-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, KrFMPXcBY1rfoWRBayN/dah8OH5EQFAj3B1+1nXfriVNcIdosDChpliF8LV2vbSp hHrqcnGUeQNRV9Ff3uGY7g== 0000352510-94-000030.txt : 19941122 0000352510-94-000030.hdr.sgml : 19941122 ACCESSION NUMBER: 0000352510-94-000030 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTH FORK BANCORPORATION INC CENTRAL INDEX KEY: 0000352510 STANDARD INDUSTRIAL CLASSIFICATION: 6022 IRS NUMBER: 363154608 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10458 FILM NUMBER: 94560157 BUSINESS ADDRESS: STREET 1: 9025 MAIN ROAD CITY: MATTITUCK STATE: NY ZIP: 11952 BUSINESS PHONE: 5162985000 MAIL ADDRESS: STREET 1: 9024 MAIN ROAD CITY: MATTITUCK STATE: NY ZIP: 11952 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the period ended: September 30, 1994 NORTH FORK BANCORPORATION, INC. (Exact name of registrant as specified in its charter) DELAWARE 36-3154608 (State or other Jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 9025 Route 25, Mattituck, New York 11952 (Address of principal executive offices) (Zip Code) (516) 298-5000 (Registrant's telephone number, including area code Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes (X) No ( ) Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. CLASSES OF COMMON STOCK NUMBER OF SHARES OUTSTANDING 11/13/94 $2.50 Par Value 14,420,937 INDEX PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (unaudited). North Fork Bancorporation, Inc. and Subsidiaries (1.) Consolidated Balance Sheets (2.) Consolidated Statements of Income. (3.) Consolidated Statements of Cash Flows. (4.) Consolidated Statements of Changes in Stockholders' Equity. (5.) Notes to Consolidated Financial Statements. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Not Applicable. ITEM 2. CHANGES IN SECURITIES Not Applicable. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not Applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS a) The Registrant held a special meeting of its stockholder's on November 10, 1994 to approve the merger with Metro Bancshares, Inc. The Registrant's Stockholders approved with 10,140,487 affirmative votes cast, 135,345 negative votes cast and 80,800 votes abstaining, the Registrant's Merger with Metro Bancshares, Inc. ITEM 5. OTHER INFORMATION Not Applicable ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (11) Statement Re: Computation of per share earnings. (b) Current Reports on Form 8-K: dated July 20, 1994. Current Reports on Form 8-K: dated October 17, 1994. Current Reports on Form 8-K: dated October 26, 1994. Current Reports on Form 8-K: dated October 28, 1994. CONSOLIDATED BALANCE SHEETS (dollars in thousands, except per share amounts)
September 30, December 31, September 30, 1994 1993 1993 ASSETS (unaudited) (unaudited) Cash & Due from Banks $ 64,290 $ 75,070 $ 62,658 Interest Earning Deposits 585 290 290 Federal Funds Sold and Securities Purchased under Agreements to Resell - - 34,050 Securities Available for Sale(Market Value of $201,489 at December 31,1993 and $207,063 at September 30, 1993) 202,772 200,219 205,041 Securities Held to Maturity 639,812 548,497 578,482 Loans: 999,361 1,029,763 1,012,245 Less:Unearned Income & Fees 10,597 12,679 13,595 Allowance for Loan Losses 41,176 46,625 49,040 Net Loans 947,588 970,459 949,610 Premises & Equipment, Net 31,784 33,277 33,348 Accrued Income Receivable 12,566 11,924 11,346 Other Real Estate 14,449 21,899 38,016 Other Assets 17,786 12,955 16,209 Excess of Cost over Fair Value of Net Assets Acquired 8,764 9,291 9,466 Total Assets $ 1,940,396 $ 1,883,881 $ 1,938,516 LIABILITIES AND STOCKHOLDERS' EQUITY Demand Deposits $ 291,113 $ 257,447 $ 239,254 Savings, N.O.W. & Money Market Deposits 862,277 866,808 867,985 Certificates of Deposits in Amounts of $100,000 & Over 55,825 32,297 24,821 Other Time Deposits 269,917 285,718 296,840 Total Deposits 1,479,132 1,442,270 1,428,900 Federal Funds Purchased & Securities Sold Under Agreements to Repurchase 200,217 255,643 325,779 Federal Home Loan Bank Advances 50,000 - - Senior Note Payable 25,000 20,000 20,000 Mortgage Notes Payable - - 62 Accrued Taxes, Interest & Other Expenses 10,857 9,439 7,003 Other Liabilities 2,114 2,057 495 Dividends Payable 1,435 - - Purchased Security Liabilities 2,108 - 495 Total Liabilities $ 1,770,863 $ 1,729,409 $ 1,788,451 STOCKHOLDERS' EQUITY Preferred Stock, par value $1.00; authorized 10,000,000 shares,unissued - - - Common stock, par value $2.50; authorized 50,000,000 shares; issued & outstanding 14,349,420, 14,109,554, and 14,088,768 shares at the periods ending, respectively 35,874 35,274 35,222 Additional Paid-in Capital 96,040 94,487 94,299 Retained Earnings 40,640 25,140 21,025 Less: Unrealized Loss on Securities Available for Sale, Net of Taxes (2,649) - - Restricted Stock Awards (354) (428) (396) Treasury Stock, at cost: 1,253, 73, and 8,073 shares at the periods ending, respectively (18) (1) (85) Total Stockholders' Equity 169,533 154,472 150,065 Total Liabilities and Stockholders' Equity $ 1,940,396 $ 1,883,881 $ 1,938,516
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (dollars in thousands, except per share amounts)
Three Months Ended Nine Months Ended as of September 30, 1994 1993 1994 1993 (unaudited) (unaudited) (unaudited) (unaudited) INTEREST INCOME Loans (including fee income) $ 21,138 $ 20,452 $ 62,588 $ 63,185 Mortgage-Backed Securities 9,728 8,406 27,447 22,275 U.S. Treasury & Government Agency Securities 1,684 493 3,937 1,390 State & Municipal Obligations 590 317 1,521 777 Other Securities 175 13 413 73 Federal Funds Sold and Securities Purchased under Agreements to Resell 85 197 347 717 Interest Earning Deposits 4 2 8 12 Total Interest Income 33,404 29,880 96,261 88,429 INTEREST EXPENSE Savings, NOW & Money Market Deposits 4,553 4,791 13,384 15,444 Certificates of Deposit, $100,000 and Over 544 274 1,260 819 Other Time Deposits 2,369 2,699 7,041 8,844 Federal Funds Purchased & Securities Sold Under Agreements to Repurchase 3,104 1,911 8,623 3,655 Federal Home Loan Bank Advances 209 - 422 - Other Borrowings 475 549 1,490 2,052 Total Interest Expense 11,254 10,224 32,220 30,814 Net Interest Income 22,150 19,656 64,041 57,615 Provision for Loan Losses 750 1,000 2,500 5,500 Net Interest Income after Provision for Loan Losses 21,400 18,656 61,541 52,115 NON-INTEREST INCOME Service Charges on Deposit Accounts 2,293 1,843 6,885 5,487 Trust Income 427 393 1,277 1,204 Mortgage Banking Operations 397 869 1,465 2,911 Other Operating Income 945 1,075 2,761 3,176 Net Securities (Loss)/Gains - 51 (54) 1,442 Total Non-Interest Income 4,062 4,231 12,334 14,220 NON-INTEREST EXPENSE Salaries & Benefits 6,405 5,966 18,876 17,783 Net Occupancy 1,232 1,232 3,701 3,771 Equipment 973 1,218 2,935 3,743 Other Real Estate 544 4,121 4,283 10,522 FDIC Assessment 801 914 2,608 2,835 Prepayment Charge Senior Note Retirement - - 876 - Amortization of Excess of Cost Over Fair Value of Net Assets Acquired 176 176 527 528 Other Operating Expenses 3,564 3,528 10,231 10,475 Total Non-Interest Expenses 13,695 17,155 44,037 49,657 Income Before Provision for Income Taxes 11,767 5,732 29,838 16,678 Provision for Income Taxes 4,283 1,861 10,766 5,696 Net Income $ 7,484 $ 3,871 $ 19,072 $ 10,982 Earnings and Dividends Per Share: Net Income $ 0.50 $ 0.26 $ 1.28 $ 0.77 Cash Dividends $ 0.10 - $ 0.25 - Weighted Average Common and Equivalent Shares Outstanding 15,054,150 14,725,164 14,936,827 14,245,764
