-----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, JP+UiNWDmWhm/V8JL7nFECegfApQIRodafbGuNxNaialdRsuHiimOOkLf6nHz0KW gIQ4e6T1UkUJSvbyycl4Jg== 0000755933-98-000014.txt : 19980514 0000755933-98-000014.hdr.sgml : 19980514 ACCESSION NUMBER: 0000755933-98-000014 CONFORMED SUBMISSION TYPE: 10-Q CONFIRMING COPY: PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980513 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERCHANGE FINANCIAL SERVICES CORP /NJ/ CENTRAL INDEX KEY: 0000755933 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 222553159 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10518 FILM NUMBER: 00000000 BUSINESS ADDRESS: STREET 1: PARK 80 WEST PLAZA TWO STREET 2: ATTN INTERCHANGE STATE BANK CITY: SADDLE BROOK STATE: NJ ZIP: 07662 BUSINESS PHONE: 2017032265 MAIL ADDRESS: STREET 1: PARK 80 WEST STREET 2: PLAZA II CITY: SADDLE BROOK STATE: NJ ZIP: 07663 FORMER COMPANY: FORMER CONFORMED NAME: INTERCHANGER STATE BANK DATE OF NAME CHANGE: 19870416 FORMER COMPANY: FORMER CONFORMED NAME: INTERCHANGE FINANCIAL SERVICES CORP DATE OF NAME CHANGE: 19861209 10-Q 1 FORM 10-Q 1ST QTR INTERCHANGE FINANCIAL SERVICES CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands)
MARCH 31, December 31, 1998 1997 -------------- -------------- ASSETS Cash and due from banks $ 17,868 $ 17,797 Federal funds sold 24,400 8,400 -------------- -------------- Total cash and cash equivalents 42,268 26,197 -------------- -------------- Investment securities at amortized cost (approximate market value of $46,963 and $46,786) 46,552 46,370 Securities available for sale at estimated market value (amortized cost of $58,971 and $59,433) 60,577 61,257 Loans 419,121 401,854 Less: Allowance for loan losses 5,089 4,893 -------------- -------------- Net loans 414,032 396,961 -------------- -------------- Premises and equipment, net 7,988 7,871 Accrued interest receivable and other assets 7,976 9,381 -------------- -------------- TOTAL ASSETS $579,393 $548,037 ============== ============== LIABILITIES Deposits Noninterest bearing $ 87,416 $ 92,145 Interest bearing 408,183 378,548 -------------- -------------- Total deposits 495,599 470,693 Securities sold under agreements to repurchase 17,303 13,027 Accrued interest payable and other liabilities 5,312 4,668 Long-term borrowings 9,852 9,879 -------------- -------------- TOTAL LIABILITIES 528,066 498,267 -------------- -------------- COMMITMENTS AND CONTINGENT LIABILITIES - - STOCKHOLDERS' EQUITY Common stock 4,811 4,811 Capital surplus 15,627 15,836 Retained earnings 30,980 29,698 Unrealized gain - securities available for sale, net of taxes 999 1,131 -------------- -------------- 52,417 51,476 Less: Treasury Stock (85,377 and 134,025 common shares) 1,090 1,706 -------------- -------------- Total stockholders' equity 51,327 49,770 -------------- -------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $579,393 $548,037 ============== ============== - -------------------------------------------------------------------------------------------------------------- See notes to consolidated financial statements
INTERCHANGE FINANCIAL SERVICES CORPORATION CONSOLIDATED STATEMENTS OF INCOME (in thousands except per share data)
Three Months Ended March 31, ------------------------------ 1998 1997 ------------- ------------ INTEREST INCOME Interest and fees on loans $8,742 $7,812 Interest on federal funds sold 250 34 Interest and dividends on securities Taxable interest income 1,549 1,702 Interest income exempt from federal income taxes 29 15 Dividends 54 53 ------------- ------------ TOTAL INTEREST INCOME 10,624 9,616 ------------- ------------ INTEREST EXPENSE Interest on deposits 3,774 3,292 Interest on short-term borrowings 208 198 Interest on long-term borrowings 147 148 ------------- ------------ TOTAL INTEREST EXPENSE 4,129 3,638 ------------- ------------ NET INTEREST INCOME 6,495 5,978 Provision for loan losses 210 610 ------------- ------------ NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 6,285 5,368 ------------- ------------ NONINTEREST INCOME Service fees on deposit accounts 593 428 Net gain on sale of loans - 1,067 Other 308 159 ------------- ------------ TOTAL NONINTEREST INCOME 901 1,654 ------------- ------------ NONINTEREST EXPENSES Salaries and benefits 2,288 2,011 Net occupancy 505 486 Furniture and equipment 234 168 Advertising and promotion 168 152 Federal Deposit Insurance Corporation assessment 16 3 Foreclosed real estate expense, net - 8 Other 995 1,034 ------------- ------------ TOTAL NONINTEREST EXPENSES 4,206 3,862 ------------- ------------ Income before income taxes 2,980 3,160 Income taxes 1,058 1,106 ------------- ------------ NET INCOME $ 1,922 $ 2,054 ============= ============ BASIC EARNINGS PER COMMON SHARE $0.30 $0.32 ============= ============ DILUTED EARNINGS PER COMMON SHARE $0.30 $0.32 ============= ============ - ------------------------------------------------------------------------------------------------------ See notes to consolidated financial statements
INTERCHANGE FINANCIAL SERVICES CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (in thousands)
Accumulated Other Comprehensive Retained Comprehensive Common Capital Treasury Income Earnings Income/(Loss) Stock Surplus Stock Total ------------ -------- -------------- -------- -------- -------- -------- Balance at January 1, 1997 $24,429 $268 $4,733 $14,931 - $44,361 Comprehensive income Net Income $2,054 2,054 2,054 Other comprehensive income, net of taxes Unrealized losses on securities (246) (246) (246) ------------ Other comprehensive income (246) ------------ Comprehensive income $1,808 ============ Dividends on common stock at $0.09 per share (1) (575) (575) Issued 12,822 shares of common stock in connection with Executive Compensation Plan (1) 9 159 168 Exercised 27,440 option shares (1) 20 143 163 Purchased 12,200 shares in exchange for option shares (1) $ (163) (163) -------- ------------- -------- -------- -------- -------- Balance at March 31, 1997 25,908 22 4,762 15,233 (163) 45,762 Comprehensive income Net Income $5,502 5,502 5,502 Other comprehensive income, net of taxes Unrealized gains on securities 1,109 1,109 1,109 ----------- Other comprehensive income 1,109 ----------- Comprehensive income $6,611 =========== Dividends on common stock at $0.27 per share (1) (1,712) (1,712) Exercised 23,225 option shares (1) 18 97 115 Fractional shares on 3 for 2 stock split (4) (4) Issued 229,562 shares of common stock in merger with Washington Interchange Corporation (1) 170 2,765 2,935 Acquired 187,283 shares of common stock held by Washington Interchange Corporation (1) (2,394) (2,394) Retired 187,283 shares of common stock held by Washington Interchange Corporation (1) (139) (2,255) 2,394 - Purchased 121,826 shares of common stock (1) (1,543) (1,543) -------- -------------- -------- -------- -------- -------- Balance at December 31, 1997 29,698 1,131 4,811 15,836 (1,706) 49,770 Comprehensive income Net Income $1,922 1,922 1,922 Other comprehensive income, net of taxes Unrealized losses on securities (132) (132) (132) ----------- Other comprehensive income (132) ----------- Comprehensive income $1,790 =========== Dividends on common stock at $0.10 per share (1) (640) (640) Issued 12,769 shares of common stock in connection with Executive Compensation Plan (1) 70 162 232 Exercise of 35,878 option shares (1) (279) 454 175 -------- -------------- -------- -------- -------- -------- Balance at March 31, 1998 $30,980 $999 $4,811 $15,627 $(1,090) $51,327 ======== ============== ======== ======== ======== ======== - ------------------------------------------------------------------------------------------------------------------------------ (1) Adjusted for the effects of the 3 for 2 stock split issued on April 17, 1998 to shareholders of record on March 20, 1998 See notes to consolidated financial statements.
