-----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, Dstve7FThjpFpyUmQJKz3aC3QfgDl71Rh2clyQR5/DRJO+/rJTSjVYccXIFzKH2G kSH/ZVtS7b0Sqjd5xq4b3g== 0000950114-97-000236.txt : 19970506 0000950114-97-000236.hdr.sgml : 19970506 ACCESSION NUMBER: 0000950114-97-000236 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970505 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROOSEVELT FINANCIAL GROUP INC CENTRAL INDEX KEY: 0000830055 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 431498200 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-17403 FILM NUMBER: 97595323 BUSINESS ADDRESS: STREET 1: 900 ROOSEVELT PKWY CITY: CHESTERFIELD STATE: MO ZIP: 63017 BUSINESS PHONE: 3145326200 MAIL ADDRESS: STREET 1: 900 ROOSEVELT PKWY STREET 2: 900 ROOSEVELT PKWY CITY: CHESTERFIELD STATE: MO ZIP: 63017 10-Q 1 ROOSEVELT FINANCIAL GROUP, INC. FORM 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 ------------------------ OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------------- --------------- Commission File #0-17403 ROOSEVELT FINANCIAL GROUP, INC. ----------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 43-1498200 --------------------------------- ------------------------ (State or other Jurisdiction (I.R.S. Employer ID No.) of incorporation or organization) 900 ROOSEVELT PARKWAY, CHESTERFIELD, MISSOURI 63017 --------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (314) 532-6200 ------------------ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --------- --------- Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. Class Outstanding at ---------------------- ------------------------------- Common Stock 42,149,737 Par Value $.01 2 INDEX ROOSEVELT FINANCIAL GROUP, INC.
PAGE PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) - Consolidated Balance Sheets 2 - Consolidated Statements of Operations 3 - Consolidated Statements of Stockholders' Equity 4 - Consolidated Statements of Cash Flows 5 - Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 PART II. OTHER INFORMATION SIGNATURES 21
3 ROOSEVELT FINANCIAL GROUP, INC. Consolidated Balance Sheets (dollars in thousands, except share data) (Unaudited)
March 31, December 31, 1997 1996 ---------- ---------- Assets: Cash and cash equivalents $ 43,025 $ 48,642 Securities available for sale: Investment securities 181,345 183,227 Mortgage-backed securities 2,726,682 2,974,530 Loans 4,288,411 4,298,469 Real estate owned 14,015 12,438 Office properties and equipment, net 54,275 54,966 Other assets 200,556 224,140 ---------- ---------- $7,508,309 $7,796,412 ========== ========== Liabilities and Stockholders' Equity: Deposits $5,306,723 $5,347,071 Securities sold under agreements to repurchase 2,076 3,095 Advances from Federal Home Loan Bank 1,584,000 1,837,756 Other liabilities 145,952 111,063 ---------- ---------- Total Liabilities 7,038,751 7,298,985 ---------- ---------- Stockholders' equity: Preferred stock - $.01 par value; $50 preference value; 6.5% non-cumulative perpetual convertible; aggregate preference value of $63,575 and $64,441 at March 31, 1997 and December 31, 1996, respectively; 3,000,000 shares authorized and 1,271,493 and 1,288,825 issued and outstanding at March 31, 1997 and December 31, 1996, respectively 13 13 Common stock - $.01 par value; 90,000,000 shares authorized; 44,151,837 and 44,183,124 shares issued and 42,614,943 and 44,183,124 shares outstanding at March 31, 1997 and December 31, 1996, respectively 442 442 Paid-in capital 294,481 298,283 Retained earnings - subject to certain restrictions 215,176 202,550 Treasury stock, at cost; 1,536,894 shares at March 31, 1997 (32,552) -- Unrealized loss on securities available for sale, net of taxes (6,441) (2,226) Unamortized restricted stock awards (1,561) (1,635) ---------- ---------- Total Stockholders' Equity 469,558 497,427 ---------- ---------- $7,508,309 $7,796,412 ========== ========== See accompanying notes to consolidated financial statements
2 4 ROOSEVELT FINANCIAL GROUP, INC. Consolidated Statements of Operations (dollars in thousands, except per share information) (Unaudited)
Three Months Ended March 31, 1997 1996 ---------- ---------- Interest income: Loans $ 82,685 $ 72,010 Securities available for sale 54,389 29,348 Securities held to maturity -- 64,477 Other 2,938 308 ---------- ---------- Total interest income 140,012 166,143 ---------- ---------- Interest expense: Deposits 64,471 61,164 Other borrowings 27,849 53,346 Interest rate exchange agreements, net (1,730) 5,259 ---------- ---------- Total interest expense 90,590 119,769 ---------- ---------- Net interest income 49,422 46,374 Provision for losses on loans 640 300 ---------- ---------- Net interest income after provision for losses on loans 48,782 46,074 ---------- ---------- Noninterest income: Retail banking fees 5,979 3,132 Insurance and brokerage sales commissions 2,975 1,698 Loan servicing fees, net 2,754 2,019 Net gain from financial instruments 392 341 Other 252 1,328 ---------- ---------- Total noninterest income 12,352 8,518 ---------- ---------- Noninterest expense: Compensation and employee benefits 11,160 9,882 Occupancy 4,811 3,922 Federal insurance premiums 756 2,339 Other 8,711 5,575 ---------- ---------- Total noninterest expense 25,438 21,718 ---------- ---------- Income before income tax expense 35,696 32,874 Income tax expense 13,605 11,309 ---------- ---------- Net income $ 22,091 $ 21,565 ========== ========== Net income attributable to common stock $ 21,060 $ 20,508 ========== ========== Earnings per share: Primary $ 0.49 $ 0.48 ========== ========== Fully-diluted $ 0.46 $ 0.46 ========== ========== Dividends Paid $ 0.17 $ 0.155 ========== ========== See accompanying notes to consolidated financial statements
3 5 ROOSEVELT FINANCIAL GROUP, INC. AND SUBSIDIARIES Consolidated Statements of Stockholders' Equity (Dollars in thousands) (Unaudited)
