ITEM 1 BUSINESS
GENERAL DEVELOPMENT OF BUSINESS
North Fork Bancorporation, Inc. (the "Registrant"), with its executive headquarters located in Melville, New York, is a bank holding company organized under the laws of the State of Delaware in 1980 and registered under the Bank Holding Company Act of 1956, as amended. The Registrant's primary subsidiary, North Fork Bank ("North Fork"), operates 80 retail banking facilities throughout Suffolk and Nassau Counties on Long Island, New York, as well as in the New York City boroughs of Manhattan, Queens, and the Bronx and in Westchester and Rockland Counties, North of New York City.
In December 1997, the Registrant completed its purchase acquisition of Branford Savings Bank ("Branford"), a Connecticut chartered savings bank. At December 31, 1997, Branford had total assets of $179 million, deposits of $160 million, and stockholder's equity of $16.6 million. Branford, which will continue to operate as a separate subsidiary, operates five retail banking facilities in the Connecticut county of New Haven. The Registrant issued 1,282,901 shares of its common stock to Branford shareholders and paid cash in the amount of $3 million to the holder of Branford's outstanding warrants.
On October 7, 1997, the Registrant entered into an agreement and plan of merger with New York Bancorp, the parent company of Home Federal Savings Bank ("Home Federal"), whereby it would acquire New York Bancorp in a stock-for-stock merger. Under the terms of the agreement, each share of New York Bancorp common stock will be converted into the Registrant's common stock at a fixed exchange ratio of 1.19. The transaction is expected to be treated as a tax-free reorganization and accounted for using the pooling-of-interests method of accounting. On January 30, 1998, the shareholders of both companies voted to approve merger. The Registrant has received the requisite regulatory approvals from the Federal Reserve Bank, the Federal Deposit Insurance Corporation, and the New York State Banking Department. It is anticipated that the transaction will close on March 27, 1998, following receipt of all required regulatory approvals and certain other customary closing conditions.
In anticipation of its merger with New York Bancorp, the Registrant enhanced its regulatory capital ratios through the issuance of $100 million of 8.0% Capital Pass-Through Securities ("Capital Securities") in December 1997. At December 31, 1997, the Registrant's total risk adjusted and leverage capital ratios were 18.61% and 10.08%, respectively.
At December 31, 1997, New York Bancorp had total assets of $3.3 billion, net loans of $2.0 billion, deposits of $1.7 billion, and stockholders' equity of $178 million. Home Federal operates 35 branch offices in the New York City boroughs of Kings, Queens, and Richmond and Nassau and Suffolk Counties on Long Island, New York. Additional information is set forth on "Note 2 - Business Combinations" (pages 33-35) of the Registrants' 1997 Annual Report to Shareholders included as exhibit 13 herewith and incorporated by reference.
On December 31, 1996, North Side Savings Bank ("North Side") was merged with and into North Fork. North Side had $1.6 billion in total assets, $1.2 billion in deposit liabilities, $124.4 million in capital and operated seventeen full-service banking facilities in the New York City boroughs of Bronx and Queens, as well as Nassau and Suffolk Counties on Long Island, New York. Pursuant to the merger agreement, the Registrant issued 15.1 million shares of its common stock to North Side shareholders. The merger was accounted for under the pooling-of-interests method of accounting.
In March 1996, North Fork completed its purchase of the domestic commercial banking business of Extebank ("Extebank"). Extebank had $388 million in total assets, $200 million in net loans, $348 million in deposit liabilities, $30 million in capital and operated eight full-service banking facilities in the metropolitan New York area, including Manhattan. Additionally, in March 1996 North Fork acquired ten Long Island branches of First Nationwide Bank, and assumed $572 million of deposit liabilities for which it paid a deposit premium of 6.35%.
PART I (CONTINUED)
ITEM 1 BUSINESS (CONTINUED)
GENERAL DEVELOPMENT OF BUSINESS (CONTINUED)
In July 1995, the Registrant consummated its purchase of Great Neck Bancorp, parent company of Bank of Great Neck, a Long Island based commercial bank ("Great Neck"). Great Neck had net assets of $91 million, including $49.4 million in net loans and $90.3 million in deposits and was merged into North Fork.
In November 1994, Metro Bancshares Inc. ("Metro"), parent company of Bayside Federal Savings Bank ("Bayside"), was merged with and into the Registrant. Simultaneously, Bayside was merged with and into North Fork. Bayside had $1.0 billion in total assets, $.9 billion in deposit liabilities, $83.5 million in capital, and operated thirteen full-service banking facilities in the New York City borough of Queens and Nassau and Suffolk Counties on Long Island, New York. The merger was accounted for under the pooling-of-interests method of accounting.