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) FOR NINE MONTHS ENDED SEPTEMBER 30, (dollars in thousands)
1994 1993 CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 19,072 $ 10,982 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Provision for Loan Losses 2,500 5,500 Depreciation and Amortization 2,505 4,325 Provision for Losses on Real Estate Acquired in Settlement of Loans 2,655 6,085 Amortization of Excess of Cost Over Fair Value of Net Assets Acquired 527 528 Accretion of Discounts and Net Deferred Loan Fees (965) (568) Amortization of Premiums 6,434 6,036 Net (Gains)\Losses on Securities Transactions 54 (1,442) Other, Net 2,384 1,631 Net Cash Provided by Operating Activities 30,398 33,077 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from Sales of Securities Held to Maturity - 1,628 Maturities, Calls and Principal Repayments on Securities Held to Maturity 123,500 118,524 Purchases of Securities Held to Maturity (264,311) (383,836) Proceeds from Sales of Securities Available for Sale 64,739 70,074 Maturities and Principal Repayments on Securities Available for Sale 43,149 28,837 Purchases of Securities Available for Sale (69,609) (180,811) Loans Originated and Principal Repayments on Loans and Other Real Estate Owned, Net (8,827) (17,190) Proceeds from Sales of Loans 25,034 50,079 Proceeds from Sales of Real Estate Acquired in Settlements of Loans 9,640 16,453 Purchases of Premises and Equipment, Net (498) (1,378) Net Cash Used in Investing Activities (77,183) (297,620)
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) FOR NINE MONTHS ENDED SEPTEMBER 30,
1994 1993 CASH FLOWS FROM FINANCING ACTIVITIES: Net Increase\(Decrease) in Deposits $ 36,862 $ (71,034) Net (Decrease)\Increase in Short-Term Borrowings (5,426) 297,579 Proceeds from the Issuance of Senior Note Payable 25,000 - Repayments of Other Borrowings (20,000) (20,112) Sale(Purchase) of Treasury Shares (26) (58) Common Stock Sold for Cash 2,027 19,012 Dividends Paid on Common Stock (2,137) - Net Cash Provided by Financing Activities 36,300 225,387 Net Decrease in Cash and Cash Equivalents (10,485) (39,156) Cash and Cash Equivalents at Beginning of Year 75,360 136,154 Cash and Cash Equivalents at End of Period 64,875 97,998 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash Paid During the Period for: Interest Expense $ 31,431 $ 31,931 Income Taxes $ 9,149 $ 2,900 SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES Real Estate Acquired in Settlement of Loans and In-Substance Foreclosures $ 6,182 $15,476 Loans to facilitate the sale of Other Real Estate $ 8,584 $ 7,968 Securities Transferred to Securities Available for Sale $ 47,005 $ - During the period the Registrant purchased various investment securities which settled in October $ 2,108 $ 495
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited)
(dollars in thousands) Unrealized Depreciation on Certain Marketable Common Retained Equity Restricted Treasury Stock Surplus Earnings Securities Stock Awards Stock Total Bal. 12/31/92 $ 29,614 80,895 10,043 (25) (675) (29) 119,823 Net Income - - 10,982 - - - 10,982 Sale of Common Stock (1,569,245 shares) 3,991 11,024 - - - - 15,015 Exercise of Warrants (646,975 shares) 1,617 2,390 - - - - 4,007 Amortization of Deferred Compensation re: Restricted Stock Awards - - - - 236 - 236 Removal of Restrictions Accelerated re: Restricted Stock Awards (4,500 shares) - - - - 22 - 22 Forfeiture of Restricted Stock Awards (1,034 shares) - (10) - - 21 (11) 0 Purchase of Treasury Stock (839 shares) - - - - - (45) (45) Net Change in Unrealized Depreciation on Certain Marketable Equity Securities - - - 25 - - 25 Bal. 9/30/93 $ 35,222 94,299 21,025 0 (396) (85) 150,065 Unrealized Loss on Securities Available Common Retained for Restricted Treasury Stock Surplus Earnings Sale Stock Awards Stock Total Bal. 12/31/93 $ 35,274 94,487 25,140 - (428) (1) 154,472 Net Income - - 19,072 - - - 19,072 Cash Dividends Declared ($0.25 per share) - - (3,572) - - - (3,572) Sale of Common Stock (141,866 shares) 355 1,294 - - - - 1,649 Exercise of Warrants (98,000 shares) 245 216 - - - - 461 Amortization of Deferred Compensation re: Restricted Stock Awards - - - - 163 - 163 Removal of Restrictions Accelerated re: Restricted Stock Awards (1,000 shares) - - - - 4 - 4 Restricted Stock Awards (10,000 shares) - 55 - - (122) 67 0 Forfeiture of Restricted Stock Awards (4,334 shares) - (12) - - 29 (58) (41) Purchase of Treasury Stock (1,846 shares) - - - - - (26) (26) Net Change in Fair Value of Securities Available for Sale, Net of Taxes - - - (2,649) - - (2,649) Bal. 9/30/94 $ 35,874 96,040 40,640 (2,649) (354) (18) 169,533
North Fork Bancorporation, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) September 30, 1994 and 1993 General In the opinion of management, all significant intercompany accounts and transactions have been eliminated in consolidation. In addition, all adjustments necessary for a fair presentation of the consolidated financial position and results of operations of the Registrant for the interim periods have been made. All such adjustments are of a normal and recurring nature. These statements should be read in conjunction with the Registrant's summary of significant accounting policies contained in its 1993 Annual Report on Form 10-K which is incorporated herein by reference. Results of operations for the quarter and nine months ended September 30, 1994 are not necessarily indicative of the results of operations which may be expected for the full year 1994 or any other interim periods. RECENT ACCOUNTING DEVELOPMENTS: Accounting for Certain Investments in Debt and Equity Securities: Statement of Financial Accounting Standards No. 115, ("SFAS 115") The Registrant adopted SFAS 115 "Accounting for Certain Investments in Debt and Equity Securities," effective January 1, 1994. Debt and Equity Securities are classified into one of three categories and are accounted for as follows: * Debt securities that the Registrant has the positive intent and ability to hold to maturity are classified as securities held to maturity and reported at amortized cost. * Debt and equity securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and carried at fair value. Unrealized gains and losses from marking the portfolio to fair value are included in earnings. * Debt and equity securities not classified as either securities held to maturity or trading securities are classified as securities available for sale and reported at fair value. Unrealized gains and losses are excluded from earnings, and reported as a separate component of stockholders' equity, net of taxes. For the periods ended December 31, 1993, and September 30, 1993, the Registrant carried these securities at the lower of cost or market. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) RECENT ACCOUNTING DEVELOPMENTS: (continued) Employers Accounting for Post-Employment Benefits. Statement of Financial Accounting Standards No. 112 ("SFAS 112") The Registrant adopted SFAS 112, "Employers Accounting for Post- Employment Benefits," effective January 1, 1994. The adoption did not have a material adverse effect on its financial condition or its results of operations. This statement introduces changes to accounting for the estimated cost of post-employment benefits provided to former or inactive employees (as well as their dependents) after employment but before retirement. Accounting by Creditors for Impairment of a Loan: Statement of Financial Accounting Standards No. 114, ("SFAS 114") As amended by Statement of Financial Accounting Standards No. 118 ("SFAS 118") SFAS 114, as amended by SFAS 118, which amends the income recognition and disclosure requirement of SFAS 114, addresses the accounting by creditors for impairment of certain loans. It is applicable to all creditors and to all loans, uncollateralized as well as collateralized, except large groups of smaller-balance homogeneous loans that are collectively evaluated for impairment, loans that are measured at fair value or at the lower of cost or fair value, leases, and debt securities (as defined in SFAS 115, "Accounting for Certain Investments in Debt and Equity Securities"). It applies to all loans that are restructured in a troubled debt restructuring involving a modification of terms. SFAS 114, as amended requires that impaired loans that are within its scope be measured based on the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical expedient, at the loan's observable market price of the fair value of the collateral if the loan is collateral dependent. SFAS 114 applies to financial statements for fiscal years beginning after December 15, 1994. The Registrant is currently assessing the financial implications of the implementation of SFAS 114 and believes that it will not have a material adverse affect on its financial condition or its results of operations. Disclosure about Derivative Financial Instruments and Fair Value of Financial Instruments: Statement of Financial Accounting Standards No. 119 ("SFAS 119") SFAS 119 expands current financial instrument disclosure requirements by mandating similar disclosures regarding derivative instruments such as futures, forward, swap, and options contracts. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) RECENT ACCOUNTING DEVELOPMENTS: (continued) Disclosure about Derivative Financial Instruments and Fair Value of Financial Instruments: Statement of Financial Accounting Standards No. 119 ("SFAS 119") (continued) SFAS 119 applies to all fiscal years ending after December 15, 1994. The Registrant is currently assessing the financial disclosure implications of the implementation of SFAS 119 and believes it will not have a material effect as its current financial instruments disclosure already contains a significant amount of disclosure regarding such derivative instruments. ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Earnings Summary North Fork Bancorporation, Inc. (the "Registrant") recognized net income of $7.5 million, or $.50 per share, for the quarter ended September 30, 1994, as compared with net income, of $3.9 million, or $.26 per share, for the comparable prior year period. Per share results are based on weighted average common and equivalent shares outstanding of 15,054,150 and 14,725,164 for the quarters ended September 30, 1994 and 1993, respectively. The increase in the Registrant's 1994 third quarter earnings, when compared with the prior year period, is primarily attributable to a $2.5 million increase in net interest income, a $.3 million decrease in the provision for loan losses, and a $3.5 million decrease in non-interest expense, partially offset by a $.2 million decrease in non-interest income. Net Interest Income Net interest income, which represents the difference between interest earned on interest earning assets and interest incurred on interest bearing liabilities, is the Registrant's primary source of earnings. Net interest income is affected by the level and composition of interest earning assets and interest bearing liabilities, as well as changes in market interest rates. Net interest income, on a fully taxable equivalent basis, increased $2.7 million, or 13.5%, to $22.7 million for the 1994 third quarter, as compared to $20.0 million for the comparable prior year period. The components of this increase include a $3.7 million increase in interest income, on a fully taxable equivalent basis, partially offset by a $1.0 million increase in interest expense. Average interest earning assets increased $134.4 million, or 7.8%, to $1.86 billion for the third quarter of 1994, as compared to $1.73 billion for the comparable prior year period. Average interest bearing liabilities increased $37.2 million, or 2.6%, to $1.5 billion for the third quarter of 1994, as compared to $1.46 billion for the comparable prior year period. Average Demand Deposit balances increased $45.8 million, or 19%, to $287.2 million for the third quarter of 1994, as compared to $241.4 million for the comparable prior year period. The increase in average interest earning assets and interest bearing liabilities is attributable to the Registrant instituting a balance sheet leverage strategy during the latter half of 1993 to effectively utilize capital, benefit from the steepness in the yield curve that existed, and