-----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, R3kpFi0h7yYZkYHinS2YZ3FKK8lEzvBsKKWHvhdKHWtWfJiz9zNm4Gwd/nVf4fxs HR6oeCEj96JnLMKLBgZO1g== 0000950124-96-002131.txt : 19960515 0000950124-96-002131.hdr.sgml : 19960515 ACCESSION NUMBER: 0000950124-96-002131 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: D&N FINANCIAL CORP CENTRAL INDEX KEY: 0000830143 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 342790646 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-17137 FILM NUMBER: 96562853 BUSINESS ADDRESS: STREET 1: 400 QUINCY ST CITY: HANCOCK STATE: MI ZIP: 49930 BUSINESS PHONE: 2024146100 10-Q 1 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, 1996 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 number 0-17137 D&N FINANCIAL CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 38-2790646 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 400 Quincy Street, Hancock, Michigan 49930 ------------------------------------------- (Address of principal executive offices) (906) 482-2700 ---------------------------------------------------- (Registrant's telephone number, including area code) --------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports 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 [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, $0.01 par value 7,552,667 ----------------------------- ---------------------- (Class) (Shares Outstanding as of April 30, 1996) ================================================================================ 2 D&N FINANCIAL CORPORATION INDEX
Page No. PART I Financial Information Consolidated statements of condition - March 31, 1996 and December 31, 1995 3 Consolidated statements of income - three months ended March 31, 1996 and 1995 4 Consolidated statements of cash flows - three months ended March 31, 1996 and 1995 5 Notes to consolidated financial statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II Other Information 16
- 2 - 3 D&N FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF CONDITION (UNAUDITED)
March 31, December 31, 1996 1995 ------------------------ (In thousands) ------------------------ ASSETS Cash and due from banks $ 20,895 $ 8,923 Interest-bearing deposits in other banks 435 6,636 ------------------------ Total cash and cash equivalents 21,330 15,559 Investment securities (market value of $33,756,000 in 1996 and $47,062,000 in 1995) 33,736 46,925 Investment securities available for sale (at market value) 29,581 40,899 Mortgage-backed securities (market value of $64,443,000 in 1996 and $69,447,000 in 1995) 63,896 68,434 Mortgage-backed securities available for sale (at market value) 49,040 55,041 Loans receivable (including loans held for sale of $6,376,000 in 1996 and $21,610,000 in 1995) 1,014,472 941,119 Allowance for loan losses ( 9,991) ( 9,931) ------------------------ Net loans receivable 1,004,481 931,188 Other real estate owned, net 1,073 1,319 Federal income taxes 6,337 5,380 Office properties and equipment, net 15,053 14,738 Other assets 7,400 7,178 ------------------------ $1,231,927 $1,186,661 ======================== LIABILITIES Checking and NOW accounts $ 94,658 $ 91,621 Money market accounts 87,076 85,287 Savings deposits 151,165 145,241 Time deposits 566,954 564,289 Accrued interest 1,443 1,431 ------------------------ Total deposits 901,296 887,869 Securities sold under agreements to repurchase 26,876 -- FHLB advances and other borrowed money 219,334 216,232 Advance payments by borrowers and investors held in escrow 9,709 11,093 Other liabilities 5,348 5,756 ------------------------ Total liabilities 1,162,563 1,120,950 STOCKHOLDERS' EQUITY Preferred stock (1,000,000 shares authorized; none issued) -- -- Common stock, $.01 par value per share (shares authorized - 10,000,000; shares outstanding- 6,850,858 in 1996 and 6,797,680 in 1995) 69 68 Additional paid-in capital 48,695 48,283 ------------------------ Total paid-in capital 48,764 48,351 Retained earnings - substantially restricted 19,543 16,046 Less cost of treasury stock (21,456 shares in 1996 and 1995) ( 213) ( 213) Unrealized holding gains on debt securities available for sale, net of tax 1,270 1,527 ------------------------ Total stockholders' equity 69,364 65,711 ------------------------ $1,231,927 $1,186,661 ========================
