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CITADEL HOLDING CORP. ANNOUNCES RESULTS

 CITADEL HOLDING CORP. ANNOUNCES RESULTS
 Glendale, California, November 5, 1992 /PRNewswire/ -- Citadel


Holding Corporation, parent company of Fidelity Federal Bank, FSB, today reported third quarter net losses of $14.9 million or $4.51 per share, compared with net losses of $21.1 million or $6.41 per share in the third quarter of 1991. For the nine months ended September 30, 1992, net losses were $4.3 million or $1.32 per share, compared with net losses of $9.6 million or $2.92 per share for the comparable 1991 period.
 The Company's provisions for estimated loan and real estate losses recorded during the nine month period ended September 30, 1992, were greater than those recorded for the corresponding 1991 period. Also, the Company's net interest income declined slightly during the first nine months of 1992 compared to the corresponding 1991 period. Notwithstanding these adverse factors, the amount of net loss for the nine months ended September 30, 1992, was less than that reported for the corresponding 1991 period due principally to two reasons. First, the Company reported substantially higher tax provisions for the nine month period in 1991 than for the comparable period in the current year. Second, in September 1991, the Company recorded reserves for certain contingent liabilities unrelated to the Company's loan and real estate portfolios in the amount of $6.0 million.
 The provision for estimated loan and real estate losses of $58.0 million for the nine months ended September 30, 1992, included the previously announced $39.0 million provision recorded in the third quarter of 1992, compared with $52.4 million in the corresponding nine months of 1991. The increased loan and real estate loss provisions in 1992 over 1991 reflect the continuing deterioration in the general economic conditions and the real estate markets in Southern California. At September 30, 1992, the Company's general valuation allowance (GVA) was $77.9 million or 1.86 pct. of total loans and real estate, up from $52.4 million or 1.13 pct. at December 31, 1991, and $50.0 million or 1.01 pct. at September 30, 1991. During the nine months ended September 30, 1992, the Company charged-off a total of $22.9 million on loans and real estate compared to $21.5 million for the corresponding 1991 period.
 During the first nine months of 1992, nonperforming assets (NPAs) increased to $236.3 million or 4.93 pct. of total assets from $124.7 million or 2.43 pct. of total assets at December 31, 1991. The Company's NPAs were $91.0 million or 1.66 pct. of total assets at September 30, 1991. Due to the increase in total NPAs, the ratio of the GVA to NPAs decreased to 33.0 pct. at September 30, 1992, from 42.0 pct. at December 31, 1991, and 54.9 pct. at September 30, 1991.
 The Company has modified the terms of certain loans in its portfolio which resulted in various concessions to the borrower with respect to the borrower's payment schedule or other loan terms in response to the borrower's financial difficulties. Some of these restructurings have required the Company to classify the loans in question as troubled debt restructurings (TDRs). TDRs increased from $6.9 million or 0.14 pct. of total assets at December 31, 1991, to $78.4 million or 1.63 pct. of total assets at September 30, 1992. There were no TDRs at September 30, 1991.
 Richard M. Greenwood, President and Chief Executive Officer, said: "The Company continues to monitor the performance of its $4.2 billion loan and real estate portfolio and additions to its allowance for estimated loan and real estate losses will be made when appropriate, depending on the performance of the Southern California real estate market and its economy. If current downward trends continue and the amount of the Company's nonperforming assets continues to increase, it is likely that the Company will need to further increase its allowance for estimated loan and real estate losses."
 Loans on single family and multifamily properties are generally believed to have less credit risk than commercial, industrial or construction loans. However, current Southern California economic conditions have adversely impacted the credit risk profile of the Company's loans secured by residential properties. At September 30, 1992, the Company's loans on residential properties totalled 90.7 pct. of its total loan portfolio. Adjustable rate mortgages represent 96.7 pct. of the total loan portfolio. Approximately 90.5 pct. of the Company's total loan portfolio is comprised of loans secured by California residential real estate. The Company has emphasized California apartment lending in recent years, and approximately 69.6 pct. of the total loan portfolio is comprised of such loans.
 Net interest income decreased $4.0 million or 3.80 pct. for the nine months ended September 30, 1992, from the corresponding 1991 period. The decrease resulted from an average 12.1 pct. balance sheet decline reducing net interest income by $9.0 million. This decrease in net interest income was partially offset by a 23 basis point increase in the effective yield on interest-earning assets which added $5.0 million to net interest income. The effective yield was 2.85 pct. and 2.62 pct. for the nine months ended September 30, 1992 and 1991, respectively. The effective yield is the interest rate margin adjusted for the difference in the balances of interest- earning assets and interest-bearing liabilities.
