[1] LIFE Financial Corporation Announces Third Quarter 2000 Results.Business Editors RIVERSIDE Riverside. 1 City (1990 pop. 226,505), seat of Riverside co., S Calif.; inc. 1883. One of the fastest growing U.S. cities in the late 20th cent., it is famous for its orange industry. , Calif.--(BUSINESS WIRE)--Oct. 19, 2000 LIFE Financial Corporation (Nasdaq:LFCO) (the "Company"), the holding company of LIFE Bank ("Life Bank"), Thursday Thursday: see week. announced its results of operations for the quarter and nine months ended Sept. 30, 2000. Steven Ste´ven n. 1. Voice; speech; language. Ye have as merry a steven As any angel hath that is in heaven. - Chaucer. 2. An outcry; a loud call; a clamor. To set steven to make an appointment. R. Gardner Gardner, city (1990 pop. 20,125), Worcester co., N central Mass.; settled 1764, inc. as a city 1921. Its furniture and lumber industries date from c.1805. Diversified metal and electronics manufactures add to the city's economic base. A state prison is there. , president and chief executive officer stated: "The Company's operating results during the third quarter and year to date reflect the changes implemented to transition Life Bank back into a community-based institution. Our board of directors and management team are committed to returning Life Bank to core profitability. "We strongly believe this will be achieved by improving our efficiency, further reducing operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. and focusing on our core business, which include retail deposit taking and permanent residential and construction lending. Our retail branch operations continue to experience growth in core deposits and fee income. "Our construction lending business remains profitable and has experienced modest growth while managing transaction specific risks. Our restructured single family residential lending business is now focused on increasing market share in California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). ." Gardner continued: "We have taken a number of steps to implement our plan to transform the Bank. During the third quarter, we discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: our mortgage banking business and the origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real of sub-prime and consumer loans. "We also took steps to reduce both our operating expenses and our exposure to higher risk loans, and announced our decision to consolidate Consolidate To combine the assets, liabilities, and other financial items of two or more entities into one. Notes: This term is generally used in the context of consolidated financial statements. the Huntington Huntington. 1 City (1990 pop. 16,389), seat of Huntington co., NE Ind.; inc. 1848. It is a farm trade center and an industrial city. Manufactures include automotive parts, machinery, construction materials, food and beverages, cleaning agents, Harbor branch into another nearby branch effective Dec. 15, 2000. In addition, during the third quarter:
We sold $121.7 million in loans, which resulted in a loss of
$3.5 million. These sales included non-performing high loan to
value loans, the majority of our consumer loan portfolio,
non-performing and performing first trust deed loans.
We transferred the remainder of our loans held for sale of
approximately $114.5 million to the loans held for investment
portfolio and took a lower of cost or market charge of
approximately $1.7 million. We allocated an additional $716
thousand to our allowance for loan losses, increasing the
allowance to $3.3 million.
We transferred our securities portfolio from held to maturity
to available for sale and revalued the Bank's Participation
Contract, a retained interest in prior years mortgage
securitizations. This revaluation reflected current estimates
of prepayment speeds and anticipated losses on the loans
underlying the contract, which resulted in a charge to
earnings of approximately $1.0 million.
We established a reserve of approximately $514 thousand to
cover the estimated costs of the consolidation of our
Huntington Harbor branch, the discontinuance of our
mortgage banking business and the sale of an office
building we previously occupied. The Huntington Harbor
branch had approximately $7.6 million in deposits as of
Sept. 30, 2000, and these deposits will be transferred to
the Huntington Beach branch upon consolidation, which is
expected to take place on Dec. 15, 2000.
Established a reserve of approximately $5.6 million on the
deferred tax asset. The deferred tax asset is the tax affect
of the Company's net operating loss carry-forward and other
timing differences.
We reduced the number of personnel throughout our operations.
At Sept. 30, 2000, we had 155 full-time equivalent employees,
a reduction of 86 employees from the June 30, 2000 level of
241 full-time equivalent employees. We expect to further
reduce the number of our full-time equivalent employees to
110 by Dec. 31, 2000."
