Independence Community Bank Corp. Issues Report of Earnings for First Quarter of Fiscal 1999
PR Newswire - July 24, 1998 15:20
BROOKLYN, N.Y., July 24 /PRNewswire/ -- Independence Community Bank Corp. (Nasdaq: ICBC), the holding company for Independence Savings Bank, reported net income of $10.9 million, or $0.15 on a diluted earnings per common share basis, for the quarter ended June 30, 1998. This represents an increase of $3.8 million or 54.3% compared to net income of $7.1 million for the quarter ended June 30, 1997. Per share amounts are not applicable for the quarter ended June 30, 1997 since the Company's conversion to a public company was completed on March 13, 1998.
Commenting on the Company's performance, Charles J. Hamm, Chairman, President & Chief Executive Officer stated, "We are pleased with the Company's results of operations in our first full quarter as a public company. The institution continues to embrace its community-based banking philosophy of providing low priced banking and financial products and services to our individual and small-business customers, with the added dimension of building shareholder value.
Upon completion of the conversion to a public company, the organization has strategically focused upon maximizing return on investment, maintaining the highest level of asset quality and continuing to run a safe and sound institution. The increase in earnings has been directly driven by the rise in the average balance of interest-earning assets resulting from the proceeds received from the conversion."
Mr. Hamm continued, "the relatively flat yield curve which currently exists in the market and the intense competition for the consumer's business will prove to be challenging as we seek to increase both our lending and deposit market share. However, we are optimistic that we will continue to compete effectively in the months ahead."
Net Interest Income
Net interest income before provision for loan losses increased to $41.3 million for the quarter ended June 30, 1998 compared to $30.9 million for the quarter ended June 30, 1997. This represents a $10.4 million or 33.6% increase, which was primarily the result of a $949.5 million increase in average earning assets during the first quarter of fiscal 1999 compared to the first quarter of fiscal 1998. The increase in average earning assets was primarily due to the investment of the proceeds from the completion of the Company's conversion to a stock form of organization during the fourth quarter of fiscal 1998. The weighted average yield on interest-earning assets was 6.96% for the first quarter of fiscal 1999 compared to 7.35% for the same quarter of last year. The average cost of funds was 4.26% for the quarter ended June 30, 1998 compared to 4.31% for the quarter ended June 30, 1997. The net interest rate spread and margin were 2.70% and 3.61%, respectively, for the first quarter of fiscal 1999 compared to 3.04% and 3.41%, respectively, for the same period in the prior year.
Non-Interest Income
Total non-interest income increased to $2.8 million for the quarter ended June 30, 1998 compared to $2.2 million for the same period in fiscal 1998. The $0.6 million, or 26.9%, increase was due to a $1.1 million increase in other income, primarily mortgage prepayment fees. This was partially offset by a $0.5 million decrease in service and fee income for the quarter ended June 30, 1998 compared to the prior year quarter.
Non-Interest Expense
Non-interest expense amounted to $23.4 million for the quarter ended June 30, 1998 compared to $20.8 million for the quarter ended June 30, 1997. The primary reasons for the $2.6 million increase were increases in personnel costs of $2.0 million, occupancy costs of $0.6 million and data processing service expenses of $0.2 million partially offset by a $0.3 million decrease in other non-interest expenses. The increased personnel expense was the result of the combined effect of staff additions and benefits related to the employee stock ownership plan, as well as normal merit increases.
Financial Condition
Total assets at June 30, 1998 were $4.79 billion, a decrease of $437.2 million, or 8.4%, from $5.22 billion at March 31, 1998. The decrease in total assets was primarily the result of a $327.8 million decrease in cash and cash equivalents principally due to a $318.0 million decrease in securities lending activities from $701.2 million at March 31, 1998 to $383.2 million at June 30, 1998. At the completion of the conversion to a public company, the organization initially invested in U.S. Treasury Notes and Bills pending deployment of the conversion proceeds into loans and other higher earning assets. The Bank has for many years "lent" a portion of its Treasury securities to money center banks receiving cash as collateral. Under new accounting rules effective January 1, 1998, 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. During the first quarter of fiscal 1999, the Company has systematically shifted its investment from Treasury securities into higher yielding mortgage loans and mortgage-related securities, and, as a result, reduced its securities lending activities. In addition, total securities were reduced by $205.0 million in the first quarter of fiscal 1999 compared to the prior year quarter in order to fund a $119.1 million increase in the loan portfolio as well as satisfy an approximate $113.4 million outflow in deposits. The Company's stockholders' equity totaled $960.3 million at June 30, 1998 compared to $949.1 million at March 31, 1998. The $11.2 million increase was primarily due to net income of $10.9 million. Tangible book value per share was $11.92 and the tangible equity to assets ratio was 18.94% at June 30, 1998. At June 30, 1998, the Bank's capital was well in excess of all regulatory requirements.
