-----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, CUCfK8gj29YO8BUZQ67SveO/jA+3Sk6lt06vYHlERmgsWK5MCZcfJQNZ3jdvjBmK hXTVonz8TyE8q5L3UQj4TA== 0000835345-96-000017.txt : 19961122 0000835345-96-000017.hdr.sgml : 19961122 ACCESSION NUMBER: 0000835345-96-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 DATE AS OF CHANGE: 19961121 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLLECTIVE BANCORP INC CENTRAL INDEX KEY: 0000835345 STANDARD INDUSTRIAL CLASSIFICATION: 6035 IRS NUMBER: 222942769 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-17515 FILM NUMBER: 96666929 BUSINESS ADDRESS: STREET 1: 158 PHILADELPHIA AVE CITY: EGG HARBOR CITY STATE: NJ ZIP: 08215 BUSINESS PHONE: 6096251110 MAIL ADDRESS: STREET 1: C/O BERNARD BERKMAN 158 PHILADELPHIA AVE STREET 2: PO BOX 316 CITY: EGG HARBOR CITY STATE: NJ ZIP: 08215 10-Q 1 10-Q FOR THREE MONTHS ENDED SEPTEMBER 30, 1996 - - -------------------------------------------------------------------------------- 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 September 30, 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 0-17515 COLLECTIVE BANCORP, INC. (Exact name of registrant as specified in its charter) Delaware 22-2942769 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 716 West White Horse Pike Cologne , New Jersey 08213 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (609) 625-1110 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 [ ] APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [ ] 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, par value $.01 per share, 20,421,524 shares outstanding as of September 30, 1996. ================================================================================ PART I Item I COLLECTIVE BANCORP, INC. AND SUBSIDIARY STATEMENTS OF CONSOLIDATED FINANCIAL CONDITION
September 30 June 30 1996 1996 -------------- -------------- ASSETS (Dollar amounts in thousands) Cash $ 79,237 $ 65,084 Federal funds sold 3,647 3,646 -------------- -------------- Total cash and cash equivalents 82,884 68,730 Loans held for sale, at amortized cost, market value of $2,996 and $5,231 2,957 5,186 Securities available for sale, at market value 162,367 162,284 Investment securities, at amortized cost, market value of $283,878 and $271,650 287,059 276,171 Loans receivable, net 2,704,156 2,548,150 Mortgage-backed securities, at amortized cost, market value of $1,834,870 and $1,896,831 1,903,685 1,973,642 Real estate acquired in settlement of loans, net 4,350 5,427 Land, office buildings and equipment, net 39,019 39,239 Other assets 42,747 42,335 Core deposit premium 7,640 8,191 Goodwill 15,619 16,116 -------------- -------------- Total assets $5,252,483 $5,145,471 ============== ============== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Demand deposits, non-interest bearing $ 103,161 $ 95,792 Demand deposits, interest bearing 528,375 508,295 Savings and investment accounts 845,587 845,199 Savings certificates 1,865,733 1,805,101 -------------- -------------- Total deposits 3,342,856 3,254,387 Borrowed funds 1,475,231 1,473,448 Advance payments by borrowers for taxes and insurance 24,360 26,852 Other liabilities 45,987 26,480 -------------- -------------- Total liabilities 4,888,434 4,781,167 -------------- -------------- Stockholders' Equity: Common stock, par value $.01 per share; authorized - 37,000,000 shares; issued - 20,421,524 shares in September 1996 and 20,418,641 shares in June 1996; outstanding - 20,372,024 shares in September 1996 and 20,374,141 shares in June 1996 204 204 Preferred stock, par value $.01 per share; authorized - 2,500,000 shares; none outstanding - - Additional paid-in capital 59,768 59,699 Treasury stock, at cost; 49,500 shares in September 1996 and 44,500 shares in June 1996 (1,230) (1,093) ESOP debt (5,546) (5,816) Unrealized appreciation on available for sale securities, net of tax 1,348 1,090 Retained earnings, substantially restricted 309,505 310,220 -------------- -------------- Total stockholders' equity 364,049 364,304 -------------- -------------- Total liabilities and stockholders' equity $5,252,483 $5,145,471 ============== ==============
2 COLLECTIVE BANCORP, INC. AND SUBSIDIARY STATEMENTS OF CONSOLIDATED OPERATIONS
