-----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, EntTQvo5xUAmqPNdwmhH7zpYgu9D2uX0CzepZ9WRgKHFb44kNziRc5a3256eNxqg 2Nncl97hcRny8piYUzZdjQ== 0000909654-97-000060.txt : 19970222 0000909654-97-000060.hdr.sgml : 19970222 ACCESSION NUMBER: 0000909654-97-000060 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970213 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FINANCIAL BANCORP INC CENTRAL INDEX KEY: 0000855932 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 061391814 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18126 FILM NUMBER: 97530556 BUSINESS ADDRESS: STREET 1: 45-25 QUEENS BLVD CITY: LONG ISLAND CITY STATE: NY ZIP: 11104 BUSINESS PHONE: 7187295002 MAIL ADDRESS: STREET 1: 45-25 QUEENS BLVD CITY: LONG ISLAND CITY STATE: NY ZIP: 11104 10-Q 1 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 December 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: 0-18126 ------- FINANCIAL BANCORP, INC. ----------------------- (Exact name of registrant as specified in its charter) Delaware 06-1391814 -------- ---------- (State or other jurisdiction of (I.R.S. Employer identification No.) incorporation or organization) 42-25 Queens Boulevard, Long Island City, NY 11104 -------------------------------------------------- (Address of principal executive offices) (Zip Code) (718) 729-5002 -------------- (Registrant's telephone number, including area code) Not Applicable - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed last report) 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. (1) X Yes No ------ ------ (2) X 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. There were 1,747,686 shares of the Registrant's common stock outstanding as of February 13, 1997. ----------------- 1 2 FINANCIAL BANCORP, INC. Form 10-Q Index Part I - Financial Information Page - ------------------------------ ---- Item 1. Financial Statements Consolidated Statements of Financial Condition as of December 31, 1996 (Unaudited) and September 30, 1996 3 Consolidated Statements of Income for the Three Months ended December 31, 1996 and 1995 (Unaudited) 4 Consolidated Statement of Changes in Stockholders' Equity for the Three Months ended December 31, 1996 (Unaudited) 5 Consolidated Statements of Cash Flows for the Three Months ended December 31, 1996 and 1995 (Unaudited) 6-7 Notes to Consolidated Financial Statements 8-11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 12-16 Part II - Other Information - --------------------------- Item 1. Legal Proceedings 17 Item 2. Changes in Securities Not applicable. 17 Item 3. Defaults Upon Senior Securities Not applicable. 17 Item 4. Submission of Matters to a Vote of Security Holders Not applicable. 17 Item 5. Other Information 17 Item 6. Reports on Form 8-K Not applicable. 17 Exhibits Exhibit 11: Computation of per share earnings 18 Signature Page 19 2 3
FINANCIAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED) DECEMBER 31, SEPTEMBER 30, 1996 1996 ------------- ---------------- Assets - ------ Cash and amounts due from depository institutions $ 1,603,668 $ 2,917,223 Federal funds sold and securities purchased under agreements to resell 2,000,000 2,185,000 ------------ ------------ Total cash and cash equivalents 3,603,668 5,102,223 Investment securities available for sale 701,750 3,608,125 Investment securities held to maturity, net; estimated fair value of $44,058,000 and $49,903,000 at December 31, 1996 and September 30, 1996, respectively 45,010,382 51,122,128 Mortgage-backed securities available for sale 5,002,458 5,016,112 Mortgage-backed securities held to maturity, net; estimated fair value of $48,149,000 and $49,901,000 at December 31, 1996 and September 30, 1996, respectively 47,734,831 49,836,734 Loans receivable, net 145,481,700 140,314,158 Real estate owned, net 218,500 377,910 Investments in real estate, net 3,468,494 3,493,153 Premises and equipment, net 2,489,883 2,522,264 Federal Home Loan Bank of New York stock, at cost 1,689,800 1,675,800 Accrued interest receivable, net 1,649,967 1,788,970 Other assets 2,052,549 1,904,945 ------------ ------------ Total assets $259,103,982 $266,762,522 ============ ============ Liabilities and stockholders' equity - ------------------------------------ Deposits $203,499,815 $202,883,766 Advance payments by borrowers for taxes and insurance 871,337 1,063,036 Advances from Federal Home Loan Bank of New York 12,000,000 9,725,000 Securities sold under agreements to repurchase 5,000,000 14,046,000 Treasury tax and loan account and other short term borrowings 10,006,868 9,880,970 Other liabilities 1,967,716 3,376,552 ------------ ------------ Total liabilities 