GreenPoint Financial Corp.

1868–1998

GreenPoint Financial Corp. is a bank holding company whose bank subsidiary, GreenPoint Bank, had 73 branches in the New York City metropolitan area in 1998. Through its mortgage lending subsidiary, the company was the national lender in no-documentation residential mortgages. With a 1998 acquisition, Greenpoint also became the second ranking originator and servicer of manufactured home loans in the United States. In addition, it was operating a for-profit community development subsidiary in the New York City metropolitan area.

Green Point Savings Bank to 1990

Located at the northwest end of Brooklyn, Greenpoint was still a small, quiet community in 1868, when prominent local citizens received a state charter to establish The Green Point Savings Bank, a mutual thrift institution and the forerunner of GreenPoint Bank. It opened for business the following year and collected about $135,000 in deposits in the first year of operation. By 1880 its deposits had grown fivefold, and they tripled again by 1885. Deposits reached more than $5 million in 1905. After moving several times, the bank, in 1908, settled into its own newly erected granite-faced building at Manhattan Avenue and Calyer Street. The bank's assets came to $12.4 million in 1918.

In 1928 Green Point opened a branch in another Brooklyn neighborhood, Crown Heights. After merging with the troubled Home Savings Bank in 1931, however, Green Point moved this branch to Flatbush. Green Point had 77,109 depositors and $65.1 million in assets at the beginning of 1940 and 105,546 depositors and $159.3 million in assets at the end of 1950. Net profits came to $3.35 million that year. The bank opened a branch in Canarsie in 1952. By the end of 1960 the number of depositors had grown to 132,813, assets to $296.7 million, and net profit to $10.2 million. Green Point opened a branch in Flushing, Queens, in 1967 and in Levittown in Nassau County in 1969.

Green Point Savings Bank had 168,765 depositors at the end of 1970, $588.6 million in assets, and $25 million in net profits for the year. The number of depositors was 218,856, and assets were $1.18 billion, at the end of 1980. In the 1970s and early 1980s, the bank opened three more Brooklyn branches, one in Queens, and four in Nassau County communities. In 1983 Green Point was making more mortgage loans in Brooklyn, Queens, and Nassau County than any other lender--even Citibank, which was 80 times bigger. The bank earned $7.6 million in 1982, a year in which 90 percent of all U.S. savings institutions were reporting losses because of high interest rates.

The corporation's success in this field was attributed to its willingness to make mortgage loans without requiring verification of such basic information as income or place of employment. Many of its clients were people who earned more money than they declared on their tax returns, said the bank's president, adding "We are not the I.R.S." Most of its borrowers were choosing an "automatic credit" mortgage, which only required checking the applicant's name with a credit bureau. Even if the credit report showed that the applicant was in arrears of bills or loans, Green Point might still approve the mortgage, though at a higher price. In some cases the bank would make the loan even if the customer could not meet the 25 percent down payment. In spite of its customer-friendly policies, Green Point was experiencing fewer foreclosures than most other mortgage lenders.

It opened for business the following year and collected about $135,000 in deposits in the first year of operation.

1987–1993

The bank also was making mortgage loans expeditiously. Its business in this field came 90 percent of the time from real estate brokers and lawyers, and within two days of the initial call from these sources, it was sending out an appraiser to inspect the property. Because of a simplified form, its personnel could process about 14 appraisals a day, compared to only three or four if they were using standard appraisal forms requiring depreciating every major item in the house individually.

In 1987 Green Point Savings Bank entered Westchester County for the first time and by mid-1988 had 16 branches. In 1987 the bank launched a highly successful referral network that encouraged real estate professionals to send it customers. "We rarely turn a loan down," bank president I. J. Lasurdo told Phil Roosevelt, "but we may charge extra fees or higher interest rates, depending on the problems surrounding the particular application." The bank's mortgage portfolio represented about 85 percent of its total assets, which had reached $3.2 billion in 1988. Its return on assets was among the highest of any thrift institution in the state of New York. The bank had net income of $78 million in 1989, a year in which American Banker ranked it third strongest among the nation's 100 largest thrifts and the strongest on the East Coast. Assets reached $5.12 billion in 1990.

