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SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): July 19, 2004
CHARTER ONE FINANCIAL, INC.
Delaware | 001-15495 | 34-1567092 | ||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
1215 Superior Avenue, Cleveland, Ohio | 44114 | |
(Address of principal executive offices) | (Zip Code) |
(216) 566-5300
NOT APPLICABLE
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ITEM 12. Results of Operations and Financial Condition
On July 19, 2004, the Registrant issued the following earnings release for the quarterly period ended June 30, 2004:
News Release
CONTACT: ELLEN BATKIE (800) 262-6301
CHARTER ONE ANNOUNCES 2ND QTR 2004 FINANCIAL RESULTS
Highlights for the quarter ended 6/30/04:
• | Net earnings of $166 million, or $.72 per share | |||
• | Opened 36 banking centers; now operate through 652 locations, up 25% in 12 months | |||
• | Deposit-related revenue up 20% over 2Q 2003; up 17% over 1Q 2004 | |||
• | Noninterest-bearing deposits (excluding custodial balances) up $118 million, or 16% annualized, in 2Q 2004; up $1.3 billion, or 66%, in 12 months | |||
• | Mortgage-backed securities down $1.7 billion; $8.7 billion in 12 months | |||
• | Non-single family lending portfolio up $1.5 billion, an annualized 29%, in 2Q 2004 | |||
• | Net yield of 3.08%, up from 3.04% in 1Q 2004 and 2.84% in 2Q 2003 | |||
• | Annualized net charge-offs of .23% of loans and leases, down from .24% in 1Q 2004 and .30% in 2Q 2003 |
CLEVELAND, Ohio, July 19, 2004 — Charter One Financial, Inc. (NYSE:CF), the holding company of Charter One Bank, N.A., today reported net income of $166 million, or $.72 per diluted share, for the three months ended June 30, 2004. Net income in the year ago quarter was also $166 million, or $.72 per diluted share.
Net income for the quarter generated annualized returns of 1.56% on average assets, 20.50% on average equity, and 23.82% on average tangible equity. In the year-ago quarter, the returns were 1.50% on average assets, 19.86% on average equity and 22.74% on average tangible equity.
“This was a strong quarter in terms of retail banking success, achieving balance sheet management goals and maintaining earnings while reducing overall asset levels,” commented Charles John Koch, Charter One’s Chairman and Chief Executive Officer. “Our success on the retail front continued unabated, with a 20% increase in deposit-related revenue and a 16% growth rate in noninterest-bearing deposits. Once again, we think our retail banking initiatives have earned Charter One a place as one of the premier consumer banks in the country.
“In addition to our ambitious retail strategy, our other principal objective for the past year has been to limit overall single-family mortgage exposure, with special emphasis on reducing the mortgage-backed security portfolio, and increase the size of our non-single family lending portfolios. I am very pleased to report that the MBS portfolio is now below $6 billion, down
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from $14.7 billion a year ago. In fact, single-family loans and securities represented 43% of total interest-earning assets at the end of June, the lowest level in our history. As part of our balance sheet strategy, we previously indicated our intent to increase overall assets only to the extent we were successful in growing our non-single family loan portfolios. Earning assets increased by $1.3 billion during the second quarter while non-single family portfolios increased by $1.5 billion, helping to accelerate the mix shift. Finally, and maybe most importantly, we maintained our earnings level even though we were $1.6 billion smaller than during last year’s second quarter and continued investing in our retail growth initiatives.”
Overview
Net yield and net interest income- Net interest margin, or net yield, was 3.08% during the three months ended June 30, 2004, up from 3.04% during the first quarter of 2004 and 2.84% during the year-ago quarter. The improvement was attributable to the increase in average noninterest-bearing deposits, as well as a full quarter’s benefit from the prepayment of $2.3 billion in fixed-rate FHLB advances on January 27, 2004.
The increase in net yield drove an increase in net interest income during the second quarter of 2004. Net interest income totaled $308.2 million in the three months ended June 30, 2004, compared to $295.4 million in the same period last year and $304.6 million in the first quarter of 2004. The 4% year-over-year increase in net interest income was posted despite a $1.6 billion decrease in average earning assets from the year ago quarter.
Net gains (losses)- During the second quarter of 2004, we reported net losses of $14.2 million as part of Other Income, compared to net gains of $108.5 million in the year ago quarter. During the current quarter we sold $1.9 billion in mortgage-backed securities as part of our ongoing strategy to reduce single-family exposure and reduce the overall duration of interest-earning assets. As discussed below, the loss was more than offset by the increased value of our mortgage servicing rights resulting from the overall increase in interest rates during the second quarter of 2004. As of June 30, 2004, there were approximately $106.6 million in unrealized pretax losses in the mortgage-backed securities portfolio.
Operating expenses —Administrative expenses totaled $225.9 million in the three months ended June 30, 2004, up 4% from the previous quarter and up 16% from the year-ago quarter. We continued to dedicate significant marketing resources to support our successful retail banking strategy and other franchise enhancing initiatives. Marketing costs were $31.1 million for the second quarter of 2004, compared to $28.8 million in the previous quarter and $20.2 million in the year-ago quarter. The higher level of expenses also included operating 36 more banking centers during the second quarter than the first quarter (a 6% increase in locations), and 130 more banking centers than a year earlier (a 25% increase in locations). The efficiency ratio was 47.56% for the three months ended June 30, 2004, compared to 45.98% for the first quarter of 2004 (excluding the $113.1 million debt prepayment penalty) and 41.14% for the second quarter of 2003.
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Deposits and Related Revenue
Deposits– Our deposit strategy over the past 18 months has been to grow noninterest-bearing deposits, and the second quarter results reinforce the success of this strategy. Noninterest-bearing deposits (excluding custodial balances) increased to $3.1 billion at June 30, 2004, up $118 million during the quarter and $1.3 billion, or 66%, in the past 12 months. Custodial balances totaled $401 million at June 30, 2004, $424 million at March 31, 2004, and $761 million at June 30, 2003.
Additionally, the number of retail noninterest-bearing checking accounts continued to show impressive growth. At the end of the second quarter, we had 1.2 million noninterest-bearing accounts, up an annualized 11% in the quarter, and 55% in the past 12 months. The total number of checking accounts (interest-bearing and noninterest-bearing) was 1,544,200 at June 30, 2004, compared to 1,524,800 accounts at March 31, 2004, and 1,358,200 at June 30, 2003.
Total deposits were $27.2 billion at June 30, 2004, up $290 million in the three-month period. Core deposits (checking, money market and savings accounts) increased by $409 million in the quarter, and now account for $17.2 billion, or 63% of the total. Small business deposits, which are included in core deposits, increased to $2.4 billion at June 30, 2004, up $133 million, or an annualized 23%, during the second quarter, and $636 million, or 36%, in the past 12 months.
Retail banking revenue- Retail banking revenue totaled $115.2 million for the three months ended June 30, 2004, up 19% from the comparable 2003 quarter. The largest component of retail banking revenue is deposit-related revenue, which was driven primarily by the success we have had in attracting checking accounts. Deposit-related revenue totaled $101.7 million during the second quarter of 2004, up 17% over the first quarter of 2004 and 20% over the second quarter of 2003. The increase in debit card transactions continues to be one of the biggest contributors to deposit-related revenue growth. The dollar volume of debit card transactions was 40% higher in the second quarter of 2004 than in the same quarter of last year, which is a powerful indicator of customer adoption of debit card usage and future revenue potential. The other components of retail banking revenue include fees from retail brokerage activities ($9.8 million, up 16% from the year-ago quarter), and other revenue related to retail operations ($3.7 million, down 3%).