enhance operating results. Utilizing funds obtained through short-term repurchase agreements, the Registrant invested primarily in agency guaranteed mortgage-backed securities. The repurchase agreement borrowings were usually for a period of ninety days, whereas the funds were invested primarily in seven and fifteen year mortgage-backed securities with original weighted average lives of ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net Interest Income (continued) approximately three to four years. Due to the increase in short term interest rates and a flattening of the yield curve during the latter half of 1994. The Registrant established a formal plan to reduce its current level of holdings of certain low yielding securities available for sale and utilize current cash flows to reduce its level of short term borrowings. The result of the strategy will be to reduce the Registrants exposure to future increases in interest rates, improve its net yield on interest earning assets and its capital ratios which is not expected to have a material impact on net interest income. To mitigate interest rate risk assumed in the initial leverage strategy due to the differences in the maturities of these assets and liabilities and maintain the level of interest rate risk within management's established guidelines, the Registrant entered into certain off- balance sheet agreements. The estimated fair market value of these off-balance sheet items was $.9 million, or an excess over the carrying value of $0.6 million at September 30, 1994. This compares to a market value of $1.1 million and $.7 million at June 30, 1994 and December 31, 1993, respectively. The decline in market value from June 30, 1994, to September 30, 1994 is primarily due to the shortening in remaining lives of these instruments. The interest rate swap, cap and floor agreements outstanding as of September 30, 1994 mature in September and December of 1995, respectively. The financial statement impact of this hedge strategy for the periods presented is not considered material. Interest income, on a fully taxable equivalent basis, increased $3.7 million to $33.9 million for the 1994 third quarter, from $30.2 million for the comparable prior year period. The yield on earning assets, on a tax equivalent basis, increased to 7.24% for the 1994 third quarter from 6.95% in the comparable prior year period. The increase in interest income, on a fully taxable equivalent basis, is attributable to (i) the Registrant's balance sheet leverage strategy, which has resulted in a higher level of interest earning assets, primarily agency guaranteed mortgage- backed securities, (ii) increases in the prime rate of interest during the first nine months of 1994, and (iii) the resultant impact of higher market interest rates on the Registrant's securities portfolio. The balance sheet leverage strategy while increasing net interest income has negatively impacted the yield on interest earning assets as proceeds are invested primarily in lower yielding mortgage backed and taxable securities. Interest earned on the Registrant's mortgage-backed securities portfolio increased $1.3 million to $9.7 million for the third quarter of 1994 as compared to $8.4 million for the comparable prior year period. Of this increase, $.2 million is due to an increase in average mortgage-backed securities of $14.9 million, or 2.3%, to $656.4 million in the third quarter of 1994 as compared to $641.5 million in the comparable prior year period, while $1.1 million of the increase is due to an increase in the yield on mortgage-backed ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net Interest Income (continued) securities to 5.88% during the third quarter of 1994 as compared to 5.20% during the comparable prior year period. The yield increase is the result of higher market interest rates and a corresponding slowdown of prepayments on certain securities contained in the portfolio. Interest earned on the Registrant's taxable securities increased $1.4 million to $1.9 million in the third quarter of 1994 when compared to $.5 million in the comparable prior year period. Average taxable securities increased $101.0 million or 256.0% to $140.5 million for the third quarter of 1994 as compared to $39.5 million for the comparable prior year period. The growth in average taxable securities consists primarily of short-term U.S. Treasury and certain U.S. Government Agency Obligations. Interest earned on the Registrant's loan portfolio, on a fully taxable equivalent basis, increased $.7 million to $21.3 million in the third quarter of 1994, when compared to $20.6 million during the comparable period of the prior year. Interest expense increased $1.0 million to $11.2 million for the 1994 third quarter, reflecting an effective cost of funds of 2.98%, as compared with $10.2 million, or an effective cost of funds of 2.78%, for the comparable prior year period. The increase in interest expense is attributable to the impact the Registrant's balance leverage strategy has had on the level of short-term borrowings, partially offset by a change in the composition of the Registrant's core deposits. Core deposits are defined as Demand Deposits, Savings, N.O.W. and Money Market Deposits, and other time deposits exclusive of Certificates of Deposits greater than $100,000. Interest incurred on short-term borrowings increased $1.4 million to $3.3 million in the third quarter of 1994 as compared to $1.9 million during the comparable prior year period. The average balance of short-term borrowings increased $52.0 million to $272.6 million for the third quarter of 1994, as compared to $220.6 million during the comparable prior year period. Of the $1.4 million increase in interest incurred on short-term borrowings, $.5 million is attributable to the growth in average short-term borrowings, and $.9 million is due to the effects of higher market interest rates. Interest incurred on Savings, NOW and Money Market deposit accounts declined $.2 million to $4.6 million in the third quarter of 1994 as compared to $4.8 million during the comparable prior year period. The average balance of these deposits declined $7.9 million, or .9%, from the comparable prior year period levels. The average balance of other Time Deposits declined $11.8 million to $327.4 million, or 3.5%, during the third quarter of 1994 as compared to $339.2 million for the comparable prior year period. Conversely, average demand deposits increased $45.8 million for the third quarter of 1994, as compared to the comparable period of the prior year, further