See notes to consolidated financial statements. - 3 - 4 D&N FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended March 31, 1996 1995 --------------------------- (In thousands except per share) ------------------------------- Interest income: Loans $ 19,550 $ 15,904 Mortgage-backed securities 2,227 2,699 Investments and deposits 1,532 1,536 ------------------------- TOTAL INTEREST INCOME 23,309 20,139 Interest expense: Deposits 10,577 7,945 Securities sold under agreements to repurchase 94 365 FHLB advances and other borrowed money 3,173 3,173 Interest rate instruments -- 1,327 ------------------------- TOTAL INTEREST EXPENSE 13,844 12,810 ------------------------- NET INTEREST INCOME 9,465 7,329 Provision for loan losses 300 200 ------------------------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 9,165 7,129 Noninterest income: Loan servicing and administrative fees, net 318 584 Deposit related fees 819 729 Gain on loans held for sale 491 3 Other income 80 46 ------------------------- TOTAL NONINTEREST INCOME 1,708 1,362 Noninterest expense: Compensation and benefits 3,909 3,713 Occupancy 707 547 Other expense 2,922 2,253 ------------------------- General and administrative expense 7,538 6,513 Other real estate owned, net 40 ( 76) Amortization of intangibles -- 134 Federal deposit insurance premiums 616 580 ------------------------- TOTAL NONINTEREST EXPENSE 8,194 7,151 ------------------------- INCOME BEFORE INCOME TAX EXPENSE (CREDIT) 2,679 1,340 Federal income tax expense (credit) ( 818) -- ------------------------- NET INCOME $ 3,497 $ 1,340 ========================= Earnings per common and common equivalent share: PRIMARY $ 0.48 $ 0.20 ========================= FULLY DILUTED $ 0.48 $ 0.20 =========================
See notes to consolidated financial statements. - 4 - 5 D&N FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended March 31, 1996 1995 -------------------------- (In thousands) -------------------------- OPERATING ACTIVITIES Net income $ 3,497 $ 1,340 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 300 200 Depreciation and amortization of office properties and equipment 522 445 Amortization of net discounts on purchased loans and securities ( 685) ( 160) Originations and purchases of loans held for sale ( 12,121) -- Proceeds from sales of loans held for sale 26,930 700 Amortization and writedowns of loan servicing rights 201 55 Other ( 1,255) 3,250 ------------------------ Net cash provided by operating activities 17,389 5,830 INVESTING ACTIVITIES Proceeds from maturities of investment securities 33,000 16,000 Purchases of investment securities ( 8,848) ( 40,632) Principal collected on mortgage-backed securities 10,103 3,240 Loans purchased ( 72,483) ( 14,526) Net change in loans receivable ( 15,172) 1,670 Decrease in other real estate owned 246 1,152 Purchases of office properties and equipment ( 827) ( 214) ------------------------ Net cash used by investing activities ( 53,981) ( 33,310) FINANCING ACTIVITIES Net change in time deposits 2,665 15,017 Net change in other deposits 10,749 ( 7,177) Proceeds from notes payable, securities sold under agreements to repurchase and other borrowed money 58,600 65,000 Payments on maturity of notes payable, securities sold under agreements to repurchase and other borrowed money ( 28,680) ( 50,565) Net change in advance payments by borrowers and investors held in escrow ( 1,384) ( 7,098) Proceeds from issuance of stock 413 -- ------------------------ Net cash provided by financing activities 42,363 15,177 ------------------------ Increase (decrease) in cash and cash equivalents 5,771 ( 12,303) Cash and cash equivalents at beginning of period 15,559 28,124 ------------------------ Cash and cash equivalents at end of period $ 21,330 $ 15,821 ========================
See notes to consolidated financial statements. - 5 - 6 D&N FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1: BASIS OF PRESENTATION The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting solely of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 1996 are not necessarily indicative of the results that may be expected for the full year. NOTE 2: EARNINGS PER SHARE Per share data is based on the weighted average number of shares outstanding for the periods presented. The weighted average number of common and common equivalent shares used in computing primary earnings per share was 7,320,082 and 6,720,886 for the three months ended March 31, 1996 and March 31, 1995, respectively. The weighted average number of common and common equivalent shares used in computing fully diluted earnings per share was 7,331,483 and 6,720,886 for the three months ended March 31, 1996 and March 31, 1995, respectively. NOTE 3: ALLOWANCE FOR LOAN LOSSES The allowance for possible losses on loans is maintained at a level believed adequate by management to absorb potential losses from impaired loans as well as losses from the remainder of the portfolio. Management's determination of the level of the allowance is based upon evaluation of the portfolio, past experience, current economic conditions, size and composition of the portfolio, collateral location and values, cash flow positions, industry concentrations, delinquencies, and other relevant factors. The allowance is increased by a provision for losses charged against income. - 6 - 7 Changes in the allowance for loan losses are summarized as follows:
Three Months Ended March 31, 1996 1995 -------------------- (In thousands) Balance at beginning of period $ 9,931 $ 8,199 Charge-offs: Single family 49 35 Income producing property -- 200 Commercial -- -- Installment 257 199 -------------------- Total 306 434 Recoveries: Single family -- 2 Income producing property -- 245 Commercial -- -- Installment 66 98 -------------------- Total 66 345 -------------------- Net charge-offs 240 89 Provision charged to operations 300 200 -------------------- Balance at end of period $ 9,991 $ 8,310 ====================
NOTE 4: FEDERAL INCOME TAXES The liability method is used in accounting for federal income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A federal income tax credit was recorded in the 1996 reporting period and no federal income tax expense was recorded in the 1995 reporting period as the Company offset taxes ordinarily payable by a realization, through a reduction in the valuation allowance previously provided, of prior years' net operating loss carryforwards. NOTE 5: ACQUISITION On April 10, 1996, Macomb Federal Savings Bank ("Macomb"), a $43 million asset savings bank, was merged into the Company. The Company issued 716,497 shares of common stock and cash in lieu of fractional shares for all of the outstanding shares of Macomb. The merger will be accounted for - 7 - 8 as a pooling-of-interests. The effect of the business combination on results of operations for the three months ended March 31, 1996 would have been to increase net interest income $200,000, decrease net income $9,000 and decrease earnings per share $0.05. The effect of the business combination on results of operations for the three months ended March 31, 1995 would have been to increase net interest income $281,000, increase net income $83,000 and decrease earnings per share $0.01. No changes in accounting methods are anticipated as a result of the business combination. NOTE 6: RECLASSIFICATIONS Certain amounts in the 1995 consolidated financial statements have been reclassified to conform with the current period presentation. - 8 - 9 D&N FINANCIAL CORPORATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis provides information regarding D&N Financial Corporation's (D&N or the Company) financial condition and results of operations for the three-month periods ended March 31, 1996 and 1995. Ratios for the three-month periods are stated on an annualized basis. Results of operations for the 1996 period are not necessarily indicative of results which may be expected for the entire year. This discussion and analysis should be read in conjunction with the consolidated financial statements and the notes thereto appearing elsewhere in this Form 10-Q. RESULTS OF OPERATIONS NET INCOME The Company recorded net income for the first quarter ended March 31, 1996 of $3.5 million, compared to net income of $1.3 million in the first quarter of 1995. Return on assets and return on equity were 1.16% and 20.81%, respectively, during the quarter ended March 31, 1996, compared to 0.50% and 9.81%, respectively, during the quarter ended March 31, 1995. The increase in net income was due primarily to an increase in net interest income, increased gains on loans held for sale and a credit for federal income taxes reduced by increases in operating expenses and the provision for loan losses. NET INTEREST INCOME Net interest income, or the difference between interest earned on interest earning assets such as loans and investment securities and interest paid on sources of funds such as deposits and borrowings, is a significant component of the Company's earnings. Net interest income is affected by changes in both the balance of and the rates on interest earning assets and interest bearing liabilities and the amount of interest earning assets funded with non-interest or low-interest bearing funds. Net interest income increased $2.1 million to $9.4 million for the quarter ended March 31, 1996 compared to $7.3 million for the quarter ended March 31, 1995. The increase was due to increased volume and improved yields on variable rate and short lived assets and to lower expense on the Company's borrowings due to repricing and more significantly to maturity of the Company's interest rate exchange agreements, partially offset by increases in interest paid on deposits due to higher volumes and general increases in market interest rates. - 9 - 10 After raising additional capital in December 1993 and by