Filed by North Fork Bancorporation, Inc. pursuant to Rule 425
under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: GreenPoint Financial Corp.
Commission File No.: 333-114173
NORTH FORK BANCORP
275 Broadhollow Road, Melville, NY 11747 (631) 844-1258 FAX (631) 844-1471
FOR IMMEDIATE RELEASE Contact: Daniel M. Healy
Executive Vice President
Chief Financial Officer
(631) 844-1258
NORTH FORK BANCORP REPORTS EARNINGS FOR THE
FIRST QUARTER OF 2004, ACCELERATED DEPOSIT AND COMMERCIAL
LOAN GROWTH AND PROGRESS RELATING TO PENDING ACQUISITIONS
Melville, N.Y. - April 15, 2004 - North Fork Bancorporation, Inc. (NYSE:
NFB) reported net income of $102.5 million or $.68 diluted earnings per share
for the first quarter of 2004. Other selected highlights include:
o Core deposits grew by 29% and demand deposits by 15% this quarter.
These trends are countercyclical to historical patterns. Total deposits
grew by 22%.
o Loan growth of 10%, led by commercial loans.
o Returns on average equity and assets of 26.6% and 1.96%, respectively.
o The announcement on February 16, 2004 of the proposed acquisition of
GreenPoint Financial Corp. ("GreenPoint"), a significantly accretive
earnings and tangible book value transaction. GreenPoint is the largest
retail bank in the New York Metropolitan area with $23 billion in
assets and 90 branches in prime locations.
o Receipt of all regulatory approvals for the proposed acquisition of The
Trust Company of New Jersey ("Trust Company"), scheduled to close on
May 14, 2004, as originally planned. Trust Company operates from an
extensive branch network in northern New Jersey.
o Declaration of its regular quarterly cash dividend of $.30, a current
yield of approximately 3.1%.
"These results demonstrate that our commercial banking model continues to
capture market share from the competition," said John Adam Kanas, Chairman,
President and Chief Executive Officer. "We believe that we can replicate this
model as we enter in New Jersey," he added.
Earnings and Returns
--------------------
Net income for the quarter ended March 31, 2004 was $102.5 million or
diluted earnings per share of $.68 compared to $103.5 million or diluted
earnings per share of $.67 in 2003. Last year, the Company employed a program of
leveraging excess capital through the purchase of mortgage backed securities,
funded by short-term borrowings. The Company discontinued its leverage strategy
in the second half of 2003 by reducing its securities and short-term borrowing
position by approximately $3 billion. In the first quarter of 2003, the strategy
contributed approximately $11.8 million to after tax earnings or $.08 diluted
earnings per share.
The Company's returns on average equity and assets in the current quarter
were 26.6% and 1.96%, respectively, compared to 26.2% and 1.86% respectively for
the full year 2003.
For the quarter ended March 31, 2004, net interest income and margin were
$206.8 million and 4.33%, respectively, compared to $209.5 million and 4.36% for
the comparable quarter last year. The Company indicated that, on a pro forma
basis with the merger of GreenPoint and Trust Company, it would move from a
neutral to an asset sensitive position, which should improve the net interest
margin as interest rates rise.
Deposits
--------
At March 31, 2004, total deposits increased (linked quarter) by $827
million, an annualized growth rate of 22% to $15.9 billion. Interest bearing
core deposits consisting of savings, NOW and money market accounts grew by $684
million for an annualized growth rate of 33%. Demand deposits contributed to
this overall growth, reflecting a 15% increase. These achievements were
especially notable since historically the first quarter has reflected lower
growth rates compared to other quarters. Commercial balances represent 67% of
total demand deposits and 36% of overall deposits. "We fully expect that this
momentum will continue," said Mr. Kanas. The Company added three new branches in
the first quarter and significantly expanded two other branch locations. The
branch expansion program will continue throughout the year.
Loans
-----
Loans increased (linked quarter) by $313.7 million in the first quarter of
2004 to $12.7 billion for an annualized growth rate of 10%. The Company is
recognized in the marketplace as a leading small business and middle market
lender. The commercial component of the loan portfolio increased by
approximately $102.5 million in the current quarter, an annualized growth rate
of 19%. Multi-family loans advanced slightly despite acute competitive pressures
exhibited by local thrift institutions. "We will continue to focus on commercial
products whose underwriting standards and yields are more rational," said John
Kanas. Commercial mortgage, residential and consumer loans also registered
advances. The Company's loan originations should improve as the pending
acquisitions will provide an extensive distribution network for commercial and
consumer products.
