-----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, QXuF47J3fgHS5w1V/GHcype0XjT4Y0ayvHSCnCUa15j9r0AiAFI9yp0kWBUNv1G1 /aFnWgHPFMHsV/act2vSTw== 0000927089-98-000159.txt : 19981023 0000927089-98-000159.hdr.sgml : 19981023 ACCESSION NUMBER: 0000927089-98-000159 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981021 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981022 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHARTER ONE FINANCIAL INC CENTRAL INDEX KEY: 0000819692 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 341567092 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-16311 FILM NUMBER: 98729338 BUSINESS ADDRESS: STREET 1: 1215 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114 BUSINESS PHONE: 2165665300 MAIL ADDRESS: STREET 1: 1215 SUPERIOR AVENUE STREET 2: 1215 SUPERIOR AVENUE CITY: CLEVELAND STATE: OH ZIP: 44114 8-K 1 PRESS RELEASE SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) October 21, 1998 CHARTER ONE FINANCIAL, INC. (Exact name of Registrant as specified in its Charter) Delaware 0-16311 34-1567092 (State or other (Commission File (IRS Employer jurisdiction of Number) Identification incorporation) No.) 1215 Superior Avenue, Cleveland, Ohio 44114 -------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (216) 566-5300 1 ITEM 5. OTHER EXHIBITS Attached as Exhibit 99.1 is the Registrant's press release dated October 21, 1998 announcing earnings for the three and nine month periods ended September 30, 1998. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (c) The following exhibit is filed as part of this Report: 99.1 Press release dated October 21, 1998. 2 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. CHARTER ONE FINANCIAL, INC. Date: October 21, 1998 By: /s/ Robert J. Vana ------------------- Robert J. Vana Chief Corporate Counsel and Secretary 3 EXHIBIT INDEX Exhibit Number Description - ------- ----------- 99.1 Press Release dated October 21, 1998. INVESTOR CONTACT: ELLEN BATKIE (800) 262-6301 MEDIA CONTACT: WILLIAM DUPUY (216) 566-5311 CHARTER ONE 3RD QUARTER EARNINGS PER SHARE UP 31% TO $.51 Highlights for the quarter ended 9/30/98: o Record net income of $68.7 million - $.51 per share o Return on equity - 18.42%, return on assets - 1.38% o Net interest income up 9% from year ago quarter, end of period net yield at 2.97% o Top line revenue up 11% from year ago quarter o Retail banking revenue up 34% from year ago quarter o Efficiency ratio - 42.3% vs. 46.3% in year ago quarter o Loan originations - $2.3 billion, including $931 million in energized assets o Nonperforming asset ratio - .40% of assets o Opened 47,100 new checking accounts CLEVELAND, Ohio, October 21, 1998 -- Charter One Financial, Inc. (NASDAQ:COFI), the holding company of Charter One Bank, F.S.B., today reported record net income for the three months ended September 30, 1998 of $68.7 million, up 28% from $53.6 million reported for the third quarter of 1997. On a per share basis, third quarter 1998 earnings were $.51 per diluted share, up 31% from $.39 per diluted share in 1997. For the first nine months of 1998, net earnings were $200.6 million, or $1.46 per diluted share, compared with $160.4 million, or $1.19 per diluted share, for the first nine months of 1997. Prior period per share data have been restated for the 5% stock dividend paid September 30, 1998 and the 2-for-1 stock split paid May 20, 1998. Annualized returns for the three months ended September 30, 1998 were 18.42% on average equity and 1.38% on average assets. These compared with returns of 16.12% on equity and 1.14% on assets for the third quarter of 1997. "The third quarter represented another strong and consistent performance from both a financial and an operational standpoint," observed Charles John Koch, Charter One's Chairman and Chief Executive Officer. "We continue to profitably grow our consumer banking franchise which is contributing to a stable net interest margin. The consumer banking strategy is also responsible for the tremendous growth in retail banking revenue, accompanied by effective control of our credit and operating costs. We are entering the fourth quarter with a solid balance sheet profile, which will be enhanced following the mergers with CS Financial and ALBANK Financial." Charter One 3rd Quarter Results Net interest income - Net interest income increased $11.6 million, or 8.8%, over the third quarter of 1997. The net yield during the three-month period was 2.97%, up from 2.88% during the third quarter of 1997. These increases were accomplished notwithstanding a challenging interest rate environment as the Company continued to be successful in its efforts to better optimize the mix of earning assets and liabilities. For the