INTERCHANGE FINANCIAL SERVICES CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
For the three months ended March 31, ------------------------------ 1998 1997 ------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 1,922 $ 2,054 Non-cash items included in earnings Depreciation and amortization of fixed assets 309 227 Amortization of securities premiums 179 202 Accretion of securities discounts (36) (17) Amortization of premiums in connection with acquisition 111 111 Provision for loan losses 210 610 Net gain on sale of loans - (1,067) Net gain on sale of foreclosed real estate - (3) Increase in carrying value of loans available for sale - 26 Decrease (increase) in operating assets Net repayment of loans available for sale - 6 Accrued interest receivable 65 364 Other 1,279 (367) Increase in operating liabilities Accrued interest payable 170 67 Other 475 1,269 ------------ ---------- CASH PROVIDED BY OPERATING ACTIVITIES 4,684 3,482 ------------ ---------- CASH FLOWS FROM INVESTING ACTIVITIES (Payments for) proceeds from Net originations of loans (6,155) (10,065) Purchase of loans (3,626) - Purchase of term federal funds (7,500) - Sale of loans - 5,945 Purchase of securities available for sale (254) (1,985) Maturities of securities available for sale 639 221 Sale of foreclosed real estate - 329 Purchase of investment securities (4,260) - Maturities of investment securities 4,011 16,672 Net payments on foreclosed real estate - 2 Purchase of fixed assets (390) (624) Sale of fixed assets - 13 ------------ ---------- CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (17,535) 10,508 ------------ ---------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from (payments for) Deposits more than withdrawals 24,906 8,125 Securities sold under agreements to repurchase 6,600 1,650 Retirement of other borrowings (27) (5,225) Retirement of securities sold under agreement to repurchase (2,324) (1,000) Dividends (640) (575) Common stock issued 232 168 Exercise of option shares from Treasury 175 - ------------ ---------- CASH PROVIDED BY FINANCING ACTIVITIES 28,922 3,143 ------------ ---------- INCREASE IN CASH AND CASH EQUIVALENTS 16,071 17,133 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 26,197 24,322 ============ ========== CASH AND CASH EQUIVALENTS, END OF PERIOD $42,268 $41,455 ============ ========== Supplemental disclosure of cash flow information: Cash paid for: Interest $3,959 $3,571 Income taxes 423 110 Supplemental disclosure of non-cash investing activities: Decrease - market valuation of securities available for sale $218 $353 Amortization of valuation allowance - securities transferred from available for sale to held to maturity - 2 - ------------------------------------------------------------------------------------------------------- See notes to consolidated financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. FINANCIAL STATEMENTS The consolidated financial statements should be read in conjunction with the financial statements and schedules as presented in the Annual Report on Form 10-K of Interchange Financial Services Corporation (the "Company") for the year ended December 31, 1997. Consolidated financial data for the three months ended March 31, 1998 and 1997, are unaudited but reflect all adjustments consisting of only normal recurring adjustments which are, in the opinion of management, considered necessary for a fair presentation of the financial condition and results of operations for the interim periods. Results for interim periods are not necessarily indicative of results to be expected for any other period or the full year. 2. LEGAL PROCEEDINGS The Company is a party to routine litigation involving various aspects of its business, none of which, in the opinion of management and its legal counsel, is expected to have a material adverse impact on the consolidated financial condition, results of operations or liquidity of the Company. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion is an analysis of the consolidated financial condition and results of operations of the Company for the three months ended March 31, 1998 and 1997, and should be read in conjunction with the consolidated financial statements and notes thereto included in Item 1 hereof. RESULTS OF OPERATIONS EARNINGS SUMMARY For the first quarter of 1998, the Company reported net income of $1.9 million or $0.30 diluted earnings per common share, as compared with $2.1 million or $0.32 diluted earnings per common share for the same period of 1997, a decrease of $132 thousand. The decrease was due to a non-recurring gain of $1.1 million recognized in the first quarter of 1997 from the sale of commercial loans. The provision for loan losses declined $400 thousand during the first quarter of 1998 as compared to the same period in 1997 and partially offset the gain from the sale of commercial loans. Adjusting for the non-recurring items, earnings for the first quarter of 1998 would have increased $302 thousand. NET INTEREST INCOME Net interest income is the most significant source of the Company's operating income. Net interest income on a tax equivalent basis increased $520 thousand to $6.5 million for the quarter ended March 31, 1998 as compared to the same quarter of 1997. The increase in net interest income is principally due to higher levels of interest earning assets and increased loan production. The loan growth was funded largely by the growth in deposit liabilities. Average interest earning assets increased $66.5 million or 14.2% to $534.3 million for the quarter ended March 31, 1998, over the same period in 1997. The growth was mainly the result of an increase in volume of commercial mortgages, home equity loans and consumer auto leases. For the first quarter of 1998, average loans increased $56.3 million or 15.9% over the same period in 1997. The average yield on loans was negatively impacted by a decline in market rates and increased competitive factors. However, the increased loan volume contributed to a $930 thousand growth in loan income which offset the decline in yield. The growth in loan income was instrumental to the growth in net interest income. For the quarter ended March 31, 1998, average interest bearing deposits grew $38.9 million or 10.9% and noninterest bearing demand deposits grew $13.2 million or 18.4%. The total growth in average deposits amounted to 12.2% and is considered exceptional relative to the industry as a whole and considering the competition and alternative investments available to consumers. Despite the outstanding growth in deposits, the Company's cost of funds increased only 5 basis points over the first quarter of 1997. NONINTEREST INCOME For the quarter ended March 31, 1998, noninterest income amounted to $901 thousand, a decrease of $753 thousand as compared to the same period in 1997. The decrease was principally due to a nonrecurring gain of $1.1 million recognized in the first quarter of 1997 from the sale of commercial loans. Adjusting for the nonrecurring item, noninterest income increased $314 thousand and was largely the result of a $165 thousand increase in service charges on deposits. The higher levels of service charges on deposits can be attributed to the growth of the deposit base and the implementation of ATM surcharges. A gain of $53 thousand from the sale of reverse mortgage servicing also contributed to the increase in noninterest income. NONINTEREST EXPENSES For the quarter ended March 31, 1998, noninterest expenses amounted to $4.2 million, an increase of $344 thousand as compared to the same period in 1997. Increases in salaries and benefits, the largest component of noninterest expenses, were predominantly responsible for the increase. Salaries and benefits expense increased $277 thousand mostly due to normal salary raises, promotions and increases in staff. At March 31, 1998, full-time equivalent staff was 179 as compared to 173 at March 31, 1997. Occupancy and equipment costs which increased $85 thousand from the first quarter of 1997 were also partly responsible for the increase. The increase in occupancy and equipment costs was mostly due to the installation of a new mainframe computer, the addition of new equipment and the renovation of a branch. One