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FIRSTFED MICHIGAN REPORTS INCREASED CORE EARNINGS IN THE THIRD QUARTER

FIRSTFED MICHIGAN REPORTS INCREASED CORE EARNINGS IN THE THIRD QUARTER
 DETROIT, October 19, 1992 /PRNewswire/ -- FirstFed Michigan Corporation (NASDAQ-NMS:FFOM), the holding company of First Federal of Michigan, today reported net earnings of $8.5 million for the quarter ended September 30, 1992, compared to $12.4 million for the same period last year. On a per share basis, net earnings were $.75 ($.71 fully diluted) for 1992, compared with $1.11 ($1.03 fully diluted) for 1991.
 Last year's third quarter included $14.3 million in pretax gains on loans and mortgage-backed securities and the sale of mortgage servicing, while this year's figure totaled only $2.6 million. Earnings before taxes excluding these gains would have been $9.8 million in the third quarter of 1992 compared to $4.5 million in 1991.
 "The quarterly results we announced today are consistent with our objective of generating higher core earnings while continuing our growth in capital and strengthening our retail operation," FirstFed Chairman C. Gene Harling commented. "Our net interest income exceeded our operating expenses by $8.6 million, a 39 percent improvement over last year, and our equity reached $500 million for the first time in our history. Additionally, mortgage loan originations increased 64 percent in the third quarter over last year and are expected to exceed $1 billion for the year."
 Net earnings for the year to date were $32.1 million, up 21 percent from $26.4 million for the first nine months of 1991. The current year-to-date figures include the $7 million cumulative effect of an accounting change made in the first quarter. Net earnings per share were $2.85 ($2.66 fully diluted) for the first three quarters of 1992, compared with $2.37 ($2.23 fully diluted) for the corresponding period a year ago.
 First Federal of Michigan, the company's thrift subsidiary, maintains regulatory capital ratios in excess of the required levels. At September 30, 1992, the thrift reported a tangible ratio of 4.68 percent, a core ratio of 5.16 percent, and a risk-based ratio of 14.39 percent.
 The company originated mortgage loans totaling $296 million during the third quarter of 1992, compared with $180 million in the same period last year. For the year to date, $873 million in mortgage loans have been originated, compared with $485 million in the first nine months of 1991.
 FirstFed's portfolio of loans and mortgage-backed securities remains primarily single-family residential, with 92 percent in one-to-four family lending. Commercial real estate totaled $482 million, or 6 percent of the portfolio.
 At September 30, 1992, nonperforming assets were $34.5 million, or .36 percent of total assets. There were also $41.3 million in commercial real estate loans classified as troubled debt restructurings. Nonperforming and restructured assets, combined, totaled $75.8 million, or .80 percent of total assets, essentially unchanged for the quarter. FirstFed's nonperforming asset levels remain substantially below the industry average. Loan loss reserves were $29.2 million at the end of the quarter, a level FirstFed believes provides adequate protection against currently estimated credit losses.
 The company's First Federal of Michigan subsidiary is a Detroit- based savings and loan association with 71 offices in the lower peninsula of Michigan. First Federal's Bay Savings Bank, FSB subsidiary, based in Newport News, Virginia, operates eight offices in Virginia, and its Omni Savings Bank, FSB subsidiary has three offices in Columbia, South Carolina.
