-----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, TUjM+VmmnrAFg49XdIov0uxzzZU2LODsY7KrI6nioJIzjT9WbE1TeXGTDJT8ls5H g1p1R+ucZbeHnH5ioo3fvg== 0000912057-01-008072.txt : 20010326 0000912057-01-008072.hdr.sgml : 20010326 ACCESSION NUMBER: 0000912057-01-008072 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20010320 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010323 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LIFE FINANCIAL CORP CENTRAL INDEX KEY: 0001028918 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 330743196 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-22193 FILM NUMBER: 1578099 BUSINESS ADDRESS: STREET 1: 10540 N MAGNOLIA ACE STREET 2: UNIT B CITY: RIVERSIDE STATE: CA ZIP: 92503 BUSINESS PHONE: 9096374000 MAIL ADDRESS: STREET 1: 1598 EAST HIGHLAND AVENUE CITY: SAN BERNADINO STATE: CA ZIP: 92404 8-K 1 a2042746z8-k.txt 8-K SECURITIES AND EXCHANGE COMISSION WASHINGTON, D.C. 20549 FORM 8-K PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) March 20, 2001 LIFE FINANCIAL CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) DELAWARE 0-22193 33-0743196 (STATE OR OTHER JURISDICTION (COMMISSION FILE NO.) (IRS EMPLOYER OF INCORPORATION) IDENTIFICATION NO.) 10540 MAGNOLIA AVENUE, SUITE B, RIVERSIDE, CA 92505 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE) (909) 637-4000 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) Not Applicable (Former Name or Former Address, If Changed Since Last Report) - -------------------------------------------------------------------------------- ITEM 5. OTHER EVENTS On March 22, 2001 LIFE Bank, F.S.B. (the "Bank"'), a wholly owned subsidiary of LIFE Financial Corporation (the "Company"), stipulated to the issuance of a Prompt Corrective Action Directive (the "PCA Directive") by the Office of Thrift Supervision (the "OTS"). On March 20, 2001, NASDAQ notified the Company that the Company's common stock has failed to maintain a minimum market value of public float of $5,000,000 over the last 30 consecutive trading days. The Company also announced the restatement of its results of operations for the quarter and year ended December 31, 2000. The PCA Directive requires the Bank to raise sufficient capital to achieve total risk-based capital of 8.0%; Tier 1 risk-based capital of 4.0%; and a leverage ratio of 4.0% by June 30, 2001 or to be recapitalized by merging or being acquired prior to September 30, 2001 among other things. In addition, the Bank is subject to other prompt corrective action provisions including limitations on capital distributions, restrictions on the payment of management fees, asset growth, acquisitions, branching, and new lines of business, senior executive officers' compensation, and on other activities. The Bank must also restrict the rates the Bank pays on deposits to the prevailing rates of interest on deposits of comparable amounts and maturities in the region where the Bank is located. The Bank is prohibited from entering into any material transaction other than in the normal course of business without the prior consent of the OTS. The NASDAQ notification stated the Company has until June 18, 2001 to regain compliance with the minimum market value of public float rule. If at anytime before June 18, 2001, the market value of the public float of the Company's common stock is at least $5,000,000 for a minimum of 10 consecutive trading days the NASDAQ staff will make a determination as to compliance with the rule. If the Company is unable to demonstrate compliance with the rule on or before June 18, 2001, or has not submitted an application to transfer to The NASDAQ SmallCap Market, NASDAQ will provide the Company with written notification that its securities will be delisted. At that time the Company may appeal the decision to a NASDAQ Listing Qualifications Panel. The Company previously disclosed it had been notified on January 5, 2001 by NASDAQ that the Company's common stock had failed to maintain a minimum bid of $1 for 30 consecutive business days and that it had until April 5, 2001 to attain compliance with the minimum bid rule. At that time the Company may appeal the decision to a NASDAQ Listing Qualifications Panel. The Company may be delisted for failure to maintain compliance with the minimum bid rule as well as the minimum market value of public float rule. On January 29, 2001 the Company announced its fourth quarter and year-end results for 2000. Due to events subsequent to that date, the