From Bank to Holding Company: 1990-95

Green Point Savings Bank's high profile in the mortgage market was not without its hazards, however. During the recession of the early 1990s, in poor Brooklyn neighborhoods a number of dilapidated apartment buildings for which the bank held mortgages were abandoned. Although Green Point had built a reputation for helping residents and community groups in minority neighborhoods, it now was faulted for failing to respond to hazardous building conditions or provide heat, hot water, and other services, sometimes for months. The bank's explanation that it was not legally entitled to enter premises until the foreclosure process was completed did not deflect criticism. One city housing official told Barbara W. Selvin of New York Newsday, "Green Point has stood in the way of our getting [our] administrators in buildings, or our getting services restored in buildings they've had put under receivership." In 1993 the bank established a subsidiary to help low- and moderate-income persons in the metropolitan area find affordable housing.

With one of the highest capital-to-assets ratios in the thrift industry, Green Point was still in robust health in 1992, It ranked first in the dollar amount of residential mortgages in Brooklyn, Queens, the Bronx, Staten Island, and Long Island. The core customer remained a heavy saver in a blue-collar neighborhood. Green Point's chairman and president said that, though the bank had tightened its credit standards, it was still more liberal than most banks. It could afford to be so because it restricted itself mainly to lending money on houses in neighborhoods where its appraisers kept a sharp eye on appropriate values, with a maximum mortgage of $400,000. Although Green Point's level of nonperforming loans was higher than the thrift industry's average, it also received higher yields in order to compensate for higher risk.

Green Point Savings Bank bought four branches in Westchester and Rockland counties from CrossLand Federal Savings Bank in early 1993, raising the number of its branches to 25. It moved its headquarters to Flushing around this time. With 246,000 depositors and $6.5 billion in deposits, Green Point was the nation's largest mutual savings bank when, in December 1993, its depositors approved a plan to convert it from mutual to stock ownership. The conversion received state sanction the following month, but the state rejected a provision that called for the bank's top officials and trustees to receive a financial package of an estimated $30 million and ordered the company to add three new independent trustees to monitor the bank's affairs.

1995–1998

The company raised $786 million in its initial public offering by selling a majority of its common stock at $15 a share. In 1995 the bank purchased 60 New York branches of Home Savings of America, FSB, with $8.3 billion in deposits, from H.F. Ahmanson Inc. for some $600 million. This acquisition brought Green Point into Manhattan and Suffolk County for the first time as well as enhanced its presence in Brooklyn, Queens, and Westchester County. Also in 1995, the bank's holding company acquired the national wholesale residential mortgage lending operation of Barclay/America/Mortgage Corp., a subsidiary of Barclays Bank PLC. This operation remained based in Charlotte, North Carolina. A subsidiary of the bank, it took the name GreenPoint Mortgage Corp. The bank itself, which dropped "Savings" from its title in 1995, was now a subsidiary of GreenPoint Financial Corp., a holding company established in May 1995.

National Mortgage Lender: 1996-98

The Barclay acquisition enabled GreenPoint Financial to take its mortgage loan business nationwide, at a pace of $2.4 billion in 1996, a 140 percent increase from the previous year. Most of these loans--offered in 10 markets outside New York City by early 1997--were no documentation, or "no-doc," loans that the mortgage subsidiary offered to home buyers who were having trouble meeting the usual income and credit standards. In return for the loans, they put up larger down payments--at least 25 percent--and paid higher interest rates and loan fees. (GreenPoint also offered low documentation, or "low-doc," mortgage loans, with a reduced rate for the provision of certain income documentation. The low-doc product was discontinued in February 1997.) Unlike many other thrift institutions, the company was holding on to all its mortgages instead of reselling them.