Three Months Ended September 30 1996 1995 ------------- -------------- (Dollar amounts in thousands except per share data) INTEREST INCOME: Interest on mortgage loans $47,369 $42,873 Interest on other loans 3,617 4,143 Interest on mortgage-backed securities 33,607 36,165 Interest and dividends on investments 6,204 5,687 ------------- -------------- Total interest and dividend income 90,797 88,868 ------------- -------------- INTEREST EXPENSE: Interest on deposits 34,117 33,279 Interest on Federal Home Loan Bank advances and other borrowed funds 19,803 21,884 ------------- -------------- Total interest expense 53,920 55,163 ------------- -------------- NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES 36,877 33,705 PROVISION FOR LOAN LOSSES 715 286 ------------- -------------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 36,162 33,419 ------------- -------------- OTHER INCOME: Loan servicing 1,006 950 Gain on sale of loans and securities 32 634 Financial service fees and other income 3,068 2,465 ------------- -------------- Total other income 4,106 4,049 ------------- -------------- Total income before other expense 40,268 37,468 ------------- -------------- OTHER EXPENSE: Compensation and employee benefits 7,034 6,979 Occupancy expense 2,636 2,679 Advertising 325 255 Deposit insurance 1,491 1,424 SAIF recapitalization assessment 16,653 - Computer services 1,019 1,242 Loan expense 776 715 Real estate operations 81 (24) Amortization of intangibles 1,048 1,205 Other expenses 2,777 2,477 ------------- -------------- Total other expense 33,840 16,952 ------------- -------------- INCOME BEFORE INCOME TAXES 6,428 20,516 INCOME TAXES 2,050 7,319 ------------- -------------- NET INCOME $4,378 $13,197 ============= ============== PER SHARE DATA: Primary and fully diluted net income per share $0.21 $0.65 Dividends per common share $0.25 $0.20 Average primary shares outstanding 20,432,072 20,430,540 Average fully diluted shares outstanding 20,451,149 20,444,438
3 COLLECTIVE BANCORP, INC. AND SUBSIDIARY STATEMENTS OF CONSOLIDATED CASH FLOWS
Three Months Ended September 30 ----------------------------- 1996 1995 ------------ ------------ (Dollar amounts in thousands) OPERATING ACTIVITIES: Interest received $ 89,337 $ 86,222 Interest paid (53,171) (54,846) Operating expenses (18,144) (15,004) Sales of trading securities - 13,328 Loan fees 1,262 1,457 Other income received 4,106 4,250 Income taxes paid (1,126) - ------------ ------------ Net cash provided by operating activities 22,264 35,407 ------------ ------------ INVESTING ACTIVITIES: Loan originations (268,876) (133,255) Purchases of loans (500) (13,874) Purchases of mortgage-backed securities (2) - Repayment of loan principal 110,285 87,259 Repayment of mortgage-backed security principal 70,701 43,035 Sales of loans held for sale 13,139 33,866 Purchases of investment securities (16,974) (22,030) Purchases of mortgage-backed securities available for sale (10,031) (30,333) Sales of mortgage-backed securities available for sale 7,017 28,890 Repayment of principal on mortgage-backed securities available for sale 4,109 4,598 Maturities of investment securities 5,323 80,149 Net decrease in real estate owned 1,077 1,261 Net change in loans maturing in 3 months or less (7,500) (15,000) Other investing, net 1,770 (12,881) ------------ ------------ Net cash (used for) provided by investing activities (90,462) 51,685 ------------ ------------ FINANCING ACTIVITIES: Net change in deposits 88,469 (92,242) Net change in Federal Home Loan Bank advances - (395,000) Net change in other borrowed funds 1,783 397,657 Net decrease in advance payments by borrowers for taxes and insurance (2,492) (2,694) Dividends paid (5,105) (4,073) Other financing, net (303) (2,257) ------------ ------------ Net cash provided by (used for) financing activities 82,352 (98,609) ------------ ------------ Net increase (decrease) in cash and cash equivalents 14,154 (11,517) Cash and cash equivalents, beginning of period 68,730 69,973 ------------ ------------ Cash and cash equivalents, end of period $ 82,884 $ 58,456 ============ ============ RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Net income $ 4,378 $ 13,197 Net change in trading securities - 13,328 Amortization and accretion of deferred charges and credits, net (273) (511) Amortization of intangibles 1,048 1,205 Accrued income and expense 20,049 8,343 Deferred income and expense (5,069) (1,853) Provision for loan and real estate owned losses 671 271 Depreciation and amortization 1,191 1,158 ESOP debt repayment 269 269 ------------ ------------ Net cash provided by operations $ 22,264 $ 35,407 ============ ============
Note: Certain reclassifications have been made to the Statement of Consolidated Cash Flows for the three months ended September 30, 1995 to conform to the 1996 presentation. 4 COLLECTIVE BANCORP, INC. AND SUBSIDIARY STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