Retail expansion update —For 2004, our stated plan was to open approximately 125 new banking centers during the year, including approximately 73 in-store locations. During the second quarter, we opened 36 new banking centers, including 22 traditional locations and 14 in-store locations. That brings the year-to-date totals to 60 new banking centers, 32 traditional and 28 in-store locations. The largest concentration of new banking centers was in Indiana where we now have 38 locations, up from 16 at the beginning of the year. As part of our previously announced agreement with Wal-Mart, we opened the first two locations in the second quarter; one in Indiana
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and the other is our entry into Columbus, Ohio. An additional location was added mid-July in Plattsburgh, New York.
Loans, Mortgage-Backed Securities and Mortgage Banking
Lending portfolio growth —Loans and leases before reserves totaled $33.0 billion at June 30, 2004, up 28% in the past 12 months and an annualized 37% in the quarter. Non-single family loans totaled $21.9 billion at June 30, 2004, up $4.1 billion, or 23% in the past 12 months, and $1.5 billion in the quarter, a 29% annualized growth rate. The non-single family growth was led by a three-month increase of $881 million (up 15%, 59% annualized) in retail consumer loans, which are comprised principally of home equity lines and loans. Small business lending continues to be a high priority, and the portfolio has increased to $886 million of the $1.9 billion corporate banking portfolio, up an annualized 42% in the second quarter of 2004, and 44% in the past 12 months. Permanent single-family residential loans increased by $1.3 billion during the quarter, up 14% (55% annualized).
Mortgage-backed securities available for sale —Mortgage-backed securities available for sale totaled $5.8 billion at June 30, 2004, down $1.7 billion, or 22%, during the quarter, and $8.5 billion, or 60% in the past 12 months. At June 30, 2004, 7% of the portfolio was in floating-rate securities, and 93% in fixed-rate securities that had an estimated duration of approximately 4.4 years.
Mortgage banking revenue- The mortgage banking category includes revenue associated with our mortgage banking operations, adjusted by the amortization and valuation adjustments related to its mortgage servicing rights asset (“MSR”). During the second quarter of 2004, MSR-related adjustments increased revenue by $47.0 million as the valuation allowance was reduced in response to the increase in interest rates. The resulting MSR valuation allowance was $52.3 million at June 30, 2004. The total mortgage banking revenue, excluding MSR-related adjustments, was $12.3 million in the second quarter of 2004, down from $22.8 million in the year-ago quarter. The reduction was due primarily to the $3.8 billion reduction in the portfolio serviced for others and lower mortgage production as compared to 2003. The portfolio serviced for others totaled $15.1 billion at June 30, 2004, and carried a weighted average coupon of 6.03%. The related MSR, net of the valuation allowance, is now 1.25% of the portfolio at $188 million. With an average servicing spread of 35.6 basis points, that translates into an MSR valuation of 3.5 times the servicing spread.
Leasing operations- Income from leasing operations was a loss of $597,000 in the second quarter of 2004, compared with a loss of $12.2 million in the second quarter of 2003. Residual value adjustments reduced income by $1.6 million in the three months ended June 30, 2004, and $12.8 million in the year ago quarter.
Credit quality and allowance for loan losses- Net charge-offs during the second quarter of 2004 totaled $17.8 million, or .23% of average loans and leases (annualized), down from .24% in the first quarter of 2004 and .30% in the second quarter of 2003.
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At June 30, 2004, nonperforming assets totaled $234 million or .72% of loans, leases and collateral owned, up from $199 million and .67% at March 31, 2004. The primary driver behind the increase was a single $35 million loan in Michigan, a shopping center under development. We believe the loan is well collateralized, and anticipate no material loss at this time. Underperforming assets (including nonperforming assets and loans delinquent 90 days and still accruing) totaled $274 million or .84% of loans, leases and collateral owned, up from $240 million and .81% at March 31, 2004.
Notwithstanding the increase in nonperforming assets, the underlying trends in asset classifications, charge-offs and other credit indicators warranted reducing the allowance for loan and lease losses by $10.6 million to $374 million at June 30, 2004, or 1.13% of loans and leases. This reserve level is equivalent to 5.3 years coverage of annualized second quarter net charge-offs.
Merger update- On May 4, 2004, Charter One joined Citizens Financial Group in announcing a definitive agreement to sell Charter One Financial to Citizens for merger consideration of $44.50 in cash for each share of Charter One common stock. The merger requires approval from Charter One’s shareholders as well as the state banking authority in Massachusetts and the Board of Governors of the Federal Reserve System, and is subject to certain other normal closing conditions. Charter One has scheduled a special meeting of shareholders to consider the merger for August 23, 2004. At this time, assuming approvals are received in a timely manner, the companies expect to complete the transaction by the fourth quarter of 2004.
Company profile —Charter One has more than $42 billion in total assets, making it one of the 25 largest bank holding companies in the country. The Bank has 652 banking center locations in Ohio, Michigan, New York, Illinois, Massachusetts, Vermont, Indiana, Connecticut and Pennsylvania. Charter One’s diverse product set includes: consumer banking, indirect auto finance, commercial leasing, business lending, commercial real estate lending, mortgage banking, and retail investment products. For additional information, including press releases, investor presentations, committee charters, and reports filed with the SEC, investors are directed to Charter One’s web site: www.charterone.com.
Forward-Looking Information
This release contains certain estimates of future operating trends for Charter One Financial, Inc., as well as estimates of financial condition and earnings, operating efficiencies, revenue creation, lending origination, loan sale volumes, charge-offs and loan loss provisions. These estimates constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995), which involve significant risks and uncertainties. Actual results may differ materially from the results discussed in these forward-looking statements. Factors that might cause such a difference include, but are not limited to: (1) revenue growth is lower than expected; (2) competitive pressures among depository institutions increase significantly; (3) changes in the interest rate environment reduce interest margins; (4) deterioration in the credit quality of Charter One’s loan portfolio requires higher loss provisions; (5) general economic conditions, either nationally or in the states in which Charter One does business, are less favorable than expected; (6) legislation or regulatory changes adversely affect the businesses in which Charter One is engaged; and (7) ongoing geopolitical conflicts add unexpected stress on the economy or customer base. Other factors that may affect these statements are identified in previous filings with the Securities and Exchange Commission.
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CHARTER ONE FINANCIAL, INC.