of the Company's goals is to control expenses in order to maximize earnings and shareholder value. Generally, the efficiency ratio is one method utilized to measure a bank's operating expenses. The efficiency ratio is gross operating expenses, excluding the amortization of intangibles and net expenses of foreclosed real estate, expressed as a percentage of net interest income (on a fully taxable equivalent basis) and other noninterest income, excluding gains. Generally, the lower the efficiency ratio the more effective the Company is in utilizing its resources to produce income. The Company's efficiency ratio for the quarter ended March 31, 1998, was 55.7% as compared to 55.1% for the year 1997. The slight deterioration resulted from the installation of a new mainframe computer, the addition of new equipment and the renovation of a branch. The national peer group average (published by SNL Securities) for the year 1997 was 60.4%. INCOME TAXES Income tax expense as a percentage of pre-tax income was 35.5% for the three months ended March 31, 1998 as compared to 35.0% for the first quarter of 1997. The increase is attributable to an increase in the effective state income tax rate. NONPERFORMING ASSETS Nonperforming assets are comprised of nonaccrual loans, restructured loans and foreclosed real estate. At March 31, 1998, nonperforming assets amounted to $2.4 million, a decrease of $450 thousand from $2.9 million at March 31, 1997. The sale of $282 thousand of real estate owned comprised most of the decrease. The ratio of nonperforming assets to total loans and foreclosed real estate decreased to 0.58% at March 31, 1998 from 0.81% at March 31, 1997. At March 31, 1998, nonperforming assets increased $353 thousand from $2.1 million at December 31, 1997. For the first quarter of 1998, the ratio of nonperforming assets to total loans and foreclosed real estate increased 6 basis points from 0.52% at December 31, 1997. PROVISION FOR LOAN LOSSES AND LOAN LOSS EXPERIENCE The provision for loan losses represents management's determination of the amount necessary to bring the allowance for loan losses to a level that management considers adequate to reflect the risk of future losses inherent in the Company's loan portfolio. In its evaluation of the adequacy of the allowance for loan losses, management considers past loan loss experience, changes in the composition of performing and nonperforming loans, the condition of borrowers facing financial pressure, the relationship of the current level of the allowance to the credit portfolio and to nonperforming loans and existing economic conditions. However, the process of determining the adequacy of the allowance is necessarily judgmental and subject to changes in external conditions. Accordingly, there can be no assurance that existing levels of the allowance will ultimately prove adequate to cover actual loan losses. The allowance for loan losses was $5.1 million at March 31, 1998, and $4.9 million at December 31, 1997, representing 208.6% and 234.45% of nonperforming loans at those dates, respectively. In the first quarter of 1998, the Company's provision for loan losses was $210 thousand, a decrease of $400 thousand from the same period a year ago. In the first quarter of 1997, the provision for loan losses was higher since, during that period, the Company's loan growth and focus was largely in commercial lending. Such growth and concentration can change the characteristics and potentially increase the inherent credit risk of the Company's loan portfolio. Accordingly, during the first quarter of 1997, the Company revised the risk allocation percentages applied to commercial loans used in computing the allowance for loan losses to capture such risk. This resulted in the increase in the provision for loan losses during the period ended, March 31, 1997. SECURITIES Securities held to maturity and securities available for sale consist of the following: (in thousands)