increasing its consumer and commercial lending activities, the Company has been able to increase its net interest earning assets and to realize increased net yields. The result of these factors is that net interest margin has steadily improved during recent quarters. Net interest margin was 3.23% for the first quarter of 1996 compared to 2.78% for the first quarter of 1995. PROVISION FOR LOAN LOSSES A provision for loan losses is charged to income based on the size and quality of the loan portfolio measured against prevailing economic conditions. This process is accomplished through a formal review analysis. The provision is recorded in sufficient amounts to maintain the allowance for possible loan losses at a level in excess of that expected by management to be required to cover specific exposures in the portfolio. The Company recorded a $300,000 provision for loan losses during the quarter ended March 31, 1996 compared to $200,000 recorded during the quarter ended March 31, 1995. The allowance for loan losses has been maintained at approximately 1.00% of gross loans even as the loan portfolio has experienced significant growth over the past several fiscal quarters. NONINTEREST INCOME Total noninterest income increased to $1.7 million during the quarter ended March 31, 1996, from $1.4 million recorded during the quarter ended March 31, 1995. Approximately $500,000 of this increase was from gains from the sale of loans originated or purchased for sale and from the recognition of originated mortgage servicing rights. Net loan servicing and administrative fees decreased $266,000 as the Company recorded impairments on its portfolio of mortgage servicing rights due to decreased market values caused primarily by higher loan prepayment experience. Additionally, the prior year's period included significant prepayment penalty income from the early repayment of certain commercial real estate loans. Deposit related fees were up approximately $90,000 in the current year quarter primarily due to an increase in ATM fee income. NONINTEREST EXPENSE Total noninterest expense increased $1.0 million to $8.2 million during the quarter ended March 31, 1996, from $7.2 million recorded in the first quarter of 1995. Compensation and benefits increased due to general wage and benefit increases and to - 10 - 11 additional staffing at new banking facilities. Occupancy expense increased primarily because of increased rental expense for new or expanded leased office locations. The increase in other expense represents the higher cost of doing business in additional and expanded facilities and locations and the resulting cost of increased support operations. The primary areas of increase were general office, data processing, furniture and equipment, marketing, legal and state tax expenses. FEDERAL INCOME TAXES A federal income tax credit of $818,000 was recorded in the first quarter of 1996 and no federal income tax was recorded in the first quarter of 1995 as the Company offset taxes ordinarily payable by a realization, through a reduction in the valuation allowance previously provided, of prior years' net operating loss carryforwards. FINANCIAL CONDITION Total assets at March 31, 1996 were $1.23 billion, an increase of $45.3 million from December 31, 1995. Earning assets represented approximately 98% of total assets as of March 31, 1996, substantially the same as at year-end 1995. CASH, DEPOSITS AND INVESTMENT SECURITIES Cash, deposits and investment securities were $84.6 million at March 31, 1996, down $18.7 million from December 31, 1995. During the period, a significant portion of the Company's liquidity portfolio was used to partially fund loan demand. MORTGAGE-BACKED SECURITIES Mortgage-backed securities decreased $10.5 million from year-end 1995 to $112.9 million at March 31, 1996. The decrease was due to repayments and amortization of $10.3 million plus a decrease of $253,000 in market value recognized through stockholders' equity on mortgage-backed securities available for sale. NET LOANS RECEIVABLE Net loans receivable increased $73.3 million during the period to $1.0 billion at March 31, 1996. Loan originations of $121.4 million and purchases of $72.4 million exceeded repayments of $93.3 million and sales of $26.9 million. Loan originations during the three months ended March 31, 1996 were substantially higher compared to the first three months of 1995. Consumer loan originations were $43.3 million compared to $37.6 million, while real estate and commercial loan originations were $78.1 million compared to $14.3 million. - 11 - 12 NONPERFORMING ASSETS AND RISK ELEMENTS The following table sets forth the amounts and categories of risk elements in the Company's loan portfolio.