nine month periods, net interest income was up 9.1% in 1998 over 1997. Provision for loan and lease losses - The provision for loan and lease losses was $5.8 million in the third quarter of 1998, down from $16.3 million in the same period last year. In last year's third quarter, RCSB Financial increased its provision in response to a deterioration in consumer credit and repossession trends in the indirect auto portfolio. RCSB was merged into Charter One in October 1997 in a pooling of interests transaction. Noninterest income - Noninterest income for the third quarter of 1998 totaled $45.8 million, up 28.9% from $35.6 million in the third quarter of 1997. The revenue growth was driven by a $6.1 million increase in retail banking fee revenue and a $3.7 million increase in gains resulting primarily from sales of securities created from a portion of the Company's fixed-rate loan portfolio. For the nine month periods, noninterest income was up 32.3% in 1998 over 1997. Lending production - Loan and lease originations for the third quarter of 1998 totaled $2.3 billion, with 60% in residential loans and 40% in energized assets. Energized asset production principally consisted of retail consumer loans ($433 million) and indirect auto loans ($294 million). In the first nine months of 1998, Charter One originated $7.4 billion in loans and leases, exceeding the full year results for 1997 of $6.9 billion. Lending portfolio and pipeline - The lending portfolio totaled $13.5 billion at September 30, 1998, up from $12.7 billion at the end of 1997. Adjusting for $1.8 billion in fixed-rate loans securitized since the beginning of the year, this was equivalent to an annualized growth rate of 27%. Energized assets represented 42% of the September 30 portfolio, compared with 34% at December 31, 1997. The principal components of the energized asset portfolio are consumer loans, auto loans, commercial real estate, and business loans and leases. Energized asset portfolio growth in the first nine months of 1998 has been significant: consumer loans up 54%, business loans and leases up 34%, and indirect auto loans up 22%. At September 30, 1998, the total loan origination pipeline was $1.8 billion, of which $600 million was in energized assets. The $1.2 billion residential pipeline was predominately fixed rate and consisted of approximately 60% to fund new purchases and 40% to refinance existing loans. The one-year repricing gap was a positive 2.2% of assets at September 30, 1998. Mortgage prepayment experience - Mortgage prepayments declined slightly in the third quarter of 1998. The annualized prepayment rate on the $5.2 billion single-family, fixed-rate retail portfolio approximated 15% during the quarter, while the rate on the $2.4 billion adjustable-rate portfolio approximated 35%. As of September 30, approximately 25% of the single-family portfolio carried prepayment penalties. Credit quality - Credit quality remained strong during the quarter. Nonperforming assets (including troubled debt restructurings) totaled $78.7 million at September 30, 1998, resulting in a nonperforming asset ratio of .40% of total assets at the end of the quarter, compared to .38% at the end of 1997. Net charge-offs for the three months ended September 30, 1998 totaled $5.5 million, or .16% of average loans on an annualized basis. The end of period allowance for loan losses was $112.4 million. Checking accounts - At September 30, 1998, the Company had a total of 594,300 checking accounts, up from 538,000 at December 31, 1997 for an annualized net growth rate of 14%. On a gross basis, the retail network opened a record 47,100 new checking accounts during the quarter. Deposits - Deposit balances totaled $10.8 billion at September 30, 1998, up 6.2% year to date. The primary contributor to the increase was certificates of deposit, which can be largely attributed to improved account retention and cross-sell efforts. Operating expenses - Administrative expenses totaled $79.0 million in the three months ended September 30, 1998 versus $77.4 million in the same period of 1997. This translated into an efficiency ratio of 42.3% for the 1998 third quarter, compared to 46.3% for the third quarter of 1997. Asset/liability strategy and capital deployment - During the past 12 months, Charter One has consistently followed the strategy of optimizing its balance sheet by replacing single-family loans and investment securities with energized assets. Additionally, given the persistent flatness of the yield curve, Charter One has substantially increased its sale of excess fixed-rate mortgage loan production. As a result of these strategies, Charter One's equity to asset ratio was 7.6% at September 30, well in excess of