MARCH 31, 1998 ------------------------------------------------------------ GROSS GROSS ESTIMATED AMORTIZED UNREALIZED UNREALIZED MARKET COST GAINS LOSSES VALUE ------------ ------------ ----------- ------------ SECURITIES HELD TO MATURITY OBLIGATIONS OF U.S. TREASURY $ 20,074 $ 106 - $ 20,180 MORTGAGE-BACKED SECURITIES 16,798 146 $27 16,917 OBLIGATIONS OF U.S. AGENCIES 6,718 186 - 6,904 OBLIGATIONS OF STATES & POLITICAL SUBDIVISIONS 2,812 - - 2,812 OTHER DEBT SECURITIES 150 - - 150 ------------ ------------ ----------- ------------ 46,552 438 27 46,963 ------------ ------------ ----------- ------------ SECURITIES AVAILABLE FOR SALE OBLIGATIONS OF U.S. TREASURY 35,406 583 53 35,936 MORTGAGE-BACKED SECURITIES 15,443 187 36 15,594 OBLIGATIONS OF U.S. AGENCIES 3,957 83 - 4,040 EQUITY SECURITIES 4,165 842 - 5,007 ------------ ------------ ----------- ------------ 58,971 1,695 89 60,577 ------------ ------------ ----------- ------------ TOTAL SECURITIES $105,523 $2,133 $116 $107,540 ============ ============ =========== ============ December 31, 1997 ------------------------------------------------------------ Gross Gross Estimated Amortized Unrealized Unrealized Market Cost Gains Losses Value ------------ ------------ ----------- ------------ Securities held to maturity Obligations of U.S. Treasury $ 22,134 $ 122 - $ 22,256 Mortgage-backed securities 14,326 153 $ 25 14,454 Obligations of U.S. Agencies 6,711 166 - 6,877 Obligations of states & political subdivisions 3,049 - - 3,049 Other debt securities 150 - - 150 ------------ ------------ ----------- ------------ 46,370 441 25 46,786 ------------ ------------ ----------- ------------ Securities available for sale Obligations of U.S. Treasury 35,452 605 74 35,983 Mortgage-backed securities 16,115 197 18 16,294 Obligations of U.S. Agencies 3,954 66 - 4,020 Equity securities 3,912 1,048 - 4,960 ------------ ------------ ----------- ------------ 59,433 1,916 92 61,257 ------------ ------------ ----------- ------------ Total securities $105,803 $2,357 $117 $108,043 ============ ============ =========== ============
At March 31, 1998, the contractual maturities of securities held to maturity and securities available for sale are as follows: (in thousands)
SECURITIES SECURITIES HELD TO MATURITY AVAILABLE FOR SALE ------------------------------- ---------------------------- AMORTIZED MARKET AMORTIZED MARKET COST VALUE COST VALUE ------------- ------------- ------------ ------------ WITHIN 1 YEAR $16,907 $16,954 $ 3,513 $ 3,545 AFTER 1 BUT WITHIN 5 YEARS 10,006 10,152 38,764 39,366 AFTER 5 BUT WITHIN 10 YEARS 12,830 12,958 5,208 5,326 AFTER 10 YEARS 6,809 6,899 7,321 7,333 EQUITY SECURITIES - - 4,165 5,007 ------------- ------------- ------------ ------------ TOTAL $46,552 $46,963 $58,971 $60,577 ============= ============= ============ ============
CAPITAL ADEQUACY The Company's and the Bank's capital amounts and ratios are as follows: (dollars in thousands)
To Be Well Capitalized Under For Capital Prompt Corrective Actual Adequacy Purposes Action Provisions ------------------------ ------------------------ ----------------------- Amount Ratio Amount Ratio Amount Ratio ------------ ----------- ------------ ----------- ----------- ----------- AS OF MARCH 31, 1998: TOTAL CAPITAL (TO RISK WEIGHTED ASSETS): THE COMPANY $54,493 13.95 % $31,249 8.00 % N/A N/A THE BANK 52,621 13.54 31,102 8.00 $38,877 10.00 % TIER 1 CAPITAL (TO RISK WEIGHTED ASSETS): THE COMPANY 49,610 12.70 15,624 4.00 N/A N/A THE BANK 47,761 12.29 15,551 4.00 23,326 6.00 TIER 1 CAPITAL (TO AVERAGE ASSETS): THE COMPANY 49,610 8.84 16,831 3.00 N/A N/A THE BANK 47,761 8.56 16,745 3.00 27,908 5.00 As of December 31, 1997: Total Capital (to Risk Weighted Assets): The Company $52,541 14.03 % $29,961 8.00 % N/A N/A The Bank 50,691 13.60 29,815 8.00 $37,269 10.00 % Tier 1 Capital (to Risk Weighted Assets): The Company 47,860 12.78 14,981 4.00 N/A N/A The Bank 46,032 12.35 14,908 4.00 22,361 6.00 Tier 1 Capital (to Average Assets): The Company 47,860 8.86 16,214 3.00 N/A N/A The Bank 46,032 8.56 16,135 3.00 26,892 5.00
