-----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, LzYw3fqaT95ma+4KDoXtcSN/f0wRTCzCpFzKmEfF9bcc31kjEgwl4RMjaJWp/KvV xhJiwyZ7qiI7uNZuLiOl+A== 0000950123-01-505611.txt : 20010815 0000950123-01-505611.hdr.sgml : 20010815 ACCESSION NUMBER: 0000950123-01-505611 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTH FORK BANCORPORATION INC CENTRAL INDEX KEY: 0000352510 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [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: 1711933 BUSINESS ADDRESS: STREET 1: 275 BROAD HOLLOW RD STREET 2: PO BOX 8914 CITY: MELVILLE STATE: NY ZIP: 11747 BUSINESS PHONE: 6318441004 MAIL ADDRESS: STREET 1: 275 BROAD HOLLOW RD STREET 2: PO BOX 8914 CITY: MELVILLE STATE: NY ZIP: 11747 10-Q 1 y52520e10-q.txt NORTH FORK BANCORPORATION, INC. 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: JUNE 30, 2001 NORTH FORK BANCORPORATION, INC. (Exact name of Company as specified in its charter) DELAWARE 36-3154608 (State or other Jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 275 BROADHOLLOW ROAD, MELVILLE, NEW YORK 11747 (Address of principal executive offices) (Zip Code) (631) 844-1004 (Company's telephone number, including area code) Indicate by check mark whether the Company (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 Company 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. CLASS OF COMMON STOCK NUMBER OF SHARES OUTSTANDING - 8/10/01 $.01 PAR VALUE 162,030,936 1 2 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) Consolidated Statements of Comprehensive Income. 6) Notes to Consolidated Financial Statements. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information required by this item is contained throughout Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and is incorporated by reference. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Not Applicable. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS Not Applicable. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not Applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable. ITEM 5. OTHER INFORMATION Not Applicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibits are submitted herewith: Exhibit # Description (11) Statement Re: Computation of Per Share Earnings. (b) Current Reports on Form 8-K 1) Current Report on Form 8-K dated June 11, 2001 (announcing that the Company issued a joint press release with Commercial Bank of New York announcing that they expect to close the Company's acquisition of Commercial Bank of New York during the fourth quarter of 2001). 2) Current Report on Form 8-K dated June 13, 2001 (announcing that the Company will host an investor and analyst conference in New York City on June 14, 2001). 2 3 CONSOLIDATED BALANCE SHEETS (UNAUDITED)
----------------------------------------------- JUNE 30, DECEMBER 31, JUNE 30, (in thousands, except per share amounts) 2001 2000 2000 ----------------------------------------------- ASSETS: Cash & Due from Banks.......................................................... $313,708 $292,456 $248,269 Money Market Investments....................................................... 17,708 17,578 72,807 Securities: Available-for-Sale ($1,451,672 and $1,701,463 pledged at June 30, 2001 and December 31, 2000, respectively)....................... 4,385,911 3,467,663 3,449,273 Held-to-Maturity ($564,664 and $722,075 pledged at June 30, 2001 and December 31, 2000, respectively)...................... 860,891 1,090,677 1,219,444 --------- --------- --------- Total Securities......................................................... 5,246,802 4,558,340 4,668,717 --------- --------- --------- Loans.......................................................................... 9,847,779 9,409,762 9,100,542 Less: Unearned Income and Fees............................................... 12,699 15,049 16,760 Allowance for Loan Losses.......................................... 92,853 89,653 88,010 --------- --------- --------- Net Loans.................................................... 9,742,227 9,305,060 8,995,772 --------- --------- --------- Goodwill....................................................................... 328,057 337,202 341,619 Core Deposit Intangibles....................................................... 8,817 9,817 10,930 Premises & Equipment........................................................... 102,711 96,844 100,517 Accrued Income Receivable...................................................... 93,165 96,914 91,208 Other Assets................................................................... 114,790 126,751 152,909 --------- --------- --------- Total Assets..............................................................$15,967,985 $14,840,962 $14,682,748 =========== =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY: Demand Deposits................................................................ $2,162,881 $2,025,249 $1,846,973 Savings Deposits............................................................... 2,914,540 2,858,757 2,967,729 NOW and Money Market Deposits.................................................. 1,873,534 1,370,214 1,155,552 Other Time Deposits............................................................ 2,346,616 2,285,196 2,373,567 Certificates of Deposits, $100,000 and Over.................................... 884,471 629,779 577,599 --------- --------- --------- Total Deposits............................................................ 10,182,042 9,169,195 8,921,420 --------- --------- --------- Federal Funds Purchased & Securities Sold Under Agreements to Repurchase.................................................... 2,112,122 2,350,882 2,800,282 Other Borrowings............................................................... 1,552,155 1,653,265 1,144,710 Broker Payables................................................................ 322,918 -- 35,206 Accrued Expenses & Other Liabilities........................................... 215,793 209,363 194,301 --------- --------- --------- Total Liabilities........................................................$14,385,030 $13,382,705 $13,095,919 --------- --------- --------- Capital Securities............................................................. $244,351 $244,339 $244,326 STOCKHOLDERS' EQUITY: Preferred Stock, par value $1.00; authorized 10,000,000 shares, unissued $ -- $ -- $ -- Common stock, par value $0.01; authorized 500,000,000 shares; issued 174,580,778 shares at June 30, 2001................................. 1,746 1,746 1,740 Additional Paid in Capital..................................................... 358,296 359,679 352,503 Retained Earnings.............................................................. 1,235,924 1,147,375 1,059,843 Accumulated Other Comprehensive Income/(Loss).................................. 25,413 9,694 (41,435) Deferred Compensation.......................................................... (29,494) (32,474) (26,585) Treasury Stock at cost; 12,678,398 shares at June 30, 2001.................... (253,281) (272,102) (3,563) --------- --------- --------- Total Stockholders' Equity............................................... 1,338,604 1,213,918 1,342,503 --------- --------- --------- Total Liabilities and Stockholders' Equity...............................$15,967,985 $14,840,962 $14,682,748 =========== =========== ===========
See Accompanying Notes to Consolidated Financial Statements 3 4 Consolidated Statements of Income (Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED ------------------------------------------------------- JUNE 30, JUNE 30, JUNE 30, JUNE 30, (in thousands, except per share amounts) 2001 2000 2001 2000 ------------------------------------------------------- INTEREST INCOME: Loans........................................................... $195,836 $181,922 $390,385 $350,846 Mortgage-Backed Securities...................................... 62,291 71,662 122,746 142,459 Other Securities................................................ 10,097 13,306 22,374 23,014 U.S. Treasury & Government Agency Securities.................... 1,815 2,684 4,141 5,125 State & Municipal Obligations................................... 2,092 929 4,162 1,848 Money Market Investments........................................ 729 639 1,541 2,017 ------- ------- ------- ------- Total Interest Income........................................... 272,860 271,142 545,349 525,309 ------- ------- ------- ------- INTEREST EXPENSE: Savings, NOW and Money Market Deposits.......................... 22,929 19,909 45,067 38,818 Other Time Deposits............................................. 30,674 30,023 62,176 56,476 Certificates of Deposit, $100,000 and Over...................... 11,379 7,690 21,000 14,877 Federal Funds Purchased & Securities Sold Under Agreements to Repurchase..................................... 22,250 38,726 53,653 72,307 Other Borrowings................................................ 21,601 21,828 46,141 50,535 ------- ------- ------- ------- Total Interest Expense....................................... 108,833 118,176 228,037 233,013 ------- ------- ------- ------- Net Interest Income.......................................... 164,027 152,966 317,312 292,296 Provision for Loan Losses....................................... 4,000 2,250 7,750 11,250 ------- ------- ------- ------- Net Interest Income after Provision for Loan Losses.......... 160,027 150,716 309,562 281,046 ------- ------- ------- ------- NON-INTEREST INCOME: Customer Related Fees and Service Charges....................... 14,066 11,459 27,084 22,234 Investment Management, Commissions & Trust Fees................. 4,034 4,623 8,008 9,356 Mortgage Banking Operations..................................... 1,097 942 2,087 1,797 Check Cashing Fees.............................................. 822 742 1,587 1,280 Other Operating Income.......................................... 2,514 2,984 4,995 5,350 Net Securities Gains/(Losses)................................... 1,336 11,148 5,208 (8,600) Trading Income.................................................. -- -- 7,943 -- Gain on Sale of Branch Facilities............................... -- 10,392 -- 10,392 Gain on Sale of Loans........................................... -- -- -- 2,303 ------- ------- ------- ------- Total Non-Interest Income.................................. 23,869 42,290 56,912 44,112 ------- ------- ------- ------- NON-INTEREST EXPENSE: Employee Compensation and Benefits.............................. 30,232 27,730 59,681 56,337 Occupancy and Equipment, net.................................... 10,347 8,864 20,583 17,784 Amortization of Goodwill........................................ 4,978 5,114 9,945 7,876 Amortization of Core Deposit Intangibles........................ 500 557 1,000 1,113 Capital Securities Costs........................................ 5,140 5,140 10,280 9,774 Other Operating Expenses........................................ 13,281 10,964 25,831 22,532 Dime Related Expenses........................................... -- 2,300 -- 8,300 Merger Related Restructure Charge............................... -- -- -- 50,499 ------- ------- ------- ------- Total Non-Interest Expense.................................. 64,478 60,669 127,320 174,215 ------- ------- ------- ------- Income Before Income Taxes...................................... 119,418 132,337 239,154 150,943 Provision for Income Taxes...................................... 41,199 46,318 82,508 63,013 ------- ------- ------- ------- Net Income................................................. $78,219 $86,019 $156,646 $87,930 ======== ======= ======== ======= PER SHARE: Earnings Per Share - Basic...................................... $0.49 $0.50 $0.98 $0.53 Earnings Per Share - Diluted.................................... $0.49 $0.50 $0.97 $0.52 Cash Dividends ................................................. $0.21 $0.18 $0.42 $0.36 Weighted Average Shares Outstanding - Basic..................... 159,392 171,672 159,300 166,994 Weighted Average Shares Outstanding - Diluted................... 161,173 172,847 160,970 168,144
