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CITADEL HOLDINGS REPORTS RESULTS

 CITADEL HOLDINGS REPORTS RESULTS
 GLENDALE, Calif., June 28 /PRNewswire/ -- Citadel


Holding Corporation, parent company of Fidelity Federal Bank, FSB, today reported second quarter net earnings of $4.5 million or $1.35 per share, compared with net earnings of $7.1 million or $2.15 per share in the second quarter of 1991. For the six months ended June 30, 1992, net earnings were $10.5 million or $3.19 per share, com- pared with net earnings of $11.5 million or $3.49 per share for the comparable 1991 period. The decrease in year over year earnings is primarily due to sharply increased loan loss provisions and a slight increase in operating expenses. These factors were partially offset by net interest income growth and the effects of a lower effective tax rate.
 The provision for estimated loan and real estate losses was $19.0 million for the six months ended June 30, 1992, compared with $12.0 million in the corresponding six months of 1991. The increased loan and real estate loss provisions in 1992 over 1991 were the result of the Company's evaluation and monitoring of its loan and real estate portfolios in light of the continuing deterioration in the general economic conditions and the local real estate markets where the Company operates. At June 30, 1992, the Company's general valuation allowance was $57.9 million or 1.33 percent of total loans and real estate, up from $52.4 million or 1.13 percent at December 31, 1991, and $21.4 million or .43 percent at June 30, 1991. During the six months ended June 30, 1992, the Company charged-off a total of $13.0 million on loans and real estate.
 During the first six months of 1992, nonperforming assets increased to $189.8 million or 3.94 percent of total assets from $124.7 million or 2.43 percent of total assets at December, 1991. The Company's nonperforming assets were $62.9 million or 1.13 percent of total assets at June 30, 1991. However, due to the increase in total nonperforming assets, the percentage of the general valuation allowance to nonperforming assets decreased to 30.51 percent at June 30, 1992, from 42.02 percent at December 31, 1991, and 34.02 percent at June 30, 1991.
 Richard M. Greenwood, President and Chief Executive Officer, said: "The ongoing uncertainty in the real estate markets and the growth of our nonperforming assets are significant concerns. While we believe that current general and specific valuation reserves are adequate, based on historic loss experience and the composition of our loan portfolio, no assurances can be given that significant additions to these reserves will not be necessary in future periods based on the economy and real estate markets in California at that time."
 Loans on single and multifamily properties -- which are generally believed to have less credit risk than commercial, industrial or construction loans -- at June 30, 1992, totalled 91.08 percent of the Company's loan portfolio. Adjustable rate mortgages represent 96.71 percent of the total loan portfolio. Approximately 90.89 percent of the Company's loan portfolio is comprised of loans secured by California residential real estate. The Company has emphasized California apartment lending in recent years, and approximately 57.43 percent of the total loan portfolio is comprised of such loans.
 Net interest income increased $3.8 million or 5.70 percent for the six months of 1992, compared to the corresponding period of 1991. The increase resulted from the combined impact of a 46 basis point increase in the effective yield on interest-earning assets, increasing net interest income by $8.8 million which was partially offset by an average balance sheet decline of 11.91 percent which reduced net interest income by $5.0 million. The effective yield was 2.93 percent and 2.47 percent for the six months ended June 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 six months ended June 30, 1992, increased $.9 million or 2.34 percent over operating expenses for the same period in 1991. However, due to shrinkage in total assets from $5.6 billion at June 30, 1991, to $4.8 billion at June 30, 1992, the ratio of operating expenses to average assets increased from 1.36 percent for the first six months of 1991 to 1.59 percent for the same 1992 period. Notwithstanding this increase, the Company's operating efficiency ratio, which measures the relationship between operating expenses and income generated, improved to 51.37 percent for the six months ended June 30, 1992, from 53.31 percent for the corresponding 1991 period.