Unrealized gain (loss) on securities available Un- for amortized Total Preferred Stock Common Stock Paid- Treasury Stock sale, Restricted Stock- ---------------- ---------------- in Retained -------------------- net Stock holders Shares Amount Shares Amount Capital Earnings Shares Amount of taxes Awards Equity --------- ------ -------- ------ ------- -------- ---------- -------- ---------- ---------- ------- Balance, December 31, 1995 1,301,000 $13 41,991,701 $420 $262,381 $223,606 -- $ -- $ 12,019 $(1,533) $496,906 Net income -- -- -- -- -- 9,662 -- -- -- -- 9,662 Purchase of common stock for treasury -- -- -- -- -- -- (57,000) (923) -- -- (923) Issuance of common stock for stock options and employee stock plans -- -- 219,991 2 2,748 (205) 57,000 923 -- (242) 3,226 Issuance of common stock for acquisitions -- -- 1,925,776 19 33,155 -- -- -- -- -- 33,174 Exchange of preferred stock for common stock (12,175) -- 45,656 1 (1) -- -- -- -- -- -- Amortization of restricted stock awards -- -- -- -- -- -- -- -- -- 140 140 Cash dividends declared: Common stock -- -- -- -- -- (26,303) -- -- -- -- (26,303) Preferred stock -- -- -- -- -- (4,210) -- -- -- -- (4,210) Unrealized loss on securities available for sale, net -- -- -- -- -- -- -- -- (14,245) -- (14,245) --------- --- ---------- ---- -------- -------- ---------- -------- -------- ------- -------- Balance, December 31, 1996 1,288,825 13 44,183,124 442 298,283 202,550 -- -- (2,226) (1,635) 497,427 Net income -- -- -- -- -- 22,091 -- -- -- -- 22,091 Purchase of common stock for treasury -- -- -- -- -- -- (1,700,000) (35,916) -- -- (35,916) Issuance of common stock for stock options and employee stock plans -- -- (31,287) -- (2,936) (690) 98,111 2,024 -- -- (1,602) Exchange of preferred stock for common stock (17,332) -- -- -- (866) (474) 64,995 1,340 -- -- -- Amortization of restricted stock awards -- -- -- -- -- -- -- -- -- 74 74 Cash dividends declared: Common stock -- -- -- -- -- (7,270) -- -- -- -- (7,270) Preferred stock -- -- -- -- -- (1,031) -- -- -- -- (1,031) Unrealized loss on securities available for sale, net -- -- -- -- -- -- -- -- (4,215) -- (4,215) --------- --- ---------- ---- -------- -------- ---------- -------- -------- ------- -------- Balance, March 31, 1997 1,271,493 $13 44,151,837 $442 $294,481 $215,176 (1,536,894) $(32,532) $ (6,441) $ 1,561 $469,558 ========= === ========== ==== ======== ======== ========== ======== ======== ======= ======== See accompanying notes to consolidated financial statements
4 6 ROOSEVELT FINANCIAL GROUP, INC. Consolidated Statements of Cash Flows (dollars in thousands) (Unaudited)
Three Months Ended March 31, 1997 1996 ---------- ----------- Cash flows from operating activities: Net income $ 22,091 $ 21,565 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,099 1,046 Amortization of discounts and premiums, net 10,449 6,591 Decrease (increase) in accrued interest receivable 905 (2,901) Decrease in accrued interest payable (964) (3,914) Provision for losses on loans 640 300 Federal tax refund 27,967 - Other, net (1,808) (6,392) ---------- ----------- Net cash provided by operating activities 60,379 16,295 ---------- ----------- Cash flows from investing activities: Principal payments and maturities of securities available for sale 201,204 55,770 Principal payments and maturities of securities held to maturity - 271,370 Principal payments on loans 243,290 256,427 Proceeds from sales of securities available for sale 96,964 358,252 Purchase of securities available for sale (61,387) (274,727) Purchase of securities held to maturity - (301,363) Purchase of loans (17,921) (170,830) Originations of loans (212,517) (288,923) Net proceeds from sales of real estate 1,484 3,179 Purchase of office properties & equipment (378) (526) ---------- ----------- Net cash provided by (used in) investing activities 250,739 (91,371) ---------- ----------- Cash flows from financing activities: Proceeds from FHLB advances 5,215,000 4,992,500 Principal payments on FHLB advances (5,468,756) (4,914,000) Proceeds received from termination of interest rate exchange agreements - 14,185 Excess of deposit (withdrawals over receipts) receipts over withdrawals (40,393) 13,430 Decrease in securities sold under agreements to repurchase, net (1,019) (14,090) Proceeds from exercise of stock options 177 1,019 Purchase of treasury stock (35,916) - Cash dividends paid (8,301) (7,582) Net increase in advances from borrowers for taxes and insurance 22,473 18,927 ---------- ----------- Net cash (used in) provided by financing activities (316,735) 104,389 ---------- ----------- Net (decrease) increase in cash and cash equivalents (5,617) 29,313 Cash and cash equivalents at beginning of period 48,642 15,433 ---------- ----------- Cash and cash equivalents at end of period $ 43,025 $ 44,746 ========== =========== Supplemental disclosures of cash flow information: Payments during the period for: Interest $ 91,555 $ 123,683 Income tax refund 27,967 - Noncash investing and financing activities: Redesignation of interest rate exchange and cap agreements to securities available for sale - 3,235 See accompanying notes to consolidated financial statements
5 7 ROOSEVELT FINANCIAL GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - BASIS OF PRESENTATION The consolidated financial statements include the accounts of Roosevelt Financial Group, Inc. (the Company), its wholly-owned subsidiaries, Roosevelt Bank (the Bank), Missouri State Bank (MSB), and F & H Realty (Realty) and the Bank's wholly-owned subsidiaries as of March 31, 1997 and for the three month periods ended March 31, 1997 and 1996. In the opinion of management, the preceding unaudited consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the financial condition of the Company as of March 31, 1997 and the results of its operations for the three month periods ended March 31, 1997 and 1996. The preceding unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial condition, results of operations and cash flows in conformity with generally accepted accounting principles. The following material under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" is written with the presumption that the users of the interim financial statements have read, or have access to, the Company's latest audited financial statements and notes thereto, together with Management's Discussion and Analysis of Financial Condition and Results of Operations as of December 31, 1996 and for the three year period then ended. Therefore, only material changes in financial condition and results of operations are discussed in the remainder of Part I. When necessary, reclassifications have been made to prior period balances to conform to the current period presentation. NOTE 2 - PROPOSED MERGER On December 23, 1996, Roosevelt Financial Group, Inc. announced its plans to merge with Mercantile Bancorporation Inc. (MTL). Pursuant to the agreement, Roosevelt shareholders will be able to elect to receive either $22 in cash or .4211 shares of common stock (subject to the issuance of a maximum number of shares of MTL common stock). Plans call for the merger, which is subject to the approval of Roosevelt shareholders and all appropriate regulatory agencies to be completed in mid-1997. 6 8 NOTE 3 -SECURITIES AVAILABLE FOR SALE The amortized cost and market value of securities available for sale at March 31, 1997 are summarized as follows:
GROSS GROSS AMORTIZED UNREALIZED UNREALIZED MARKET COST GAINS LOSSES VALUE ---------- ---------- ---------- ---------- (in thousands) Investment Securities: U.S. Government and agency obligations $ 12,594 $ 244 $ (84) $ 12,754 Corporate securities 11,731 1,002 (3) 12,730 ---------- ------- -------- ---------- 24,325 1,246 (87) 25,484 FHLB stock 155,861 -- -- 155,861 ---------- ------- -------- ---------- 180,186 1,246 (87) 181,345 ---------- ------- -------- ---------- Mortgage-backed Securities: Mortgage-backed certificates: GNMA 59,865 662 (351) 60,176 FNMA 129,677 2,946 (528) 132,095 FHLMC 127,139 1,475 (1,754) 126,860 Private pass throughs 2,158,888 14,286 (17,686) 2,155,488 Collateralized mortgage obligations 160,871 1,945 (4,526) 158,290 Other 32,472 1,788 (536) 33,724 Derivative financial instruments: Interest rate cap agreements 68,540 1,758 (11,108) 59,190 Interest rate floor agreements 83 776 -- 859 ---------- ------- -------- ---------- 2,737,535 25,636 (36,489) 2,726,682 ---------- ------- -------- ---------- $2,917,721 $26,882 $(36,576) $2,908,027 ========== ======= ======== ==========
Gross realized gains and gross realized losses on sales of securities available for sale are summarized as follows:
THREE MONTHS ENDED MARCH 31, ---------------------------- 1997 1996 ------ ------- Gross realized gains $3,980 $ 6,157 Gross realized losses -- (3,067) ------ ------- $3,980 $ 3,090 ====== =======
7 9 NOTE 4 - SECURITIES HELD TO MATURITY In December, 1996, the Company reclassified its entire investment and mortgage-backed securities portfolios from held to maturity to available for sale. This action was taken to provide the Company with maximum flexibility to manage its portfolio. As a result of the Company's decision to reclassify its entire securities portfolios from held to maturity to available for sale, it will not be able to classify any securities as held to maturity for a minimum period of one year from the initial redesignation date. NOTE 5 - COMMON STOCK DIVIDENDS AND PREFERRED STOCK DIVIDENDS On April 24, 1997, the Board of Directors declared the Company's thirty seventh common stock cash dividend in the amount of 22.5 cents per share payable May 30, 1997 to stockholders of record on May 15, 1997. The 22.5 cent dividend consists of the Company's regular quarterly dividend of 17 cents per share and a special transition dividend of 5.5 cents per share. The special transition dividend ensures that Roosevelt shareholders do not receive a shortfall based on the record and payment dates of Roosevelt's anticipated last dividend prior to its merger with Mercantile Bancorporation Inc. (see Note 2) and the record and payment dates of Mercantile's first dividend following the merger. On March 27, 1997, the Board of Directors declares a regular quarterly cash dividend on the Company's Series A and F 6.5% non-cumulative perpetual convertible preferred stock in the amount of 81.25 cents per share payable May 15, 1997 to shareholders of record May 5, 1997. NOTE 6 - STOCK REPURCHASE PROGRAM On December 15, 1994, the Board of Directors of Roosevelt Financial Group, Inc. authorized the Company to acquire up to 1,750,000 shares of its own common stock, subject to market conditions, prior to December 31, 1997. The stock repurchased is to be held in treasury in order to fund, from time to time, the Company's benefit programs. Shares of stock repurchased may also be retired, from time to time, if not needed for other corporate purposes. Through December 31, 1996, 281,500 shares of common stock of the Company have been repurchased pursuant to the stock repurchase program at a weighted average price of $15.98 per share. On January 2, 1997, the Board of Directors of the Company authorized an expansion of the capacity of the above-mentioned stock repurchase plan by an additional 5,529,880 shares. This expansion, when coupled with the remaining authorization prior to the expansion (1,468,500 shares), resulted in a total authorization of 6,998,380 shares, the number of shares that the Company has agreed to use its reasonable best efforts, subject to prudent business practices, to acquire in open market transactions prior to the closing date of its planned merger with Mercantile Bancorporation Inc. (see Note 2). December 31, 1996 and through April 24, 1997, an additional 2,325,000 shares have been repurchased at a weighted average price of $21.32 per share. NOTE 7 - EARNINGS PER SHARE Net income for primary earnings per share is adjusted for the dividends on convertible preferred stock. Primary earnings per share have been computed based on the weighted average number of common shares outstanding and common stock equivalents arising from the assumed exercise of outstanding stock options unless their effect would be anti-dilutive. Common stock equivalents are computed under the treasury stock method. Average common and common stock equivalents outstanding for the three month periods ended March 31, 1997 and 1996 were 43,395,534 and 42,373,404, respectively. Fully-diluted earnings per share have been computed using the weighted average number of common shares and common stock equivalents, which include the effect of the assumed conversion of the 6.5% non-cumulative convertible preferred stock into common stock. Net income has not been adjusted for the preferred stock dividend for the purposes of the fully-diluted earnings per share calculation. Average common and common stock equivalents outstanding, for the purpose of calculating fully-diluted earnings per share, for the three month periods ended March 31, 1997 and 1996 were 48,163,633 and 47,258,439, respectively. NOTE 8 - ACCOUNTING PRONOUNCEMENTS In February 1997, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 128, Earnings Per Share (SFAS 128). SFAS 128 establishes standards for computing and presenting earnings per share (EPS). SFAS 128 simplifies existing standards for computing EPS and makes them comparable to international standards. It replaces the presentation of primary EPS with a presentation of basic EPS. It also requires dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the components of basic and diluted EPS. Basic EPS excludes dilution and is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. SFAS 128 is effective for financial statements issued for periods ending after December 31, 1997, including interim periods, and requires restatement of all prior EPS data presented. The Company does not believe the adoption of SFAS 128 will have a material effect on its financial condition or results of operations. During June 1996, the FASB issued Statement of Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinquishments of Liabilities" (SFAS 125). SFAS 125 provides accounting and reporting standards for transfers and servicing of financial assets and extinguishments of liabilities based on consistent application of a financial components approach that focuses on control. It distinguishes transfers of financial assets that are sales from transfers that are secured borrowings. Under the financial components approach, after a transfer of financial assets, an entity recognizes all financial and servicing assets it controls and liabilities it has incurred and derecognizes financial assets it no longer controls and liabilities that have been extinguished. The financial components approach focuses on the assets and liabilities that exist after the transfer. Many of these assets and liabilities are components of financial assets that existed prior to the transfer. If a transfer does not meet the criteria for a sale, the transfer is accounted for as a secured borrowing with pledge of collateral. 