Unrealized Appreciation Additonal on Available Common Paid-In Treasury ESOP for Sale Retained Stock Capital Stock Debt Securities Earnings Total ---------------------------------------------------------------------------------------- (Dollar amounts in thousands) BALANCE JUNE 30, 1995 $204 $59,299 - $(6,892) $2,136 $273,045 $327,792 Net income for the year - - - - - 54,500 54,500 Stock options exercised - 279 - - - - 279 Dividends on common stock - $.85 per share - - - - - (17,325) (17,325) Purchase of treasury stock - - (1,093) - - - (1,093) ESOP debt repayment - - 1,076 - - 1,076 ESOP shares released - 121 - - - - 121 Securities valuation - - - - (1,046) - (1,046) ---------------------------------------------------------------------------------------- BALANCE JUNE 30, 1996 204 59,699 (1,093) (5,816) 1,090 310,220 364,304 Net income fiscal year to date - - - - - 4,378 4,378 Stock options exercised - 19 - - - - 19 Dividends on common stock - $.25 per share - - - - - (5,093) (5,093) Purchase of treasury stock - - (137) - - - (137) ESOP debt repayment - - - 270 - - 270 ESOP shares released - 50 - - - - 50 Securities valuation - - - - 258 - 258 ---------------------------------------------------------------------------------------- BALANCE SEPTEMBER 30, 1996 $204 $59,768 $(1,230) $(5,546) $1,348 $309,505 $364,049 ========================================================================================
5 COLLECTIVE BANCORP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The unaudited interim consolidated financial statements of Collective Bancorp, Inc. and subsidiary ("Collective") included herein should be read in conjunction with the audited financial statements for the year ended June 30, 1996 included in Collective's 1996 Annual Report and incorporated by reference in the Form 10-K for that year. The unaudited interim financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the periods presented. Such adjustments consist only of normal recurring accruals. The results of operations for the three-month period ended September 30, 1996 are not necessarily indicative of the results to be expected for the fiscal year ending June 30, 1997. 2. In connection with the enactment of the Deposit Insurance Funds Act of 1996 ("DIFA") on September 30, 1996, Collective Bank, a wholly-owned subsidiary of Collective Bancorp, Inc., will be required to pay a one-time special assessment of $16.653 million to the Federal Deposit Insurance Corporation ("FDIC") to capitalize the Savings Association Insurance Fund ("SAIF") to its required reserve ratio. The special assessment rate of 65.7 cents per $100 was applied to SAIF-assessable deposits held as of March 31, 1995. The assessment will be payable on November 27, 1996. DIFA also requires the Financing Corporation ("FICO") bond obligation to be shared by insured depository institutions pro rata beginning in the year 2000. For the transition period from January 1, 1997 to December 31, 1999, banks will pay on their Bank Insurance Fund ("BIF") deposit base one-fifth of the assessment rate imposed upon thrifts. During this period, the FICO assessment rates are estimated to be 1.3 basis points for banks and 6.4 basis points for thrifts, such as Collective Bank. From 2000 to 2019, when the FICO bonds are retired, the FICO assessment rate is estimated to run under 2.5 basis points per $100 of each institution's insured deposit base. DIFA directs the Treasury Department to present a report to Congress by March 31, 1997 regarding the development of a common charter for all depository institutions. The report is to include a recommendation for legislative and administrative action. DIFA requires that the BIF and the SAIF be merged into a single new fund (the Deposit Insurance Fund) on January 1, 1999, provided "no insured depository institution is a savings association on that date". 3. On August 20, 1996, the Small Business Job Protection Act of 1996 ("SBJPA") was enacted, which included a repeal of the thrift bad debt reserve method (percentage-of-taxable income method) under section 593 of the Internal Revenue Code. The repeal is effective for Collective's 1997 fiscal year. Since 1993, Collective has used the percentage-of-taxable method in its income tax returns. Effective July 1, 1996, Collective was required to change from the reserve method to the specific charge-off method to calculate its bad debt deduction. The change in bad debt tax accounting methods has not had, nor is it expected to have, a material impact on Collective's results of operations. The SBJPA also provided for the recapture of a thrift's post-1987 excess bad debt reserve resulting from the use of the