March 31, December 31, 1996 1995 ----------------------- (Dollars in thousands) Nonaccruing loans $ 6,144 $ 8,172 Accruing loans delinquent more than 90 days -- -- Restructured loans -- -- -------------------- Total nonperforming loans 6,144 8,172 Other real estate owned (OREO) 1,073 1,452 -------------------- Total nonperforming assets $ 7,217 $ 9,624 ==================== Nonperforming loans as a percentage of total loans 0.61% 0.87% ==================== Nonperforming assets as a percentage of total assets 0.59% 0.81% ==================== Allowance for loan losses as a percentage of nonperforming loans 162.61% 121.53% ==================== Allowances for loan and OREO losses as a percentage of nonperforming assets 138.44% 104.57% ====================
Nonperforming assets, before allowances for loan and OREO losses, decreased $2.4 million during the period primarily as a large commercial real estate loan secured by a hotel was restored to accrual status after several months of performance in accordance with loan contract terms. - 12 - 13 MORTGAGE SERVICING RIGHTS (MSRS) The Company's net investment in MSRs increased slightly during the period to $1.1 million at March 31, 1996. The following table details activity in the portfolio for the periods indicated.
Three Months Year Ended Ended March 31, 1996 December 31, 1995 ------------------------------------ (Dollars in thousands) Balance at beginning of period $ 1,113 $ 968 Additions: Capitalized servicing 210 621 Purchased servicing -- -- ------- -------- Total 210 621 Reductions: Scheduled amortization 74 169 Additional amortization due to changes in prepayment assumptions 11 71 Impairment 116 234 Sales -- -- Transfers to loan portfolio under recourse and other provisions -- 2 ------- -------- Total 201 476 ------- -------- Balance at end of period $ 1,122 $ 1,113 ======= ======== Fair market value at end of period $ 1,381 $ 1,161 ======= ========
DEPOSITS Deposits increased $13.4 million during the period to $901.3 million at March 31, 1996. Certificates of deposit increased $2.7 million and savings deposits increased $5.9 million while checking accounts and money market accounts increased $3.0 million and $1.8 million, respectively. The Company's cost of deposits decreased to 4.66% at March 31, 1996, compared to 4.80% at December 31, 1995, as result of a general decrease in market rates of interest. BORROWINGS Total borrowings increased $30.0 million during the period to $246.2 million at March 31, 1996 in order to fund anticipated loan demand. The Company's cost of borrowings was 5.63% at March 31, 1996, compared to 6.09% at December 31, 1995. - 13 - 14 CAPITAL According to federal regulations, the Bank must meet certain minimum capital ratios. As the following table indicates, the Bank's capital ratios at March 31, 1996 exceeded these requirements.