its internal target of 6.5%. The Company's capital position together with the current interest rate environment has provided it with significant opportunities to reprice and/or extend a portion of its liabilities. Accordingly, early in the fourth quarter, the Company replaced (through maturity and extinguishment) approximately $3.5 billion in borrowings, bearing a weighted average cost of 5.86%, with longer term borrowings that have a weighted average maturity of approximately 30 months. This activity, which will result in an after-tax extraordinary loss in the fourth quarter of 1998 of approximately $17 million, will reduce the cost of the $3.5 billion borrowing position by approximately 100 basis points. On a similar front, on October 13, 1998, Charter One announced that it had tendered for all or a portion of its secured zero coupon bonds due February 2005. These bonds were issued in 1985 by First Federal of Michigan prior to its merger with Charter One. The issue had an accreted balance of $198 million, an original face value of $407 million, and an annual yield to maturity of 11.93%. As of October 20, 1998, bonds had been tendered with an original face balance of approximately $200 million, resulting in an after-tax extraordinary loss to be recognized in the fourth quarter of approximately $33 million. The tender offer has been extended to October 27, 1998. Going forward, the above actions, together with the contractual maturity within one year of $5.2 billion in retail certificates of deposit (with a 5.67% cost of funds), will tend to mitigate potential margin compression caused by the downward pressure on asset yields in the current interest rate environment. Merger update - On October 16, 1998, Charter One completed its previously announced acquisition of CS Financial, Inc., a $400 million institution headquartered in Cleveland, Ohio. As a result of the merger, which was accounted for as a pooling of interests, Charter One issued an additional 2,131,500 shares of its common stock. The transaction added eight branches to the Ohio network, five of which have been consolidated, resulting in a net increase of four branches. Charter One has already converted CS Financial's data processing operation, essentially completing all consolidation activity associated with this merger. Separately, Charter One's pending acquisition of ALBANK Financial Corporation will be considered by the companies' respective shareholders at separate special meetings on November 13, 1998. Headquartered in Albany, New York, ALBANK has $4.1 billion in assets and $3.5 billion in deposits (bearing an average cost of approximately 4.00%), and operates with 109 branches throughout upstate New York, Vermont and Massachusetts. The merger, which is structured as a pooling of interests, would result in approximately 33 million additional Charter One common shares being issued. A closing is expected in the fourth quarter of 1998, with introduction of Charter One products set for the first half of 1999. Charter One Bank has approximately $20 billion in total assets, making it one of the largest thrifts in the country. The Bank has more than 220 branch locations in Ohio, Michigan and western New York. Additionally, Charter One Mortgage Corporation, the Bank's mortgage banking subsidiary, operates 39 loan production offices across 13 states, and Charter One Auto Finance, the Bank's indirect auto finance subsidiary, generates loans in seven states. The Company's press releases are available by telefax at no charge by calling PR Newswire Fax On Demand. To retrieve a specific press release, call: (800) 758-5804 and reference account 313075. Additional information may be found at the Company's web site: www.charterone.com. * * * * * * Forward-Looking Information There are a number of important factors which could cause future results to differ materially from historical performance. These include but are not limited to financial condition, operating efficiencies, revenue creation, lending origination, prepayment speeds, loan sale volumes, charge-offs and loan loss provisions. Factors that might cause such a difference include, but are not limited to: (1) competitive pressures among depository institutions increase significantly; (2) changes in the interest rate environment reduce interest margins; (3) general economic conditions, either nationally or in the states in which the Company does business, are less favorable than expected, resulting in, among other things, a deterioration in credit quality; (4) legislation or regulatory changes adversely affect the businesses in which the Company is engaged; (5) changes in business conditions and inflation; and (6) changes in the securities markets.