Three Months Ended | ||||||||||||||||||||
6/30/04 | 3/31/04 | 12/31/03 | 9/30/03 | 6/30/03 | ||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||
Interest income: | ||||||||||||||||||||
Loans and leases | $ | 387,217 | $ | 367,344 | $ | 376,741 | $ | 368,952 | $ | 367,602 | ||||||||||
Mortgage-backed securities: | ||||||||||||||||||||
Available for sale | 80,146 | 107,667 | 118,903 | 129,695 | 154,490 | |||||||||||||||
Held to maturity | 2,823 | 3,371 | 4,065 | 5,326 | 6,858 | |||||||||||||||
Investment securities: | ||||||||||||||||||||
Available for sale | 2,992 | 3,604 | 3,590 | 3,563 | 3,297 | |||||||||||||||
Held to maturity | 47 | 48 | 48 | 51 | 56 | |||||||||||||||
Other interest-earning assets | 7,586 | 7,793 | 7,619 | 7,531 | 7,856 | |||||||||||||||
Total interest income | 480,811 | 489,827 | 510,966 | 515,118 | 540,159 | |||||||||||||||
Interest expense: | ||||||||||||||||||||
Deposits | 90,659 | 95,886 | 110,746 | 115,862 | 126,734 | |||||||||||||||
Federal Home Loan Bank advances | 71,036 | 76,247 | 97,385 | 100,813 | 104,025 | |||||||||||||||
Other borrowings | 10,917 | 13,140 | 13,678 | 13,185 | 13,969 | |||||||||||||||
Total interest expense | 172,612 | 185,273 | 221,809 | 229,860 | 244,728 | |||||||||||||||
Net interest income | 308,199 | 304,554 | 289,157 | 285,258 | 295,431 | |||||||||||||||
Provision for loan and lease losses | 7,160 | 18,616 | 17,778 | 37,663 | 35,360 | |||||||||||||||
Net interest income after provision for loan and lease losses | 301,039 | 285,938 | 271,379 | 247,595 | 260,071 | |||||||||||||||
Other income: | ||||||||||||||||||||
Retail banking | 115,197 | 99,613 | 102,593 | 94,183 | 97,087 | |||||||||||||||
Mortgage banking | 59,343 | (16,682 | ) | 3,240 | 65,604 | (23,895 | ) | |||||||||||||
Leasing operations | (597 | ) | 2,125 | 1,668 | (4,118 | ) | (12,230 | ) | ||||||||||||
Net gains (losses) | (14,240 | ) | (91,027 | ) | 63,274 | 16,112 | 108,549 | |||||||||||||
Bank owned life insurance and other | 7,120 | 11,168 | 7,489 | 8,638 | 8,450 | |||||||||||||||
Total other income | 166,823 | 5,197 | 178,264 | 180,419 | 177,961 | |||||||||||||||
Administrative expenses: | ||||||||||||||||||||
Compensation and employee benefits | 102,109 | 101,968 | 101,612 | 92,582 | 90,790 | |||||||||||||||
Net occupancy and equipment | 34,329 | 34,349 | 34,124 | 31,985 | 30,466 | |||||||||||||||
Marketing expenses | 31,051 | 28,809 | 24,010 | 22,411 | 20,205 | |||||||||||||||
Federal deposit insurance premiums | 1,052 | 1,083 | 1,066 | 1,118 | 1,125 | |||||||||||||||
Other administrative expenses | 57,360 | 51,826 | 57,034 | 46,733 | 52,168 | |||||||||||||||
Total administrative expenses | 225,901 | 218,035 | 217,846 | 194,829 | 194,754 | |||||||||||||||
Income before income taxes | 241,961 | 73,100 | 231,797 | 233,185 | 243,278 | |||||||||||||||
Income taxes | 75,615 | 22,844 | 73,583 | 74,036 | 77,241 | |||||||||||||||
Net income | $ | 166,346 | $ | 50,256 | $ | 158,214 | $ | 159,149 | $ | 166,037 | ||||||||||
Basic earnings per share | $ | .74 | $ | .22 | $ | .71 | $ | .71 | $ | .74 | ||||||||||
Diluted earnings per share | $ | .72 | $ | .22 | $ | .69 | $ | .69 | $ | .72 | ||||||||||
Average common shares outstanding: | ||||||||||||||||||||
Basic | 224,089,781 | 223,533,656 | 222,720,197 | 224,399,805 | 225,501,687 | |||||||||||||||
Diluted | 231,827,268 | 230,219,061 | 228,809,671 | 230,661,929 | 231,095,694 | |||||||||||||||
Cash dividends declared per share | $ | .29 | $ | .26 | $ | .26 | $ | .26 | $ | .24 | ||||||||||
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CHARTER ONE FINANCIAL, INC.
Six Months Ended | ||||||||
6/30/04 | 6/30/03 | |||||||
(Dollars in thousands, | ||||||||
except per share data) | ||||||||
Interest income: | ||||||||
Loans and leases | $ | 754,561 | $ | 745,326 | ||||
Mortgage-backed securities: | ||||||||
Available for sale | 187,813 | 303,801 | ||||||
Held to maturity | 6,194 | 15,127 | ||||||
Investment securities: | ||||||||
Available for sale | 6,596 | 6,340 | ||||||
Held to maturity | 95 | 110 | ||||||
Other interest-earning assets | 15,379 | 15,241 | ||||||
Total interest income | 970,638 | 1,085,945 | ||||||
Interest expense: | ||||||||
Deposits | 186,545 | 260,477 | ||||||
Federal Home Loan Bank advances | 147,283 | 203,824 | ||||||
Other borrowings | 24,057 | 27,172 | ||||||
Total interest expense | 357,885 | 491,473 | ||||||
Net interest income | 612,753 | 594,472 | ||||||
Provision for loan and lease losses | 25,776 | 96,831 | ||||||
Net interest income after provision for loan and lease losses | 586,977 | 497,641 | ||||||
Other income: | ||||||||
Retail banking | 214,810 | 181,187 | ||||||
Mortgage banking | 42,661 | (23,922 | ) | |||||
Leasing operations | 1,528 | (19,086 | ) | |||||
Net gains (losses) | (105,267 | ) | 185,202 | |||||
Bank owned life insurance and other | 18,288 | 16,406 | ||||||
Total other income | 172,020 | 339,787 | ||||||
Administrative expenses: | ||||||||
Compensation and employee benefits | 204,077 | 177,846 | ||||||
Net occupancy and equipment | 68,678 | 61,652 | ||||||
Marketing expenses | 59,860 | 33,852 | ||||||
Federal deposit insurance premiums | 2,135 | 2,267 | ||||||
Other administrative expenses | 109,186 | 102,429 | ||||||
Total administrative expenses | 443,936 | 378,046 | ||||||
Income before income taxes | 315,061 | 459,382 | ||||||
Income taxes | 98,459 | 145,854 | ||||||
Net income | $ | 216,602 | $ | 313,528 | ||||
Basic earnings per share | $ | .96 | $ | 1.40 | ||||
Diluted earnings per share | $ | .94 | $ | 1.36 | ||||
Average common shares outstanding: | ||||||||
Basic | 223,811,719 | 225,249,543 | ||||||
Diluted | 231,023,165 | 230,778,271 | ||||||
Cash dividends declared per share | $ | .55 | $ | .46 | ||||
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CHARTER ONE FINANCIAL, INC.