 At June 30, 1992, the capital ratios at 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 June 30, 1992, Fidelity's tangible, core and risk-based capital ratios were 4.40 percent, 4.55 percent and 10.10 percent, respectively; while the minimum requirements were 1.50 percent, 3.00 percent and 7.20 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 Fidelity's minimum core capital requirements from 3.00 percent to a range of 4.50 percent to 5.00 percent. 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 and has adopted a business plan calling for 5.00 percent core capital by the end of 1992. The Company intends to meet its future equity capital needs primarily through retained earnings and a $30 million rights offering for common stock which was approved by the Board of Directors of Citadel in the second quarter of 1992 to enhance its capital position. No assurances can be given that such offering will be successful, and, if necessary, Fidelity may be required to further reduce its assets, or to seek additional equity in order to increase its capital ratios.
 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 Six Months Ended
 June 30, June 30,
 1992 1991 1992 1991
 INTEREST INCOME:
 Loans $93,392 $127,824 $194,660 $258,343
 Mortgage-backed
 securities 613 1,480 1,278 2,667
 Investment securities
 and other 2,833 4,630 5,818 9,732
 Total interest inc 96,838 133,934 201,756 270,742
 INTEREST EXPENSE:
 Deposits 44,274 72,510 95,339 149,321
 FHLB Advances 5,971 11,590 12,190 25,511
 Other borrowings 9,115 12,551 19,745 25,244
 Subordinated notes 1,843 1,843 3,686 3,686
 Total interest exp 61,203 98,494 130,960 203,762
 NET INTEREST INCOME 35,635 35,440 70,796 66,980
 Provision for estimated
 loan and real estate
 losses 10,000 6,000 19,000 12,000
 NET INTEREST INCOME
 AFTER PROVISION FOR
 ESTIMATED LOAN AND
 REAL ESTATE LOSSES 25,635 29,440 51,796 54,980
 OTHER INCOME:
 Loan & other fees 1,842 1,375 3,536 2,700
 Gains on sales of loans,
 net 284 114 637 114
 Gains on sales of mortgage-
 backed securities, net - 1,008 - 1,008
 Real estate operations,
 net (575) (277) (1,156) (739)
 Other income 1,219 963 2,615 1,895
 Total other income 2,770 3,183 5,632 4,978
 OPERATING EXPENSE:
 Compensation 10,221 9,315 19,052 18,235
 Occupancy 3,310 3,235 6,275 6,427
 FDIC insurance 2,180 2,151 4,360 4,298
 Other general and
 administrative 4,953 4,866 9,573 9,402
 Total operating exp 20,664 19,567 39,260 38,362
 EARNINGS BEFORE INCOME
 TAXES 7,741 13,056 18,168 21,596
 Income tax expense 3,269 5,963 7,641 10,082
 NET EARNINGS $4,472 $7,093 $10,527 $11,514
 NET EARNINGS PER SHARE$1.35 $2.15 $3.19 $3.49
 FINANCIAL DATA
 FOR THE PERIOD:
 Real estate loans
 funded $80,830 $174,343 $184,656 $335,091
 (Decrease) increase
 in deposits ($21,685)($90,456)($214,459) $17,780
 Operating exp to
 average assets 1.70 pct. 1.40 pct. 1.59 pct. 1.36 pct.
 Operating efficiency
 ratio (1) 53.81 pct. 50.66 pct. 51.37 pct. 53.31 pct.
 Average common and
 common equivalent
 outstanding (2) 3,297,812 3,297,812 3,297,812 3,297,812
 FINANCIAL DATA AT END OF
 THE PERIOD:
 Total assets $4,821,738 $5,574,466
 Total loans and mortgage-
 backed securities $4,295,048 $5,011,577
 General valuation allow-
 ance to loans and real
 estate owned 1.33 pct. 0.43 pct.
 Deposits $3,670,248 $3,985,268
 Borrowings $799,509 $1,202,754
 Subordinated notes $60,000 $60,000
 Stockholders' equity $231,667 $229,991
 Stockholders' equity
 per share $70.25 $69.74
 Common shares
 outstanding (2) 3,297,812 3,297,812
 FIDELITY FEDERAL BANK
 REGULATORY CAPITAL RATIOS:
 Tangible capital 4.40 pct. 3.77 pct.
 Core capital 4.55 pct. 4.06 pct.
 Risk-based capital 10.10 pct. 9.16 pct.
 WEIGHTED AVERAGE YIELD
 FOR THE PERIOD:
 Loans 8.64 pct. 10.18 pct.
 Investments 4.44 pct. 7.29 pct.
 Combined loans and investments 8.41 pct. 10.04 pct.
 WEIGHTED AVERAGE COST
 FOR THE PERIOD:
 Deposits 5.19 pct. 7.42 pct.
 Borrowings 7.44 pct. 8.69 pct.
 Combined deposits and
 borrowings 5.65 pct. 7.72 pct.
 INTEREST RATE MARGIN FOR
 THE PERIOD 2.76 pct. 2.32 pct.
 EFFECTIVE YIELD FOR
 THE PERIOD 2.93 pct. 2.47 pct.
 (1) The efficiency ratio is computed by dividing total noninterest expense by net interest income and other income, net of nonrecurring items.
 (2) Net of 179,700 shares of Treasury Stock.
 June 30, March 31, June 30,
 1992 1992 1991
 NONPERFORMING ASSETS (NPAs):
 Nonaccruing loans $108,264 $116,774 $34,102
 In-substance
 foreclosures (1) 29,249 24,162 9,863
 Foreclosed real estate (1) 52,298 36,652 18,894
 Total NPAs $189,811 $177,588 $62,859
 NPAs to total assets 3.94 pct. 3.53 pct. 1.13 pct.
 NPAs AND TROUBLED DEBT
 RESTRUCTURINGS (TDRs):
 Total NPAs $189,811 $177,588 $62,859
 TDRs 43,796 15,034 -
 Total NPAs and TDRs $233,607 $192,622 $62,859
 NPAs and TDRs to total
 assets 4.84 pct. 3.83 pct. 1.13 pct.
 CLASSIFIES ASSETS:
 Total NPAs $189,811 $177,588 $62,859
 Performing loans with
 increased risk 73,380 58,127 36,364
 Real estate held for
 investment 12,341 12,428 13,092
 Other assets - - 269
 Total Classified Assets $275,532 $248,143 $112,584
 Classified assets to
 total assets 5.71 pct. 4.93 pct. 2.02 pct.
 (1) Foreclosed real estate and ISF are shown net of lst trust deeds, where applicable.
 -0- 7/28/92
 /CONTACT: Albert J. Clemens, Senior Vice President and Marketing Director, Fidelity Federal Bank, 818-549-3525/
 (CDL) CO: Citadel Holding Co.; Fidelity Federal Bank ST: California IN: FIN SU: ERN


JL -- LA039 -- 4370 07/28/92 20:54 EDT
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