Tangible Core Risk-Based Capital Capital Capital --------- --------- ---------- (Dollars in thousands) Actual capital $ 64,742 $ 64,742 $ 74,343 Required capital 18,749 37,498 61,428 --------- --------- --------- Excess capital $ 45,993 $ 27,244 $ 12,915 ========= ========= ========= Actual ratio 5.18% 5.18% 9.68% ========= ========= ========= Required ratio 1.50% 3.00% 8.00% ========= ========= =========
Consolidated stockholders' equity was $69.4 million at March 31, 1996 and represents 5.63% of consolidated assets. LIQUIDITY Liquidity is the ability to meet financial obligations when due. Regulatory authorities require that thrift institutions maintain liquidity consisting of cash, short-term U. S. Government Securities and other specified assets, equal to at least 5% of net withdrawable accounts and borrowings payable in one year or less. At March 31, 1996, the Bank's average liquidity ratio was 5.99%. At March 31, 1996, unused borrowing capacity as measured by the Bank's inventory of readily available but unpledged collateral was approximately $215 million. The Company considers its current liquidity and other funding sources sufficient to fund its outstanding loan commitments and scheduled liability maturities. REGULATORY ISSUES Deposits of savings institutions such as the Bank are presently insured by the SAIF, which along with the BIF, is one of the two insurance funds administered by the FDIC. Financial institutions which are members of the BIF are likely to experience lower deposit insurance premiums in the future because the BIF has higher reserves and is expected to be responsible for fewer troubled institutions than the SAIF. As a result of the BIF achieving its statutory reserve ratio, the FDIC has proposed that the premium schedule for BIF members be revised so that well capitalized and healthy BIF members - 14 - 15 would pay the lowest premiums. It is not anticipated that the SAIF will be adequately recapitalized for several years, absent a substantial increase in premium rates or the imposition of special assessments or other significant developments, such as a merger of the SAIF and the BIF. As a result of this disparity, SAIF members could be placed at a significant, competitive disadvantage to BIF members with respect to pricing of loans and deposits and the ability to achieve lower operating costs. A recapitalization plan recently under consideration by the Congress reportedly would provide for a special assessment of .80% to .90% to be imposed on all SAIF insured deposits to eliminate the disparity. No assurance can be given, however, as to whether the FDIC's proposal or a recapitalization plan will be implemented or as to the nature or extent of any competitive disadvantage which may be experienced by SAIF-member institutions. - 15 - 16 D&N FINANCIAL CORPORATION 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 (a) The annual meeting of stockholders was held on April 23, 1996. (b) The matters approved by stockholders at the annual meeting and the number of votes cast for, against and withheld (as well as the number of abstentions and broker non-votes) as to each matter are set forth below: Elections of the following Directors for a Broker three-year term: For Withheld Non-Votes --------- -------- --------- George J. Butvilas 5,703,746 248,474 -- B. Thomas M. Smith, Jr. 5,705,597 246,623 -- Thomas J. St. Dennis 5,701,988 250,232 -- Ratification of Coopers and Lybrand L.L.P. as auditors for the fiscal year ending December 31, 1996: For 5,835,070 Against 30,449 Abstain 86,701 Broker Non-Votes -- - 16 - 17 D&N FINANCIAL CORPORATION PART II - OTHER INFORMATION - CONTINUED Approving and adopting an amendment to the Certificate of Incorporation to increase the number of authorized shares of common stock to 25,000,000: For 5,283,714 Against 637,681 Abstain 30,825 Broker Non-Votes -- ITEM 5: OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibits are included herein: (11) Statement re: computation of per share earnings (27) Financial Data Schedule (99) Additional exhibits i. Interest rate/volume analysis: quarter