8 10 SFAS 125 extends the "available-for-sale" or "trading" approach in SFAS 115 to nonsecurity financial assets that can contractually be prepaid or otherwise settled in such a way that the holder of the asset would not recover substantially all of its recorded investment. Thus, nonsecurity financial assets (no matter how acquired) such as loans, other receivables, interest-only strips or residual interests in securitization trusts that are subject to prepayment risk that could prevent recovery of substantially all of the recorded amount are to be reported at fair value with the change in fair value accounted for depending on the asset's classification as "available-for-sale" or "trading". SFAS 125 also amends SFAS 115 to prevent a security from being classified as held-to-maturity if the security can be prepaid or otherwise settled in such a way that the holder of the security would not recover substantially all of its recorded investment. SFAS 125 is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after December 31, 1996, and is to be applied prospectively. Earlier or retroactive application is not permitted. Also, the extension of the SFAS 115 approach to certain nonsecurity financial assets and the amendment to SFAS 115 is effective for financial assets held on or acquired after January 1, 1997. Reclassifications that are necessary because of the amendment do not call into question an entity's intent to hold other debt securities to maturity in the future. The Company's adoption of SFAS 125 effective January 1, 1997 did not have any impact on the Company's financial statements. 9 11 ROOSEVELT FINANCIAL GROUP, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS When used in this Form 10-Q or future filings by the Company with the Securities and Exchange Commission, in the Company's press releases or other public or shareholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases "will likely result", "are expected to", "will continue", "is anticipated", "estimate", "project" or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made, and to advise readers that various factors, including regional and national economic conditions, substantial changes in levels of market interest rates, credit and other risks of lending and investment activities and competitive and regulatory factors, could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from those anticipated or projected. The Company does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrence of anticipated or unanticipated events or circumstances after the date of such statements. RESULTS OF OPERATIONS Net Income - ---------- The Company recorded net income totaling $22.1 million for the three month period ended March 31, 1997 as compared to $21.6 million for the three month period ended March 31, 1996. Net income on a fully diluted per share basis was $0.46 for each of the three month periods. The Company took several actions in the fourth quarter of 1996 to reposition its balance sheet and improve its operating results. These actions included the sale of marginally profitable assets, the transfer of its securities held to maturity portfolio to the available for sale portfolio, the repayment of higher cost wholesale liabilities and the removal of derivative positions which had been designated as synthetic alterations of some of the assets sold or the liabilities repaid. These actions and others were part of continuous efforts to transition the Bank to become a more retail-oriented institution and contributed to the $526,000 increase in net income in the first quarter of 1997. Interest Income - --------------- Interest income declined $26.1 million or 15.6% to $140.0 million for the three month period ended March 31, 1997 as compared to $166.1 million for the three month period ended March 31, 1996. Interest income on loans increased $10.7 million primarily as a result of a $608.6 million increase in the average balance of loans outstanding which was partially offset by a small decrease in the average yield on the loan portfolio from 7.72% to 7.62%. The increase in the average balances of loans is primarily attributable to the Company's continuing efforts to originate a greater portion of its assets in the form of mortgage and consumer loans, as well as strong demand for such loans in the Company's retail markets. Interest income on securities available for sale increased $25.0 million while interest income on securities held to maturity declined $64.5 million. The increase in available for sale interest income and decrease in held to maturity interest income is primarily a factor of the average balances outstanding reflecting the net impact of the transfer of securities between portfolios in the fourth quarter of 1996 and purchases, sales and repayments occurring subsequent to March 31, 1996 and through March 31, 1997. Interest Expense - ---------------- Interest expense decreased $29.2 million or 24.4% to $90.6 million for the three month period ended March 31, 1997 as compared to $119.8 million for the same period in 1996. Interest expense on deposits increased $3.3 million to $64.5 million for the three month period ended March 31, 1997 as compared to $61.2 million for the 1996 period primarily as a result of a $423.0 million increase in the average balance outstanding. The remaining $32.5 million net decrease in interest expense primarily results from the fourth quarter of 1996 repayment of higher cost wholesale liabilities and the removal of interest rate exchange agreements which had been used as synthetic alterations of the liabilities repaid. 10 12 Average Balances, Interest Rates and Yields - ------------------------------------------- The following table presents at the date and for the periods indicated the Company's average interest-earning assets, average interest-bearing liabilities, interest income and expense and average rates earned and paid. Average rates earned and paid are derived by dividing income or expense by the average balance of assets and liabilities, respectively.
