UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended: December 31, 2000 Commission File Number 0-22278
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NEW YORK COMMUNITY BANCORP, INC.
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(Exact name of registrant as specified in its charter)
Delaware 06-1377322
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
615 Merrick Avenue, Westbury, New York 11590
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(Address of principal executive offices) (Zip code)
(Registrant's telephone number, including area code) 516: 683-4100
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Securities registered pursuant to Section 12(b) of the Act: None
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
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(Title of Class)
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 |_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not considered
herein, and will not be contained to the best of the registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of the Form 10-K or any amendment to this Form 10-K. |X|
As of March 22, 2001, the aggregate market value of the shares of common stock
of the registrant outstanding was $1,022,474,125, excluding 3,352,301 shares
held by all directors and executive officers of the registrant. This figure is
based on the closing price by The Nasdaq Stock Market(R) for a share of the
registrant's common stock on March 22, 2001, which was $39.91 as reported in The
Wall Street Journal on March 23, 2001. The number of shares of the registrant's
common stock outstanding as of March 22, 2001 was 28,971,798 shares.
Documents Incorporated by Reference
Portions of the definitive Proxy Statement for the Annual Meeting of
Shareholders to be held on May 9, 2001 and the 2000 Annual Report to
Shareholders are incorporated herein by reference - Parts I, II, and III.
CROSS REFERENCE INDEX
PART I Page
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Item 1. Business 1
Description of Business 1
Statistical Data: 19
Mortgage and Other Lending Activities 20
Loan Maturity and Repricing 21
Summary of Allowance for Loan Losses 22
Composition of Loan Portfolio 23
Securities, Money Market Investments, and Mortgage-backed Securities Portfolio 24
Item 2. Properties 24
Item 3. Legal Proceedings 30
Item 4. Submission of Matters to a Vote of Security Holders 30
PART II
Item 5. Market for Registrant's Common Stock and Related Stockholder Matters 30
Item 6. Selected Financial Data 31
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 31
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 31
Item 8. Financial Statements and Supplementary Data
New York Community Bancorp, Inc. and Subsidiaries: 31
Independent Auditors' Report 31
Consolidated Statements of Financial Condition 31
Consolidated Statements of Income 31
Consolidated Statements of Changes in Stockholders' Equity 31
Consolidated Statements of Cash Flows 31
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
PART III
Item 10. Directors and Executive Officers of the Registrant 31
Item 11. Executive Compensation 31
Item 12. Security Ownership of Certain Beneficial Owners and Management 31
Item 13. Certain Relationships and Related Transactions 32
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 32
Signatures 34
PART I
ITEM 1. BUSINESS
New York Community Bancorp, Inc. (the "Company"), formerly known as Queens
County Bancorp Inc., was incorporated in the State of Delaware on July 20, 1993
as the holding company for New York Community Bank (the ("Bank"), formerly known
as Queens County Savings Bank, the first savings bank chartered by the State of
New York in the Borough of Queens, on April 14, 1859. The Company acquired all
of the stock of the Bank upon its conversion from a New York State-chartered
mutual savings bank to a New York State-chartered stock form savings bank on
November 23, 1993.
On November 21, 2000, the Company changed its name from Queens County
Bancorp, Inc. to New York Community Bancorp, Inc., in anticipation of its
acquisition of Haven Bancorp, Inc., parent company of CFS Bank, which was
founded as the Columbia Building and Loan Association, also in Queens, in 1889.
The acquisition was announced on June 27, 2000 and was completed on November 30,
2000. Shareholders of Haven Bancorp received 1.04 shares of New York Community
Bancorp, Inc. stock for each share of Haven Bancorp stock held at the closing
date.
On December 15, 2000, the name of the Company's primary subsidiary was
changed from Queens County Savings Bank to New York Community Bank, and its
headquarters was relocated from Flushing, in Queens County, New York to
Westbury, in Nassau County, New York. CFS Bank merged with and into New York
Community Bank on January 31, 2001. Two additional branches were opened in the
first quarter of 2001.
General
Primarily reflecting the acquisition of Haven Bancorp on November 30, 2000
and the subsequent sale of assets totaling $620.0 million, the Company ended the
year 2000 as a $4.7 billion institution with loans of $3.6 billion, deposits of
$3.3 billion, and a network of 84 branch offices serving customers throughout
the greater metropolitan New York area.
The acquisition joined New York Community Bancorp's strength as a
multi-family mortgage lender with Haven Bancorp's strength as a significant
source of low-cost deposits and fee income derived from the sale of investment
products and banking services.
In addition to multi-family mortgage loans, the Company's assets include
commercial real estate and construction loans and short-term securities,
primarily in the form of U.S. Government agency obligations. While the Company
adopted a policy of originating one-to-four family mortgage loans and consumer
loans on a pass-through basis on December 1, 2000, the Company's balance sheet
at December 31, 2000 also reflects one-to-four family mortgage loans and other
loans originated prior to the adoption of said policy.
The Company's revenues primarily stem from the interest earned on mortgage
and other loans and securities investments, together with fee income derived
from depository accounts and, to a greater extent since the acquisition of
Haven, from the sale of investment products and banking services.
The Bank's primary funding sources are deposits, amortization and
prepayments of loans, and the amortization, prepayments, and maturities of
mortgage-backed and investment securities. In addition, the Company has drawn
extensively on its line of credit with the Federal Home Loan Bank of New York
(the "FHLB-NY") to fund loan production. The increase in deposits stemming from
the Haven acquisition is expected to reduce the Company's use of FHLB borrowings
in the current year. Additionally, in 2000, the Company issued $25.0 million of
trust preferred securities through two subsidiaries, the proceeds of which have
been used for general operations.
In addition to maintaining a high level of asset quality and a strong capital
position through the generation of stable earnings, the Company has enhanced
share value through a series of share repurchase programs and the payment of
quarterly cash dividends. Reflecting share repurchases and the issuance of
9,827,744 shares of common stock from Treasury in connection with the
acquisition, the number of shares outstanding at December 31, 2000 was
29,580,124; reflecting share repurchases, the number of outstanding shares at
March 22, 2001 was 28,971,798.
1
Market Area and Competition
The Bank is a community-oriented financial institution offering a wide
variety of financial products and services to meet the needs of the communities
it serves. As a result of the acquisition, the Bank has 86 locations serving the
greater metropolitan New York region, including 19 traditional branch offices
(17 in Queens and one each in Nassau and Suffolk counties) and 67 in-store
branches throughout New York City, Nassau, Suffolk, Rockland and Westchester
counties, New Jersey, and Connecticut. The Bank's deposit gathering base is
concentrated in the communities surrounding its offices, while its primary
lending area extends throughout the greater metropolitan New York area. Most of
the Bank's mortgage loans are secured by properties located in the New York City
Boroughs of Queens, Brooklyn, and Manhattan, and in Nassau County.
The Bank faces significant competition both in making loans and in
attracting deposits. Its market area has a high density of financial
institutions, many of which have greater financial resources than the Bank, and
all of which are competitors of the Bank to varying degrees. The Bank's
competition for loans comes principally from commercial banks, savings banks,
credit unions, savings and loan associations, mortgage banking companies, and
insurance companies. Additionally, the Bank faces competition from
non-traditional financial service companies and, on a nationwide basis, from
companies that solicit loans and deposits over the Internet.
Competition is likely to increase as a result of recent regulatory actions
and legislative changes, most notably the enactment of the Gramm-Leach-Bliley
Act of 1999. These changes have eased and likely will continue to ease
restrictions on interstate banking and the entrance into the financial services
market by non-traditional and non-depository financial services providers,
including insurance companies and securities brokerage and underwriting firms.
The Bank has recently faced increased competition for the origination of
multi-family loans, which comprised 53.51% of the Bank's loan portfolio at
year-end 2000. Management anticipates that competition for multi-family loans
will continue to increase in the future. Thus, no assurances can be made that
the Bank will be able to maintain its current level of lending activity.
Lending Activities
Loan and Mortgage-backed Securities Portfolio Composition. The Bank's loan
portfolio consists primarily of multi-family mortgage loans on both rental and
cooperative apartment buildings, and conventional first mortgage loans secured
by one-to-four family homes. To a lesser extent, the Bank also originates
commercial real estate loans, construction loans, and home equity and other
consumer loans. At December 31, 2000, the Bank's gross loan portfolio totaled
$3.6 billion, of which $1.9 billion, or 53.51%, were multi-family mortgage
loans, and $1.3 billion, or 34.85%, were one-to-four family first mortgage
loans. Of the total mortgage loan portfolio at year-end 2000, 69.14% were
adjustable rate loans and 30.86% were fixed-rate loans. The Bank's mortgage loan
portfolio also included $324.1 million in commercial real estate loans and $59.5
million in construction loans. In addition, the Bank had $3.7 million in
cooperative apartment loans, $12.2 million in home equity loans generally
secured by second liens on real property, and $23.8 million in other consumer
loans at December 31, 2000.
The types of loans originated by the Bank are subject to Federal and State
laws and regulations. Interest rates charged by the Bank on loans are affected
principally by the demand for such loans, the supply of money available for
lending purposes, and the rates offered by its competitors. These factors are,
in turn, affected by general economic conditions, the monetary policy of the
Board of Governors of the Federal Reserve System ("Federal Reserve Board"),
legislative tax policies, and governmental budgetary matters.
The Bank has invested in a variety of mortgage-backed securities, some of
which are directly or indirectly insured or guaranteed by the Federal Home Loan
Mortgage Corporation ("FHLMC"), the Government National Mortgage Association
("GNMA") or the Federal National Mortgage Association ("FNMA"). At December 31,
2000, mortgage-backed securities totaled $161.6 million, or 3.43% of total
assets. The market value of such securities was approximately $161.6 million at
December 31, 2000. Of the $161.6 in million total mortgage-backed securities,
$159.7 million were classified as available for sale and $1.9 million were
classified as held to maturity.
2
Loan Originations, Purchases, Sales, and Servicing. The Bank originates
both adjustable rate mortgage ("ARM") loans and fixed-rate loans, the amounts of
which are dependent upon customer demand and market rates of interest.
Generally, the Bank does not purchase whole mortgage loans or loan
participations. Prior to the year 2000, the Bank held all adjustable rate
one-to-four family mortgage loans that it originated, and generally sold any
fixed-rate one-to-four family mortgage loans it originated to Savings Bank Life
Insurance ("SBLI"). One-to-four family mortgage loans sold to SBLI during the
year ended December 31, 1999 amounted to $2.0 million; no one-to-four family
mortgage loans were sold to SBLI during 2000. In December 2000, the Bank sold
one-to-four family mortgage loans totaling $1.7 million. On December 28, 2000,
the Bank sold 458 fixed-rate one-to-four family mortgage loans totaling $105.7
million that it had acquired in the Haven transaction. Together with the
proceeds from the sale of securities in December, the proceeds from the loan
sales were used to reduce the balance of FHLB borrowings.
For the fiscal years December 31, 2000 and 1999, originations of new ARM
loans totaled $557.5 million and $563.9 million, respectively, or 90.51% and
92.32%, of all mortgage loan originations. Originations of fixed-rate loans
totaled $58.4 million and $46.9 million, respectively, for the same periods,
while sales of ARM loans and fixed-rate loans totaled $107.4 million and $213.6
million, respectively, for those periods. As of December 31, 2000, the Bank was
servicing $1.1 billion in loans for others. The Bank is generally paid a fee up
to 0.25% for servicing loans sold.
Multi-Family Lending. The Bank originates multi-family loans (defined as
loans on properties with five or more units), which are secured by rental or
cooperative apartment buildings located primarily in the greater metropolitan
New York area. At December 31, 2000, the Bank's portfolio of multi-family
mortgage loans totaled $1.9 billion, representing 53.51% of the total loan
portfolio. Of this total, $1.6 billion, or 81%, were secured by rental apartment
buildings and $362.5 million, or 19%, were secured by underlying mortgages on
cooperative apartment buildings.
Such loans are generally originated for terms of 10 years at a rate of
interest that adjusts to the prime rate of interest, as reported in The New York
Times, plus a margin of 100 basis points, in each of years six through ten. In
2000, the majority of the Bank's multi-family mortgage loan originations
featured a fixed-rate for the first five years of the credit; prepayment
penalties range from five points to two over the first five years of the loan.
At year-end 2000, 69% of the Bank's multi-family mortgage loans were adjustable
rate credits, including $1.3 billion that are due to adjust in 2001. Properties
securing multi-family mortgage loans are appraised by independent appraisers
approved by the Bank.
In originating such loans, the Bank bases its underwriting decisions
primarily on the net operating income generated by the property in relation to
the debt service. The Bank also considers the financial resources of the
borrower, the borrower's experience in owning or managing similar property, the
market value of the property, and the Bank's lending experience with the
borrower. The Bank generally requires minimum debt service ratios of 120% on
multi-family properties. In addition, the Bank requires a security interest in
the personal property at the premises and an assignment of rents.