At March 31, 2004, non-performing loans were $11.3 million, a $2 million
decline from year-end. The allowance for loan losses, at $124 million or 98
basis points of total loans, provides sufficient coverage.
Pending Acquisitions
--------------------
Trust Company
-------------
The Company advised that the Trust Company transaction will close May 14,
2004, as originally planned. A special meeting of Trust Company shareholders to
approve the transaction will take place on May 13, 2004. "The integration work
in anticipation of the closing is substantially complete," said Mr. Kanas.
GreenPoint
----------
On February 16, 2004, the Company announced that an agreement had been
reached to acquire GreenPoint in a stock transaction valued at approximately
$6.3 billion. The transaction is expected to be immediately accretive to the
Company's earnings and tangible book value. Regulatory applications have been
filed and integration plans are on schedule. The transaction is expected to
close by the end of the third quarter.
The mergers with Trust Company and GreenPoint will create a Company with
approximately $54 billion in assets and $31 billion in deposits. It will operate
from approximately 350 branch locations in Metropolitan New York, northern New
Jersey and Connecticut. "These acquisitions will transform the Company," said
Mr. Kanas. "We will have the benefit of operating GreenPoint's successful
consumer model with North Fork's proven record as the area's most successful
commercial bank," he said.
Cash Dividend
-------------
On March 23, 2004, the Board declared its regular quarterly dividend of
$.30 per common share. The dividend will be payable May 17, 2004, to
shareholders of record at the close of business on April 30, 2004.
* * *
This release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements include, but
are not limited to, statements about the benefits of the mergers between North
Fork and each of GreenPoint Financial Corp. ("GreenPoint") and The Trust Company
of New Jersey ("Trustcompany"), including future financial and operating
results, North Fork's plans, objectives, expectations and intentions and other
statements that are not historical facts. Such statements are based upon the
current beliefs and expectations of North Fork's, GreenPoint's and
Trustcompany's management and are subject to significant risks and
uncertainties. Actual results may differ from those set forth in the
forward-looking statements. The following
factors, among others, could cause actual results to differ from those set forth
in the forward-looking statements: the ability to obtain governmental approvals
of the mergers on the proposed terms and schedule; the failure of North Fork and
GreenPoint stockholders to approve the GreenPoint merger; the failure of
Trustcompany stockholders to approve the Trustcompany merger; the risk that the
businesses will not be integrated successfully; the risk that the cost savings
and any revenue synergies from the mergers may not be fully realized or may take
longer to realize than expected; disruption from the mergers making it more
difficult to maintain relationships with clients, employees or suppliers;
increased competition and its effect on pricing, spending, third-party
relationships and revenues; the risk of new and changing regulation in the U.S.
and internationally. Additional factors that could cause North Fork's or
GreenPoint's results to differ materially from those described in the
forward-looking statements can be found in the 2003 Annual Reports on Forms 10-K
of North Fork and GreenPoint, and in the Quarterly Reports on Form 10-Q of North
Fork and GreenPoint filed with the Securities and Exchange Commission ("SEC")
and available at the SEC's internet site (http://www.sec.gov). Additional
factors that could cause Trustcompany's results to differ materially from those
described in the forward-looking statements can be found in the 2003 Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q of Trustcompany filed
with the Federal Deposit Insurance Corporation. The forward-looking statements
in this document speak only as of the date of the document, and neither North
Fork, GreenPoint nor Trustcompany assumes any obligation to update the
forward-looking statements or to update the reasons why actual results could
differ from those contained in the forward-looking statements.
