Bedford Bancshares Inc. announces results for the six and three months ended March 31, 1997.

BEDFORD, Va.--(BUSINESS WIRE)--April 14, 1997--Bedford Bancshares Inc., (NASDAQ: BFSB) the holding company of Bedford Federal Savings Bank today announced its results for the three and six months ended March 31, 1997.

The Corporation's net income for the three months ended March 31, 1997 was $414,000 compared to $398,000 for the same period of 1996. On a per share basis, earnings for the second quarter of fiscal 1997 amounted to $.38 compared to $.35 for the same quarter of fiscal 1996. Returns on average assets and equity for the second quarter of fiscal 1997 were 1.26% and 8.81%, respectively.

Net interest income increased $87,000, or 7.25%, in the second quarter of fiscal 1997 over the same quarter of fiscal 1996 due to an increase in average interest-earning assets. The growth of average earning assets was primarily the result of an increase in the consumer and commercial loan portfolios. For the second quarter of fiscal 1997, the net interest spread and net interest margin were 3.40% and 4.11%, respectively, as compared to 3.46% and 4.29%, respectively.

During the second quarter of fiscal 1997, the provision for credit losses amounted to $25,000, compared to no provision during the same quarter of 1996. The overall growth of the Corporation's loan portfolio was the principal reason for the addition.

Noninterest income for the three months ended March 31, 1997 was $145,000, down $17,000 from the level earned in the same quarter one year earlier. In the second quarter of 1996 the Corporation recognized a $27,000 gain on the sale of foreclosed real estate. Excluding that gain, noninterest income would have reflected a 7.4% gain.

Noninterest expense rose $19,000, or 2.6%, to $740,000, for the three months ended March 31, 1997 over the same period one year earlier. Personnel compensation and benefits increased $40,000 due to staff increases and general merit increases, and data processing expenses were up $11,000. A $36,000 decline in the cost of Federal deposit insurance helped offset these increases.

For the six months ended March 31, 1997 net income amounted to $771,000 compared to $753,000 for the comparable period of fiscal 1996. On a per share basis, earnings were $.71 and $.67, respectively. The returns on average assets and equity for the first half of fiscal 1997 were 1.18% and 8.27%, respectively.

For the six months ended March 31, 1997, Noninterest income was $300,000 compared to $317,000 for the first six months of fiscal 1996. The decline was due to the gain realized on the sale of foreclosed real estate in the first half of fiscal 1996. Noninterest expense for the three months ended March 31, 1997 was $1,489,000 compared to $1,449,000 for the same period of fiscal 1996. The $40,000 increase was primarily the result of higher personnel compensation and benefits, offset somewhat by the lower cost of Federal deposit insurance.

Total assets at March 31, 1997 were $131.5 million, compared to $127.2 million on September 30, 1996. The asset expansion was focused in the loan portfolio with net loans receivable increasing to $112.5 million from $108.8 million at September 30, 1996. Increases in deposits and FHLB advances provided funding for the asset expansion. At March 31, 1997, nonperforming assets totaled $.8 million, compared to $.7 million at September 30, 1996.

Stockholders' equity stood at $18.8 million on March 31, 1997 compared to $18.2 million at September 30, 1996. The increase reflects the continued profitability of the Corporation, net of the quarterly dividend payments. On March 19, 1997 the Board of Directors declared a quarterly dividend $.13 per share, payable April 10, 1997 to shareholders of record as of March 31, 1997. This is the fourth consecutive quarter that the dividend per share amount has been increased.

Harold K. Neal, President and Chief Executive Officer, commented, "The Corporation continues to experience solid growth in both earnings and assets. Our credit quality remains very strong, and the markets we serve continue to reflect good economic health. Our performance has been good in the first half of fiscal 1997, and we look forward to continued success. During the second quarter of fiscal 1997, Bedford Federal introduced the "Anytime Banking System," providing our customers with a large menu of banking services which can be performed by using a touch tone phone. We are very pleased at the response this system has received."

Bedford Federal operates three full-service offices in Bedford and Bedford County, Virginia and has served the area for over 60 years. Bedford BANCSHARES, Inc. common stock trades on the NASDAQ National Market under the symbol "BFSB." -0-

                BEDFORD BANCSHARES, INC. AND SUBSIDIARY
                      Selected Financial Data
                           (Unaudited)

Financial Condition                 At         At
(In thousands of dollars,       March 31    Sept. 30   $ Chg   % Chg
 except per share)                 1997       1996

Total assets                     $131,506   $127,201  $4,305   3.38%
Loans receivable, net             112,478    108,873   3,605   3.31
Investment securities               9,110      8,010   1,100  13.73
Marketable equity securities        4,024      3,879     145   3.74
Mortgage-backed securities            466        478     (12) (2.51)
Foreclosed real estate, net             0          0       0    --
Deposits                           97,842     95,378   2,464   2.58
FHLB advances                      14,000     12,000   2,000  16.67
Retained earnings
  (substantially restricted)        9,222      8,739     483   5.53
Total stockholders' equity       $ 18,835   $ 18,227    $608   3.34%

Book value per share
 Excluding unallocated ESOP
  shares                         $  17.43   $  16.95
Including unallocated ESOP
 shares                          $  16.49   $  15.94

Asset Quality Indicators
 Nonperforming assets to
  total assets                      0.63%      0.54%
 Nonperforming loans to
  total loans                       0.74%      0.63%
 Allowance for credit losses
  to nonperforming assets          76.55%     95.03%

Summary of Operations                  For the             For the
(In thousands of dollars,         Three Months Ended   Six Months Ended
 except per share)                     March 31           March 31
                                    1997      1996     1997     1996

Interest income                  $  2,539  $  2,283   $5,001  $4,535
Interest expense                    1,252     1,083    2,520   2,189
Net interest income                 1,287     1,200    2,481   2,346
Provision for credit losses            25       --        50      -
Noninterest income                    145       162      300     317
Noninterest expense                   740       721    1,489   1,449
Net income before income taxes        667       641    1,242   1,214
Net income                       $    414  $    398     $771    $753
Earnings per share               $   0.38  $   0.35    $0.71   $0.67

Performance Indicators
 Return on average assets (1)        1.26%      1.37%   1.18%   1.30%
 Return on average equity (1)        8.81%      8.45%   8.27%   8.01%
 Net interest rate margin (1)        4.11%      4.29%   3.98%   4.22%
 Net interest rate spread (1)        3.40%      3.46%   3.24%   3.36%

(1) Annualized

CONTACT: Bedford Bancshares, Inc., Bedford

H.K. Neal or J.W. Smith, 540/586-2590

KEYWORDS: VIRGINIA

INDUSTRY KEYWORD: BANKING EARNINGS REPEATS: New York 212-752-9600 or 800-221-2462; Boston 617-236-4266 or