THREE MONTHS ENDED MARCH 31, ---------------------------------------------------------------------- 1997 1996 ---------------------------------- --------------------------------- INTEREST AVERAGE INTEREST AVERAGE AVERAGE INCOME/ RATE AVERAGE INCOME/ RATE BALANCE EXPENSE % BALANCE EXPENSE % ------- -------- ------- ------- -------- ------- (DOLLARS IN MILLIONS) Assets: Cash equivalents $ 227.8 $ 2.9 5.16% $ 24.0 $ 0.3 5.13% Securities available for sale 3,050.9 54.4 7.13 1,563.2 29.3 7.51 Securities held to maturity -- -- -- 3,599.3 64.5 7.17 Loans 4,339.9 82.7 7.62 3,731.3 72.0 7.72 -------- ------ -------- ------ Total interest-earning assets 7,618.6 140.0 7.35% 8,917.8 166.1 7.45% ------ ---- ------ ----- Other assets 326.8 383.9 -------- -------- $7,945.4 $9,301.7 ======== ======== Liabilities Deposits: NOW and money market accounts $1,187.9 8.9 2.98% $ 904.9 6.6 2.92% Passbook savings deposits 285.0 1.6 2.28 321.1 1.8 2.27 Time deposits 3,819.2 52.3 5.47 3,643.1 51.3 5.63 -------- ------ -------- ------ 5,292.1 62.8 4.74 4,869.1 59.7 4.90 Borrowings: Securities sold under agreements to repurchase 52.3 .8 6.17 1,163.7 18.7 6.43 Advances from FHLB 1,984.3 27.0 5.45 2,577.1 40.1 6.22 Other borrowings -- -- -- 47.5 1.2 10.26 -------- ------ -------- ------ Total interest-bearing liabilities 7,328.7 90.6 4.94% 8,657.4 119.7 5.53% ------ ---- ------ ----- Other liabilities 139.7 142.1 -------- -------- 7,468.4 8,799.5 Stockholders' equity 477.0 502.2 -------- -------- Total liabilities and stockholders' equity $7,945.4 $9,301.7 ======== ======== Net interest income $ 49.4 $ 46.4 ====== ====== Interest rate spread 2.41% 1.92% ==== ===== Effective net spread 2.60% 2.08% ==== ===== - ------------------------- The securities available for sale are included in the following table at historical cost with the corresponding average rate calculated upon historical balances. Average balances include non accrual loans. Interest on such loans is included in interest income upon receipt. Interest includes amortization of deferred fees. Includes the effect of interest rate exchange agreements. Equals average rate earned on all assets minus average rate paid on all liabilities. Net interest income annualized divided by average balance of all interest-earning assets.
At March 31, 1997 the weighted average yield on interest-earning assets was 7.55% and the weighted average cost on interest-bearing liabilities was 4.96%. 11 13 The following table presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. It distinguishes between changes related to volume and those due to changes in interest rates. For each category of interest income and interest expense, information is provided on changes attributed to (i) changes in volume (i.e., changes in volume multiplied by prior year rate) and (ii) changes in rate (i.e., changes in rate multiplied by prior year volume). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated to the change due to rate.
THREE MONTHS ENDED MARCH 31, 1997 VS. 1996 --------------------------------------------- INCREASE (DECREASE) TOTAL DUE TO INCREASE (DOLLARS IN THOUSANDS) VOLUME RATE (DECREASE) -------- -------- ---------- Interest income: Loans $ 11,744 $(1,069) $ 10,675 Securities available for sale 28,107 (3,066) 25,041 Securities held to maturity (64,477) -- (64,477) Other earning assets 2,613 17 2,630 -------- ------- -------- Total interest income $(22,013) $(4,118) $(26,131) -------- ------- -------- Interest expense: Deposits $ 5,313 $(2,006) $ 3,307 Securities sold under agreements to repurchase (15,501) 77 (15,424) Advances from Federal Home Loan Bank (8,256) (597) (8,853) Other borrowings (1,220) -- (1,220) Interest rate exchange agreements (7,937) 948 (6,989) -------- ------- -------- Total interest expense $(27,601) $(1,578) $(29,179) -------- ------- -------- Change in net interest income $ 5,588 $(2,540) $ 3,048 ======== ======= ========
Provision for Losses on Loans - ----------------------------- The provision for losses on loans recorded for the three month period ended March 31, 1997 was $640,000 as compared to $300,000 for the three month period ended March 31, 1996. The provision for losses on loans represents a charge against current net income to maintain a level of the allowance for losses on loans that has been determined necessary to absorb losses inherent in the Company's loan portfolio. The increase in the provision in 1997 reflects growth in the Bank's loan portfolio, especially consumer loans. Noninterest Income - ------------------ Retail Banking Fees Retail banking fees increased $2.8 million to $5.9 million for the three month period ended March 31, 1997 compared to $3.1 million for the three month period ended March 31, 1996. The increase resulted from increased levels of transaction account activities, primarily ATM fees, returned check fees, telephone banking fees and the Company's credit card and debit card programs. Insurance and Brokerage Sales Commissions Insurance and brokerage sales commissions increased $1.3 million to $3.0 million for the three month period ended March 31, 1997 compared to $1.7 million for the three month period ended March 31, 1996. The increase is primarily the result of an increase in the sales volume of commission generating products as the Company successfully increases its penetration of its existing customer base as well as attracts new customers. Loan Servicing Fees, Net Loan servicing fees increased $735,000 to $2.7 million for the three month period ended March 31, 1997 compared to $2.0 million for the three month period ended March 31, 1996. This increase is due primarily to several purchases of loan servicing rights in 1996 which were completed after the first quarter of 1996 and added approximately $3.5 billion to the amount of loans serviced. 12 14 Net Gain (Loss) from Financial Instruments In the conduct of its business operations, the Company has determined the need to sell or terminate certain assets, liabilities, or off-balance sheet positions due to various unforeseen events. Fundamental to the conduct of such sale or termination activities is the effect such transactions will have on the future volatility of the net market value of the Company. Consequently, in pursuing these sale or termination of activities, the Company does not seek net gains in a reporting period to the detriment of earnings in future periods. Net gain from financial instruments is summarized as follows:
THREE MONTHS ENDED MARCH 31, 1997 1996 ---- ---- (IN THOUSANDS) Mortgage-backed securities available for sale $ 3,980 $ 3,090 Options expense (3,588) (2,749) ------- ------- $ 392 $ 341 ======= =======
