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ANCHOR BANCORP ANNOUNCES FIRST QUARTER RESULTS

 ANCHOR BANCORP ANNOUNCES FIRST QUARTER RESULTS
 HEWLETT, N.Y., Oct. 23 /PRNewswire/ -- Anchor Bancorp, Inc.,


(NASDAQ: ABKR), parent company of Anchor Savings Bank FSB, reported net income for the first fiscal quarter ended Sept. 30, 1992, of $1.3 million before the accumulation of preferred stock dividends as compared to $17.1 million before the accumulation of preferred stock dividends for the prior fiscal ear.
 Earnings for the current quarter included $20.3 million in core pretax income, the highest in Anchor's history and the tenth consecutive quarterly increase. Earnings were, however, negatively impacted by a charge associated with a change in an accounting method and a different application of tax benefits associated with net operating loss carryforwards. In making the announcement, Mr. James M. Large, Jr., chairman and chief executive officer, noted that these changes had no adverse impact on regulatory capital since they were already reflected in the regulatory capital calculations. Anchor's leverage capital grew $23.2 million in the quarter to $267.0 million or 3.34 percent of assets as of Sept. 30, 1992.
 Income before extraordinary item and cumulative effect of accounting change for the first fiscal quarter ended Sept. 30, 1992, was $10.2 million before the accumulation of preferred stock dividends of $3.1 million as compared to $8.9 million before the accumulation of preferred stock dividends of $3.3 million for the first quarter of last year. This amounted to income per common share before extraordinary item and cumulative effect of accounting change of $.39 for the first fiscal quarter of 1993 as compared to $.32 for the comparable prior year quarter. This year's quarterly results included $1.0 million in net pretax gains on the sale and revaluation of earning assets as compared to $8.0 million in the prior year quarter.
 Anchor reported a change in its method of accounting for purchased mortgage servicing rights (PMSRs) which resulted in a one-time charge of $8.9 million, the cumulative effect of the accounting change at July 1, 1992. The newly adopted method, selected after discussions with the Office of Thrift Supervision (OTS), conforms Anchor's accounting to current interpretations of applicable regulatory guidelines in this area and anticipates the OTS's September 1992 proposal that PMSRs be valued quarterly and carried on the balance sheet at an amount not to exceed the present value of the estimated net future servicing income, discounted at a rate no less than the expected rate at acquisition.
 The first quarter of fiscal 1992 benefited from an extraordinary item of $8.2 million relative to the tax benefit of net operating losses (NOLs) utilized in that quarter. In the first quarter of 1993, such tax benefits, which amounted to $6.0 million were applied to reduce goodwill on the balance sheet rather than being included in the income statement as an extraordinary item. This change in treatment was required by generally accepted accounting principles as the NOLs utilized in 1993 were associated with acquisitions which gave rise to goodwill.
 Accordingly, after considering the preferred dividend accumulation and all the items mentioned above, Anchor incurred a net loss per common share of $.10 in the first quarter of fiscal 1993 as compared to net income per common share of $.79 in the first quarter of fiscal 1992.
 The continued upward trend in core pretax income (earnings before gains on sale and other nonrecurring items) is primarily attributable to a growing net yield on average earning assets which amounted to 2.94 percent in the first quarter, up from 2.75 percent in the fourth quarter of last year. The net yield averaged 2.38 percent in the comparable prior year period. With the continued drop in market interest rates, Anchor maintained its aggressive practice of repricing its liabilities downward. The resulting reduction in the cost of liabilities exceeded the drop in yields on adjustable-rate mortgage product as, generally, adjustable-rate mortgages are limited to a contractual maximum annual adjustment of 2 percent.
 Core earnings also benefited from improved mortgage banking income and other income which totaled $9.7 million for the quarter, up from $8.6 million in the previous quarter while general and administrative expenses remained tightly controlled at approximately 1.54 percent of average assets.
 Anchor's asset quality also improved in the first quarter as nonperforming assets dropped $11.2 million during the quarter to $62.0 million or 0.75 percent of assets at Sept. 30, 1992, well below peer averages. Its allowance for credit losses grew to $29.8 million and now approximates 69 percent of total nonperforming loans. Anchor's regulatory tangible capital amounted to $187.1 million or 2.3 percent of assets while regulatory risk-based capital amounted to $298.8 million or 8.9 percent of assets. Like the leverage capital ratio, both ratios were in excess of currently applicable regulatory capital requirements.