See Accompanying Notes to Consolidated Financial Statements 4 5 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)
FOR THE SIX MONTHS ENDED JUNE 30, 2001 2000 CASH FLOWS FROM OPERATING ACTIVITIES: ------------------------- Net Income.......................................................................... $156,646 $87,930 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Provision for Loan Losses........................................................... 7,750 11,250 Depreciation and Amortization....................................................... 8,219 7,273 Amortization of Goodwill & Core Deposit Intangibles................................. 10,945 8,989 Amortization of Securities Premiums................................................. 3,864 2,790 Accretion of Discounts and Net Deferred Loan Fees................................... (15,464) (10,518) Securities (Gains)/Losses, net...................................................... (5,208) 8,600 Gain on Sale of Branch Facilities................................................... -- (10,392) Gain on Sale of Loans............................................................... -- (2,303) Other, net.......................................................................... 8,057 16,334 ------- ------- Net Cash Provided by Operating Activities....................................... 174,809 119,953 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of Securities Held-to-Maturity............................................ (4,557) (10,083) Maturities, Redemptions, Calls and Principal Repayments on Securities Held-to-Maturity..................................................... 128,755 141,509 Purchases of Securities Available-for-Sale.......................................... (1,074,835) (358,857) Proceeds from Sales of Securities Available-for-Sale................................ 157,375 1,585,216 Maturities, Redemptions, Calls and Principal Repayments on Securities Available-for-Sale................................................... 465,338 228,264 Loans Originated, net of principal repayments and charge-offs....................... (467,931) (467,574) Proceeds from the Sale of Loans..................................................... 29,102 254,624 Transfers to Other Real Estate, net of sales........................................ (67) 207 (Purchases)/Sales of Premises and Equipment, net.................................... (11,380) 10,273 Purchase Acquisition, net of cash acquired.......................................... -- 36,858 ------- ------- Net Cash (Used in)/Provided by Investing Activities............................. (778,200) 1,420,437 ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Net Increase/(Decrease) in Customer Deposits Liabilities............................ 1,012,847 (221,722) Net Decrease in Borrowings.......................................................... (339,870) (1,338,212) Purchase of Treasury Stock.......................................................... (4,996) (10,216) Exercise of Options and Common Stock Sold for Cash.................................. 19,839 2,030 Cash Dividends Paid................................................................. (63,047) (54,395) ------- ------- Net Cash Provided by/(Used in) Financing Activities............................. 624,773 (1,622,515) ------- ------- Net Increase/(Decrease) in Cash and Cash Equivalents............................ 21,382 (82,125) Cash and Cash Equivalents at Beginning of the Period................................ 310,034 403,201 ------- ------- Cash and Cash Equivalents at End of the Period...................................... $331,416 $321,076 ======== ======== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash Paid During the Period for: Interest Expense................................................................ $230,833 $242,036 ======== ======== Income Taxes.................................................................... 86,255 1,412 ======== ======== Securities Transferred from Held-to-Maturity to Available-for-Sale in Accordance with SFAS 133..................................................... 119,578 -- ======== ======== During the Period the Company Purchased Various Securities which Settled in the Subsequent Period................................................ 332,918 35,206 ======== ======== In February 2000, the Company acquired all of the outstanding common stock of Reliance Bancorp, Inc. Each share of Reliance's common stock was exchanged for 2.0 shares of the Company's common stock. Noncash activity related to the Reliance acquisition not reflected above for the six months ended June 30, 2000 is as follows: Fair Value of Assets Acquired....................................................... -- $2,340,970 Intangible Assets................................................................... -- 285,693 Common Stock Issued................................................................. -- (332,947) -------- Liabilities Assumed ................................................................ -- $2,293,716 ==========
See Accompanying Notes to Consolidated Financial Statements 5 6 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) (Dollars in thousands, except per share amounts)
Accumulated Additional Other Common Paid in Retained Comprehensive Stock Capital Earnings Income/(Loss) ------------------------------------------------ BALANCE, DECEMBER 31, 1999...................... $1,931 $560,979 $1,026,546 ($37,818) Net Income...................................... -- -- 87,930 -- Cash Dividends ($.36 per share)................. -- -- (62,568) -- Cash Dividends-Acquired Company................. -- -- (4,718) -- Issuance of Stock-Reliance Acquisition (17,120,638 shares).......................... -- (38,989) -- -- Fair Value of Options-Reliance Acquisition...... -- 14,075 -- -- Issuance of Stock (124,924 shares).............. 1 1,975 -- -- JSB Common Stock Retired (19,687,149 shares).... (197) (184,872) 13,540 -- Purchases of Treasury Stock (636,300 shares).... -- -- -- -- Restricted Stock Activity, net.................. -- (20) -- -- Stock Based Compensation Activity, net.......... 5 (645) (887) -- Accumulated Other Comprehensive Income/(Loss)... -- -- -- (3,617) ------ -------- ---------- -------- BALANCE, JUNE 30, 2000.......................... $1,740 $352,503 $1,059,843 ($41,435) ====== ======== ========== ======== BALANCE, DECEMBER 31, 2000...................... $1,746 $359,679 $1,147,375 $9,694 Net Income...................................... -- -- 156,646 -- Cash Dividends ($.42 per share)................. -- -- (68,097) -- Issuance of Stock (84,240 shares)............... -- 533 -- -- Purchases of Treasury Stock (200,000 shares).... -- -- -- -- Restricted Stock Activity, net.................. -- 16 -- -- Stock Based Compensation Activity, net.......... -- (1,932) -- -- Accumulated Other Comprehensive Income/(Loss)... -- -- -- 15,719 ------ -------- ---------- -------- BALANCE, JUNE 30, 2001.......................... $1,746 $358,296 $1,235,924 $25,413 ====== ======== ========== ========
Deferred Treasury Compensation Stock Total BALANCE, DECEMBER 31, 1999...................... ($28,007) ($524,533) $999,098 Net Income...................................... -- -- 87,930 Cash Dividends ($.36 per share)................. -- -- (62,568) Cash Dividends-Acquired Company................. -- -- (4,718) Issuance of Stock-Reliance Acquisition (17,120,638 shares).......................... -- 357,861 318,872 Fair Value of Options-Reliance Acquisition...... -- -- 14,075 Issuance of Stock (124,924 shares).............. -- 54 2,030 JSB Common Stock Retired (19,687,149 shares).... -- 171,529 -- Purchases of Treasury Stock (636,300 shares).... -- (10,216) (10,216) Restricted Stock Activity, net.................. 1,422 (228) 1,174 Stock Based Compensation Activity, net.......... -- 1,970 443 Accumulated Other Comprehensive Income/(Loss)... -- -- (3,617) --------- --------- ---------- BALANCE, JUNE 30, 2000.......................... ($26,585) ($3,563) $1,342,503 ========= ========= ========== BALANCE, DECEMBER 31, 2000...................... ($32,474) ($272,102) $1,213,918 Net Income...................................... -- -- 156,646 Cash Dividends ($.42 per share)................. -- -- (68,097) Issuance of Stock (84,240 shares)............... -- 1,675 2,208 Purchases of Treasury Stock (200,000 shares).... -- (4,996) (4,996) Restricted Stock Activity, net.................. 2,980 (625) 2,371 Stock Based Compensation Activity, net.......... -- 22,767 20,835 Accumulated Other Comprehensive Income/(Loss)... -- -- 15,719 --------- --------- ------ BALANCE, JUNE 30, 2001.......................... ($29,494) ($253,281) $1,338,604 ======== ========= ==========
See Accompanying Notes to Consolidated Financial Statements 6 7 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (in thousands)
THREE MONTHS ENDED SIX MONTHS ENDED ------------------------------------------------------------ JUNE 30, June 30, JUNE 30, June 30, 2001 2000 2001 2000 ------------------------------------------------------------ Net Income..................................................... $78,219 $86,019 $156,646 $87,930 Other Comprehensive income, net of taxes: Cash Flow Hedges(1): Net Derivative Gains/(Losses).......................... 1,512 -- (845) -- Reclassification Adjustment - Net Derivative Gains..... - -- 1,232 -- Securities Available-for-Sale: Unrealized (Losses)/Gains.............................. (6,113) (1,268) 18,743 (9,207) Less: Reclassification of Realized Gains/(Losses)...... 875 7,246 3,411 (5,590) ------- ------- -------- ------- Other Comprehensive Income..................................... (5,476) (8,514) 15,719 (3,617) ------- ------- -------- ------- Comprehensive Income........................................... $72,743 $77,505 $172,365 $84,313 ======= ======= ======== =======
