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 FLORAL PARK, N.Y., April 30 /PRNewswire/ -- At a meeting of the board of directors of North Side Savings Bank (NASDAQ: NSBK) held on April 30, 1993, the board approved certain management recommendations regarding the restructuring of the bank's balance sheet at March 31, 1993 to reflect the bank's current intentions regarding the disposition and valuation of certain real estate related assets, the elimination of goodwill, and the adoption of recent accounting pronouncements regarding accounting for income taxes and post-retirement benefits other than pensions. As a result of adopting these measures, North Side Savings Bank is reporting a loss of ($23.5) million or ($5.52) per share for the quarter ended March 31, 1993 and a loss of ($18.9) million or ($4.43) per share for the six months ended March 31, 1993. North Side reported net income of $1.3 million or $.30 per share and $2.3 million or $.54 per share for the comparable periods of 1992.
 These actions were taken in order to strengthen the bank's balance sheet by reducing the carrying value of non-performing and marginally performing commercial real estate loans and to assist the bank in its efforts to accelerate the sale of other real estate owned ("OREO"). These actions also are part of the bank's efforts to improve future earnings. The bank will aggressively market for bulk sale approximately $43.3 million of marginally performing and non-performing commercial real estate loans and $89.3 million of performing one- to four-family residential mortgage loans. These loans have been reclassified on the bank's balance sheet as assets held for sale at March 31, 1993, and have been written-down to anticipated net realizable value by a net charge against the bank's earnings of $11.1 million. The bank also decided to establish an allowance for OREO by a charge against earnings of $9.5 million at March 31, 1993, which is equal to approximately 50 percent of the most recent appraised value of such assets.
 These write-downs are expected to facilitate the accelerated disposition of these loans and OREO. The bank determined to take these measures because it concluded that the much hoped for recovery in the economy in general, and the commercial real estate market in particular, in the bank's lending area in New York and the Northeastern United States remains elusive. In addition, a disproportionate amount of senior management's and the board's time was being devoted to the administration and management of these assets. Management recognizes that the significant charge-offs and expenses reported today reflect large discounts in value of the loans held for sale and OREO. Management believes that such discounts are necessary to properly reflect the value of such assets given management's determination to aggressively accelerate its attempted disposition of these assets as quickly as practicable on a liquidation basis. Obviously, these actions have a substantial adverse effect on the results of operations for the three months and six months ended March 31, 1993. The bank believes, however, that the results of future operations will not continue, to the same extent as in recent periods, to be adversely affected by large additional provisions for loan losses, additional write-downs of OREO, and the increasingly high costs of holding and disposing of OREO. By taking these very aggressive steps in anticipation of a bulk sale, the bank expects that it will be able to substantially accelerate its disposition of the loans held for sale and OREO, and believes that future reported results will more accurately reflect the value of the bank's core operations.
 The bank has written-off the remaining unamortized balance of $9.7 million of goodwill which resulted from the acquisition of the Richmond Hill Savings Bank in October 1988. The bank also decided to fully reflect its adoption of the recent accounting pronouncements, statement of financial accounting standards (SFAS No. 109) "Accounting for Income Taxes" and SFAS No. 106 "Employer's Accounting For Postretirement Benefits Other Than Pensions" retroactive to the first quarter of fiscal 1993. The bank decided to implement the above referenced accounting changes as part of its restructuring measures and to eliminate those non-operating items which could continue to adversely affect the bank's future results of operations.
 The other significant balance sheet changes in the current period compared to Sept. 30, 1992 were an increase on other assets of approximately $13.3 million, primarily reflecting income taxes receivable, as well as the net deferred tax asset resulting from the adoption of SFAS No. 109, and the reduction of investments of approximately $20 million due to the remote possibility of any put-back options being exercised on a unit investment trust.