 Operating expenses for the nine months ended September 30, 1992, remained fairly stable increasing only $.2 million or 0.33 pct. over operating expenses for the corresponding period in 1991. However, the ratio of operating expenses to average assets increased to 1.58 pct. for the nine months of 1992 from 1.38 pct. for the corresponding 1991 period as a result of a reduction in asset size from $5.5 billion at September 30, 1991, to $4.8 billion at September 30, 1992. The Company's operating efficiency ratio, which measures the relationship between operating expenses and income generated, increased to 53.2 pct. for the nine months ended September 30, 1992, from 51.3 pct. for the corresponding 1991 period.
 Nonoperating expenses for the nine months ended September 30, 1992, decreased $6.6 million due to a $6.0 million accrual for loss contingencies recorded in the third quarter of 1991, with no comparable amount recorded in 1992.
 At September 30, 1992, Fidelity Federal Bank, the Company's principal subsidiary, met the fully phased-in capital requirements for all three capital ratio measurements based upon regulations currently required by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). At September 30, 1992, Fidelity's tangible, core and risk-based capital ratios were 4.12 pct., 4.21 pct. and 9.48 pct., respectively; while the minimum requirements were 1.50 pct., 3.00 pct. and 7.20 pct., respectively. However, further regulations on the core capital requirements are being contemplated by the Office of Thrift Supervision (OTS). These proposed regulations, if adopted in their current form, will likely increase Fidelity's minimum core capital requirements from 3.00 pct. to a range of 4.50 pct. to 5.00 pct. Accordingly, no assurances can be given that Fidelity will continue to meet all minimum capital requirements. As of September 30, 1992, Fidelity would be considered adequately capitalized under regulations recently promulgated by the OTS which implement the "prompt corrective action" system mandated by the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA).
 Citadel's common stock is traded on the American Stock Exchange under the symbol CDL.
 CITADEL HOLDING CORPORATION AND SUBSIDIARIES
 FINANCIAL HIGHLIGHTS
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (Subject to year-end audit)
 (Dollars in thousands, except per share amounts)
 Quarter Ended Nine Months Ended
 September 30, September 30,
 1992 1991 1992 1991
 INTEREST INCOME:
 Loans $83,463 $122,729 $278,123 $381,072
 Mortgage-backed
 securities 1,205 1,097 2,483 3,764
 Investment securities
 and other 2,075 4,254 7,893 13,986
 Total interest income 86,743 128,080 288,499 398,822
 INTEREST EXPENSE:
 Deposits 41,997 66,437 137,336 215,758
 FHLB Advances 4,312 9,574 16,502 35,085
 Other borrowings 8,184 12,010 27,929 37,254
 Subordinated notes 1,844 1,844 5,530 5,530
 Total interest expense 56,337 89,865 187,297 293,627
 NET INTEREST INCOME 30,406 38,215 101,202 105,195
 Provision for estimated
 loan and real estate
 losses 39,000 40,405 58,000 52,405
 NET INTEREST INCOME
 (EXPENSE) AFTER
 PROVISION FOR ESTIMATED
 LOAN AND REAL ESTATE
 LOSSES (8,594) (2,190) 43,202 52,790
 OTHER INCOME:
 Loan and other fees 2,077 1,700 5,613 4,400
 Gains on sales of
 loans, net 403 256 1,040 370
 Gains on sales of mortgage-
 backed securities, net --- --- --- 1,008
 Real estate operations,
 net (1,331) (611) (2,487) (1,350)
 Other income (expense) 980 (4,895) 3,595 (3,000)
 Total other income 2,129 (3,550) 7,761 1,428
 OPERATING EXPENSE:
 Compensation 9,263 8,915 28,315 27,150
 Occupancy 3,182 3,057 9,457 9,484
 FDIC insurance 2,015 2,191 6,375 6,489
 Other general and
 administrative 4,272 5,275 13,845 14,677
 Total operating expense 18,732 19,438 57,992 57,800
 LOSS BEFORE INCOME
 TAXES (25,197) (25,178) (7,029) (3,582)
 Income tax (benefit)
 expense (10,327) (4,049) (2,686) 6,033
 NET LOSS ($14,870) ($21,129) ($4,343) ($9,615)
 NET LOSS PER SHARE ($4.51) ($6.41) ($1.32) ($2.92)
 FINANCIAL DATA
 FOR THE PERIOD:
 Real estate loans
 funded $99,124 $90,972 $283,780 $426,063
 (Decrease) increase
 in deposits ($59,823) $63,900 ($274,282) $81,680
 Operating expenses
 to average assets 1.55 pct. 1.41 pct. 1.58 pct. 1.38 pct.