evidence of the success of the Registrant's conversion of its former ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net Interest Income (continued) savings bank subsidiary to a full service commercial bank and the Registrant's continued efforts to expand its small and medium sized commercial client base. Demand deposits comprised 19.7% of total deposits at September 30, 1994, as compared to 16.7% for the comparable period of the prior year. The following tables set forth a summary analysis of the relative impact on net interest income of changes in the volume of interest earning assets and interest bearing liabilities and changes in rates earned by the Registrant on such assets and liabilities. Because of numerous simultaneous volume and rate changes during the period analyzed, it is not possible to precisely allocate changes between volumes and rates. For presentation purposes, changes which are not solely due to volume changes or rate changes have been allocated to these categories based on the respective percentage changes in average volume and average rates as they compare to each other. In addition, average interest earning assets include non-performing loans. FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1994 OVER SEPTEMBER 30, 1993 (dollars in thousands) Changes Due To Net Volume Rate Change INTEREST EARNING ASSETS: Interest Earning Deposits $ 2 0 2 Taxable Securities 1,384 ( 10) 1,374 Non-Taxable State and Municipal Obligations* 371 73 444 Mortgage-Backed Securities 199 1,123 1,322 Taxable Loans including Non-accrual Loans 391 366 757 Non-Taxable Loans* (146) 45 (101) Federal Funds Sold (181) 69 (112) Total Interest Earning Assets 2,020 1,666 3,686 INTEREST BEARING LIABILITIES Savings, NOW, & Money Market Deposits (43) (195) (238) Other Time Deposits (104) 44 (60) Short-Term Borrowings 518 884 1,402 Other Borrowings 115 (189) (74) Total Interest Bearing Liabilities 486 544 1,030 Net Change in Net Interest Income* 1,534 1,122 2,656 * Taxable equivalent basis. FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 OVER SEPTEMBER 30, 1993 (dollars in thousands) Changes Due To Net Volume Rate Change INTEREST EARNING ASSETS: Interest Earning Deposits $ 3 (7) (4) Taxable Securities 2,935 (50) 2,885 Non-Taxable State and Municipal Obligations* 1,447 (211) 1,236 Mortgage-Backed Securities 4,855 316 5,171 Taxable Loans including Non-accrual Loans 700 (1,002) (302) Non-Taxable Loans* (439) (4) (443) Federal Funds Sold (513) 143 (370) Total Interest Earning Assets 8,988 (815) 8,173 INTEREST BEARING LIABILITIES Savings, NOW, & Money Market Deposits (258) (1,802) (2,060) Other Time Deposits (720) (642) (1,362) Short-Term Borrowings 4,577 812 5,389 Other Borrowings (81) (480) (561) Total Interest Bearing Liabilities 3,518 (2,112) 1,406 Net Change in Net Interest Income* 5,470 1,297 6,767 * Taxable equivalent basis. The Registrant's net interest margin on a tax equivalent basis, which measures the rate of net interest income earned for each dollar of average interest earning asset, increased to 4.83% in the 1994 third quarter, as compared with 4.60% for the comparable prior year period. The Registrant's net interest margin on a tax equivalent basis decreased to 4.73%, for the nine months ended September 30, 1994, as compared with 4.78% for the comparable prior year period. ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following table presents and analysis of net interest income by each major category of interest earning assets and interest bearing liabilities for the three month and nine month periods ended September 30, 1994 and 1993, respectively:
ANALYSIS OF NET INTEREST INCOME (unaudited) THREE MONTHS ENDED SEPTEMBER 30, 1994 SEPTEMBER 30, 1993 Average Average Average Average Balance Rate Balance Rate (dollars in thousands) Interest Earning Assets Interest Earning Deposits $ 465 3.50% $ 289 3.15% Taxable Securities 140,510 5.43% 39,474 5.53% Non-Taxable Municipals 52,596 6.83% 30,568 5.98% Mortgage-Backed Securities 656,387 5.88% 641,465 5.20% Taxable Loans 992,931 8.36% 974,219 8.21% Non-Taxable Loans 9,013 15.47% 12,870 13.95% Federal Funds Sold and Securities Purchased Under Agreements to Resell 7,571 4.46% 26,191 2.99% Total Int. Earning Assets $1,859,473 7.24% $ 1,725,076 6.95% Interest and Non-Interest Bearing Liabilities Savings, N.O.W and Money Market Deposits $ 871,137 2.07% $ 879,000 2.16% Time Deposits 327,406 3.53% 339,200 3.48% Total Savings & Time Deposits $1,198,543 2.47% $ 1,218,200 2.53% Federal Funds Purchased and Securities Sold Under Agreements to Repurchase 272,624 4.82% 220,590 3.44% Other Borrowed Funds 25,000 7.54% 20,131 10.83% Total Int. Bearing Liabilities $1,496,167 2.98% $ 1,458,921 2.78% Other Liabilities & Stockholders' Equity (Net of Non-Interest Earning Assets) 475,084 419,377 Total Liabilities & Stockholders' Equity (Net of Non-Interest Earning Assets) $1,971,251 $ 1,878,298 Rate Spread 4.25% 4.17% Net Yield on Interest-Earning Assets (Tax Equivalent Basis) 4.83% 4.60%
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
ANALYSIS OF NET INTEREST INCOME (unaudited) NINE MONTHS ENDED SEPTEMBER 30, 1994 SEPTEMBER 30, 1993 Average Average Average Average Balance Rate Balance Rate (dollars in thousands) Interest Earning Assets Interest Earning Deposits $ 829 1.29% $ 608 2.65% Taxable Securities 107,764 5.58% 37,461 5.75% Non-Taxable Municipals 51,269 6.12% 20,242 7.33% Mortgage-Backed Securities 663,776 5.53% 546,264 5.45% Taxable Loans 1,002,109 8.26% 990,888 8.40% Non-Taxable Loans 9,588 14.51% 13,628 14.55% Federal Funds Sold and Securities Purchased Under Agreements to Resell 12,346 3.76% 31,663 3.03% Total Int. Earning Assets $ 1,847,681 7.06% $1,640,754 7.29% Interest and Non-Interest Bearing Liabilities Savings, N.O.W and Money Market Deposits $ 873,139 2.05% $ 888,232 2.32% Time Deposits 325,690 3.41% 352,972 3.66% Total Savings & Time Deposits $ 1,198,829 2.42% 1,241,204 2.70% Federal Funds Purchased and Securities Sold Under Agreements to Repurchase 290,748 4.16% 139,966 3.49% Other Borrowed Funds 23,003 8.66% 23,985 11.44% Total Int. Bearing Liabilities $ 1,512,580 2.85% 1,405,155 2.93% Other Liabilities and Stockholders' Equity (Net of Non-Interest Earning Assets) 456,595 375,446 Total Liabilities and Stockholders' Equity (Net of Non-Interest Earning Assets) $ 1,969,175 $ 1,780,601 Rate Spread 4.22% 4.36% Net Yield on Interest-Earning Assets (Tax Equivalent Basis) 4.73% 4.78%