233,345,736 240,975,324 ------------ ------------ Stockholders' equity Preferred stock, $0.01 par value, 2,500,000 shares authorized; none issued Common stock, $0.01 par value, 6,000,000 shares authorized; 2,185,000 shares issued, 1,747,686 and 1,790,622 shares outstanding at December 31, 1996 and September 30, 1996, respectively 21,850 21,850 Additional paid-in capital 20,156,882 20,151,858 Retained earnings - substantially restricted 12,688,064 12,218,607 Common stock acquried by Employee Stock Ownership Plan (ESOP) (1,132,958) (1,173,422) Common stock acquired by Recognition & Retention Plan (RRP) (420,154) (454,221) Unrealized gain (loss) on securities available for sale, net of income taxes 34,180 (488) Treasury stock, at cost; 437,314 and 394,378 shares at December 31, 1996 and at September 30, 1996, respectively (5,589,618) (4,976,986) ------------ ------------- Total stockholders' equity 25,758,246 25,787,198 ------------ ------------- Total liabilities and stockholders' equity $259,103,982 $ 266,762,522 ============ ============= See accompanying notes to consolidated financial statements
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FINANCIAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended ----------------------------------- December 31, ----------------------------------- 1996 1995 ------------ ----------- Interest income: Loans $2,899,293 $2,338,631 Mortgage-backed securities 955,509 1,070,231 Investments and other interest-earning assets 1,041,882 791,956 Federal funds sold and securities purchased under agreements to resell 15,789 11,003 ------------ ----------- Total interest income 4,912,473 4,211,821 ------------ ----------- Interest expense: Deposits 1,981,214 1,909,176 Borrowings 476,765 161,653 ------------ ----------- Total interest expense 2,457,979 2,070,829 ------------ ----------- Net interest income 2,454,494 2,140,992 Provision for loan losses 99,600 54,000 ------------ ----------- Net interest income after provision for loan losses 2,354,894 2,086,992 ------------ ----------- Non-interest income (loss): Fees and service charges 131,280 88,072 Gain on sale of investment securities 26,353 0 (Loss) from real estate operations (28,053) (22,610) Miscellaneous 10,629 11,698 ------------ ----------- Total non-interest income 140,209 77,160 ------------ ----------- Non-interest expenses: Salaries and employee benefits 742,047 646,505 Net occupancy expense of premises 132,511 112,480 Equipment 150,346 137,650 Advertising 9,587 25,049 Loss from real estate owned 18,384 29,216 Federal insurance premium 81,772 89,145 Miscellaneous 250,043 261,410 ------------ ----------- Total non-interest expenses 1,384,690 1,301,455 ------------ ----------- Income before income taxes 1,110,413 862,697 Income taxes 516,974 378,939 ------------ ----------- Net income $593,439 $483,758 ============ =========== Net income per common share & common stock equivalents $0.35 $0.26 ============ =========== Weighted average number of common shares & common stock equivalents 1,688,000 1,894,600 ============ =========== See accompanying notes to consolidated financial statements
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Financial Bancorp. Inc. And Subsidiaries Consolidated Statements of Changes in Stockholders' Equity (Unaudited) Unrealized Gain on Investment Retained Common Common Securities Additional Earnings - Stock Stock Available for Common Paid-in Substantially Acquired Acquired sale Net of Treasury Stock Capital Restricted By ESOP By RRP Income Taxes Stock Total -------- ---------- ----------- --------- --------- ---------------- ---------- ---------- Balance at September 30, 1996 $21,850 $20,151,858 $12,218,607 ($1,173,422)($454,221) ($488) ($4,976,986) $25,787,198 Net Income for the three months ended December 31, 1996 - - 593,439 - - - - 593,439 Purchase of 47,000 shares of treasury stock - - - - - (663,938) ($663,938) Amortization relating to allocation of ESOP stock and earned portion of RRP stock - 17,965 - 40,464 34,067 - - 92,496 Adjustment to valuation reserve on securities available for sale - - - - - 34,668 - $34,668 Stock issued upon exercise of stock options - (12,941) - - - - 51,306 $38,365 Cash dividends paid on common stock - - (123,982) - - - - (123,982) --------- ----------- ----------- ----------- --------- ------------- ------------ ------------ Balance at December 31, 1996 $21,850 $20,156,882 $12,688,064 ($1,132,958) ($420,154) $34,180 ($5,589,618) $25,758,246 ========= =========== =========== =========== ========== ============= ============ ============ See accompanying notes to consolidated financial statements.