(1) See Asset/Liability Management section of this document for further discussion. See Accompanying Notes to Consolidated Financial Statements 7 8 NORTH FORK BANCORPORATION, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) JUNE 30, 2001 AND 2000 FORWARD LOOKING STATEMENTS This document and other documents filed with the Securities and Exchange Commission ("SEC") have forward-looking statements. In addition, senior management may make forward-looking statements orally to analysts, investors, the media, and others. Forward-looking statements might include one or more of the following: -Projections of revenues, income, earnings per share, capital expenditures, dividends, capital structure, or other financial items; -Descriptions of plans or objectives of management for future operations, products, or services, including pending acquisition transactions; -Forecasts of future economic performance; and -Descriptions of assumptions underlying or relating to any of the foregoing. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as "believe", "expect", "anticipate", "intend", "plan", "estimate", or words of similar meaning, or future or conditional verbs such as "will", "would", "should", "could", or "may". Forward-looking statements present the Company's expectations or predictions of future conditions, events or results. They are not guarantees of future performance. By their nature, forward-looking statements are subject to risks and uncertainties. There are a number of factors, many of which are beyond the Company's control, that could cause actual conditions, events, or results to differ significantly from those described in the forward-looking statements. Factors that may cause or contribute to such differences include, among others, the following possibilities: (1) changes in general business and economic conditions on both a regional and national level; (2) increased competition in terms of the products and services the Company offers and the markets in which the Company conducts its business; (3) changes in the interest rate environment, which may impact interest margins; and (4) accounting, tax, legislative, regulatory, and technological changes may also affect the business in which the Company is engaged. Forward-looking statements speak only as of the date they are made. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made. BASIS OF PRESENTATION North Fork Bancorporation, Inc. (the "Company") is a $16.0 billion multi-bank holding company headquartered in Melville, New York. The Company's primary bank subsidiary, North Fork Bank ("North Fork"), operates through 150 full-service retail-banking facilities located in the New York metropolitan area, one of the most densely populated and wealthiest markets in the nation. North Fork focuses on providing superior customer service to both personal and commercial clients by offering the convenience of electronic banking as well as an array of financial products and brokerage/investment management services through its non-bank subsidiaries, Compass Investment Services Corp. ("Compass") and Amivest Corporation ("Amivest"). The Company's other bank subsidiary, Superior Savings of New England, N.A. ("Superior"), a nationally chartered bank headquartered in the Connecticut county of New Haven, operates from two locations, where it currently conducts an electronic banking operation focused on gathering deposits throughout the northeast. The accounting and reporting policies of the Company are in conformity with accounting principles generally accepted in the United States of America and prevailing practices within the financial services industry. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Such estimates are subject to change in the future as additional information becomes available or previously existing circumstances are modified. Actual results could differ from those estimates. Certain reclassifications have been made to prior year amounts to conform to current year presentations. Results of operations for the three and six month periods ended June 30, 2001 are not necessarily indicative of the results of operations which may be expected for the full year 2001 or any other interim periods. These statements should be read in conjunction with the Company's 2000 Annual Report on Form 10-K, which is incorporated herein by reference. 8 9 RECENT ACCOUNTING DEVELOPMENTS ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Effective January 1, 2001, the Company adopted Statement of Financial Accounting Standards No. 133 "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"), as amended. SFAS 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. The statement requires that all derivative instruments be recorded on the balance sheet at fair value. However, the accounting for changes in fair value of the derivative instrument depends on whether the derivative instrument qualifies as a hedge. If the derivative instrument qualifies as a hedge, the accounting treatment varies based on the type of risk being hedged. If the derivative instrument does not qualify as a hedge, changes in fair value are reported in earnings when they occur. Under SFAS 133, an entity that elects to apply hedge accounting is required to establish, at the inception of the hedge, the method it will use for assessing the effectiveness of the hedging derivative and the measurement approach for determining the ineffective aspect of the hedge. Those methods must be consistent with the entity's approach to managing risk. SFAS 133 has not had a material impact on the consolidated financial statements during the first six months of 2001, however, future volatility of earnings and other comprehensive income may result due to management's use of derivatives in connection with potential hedging strategies, market values of derivatives and hedged items, and future guidance issued by FASB with regards to the implementation of SFAS 133. See Asset/Liability Management section of this document for additional disclosure. ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES In September 2000, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 140 "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities" ("SFAS 140"), a replacement of Statement No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities", ("SFAS 125"). SFAS 140 revised the standards of accounting for securitizations and other transfers of financial assets and collateral and requires certain disclosures, but it carries over most of SFAS 125's provisions without reconsideration. SFAS 140 provides accounting and reporting standards for transfers and servicing of financial assets and extinguishments of liabilities based on consistent application of a financial components approach that focuses on control. Under this approach, after a transfer of financial assets, an entity recognizes the financial and servicing assets it controls and the liabilities it has incurred, derecognizes the financial assets when control has been surrendered, and derecognizes liabilities when extinguished. This statement provides consistent standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings. SFAS 140 was generally effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001. SFAS 140 was effective for recognition and reclassification of collateral and for disclosures relating to securitization transactions and collateral for fiscal years ending after December 15, 2000. The adoption of SFAS 140 did not have a material impact on the Company's financial condition or results of operations. BUSINESS COMBINATIONS In July 2001, the FASB issued Statement of Financial Accounting Standards No. 141 "Business Combinations" ("SFAS 141") effective June 30, 2001. SFAS 141 addresses financial accounting and reporting for business combinations and requires the use of the purchase method of accounting for all business combinations; the use of the pooling-of-interests method of accounting is eliminated for transactions initiated after June 30, 2001. SFAS 141 also establishes guidelines as to how the purchase method is to be applied. This guidance is similar to that previously contained in APB opinion No. 16, however, SFAS 141 establishes additional disclosure requirements for transactions occurring after the effective date. GOODWILL AND OTHER INTANGIBLE ASSETS In July 2001, the FASB also issued Statement of Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets" ("SFAS 142"). SFAS 142 addresses the initial recognition and measurement of intangible assets acquired individually or as part of a group of other assets not constituting a business combination (SFAS 141 addresses the initial recognition and measurement of goodwill and other intangible assets acquired in a business combination). In accordance with the provisions of SFAS 142 amortization will cease effective January 1, 2002 on all goodwill identified as having an indefinite useful life. Goodwill identified as such will be assessed for impairment on an annual basis, by applying a fair-value based test as defined in the Statement. SFAS 142 also provides additional guidance on acquired intangibles that should be separately recognized and amortized over their estimated useful lives. Such intangible assets remain subject to the impairment provisions of SFAS 121. 9 10 Assuming the standards set forth in SFAS 142 were effective the beginning of the current year, net income and earnings per share for the three and six months ended June 30, 2001 would have been $83.1 million or diluted earnings per share of $.52 and $166.3 million or diluted earnings per share of $1.03, respectively. Additionally, SFAS 142 requires that the company complete an initial goodwill impairment assessment on all goodwill recognized in its consolidated financial statements as of the statements effective date to determine if a transition impairment charge needs to be recognized. Management does not anticipate that the assessment will result in a transition impairment charge. MANAGEMENT'S DISCUSSION AND ANALYSIS PROPOSED BUSINESS COMBINATION Commercial Bank of New York On February 13, 2001, the Company entered into an Agreement and Plan of Reorganization with Commercial Bank of New York ("CBNY"), whereby it would acquire CBNY for approximately $175 million in cash. The transaction is pending regulatory approval and is anticipated to close in the fourth quarter of 2001. The Company's operating results in 2001 will not be materially affected by the acquisition. At June 30, 2001, CBNY had $1.4 billion in total assets, $.4 billion in loans, $1.2 billion in deposit liabilities, and $104 million in shareholders equity. CBNY operates from 14 retail banking facilities, including 11 in the New York City borough of Manhattan. OVERVIEW The following table sets forth selected financial highlights for the three and six month periods ended June 30, 2001 and 2000, respectively. The succeeding discussion and analysis describes the changes in components of operating results giving rise to net income.