CHARTER ONE FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (unaudited) Three Months Ended Nine Months Ended September 30, September 30, --------------------------- --------------------------- 1998 1997 1998 1997 ---- ---- ---- ---- (Dollars in thousands, except per share data) Interest income: Loans and leases..................................... $ 268,083 232,901 787,971 660,656 Mortgage-backed securities: Available for sale................................. 32,475 18,739 75,337 56,307 Held to maturity................................... 55,366 82,570 188,866 262,600 Investment securities available for sale............. 796 5,729 11,448 16,143 Other interest-earning assets........................ 7,483 7,091 24,519 19,101 ------------ ------------- ------------ ------------ Total interest income........................... 364,203 347,030 1,088,141 1,014,807 ------------ ------------- ------------ ------------ Interest expense: Deposits............................................. 115,963 113,547 341,402 335,502 FHLB advances........................................ 74,184 58,516 219,929 159,492 Other borrowings..................................... 31,814 44,286 100,421 129,046 ------------ ------------- Total interest expense.......................... 221,961 216,349 661,752 624,040 ------------ ------------- ------------ ------------ Net interest income............................. 142,242 130,681 426,389 390,767 Provision for loan and lease losses................... 5,780 16,342 15,935 25,967 ------------ ------------- ------------ ------------ Net interest income after provision for loan and lease losses............................... 136,462 114,339 410,454 364,800 ------------ ------------- ------------ ------------ Other income: Mortgage banking..................................... 14,165 13,651 44,591 44,821 Retail banking....................................... 23,906 17,824 66,089 47,946 Leasing operations................................... 1,464 1,908 7,114 5,442 Net gains (losses)................................... 5,661 1,982 14,035 2,599 Other................................................ 640 199 1,916 309 ------------ ------------- ------------ ------------ Total other income............................. 45,836 35,564 133,745 101,117 ------------ ------------- ------------ ------------ Administrative expenses: Compensation and employee benefits................... 39,120 40,671 117,290 123,766 Net occupancy and equipment.......................... 12,679 13,184 37,935 38,648 Federal deposit insurance premiums................... 1,197 1,345 3,730 4,041 Amortization of goodwill............................. 1,791 1,362 5,373 4,086 Other administrative expenses........................ 24,210 20,879 78,525 61,905 ------------ ------------- ------------ ------------ Total administrative expenses.................. 78,997 77,441 242,853 232,446 ------------ ------------- ------------ ------------ Income before income taxes........................... 103,301 72,462 301,346 233,471 Income taxes......................................... 34,555 18,889 100,706 73,027 ------------ ------------- ------------ ------------ Net income..................................... $ 68,746 53,573 200,640 160,444 ============ ============= ============ ============ Basic earnings per share............................. $ .52 .41 1.50 1.22 ============ ============= ============ ============ Diluted earnings per share........................... $ .51 .39 1.46 1.19 ============ ============= ============ ============ Average common shares(1)............................. 132,966,320 132,084,519 133,926,283 131,677,035 ============ ============= ============ ============ Average common and common equivalent shares outstanding -- assuming dilution(1)................. 135,898,290 135,929,373 137,666,906 135,330,425 ============ ============= ============ ============ Cash dividends declared per share(1)................. $ .13 .11 .39 .33 ============ ============= ============ ============ - --------------------------- (1) Restated to reflect the 2-for-1 stock split issued on May 20, 1998 and the 5% stock dividend issued September 30, 1998.
CHARTER ONE FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited)
September 30, 1998 December 31, 1997 ----------------- ------------------ (Dollars in thousands, except per share data) ASSETS Cash and deposits with banks..................................................$ 200,595 214,716 Federal funds sold and other.................................................. 15,235 25,000 ----------- ----------- Total cash and cash equivalents.......................................... 215,830 239,716 Investment securities available for sale, at fair value....................... 82,581 582,589 Mortgage-backed securities: Available for sale, at fair value........................................... 2,124,905 1,070,233 Held to maturity (fair value of $3,103,099 and $4,273,605).................. 3,039,126 4,215,249 Loans and leases, net......................................................... 13,378,290 12,360,134 Loans held for sale........................................................... 155,088 341,671 FHLB stock.................................................................... 285,375 366,647 Premises and equipment........................................................ 160,103 158,500 Accrued interest receivable................................................... 99,621 110,181 Real estate and other collateral owned........................................ 13,540 13,726 Loan servicing assets......................................................... 92,026 81,836 Goodwill...................................................................... 84,937 90,471 Other assets.................................................................. 