 Commenting on the above actions, Thomas M. O'Brien, chairman of the board, president and chief executive officer stated that "After my review of the preliminary results for the quarter ended March 31, 1993, it was apparent that the continuing drag on earnings from the high cost of carrying non-performing loans and OREO would once again mask the significantly enhanced earnings from operations before these real estate and other considerations. For the six months ended March 31, 1993, the bank's net interest income, before the provision for loan losses, increased by $4.3 million as the net interest margin improved by more than 100 basis points to $13.8 million from $14.9 million at March 31, 1992 before any special real estate and goodwill charges. Unfortunately, all of this was overshadowed by management's concerns regarding the likelihood of any near term substantial improvement in the performance of the bank's commercial real estate loans or recovery of values of OREO, which resulted in the decision to reclassify some of these assets as held for sale and reflect their value accordingly. As a result of all of the above decisions, the current quarter statements of operations reflect the following:
 -- approximately $9.7 million for a provision for loan losses.
 -- $11.1 million as a provision for accelerated disposition of assets held for sale.
 -- $9.5 million as a provision for losses charged to OREO expense.
 -- a tax benefit of $10.0 million on losses
 -- $5.3 million credit related to the tax change (SFAS No. 109)
 -- $2.3 million for postretirement benefit costs (SFAS No. 106)
 "These actions will also reduce the total carrying value of North Side's non-recurring loans to approximately $21 million at March 31, 1993. More importantly, we believe that the characteristics of the remaining non-performing loan portfolio, together with the increased level of the allowance for loan losses, increase the potential to work out these loans with fewer costs and less risk of principal loss. The bank will also have a $10.8 million allowance for loan losses (a reserve ratio to non-performing loans of approximately 50 percent), and a $9.5 million reserve for the losses in the OREO portfolio (a reserve ratio to OREO of approximately 49 percent). In addition, the bank's total remaining exposure to the uncertainties of the commercial real estate market will have been reduced significantly. I believe that shareholder value ultimately will increase as a result of these strategic decisions.
 "I think that shareholders are best served by a sound balance sheet and strong core earning, attributes which are primary contributors to an appreciation of the full value of the bank's common stock. Commercial real estate loans and property valuation concerns and related expenses have served to cloud the market's appreciation for North Side stock. Therefore, after exploring the net after-tax cost of a bulk sale of higher risk commercial real estate and other one- to four-family home loans, the board determined that this was an appropriate strategy. The emerging secondary market for commercial real estate assets has provided North Side with an opportunity to clear away much of the earnings drag associated with its problematic commercial real estate portfolio. After this quarter, it is our expectation that within a relatively short period, the earnings momentum from North Side's operations will more than compensate for the extraordinary charges taken today."
 In lieu of the regular $.10 per share quarterly cash dividend, which would reduce capital, the board of directors of the bank declared (subject to the approval of the Superintendent of Banks of the State of New York) a five percent stock dividend payable on June 4, 1993 to shareholders of record on May 21, 1993.
 North Side continues to be a sound financial institution with strong capital ratios at March 31, 1993. At such date the bank's ratio of leverage capital to average assets was 5.56 percent and its total risk based capital to risk based asset ratio was 12.60 percent. All such capital ratios exceed current regulatory requirements and the banks's ratios continue to meet the highest "well capitalized" regulatory definition. The bank's book value per share was $20.13 prior to the five percent stock dividend and $19.16 after giving effect to such stock dividend at March 31, 1993 and the ratio of shareholders' equity to total assets was 5.74 percent at such date. In addition, the market value of the mortgage-backed securities portfolio exceeds the book value of such portfolio by $11.1 million at March 31, 1993.