THREE MONTHS ENDED SIX MONTHS ENDED ------------------------------------------------------------------- JUNE 30, JUNE 30, JUNE 30, JUNE 30, (in thousands, except ratios & per share amounts) 2001 2000 2001 2000 - ------------------------------------------------------------------------------------------------------------------------------ EARNINGS: Net Income......................................... $78,219 $86,019 $156,646 $87,930 - ----------------------------------------------------------------------------------------------------------------------------- PER SHARE: Earnings Per Share - Basic......................... $0.49 $0.50 $0.98 $0.53 Earnings Per Share - Diluted....................... $0.49 $0.50 $0.97 $0.52 Cash Dividends..................................... $0.21 $0.18 $0.42 $0.36 Dividend Payout Ratios............................. 42.86% 36.0% 43.30% 70.59% Book Value......................................... $8.27 $7.72 $8.27 $7.72 Average Equivalent Shares - Basic.................. 159,392 171,672 159,300 166,994 Average Equivalent Shares - Diluted................ 161,173 172,847 160,970 168,144 - ----------------------------------------------------------------------------------------------------------------------------- SELECTED RATIOS: Return on Average Total Assets (1)................. 2.07% 2.35% 2.10% 1.23% Return on Average Stockholders' Equity (1)......... 23.28% 25.10% 23.92% 13.81% Core Efficiency Ratio.............................. 33.67% 32.96% 34.30% 34.05% Net Interest Margin................................ 4.77% 4.52% 4.67% 4.39% - -----------------------------------------------------------------------------------------------------------------------------
(1) Return on average total assets and average stockholders' equity, excluding merger related expenses and other special items was 2.01% and 21.45% for the three months ended June 30, 2000, respectively, and 1.93% and 21.68% for the six months ended June 30,2000, respectively. The dividend payout ratio, excluding merger related expenses and other special items was 43.61% for the months ended June 30, 2000. The Company reported net income of $78.2 million, or diluted earnings per share of $.49, for the second quarter ended June 30, 2001, as compared with net income, as adjusted for certain non-recurring items, of $73.5 million or adjusted diluted earnings per share of $.43 for the comparable prior year quarter. Net income and diluted earnings per share, as reported, for the three months ended June 30, 2000, were impacted by gains recognized from the sale of certain branch facilities and equity securities, partially offset by additional expenses incurred in the attempt to acquire Dime Bancorp, Inc. The aggregate impact of these items, net of taxes, was $12.5 million, or $.07 per share. 10 11 Net income for the six months ended June 30, 2001, was $156.6 million or diluted earnings per share of $.97, as compared with net income, as adjusted for certain non-recurring items, of $138.1 million or adjusted diluted earnings per share of $.82 for the six months ended June 30, 2000. Net income and diluted earnings per share, as reported, for the six months ended June 30, 2000 were impacted by the recognition of merger related restructuring costs and other items associated with the JSB merger, Dime related acquisition expenses and net securities losses, partially offset by gains recognized from the sale of certain branch facilities. The aggregate impact of these items, net of taxes, was $50.1 million, or $.30 per share. On June 26, 2001, the Board of Directors declared a regular quarterly cash dividend of $.21 per common share. The dividend is payable August 15, 2001 to shareholders of record at the close of business July 27, 2001. 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 primary source of earnings. Net interest income is affected by the level and composition of assets, liabilities, and equity, as well as changes in market interest rates. Net interest income for the second quarter of 2001 increased $11.0 million, or 7.2 %, to $164.0 million, when compared to $153.0 million in the comparable prior year quarter. The net interest margin during the most recent quarter improved by 25 basis points to 4.77% from 4.52% for the second quarter of 2000. The improvement in both net interest income and the net interest margin resulted from management's successful execution of its strategy. This strategy included increasing the level of higher yielding loans, positioning its borrowings to benefit from lower market interest rates and growing core deposits. Interest income increased modestly during the second quarter of 2001 to $272.9 million when compared to $271.1 million in the comparable prior year period. The yield on average interest earning assets declined 9 basis points to 7.84%, when compared to 7.93% for the second quarter of 2000. Average loans for the second quarter of 2001 increased $772.4 million or 8.6%, to $9.8 billion, when compared to June 30, 2000. The yield on average loans declined 9 basis points to 8.06% for the second quarter 2001. Each segment of the loan portfolio showed measurable growth, with commercial loans representing the largest growth component. Average loans represented 68.7% of average interest earning assets as compared to 64.5% in the comparable prior year period reflecting management's decision to fund a portion of loan growth from the securities portfolios cash flows. Recent reductions in both short-term interest rates and the prime rate of interest should continue to have a favorable impact on loan growth, which will lower loan yields during the remainder of 2001. Average securities declined $520.7 million, or 10.6%, when compared to the second quarter of 2000, while the yield declined 13 basis points to 7.40%, when compared to the second quarter of 2000. Factors contributing to these declines are lower market interest rates during 2001 coupled with management's aforementioned strategy of re-investing securities portfolios cash flows into higher yielding loans. Interest expense declined $9.3 million, or 7.9%, to $108.8 million during the second quarter of 2001 when compared to $118.2 million in 2000. This decline was attributable to a 37 basis point reduction in cost of funds to 3.87%. Factors contributing to the reduction were lower market interest rates and growth in core deposits (both demand and interest bearing), thereby reducing the level of higher costing wholesale borrowings. Average savings, NOW, and money market deposits, which represent a stable funding source, increased $387.4 million to $4.6 billion with a cost of funds of 2.0% for the 2001 second quarter from $4.2 billion, costing 1.90% during the second quarter of 2000. At June 30, 2001, demand deposits represented 21.2% of total deposits, as compared to 20.7% at June 30, 2000. Core deposit growth and the corresponding increase in cost of funds resulted primarily from the expanded presence in the Manhattan market place, an emphasis on developing deposit relationships with borrowers and introducing new products and services to meet commercial customer needs. In addition, the use of incentive compensation plans and the conversion of previously acquired savings bank locations into full service commercial banking branches positively impacted this growth. Average time deposits increased $272.7 million or 9.0% to $3.3 billion at a cost of funds of 5.11% during the second quarter of 2001 from $3.0 billion costing 5.0% during the second quarter of 2000. The increase in cost of funds resulted from higher market interest rates throughout 2000 and the lagging price resets associated with time deposits. The rapid decline in market interest rates during 2001 is expected to have a continuing favorable impact on deposit pricing during the next several quarters. 11 12 Average borrowings declined $577.7 million or 14.5% to $3.4 billion, while costs declined 95 basis points to 15.1%. The decisions made in 2000 to maintain a higher relative level of short-term borrowings has had a positive impact on the net interest margin during 2001, as many of these instruments have reset at the lower market interest rates. The effects of these factors will continue to have an impact on 2001 results as market interest rates continued to decline and the rates on the borrowings reset downward. Management has also initiated steps to extend the maturities on a portion of these borrowings to provide protection against the eventual reversal of this interest rate trend. At June 30,2001, the weighted average maturity of other borrowings was 3.2 years. Net interest income for the June 30,2001 quarter was $164 million resulting in a net interest margin of 4.77% , an improvement of 19 basis points over the immediately preceding quarter. Substantially all of the improvement was derived from a reduction in the cost of funds. Management does not anticipate this upward trend in net interest margin continuing in the near term. Consistent with its capital management strategy, the Company purchased approximately $930 million of available-for-sale securities toward the end of the current quarter that was funded by a blend of borrowings and deposits. This action will positively impact net interest income and earnings in succeeding periods but will compress the net interest margin. The following table sets forth a summary analysis of the relative impact on net interest income of changes in the average volume of interest earning assets and interest bearing liabilities and changes in average rates on such assets and liabilities. Because of the numerous simultaneous volume and rate changes during the periods analyzed, it is not possible to precisely allocate changes to volume or rate. 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.