reserve method for calculating the bad debt deduction. Pre-1988 excess bad debt reserves are not subject to recapture. The recaptured amount must be taken into taxable 6 income ratably over a six-year period commencing with the thrift's tax year beginning in 1996. The timing of the recapture may be delayed for a one-or two-year period provided the residential loan requirement is met. Collective expects to meet the residential loan requirement for its 1996 and 1997 tax years. Therefore, its estimated tax liability of approximately $5.5 million, resulting from the recapture, will be payable over a six-year period commencing with Collective's 1999 fiscal year. The excess bad debt reserve recapture is not expected to have a material impact on Collective's results of operations or financial position because Collective has recorded deferred income tax provisions on its excess bad reserves since 1987. 4. On October 1, 1996, Collective acquired the outstanding capital stock of Continental Bancorporation for $25.7 million in cash pursuant to an agreement entered into on May 21, 1996. Simultaneously with the acquisition, Continental Bancorporation was liquidated and its subsidiary, Continental Bank of New Jersey ("Continental") became a subsidiary of Collective. Continental is a state-chartered, BIF-insured commercial bank with total assets of $161.3 million and deposits of $129.5 million on the date of acquisition. The acquisition will be accounted for by the purchase method. It is not expected to have a material effect on Collective's results of operations or financial position. 7 Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General Financial Institution Legislation and Regulation Collective's primary subsidiary, Collective Bank (the "Bank"), is subject to extensive regulation, supervision and examination by the Office of Thrift Supervision ("OTS"), as its chartering authority and primary federal regulator, and by the Federal Deposit Insurance Corporation ("FDIC"), which insures its deposits up to applicable limits. Such regulation and supervision establish a comprehensive framework of activities in which an institution can engage and are intended primarily for the protection of the insurance fund and depositors. The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities. Any change in such regulation, whether by the OTS, FDIC or the Congress, could have a material impact on the Bank and its operations. See Notes 2 and 3 to the consolidated financial statements. Assets Total assets increased $107 million during the three months ended September 30, 1996. The net increase, primarily in interest-earning assets, was comprised of increases in loans receivable, net of $156 million, cash of $14 million and investment securities of $11 million and a decrease in mortgage-backed securities of $70 million. All other assets combined decreased $4 million. Loans receivable, net increased because loan originations and purchases exceeded loan repayments. The increase occurred as Collective continued its strategy of relying more on loans and less on collateralized mortgage obligations ("CMO's") as investment vehicles. The elements of the increase were as follows (in millions): Residential first mortgage $ 75 Commercial 42 Home equity 20 Construction 14 Other 5 ---- $156 ====
Collective's strategy to increase loans as percentage of total earning assets (increased from 51.3% at June 30, 1996 to 53.4% at September 30, 1996) was implemented through more aggressive advertising and marketing initiatives combined with more competitive pricing. The growth in Collective's loan portfolio was funded primarily by deposit growth and CMO principal repayments. Cash and cash equivalents increased because cash provided by operating and financing activities exceeded cash used in investing activities. The increase in investment securities resulted from the addition of medium-term U.S. agency structured notes. Collective has the positive intent and ability to hold its investment and mortgage-backed securities portfolios to maturity under all foreseeable economic conditions. Therefore, it is not expected that any gains or losses will be 8 realized from sales of securities from Collective's held-to-maturity portfolios. In recent years, since authoritative guidance and/or accounting standards have been developed for the definitive classification of securities, Collective has not sold securities from its held-to-maturity portfolios. Collective has always been able to satisfy its liquidity needs from the cash flows from operating and financing activities, and there is no present