 Mr. Large noted that in September 1992, the OTS adopted prompt corrective action regulations that will classify Anchor as "undercapitalized" since its leverage capital ratio is under 4 percent. This will require Anchor to submit a new capital plan and will impose certain restrictions such as growth and capital distribution limitations on Anchor. The effective date of this regulation is Dec. 19, 1992 and a capital plan must be submitted 45 days thereafter. Anchor is fully prepared to file such a plan, however, no assurance can be given that the plan will be approved.
 FIRST QUARTER FISCAL 1993 OPERATING STATISTICS
 Net interest income amounted to $54.6 million in the first quarter of fiscal 1993 as compared to $45.8 million in the comparable prior year period, an increase of 19.2 percent. The net yield on average earning assets amounted to 2.94 percent, a significant improvement from the 2.38 percent reported in the first quarter of last year. The sharp decline of short-term rates and an aggressive approach to liability pricing continue to be principal factors underlying the improvement throughout the year. The cost of interest-bearing liabilities declined to 4.45 percent in the current quarter from 6.41 percent in the first quarter of fiscal 1992.
 The total provision for credit losses amounted to $5.1 million for the current quarter, the same as that in the comparable prior year quarter. Net loans charged off to the allowance for credit losses were $3.3 million in the current quarter as compared to $5.1 million in the first quarter of fiscal 1992. Anchor's allowance for credit losses amounted to $29.8 million at the end of the first quarter as compared to $24.0 million at Sept. 30, 1991.
 Mortgage banking income amounted to $4.6 million, up from the $3.8 million earned in the comparable prior year quarter, primarily the result of an increase in service fee income associated with a larger servicing portfolio and increased gains on secondary market sales.
 General and administrative expenses for the first quarter amounted to $30.6 million or $.7 million less than that in the comparable prior year quarter. The decrease in expense related primarily to a reduction in net costs associated with real estate owned, lower deposit insurance premiums due to a lower deposit base, and a reduction in occupancy costs.
 The amortization of loan servicing rights totaled $4.3 million in the first quarter of fiscal 1993, up $2.8 million from the comparable prior year quarter. This increase was due to a charge associated with the change in value of the PMSR portfolio during the first quarter in accordance with the new accounting method adopted at the beginning of this year. The method of accounting now used for valuing PMSRs is somewhat similar to the "lower of cost or market" theory.
 During the current quarter, Anchor utilized NOLs that were acquired in connection with acquisitions that gave rise to goodwill. Accordingly, $6.0 million in NOL benf?its was credited to goodwill in the current quarter rather than as an extraordinary item in the income statement. The utilization of Anchor's remaining NOLs will be accounted for in this manner pending the adoption of Statement of Financial Accounting Standards "SFAS" 109. In the first quarter of last year, the NOL benefits of $8.2 million were credited as an extraordinary item in the income statement since they were not associated with acquisitions which gave rise to goodwill.
 Anchor Savings Bank is among the 15 largest U. S. thrifts with deposits of $6.2 billion as of Sept. 30, 1992. It operates branches in three market areas: Metropolitan New York/New Jersey, Western New York and Florida.