110,217 129,312 ----------- ----------- Total assets............................................................$ 19,841,639 19,760,265 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Checking accounts...........................................................$ 1,432,980 1,181,528 Money market accounts....................................................... 1,781,174 1,799,709 Savings accounts............................................................ 1,095,546 1,155,093 Certificates of deposit..................................................... 6,539,713 6,082,870 ----------- ----------- Total deposits.......................................................... 10,849,413 10,219,200 FHLB advances................................................................. 5,187,809 5,370,503 Reverse repurchase agreements................................................. 1,695,062 2,096,524 Other borrowings.............................................................. 242,823 229,798 Advance payments by borrowers for taxes and insurance......................... 50,811 138,379 Accrued interest payable...................................................... 62,314 53,094 Accrued expenses and other liabilities........................................ 249,974 275,878 ----------- ----------- Total liabilities...................................................... 18,338,206 18,383,376 ----------- ----------- Shareholders' equity: Preferred stock - $.01 par value per share; 20,000,000 shares authorized and unissued.................................................... - - Common stock - $.01 par value per share; 180,000,000 shares authorized; 132,541,371 and 129,915,210 shares issued(1)................... 1,325 1,299 Additional paid-in capital(1)............................................... 774,901 706,155 Retained earnings........................................................... 680,932 700,616 Less zero and 2,217,536 shares of common stock held in treasury at cost(1).. - (45,441) Borrowings of employee investment and stock ownership plan.................. (1,734) (2,349) Accumulated other comprehensive income...................................... 48,009 16,609 ----------- ----------- Total shareholders' equity............................................. 1,503,433 1,376,889 ----------- ----------- Total liabilities and shareholders' equity.............................$ 19,841,639 19,760,265 =========== =========== - --------------------------- (1) Restated to reflect the 2-for-1 stock split issued on May 20, 1998.
CHARTER ONE FINANCIAL, INC. SELECTED STATISTICAL DATA (unaudited)
September 30, 1998 December 31, 1997 ----------------- ------------------ End of period capitalization: Equity to assets................................ 7.58% 6.97% Tangible equity to assets....................... 7.13 6.48 Book value per share(1)......................... $11.34 $10.27 Tangible book value per share(1)................ 10.67 9.56 Miscellaneous end-of-period data: Number of employees (full-time equivalents)..... 4,238 4,327 Number of full-service branches................. 227 220 Number of loan production offices............... 37 37 Number of ATMs.................................. 232 221 - --------------------------- (1) Restated to reflect the 2-for-1 stock split issued May 20, 1998 and the 5% stock dividend issued September 30, 1998.
Three Months Ended Nine Months Ended September 30, September 30, ------------------- ------------------ 1998 1997 1998 1997 ---- ---- ---- ---- Annualized returns: Return on average assets......................... 1.38% 1.14% 1.35% 1.17% Return on average equity......................... 18.42 16.12 18.35 16.49 Average equity to average assets................. 7.50 7.09 7.35 7.07 Annualized operating ratios: Net interest income to administrative expenses... 1.80x 1.69x 1.76x 1.68x Administrative expenses to average assets........ 1.59% 1.65% 1.63% 1.69% Efficiency ratio................................. 42.32 46.32 43.49 46.67
COMPOSITION OF DEPOSITS
September 30, 1998 December 31, 1997 ----------------- ------------------ (Dollars in thousands) ---- Checking accounts: Interest-bearing....................................... $ 783,916 $ 783,768 Noninterest-bearing.................................... 649,064 397,760 Money market accounts.................................... 1,781,174 1,799,709 Savings accounts......................................... 1,095,546 1,155,093 Certificates of deposit: Retail: Six months or less................................... 703,176 797,002 Greater than six months to one year.................. 2,409,614 1,834,161 Greater than one year to three years................. 2,590,020 2,505,717 Other................................................ 835,722 908,311 ------------ ----------- Total retail....................................... 6,538,532 6,045,191 Total brokered..................................... - 36,243 ------------ ----------- Total certificates of deposit.................... 6,538,532 6,081,434 ------------ ----------- Deposits......................................... 10,848,232 10,217,764 Plus unamortized premium on deposits purchased... 1,181 1,436 ------------ ----------- Total deposits................................. $ 10,849,413 10,219,200 ============ ===========
MARKET PRICE DATA 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 1998 1998 1998 1997 1997 ------- ------- ------- ------- ------- Market price of common stock(1): High................................ $ 34.17 34.89 32.44 30.48 27.90 Low................................. 21.84 28.57 22.86 25.77 23.36 Close............................... 24.88 32.09 31.88 30.06 26.82 - --------------------------- (1) Restated to reflect the 2-for-1 stock split issued on May 20, 1998 and the 5% stock dividend issued September 30, 1998.