The Bank's largest concentration of loans to one borrower at December 31,
2000 consisted of 24 loans secured by 24 multi-family properties located in the
Bank's primary market area. These loans were made to several borrowers who are
deemed to be related for regulatory purposes. As of December 31, 2000, the
outstanding balance of these loans totaled $25.7 million and, as of such date,
all such loans were performing in accordance with their terms. The Bank's
concentration of such loans did not exceed its "loans-to-one-borrower"
limitation.
Loans secured by multi-family properties are generally larger and involve
a greater degree of risk than one-to-four family residential mortgage loans.
Payments on loans secured by multi-family buildings are generally dependent on
the income produced by such properties, which, in turn, is dependent on the
successful operation or management of the properties; accordingly, repayment of
such loans may be subject to a greater extent to adverse conditions in the real
estate market or the local economy. The Bank seeks to minimize these risks
through its underwriting policies, which restrict new originations of such loans
to the Bank's primary lending area and require such loans to be qualified on the
basis of the property's net income and debt service ratio. Since 1987, one loan
on a multi-family property located outside of the primary lending area was
foreclosed upon and subsequently sold.
3
One-to-Four Family Mortgage Lending. At December 31, 2000, $1.3 billion,
or 34.85%, of the Bank's loan portfolio, consisted of one-to-four family
mortgage loans; however the concentration of one-to-four family mortgage loans
is expected to decline in 2001. Effective December 1, 2000, the Bank adopted a
policy of originating such loans on a pass-through basis. Applications are taken
and processed by one of the nation's leading mortgage brokers; upon closing, the
loans are sold to the broker, service-released.
The Bank had non-performing loans of $9.1 million at December 31, 2000,
primarily consisting of one-to-four family mortgage loans. Since 1990, the Bank
has foreclosed on 51 one-to-four family residential properties; one property,
with a carrying value of $12,000, remained in foreclosed real estate as of
December 31, 2000.
In the years ended December 31, 2000 and 1999, the Bank originated
one-to-four family ARM loans of $724,000 and $1.4 million respectively. For the
years ended December 31, 2000 and 1999, the Bank originated $1.8 million and
$4.2 million, respectively, of fixed-rate one-to-four family mortgage loans.
Prior to the year 2000, the Bank held all adjustable rate one-to-four
family mortgage loans that it originated, and generally sold any fixed-rate
one-to-four family mortgage loans it originated to Savings Bank Life Insurance
("SBLI"), while retaining the servicing rights. One-to-four family mortgage
loans sold to SBLI during the year ended December 31, 1999 amounted to $2.0
million; no one-to-four family mortgage loans were sold to SBLI during 2000.
On December 28, 2000, the Bank sold fixed-rate one-to-four family mortgage
loans totaling $105.7 million that it had acquired in the Haven transaction,
while retaining the servicing rights. As of December 31, 2000 the Bank's
portfolio of loans serviced for others totaled $1.1 billion. In December 2000,
the Bank sold one-to-four family mortgage loans totaling $1.7 million to Cendant
Mortgage Corporation. The Bank intends to continue to sell all of its newly
originated one-to-four family mortgage loans as a means of managing its interest
rate risk; however, no assurances can be made that the Bank will be able to do
so in the future.
Commercial Real Estate Lending. The Bank offers commercial real estate
loans that are typically secured by office buildings, retail stores, medical
offices, warehouses, and other non-residential buildings. At December 31, 2000,
the Bank had loans secured by commercial real estate of $324.1 million,
comprising 8.9% of the Bank's total loan portfolio. Commercial real estate loans
may be originated in amounts of up to 75% of the appraised value of the
mortgaged property. Such loans are typically made for terms of ten years with
interest rates charged in the same manner as the Company's multi-family loans.
To originate commercial real estate loans, the Bank requires one or more of the
following: personal guarantees of the principals, a security interest in the
personal property, and an assignment of rents and/or leases. Properties securing
the loan are appraised by independent appraisers approved by the Bank.
Loans secured by commercial real estate properties, like multi-family
loans, are generally larger and involve a greater degree of risk than
one-to-four family residential mortgage loans. Because payments on loans secured
by commercial real estate properties are often dependent on the successful
operation and management of the properties, repayment of such loans may be
subject to adverse conditions in the real estate market or the economy, to a
greater extent than other types of loans. The Bank seeks to minimize these risks
through its lending policies and underwriting standards, which restrict new
originations of such loans to the Bank's primary lending area and qualify such
loans on the basis of the property's net income and debt service ratio.
Construction Lending. The Bank's construction loans primarily have been
made to finance the construction of one-to-four family residential properties
and, to a lesser extent, multi-family properties. The Bank's policies provide
that construction loans may be made in amounts of up to 70% of the appraised
value of the project. The Bank generally has provided construction loans only as
an accommodation to existing customers and does not actively solicit such loans.
The Bank generally requires personal guarantees and a permanent loan commitment.
Construction loans are made with adjustable rate terms of up to 18 months. Loan
proceeds are disbursed in increments as construction progresses and as
inspections warrant. Construction loans are structured to be converted to
permanent end loans originated by the Bank at the end of the construction period
or upon the borrower receiving permanent financing from another financial
institution. As of December 31, 2000, the Bank had $59.5 million, or 1.64%, of
its total loan portfolio invested in construction loans. The Bank does not
currently intend to increase the level or ratio of its construction loans to
total loans.
4
Other Lending. Other loans outstanding at December 31, 2000 totaled $39.7
million, or 1.09% of the Bank's loan portfolio, and included cooperative
apartment loans of $3.7 million, representing 9.37% of other loans. The Bank's
home equity loans extend a line of credit ranging from a minimum of $10,000 to a
maximum of $400,000. The credit line, when combined with the balance of the
first mortgage lien, may not exceed 70% of the appraised value of the property
at the time of the loan commitment. Home equity loans outstanding at December
31, 2000 totaled $12.2 million, against total available credit lines of $1.6
million. Effective December 1, 2000, the Company adopted a policy of originating
other loans on a pass-through basis as a means of reducing credit and interest
rate risk.
Loan Approval Authority and Underwriting. The Board of Directors
establishes lending authority for individual officers for its various loan
products. For multi-family and commercial real estate loans, the Mortgage and
Real Estate Committee must approve all loans. A loan in excess of $3.0 million
must be approved by the Executive Committee; as of December 31, 2000, the Bank
had 34 loans in excess of $3.0 million, with the highest amount being $31.5
million.
Non-performing Loans and Foreclosed Assets. The Bank had $9.1 million in
loans 90 days or more delinquent at December 31, 2000. Based on current market
values, management does not currently expect to incur significant losses on its
non-performing mortgage loans.
Management reviews non-performing loans on a regular basis and reports
monthly to both the Mortgage and Real Estate Committee and the Executive
Committee regarding delinquent loans. The Bank hires outside counsel experienced
in foreclosure and bankruptcy to institute foreclosure and other proceedings on
the Bank's delinquent loans.
With respect to one-to-four family mortgage loans, the Bank's collection
procedures include sending a past due notice when the regular monthly payment is
17 days past due. In the event that payment is not received following
notification, another notice is sent after the loan becomes 30 days delinquent.
If payment is not received after the second notice is sent, personal contact
with the borrower is attempted through additional letters and telephone calls.
If a loan becomes 90 days delinquent, the Bank then issues a demand note and
sends an inspector to the property. When contact is made with the borrower at
any time prior to foreclosure, the Bank attempts to obtain full payment or to
work out a repayment schedule with the borrower to avoid foreclosure. If a
satisfactory repayment schedule is not worked out with the borrower, foreclosure
actions are generally initiated prior to the loan becoming 120 days past due.
With respect to multi-family and commercial real estate loans, any loans
that become 20 days delinquent are reported to the Executive Vice President,
Mortgages. The Bank then attempts to contact such borrowers by telephone. Before
a loan becomes 30 days past due, the Bank conducts a physical inspection of the
property. Once contact is made with the borrower, the Bank attempts to obtain
full payment or to work out a repayment schedule. If the Bank determines that
successful repayment is unlikely, the Bank initiates foreclosure proceedings,
typically before the loan becomes 60 days delinquent.
The Bank's policies provide that management report monthly to the Mortgage
and Real Estate Committee and Executive Committee regarding classified assets.
The Bank reviews the problem loans in its portfolio on a monthly basis to
determine whether any loans require classification in accordance with applicable
regulatory guidelines, and believes its classification policies are consistent
with regulatory policies. All classified assets of the Bank are included in
non-performing loans 90 days or more delinquent or foreclosed real estate.
When loans are designated as "in foreclosure", the accrual of interest and
amortization of origination fees continues up to net realizable value less the
transaction cost of disposition. During the years ended December 31, 2000, 1999,
and 1998, the amounts of additional interest income that would have been
recorded on mortgage loans in foreclosure, had they been current, totaled
$435,000, $641,000, and $1.1 million, respectively. These amounts were not
included in the Bank's interest income for the respective periods.
5
The following table sets forth information regarding all mortgage loans in
foreclosure, loans which are 90 days or more delinquent, and foreclosed real
estate at the dates indicated. At December 31, 2000, the Bank had no
restructured loans within the meaning of Statement of Financial Accounting
Standards ("SFAS") No. 15, "Accounting by Debtors and Creditors for Troubled
Debt Restructurings," as amended by SFAS No. 114.
At December 31,
2000 1999 1998 1997 1996
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(dollars in thousands)
Mortgage loans in foreclosure $ 6,011 $ 2,886 $ 5,530 $ 6,121 $ 6,861
Loans 90 days or more delinquent
and still accruing interest 3,081 222 663 1,571 2,798
------- ------- ------- ------- -------
Total non-performing loans 9,092 3,108 6,193 7,692 9,659
------- ------- ------- ------- -------
Foreclosed real estate 12 66 419 1,030 627
------- ------- ------- ------- -------
Total non-performing assets $ 9,104 $ 3,174 $ 6,612 $ 8,722 $10,286
======= ======= ======= ======= =======
Total non-performing loans to
loans, net 0.25% 0.19% 0.42% 0.55% 0.84%
Total non-performing assets to
total assets 0.19 0.17 0.38 0.54 0.76
Management monitors non-performing loans and, when deemed appropriate,
writes down such loans to their current appraised values, less transaction
costs. There can be no assurances that further write-downs will not occur with
respect to such loans.
At December 31, 2000, foreclosed real estate consisted of one residential
property with an aggregate carrying value of $12,000. The Bank generally
conducts appraisals on all properties securing mortgage loans in foreclosure and
foreclosed real estate as deemed appropriate and, if necessary, charges off any
declines in value at such times. Based upon management's estimates as to the
timing of, and expected proceeds from, the disposition of these loans, no
material loss is currently expected to be incurred.
Once a loan is placed in foreclosure, the Bank performs an appraisal of
the property. In the event that the carrying balance of the loan exceeds the
appraisal amount less transaction costs, a charge-off is recognized. It is the
Bank's general policy to dispose of properties acquired through foreclosure or
by deed in lieu thereof as quickly and as prudently as possible, in
consideration of market conditions and the condition of such property.
Foreclosed real estate is titled in the name of the Bank's wholly-owned
subsidiary, Main Omni Realty Corp., which manages the property while it is
offered for sale.
Allowance for Loan Losses
The allowance for loan losses is established through a provision for loan
losses based on management's evaluation of the risks inherent in its loan
portfolio and the regional and national economies. Such evaluation, which
includes a review of all loans on which full collectibility may not be
reasonably assured, considers, among other matters, the current market value of
the underlying collateral, economic conditions, historical loan loss experience,
and other factors that warrant recognition in providing for an adequate loan
loss allowance. In addition, various regulatory agencies, as an integral part of
their examination process, periodically review the Bank's allowance for loan
losses and the valuation of foreclosed real estate. While the Bank believes that
the level of its loan loss allowance is adequate and utilizes a conservative
approach when evaluating the adequacy of its loan loss allowance, such
authorities may require the Bank to recognize additions to the allowance based
on their judgment about information made available to them at the time of their
examinations.
The allowance for loan losses is composed of 5 separate categories
corresponding to the various loan classifications listed in Statistical Data-D,
"Composition of the Loan Portfolio." Within these categories, there is a further
stratification allowing analysis of each loan based on its performing or
non-performing status.
6
Non-performing loans have been assigned risk weightings (based on an aging
schedule) ranging from 300 to 750 basis points. The performing portfolio is
similarly reviewed, with risk weightings ranging from 23 to 200 basis points.
The respective portfolio classifications and the corresponding risk weighting
formulae resulted in the allocation of the allowance for loans losses as
presented in Statistical Data-C, "Summary of the Allowance for Loan Losses."
Each element of the allowance for loan losses corresponds to the various
loan classifications. While each element as of December 31, 1999 and December
31, 2000 is summarized in Statistical Data-C, the overall risk weighting
increased from 44 basis points of coverage (as of December 31, 1999) to 50 (as
of December 31, 2000) basis points of coverage to the entire portfolio. The
major category components that had risk weight changes involved the one-to-four
residential loans (performing sub-category only) and the multi-family loans.