THREE MONTHS ENDED SIX MONTHS ENDED 2001 VS. 2000 2001 VS. 2000 --------------------------------------- -------------------------------------- CHANGE IN CHANGE IN AVERAGE AVERAGE NET INTEREST AVERAGE AVERAGE NET INTEREST (in thousands) VOLUME RATE INCOME VOLUME RATE INCOME -------------------------------------------------------------------------------- INTEREST INCOME FROM EARNING ASSETS: Securities........................................ ($9,547) ($1,460) ($11,007) ($18,810) $3,031 ($15,779) Loans, net (2).................................... 15,975 (2,077) 13,898 37,046 2,462 39,508 Money Market Investments.......................... 432 (392) 40 (421) (391) (812) ----- ------ ----- ------ ----- ------ Total Interest Income.......................... 6,860 (3,929) 2,931 17,815 5,102 22,917 ----- ------ ----- ------ ----- ------ INTEREST EXPENSE ON LIABILITIES: Savings, NOW & Money Market Deposits.............. 1,935 1,085 3,020 3,838 2,411 6,249 Time Deposits..................................... 3,490 850 4,340 6,768 5,054 11,822 Federal Funds Purchased and Securities Sold Under Agreements to Repurchase.................. (11,849) (4,628) (16,477) (13,995) (4,659) (18,654) Other Borrowings.................................. 3,788 (4,015) (227) 53 (4,447) (4,394) ----- ------ ----- ------ ----- ------ Total Interest Expense......................... (2,636) (6,708) (9,344) (3,336) (1,641) (4,977) ----- ------ ----- ------ ----- ------ Net Change in Net Interest Income................. $9,496 $2,779 $12,275 $21,151 $6,743 $27,894 ====== ====== ======= ======= ====== =======
(1) The above table is presented on a tax equivalent basis. (2) Non-accrual loans are included in average loans, net of unearned income. 12 13 MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) NET INTEREST INCOME (CONTINUED) The following tables present an analysis of net interest income by each major category of interest earning assets and interest bearing liabilities for the three and six month periods ended June 30, 2001 and 2000, respectively.
FOR THE THREE MONTHS ENDED JUNE 30, 2001 2000 --------------------------------------------------------------------------- AVERAGE AVERAGE AVERAGE AVERAGE (dollars in thousands ) BALANCE INTEREST RATE BALANCE INTEREST RATE --------------------------------------------------------------------------- INTEREST EARNING ASSETS: Securities.................................... $4,380,057 $80,783 7.40% $4,900,775 $91,789 7.53% Loans, net (1)................................ 9,761,554 196,050 8.06% 8,989,125 182,153 8.15% Money Market Investments...................... 67,901 808 4.77% 38,569 767 8.00% ---------- ------- ---------- ------- Total Interest Earning Assets............... 14,209,512 277,641 7.84% 13,928,469 274,709 7.93% ---------- ------- ---------- ------- NON INTEREST EARNING ASSETS: Cash and Due from Banks....................... 273,930 243,139 Other Assets (2).............................. 661,684 566,799 ----------- ----------- Total Assets................................ $15,145,126 $14,738,407 =========== =========== INTEREST BEARING LIABILITIES: Savings, NOW and Money Market Deposits......... $4,592,345 $22,929 2.00% $4,204,952 $19,909 1.90% Time Deposits.................................. 3,304,022 42,053 5.11% 3,031,302 37,713 5.00% ---------- ------- ---------- ------- Total Savings and Time Deposits.............. 7,896,367 64,982 3.30% 7,236,254 57,622 3.20% Federal Funds Purchased and Securities Sold Under Agreements to Repurchase............... 1,704,272 22,249 5.24% 2,580,818 38,726 6.04% Other Borrowings............................... 1,692,672 21,602 5.12% 1,393,806 21,828 6.30% ---------- ------- ---------- ------- Total Borrowings............................. 3,396,944 43,851 5.18% 3,974,624 60,554 6.13% ---------- ------- ---------- ------- Total Interest Bearing Liabilities......... $11,293,311 $108,833 3.87% $11,210,878 $118,176 4.24% ---------- ------- ---------- ------- Rate Spread.................................... 3.97% 3.69% NON-INTEREST BEARING LIABILITIES: Demand Deposits................................ $2,040,803 $1,773,792 Other Liabilities.............................. 193,382 178,066 ---------- ---------- Total Liabilities............................. 13,527,496 13,162,736 Capital Securities............................. 244,349 244,324 Stockholders' Equity.......................... 1,373,281 1,331,347 ---------- ---------- Total Liabilities and Stockholders' Equity... $15,145,126 $14,738,407 =========== =========== Net Interest Income and Net Interest Margin ... $168,808 4.77% $156,533 4.52% Less: Tax Equivalent Adjustment (3)............ (4,781) (3,567) ------- ------- Net Interest Income....................... $164,027 $152,966 ======== ========
(1) For purposes of these computations, non-accrual loans are included in average loans. (2) For purposes of these computations, unrealized gains/(losses) on available-for-sale securities are recorded in other assets. (3) Interest income on a tax equivalent basis includes the additional amount of income that would have been earned if investment in tax exempt money market investments and securities, state and municipal obligations, non-taxable loans, public equity and debt securities, and U.S. Treasuries had been made in securities and loans subject to Federal, State, and Local income taxes yielding the same after tax income. The tax equivalent amount for $1.00 of those aforementioned categories was $1.77, $1.60, $1.55, $1.23, and $1.03 for the three months ended June 30, 2001; and $1.75, $1.43, $1.55, $1.43, and $1.03 for the three months ended June 30, 2000. 13 14 MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 2001 2000 ------------------------------------------------------------------------ AVERAGE AVERAGE AVERAGE AVERAGE (dollars in thousands ) BALANCE INTEREST RATE BALANCE INTEREST RATE INTEREST EARNING ASSETS: ------------------------------------------------------------------------ Securities....................................... $4,402,833 $162,543 7.44% $4,914,881 $178,321 7.30% Loans, net (1)................................... 9,640,382 390,819 8.18% 8,703,649 351,312 8.12% Money Market Investments......................... 64,049 1,683 5.30% 78,492 2,495 6.39% ---------- ------- ---------- ------- Total Interest Earning Assets.................. 14,107,264 555,045 7.93% 13,697,022 532,128 7.81% ---------- ------- ---------- ------- NON INTEREST EARNING ASSETS: Cash and Due from Banks.......................... 266,741 231,784 Other Assets (2)................................. 652,199 476,775 ----------- ----------- Total Assets................................... $15,026,204 $14,405,581 =========== =========== INTEREST BEARING LIABILITIES: Savings, NOW and Money Market Deposits........... $4,425,686 $45,067 2.05% $4,033,564 $38,818 1.94% Time Deposits.................................... 3,181,947 83,176 5.27% 2,919,717 71,354 4.91% ---------- ------- ---------- ------- Total Savings and Time Deposits................ 7,607,633 128,243 3.40% 6,953,281 110,172 3.19% Federal Funds Purchased and Securities Sold Under Agreements to Repurchase................. 1,961,358 53,653 5.52% 2,458,626 72,307 5.91% Other Borrowings................................. 1,700,031 46,141 5.47% 1,657,060 50,535 6.13% ---------- ------- ---------- ------- Total Borrowings............................... 3,661,389 99,794 5.50% 4,115,686 122,842 6.00% ---------- ------- ---------- ------- Total Interest Bearing Liabilities........... $11,269,022 $228,037 4.08% $11,068,967 $233,014 4.23% ---------- ------- ---------- ------- Rate Spread...................................... 3.85% 3.58% NON-INTEREST BEARING LIABILITIES: Demand Deposits.................................. $1,973,259 $1,706,386 Other Liabilities................................ 195,361 162,815 ------- ------- Total Liabilities............................... 13,437,642 12,938,168 Capital Securities............................... 244,346 232,254 Stockholders' Equity............................ 1,344,216 1,235,159 ------- ------- Total Liabilities and Stockholders' Equity..... $15,026,204 $14,405,581 =========== =========== Net Interest Income and Net Interest Margin...... $327,008 4.67% $299,114 4.39% Less: Tax Equivalent Adjustment (3).............. (9,695) (6,818) ------ ------ Net Interest Income......................... $317,313 $292,296 ======== ========
(1) For purposes of these computations, non-accrual loans are included in average loans. (2) For purposes of these computations, unrealized gains/(losses) on available-for-sale securities are recorded in other assets. (3) Interest income on a tax equivalent basis includes the additional amount of income that would have been earned if investment in tax exempt money market investments and securities, state and municipal obligations, non-taxable loans, public equity and debt securities, and U.S. Treasuries had been made in securities and loans subject to Federal, State, and Local income taxes yielding the same after tax income. The tax equivalent amount for $1.00 of those aforementioned categories was $1.77, $1.60, $1.55, $1.23, and $1.03 for the six months ended June 30, 2001; and $1.75, $1.43, $1.55, $1.43, and $1.03 for the six months ended June 30, 2000. 