in the accompanying unaudited financial statements. Accounting for Derivative Instruments and Hedging Activities In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133- "Accounting for Derivative Instruments and Hedging Activities." This Statement requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. If certain conditions are met, a derivative may be specifically accounted as a hedge. The accounting for changes in the fair value of a derivative (that is, gains and losses) depends on the intended use of the derivative and the resulting designation. This Statement is effective for all fiscal quarters of fiscal years beginning after June 15, 1999. Management is evaluating its hedging strategy in light of this new pronouncement to establish the initial designation of its hedging activities and determine the effect and timing of adoption. However, due to the relatively limited extent to which the Company is using derivative instruments and the simple nature of the instruments used, management does not expect the impact of adoption to be significant. Accounting for Mortgage-Backed Securities Retained after the Securitization of Mortgage Loans Held for Sale by a Mortgage Banking Enterprise In October 1998, the FASB issued SFAS No. 134- "Accounting for Mortgage-Backed Securities Retained after the Securitization of Mortgage Loans Held for Sale by a Mortgage Banking Enterprise." This Statement amends SFAS No. 65 to require that after the securitization of mortgage loans held for sale, an entity engaged in mortgage banking activities classify the resulting mortgage-backed securities or other retained interest based on its ability and intent to sell or hold those investments. This Statement conforms the subsequent accounting for securities retained after the securitization of mortgage loans by a mortgage banking enterprise with the subsequent accounting for securities retained after the securitization of other types of assets by a non-mortgage banking enterprise. This Statement is effective for the first fiscal quarter beginning after December 15, 1998. In connection with the adoption of this Statement on January 1, 1999 the Company reclassified approximately $427.4 million of mortgage-backed securities from trading to available for sale. NOTE 2 - EARNINGS PER SHARE Basic earnings per common share for the three months ended March 31, 1999 and 1998 are computed by dividing net income for such periods by the weighted average number of shares of common stock outstanding during such periods, which was 28,600,647 and 28,289,504, respectively. Outstanding stock options granted in connection with the Company's Stock Option Plan are included in the weighted average number of shares for purposes of the diluted earnings per share computation. The Company's weighted average number of shares outstanding for purposes of diluted earnings per share was 29,342,647 and 29,045,504 for the three month periods ended March 31, 1999 and 1998, respectively. -8- On June 25, 1998 the Company effected a 2 for 1 stock split on the Company's common stock, in the form of a stock dividend of one additional share of common stock for each share of common stock held in record as of June 12, 1998. Following distribution of the additional shares, the Company had 28,289,504 common shares outstanding. Per share information for all periods presented take into consideration the stock split paid by the Company in June 1998. NOTE 3 - INVESTMENT AND MORTGAGE-BACKED SECURITIES The carrying value and estimated fair value of investment and mortgage-backed securities by category are shown below. The fair value of investment securities is based on quoted market prices and dealer quotes, except for the investment in Federal Home Loan Bank (FHLB) stock which is valued at its redemption value.
March 31, December 31, 1999 1998 ------------ ------------ (Unaudited) Mortgage-backed securities held for trading: CMO Residuals (all interest only) $ 8,261,442 $ 7,146,762 GNMA Certificates 16,954,747 443,399,272 ------------ ------------ $ 25,216,189 $450,546,034 ============ ============
-9-
March 31, 1999 December 31, 1998 ----------------------------- ----------------------------- Amortized Fair Amortized Fair cost value cost value ------------ ------------ ------------ ------------ (Unaudited) Mortgage-backed securities available for sale: CMO residuals and other mortgage-backed securities $ 8,338,991 $ 10,154,780 $ 7,845,382 $ 9,661,171 ------------ ------------ ------------ ------------ FNMA certificates: Due over ten years 7,699,654 7,704,471 8,091,335 8,161,704 ------------ ------------ ------------ ------------ FHLMC certificates: Due from one to five years 83,754 85,363 89,209 90,765 Due from five to ten years 1,003,828 1,015,858 240,394 244,140 Due over ten years 18,990,388 19,185,453 21,368,689 21,723,711 ------------ ------------ ------------ ------------ 20,077,970 20,286,674 21,698,292 22,058,616 ------------ ------------ ------------ ------------ GNMA certificates: Due over ten years 491,138,214 490,611,142 55,158,840 55,158,840 ------------ ------------ ------------ ------------ $527,254,829 $528,757,067 $ 92,793,849 $ 95,040,331 ============ ============ ============ ============ Investment securities available for sale: U.S. Treasury securities: Due from one to five years $ 4,995,772 $ 4,963,280 $ 4,995,028 $ 4,990,625 ------------ ------------ ------------ ------------ U.S. Government and agencies securities: Due from one to five years 55,500,000 55,204,050 38,100,000 38,106,648 Due from five to ten years 5,010,140 5,000,000 ------------ ------------ ------------ ------------ 55,500,000 55,204,050 43,110,140 43,106,648 ------------ ------------ ------------ ------------ FHLB stock 11,404,867 11,404,867 11,404,867 11,404,867 ------------ ------------ ------------ ------------ $ 71,900,639 $ 71,572,197 $ 59,510,035 $ 59,502,140 ============ ============ ============ ============