North Fork itself is the result of the 1992 merger of the Registrant's two former banking subsidiaries, the North Fork Bank & Trust Company ("Bank & Trust"), which was the Registrant's original subsidiary bank, and Southold Savings Bank ("Southold"), which the Registrant acquired by merger in 1988. In 1992, Bank & Trust was merged with and into Southold; Southold then converted its charter from that of a state savings bank to a state commercial bank and changed its name to North Fork Bank.
Additionally, the Registrant has several active non-bank subsidiaries, none of which accounted for a significant portion of the Registrant's consolidated assets, nor contributed significantly to the Registrant's consolidated results of operations, at and for the year ended December 31, 1997.
DESCRIPTION OF BUSINESS
The Registrant, through its primary subsidiary North Fork Bank, provides a variety of banking and financial services to middle market and small business organizations, local governmental units, and retail customers in the metropolitan New York area. North Fork's major competitors across the entire line of its products and services are local branches of large money-center banks headquarters in New York City and other major commercial banks headquarters in New York State. North Fork also competes with other independent commercial banks in its marketplace for loans and deposits; with local savings and loan associations and savings banks for deposits and mortgage loans; with credit unions for deposits and consumer loans; with insurance companies and money market funds for deposits; and with local consumer finance organizations and the financing affiliates of consumer goods manufacturers (especially automobile manufacturers) for consumer loans. In setting rate structures for North Fork's loan and deposit products, management refers to a wide variety of financial information and indices, including the rates charged or paid by the major money-center banks, both locally and in the commercial centers, and the rates fixed periodically by smaller, local competitors.
The Registrant and its subsidiaries, in their normal course of business, are subject to various regulatory statutes and guidelines. Additional information is set forth under the caption "Capital" (pages 21 - 22) in Management's Discussion and Analysis and "Note 14 - Regulatory Matters" (pages 49 - 50) of the Registrant's 1997 Annual Report to Shareholders included as Exhibit 13 herewith and incorporated herein by reference.
As of December 31, 1997, the Registrant and its consolidated subsidiaries had approximately 1,273 full-time equivalent employees.
PART I (CONTINUED)
ITEM 2
ITEM 2 PROPERTIES
The executive and administrative offices of the Registrant and its bank subsidiaries are located at 275 Broad Hollow Road, Melville, New York 11747. The Registrant currently leases 63,000 square feet of the building, representing approximately 60% of the building's rentable space.
North Fork maintains its data processing and operations center in a 44,900 square foot owned facility, located at 9025 Main Road, Mattituck, New York 11952.
At December 31, 1997, the Registrants' bank subsidiaries owned 49 of their branch banking offices (see "Note 6 - Premises and Equipment" (page 39) of the Registrant's 1997 Annual Report to Shareholders included as Exhibit 13 herewith and incorporated herein by reference) and leased 58 branch banking offices under various lease arrangements expiring at various times through 2016 (see "Note 15 - Other Commitments and Contingent Liabilities (B) Lease Commitments" (page 51) of the Registrant's 1997 Annual Report to Shareholders included as Exhibit 13 herewith and incorporated herein by reference). North Fork and Branford are also obligated under several other leases for facilities, which are either used in conducting banking and non-banking activity, or have been vacated by North Fork and Branford, as a result of its consolidation of operations following its recent mergers and acquisitions. The facilities owned or occupied under lease by the Registrant and its bank subsidiaries are considered by management to be well located and suitably equipped to serve as banking and financial services facilities.
ITEM 3
ITEM 3 LEGAL PROCEEDINGS
The information required by this item is set forth under the caption "Note 15 - Other Commitments and Contingent Liabilities (C) Other Matters" (page 51) in the Registrant's 1997 Annual Report to Shareholders included herein as Exhibit 13, and incorporated herein by reference.
ITEM 4
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Registrant held a special meeting of its stockholders on January 30, 1998 to approve the merger with New York Bancorp. The Registrant's stockholders approved the merger with 47,533,967 affirmative votes cast, 93,568 negative votes cast and 201,869 votes abstaining.
ITEM 4A EXECUTIVE OFFICERS OF THE REGISTRANT
The name, age, position and business experience during the past five years of each of the executive officers of the Registrant as of January 1, 1998, are presented in the following table. The officers are elected annually by the Board of Directors.
PART II
ITEM 5
ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Registrant's common stock is traded on the New York Stock Exchange under the symbol NFB. As of February 26, 1998, there were 6,161 shareholders of record of the Registrant's common stock.
On February 25, 1997, the Registrants' Board of Directors approved a two-for-one common stock split. The additional shares were issued on May 15, 1997 to shareholders of record on April 25, 1997. Additionally, during 1997, the Registrant declared dividends of $.125 per share for the first quarter and $.15 per share for the second, third, and fourth quarters, respectively. During 1996, the Registrant declared dividends of $.10 per share for the first, second, and third quarters, respectively, and $.125 per share for the fourth quarter.