The Company reported a third quarter loss of $11.2 million, or ($1.68) per basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with net income of $1.0 million, or $.16 per diluted share for the quarter ended Sept. 30, 1999. Net loss year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. for 2000 is $11.9 million, or ($1.78) per basic and diluted share, compared to net income of $3.5 million, or $.53 per basic and diluted share, for the nine months ended Sept. 30, 1999. Total assets of the Company were $471.1 million as of Sept. 30, 2000 compared to $547.6 million as of Dec. 31, 1999. The $76.5 million or 14.0% decrease in total assets of the Company from Dec. 31, 1999 was primarily the result of a $90.9 million decrease in the loan portfolio partially offset by an increase of $44.7 million increase in other interest earning assets Earning Assets Any income-earning asset owned by a company. Notes: These assets are generally interest-bearing accounts, bonds, and securities available for sale. See also: Asset, Asset Valuation, Earnings, Net Interest Margin , such as investments securities and federal funds Federal Funds Funds deposited to regional Federal Reserve Banks by commercial banks, including funds in excess of reserve requirements. Notes: These non-interest bearing deposits are lent out at the Fed funds rate to other banks unable to meet overnight reserve sold. Loan production for the quarter ended Sept. 30, 2000 was $74.9 million, compared to $267.0 million for the quarter ended Sept. 30, 1999. Loan production for the nine months ended Sept. 30, 2000 was $444.0, compared to $745.1 for the nine months ended Sept. 30, 1999. The reduction in loan production is partly the result of the decision to originate o·rig·i·nate v. 1. To bring into being; create. 2. To come into being; start. higher credit quality loan production and to discontinue dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: sub-prime originations. Additionally, the decrease in loan production can be attributed to the decrease in the overall loan volumes in the mortgage market due to the increase in interest rate increases. Total deposits as of Sept. 30, 2000 were $408.9 million, compared to $468.9 million at Dec. 31, 1999. The $60.0 million decrease in deposits over the same period is the result of the Bank's strategy to focus heavily on increasing Branch deposits through the growth of both local consumer and business accounts and to reduce reliance on wholesale certificates of deposit and other borrowings. The ratio of Branch Bank deposits to total deposits increased to 72.5% at Sept. 30, 2000, compared to 52.4% as of Dec. 31, 1999. The Company's net interest income before provision for loan losses declined 30.9% to $3.0 million during the quarter ended Sept. 30, 2000, compared to $4.3 million for the quarter ended Sept. 30, 1999. The decline is due to the combination of decreased loan yields and increased cost of funds Cost of Funds The interest rate paid on an outstanding loan. Notes: Money isn't free! Cost of funds is the cost of borrowing money. See also: Interest Rate Cost of funds Interest rate associated with borrowing money. . The loan yield decrease is a result of the reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its of non-accrual interest and the amortization of deferred premiums and discounts on the loans transferred from held for sale to held for investment. The deposit rate increase is a result of higher market interest rates. Allowance for loan losses totaled $3.3 million and a lower cost or market adjustment of $1.7 million as of Sept. 30, 2000 and $2.7 million and $3.5 million, respectively as of Dec. 31, 1999. The Sept. 30, 2000 allowance for loan losses as a percent of non-accrual loans was 30.8% and 100% as of Dec. 31, 1999. Non-accrual loans totaled $10.7 million at Sept. 30, 2000 and totaled $2.8 million as of Dec. 31, 1999. Noninterest expenses were $5.9 million for the three months ended Sept. 30, 2000, which were $2.5 million lower than the same period 1999. The decrease of 29.7% is a direct result of increased focus on gaining efficiencies throughout the Company. The decrease is primarily a result of reduced compensation expense in the amount of $734 thousand related to reduction in personnel, and a $958 thousand decrease in other expense related to professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. . Additionally, the decrease is a result of a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when payment of $1.2 million made during the third quarter of 1999. The Bank's core, tier 1 and total risk-based capital ratios Risk-based capital ratio Bank requirement that there be a minimum ratio of estimated total capital to estimated risk-weighted asset. based upon period end risk-based assets at Sept. 30, 2000 were 5.28%, 6.53% and 7.78%, respectively, compared to 6.32%, 10.17% and 11.19% for the period ended Sept. 30, 1999. LIFE Financial Corporation is a saving and loan holding company that owns 100% of the capital stock of LIFE Bank, the Company's principal operating subsidiary An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. . LIFE Bank is a federally chartered stock savings bank savings bank, financial institution that, until recently, performed only the following functions: receiving savings deposits of individuals, investing them, and providing a modest return to its depositors in the form of interest. whose primary business includes branch banking, permanent residential and construction lending. LifeBank currently operates six full-service full-ser·vice adj. Associated with or offering complete service: full-service gasoline pumps; full-service banks. branches located in Orange, San Bernardino San Bernardino, city, United States San Bernardino (săn bûr'nədē`nō), city (1990 pop. 164,164), seat of San Bernardino co., S Calif., at the foot of the San Bernardino Mts.; inc. 1854. and Riverside Counties, in Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, . Forward-Looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. Comments The statements contained in this release that are not historical facts are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. Actual results may differ from those projected in the forward-looking statements. These forward-looking statements involve risks and uncertainties. These include, but are not limited to, the following risks: Changes in the performance of the financial markets; changes in the demand for and market acceptance of the Company's products and services; changes in general economic conditions including interest rates, presence of competitors with greater financial resources, and the impact of competitive products and pricing; the effect of the Company's policies; the continued availability of adequate funding sources; actual prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. rates and credit losses of loans sold as compared to prepayment rates and credit losses assumed by the Company at the time of sale for purposes of its gain on sale computations; the effect of changes in market interest rates on the spread between the coupon rate Coupon rate In bonds, notes, or other fixed income securities, the stated percentage rate of interest, usually paid twice a year. on loans sold and the pass through rate on securities backed by such loans issued by the Company in securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. transactions and on the discount rate assumed by the Company in its gain on sale computations; and various legal, regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. and litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. risks. For information on the company or to obtain the company's quarterly financial supplement, e-mail your request to irinfo@lifebank.net or call Roy Roy, city (1990 pop. 24,603), Weber co., N Utah, near Great Salt Lake; settled by Mormons 1877, inc. 1937. Computer equipment is manufactured, and many residents work at nearby Hill Air Force Base. L. Painter, chief financial officer at 909/637-4095 or Steven R. Gardner, president and chief executive officer at 909/637-4110. Include your phone, facsimile and mailing address.