Skeptics said GreenPoint Financial's no-doc mortgage loans were producing results only because property values were growing significantly due to boom times, allowing the mortgage subsidiary virtually to recover its investment when borrowers defaulted. But Thomas S. Johnson, GreenPoint's chairman and president, said its secret was "management discipline," according to Karen Talley, with checks and double checks, instead of the scattershot approach he said produced volume for other lenders but also led to lax standards. Johnson said that because appraisals had to be dead accurate, GreenPoint Mortgage was maintaining its own corps of appraisers instead of, as most other lenders, farming the work out. It was lending no more than 75 percent of a property's appraised value or purchase price. The company frequently was choosing to foreclose rather than renegotiate or restructure a nonperforming loan and was collecting 97 cents on the dollar when it did foreclose.

GreenPoint Financial entered another field in 1998, when it purchased BankAmerica Housing Services, which it renamed GreenPoint Credit Corp., for $703 million. The acquired company was originating and servicing manufactured housing loans for BankAmerica Corp. through a sales and service network of 45 offices with more than 5,000 dealer relationships in 48 states. It ranked second in such mortgages in 1996, with 16 percent of about $12.6 billion originated in the manufactured housing sector. When BankAmerica closed NationsCredit Manufactured Housing Corp., the nation's fourth largest manufactured housing lender, in December 1998, GreenPoint said it would buy the unit's dealer contacts for an undisclosed amount.

Also in December 1998, GreenPoint Financial moved to double its lending capacity by purchasing Headlands Mortgage Co. for $473 million. Headlands was a specialist in "alt-A" loans to borrowers who did not quite meet the guidelines of Freddie Mac and Fannie Mae, names given to government-sponsored enterprises purchasing the bulk of mortgage loans. Headlands, whose sales force was strongest in the West, while GreenPoint's was strongest in the East, had originated more than $6.8 billion in loans in 1998 by early December.

1996–1998

GreenPoint Financial Corp. in 1997

GreenPoint Financial's revenues remained steady at $1.03 billion in 1997, but its net income rose to $147.6 million. A share of stock traded as high as $75.50 during 1997, leading to a two for one stock split in March 1998. Mortgage originations reached $2.85 billion in 1997, and the company was offering mortgages in 25 cities by March 1998. Nonperforming assets were remaining at a steady rate of 2.9 percent of the company's total assets, which were $13.1 billion in 1997. The long-term debt was $399.5 billion at the end of 1997. Revenues and income rose only slightly in 1998, to $1.06 billion and $149.5 million, respectively.

At the end of 1997 GreenPoint Mortgage was servicing about 95,000 residential mortgage loans with outstanding principal balances of $9.6 billion, including $8.9 billion in its own portfolio. In addition to no-doc loans, which had a maximum amount of $1 million, it was offering full-doc ones (those in accordance with Federal National Mortgage Association guidelines). Both fixed and adjustable rates were being offered, with terms of 10 to 30 years for fixed rates and terms of up to 30 years for adjustable rates. The mortgage subsidiary also was originating real estate loans in the New York City metropolitan area for larger residential, mixed use, and commercial properties. Of total loans of $8.9 billion in 1997, 86 percent were designated for one- to four-family homes; seven percent to apartments; six percent, commercial; and one percent other.

GreenPoint Financial also was offering student and personal-savings loans. GreenPoint Community Development Corp. was offering lending programs, development opportunities and assistance, consulting, and other activities to foster greater access to affordable housing for low- and moderate-income persons residing in the New York City metropolitan area. GreenPoint Bank had 74 full-service offices, all in the metropolitan area. The holding company maintained operating centers and mortgage lending centers in Lake Success, New York, and Charlotte, North Carolina; a mortgage lending center in Englewood Cliffs, New Jersey; and a servicing center in Columbus, Georgia. The company also had hub offices in eight other states. It moved its headquarters to Manhattan in 1996. An employee stock ownership plan controlled 19.1 percent of the shares at the end of 1997. Fidelity Management & Research Corp. owned 8.5 percent.