For additional information regarding dividends and restrictions thereon, and market price information, refer to the "Selected Financial Data" (page 9), the "Liquidity" section of Management's Discussion and Analysis (pages 17-18), the "Selected Statistical Data" (page 25), "Note 8 - Other Borrowings" (page 41), and "Note 14 - Regulatory Matters" (page 49-50) of the Registrant's 1997 Annual Report to Shareholders included herewith as Exhibit 13 and incorporated herein by reference.
ITEM 6
ITEM 6 SELECTED FINANCIAL DATA
The information required by this item is set forth in "Selected Financial Data" (page 9) of the Registrant's 1997 Annual Report to Shareholders included herewith as Exhibit 13 and incorporated herein by reference.
ITEM 7
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information required by this item is set forth in Management's Discussion and Analysis, (pages 10 - 25) of the Registrant's 1997 Annual Report to Shareholders included herewith as Exhibit 13 and incorporated herein by reference.
ITEM 8
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following information is set forth in the Registrant's 1997 Annual Report to Shareholders included herewith as Exhibit 13 and incorporated herein by reference:
Unaudited Quarterly Financial Information (page 25); the Consolidated Financial Statements (pages 26-29); the Notes to the Consolidated Financial Statements (pages 30-53); the Independent Auditors' Report (page 54); and the Report of Management (page 55).
ITEM 9
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There were no changes in or disagreements with accountants on accounting and financial disclosure as defined in Item 304 of Regulation S-K.
PART III
ITEM 10
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is set forth under the caption "Election of Directors and Information with Respect to Directors and Officers" (pages 3 - 6) in the Registrant's Definitive Proxy Statement for its Annual Meeting of Stockholders to be held on Tuesday, April 28, 1998, which is incorporated herein by reference, and in Part I of this report under the caption Item 4A "Executive Officers of the Registrant".
ITEM 11
ITEM 11 EXECUTIVE COMPENSATION
The information required by this item is set forth under the captions "Compensation of Directors" (page 8), "Executive Compensation" (pages 8 - 25), and "Retirement Plans" (pages 25-26) in the Registrant's Definitive Proxy Statement for its Annual Meeting of Stockholder's to be held April 28, 1998, which is incorporated herein by reference.
ITEM 12
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is set forth under the caption "Certain Beneficial Ownership" and "Nominees for Director and Directors Continuing in Office" (pages 2 - 6) in the Registrant's Definitive Proxy Statement for its Annual Meeting of Stockholder's to be held April 28, 1998, which is incorporated herein by reference.
ITEM 13
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is set forth under the caption "Transactions with Directors, Executive Officers and Associated Persons" (page 26) in the Registrant's Definitive Proxy Statement for its Annual Meeting of Stockholders to be held April 28, 1998, which is incorporated herein by reference.
PART IV
ITEM 14
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The consolidated financial statements, including notes thereto, and financial schedules of the Registrant, required in response to this item as set forth in response to Part II, Item 8 of this Annual Report are incorporated herein by reference to the Registrant's 1997 Annual Report to Shareholders filed herewith as Exhibit 13.
2. Financial Statement Schedules -----------------------------
Schedules to the consolidated financial statements required by Article 9 of Regulation S-X and all other schedules to the consolidated financial statements of the Registrant have been omitted because they are either not required, are not applicable or are included in the consolidated financial statements or notes thereto, which is incorporated herein by reference.
3. Exhibits --------
The exhibits listed on the Exhibit Index page of this Annual Report are incorporated herein by reference or filed herewith as required by Item 601 of Regulation S-K (each management contract or compensatory plan or arrangement listed therein is identified).
(b) Current Report on Form 8-K filed during the fourth quarter of 1997 are as follows:
On October 8, 1997, the Registrant filed a current report stating that it had entered into an agreement and plan of merger dated October 7, 1997 with New York Bancorp.
On October 31, 1997, the Registrant filed a current report stating that it had issued a press release regarding its third quarter and year-to-date 1997 financial results.
On December 9, 1997, the Registrant filed a current report stating that it had issued a press release announcing that the shareholders of Branford Savings Bank had approved the merger with the Registrant.
On December 10, 1997, the Registrant filed a current report stating that it had sold through North Fork Capital Trust II, a newly formed special purpose subsidiary, $100 million of 8% Capital Trust Pass-Through Securities.
On December 12, 1997, the Registrant filed a current report stating that it had completed its acquisition of Branford Savings Bank.
Pursuant to the requirements of Section 13 or 15(d) of this Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NORTH FORK BANCORPORATION, INC.
BY: /s/ John A. Kanas ----------------- JOHN A. KANAS President and Chief Executive Officer
Dated: March 17, 1998 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.
EXHIBIT INDEX
EXHIBIT INDEX (CONTINUED)
EXHIBIT INDEX (CONTINUED)
(a) Management contract or compensatory plan or arrangement.