 ANCHOR BANCORP, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENT OF OPERATIONS
 (Unaudited, in thousands, except per share amounts)
 Three months ended Sept. 30 1992 1991
 Interest Income:
 Loans receivable & loans held for sale:
 First mortgage loans $ 25,350 $ 33,045
 Cooperative apartment loans 8,290 10,976
 Consumer and commercial loans 14,781 19,706
 Mortgage-backed securities and mortgage-
 backed securities held for sale 85,460 96,993
 Money market investments 1,963 7,946
 Investment securities and investment
 securities held for sale 2,138 3,594
 Total interest income 137,982 172,260
 Interest expense:
 Deposits 68,540 106,299
 Borrowed funds and preferred stock
 of finance subsidiaries 14,860 20,164
 Total interest expense 83,400 126,463
 Net interest income 54,582 45,797
 Provision for credit losses (5,100) (5,100)
 Net interest income after
 provisions for credit losses 49,482 40,697
 Non-interest income:
 Gain on sales and revaluations of
 earning assets, net 1,042 8,029
 Mortgage banking income 4,570 3,838
 Other 5,100 4,768
 Total non-interest income 10,712 16,635
 Non-interest income:
 General and administrative:
 Compensation and benefits 13,852 14,190
 Occupancy and equipment 4,582 4,991
 Federal deposit insurance premiums 8,566 8,208
 Other 30,563 31,242
 Amortization of excess of cost over
 fair value of net assets acquired 4,028 4,332
 Amortization and write-down of cost
 of loan servicing rights acquired 4,258 1,507
 Restructuring charges -- --
 Total non-interest expense 38,849 37,429
 Income before income tax expense,
 extraordinary item & cumulative
 effect of a change in accounting
 principle 21,345 19,903
 Income tax expense 11,184 11,025
 Income before extraordinary item &
 cumulative effect of a change in
 accounting principle 10,161 8,878
 Extraordinary item-federal income tax
 benefit of net operating loss
 carryforwards -- 8,202
 Cumulative effect on prior years of a
 change in accounting principle, net of
 income tax effect (8,861) --
 Net income $ 1,300 $17,080
 Dividends on Class A cumulative
 preferred stock $ 3,081 $ 3,318
 Net income/(loss) applicable to
 common stock $(1,781) $13,762
 Earnings (loss) per share amounts:
 Primary & fully diluted earnings(loss)
 per share:
 Income before extraordinary item &
 cumulative effect of a change in
 accounting principle $0.39 $0.32
 Extraordinary item -- 0.47
 Cumulative effect on prior years of
 a change in accounting principle,
 net of income tax effect (0.49) --
 Net income (loss) $(0.10) $ 0.79
 Pro forma amounts assuming the change in
 accounting principle is applied
 retroactively:
 Income before extraordinary item $10,161 $ 8,878
 Primary and fully diluted earnings
 per share $0.39 $0.32
 Net income $10,161 $17,080
 Primary and fully diluted
 earnings per share $0.39 $0.79
 ANCHOR BANCORP, INC. AND SUBSIDIARIES
 Consolidated Statements of Financial Condition
 (Dollars in thousands, unaudited)
 9/30/92 6/30/91
 Assets
 Cash and due from banks $ 76,474 $ 71,835
 Money market investments 266,516 277,187
 Loans, mortgage-backed securities
 and investments held for sale 399,780 314,608
 Investment securities 122,844 117,942
 Mortgage-backed securities 4,747,845 4,635,240
 Loans receivable:
 First mortgage loans 1,136,737 1,090,574
 Cooperative apartment loans 399,728 408,527
 Consumer and commercial loans 690,690 706,139
 Less allowance for credit losses (29,822) (28,011)
 Loans receivable, net 2,197,333 2,177,229
 Accrued interest receivable 48,010 48,636
 Premises and equipment 39,561 40,381
 Excess of cost over fair value
 of net assets acquired 218,668 228,698
 Cost of loan servicing rights acquired 33,640 38,010
 Other assets 62,345 68,086
 Total 8,213,016 8,017,852
 Liabilities, Preferred Stock of Finance Subsidiaries and
 Stockholders' Equity
 Liabilities:
 Deposits 6,194,463 6,239,025
 Borrowed funds 1,408,764 1,180,681
 Mortgage escrow funds 73,501 59,591
 Accrued expenses and other liabilities 53,203 56,775
 Total 7,729,931 7,536,072
 Preferred stock of finance subsidiaries 75,000 75,000
 Stockholders' equity:
 Preferred stock:
 Class A cumulative 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:
 $.01 par value, 70 million shares authorized;
 17,625,831 and 17,623,331 shares issued and
 outstanding at Sept. 30, 1992 and
 June 30, 1992, respectively 176 176
 Additional paid-in capital 192,020 192,015
 Total common stock 192,196 192,191
 Retained income 59,436 58,136
 Less treasury stock at cost
 (119,000 common shares) (547) (547)
 Total 408,085 406,780
 Total 8,213,016 8,017,852
 -0- 10/23/92
 /CONTACT: Thomas K. Hernly of Anchor Bancorp, Inc., 516-596-3902/
 (ABKR) CO: Anchor Bancorp, Inc. ST: New York IN: FIN SU: ERN


SH-TS -- NY049 -- 4235 10/23/92 14:25 EDT
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Date:Oct 23, 1992
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