 FIRSTFED MICHIGAN CORPORATION
 Consolidated Statements of Operations
 Three Months Ended Nine Months Ended
 September 30, September 30,
 1992 1991 1992 1991
 (in thousands, except per share data)
 Interest income:
 Loans $ 85,483 93,906 264,344 287,825
 Mortgage-backed
 securities 96,082 99,308 284,078 290,557
 Investments 12,470 29,095 46,500 112,982
 Total interest
 income......... 194,035 222,309 594,922 691,364
 Interest expense:
 Deposits 61,189 66,305 190,691 200,257
 FHLB advances 35,650 49,133 114,916 149,254
 Other borrowings 69,148 78,174 209,623 267,821
 Total interest
 expense........ 165,987 193,612 515,230 617,332
 Net interest
 income......... 28,048 28,697 79,692 74,032
 Provision for
 losses 1,500 1,975 4,500 5,733
 Net interest
 income after
 provision for
 losses......... 26,548 26,722 75,192 68,299
 Other income (expense):
 Loan fees and
 service charges 441 551 1,309 8,890
 Other operating
 income 2,083 3,563 5,934 10,103
 Net gains (losses)
 on investment
 securities - (2) 7,032 5,874
 Net gains on loans
 and mortgage-backed
 securities 2,545 10,530 7,011 18,126
 Real estate
 operations 248 13 661 (888)
 Total other
 income......... 5,317 14,655 21,947 42,105
 General and adminis-
 trative expenses:
 Compensation and
 employee benefits 9,802 11,897 29,831 34,781
 Office occupancy 2,092 2,358 6,338 6,648
 Federal deposit
 insurance 2,118 2,030 6,339 6,248
 Other 4,608 5,301 13,646 17,128
 Amortization of
 goodwill 824 930 2,473 2,790
 Total general and
 administrative
 expenses....... 19,444 22,516 58,627 67,595
 Earnings before
 federal income
 taxes, extra-
 ordinary items
 and cumulative
 effect of
 accounting
 change......... 12,421 18,861 38,512 42,809
 Federal income taxes 3,960 6,475 13,395 16,330
 Earnings before
 extraordinary
 items and cumula-
 tive effect of
 accounting
 change......... 8,461 12,386 25,117 26,479
 Extraordinary items,
 net of federal income
 tax effect - 1 - (33)
 Cumulative effect of
 change in accounting
 for income taxes - - 7,000 -
 Net earnings.... $ 8,461 12,387 32,117 26,446
 Net earnings per share:
 Primary:
 Earnings before
 extraordinary items
 and cumulative
 effect of account-
 ing change $.75 1.11 2.23 2.37
 Extraordinary items - - - -
 Cumulative effect of
 accounting change - - .62 -
 Net earnings .75 1.11 2.85 2.37
 Fully diluted:
 Earnings before
 extraordinary items
 and cumulative
 effect of accounting
 change .71 1.03 2.10 2.23
 Extraordinary items - - - -
 Cumulative effect of
 accounting change - - .56 -
 Net earnings .71 1.03 2.66 2.23
 FIRSTFED MICHIGAN CORPORATION
 Consolidated Statements of Financial Condition
 September 30, December 31, September 30,
 1992 1991 1991
 (in thousands)
 Assets
 Cash $ 48,388 51,728 46,045
 Federal funds sold
 and other 7,400 3,487 3,528
 Investment
 securities:
 U.S. government
 and agency
 securities 267,137 265,241 401,423
 Collateralized
 mortgage
 obligations 216,489 606,103 621,456
 Corporate notes
 and commercial
 paper 180,020 211,248 123,624
 Other 108 64,106 50,103
 Total invest-
 ment securities
 (market value
 $686,216-
 9/92)........ 663,754 1,146,698 1,196,606
 Investment securi-
 ties held for sale - 136,106 28,950
 Mortgage-backed
 securities (market
 value $4,984,282-
 9/92) 4,801,733 4,001,756 3,908,727
 Mortgage-backed
 securities held
 for sale (market
 value $6,942-9/92) 6,252 145,722 304,974
 Loans receivable:
 Real estate
 loans 3,435,010 3,356,549 3,347,744
 Other loans 149,937 172,362 179,628
 Total loans
 receivable... 3,584,947 3,528,911 3,527,372
 Real estate loans
 held for sale - 10,394 -
 Accrued interest
 receivable 62,447 79,722 68,132
 Real estate 17,402 15,127 14,943
 Premises and
 equipment 51,469 54,717 55,985
 Federal Home Loan
 Bank stock, at
 cost 114,504 114,504 114,504
