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CITADEL HOLDING CORP. REPORTS EARNINGS

 CITADEL HOLDING CORP. REPORTS EARNINGS
 GLENDALE, Calif., May 5 /PRNewswire/ -- Citadel Holding Corporation


(AMEX: CDL), parent company of Fidelity Federal Bank, FSB, today reported first quarter net earnings of $6.1 million or $1.84 per share, compared with net earnings of $4.4 million or $1.34 per share in the first quarter of 1991. The increase in earnings in the first quarter of 1992 compared to the first quarter of 1991 was primarily due to increased net interest income, increased other income and, to a lesser degree, decreased operating expenses. These items were partially offset by increased provisions for estimated loan and real estate losses.
 The Company recorded provisions for estimated loan and real estate losses in the first quarter of $9.0 million compared to $6.0 million for the same period in 1991. The increased loan and real estate loss provisions in 1992 over 1991 were the result of the Company's continuing evaluation of its loan and real estate portfolios in light of the increased delinquencies and nonperforming assets being experienced by the Company and the continued deterioration in the real estate markets where the Company operates. The Company's general valuation reserve is currently $54.8 million or 1.21 percent of total loans and real estate, up from $52.4 million or 1.13 percent at December 31, 1991 and from $18.2 million or .35 percent at March 31, 1991. During the first quarter, the Company charged off a total of $6.5 million on loans and real estate.
 The Company's nonperforming assets and ratio of nonperforming assets to total assets increased to $177.6 million and 3.53 percent, respectively at March 31, 1992 from $124.7 million and 2.43 percent, respectively at December 31, 1991, and $49.6 million and .87 percent, respectively at March 31, 1991.
 William C. Walbrecher, President and Chief Executive Officer, said: "The ongoing uncertainty in real estate markets and the growth of our nonperforming assets are significant concerns. No assurances can be given that significant additions to the general or specific valuation reserves will not be necessary in future periods depending on the evolution of the economy and real estate markets in California."
 Loans on single and multifamily properties -- which are generally believed to have less credit risk than commercial, industrial or construction loans -- currently total 91.1 percent of the Company's loan portfolio. Adjustable rate mortgages represent 96.5 percent of the Company's loan portfolio. Approximately 90.9 percent of the Company's loan portfolio is comprised of loans secured by California residential real estate. The Company has specialized in California apartment lending and approximately 55.8 percent of the Company's loan portfolio is comprised of such loans.
 Net interest income increased $3.6 million or 11.5 percent for the first quarter of 1992 compared with the first quarter of 1991. The increase resulted from the combination of a reduction in average interest-earning assets and spread improvement. The effective yield was 2.88 percent and 2.33 percent for the first quarter of 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 first quarter of 1992 decreased slightly to $18.6 million from $18.8 million in the first quarter of 1991. However, due to shrinkage in total assets from $5.7 billion at March 31, 1991 to $5.0 billion at March 31, 1992, the ratio of operating expenses to average assets increased from 1.32 percent for the first quarter of 1991 to 1.48 percent for the first quarter of 1992.
 At March 31, 1992, the capital ratios of Fidelity Federal Bank were in excess of the current and fully phased-in levels required by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"). At March 31, 1992, Fidelity's tangible, core and risk-based capital ratios were 4.09 percent, 4.24 percent and 9.89 percent, respectively; while the minimum requirements were 1.5 percent, 3 percent and 7.2 percent, 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 minimum core capital requirements from 3 percent to a range of 4 percent to 5 percent depending upon the overall composite rating issued by the institution's primary regulator. The Company currently believes that, subject to any phase-in or transitional rules as may be adopted, such a standard may require the Bank to maintain core capital in the middle to upper portions of this range. Accordingly, no assurances can be given that Fidelity will continue to meet all minimum capital requirements. In addition, the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") was enacted on December 31, 1991. The impact of FDICIA on Fidelity cannot be predicted at this time, because such impact will depend on yet to be promulgated implementing regulations, particularly in the area of capital adequacy.