CHARTER ONE FINANCIAL, INC. AVERAGE BALANCE SHEET, YIELDS AND COSTS (unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ------------------------- ------------------------- 1998 1997 1998 1997 ---- ---- ---- ---- (Dollars in thousands) Average balance sheet data Interest-earning assets: Real estate loans................................... $ 8,666,887 8,330,450 8,868,228 8,028,583 Automobile loans.................................... 1,876,826 1,418,808 1,761,207 1,255,529 Retail consumer loans............................... 2,390,747 1,418,330 2,041,142 1,300,099 Leases.............................................. 603,087 324,020 537,338 293,045 Corporate banking loans............................. 184,520 138,742 177,820 121,690 ----------- ------------ ----------- ------------ Total loans and leases............................ 13,722,067 11,630,350 13,385,735 10,998,946 Mortgage-backed securities.......................... 4,963,747 5,760,660 4,966,921 6,029,785 Investment securities............................... 49,486 336,475 220,088 311,946 Other interest-earning assets....................... 405,457 403,343 458,625 370,779 ----------- ------------ ----------- ------------ Total interest-earning assets..................... 19,140,757 18,130,828 19,031,369 17,711,456 Allowance for loan leases........................... (111,164) (93,557) (112,007) (93,100) Noninterest-earning assets (1)...................... 876,790 718,581 908,777 724,600 ----------- ------------ ----------- ------------ Total assets................................... $ 19,906,383 18,755,852 19,828,139 18,342,956 =========== ============ =========== ============ Interest-bearing liabilities: Checking............................................ $ 1,499,465 1,106,611 1,382,466 1,095,782 Savings............................................. 1,115,405 1,314,789 1,131,601 1,333,792 Money Market........................................ 1,771,218 1,629,502 1,777,180 1,639,902 Certificates of deposit............................. 6,486,179 6,069,176 6,361,964 6,060,907 ----------- ------------ ----------- ------------ Total deposits................................... 10,872,267 10,120,078 10,653,211 10,130,383 FHLB advances....................................... 5,240,515 3,985,902 5,200,188 3,655,711 Other borrowings.................................... 1,950,974 2,923,309 2,085,449 2,890,107 ----------- ------------ ----------- ------------ Total interest-bearing liabilities............. 18,063,756 17,029,289 17,938,848 16,676,201 Noninterest-bearing liabilities....................... 349,950 396,967 431,441 369,541 ----------- ------------ ----------- ------------ Total liabilities.............................. 18,413,706 17,426,256 18,370,289 17,045,742 Shareholders' equity.................................. 1,492,677 1,329,596 1,457,850 1,297,214 ----------- ------------ ----------- ------------ Total liabilities and shareholders' equity..... $ 19,906,383 18,755,852 19,828,139 18,342,956 =========== ============ =========== ============ Yields and costs during period Weighted average yield: Real estate loans................................... 7.53% 7.74% 7.58% 7.80% Automobile loans.................................... 9.07 9.04 9.01 8.97 Retail consumer loans............................... 7.96 8.58 8.16 8.45 Leases(2)........................................... 6.68 7.37 6.85 7.49 Corporate banking loans............................. 9.27 8.79 9.27 8.91 Total loans and leases............................ 7.80 8.00 7.85 8.01 Mortgage-backed securities.......................... 7.08 7.03 7.09 7.05 Investment securities............................... 6.44 6.81 6.94 6.90 Other interest-earning assets....................... 7.22 6.88 7.05 6.79 Total interest-earning assets................... 7.60 7.65 7.62 7.64 Weighted average cost (3): Checking............................................ .77 1.16 .85 1.15 Savings............................................. 2.17 2.35 2.19 2.37 Money market........................................ 3.25 3.49 3.26 3.50 Certificates of deposit............................. 5.66 5.76 5.69 5.73 Total deposits.................................... 4.23 4.45 4.28 4.43 FHLB advances....................................... 5.61 5.80 5.65 5.81 Other borrowings.................................... 6.41 5.86 6.36 5.90 Total interest-bearing liabilities............. 4.87 5.02 4.92 4.99 Interest rate spread.................................. 2.73 2.63 2.70 2.65 Net yield on interest-earning assets.................. 2.97 2.88 2.99 2.94 - --------------------------- (1) Includes market-to-market adjustments on securities available for sale. (2) Excludes impact of related tax benefits. (3) The costs of liabilities include the annualized effect of interest rate risk management instruments.