indication that Collective will not be able to do so in the future. Unrealized gains or losses in Collective's held-to-maturity securities portfolios are primarily a function of the interest-rate environment at any given point in time and, therefore, are only temporary in nature. If presently unforeseen economic conditions should result in the sale of those securities at some future date, any realized gain or loss will be determined by their market value when sold. Liabilities The increase in liabilities of $107 million from June 30, 1996 to September 30, 1996 was comprised primarily of increases in deposits of $88 million and other liabilities of $20 million. The increase in deposits resulted from more aggressive marketing and pricing initiatives as Collective sought to fund asset growth with lower cost deposits rather than borrowings. The deposit increase occurred in the following categories (in millions): Non-interest bearing demand $ 7 Interest bearing demand 20 Savings certificates 61 ---- $ 88 ====
The increase in non-interest bearing demand deposits consisted of commercial checking accounts and the increase in interest bearing demand deposits was comprised of cash management accounts, primarily with municipalities. Municipal jumbo certificates of deposit (in excess of $100,000) comprised the increase in savings certificates. The increase in other liabilities consisted primarily of the accrual for the SAIF recapitalization assessment discussed in note 2 to the consolidated financial statements (page 6). Stockholders' Equity Retained earnings decreased during the three-month period ended September 30, 1996 because dividends on common stock exceeded net income. Liquidity and Capital Resources The Bank is required by regulation to maintain certain levels of liquidity. Regulations currently in effect require the Bank to maintain liquid assets of not less than 5% of its net withdrawable deposits and short-term borrowings, of which at least 1% must be short-term liquid assets. Throughout the three months ended September 30, 1996, the Bank was in compliance with that regulation and at that date had an overall liquidity ratio of 5.12 % and a short-term ratio of 2.19%. At September 30, 1996, capital resources were sufficient to meet outstanding loan origination commitments of $144 million and commitments on unused lines of credit of $127 million. Loans originated or purchased during the three months ended September 30, 1996 were funded from normal sources including investment 9 security maturities, amortization of the existing loan and mortgage-backed securities portfolios, and borrowings. The Bank is subject to capital requirements mandated by the Financial Institutions Reform, Recovery and Enforcement Act ("FIRREA"). Under FIRREA, thrift institutions must have tangible capital equal to 1.5% of tangible assets, core capital equal to 3% of adjusted tangible assets and risk-based capital equal to 8% of risk-weighted assets. At September 30, 1996, the Bank exceeded those requirements as follows: Tangible Capital: (In Thousands) Percent Actual $ 320,409 6.03% Required 79,648 1.50% ----------- ----- Excess $ 240,761 4.53% ----------- ----- Core Capital: Actual $ 320,409 6.03% Required 159,297 3.00% ----------- ----- Excess $ 161,112 3.03% ----------- ----- Risk-based Capital: Actual $ 327,657 15.76% Required 166,271 8.00% ----------- ------ Excess $ 161,386 7.76% ----------- ------
Three Months Ended September 30, 1996 Compared to Three Months Ended September 30, 1995 Net income for the three months ended September 30, 1996 decreased $8.819 million compared to net income for the three months ended September 30, 1995. Without the SAIF recapitalization assessment (See note 2 to the consolidated financial statements), which reduced net income by $10.500 million, net income would have been $14.878 for the 1996 quarter, an increase of $1.681 million over the 1995 quarter. The actual decrease in net income was comprised of a $3.172 million increase in net interest income, a $429,000 increase in the provision for loan losses, a $57,000 increase in other income, a $16.888 million increase in other expense and a $5.269 million decrease in income taxes. The increase in net interest income resulted from an increase in net interest spread (the difference between the weighted average yield on interest-earning assets and the weighted average rate paid on interest-bearing liabilities) from 2.63% for the 1995 period to 2.76% for the 1996 period, combined with an increase in average interest-earning assets of $141 million. The combination of the increases in net