 Operating efficiency
 ratio (1) 57.57 pct.47.80 pct. 53.22 pct. 51.32 pct.
 Average common and
 common equivalent shares
 outstanding (2) 3,297,812 3,297,812 3,297,812 3,297,812
 FINANCIAL DATA AT
 END OF THE PERIOD:
 Total assets $4,793,631 $5,480,809
 Total loans and
 mortgaged-backed
 securities $4,177,052 $4,906,493
 General valuation
 allowance to loans
 and real estate owned 1.33 pct. 0.43 pct.
 Deposits $3,610,425 $4,049,168
 Borrowings $847,950 $1,076,175
 Subordinated notes $60,000 $60,000
 Stockholders' equity $216,797 $208,862
 Stockholders' equity per share $65.74 $63.33
 Common shares
 outstanding (2) 3,297,812 3,297,812
 FIDELITY FEDERAL BANK
 REGULATORY CAPITAL RATIOS:
 Tangible capital 4.12 pct. 4.09 pct.
 Core capital 4.21 pct. 3.59 pct.
 Risk-based capital 9.48 pct. 9.39 pct.
 WEIGHTED AVERAGE YIELD
 FOR THE PERIOD:
 Loans 8.39 pct. 10.09 pct.
 Investments 3.90 pct. 7.09 pct.
 Combined loans and
 investments 8.13 pct. 9.94 pct.
 WEIGHTED AVERAGE COST
 FOR THE PERIOD:
 Deposits 4.99 pct. 7.16 pct.
 Borrowings 7.16 pct. 8.51 pct.
 Combined deposits and
 borrowings 5.43 pct. 7.47 pct.
 INTEREST RATE MARGIN FOR
 THE PERIOD 2.70 pct. 2.47 pct.
 EFFECTIVE YIELD FOR
 THE PERIOD 2.85 pct. 2.62 pct.
 (1) The efficiency ratio is computed by dividing total noninterest expense by net interest income and other income, net of nonrecurring items.
 (2) Average common and common equivalent shares outstanding at September 30, 1991 are shown net of 179,700 shares of Treasury Stock.
 Sept. 30, June 30, Sept. 30,
 1992 1992 1991
 NONPERFORMING ASSETS (NPAs):
 Nonaccruing loans $118,832 $108,264 $37,603
 In-substance foreclosures (1) 41,983 29,249 31,886
 Foreclosed real estate (1) 75,438 52,298 21,534
 Total NPAs $236,253 $189,811 $91,023
 NPAs to total assets 4.93 pct. 3.94 pct. 1.66 pct.
 NPAs AND TROUBLED DEBT
 RESTRUCTURINGS (TDRs):
 Total NPAs $236,253 $189,811 $91,023
 TDRs 78,374 43,796 ---
 Tota NPAs and TDRs $314,627 $233,607 $91,023
 NPAs and TDRs to total assets 6.56 pct. 4.84 pct. 1.66 pct.
 CLASSIFIES ASSETS:
 Total NPAs $236,253 $189,811 $91,023
 Performing loans with
 increased risk 133,218 73,380 64,199
 Real estate held for investment 12,253 12,341 10,400
 Other assets --- --- 63
 Total Classified Assets $381,724 $275,532 $165,685
 Classified assets to
 total assets 7.96 pct. 5.71 pct. 3.02 pct.
 (1) Foreclosed real estate and ISF are shown net of lst trust deeds, where applicable.
 -0- 11/5/92
 /CONTACT: Albert J. Clemens, Senior Vice President and Marketing Director, Fidelity Federal Bank, 818-549-3525/
 (CDL) CO: Citadel Holding Corp.; Fidelity Federal Bank ST: California IN: FIN SU: ERN


JL -- LA033 -- 7950 11/05/92 17:08 EST
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