Company is restating its fourth quarter and year end results. The fourth quarter of 2000 loss is $6.1 million, or ($.92) per basic and diluted share, compared with a loss of -2- $21.3 million, or ($3.23) per basic and diluted share for the quarter ended December 31, 1999. The fourth quarter loss included a $2.2 million provision for loan losses, a $5.4 million write-down of the Bank's Participation Contract and a $2.2 million provision for income taxes. The net loss for the year ended December 31, 2000 is $18.0 million, or ($2.70) per basic and diluted share, compared to net loss of $17.8 million, or ($2.71) per basic and diluted share, for the year ended December 31, 1999. The restatement of the fourth quarter loss and the loss for the year ended December 31, 2000 resulted in part from an OTS field review of the Bank's valuation of the Participation Contract during the first quarter of 2001. The OTS field review was conducted in conjunction with the February 16, 2001 notification of their intent to issue a Prompt Corrective Action Directive. The proposed PCA Directive included a requirement to sell or otherwise dispose of the Bank's Participation Contract by March 31, 2001. During the OTS field review, the OTS made recommendations regarding the assumptions used to value the Participation Contract and has removed the requirement to dispose of the asset from the PCA Directive. Additionally, the Bank will limit the Participation Contract to 25% of Tier 1 capital consistent with the proposed capital rule changes for the treatment of residual interests as published by the regulatory agencies on September 27, 2000. The Bank has increased the discount rate from 20% to 40% to value its interest in the Participation Contract, which in part decreased the valuation by $5.4 million. ITEM 7. EXHIBITS 1 Stipulation and consent to issuance of Prompt Corrective Action Directive 2 Prompt Corrective Action Directive 3 Press release dated March 22, 2001 SIGNATURE 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. LIFE FINANCIAL CORPORATION By: /s/ STEVEN R. GARDNER ----------------------------------- Steven R. Gardner President and Chief Executive Officer March 22, 2001 -3- EX-99.1 2 a2042746zex-99_1.txt EXHIBIT 99.1 EXHIBIT 1 UNITED STATES OF AMERICA BEFORE THE OFFICE OF THRIFT SUPERVISION - ---------------------------------- ) OTS Order No.: In the Matter of: ) ) Dated: LIFE BANK ) RIVERSIDE, CALIFORNIA. ) (OTS No. 07946) ) - ----------------------------------) STIPULATION AND CONSENT TO ISSUANCE OF PROMPT CORRECTIVE ACTION DIRECTIVE 1. The Office of Thrift Supervision (OTS) has informed Life Bank (the Institution), based upon information reported to the OTS, that grounds exist to issue a Prompt Corrective Action Directive (the Directive) pursuant to Section 38 of the Federal Deposit Insurance Act (FDIA), 12 U.S.C. Section 1831o, against the Institution. The Institution, in the interests of cooperation and to avoid the time and expense of pursuing further OTS administrative procedures for the issuance of the Directive, stipulates and consents to the following: 2. The Institution is a federal savings association subject to the supervision and regulation by the OTS, making it a "savings association" as that term is defined in the Home Owners' Loan Act (HOLA), 12 U.S.C. Section 1461, ET Seq., and, as such, is subject to the authority of the OTS to issue a directive to take prompt corrective action pursuant to Section 38 of the FDIA, 12 U.S.C. Section 1831o(e) and Section 565.7 of the OTS regulations, 12 C.F.R. Section 565.7. 3. The Institution consents by execution of this Stipulation and Consent to the issuance by the OTS of the Directive. The Institution further agrees to comply with the terms of the Directive. 4. The attached Directive is effective upon issuance and enforceable under Section 5(d) of the HOLA, 12 U.S.C. Section 1464(d), and Section 8 of the FDIA, 12 U.S.C. Section 1818. 5. The Institution hereby (i) waives its rights to pursue the OTS's administrative process for issuance of the accompanying Directive pursuant to 12 C.F.R. Section 565.7; (ii) waives any and all rights it might otherwise have pursuant to 12 U.S.C. Section 1831o and 12 C.F.R. Section 565.7; (iii) waives its right to seek judicial review of the PCA Directive, including any such right provided by Section 8(h) of the FDIA, 12 U.S.C. Section 1818(h); and (iv) waives its right to challenge or contest in any manner the basis, issuance, validity or enforceability of the Directive or any provision thereof. 