STATEN ISLAND BANCORP INC - 10-Q Quarterly Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark one)
ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2003
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition period from to

Commission File Number 1-13503

Staten Island Bancorp, Inc.
(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		13-3958850 (I.R.S. Employer Identification Number)
1535 Richmond Avenue Staten Island, New York (Address of principal executive office)		10314 (Zip Code)

(718) 447-8880
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ý No o

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. The Registrant had 58,763,994 shares of Common Stock outstanding as of November 6, 2003.

TABLE OF CONTENTS

			PAGE
Part I	FINANCIAL INFORMATION
	Item 1	Financial Statements
	Unaudited Consolidated Statements of Financial Condition (As of September 30, 2003 and December 31, 2002)		1
	Unaudited Consolidated Statements of Income (For the three months and nine months ended September 30, 2003 and 2002)		2
	Unaudited Consolidated Statement of Changes in Stockholders' Equity (For the nine months ended September 30, 2003)		3
	Unaudited Consolidated Statements of Cash Flows (For the nine months ended September 30, 2003 and 2002)		4
	Notes to Unaudited Consolidated Financial Statements		5
	Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	35
	Item 4	Controls and Procedures	35
Part II	OTHER INFORMATION
	Item 1	Legal Proceedings	37
	Item 2	Changes In Securities And Use Of Proceeds	37
	Item 3	Defaults Upon Senior Securities	37
	Item 4	Submission Of Matters To A Vote Of Security Holders	37
	Item 5	Other Information	37
	Item 6	Exhibits And Reports On Form 8-K	37
	Signatures		38

Part I.

FINANCIAL INFORMATION

Item 1. Financial Statements

STATEN ISLAND BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)

			September 30, 2003			December 31, 2002
			(000's omitted, except share data)
ASSETS:
	Cash and due from banks		$	125,407		$	137,085
	Federal funds sold			184,000			237,000
	Securities available for sale			1,152,574			911,432
	Federal Home Loan Bank of NY capital stock			106,900			112,150
	Loans, net of allowance for loan losses of $24.0 million at September 30, 2003 and $22.8 million at December 31, 2002			3,442,593			3,422,492
	Loans held for sale			2,143,278			1,729,890
	Accrued interest receivable			22,896			23,976
	Premises and equipment, net			52,031			47,545
	Intangible assets, net			57,056			57,881
	Other assets			267,354			255,644

		Total assets	$	7,554,089		$	6,935,095

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
	Due Depositors—
	Savings		$	1,131,251		$	1,045,767
	Certificates of deposit			1,233,462			1,105,370
	Money market			753,753			639,037
	NOW accounts			153,834			134,450
	Demand deposits			583,293			539,510

		Total deposits		3,855,593			3,464,134
	Borrowed funds			2,961,507			2,756,927
	Advances from borrowers for taxes and insurance			28,605			23,537
	Accrued interest and other liabilities			81,270			76,229

		Total liabilities		6,926,975			6,320,827

STOCKHOLDERS' EQUITY:
	Common stock, par value $.01 per share, 100,000,000 shares authorized, 90,260,624 issued and 58,755,994 outstanding at September 30, 2003 and 90,260,624 issued and 60,269,397 outstanding at December 31, 2002			903			903
	Additional paid-in-capital			588,155			586,405
	Retained earnings			429,287			391,739
	Unallocated common stock held by ESOP			(26,782	)		(27,468	)
	Unearned common stock held by RRP			(3,917	)		(8,894	)
	Treasury stock 31,504,630 shares at September 30, 2003 and 29,991,227 at December 31, 2002), at cost			(369,178	)		(339,982	)

				618,468			602,703
	Accumulated other comprehensive income, net of taxes			8,646			11,565

		Total stockholders' equity		627,114			614,268

		Total liabilities and stockholders' equity	$	7,554,089		$	6,935,095

See accompanying notes to consolidated financial statements.

STATEN ISLAND BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

			For the Three Months Ended September 30,					For the Nine Months Ended September 30,
			2003			2002		2003		2002
			(000's omitted, except per share data)
Interest Income:
	Loans		$	81,640		$	79,552	$	247,945	$	225,190
	Securities, available for sale			11,067			20,761		35,976		68,602
	Federal funds sold			371			322		1,259		1,020

		Total interest income		93,078			100,635		285,180		294,812

Interest Expense:
	Savings and escrow			2,560			4,285		8,662		13,686
	Certificates of deposit			7,586			9,837		23,006		29,994
	Money market and NOW			3,544			4,423		11,288		11,765
	Borrowed funds			28,131			29,821		83,802		86,340

		Total interest expense		41,821			48,366		126,758		141,785

		Net interest income		51,257			52,269		158,422		153,027
Provision for Loan Losses				1,894			3,349		5,523		9,839

	Net interest income after provision for loan losses			49,363			48,920		152,899		143,188

Other Income (Loss):
	Service and fee income			4,143			3,948		12,019		10,819
	Net gain on loan sales			104,728			55,293		304,289		127,477
	Unrealized gain (loss) on derivative transactions			(4,123	)		14,033		1,341		13,013
	Loan fees			15,718			7,252		40,650		19,095
	Other income			1,931			1,917		5,766		8,626
	Securities transactions			45			1,512		358		2,111

		Total other income		122,442			83,955		364,423		181,141

Other Expenses:
	Personnel			31,961			9,905		86,999		71,134
	Commissions			88,980			33,735		230,134		75,479
	Occupancy and equipment			5,757			4,079		16,387		11,506
	Amortization of intangible assets			145			138		434		436
	Data processing			2,046			1,643		5,729		5,016
	Marketing			1,980			1,322		6,271		3,814
	Professional fees			4,462			2,978		14,013		8,697
	Other			19,577			10,369		53,843		28,149