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Financial Bancorp, Inc. And Subsidiaries Consolidated Statements of Cash Flows (Unaudited) Three Months Ended ------------------------------------------- December 31, ------------------------------------------- 1996 1995 ------------------ ------------------ Cash flow from operating activities: Net income $593,439 $483,758 Adjustments to reconcile net income to net cash used by operating activities (Gain) on sale of investment securities (26,353) Loss on write-down of investment securities 0 0 (Gain) on sale of real estate owned 0 (1,100) Net amortization of premiums and accretion of discounts on investment securities (49,779) 6,537 Net amortization of premiums and accretion of discounts on mortgage-backed securities 8,559 (5,913) Accretion of deferred loan fees and discounts (23,136) (20,339) Amortization of intangibles 4,261 5,705 Depreciation and amortization of premises and equipment 75,877 74,641 Provision for loan losses 99,600 54,000 Provision for losses on real estate owned 15,482 0 Cost of ESOP and RRP 92,496 88,696 Deferred income taxes 127,426 28,947 Decrease (increase) in accrued interest receivable, net 139,003 (97,115) Increase in income taxes payable 206,276 170,435 (Increase) decrease in other assets (342,869) 124,809 (Decrease) increase in other liabilities (1,578,772) 148,985 ----------------- ------------------ Net cash (used in) provided by operating activities (658,490) 1,062,046 ------------------ ------------------ Cash flows from investing activities: Purchases of investment securities (8,840,000) (15,000,000) Proceeds of maturities of investment securities 15,000,000 8,430,000 Proceeds from sale of investment securities available for sale 2,947,031 Purchases of mortgage-backed securities 0 0 Purchases of mortgage loans 0 (5,647,072) Proceeds from principal repayments on mortgage-backed securities 2,156,126 3,091,499 Loan originations, net of repayments (5,244,006) (4,783,120) Additions to premises and equipment (43,837) (920,940) Purchase of Federal Home Loan Bank of N.Y. stock (14,000) 0 Proceeds from sale of and insurance recoveries on real estate owned 143,928 81,100 Capitalized expenses on real estate owned 0 (1,476) Net (increase) in investments in real estate 25,000 0 ------------------ ------------------ Net cash provided by (used in) investing activities 6,130,242 (14,750,009) ------------------ ------------------ See accompanying notes to consolidated financial statements.
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FINANCIAL BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (UNAUDITED) Three Months Ended ----------------------------------------- December 31, ----------------------------------------- 1996 1995 ----------------- ------------------ Cash flows from financing activities: Net increase in deposits $616,049 $3,068,764 Advances from FHLB of NY 2,800,000 7,825,000 Net change in short-term borrowings from FHLB N.Y. (525,000) 0 Net change in other borrowings (8,920,102) 2,937,500 (Decrease) increase in advance payments by borrowers for taxes and insurance (191,699) 142,473 Dividends paid (123,982) (91,315) Reissuance of treasury stock 38,365 0 Purchase of treasury stock (663,938) (133,750) ----------------- ------------------ Net cash (used in) provided by financing activities (6,970,307) 13,748,672 ----------------- ------------------ Net (decrease) increase in cash and cash equivalents (1,498,555) 60,709 Cash and cash equivalents - beginning 5,102,223 7,853,316 ----------------- ------------------ Cash and cash equivalents - ending $3,603,668 $7,914,025 ================= ================== Supplemental schedule of noncash investing and financing activities: Loans transferred to real estate owned $0 $47,360 ================= ================== Property transferred to investment in real estate $0 $195,724 ================= ================== Transfer to investment securities available for sale Investment securities $0 $1,989,839 ================= ================== Unrealized gain on investment securities available for sale $61,906 $15,791 Deferred income taxes (27,238) (6,948) ----------------- ------------------ $34,668 $8,843 ================= ================== Supplemental disclosures of cash flow information: Cash paid (net of refunds received) during the year for: Federal, state and city income taxes 156,034 $185,000 ================= ================== Interest on deposits and borrowed funds $2,441,301 $2,049,572 ================= ================== See Accompanying notes to consolidated financial statements.
