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Delaware | 001-15495 | 34-1567092 |
(State or other jurisdiction of incorporation) | (Commission File No.) | (IRS Employer Identification Number) |
1215 Superior Avenue, Cleveland, Ohio | 44114 |
(Address of principal executive offices) | (Zip Code) |
ITEM 5. OTHER EVENTS.
The Registrant's earnings press release dated April 22, 2002, a copy of which is attached hereto as Exhibit 99.1, is hereby incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) The following exhibit is filed as part of this Report:
99.1 Press Release dated April 22, 2002.
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: April 23, 2002 | By: /s/ Robert J. Vana Robert J. Vana Senior Vice President, Chief Corporate Counsel and Corporate Secretary |
Exhibit No. | Description |
99.1 | Press Release Dated April 22, 2002. |
News Release
CONTACT: ELLEN BATKIE (800) 262-6301
CHARTER ONE REPORTS RECORD 1st QTR EPS OF $.62, UP 22%
Highlights for the quarter ended 3/31/02:
CLEVELAND, Ohio, April 22, 2002 -- Charter One Financial, Inc. (NYSE:CF), the holding company of Charter One Bank, F.S.B., today reported net income of $139.8 million for the three months ended March 31, 2002, or a record $.62 per diluted share. This was up 22% from $.51 in net earnings per diluted share reported in the year ago quarter, and up 5% from $.59 in the fourth quarter of 2001. All per share data have been restated for the 5% stock dividend paid on September 28, 2001.
Earnings per share on a cash basis, which excludes the amortization of goodwill related to branch acquisitions, was $.63 per share in the first quarter of 2002, up from $.52 in last year's first quarter. As previously disclosed, pending further clarification from the Financial Accounting Standards Board, Charter One anticipates its quarterly amortization of goodwill related to branch acquisitions will be equivalent to $.01 per share in each quarter of 2002.
Net income for the quarter generated annualized returns of 1.49% on average assets, 19.35% on average equity, and 22.48% on average tangible equity. These compared with returns of 1.38% on average assets, 18.29% on average equity and 20.11% on average tangible equity in the first quarter of 2001.
"We are off to a strong start in 2002," commented Charles John Koch, Charter One's Chairman and Chief Executive Officer in announcing the first quarter's results. "The retail lending and deposit momentum built throughout 2001 definitely carried over into this year. On top of the sales momentum, I am very pleased with our operating cost control coming out of this quarter and the stability of our net yield. Combining those accomplishments with manageable credit cost levels gives us the confidence to reaffirm earnings guidance of $2.50 to $2.55 per share for 2002, or $2.54 to $2.59 per share on a cash basis."
Net interest income and net yield - Net interest income was $283 million for the three months ended March 31, 2002, up 1% from the fourth quarter of 2001 and 23% from the first quarter of 2001. Although average interest-earning assets declined slightly, net yield expanded by five basis points during the quarter to 3.26%. The net yield at the end of the first quarter of 2002 came in at 3.20%, down from 3.38% at December 31, 2001. The primary reason for the decline was the $815 million balance in federal funds sold at March 31 (yield of 1.77%). This excess liquidity position primarily resulted from the significant level of mortgage-backed securities sales initiated as part of Charter One's interest rate risk management activities. Adjusting for the excess liquidity position, the net yield at the end of March would have been approximately 3.30%.
Retail banking revenue - Retail banking revenue is the largest component of recurring noninterest income and totaled $74 million for the three months ended March 31, 2002, up 9% from the comparable 2001 quarter. Retail banking revenue actually includes three separate components: deposit-related revenue ($62 million), fees from retail brokerage activities ($8 million), and other revenue related to retail operations ($4 million). The growth rate in deposit-related revenue was consistent with the plan for the first quarter. As expected, revenues were slightly tempered by the weaker economy and seasonal influences. Due to consumer spending patterns, deposit-related retail banking revenue is typically lower in the first quarter than the last three quarters of the year. Referencing projected account and transaction growth, management reaffirmed its previously disclosed target for 20% year-over-year growth in deposit-related retail banking revenue for 2002.
Mortgage banking revenue - The mortgage banking category includes revenue associated with Charter One's mortgage servicing and mortgage banking operations, offset by the amortization of its mortgage servicing rights asset. As a result of the strong loan origination and securitization activity during the quarter, the portfolio serviced for others increased 15% to $15.9 billion, and the related mortgage servicing rights (MSR) remained at just over 1% of the portfolio at $165 million. With an average excess servicing spread of 35 basis points, that translates into a relatively conservative MSR valuation of just over three times the excess servicing spread. The MSR valuation allowance remained unchanged at $27 million during the quarter.
Net gains - Historically, Charter One has managed portfolio size and mix through sales of mortgage-backed securities comprised primarily of seasoned bank-originated, fixed-rate mortgage product. These sales generate nearly all of the revenue included as net gains. During the first quarter of 2002, net gains of $22 million resulted primarily from the sale of $1.2 billion of such securities.
Lending production - Loan and lease originations during the first quarter of 2002 hit a near-record pace of $5.1 billion, 3% above the strong fourth quarter of 2001 and 55% above the first quarter of 2001. It is important to note that, with the exception of the indirect auto business, Charter One's loan origination activities are almost entirely retail, with very little wholesale and correspondent production. Non single-family loan originations increased 14% over the fourth quarter of 2001, and 42% over the first quarter of 2001. The principal drivers of the increase were retail consumer, indirect auto and corporate banking (which includes small business lending).