14 15 NON-INTEREST INCOME Non-interest income, exclusive of net securities gains and other non-recurring items, increased $1.8 million, or 8.6%, to $22.5 million for the second quarter of 2001, when compared to $20.8 million in 2000. The improvement was achieved through a $2.6 million, or 22.8%, increase in customer related fees and service charges to $14.1 million. This increase resulted from the growth in core deposits, the introduction of new fee based services and products, changes to fee schedules, and the continued implementation of the Company's fee schedules on the former JSB and Reliance customer base. Partially offsetting this improvement was a $.6 million decline in investment management, commissions, and trust fees to $4.0 million and a $.5 million decline in other operating income to $2.5 million. The decline in investment management, commissions, and trust fees was attributable to the recent volatility in the stock market, resulting in declines in mutual fund and annuity sales activity. Net securities gains recognized during the most recent quarter were $1.3 million, as compared to $11.1 million during the comparable quarter in 2000. Net securities gains recognized during second quarters of 2001 and 2000 resulted from the sale of equity positions in certain publicly traded companies. Additionally, the Company recognized a net gain of $10.4 million on the sale of certain branch facilities during the second quarter of 2000. NON-INTEREST EXPENSE Non-interest expense increased $6.1 million, or 10.5%, to $64.5 million during the most recent quarter, as compared to $58.4 million in the second quarter of 2000, when adjusted for the expenses incurred in connection with the proposed acquisition of Dime Bancorp, Inc. of $2.3 million. This resulted from increases of $2.5 million in employee compensation and benefits, $2.3 million in other operating expenses and a $1.5 million increase in occupancy and equipment costs. Increases in employee compensation and benefits expense is due to increases in incentive compensation directly linked to the growth in deposits and related fee income, annual merit increases, increased costs associated with employee benefits, and costs associated with the expansion in the Manhattan market. Occupancy and equipment costs and other operating expenses increased due to the Company's de novo expansion in Manhattan and other costs associated with new business initiatives. The Company's core efficiency ratio, which represents the ratio of non-interest expense, excluding other real estate costs and other non-recurring charges, to net interest income on a tax equivalent basis and non-interest income, excluding securities gains and losses and other non-recurring income, was 33.7% in the 2001 second quarter, as compared with 33.0% for the comparable prior year period. The core efficiency ratio demonstrates management's ability to maintain a disciplined approach to monitoring its operating structure, controlling related costs, and continuing to grow revenue. INCOME TAXES The effective tax rate for the three and six month periods ended June 30, 2001 was 34.5%, as compared to 35%, exclusive of the merger and related restructuring charge, for the three and six month periods ended June 30, 2000. Management anticipates that the effective tax rate for the remainder of 2001 will be approximately 34.5%. LOAN PORTFOLIO The following table represents the components of the loan portfolio for the periods indicated:
------------------------------------------------------------------------- JUNE 30, % OF DECEMBER 31, % OF JUNE 30, % OF (dollars in thousands) 2001 TOTAL 2000 TOTAL 2000 TOTAL ------------------------------------------------------------------------- Mortgage Loans-Multi-Family..................... $3,306,790 34% $3,316,894 35% $3,283,083 36% Mortgage Loans-Residential...................... 2,694,767 27% 2,634,030 28% 2,640,017 29% Mortgage Loans-Commercial....................... 1,595,783 16% 1,503,795 16% 1,456,321 16% Commercial Loans................................ 1,217,479 12% 1,035,071 11% 885,486 10% Consumer Loans.................................. 835,744 9% 778,218 8% 722,029 8% Construction and Land Loans.................... 197,216 2% 141,754 2% 113,606 1% ---------- --- ---------- --- ---------- --- $9,847,779 100% $9,409,762 100% $9,100,542 100% Less: Unearned Income and Fees................. 12,699 15,049 16,760 ---------- --- ---------- --- ---------- --- Loans, net...................................... $9,835,080 $9,394,713 $9,083,782 ---------- --- ---------- --- ---------- ---
At June 30,2001, the loan portfolio increased $751.3 million or 8.3%, to $9.8 billion when compared to $9.1 billion at June 30, 2000, with growth reflected in all segments of the portfolio. Quality loan demand should continue to remain strong in the near term. 15 16 The loan portfolio is primarily secured by real estate in the New York metropolitan area. The risk inherent in the portfolio is dependent on both regional and general economic stability, which affects property values, and the financial well being and creditworthiness of the borrowers. To minimize the credit risk related to the portfolio's real estate concentration, management utilizes prudent underwriting standards and diversifies the type and locations of loans. Multi-family mortgage loans generally are for $1-5 million and are secured by properties located in the New York metropolitan area. The multi-family business includes loans on various types and geographically diverse apartment complexes. These mortgages are dependent largely on sufficient income to cover operating expenses and may be affected by government regulation, such as rent control regulations, which could impact the future cash flows of the property. Since most multi-family mortgages do not fully amortize, the principal outstanding is not significantly reduced prior to contractual maturity. The residential mortgage portfolio is comprised primarily of first mortgage loans on owner occupied 1-4 family residences located in the Company's market area. The commercial mortgage portfolio contains loans secured by professional office buildings, retail stores, shopping centers and industrial developments. Commercial loans consist primarily of loans to small and medium size businesses, as well as lease finance lending. The commercial mortgage and commercial loan portfolios do not contain syndicated loans. Consumer loans are primarily issued to finance new and used automobiles and are originated through an expanded dealer network. The credit risk in auto lending is dependent on the creditworthiness of the borrower and the value of the collateral. The consumer loan portfolio does not contain higher risk credit card and sub-prime loans. Land loans are used to finance the acquisition of vacant land for future residential and commercial development. Construction loans finance the construction and rehabilitation of both residential, and multi- family projects and to a lessor extent commercial developments. The construction and land development portfolios do not contain any higher risk equity participation loans ("AD&C") loans. Real estate underwriting standards include various limits on the loan-to-value ratios based on the type of property, and management considers, among other things, the creditworthiness of the borrower, the location of the real estate, the condition and value of the security property, the quality of the organization managing the property, and the viability of the project including occupancy rates, tenants and lease terms. Additionally, underwriting standards require appraisals and periodic inspections of the properties as well as ongoing monitoring of operating results. ASSET QUALITY The components of non-performing assets and restructured, accruing loans are detailed in the table below:
------------------------------------------------------ JUNE 30, DECEMBER 31, JUNE 30, (in thousands) 2001 2000 2000 ------------------------------------------------------ Loans Ninety Days Past Due and Still Accruing................ $4,973 $5,777 $4,692 Non-Accrual Loans............................................ 10,657 9,144 9,189 ------ ----- ----- Non-Performing Loans......................................... 15,630 14,921 13,881 Other Real Estate............................................ 566 499 913 ------ ----- ----- Non-Performing Assets........................................ $16,196 $15,420 $14,794 ======= ======= ======= Allowance for Loan Losses to Non-Performing Loans............ 594% 601% 634% Allowance for Loan Losses to Total Loans, net................ 0.94% 0.95% 0.97% Non-Performing Loans to Total Loans, net..................... 0.16% 0.16% 0.15% Non-Performing Assets to Total Assets........................ 0.10% 0.10% 0.10%
At June 30, 2001, non-performing assets increased modestly to $16.2 million, when compared to $15.4 million at December 31, 2000 and $14.8 million at June 30, 2000. As depicted in the table above, the level of non-performing loans to total loans has remained constant as the loan portfolio continues to grow, while reserve coverage ratios remain adequate. The modest level of non-performing assets over the past several years is a result of the effectiveness of the Company's loan administration and workout procedures, as well as a strong local economy. Non-performing loans at June 30, 2001 consisted of $4.8 million in consumer loans, $4.7 million in residential mortgages, $2.5 million in commercial mortgages, and $3.6 million in commercial loans. No assurance can be given as to the future level of non-performing assets, since the economic environment, interest rates, and other internal and external factors will influence these levels. 