7 8 FINANCIAL BANCORP, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements include the accounts of Financial Bancorp, Inc. (the "Company"), its wholly owned subsidiaries, 842 Manhattan Avenue Corp. which manages real property, and Financial Federal Savings Bank (the "Bank") a federally chartered stock association, and the Bank's wholly owned subsidiaries, Finfed Development Corp., which participates in a joint venture for the development of land and sale of lots, Finfed Funding Ltd., which serves as a conduit for funding investments in Finfed Development Corp., and F.S. Agency Inc., which is engaged in the sale of annuities. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain information and footnote disclosures required under generally accepted accounting principles have been condensed or omitted from the following consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. Financial Bancorp, Inc. (the "registrant" or the "Company") believes that the disclosures presented are adequate to assure that the information presented is not misleading in any material respect. It is suggested that the following consolidated financial statements be read in conjunction with the year-end consolidated financial statements and notes thereto included in the registrant's Annual Report on Form 10-K for the year ended September 30, 1996. The results of operations for the three ended December 31, 1996 are not necessarily indicative of the results that may be expected for the entire fiscal year. Certain amounts for the three months ended December 31, 1995 have been reclassified to conform with the current period's presentation. RECENT ACCOUNTING PRONOUNCEMENTS In October 1995, the Financial Accounting Standards Board (the "FABS") issued Statement of Financial Accounting Standards ("SFAS") No. 123 "Accounting for Stock-Based Compensation," effective for fiscal years beginning after December 15, 1995. The Company has elected to continue to measure compensation cost using the intrinsic value-based method of accounting prescribed by the Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." Pro forma disclosures required for entities that elect to continue to measure compensation cost using APB Opinion No. 25 must include the effects of all awards granted in fiscal years that begin after December 15, 1994. Management will implement the pro forma disclosure required by SFAS No. 123 with the preparation of the annual financial statement for the fiscal years ending September 30, 1997. 8 9 EARNINGS PER SHARE Net income per common share and common stock equivalents is computed by dividing net income by the weighted average number of shares of common stock outstanding adjusted for the unallocated shares held by the ESOP. Stock options ranted are considered in earnings per share as common stock equivalents, if dilutive, using the treasury stock method. INVESTMENT SECURITIES The following table sets forth certain information regarding the carrying and estimated fair value of the Company's investment securities at December 31, 1996 and September 30, 1995, respectively.
December 31, 1996 September 30, 1996 ----------------------- ------------------------- Carrying Fair Carrying Fair Value Value Value Value ------------ --------- ------------ ----------- (in thousands) Investment Securities: Available for sale U.S. Treasury securities $0 $0 $2,919 $2,908 Corporate preferred stock 700 702 700 700 Less: Unrealized gain (loss) 2 - (11) - ------------ --------- ------------ ----------- Total investment securities available for sale $702 $702 $3,608 $3,608 ============ ========= ============ =========== Held to maturity U.S. Treasury securities and other government agencies $45,010 $44,058 $51,122 $49,903 ------------ --------- ------------ ----------- Total investment securities held to maturity $45,010 $44,058 $51,122 $49,903 ============ ========= ============ ===========
MORTGAGE-BACKED SECURITIES The following table sets forth certain information regarding the carrying and estimated fair value of the Company's mortgage-backed security portfolio at December 31, 1996 and September 30, 1996, respectively.
December 31, 1996 September 30, 1996 --------------------- -------------------- Carrying Fair Carrying Fair Value Value Value Value ---------- -------- ---------- ------- (in thousands) Mortgage-backed securities: Available for sale FHLMC certificates $4,943 $5,002 $5,006 $5,016 Add: Unrealized gain 59 - 10 - ---------- -------- ---------- -------- Total mortgage-backed securities available for sale $5,002 $5,002 $5,016 $5,016 ========== ======== ========== ======== Held to maturity GNMA certificates $26,269 $26,595 $27,106 $27,198 FHLMC certificates 17,011 17,103 17,999 17,960 FNMA certificates 2,450 2,446 2,697 2,708 Other pass-through certificates 2,005 2,005 2,035 2,035 ---------- --------- ---------- -------- Total mortgage-backed securities held to maturity $47,735 $48,149 $49,837 $49,901 ========== ========= ========== ========
9 10 LOANS RECEIVABLE, NET The following table sets forth the composition of the Company's loan portfolio at December 31, 1996 and September 30, 1996, respectively.