ended 3/31/96 vs. quarter ended 3/31/95 (b) Reports on Form 8-K: As previously announced, the Registrant and Macomb Federal Savings Bank ("Macomb") entered into an Agreement and Plan of Reorganization dated November 8, 1995. On February 28, 1996, the Registrant filed as an exhibit to Form 8-K Macomb's quarterly Report on Form 10-Q for the quarter ended December 31, 1995 filed by Macomb with the Office of Thrift Supervision pursuant to the Securities Exchange Act of 1934. - 17 - 18 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. D&N FINANCIAL CORPORATION \s\ George J. Butvilas ---------------------------------- George J. Butvilas, President and Chief Executive Officer \s\ Kenneth R. Janson ---------------------------------- Kenneth R. Janson, Executive Vice President/Chief Financial Officer and Treasurer Date: May 10, 1996 19 EXHIBIT INDEX Exhibit Number Description - -------------- ----------- 11 Computation of Per Share Earnings 27 Financial Data Schedule 99i Interest Rate/Volume Analysis EX-11 2 EXHIBIT 11 1 EXHIBIT (11) STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Three Months Ended March 31, ---------------------------------- 1996 1995 ---------------- ---------------- Fully Fully Primary Diluted Primary Diluted ------- ------- ------- ------- (In thousands, except per share) Net income $3,497 $3,497 $1,340 $1,340 ====== ====== ====== ====== Average shares Common 6,799 6,799 6,721 6,721 Common equivalents 521 532 27 120 ------ ------ ------ ------ Total 7,320 7,331 6,748 6,841 ====== ======= ====== ====== Earnings per common share $ 0.48 $ 0.48 $ 0.20 $ 0.20 ====== ====== ====== ======
Common share equivalents assume exercise of stock options and warrants, if dilutive. EX-27 3 EXHIBIT 27
9 1,000 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 20,895 435 0 0 78,621 97,632 98,199 1,014,472 9,991 1,231,927 901,296 26,876 15,057 219,334 0 0 48,764 20,600 1,231,927 19,550 3,759 0 23,309 10,577 13,844 9,465 300 0 8,194 2,679 3,497 0 0 3,497 0.48 0.48 3.23 6,144 0 0 16,662 9,931 306 66 9,991 9,991 0 0
EX-99.I 4 EXHIBIT 99.I 1 EXHIBIT (99)i. INTEREST RATE/VOLUME ANALYSIS QUARTER ENDED 3/31/96 VS. 3/31/95
Average balance Average Rate Interest Variance due to: --------------------- ------------------ ----------------------------- ---------------- Increase Quarter ended 03/31/96 03/31/95 03/31/96 03/31/95 03/31/96 03/31/95 (Decrease) Volume Rate - ----------------------------- ---------- -------- -------- --------- -------- -------- ---------- -------- ------ (Dollars in thousands) (Dollars in thousands) Interest-earning assets: Loans receivable $ 968,149 $ 807,293 8.08% 7.90% $19,550 $15,904 $3,646 $3,273 $ 373 Mortgage-backed securities 116,199 144,678 7.67% 7.46% 2,227 2,699 ( 472) ( 544) 72 Investments 87,065 96,732 7.08% 6.44% 1,532 1,536 ( 4) ( 146) 142 ---------- ---------- ------ ------ ------ ------- ------ ------ ------- 1,171,414 1,048,703 7.96% 7.70% 23,309 20,139 3,170 2,583 587 ---------- ---------- ------ ------ ------ ------- ------ ------ ------- Interest-bearing liabilities: Deposits 893,000 783,540 4.76% 4.11% 10,577 7,945 2,632 1,284 1,348 Borrowings Securities sold w/repo 6,920 24,632 5.37% 6.01% 94 365 ( 271) ( 236) ( 35) Notes payable 206,003 186,448 5.61% 6.17% 2,919 2,875 44 318 ( 274) Other borrowed money 10,280 11,932 9.88% 9.99% 254 298 ( 44) ( 41) ( 3) ---------- ---------- ------ ------ ------ ------- ------ ----- ------- Subtotal - Borrowings 223,203 223,012 5.80% 6.35% 3,267 3,538 ( 271) 42 ( 313) Interest rate instruments n/a n/a 0.00% 0.52% 0 1,327 ( 1,327) 0 ( 1,327) ---------- --------- ------ ------ ------ ------- ------ ------ ------ 1,116,204 1,006,552 4.97% 5.13% 13,844 12,810 1,034 1,325 ( 291) ---------- ---------- ------ ------ ------ ------- ------ ------ ------- Interest rate spread 2.99% 2.58% Excess average earning assets $ 55,210 $ 42,151 ========== ========== Net interest margin 3.23% 2.78% $ 9,465 $ 7,329 $2,136 $1,258 $ 878 ======= ======= ====== ====== ======= Net interest margin w/o swaps 3.23% 3.28% ======= ======
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