On April 2, 2004, North Fork filed a registration statement with the SEC
containing North Fork's and GreenPoint's preliminary joint proxy
statement/prospectus regarding the proposed merger with GreenPoint. On April 12,
2004 North Fork filed an amended registration statement with the SEC containing
North Fork's and Trustcompany's amended preliminary proxy statement/prospectus
with the SEC regarding the proposed merger with Trustcompany. Stockholders are
urged to read the preliminary joint proxy statement/prospectus filed with the
SEC on April 2, 2004 regarding the proposed merger with GreenPoint, the
definitive joint proxy statement/prospectus regarding the proposed merger with
GreenPoint when it becomes available, the amended preliminary proxy
statement/prospectus filed with the SEC on April 12, 2004 regarding the proposed
merger with Trustcompany and the definitive proxy statement/prospectus regarding
the proposed merger with Trustcompany when it becomes available because they
contain, or will contain, important information. Stockholders will be able to
obtain a free copy of these documents, as well as other filings containing
information about North Fork, GreenPoint and Trustcompany, without charge, at
the SEC's internet site (http://www.sec.gov). Copies of these documents can also
be obtained without charge, by directing a request to North Fork Bancorporation,
Inc., 275 Broadhollow Road, Melville, NY 11747; Attention: Aurelie Campbell,
631-844-1252.
The directors and executive officers of North Fork and other persons may be
deemed to be participants in North Fork's solicitation of proxies in respect of
the proposed merger between North Fork and GreenPoint. Information regarding
North Fork's directors and executive officers is available in the proxy
statement filed with the SEC by North Fork on March 19, 2004. Other information
regarding the participants in North Fork's proxy solicitation in respect of the
proposed merger between North Fork and GreenPoint and a description of any
direct and indirect interests, by security holdings or otherwise, are contained
in the preliminary joint proxy statement/prospectus filed with the SEC on April
2, 2004 regarding the proposed merger with GreenPoint.
North Fork Bancorporation, Inc.
Consolidated Statements of Income
(Unaudited)
Three Months Ended
March 31, December 31, March 31,
(in thousands, except per share amounts) 2004 2003 2003
----------------------------------------------------
Interest Income:
Loans $194,200 $197,457 $196,921
Securities 73,260 69,982 99,622
Money Market Investments 203 282 174
----------------------------------------------------
Total Interest Income 267,663 267,721 296,717
----------------------------------------------------
Interest Expense:
Savings, NOW & Money Market Deposits 15,011 14,337 14,760
Time Deposits 6,643 7,706 10,053
Certificates of Deposit, $100,000 & Over 4,093 4,003 5,103
Federal Funds Purchased & Collateralized Borrowings 28,603 28,401 47,615
Subordinated Debt 4,545 4,630 7,225
Junior Subordinated Debt (3) 1,939 1,952 2,511
----------------------------------------------------
Total Interest Expense 60,834 61,029 87,267
----------------------------------------------------
Net Interest Income 206,829 206,692 209,450
Provision for Loan Losses 6,500 7,000 6,250
----------------------------------------------------
Net Interest Income after Provision for Loan Losses 200,329 199,692 203,200
----------------------------------------------------
Non-Interest Income:
Customer Related Fees & Service Charges 21,771 21,044 20,166
Investment Management, Commissions & Trust Fees 3,924 3,489 3,124
Mortgage Banking Income 1,160 1,279 2,818
Check Cashing Fees 1,189 1,217 996
Other Operating Income 5,797 3,961 4,546
Securities Gains, net 7,888 9,085 2,597
----------------------------------------------------
Total Non-Interest Income 41,729 40,075 34,247
----------------------------------------------------
Non-Interest Expense:
Employee Compensation & Benefits 51,077 46,947 47,340
Occupancy & Equipment, net 17,625 17,903 15,521
Other Operating Expenses 17,946 18,162 16,817
Amortization of Identifiable Intangibles 781 892 892
Acquisition Related Costs - 1,438 -
----------------------------------------------------
Total Non-Interest Expense 87,429 85,342 80,570
----------------------------------------------------
Income Before Income Taxes 154,629 154,425 156,877
Provision for Income Taxes 52,110 52,042 53,338
----------------------------------------------------
Net Income $102,519 $102,383 $103,539
----------------------------------------------------
Earnings Per Share:
Basic $0.69 $0.69 $0.67
Diluted $0.68 $0.68 $0.67
See accompanying notes appended to the financial data and summaries
North Fork Bancorporation, Inc.
