Friday May 15, 4:30 pm Eastern Time
Company Press Release
SOURCE: Independence Community Bank Corp.
Independence Community Bank Corp. Issues First Report of Operation
BROOKLYN, N.Y., May 15 /PRNewswire/ -- Independence Community Bank Corp. (Nasdaq: ICBC - news), the holding company for Independence Savings Bank, reported a net loss of $31.0 million for the quarter ended March 31, 1998 and a net loss of $10.0 million for the fiscal year ended March 31, 1998. Results of operations for the fourth quarter and fiscal 1998 reflect the effect of a non-recurring contribution to the Independence Community Foundation in connection with the conversion and reorganization of Independence Savings Bank and its mutual holding company parent in March, 1998. Excluding the effect of this contribution, net income was $6.2 million and $27.2 million for the fourth quarter and 1998 fiscal year, respectively, as compared to a net loss of $3.6 million and net income of $17.2 million for the respective periods of the prior year.
The Independence Community Foundation was established as part of the conversion of Independence Savings Bank and its mutual holding company parent to the stock form of organization. In connection with the consummation of the conversion in March, 1998, Independence Community Bank Corp. contributed to the Foundation 5,632,870 shares of common stock resulting in a one-time, non-recurring charge of $56.4 million ($37.2 million after Federal tax). Charles J. Hamm, Chairman, President & Chief Executive Officer stated, ''The recently completed stock offering was very successful, and we appreciate the support and participation of our customers. I am pleased that we were able to establish the Independence Community Foundation, a charitable organization, which will continue to contribute to the well-being of all the communities served by the bank, well into the next millennium. As a public company, our management team is well positioned to continue to provide high quality service to our customers while creating value for our shareholders.''
Financial Condition
Total assets at March 31, 1998 were $5.22 billion, an increase of $1.49 billion or 39.8% from $3.73 billion at March 31, 1997. The increase in total assets was the result of the receipt of the net proceeds of the stock offering of $685.7 million, as well as the impact of adopting new accounting rules relating to the Bank's ongoing securities lending activities. These accounting rules required the Bank to recognize $701.2 million in cash and cash equivalents and an equal amount as borrowed funds. The Bank has for many years ''lent'' a portion of its securities, primarily U.S. Treasury Notes and bills, generally to money center banks and national securities firms. The securities lent are collateralized generally by cash in an amount slightly in excess of the value of the securities lent. Under the new accounting rules, the obligation to return the cash upon receipt of the lent securities is deemed a borrowing while the cash, which has been invested in cash equivalents, is reflected as an asset. As a result of the influx of proceeds upon completion of the conversion and subsequent investment in Treasury Securities, the Company increased its activity in security lending transactions pending deployment of such assets into loans and other earning assets. Prior to January 1, 1998 these transactions were not recorded in the statement of financial condition. Stockholders' equity totaled $949.1 million at March 31, 1998 compared to $309.1 million at March 31, 1997. The $640.0 million increase was primarily due to net proceeds received in the conversion, adjusted for the contribution of stock to the Foundation, partially offset by the issuance of a $98.9 million loan to the Company's Employee Stock Ownership Plan (ESOP) to fund the ESOP's purchase of 5,632,870 shares of common stock in the open market. Tangible book value per share was $11.75 and tangible equity to assets ratio was 17.10% at March 31, 1998. At March 31, 1998, the Bank's capital was well in excess of all regulatory requirements.
Asset Qualities
The Company's non-performing assets (consisting of non-performing loans and other real estate owned (''OREO'')) totaled $29.9 million at March 31, 1998 compared to $27.6 million at March 31, 1997, an increase of $2.3 million or 8.4%. At March 31, 1998 non-performing loans totaled $29.7 million while OREO amounted to $192,000. Non-performing loans and OREO were $27.1 million and $540,000, respectively, at March 31, 1997. Non-performing assets as a percentage of total assets was .57% at March 31, 1998 compared to .74% at March 31, 1997. The allowance for loan losses was $36.3 million at March 31, 1998, an increase of $9.3 million from $27.0 million at March 31, 1997. The allowance for loan losses as a percentage of non-performing loans was 122.2% at Match 31, 1998 compared to 99.8% at March 31, 1997.