interest spread and interest-earning assets caused net interest margin (net interest income divided by average interest-earning assets) to rise from 2.82% for the 1995 period to 2.97% for the 1996 period. The increase in net interest spread consisted of a 6 basis point decrease in the yield on interest-earning assets coupled with a 19 basis point decrease in the cost of funds. The decline in yield on interest-earning assets occurred because Collective's yields on loans, mortgage-backed securities and investment securities all were lower in the 1996 period compared to the 1995 period because shorter-term interest rates were generally lower throughout the intervening twelve-month period. A greater portion of Collective's loan originations during that period were adjustable rate products which have a lower (teaser) rate during the initial period to their first repricing. This was offset by rising longer-term rates during the second half of the intervening period. The lower 10 cost of funds in the 1996 quarter resulted from a 50 basis point reduction in the cost of borrowings compared to 1995. Collective's borrowings are primarily short-term and changes in the cost of its borrowings usually correlate with changes in the federal funds rate. The federal funds rate was approximately 50 basis points lower in the 1996 quarter than it was in the 1995 quarter. The average cost of deposits was 4.09% for the 1996 period compared to 4.11% for the 1995 quarter, also contributing to the lower cost of funds in 1996. Collective's net interest income tends to increase in periods of declining interest rates because its interest-bearing liabilities generally reprice faster than its interest-earning assets. (See the "Maturity and Rate Sensitivity Analysis", page 12.) Conversely, Collective's net interest income tends to decrease in periods of rising interest rates. The lower short-term interest rates discussed above, combined with a steeper yield curve, when compared to the three months ended September 30, 1995, caused the increased net interest spread and margin in the 1996 quarter. Although Collective's classified asset ratio decreased from .42% at September 30, 1995 to 0.33% at September 30, 1996, the loan loss provision was higher during the 1996 quarter because of increased general loss provisions for the growing commercial loan portfolio. Gain on sale of loans and securities decreased from $634,000 in the 1995 period to $32,000 in the 1996 period. Because longer-term interest rates were higher in the 1996 quarter than they were in the comparable 1995 period, the percentage of loan originations that met the criteria for long-term investment increased from 71% in the 1995 period to 95% in the 1996 quarter. Another contributing factor was that 82% of total loan originations were adjustable rate loans in the 1996 period compared to 50% in 1995. All adjustable rate loan originations are placed in the held-to-maturity portfolio. Therefore sales of loans and securitized loans decreased from $63 million in 1995 to $20 million in 1996. The increase in financial service fees and other income resulted primarily from increased fee income from the growth in demand deposit balances and a more aggressive strategy in charging and collecting fees related to deposit accounts. The increase in other expense resulted primarily from the SAIF recapitalization assessment previously discussed. Collective's ratio of operating expenses to assets was 1.23% in the 1996 quarter, excluding the SAIF assessment, compared to 1.24% for the 1995 period. The decrease in income taxes resulted from the reduced pre-tax income. The effective income tax rate was 31.9% for the three months ended September 30, 1996 compared to 35.7% for the three months ended September 30, 1995. The lower effective rate for the 1996 period resulted because the marginal tax benefit rate for the SAIF assessment deduction was higher than Collective's effective tax rate without such deduction. 11 COLLECTIVE BANCORP, INC. AND SUBSIDIARY MATURITY AND RATE SENSITIVITY ANALYSIS (1)
