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FIRST LIBERTY REPORTS RESULTS FOR THE SECOND QUARTER OF FISCAL 1992

FIRST LIBERTY REPORTS RESULTS FOR THE SECOND QUARTER OF FISCAL 1992
 MACON, Ga., May 6 /PRNewswire/ -- First Liberty Financial Corp. (NASDAQ-NMS: FLFC) reported today a net income of $103,000 or $.04 per fully diluted share, for the second quarter of fiscal 1992, compared to $617,000 or $.28 per fully diluted share for the second quarter of fiscal 1991.
 For the six months ended March 31, net income for fiscal 1992 was $1,704,000 or $.57 per fully diluted share compared to $1,398,000 or $.60 per fully diluted share in fiscal 1991.
 Robert F. Hatcher, First Liberty's president and chief executive officer, said: "Second quarter operating results were lower than prior quarter's and year to date results are substantially higher due to several factors. First, loan loss provisions were increased. Second, we incurred increased hedging expenses to control interest rate risk on an increased level of loan production. Those expenses will be recovered in future quarters from servicing sales of second quarter loan production. Third, as a result of increased prepayments of mortgage loans, we accelerated the write-off of deferred assets related to those loans (excess servicing). Lastly, year to date net income included a tax benefit relating to a change in accounting principle."
 Net income for both fiscal 1992 and fiscal 1991 included the effect of changes in accounting principles and an extraordinary item in fiscal 1991. Before the effect of the changes in accounting principles and the extraordinary item, net income for the three and six months ended March 31 was $103,000 and $487,000, respectively, compared to $335,000 and $740,000 for the comparable periods in fiscal 1991.
 Continuing, Hatcher said: "During the second quarter, several things happened to strengthen the company's balance sheet. Non- performing assets declined, foreclosed real estate declined, loan loss reserves increased and loan production and loan servicing increased."
 Non-performing assets (which include non-performing loans and repossessed assets) were $33 million or 4.6 percent of total assets at March 31, compared to $41 million or 5.6 percent of total assets a year ago. Non-performing loans were $6 million or 1.1 percent of total loans at March 31, compared to $14 million or 2.5 percent of total loans at March 31, 1991.
 Foreclosed real estate and other repossessed assets declined to $25.6 million at March 31 from $25.8 million a year earlier. Sales of real estate owned during the three and six months ended March 31 were $6.9 million and $10.4 million compared to $1.5 million and $3.1 million, respectively, a year ago.
 General loan loss reserves were $5.4 million at March 31, compared to $5.2 million a year earlier. General loan loss reserves were 1.1 percent of total loans (excluding loans held for sale) at March 31, compared to 1.0 percent at March 31, 1991. General loan loss reserves were 86 percent of non-performing loans at March 31, compared to 38 percent a year ago.
 Liberty Mortgage Corporation (First Liberty's mortgage banking subsidiary) originated $170 million and $278 million of loans during the three and six months ended March 31, compared to $34 million and $71 million a year earlier, respectively. Originations for the first six months of fiscal 1992 have exceeded total loan originations for fiscal 1991 of $201 million. Liberty Mortgage continues a policy of selling substantially all loan production and purchasing interest rate coverage to hedge interest rate risk on loans awaiting sale.
 Commenting on Liberty Mortgage's results, Hatcher said: "During the second quarter, we experienced significant increases in loan originations and in interest rates. As a result of our strategy to hedge substantially all interest rate risk, our exposure to increasing rates has been reflected in these quarterly results. Our policy of limiting interest rate risk in the mortgage company worked as anticipated. As a result of that policy, we will not carry the baggage of rising interest rates into future quarters."
 On Feb. 10, the Financial Accounting Standards Board ("FASB") issued SFAS No. 109. As a result of the issuance of SFAS No. 109, First Liberty recorded a tax benefit of $1,217,000 or $.40 per fully diluted share effective Oct. 1, 1991, reflecting the cumulative effect of the change in accounting principle.