6. Each Director signing this Stipulation attests that s/he voted in favor of the resolution authorizing the execution of the Stipulation. LIFE BANK By: /s/ STEVEN R. GARDNER ------------------------------------ Steven Gardner President/Chief Executive Officer By: /s/ RONALD G. SKIPPER By: /s/ KENT G. SNYDER ---------------------------- ---------------------------- Director Director By: /s/ MILTON E. JOHNSON By: /s/ EDGAR C. KELLER ---------------------------- ---------------------------- Director Director By: /s/ JOHN D. GODDARD By: /s/ WILLIAM C. BUSTER ---------------------------- ---------------------------- Director Director EX-99.2 3 a2042746zex-99_2.txt EXHIBIT 99.2 EXHIBIT 2 UNITED STATES OF AMERICA BEFORE THE OFFICE OF THRIFT SUPERVISION - ---------------------------------- ) OTS Order No.: In the Matter of: ) ) Dated: LIFE BANK, ) RIVERSIDE, CALIFORNIA. ) (OTS No. 07946) ) - ----------------------------------) PROMPT CORRECTIVE ACTION DIRECTIVE WHEREAS, Life Bank, Riverside, California (the Institution) is a federal savings association that is regulated by the Office of Thrift Supervision (OTS); and WHEREAS, Section 38 of the Federal Deposit Insurance Act (FDIA) as added by Section 131 of the Federal Deposit Insurance Corporation Improvement Act of 1992(FDICIA), 12 U.S.C. Section 1831o and Part 565 of the OTS regulations promulgated thereunder, 12 C.F.R. Part 565, require institutions that are undercapitalized to file a capital restoration plan specifying the steps the Institution will take to become at least adequately capitalized; and WHEREAS, Section 38 of the FDIA, 12 U.S.C. Section 1831o, requires the OTS to take prompt corrective action to resolve the problems of insured savings associations at the least possible long-term loss to the deposit insurance fund; and WHEREAS, Section 565.7 of the OTS regulations, 12 C.F.R. Section 565.7, provides for the issuance by the OTS of directives to take prompt corrective action to resolve the problems of insured depository institutions and to restore their capital; and WHEREAS, the Institution was notified on October 19, 2000 that the Institution was undercapitalized for purposes of the prompt corrective action provisions of Section 38 of the FDIA, 12 U.S.C. Section 1831o; and WHEREAS, Section 5(t)(6)(B)(ii) of the Home Owners' Loan Act (HOLA), 12 U.S.C. Section 1464(t)(6)(B)(ii), requires any savings association not in compliance with capital standards to comply with a capital directive issued by the OTS; and WHEREAS, the Institution has not submitted a capital restoration plan that is acceptable under Section 38(e)(2)(C) of the FDIA, 12 U.S.C. Section 1831o(e)(2)(C); and WHEREAS, the Institution and the Board of Directors thereof, by execution of the attached Stipulation and Consent (the Stipulation) to the issuance of this Prompt Corrective Action Directive (the Directive), the terms of which are incorporated herein by this reference, have stipulated and consented to the issuance of this Directive; and WHEREAS, the OTS issued a Notice of Intent to Issue this Directive on February 16, 2001, has considered the response filed by the Institution, and has determined to issue this Directive in order to carry out the purposes of Section 38 to resolve the Institution's problems at the least long-term loss to the deposit insurance fund; NOW, THEREFORE, pursuant to Section 565.7(a)(1) of the OTS regulations, 12 C.F.R. Section 565.7(a)(1), the Institution and its Board of Directors are directed to do the following, effective as of the date hereof: PART I - IMPROVING CAPITAL SECTION 1.1 REQUIRED SECURITIES ISSUANCE. Pursuant to Section 38(f)(2)(A)(i) of the FDIA, 12 U.S.C. Section 1831o(f)(2)(A)(i), the Institution is directed to raise sufficient capital through securities issuance to achieve the following capital levels by June 30, 2001: Total risk-based capital of 8.0 percent; Tier 1 risk-based capital of 4.0 percent; and Leverage ratio of 4.0 percent. SECTION 1.2 REQUIRED ACQUISITION OR MERGER. As an alternative to Section 1.1, pursuant to Section 38(f)(2)(A)(iii) of the FDIA, 12 U.S.C. Section 1831o(f)(2)(A)(iii), the Institution is directed to be recapitalized by merging or being acquired prior to September 30, 2001, and shall submit a binding merger or acquisition agreement to the OTS by June 30, 2001. The Institution's management and Board of Directors shall take appropriate steps to