		Total other expenses		154,908			64,169		413,810		204,231

Income before provision for income taxes				16,897			68,706		103,512		120,098
Provision for Income Taxes				7,074			28,230		43,978		49,013

Income before cumulative effect of accounting change				9,823			40,476		59,534		71,085
Cumulative effect of accounting change				—			4,731		—		4,731

Net Income			$	9,823		$	45,207	$	59,534	$	75,816

Earnings Per Share Before Cumulative Effect of Accounting Change:
	Basic		$	0.18		$	0.73	$	1.09	$	1.27
	Diluted		$	0.17		$	0.70	$	1.05	$	1.21
Earnings Per Share After Cumulative Effect of Accounting Change:
	Basic		$	0.18		$	0.81	$	1.09	$	1.35
	Diluted		$	0.17		$	0.78	$	1.05	$	1.30
Dividends Declared			$	0.14		$	0.12	$	0.40	$	0.33

See accompanying notes to consolidated financial statements.

STATEN ISLAND BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
(UNAUDITED)

	Common Stock		Additional Paid-in Capital			Unallocated Common Stock Held by ESOP			Unearned Common Stock Held by RRP			Treasury Stock			Comprehensive Income			Retained Earnings			Accumulated Other Comprehensive Income (Loss) Net of Taxes			Total
	(000's omitted, except share data)
Balance, January 1, 2003	$	903	$	586,405		$	(27,468	)	$	(8,894	)	$	(339,982	)	$	—		$	391,739		$	11,565		$	614,268
Allocation of 114,452 ESOP shares				1,298			686																		1,984
Earned RRP shares				528						4,977															5,505
Treasury stock purchases (2,063,056), at cost													(35,554	)											(35,554	)
Cash dividends paid ($0.40 per share)																			(21,986	)					(21,986	)
Exercise of 549,653 stock options				(76	)								6,358												6,282
Change in unrealized appreciation (depreciation) on securities, net of reclassification adjustment and tax effect																(2,919	)					(2,919	)		(2,919	)
Net income																59,534			59,534						59,534

Comprehensive income															$	56,615

Balance, September 30, 2003	$	903	$	588,155		$	(26,782	)	$	(3,917	)	$	(369,178	)				$	429,287		$	8,646		$	627,114

See accompanying notes to consolidated financial statements.

STATEN ISLAND BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(UNAUDITED)

			For the Nine Months Ended September 30,
			2003			2002
			(000's omitted)
Cash Flows From Operating Activities:
Net Income			$	59,534		$	75,816
Adjustments to reconcile net income to net cash provided by operating activities
	Depreciation and software amortization			5,822			4,486
	(Accretion) and amortization of bond and mortgage premiums and discount			3,732			(238	)
	Amortization of intangible assets			434			436
	Securities impairment charges			819			100
	Realized gain on sale of available for sale securities			(1,177	)		(2,211	)
	Expense charge relating to allocation and earned portions of employee benefit plans			7,489			19,289
	Provision for loan losses			5,523			9,839
	Increase in cash surrender value of BOLI			(5,766	)		(5,626	)
	Gain on sale of loans held for sale			(304,289	)		(127,477	)
	Origination of loans held for sale			(12,380,791	)		(4,507,766	)
	Purchase of loans held for sale			(1,203,684	)		(440,089	)
	Proceeds from sale of loans held for sale			12,972,021			4,426,861
	Repayment of loans held for sale			532,236			324,833
	Unrealized gain on derivative transactions			(1,341	)		(13,013	)
	Increase in net deferred loan fees and costs			(66	)		(5,793	)
	(Increase) decrease in accrued interest receivable			1,080			(4,202	)
	Increase in other assets			(8,945	)		(10,746	)
	Increase (decrease) in accrued interest and other liabilities			(18,331	)		3,122
	Deferred income taxes			7,015			10,399

		Net cash used in operating activities		(328,685	)		(241,980	)

Cash Flows From Investing Activities:
	(Increase) decrease in Federal Funds sold			53,000			(357,000	)
	Maturities and amortization of mortgage-backed securities and CMOs			407,776			440,066
	Maturities and amortization of all other available for sale securities			230,431			54,799
	Sales of mortgage-backed securities and CMOs			—			169,655
	Sales of all other available for sale securities			64,579			187,296
	Purchases of mortgage-backed securities and CMOs			(110,664	)		(405,869	)
	Purchases of all other available for sale securities			(840,996	)		(105,284	)
	Principal collected on loans			1,027,622			744,126
	Deferred loan fees			(4,245	)		(4,086	)
	Loans made to customers			(1,166,365	)		(1,369,425	)
	Sales of loans			115,416			129,027
	Redemption (purchase) of Federal Home Loan Bank of New York common stock			5,250			(11,250	)
	Capital expenditures			(9,578	)		(10,312	)

		Net cash used in investing activities		(227,774	)		(538,257	)

Cash Flows From Financing Activities:
	Net increase in deposit accounts			391,459			552,600
	Increase in borrowings			204,580			294,389
	Cash dividends paid			(21,986	)		(18,853	)
	Purchase of treasury stock			(35,554	)		(60,163	)
	Exercise of stock options			6,282			9,171

		Net cash provided by financing activities		544,781			777,144

		Net decrease in cash and cash equivalents		(11,678	)		(3,093	)
Cash and cash equivalents, beginning of year				137,085			116,846

Cash and cash equivalents, end of period			$	125,407		$	113,753

Supplemental Disclosures of Cash Flow Information:
Cash paid for—