Consolidated Balance Sheets
(Unaudited)
March 31, December 31, March 31,
(in thousands, except per share amounts) 2004 2003 2003
-----------------------------------------------------
Assets:
Cash & Due from Banks $407,025 $510,354 $376,355
Money Market Investments 239,081 21,037 47,693
Securities:
Available-for-Sale 7,706,879 7,136,275 9,516,955
Held-to-Maturity 169,264 190,285 252,364
-----------------------------------------------------
Total Securities 7,876,143 7,326,560 9,769,319
-----------------------------------------------------
Loans, Net of Unearned Income & Deferred Costs 12,658,953 12,345,273 11,435,423
Less: Allowance for Loan Losses 124,364 122,733 115,087
-----------------------------------------------------
Net Loans 12,534,589 12,222,540 11,320,336
-----------------------------------------------------
Goodwill 410,494 410,494 410,495
Identifiable Intangibles 11,984 12,765 15,440
Premises & Equipment 160,151 150,875 140,517
Other Assets 334,670 314,749 319,478
-----------------------------------------------------
Total Assets $21,974,137 $20,969,374 $22,399,633
-----------------------------------------------------
Liabilities and Stockholders' Equity:
Deposits:
Demand $4,233,526 $4,080,134 $3,359,885
Savings 3,846,837 3,770,683 3,532,326
NOW & Money Market 5,126,883 4,519,476 3,376,108
Time 1,743,679 1,784,408 1,932,743
Certificates of Deposit, $100,000 & Over 992,563 961,414 1,171,386
-----------------------------------------------------
Total Deposits 15,943,488 15,116,115 13,372,448
-----------------------------------------------------
Federal Funds Purchased & Collateralized Borrowings 2,955,362 3,221,154 6,077,000
Subordinated Debt 488,402 476,499 499,162
Junior Subordinated Debt (3) 273,942 266,977 276,672
-----------------------------------------------------
Total Borrowings 3,717,706 3,964,630 6,852,834
-----------------------------------------------------
Dividends Payable 45,904 45,757 42,411
Due to Brokers 303,604 31,095 178,076
Accrued Expenses & Other Liabilities 379,656 333,288 421,777
-----------------------------------------------------
Total Liabilities $20,390,358 $19,490,885 $20,867,546
-----------------------------------------------------
Stockholders' Equity:
Common Stock, par value $0.01; authorized 500,000,000 shares;
issued 174,580,778 shares 1,746 1,746 1,746
Additional Paid in Capital 376,408 378,793 375,513
Retained Earnings 1,872,989 1,816,458 1,651,882
Accumulated Other Comprehensive Income/(Loss) 31,855 (2,044) 30,916
Deferred Compensation (88,502) (91,789) (68,307)
Treasury Stock at Cost; 21,566,242 shares at March 31, 2004 (610,717) (624,675) (459,663)
-----------------------------------------------------
Total Stockholders' Equity 1,583,779 1,478,489 1,532,087
-----------------------------------------------------
Total Liabilities and Stockholders' Equity $21,974,137 $20,969,374 $22,399,633
-----------------------------------------------------
See accompanying notes appended to the financial data and summaries
North Fork Bancorporation, Inc.
Selected Financial Data and Balance Sheet Components
(Unaudited)
March 31, December 31, March 31,
March 31, December 31, March 31,
SELECTED FINANCIAL DATA: 2004 2003 2003
----------------------------------------------------------------
(in thousands, except ratios and per share amounts)
Per Share:
Net Income - Basic $0.69 $0.69 $0.67
Net Income - Diluted $0.68 $0.68 $0.67
Average Shares Outstanding - Basic 148,269 147,873 153,929
Average Shares Outstanding - Diluted 150,246 149,735 155,476
Cash Dividends $0.30 $0.30 $0.27
Dividend Payout Ratio 45% 45% 41%
Book Value $10.35 $9.69 $9.75
Selected Financial Data:
Return on Average Total Assets 1.96% 1.98% 1.94%
Return on Average Stockholders' Equity 26.58% 27.32% 27.22%
Efficiency Ratio (2) 35.41% 34.43% 32.60%
Yield on Interest Earning Assets (1) 5.57% 5.64% 6.12%
Cost of Funds 1.62% 1.66% 2.15%
Net Interest Margin (1) 4.33% 4.39% 4.36%
March 31, December 31, March 31,
2004 2003 2003
----------------------------------------------------------------
Capital Ratios:
Risk Based Capital:
Tier 1 10.61% 10.49% 10.94%
Total 15.43% 15.53% 16.04%
Leverage Ratio 6.66% 6.47% 6.22%
Quarterly Average Balance Sheet:
Total Assets $21,060,732 $20,554,912 $21,663,614
Securities 7,212,411 7,001,865 8,592,607
Loans 12,474,528 12,126,302 11,397,521
Demand Deposits 4,077,535 4,098,276 3,281,234
Interest Bearing Deposits 11,309,570 10,894,793 9,945,217
Federal Funds Purchased & Collateralized Borrowings 3,025,446 2,980,436 5,718,852
Subordinated Debt 476,511 481,293 499,151
Junior Subordinated Debt (3) 266,980 272,920 276,661
Stockholders' Equity $1,551,429 $1,487,049 $1,542,720
BALANCE SHEET COMPONENTS:
Securities:
The following table shows the securities portfolio composition for the periods
ended:
March 31, December 31, March 31,
(in thousands) 2004 2003 2003
-----------------------------------------------------------
Collateralized Mortgage Obligations $4,877,161 $4,424,868 $7,525,718
Agency Pass-Through Certificates 1,339,766 1,328,753 778,729
State & Municipal Obligations 767,802 761,747 478,623
Equity Securities 176,950 194,345 326,563
U.S. Treasury & Government Agencies 109,980 58,090 116,417
Other Securities 604,484 558,757 543,269
-----------------------------------------------------------
Total Securities $7,876,143 $7,326,560 $9,769,319
-----------------------------------------------------------
North Fork Bancorporation, Inc.