accomplish such merger or acquisition. SECTION 1.3 EFFORTS TO OBTAIN CAPITAL. a) On or after the date of this Directive, the Institution and its Board of Directors shall at all times make diligent and good faith efforts to seek capital in accordance with the provisions of this Directive. b) For purposes of this Directive, diligent and good faith efforts to seek capital by the Institution and its Board of Directors shall include, at a minimum, taking all reasonably practicable steps to remove any impediments to increasing capital. c) The Institution shall inform the OTS in writing of (i) all efforts the Institution has made to seek capital; and (ii) all expressions of interest by prospective investors, acquirors, or merger candidates. Such reports shall be submitted not later than the 15th and 30th day of each month until otherwise notified by the OTS. SECTION 1.4 REPORTS OF COMPLIANCE. a) No later than twenty-five (25) days following the end of each month, management of the Institution shall prepare, and the Board of Directors of the Institution shall review, a written report concerning the Institution's compliance with the requirements of this Directive during the prior month. The report and review shall include verification of the Institution's prompt corrective action capital category and confirmation that the Institution is in compliance with all restrictions that apply automatically to an institution in that category, and with the other restrictions contained in this Directive. This review shall be documented in the minutes of the meeting of the Board of Directors. All documentation considered by the Board of Directors in performing its review shall be explicitly referenced in the minutes of the meeting at which the review was undertaken. b) The Institution shall, no later than thirty (30) days following the end of each month, submit the following documents to the OTS in a format acceptable to the OTS: 1) Confirmation of the Institution's compliance with this Directive, or a description of any instances of noncompliance with any of the Institution's obligations under this Directive, and the specific measures undertaken to cure such noncompliance; and 2) If requested, copies of the minutes of the Institution's Board of Directors supporting actions taken to comply with this Section of the Directive. SECTION 1.5 ADEQUATE PROGRESS. If the OTS, in its sole discretion, determines that the Institution is failing to make adequate progress towards achieving the requirements set forth in this Directive, the OTS may take such further supervisory, enforcement, or resolution action as it deems appropriate. PART II - OPERATING RESTRICTIONS SECTION 2.1 COMPLIANCE WITH MANDATORY RESTRICTIONS. The Institution shall comply with all of the mandatory prompt corrective action provisions contained in Section 38 of the FDIA, 12 U.S.C. Section 1831o, which automatically apply to the Institution based upon the Institution's prompt corrective action capital category at any given time. These provisions are set forth at 12 U.S.C. Sections 1831o(d)(1) (capital distributions restriction), (d)(2) (management fees restriction), (e)(3) (asset growth restriction), (e)(4) (restrictions on acquisitions, branching, and new lines of business), (f)(4) (senior executive officers' compensation restriction), (h)(2) (prohibition on payment of subordinated debt), and (i) (restrictions on activities). However, if the Institution should improve from a lower to a higher PCA capital category, it should continue to comply with the previously applicable mandatory sanctions of the lower category, until such time as approval to cease compliance with the lower category sanctions is requested of and received from the OTS. SECTION 2.2 SISTER BANK/THRIFT EXEMPTION UNAVAILABLE. Pursuant to Section 38(f)(2)(B)(i) of the FDIA, 12 U.S.C. Section 1831o(f)(2)(B)(i), the Institution shall comply with Section 23A of the Federal Reserve Act (FRA) (12 U.S.C. Section 371c) in any transaction with any depository institution affiliates, as if the exemptions at Section 23A of the FRA (12 U.S.C. Seciton 371c)(d)(1)) did not apply. SECTION 2.3 RESTRICTIONS ON INTEREST RATES. Pursuant to Section 38(f)(2)(C) of the FDIA, 12 U.S.C. Section 1831o(f)(2)(C), the Institution shall restrict the rates the Institution pays on deposits to the prevailing rates of interest on deposits of comparable amounts and maturities in the region where the Institution is located. Nothing herein