Lending portfolio - Loans and leases before reserves totaled $24.8 billion at March 31, 2002, down $1.2 billion, or 5%, from the end of the 2001. The decline reflects the record level of $2.7 billion in agency loan securitizations. Charter One retains essentially no credit risk in connection with these securitizations. Without the securitizations, the portfolio would have increased by $1.5 billion during the quarter for an annualized growth rate of 23%. At the end of March, 36% of the loan portfolio was in single-family loans, down from 39% at the end of 2001. The non single-family portion of the
portfolio totaled $15.9 billion at March 31, 2002. Taking into account $519 million in consumer loan securitizations, that level implies an annualized organic growth rate of 16%. One of the fastest growing components of the portfolio remains retail direct home equity lines of credit, which increased by $182 million to $2.2 billion for an annualized growth rate of 36%. This growth reflected the Company's continued success in cross-selling customers home equity lines with their single-family mortgage.
Credit quality and allowance for loan losses - The provision for loan and lease losses exceeded net charge-offs by $3 million during the quarter and the ratio of the allowance to total loans increased to 1.04% from .98% at December 31 and .80% at March 31, 2001. The portfolio remains well diversified and 96% of all loans are collateralized, with 62% backed by single and multifamily real estate.
Annualized net charge-offs equaled .40% of average loans for the first quarter of 2002, up from .29% in the fourth quarter. As anticipated, the increase during the quarter was largely attributable to net charge-offs in the indirect auto portfolio, which posted a net charge-off ratio of 130 basis points during the three-month period, up from 104 basis points in the fourth quarter of 2001. However, the rate declined to 109 basis points for the month of March. Within the auto portfolio, one of the primary indicators of charge-off trends is the inventory of repossessed units. Following the events surrounding September 11, 2001, the normal auction process used to dispose of these units was severely restricted for several weeks. This, coupled with aggressive new car promotions by the auto manufacturers, resulted in a temporary build up of repossessed units at year-end 2001. This excess inventory was substantially liquidated during the first quarter of 2002. At March 31, 2002, the repossessed inventory represented .31% of the total portfolio units, down significantly from the .43% high at the end of January 2002 and identical to the March 31, 2001 level.
During the first quarter of 2002, nonperforming assets (including troubled debt restructurings and loans delinquent 90 days and still accruing) increased by $19 million to $263 million at March 31, 2002. The ratio of nonperforming assets to total assets remained low at .70% at March 31, 2002. Additionally, the $259 million allowance for loan and lease losses was equivalent to over three years of charge-offs, based on the past 12 months experience. Given the performance of the portfolio and the collateralized nature of these assets, management continues to believe credit losses remain very manageable.
In considering the balance of the year, management reviewed its previous expectation of a net charge-off rate running at 30 basis points in 2002, plus or minus five basis points, which is equivalent to approximately $75 to $100 million in projected net charge-offs for the year. Based on the present operating environment and current delinquency, charge-off and classification trends, management remains comfortable with that forecast.
Deposits - Deposits totaled $25.6 billion at March 31, 2002, up $513 million during the quarter, which indicates an annualized growth rate of 8% during the quarter and 15% for the past 12 months (excluding acquisitions). Core deposits (checking, money market and savings accounts) totaled $15.6 billion at March 31, 2002, up $1.0 billion during the quarter, indicating a 28% annualized growth rate during the quarter and 41% for the past 12 months (excluding acquisitions). Core deposits now represent 61% of total deposits (up from 58% at the end of 2001), and checking account balances make up 31% of the total. Custodial accounts included in noninterest bearing checking account balances totaled $427 million at March 31, 2002 and $496 million at December 31, 2001. The tremendous deposit growth rate translates into an ever-improving loan to deposit ratio, with the
quarter-end rate at 96%, down from 102% at December 31, 2001 and 117% at the end of March 2001.
Much of the success in attracting deposits has been attributable to attractive checking account products. Once again, a record was established in opening 141,700 checking accounts during the first quarter and the total number of checking accounts increased to 1.302 million, up from 1.271 million at the end of 2001.
Operating expenses - Administrative expenses totaled $166 million in the three months ended March 31, 2002, down 6% from the fourth quarter of 2001. The fourth quarter 2001 expenses totaled $176 million, including $7.5 million used to establish a charitable foundation. The Company's operating expense control remains excellent and a primary component of its business strategy. Operating expenses translated into an efficiency ratio of 40.58% for the first quarter of 2002, compared to 41.66% for the fourth quarter of 2001 and 43.05% for the first quarter of 2001.
Stock repurchase update- On July 18, 2000, the Company authorized the repurchase of 10% of its outstanding shares, or approximately 20 million shares. Through March 31, 2002, the Company repurchased 15 million shares under the authorization, 5.4 million of which were repurchased during 2002 at an average cost of $28.17 per share.
National bank charter application - As previously announced, Charter One filed an application with the Office of the Comptroller of the Currency to convert to a national bank charter. Charter One Bank is currently a federal savings bank regulated by the Office of Thrift Supervision. Management expects regulatory approval shortly, and anticipates an effective date before the end of the second quarter of 2002.
Company profile - Charter One has $38 billion in total assets, making it one of the 25 largest bank holding companies in the country. The Bank has 450 branch locations in Ohio, Michigan, New York, Illinois, Massachusetts, and Vermont. In Michigan, the branch locations currently operate under the name First Federal of Michigan. The Company's diverse product set includes: consumer banking, indirect auto finance, commercial leasing, business lending, commercial real estate lending, mortgage banking, and retail investment products. For additional information, including press releases and investor presentations, investors are directed to Charter One's web site: www.charterone.com.