6/30/04 | 3/31/04 | 12/31/03 | 9/30/03 | 6/30/03 | ||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and deposits with banks | $ | 591,213 | $ | 543,962 | $ | 527,649 | $ | 526,534 | $ | 586,018 | ||||||||||
Federal funds sold and other | 520 | 518 | 517 | 516 | 10,514 | |||||||||||||||
Total cash and cash equivalents | 591,733 | 544,480 | 528,166 | 527,050 | 596,532 | |||||||||||||||
Investments securities: | ||||||||||||||||||||
Available for sale | 190,634 | 231,967 | 273,260 | 270,511 | 336,126 | |||||||||||||||
Held to maturity | 3,432 | 3,696 | 3,505 | 3,952 | 3,691 | |||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||
Available for sale | 5,796,777 | 7,475,140 | 10,193,798 | 11,078,285 | 14,313,397 | |||||||||||||||
Held to maturity | 185,627 | 212,124 | 251,449 | 292,336 | 362,768 | |||||||||||||||
Loans and leases, net | 32,321,116 | 29,652,925 | 28,130,017 | 27,735,087 | 25,127,882 | |||||||||||||||
Loans held for sale | 284,400 | 132,507 | 120,431 | 296,078 | 362,270 | |||||||||||||||
Bank owned life insurance | 842,075 | 837,140 | 828,678 | 823,676 | 834,337 | |||||||||||||||
Federal Home Loan Bank and Federal Reserve Bank stock | 712,925 | 706,358 | 705,244 | 700,170 | 694,073 | |||||||||||||||
Premises and equipment, net | 433,478 | 417,908 | 404,086 | 391,615 | 375,256 | |||||||||||||||
Accrued interest receivable | 133,279 | 132,215 | 140,857 | 147,254 | 153,346 | |||||||||||||||
Real estate and other collateral owned | 27,274 | 30,127 | 36,643 | 48,198 | 40,220 | |||||||||||||||
Mortgage servicing rights, net | 188,177 | 142,340 | 177,244 | 168,697 | 115,242 | |||||||||||||||
Goodwill | 415,696 | 415,696 | 415,696 | 415,696 | 433,014 | |||||||||||||||
Other assets | 378,050 | 344,306 | 418,992 | 380,647 | 386,785 | |||||||||||||||
Total assets | $ | 42,504,673 | $ | 41,278,929 | $ | 42,628,066 | $ | 43,279,252 | $ | 44,134,939 | ||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
Checking accounts: | ||||||||||||||||||||
Interest-bearing | $ | 4,632,750 | $ | 4,944,405 | $ | 5,666,346 | $ | 5,810,478 | $ | 6,493,279 | ||||||||||
Noninterest-bearing | 3,549,865 | 3,454,577 | 2,532,616 | 2,760,848 | 2,656,047 | |||||||||||||||
Total checking accounts | 8,182,615 | 8,398,982 | 8,198,962 | 8,571,326 | 9,149,326 | |||||||||||||||
Money market and savings accounts | 9,032,492 | 8,406,630 | 8,686,356 | 8,686,491 | 8,475,706 | |||||||||||||||
Certificates of deposit | 10,013,453 | 10,133,389 | 10,318,001 | 10,788,421 | 10,314,742 | |||||||||||||||
Total deposits | 27,228,560 | 26,939,001 | 27,203,319 | 28,046,238 | 27,939,774 | |||||||||||||||
Federal Home Loan Bank advances | 9,970,594 | 8,661,607 | 9,847,293 | 9,820,184 | 10,582,255 | |||||||||||||||
Federal funds purchased and repurchase agreements | 100,756 | 428,158 | 269,319 | 62,716 | 51,399 | |||||||||||||||
Other borrowings | 596,260 | 596,571 | 697,753 | 704,629 | 706,083 | |||||||||||||||
Advance payments by borrowers for taxes and insurance | 77,545 | 58,631 | 61,054 | 50,768 | 58,593 | |||||||||||||||
Accrued interest payable | 20,218 | 53,631 | 35,944 | 65,075 | 46,418 | |||||||||||||||
Accrued expenses and other liabilities | 1,202,749 | 1,284,298 | 1,237,515 | 1,288,801 | 1,387,835 | |||||||||||||||
Total liabilities | 39,196,682 | 38,021,897 | 39,352,197 | 40,038,411 | 40,772,357 | |||||||||||||||
Shareholders’ equity: | ||||||||||||||||||||
Preferred stock — $.01 par value per share; 20,000,000 shares authorized and unissued | — | — | — | — | — | |||||||||||||||
Common stock — $.01 par value per share; 360,000,000 shares authorized; 229,924,425; 229,924,425; 229,940,729; 229,944,441 and 229,946,762 shares issued | 2,299 | 2,299 | 2,299 | 2,299 | 2,299 | |||||||||||||||
Additional paid-in capital | 2,299,786 | 2,292,137 | 2,280,335 | 2,274,947 | 2,270,580 | |||||||||||||||
Retained earnings | 1,231,486 | 1,142,547 | 1,178,803 | 1,098,042 | 1,009,784 | |||||||||||||||
Less 5,321,530; 6,272,992; 6,767,285; 6,953,759 and 3,851,660 shares of common stock held in treasury at cost | (171,409 | ) | (202,056 | ) | (209,653 | ) | (215,085 | ) | (116,652 | ) | ||||||||||
Accumulated other comprehensive income | (54,171 | ) | 22,105 | 24,085 | 80,638 | 196,571 | ||||||||||||||
Total shareholders’ equity | 3,307,991 | 3,257,032 | 3,275,869 | 3,240,841 | 3,362,582 | |||||||||||||||
Total liabilities and shareholders’ equity | $ | 42,504,673 | $ | 41,278,929 | $ | 42,628,066 | $ | 43,279,252 | $ | 44,134,939 | ||||||||||
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CHARTER ONE FINANCIAL, INC.
Three Months Ended | ||||||||||||||||||||
6/30/04 | 3/31/04 | 12/31/03 | 9/30/03 | 6/30/03 | ||||||||||||||||
Annualized returns and ratios based on net income: | ||||||||||||||||||||
Return on average assets | 1.56 | % | .47 | % | 1.46 | % | 1.46 | % | 1.50 | % | ||||||||||
Return on average equity | 20.50 | 6.18 | 19.24 | 20.12 | 19.86 | |||||||||||||||
Average equity to average assets | 7.62 | 7.61 | 7.58 | 7.25 | 7.55 | |||||||||||||||
Net interest income to administrative expenses | 1.36 | x | 1.40 | x | 1.33 | x | 1.46 | x | 1.52 | x | ||||||||||
Administrative expenses to average assets | 2.12 | % | 2.04 | % | 2.01 | % | 1.79 | % | 1.76 | % | ||||||||||
Efficiency ratio(1) | 47.56 | 70.39 | 46.61 | 41.84 | 41.14 | |||||||||||||||
Annualized return on average tangible equity(2) | 23.82 | 7.21 | 22.31 | 23.59 | 22.74 |
(1) | Computed as the ratio of total administrative expenses to net interest income and total other income. | |
(2) | Computed as the ratio of net income, excluding the amortization of other intangible assets, to average tangible equity. |
Six Months Ended | ||||||||
6/30/04 | 6/30/03 | |||||||
Annualized returns and ratios based on net income: | ||||||||
Return on average assets | 1.02 | % | 1.44 | % | ||||
Return on average equity | 13.34 | 19.17 | ||||||
Average equity to average assets | 7.61 | 7.51 | ||||||
Net interest income to administrative expenses | 1.38 | x | 1.57 | x | ||||
Administrative expenses to average assets | 2.08 | % | 1.74 | % | ||||
Efficiency ratio(1) | 56.57 | 40.46 | ||||||
Annualized return on average tangible equity(2) | 15.51 | 22.02 |
(1) | Computed as the ratio of total administrative expenses to net interest income and total other income. | |
(2) | Computed as the ratio of net income, excluding the amortization of other intangible assets, to average tangible equity. |
6/30/04 | 3/31/04 | 12/31/03 | 9/30/03 | 6/30/03 | ||||||||||||||||
End of period capitalization: | ||||||||||||||||||||
Equity to assets | 7.78 | % | 7.89 | % | 7.68 | % | 7.49 | % | 7.62 | % | ||||||||||
Tangible equity to assets | 6.73 | 6.80 | 6.63 | 6.45 | 6.56 | |||||||||||||||
Book value per share | $ | 14.73 | $ | 14.56 | $ | 14.68 | $ | 14.53 | $ | 14.87 | ||||||||||
Tangible book value per share | 12.74 | 12.56 | 12.67 | 12.52 | 12.81 | |||||||||||||||
Miscellaneous end-of-period data: | ||||||||||||||||||||
Number of employees (full-time equivalents) | 7,977 | 7,843 | 7,804 | 7,765 | 7,703 | |||||||||||||||
Number of loan production offices | 29 | 30 | 33 | 27 | 28 | |||||||||||||||
Number of ATMs | 1,017 | 988 | 969 | 956 | 953 |
6/30/04 | 3/31/04 | 12/31/03 | 9/30/03 | 6/30/03 | ||||||||||||||||
Number of banking centers: | ||||||||||||||||||||
Traditional banking centers | 478 | 456 | 446 | 435 | 433 | |||||||||||||||
In-store banking centers | 174 | 160 | 146 | 131 | 89 | |||||||||||||||
Total | 652 | 616 | 592 | 566 | 522 | |||||||||||||||
Number of banking centers by state: | ||||||||||||||||||||
New York | 189 | 186 | 180 | 176 | 154 | |||||||||||||||
Ohio | 149 | 143 | 138 | 130 | 126 | |||||||||||||||
Michigan | 114 | 108 | 107 | 106 | 105 | |||||||||||||||
Illinois | 113 | 108 | 105 | 99 | 99 | |||||||||||||||
Vermont | 27 | 27 | 27 | 27 | 27 | |||||||||||||||
Indiana | 38 | 23 | 16 | 11 | — | |||||||||||||||
Massachusetts | 13 | 13 | 13 | 13 | 10 | |||||||||||||||
Connecticut | 6 | 5 | 3 | 1 | 1 | |||||||||||||||
Pennsylvania | 3 | 3 | 3 | 3 | — |
Table of Contents
CHARTER ONE FINANCIAL, INC.