shall be construed as requiring a reduction of interest rates paid on outstanding time deposits prior to their renewal. SECTION 2.4 RESTRICTIONS ON MATERIAL TRANSACTIONS. Pursuant to Section 38(f)(5) of the FDIA, 12 U.S.C. Section 1831o(f)(5), based upon a determination by the OTS that the imposition of certain restrictions described in Section 38(i) of the FDIA, 12 U.S.C. Section 1831o(i), is necessary to carry out the purposes of Section 38 of the FDIA, the Institution is hereby prohibited from entering into any material transaction other than in the usual course of business, including any investment, expansion, acquisition, sale of assets, or other similar action with respect to which the Institution is required to provide notice to the OTS, without the prior written consent of the OTS. SECTION 2.5 RESTRICTIONS ON EXTENDING CREDIT. Pursuant to Section 38(f)(5) of the FDIA, 12 U.S.C. Section 1831o(f)(5), based upon a determination by the OTS that the imposition of certain restrictions described in Section 38(i) of the FDIA, 12 U.S.C. Section 1831o(i), is necessary to carry out the purposes of Section 38 of the FDIA, the Institution is hereby prohibited from extending credit on a highly leveraged transaction. SECTION 2.6 RESTRICTIONS ON CHANGING ACCOUNTING METHODS. Pursuant to Section 38(f)(5) of the FDIA, 12 U.S.C. Section 1831o(f)(5), based upon a determination by the OTS that the imposition of certain restrictions described in Section 38(i) of the FDIA, 12 U.S.C. Section 1831o(i), is necessary to carry out the purposes of Section 38 of the FDIA, the Institution is hereby prohibited from making any material change in accounting methods without the prior written consent of the OTS. SECTION 2.7 RESTRICTIONS ON COVERED TRANSACTIONS. Pursuant to Section 38(f)(5) of the FDIA, 12 U.S.C. Section 1831o(f)(5), based upon a determination by the OTS that the imposition of certain restrictions described in Section 38(i) of the FDIA, 12 U.S.C. Section 1831o(i), is necessary to carry out the purposes of Section 38 of the FDIA, the Institution is hereby prohibited from entering into any covered transaction as defined in 12 C.F.R. Section 563.41(b)(7) or 12 U.S.C. Section 371c(b). PART III - GENERAL PROVISIONS SECTION 3.1 DEFINITIONS. All technical words or terms used in this Directive, for which meanings are not specified or otherwise provided by the provisions of this Directive, shall, insofar as applicable, have meanings as defined in Chapter V of Title 12 of the Code of Federal Regulations, HOLA, FDIA, or OTS memoranda. Any such technical words or terms used in this Directive and undefined in said Code of Federal Regulations, HOLA, FDIA, or OTS memoranda shall have meanings that are in accordance with the best custom and usage in the savings and loan industry. SECTION 3.2 SUCCESSOR STATUTES, REGULATIONS, GUIDANCE, AMENDMENTS. Reference in this Directive to provisions of statutes and regulations shall be deemed to include reference to all amendments to such provisions as have been made as of the effective date hereof and references to successor provisions as they become applicable. SECTION 3.3 NOTICES. Except as otherwise provided herein, any request, demand, authorization, direction, notice, consent, waiver or other document provided or permitted by the Directive to be made upon, given or furnished to, delivered to, or filed with the OTS or the Institution shall be in writing and mailed, by first class mail or overnight courier, sent by electronic transmission, or physically delivered, and addressed as follows: OTS Life Bank Attn: Michael W. Buting Attn: Steven Gardner 1551 N. Tustin Ave., Ste 1050 10540 Magnolia Ave, Ste B Santa Ana, CA 92705-8635 Riverside, CA 92505-1814 SECTION 3.4 DURATION, TERMINATION, OR SUSPENSION OF THE DIRECTIVE. a) The terms and provisions of this Directive shall be binding upon the Institution and its successors in interest. b) The Directive shall remain in effect until terminated, modified, or suspended in writing by the OTS. c) The OTS, in its discretion, may, by written notice, suspend any or all provisions of this Directive, except for Section 2.1. SECTION 3.5 EFFECT OF HEADINGS. The Part and Section headings herein are for convenience only and shall not affect the construction hereof. SECTION 3.6 SEPARABILITY CLAUSE. In case any provision in this Directive is ruled to be invalid, illegal, or unenforceable by the decision of any court of competent jurisdiction, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby unless the OTS, in its discretion, determines otherwise. SECTION 3.7 NO VIOLATIONS AUTHORIZED; CONSEQUENCES OF DIRECTIVE. Nothing in this Directive, including, without limitation, any of the timeframes for actions set forth in Part I, shall be construed as: (i) allowing the Institution to violate any law, rule, regulation, or policy statement to which it is subject; or (ii) restricting the OTS from taking such actions as are appropriate in fulfilling the responsibilities placed upon it by law, including, without limitation, actions pursuant to Section 38 of the FDIA, or taking any other type of supervisory, enforcement, or resolution action that the OTS determines to be appropriate. SECTION 3.8 OTHER ENFORCEMENT DOCUMENTS. The Supervisory Agreement dated September 25, 2000, shall remain in full force and effect in accordance with its terms and the subsequent termination of this Directive, if and when it occurs, shall have no impact upon the Supervisory Agreement and its continued enforceability. This Section 3.8 is for information and convenience only and shall not modify, amend, supersede, or otherwise affect the construction, interpretation, or enforceability of the Supervisory Agreement. Nothing contained in this Directive shall affect or limit the OTS's ability to take enforcement action in connection with any violation of the Supervisory Agreement. IT IS SO ORDERED. -------------------------------- CHARLES A. DEARDORFF REGIONAL DIRECTOR WEST REGION EX-99.3 4 a2042746zex-99_3.txt EXHIBIT 99.3 EXHIBIT 3 LIFE FINANCIAL CORPORATION ANNOUNCES RECENT EVENTS RIVERSIDE, Calif., March 22, 2001-- LIFE Financial Corporation (NASDAQ: LFCO) (the "Company"), the holding company of LIFE Bank, F.S.B. (the "Bank"'), announced that the Bank has stipulated to the issuance of a Prompt Corrective Action Directive (the "PCA Directive") by the Office of Thrift Supervision (the "OTS"). In addition, NASDAQ notified the Company on March 20, 2001 that the Company's common stock has failed to maintain a minimum market value of public float of $5,000,000 over the last 30 consecutive trading days. The Company also announced the restatement of its results of operations for the quarter and year ended December 31, 2000. The PCA Directive requires the Bank to raise sufficient capital to achieve total risk-based capital of 8.0%; Tier 1 risk-based capital of 4.0%; and a leverage ratio of 4.0% by June 30, 2001 or to be recapitalized by merging or being acquired prior to September 30, 2001 among other things. In addition, the Bank is subject to other prompt corrective action provisions including limitations on capital distributions, restrictions on the payment of management fees, asset growth, acquisitions, branching, and new lines of business, senior executive officers' compensation, and on other activities. The Bank must also restrict the rates the Bank pays on deposits to the prevailing rates of interest on deposits of comparable amounts and maturities in the region where the Bank is located. The Bank is prohibited from entering into any material transaction other than in the normal course of business without the prior consent of the OTS. Steven R. Gardner, President and Chief Executive Officer stated "We continue to work closely with our investment bankers to identify the best alternative to satisfy the regulatory capital requirments while maximizing shareholder value. We have taken significant steps in restructuring and reducing the risk profile of the Bank while making progress to return to core operating profitability." The NASDAQ notification stated the Company has until June 18, 2001 to regain compliance with the minimum market value of public float rule. If at anytime before June 18, 2001, the market value of the public float of the Company's common stock is at least $5,000,000 for a minimum of 10 consecutive trading days the NASDAQ staff will make a determination as to compliance with the rule. If the Company is unable to demonstrate compliance with the rule on or before June 18, 2001, or has not submitted an application to transfer to The NASDAQ SmallCap Market, NASDAQ will provide the Company with written notification that its securities will be delisted. At that time the Company may appeal the decision to a NASDAQ Listing Qualifications Panel. The Company previously disclosed it had been notified on January 5, 2001 by NASDAQ that the Company's common stock had failed to maintain a minimum