The Company has scheduled a conference call to discuss quarterly results for 11:00 a.m. eastern time on Monday, April 22, 2002. To participate in the call, dial (800) 230-1085 and ask for the Charter One 1st quarter earnings call. The call is available on a replay basis until May 2, 2002 by dialing (320) 365-3844, access code 632875. Alternatively, the call will be available through Charter One's website, both on a live and a replay basis.
Forward-Looking Information
This release contains certain estimates of future operating trends for Charter One Financial, Inc., as well as estimates of financial condition and earnings, operating efficiencies, revenue creation, lending origination, loan sale volumes, charge-offs and loan loss provisions. These estimates constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995), which involve significant risks and uncertainties. Actual results may differ materially from the results discussed in these forward-looking statements. Factors that might cause such a difference include, but are not limited to: (1) the economic impact of the terrorist attacks on September 11, and the U.S. response to those attacks; (2) revenue growth is lower than expected; (3) competitive pressures among depository institutions increase significantly; (4) changes in the interest rate environment reduce interest m argins; (5) general economic conditions, either nationally or in the states in which the Company does business, are less favorable than expected; and (6) legislation or regulatory changes adversely affect the businesses in which the Company is engaged. Other factors which may affect these statements are identified in previous filings with the Securities and Exchange Commission.
#####
CHARTER ONE FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended | |||||
3/31/02 |
12/31/01 |
9/30/01 |
6/30/01 |
3/31/01 |
|
(Dollars in thousands, except per share data) | |||||
Interest income: | |||||
Loans and leases | $ 427,838 | $ 462,055 | $ 484,697 | $ 458,851 | $ 466,667 |
Mortgage-backed securities: | |||||
Available for sale | 111,128 | 109,319 | 89,819 | 84,613 | 82,724 |
Held to maturity | 14,800 | 17,241 | 20,141 | 23,283 | 26,287 |
Investment securities: | |||||
Available for sale | 2,962 | 2,741 | 3,387 | 2,216 | 2,836 |
Held to maturity | 71 | 85 | 88 | 91 | 145 |
Other interest-earning assets | 7,912 |
8,605 |
10,850 |
10,888 |
10,617 |
Total interest income | 564,711 |
600,046 |
608,982 |
579,942 |
589,276 |
Interest expense: | |||||
Deposits | 170,401 | 199,688 | 224,811 | 216,327 | 214,457 |
FHLB advances | 103,716 | 112,297 | 122,214 | 128,186 | 135,747 |
Other borrowings | 7,497 |
8,121 |
8,633 |
7,758 |
9,591 |
Total interest expense | 281,614 |
320,106 |
355,658 |
352,271 |
359,795 |
Net interest income | 283,097 | 279,940 | 253,324 | 227,671 | 229,481 |
Provision for loan and lease losses | 28,717 |
38,853 |
27,109 |
17,076 |
17,728 |
Net interest income after provision for loan and lease losses |
254,380 |
241,087 |
226,215 |
210,595 |
211,753 |
Other income: | |||||
Retail banking | 73,756 | 80,108 | 72,285 | 72,130 | 67,369 |
Mortgage banking | 11,290 | (3,069) | 9,637 | 8,830 | 9,480 |
Leasing operations | 270 | 252 | 2,230 | 331 | 1,207 |
Net gains | 21,727 | 46,336 | 26,302 | 25,580 | 16,094 |
Bank owned life insurance and other | 9,508 |
9,197 |
9,691 |
9,785 |
9,849 |
Total other income | 116,551 |
132,824 |
120,145 |
116,656 |
103,999 |
Administrative expenses: | |||||
Compensation and employee benefits | 77,252 | 72,412 | 73,951 | 65,438 | 68,099 |
Net occupancy and equipment | 28,563 | 29,162 | 27,051 | 26,314 | 26,861 |
Marketing expenses | 8,829 | 9,462 | 6,554 | 9,633 | 6,059 |
Federal deposit insurance premiums | 1,211 | 1,044 | 1,026 | 932 | 916 |
Amortization of goodwill | 3,898 | 4,039 | 4,039 | 4,039 | 4,039 |
Other administrative expenses | 46,307 |
59,884 |
42,629 |
44,467 |
41,612 |
Total administrative expenses | 166,060 |
176,003 |
155,250 |
150,823 |
147,586 |
Income before income taxes | 204,871 | 197,908 | 191,110 | 176,428 | 168,166 |
Income taxes | 65,048 |
62,829 |
60,677 |
56,016 |
53,376 |
Net income | $ 139,823 |
