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ANCHOR BANCORP ANNOUNCES A SHARP INCREASE IN THIRD-QUARTER CORE EARNINGS

ANCHOR BANCORP ANNOUNCES A SHARP INCREASE IN THIRD-QUARTER CORE EARNINGS
 HEWLETT, N.Y., April 16 /PRNewswire/ -- Anchor Bancorp, Inc. (NASDAQ: ABKR), parent company of Anchor Savings Bank FSB, today reported net income for the third fiscal quarter ended March 31, 1992, of $19.3 million before the accumulation of preferred stock dividends of $3.1 million as compared to net income of $20.3 million before preferred stock dividends of $3.2 million for the comparable quarter of last year.
 This amounted to net income per common share of 93 cents for the third fiscal quarter of 1992 as compared to 98 cents per common share for the comparable prior-year quarter. The prior-year period results included $17.8 million in non-core pretax gains as compared to only $7.4 million in the current quarter.
 For the first nine months of fiscal 1992, Anchor's net income amounted to $47.5 million before the accumulation of $9.6 million in preferred stock dividends or $2.17 per share. This compares to net income of $34 million before preferred stock dividends of $10.1 million, or $1.37 per share in the prior year.
 Core pretax earnings amounted to $17.3 million for the third quarter of fiscal 1992, up 36 percent from $12.7 million in the preceding quarter and more than double the comparable prior-year period. This was the eighth consecutive quarter of increased core earnings. The rate of growth in core pretax earnings grew sharply in the quarter due to an appreciable jump in net interest income. James M. Large Jr., chairman and chief executive officer, stated, "As short-term Treasury rates dropped sharply, Anchor continued to aggressively reprice downward its liabilities. The resulting reduction in the cost of deposits exceeded the drop in yields on adjustable rate mortgage repricing, as generally, adjustable rate mortgages are limited to a contractual maximum annual adjustment of 2 percent. Anchor profited handsomely from this cap on the downward rate adjustment on loans during the quarter."
 Large noted that Anchor has now exceeded its current regulatory capital requirements for the third consecutive quarter. Anchor had previously indicated that it might temporarily fall out of compliance in the current quarter due to the phase-out of approximately $45 million in supervisory goodwill from its regulatory capital on Jan. 1, 1992, as required by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). Compliance, however, was maintained because of the surprisingly good core earnings, the gains on branch deposit sales and the modest shrinkage of the balance sheet. The remaining balance of supervisory goodwill currently included in regulatory capital will be phased out through the end of calendar year 1994.
 Large did caution that the OTS has proposed an increase in the minimum leverage capital requirement for most of the industry from 3 percent to 4 percent, a level consistent with Anchor's internal goal. If this proposal should become effective, Anchor believes it could achieve the new level within a reasonable period of time.
 As the quarter ended, Anchor's general and administrative expenses remained tightly controlled, and its loan portfolio continued to perform well with non-performing loans and real estate owned approximating 1 percent of total assets. Anchor's regulatory tangible capital amounted to $159 million or 2.1 percent of assets while regulatory leverage capital amounted to $234.5 million or 3.1 percent of assets at March 31, 1992. Risk-based regulatory capital amounted to $262.7 million or 7.8 percent of risk-weighted assets at that date. All ratios were in excess of currently applicable regulatory capital requirements.
 Third Quarter Fiscal 1992 Operating Statistics
 Net interest income amounted to $50.4 million in the third quarter of fiscal 1992 as compared to $44.7 million in the comparable prior-year period, an increase of 12.8 percent. The net yield on average earning assets amounted to 2.63 percent, a significant improvement from the 2.06 percent reported in the third quarter of last year. The sharp decline of short-term rates and an aggressive approach to liability pricing were the principal factors underlying the improvement. The cost of liabilities declined to 5.37 percent in the current quarter from 7.33 percent in the third quarter of fiscal 1991.