bid of $1 for 30 consecutive business days and that it had until April 5, 2001 to attain compliance with the minimum bid rule. At that time the Company may appeal the decision to a NASDAQ Listing Qualifications Panel. The Company may be delisted for failure to maintain compliance with the minimum bid rule as well as the minimum market value of public float rule. On January 29, 2001 the Company announced its fourth quarter and year-end results for 2000. Due to events subsequent to that date, the Company is restating its fourth quarter and year end results. The fourth quarter of 2000 loss is $6.1 million, or ($.92) per basic and diluted share, compared with a loss of $21.3 million, or ($3.23) per basic and diluted share for the quarter ended December 31, 1999. The fourth quarter loss included a $2.2 million provision for loan losses, a $5.4 million write-down of the Bank's Participation Contract and a $2.2 million provision for income taxes. The net loss for the year ended December 31, 2000 is $18.0 million, or ($2.70) per basic and diluted share, compared to net loss of $17.8 million, or ($2.71) per basic and diluted share, for the year ended December 31, 1999. The restatement of the fourth quarter loss and the loss for the year ended December 31, 2000 resulted in part from an OTS field review of the Bank's valuation of the Participation Contract during the first quarter of 2001. The OTS field review was conducted in conjunction with the February 16, 2001 notification of their intent to issue a Prompt Corrective Action Directive. The proposed PCA Directive included a requirement to sell or otherwise dispose of the Bank's Participation Contract by March 31, 2001. During their field review, the OTS made recommendations regarding the assumptions used to value the Participation Contract and has removed the requirement to dispose of the asset from the PCA Directive. Additionally, the Bank will limit the Participation Contract to 25% of Tier 1 capital consistent with the proposed capital rule changes for the treatment of residual interests as published by the regulatory agencies on September 27, 2000. The Bank has increased the discount rate from 20% to 40% to value its interest in the Participation Contract, which in part decreased the valuation by $5.4 million. Mr. Gardner commented "this decrease in value is ironic given the fact that the overall performance of each of the three loan pools in the securitizations are generally performing better than the current assumptions we employ to value the future cash flows. However, given the heightened regulatory concern over residuals and the absence of an active market for these assets, we feel the discount rate is appropriate." FORWARD-LOOKING COMMENTS The statements contained in this release that are not historical facts are forward-looking statements based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. Actual results may differ from those projected in the forward-looking statements. These forward-looking statements involve risks and uncertainties. These include, but are not limited to, the following risks: - Changes in the performance of the financial markets; - Changes in the demand for and market acceptance of the Company's products and services; - Changes in general economic conditions including interest rates, presence of competitors with greater financial resources, and the impact of competitive products and pricing; - The effect of the Company's policies; - The continued availability of adequate funding sources; and - various legal, regulatory and litigation risks. FOR INFORMATION ON LIFE FINANCIAL-PLEASE E-MAIL YOUR REQUEST TO rpainter@lifebank.net OR CALL ROY L. PAINTER, CHIEF FINANCIAL OFFICER AT 909.637.4095 OR STEVEN R. GARDNER, PRESIDENT AND CHIEF EXECUTIVE OFFICER AT 909.637.4110. PLEASE INCLUDE YOUR PHONE, FACSIMILE AND MAILING ADDRESS. LIFE FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET UNAUDITED (In thousands)