Asset Quality
During the quarter, the quality of the Company's assets remained consistent with prior periods. Non-performing assets (consisting of non-performing loans and other real estate owned ("OREO")) totaled $28.6 million at June 30, 1998 compared to $29.9 million at March 31, 1998, a decrease of $1.3 million or 4.3%. Non-performing assets as a percentage of total assets was .60% at June 30, 1998 compared to .57% at March 31, 1998. The allowance for loan losses was $38.9 million at June 30, 1998, an increase of $2.6 million from $36.3 million at March 31, 1998. The allowance for loan losses as a percentage of non-performing loans was 137.0% at June 30, 1998 compared to 122.2% at March 31, 1998. The increase in the allowance was due to the Company's continuing increase in its investment in multi-family residential and commercial real estate loans, which while not delinquent may be subject to greater risk of loss. The allowance for loan losses to total loans at June 30, 1998 was 1.34% as compared to 1.31% at March 31, 1998. Management believes the allowance for loan losses is adequate.
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 33 full service branches located in the greater New York City metropolitan area including 27 branches located in the boroughs of Brooklyn and Queens.
INDEPENDENCE COMMUNITY BANK CORP.
June 30, March 31,
1998 1998
Selected Financial Condition Data:
(Dollars in thousands, except
per share amounts)
Total assets $ 4,785,837 $ 5,222,996
Cash and cash equivalents (1) 529,402 857,251
Securities available for sale 1,161,645 1,366,682
Loans receivable, net 2,862,078 2,745,540
Intangible assets 53,709 55,873
Deposit accounts 3,280,403 3,393,839
Borrowings-securities loaned 383,241 701,160
Borrowings-other 16,226 16,681
Stockholders' equity 960,300 949,124
Non-performing assets 28,642 29,938
Common shares outstanding (2) 76,043,750 76,043,750
Three Months Ended
June 30,
1998 1997
Selected Operating Data:
Interest and dividend income $79,522 $66,591
Interest expense 38,240 35,680
Net interest income 41,282 30,911
Provision for possible loan
losses 2,332 2,230
Net interest income after
provision for possible
loan losses 38,950 28,681
Non-interest income 2,770 2,183
Non-interest expense 23,381 20,838
Income before provision
for income taxes 18,339 10,026
Provision for income taxes 7,430 2,956
Net income 10,909 7,070
(1) 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.
(2) Includes 5,632,870 shares held by the Company's ESOP.
INDEPENDENCE COMMUNITY BANK CORP.
Key operating ratios:
At or For the
Three Months Ended
June 30,
1998 1997
Performance Ratios:
Return on average assets (a) 0.91% 0.74%
Return on average equity (a) 4.58% 9.04%
Basic earnings per common share $ 0.15 N/A
Diluted earnings per common share $ 0.15 N/A
Interest rate spread 2.70% 3.04%
Net interest margin (a) 3.61% 3.41%
Non-interest expense,
to average assets (b) 1.78% 1.95%
Efficiency Ratio (c) 48.18% 56.24%
Average interest-earning
assets to average interest-
bearing liabilities 127.08% 109.14%
June 30, 1998 March 31, 1998
Asset Quality Ratios:
Non-performing assets to
total assets at end of
period 0.60% 0.57%
Allowance for loan losses
to non-performing loans
at end of period 137.02% 122.19%
Allowance for loan losses to
total loans at end of period 1.34% 1.31%
Capital and Other Ratios:
Average equity to average
assets 19.93% 8.45%
Tangible equity to assets at
end of period 18.94% 17.10%
Tangible book value per share $11.92 $11.75
(a) Presented on an annualized basis.
(b) Excludes amortization of intangible assets.
(c) Reflects adjusted operating expense (net of amortization of intangibles) as a percent of the aggregate of net interest income and adjusted non-interest income (excluding gains and losses on the sales of loans and securities).
SOURCE Independence Community Bank Corp.
/CONTACT: Alan J. Cohen, First Vice President, Investor Relations of
Independence Community Bank Corp., 718-722-5400/ |