Net Interest Income
Net interest income before provision for loan losses increased to $38.0 million for the quarter ended March 31, 1998 compared to $25.1 million for the same quarter in the prior year. This represents a $12.9 million or 51.1% increase, which was primarily the result of a $1.8 billion increase in average earning assets during the fourth quarter. The increase in net interest income includes approximately $3.6 million earned on stock subscription funds submitted during the offering period which were invested in short term securities until the consummation of the offering, at which time the funds received in excess of the consideration for the common stock issued in the conversion were refunded. The increase in average earning assets was primarily due to the stock subscription offering as well as increased activity in security lending transactions. The proceeds from the conversion were initially invested in short-term securities and cash equivalents. The weighted average yield on interest earning assets was 6.79% for the fourth quarter of fiscal 1998 compared to 6.86% for the same quarter of last year. The average cost of funds was 4.23% for the quarter ended March 31, 1998 compared to 4.25% for the quarter ended March 31, 1997. It is expected that the level of average earning assets will decline in the first quarter of fiscal 1999 due to the refunding of a significant portion of the stock subscription funds upon completion of the conversion. The net interest rate spread and margin were 2.56% and 2.86%, respectively, for the fourth quarter of fiscal 1998 compared to 2.60% and 2.88%, respectively, for the same period in the prior year.
Net interest income before the provision for loan losses for the year ended
March 31, 1998 increased by $17.0 million or 14.8% to $132.1 million from
$115.1 million for the year ended March 31, 1997. Average earning assets for
the year increased by $587.7 million as a result of the reasons noted above.
The yield on interest-earning assets for the year ended March 31, 1998 was
7.23% compared to 7.37% for fiscal 1997. The average cost of funds for fiscal
1998 was 4.32% compared to 4.28% for the prior year. The net interest rate
spread decreased to 2.91% for fiscal 1998 from 3.09% for fiscal 1997. The
Company's net interest margin was 3.26% for the year ended March 31, 1998
compared to 3.32% for the prior fiscal year.
Non-Interest Income
Total non-interest income increased to $3.3 million and $10.3 million for the quarter and year ended March 31, 1998, respectively, compared to a loss of $2.3 million and income of $2.9 million for the same periods in fiscal 1997. Losses on sales of loans and securities aggregating $4.1 and $3.3 million are included in the quarter and fiscal results, respectively, for fiscal 1997, while the quarter and year ended March 31, 1998 included gains on sales of loans and securities totaling $52,000 and $115,000, respectively. For the year ended March 31, 1998, service and fee income was $6.4 million, a 11.7% increase over the $5.7 million recognized during the year ended March 31, 1997. Other non-interest income increased by $1.4 million to $1.8 million for the quarter ended March 31, 1998, while for the year ended March 31, 1998 other non-interest income increased by $3.3 million to $3.8 million as compared to the year ended March 31, 1997.
Non-Interest Expense
Non-interest expense, exclusive of the $56.4 million contribution to the Foundation, amounted to $25.9 million for the quarter ended March 31, 1998 compared to $20.7 million for the quarter ended March 31, 1997. Non-interest expense, exclusive of the contribution to the Foundation, amounted to $89.5 million for the year ended March 31, 1998, an increase of $7.3 million or 8.9% compared to $82.2 million for the year ended March 31, 1997. The primary reasons for the overall year-to-year increase were increases in personnel costs of $4.8 million, data processing service expenses of $4.5 million, occupancy costs of $1.6 million and other non-interest expenses of $4.8 million, partially offset by a $1.0 million decrease in FDIC premiums and the non-recurrence of the one-time SAIF special assessment of $8.6 million. The increase in personnel expense was the result of the combined effects of normal salary increases as well as an increase in the number of employees. The increase for data processing service expenses reflects a $3.0 million increase in data conversion costs to $5.7 million which were incurred in connection with the conversion to a new data processing service provider.