(Restated) December 31, December 31, ASSETS 2000 1999 - ----------------------------------------------- --------- ------------- Cash and cash equivalents $ 7,810 $ 17,315 Federal Funds Sold 730 3,000 Securities Held under Repurchase Agreements 25,000 -- Participation Contract 4,429 9,288 Investment Securities Available for Sale 42,370 -- Investment Securities Held to Maturity -- 32,833 Loans: Loans held for sale -- 330,727 Loans held for investment 321,723 106,350 Allowance for loan losses (4,999) (2,749) --------- ------------- Net loans 316,724 434,328 Mortgage servicing rights 5,652 6,431 Accrued interest receivable 3,187 3,676 Foreclosed real estate 1,683 2,214 Premises and equipment 3,100 6,003 Income taxes receivable 201 18,653 Deferred income taxes 902 5,196 Other assets 2,633 12,964 --------- ------------- TOTAL ASSETS $ 414,421 $ 551,901 ========= ============= LIABILITIES AND STOCKHOLDERS' EQUITY - ---------------------------------------------- LIABILITIES: Deposit accounts $ 345,093 $ 468,859 Other borrowings 47,120 17,873 Subordinated debentures 1,500 1,500 Accrued expenses and other liabilities 6,808 29,207 --------- ------------- Total liabilities 400,521 517,439 --------- ------------- STOCKHOLDERS' EQUITY: Common stock, $.01 par value 67 67 Additional paid-in capital 42,575 42,525 Retained earnings (26,110) (8,130) Accumulated adjustments to stockholders' equity (2,632) -- --------- ------------- Total stockholders' equity 13,900 34,462 --------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 414,421 $ 551,901 ========= =============
LIFE FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENT UNAUDITED (IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED TWELVE MONTHS ENDED ---------------------- ----------------------- (Restated) (Restated) DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, INTEREST INCOME: 2000 1999 2000 1999 - ---------------------------------------------------------------------- ------------------------------------------------------- Loans $ 7,661 $ 11,555 $ 39,262 $ 40,991 Other interest-earning assets 2,410 366 4,809 5,387 ----------- ----------- ----------- ----------- Total interest income 10,071 11,921 44,071 46,378 INTEREST EXPENSE: Interest-bearing deposits 5,766 6,144 25,572 22,000 Subordinated debentures 53 53 472 210 Other borrowings 500 876 2,402 3,367 ----------- ----------- ----------- ----------- Total interest expense 6,319 7,073 28,446 25,577 ----------- ----------- ----------- ----------- NET INTEREST INCOME 3,752 4,848 15,625 20,801 PROVISION FOR LOAN LOSSES 2,194 2,744 2,910 5,382 ----------- ----------- ----------- ----------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,558 2,104 12,715 15,419 NONINTEREST INCOME: Loan servicing fee income 594 1,446 3,344 4,967 Bank and other fee income 155 102 568 355 Net gain (loss) on mortgage banking operations 204 (45) (5,684) 8,599 Net gain/ (loss) from participation contract and investment securities (650) -- (1,675) -- Net gain (loss) on residual mortgage-backed securities 131 (31,901) 295 (31,888) Other income/ (loss) 174 100 546 789 ----------- ----------- ----------- ----------- Total noninterest income 608 (30,298) (2,606) (17,178) NONINTEREST EXPENSE: Compensation and benefits 2,139 3,358 10,848 12,394 Premises and occupancy 820 1,117 4,059 4,037 Data processing 236 529 1,072 1,642 Net loss on foreclosed real estate 270 90 589 31 Restructuring charges 335 -- 849 -- Other expense 1,147 2,165 5,710 9,381 ----------- ----------- ----------- ----------- Total noninterest expense 4,947 7,259 23,127 27,485 ----------- ----------- ----------- ----------- LOSS FROM OPERATIONS (2,781) (35,453) (13,018) (29,244) PROVISION (BENEFITS) FOR INCOME TAXES 3,339 (14,134) 4,962 (11,405) ----------- ----------- ----------- ----------- NET LOSS FROM OPERATIONS $ (6,120) $ (21,319) $ (17,980) $ (17,839) =========== =========== =========== =========== Basic Average Shares Outstanding 6,668,436 6,606,316 6,668,231 6,575,189 Basic Earnings (Loss) per Share ($0.92) ($3.23) ($2.70) ($2.71) Diluted Average Shares Outstanding 6,668,436 6,606,316 6,668,231 6,575,189 Diluted Earnings (Loss) per Share ($0.92) ($3.23) ($2.70) ($2.71)
LIFE FINANCIAL CORPORATION AND SUBSIDIARIES STATISTICAL INFORMATION UNAUDITED (IN THOUSANDS)
(Restated) ASSET QUALITY: Non-accrual loans $ 22,616 Real estate owned $ 1,683 Charge offs $ 407 Charge offs to average loans 0.10% Non-accrual loans to total loans 6.75% Non-accrual loans to total assets 5.46% Allowance for credit losses to total loans 1.49% Allowance for credit losses to non-accrual loans 22.49% AVERAGE BALANCE SHEET: Total assets $ 522,082 Loans $ 417,507 Deposits $ 432,409 Borrowings $ 37,839 NET INTEREST MARGIN 3.28% SHARE DATA: Book value $ 2.08 Market value(Closing Price) $ 0.6875 LIFE BANK CAPITAL RATIOS: Tangible Equity Capital Ratio 4.33% Core Capital Ratio 4.33% Tier 1 Risk-based Capital Ratio 5.73% Risk-based Capital Ratio 6.99%
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