 Consolidated Statements of Condition
 (Dollars in Thousands, Unaudited)
 Period Ended 3/31/93 9/30/92
 Cash and due from banks $9,401 $9,302
 Money market investments 8,337 5,449
 Loans held for sale 108,386 --
 Investment securities, net 54,182 75,614
 Mortgage-backed securities, net 755,355 720,494
 Loans, net of premium and discount:
 Mortgage loans 408,208 594,786
 Commercial loans 6,319 7,454
 Other loans 7,845 9,748
 422,372 611,988
 Less allowance for loan losses 10,837 15,012
 Loans, net 411,535 596,976
 Accrued interest receivable 11,386 13,534
 Premises and equipment, net 16,463 16,893
 Other real estate owned, 19,507 17,641
 Less allowance for other real estate
 owned losses 9,500 --
 Other real estate owned, net 10,007 17,641
 Excess of cost over fair value of net
 assets acquired -- 10,192
 Other assets 35,989 21,123
 Total assets $1,421,041 $1,487,218
 Liabilities and shareholders' equity:
 Deposits $1,289,584 $1,340,584
 Mortgagors' escrow payments 8,409 8,102
 Borrowed funds 28,005 22,276
 Other liabilities 13,370 16,517
 Total liabilities 1,339,368 1,387,479
 Shareholders' Equity:
 Preferred stock, par value $1.00 per
 share, 5,000,000 shares authorized,
 none outstanding -- --
 Common stock, par value $1.00 per share,
 10,000,000 shares authorized, 4,273,203
 and 4,256,261 shares issued and
 outstanding at March 31, 1993 and
 Sept. 30, 1992, respectively (A) 4,273 4,256
 Paid-in capital 49,477 49,206
 Surplus fund 24,101 24,101
 Undivided profits 4,466 24,156
 Unrealized depreciation on certain
 marketable equity securities -- (80)
 Unallocated shares in management
 development and recognition plan (413) (1,587)
 Unearned portion of incentive compensation (231) (313)
 Total shareholders' equity 81,673 99,739
 Total liabilities and shareholders'
 equity $1,421,041 $1,487,218
 Other assets 35,989 21,123
 Consolidated Condensed Statements of Operations
 (Dollars in thousands, except per share amounts, unaudited)
 Period Ended Three Months Six Months
 March 31, 1993 1992 1993 1992
 Interest income $25,854 $30,663 $52,184 $63,081
 Interest expense 11,696 18,130 24,483 39,666
 Net interest income 14,158 12,533 27,701 23,415
 Provision for loan losses 9,745 2,100 13,606 4,100
 Net interest income after
 provision for loan losses 4,413 10,433 14,095 19,315
 Net loss on sales of investment
 securities, mortgage-backed
 securities and other real
 estate owned 336 727 458 467
 Provision for disposition
 of assets 11,063 -- 11,063 --
 Other income 760 738 1,595 1,516
 Amortization of excess cost
 over fair value of net
 assets acquired 9,962 230 10,192 460
 OREO expense 9,987 1 10,057 125
 Other expenses 7,382 7,569 13,790 14,904
 (Loss) income before income
 taxes and accounting
 changes (33,557) 2,644 (29,870) 4,875
 (Benefit) provision for
 income taxes (10,027) 1,387 (7,961) 2,571
 (Loss) income from
 continuing operations
 before accounting changes (23,530) 1,257 (21,909) 2,304
 Accounting changes
 Postretirement benefits cost -- -- (2,300) --
 Income taxes -- -- 5,329 --
 Net (loss) income $(23,530) $1,257 $(18,880) $2,304
 Net (loss) income per
 share (A) $(5.52) $.30 $(4.43) $.54
 (A) Based on the weighted average number of shares outstanding of 4,261,968 and 4,262,232 for the three and six month periods ended March 31, 1993 and 4,254,139 and 4,253,847 for the three and six month periods ended March 31, 1992, respectively. Prior period income per share was restated to reflect the 5 percent stock dividend.
 -0- 4/30/93
 /CONTACT: John McDermott, senior vice president of North Side Savings Bank, 516-488-6900, ext. 221/

CO: North Side Savings Bank ST: New York IN: FIN SU: ERN

TM-LD -- NY105 -- 3507 04/30/93 23:53 EDT
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Date:Apr 30, 1993

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