The underlying credit analysis of the one-to-four family performing
residential loans considered the average age and loan-to-value ratios which
resulted in a modest risk weighting decrease from 22 basis points as of December
31, 1999 to 19 basis points as of December 31, 2000. The multi-family category
was evaluated in similar fashion; however, additional consideration was given to
the payment history experience, selected physical inspections of the collateral,
and the lack (in totality) of any charge-offs in this category over several
years. This resulted in a risk weighting increase from 37 basis points (as of
December 31, 1999) to 40 basis points (as of December 31, 2000).
Impaired loans were either one-to-four family residential loans that were
90 days or more delinquent and had an assigned risk weighting of 300 basis
points, or were loans in foreclosure and had an overall assigned risk weighting
of 750 basis points. These risk weightings for impaired loans remained constant
at both measurement dates being discussed. The year-end balances of these two
categories of impaired loans are presented in the table on page 6.
The remaining categories, comprising approximately 12% of the entire loan
portfolio, had the following risk weighted assessments: construction loans,
which had outstanding balances ranging from $4.8 million to $59.5 million over
the measurement dates, had an overall increase in risk weighting from 134 basis
points to 150 basis points; outstanding balances on commercial real estate loans
ranged from $96.0 million to $324.1 million and also experienced an increase
from 125 basis points to 175 basis points over the measurement dates; other
loans having outstanding balances increased from $8.7 million to $39.7 million
and remained constant with a risk weighting assessment of 200 basis points at
all measurement dates.
In order to determine its overall adequacy, the allowance for loan losses
is reviewed quarterly by both management (through its Classification of Assets
Committee) and the Board of Directors' designated committee (the Mortgage and
Real Estate Committee).
Various factors are considered in determining the appropriate level of the
allowance for loan losses. These factors include, but are not limited to:
1) End of period levels and observable trends in non-performing loans;
2) Charge-offs experienced over prior periods, including an analysis of
the underlying factors leading to the delinquencies and subsequent
charge-off (if any);
3) Analysis of the portfolio in the aggregate as well as on an
individual loan basis, which analysis considers:
i. payment history;
ii. underwriting analysis based upon current financial
information, and;
iii. current inspections of the loan collateral by qualified
in-house property appraisers/inspectors.
4) Bi-weekly meetings of executive management with the Mortgage and
Real Estate Committee (which committee includes 4 outside directors,
each possessing over 30 years of complementary real estate
experience) during which observable trends in the local economy and
their effect on the real estate market are discussed.
7
5) Discussions with and periodic review by the various governmental
regulators (e.g., Federal Deposit Insurance Corporation, the New
York State Banking Department); and
6) Full Board assessment of all of the above when making a business
judgment regarding the impact of anticipated changes on the future
level of the allowance for loan losses.
When the Bank determines that an asset should be classified, it generally
does not establish a specific allowance for such asset unless it determines that
such asset may result in a loss. The Bank may, however, increase its general
valuation allowance in an amount deemed prudent. General valuation allowances
represent loss allowances, which have been established to recognize the inherent
risk associated with lending activities, but which, unlike specific allowances,
have not been allocated to particular problem assets. The Bank's determination
as to the classification of its assets and the amount of its valuation
allowances are subject to review by the FDIC and the Banking Department, which
can order the establishment of additional general or specific loss allowances.
At December 31, 2000, the total allowance was $18.1 million, which
amounted to 198.68% of non-performing loans and 198.42% of non-performing
assets. The increase of $11.0 million from 1999 stemmed from the Haven
acquisition. For the years ended December 31, 2000 and 1999, the Bank had no net
charge-offs against this allowance. The Bank will continue to monitor and modify
the level of its allowance for loan losses in order to maintain such allowance
at a level which management considers adequate. See Statistical Data-A, B, C,
and D for components of the Bank's mortgage loan portfolio, maturity and
repricing, and for a summary of the allowance for loan losses.
Mortgage-backed Securities
Most of the Bank's mortgage-backed securities are directly or indirectly
insured or guaranteed by the FNMA, FHLMC, or GNMA. At December 31, 2000,
mortgage-backed securities totaled $161.6 million, representing 3.43% of total
assets. Of the $161.6 million in total mortgage-backed securities, $1.9 million
were classified by the Bank as held to maturity and $159.7 million were
classified as available for sale. Because a majority of the Bank's
mortgage-backed securities are either adjustable rate or are FHLMC five-year
term securities, the Bank anticipates that all of its mortgage-backed securities
will prepay or reprice within three years. At December 31, 2000, the
mortgage-backed securities portfolio had a weighted average interest rate of
6.95% and a market value of approximately $161.6 million. See Statistical Data-E
for components of the mortgage-backed securities portfolio.
Investment Activities
General. The investment policy of the Bank, which is established by the
Board of Directors and implemented by the Mortgage and Real Estate Committee and
the Investment Committee, together with certain executive officers of the Bank,
is designed primarily to provide and maintain liquidity, to generate a favorable
return on investments without incurring undue interest rate and credit risk, and
to complement the Bank's lending activities. The Bank's current securities
investment policy permits investments in various types of liquid assets,
including U.S. Treasury securities, obligations of various Federal agencies, and
bankers' acceptances of other Board-approved financial institutions, investment
grade corporate securities, commercial paper, certificates of deposit, and
Federal funds. The Bank currently does not participate in hedging programs or
interest rate swaps and does not invest in non-investment grade bonds or
high-risk mortgage derivatives. See Statistical Data-E, "Securities, Money
Market Investments, and Mortgage-backed Securities".
Sources of Funds
General. Deposits, repayments of loans and mortgage-backed securities, and
maturities and redemptions of investment securities are the Bank's traditional
sources of funds for lending, investing, and other general purposes. In recent
years, FHLB borrowings have been increasingly utilized to fund increasing loan
demand; however, the increase in deposits stemming from the Haven acquisition is
likely to reduce the Company's use of borrowings in the near term.
Deposits. The Bank offers a variety of deposit accounts with a range of
interest rates and terms. The Bank's deposits principally consist of
certificates of deposit ("CDs") and money market accounts, together with savings
accounts, demand deposits, and NOW accounts. The flow of deposits is influenced
significantly by general economic conditions, the
8
restructuring of the banking industry changes in money market and prevailing
interest rates, and competition with other financial institutions. The Bank's
deposits are typically obtained from customers residing or working in the
communities in which its offices are located. The Bank relies primarily on
long-standing relationships with customers to retain these deposits. At December
31, 2000, $320.7 million, or 9.85% of the Bank's deposit balance, consisted of
CDs with a balance of $100,000 or more.
Borrowings. The Bank is a member of the FHLB-NY, and had a $1.9 billion
line of credit at December 31, 2000. To supplement its funding in a year of
increased lending and acquisition-related share repurchases, the Company drew on
its line of credit with the FHLB in 2000. FHLB borrowings totaled $958.7 million
at December 31, 2000. A $10.0 million line of credit with a correspondent
financial institution is also available to the Bank.
On June 28, 2000, the Company sponsored the creation of Queens Capital
Trust I ("Trust" I), a Delaware statutory business trust. The Company is the
owner of all of the common securities of the Trust I. On July 26, 2000, the
Trust I issued $10.0 million of its 11.045% capital securities through a pooled
trust preferred securities offering. The proceeds from this issuance, along with
the Company's $309,000 capital contribution for the Trust I common securities,
were used to acquire $10.3 million aggregate principal amount of the Company's
11.045% Junior Subordinated Notes due July 19, 2030, which constitute the sole
asset of the Trust I. The Company has, through a trust agreement establishing
the Trust I, a guarantee agreement, the notes and the related indenture, taken
together, fully irrevocably and unconditionally guaranteed all of the Trust I's
obligations under the capital securities.
On August 23, 2000, the Company sponsored the creation of Queens County
Statutory Trust I ("Trust II"), a Connecticut statutory trust. The Company is
the owner of all of the common securities of the Trust II. On September 7, 2000,
the Trust II issued $15.0 million of its 10.60% capital securities through a
pooled trust preferred securities offering. The proceeds from this issuance,
along with the Company's $464,000 capital contribution for the Trust II common
securities, were used to acquire $15.5 million aggregate principal amount of the
Company's 10.60% Junior Subordinated Deferrable Interest Debentures due
September 7, 2030, which constitute the sole asset of the Trust II. The Company
has, through a trust agreement establishing the Trust II, the guarantee
agreement, the debentures and the related indenture, taken together, fully
irrevocably and unconditionally guaranteed all of the Trust II's obligations
under the capital securities.
In addition, the Company assumed two trusts in connection with the
acquisition of Haven Bancorp, Inc., Haven Capital Trust I, which issued $25.0
million of 10.46% capital securities scheduled to mature on February 1, 2027,
and Haven Capital Trust II, which issued $25.3 million of 10.25% capital
securities scheduled to mature on September 30, 2029.
Subsidiary Activities
Under its New York State leeway authority, the Bank has formed six
wholly-owned subsidiary corporations: M.F.O. Holding Corp. ("MFO") holds title
to banking premises; Main Omni Realty Corp.'s purpose is to hold, operate, and
maintain real estate acquired by the Bank as a result of foreclosure or by deed
in lieu; and Queens Realty Trust, Inc. which holds a pool of qualifying mortgage
loans for investment purposes. Queens County Capital Management, Inc. ("QCCM")
sells annuity products for the Bank; as a result of the acquisition, the Bank
also now has CFS Investments, Inc., which sells non-deposit investment products
and life insurance for the Bank; and CFS Investments New Jersey, Inc. which owns
Columbia Preferred Capital Corporation ("CPCC") and holds various types of
mortgage loans for investment purposes. The Bank is also an affiliate of CFS
Insurance Agency, Inc., which sells property and casualty, auto and business
insurance.
Personnel
At December 31, 2000, the number of full-time equivalent employees was
908. The Bank's employees are not represented by a collective bargaining unit,
and the Bank considers its relationship with its employees to be good.
FEDERAL, STATE, AND LOCAL TAXATION
Federal Taxation
General. The Company and the Bank report their income on a consolidated
basis using a calendar year on the accrual method of accounting, and are subject
to Federal income taxation in the same manner as other corporations with some
exceptions, including, particularly, the Bank's addition to its reserve for bad
debts, as discussed below. The following discussion of tax matters is intended
only as a summary and does not purport to be a comprehensive description of the
tax rules applicable to the Bank or the Company.
Bad Debt Reserves. The Small Business Job Protection Act of 1996 (the
"1996 Act"), which was enacted on August 20, 1996, made significant changes to
provisions of the Internal Revenue Code of 1986 (the "Code") relating to a
savings institution's use of bad debt reserves for Federal income tax purposes
and requires such institutions to recapture (i.e. take into income) certain
portions of their accumulated bad debt reserves. The effect of the 1996 Act on
the Bank is discussed below. Prior to the enactment of the 1996 Act, the Bank
was permitted to establish tax reserves for bad debts and to make annual
additions thereto, which additions, within specified formula limits, were
deducted in arriving at the Bank's taxable income. The Bank's deduction with
respect to "qualifying loans," which are generally loans secured by certain
interests in real property, could be computed using an amount based on a
six-year moving average of the Bank's actual loss experience (the "Experience
Method"), or a percentage equal to 8% of the Bank's taxable income (the "PTI
Method"), computed without regard to this deduction and with additional
modifications, and reduced by the amount of any permitted addition to the
non-qualifying reserve.
The 1996 Act. Under the 1996 Act, for its current and future taxable
years, the Bank is not permitted to make additions to its tax bad debt reserves.
In addition, the Bank is required to recapture (i.e. take into income) over a
six-year period the excess of the balance of its tax bad debt reserves as of
December 31, 1995 over the balance of such reserves as of December 31, 1987. The
amount subject to recapture is approximately $7.4 million.
9
Distributions. To the extent that the Bank makes "non-dividend
distributions" to shareholders that are considered to result in distributions
from the excess bad debt reserve, i.e., that portion, if any, of the balance of
the reserve for qualifying real property loans attributable to certain
deductions under the percentage of taxable income method, or the supplemental
reserve for losses on loans ("Excess Distributions"), then an amount based on
the distribution will be included in the Bank's taxable income.
Non-dividend distributions include distributions in excess of the Bank's
current and accumulated earnings and profits, distributions in redemption of
stock, and distributions in partial or complete liquidation. However, dividends
paid out of the Bank's current or accumulated earnings and profits, as
calculated for Federal income tax purposes, will not be considered to result in
a distribution from the Bank's bad debt reserves. Thus, any dividends to the
Company that would reduce amounts appropriated to the Bank's bad debt reserves
and deducted for Federal income tax purposes would create a tax liability for
the Bank.
The amount of additional taxable income created from an Excess
Distribution is an amount that, when reduced by the tax attributable to the
income, is equal to the amount of the distribution. Thus, the additional taxable
income would be an amount equal to approximately one and one-half times the
amount of the Excess Distribution, assuming a 35% corporate income tax rate
(exclusive of state taxes). See "Regulation and Supervision" for limits on the
payment of dividends by the Bank. The Bank does not intend to pay dividends that
would result in a recapture of any portion of its bad debt reserves.