16 17 ALLOWANCE FOR LOAN LOSSES The provision for loan losses during the most recent quarter increased $1.7 million to $4.0 million when compared to $2.3 million for the comparable prior year period. The increase in the Company's level of provision is consistent with the growth experienced in the loan portfolio during the past year. For the six months ended June 30, 2001 the provision declined by $3.5 million when compared to the comparable prior year period. Reflected in the prior year period was a special provision of approximately $6.8 million. The additional provision during 2000 was recognized to conform the provisioning policies of JSB and Reliance to those of the Company and to restore the Company's post-merger reserve coverage ratios to approximate pre-merger levels. The determination of the adequacy of the allowance for loan losses and the periodic provisioning for estimated losses included in the consolidated financial statements is the responsibility of management. The evaluation process is undertaken on a quarterly basis but may increase in frequency should conditions arise that would require management's prompt attention. Conditions giving rise to such action are business combinations, opportunities to dispose of non-performing and marginally performing loans by bulk sale or any development, which may indicate an adverse trend. During the last several years, several mergers and acquisitions of commercial banks and thrift companies were completed. Generally, in these transactions, the merged entity's loan underwriting standards were less restrictive than the Company's, thereby increasing the level of risk in the portfolio. The methodology employed for assessing the appropriateness of the allowance consists of the following criteria: - The establishment of reserve amounts for all specifically identified criticized loans, including those arising from business combinations and those that have been designated as requiring attention by management's internal loan review program, bank regulatory examinations or the Company's external auditors. - An average one-year loss factor is applied to smaller balance homogenous types of loans not subject to specific review. These loans include residential 1-4 family properties and consumer loans. - An allocation to the remaining loans giving effect to historical loss experience over several years and linked to cyclical trends. Recognition is also given to the changed risk profile brought about from previous business combinations, customer knowledge, the results of the ongoing credit-quality monitoring processes and the cyclical nature of economic and business conditions. An important consideration in applying these methodologies is the concentration of real estate related loans located in the New York metropolitan area. Since many of the loans depend upon the sufficiency of collateral, any adverse trend in the real estate markets could seriously affect underlying values available to protect the Company from loss. This condition existed in the early 1990's when the Company experienced sizable real estate loan losses. Other evidence used to support the amount of the allowance and its components is as follows: - Regulatory examinations. - The amount and trend of criticized loans. - Actual losses. - Peer comparisons with other financial institutions. - Economic data associated with the real estate market in the Company's market area. - Opportunities to dispose of marginally performing loans for cash consideration. Based upon the process employed and giving recognition to all attendant factors associated with the loan portfolio, management considers the allowance for loan losses to be adequate at June 30, 2001. The following table represents a summary of the changes in the allowance for loan losses for the six months ended June 30, 2001 and 2000:
2001 2000 (dollars in thousands) Balance at Beginning of Year............................................ $89,653 $74,525 Provision for Loan Losses............................................... 7,750 11,250 Recoveries Credited to the Allowance.................................... 3,575 3,463 ------- -------- 100,978 89,238 Losses Charged to the Allowance......................................... (8,125) (10,297) Additional Allowance Acquired in the Reliance Acquisition.............. - 9,069 ------- -------- Balance at End of Period................................................ $92,853 $88,010 ======= ======== Net Charge-Offs to Average Loans, net................................... 0.09% 0.16%
17 18 SECURITIES PORTFOLIO The composition of and the amortized cost and estimated fair values of available-for-sale and held-to-maturity securities portfolios were as follows:
JUNE 30, 2001 DECEMBER 31, 2000 JUNE 30, 2000 ----------------------------------------------------------------------------------- AVAILABLE-FOR-SALE AMORTIZED FAIR AMORTIZED FAIR AMORTIZED FAIR (in thousands) COST VALUE COST VALUE COST VALUE --------------------------------------------- ------------------------------------- CMO's Private Issuances...................... $2,164,241 $2,209,416 $1,544,537 $1,576,245 $1,611,360 $1,586,993 CMO's Agency Issuances....................... 821,141 833,063 476,315 486,202 506,035 491,969 Mortgage-Backed Securities................... 508,044 509,365 553,793 555,470 656,018 638,613 U.S. Government Agencies' Obligations........ 97,826 98,708 150,200 151,746 131,348 129,731 U.S. Treasury Securities..................... 10,007 10,047 20,030 20,050 20,038 19,947 State & Municipal Obligations................ 120,391 121,665 89,664 90,530 -- -- Equity Securities (1)........................ 254,410 254,284 253,405 256,145 269,372 278,485 Other Securities............................. 365,945 349,363 362,711 331,275 327,796 303,535 ------- ------- ------- ------- ------- ------- $4,342,005 $4,385,911 $3,450,655 $3,467,663 $3,521,967 $3,449,273 ========== ========== ========== ========== ========== ==========
------------------------------------------------------------------------------ HELD-TO-MATURITY AMORTIZED FAIR AMORTIZED FAIR AMORTIZED FAIR (in thousands) COST VALUE COST VALUE COST VALUE ------------------------------------------------------------------------------ CMO's Private Issuances...................... $506,798 $508,669 $576,370 $571,110 $631,000 $600,987 CMO's Agency Issuances....................... -- -- 58,988 58,691 86,817 85,781 Mortgage-Backed Securities................... 271,038 269,958 361,363 357,488 405,381 388,533 State & Municipal Obligations................ 70,419 71,287 78,711 78,982 78,659 76,788 U.S. Government Agencies' Obligations........ -- -- 24 24 38 38 Other Securities............................. 12,636 12,606 15,221 14,994 17,549 17,294 ------ ------ ------ ------ ------ ------ $860,891 $862,520 $1,090,677 $1,081,289 $1,219,444 $1,169,421 ======== ======== ========== ========== ========== ==========
(1) Amortized cost and fair value includes $197.4 million in Federal Home Loan Bank stock for all periods presented. The growth in the available-for-sale CMO portfolios resulted from the aforementioned capital management strategy. Approximately, $930 million of these securities were purchased during the latter part of the quarter, with approximately $323 million settling subsequent to quarter end. The strategy for the securities portfolio is to maintain a short duration minimizing exposure to sustained increases in interest rates. This is achieved primarily through investments in securities with predictable cash flows and short average lives, and secondly, through the use of certain adjustable rate investments. The duration of the portfolio at June 30, 2001 was 3.2 years. The amortizing securities are almost exclusively mortgage-backed securities ("MBS"). These instruments provide a relatively stable source of cash flows, although they may be impacted by changes in interest rates. Such MBS securities are either guaranteed by FLHMC, GNMA or FNMA, or constitute collateralized mortgage-backed obligations ("CMO's") backed by U.S. government agency securities or CMO private issuances, which are principally AAA rated and are conservative current pay sequentials or PAC structures. Equity securities maintained in the available-for-sale portfolio were comprised principally of FHLB common stock and common and preferred stock of certain publicly traded companies. Other securities maintained in the available-for-sale portfolio consist of capital securities of certain financial institutions and corporate bonds. In connection with the adoption of SFAS 133 in the first quarter of 2001, management reclassified securities with an amortized cost of $119.6 million and a fair value of $119.0 million from the held-to-maturity portfolio to the available-for-sale portfolio. At June 30, 2001, securities carried at $3.2 billion were pledged to secure securities sold under agreements to repurchase, other borrowings, and for other purposes as required by law. Securities pledged for which the collateral may be sold or repledged by the secured parties approximated $2.0 billion, while securities pledged which the secured parties may not sell or repledge approximated $1.2 billion at June 30, 2001. 18 19 CAPITAL The Company and its banking subsidiaries are subject to the risk based capital guidelines administered by the bank regulatory agencies. 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 require all banks and bank holding companies to maintain a minimum ratio of total risk based capital to total risk weighted assets of 8%, including a minimum ratio of Tier I capital to total risk weighted assets of 4% and a Tier I capital to average assets of 4% ("Leverage Ratio"). Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators, that, if undertaken, could have a direct material effect on the Company's consolidated financial statements. As of June 30, 2001, the most recent notification from the various bank regulators categorized the Company and its banking subsidiaries as well capitalized under the regulatory framework for prompt corrective action. Under the capital adequacy guidelines, a well capitalized institution must maintain a minimum total risk based capital to total risk weighted assets ratio of at least 10%, a minimum Tier I capital to total risk weighted assets ratio of at least 6%, a minimum leverage ratio of at least 5% and not be subject to any written order, agreement or directive. There are no conditions or events since such notification that management believes have changed this classification. The following table sets forth the Company's regulatory capital at June 30, 2001 and 2000, under the rules applicable at such dates. Management believes that the Company and its banking subsidiaries meet all capital adequacy requirements.