 The following table summarizes Liberty Savings Bank's regulatory capital ratios and its requirements at March 31:
 Current level Regulatory requirements Excess
 Tangible 4.6 pct. 1.5 pct. 3.1 pct.
 Core 4.9 pct. 3.0 pct. 1.9 pct.
 Risk-based 9.3 pct. 7.2 pct. 2.1 pct.
 Total stockholders' equity was $37 million or $12.53 per share at March 31, compared to $27 million or $13.44 per share at March 31, 1991. Tangible book value per share was $11.41 at March 31, compared to $11.61 a year earlier.
 The difference in book value from year to year is because during September 1991, First Liberty conducted an exchange offering to holders of its 8 1/4 percent Convertible Subordinated Debentures due Aug. 1, 2005. Pursuant to that offer, 97 percent of the outstanding bonds were exchanged for 997,040 shares of First Liberty Common Stock and $16.5 million on new debt securities. As a result of the exchange offer, total outstanding shares of First Liberty Common Stock increased from 1.9 million to 2.9 million and equity capital increased by $8.1 million from $27.5 million to $35.6 million.
 At March 31, First Liberty reported total assets of $718 million compared to $724 million a year earlier. Total deposits were $510 million at March 31, compared to $526 million at March 31, 1991. Total loans (including loans held for sale) increased to $570 million at March 31, compared to $554 million last year.
 Summarizing the results, Hatcher said: "We continued to make progress toward our goal of resolving Liberty's problem assets during the second quarter. Non-performing assets have declined by $6.6 million or 17 percent so far this fiscal year, and we expect this trend to continue through the remainder of fiscal 1992. While the cost of resolving these assets will remain high for the remainder of fiscal 1992, the reduction of these problem assets will provide a strong foundation for increased profitability in fiscal 1993."
 First Liberty Financial Corp. is the holding company for Liberty Savings Bank, F.S.B., operating 18 banking offices in middle, coastal and south Georgia, a loan production office in Atlanta and a mortgage banking company (Liberty Mortgage Corporation) operating throughout Georgia, and through correspondent relationships in several other southeastern states. First Liberty Common Stock is quoted through the National Market System of the National Association of Securities Dealers (NASDAQ) under the symbol FLFC.
 FIRST LIBERTY FINANCIAL CORPORATION
 SUMMARY OF FINANCIAL INFORMATION
 (dollars in millions, except per share data)
 (Unaudited)
 Balance Sheet 3/31/92 3/31/91 9/30/91
 Non-performing assets 33.0 41.0 39.0
 NPA/Total assets 4.6 pct. 5.6 pct. 5.5 pct.
 Foreclosed real estate and
 other repossessed assets 25.6 25.8 31.4
 General loan loss reserves 5.4 5.2 4.9
 GLLR/loans (Excl. held for sale) 1.1 pct. 1.0 pct. 1.0 pct.