13 15 Noninterest Expense - ------------------- General and Administrative Expense General and administrative expense increased $3.7 million to $25.4 million for the three month period ended March 31, 1997 when compared to $21.7 million for the three month period ended March 31, 1996. Such increase was due primarily to an increase in compensation and employee benefits partially offset by a decrease in federal insurance premiums. Compensation and employee benefits increased approximately $1.2 million as a result of normal wage increases, additions to staff, and an increase in the costs related to other employee benefits expense. Federal insurance premiums decreased approximately $1.6 million as a result of a decrease in the insurance premium rate paid by the Company on its deposits following the recapitalization of the Savings Association Insurance Fund in the third quarter of 1996. FINANCIAL CONDITION Total assets decreased $288.1 million or 3.7% to $7.5 billion at March 31, 1997 from $7.8 billion at December 31, 1996. During the three month period ended March 31, 1997 the Bank originated $212.5 million in loans and purchased $17.9 million in loans. These increases were offset by principal repayments totaling $238.4 million. Securities available for sale decreased $249.7 million primarily as a result of principal repayments and sales of such securities totaling $298.2 million exceeding purchases which totaled $61.4 million. Other assets decreased $23.6 million primarily reflecting the receipt of a federal income tax refund of $28.0 million in the period ended March 31, 1997. Total liabilities decreased $260.2 million or 3.6% to $7.0 billion at March 31, 1997 from $7.3 billion at December 31, 1996. Net cash provided by investing activities during the quarter ended March 31, 1997, was used to reduce advances from the Federal Home Loan Bank by $253.8 million. The decrease in retail deposits of $40.3 million during the quarter ended March 31, 1997 results in part from customer uncertainty regarding the planned merger with Mercantile Bancorporation Inc. (see Note 2) and from single-product customers who did not renew high rate maturing time deposits. The increase in other liabilities results primarily from a $22.5 million increase in escrow balances on loans. 14 16 ASSET QUALITY The following table sets forth the amounts and categories of non-performing assets. Loans are placed on non-accrual status when the collection of principal and/or interest becomes doubtful. Troubled debt restructurings involve forgiving a portion of interest or principal on any loans or making loans at a rate materially less than that of market rates. Foreclosed assets include assets acquired in settlement of loans. "Other than temporarily impaired" mortgage-backed securities represent private issuer mortgage-backed securities that have been determined to be "other than temporarily impaired" under the provisions of Statement of Financial Accounting Standards No. 115 and for which the previously existing credit enhancement support, in the form of subordination, has been totally absorbed and therefore any future losses will flow directly to the Company as a senior position holder. These securities were issued with several classes available for purchase. Certain classes are subordinate to the position of senior classes in that such subordinate classes absorb all credit losses and must be completely eliminated before any losses flow to senior position holders. The securities purchased by the Company were purchases of the most senior positions, thus intended to be protected by the subordination credit enhancement feature. In an attempt toward a conservative presentation, the Company includes the entire estimated fair value of these securities (approximately 75% of the unpaid principal balances at March 31, 1997) in this table when the credit enhancement, in the form of subordination, is exhausted even though a substantial portion of the underlying loans (approximately 76% at March 31, 1997) are either current or less than 90 days delinquent. In addition, the remaining amount of "other than temporarily impaired" mortgage-backed securities that continue to be protected by remaining credit enhancement, but for which the Company has concluded it is probable that such credit enhancement will be absorbed before the duration of the underlying security, are disclosed in the paragraphs following the table as other potential problem assets.
Nonperforming Assets MARCH 31, DECEMBER 31, (in thousands) 1997 1996 --------- ------------ Nonaccruing loans: Residential $ 5,958 $ 9,659 Commercial real estate 760 1,968 Consumer 2,600 597 ------------ ------------ Total 9,318 12,224 ------------ ------------ Accruing loans delinquent more than 90 days: Residential 10,955 10,126 ------------ ------------ Troubled-debt restructurings: Commercial real estate 53 53 ------------ ------------ Foreclosed assets: Residential 5,922 4,761 Commercial real estate 8,308 7,804 Consumer 215 238 ------------ ------------ Total 14,445 12,803 ------------ ------------ Sub-total 34,771 35,206 ------------ ------------ Sub-total nonperforming assets as a percentage of total assets .46% .45% ============ ============ "Other than temporarily impaired" mortgage-backed securities with approximately 76% of the underlying loans either current or less than 90 days delinquent 38,814 41,828 ------------ ------------ Total non-performing assets $ 73,585 $ 77,034 ============ ============ Total as a percentage of total assets .85% .99% ============ ============
Not included in the preceding table is a private issuer mortgage-backed security with a carrying value of $4.7 million which was performing according to its contractual terms at March 31, 1997. However, this security was determined by the Company to be "other than temporarily impaired" and written down to fair value, since at March 31, 1995, the subordination protection had been substantially reduced to the point where the Company concluded it was probable that the securities would not continue to perform to 100% of their contractual terms over the course of their remaining lives. This security will be included in the preceding non-performing assets table in future periods when, and if, the remaining subordination is exhausted. 15 17 The allowance for losses on loans is established when a loss is probable and can be reasonably estimated. This allowance is provided based on past experience and the prevailing market conditions. Management's evaluation of loss considers various factors including, but not limited to, general economic conditions, loan portfolio composition and prior loss experience. Provisions for loan losses are recorded to maintain the Company's overall allowance for loan losses within an acceptable range to cover probable credit losses inherent in the portfolio. Management believes that the allowance for losses on loans is adequate. While management uses available information to recognize losses, future additions to the allowance may be necessary based on changes in economic conditions.