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Non Interest Income Non interest income declined $.2 million, or 4.0%, to $4.0 million during the 1994 third quarter as compared to $4.2 million during the comparable prior year period. The decline is primarily attributable to a $.5 million decrease in income from mortgage banking operations, due to higher mortgage interest rates and a corresponding decrease in the level of refinancing activity, and a $.1 million decrease in other operating income. These declines were partially offset by a $.5 million increase in service charges on deposit accounts resulting from the growth in the Registrant's demand deposit base, increases in per item charges and the introduction of new products and services. Non Interest Expense Non interest expense declined $3.5 million, or 20.2%, to $13.7 million during the 1994 third quarter when compared to $17.2 million during the comparable prior year period. The decline is attributable to a $3.6 million decrease in other real estate related expenses, a $.2 million decrease in equipment expense, and a $.1 million decrease in FDIC assessment. These improvements were partially offset by an increase of $0.4 million increase in salaries and benefits. The Registrant's core efficiency ratio, which represents the ratio of non-interest expense, net of other real estate related costs and other non-recurring charges, to net interest income on a tax equivalent basis and non-interest income net of security gains improved to 49.2% for the 1994 third quarter as compared to 53.9% for the 1993 third quarter. This improvement in the Registrant's core efficiency ratio reflects management's continued emphasis on efficient deployment of its resources. Income Taxes The Registrant provides for income taxes under the asset and liability method. Under this method, the Registrant is required to establish deferred tax assets and liabilities for the temporary differences between the financial reporting basis and the tax basis of the Registrant's assets and liabilities at the enacted tax rates expected to be in effect when such amounts are realized or settled. A valuation allowance is to be established to reduce the deferred tax asset if it is "more likely than not" that some or all of the deferred tax asset will not be realized. The Registrant's effective tax rate was 36.4% for the third quarter of 1994, as compared to 32.5% for the comparable prior year period. The increase in the effective tax rate for the third quarter of 1994, when compared to the comparable prior year period, is primarily attributable to the Registrant's recognizing a decrease in its New York State deferred tax valuation allowance during the third quarter of 1993, resulting from tax charge-offs in excess of book. The Registrant's effective tax rate for the nine months ended September 30, 1994, was 36.1% as compared 34.2% for the comparable prior year period. ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Asset Quality The Registrant's loan portfolio, concentrated primarily in loans secured by real estate in Suffolk and Nassau Counties in New York and to a lesser extent in Westchester and Rockland Counties in New York, has been and will continue to be affected by market trends in real estate values. The following table delineates the composition of the Registrant's loan portfolio for the period indicated: (in thousands) September 30, December 31, September 30, 1994 1993 1993 Commercial, Financial & Agricultural $ 233,214 $ 257,151 $ 254,304 Commercial Mortgages 296,946 292,157 289,429 Residential Mortgages 350,199 363,644 351,332 Construction 18,017 19,828 18,322 Land 39,129 37,160 40,179 Consumer 61,856 59,823 58,679 TOTAL $ 999,361 $ 1,029,763 $ 1,012,245 The Registrant's non-performing assets, which include loans past due ninety days and still accruing interest, non-accrual loans, and other real estate owned and loans classified as insubstance foreclosures, decreased to $50.3 million at September 30, 1994, as compared with $57.2 million at December 31, 1993 and $77.6 million at September 30, 1993. Non-performing assets now comprise 2.6% of total assets, as compared with 3.0% at December 31, 1993 and 4.0% at September 30, 1993. The components of non-performing assets are delineated in the table below (in thousands): September 30, December 31, September 30, 1994 1993 1993 Loans 90 days past due & still accruing $ 1,422 $ 1,811 $ 2,726 Non-accrual Loans 34,393 33,484 36,866 Non-performing Loans 35,815 35,295 39,592 Other Real Estate Owned 6,965 7,426 16,248 In-Substance Foreclosure 7,484 14,473 21,768 Non-performing assets 50,264 57,194 77,608 Restructured, accruing loans $ 4,817 $ 15,237 $ 13,312 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Asset Quality (continued) Loans are classified as restructured when the Registrant has granted, for economic or legal reasons related to the borrowers financial difficulties, a concession to the customer that the Registrant would not otherwise consider. Restructured, accruing loans are defined as loans whose repayment terms and/or interest rate have been modified by agreement with the respective borrowers. Generally this occurs when the cash flow of the borrower is insufficient to service the loan under its original terms. As a result of the continued and consistent decline in the Registrant's non-performing loans, the provision for loan losses declined to $.75 million for the 1994 third quarter, from $1.0 million in the comparable prior year period. Net charge offs aggregated $3.9 million, or 1.56% of average net loans on an annualized basis, for the 1994 third quarter, as compared with $7.5 million, or 1.57% of average net loans on an annualized basis, for the 1993 third quarter. The allowance for loan losses at September 30, 1994 was $41.2 million, or 114.98% of non-performing loans, and 4.16% of loans, net of unearned income. The allowance for loan losses at December 31, 1993 was $46.6 million, or 132.1% of non-performing loans, and 4.58% of loans, net of unearned income. The allowance for loan losses at September 30, 1993 was $49.0 million, or 123.9% of non-performing loans and 4.91% of loans, net of unearned income. Management determines what it deems to be the appropriate level of the Registrant's allowance for loan losses on an ongoing basis by reviewing individual loans within, as well as the composition, of the loan portfolio. In reviewing the composition of the loan portfolio, management considers, among other things, concentrations therein, delinquency trends, as well as recent charge-off experience and third party evidentiary matter (such as appraisals) to assist in assessing the degree of credit risk in the portfolio. Various appraisals and estimates of current market value influence the calculation of the required allowance at any point in time. While management uses available information to provide for possible loan losses, future additions to the allowance may be necessary based on future changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Registrant's bank subsidiary's allowance for loan losses. Such agencies may require the Registrant to recognize additions to the allowance based on their judgement of information available to them at the time of their examinations which may not be available now. Based on current economic conditions, management considers the allowance at September 30, 1994 adequate to cover the possible risk of loss in the loan portfolio. ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Asset Quality (continued) Potential problem loans, which are loans that are currently performing under present loan repayment terms but where known information about possible credit problems of borrowers cause management to have serious doubts as to the ability of the borrowers to continue to comply with the present repayment terms, aggregated $11.1 million at September 30, 1994. Other real estate owned, which includes other real estate and in-substance foreclosures, declined to $14.5 million at September 30, 1994 from $21.9 million at December 31, 1993, and $38.0 million at September 30, 1993. Securities The Registrant adopted SFAS 115, "Accounting for Certain Investments in Debt and Equity Securities", as of January 1, 1994. Securities Held to Maturity are debt securities that the Registrant has the positive intend and ability to hold to maturity and are stated at amortized cost. At September 30, 1994, Securities Held to Maturity consisted of the following: Securities Held to Maturity Gross Gross Carrying Unrealized Unrealized Fair Value Gains Losses Value U.S. Treasury 26,531 0 9 26,522 U.S. Government Agency Obligations 54,964 0 3,916 51,048 State and Municipal Obligations 60,746 341 972 60,115 Mortgage-backed Securities 497,571 62 23,463 474,170 TOTAL $ 639,812 $ 403 $ 28,360 $ 611,855 Securities Available for Sale are debt and equity securities not classified as either securities held to maturity or trading securities and are stated at fair value. At September 30, 1994, Securities Available for Sale consisted of the following: Securities Available for Sale Gross Gross Amortized Unrealized Unrealized Fair Value Gains Losses Value U.S. Treasury 39,905 - 574 39,331 Mortgage-backed Securities 147,951 5 5,628 142,328 Equity Securities 19,540 1,637 64 21,113 TOTAL $ 207,396 $ 1,642 $ 6,266 $ 202,772 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Securities (continued) Consistent with SFAS 115, the net unrealized loss of $4.6 million was reported as a $2.6 million separate component of stockholders' equity, on a net of tax basis at September 30, 1994. The Registrant's total mortgage-backed security holdings included in both the available for sale and held to maturity portfolios was $645.5 million at September 30, 1994 with an aggregate fair market vlaue of $616.5 million, or a net pre-tax unrealized loss of $29.0 million. This compares to holdings of $665.5 million with a fair market value of $667.6 million, at year end December 31, 1993. The decline in value is the result of previously identified increases in market interest rates throughout 1994. The securities holdings are principally fixed rate and the value of these instruments moves in an inverse relationship to interest rates. The unrealized losses on these mortgage backe securities, exclusive of its impact on equity pursuant to SFAS 115, will affect the results of operations to the extent that the below market yields on the assets create a potential for compression of net interest margin. The liquidity of securities with unrealized losses will be limited, for pledging purposes to the fair market value of the instruments. ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Capital The Federal Reserve Board has formal capital guidelines which bank holding companies are required to meet. The risk based capital guidelines are designed to make regulatory capital requirements more sensitive to differences in risk profiles among banks and bank holding companies, to account for off-balance sheet exposure and to minimize disincentives for holding liquid assets. Under these guidelines, assets and off-balance sheet items are assigned to broad risk categories, each with appropriate weights. The resulting capital ratios represent capital as a percentage of total risk weighted assets and off balance sheet items. The guidelines currently require all bank holding companies to maintain a minimum ratio of total risk based capital to total risk weighted assets of 8.00%, including a minimum ratio of Tier I capital to risk weighted assets of 4.00%. The following table sets forth the Registrant's regulatory capital as of September 30, 1994, under the rules applicable at such date. At such date, the Registrant was in compliance with all applicable regulatory requirements. (dollars in thousands) Amount Ratio Tier I Capital 163,347 15.29% Regulatory Requirement 42,733 4.00% Excess 120,614 11.29% Total Risk Adjusted Capital $ 177,045 16.57% Regulatory Requirement 85,466 8.00% Excess 91,579 8.57% Risk weighted assets $1,068,322 The Registrant's leverage ratio for the quarter ended September 30, 1994 was 8.32%. The Tier I, total risk based and leverage capital ratios of North Fork Bank, the Registrant's primary banking subsidiary, were 16.61%, 17.90%, and 8.99%, respectively, at September 30, 1994. The Federal Deposit Insurance Corporation Act ("FDICIA") became effective December 19, 1991. FDICIA substantially revised the depository institution regulatory and funding provisions of the Federal Deposit Insurance Act and makes revisions to several other banking statutes. Among other things, FDICIA requires the federal banking regulators to take prompt corrective action on depository institutions that do not meet minimum capital requirements. FDICIA ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Capital (continued) establishes five categories: "well capitalized", "adequately capitalized", "undercapitalized", "significantly undercapitalized" and "critically undercapitalized". Under the regulations, a "well capitalized" institution has a minimum total risk based capital to total risk weighted assets of at least 10%, a minimum Tier I capital to total risk weighted assets of 6%, a minimum leverage ratio of at least 5% and is not subject to any written order, agreement or