LIQUIDITY LIQUIDITY IS THE ABILITY TO PROVIDE SUFFICIENT RESOURCES TO MEET ALL FINANCIAL OBLIGATIONS AND FINANCE PROSPECTIVE BUSINESS OPPORTUNITIES. LIQUIDITY LEVELS OVER ANY GIVEN PERIOD OF TIME ARE A PRODUCT OF THE COMPANY'S OPERATING, FINANCING AND INVESTING ACTIVITIES. THE EXTENT OF SUCH ACTIVITIES ARE OFTEN SHAPED BY SUCH EXTERNAL FACTORS AS COMPETITION FOR DEPOSITS AND DEMAND FOR LOANS. FINANCING FOR THE COMPANY'S LOANS AND INVESTMENTS IS DERIVED PRIMARILY FROM DEPOSITS, ALONG WITH INTEREST AND PRINCIPAL PAYMENTS ON LOANS AND INVESTMENTS. AT MARCH 31, 1998, TOTAL DEPOSITS AMOUNTED TO $495.6 MILLION, AN INCREASE OF $24.9 MILLION OR 5.3% FROM DECEMBER 31, 1997. IN ADDITION, THE COMPANY SUPPLEMENTED THE MORE TRADITIONAL FUNDING SOURCES WITH BORROWINGS FROM THE FEDERAL HOME LOAN BANK OF NEW YORK ("FHLB") AND WITH SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE ("REPOS"). AT MARCH 31, 1998, ADVANCES FROM THE FHLB AND REPOS AMOUNTED TO $9.9 MILLION AND $17.3 MILLION, RESPECTIVELY, AS COMPARED TO $9.9 MILLION AND $13.0 MILLION, RESPECTIVELY, AT DECEMBER 31, 1997. IN THE FIRST QUARTER OF 1998, LOAN PRODUCTION CONTINUED TO BE THE COMPANY'S PRINCIPAL INVESTING ACTIVITY. NET LOANS AT MARCH 31, 1998 AMOUNTED TO $414.0 MILLION, COMPARED TO $397.0 MILLION AT THE END OF 1997, AN INCREASE OF $17.0 MILLION OR 4.3%. THE COMPANY'S MOST LIQUID ASSETS ARE CASH AND DUE FROM BANKS AND FEDERAL FUNDS SOLD. AT MARCH 31, 1998, THE TOTAL OF SUCH ASSETS AMOUNTED TO $42.3 MILLION OR 7.3% OF TOTAL ASSETS, COMPARED TO $26.2 MILLION OR 4.8% OF TOTAL ASSETS AT YEAR-END 1997. ANOTHER SIGNIFICANT LIQUIDITY SOURCE IS THE COMPANY'S AVAILABLE-FOR-SALE ("AFS") SECURITIES. AT MARCH 31, 1998, AFS SECURITIES AMOUNTED TO $60.6 MILLION OR 56.5% OF TOTAL SECURITIES, COMPARED TO $61.3 MILLION OR 56.9% OF TOTAL SECURITIES AT YEAR-END 1997. IN ADDITION TO THE AFOREMENTIONED SOURCES OF LIQUIDITY, THE COMPANY HAS AVAILABLE VARIOUS OTHER SOURCES OF LIQUIDITY, INCLUDING FEDERAL FUNDS PURCHASED FROM OTHER BANKS AND THE FEDERAL RESERVE DISCOUNT WINDOW. THE BANK ALSO HAS A $51.0 MILLION LINE OF CREDIT AVAILABLE THROUGH ITS MEMBERSHIP IN THE FEDERAL HOME LOAN BANK OF NEW YORK. MANAGEMENT BELIEVES THAT THE COMPANY'S SOURCES OF FUNDS ARE SUFFICIENT TO MEET ITS FUNDING REQUIREMENTS. PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS REFERENCE IS MADE TO FORM 10-K FILED FOR THE YEAR ENDED DECEMBER 31, 1997. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A) THE FOLLOWING EXHIBITS ARE FURNISHED HEREWITH: EXHIBIT NO. 11 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS 27 FINANCIAL DATA SCHEDULE (B) FORM 8-K FILED MARCH 17, 1998 ANNOUNCING THE ACQUISITION OF THE JERSEY BANK FOR SAVINGS BY MERGER. (C) FORM 8-K FILED MARCH 17, 1998 ANNOUNCING ITS INCREASED QUARTERLY CASH DIVIDEND AND 3 FOR 2 STOCK SPLIT. 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. INTERCHANGE FINANCIAL SERVICES CORPORATION BY: /S/ ANTHONY LABOZZETTA ______________________________ ANTHONY LABOZZETTA EXECUTIVE VICE PRESIDENT & CFO EX-11 2 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS EXHIBIT 11. COMPUTATION RE EARNINGS PER SHARE
------------------------------------------------------------------------------------ Three Months Ended, ------------------------------------------------------------------------------------ March 31, 1998 March 31, 1997 ---------------------------------------- -------------------------------------- Weighted Per Weighted Per Average Share Average Share Income Shares Amount Income Shares Amount ------------- ------------- ------------ ----------- ------------- ------------- BASIC EARNINGS PER COMMON SHARE Income available to common shareholders $1,922 6,387 $0.30 $2,054 6,393 $0.32 ============ =========== EFFECT OF DILUTIVE SHARES Options issued to management - 75 - 74 ------------- ------------- ----------- -------------- DILUTED EARNINGS PER COMMON SHARE $1,922 6,462 $0.30 $2,054 6,467 $0.32 ============= ============= ============ =========== ============== ============
EX-27 3
9 1,000 3-Mos Dec-31-1998 Mar-31-1998 17,868 0 24,400 0 60,577 46,552 46,963 419,121 5,089 579,393 495,599 17,303 5,312 9,852 4,811 0 0 46,516 579,393 8,742 1,632 250 10,624 3,774 4,129 6,495 210 0 4,206 2,980 2,980 0 0 1,922 0.30 0.30 4.72 1,867 0 573 0 4,893 42 28 5,089 5,089 0 865
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