September 30, 1996 ---------------- --------------- --------------- ---------------- 1 Year 1 Year Over or Less to 5 Years 5 Years Total ---------------- --------------- --------------- ---------------- Assets: (Dollar amounts in thousands) Mortgage loans: Balloon & adjustable rate first mortgages $ 722,138 $ 549,210 $ 204,858 $ 1,476,206 Fixed rate mortgages 228,089 (2) 439,651 395,352 1,063,092 Mortgage-backed securities 393,622 (3) 1,200,590 403,544 1,997,756 Consumer and commercial loans 129,620 35,821 2,374 167,815 Federal funds sold 3,647 - - 3,647 Investment securities 355,170 (4) - 185 355,355 ---------------- --------------- --------------- ---------------- Total rate sensitive assets $ 1,832,286 $ 2,225,272 $ 1,006,313 $ 5,063,871 ================ =============== =============== ================ Liabilities: Fixed maturity deposits $ 1,434,191 $ 417,562 $ 13,979 $ 1,865,732 NOW accounts - 528,375 - 528,375 Money market demand accounts 294,765 - - 294,765 Passbook accounts 102,533 230,383 217,907 550,823 Other borrowings $ 1,475,231 - - 1,475,231 ---------------- --------------- --------------- ---------------- Total rate sensitive liabilities $ 3,306,720 $ 1,176,320 $ 231,886 $ 4,714,926 ================ =============== =============== ================ Dollar gap (5) $(1,474,434) $ 1,048,952 $ 774,427 $ 348,945 ================ =============== =============== ================ (1) As presented in the above table, the Bancorp calculates interest rate sensitivity information employing techniques developed by the Office of Thrift Supervision. (2) Includes $2,957 of loans classified as held for sale. (3) Includes $94,071 of mortgage-backed securities classified as available for sale. (4) Includes $68,296 of securities classified as available for sale. (5) Rate sensitive assets less rate sensitive liabilities.
Part II Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (11) Statement Re Computation of Per Share Earnings (27) Financial Data Schedule 12 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. COLLECTIVE BANCORP, INC. EDWARD J. MCCOLGAN -------------------------------------- Date November 14, 1996 Edward J. McColgan Vice Chairman & Chief Financial Officer BENARD H. BERKMAN ------------------------------------------- Date November 14, 1996 Bernard H.Berkman Executive Vice President & Chief Accounting 13 EX-11 2 COMPUTATION OF PER SHARE EARNINGS EXHIBIT (11) COLLECTIVE BANCORP, INC. COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK
Three Months Ended September 30 PRIMARY 1996 1995 --------------------------------------------- EARNINGS: Net income...................................... $4,378,262 $13,197,324 ============================================= SHARES: Weighted average number of common shares outstanding..................... 20,186,176 20,143,166 Assuming exercise of options reduced by the number of shares which could have been purchased with the proceeds from exercise of such options (1)........................... 245,896 287,374 --------------------------------------------- Weighted average number of common shares outstanding as adjusted................ 20,432,072 20,430,540 ============================================= Primary earnings per share of common stock.................................... $0.21 $0.65 ============================================= ASSUMING FULL DILUTION EARNINGS: Net income...................................... $4,378,262 $13,197,324 ============================================= SHARES: Weighted average number of common shares outstanding..................... 20,186,177 20,143,166 Assuming exercise of options reduced by the number of shares which could have been purchased with the proceeds from exercise of such options (2)........................... 264,972 301,272 --------------------------------------------- Weighted average number of common shares outstanding as adjusted................ 20,451,149 20,444,438 ============================================= Fully diluted earnings per share of common stock.................................... $0.21 $0.65 ============================================= (1) Assumes the proceeds obtained from the exercise of options were used to purchase common shares at the average market price during the quarter. (2) Assumes the proceeds obtained from the exercise of stock options were used to purchase common shares at the market price at the close of the quarter if such price was higher than the average price during the quarter.
EX-27 3 FDS --
9 This schedule contains summary financial information extracted from the Statements of Consolidated Financial Condition as of September 30, 1996 (Unaudited) and the Statements of Consolidated Operations for the three months ended September 30, 1996 (Unaudited) and is qualified in its entirety by reference to such financial statements. 1000 3-mos JUN-30-1997 JUL-01-1996 SEP-30-1996 79237 0 3647 0 165324 2190744 2118748 2704156 0 5252483 3342856 1475231 70347 0 0 0 204 363845 5252483 50986 39811 0 90797 34117 19803 36877 715 32 33840 6428 6428 0 0 4378 0.21 0.21 7.21 20235 0 0 0 12891 824 0 12782 12782 0 0
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