Three Months Ended | ||||||||||||||||||||
6/30/04 | 3/31/04 | 12/31/03 | 9/30/03 | 6/30/03 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Average balance sheet data: | ||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||
Loans and leases | $ | 31,454,312 | $ | 29,220,076 | $ | 28,876,531 | $ | 26,993,081 | $ | 26,101,819 | ||||||||||
Mortgage-backed securities | 7,618,886 | 9,761,887 | 10,849,575 | 12,732,102 | 14,405,655 | |||||||||||||||
Investment securities | 228,090 | 259,034 | 265,043 | 286,497 | 260,634 | |||||||||||||||
Other interest-earning assets | 751,409 | 823,199 | 715,197 | 723,721 | 839,597 | |||||||||||||||
Total interest-earning assets | 40,052,697 | 40,064,196 | 40,706,346 | 40,735,401 | 41,607,705 | |||||||||||||||
Allowance for loan and lease losses | (390,693 | ) | (387,712 | ) | (396,096 | ) | (379,527 | ) | (360,448 | ) | ||||||||||
Noninterest-earning assets(1) | 2,963,313 | 3,053,124 | 3,089,013 | 3,272,787 | 3,044,576 | |||||||||||||||
Total assets | $ | 42,625,317 | $ | 42,729,608 | $ | 43,399,263 | $ | 43,628,661 | $ | 44,291,833 | ||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||
Checking accounts | $ | 4,874,822 | $ | 5,538,583 | $ | 5,716,427 | $ | 6,166,100 | $ | 6,951,974 | ||||||||||
Money market and savings accounts | 8,546,445 | 8,553,416 | 8,736,844 | 8,545,286 | 8,332,278 | |||||||||||||||
Certificates of deposit | 9,976,862 | 10,172,127 | 10,699,475 | 10,708,517 | 9,733,110 | |||||||||||||||
Total interest-bearing deposits | 23,398,129 | 24,264,126 | 25,152,746 | 25,419,903 | 25,017,362 | |||||||||||||||
Federal Home Loan Bank advances | 10,166,098 | 10,189,502 | 10,147,668 | 10,265,634 | 11,397,410 | |||||||||||||||
Other borrowings | 968,900 | 1,102,005 | 925,641 | 871,430 | 874,062 | |||||||||||||||
Total interest-bearing liabilities | 34,533,127 | 35,555,633 | 36,226,055 | 36,556,967 | 37,288,834 | |||||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||||
Demand deposit accounts | 3,524,462 | 2,604,755 | 2,505,876 | 2,615,262 | 2,308,993 | |||||||||||||||
Other noninterest-bearing liabilities | 1,321,750 | 1,317,979 | 1,377,774 | 1,292,960 | 1,349,173 | |||||||||||||||
Total noninterest-bearing liabilities | 4,846,212 | 3,922,734 | 3,883,650 | 3,908,222 | 3,658,166 | |||||||||||||||
Total liabilities | 39,379,339 | 39,478,367 | 40,109,705 | 40,465,189 | 40,947,000 | |||||||||||||||
Shareholders’ equity | 3,245,978 | 3,251,241 | 3,289,558 | 3,163,472 | 3,344,833 | |||||||||||||||
Total liabilities and shareholders’ equity | $ | 42,625,317 | $ | 42,729,608 | $ | 43,399,263 | $ | 43,628,661 | $ | 44,291,833 | ||||||||||
Yields and costs during period: | ||||||||||||||||||||
Weighted average yield: | ||||||||||||||||||||
Loans and leases(2) | 4.93 | % | 5.03 | % | 5.19 | % | 5.46 | % | 5.64 | % | ||||||||||
Mortgage-backed securities | 4.36 | 4.55 | 4.53 | 4.24 | 4.48 | |||||||||||||||
Investment securities | 5.33 | 5.64 | 5.49 | 5.04 | 5.15 | |||||||||||||||
Other interest-earning assets | 3.99 | 3.75 | 4.17 | 4.07 | 3.70 | |||||||||||||||
Total interest-earning assets | 4.80 | 4.89 | 5.00 | 5.05 | 5.19 | |||||||||||||||
Weighted average cost(3): | ||||||||||||||||||||
Checking accounts | .80 | .76 | .88 | .96 | 1.35 | |||||||||||||||
Money market and savings accounts | .95 | .93 | 1.04 | 1.10 | 1.50 | |||||||||||||||
Certificates of deposit | 2.45 | 2.60 | 2.79 | 2.86 | 2.97 | |||||||||||||||
Total interest-bearing deposits | 1.56 | 1.59 | 1.75 | 1.81 | 2.03 | |||||||||||||||
Federal Home Loan Bank advances | 2.80 | 3.00 | 3.80 | 3.89 | 3.66 | |||||||||||||||
Other borrowings | 4.50 | 4.76 | 5.89 | 6.03 | 6.38 | |||||||||||||||
Total interest-bearing liabilities | 2.01 | 2.09 | 2.43 | 2.49 | 2.63 | |||||||||||||||
Interest rate spread | 2.79 | 2.80 | 2.57 | 2.56 | 2.56 | |||||||||||||||
Net yield on interest-earning assets | 3.08 | 3.04 | 2.84 | 2.80 | 2.84 |
(1) | Includes mark-to-market adjustments on securities available for sale. | |
(2) | Excludes impact of related tax benefits. | |
(3) | Includes the annualized effect of interest rate risk management instruments. |
Table of Contents
CHARTER ONE FINANCIAL, INC.