Corporate Alternative Minimum Tax. The Code imposes a tax on Alternative
Minimum Taxable Income ("AMTI") at a rate of 20%. Only 90% of AMTI can be offset
by net operating loss carryovers. The adjustment to AMTI based on adjusted
current earnings is an amount equal to 75% of the amount by which a
corporation's adjusted current earnings exceeds its AMTI (determined without
regard to this preference and prior to reduction for net operating losses). In
addition, for taxable years beginning after December 31, 1986 and before January
1, 1996, an environmental tax of 0.12% of the excess of AMTI (with certain
modifications) over $2.0 million is imposed on corporations, including the Bank,
whether or not an Alternative Minimum Tax ("AMT") is paid. The Bank does not
expect to be subject to the AMT. The Bank was subject to an environmental tax
liability for the year ended December 31, 1995 which was not material.
Dividends Received Deduction and Other Matters. The Company may exclude
from its income 100% of dividends received from the Bank as a member of the same
affiliated group of corporations. The corporate dividends received deduction is
generally 70% in the case of dividends received from unaffiliated corporations
with which the Company and the Bank will not file a consolidated tax return,
unless the Company and the Bank own more than 20% of the stock of the
corporation distributing a dividend, in which case 80% of any dividends received
may be deducted.
State and Local Taxation
The Bank is subject to the New York State Franchise Tax on Banking
Corporations in an annual amount equal to the greater of (i) 9% of the Bank's
"entire net income" allocable to New York State during the taxable year, or (ii)
the applicable alternative minimum tax. The alternative minimum tax is generally
the greatest of (a) 0.01% of the value of the Bank's assets allocable to New
York State with certain modifications, (b) 3% of the Bank's "alternative entire
net income" allocable to New York State, or (c) $250. Entire net income is
similar to Federal taxable income, subject to certain modifications (including
the fact that net operating losses cannot be carried back or carried forward)
and alternative entire net income is equal to entire net income without certain
deductions. The Bank is also subject to a similarly calculated New York City tax
of 9% on income allocated to New York City and similar alternative taxes.
A temporary Metropolitan Transportation Business Tax Surcharge on banking
corporations doing business in the metropolitan district has been applied since
1982. The Bank does all of its business within this District (except for the
branch offices in Connecticut and New Jersey), and is subject to this surcharge
rate of 17.00%.
Delaware State Taxation. As a Delaware business corporation, the Company
is required to file annual returns and pay annual fees and an annual franchise
tax to the State of Delaware. These taxes and fees were not material in 2000.
10
REGULATION AND SUPERVISION
General
The Bank is a New York State-chartered stock form savings bank and its
deposit accounts are insured under the Bank Insurance Fund ("BIF"), up to
applicable limits by the FDIC. The Bank is subject to extensive regulation and
supervision by the New York State Banking Department ("Banking Department"), as
its chartering agency, and by the FDIC, as its deposit insurer. The Bank must
file reports with the Banking Department and the FDIC concerning its activities
and financial condition, in addition to obtaining regulatory approvals prior to
entering into certain transactions such as mergers with, or acquisitions of,
other depository institutions. There are periodic examinations by the Banking
Department and the FDIC to assess the Bank's compliance with various regulatory
requirements. This regulation and supervision establishes a comprehensive
framework of activities in which a savings bank can engage and is 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 and examination
policies, including policies with respect to the classification of assets and
the establishment of adequate loan loss allowances for regulatory purposes. Any
change in such regulation, whether by the Banking Department, the FDIC, or
through legislation, could have a material adverse impact on the Company and the
Bank and their operations, and the Company's shareholders. The Company is
required to file certain reports, and otherwise comply with the rules and
regulations of the Federal Reserve Board and the Banking Department and of the
Securities and Exchange Commission ("SEC") under Federal securities laws.
Certain of the regulatory requirements applicable to the Bank and to the Company
are referred to below or elsewhere herein.
New York Law
The Bank derives its lending, investment, and other authority primarily
from the applicable provisions of Banking Law and the regulations of the Banking
Department, as limited by FDIC regulations. See "Restrictions on Certain
Activities." Under these laws and regulations, savings banks, including the
Bank, may invest in real estate mortgages, consumer and commercial loans,
certain types of debt securities (including certain corporate debt securities
and obligations of Federal, state, and local governments and agencies), certain
types of corporate equity securities and certain other assets. Under the
statutory authority for investing in equity securities, a savings bank may
directly invest up to 7.5% of its assets in certain corporate stock, and may
also invest up to 7.5% of its assets in certain mutual fund securities.
Investment in the stock of a single corporation is limited to the lesser of 2%
of the outstanding stock of such corporation or 1% of the savings bank's assets,
except as set forth below. Such equity securities must meet certain earnings
ratios and other tests of financial performance. A savings bank's lending powers
are not subject to percentage of asset limitations, although there are limits
applicable to single borrowers. A savings bank may also, pursuant to the
"leeway" power, make investments not otherwise permitted under the New York
State Banking Law. This power permits investments in otherwise impermissible
investments of up to 1% of assets in any single investment, subject to certain
restrictions and to an aggregate limit for all such investments of up to 5% of
assets. Additionally, savings banks are authorized to elect to invest under a
"prudent person" standard in a wide range of debt and equity securities in lieu
of investing in such securities in accordance with and reliance upon the
specific investment authority set forth in the New York State Banking Law.
Although the "prudent person" standard may expand a savings bank's authority, in
the event a savings bank elects to utilize the "prudent person" standard, it
will be unable to avail itself of the other provisions of the New York State
Banking Law and regulations which set forth specific investment authority. A
savings bank may also exercise trust powers upon approval of the Banking
Department.
New York savings banks may also invest in subsidiaries under a service
corporation power. A savings bank may use this power to invest in corporations
that engage in various activities authorized for savings banks, plus any
additional activities, which may be authorized by the Banking Department.
Investment by a savings bank in the stock, capital notes, and debentures of its
service corporations is limited to 3% of the savings bank's assets, and such
investments, together with the savings bank's loans to its service corporations,
may not exceed 10% of the savings bank's assets.
The exercise by an FDIC-insured savings bank of the lending and investment
powers of a savings bank under the New York State Banking Law is limited by FDIC
regulations and other Federal law and regulations. In particular, the
11
applicable provisions of New York State Banking Law and regulations governing
the investment authority and activities of an FDIC-insured state-chartered
savings bank have been effectively limited by the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") and the FDIC regulations issued
pursuant thereto.
With certain limited exceptions, a New York State chartered savings bank
may not make loans or extend credit for commercial, corporate, or business
purposes (including lease financing) to a single borrower, the aggregate amount
of which would be in excess of 15% of the bank's net worth. The Bank currently
complies with all applicable loans-to-one-borrower limitations.
Under New York State Banking Law, a New York State chartered stock form
savings bank may declare and pay dividends out of its net profits, unless there
is an impairment of capital, but approval of the Superintendent is required if
the total of all dividends declared in a calendar year would exceed the total of
its net profits for that year combined with its retained net profits of the
preceding two years, subject to certain adjustments.
Under New York State Banking Law, the Superintendent of Banks may issue an
order to a New York State chartered banking institution to appear and explain an
apparent violation of law, to discontinue unauthorized or unsafe practices, and
to keep prescribed books and accounts. Upon a finding by the Banking Department
that any director, trustee, or officer of any banking organization has violated
any law, or has continued unauthorized or unsafe practices in conducting the
business of the banking organization after having been notified by the
Superintendent to discontinue such practices, such director, trustee, or officer
may be removed from office after notice and an opportunity to be heard.
FDIC Regulations
Capital Requirements. The FDIC has adopted risk-based capital guidelines
to which the Bank is subject. The guidelines establish a systematic analytical
framework that makes regulatory capital requirements more sensitive to
differences in risk profiles among banking organizations. The Bank is required
to maintain certain levels of regulatory capital in relation to regulatory
risk-weighted assets. The ratio of such regulatory capital to regulatory
risk-weighted assets is referred to as the Bank's "risk-based capital ratio."
Risk-based capital ratios are determined by allocating assets and specified
off-balance-sheet items to four risk-weighted categories ranging from 0% to
100%, with higher levels of capital being required for the categories perceived
as representing greater risk.
These guidelines divide a savings bank's capital into two tiers. The first
tier ("Tier I") includes common equity, retained earnings, certain
non-cumulative perpetual preferred stock (excluding auction rate issues) and
minority interests in equity accounts of consolidated subsidiaries, less
goodwill and other intangible assets (except mortgage servicing rights and
purchased credit card relationships subject to certain limitations).
Supplementary ("Tier II") capital includes, among other items, cumulative
perpetual and long-term limited-life preferred stock, mandatory convertible
securities, certain hybrid capital instruments, term subordinated debt and the
allowance for loan and lease losses, subject to certain limitations, less
required deductions. Savings banks are required to maintain a total risk-based
capital ratio of 8%, of which at least 4% must be Tier I capital.
In addition, the FDIC has established regulations prescribing a minimum
Tier I leverage capital ratio (Tier I capital to adjusted average assets as
specified in the regulations). These regulations provide for a minimum Tier I
leverage capital ratio of 3% for banks that meet certain specified criteria,
including that they have the highest examination rating and are not experiencing
or anticipating significant growth. All other banks are required to maintain a
Tier I leverage capital ratio of at least 4%. The FDIC may, however, set higher
leverage and risk-based capital requirements on individual institutions when
particular circumstances warrant. Savings banks experiencing or anticipating
significant growth are expected to maintain capital ratios, including tangible
capital positions, well above the minimum levels.
As of December 31, 2000, the most recent notification from the FDIC
categorized the Bank as well capitalized under the regulatory framework for
prompt corrective action. To be categorized as well capitalized, the Bank must
maintain a minimum Tier I Leverage Capital ratio of 5%, Total Capital ratio of
10% and Tier I Capital Ratio of 6%.
The following is a summary of the Bank's regulatory capital at December
31, 2000:
Tier 1 Leverage Capital to Average Assets 6.38%
Total Capital to Risk-Weighted Assets 13.02%
Tier I Capital to Risk-Weighted Assets 12.11%
12
In August 1995, the FDIC, along with the other Federal banking agencies,
adopted a regulation providing that the agencies will take account of the
exposure of a bank's capital and economic value to changes in interest rate risk
in assessing a bank's capital adequacy. According to the agencies, applicable
considerations include the quality of the bank's interest rate risk management
process, the overall financial condition of the bank, and the level of other
risks at the bank for which capital is needed. Institutions with significant
interest rate risk may be required to hold additional capital. The agencies
recently have issued a joint policy statement providing guidance on interest
rate risk management, including a discussion of the critical factors affecting
the agencies' evaluation of interest rate risk in connection with capital
adequacy. The agencies have determined not to proceed with a previously issued
proposal to develop a supervisory framework for measuring interest rate risk and
an explicit capital component for interest rate risk.
Standards for Safety and Soundness. Federal law requires each Federal
banking agency to prescribe for depository institutions under its jurisdiction
standards relating to, among other things, internal controls; information
systems and audit systems; loan documentation; credit underwriting; interest
rate risk exposure; asset growth; compensation; fees and benefits; and such
other operational and managerial standards as the agency deems appropriate. The
Federal banking agencies adopted final regulations and Interagency Guidelines
Establishing Standards for Safety and Soundness (the "Guidelines") to implement
these safety and soundness standards. The Guidelines set forth the safety and
soundness standards that the Federal banking agencies use to identify and
address problems at insured depository institutions before capital becomes
impaired. The Guidelines address internal controls and information systems;
internal audit system; credit underwriting; loan documentation; interest rate
risk exposure; asset growth; asset quality; earnings and compensation; fees and
benefits. If the appropriate Federal banking agency determines that an
institution fails to meet any standard prescribed by the Guidelines, the agency
may require the institution to submit to the agency an acceptable plan to
achieve compliance with the standard, as required by the Federal Deposit
Insurance Act, as amended, ("FDI Act"). The final regulation establishes
deadlines for the submission and review of such safety and soundness compliance
plans.
Real Estate Lending Standards. The FDIC and the other Federal banking
agencies have adopted regulations that prescribe standards for extensions of
credit that (i) are secured by real estate or (ii) are made for the purpose of
financing the construction or improvements on real estate. The FDIC regulations
require each savings bank to establish and maintain written internal real estate
lending standards that are consistent with safe and sound banking practices and
appropriate to the size of the bank and the nature and scope of its real estate
lending activities. The standards also must be consistent with accompanying FDIC
Guidelines, which include loan-to-value limitations for the different types of
real estate loans. Savings banks are also permitted to make a limited amount of
loans that do not conform to the proposed loan-to-value limitations so long as
such exceptions are reviewed and justified appropriately. The Guidelines also
list a number of lending situations in which exceptions to the loan-to-value
standard are justified.
Dividend Limitations. The FDIC has authority to use its enforcement powers
to prohibit a savings bank from paying dividends if, in its opinion, the payment
of dividends would constitute an unsafe or unsound practice. Federal law
prohibits the payment of dividends by a bank that will result in the bank
failing to meet applicable capital requirements on a pro forma basis. The Bank
is also subject to dividend declaration restrictions imposed by New York law.