directive. The Registrant and its banking subsidiary are considered well capitalized. Liquidity Liquidity is defined as the Registrant's ability to generate sufficient cash flows to fund growth in interest earning assets, depositor withdrawals and the repayment of borrowings. The Registrant's sources of liquidity include dividends from its bank subsidiary, borrowings, and funds available through the capital markets. Dividends from the Registrant's bank subsidiary are limited by the regulations of the New York State Banking Department to the current year's earnings plus the prior two years' retained net profits. According to the parameters of this regulation, the Registrant's bank subsidiary had $45 million of retained earnings available for dividends to the holding company as of September 30, 1994. On October 25, 1994, the Bank's board of directors approved the distribution of a $5.2 million cash dividend to the Registrant to be used for general corporate purposes. The Registrant's bank subsidiary has numerous sources of liquidity including loan and investment principal repayments and maturities, lines of credit with other financial institutions, the ability to borrow under repurchase agreements utilizing its unpledged securities portfolio, the securitization of loans within the portfolio, whole loan sales and growth in its core deposit base. During 1994, the Registrant's bank subsidiary further enhanced its borrowing capabilities by becoming a member of the Federal Home Loan Bank ("FHLB") system. To become a member, the bank purchased $9.5 million of FHLB stock; as a member the Bank has the ability to borrow $190 million on a secured basis, utilizing mortgage related loans and securities for a term ranging from one day to ten years at both fixed and variable rates. As of September 30, 1994, the Registrant's bank subsidiary had $50 million in short-term advances outstanding. The Registrant's liquidity position is monitored to ensure the maintenance of an optimum level and the most cost efficient use of available funds. Management believes that the Registrant has sufficient liquidity to meet its operating requirements. ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Other Matters Metro Bancshares, Inc. Acquisitions On November 10, 1994, the Registrant's shareholders approved the acquisition of Metro Bancshares Inc. ("Metro"), the parent company of Bayside Federal Savings Bank. Similarly, on this date, Metro shareholders approved the merger of Metro into the Registrant. Previously, the Registrant had received all of the required regulatory approvals from the Federal Reserve Bank of New York, Federal Deposit Insurance Corporation, New York State Banking Department and the office of Thrift Supervision. The transaction will be treated as a tax free reorganization and a pooling of interests. It is anticipated that the closing will take place on November 30, 1994. Based upon the exchange ratio formula contained in the merger agreement, the Registrant will issue 1.645 common shares for each share of Metro outstanding at the closing date. At September 30, 1994, Metro had 5,080,504 common shares outstanding (which equates to 8,357,429 common shares of the Registrant based upon the exchange ratio of 1.645). Upon completion of the transaction, Bayside Federal Savings Bank will be merged into the Registrant's bank subsidiary, North Fork Bank. The Registrant will reflect, in its fourth quarter results of operations, a one-time charge related to merger expenses and restructuring costs of approximately $13.2 million, after taxes. The following table delineates a summary of selected financial information of Metro as of September 30, 1994, its fiscal year end. ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Other Matters (continued) Metro Bancshares, Inc. Summary Financial Highlights (dollars in thousands, except per share amount) For the fiscal year ended September 30, 1994 (Unaudited): Net Interest Income 44,563 Provision for Loan Losses 525 Non-Interest Income 600 Non-Interest Expense 21,205 Income before provision for income taxes and cumulative effect of accounting change 23,433 Provision for Income Taxes 10,670 Income before cumulative effect of accounting change 12,763 Cumulative effect of change in accounting for Income Taxes 3,700 Net Income 16,463 Return on average assets (1) 1.27% Return on average equity (1) 15.85% Net Interest Margin 4.64% (1) Does not reflect the impact of the cumulative change in accounting for income taxes. PER SHARE: Income before cumulative change $ 2.35 Cumulative effect of change in accounting for Income Taxes $ .68 Net Income $ 3.03 Book Value $16.68 Average equivalent shares outstanding 5,472,165 Actual shares outstanding 5,080,504 AT SEPTEMBER 30, 1994: Loans, net of unearned income 793,799 Securities 134,152 Assets 975,735 Deposits 868,041 Stockholders' Equity 84,747 Total Risk Based Capital Ratio 14.94% Leverage Ratio 7.65% SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: November 14, 1994 /s/Daniel M. Healy ------------------- Daniel M. Healy Executive Vice President & Chief Financial Officer Ex.11.1 EPS CALCULATION EXHIBIT 11 North Fork Bancorporation, Inc. COMPUTATION OF NET INCOME PER COMMON EQUIVALENT SHARE September 30, 1994 (Unaudited) THREE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1994 1993 Net Income $ 7,484,424 $ 3,870,904 Common Equivalent Shares: Weighted average common shares outstanding 14,303,786 14,051,516 Weighted average common equivalent shares(a) 750,364 673,648 Weighted average common and common equivalent shares 15,054,150 14,725,164 Income per common equivalent share $ 0.50 $ 0.26 NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1994 1993 Net Income $ 19,071,484 $ 10,981,765 Common Equivalent Shares: Weighted average common shares outstanding 14,208,171 13,608,866 Weighted average common equivalent shares(a) 728,656 636,898 Weighted average common and common equivalent shares 14,936,827 14,245,764 Income per common equivalent share $ 1.28 $ 0.77 (a) consists of warrants and options EX-27 2
9 This schedule contains summary financial information extracted from SEC Form 10-Q and is qualified in its entirity by reference to such financial statements. 1,000 9-MOS DEC-31-1994 SEP-30-1994 64,290 585 0 0 202,772 639,812 611,855 999,361 41,176 1,940,396 1,479,132 250,217 2,114 25,000 35,874 0 0 0 1,940,396 62,588 95,906 355 96,261 21,685 32,220 64,041 2,500 (54) 44,037 29,838 0 0 0 19,072 1.28 0 2,114 34,393 1,422 4,817 11,100 46,625 10,567 2,617 41,175 41,175 0 0
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