Six Months Ended | ||||||||
6/30/04 | 6/30/03 | |||||||
(Dollars in thousands) | ||||||||
Average balance sheet data: | ||||||||
Interest-earning assets: | ||||||||
Loans and leases | $ | 30,336,896 | $ | 25,977,336 | ||||
Mortgage-backed securities | 8,690,386 | 13,775,103 | ||||||
Investment securities | 243,562 | 235,914 | ||||||
Other interest-earning assets | 787,304 | 801,391 | ||||||
Total interest-earning assets | 40,058,148 | 40,789,744 | ||||||
Allowance for loan and lease losses | (389,199 | ) | (343,860 | ) | ||||
Noninterest-earning assets(1) | 3,008,141 | 3,097,175 | ||||||
Total assets | $ | 42,677,090 | $ | 43,543,059 | ||||
Interest-bearing liabilities: | �� | |||||||
Checking accounts | $ | 5,206,702 | $ | 7,245,197 | ||||
Money market and savings accounts | 8,549,931 | 8,131,890 | ||||||
Certificates of deposit | 10,074,494 | 9,648,034 | ||||||
Total interest-bearing deposits | 23,831,127 | 25,025,121 | ||||||
Federal Home Loan Bank advances | 10,177,800 | 10,906,526 | ||||||
Other borrowings | 1,035,442 | 870,299 | ||||||
Total interest-bearing liabilities | 35,044,369 | 36,801,946 | ||||||
Noninterest-bearing liabilities: | ||||||||
Demand deposit accounts | 3,064,520 | 2,163,822 | ||||||
Other noninterest-bearing liabilities | 1,319,588 | 1,306,110 | ||||||
Total noninterest-bearing liabilities | 4,384,108 | 3,469,932 | ||||||
Total liabilities | 39,428,477 | 40,271,878 | ||||||
Shareholders’ equity | 3,248,613 | 3,271,181 | ||||||
Total liabilities and shareholders’ equity | $ | 42,677,090 | $ | 43,543,059 | ||||
Yields and costs during period: | ||||||||
Weighted average yield: | ||||||||
Loans and leases(2) | 4.98 | % | 5.75 | % | ||||
Mortgage-backed securities | 4.46 | 4.63 | ||||||
Investment securities | 5.49 | 5.47 | ||||||
Other interest-earning assets | 3.86 | 3.78 | ||||||
Total interest-earning assets | 4.85 | 5.33 | ||||||
Weighted average cost(3): | ||||||||
Checking accounts | .78 | 1.50 | ||||||
Money market and savings accounts | .94 | 1.53 | ||||||
Certificates of deposit | 2.52 | 3.03 | ||||||
Total interest-bearing deposits | 1.57 | 2.10 | ||||||
Federal Home Loan Bank advances | 2.90 | 3.76 | ||||||
Other borrowings | 4.64 | 6.24 | ||||||
Total interest-bearing liabilities | 2.05 | 2.69 | ||||||
Interest rate spread | 2.80 | 2.64 | ||||||
Net yield on interest-earning assets | 3.06 | 2.91 |
(1) | Includes mark-to-market adjustments on securities available for sale. | |
(2) | Excludes impact of related tax benefits. | |
(3) | Includes the annualized effect of interest rate risk management instruments. |
Table of Contents
CHARTER ONE FINANCIAL, INC.
Three Months Ended | ||||||||||||||||||||
6/30/04 | 3/31/04 | 12/31/03 | 9/30/03 | 6/30/03 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Originations: | ||||||||||||||||||||
Real estate: | ||||||||||||||||||||
Permanent: | ||||||||||||||||||||
One-to-four family | $ | 1,807,730 | $ | 1,161,546 | $ | 1,848,459 | $ | 3,896,869 | $ | 3,555,968 | ||||||||||
Multifamily | 100,048 | 75,992 | 84,470 | 75,185 | 57,451 | |||||||||||||||
Commercial | 134,427 | 128,270 | 92,383 | 124,806 | 60,226 | |||||||||||||||
Total permanent loans | 2,042,205 | 1,365,808 | 2,025,312 | 4,096,860 | 3,673,645 | |||||||||||||||
Construction: | ||||||||||||||||||||
One-to-four family | 68,310 | 88,851 | 45,304 | 62,180 | 53,537 | |||||||||||||||
Multifamily | 36,545 | 30,741 | 84,815 | 30,371 | 7,613 | |||||||||||||||
Commercial | 123,846 | 117,233 | 29,921 | 16,656 | 30,246 | |||||||||||||||
Total construction loans | 228,701 | 236,825 | 160,040 | 109,207 | 91,396 | |||||||||||||||
Total real estate loans originated | 2,270,906 | 1,602,633 | 2,185,352 | 4,206,067 | 3,765,041 | |||||||||||||||
Retail consumer | 1,628,263 | 1,054,029 | 1,167,620 | 1,431,291 | 1,209,221 | |||||||||||||||
Automobile | 739,204 | 664,636 | 719,738 | 909,477 | 1,026,245 | |||||||||||||||
Consumer finance | 189,048 | 105,633 | 92,340 | 128,536 | 122,839 | |||||||||||||||
Leases | 122,334 | 155,279 | 127,148 | 152,279 | 73,946 | |||||||||||||||
Corporate banking | 677,889 | 515,264 | 582,832 | 443,732 | 473,677 | |||||||||||||||
Total loans and leases originated | 5,627,644 | 4,097,474 | 4,875,030 | 7,271,382 | 6,670,969 | |||||||||||||||
Acquired through business combinations and purchases | 1,088,706 | 470,472 | 3,058 | 2,737 | 403,324 | |||||||||||||||
Sales and principal reductions: | ||||||||||||||||||||
Loans sold | 605,930 | 314,460 | 670,456 | 1,067,083 | 885,179 | |||||||||||||||
Loans exchanged for mortgage-backed securities | 51,929 | 72,749 | 1,207,646 | 225,498 | 2,346,609 | |||||||||||||||
Principal reductions | 3,180,918 | 2,606,192 | 2,744,598 | 3,447,925 | 3,260,094 | |||||||||||||||
Total sales and principal reductions | 3,838,777 | 2,993,401 | 4,622,700 | 4,740,506 | 6,491,882 | |||||||||||||||
Increase before net items | $ | 2,877,573 | $ | 1,574,545 | $ | 255,388 | $ | 2,533,613 | $ | 582,411 | ||||||||||
Six Months Ended | ||||||||
6/30/04 | 6/30/03 | |||||||
(Dollars in thousands) | ||||||||
Originations: | ||||||||
Real estate: | ||||||||
Permanent: | ||||||||
One-to-four family | $ | 2,969,276 | $ | 6,651,686 | ||||
Multifamily | 176,040 | 108,891 | ||||||
Commercial | 262,697 | 150,439 | ||||||
Total permanent loans | 3,408,013 | 6,911,016 | ||||||
Construction: | ||||||||
One-to-four family | 157,161 | 89,093 | ||||||
Multifamily | 67,286 | 26,896 | ||||||
Commercial | 241,079 | 41,076 | ||||||
Total construction loans | 465,526 | 157,065 | ||||||
Total real estate loans originated | 3,873,539 | 7,068,081 | ||||||
Retail consumer | 2,682,292 | 2,288,511 | ||||||
Automobile | 1,403,840 | 2,007,359 | ||||||
Consumer finance | 294,681 | 224,766 | ||||||
Leases | 277,613 | 175,517 | ||||||
Corporate banking | 1,193,153 | 922,003 | ||||||
Total loans and leases originated | 9,725,118 | 12,686,237 | ||||||
Acquired through business combinations and purchases | 1,559,178 | 407,089 | ||||||
Sales and principal reductions: | ||||||||
Loans sold | 920,390 | 1,648,230 | ||||||
Loans exchanged for mortgage-backed securities | 124,678 | 5,765,725 | ||||||
Principal reductions | 5,787,110 | 6,285,924 | ||||||
Total sales and principal reductions | 6,832,178 | 13,699,879 | ||||||
Increase (decrease) before net items | $ | 4,452,118 | $ | (606,553 | ) | |||
Table of Contents
CHARTER ONE FINANCIAL, INC.