CHARTER ONE FINANCIAL, INC. YIELDS AND COSTS AT END OF PERIOD (unaudited) September 30, 1998 December 31, 1997 ------------------ ------------------ Yields and costs at end of period Weighted average yield: Real estate loans..................................... 7.52% 7.72% Automobile loans...................................... 8.81 8.92 Retail consumer loans................................. 7.98 8.40 Leases(1)............................................. 6.45 8.04 Corporate banking loans............................... 9.15 8.86 Total loans and leases.............................. 7.76 8.00 Mortgage-backed securities............................ 7.02 7.20 Investment securities................................. 8.02 6.67 Other interest-earning assets......................... 7.14 7.29 Total interest-earning assets..................... 7.55 7.73 Weighted average cost (2): Checking.............................................. .68 1.02 Savings............................................... 2.16 2.33 Money market.......................................... 3.14 3.31 Certificates of deposit............................... 5.65 5.73 Total deposits...................................... 4.23 4.37 FHLB advances......................................... 5.62 5.83 Other borrowings...................................... 6.45 6.38 Total interest-bearing liabilities............... 4.87 5.07 Interest rate spread.................................... 2.68 2.66 Net yield on interest-earning assets.................... 2.97 2.96 - ------------------------------------ (1) Excludes impact of related tax benefits. (2) The costs of liabilities include the annualized effect of interest rate risk management instruments.
CHARTER ONE FINANCIAL, INC. LOAN AND LEASE PORTFOLIO (unaudited)
September 30, 1998 December 31, 1997 ------------------------ ---------------------- % of % of Amount Total Amount Total ------------ ---------- ----------- -------- (Dollars in thousands) Loan and lease portfolio, net One-to-four family: Permanent: Fixed rate.................................... $ 5,220,855 38.58% $ 5,281,533 41.59% Adjustable rate............................... 2,402,851 17.75 2,880,513 22.68 Construction.................................... 200,160 1.48 196,647 1.55 ------------ ------- ----------- ------- 7,823,866 57.81 8,358,693 65.82 Commercial real estate: Multifamily..................................... 199,149 1.47 265,360 2.09 Other........................................... 352,318 2.61 325,646 2.56 ------------ ------- ----------- ------- 551,467 4.08 591,006 4.65 Consumer: Retail.......................................... 2,473,559 18.28 1,606,128 12.64 Automobile...................................... 1,877,685 13.87 1,542,230 12.14 ------------ ------- ----------- ------- 4,351,244 32.15 3,148,358 24.78 Business: Leasing......................................... 622,486 4.60 437,227 3.44 Corporate banking............................... 184,315 1.36 166,521 1.31 ------------ ------- ----------- ------- 806,801 5.96 603,748 4.75 ------------ ------- ----------- ------- $ 13,533,378 100.00% $ 12,701,805 100.00% ============ ======= =========== ======= Portfolio of loans serviced for others.............. $ 9,905,436 $ 9,084,871 ============ ===========
LOAN AND LEASE ACTIVITY (unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ------------------------- ------------------------ 1998 1997 1998 1997 ---- ---- ---- ---- (Dollars in thousands) Originations: Real Estate: Permanent: One-to-four family........................... $ 1,266,592 1,039,460 4,117,455 2,804,554 Multifamily.................................. 4,706 1,570 20,820 18,859 Commercial................................... 44,893 15,816 77,198 53,907 ---------- ---------- ---------- ---------- Total permanent loans..................... 1,316,191 1,056,846 4,215,473 2,877,320 ---------- ---------- ---------- ---------- Construction: One-to-four family........................... 113,061 106,601 316,205 282,688 Multifamily.................................. 11,942 5,350 16,833 7,714 Commercial................................... 15,433 5,630 24,191 15,225 ---------- ---------- ---------- ---------- Total construction loans.................. 140,436 117,581 357,229 305,627 ---------- ---------- ---------- ---------- Total real estate loans originated..... 1,456,627 1,174,427 4,572,702 3,182,947 ---------- ---------- ---------- ---------- Retail consumer............................... 