$ 135,079 |
$ 130,433 |
$ 120,412 |
$ 114,790 |
Basic earnings per share(1) | $ .63 |
$ .60 |
$ .58 |
$ .55 |
$ .52 |
Diluted earnings per share(1) | $ .62 |
$ .59 |
$ .57 |
$ .54 |
$ .51 |
Average common shares outstanding(1): | |||||
Basic | 220,652,028 |
224,524,427 |
224,709,693 |
217,811,601 |
218,849,204 |
Diluted | 226,878,032 |
229,922,618 |
230,579,401 |
223,381,474 |
224,244,027 |
Cash dividends declared per share(1) | $ .20 |
$ .20 |
$ .19 |
$ .19 |
$ .17 |
CHARTER ONE FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(unaudited)
3/31/02 |
12/31/01 |
9/30/01 |
6/30/01 |
3/31/01 | |
(Dollars in thousands, except per share data) | |||||
ASSETS | |||||
Cash and deposits with banks | $ 539,846 | $ 481,013 | $ 565,955 | $ 608,420 | $ 537,754 |
Federal funds sold and other | 815,509 |
35,507 |
504 |
13,161 |
35,494 |
Total cash and cash equivalents | 1,355,355 | 516,520 | 566,459 | 621,581 | 573,248 |
Investments securities: | |||||
Available for sale | 133,509 | 129,312 | 133,409 | 109,298 | 113,242 |
Held to maturity | 5,043 | 6,274 | 7,088 | 6,827 | 7,469 |
Mortgage-backed securities: | |||||
Available for sale | 8,067,946 | 8,030,512 | 7,390,874 | 5,621,148 | 5,385,106 |
Held to maturity | 830,032 | 983,904 | 1,129,049 | 1,268,993 | 1,415,280 |
Loans and leases, net | 24,355,261 | 25,396,071 | 25,194,411 | 24,337,829 | 23,807,368 |
Loans held for sale | 160,805 | 332,629 | 204,126 | 198,491 | 157,762 |
Bank owned life insurance | 809,356 | 808,231 | 798,124 | 753,840 | 753,323 |
Federal Home Loan Bank stock | 618,969 | 617,836 | 614,603 | 572,857 | 577,135 |
Premises and equipment | 357,915 | 352,235 | 348,821 | 334,057 | 331,459 |
Accrued interest receivable | 155,479 | 162,065 | 176,359 | 156,732 | 159,103 |
Real estate and other collateral owned | 57,417 | 54,351 | 45,642 | 39,537 | 36,573 |
Loan servicing assets | 164,789 | 139,840 | 148,875 | 134,286 | 127,301 |
Goodwill | 347,142 | 350,839 | 300,104 | 164,227 | 168,319 |
Other assets | 285,366 |
293,897 |
244,184 |
227,517 |
218,973 |
Total assets | $37,704,384 |
$38,174,516 |
$37,302,128 |
$34,547,220 |
$33,831,661 |
Deposits: | |||||
Checking accounts | $ 7,934,769 | $ 7,830,026 | $ 6,405,681 | $ 5,101,776 | $ 4,365,660 |
Money market and savings accounts | 7,644,542 | 6,737,160 | 6,754,670 | 6,375,715 | 6,220,615 |
Certificates of deposit | 10,057,421 |
10,556,123 |
10,328,720 |
9,642,507 |
9,834,765 |
Total deposits | 25,636,732 | 25,123,309 | 23,489,071 | 21,119,998 | 20,421,040 |
Federal Home Loan Bank advances | 7,830,065 | 8,657,238 | 9,139,367 | 9,384,710 | 9,635,622 |
Federal funds purchased and repurchase agreements | 57,228 | 203,259 | 467,771 | 171,636 | 56,472 |
Other borrowings | 325,505 | 304,410 | 306,987 | 292,504 | 289,010 |
Advance payments by borrowers for taxes and insurance | 44,693 | 54,103 | 57,775 | 54,120 | 50,306 |
Accrued interest payable | 59,813 | 57,704 | 73,908 | 91,419 | 91,849 |
Accrued expenses and other liabilities | 893,090 | 845,993 | 841,057 | 865,265 | 742,738 |
Total liabilities | 34,847,126 | 35,246,016 | 34,375,936 | 31,979,652 | 31,287,037 |
Shareholders' equity: | |||||
Preferred stock - $.01 par value per share; 20,000,000 shares authorized and unissued |
- | - | - | - | - |
Common stock - $.01 par value per share; 360,000,000 shares authorized; 224,854,600, 224,855,827, 224,427,720, 212,681,891, and 212,681,891 shares issued |
2,249 | 2,249 | 2,244 | 2,127 | 2,127 |
Additional paid-in capital | 2,097,473 | 2,091,767 | 2,084,103 | 1,751,959 | 1,747,775 |
Retained earnings | 890,539 | 811,093 | 721,430 | 916,326 | 850,961 |
Less 4,836,968, 516,082, 0, 5,571,193, and 4,667,371 shares of common stock held in treasury at cost |
(136,429) | (14,586) | - | (141,622) | (110,821) |
Borrowings of employee investment and stock ownership plan |
- | - | (314) | (628) | (942) |
Accumulated other comprehensive income | 3,426 |
37,977 |
118,729 |
39,406 |
55,524 |
Total shareholders' equity | 2,857,258 |
2,928,500 |
2,926,192 |
2,567,568 |
2,544,624 |
Total liabilities and shareholders' equity | $37,704,384 |
$38,174,516 |
$37,302,128 |
$34,547,220 |
$33,831,661 |
CHARTER ONE FINANCIAL, INC.