December 31, September 30, 1996 1996 ----------------- ----------------- (in thousands) Real estate mortgages: One-to-four family $117,752 $115,500 Equity and second mortgages 2,841 2,780 Multi-family 6,127 5,622 Commercial 17,651 15,301 ----------------- ----------------- 144,371 139,203 ----------------- ----------------- Construction/land 4,594 4,920 ----------------- ----------------- Consumer: Passbook or certificate 163 171 Home improvement 6 7 Student education guaranteed by the State of New York 210 202 Personal 38 21 ----------------- ----------------- 417 401 Commercial, including lines of credit 143 168 ----------------- ----------------- Total loans 149,525 144,692 ----------------- ----------------- Less: Loans in process 2,104 2,509 Allowance for loan losses 1,672 1,573 Deferred loan fees and discounts 267 296 ----------------- ----------------- 4,043 4,378 ----------------- ----------------- Total loans receivable, net $145,482 $140,314 ================= =================
10 11 ADVANCES FROM FEDERAL HOME LOAN BANK OF NEW YORK ("FHLB") As a member of the FHLB, the Bank has an available overnight line of credit subject to the terms and conditions of the lender's overnight advance program in the amount of $26,398,500 at December 31, 1996. The following table sets forth the composition of the Bank's FHLB advances as of December 31, 1996 and September 30, 1996, respectively.
December 31, September 30, 1996 1996 ----------------- ----------------- (in thousands) FHLB advances: Fixed rate: 5.133% due February 1997 $1,200 $1,200 5.597% due December 1997 2,000 2,000 5.670% due December 1998 6,000 6,000 ----------------- ----------------- Total fixed rate 9,200 9,200 Overnight line of credit: 6.125% due October 1996 - 525 6.875% due January 1997 2,500 - 7.375% due January 1997 300 - ----------------- ----------------- Total overnight line of credit 2,800 525 ----------------- ----------------- Total FHLB advances $12,000 $9,725 ================= =================
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE Securities sold under agreements to repurchase consist of borrowings collateralized by investment securities. The following table sets forth the composition of the Company's borrowings collateralized by securities sold under agrrements to repurchase as of December 31, 1996 and September 30, 1996, respectively.
December 31, September 30, 1996 1996 ----------------- ----------------- (in thousands) Securities sold under agreements to repurchase: 5.44% due December 1995 $0 $14,046 5.291% due December 2001, callable December 1997 5,000 - ----------------- ----------------- Total securities sold under agreements to repurchase $5,000 $14,046 ================= =================
11 12 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Financial Bancorp, Inc. is the holding company for Financial Federal Savings Bank, which converted to a federally chartered stock savings association on August 17, 1994 and to a federally chartered stock savings bank on October 20, 1994. The Bank is headquartered in Long Island City, New York and operates four full service branches in Queens and one in Brooklyn. Deposits of the Bank are insured up to the applicable limits of the Federal Deposit Insurance Corporation ("FDIC"). The Bank is subject to regulation by the Office of Thrift Supervision ("OTS") and the FDIC. The Company is listed on The Nasdaq Stock Market under the symbol "FIBC". The Company's results of operations are generally dependent on the Bank. The Bank's sources of earnings primarily consist of net interest income, which is the difference between the income earned on interest earning assets and the expenses paid on interest bearing liabilities. The results of operations are also affected, to a lesser extent, by non-interest income, which includes loan servicing fees and charges, and other miscellaneous income. In addition, operations are impacted by non-interest expenses such as employee salaries and benefits, office occupancy, data processing and federal deposit insurance premiums. The Bank is primarily engaged in the origination of one-to-four family residential mortgage loans, multi-family and commercial real estate mortgage loans, and to a lesser extent residential and commercial construction loans. As a community-oriented institution, the Bank is generally engaged in attracting retail deposits from the areas surrounding its branch offices. In addition, the Bank may borrow funds from the FHLB or through reverse repurchase agreements. These funds are then generally concentrated in lending activities throughout the New York City metropolitan area. FINANCIAL CONDITION As of December 31, 1996, the Company's total assets were $259.1 million, representing a $7.7 million, or a 2.9%, decrease from $266.8 million as of September 30, 1996. The $7.7 million decrease in assets is primarily attributable to the sale of a $3.0 million U.S. Treasury security, classified as available for sale, in addition to a $6.1 million decrease in investment securities and $2.1 million decrease in mortgage-backed securities, which was partially offset by the $5.2 million increase in loans receivable. During the same period, securities sold under agreements to repurchase decreased by $9.0 million to $5.0 million at December 31, 1996, from $14.0 million at September 30, 1996. This was partially offset by an increase in deposits of $616,049, or 0.3%, to $203.5 million as of December 31, 1996, from $202.9 million as of September 30, 1996. In addition, FHLB advances increased by $2.3 million to $12.0 million, at December 31, 1996, from $9.7 million at September 30, 1996. 