Investment Activities
Since the enactment of FDICIA, all state-chartered financial institutions,
including savings banks and their subsidiaries, have generally been limited to
activities as principal and equity investments of the type and in the amount
authorized for national banks. Notwithstanding state law, FDICIA and the FDIC
regulations hereunder permit certain exceptions to these limitations. For
example, certain state chartered banks, such as the Bank, may, with FDIC
approval, continue to exercise state authority to invest in common or preferred
stocks listed on a national securities exchange or the National Market System of
Nasdaq(R) and in the shares of an investment company registered under the
Investment Company Act of 1940, as amended. Such banks may also continue to sell
Savings Bank Life Insurance. In addition, the FDIC is authorized to permit such
institutions to engage in state authorized activities or investments that do not
meet this standard (other than non-subsidiary equity investments) for
institutions that meet all applicable capital requirements if it is determined
that such activities or investments do not pose a significant risk to the BIF.
The FDIC has adopted revisions to its regulations governing the procedures for
institutions seeking approval to engage in such activities or investments. These
13
revisions, among other things, streamline certain application procedures for
healthy banks and impose certain quantitative and qualitative restrictions on a
bank's dealings with its subsidiaries engaged in activities not permitted for
national bank subsidiaries. All non-subsidiary equity investments, unless
otherwise authorized or approved by the FDIC, must have been divested by
December 19, 1996, pursuant to an FDIC-approved divestiture plan unless such
investments were grandfathered by the FDIC. The Bank received grandfathering
authority from the FDIC in February 1993 to invest in listed stock and/or
registered shares subject to the maximum permissible investments of 100% of Tier
1 Capital, as specified by the FDIC's regulations, or the maximum amount
permitted by New York State Banking Law, whichever is less. Such grandfathering
authority is subject to termination upon the FDIC's determination that such
investments pose a safety and soundness risk to the Bank or in the event the
Bank converts its charter or undergoes a change in control. As of December 31,
2000, the Bank had $23.3 million of such investments.
Prompt Corrective Regulatory Action
Federal law requires, among other things, that Federal bank regulatory
authorities take "prompt corrective action" with respect to banks that do not
meet minimum capital requirements. For these purposes, the law establishes five
capital tiers: well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized, and critically undercapitalized.
The FDIC has adopted regulations to implement the prompt corrective action
legislation. Among other things, the regulations define the relevant capital
measures for the five capital categories. An institution is deemed to be "well
capitalized" if it has a total risk-based capital ratio of 10% or greater, a
Tier 1 risk-based capital ratio of 6% or greater, and a leverage ratio of 5% or
greater, and is not subject to a regulatory order, agreement, or directive to
meet and maintain a specific capital level for any capital measure. An
institution is deemed to be "adequately capitalized" if it has a total
risk-based capital ratio of 8% or greater, a Tier 1 risk-based capital ratio of
4% or greater, and generally a leverage ratio of 4% or greater. An institution
is deemed to be "undercapitalized" if it has a total risk-based capital ratio of
less than 8%, a Tier 1 risk-based capital ratio of less than 4%, or generally a
leverage capital ratio of less than 4%. An institution is deemed to be
"significantly undercapitalized" if it has a total risk-based capital ratio of
less than 6%, a Tier 1 risk-based capital ratio of less than 3%, or a leverage
ratio of less than 3%. An institution is deemed to be "critically
undercapitalized" if it has a ratio of tangible equity (as defined in the
regulations) to total assets that is equal to or less than 2%.
"Undercapitalized" banks are subject to growth, capital distribution
(including dividend) and other limitations and are required to submit a capital
restoration plan. A bank's compliance with such plan is required to be
guaranteed by any company that controls the undercapitalized institution in an
amount equal to the lesser of 5.0% of the bank's total assets when deemed
undercapitalized or the amount necessary to achieve the status of adequately
capitalized. If an "undercapitalized" bank fails to submit an acceptable plan,
it is treated as if it is "significantly undercapitalized." "Significantly
undercapitalized" banks are subject to one or more of a number of additional
restrictions, including but not limited to an order by the FDIC to sell
sufficient voting stock to become adequately capitalized, requirements to reduce
total assets and cease receipt of deposits from correspondent banks or dismiss
directors or officers, and restrictions on interest rates paid on deposits,
compensation of executive officers, and capital distributions by the parent
holding company. "Critically undercapitalized" institutions also may not,
beginning 60 days after becoming "critically undercapitalized," make any payment
of principal or interest on certain subordinated debt or extend credit for a
highly leveraged transaction or enter into any material transaction outside the
ordinary course of business. In addition, "critically undercapitalized"
institutions are subject to appointment of a receiver or conservator. Generally,
subject to a narrow exception, the appointment of a receiver or conservator is
required for a "critically undercapitalized" institution within 270 days after
it obtains such status.
Transactions with Affiliates
Under current Federal law, transactions between depository institutions
and their affiliates are governed by Section 23A and 23B of the Federal Reserve
Act. An affiliate of a savings bank is any company or entity that controls, is
controlled by, or is under common control with the savings bank, other than a
subsidiary. In a holding company context, at a minimum, the parent holding
company of a savings bank and any companies, which are controlled, by such
parent holding company are affiliates of the savings bank. Generally, Section
23A limits the extent to which the savings bank or its subsidiaries may engage
in "covered transactions" with any one affiliate to an amount equal to 10% of
such savings bank's capital stock and surplus, and contains an aggregate limit
on all such transactions with all affiliates to an amount equal to
14
20% of such capital stock and surplus. The term "covered transaction" includes
the making of loans or other extensions of credit to an affiliate; the purchase
of assets from an affiliate, the purchase of, or an investment in, the
securities of an affiliate; the acceptance of securities of an affiliate as
collateral for a loan or extension of credit to any person; or issuance of a
guarantee, acceptance, or letter of credit on behalf of an affiliate. Section
23A also establishes specific collateral requirements for loans or extensions of
credit to, or guarantees, acceptances on letters of credit issued on behalf of
an affiliate. Section 23B requires that covered transactions and a broad list of
other specified transactions be on terms substantially the same, or no less
favorable, to the savings bank or its subsidiary as similar transactions with
nonaffiliates.
Further, Section 22(h) of the Federal Reserve Act restricts a savings bank
with respect to loans to directors, executive officers, and principal
shareholders. Under Section 22(h), loans to directors, executive officers, and
shareholders who control, directly or indirectly, 10% or more of voting
securities of a savings bank, and certain related interests of any of the
foregoing, may not exceed, together with all other outstanding loans to such
persons and affiliated entities, the savings bank's total capital and surplus.
Section 22(h) also prohibits loans above amounts prescribed by the appropriate
Federal-banking agency to directors, executive officers, and shareholders who
control 10% or more of voting securities of a stock savings bank, and their
respective related interests, unless such loan is approved in advance by a
majority of the board of directors of the savings bank. Any "interested"
director may not participate in the voting. The loan amount (which includes all
other outstanding loans to such person) as to which such prior board of director
approval is required, is the greater of $25,000 or 5% of capital and surplus or
any loans over $500,000. Further, pursuant to Section 22(h), loans to directors,
executive officers, and principal shareholders must be made on terms
substantially the same as offered in comparable transactions to other persons.
Recent legislation created an exception for loans made pursuant to a benefit or
compensation program that is widely available to all employees of the
institution and does not give preference to executive officers over other
employees. Section 22(g) of the Federal Reserve Act places additional
limitations on loans to executive officers.
Enforcement
The FDIC has extensive enforcement authority over insured savings banks,
including the Bank. This enforcement authority includes, among other things, the
ability to assess civil money penalties, to issue cease and desist orders, and
to remove directors and officers. In general, these enforcement actions may be
initiated in response to violations of laws and regulations and to unsafe or
unsound practices.
The FDIC has authority under Federal law to appoint a conservator or
receiver for an insured savings bank under certain circumstances. The FDIC is
required, with certain exceptions, to appoint a receiver or conservator for an
insured state savings bank if that savings bank was "critically
undercapitalized" on average during the calendar quarter beginning 270 days
after the date on which the savings bank became "critically undercapitalized."
For this purpose, "critically undercapitalized" means having a ratio of tangible
equity to total assets of less than 2%. See "Prompt Corrective Regulatory
Action." The FDIC may also appoint a conservator or receiver for a state savings
bank on the basis of the institution's financial condition or upon the
occurrence of certain events, including: (i) insolvency (whereby the assets of
the savings bank are less than its liabilities to depositors and others); (ii)
substantial dissipation of assets or earnings through violations of law or
unsafe or unsound practices; (iii) existence of an unsafe or unsound condition
to transact business; (iv) likelihood that the savings bank will be unable to
meet the demands of its depositors or to pay its obligations in the normal
course of business; and (v) insufficient capital, or the incurring or likely
incurring of losses that will deplete substantially all of the institution's
capital with no reasonable prospect of replenishment of capital without Federal
assistance.
Insurance of Deposit Accounts
The Bank is a member of Bank Insurance Fund ("BIF") and, through its
merger with CFS Bank, also holds some deposits insured by the Savings
Association Insurance Fund ("SAIF").
The FDIC has adopted a risk-based insurance assessment system. The FDIC
assigns an institution to one of three capital categories based on the
institution's financial information, as of the reporting period ending seven
months before the assessment period, consisting of (1) well capitalized, (2)
adequately capitalized, or (3) undercapitalized, and one of three supervisory
subcategories within each capital group. The supervisory subgroup to which an
institution is assigned is based on the supervisory evaluation provided to the
FDIC by the institution's primary Federal regulator, and information which the
FDIC determines to be relevant to the institution's financial condition and the
risk posed to the deposit insurance funds. An institution's assessment rate
depends on the capital category and supervisory category to which it is
assigned. Assessment rates for both BIF and SAIF deposits are determined
semiannually by the FDIC and currently range from 0 basis points to 27 basis
points.
15
The FDIC is authorized to raise the assessment rates in certain circumstances,
including maintaining or achieving the designated reserve ratio of 1.25%, which
requirement the BIF and SAIF currently meet. On September 30, 1996, the
President signed into law the Deposit Insurance Funds Act of 1996 (the "Funds
Act"), which, among other things, spreads the obligations for payment of the
financing Corporation ("FICO") bonds across all SAIF and BIF members. Prior to
January 1, 2000, BIF members were assessed for FICO payments at approximately
20% of SAIF members. Full pro rata sharing of the FICO payments between BIF and
SAIF members began on January 1, 2000.
Under the FDI Act, insurance of deposits may be terminated by the FDIC
upon a finding that the institution has engaged in unsafe or unsound practices,
is in an unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, rule, order, or condition imposed by the FDIC. The
management of the Bank does not know of any practice, condition, or violation
that might lead to the termination of deposit insurance.
Community Reinvestment Act
Federal Regulation. Under the Community Reinvestment Act ("CRA"), as
implemented by FDIC regulations, a savings institution has a continuing and
affirmative obligation consistent with its safe and sound operation to help meet
the credit needs of its entire community, including low and moderate income
neighborhoods. CRA does not establish specific lending requirements or programs
for financial institutions nor does it limit an institution's discretion to
develop the types of products and services that it believes are best suited to
its particular community, consistent with CRA. CRA requires the FDIC, in
connection with its examination of a savings institution; to assess the
institution's record of meeting the credit needs of its community and to take
such record into account in its evaluation of certain applications by such
institution. CRA requires public disclosure of an institution's CRA rating and
further requires the FDIC to provide a written evaluation of an institution's
CRA performance utilizing a four-tiered descriptive rating system. The Bank's
latest CRA rating, received from the FDIC in September 1999, was "satisfactory."
New York Regulation. The Bank is also subject to provisions of the New
York Banking Law which impose continuing and affirmative obligations upon
banking institutions organized in New York to serve the credit needs of its
local community ("NYCRA"), which are substantially similar to those imposed by
the CRA. Pursuant to the NYCRA, a bank must file an annual NYCRA report and
copies of all Federal CRA reports with the Banking Department. The NYCRA
requires the Banking Department to make an annual written assessment of a bank's
compliance with the NYCRA, utilizing a four-tiered rating system, and make such
assessment available to the public. The NYCRA also requires the Superintendent
to consider a bank's NYCRA rating when reviewing a bank's application to engage
in certain transactions, including mergers, asset purchases, and the
establishment of branch offices or ATMs, and provides that such assessment may
serve as a basis for the denial of any such application. The Banking Department
has adopted, effective December 3, 1997, new regulations to implement the NYCRA.
The Banking Department replaced its process-focused regulations with
performance-focused regulations that are intended to parallel current CRA
regulations of federal banking agencies and to promote consistency in CRA
evaluations by considering more objective criteria. The new regulations require
a biennial assessment of a bank's compliance with the NYCRA, utilizing a
four-tiered rating system, and require the Banking Department to make available
to the public such rating and a written summary of the results. The Bank's
latest NYCRA rating, received from the Banking Department in June 1998, was a
"2" or "satisfactory."