 Stockholders equity 37.3 26.6 35.6
 Book value per share 12.53 13.44 11.94
 Tangible book value per share 11.41 11.61 10.77
 Income statement
 (dollars in thousands, except per share data)
 3 mos. ended 3/31/92 3/31/91
 Net income from operations $ 103 $ 335
 Impact of changes in accounting
 principles:
 Staff accounting bulletin No. 91 --- 252
 SFAS No. 109 --- ---
 Extraordinary item:
 Gain on extinguishment of debt --- 30
 Net income $ 103 $ 617
 Earnings per share (fully diluted):
 Net income from operations $0.04 $0.19
 Impact of changes in accounting
 principles:
 Staff accounting bulletin No. 91 --- 0.08
 SFAS No. 109 --- ----
 Extraordinary item:
 Gain on extinguishment of debt --- 0.01
 Net income $0.04 $0.28
 6 mos. ended 3/31/92 3/31/91
 (dollars in thousands, except per share data)
 Net income from operations $ 487 $ 740
 Impact of changes in accounting
 principles:
 Staff accounting bulletin No. 91 --- 386
 SFAS No. 109 1,217 ---
 Extraordinary item:
 Gain on extinguishment of debt --- 272
 Net income $1,704 $1,398
 Earnings per share (fully diluted):
 Net income from operations $0.17 $0.41
 Impact of changes in accounting
 principles:
 Staff accounting bulletin No. 91 --- 0.11
 SFAS No. 109 0.40 ---
 Extraordinary item:
 Gain on extinguishment of debt --- 0.08
 Net income $0.57 $0.60
 FIRST LIBERTY FINANCIAL CORP. AND SUBSIDIARIES
 Condensed Consolidated Statements of Financial Condition
 (dollars in thousands)
 (Unaudited)
 ASSETS 3/31/92 9/30/91
 Cash and due from banks $ 9,815 $ 10,524
 Federal funds sold and securities
 purchased under resale agreements 16,331 15,459
 Investment securities held for sale
 (market value of $7,953 and $11,707,
 respectively) 7,927 11,640
 Investment securities (market value
 of $8,234 and $7,941, respectively) 8,234 7,941
 Mortgage-backed securities held for sale
 (market value of $27,275 and $49,827,
 respectively) 26,773 48,431
 Mortgage-backed securities (market value
 of $17,779 and $8,045, respectively) 17,846 8,308
 Loans held for sale, net (market value
 of $95,320 and $45,493, respectively) 95,126 45,214
 Loans, net 474,389 495,748
 Accrued interest receivable 4,336 5,895
 Premises and equipment, net 18,339 18,789
 Real estate, net 25,687 31,505
 Cost in excess of net assets acquired 3,341 3,486
 Other assets 10,234 10,269
 Total $ 718,378 $ 713,209
 LIABILITIES AND STOCKHOLDERS' EQUITY
 Deposits $ 509,984 $ 527,835
 Notes payable and other borrowed
 money 107,260 114,110
 Subordinated debentures 11,933 11,870
 Securities sold under agreements to
 repurchase 22,457 1,616
 Drafts payable on loans originated 20,916 11,061
 Other liabilities 8,502 11,167
 Total 681,052 677,659
 Commitments and contingencies
 Stockholders' equity:
 Common stock ($1.00 par value, 25
 million shares authorized, 3,000,690
 shares issued and 2,978,350 shares
 outstanding) 3,001 3,001
 Additional paid-in capital 16,026 16,026
 Retained earnings (substantially
 restricted) 18,817 17,113
 Total 37,844 36,140
 Less:
 Treasury stock at cost (22,340
 shares) (269) (269)
 Obligations under Employee Stock
 Ownership Plan (249) (321)
 Total 37,326 35,550
 Total $ 718,378 $ 713,209
 Condensed Consolidated Statements of Income
 (dollars in thousands except per share amounts)
 (Unaudited)
 3 mos. ended 3/31/92 3/31/91
 Interest revenue:
 Loans $13,460 $14,815
 Mortgage-backed securities 1,001 1,505
 Investment securities 281 491
 Federal funds sold and securities
 purchased under resale agreements 154 294
 Total 14,896 17,105
 Interest expense:
 Deposits 7,352 9,326
 Short-term borrowings 1,211 1,191
 Long-term borrowings 1,449 2,114
 Total 10,012 12,631
 Net interest income 4,884 4,474
 Provision for estimated losses
 on loans 1,200 686
 Net interest income after provision
 for estimated losses on loans 3,684 3,788