12 13 As of December 31, 1996, investment securities, including available for sale, consisted primarily of medium-term U.S. Government Agency obligations, with features such as calls and/or interest rate "step-ups," decreased by $9.0 million, or 16.5%, to $45.7 million from $54.7 million as of September 30, 1996. As of December 31, 1996, mortgage-backed securities, including available for sale, decreased by $2.1 million, or 3.9%, to $52.7 million from $54.8 million as of September 30, 1996. Loans receivable increased by $5.2 million, or 3.7%, to $145.5 million as of December 31, 1996 from $140.3 million as of September 30, 1996. Non-performing loans totaled $5.1 million, or 3.43% of total loans at December 31, 1996 as compared to $4.6 million, or 3.15% of total loans at September 30, 1996. Of the $5.1 million in non-performing loans, $528,00 represents an increase in delinquencies in the one-to-four family mortgage loan portfolio. In addition, $2.5 million of the non-performing loans consists of the balance of Thrift Association Service Corporation ("TASCO") pass-through securities. In May 1996, the FDIC stated that they would not continue the scheduled pass-through of principal and interest payments whether or not collected. At December 31, 1996, non-performing assets totalled $8.6 million, or 3.33% of total assets, as compared to $8.2 million, or 3.09% of total assets at September 30, 1996. The Company's allowance for loan losses to non-performing assets and to total loans equals 19.37% and 1.12%, respectively, as compared to 19.08% and 1.09%, respectively, at September 30, 1996. Total deposits at December 31, 1996, increased by $616,049, or 0.3%, to $203.5 million from $202.9 million at September 30, 1996. In addition, advances from the FHLB, increased by $2.3 million, or 23.4%, to $12.0 million at December 31, 1996. Securities sold under agreements to repurchase decreased by $9.0 million, or 64.4%, to $5.0 million at December 31, 1996, as compared to $14.0 million at September 30, 1996. The decrease in securities sold under agreements to resell was attributable to the proceeds realized from the maturity of $15.0 million in investment securities. Total stockholders' equity was $25.8 million at December 31, 1996, reflecting a $28,952, or 0.1%, decrease from $25.8 million at September 30, 1996. The decrease in stockholders' equity was primarily attributable to the repurchase of the Company's common stock, partially offset by earnings retained. At December 31, 1996, the Company had, exclusive of shares repurchased 1,747,686 common shares outstanding. As of December 31, 1996, the Company's stated book value per share of common stock increased by $0.34, or 2.4%, to $14.74, from $14.40 at September 30, 1996. ANALYSIS OF OPERATIONS COMPARISON OF THE THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995 Net income for the three months ended December 31, 1996, totalled $593,439, or $0.35 per share as compared to net income of $483,758, or $0.26 per share for the three months ended December 31, 1995. The $109,681, or 22.7% increase, was primarily attributable to a $700,652, or 16.6% increase in interest income, offset in part by a $387,150 increase in interest expense and a $83,235 increase in non-interest expenses. 13 14 The return on average assets equalled 0.90% for the quarter ended December 31, 1996, as compared to 0.84% for the same quarter in 1995. For the quarter ended December 31, 1996, the Company's return on average equity equalled 9.21%, as compared to 7.07% for the same period in 1995. The Company's net interest income increased by $313,502, or 14.6%, to $2.5 million for the quarter ended December 31, 1996, from $2.1 million for the quarter ended December 31, 1995. The increase in net interest income for the three months ended December 31, 1996 was primarily attributable to the continued leveraging of the balance sheet, utilizing low cost borrowings and deposit growth to fund mortgage loan originations. As a result, for the quarter ended December 31, 1996, average interest earning assets were $253.5 million, which represents a $32.8 million increase from $220.7 million for the quarter ended December 31, 1995. For the quarter ended December 31, 1996, average interest-bearing liabilities were $230.3 million, as