THREE MONTHS ENDED MARCH 31, ---------------------------- 1997 1996 ------- ------- Balance at beginning of period $22,719 $21,855 Provision charged to expense 640 300 Charge-offs: Mortgage loans (1,636) (518) Consumer loans (150) (22) ------- ------- (1,786) (540) ------- ------- Recoveries: Mortgage loans 24 84 Consumer loans 6 12 ------- ------- 30 96 ------- ------- Net charge-offs (1,756) (444) ------- ------- Balance at end of period $21,603 $21,711 ======= =======
Included in the mortgage loans charged-off during the three months ended March 31, 1997, are two loans which account for a significant portion of the total charge-offs during the period. It is Management's opinion that these two charge-offs do not reflect a continuing trend or a deterioration in the quality of the total portfolio of mortgage loans. ASSET/LIABILITY MANAGEMENT The Company's primary objective regarding asset/liability management is to position the Company such that changes in interest rates do not have a material adverse impact upon net interest income or the net market value of the Company. The Company's primary strategy for accomplishing its asset/liability management objective is achieved by matching the weighted average maturities of assets, liabilities, and off-balance sheet items (duration matching). A portion of the duration matching strategy has involved, more historically than currently, the use of derivative financial instruments such as interest rate exchange agreements, interest rate cap and floor agreements and, to a much more limited extent, financial futures contracts. The Company uses derivative financial instruments solely for risk management purposes. None of the Company's derivative instruments are what are termed leveraged instruments. These types of instruments are riskier than the derivatives used by the Company in that they have embedded options that enhance their performance in certain circumstances but dramatically reduce their performance in other circumstances. The Company is not a dealer nor does it make a market in such instruments. The Company does not trade the instruments and the Board of Directors' approved policy governing the Company's use of these instruments strictly forbids speculation of any kind. Net market value as prescribed by Statement of Financial Accounting Standards No. 107 "Disclosures about Fair Value of Financial Instruments" (SFAS 107) is calculated by adjusting stockholders' equity for differences between the estimated fair values and the carrying values (historical cost basis) of the Company's assets, liabilities, and off-balance sheet items. Net market value, as calculated by the Company and presented herein, should not be confused with the value of the Company's stock or of the amounts distributable to stockholders in connection with a sale of the Company or in the unlikely event of its liquidation. Under SFAS 107 certain valuations, such as the estimated value of demand deposits, are not considered as part of the net market value calculation. As a result the Company calculates an economic net market which is comprised of net market value as calculated under SFAS 107 plus the estimated value of demand deposits. The economic net market value (including the estimated value of demand deposits totaling $39.2 million and $33.2 million at March 31, 1997 and December 31, 1996, respectively) as calculated by the Company decreased to approximately $535.3 million at March 31, 1997 as compared to approximately $557.6 million at December 31, 1996. Such decrease in economic net market value was primarily the result of the Company's stock repurchase program. To measure the impact of interest rate changes, the Company recalculates its net market value on a pro forma basis assuming instantaneous, permanent parallel shifts in the yield curve, in varying amounts both upward and downward. Larger increases or decreases in the Company's net market value as a result of these assumed interest rate changes indicate greater levels of interest rate sensitivity than do smaller increases or decreases in net market value. The Company endeavors to maintain a position whereby it experiences no material change in net market value as a result of assumed 100 and 200 basis point increases and decreases in general levels of interest rates. The OTS issued a regulation, effective January 1, 1994, which uses a similar methodology to measure the 16 18 interest rate risk exposure of thrift institutions. This exposure is a measure of the potential decline in the net portfolio value of the institution based upon the effect of an assumed 200 basis point increase or decrease in interest rates. "Net portfolio value" is the present value of the expected net cash flow from the institution's assets, liabilities, and off-balance sheet contracts. Under the OTS regulation, an institution's "normal" level of interest rate risk in the event of this assumed change in interest rates is a decrease in the institution's net portfolio value in an amount not exceeding two percent of the present value of its assets. The regulation provides for a two quarter lag between calculating interest rate risk and recognizing any deduction from capital. The amount of that deduction is one-half of the difference between (a) the institution's actual calculated exposure to the 200 basis point interest rate increase or decrease (whichever results in the greater pro forma decrease in net portfolio value) and (b) its "normal" level of exposure which is two percent of the present value of its assets. The OTS recently announced that it will delay the effectiveness of the regulation until it adopts the process by which an association may appeal an interest rate risk capital deduction determination. Utilizing this measurement concept, the interest rate risk of the Company at March 31, 1997 is as follows:
(DOLLARS IN THOUSANDS) Basis point changes in interest rates -200 -100 +100 +200 Change in net market value due to changes in interest rates (Company methodology) $ (16,163) $(1,035) $(12,877) $ (39,687) Interest rate exposure deemed "normal" by the OTS $(150,166) N/A N/A $(150,166)
The Company's operating strategy is designed to avoid material changes in net market value as a result of fluctuations in interest rates. As of March 31, 1997, the Company believes it has accomplished its objectives as the pro forma changes in net market value brought about by changes in interest rates are not material relative to the Company's net market value. A net loss when rates increase indicates the duration of the Company's assets is slightly longer than the duration of the Company's liabilities. A loss when rates decrease is due primarily to borrowers prepaying their loans resulting in the Company's assets repricing down more quickly than the Company can reprice its liabilities. LIQUIDITY AND CAPITAL RESOURCES OTS regulations require federally insured savings institutions to maintain a specified ratio (presently 5.0%) of cash and short-term United States Government, government agency, and other specified securities to net withdrawable accounts and borrowings due within one year. The Company has maintained liquidity in excess of required amounts having had ratios of 5.16%, and 5.05% at March 31, 1997 and December 31, 1996, respectively. The Company's cash flows are comprised of cash flows from operating, investing and financing activities. Cash flows provided by operating activities, consisting primarily of interest received on investments (principally loans and mortgage-backed securities) less interest paid on deposits and other short-term borrowings, were $60.4 million for the three month period ended March 31, 1997. Net cash related to investing activities, consisting primarily of purchases of securities and originations and purchases of loans, offset by principal repayments on securities and loans and sales of