Bedford Bancshares, Inc. announces that earnings increased 42.5% for the fourth quarter.

BEDFORD, Va.--(BUSINESS WIRE)--Dec. 13, 1994--Harold K. Neal, Executive Vice President and CEO of Bedford Bancshares, Inc., announced earnings for the quarter ended Sept. 30, 1994, the Company's first quarter of operation as a public company and the end of its fiscal year. Bedford Bancshares was formed to be the holding company for Bedford Federal Savings Bank ("Bedford Federal") upon Bedford Federal's conversion from the mutual to the stock form on Aug. 19, 1994.

Net income for the quarter ended Sept. 30, 1994 increased 42.5%, or $109,000, to $365,000, or 31 cents per share when compared to $256,000 for the quarter ended Sept. 30, 1993 (assuming 1,176,375 shares were outstanding for the entire quarter). Per share earnings for the fourth quarter 1993 are not applicable since Bedford Federal converted from mutual to stock ownership during the fourth quarter of fiscal 1994. The increase in net income for the last quarter of 1994 over 1993 resulted primarily from an increase in both net interest income and noninterest income of $160,000 and $28,000 respectively, and a reduction in the provisions for credit losses of $62,000, offset somewhat by an increase in both noninterest expense of $109,000 and income tax expense of $32,000. The 19.7% increase in net interest income in fourth quarter 1994 over the same period in 1993 is primarily due to an increase in average interest earning assets from $93.1 million during the fourth quarter in fiscal 1993 to $101.1 million during the same period in 1994 and the positive sensitivity of the Bank's asset/liability composition due to the concentration of adjustable rate loans in its portfolio in a rising interest rate environment. Noninterest expense increased $109,000 due primarily to increased compensation and benefits expenses.

Total assets at Sept. 30, 1994 were $105.2 million compared to $96.9 million at Sept. 30, 1993. This increase was due primarily to the conversion and an increase in loans receivable of $8.3 million, from $81.0 million at Sept. 30, 1993 to $89.3 million at year end 1994.

Earnings for the fiscal year ended Sept. 30, 1994 amounted to $1.4 million, or $1.23 per share and a return on assets (ROA) of 1.45%. Included in this amount is a one-time adjustment of $323,000 to income due to the adoption of a change in accounting principle (FASB 109). Exclusive of this one time adjustment, 1994 net income exceeded that of 1993 by $197,000, an increase of 21.2% which represents earnings of 95 cents per share and a ROA of 1.12%.

Mr. Neal stated that he was pleased with the operating results for 1994 and feels that the company is positioned for continued progress in the years ahead.

Bedford Federal operates three full service offices in Bedford and Bedford County, Virginia and has served its community since 1935. Bedford Bancshares' common shares trade on the NASDAQ National Market under the symbol "BFSB".

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                     BEDFORD BANCSHARES, INC.
            (Dollars in thousands, except per share data)

               Consolidated Statements of Income

                              Three Months Ended    Year Ended
                                Sept. 30, (1)        Sept. 30,
                             1993 (2)  1994 (2)  1993 (2)  1994 (2)

Interest income              $1,733    $1,818    $7,095    $6,964
Interest expense                924       849     3,740     3,478

 Net interest income            809       969     3,355     3,486
Provision for credit losses      61        (1)      234        51

 Net interest income after
  provision for credit losses   748       970     3,121     3,435
Noninterest income              125       153       497       554
Noninterest expenses            489       598     2,089     2,238

 Income before income taxes
  and cumulative effect         384       525     1,529     1,751
Income tax expense              128       160       604       629

 Income before cumulative
  effect                        256       365       925     1,122
Cumulative effect of change
 in accounting principle         --        --        --       323

Net income                   $  256    $  365     $ 925    $1,445

Earnings per common share       n/a(3)  $0.31%(4)  n/a(3) $1.23(5,6)
Return on average assets       1.06%     1.38%     0.97%     1.12%
Return on average equity      17.02%     9.84%    16.25%    12.89%
Interest rate spread           3.17%     3.21%     3.39%     3.28%
Net interest margin            3.48%     3.83%     3.68%     3.64%
Noninterest expense to
 average assets                2.02%     2.26%     2.19%     2.24%
Net charge-offs to average
 outstanding loans             0.00%     0.01%     0.02%     0.01%

                        Consolidated Balance Sheets

                                          At            At
                                     September 30   September 30
                                         1993          1994

Loans receivable                       $81,590       $89,945
Reserves for credit losses                (595)         (636)
Mortgage-backed securities                  47            37
Cash and investments                    13,787        13,564
Property and equipment                   1,151         1,125
Other                                      953         1,182

 Total assets                          $96,933      $105,217

Savings deposits                      $89,187      $ 84,841
Advances from FHLB                       1,000         1,000
Accrued expenses and
 other liabilities                         602           717

Shareholders' equity                     6,144        18,659

 Total liabilities and
  shareholders' equity                 $96,933      $105,217

Nonaccrual and 90 days
 past due loans                        $   354      $  1,126
Repossessed real estate                     31             0
Other nonperforming assets                   0             0
 Total nonperforming assets                385      $  1,126

Allowance for credit losses
 to nonperforming assets                154.55%        56.48%
Nonperforming loans to total loans        0.44%         1.26%
Nonperforming assets to total assets      0.40%         1.07%
Book value per share                       n/a(3)     $15.86 (5)

(1) Three months ended Sept. 30, 1993 and 1994 are unaudited (2) The ratios for the three-month periods are annualized (3) There were no shares outstanding prior to the Company's initial

public offering on Aug. 19, 1994. (4) The average number of shares outstanding during the quarter

ended Sept. 30, 1994 were 1,176,375 (5) The number of shares outstanding as of Sept. 30, 1994 was

1,176,375 (6) Includes cumulative effect of change in accounting principle

CONTACT: Bedford Bancshares, Inc., Bedford

H.K. Neal, 703/586-2590

KEYWORDS: VIRGINIA

INDUSTRY KEYWORD: BANKING REPEATS: New York 212-575-8822 or 800-221-2462; Boston 617-330-5311 or

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