Federal Reserve System
Under Federal Reserve Board ("FRB") regulations, the Bank is required to
maintain non-interest-earning reserves against its transaction accounts
(primarily NOW and regular checking accounts). The Federal Reserve Board
regulations generally require that reserves be maintained against aggregate
transaction accounts as follows: for that portion of transaction accounts
aggregating $42.8 million or less (subject to adjustment by the Federal Reserve
Board), the reserve requirement is 3%; for accounts greater than $42.8 million,
the reserve requirement is $1.284 million plus 10% (subject to adjustment by the
Federal Reserve Board between 8% and 14% against that portion of total
transaction accounts in excess of $42.8 million). The first $5.5 million of
otherwise reservable balances (subject to adjustments by the Federal Reserve
Board) are exempted from the reserve requirements. The Bank is in compliance
with the foregoing requirements. Because required reserves must be maintained in
the form of either vault cash, a non-interest-bearing account at a Federal
Reserve
16
Bank, or a pass-through account as defined by the Federal Reserve Board, the
effect of this reserve requirement is to reduce the Bank's interest-earning
assets. FHLB System members are also authorized to borrow from the Federal
Reserve "discount window," but Federal Reserve Board regulations require
institutions to exhaust all FHLB sources before borrowing from a Federal Reserve
Bank.
Federal Home Loan Bank System
The Bank is a member of the FHLB System, which consists of 12 regional
FHLBs. The FHLB provides a central credit facility primarily for member
institutions. The Bank, as a member of the FHLB-NY, is required to acquire and
hold shares of capital stock in that FHLB in an amount at least equal to 1% of
the aggregate principal amount of its unpaid residential mortgage loans and
similar obligations at the beginning of each year, or 1/20 of its advances
(borrowings) from the FHLB-NY, whichever is greater. The Bank was in compliance
with this requirement, with an investment in FHLB-NY stock of $72.0 million at
December 31, 2000. FHLB advances must be secured by specified types of
collateral and may be obtained primarily for the purpose of providing funds for
residential housing finance.
The FHLBs are required to provide funds to cover certain obligations on
bonds issued to fund the resolution of insolvent thrifts and to contribute funds
for affordable housing programs. These requirements could reduce the amount of
dividends that the FHLBs pay to their members and could also result in the FHLBs
imposing a higher rate of interest on advances to their members. For the fiscal
years ended December 31, 2000, and 1999, dividends from the FHLB-NY to the Bank,
amounted to $4.1 million and $2.0 Million, respectively. If dividends were
reduced, or interest on future FHLB advances increased, the Bank's net interest
income might also be reduced.
Holding Company Regulation
Federal Regulation. The Company is currently subject to examination,
regulation, and periodic reporting under the Bank Holding Company Act of 1956,
as amended ("BHCA"), as administered by the FRB.
The Company is required to obtain the prior approval of the FRB to acquire
all, or substantially all, of the assets of any bank or bank holding company.
Prior FRB approval would be required for the Company to acquire direct or
indirect ownership or control of any voting securities of any bank or bank
holding company if, after giving effect to such acquisition, it would, directly
or indirectly, own or control more than 5% of any class of voting shares of such
bank or bank holding company. In addition to the approval of the FRB, before any
bank acquisition can be completed, prior approval thereof may also be required
to be obtained from other agencies having supervisory jurisdiction over the bank
to be acquired, including the Banking Department.
A bank holding company is generally prohibited from engaging in, or
acquiring direct or indirect control of more than 5% of the voting securities of
any company engaged in non-banking activities. One of the principal exceptions
to this prohibition is for activities found by the FRB to be so closely related
to banking or managing or controlling banks as to be a proper incident thereto.
Some of the principal activities that the FRB has determined by regulation to be
so closely related to banking are: (i) making or servicing loans; (ii)
performing certain data processing services; (iii) providing discount brokerage
services; (iv) acting as fiduciary, investment or financial advisor; (v) leasing
personal or real property; (vi) making investments in corporations or projects
designed primarily to promote community welfare; and (vii) acquiring a savings
and loan association.
The FRB has adopted capital adequacy guidelines for bank holding companies
(on a consolidated basis) substantially similar to those of the FDIC for the
Bank. See "Capital Maintenance." At December 31, 2000, the Company's total and
Tier 1 capital exceeded these requirements.
Bank holding companies are generally required to give the FRB prior
written notice of any purchase or redemption of its outstanding equity
securities if the gross consideration for the purchase or redemption, when
combined with the net consideration paid for all such purchases or redemptions
during the preceding 12 months, is equal to 10% or more of the
17
Company's consolidated net worth. The FRB may disapprove such a purchase or
redemption if it determines that the proposal would constitute an unsafe and
unsound practice, or would violate any law, regulation, FRB order or directive,
or any condition imposed by, or written agreement with, the FRB. The FRB has
adopted an exception to this approval requirement for well-capitalized bank
holding companies that meet certain other conditions.
The FRB has issued a policy statement regarding the payment of dividends
by bank holding companies. In general, the FRB's policies provide that dividends
should be paid only out of current earnings and only if the prospective rate of
earnings retention by the bank holding company appears consistent with the
organization's capital needs, asset quality, and overall financial condition.
The FRB's policies also require that a bank holding company serve as a source of
financial strength to its subsidiary banks by standing ready to use available
resources to provide adequate capital funds to those banks during periods of
financial stress or adversity and by maintaining the financial flexibility and
capital-raising capacity to obtain additional resources for assisting its
subsidiary banks where necessary. These regulatory policies could affect the
ability of the Company to pay dividends or otherwise engage in capital
distributions.
The status of the Company as a registered bank holding company under the
BHCA does not exempt it from certain Federal and state laws and regulations
applicable to corporations generally, including, without limitation, certain
provisions of the Federal securities laws.
Under the FDI Act, depository institutions are liable to the FDIC for
losses suffered or anticipated by the FDIC in connection with the default of a
commonly controlled depository institution or any assistance provided by the
FDIC to such an institution in danger of default. This law would have potential
applicability if the Company ever held as a separate subsidiary a depository
institution in addition to the Bank.
The Company and the Bank will be affected by the monetary and fiscal
policies of various agencies of the United States Government, including the
Federal Reserve System. In view of changing conditions in the national economy
and in the money markets, it is impossible for management to accurately predict
future changes in monetary policy or the effect of such changes on the business
or financial condition of the Company or the Bank.
Recent Legislation
The Gramm-Leach-Bliley Act of 1999 authorizes a bank holding company that
meets specified conditions, including being "well capitalized" and "well
managed," to opt to become a "financial holding company" and thereby engage in a
broader array of financial activities than previously permitted. Such activities
can include insurance underwriting and investment banking. The
Gramm-Leach-Bliley Act also authorizes banks to engage through "financial
subsidiaries" in certain of the activities permitted for financial holding
companies. Financial subsidiaries are generally treated as affiliates for
purposes of restrictions on a bank's transactions with affiliates.
Acquisition of the Holding Company
Federal Restrictions. Under the Federal Change in Bank Control Act
("CIBCA"), a notice must be submitted to the FRB if any person (including a
company), or group acting in concert, seeks to acquire 10% or more of the
Company's shares of Common Stock outstanding, unless the FRB has found that the
acquisition will not result in a change in control of
18
the Company. Under the CIBCA, the FRB has 60 days within which to act on such
notices, taking into consideration certain factors, including the financial and
managerial resources of the acquirer, the convenience and needs of the
communities served by the Company and the Bank, and the anti-trust effects of
the acquisition. Under the BHCA, any company would be required to obtain prior
approval from the FRB before it may obtain "control" of the Company within the
meaning of the BHCA. Control generally is defined to mean the ownership or power
to vote 25% or more of any class of voting securities of the Company or the
ability to control in any manner the election of a majority of the Company's
directors. An existing bank holding company would be required to obtain the
FRB's prior approval under the BHCA before acquiring more than 5% of the
Company's voting stock. See "Holding Company Regulation." Approval of the
Banking Department may also be required for acquisition of the Company.
New York Change in Control Restrictions. In addition to the CIBCA and the
BHCA, the New York State Banking Law generally requires prior approval of the
New York Banking Board before any action is taken that causes any company to
acquire direct or indirect control of a banking institution which is organized
in New York.
Federal Securities Laws
The Company's common stock is registered with the SEC under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Company is subject to
the information and proxy solicitation requirements, insider trading
restrictions, and other requirements under the Exchange Act.
Registration of the shares of the Common Stock that were issued in the
Bank's conversion from mutual to stock form under the Securities Act of 1933, as
amended (the "Securities Act"), does not cover the resale of such shares. Shares
of the common stock purchased by persons who are not affiliates of the Company
may be resold without registration. Shares purchased by an affiliate of the
Company will be subject to the resale restrictions of Rule 144 under the
Securities Act. If the Company meets the current public information requirements
of Rule 144 under the Securities Act, each affiliate of the Company who complies
with the other conditions of Rule 144 (including those that require the
affiliate's sale to be aggregated with those of certain other persons) would be
able to sell in the public market, without registration, a number of shares not
to exceed in any three-month period the greater of (i) 1% of the outstanding
shares of the Company or (ii) the average weekly volume of trading in such
shares during the preceding four calendar weeks. Provision may be made in the
future by the Company to permit affiliates to have their shares registered for
sale under the Securities Act under certain circumstances.
STATISTICAL DATA
The detailed statistical data that follows is being presented in accordance with
Guide 3, prescribed by the Securities and Exchange Commission. This data should
be read in conjunction with the consolidated financial statements and related
notes and the discussion included in the Management's Discussion and Analysis of
Financial Condition and Results of Operations that are indexed on the Form 10-K
Cross Reference Index.
19
A. Mortgage and Other Lending Activities
The following table sets forth the Bank's loan originations and mortgage-backed
securities, including purchases, sales, and principal repayments, for the
periods indicated:
For the
Years Ended December 31,
------------------------
(dollars in thousands) 2000 1999 1998
---------- ---------- ----------
Mortgage loans (gross):
At beginning of period $1,601,796 $1,487,256 $1,394,939
Mortgage loans originated:
One-to-four family 6,205 26,338 7,473
Multi-family 541,734 603,347 409,800
Commercial real estate 58,899 42,708 32,826
Construction 9,133 4,433 2,091
---------- ---------- ----------
Total mortgage loans originated 615,971 676,826 452,190
Mortgage loans acquired from Haven 1,749,180 -- --
Principal repayments 185,539 348,036 349,952
Mortgage loans sold 185,137 213,597 8,647
Mortgage loans transferred to foreclosed real estate -- 651 1,274
---------- ---------- ----------
At end of period 3,596,273 1,601,796 1,487,256
Other loans (gross):
At beginning of period 8,742 9,750 10,795
Other loans originated and/or acquired from Haven 36,655 2,039 2,008
Principal repayments 5,649 3,047 3,053
---------- ---------- ----------
At end of period 39,748 8,742 9,750
---------- ---------- ----------
Total loans $3,636,021 $1,610,538 $1,497,006
========== ========== ==========
Mortgage-backed securities:
At beginning of period $ 2,094 $ 19,680 $ 49,781
Principal repayments 171 17,586 30,101
---------- ---------- ----------
At end of period $ 1,923 $ 2,094 $ 19,680
========== ========== ==========
20
B. Loan Maturity and Repricing
The following table shows the maturity or period to repricing of the Bank's loan
portfolio at December 31, 2000. Loans that have adjustable rates are shown as
being due in the period during which the interest rates are next subject to
change. The table does not include prepayments or scheduled principal
amortization. Prepayments and scheduled principal amortization on mortgage loans
totaled $185.5 million for the twelve months ended December 31, 2000.
Mortgage and Other Loans
at December 31, 2000
--------------------
1-4 Multi- Commercial Home Total
(dollars in thousands) Family Family Real Estate Construction Equity Other Loans
---------- ---------- ----------- ------------ ---------- ---------- ----------
Amount due:
Within one year $ 181,995 $ 279,460 $ 46,547 $ 59,469 $ 12,240 $ 3,951 $ 583,662
After one year:
One to three years 190,573 292,634 48,741 -- -- 4,137 536,085
Three to five years 601,234 923,220 153,771 -- -- 13,053 1,691,278
Five to ten years 270,782 415,798 69,255 -- -- 5,879 761,714
Ten years and over 22,496 34,544 5,754 -- -- 488 63,282
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total due or repricing
after one year 1,085,085 1,666,196 277,521 -- -- 23,557 3,052,359
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total amounts due or
repricing, gross $1,267,080 $1,945,656 $ 324,068 $ 59,469 $ 12,240 $ 27,508 $3,636,021
========== ========== ========== ========== ========== ========== ==========
The following table sets forth, at December 31, 2000, the dollar amount of all
loans due after December 31, 2001, and indicates whether such loans have fixed
or adjustable rates of interest.