 The total provision for credit losses amounted to $5.1 million for the current quarter, the same as in the comparable prior-year quarter. Net loans charged off to the allowance for credit losses were $2.9 million in the current quarter as compared to $4.8 million in the third quarter of fiscal 1991. Anchor's allowance for credit losses amounted to $26.1 million with non-accrual loans and real estate owned of $78.6 million or 1.01 percent of total assets at March 31, 1992, as compared to the allowance for credit losses of $21.7 million and non-accrual loans and real estate owned of $79.2 million or 0.91 percent of total assets at March 31, 1991.
 Gains on the sale of earning assets amounted to $1.2 million during the quarter as compared to $17.8 million in the prior-year period. Loans held for sale at the end of the quarter amounted to $73.4 million and represented loans originated for sale in the secondary market and $25 million of subordinated high-yield debt which was transferred from the investment portfolio during the quarter and subsequently sold. Anchor no longer holds any highly leveraged related debt.
 Mortgage banking income amounted to $4.2 million, up from the $3.5 million earned in the comparable prior-year quarter primarily due to secondary market sale gains and increased mortgage servicing fee income.
 Other income amounted to $10.9 million during the quarter, up from $5.3 million last year. This was primarily due to a non-recurring gain of $6.2 million on the sale of deposits in the current quarter. Additional deposit sale premiums of $2.1 million were credited to goodwill during the quarter. In total, $276 million of deposits in seven branches were sold during the quarter.
 General and administrative expenses for the third quarter, exclusive of restructuring charges, amounted to $30.6 million or $4.5 million less than that in the comparable prior year quarter. The improvement relates primarily to Anchor's exit from the Georgia market.
 Goodwill amortization expense amounted to $4.3 million in the current quarter, up $0.8 million from the level existing in the comparable quarter of last year. This increase was due to a reduction in the amortization periods in order to comply with SEC regulations when Anchor formed a holding company in March of 1991.
 Anchor Savings Bank is among the 25 largest U.S. thrifts with deposits of over $6.3 billion as of March 31, 1992. It operates branches in three market areas: Metropolitan New York/New Jersey, Western New York and Florida.
 ANCHOR BANCORP, INC., AND SUBSIDIARIES
 Consolidated Statements of Income
 (In thousands, except per share amounts, unaudited)
 Periods ended Three Months Nine Months
 March 31 1992 1991 1992 1991
 Interest income:
 Loans receivable and
 loans held for sale:
 First mortgage loans $ 29,327 $ 46,194 $ 93,020 $146,937
 Cooperative apartment loans 9,736 13,355 31,061 40,733
 Consumer and commercial loans 16,255 21,466 53,934 67,587
 Mortgage-backed securities
 and mortgage-backed securities
 held for sale 89,685 105,496 279,638 292,248
 Money market investments 3,440 6,188 16,797 47,140
 Investment securities and
 investment securities
 held for sale 3,229 4,574 10,258 15,031
 Total interest income 151,672 197,273 484,708 609,676
 Interest expense:
 Deposits 86,231 124,757 291,161 402,587
 Borrowed funds and preferred
 stock of finance subsidiaries 15,001 27,783 51,834 84,472
 Total interest expense 101,232 152,540 342,995 487,059
 Net interest income 50,440 44,733 141,713 122,617
 Provision for credit losses (5,100) (5,100) (15,300) (15,300)
 Net interest income after
 provision for credit losses 45,340 39,633 126,413 107,317
 Non-interest income:
 Gain on sales of earning