 Goodwill 45,444 52,679 53,609
 Federal income
 taxes refundable 30,556 19,534 13,728
 Other assets 52,213 54,095 60,896
 Total Assets...... $9,486,509 9,415,180 9,397,999
 Liabilities and
 Stockholders'
 Equity
 Deposits:
 Checking
 accounts $ 240,729 228,400 220,594
 Money market
 accounts 348,646 331,825 328,910
 Regular accounts 532,614 499,708 486,307
 Certificate
 accounts 2,445,244 2,718,283 2,689,918
 Total
 deposits..... 3,567,233 3,778,216 3,725,729
 Advances from
 Federal Home
 Loan Bank 1,728,533 1,620,533 1,670,533
 Reverse repurchase
 agreements 3,165,023 2,993,353 2,993,939
 Other borrowings 224,881 216,716 238,144
 Accrued interest
 payable 111,376 164,117 130,359
 Advance payments
 by borrowers for
 taxes and
 insurance 64,576 31,433 61,731
 Liability for
 checks and money
 orders issued 37,061 62,210 35,597
 Other liabilities 87,770 75,764 76,723
 Total
 liabilities.. 8,986,453 8,942,342 8,932,755
 Stockholders'
 equity:
 Common stock,
 $.01 par value 111 111 111
 Paid-in capital 82,982 82,751 82,751
 Retained
 earnings 416,963 389,976 382,382
 Total
 stockholders'
 equity 500,056 472,838 465,244
 Total Liabil-
 ities and
 Stockholder's
 Equity........... $9,486,509 9,415,180 9,397,999
 FIRSTFED MICHIGAN CORPORATION
 Statistical Data
 September 30, December 31, September 30,
 1992 1991 1991
 (dollars in thousands, except per share data)
 Book value
 per share $44.81 42.44 41.76
 Shares out-
 standing 11,160,403 11,141,701 11,141,681
 Weighted average
 yield on
 (percent):
 Loans receivable 9.52 10.27 10.35
 Mortgage-backed
 securities 8.00 8.92 9.15
 Investments 6.18 7.52 7.99
 All interest-
 earning assets...... 8.44 9.23 9.45
 Weighted average
 cost of (percent):
 Deposits 6.39 6.99 7.16
 FHLB advances 7.94 10.21 10.21
 Other borrowings 8.16 9.14 9.08
 All interest-
 bearing liabil-
 ities............... 7.39 8.40 8.47
 Net yield on
 interest-earning
 assets (percent) (a).. 1.47 1.28 1.41
 Regulatory capital
 ratios (percent):
 Tangible capital 4.68 4.32 4.25
 Core capital 5.16 4.89 4.83
 Risk-based capital 14.39 13.16 13.24
 Nonperforming assets $34,472 35,331 32,637
 Nonperforming and
 restructured assets 75,816 72,530 68,038
 Allowance for losses
 on loans 29,239 26,728 26,071
 Three Months Ended Nine Months Ended
 September 30, September 30,
 1992 1991 1992 1991
 Return on average
 assets (annualized)
 (percent) (b) .36 .51 .43 .35
 Return on average
 equity (annualized)
 (b) 6.83 10.84 8.30 7.82
 Average equity to
 average assets 5.20 4.70 5.14 4.48
 Weighted average
 yield on (percent):
 Loans receivable 9.55 10.37 9.84 10.40
 Mortgage-backed
 securities 7.97 9.14 8.21 9.21
 Investment securities 6.16 7.97 6.43 8.03
 All interest-earning
 assets.............. 8.43 9.43 8.66 9.43
 Weighted average
 cost of (percent):
 Deposits 6.57 7.20 6.81 7.35
 FHLB advances 8.94 10.66 9.61 10.47
 Other borrowings 8.24 9.15 8.36 9.52
 All interest-bearing
 liabilities......... 7.65 8.66 7.92 8.87
 Net yield on interest-
 earning assets
 (percent) (a)......... 1.22 1.22 1.16 1.01
 Average interest-
 earning assets $9,210 9,427 9,161 9,775
 (in millions)
 (a)The yields and costs include the annualized effect of the interest rate exchange positions and interest rate collar transaction.
 (b)The cumulative effect of the change in accounting for income taxes of $7 million, recognized in the first quarter of 1992, has not been annualized.
 -0- 10/19/92
 /CONTACT: Ellen L. Batkie, Manager Investor Relations, of FirstFed Michigan Corporation, 313-965-1400/
 (FFOM) CO: FirstFed Michigan Corporation ST: Michigan IN: FIN SU: ERN


ML -- DE024 -- 1691 10/19/92 14:11 EDT
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Date:Oct 19, 1992
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