Due after December 31, 2001
------------------------------------------
(dollars in thousands) Fixed Adjustable Total
---------- ---------- ----------
Mortgage loans:
One-to-four family $ 358,490 $ 726,595 $1,085,085
Multi-family 510,498 1,155,698 1,666,196
Commercial real estate 65,237 212,284 277,521
---------- ---------- ----------
Total mortgage loans $ 934,225 $2,094,577 $3,028,802
Other loans 15,224 8,333 23,557
---------- ---------- ----------
Total loans $ 949,449 $2,102,910 $3,052,359
========== ========== ==========
21
C. Summary of the Allowance for Loan Losses
The allowance for loan losses was allocated as follows at December 31,:
2000 1999
---------------------------------------------
Percent Percent
of of
Loans in Loans in
Category Category
to Total to Total
(dollars in thousands) Amount Loans Amount Loans
------- ------ ------- ------
Mortgage loans:
One-to-four family $ 2,923 16.18% $ 663 9.42%
Multi-family 7,783 43.08 4,927 70.08
Construction 892 4.94 64 0.91
Commercial real estate 5,671 31.40 1,202 17.10
Other loans 795 4.40 175 2.49
------- ------ ------- ------
Total loans $18,064 100.00% $ 7,031 100.00%
======= ====== ======= ======
1998 1997 1996
-----------------------------------------------------------------
Percent Percent Percent
of of of
Loans in Loans in Loans in
Category Category Category
to Total to Total to Total
(dollars in thousands) Amount Loans Amount Loans Amount Loans
------- ------ ------- ------ ------- ------
Mortgage loans:
One-to-four family $ 1,341 14.22% $ 1,592 16.88% $ 1,812 19.36%
Multi-family 6,686 70.89 6,521 69.14 6,168 65.90
Construction 28 0.30 23 0.24 24 0.26
Commercial real estate 1,181 12.52 1,080 11.45 1,110 11.86
Other loans 195 2.07 215 2.29 245 2.62
------- ------ ------- ------ ------- ------
Total loans $ 9,431 100.00% $ 9,431 100.00% $ 9,359 100.00%
======= ====== ======= ====== ======= ======
The preceding allocation is based upon an estimate at a given point in
time, based on various factors, including, but not limited to, local economic
conditions. A different allocation methodology may be deemed to be more
appropriate in the future.
22
D. Composition of Loan Portfolio
The following table sets forth the composition of the Bank's portfolio of
mortgage and other loans in dollar amounts and in percentages at December 31,:
2000 1999 1998
----------------------- ------------------------ ------------------------
Percent Percent Percent
of of of
(dollars in thousands) Amount Total Amount Total Amount Total
---------- ------- ---------- ------- ---------- -------
Mortgage loans:
One-to-four family $1,267,080 34.85% $ 152,644 9.48% $ 178,770 11.94%
Multi-family 1,945,656 53.51 1,348,351 83.72 1,239,094 82.77
Commercial real estate 324,068 8.91 96,008 5.96 67,494 4.51
Construction 59,469 1.64 4,793 0.30 1,898 0.13
---------- ------ ---------- ------ ---------- ------
Total mortgage loans 3,596,273 98.91 1,601,796 99.46 1,487,256 99.35
---------- ------ ---------- ------ ---------- ------
Other loans:
Cooperative apartment 3,726 0.10 4,856 0.30 4,802 0.32
Home equity 12,240 0.34 1,347 0.08 1,793 0.12
Student 683 0.02 8 0.00 8 0.00
Passbook savings 779 0.02 331 0.02 321 0.02
Other 22,320 0.61 2,200 0.14 2,826 0.19
---------- ------ ---------- ------ ---------- ------
Total other loans 39,748 1.09 8,742 0.54 9,750 0.65
---------- ------ ---------- ------ ---------- ------
Total loans 3,636,021 100.00% 1,610,538 100.00% 1,497,006 100.00%
---------- ====== ---------- ====== ---------- ======
Less:
Unearned discounts 18 24 22
Net deferred loan
Origination fees 1,553 2,404 1,034
Allowance for loan losses 18,064 7,031 9,431
---------- ---------- ----------
Loans, net $3,616,386 $1,601,079 $1,486,519
========== ========== ==========
1997 1996
------------------------ ------------------------
Percent Percent
of Of
(dollars in thousands) Amount Total Amount Total
---------- ------- ---------- -------
Mortgage loans:
One-to-four family $ 224,287 15.96% $ 256,904 22.21%
Multi-family 1,107,343 78.78 822,364 71.10
Commercial real estate 61,740 4.39 63,452 5.49
Construction 1,538 0.10 1,598 0.14
---------- ------ ---------- ------
Total mortgage loans 1,394,908 99.23 1,144,318 98.94
---------- ------ ---------- ------
Other loans:
Cooperative apartment 5,041 0.36 5,764 0.50
Home equity 2,386 0.17 2,819 0.24
Student 8 0.00 24 0.00
Passbook savings 312 0.02 375 0.03
Other 3,048 0.22 3,293 0.29
---------- ------ ---------- ------
Total other loans 10,795 0.77 12,275 1.06
---------- ------ ---------- ------
Total loans 1,405,734 100.00% 1,156,593 100.00%
---------- ====== --------- ======
Less:
Unearned discounts 19 24
Net deferred loan
Origination fees 1,281 1,058
Allowance for loan losses 9,431 9,359
---------- ----------
Loans, net $1,395,003 $1,146,152
========== ==========
23
E. Securities, Money Market Investments, and Mortgage-backed Securities
The following table sets forth certain information regarding the carrying and
market values of the Bank's securities, money market investments, and
mortgage-backed securities portfolios at the dates indicated:
At December 31,
2000 1999 1998
--------------------- -------------------- ---------------------
Carrying Market Carrying Market Carrying Market
(dollars in thousands) Value Value Value Value Value Value
-------- -------- -------- -------- -------- --------
Securities:
U.S. Government and agency
obligations $184,994 $184,161 $140,325 $135,797 $129,893 $129,586
Equity securities 95,286 95,492 55,690 55,762 26,978 27,125
Corporate bonds 61,140 61,140 -- -- -- --
Capital trust notes 25,191 23,892 -- -- -- --
-------- -------- -------- -------- -------- --------
Total securities $366,611 $364,685 $196,015 $191,559 $156,871 $156,711
======== ======== ======== ======== ======== ========
Money market investments:
Federal funds sold $124,622 $124,622 $ 6,000 $ 6,000 $ 19,000 $ 19,000
-------- -------- -------- -------- -------- --------
Total money market investments $124,622 $124,622 $ 6,000 $ 6,000 $ 19,000 $ 19,000
======== ======== ======== ======== ======== ========
Mortgage-backed securities:
GNMA $ 1,059 $ 1,067 $ 1,429 $ 1,429 $ 15,886 $ 16,403
FHLMC 6,886 6,942 2,094 2,135 3,794 3,929
FNMA Certificates 80,286 80,286 -- -- -- --
CMOs and REMICs 73,341 73,341 -- -- -- --
-------- -------- -------- -------- -------- --------
Total mortgage-backed securities $161,572 $161,636 $ 3,523 $ 3,564 $ 19,680 $ 20,332
======== ======== ======== ======== ======== ========
ITEM 2. PROPERTIES
The Bank has 86 locations serving the greater metropolitan New York
region, including 19 traditional branch offices (17 in Queens and one each in
Nassau and Suffolk counties) and 67 in-store branches throughout New York City,
Nassau, Suffolk, Rockland and Westchester counties, New Jersey, and Connecticut.
The Bank's main office is located at 136-65 Roosevelt Avenue, Flushing, New
York. The Bank believes that its current facilities are adequate to meet the
present and immediately foreseeable needs of the Bank and the Company.
Leased Date Lease Net Book Value
or Leased or Expiration at
Owned Acquired Date December 31, 2000
------ --------- ---------- -----------------
Corporate Headquarters (1) Owned 1997 -- $11,377,204
615 Merrick Avenue
Westbury, NY 11590
Flushing Branch Leased 2000 2015 44,626
136-65 Roosevelt Avenue
Flushing, NY 11354
Corona Branch Owned 1923 -- 116,852
37-97 103rd Street
Corona, NY 11368
Little Neck Branch Owned 1946 -- 42,126
251-31 Northern Blvd
Little Neck, NY 11363
24
Leased Date Lease Net Book Value
or Leased or Expiration at
Owned Acquired Date December 31, 2000
------ --------- ---------- -----------------
Kew Gardens Hills Branch Owned 1948 -- 66,077
75-44 Main Street
Kew Gardens Hills, NY 11367
Jackson Heights Branch Leased 1974 2023 424,232
76-02 Northern Blvd
Jackson Heights, NY 11372
Astoria Branch (2) Leased 1993 2018 89,100
31-42 Steinway Street
Astoria, NY 11103
Fresh Meadows Branch Leased 1995 2010 3,947
61-49 188th Street
Fresh Meadows, NY 11365
College Point Branch Leased 1996 2021 1,164
15-01 College Point Blvd
College Point, NY 11356
Murray Hill Branch Leased 1997 2007 60,377
156-18 Northern Blvd
Flushing, NY 11354
Plainview Branch Owned 1974 -- 281,185
1092 Old Country Road
Plainview, NY 11803
Woodside Branch Leased 1999 2009 42,253
60-10 Queens Boulevard
Woodside, NY 11377
Mortgage Service Center (3) Owned 1991 -- 3,331,124
158-14 Northern Blvd
Flushing, NY 11358
Auburndale Customer Service Center Leased 1996 2006 1,357
193-10 Northern Blvd
Flushing, NY 11358
Ditmars Service Center Leased 1996 2005 4,398
31-09 Ditmars Blvd
Astoria, NY 11105
Corona Service Center Leased 1999 2007 51,074
51-13 108th Street
Corona, NY 11368
Bellerose Branch Leased 1973 2003 64,384
244-19 Braddock Avenue
Bellerose, NY 11426
Forest Hills Branch Leased 1959 2013 --
106-19 Continental Avenue
Forest Hills, NY 11375
Woodhaven Branch Leased 1999 2014 3,845
93-22 Jamaica Avenue
Woodhaven, NY 11421
Rockaway Branch Leased 1996 2008 27,299
104-08 Rockaway Beach Blvd.
Rockaway Park, NY 11694
Snug Harbor Branch Leased 1977 2001 370,375
343 Merrick Road
Amityville, NY 11701
25
Leased Date Lease Net Book Value
or Leased or Expiration at
Owned Acquired Date December 31, 2000
------ --------- ---------- -----------------
Ozone Park Branch Owned 1976 -- 546,556
98-16 101st Avenue
Ozone Park, NY 11416
Howard Beach Branch Owned 1971 -- 801,438
82-10 153rd Avenue
Howard Beach, NY 11414
Forest Parkway Branch Owned 1979 -- 269,012
80-35 Jamaica Avenue
Woodhaven, NY 11421
Medford Branch Leased 1996 2001 125,453
700-60 Patchogue-Yaphank Road
Medford, NY 11763
Uniondale Branch Leased 1996 2001 140,956
1121 Jerusalem Avenue
Uniondale, NY 11553
W. Babylon Branch Leased 1997 2002 154,022
575 Montauk Highway
W. Babylon, NY 11704
Hauppauge Branch Leased 1998 2003 229,795
335 Nesconset Highway
Hauppauge, NY 11788
Farmingvillle Branch Leased 1999 2004 216,652
2350 North Ocean Avenue
Farmingville, NY 11738
E. Islip Branch Leased 1998 2003 196,532
2650 Sunrise Highway
E. Islip, NY 11730
Hylan Blvd. Branch Leased 1999 2004 170,586
2424 Hylan Blvd.
Staten Island, NY 10306
Springfield Gardens Branch Leased 2000 2005 313,337
134-40 Springfield Blvd.
Springfield Gardens, NY 11413
Atlantic Terminal Branch Leased 1996 2001 149,422
625 Atlantic Avenue & Ft. Greene Place
Brooklyn, NY 11217
New Hyde Park Branch Leased 1996 2002 169,373
2335 New Hyde Park Road
New Hyde Park, NY 11040
N. Babylon Branch Leased 1997 2002 161,005
1251 Deer Park Avenue
N. Babylon, NY 11703
Brentwood Branch Leased 1997 2002 168,811
101 Wicks Road
Brentwood, NY 11717
Levittown Branch Leased 1997 2002 173,341
3535 Hempstead Tpke.
Levittown, NY 11756b
26
Leased Date Lease Net Book Value
or Leased or Expiration at
Owned Acquired Date December 31, 2000
------ --------- ---------- -----------------
Centereach Branch Leased 1997 2002 173,271
2150 Middle Country Road
Centereach, NY 11720
East Meadow Branch Leased 1997 2002 178,237
1897 Front Street
East Meadow, NY 11554
Woodbury Branch Leased 1997 2002 172,397
8101 Jericho Tpke.
Woodbury, NY 11797
Patchogue Branch Leased 1997 2002 166,465
395 Rt. 112
Patchogue, NY 11772
Baldwin Branch Leased 1997 2002 174,694
1764 Grand Avenue
Baldwin, NY 11510
Seaford Branch Leased 1999 2004 244,271
4055 Merrick Road
Seaford, NY 11783
Port Jefferson Branch Leased 1997 2002 190,190
5145 Nesconset Hwy.
Port Jefferson, NY 11776
Whitestone Branch Leased 1997 2002 172,401
31-06 Farrington Street
Whitestone, NY 11357
Holbrook Branch Leased 1997 2002 166,305
5801 Sunrise Hwy.
Holbrook, NY 11741
W. Babylon Branch Leased 1997 2002 175,312
531 Montauk Hwy.
W. Babylon, NY 11704
Islip Branch Leased 1997 2002 177,000
155 Islip Avenue
Islip, NY 11751
Shirley Branch Leased 1997 2002 180,016
800 Montauk Hwy.
Shirley, NY 11967
Jericho Branch Leased 1998 2003 192,023
366 North Broadway
Jericho, NY 11753
Franklin Square Branch Leased 1999 2004 217,647
460 Franklin Avenue
Franklin Sq., NY 11010
Long Island City Branch Leased 1998 2003 184,716
42-02 Northern Blvd.