mortgage-backed securities available for sale, provided $250.7 million for the three month period ended March 31, 1997. Net cash related to financing activities, consisting of proceeds, net of repayments, from FHLB advances, proceeds from securities sold under agreements to repurchase and excess of saving flows utilized $316.7 million for the three month period ended March 31, 1997. At March 31, 1997, the Company had commitments outstanding to originate fixed-rate mortgage loans of approximately $25.0 million and adjustable-rate mortgages of approximately $70.8 million. The Company expects to satisfy such commitments through its primary source of funds. At March 31, 1997, there were no commitments to either purchase or sell mortgage-backed securities. The Company's merger agreement with Mercantile Bancorporation Inc. (see Note 2) requires the redemption of all the Company's issued and outstanding shares of preferred stock on May 16, 1997. In addition, under the same agreement, Roosevelt is required to use its reasonable best efforts, subject to prudent business practices, to acquire 17 19 in open market transactions prior to the closing date of the planned merger up to 6,998,380 of its own common shares at a cost per share in each transaction not to exceed $22.00 The Company anticipates that prior to the above mentioned redemption date, most if not all, existing preferred shareholders will elect to convert their preferred shares into common shares due to the significant currently existing value differential between post-conversion shares and the $50.00 per share redemption price. To the extent that certain preferred shareholders allow their shares to be redeemed at $50.00 per share by not electing conversion prior to the May 16, 1997 redemption date, such redemptions, if any, are anticipated to be funded by the Company from either then existing cash on hand or with funds drawn on a credit facility provided by Mercantile Bancorporation Inc. To the extent that all preferred shareholders elect to convert their shares into common stock prior to the May 16, 1997 redemption date, total stockholders' equity of the Company will not be impacted by such conversion. Any actual cash redemptions will have the impact of reducing the Company's stockholders' equity by the redemption price of $50.00 per share plus accrued and unpaid dividends for each share of preferred stock so redeemed. The Company's above mentioned share repurchases are being conducted pursuant to a stock repurchase program authorized by the Board of Directors of Roosevelt Financial Group, Inc. on December 15, 1994 and expanded by that same board on January 2, 1997. Subsequent to December 31, 1996 and through April 24, 1997, 2,325,000 shares have been purchased at a weighted average price of $21.32. The share repurchases to date have been funded by the Company from dividends from Roosevelt Bank. As a result of the recent trading range of Roosevelt's common stock exceeding the $22.00 per share maximum specified in the merger agreement, above which the Company is precluded from executing any repurchase transactions, the Company cannot predict the amount, if any, of additional share repurchases which may be accomplished prior to the anticipated closing date of the merger. To the extent that the price of the Company's common stock falls to $22.00 or below, the Company anticipates future repurchases will be funded by either then existing cash on hand at the Company, or with funds provided to the Company from dividends from Roosevelt Bank. With respect to potential futures dividends from Roosevelt Bank, the Company does not intend to allow the Bank to declare any such dividends that would result in the Bank not being classified as well capitalized under existing regulatory capital adequacy guidelines. Future share repurchases, if any, prior to the anticipated effective date of the merger with Mercantile, are expected to reduce total shareholders' equity of the Company only in the unlikely event that such shares are not reissued in connection with either Company benefit programs or to fund the anticipated conversion, prior to May 16, 1997, of the Company's existing preferred stock into common stock. The potential funding by the Company of future share repurchases or preferred stock redemptions, if any, utilizing Roosevelt Bank dividends as a funding source is not anticipated to have a material adverse impact on the Company's future operating income or earnings per share. The Company and the subsidiary banks are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's consolidated financial statements. Under capital adequacy guidelines, the Company and the subsidiary banks must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company and the subsidiary banks' capital amounts and classifications are also subject to quantitative judgements by the regulators about components, risk-weightings and other factors. Management believes, as of March 31, 1997 the Company and the subsidiary banks meet all capital adequacy requirements. The subsidiary banks are also subject to the regulatory framework for prompt corrective action. The most recent notification from the regulatory agencies categorized the banks as well capitalized. To be categorized as well capitalized, the banks must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the following table. There are no conditions or events since the dates of the aforementioned notifications that management believes have changed the banks' category. 18 20 The Company and the banks' actual and required capital amounts and ratios as of March 31, 1997 are as follows:
REQUIREMENTS TO BE WELL-CAPITALIZED CAPITAL UNDER PROMPT AND CORRECTIVE ACTUAL REQUIREMENTS ACTION PROVISIONS ---------------------- ---------------------- ----------------------------------- AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO -------- ------- -------- ------- -------- ------- (DOLLARS IN MILLIONS) Total Capital: Roosevelt Financial Group, Inc. $ 453.4 12.15% $ 298.6 8.00% N/A N/A Roosevelt Bank 420.7 11.46 293.6 8.00 $ 367.0 10.00% Missouri State Bank 8.8 14.22 5.0 8.00 6.2 10.00 Tangible Capital: Roosevelt Bank 400.0 5.36 112.0 1.50 N/A N/A Core (Leverage) Capital: Roosevelt Bank 401.9 5.38 224.1 3.00 N/A N/A Tier I Capital: Roosevelt Financial Group, Inc. 433.8 11.82 146.8 4.00 N/A N/A Roosevelt Bank 401.9 10.95 N/A N/A 220.2 6.00 Missouri State Bank 8.0 12.97 2.5 4.00 3.7 6.00 Tier I Capital: Roosevelt Bank 401.9 5.38 N/A N/A 373.4 5.00 Missouri State Bank 8.0 10.43 N/A N/A 3.9 5.00 To risk weighted assets. To adjusted total assets. To average adjusted assets.
19 21 PART II OTHER INFORMATION Item 1. Legal Proceedings -------------------------------------------- None Item 2. Changes in Securities -------------------------------------------- None Item 3. Defaults Upon Senior Securities -------------------------------------------- None Item 4. Submission of Matters to a Vote of Security Holders -------------------------------------------- None 20 22 SIGNATURES 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. ROOSEVELT FINANCIAL GROUP, INC. --------------------------- REGISTRANT DATE: MAY 5, 1997 BY: /S/STANLEY J. BRADSHAW ----------------------------------------- STANLEY J. BRADSHAW PRESIDENT AND CHIEF EXECUTIVE OFFICER DATE: MAY 5, 1997 BY: /S/GARY W. DOUGLASS ----------------------------------------- GARY W. DOUGLASS EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER 21 EX-27 2 ARTICLE 9 FINANCIAL DATA SCHEDULE
9 1,000 3-MOS DEC-31-1997 JAN-01-1996 MAR-31-1996 41,875 1,150 0 0 2,908,027 0 0 4,310,014 21,603 7,508,309 5,306,723 1,458,076 145,952 128,000 0 63,575 198,809 207,174 7,508,309 82,685 54,389 2,938 140,012 64,471 90,590 49,422 640 0 25,438 35,696 22,091 0 0 22,091 0.49 0.46 2.60 9,318 10,955 53 0 22,719 (1,786) 30 21,603 0 0 18,833
-----END PRIVACY-ENHANCED MESSAGE-----