Mortgage backed securities available for sale include interest only securities with an amortized cost of $3,771,323 as of March 31, 1999, which are primarily associated with the sale in prior years of collaterized mortgage obligations. These sales were not made in connection with the Company's mortgage banking activities. -10-
March 31, 1999 December 31, 1998 --------------------------- ----------------------------- Amortized Fair Amortized Fair cost value cost value ----------- ----------- ----------- ----------- (Unaudited) Mortgage-backed securities held to maturity: GNMA certificates: Due from one to five years $ 24,404 $ 26,173 $ 27,227 $ 29,201 Due from five to ten years 12,406,776 12,146,591 13,024,960 12,751,640 Due over ten years 2,338,609 2,285,900 2,359,713 2,306,529 ----------- ----------- ----------- ----------- 14,769,789 14,458,664 15,411,900 15,087,370 ----------- ----------- ----------- ----------- FNMA certificates: Due over ten years 11,842,243 12,155,027 12,607,700 12,944,020 ----------- ----------- ----------- ----------- FHLMC certificates: Due over ten years 222,167 216,155 235,918 229,535 ----------- ----------- ----------- ----------- $26,834,199 $26,829,846 $28,255,518 $28,260,925 =========== =========== =========== =========== Investment securities held to maturity: U.S. Treasury securities: Due within one year $ 197,446 $ 197,000 $ 194,892 $ 196,000 ----------- ----------- ----------- ----------- U.S. Government and agencies securities: Due within one year 207,066 206,910 204,167 204,167 ----------- ----------- ----------- ----------- Puerto Rico Government and Agencies obligations: Due from five to ten years 5,943,660 5,963,667 5,944,870 5,978,467 ----------- ----------- ----------- ----------- $ 6,348,172 $ 6,367,577 $ 6,343,929 $ 6,378,634 =========== =========== =========== ===========
-11- NOTE 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES Loans consist of the following:
March 31, December 31, 1999 1998 ---------------- --------------- (Unaudited) Real estate loans: Residential - first mortgage $ 814,544,472 $ 735,457,756 Residential - second mortgage 18,368,941 18,633,916 Land 388,750 337,250 Construction 36,024,315 34,391,170 Commercial 139,092,081 121,393,030 --------------- --------------- 1,008,418,559 910,213,122 Undisbursed portion of loans in process (19,489,007) (18,170,178) Net deferred loan costs (fees) 249,207 (166,056) --------------- --------------- 989,178,759 891,876,888 --------------- --------------- Other loans: Commercial 44,921,382 46,532,311 Consumer: Secured by deposits 16,998,053 17,225,437 Secured by real estate 85,837,802 85,054,815 Other 39,150,532 41,381,304 Unamortized discount (187,188) (163,499) Unearned interest (165,693) (183,546) --------------- --------------- 186,554,888 189,846,822 --------------- --------------- Total loans 1,175,733,647 1,081,723,710 Allowance for loan losses (8,493,117) (8,055,432) --------------- --------------- $ 1,167,240,530 $ 1,073,668,278 =============== ===============
The changes in the allowance for loan losses follow:
Three months ended March 31, --------------------------------- 1999 1998 ----------- ----------- (Unaudited) Balance, beginning of period $ 8,055,432 $ 6,771,698 Provision for loan losses 1,300,000 1,500,000 Loans charged-off (1,039,726) (1,908,602) Recoveries 177,411 44,920 ----------- ----------- Balance, end of period $ 8,493,117 $ 6,408,016 =========== ===========
-12- NOTE 5 - COMMITMENTS AND CONTINGENCIES Commitments to developers providing end loans The Company has outstanding commitments for various projects in the process of completion. Total commitments amounted to approximately $478.0 million at March 31, 1999. All commitments are subject to prevailing market prices at time of closing with no market risk exposure against the Company or with firm back-to-back commitments extended in favor of the mortgagee. Loans in process Loans in process pending final approval and/or closing amounted to approximately $153.7 million at March 31, 1999. Commitments to buy and sell GNMA certificates As of March 31, 1999, the Company had open commitments to issue GNMA certificates of approximately $118.8 million. Commitments to sell mortgage loans As of March 31, 1999 the Company had commitments to sell mortgage loans to third party investors amounting to approximately $76.9 million. Lease commitments The Company is obligated under several noncancellable leases for office space and equipment rentals, all of which are accounted for as operating leases. The leases expire at various dates with options for renewals. Other At March 31, 1999, the Company is liable under limited recourse provisions resulting from the sale of loans to several investors, principally FHLMC. The principal balance of these loans, which are serviced by the Company, amounts to approximately $567.8 million at March 31, 1999. Liability, if any, under the recourse provisions at March 31, 1999 is estimated by management to be significant. -13- 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. R&G FINANCIAL CORPORATION Date: November 5, 1999 By: /S/ VICTOR J. GALAN ------------------- Victor J. Galan, Chairman and Chief Executive Officer (Principal Executive Officer) By: /S/ JOSEPH R. SANDOVAL ---------------------- Joseph R. Sandoval Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) -----END PRIVACY-ENHANCED MESSAGE-----