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FLAGSHIP FINANCIAL REPORTS FIRST QUARTER RESULTS

 FLAGSHIP FINANCIAL REPORTS FIRST QUARTER RESULTS
 JENKINTOWN, Pa., May 21 /PRNewswire/ -- Flagship Financial Corp.


(NASDAQ-NMS: FLGF) announced today a 1992 first quarter net loss of $1.0 million or $.30 per share for the three months ended March 31, 1992.
 This compares with net income of $1.6 million or $.47 per share for the same period in 1991.
 Commenting on the results, Raymond W. McConnell, chairman and acting chief executive officer, said, "The first quarter results reflect the fragile conditions in the housing market and an ongoing evaluation of the company's real estate owned portfolio. We remain cautious about the pace of the economic recovery for real estate."
 Nonperforming assets at March 31, 1992, decreased to $40.6 million, or 4.7 percent of total assets, from $43.0 million, or 4.7 percent of total assets at Dec. 31, 1991. Total assets decreased to $872.0 million at March 31, 1992, from $925.0 million at Dec. 31, 1991. Nonperforming assets at March 31, 1991, were $26.2 million or 2.7 percent of total assets. The decrease from Dec. 31, 1991, in the first quarter of 1992 is attributable to charge-offs and cash payments which reduced the carrying value of certain assets. The composition of nonperforming assets remained virtually unchanged from year end. The ratio of allowance for loan losses to nonperforming loans increased slightly from 83.55 percent at Dec. 31, 1991, to 84.18 percent at March 31, 1992, and remains above the 59.47 percent level at March 31, 1991.
 Net interest income for the first quarter of 1992 decreased to $6.6 million from $6.9 million in the fourth quarter of 1991 and $7.1 million for the first quarter of 1991. The decrease in net interest income is due primarily to a higher level of nonperforming assets at March 31, 1992, compared to March 31, 1991.
 Noninterest income decreased for the first quarter of 1992 largely as a result of lower gains on the sale of loans and securities, and the company charged $531,000 to reduce the carrying value of an investment in a real estate joint venture. Management continues to reduce investment in joint venture real estate- development activities.
 Noninterest expenses for the first quarter 1992 increased to $7.5 million from $5.0 million for the first quarter 1991. The increase is primarily a result of a $2.2 million provision for loss on real estate owned and legal fees related to stockholder litigation.
 At quarter end the company's ratio of tangible capital to tangible assets was 7.47 percent. Both of the company's thrift subsidiaries continued to exceed the fully phased in capital requirements of the federal government.
 At a recent meeting, the company's board of directors declared a regular quarterly dividend of $.10 per share. This dividend was paid on May 15, 1992, to common shareholders of record on May 4.
 The company has signed a definitive agreement with PNC Financial Corp (NYSE: PNC) for PNC to acquire Flagship. Under terms of the agreement, PNC will pay Flagship shareholders $13.05 cash per common share. On March 16, 1992, PNC informed Flagship that it waived its right to terminate the merger agreement under the due diligence provision. The transaction is subject to approval by Flagship stockholders and certain regulatory authorities.
 Flagship Financial Corporation, which ranks among the 10 largest publicly traded thrift institutions in Pennsylvania, conducts business through its wholly owned subsidiaries First American Savings and Brandywine Savings Bank. First American operates 12 full-service offices in southeastern Pennsylvania. Brandywine Savings operates nine full-service branches in Chester County, Pa. The common stock of Flagship Financial Corporation is traded on the NASDAQ National Market System under the symbol FLGF.
 FLAGSHIP FINANCIAL CORPORATION
 (Unaudited; dollars in thousands, except per-share data)
 Quarters ended March 31 1992 1991
 Operating data:
 Total interest income $18,824 $22,601
 Total interest expense 12,221 15,534
 Net interest income 6,603 7,067
 Provision for loan losses 166 355
 Net interest income after
 provision for loan losses 6,437 6,712
 Non-interest income:
 Gain on sale of loans and securities 5 387
 Equity in (loss) income from
 joint ventures (531) 54
 Other 476 443
 Total non-interest income (50) 884
 Non-interest expenses:
 Salaries and employee benefits 2,221 2,172
 Occupancy and equipment 1,024 991
 Deposit insurance premiums 408 434
 Advertising and marketing 109 195
 Provision for loss on real estate owned 2,200 ---
 Amortization of excess cost over
 fair value of net assets acquired 220 232
 Other operating expenses 1,302 1,023
 Total non-interest expenses 7,484 5,047
 Income (loss) before income taxes and
 utilization of tax loss carryforward (1,097) 2,549
 Income tax expense (benefit) (8) 1,132
 Income (loss) before utilization of
 tax loss carryforward (1,089) 1,417
 Utilization of tax loss carryforward 49 200
 Net income (loss) (1,040) 1,617
 Earnings (loss) per common share:
 Before utilization of
 tax loss carryforward $(.31) $.41
 Utilization of tax loss carryforward .01 .06
 Earnings (loss) per common share (.30) .47
 Net interest rate spread (pct.) 2.78 2.49
 Net interest margin (pct.) 3.06 2.99
 Return on average assets (pct.) (.46) .68
 Return on average equity (pct.) (5.70) 7.82
 FLAGSHIP FINANCIAL CORPORATION
 Financial Condition Data
 At March 31 1992 1991
 Total assets $871,948 $965,985
 Loans receivable -- net 567,467 699,732
 Investment securities and
 interest-bearing deposits 139,870 100,245
 Mortgage-backed securities 100,558 111,020
 Total deposits 701,767 734,229
 Total borrowings 83,629 132,210
 Total capital 71,920 83,407
 Tangible capital to
 tangible assets (pct.) 7.47 7.82
 Tangible book value per common share $18.59 $21.64
 Nonperforming assets to
 total assets (pct.) 4.65 2.71
 Allowance for loan losses to
 total loans (pct.) 2.43 1.45
 Allowance for loan losses to
 nonperforming loans 84.18 59.47
 /delval/
 -0- 5/21/92
 /CONTACT: Robert K. Lockyer, CFO, 215-576-3075, or Joseph F. Kubiak, vp-investor relations, 215-576-3078, both of Flagship Financial/
 (FLGF PNC) CO: Flagship Financial Corporation ST: Pennsylvania IN: FIN SU: ERN


MK-CC -- PH037 -- 3030 05/21/92 16:15 EDT
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Date:May 21, 1992
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