compared to $193.8 million for the quarter ended December 31, 1995, which represents a $36.5 million increase. For the current quarter, the net interest rate spread increased 10 basis points to 3.52% from 3.42% for the corresponding period in 1995. For the quarter ended December 31, 1996, the average yield on interest-earning assets was 7.75% and the average cost of interest-bearing liabilities was 4.23%, as compared to 7.63% and 4.21%, respectively, for the quarter ended December 31, 1995. The increase in the net interest spread is the result of a 67 basis points increase in the investment securities portfolio and higher yields realized from the growth in loans receivable. Despite the $36.5 million increase in interest bearing liabilities to $230.5 million, the cost of interest bearing liabilities remained stable at 4.23%. The net interest margin equalled 3.87% for the quarter ended December 31, 1996, which represents a slight decline from 3.88% realized for the corresponding period in 1995. The Company's provision for loan losses for the quarter ended December 31, 1996, increased by $45,600, to $99,600, from $54,000 for the quarter ended December 31, 1995. The increase in provisions for loan losses reflects the increase in non-performing loans and management's on-going effort to maintain adequate allowances. Non-interest income, for the quarter ended December 31, 1996, increased by $63,049, or 81.7%, to $140,209, as compared to $77,160 for the quarter ended December 31, 1995. This increase is primarily attributable to a $43,208 increase in income realized from additional service fee income and automated teller machines (ATM's) related service fees and a $26,353 net gain in sale of a $3.0 million U.S. Treasury security classified as available for sale. Non-interest expenses increased $83,235, or 6.4%, to $1,384,690 for the quarter ended December 31, 1996, as compared to $1,301,455 for the same period in 1995. Salaries and employee benefits increased by $95,542, or 14.8%, to $742,047 for the quarter ended December 31, 1996, from $646,505 for the corresponding period in 1995. The increase in salaries and employee benefits is primarily attributable to the reinstatement of the Company's bonus accrual, additional commissions paid and other benefit related costs for the quarter ended December 31, 1996. For the quarter ended December 31, 1996, occupancy expense increased by $20,031, or 14 15 17.8%, to $132,511, from $112,480 for the quarter ended December 31, 1995. The increase in occupancy expense is primarily attributable to the increase in rental payments for a branch office and a corresponding decrease in rental income from a Bank owned property. Equipment expense increased by $12,696, or 9.2%, to $150,346 for the quarter ended December 31, 1996, from $137,650 for the same period in 1995. The increase in equipment expense represents costs associated with the Company's demand deposit and check processing servicing fees and other vendor related services and contracts. Advertising expense decreased by $15,462, or 61.7%, to $9,587 for the quarter ended December 31, 1996, from $25,049 for the corresponding period in 1995. Presently, the Company is limiting its advertising campaigns in an effort to bolster earnings. Although non-interest expenses have increased, the ratio of operating expenses to average assets decreased 13 basis points to 2.07% for the quarter ended December 31, 1996, as compared to 2.20% for the same period last year. The Company has been successful in controlling operating expenses, as evidenced by the efficiency ratio 52.6% for the quarter ended December 31, 1996, as compared to 56.8% for the same period in 1995. For the quarter ended December 31, 1996, income tax expense increased by $138,035, to $593,439, as compared to $378,939, for the same quarter in 1995, as a result of a $247,716 increase in income before taxes. LIQUIDITY AND CAPITAL RESOURCES The Bank is required to maintain an average daily balance of liquid assets (as defined in the regulations) equal to a monthly average of not less than the specified percentage of its net withdrawable deposit accounts plus short-term borrowings. This liquidity requirement is currently 5%. OTS regulations also require each member savings institution to maintain an average daily balance of short-term liquid assets at a specified percentage (currently 1%) of the total of its net withdrawable deposit accounts and borrowings payable in one year or less. Monetary penalties may be imposed for failure to meet these liquidity requirements. The liquidity of the Bank at December 31, 1996 was 6.6%, which exceeded the then applicable 5% liquidity requirement. It's short-term liquidity ratio at December 31, 1996, was 2.5%. The primary investment activities of the Bank are the origination of mortgage loans and the purchase of investment securities and mortgage-backed securities. The Company's primary sources of funds are the Bank's deposit