LIFE FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
UNAUDITED (In Thousands)
September 30, December 31,
ASSETS 2000 1999
Cash and cash equivalents $ 7,883 $ 17,315
Federal Funds Sold 44,090 3,000
Participation Contract 7,895 9,288
Investment Securities Available for
Sale 45,915 -
Investment Securities Held to
Maturity - 32,833
Loans:
Loans held for sale - 330,727
Loans held for investment 346,131 106,350
Allowance for loan losses (3,326) (2,749)
Net loans 342,805 434,328
Mortgage servicing rights 5,977 6,431
Accrued interest receivable 3,516 3,676
Foreclosed real estate 1,335 2,214
Premises and equipment 4,454 6,003
Income taxes receiveable 2,395 18,653
Deferred income taxes 1,749 5,196
Other assets 3,058 8,671
TOTAL ASSETS $ 471,072 $ 547,608
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposit accounts $ 408,927 $ 468,859
Other borrowings 30,333 17,873
Subordinated debentures 1,500 1,500
Accrued expenses and other
liabilities 7,591 24,914
Total liabilities 448,351 513,146
STOCKHOLDERS' EQUITY
Common stock, $.01 par value 67 67
Additional paid-in capital 42,575 42,525
Retained earnings (19,990) (8,130)
Accumulated adjustments to
stockholders' equity 69 -
Total stockholders' equity 22,721 34,462
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 471,072 $ 547,608
LIFE FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
UNAUDITED (In Thousands)
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
INTEREST 2000 1999 2000 1999
INCOME:
Loans $ 9,102 $ 9,683 $ 31,602 $ 29,437
Other interest-earning
assets 922 749 2,399 5,021
Total interest
income 10,024 10,432 34,001 34,458
INTEREST EXPENSE:
Interest-bearing
deposits 6,611 5,259 19,806 15,856
Subordinated
debentures 53 53 420 158
Other borrowings 404 844 1,902 2,490
Total interest
expense 7,068 6,156 22,128 18,504
NET INTEREST
INCOME 2,956 4,276 11,873 15,954
PROVISION FOR LOAN
LOSSES 716 430 716 2,638
NET INTEREST INCOME
AFTER PROVISION FOR
LOAN LOSSES 2,240 3,846 11,157 13,316
NONINTEREST INCOME:
Loan servicing and
mortgage banking
fee income 1,254 1,410 2,749 3,521
Bank and other fee
income 150 90 413 253
Net gain/(loss)
from mortgage
banking (5,798) 4,273 (5,888) 8,657
Net gain/(loss)
from investment
securities (1,025) - (1,025) -
Other income/
(loss) (64) 581 161 689
Total noninterest
income (5,483) 6,354 (3,590) 13,120
NONINTEREST EXPENSE:
Compensation and
benefits 2,616 3,350 8,846 9,036
Premises and
occupancy 1,040 1,009 3,239 2,921
Data processing 186 321 836 1,113
Net loss/(gain) on
foreclosed real
estate 256 16 319 (59)
Other expense 1,802 3,697 4,564 7,215
Total noninterest
expense 5,900 8,393 17,804 20,226
INCOME (LOSS) BEFORE
INCOME TAXES (9,143) 1,807 (10,237) 6,210
PROVISION FOR
INCOME TAXES 2,068 770 1,623 2,730
NET INCOME
(LOSS) $ (11,211) $ 1,037 $ (11,860) $ 3,480
Basic Average Shares
Outstanding 6,668,436 6,568,436 6,668,162 6,564,700
Basic Earnings
(Loss) per
Share $ (1.68) $ 0.16 $ (1.78) $ 0.53
Diluted Average
Shares
Outstanding 6,668,436 6,623,906 6,668,162 6,564,700
Diluted Earnings
(Loss) per
Share $ (1.68) $ 0.16 $ (1.78) $ 0.53
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