SELECTED STATISTICAL DATA
(unaudited)
Three Months Ended | |||||
3/31/02 |
12/31/01 |
9/30/01 |
6/30/01 |
3/31/01 | |
(Dollars in thousands, except per share data) | |||||
Annualized returns and ratios based on net income: | |||||
Return on average assets | 1.49% | 1.44% | 1.43% | 1.42% | 1.38% |
Return on average equity | 19.35 | 17.67 | 17.81 | 18.70 | 18.29 |
Average equity to average assets | 7.71 | 8.15 | 8.03 | 7.60 | 7.52 |
Net interest income to administrative expenses | 1.70x | 1.59x | 1.63x | 1.51x | 1.55x |
Administrative expenses to average assets | 1.77% | 1.88% | 1.70% | 1.78% | 1.77% |
Efficiency ratio | 40.58 | 41.66 | 40.49 | 42.63 | 43.05 |
Annualized return on average tangible equity(1) | 22.48 | 20.18 | 19.84 | 20.45 | 20.11 |
____________________________ (1) Computed as the ratio of net income, excluding the amortization of goodwill and other intangible assets, to average tangible equity. |
3/31/02 |
12/31/01 |
9/30/01 |
6/30/01 |
3/31/01 | |
End of period capitalization: | |||||
Equity to assets | 7.58% | 7.67% | 7.84% | 7.43% | 7.52% |
Tangible equity to assets | 6.65 | 6.74 | 7.03 | 6.96 | 7.02 |
Book value per share(1) | $12.99 | $13.05 | $13.04 | $11.81 | $11.65 |
Tangible book value per share(1) | 11.39 | 11.47 | 11.68 | 11.05 | 10.88 |
Miscellaneous end-of-period data: | |||||
Number of employees (full-time equivalents) | 6,874 | 6,850 | 6,716 | 6,660 | 6,551 |
Number of full-service branches | 450 | 456 | 436 | 423 | 423 |
Number of loan production offices | 27 | 29 | 29 | 29 | 32 |
Number of ATMs | 913 | 919 | 921 | 905 | 910 |
____________________________ (1) Restated to reflect the 5% stock dividend issued September 28, 2001. |
COMPOSITION OF DEPOSITS
3/31/02 |
12/31/01 |
9/30/01 |
6/30/01 |
3/31/01 | |
(Dollars in thousands) | |||||
Checking accounts: | |||||
Interest-bearing | $6,121,320 | $5,973,545 | $4,840,344 | $3,545,157 | $2,853,954 |
Noninterest-bearing | 1,813,449 | 1,856,481 | 1,565,337 | 1,556,619 | 1,511,706 |
Money market and savings accounts | 7,644,542 | 6,737,160 | 6,754,670 | 6,375,715 | 6,220,615 |
Certificates of deposit: | |||||
Retail | 10,017,629 | 10,465,071 | 10,243,990 | 9,522,954 | 9,695,516 |
Brokered | 39,792 |
91,052 |
84,730 |
119,553 |
139,249 |
Total deposits | $25,636,732 |
$25,123,309 |
$23,489,071 |
$21,119,998 |
$20,421,040 |
CHARTER ONE FINANCIAL, INC.
AVERAGE BALANCE SHEET, YIELDS AND COSTS
(unaudited)
Three Months Ended | |||||||||||
3/31/02 |
12/31/01 |
9/30/01 |
6/30/01 |
3/31/01 | |||||||
(Dollars in thousands) | |||||||||||
Average balance sheet data: | |||||||||||
Interest-earning assets: | |||||||||||
Loans and leases | $25,530,842 | $25,992,199 | $26,538,590 | $24,545,830 | $24,414,279 | ||||||
Mortgage-backed securities | 8,257,013 | 8,125,218 | 6,721,551 | 6,308,018 | 6,096,885 | ||||||
Investment securities | 150,619 | 139,714 | 169,317 | 121,273 | 155,647 | ||||||
Other interest-earning assets | 846,552 |
627,381 |
642,584 |
636,982 |
594,483 |
||||||
Total interest-earning assets | 34,785,026 | 34,884,512 | 34,072,042 | 31,612,103 | 31,261,294 | ||||||
Allowance for loan and lease losses | (255,109 | ) | (235,087 | ) | (231,028 | ) | (192,922 | ) | (187,665 | ) | |
Noninterest-earning assets(1) | 2,953,303 |
2,867,450 |
2,656,029 |
2,466,163 |
2,295,337 |
||||||
Total assets | $37,483,220 |
$37,516,875 |
$36,497,043 |
$33,885,344 |
$33,368,966 |
||||||
Interest-bearing liabilities: | |||||||||||
Checking accounts | $7,832,954 | $6,971,531 | $5,803,371 | $4,515,967 | $3,957,804 | ||||||
Money market and savings accounts | 6,780,737 | 6,705,579 | 6,741,797 | 6,293,361 | 5,861,567 | ||||||
Certificates of deposit | 10,448,328 |
10,449,348 |
10,406,778 |