ALLOWANCE FOR LOAN AND LEASE LOSSES
(unaudited)
Three Months Ended | ||||||||||||||||||||
6/30/04 | 3/31/04 | 12/31/03 | 9/30/03 | 6/30/03 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Allowance for loan and lease losses: | ||||||||||||||||||||
Balance, beginning of period | $ | 384,842 | $ | 383,733 | $ | 389,355 | $ | 376,393 | $ | 355,926 | ||||||||||
Provision for loan and lease losses | 7,160 | 18,616 | 17,778 | 37,663 | 35,360 | |||||||||||||||
Acquired through business combination | — | — | — | — | 4,969 | |||||||||||||||
Loans and leases charged off: | ||||||||||||||||||||
One-to-four family | (1,763 | ) | (827 | ) | (686 | ) | (655 | ) | (1,036 | ) | ||||||||||
Commercial real estate | (6 | ) | (872 | ) | (419 | ) | (474 | ) | (253 | ) | ||||||||||
Retail consumer | (3,322 | ) | (2,534 | ) | (2,234 | ) | (2,819 | ) | (2,596 | ) | ||||||||||
Automobile | (9,698 | ) | (13,679 | ) | (16,794 | ) | (15,869 | ) | (13,628 | ) | ||||||||||
Consumer finance | (4,468 | ) | (3,479 | ) | (3,811 | ) | (4,396 | ) | (3,975 | ) | ||||||||||
Leases | — | — | — | — | (2,095 | ) | ||||||||||||||
Corporate banking | (4,979 | ) | (2,516 | ) | (5,018 | ) | (6,610 | ) | (2,652 | ) | ||||||||||
Total charge-offs | (24,236 | ) | (23,907 | ) | (28,962 | ) | (30,823 | ) | (26,235 | ) | ||||||||||
Recoveries: | ||||||||||||||||||||
One-to-four family | 30 | 11 | 24 | 31 | 41 | |||||||||||||||
Commercial real estate | 46 | 64 | 129 | 68 | 61 | |||||||||||||||
Retail consumer | 752 | 634 | 380 | 1,044 | 548 | |||||||||||||||
Automobile | 4,845 | 4,421 | 4,010 | 4,279 | 4,561 | |||||||||||||||
Consumer finance | 370 | 228 | 264 | 329 | 235 | |||||||||||||||
Leases | — | 433 | 253 | 228 | 606 | |||||||||||||||
Corporate banking | 427 | 609 | 502 | 143 | 321 | |||||||||||||||
Total recoveries | 6,470 | 6,400 | 5,562 | 6,122 | 6,373 | |||||||||||||||
Net loan and lease charge-offs | (17,766 | ) | (17,507 | ) | (23,400 | ) | (24,701 | ) | (19,862 | ) | ||||||||||
Balance, end of period | $ | 374,236 | $ | 384,842 | $ | 383,733 | $ | 389,355 | $ | 376,393 | ||||||||||
Net charge-offs to average loans and leases (annualized) | .23 | % | .24 | % | .32 | % | .37 | % | .30 | % |
Six Months Ended | ||||||||
6/30/04 | 6/30/03 | |||||||
(Dollars in thousands) | ||||||||
Allowance for loan and lease losses: | ||||||||
Balance, beginning of period | $ | 383,733 | $ | 328,017 | ||||
Provision for loan and lease losses | 25,776 | 96,831 | ||||||
Acquired through business combination | — | 4,969 | ||||||
Loans and leases charged off: | ||||||||
One-to-four family | (2,590 | ) | (1,706 | ) | ||||
Commercial real estate | (878 | ) | (753 | ) | ||||
Retail consumer | (5,856 | ) | (6,074 | ) | ||||
Automobile | (23,377 | ) | (30,078 | ) | ||||
Consumer finance | (7,947 | ) | (8,512 | ) | ||||
Leases | — | (8,156 | ) | |||||
Corporate banking | (7,495 | ) | (9,897 | ) | ||||
Total charge-offs | (48,143 | ) | (65,176 | ) | ||||
Recoveries: | ||||||||
One-to-four family | 41 | 58 | ||||||
Commercial real estate | 110 | 209 | ||||||
Retail consumer | 1,386 | 981 | ||||||
Automobile | 9,266 | 8,676 | ||||||
Consumer finance | 598 | 340 | ||||||
Leases | 433 | 999 | ||||||
Corporate banking | 1,036 | 489 | ||||||
Total recoveries | 12,870 | 11,752 | ||||||
Net loan and lease charge-offs | (35,273 | ) | (53,424 | ) | ||||
Balance, end of period | $ | 374,236 | $ | 376,393 | ||||
Net charge-offs to average loans and leases (annualized) | .23 | % | .41 | % |
Table of Contents
CHARTER ONE FINANCIAL, INC.
NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES
(unaudited)
Three Months Ended | ||||||||||||||||||||
6/30/04 | 3/31/04 | 12/31/03 | 9/30/03 | 6/30/03 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Average loans and leases: | ||||||||||||||||||||
Mortgage | $ | 13,387,468 | $ | 12,193,635 | $ | 12,333,237 | $ | 11,481,071 | $ | 11,126,226 | ||||||||||
Retail consumer | 6,513,957 | 5,699,052 | 5,346,225 | 4,535,869 | 4,329,896 | |||||||||||||||
Automobile | 6,249,478 | 6,322,555 | 6,360,687 | 6,317,768 | 6,088,204 | |||||||||||||||
Consumer finance | 1,242,331 | 1,107,101 | 1,079,984 | 1,055,588 | 1,023,295 | |||||||||||||||
Leases | 2,223,471 | 2,188,135 | 2,196,592 | 2,116,646 | 2,127,384 | |||||||||||||||
Corporate banking | 1,837,607 | 1,709,598 | 1,559,806 | 1,486,139 | 1,406,814 | |||||||||||||||
Total average loans and leases | $ | 31,454,312 | $ | 29,220,076 | $ | 28,876,531 | $ | 26,993,081 | $ | 26,101,819 | ||||||||||
Net charge-offs (recoveries) to average loans and leases (annualized): | ||||||||||||||||||||
Mortgage | .05 | % | .05 | % | .03 | % | .04 | % | .04 | % | ||||||||||
Retail consumer | .16 | .13 | .14 | .16 | .19 | |||||||||||||||
Automobile | .31 | .59 | .80 | .73 | .60 | |||||||||||||||
Consumer finance | 1.32 | 1.17 | 1.31 | 1.54 | 1.46 | |||||||||||||||
Leases | — | (.08 | ) | (.05 | ) | (.04 | ) | .28 | ||||||||||||
Corporate banking | .99 | .45 | 1.16 | 1.74 | .66 | |||||||||||||||
Total | .23 | .24 | .32 | .37 | .30 |
LOAN AND LEASE PORTFOLIO
(unaudited)
6/30/04 | 3/31/04 | 12/31/03 | 9/30/03 | 6/30/03 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Loan and lease portfolio, net(1): | ||||||||||||||||||||
One-to-four family: | ||||||||||||||||||||
Permanent: | ||||||||||||||||||||
Fixed rate | $ | 8,422,124 | $ | 6,825,379 | $ | 6,001,695 | $ | 6,737,463 | $ | 5,411,639 | ||||||||||
Adjustable rate | 2,608,089 | 2,867,295 | 2,830,677 | 2,600,507 | 2,577,778 | |||||||||||||||