Selected Financial Data and Balance Sheet Components, Continued
(Unaudited)
Loans:
The following table represents the components of the loan portfolio for the
periods ended:
March 31, December 31, March 31,
(in thousands) 2004 2003 2003
----------------------------------------------------
Multi-Family Mortgages $3,658,070 $3,634,533 $3,652,430
Commercial Mortgages 2,836,434 2,814,103 2,221,014
Residential Mortgages 2,506,316 2,403,306 2,418,156
Commercial 2,248,285 2,145,798 1,856,843
Consumer 1,113,982 1,095,529 1,038,195
Construction and Land 326,703 283,243 273,924
----------------------------------------------------
Total $12,689,790 $12,376,512 $11,460,562
Less:
Unearned Income & Deferred Costs 30,837 31,239 25,139
----------------------------------------------------
Loans, net $12,658,953 $12,345,273 $11,435,423
====================================================
Asset Quality:
Non-Performing Loans $11,302 $13,340 $12,870
Other Real Estate 93 313 295
----------------------------------------------------
Total Non-Performing Assets $11,395 $13,653 $13,165
====================================================
Allowance for Loan Losses to Non-Performing Loans 1,100% 920% 894%
Allowance for Loan Losses to Total Loans, net 0.98% 0.99% 1.01%
Non-Performing Loans to Total Loans, net 0.09% 0.11% 0.11%
Quarterly Net Charge-offs to Average Loans (Annualized) 0.16% 0.14% 0.22%
Deposits:
The following table represents the composition of total deposits, while more
specifically highlighting Manhattan for the periods ended:
March 31, December 31, March 31,
(in thousands) 2004 2003 2003
----------------------------------------------------
Manhattan (27 branches)
Demand $1,113,988 $1,027,017 $705,742
Interest Bearing 2,701,020 2,267,543 1,783,522
----------------------------------------------------
Total 3,815,008 3,294,560 2,489,264
All Other Locations (153 branches)
Demand 3,119,538 3,053,117 2,654,143
Interest Bearing 9,008,942 8,768,438 8,229,041
----------------------------------------------------
Total 12,128,480 11,821,555 10,883,184
Total Deposits (180 branches)
Demand 4,233,526 4,080,134 3,359,885
Interest Bearing 11,709,962 11,035,981 10,012,563
----------------------------------------------------
Total $15,943,488 $15,116,115 $13,372,448
====================================================
See accompanying notes appended to the financial data and summaries.
North Fork Bancorporation, Inc.