9,708,127 |
9,964,579 |
||||||
Total deposits | 25,062,019 | 24,126,458 | 22,951,946 | 20,517,455 | 19,783,950 | ||||||
FHLB advances | 8,071,957 | 8,866,648 | 9,280,037 | 9,411,921 | 9,819,816 | ||||||
Other borrowings | 460,700 |
553,116 |
548,888 |
427,597 |
531,171 |
||||||
Total interest-bearing liabilities | 33,594,676 | 33,546,222 | 32,780,871 | 30,356,973 | 30,134,937 | ||||||
Noninterest-bearing liabilities | 998,029 |
912,290 |
787,228 |
952,391 |
723,044 |
||||||
Total liabilities | 34,592,705 | 34,458,512 | 33,568,099 | 31,309,364 | 30,857,981 | ||||||
Shareholders' equity | 2,890,515 |
3,058,363 |
2,928,944 |
2,575,980 |
2,510,985 |
||||||
Total liabilities and shareholders' equity | $37,483,220 |
$37,516,875 |
$36,497,043 |
$33,885,344 |
$33,368,966 |
||||||
Yields and costs during period: | |||||||||||
Weighted average yield: | |||||||||||
Loans and leases(2) | 6.73 | % | 7.10 | % | 7.29 | % | 7.48 | % | 7.68 | % | |
Mortgage-backed securities | 6.10 | 6.23 | 6.54 | 6.84 | 7.15 | ||||||
Investment securities | 8.05 | 8.09 | 8.21 | 7.61 | 7.66 | ||||||
Other interest-earning assets | 3.74 | 5.37 | 6.61 | 6.76 | 7.14 | ||||||
Total interest-earning assets | 6.51 | 6.87 | 7.13 | 7.34 | 7.56 | ||||||
Weighted average cost(3): | |||||||||||
Checking accounts | 1.88 | 2.24 | 2.47 | 2.16 | 1.94 | ||||||
Money market and savings accounts | 2.23 | 2.61 | 3.13 | 3.71 | 3.60 | ||||||
Certificates of deposit | 3.76 | 4.41 | 5.17 | 5.53 | 5.84 | ||||||
Total deposits | 2.76 | 3.28 | 3.89 | 4.23 | 4.40 | ||||||
FHLB advances | 5.21 | 5.02 | 5.22 | 5.46 | 5.60 | ||||||
Other borrowings | 6.51 | 5.82 | 6.23 | 7.23 | 7.22 | ||||||
Total interest-bearing liabilities | 3.40 | 3.79 | 4.30 | 4.65 | 4.84 | ||||||
Interest rate spread | 3.11 | 3.08 | 2.83 | 2.69 | 2.72 | ||||||
Net yield on interest-earning assets | 3.26 | 3.21 | 2.97 | 2.88 | 2.94 |
CHARTER ONE FINANCIAL, INC.
YIELDS AND COSTS AT END OF PERIOD
(unaudited)
3/31/02 |
12/31/01 |
9/30/01 |
6/30/01 |
3/31/01 |
||||||
Yields and costs at end of period: | ||||||||||
Weighted average yield: | ||||||||||
Real estate loans | 6.82 | % | 6.99 | % | 7.30 | % | 7.33 | % | 7.45 | % |
Retail consumer loans | 5.84 | 6.35 | 6.90 | 7.18 | 7.82 | |||||
Automobile loans | 7.43 | 7.67 | 8.16 | 8.45 | 8.63 | |||||
Consumer finance loans | 7.98 | 8.15 | 8.33 | 8.41 | 8.76 | |||||
Leases(1) | 5.64 | 5.87 | 6.05 | 6.22 | 6.27 | |||||
Corporate banking loans | 5.79 | 6.07 | 7.11 | 7.47 | 8.34 | |||||
Total loans and leases | 6.65 | 6.91 | 7.30 | 7.43 | 7.69 | |||||
Mortgage-backed securities | 6.07 | 6.18 | 6.46 | 6.73 | 7.06 | |||||
Investment securities | 7.31 | 8.21 | 8.15 | 7.90 | 7.92 | |||||
Other interest-earning assets | 2.95 | 5.43 | 6.88 | 7.13 | 7.12 | |||||
Total interest-earning assets | 6.36 | 6.71 | 7.10 | 7.27 | 7.54 | |||||
Weighted average cost(2): | ||||||||||
Checking accounts | 1.56 | 1.86 | 2.45 | 2.15 | 1.93 | |||||
Money market and savings accounts | 2.27 | 2.26 | 2.72 | 3.14 | 3.79 | |||||
Certificates of deposit | 3.70 | 4.03 | 4.84 | 5.52 | 5.76 | |||||
Total deposits | 2.61 | 2.88 | 3.58 | 3.99 | 4.34 | |||||
FHLB advances | 5.30 | 5.02 | 5.12 | 5.39 | 5.51 | |||||
Other borrowings | 7.60 | 5.86 | 5.31 | 6.84 | 8.06 | |||||
Total interest-bearing liabilities | 3.29 | 3.46 | 4.04 | 4.46 | 4.75 | |||||
Interest rate spread | 3.07 | 3.25 | 3.06 | 2.81 | 2.79 | |||||
Net yield on interest-earning assets | 3.20 | 3.38 | 3.21 | 3.00 | 2.97 |
LOAN AND LEASE PORTFOLIO
(unaudited)
3/31/02 |
12/31/01 |
9/30/01 |
6/30/01 |
3/31/01 |
|||||||
(Dollars in thousands) | |||||||||||
Loan and lease portfolio, net(1): | |||||||||||
One-to-four family: | |||||||||||
Permanent: | |||||||||||