 Non-interest income:
 Loan servicing fees 676 810
 Gain (loss) on sale of loans and
 mortgage-backed securities (1,060) (3)
 Gain (loss) on securities transactions 54 (30)
 Gain on sale of servicing 547 416
 Deposit account service charges 380 364
 Provision for estimated losses on
 real estate --- 7
 Other income 148 169
 Total non-interest income 745 1,733
 Total 4,429 5,521
 Non-interest expense:
 Compensation, payroll taxes and
 fringe benefits 2,043 2,265
 Occupancy and equipment 612 723
 Advertising 147 137
 Data processing 219 312
 Federal insurance premiums 328 348
 Amortization of intangible assets 73 73
 Other 1,111 1,084
 Total 4,533 4,942
 Income (loss) before income tax
 expense (benefit) (104) 579
 Income tax expense (benefit) (207) (8)
 Income before cumulative effect of
 change in accounting principle and
 extraordinary item 103 587
 Cumulative effect of change in
 accounting principle --- ---
 Extraordinary item: gain on
 extinguishment of debt, net of
 income tax expense --- 30
 Net income $ 103 $ 617
 Earnings per share:
 Income before cumulative effect of change in accounting
 principle and extraordinary item:
 Primary $ .03 $ .30
 Fully diluted $ .04 $ .27
 Cumulative effect of change in accounting principle
 Primary --- ---
 Fully diluted --- ---
 Extraordinary item: gain on extinguishment of debt, net of
 income tax expense:
 Primary --- $ .02
 Fully diluted --- $ .01
 Net income:
 Primary $ .03 $ .32
 Fully diluted $ .04 $ .28
 6 mos. ended 3/31/92 3/31/91
 Interest revenue:
 Loans $26,803 $30,111
 Mortgage-backed securities 2,185 3,096
 Investment securities 629 842
 Federal funds sold and securities
 purchased under resale agreements 305 666
 Total 29,922 34,715
 Interest expense:
 Deposits 15,609 18,879
 Short-term borrowings 2,160 2,313
 Long-term borrowings 3,022 4,502
 Total 20,791 25,694
 Net interest income 9,131 9,021
 Provision for estimated losses
 on loans 2,000 1,143
 Net interest income after provision
 for estimated losses on loans 7,131 7,878
 Non-interest income:
 Loan servicing fees 1,324 1,676
 Gain (loss) on sale of loans and
 mortgage-backed securities (449) 30
 Gain (loss) on securities transactions 96 (30)
 Gain on sale of servicing 1,127 600
 Deposit account service charges 771 806
 Provision for estimated losses on
 real estate (40) (183)
 Other income 277 254
 Total non-interest income 3,106 3,153
 Total 10,237 11,031
 Non-interest expense:
 Compensation, payroll taxes and
 fringe benefits 4,588 4,456
 Occupancy and equipment 1,331 1,370
 Advertising 294 257
 Data processing 431 585
 Federal insurance premiums 653 707
 Amortization of intangible assets 145 145
 Other 2,274 2,212
 Total 9,716 9,732
 Income (loss) before income tax
 expense (benefit) 521 1,299
 Income tax expense (benefit) 34 173
 Income before cumulative effect of
 change in accounting principle and
 extraordinary item 487 1,126
 Cumulative effect of change in
 accounting principle 1,217 ---
 Extraordinary item: gain on
 extinguishment of debt, net of
 income tax expense --- 272
 Net income $ 1,704 $ 1,398
 Earnings per share:
 Income before cumulative effect of change in accounting
 principle and extraordinary item:
 Primary $ .16 $ .57
 Fully diluted $ .17 $ .52
 Cumulative effect of change in accounting principle
 Primary $ .41 ---
 Fully diluted $ .40 ---
 Extraordinary item: gain on extinguishment of debt, net of
 income tax expense:
 Primary --- $ .14
 Fully diluted --- $ .08
 Net income:
 Primary $ .57 $ .71
 Fully diluted $ .57 $ .60
 -0- 5/7/92
 /CONTACT: David L. Hall, senior vice president and chief financial officer of First Liberty Financial Corp., 404-936-3350/
 (FLFC) CO: First Liberty Financial Corp. ST: Georgia IN: FIN SU: ERN


EA-BN -- AT011 -- 7188 05/06/92 14:51 EDT
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