433,410 237,266 1,480,930 665,471 Automobile.................................... 294,190 270,625 893,386 821,203 Leases........................................ 62,539 67,838 279,987 132,621 Corporate banking............................. 63,743 55,436 156,620 159,029 ---------- ---------- ---------- ---------- Total loans and leases originated.......... 2,310,509 1,805,592 7,383,625 4,961,271 ---------- ---------- ---------- ---------- Loans purchased..................................... 2,708 295,318 18,857 295,318 Sales and principal reductions: Loans sold........................................ 564,819 471,637 1,453,503 1,290,939 Loans exchanged for MBS........................... 468,666 - 1,816,088 - Principal reductions.............................. 1,073,016 765,120 3,367,334 1,980,300 ---------- ---------- ---------- ---------- Total sales and principal reductions...... 2,106,501 1,236,757 6,636,925 3,271,239 ---------- ---------- ---------- ---------- Increase before net items.............. $ 206,716 864,153 765,557 1,985,350 ========== ========== ========== ==========
CHARTER ONE FINANCIAL, INC. NONPERFORMING ASSETS AND ALLOWANCE FOR LOSSES (unaudited)
September 30, 1998 December 31, 1997 ----------------- ---------------- (Dollars in thousands) Nonperforming assets Nonperforming loans and leases: Nonaccrual loans and leases................................. $ 38,704 38,607 Accruing loans and leases delinquent more than 90 days...... 20,456 16,864 Restructured real estate loans.............................. 6,258 6,722 --------- -------- Nonperforming loans and leases............................ 65,418 62,193 Foreclosed and repossessed assets........................... 13,249 13,414 --------- -------- Nonperforming assets(1)................................. $ 78,667 75,607 ========= ======== Allowance for loans and lease losses............................ $ 112,416 113,868 Ratio of (excluding guaranteed nonperforming loans): Nonperforming loans and leases to total loans and leases.... .48% .49% Nonperforming assets to total assets........................ .40 .38 Allowance for loan and lease losses to: Nonperforming loans and leases............................ 171.84 183.09 Total loans and leases before allowance................... .82 .89 - --------------------------- (1) Nonperforming assets are reported net of $18.6 million of government guaranteed nonperforming loans as of September 30, 1998. There were no comparable nonperforming government loans at December 31, 1997.
Three Months Ended Nine Months Ended September 30, September 30, -------------------- -------------------- 1998 1997 1998 1997 ---- ---- ---- ---- (Dollars in thousands) Allowance for loan and lease losses Balance, beginning of period................................ $ 112,142 92,924 113,868 94,112 Provision for loan and lease losses......................... 5,780 16,342 15,935 25,967 Adjustment to convert Rochester to a calendar year end...... - - - 650 Loans and leases charged off: Mortgage.................................................. (1,224) (3,075) (2,833) (6,917) Automobile................................................ (5,894) (4,495) (18,662) (13,216) Retail consumer........................................... (222) (866) (453) (2,319) Leases.................................................... - - - - Corporate banking......................................... (71) - (71) (42) --------- --------- -------- -------- Total charge-offs...................................... (7,411) (8,436) (22,019) (22,494) --------- --------- -------- -------- Recoveries: Mortgage.................................................. 367 3,115 642 3,560 Automobile................................................ 1,435 1,038 3,624 2,876 Retail consumer........................................... 102 239 339 546 Leases.................................................... - - - - Corporate banking......................................... 1 1 27 6 --------- --------- -------- -------- Total recoveries....................................... 1,905 4,393 4,632 6,988 --------- --------- -------- -------- Net loan and lease charge-offs...................... (5,506) (4,043) (17,387) (15,506) --------- --------- -------- -------- Balance, end of period..................................... $ 112,416 105,223 112,416 105,223 ========= ========= ======== ======== Net charge-offs to average loans and leases (annualized)... .16% .14% .17% .19%
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