 Fidelity believes maintaining regulatory capital in excess of required minimum levels is of paramount importance. The Company intends to meet its future equity capital needs primarily through retained earnings and is currently considering a rights offering in the second or third quarter of 1992 to enhance its capital position.
 Mr. Walbrecher announced that Director Geoffrey L. Denempont, the representative of Tucson Electric Power Company and its investment subsidiaries ("Tucson"), resigned from the boards of Citadel Holding Corporation and Fidelity Federal Bank, effective April 27, 1992 and to date, no proposed replacement for Mr. Denempont has been designated by Tucson to the best knowledge of the Company. Scott A. Braly, previously the Chief Executive Officer of Valley Federal Savings and Loan Association, headquartered in Van Nuys, California, was elected a director of both boards on April 29, 1992.
 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
 March 31,
 1992 1991
 Interest Income:
 Loans $101,268 $130,519
 Mortgage-backed
 securities 665 1,187
 Investment securities and other 2,985 5,102
 Total interest income 104,918 136,808
 Interest Expense:
 Deposits 51,065 76,811
 FHLB Advances 6,219 13,921
 Other borrowings 10,630 12,693
 Subordinated notes 1,843 1,843
 Total interest expense 69,757 105,268
 Net Interest Income 35,161 31,540
 Provision for estimated loan
 and real estate losses 9,000 6,000
 Net Interest Income
 After Provision for
 Estimated Loan and
 Real Estate Losses 26,161 25,540
 Other Income:
 Loan and other fees 1,694 1,325
 Gains on sale
 of loans and
 securities, net 353 0
 Real estate operations,
 net (581) (462)
 Other income 1,396 932
 Total other income 2,862 1,795
 Operating Expense:
 Compensation 8,831 8,920
 Occupancy 2,965 3,192
 FDIC insurance premiums 2,180 2,147
 Other general and
 administrative 4,620 4,536
 Total operating expense 18,596 18,795
 Earnings Before Income
 Taxes 10,427 8,540
 Income tax expense 4,372 4,119
 Net Earnings $6,055 $4,421
 Net Earnings Per Share $1.84 $1.34
 At or for the quarter ended
 March 31,
 1992 1991
 Financial Data
 for the Period:
 Real estate loans funded $103,826 $160,748
 (Decrease) increase
 in deposits ($192,774) $108,236
 Operating expenses
 to average assets 1.48 pct. 1.32 pct.
 Average common and
 common equivalent
 shares
 outstanding (1) 3,297,812 3,297,812
 Financial Data at
 end of the period:
 Total assets $5,028,710 $5,676,475
 Total loans and mortgage-
 backed securities $4,483,391 $5,156,217
 General valuation reserve
 to loans and real estate
 owned 1.21 pct. 0.35 pct.
 Deposits $3,691,933 $4,075,724
 Borrowings $967,030 $1,217,881
 Subordinated notes $60,000 $60,000
 Stockholders' equity $227,195 $222,898
 Stockholders' equity
 per share $68.89 $67.59
 Common shares
 outstanding (1) 3,297,812 3,297,812
 Fidelity Federal Bank
 Regulatory Capital Ratios:
 Tangible capital 4.09 pct. 3.52 pct.
 Core capital 4.24 pct. 3.83 pct.
 Risk-based capital 9.89 pct. 8.57 pct.
 Weighted Average Yield at
 end of the period:
 Loans 8.73 pct. 10.33 pct.
 Investments 6.24 pct. 6.73 pct.
 Combined loans and
 investments 8.66 pct. 10.22 pct.
 Weighted Average Cost at
 end of the period:
 Deposits 5.02 pct. 7.34 pct.
 Borrowings 6.85 pct. 8.16 pct.
 Combined deposits and
 borrowings 5.42 pct. 7.53 pct.
 Interest Rate Margin at
 end of the period 3.24 pct. 2.69 pct.
 Effective Yield for
 the period 2.88 pct. 2.33 pct.
 (1) Excluding 179,700 shares of Treasury Stock.
 March 31, December 31, March 31,
 1992 1991 1991
 Nonperforming Assets:
 Nonaccruing loans $116,774 $68,982 $24,647
 In-substance foreclosures 24,162 25,490 7,512
 Foreclosed real estate 36,652 30,253 17,440
 Total Nonperforming
 Assets $177,588 $124,725 $49,599
 Nonperforming assets to
 total assets 3.53 pct. 2.43 pct. 0.87 pct.
 Classified Assets:
 Total Nonperforming
 Assets $177,588 $124,725 $49,599
 Performing loans with
 increased risk 58,127 89,099 38,699
 Real estate held for
 investment 12,428 14,516 13,140
 Other assets 0 63 317
 Total Classified Assets $248,143 $228,403 $101,755
 Classified assets to
 total assets 4.93 pct. 4.46 pct. 1.79 pct.
 -0- 5/5/92
 /CONTACT: Philip R. Sherringham, executive VP and CFO of Citadel Holding Corp., 818-956-7100/
 (CDL) CO: Citadel Holding Corp. ST: California IN: FIN SU: ERN


EH-JL -- LA017 -- 6383 05/05/92 09:05 EDT
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