Fixed rate | $5,695,007 | $6,419,819 | $5,812,007 | $5,408,985 | $4,788,565 | ||||||
Adjustable rate | 2,816,726 | 3,350,370 | 3,753,921 | 3,935,194 | 5,034,817 | ||||||
Construction | 397,838 |
409,369 |
411,186 |
380,735 |
354,997 |
||||||
8,909,571 |
10,179,558 |
9,977,114 |
9,724,914 |
10,178,379 |
|||||||
Commercial real estate: | |||||||||||
Multifamily | 1,119,565 | 1,189,777 | 1,240,894 | 1,035,595 | 1,031,704 | ||||||
Commercial | 1,311,263 |
1,279,889 |
1,276,072 |
1,038,628 |
1,001,852 |
||||||
2,430,828 |
2,469,666 |
2,516,966 |
2,074,223 |
2,033,556 |
|||||||
Consumer: | |||||||||||
Retail | 4,747,254 | 4,857,473 | 4,910,435 | 5,454,166 | 4,853,952 | ||||||
Automobile | 4,582,136 | 4,397,425 | 4,259,625 | 3,625,418 | 3,308,099 | ||||||
Consumer finance | 1,012,168 |
1,042,522 |
1,066,613 |
1,073,648 |
1,098,983 |
||||||
10,341,558 |
10,297,420 |
10,236,673 |
10,153,232 |
9,261,034 |
|||||||
Business: | |||||||||||
Leases | 2,022,104 | 1,994,524 | 2,008,167 | 1,937,747 | 1,869,117 | ||||||
Corporate banking | 1,070,610 |
1,043,010 |
895,221 |
844,582 |
816,035 |
||||||
3,092,714 |
3,037,534 |
2,903,388 |
2,782,329 |
2,685,152 |
|||||||
Loans and leases before allowance for loan and lease losses |
24,774,671 | 25,984,178 | 25,634,141 | 24,734,698 | 24,158,121 | ||||||
Allowance for loan and lease losses | (258,605 | ) | (255,478 | ) | (235,604 | ) | (198,378 | ) | (192,991 | ) | |
Loans and leases, net(1) | $24,516,066 |
$25,728,700 |
$25,398,537 |
$24,536,320 |
$23,965,130 |
||||||
Portfolio of loans serviced for others | $15,855,010 | $13,846,807 | $13,862,069 | $12,115,754 | $10,723,836 |
CHARTER ONE FINANCIAL, INC.
LOAN AND LEASE ACTIVITY
(unaudited)
Three Months Ended | ||||||||||
3/31/02 |
12/31/01 |
9/30/01 |
6/30/01 |
3/31/01 |
||||||
(Dollars in thousands) | ||||||||||
Originations: | ||||||||||
Real estate: | ||||||||||
Permanent: | ||||||||||
One-to-four family | $2,657,994 | $2,831,833 | $2,015,708 | $2,512,966 | $1,453,923 | |||||
Multifamily | 35,719 | 1,774 | 21,003 | 5,650 | 14,026 | |||||
Commercial | 92,088 |
9,070 |
19,953 |
65,775 |
60,806 |
|||||
Total permanent loans | 2,785,801 |
2,842,677 |
2,056,664 |
2,584,391 |
1,528,755 |
|||||
Construction: | ||||||||||
One-to-four family | 14,031 | 7,288 | 16,765 | 203,528 | 121,929 | |||||
Multifamily | 24,988 | 7,841 | 60,506 | 32,327 | 38,187 | |||||
Commercial | 66,234 |
21,947 |
68,526 |
19,207 |
86,216 |
|||||
Total construction loans | 105,253 |
37,076 |
145,797 |
255,062 |
246,332 |
|||||
Total real estate loans originated | 2,891,054 |
2,879,753 |
2,202,461 |
2,839,453 |
1,775,087 |
|||||
Retail consumer | 998,727 | 867,979 | 948,975 | 1,135,388 | 584,345 | |||||
Automobile | 684,045 | 636,021 | 900,593 | 688,682 | 490,625 | |||||
Consumer finance | 56,083 | 63,935 | 70,161 | 68,657 | 56,705 | |||||
Leases | 93,041 | 104,562 | 141,386 | 111,288 | 144,837 | |||||
Corporate banking | 353,640 |
396,426 |
273,105 |
254,980 |
213,985 |
|||||
Total loans and leases originated | 5,076,590 |
4,948,676 |
4,536,681 |
5,098,448 |
3,265,584 |
|||||
Loans purchased | 4,715 |
7,244 |
1,406,582 |
3,827 |
7,896 |
|||||
Sales and principal reductions: | ||||||||||
Loans sold | 644,097 | 476,089 | 399,889 | 466,831 | 293,094 | |||||
Loans exchanged for mortgage-backed securities | 2,717,271 | 1,259,205 | 2,258,523 | 1,768,191 | 1,422,334 | |||||
Principal reductions | 2,921,080 |
2,982,202 |
2,225,932 |
2,306,019 |
1,597,326 |
|||||
Total sales and principal reductions | 6,282,448 |
4,717,496 |
4,884,344 |
4,541,041 |
3,312,754 |
|||||
Increase (decrease) before net items | $(1,201,143 |
) | $238,424 |
$1,058,919 |
$561,234 |
$(39,274 |
) |
CHARTER ONE FINANCIAL, INC.