Net Interest Margin Analysis
(Unaudited)
The following table presents, on a linked quarter basis, an analysis of net
interest income by each major category of interest earning assets and interest
bearing liabilities:
For the Three Months Ended: March 31, 2004 December 31, 2003
-------------------------------------------------------------------------
Average Average Average Average
(dollars in thousands) Balance Interest Rate Balance Interest Rate
-------------------------------------------------------------------------
Interest Earning Assets:
Securities $7,212,411 $78,963 4.40% $7,001,865 $75,800 4.29%
Loans, net 12,474,528 194,615 6.27% 12,126,302 197,855 6.47%
Money Market Investments 81,144 241 1.19% 125,441 294 0.93%
------------------------- -------------------------
Total Interest Earning Assets 19,768,083 273,819 5.57% 19,253,608 273,949 5.64%
------------------------- -------------------------
Non-Interest Earning Assets:
Cash and Due from Banks $533,395 $527,476
Other Assets 759,254 773,828
-------------- --------------
Total Assets $21,060,732 $20,554,912
-------------- --------------
Interest Bearing Liabilities:
Savings, NOW & Money Market Deposits $8,515,206 $15,011 0.71% $8,140,175 $14,337 0.70%
Time Deposits 2,794,364 10,736 1.55% 2,754,618 11,709 1.69%
------------------------- -------------------------
Total Savings and Time Deposits 11,309,570 25,747 0.92% 10,894,793 26,046 0.95%
Fed Funds Purchased & Collateralized Borrowings 3,025,446 28,603 3.80% 2,980,436 28,401 3.78%
Subordinated Debt 476,511 4,545 3.84% 481,293 4,630 3.82%
Junior Subordinated Debt (3) 266,980 1,939 2.92% 272,920 1,952 2.84%
------------------------- -------------------------
Total Borrowings 3,768,937 35,087 3.74% 3,734,649 34,983 3.72%
------------------------- -------------------------
Total Interest Bearing Liabilities 15,078,507 60,834 1.62% 14,629,442 61,029 1.66%
------------------------- -------------------------
Interest Rate Spread 3.95% 3.98%
Non-Interest Bearing Liabilities:
Demand Deposits $4,077,535 $4,098,276
Other Liabilities 353,261 340,145
-------------- --------------
Total Liabilities 19,509,303 19,067,863
Stockholders' Equity 1,551,429 1,487,049
-------------- --------------
Total Liabilities and Stockholders' Equity $21,060,732 $20,554,912
-------------- --------------
Net Interest Income and Net Interest Margin $212,985 4.33% $212,920 4.39%
Less: Tax Equivalent Adjustment (6,156) (6,228)
----------- -----------
Net Interest Income $206,829 $206,692
----------- -----------
The following table summarizes the net interest margin for the previous five
quarters:
2004 2003
--------------------------------------------------------------
1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
--------------------------------------------------------------
Interest Earning Assets:
Securities 4.40% 4.29% 3.84% 4.15% 4.97%
Loans, net 6.27% 6.47% 6.62% 6.73% 7.02%
Money Market Investments 1.19% 0.93% 1.34% 1.54% 1.77%
--------------------------------------------------------------
Total Interest Earning Assets 5.57% 5.64% 5.56% 5.60% 6.12%
--------------------------------------------------------------
Interest Bearing Liabilities:
Total Savings and Time Deposits 0.92% 0.95% 1.01% 1.12% 1.22%
Total Borrowings 3.74% 3.72% 3.30% 3.31% 3.58%
--------------------------------------------------------------
Total Interest Bearing Liabilities 1.62% 1.66% 1.67% 1.97% 2.15%
--------------------------------------------------------------
Interest Rate Spread 3.95% 3.98% 3.89% 3.63% 3.97%
Net Interest Margin 4.33% 4.39% 4.23% 4.00% 4.36%
North Fork Bancorporation, Inc.
Notes to the Financial Data and Summaries
(1) Presented on a tax equivalent basis.
(2) The efficiency ratio is defined as the ratio of non-interest expense,
net of acquisition related costs, debt restructuring costs,
amortization of identifiable intangibles, other real estate related
expenses and other non-recurring charges, to net interest income on a
tax equivalent basis and other non-interest income net of securities
gains, facilities gains and other non-recurring items.
(3) On January 1, 2004, the Company was required to adopt the accounting
provisions of Interpretation No. 46 "Consolidation of Variable Interest
Entities (revised December 2003)," ("FIN 46R"). In accordance with the
provisions of FIN 46R, the Company was required to deconsolidate its
investment in the statutory business trusts that were formed for the
issuance of trust preferred securities (capital securities). This
deconsolidation resulted in the re-characterization of the underlying
consolidated debt obligation from the trust preferred securities
(capital securities) to the junior subordinated debt obligations that
exist between the Company and the three wholly-owned trust entities
that issued the securities. The adoption of FIN 46R had no effect on
the Company's results of operations.