Statements contained in this news release which are not historical facts are forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time.
Independence Community Bank Corp. is the holding company for Independence Savings Bank. The Bank was originally chartered in 1850 and currently operates 34 full service branches located in the greater New York City metropolitan area including 28 branches located in the boroughs of Brooklyn and Queens.
INDEPENDENCE COMMUNITY BANK CORP.
Selected Financial Condition Data:
(Dollars in Thousands)
March 31,
1998 1997
Total Assets $5,222,996 $3,734,723
Cash and cash equivalents (a) 857,25l 374,636
Securities available for sale1,366,682 548,466
Loans receivable, net 2,745,540 2,504,496
Intangible assets 55,873 6O,499
Deposit accounts 3,393,839 3,325,558
Borrowings - Securities Loaned701,160 NA
Borrowings - Other 16,681 17,232
Stockholders' equity 949,124 309,114
Non-Performing assets 29,938 27,630
Common Shares
Outstanding (b) 76,043,750 NA
3 Months Ended Year Ended
March 31, March 31,
1998 1997 1998 1997
Selected Operating Data:
Interest and dividend
income $90,233 $59,751 $293,043 $255,303
Interest expense 52,239 34,610 160,943 140,187
Net interest income 37,994 25,141 132,100 115,116
Provision for possible loan
losses 2,331 5,175 10,011 7,960
Net interest income after
provision for possible
loan losses 35,663 19,966 122,089 107,156
Non- interest income
(loss) 3,252 (2,286) 10,348 2,909
Charitable contribution to
Independence Community
Foundation 56,422 -- 56,422 --
Non-interest expense 25,947 20,747 89,453 82,153
(Loss) income before
(benefit) provision
for income taxes (43,454) (3,067) (13,438) 27,912
(Benefit) provision for
income taxes (12,490) 543 (3,482) 10,732
Net (loss) income (30,964) (3,610) (9,956) 17,180
(a) Includes cash, invested in cash equivalents, received in connection
with the lending of securities by the Company. The obligation to
return the collateral upon the return of the borrowed securities to
the Company is reflected as a borrowing.
(b) Includes 5,632,870 shares held by the Company's ESOP.
INDEPENDENCE COMMUNITY BANK CORP.
Key operating ratios:
At or For the At or For the
Three Months Ended Year Ended
March 31, March 31,
1998 1997 1998 1997
Performance Ratios:
Return on average
assets (a) 0.45% (0.39%) 0.64% O.46%
Return on average
equity (a) 5.27% (4.63%) 7.59% 5.69%
Net income per common share
since conversion excluding
Foundation contribution$(0.01) NA $(0.01) NA
Net (loss) per common share
since conversion $(0.52) NA $(0.52) NA
Average interest-earning
assets to average interest
bearing liabilities 107.71% 107.15% 108.71% 105.80%
Interest rate spread 2.56% 2.60% 2.91% 3.09%
Net interest margin 2.86% 2.88% 3.26% 3.32%
Non-interest expense,
exclusive of amortization
of intangible assets, to
average assets (a) 1.70% 2.00% 1.90% 1.99%
Asset Quality Ratios:
Non-performing assets to
total assets at end of
period 0.57% 0.74% 0.57% 0.74%
Allowance for loan losses
to non-performing loans
at end of period 122.19% 99.76% 122.19% 99.76%
Allowance for loan
losses to total loans
at end of period 1.31% 1.06% 1.31% 1.06%
Capital and Other Ratios:
Average equity to average
assets 8.45% 8.43% 8.45% 8.14%
Tangible equity to assets
at end of period 17.10% 6.66% 17.10% 6.66%
Total capital to
risk-weighted assets 23.50% 11.15% 23.50% 11.15%
Tangible book value
per share $11.75 NA $11.75 NA
(a) Excludes the one time non-recurring charge of $56.4 million
($37.2 million net of tax) for the funding of the Independence
Community Foundation, in the periods ending Match 31, 1998.
SOURCE: Independence Community Bank Corp
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