 assets, net 1,216 17,782 9,836 32,041
 Mortgage banking income 4,184 3,450 12,372 10,157
 Other 10,874 5,271 19,990 15,247
 Total non-interest income 16,274 26,503 42,198 57,445
 Non-interest expense:
 General and administrative:
 Compensation and benefits 14,366 15,578 42,732 47,681
 Occupancy and equipment 4,652 5,578 14,471 17,964
 Federal deposit insurance
 premiums 3,765 4,083 11,471 11,452
 Other 7,854 9,864 23,895 28,310
 Total 30,637 35,103 92,569 105,407
 Amortization of excess
 of cost over fair value
 of net assets acquired 4,263 3,444 12,879 10,412
 Amortization of cost of loan
 servicing rights acquired 1,469 1,187 4,397 3,341
 Restructuring charges 2,533 3,118 3,205 5,640
 Total non-interest expense 38,902 42,852 113,050 124,800
 Income before income tax
 expense and extraord. item 22,712 23,284 55,561 39,962
 Income tax expense 12,716 11,679 31,711 23,740
 Income before extraord. item 9,996 11,605 23,850 16,222
 Extraordinary item - federal
 income tax benefit of net
 operating loss carryforwards 9,350 8,718 23,622 17,810
 Net income 19,346 20,323 47,472 34,032
 Dividends on Class A
 preferred stock 3,081 3,237 9,558 10,068
 Net income applicable
 to common stock $ 16,265 $ 17,086 $ 37,914 $ 23,964
 Income per common share:
 Income before extraord. item $0.40 $0.48 $0.82 $0.35
 Extraordinary item 0.53 0.50 1.35 1.02
 Net income $0.93 $0.98 $2.17 $1.37
 ANCHOR BANCORP, INC., AND SUBSIDIARIES
 Consolidated Statements of Financial Condition
 (In thousands, unaudited)
 3/31/92 6/30/91
 ASSETS
 Cash and due from banks $ 68,716 $ 74,218
 Money market investments 349,498 788,519
 Loans and securities held for sale 73,424 34,695
 Investment securities (estimated market
 value of $123,147 at March 31, 1992, and
 $160,716 at June 30, 1991) 126,096 169,544
 Mortgage-backed securities (estimated
 market value of $4,443,288 at March 31,
 1992, and $4,240,000 at June 30, 1991) 4,430,540 4,254,361
 Loans receivable:
 First mortgage loans 1,198,518 1,364,652
 Cooperative apartment loans 423,278 461,100
 Consumer and commercial loans 730,553 825,019
 Less allowance for credit losses (26,097) (24,027)
 Loans receivable, net 2,326,252 2,626,744
 Accrued interest receivable 50,760 60,366
 Premises and equipment 40,945 46,659
 Excess of cost over fair value of
 net assets acquired 236,050 251,353
 Cost of loan servicing rights acquired 36,445 29,011
 Other assets 58,216 79,974
 Total $7,796,942 $8,415,444
 LIABILITIES, PREFERRED STOCK OF FINANCE
 SUBSIDIARIES AND STOCKHOLDERS' EQUITY
 Liabilities:
 Deposits $6,319,805 $6,706,185
 Borrowed funds 895,270 1,054,630
 Mortgage escrow funds 47,571 63,520
 Accrued expenses and other liabilities 56,011 88,166
 Total 7,318,657 7,912,501
 Preferred stock of finance subsidiaries 75,000 150,000
 Stockholders' equity:
 Preferred stock:
 Class A preferred stock, $1 par value;
 3,140,000 shares authorized, issued and
 outstanding 3,140 3,140
 Additional paid-in capital 153,860 153,860
 Total preferred stock 157,000 157,000
 Common stock:
 $0.01 par value, 70 million shares authorized;
 17,601,166 and 17,595,000 shares issued and
 outstanding at March 31, 1992, and
 June 30, 1991, respectively 176 176
 Additional paid-in capital ?191,966 191,954
 Total common stock 192,142 192,130
 Retained income 54,690 7,218
 Net unrealized depreciation on
 certain marketable equity securities -- (2,858)
 Less treasury stock at cost (119,000
 common shares) (547) (547)
 Total 403,285 352,943
 Total $7,796,942 $8,415,444
 -0- 4/16/92
 /CONTACT: Thomas K. Hernly of Anchor Bancorp, 516-596-3902/
 (ABKR) CO: Anchor Bancorp, Inc. ST: New York IN: FIN SU: ERN


GK-CO -- NY067 -- 9354 04/16/92 13:55 EDT
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