DeGeorge Financial reports earnings.

CHESHIRE, Conn.--(BUSINESS WIRE)--March 17, 1997--DeGeorge Financial Corp. (NASDAQ NMS: DEGE) today reported net income of $1.2 million, or $0.11 per share for the year ended Dec. 31, 1996, as compared to a net loss of $27.7 million, or $2.56 per share, for the year ended Dec. 31, 1995. Total revenue increased to $91.6 million in 1996 from $66.5 million in 1995, an increase of $25.1 million, or 37.8%. The net income for 1996 includes earnings from continuing operations of $800,000, or $0.08 per share, of which $200,000 relates to the income tax benefit recorded for the year. For 1995, the company reported a loss from continuing operations of $11.1 million, or $1.02 per share, which included a restructuring charge of $1.4 million and the reversal of a prior year tax benefit of $1.3 million. The company also recorded income of $400,000 in 1996 from the discontinued operations of its wholly-owned subsidiary, Patwil Homes Inc., as compared to losses of $16.6 million recorded in 1995, of which $8.2 million related to estimated losses on disposal recorded at Dec. 31, 1995.

For the fourth quarter of 1996, the company reported $900,000 of pre-tax income from continuing operations, or $0.08 per share, as compared to a pre-tax net loss from continuing operations of $3.5 million (which includes the $1.4 million restructuring charge), or $0.33 per share, for 1995. Total revenue during the fourth quarter increased to $24.5 million in 1996 as compared to $18.3 million in 1995, an increase of $6.2 million, or 33.9%.

During 1996, the company completed the relocation of its operational and administrative functions from Plymouth, Minn. to Cheshire. The results of continuing operations for 1996 include non-recurring general and administrative expenses relating to transition, travel and staff realignments in connection with the movement and restructuring of operations that were completed in 1996. On a pro-forma basis, general and administrative expenses would be reduced in 1996 by $3.2 million for non-recurring items, to 15.2% of total revenue. As reported, general and administrative expenses were 18.7% of total revenue, a decrease from 22.8% of total revenue in 1995.

"I am certainly pleased with our successful turnaround, but what is really great is that we have increased our revenue base by 38% while reducing selling, general and administrative expenses by nearly 4% and 8% considering the non-recurring expenses on an equivalent basis. I am very excited about the new senior management team which has demonstrated the ability to both expand and improve productivity simultaneously as well as about our prospects for 1997, now that we have these restructuring changes behind us," said Peter R. DeGeorge, Chairman of the Board and Chief Executive Officer.

Shipments of standard orders to customers of DeGeorge Home Alliance, the Company's core business subsidiary, increased to 1,393 financed units in 1996 from 1,101 financed units in 1995, an increase of 26.5%. Total shipments to customers in 1996 increased to 1,494 financed units from 1,246 financed units in 1995, an increase of 19.9%. In the immediately preceding year (from 1994 to 1995) total shipments had also increased, by 22.4%. Gross standard orders received in 1996 were 3,054 versus 3,153 received in 1995, a decrease of 3.1%. The decrease in order activity occurred during the latter part of 1996 and is attributable to the disruption of the company's ongoing business operations by former executives of the company, who left to form a competing business. This resulted in a curtailment of sales activity by the independent sales force, some of whom were convinced to leave the company and join the defendants' new venture. The company is vigorously pursuing this and other allegations against these individuals in federal court.

Notwithstanding this disruption, the company completed its restructuring of its field sales recruitment and compensation programs and its direct marketing programs by the close of the fourth quarter of 1996. Since early January 1997, the company has added 66 highly qualified sales representatives, of which 22 have already produced orders. Typically, the company had experienced longer periods for new sales representatives, to begin producing orders. The changes to the field sales recruitment and compensation programs, which became effective on Jan. 1, 1997, should reduce fixed selling expenses by $2.5 million during 1997, based on 1996 sales activity. This reduction combined with the non-recurring expenses should reduce ongoing SG&A expenses $5.7 million on an equivalent basis.

Direct marketing programs, which include 30 and 60 second television advertisements as well as half hour information commercials ("infomercials") on national and regional cable television, have enabled the company to target specific markets and to generate substantial numbers of leads for the field sales force. The infomercial was launched in January 1997 and the response to date has far exceeded expectations. Through this date, over 14,000 prospects have received a free video describing the company's product offering. All other marketing activity has been sustained at prior year levels.

DeGeorge Financial Corp. arranges financing and is currently servicing over $200 million in underwritten construction loans. It provides access to home ownership for people who lack a sufficient down payment or sufficient income to support the purchase of the home they desire through conventional mortgage programs. Through its packaging of financing and customer support, the company enables its customers to reduce the cost of home construction by eliminating the general contractor, the intent of which is to create an equity position that serves as the down payment for permanent financing upon the conclusion of the home construction process.

CONTACT: DeGeorge Financial Corp.

Salvatore A. Bucci, 203/699-3407