Long Island City, NY 11100
Greenvale Branch Leased 1998 2003 201,483
130 Wheatley Plaza
Greenvale, NY 11548
East Rockaway Branch Leased 1998 2003 191,777
492 E. Atlantic Avenue
East Rockaway, NY 11518
27
Leased Date Lease Net Book Value
or Leased or Expiration at
Owned Acquired Date December 31, 2000
------ --------- ---------- -----------------
Boro Park Branch Leased 1998 2003 204,259
1245 61st Street
Brooklyn, NY 11219
Starrett City Branch Leased 1997 2002 183,063
111-10 Flatlands Avenue
Brooklyn, NY 11207
Gowanus Branch Leased 1998 2003 189,884
1-37 12th Street
Brooklyn, NY 11215
Pike Slip Branch Leased 1997 2002 174,884
227 Cherry Street
New York, NY 10002
Richmond Avenue Branch Leased 1997 2002 200,264
2875 Richmond Avenue
Staten Island, NY 10314
Forest Avenue Branch Leased 1998 2003 219,299
1351 Forest Avenue
Staten Island, NY 10302
Monsey Branch Leased 1997 2002 179,133
45 Route 59
Monsey, NY 10952
Nanuet Branch Leased 1997 2002 188,952
Route 59 E
195 Rockland Center
Nanuet, NY 10954
Yonkers Branch Leased 1998 2003 232,766
1757 Central Park Avenue
Yonkers, NY 10710
Port Chester Branch Leased 1998 2003 219,745
130 Midland Avenue
Port Chester, NY 10573
N. Yonkers Branch Leased 1998 2003 173,356
2540 Central Park Avenue
N. Yonkers, NY 10710
Mount Vernon Branch Leased 1997 2002 207,738
One Pathmark Plaza
East 2nd & 3rd Avenues
Mount Vernon, NY 10550
Bay Shore Branch Leased 1997 2002 185,459
1905 Sunrise Hwy.
Bay Shore, NY 11706
Ozone Park Branch Leased 1997 2002 174,481
92-10 Atlantic Avenue
Ozone Park, NY 11416
Massapequa Branch Leased 1997 2012 65,318
941 Carmans Road
Massapequa, NY 11758
Flushing Branch Leased 1999 2004 194,198
155-15 Aguilar Avenue
Flushing, NY 11367
28
Leased Date Lease Net Book Value
or Leased or Expiration at
Owned Acquired Date December 31, 2000
------ --------- ---------- -----------------
Castle Center Branch Leased 2000 2005 12,646
1720 Eastchester Road
Bronx, NY 10461
Hillside Branch Leased 1998 2013 184,207
367 Highway 22W
Hillside, NJ 07205
Hackensack Branch Leased 1997 2012 138,922
S. River St. & E. Main Moonachie Rd.
Hackensack, NJ 07601
Wayne Branch Leased 1998 2013 147,185
625 Hamburg Tpke.
Wayne, NJ 07470
Palisades Park Branch Leased 1998 2013 168,256
201 Roosevelt Place
Palisades Park, NJ 07650
West Milford Branch Leased 1998 2013 194,996
23 Marshall Hill Road
West Milford, NJ 07480
Bound Brook Branch Leased 1998 2013 176,535
611 West Union Avenue
Bound Brook, NJ 08805
W. Long Branch Branch Leased 1999 2013 263,744
50 Highway 36
W. Long Branch, NJ 07764
Bricktown Branch Leased 1998 2013 169,438
Rt. 70 & Chambersbridge Rd.
Bricktown, NJ 08723
Bridgeport Branch Leased 1998 2013 182,246
500 Sylvan Avenue
Bridgeport, CT 06606
Ansonia Branch Leased 1998 2003 134,802
404 Main Street
Ansonia, CT 06401
Newtown Branch Leased 1998 2003 159,765
6 Queen Street
Newtown, CT 06470
Milford Branch Leased 1998 2003 137,994
157 Cherry Street
Milford, CT 06460
West Haven Branch Leased 1998 2003 138,218
1131 Campbell Avenue
West Haven, CT 06516
Waterbury Branch Leased 1998 2013 180,708
650 Wolcott Street
Waterbury, CT 06705
Meriden Branch Leased 1998 2003 184,037
533 S. Broad Street
Meriden, CT 06450
CFS Insurance Agency Leased 1998 2003 --
2100 Middle Country Road, Suite 115A
Centereach, NY 11720
29
(1) On December 15, 2000, the Company relocated its corporate headquarters to
the former headquarters of Haven Bancorp, Inc. in Westbury, New York.
(2) This branch office replaced another branch office, formerly located at
31-02 Steinway Street, Astoria, which was closed as of June 28, 1993. The
vacated space, which is owned by the Bank, has a net book value of $1.0
million and has subsequently been leased.
(3) The Bank currently leases a majority of the office space at this location
to unrelated tenants.
ITEM 3. LEGAL PROCEEDINGS
The Bank is involved in various legal actions arising in the ordinary
course of its business. All such actions, in the aggregate, involve amounts,
which are believed by management to be immaterial to the financial condition and
results of operations of the Bank.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held a Special Meeting of Shareholders on November 20, 2000. Proxies
were solicited with respect to such meeting under Regulation 14A of the
Securities Exchange Act of 1934, as amended, pursuant to a joint proxy
statement/prospectus dated October 13, 2000. Of the 20,122,640 shares eligible
to vote at the special meeting, 18,877,864 were represented in person or by
proxy.
Two proposals were submitted for a vote, with the following results:
No. of Votes No. of Votes No. of Votes Broker
For Against Abstaining Non-Votes
--- ------- ---------- ---------
1. Approval and adoption of the 16,525,437 32,252 37,633 2,282,549
Agreement and Plan of Merger,
dated as of June 27, 2000 between
Queens County Bancorp, Inc. and
Haven Bancorp, Inc.
2. Approval and adoption of the 18,726,291 115,590 35,983 -0-
amendment of Article FIRST of
the Certificate of Incorporation of
Queens County Bancorp, Inc.,
which amendment changes the
name of Queens County Bancorp,
Inc. to "New York Community
Bancorp, Inc."
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's common stock is traded on The Nasdaq Stock Market(R)and
quoted under the symbol "NYCB".
Information regarding the Company's common stock and its price during
fiscal year 2000 appears on page 30 of the 2000 Annual Report to Shareholders
under the caption "Market Price of Common Stock and Dividends Paid per Common
Share" and is incorporated herein by this reference.
30
As of March 23, 2001 the Company had approximately 960 shareholders of
record, not including the number of persons or entities holding stock in nominee
or street name through various brokers and banks.
ITEM 6. SELECTED FINANCIAL DATA
Information regarding selected financial data appears on page 8 of the
2000 Annual Report to Shareholders under the caption "Financial Summary" and is
incorporated herein by this reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Information regarding management's discussion and analysis of financial
condition and results of operations appears on pages 11 through 30 of the 2000
Annual Report to Shareholders under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and is incorporated
herein by this reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information regarding quantitative and qualitative disclosures about
market risk appears on pages 17 through 19 of the 2000 Annual Report to
Shareholders under the caption "Market Risk and Interest Rate Sensitivity" and
is incorporated herein by this reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information regarding the consolidated financial statements and the
Independent Auditors' Report appears on pages 31 through 55 of the 2000 Annual
Report to Shareholders and is incorporated herein by this reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding the directors and executive officers of the
Registrant appears on pages 5 through 8 of the Company's Proxy Statement for the
Annual Meeting of Shareholders to be held May 9, 2001, under the caption
"Information with Respect to Nominees and Continuing Directors," and is
incorporated herein by this reference.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding executive compensation appears on pages 11 through
20 of the Company's Proxy Statement for the Annual Meeting of Shareholders to be
held May 9, 2001, and is incorporated herein by this reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding security ownership of certain beneficial owners
appears on pages 3 and 4 of the Company's Proxy Statement for the Annual Meeting
of Shareholders to be held May 9, 2001, under the caption "Security Ownership of
Certain Beneficial Owners," and is incorporated herein by this reference.
Information regarding security ownership of management appears on pages 5
through 8 of the Company's Proxy Statement for the Annual Meeting of
Shareholders to be held May 9, 2001, under the caption "Information with Respect
to the Nominees, Continuing Directors, and Executive Officers," and is
incorporated herein by this reference.
31
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and related transactions
appears on page 20 of the Company's Proxy Statement for the Annual Meeting of
Shareholders to be held on May 9, 2001 under the caption "Transactions with
Certain Related Persons," and is incorporated herein by this reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The following consolidated financial statements are included in the
Company's Annual Report to Shareholders for the year ended December 31, 2000 and
are incorporated by this reference herein:
- Consolidated Statements of Condition at December 31, 2000 and 1999;
- Consolidated Statements of Income and Comprehensive Income for each
of the years in the three-year period ended December 31, 2000;
- Consolidated Statements of Changes in Stockholders' Equity for each
of the years in the three-year period ended December 31, 2000;
- Consolidated Statements of Cash Flows for each of the years in the
three-year period ended December 31, 2000;
- Notes to the Consolidated Financial Statements
- Management's Responsibility for Financial Reporting
- Independent Auditors' Report
The remaining information appearing in the 2000 Annual Report to
Shareholders is not deemed to be filed as a part of this report, except as
expressly provided herein.
2. Financial Statement Schedules
Financial Statement Schedules have been omitted because they are not
applicable or because the required information is shown in the Consolidated
Financial Statements or Notes thereto.
(b) Reports on Form 8-K filed during the last quarter of 2000
On February 12, 2001, the Company filed a Current Report on Form 8-K
regarding the Board of Directors' declaration of a three-for-two stock split in
the form of a 50% stock dividend, payable on March 29, 2001 to shareholders of
record on March 14, 2001.
(c) Exhibits Required by Securities and Exchange Commission Regulation S-K
Exhibit
Number
------
3.1 Certificate of Incorporation of Queens County Bancorp, Inc. (1)
3.2 Bylaws of New York Community Bancorp, Inc. (attached hereto)
10.1 Form of Employment Agreement between Queens County Savings Bank and Certain Officers (1)
10.2 Form of Employment Agreement between Queens County Bancorp, Inc. and Certain Officers (1)
10.3 Form of Change in Control Agreements among the Company, the Bank, and Certain Officers (1)
10.4 Form of Queens County Savings Bank Recognition and Retention Plan for Outside Directors (1)
10.5 Form of Queens County Savings Bank Recognition and Retention Plan for Officers (1)
10.6 Form of Queens County Bancorp, Inc. 1993 Incentive Stock Option Plan (2)
10.7 Form of Queens County Bancorp, Inc. 1993 Incentive Stock Option Plan for Outside Directors (2)
10.8 Form of Queens County Savings Bank Employee Severance Compensation Plan (1)
10.9 Form of Queens County Savings Bank Outside Directors' Consultation and Retirement Plan (1)
10.10 Form of Queens County Bancorp, Inc. Employee Stock Ownership Plan and Trust (1)
10.11 ESOP Loan Documents (1)
32
10.12 Incentive Savings Plan of Queens County Savings Bank (3)
10.13 Retirement Plan of Queens County Savings Bank (1)
10.14 Supplemental Benefits Plan of Queens County Savings Bank (4)
10.15 Excess Retirement Benefits Plan of Queens County Savings Bank (1)
10.16 Queens County Savings Bank Directors' Deferred Fee Stock Unit Plan (1)
10.17 Queens County Bancorp, Inc. 1997 Stock Option Plan (5)
11.0 Statement Re: Computation of Per Share Earnings
13.0 2000 Annual Report to Shareholders
21.0 Subsidiaries information incorporated herein by reference to Part I, "Subsidiaries"
23.0 Consent of KPMG LLP, dated March 27, 2001
99.0 Proxy Statement for the Annual Meeting of Shareholders to be held on May 9, 2001
(1) Incorporated by reference to Exhibits filed with the Registration
Statement on Form S-1, Registration No. 33-66852.
(2) Incorporated herein by reference into this document from the Exhibits to
Form S-8, Registration Statement filed on October 27, 1994, Registration
No. 33-85684.
(3) Incorporated herein by reference into this document from the Exhibits to
Form S-8, Registration Statement filed on October 27, 1994, Registration
No. 33-85682.
(4) Incorporated by reference to Exhibits filed with the 1995 Proxy Statement
for the Annual Meeting of Shareholders held on April 19, 1995.
(5) Incorporated by reference to Exhibit filed with the 1997 Proxy Statement
for the Annual Meeting of Shareholders held on April 16, 1997.
33