ALLOWANCE FOR LOAN AND LEASE LOSSES
(unaudited)
Three Months Ended | ||||||||||
3/31/02 |
12/31/01 |
9/30/01 |
6/30/01 |
3/31/01 | ||||||
(Dollars in thousands) | ||||||||||
Allowance for loan and lease losses: | ||||||||||
Balance, beginning of period | $255,478 | $235,604 | $198,378 | $192,991 | $189,616 | |||||
Provision for loan and lease losses | 28,717 | 38,853 | 27,109 | 17,076 | 17,728 | |||||
Acquired through business combination | - | - | 33,782 | - | - | |||||
Loans and leases charged off: | ||||||||||
One-to-four family | (976 | ) | (1,035 | ) | (800 | ) | (357 | ) | (1,005 | ) |
Commercial real estate | (801 | ) | (630 | ) | (26 | ) | (448 | ) | (35 | ) |
Retail consumer | (2,258 | ) | (1,841 | ) | (2,123 | ) | (1,694 | ) | (1,955 | ) |
Automobile | (16,920 | ) | (13,073 | ) | (8,243 | ) | (8,794 | ) | (9,986 | ) |
Consumer finance | (3,822 | ) | (2,890 | ) | (3,762 | ) | (2,537 | ) | (2,057 | ) |
Leases | (460 | ) | - | (7,234 | ) | 262 | - | |||
Corporate banking | (4,023 |
) | (2,216 |
) | (3,903 |
) | (284 |
) | (1,269 |
) |
Total charge-offs | (29,260 |
) | (21,685 |
) | (26,091 |
) | (14,376 |
) | (16,307 |
) |
Recoveries: | ||||||||||
One-to-four family | 2 | 13 | 74 | 21 | 24 | |||||
Commercial real estate | 121 | 51 | 19 | 4 | 1 | |||||
Retail consumer | 403 | 650 | 402 | 499 | 421 | |||||
Automobile | 2,408 | 1,803 | 1,756 | 1,678 | 1,366 | |||||
Consumer finance | 63 | 26 | 73 | 77 | 51 | |||||
Leases | - | - | - | 220 | - | |||||
Corporate banking | 673 |
163 |
102 |
188 |
91 |
|||||
Total recoveries | 3,670 |
2,706 |
2,426 |
2,687 |
1,954 |
|||||
Net loan and lease charge-offs | (25,590 |
) | (18,979 |
) | (23,665 |
) | (11,689 |
) | (14,353 |
) |
Balance, end of period | $258,605 | $255,478 | $235,604 | $198,378 | $192,991 | |||||
Net charge-offs to average loans and leases (annualized) | .40 | % | .29 | % | .36 | % | .19 | % | .24 | % |
CHARTER ONE FINANCIAL, INC.
NONPERFORMING ASSETS
(unaudited)
3/31/02 |
12/31/01 |
9/30/01 |
6/30/01 |
3/31/01 |
||||||
(Dollars in thousands) | ||||||||||
Nonperforming loans and leases: | ||||||||||
Nonaccrual loans and leases: | ||||||||||
Real estate mortgage loans: | ||||||||||
One-to-four family(1) | $82,721 | $79,394 | $77,094 | $71,761 | $71,531 | |||||
Multifamily and commercial | 15,178 | 13,552 | 8,046 | 5,566 | 8,566 | |||||
Construction and land | 12,713 |
10,276 |
4,182 |
6,482 |
7,683 |
|||||
Total real estate mortgage loans | 110,612 | 103,222 | 89,322 | 83,809 | 87,780 | |||||
Retail consumer | 17,323 | 16,592 | 16,156 | 14,565 | 12,924 | |||||
Automobile | - | - | 24 | 47 | 56 | |||||
Consumer finance | 69,259 | 68,485 | 63,198 | 58,255 | 51,898 | |||||
Leases | 2,256 | 904 | 2,687 | 6,441 | - | |||||
Corporate banking | 21,548 |
10,551 |
9,455 |
15,041 |
16,593 |
|||||
Total nonaccrual loans and leases | 220,998 |
199,754 |
180,842 |
178,158 |
169,251 |
|||||
Accruing loans and leases delinquent more than 90 days: | ||||||||||
Real estate mortgage loans: | ||||||||||
One-to-four family | - | - | - | - | - | |||||
Multifamily and commercial | - | - | - | - | - | |||||
Construction and land | - |
- |
- |
- |
- |
|||||
Total real estate mortgage loans | - | - | - | - | - | |||||
Retail consumer(1) | 3,734 | 4,519 | 3,149 | 2,692 | 2,947 | |||||
Automobile | 5,756 | 6,000 | 6,437 | 6,709 | 5,887 | |||||
Consumer finance | - | - | - | - | - | |||||
Leases | 716 | - | 62 | 412 | 1,958 | |||||
Corporate banking | 966 |
4,691 |
1,991 |
2,076 |
1,114 |
|||||
Total accruing loans and leases delinquent more than 90 days | 11,172 |
15,210 |
11,639 |
11,889 |
11,906 |
|||||
Restructured real estate mortgage loans | 1,169 |
653 |
656 |
659 |
662 |
|||||
Total nonperforming loans and leases | 233,339 | 215,617 | 193,137 | 190,706 | 181,819 | |||||
Real estate acquired through foreclosure and other collateral owned | 53,291 |
50,265 |
41,955 |
36,500 |
33,363 |
|||||
Total nonperforming assets | 286,630 | 265,882 | 235,092 | 227,206 | 215,182 | |||||
Less government guaranteed loans | 23,389 |
21,506 |
21,439 |
19,527 |
22,878 |
|||||
Nonperforming assets net of government guaranteed loans | $263,241 |
$244,376 |
$213,653 |
$207,679 |
$192,304 |
|||||
Ratio of (excluding government guaranteed nonperforming loans): | ||||||||||
Nonperforming loans and leases to total loans and leases | .86 | % | .75 | % | .68 | % | .70 | % | .66 | % |
Nonperforming assets to total assets | .70 | .64 | .57 | .60 | .57 | |||||
Allowance for loan and lease losses to: | ||||||||||
Nonperforming loans and leases | 123.17 | 131.61 | 137.22 | 115.89 | 121.42 | |||||
Total loans and leases before allowance | 1.04 | .98 | .92 | .80 | .80 |