Construction | 510,957 | 483,275 | 485,354 | 451,093 | 418,485 | |||||||||||||||
11,541,170 | 10,175,949 | 9,317,726 | 9,789,063 | 8,407,902 | ||||||||||||||||
Commercial real estate: | ||||||||||||||||||||
Multifamily | 866,076 | 800,524 | 776,528 | 752,006 | 739,464 | |||||||||||||||
Commercial | 1,276,177 | 1,242,304 | 1,193,377 | 1,181,362 | 1,148,073 | |||||||||||||||
Construction | 583,999 | 541,600 | 521,680 | 528,628 | 536,330 | |||||||||||||||
2,726,252 | 2,584,428 | 2,491,585 | 2,461,996 | 2,423,867 | ||||||||||||||||
Consumer: | ||||||||||||||||||||
Retail | 6,899,475 | 6,018,261 | 5,491,923 | 4,999,488 | 4,180,702 | |||||||||||||||
Automobile | 6,245,154 | 6,272,710 | 6,364,703 | 6,376,830 | 6,247,964 | |||||||||||||||
Consumer finance | 1,395,972 | 1,130,226 | 1,092,533 | 1,073,054 | 1,038,517 | |||||||||||||||
14,540,601 | 13,421,197 | 12,949,159 | 12,449,372 | 11,467,183 | ||||||||||||||||
Business: | ||||||||||||||||||||
Leases | 2,244,746 | 2,208,350 | 2,195,418 | 2,166,350 | 2,104,713 | |||||||||||||||
Corporate banking | 1,926,983 | 1,780,350 | 1,680,293 | 1,553,739 | 1,462,880 | |||||||||||||||
4,171,729 | 3,988,700 | 3,875,711 | 3,720,089 | 3,567,593 | ||||||||||||||||
Loans and leases before allowance for loan and lease losses | 32,979,752 | 30,170,274 | 28,634,181 | 28,420,520 | 25,866,545 | |||||||||||||||
Allowance for loan and lease losses | (374,236 | ) | (384,842 | ) | (383,733 | ) | (389,355 | ) | (376,393 | ) | ||||||||||
Loans and leases, net(1) | $ | 32,605,516 | $ | 29,785,432 | $ | 28,250,448 | $ | 28,031,165 | $ | 25,490,152 | ||||||||||
Portfolio of loans serviced for others | $ | 15,104,799 | $ | 16,124,233 | $ | 16,877,169 | $ | 16,700,490 | $ | 18,948,077 |
(1) | Includes loans held for sale. |
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CHARTER ONE FINANCIAL, INC.
NONPERFORMING AND UNDERPERFORMING ASSETS
(unaudited)
6/30/04 | 3/31/04 | 12/31/03 | 9/30/03 | 6/30/03 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Nonperforming assets: | ||||||||||||||||||||
Nonaccrual loans and leases: | ||||||||||||||||||||
Real estate mortgage loans: | ||||||||||||||||||||
One-to-four family | $ | 25,065 | $ | 24,143 | $ | 23,301 | $ | 22,784 | $ | 25,723 | ||||||||||
Multifamily and commercial | 37,768 | 34,296 | 33,692 | 11,333 | 16,764 | |||||||||||||||
Construction and land | 56,341 | 25,114 | 25,161 | 22,974 | 27,483 | |||||||||||||||
Total real estate mortgage loans | 119,174 | 83,553 | 82,154 | 57,091 | 69,970 | |||||||||||||||
Retail consumer | 11,988 | 10,163 | 9,818 | 10,405 | 10,652 | |||||||||||||||
Automobile | — | — | — | — | — | |||||||||||||||
Consumer finance | 38,667 | 43,733 | 42,843 | 42,589 | 43,175 | |||||||||||||||
Leases | 4,161 | 6,201 | 6,360 | 6,569 | 6,877 | |||||||||||||||
Corporate banking | 32,992 | 25,073 | 28,408 | 25,078 | 35,595 | |||||||||||||||
Total nonaccrual loans and leases | 206,982 | 168,723 | 169,583 | 141,732 | 166,269 | |||||||||||||||
Restructured loans | — | — | 474 | 481 | 488 | |||||||||||||||
Total nonperforming loans and leases | 206,982 | 168,723 | 170,057 | 142,213 | 166,757 | |||||||||||||||
Real estate and other collateral owned | 26,938 | 29,793 | 35,654 | 47,249 | 39,278 | |||||||||||||||
Total nonperforming assets | $ | 233,920 | $ | 198,516 | $ | 205,711 | $ | 189,462 | $ | 206,035 | ||||||||||
Ratio of: | ||||||||||||||||||||
Nonperforming loans and leases to total loans and leases | .63 | % | .57 | % | .60 | % | .51 | % | .65 | % | ||||||||||
Nonperforming assets to total assets | .55 | .48 | .48 | .44 | .47 | |||||||||||||||
Nonperforming assets to total loans, leases and real estate and other collateral owned | .72 | .67 | .73 | .67 | .81 | |||||||||||||||
Allowance for loan and lease losses to: | ||||||||||||||||||||
Nonperforming loans and leases | 180.81 | 228.09 | 225.65 | 273.78 | 225.71 | |||||||||||||||
Total loans and leases before allowance | 1.13 | 1.28 | 1.34 | 1.37 | 1.46 | |||||||||||||||
Accruing loans and leases delinquent more than 90 days: | ||||||||||||||||||||
Real estate mortgage loans: | ||||||||||||||||||||
One-to-four family | $ | 18,083 | $ | 21,576 | $ | 21,549 | $ | 21,239 | $ | 18,056 | ||||||||||
Multifamily and commercial | — | — | — | — | 396 | |||||||||||||||
Construction and land | — | — | — | — | — | |||||||||||||||
Total real estate mortgage loans | 18,083 | 21,576 | 21,549 | 21,239 | 18,452 | |||||||||||||||
Retail consumer | 2,815 | 2,144 | 2,722 | 2,654 | 3,056 | |||||||||||||||
Automobile | 2,124 | 2,035 | 2,771 | 2,680 | 2,254 | |||||||||||||||
Consumer finance | 16,537 | 15,340 | 17,839 | 23,298 | 21,172 | |||||||||||||||
Leases | — | — | 52 | — | — | |||||||||||||||
Corporate banking | 261 | 412 | 522 | 311 | 117 | |||||||||||||||
Total accruing loans and leases delinquent more than 90 days | $ | 39,820 | $ | 41,507 | $ | 45,455 | $ | 50,182 | $ | 45,051 | ||||||||||
Total underperforming assets | $ | 273,740 | $ | 240,023 | $ | 251,166 | $ | 239,644 | $ | 251,086 | ||||||||||
Ratio of: | ||||||||||||||||||||
Underperforming assets to total assets | .64 | % | .58 | % | .59 | % | .55 | % | .57 | % | ||||||||||
Underperforming assets to total loans, leases and real estate and other collateral owned | .84 | .81 | .89 | .85 | .98 |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
CHARTER ONE FINANCIAL, INC. | ||
Date: July 19, 2004 | By: /s/ Robert J. Vana | |
Robert J. Vana | ||
Senior Vice President, Chief | ||
Corporate Counsel and Corporate Secretary |