JUNE 30, 2001 JUNE 30, 2000 -------------------------------------------------- (dollars in thousands ) AMOUNT Ratio AMOUNT RATIO -------------------------------------------------- Tier 1 Capital................................... $1,220,586 12.67% $1,275,716 14.71% Regulatory Requirement........................... 385,347 4.00% 346,862 4.00% ------- ---- ------- ---- Excess........................................... $835,239 8.67% $928,854 10.71% ======== ==== ======== ===== Total Risk Adjusted Capital...................... $1,313,439 13.63% $1,367,827 15.77% Regulatory Requirement........................... 770,694 8.00% 693,725 8.00% ------- ---- ------- ---- Excess........................................... $542,745 5.63% $674,102 7.77% ======== ==== ======== ==== Risk Weighted Assets............................. $9,633,678 $8,671,559
The Company's leverage ratio at June 30, 2001 was 8.24%. The Tier 1, total risk-based and leverage capital ratios of North Fork were 11.51%, 12.50%, and 7.47%, respectively, at June 30, 2001. On June 26, 2001, the Board of Directors declared a regular quarterly cash dividend of $.21 per common share. The dividend is payable August 15, 2001 to shareholders of record at the close of business July 27, 2001. In September 2000, the Board of Directors approved the repurchase of up to 17.1 million, or 10% of the Company's common shares outstanding. As of June 30, 2001, 14.3 million shares had been repurchased at an average cost of $19.87. No shares were repurchased during the most recent quarter. ASSET/LIABILITY MANAGEMENT The Company's primary earnings source is the net interest margin, which is affected by changes in the level of interest rates, the relationship between rates, the impact of interest rate fluctuations on asset prepayments, the level and composition of assets and liabilities, and the credit quality of the loan portfolio. Management's asset/liability objectives are to maintain a strong, stable net interest margin, to utilize capital effectively without taking undue risks and to maintain adequate liquidity. The risk assessment program includes a coordinated approach to the management of liquidity, capital and interest rate risk. This risk assessment process is governed by policies and limits established by senior management which are reviewed and approved by the Asset/Liability Committee of the Board of Directors ("ALCO"). ALCO provides guidance for the day to day asset/liability activities of the Company. ALCO meets periodically to evaluate the impact of changes in market interest rates on interest earning assets and interest bearing liabilities, net interest margin, capital and liquidity, and to evaluate management's strategic plan. The balance sheet structure is primarily short-term with most assets and liabilities repricing or maturing in less than five years. Management monitors the sensitivity of net interest income by utilizing a dynamic simulation model complemented by a traditional gap analysis. This model measures net interest income sensitivity and volatility to interest rate changes. It involves a degree of estimation based on certain assumptions that management believes to be reasonable. Factors considered include actual maturities, estimated cash flows, repricing characteristics, 19 20 deposit growth/retention and, primarily, the relative sensitivity of assets and liabilities to changes in market interest rates. Utilizing this process, management can estimate and project the impact of changes in interest rates on net interest income. This relative sensitivity is important to consider since the core deposit base is not subject to the same degree of interest rate sensitivity as its assets and borrowings. Core deposit costs are internally controlled and generally exhibit less sensitivity to changes in interest rates than the adjustable rate assets or liabilities whose yields or cost of funds are based on external indices and change in concert with market interest rates. Management has established certain limits for the potential volatility of net interest income, assuming certain levels of change in market interest rates with the objective of maintaining a stable level of net interest income under various probable rate scenarios. Management may choose to extend the maturity of its funding sources and/or reduce the repricing mismatches of its assets or liabilities by using derivative instruments such as interest rate swaps. Additionally, management may use interest rate collars, interest rate floors, and interest rate cap agreements to assist in insulating it from volatile interest rate changes. Based upon the aforementioned factors regarding the simulation model, projected net interest income for the next twelve months was modeled based on both an immediate rise and fall in interest rates as well as gradual movements in interest rates over the twelve-month period. Based on the information and assumptions in effect at June 30, 2001, management believes that a 100 basis point gradual increase in interest rates over the next twelve months would decrease net interest income by $3.7 million, or .5%, while a gradual decrease in interest rates would increase net interest income by $15.8 million, or 2.2%. It should be emphasized, however, that the estimated exposures set forth above are dependent on material assumptions such as those previously discussed. The traditional gap analysis complements the income simulation modeling, primarily focusing on the longer term structure of the balance sheet, since the gap analysis does not assess the relative sensitivity of assets and liabilities to changes in interest rates. The gap analysis is prepared based on the maturity and repricing characteristics of interest earning assets and interest bearing liabilities for selected time periods. The mismatch between repricings or maturities within a time period is commonly referred to as the "gap" for that period. A positive gap (asset sensitive), where interest-rate sensitive assets exceed interest-rate sensitive liabilities, generally will result in the net interest margin increasing in a rising rate environment and decreasing in a falling rate environment. A negative gap (liability sensitive) will generally have the opposite results on the net interest margin. However, the gap analysis is static in nature; therefore, the maturity and repricing characteristics of interest earning assets and interest bearing liabilities can change considerably with changes in interest rates. As part of the Company's overall interest rate risk management strategy management periodically uses derivative instruments to minimize significant unplanned fluctuations in earnings and cash flows caused by interest rate volatility. The Company's interest rate risk management strategy involves modifying the repricing characteristics of certain assets and liabilities so that changes in interest rates do not have a significant adverse effect on net interest income, the net interest margin and cash flows. Derivative instruments that management periodically uses as part of its interest rate risk management strategy include interest rate swaps, caps and floors. Derivative instruments outstanding at June 30, 2001 are summarized as follows:
FIXED VARIABLE NOTIONAL INTEREST RATE INTEREST RATE MATURITY AMOUNT RANGE RANGE - ---------------------------------------------------------------------------------------------------- (dollars in thousands) PAY FIXED SWAPS-MATURING: 2001.......................................... $200,000 4.66% - 4.72% 4.03% 2002.......................................... 100,000 4.18% 4.09% 2003.......................................... 700,000 4.54% - 4.88% 3.79% - 4.09% 2004.......................................... 100,000 5.23% 4.00% 2008.......................................... 75,000 6.14% 4.30% ------ $1,175,000 ========== PAY FLOATING SWAPS-MATURING: ------ 2001.......................................... $50,000 6.75% - 6.88% 4.03% - 4.13% ==========
20 21 MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) ASSET/LIABILITY MANAGEMENT (CONTINUED) The $1,175 million in swap agreements hedging certain borrowings require the Company to make periodic fixed rate payments, while receiving periodic variable rate payments indexed to the three month LIBOR rate based on a common notional amount and maturity date. Payments related to the Company's swap agreements are made either monthly, quarterly or semi-annually by one of the parties based on contractual terms. These swap agreements, which qualify as cash flow hedges, have original maturities of up to 10 years, and as of June 30, 2001 had an unrealized gain of $.7 million. At adoption of SFAS 133, a transition gain of $2.2 million (net of taxes of $.9 million) was recorded as a component of other comprehensive income for the swaps outstanding at January 1, 2001 accounted for as cash flow hedges. The $50 million in swap agreements hedging certain time deposits require the Company to make periodic floating rate payments while receiving periodic fixed rate payments indexed to the one month LIBOR rate. These agreements qualify as fair value hedges and mature within three months. These swaps and the hedged time deposits had fair values at June 30, 2001 of $50.3 million and $49.7 million, respectively. The use of interest rate swap agreements increased interest expense during the most recent quarter by $.2 million and decreased interest expense during the six month period by $.7 million. The credit risk associated with these financial instruments is the risk of non-performance by the counterparties to the agreements. However, management does not anticipate non-performance by the counterparties and monitors risk through its asset/liability management procedures. LIQUIDITY The objective of liquidity management is to ensure the availability of sufficient resources by the Company and its subsidiaries to meet their financial commitments and to capitalize on opportunities for business expansion. Liquidity management addresses the ability to meet deposit withdrawals either on demand or at contractual maturity, to repay other borrowings as they mature and to make new loans and investments as opportunities arise. Sources of liquidity include dividends from its subsidiaries, borrowings, the sale of available-for-sale securities, and funds available through the capital markets. Dividends from the Company's banking subsidiaries are limited by regulatory guidelines. The bank subsidiaries have numerous sources of liquidity including loan and security principal repayments and maturities, lines-of-credit with other financial institutions, the ability to borrow under repurchase agreements and Federal Home Loan Bank ("FHLB") advances, utilizing their unpledged securities and mortgage related loan portfolios, the sale of available-for-sale securities, the securitization or sale of loans, and growth in deposits. The banking subsidiaries currently have the ability to borrow an additional $4.9 billion on a secured basis, utilizing mortgage related loans and securities as collateral. At June 30, 2001, the Company had $2.7 billion in outstanding borrowings with the FHLB. The Company and its banking subsidiaries' liquidity positions are monitored daily to ensure the maintenance of an optimum level and efficient use of available funds. Management believes that sufficient liquidity exists to meet their operating requirements. 21 22 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: August 14, 2001 /s/ Daniel M. Healy ________________________________ Daniel M. Healy Executive Vice President & Chief Financial Officer 22 EX-11 3 y52520ex11.txt STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS 1 [EXHIBIT 11] NORTH FORK BANCORPORATION, INC. COMPUTATION OF NET INCOME PER COMMON EQUIVALENT SHARE JUNE 30, 2001 (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED ------------------------------------------------------------- JUNE 30, 2001 JUNE 30, 2000 JUNE 30, 2001 JUNE 30, 2000 ------------------------------------------------------------- Net Income.................................................... $78,219,145 $86,019,038 $156,646,203 $87,930,724 Common Equivalent Shares: Weighted Average Common Shares Outstanding.................... 159,391,536 171,671,916 159,300,171 166,994,366 Weighted Average Common Equivalent Shares .................... 1,781,142 1,174,971 1,669,741 1,149,566 ----------- ----------- ----------- ----------- Weighted Average Common and Common Equivalent Shares.......... 161,172,678 172,846,887 160,969,912 168,143,932 =========== =========== =========== =========== Net Income per Common Equivalent Share - Basic................ $0.49 $0.50 $0.98 $0.53 Net Income per Common Equivalent Share - Diluted.............. $0.49 $0.50 $0.97 $0.52
23 -----END PRIVACY-ENHANCED MESSAGE-----