accounts, proceeds from principal and interest payments on loans and investments, and to a lesser extent, advances and overnight borrowings from the FHLB, as well as reverse repurchase agreements. While maturities and scheduled amortization of loans, mortgage-backed securities and investment securities are predictable sources of funds, deposit flows, mortgage prepayments and callable investment securities are greatly influenced by market interest rates, general economic conditions and competition within the financial industry. At December 31, 1996, the Bank had outstanding loan commitments to originate mortgage loans and purchase mortgage-backed securities of $3.7 million and $5.0 million, respectively. Management anticipates that it will have sufficient funds available and borrowing capability to meet its current loan originations and loan purchase commitments. Certificates of deposit, which are scheduled to mature in one-year or less from December 31, 1996 totalled $69.2 million, of 15 16 which $16.5 million represent "Silver Certificate of Deposit" accounts, which allow one withdrawal of principal per quarter without an early withdrawal penalty for direct deposit customers 62 years of age or older. Although the OTS capital regulations require savings institutions to meet a 1.5% tangible capital ratio and a 3.0% leverage (core) capital ratio, the prompt corrective action standards also establish, in effect, a minimum 2.0% tangible capital standard, a 4.0% leverage (core) capital ratio (3.0% for institutions receiving the highest rating on the CAMEL financial institution rating system). The Bank's tangible capital and core capital totalled $18.9 million, or 7.5% at December 31, 1996, far in excess of the regulatory requirements. The Bank's risk-based capital ratio as of December 31, 1996 was $20.1 million, or 18.8%, also well in excess of the regulatory capital requirement of 8.0%. 16 17 FINANCIAL BANCORP, INC. Part II. OTHER INFORMATION Item 1. Legal Proceedings The Company is not presently engaged in any legal proceeding of a material nature. Item 2. Changes in Securities Not applicable. Item 3. Defaults Upon Senior Securities Not applicable. Item 4. Submission of Matters to a Vote of Security-Holders Not applicable. Item 5. Other information On September 27, 1996, the Company announced that it received regulatory approval from the Office of Thrift Supervision to commence its fifth repurchase program. The Company is authorized to purchase up to 89,531 or 5% of its common stock outstanding through open-market transactions, subject to the availability of stock, prior to August 17, 1997. During the quarter ended December 31, 1996, the company repurchased 47,000 shares at an average price of $14.13. On January 15, 1997, the Holding Company declared its quarterly cash dividend for the period ended December 31, 1996, of $0.10 per share, which represents an increase of $0.025, payable on February 18, 1997 to stockholders of record on February 4, 1997. Item 6. (A) Exhibits Exhibit 3.1 Certificate of Incorportion of Financial Bancorp, Inc.* Exhibit 3.2 Bylaws of Financial Bancorp, Inc.* Exhibit 11 Earnings Per Share Exhibit 27 Financial Data Schedule (B) Reports on Form 8-K None *Incorporated herein by reference to Form S-1, Registration Statement, as amended, filed on March 18, 1994, Registration Number 33-76664 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. Financial Bancorp, Inc. (Registrant) Date: February 14, 1997 By: /s/ Frank S. Lataweic ---------------------- Frank S. Latawiec President and Chief Executive Officer Date: February 14, 1997 By: /s/ P. James O'Gorman -------------------------- P. James O'Gorman Senior Vice President and Chief Financial Officer 19 EX-11 2 1
Item 6. - ------- Exhibit 11 ---------- THREE MONTHS THREE MONTHS ENDED ENDED COMPUTATION OF PER SHARE EARNINGS DECEMBER 31, 1996 DECEMBER 31, 1995 ---------------------- ---------------------- Net income $593,439 $483,758 ======== ======== Weighted average common shares outstanding 1,652,400 1,834,900 Common stock equivalents due to dilutive effect of stock options 35,600 59,700 ------ ------ Total weighted average common shares and equivalents outstanding 1,688,000 1,894,600 ========= ========= Earnings per common share and common share equivalent $0.35 $0.26 ===== =====
18 EX-27 3
9 This schedule contains summary information extracted from the Form 10-Q and is qualified in its entirety by reference to such financial statements. 0000855932 FINANCIAL BANCORP, INC. 1,000 3-MOS SEP-30-1996 DEC-31-1996 1,603,668 0 2,000,000 0 701,750 45,010,382 44,058,000 145,481,700 1,320,000 259,103,482 203,499,815 27,006,668 1,967,716 0 0 0 21,850 25,736,396 259,103,982 2,899,293 1,997,391 15,789 4,912,473 1,981,214 476,765 2,454,494 99,600 26,353 1,384,690 1,110,413 593,439 0 0 593,439 0.35 0.35 7.63 4,951,000 180,000 922,000 0 1,573,000 2,000 1,000 1,672,000 1,672,000 0 1,165,000
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