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POLIFLY FINANCIAL COMMENTS ON OTS, FDIC EVALUATION OF APPRAISALS

    POLIFLY FINANCIAL COMMENTS ON OTS, FDIC EVALUATION OF APPRAISALS
    NEW MILFORD, N.J., Nov. 12 /PRNewswire/ -- Polifly Financial Corporation (NASDAQ: PFLY), the holding company for Polifly Savings and Loan Association, today announced that, in conjunction with an ongoing routine regulatory examination of the association by the Office of Thrift Supervision (OTS) and the Federal Deposit Insurance Corporation (FDIC), the OTS and the FDIC are evaluating the appraisals of certain properties in the association's portfolio, repossessed real estate, and real estate foreclosed in-substance.  The OTS recently indicated that the association may be required to substantially increase its provision for loan and real estate losses, based on the OTS' view of the appraised value of these properties.  The association has taken steps to reorder appraisals where necessary and will make any future adjustments to loan loss reserves based on these new appraisals.  There can be no assurance, however, that the OTS will agree with the association's analysis of the provision for loan and real estate losses.  In the event that the OTS requires a substantial increase for loan loss reserves it may cause the association not to be in compliance with any of its minimum regulatory capital requirements or with its Regulatory Capital Plan approved by the OTS in March 1991.
    At Sept. 30, 1991, the association did not meet its minimum risk based capital requirement.  Moreover, in the event that the OTS requires the association to increase its provision for loan losses by an amount greater than $2.0 million, the association would not meet all three of its minimum regulatory capital requirements.  In such event, the association's ability to continue as a going concern would be severely threatened.  The OTS and the FDIC generally are authorized to take enforcement actions against a savings association that fails to meet its capital requirements, which actions may include restrictions on operations and banking activities, the imposition of a capital directive, cease and desist order, civil money penalties or harsher measures such as the appointment of a receiver or conservator or a forced merger into another institution.  The imposition by the OTS of any of these measures on the association may have a substantial adverse effect on the association's financial condition and results of operations and the value of the common stock of Polifly.
    The company also announced today that due to the uncertainty as to the amount of the loan loss provision, the company is unable to complete its financial statements for the quarter ended Sept. 30, 1991, and, as a result, will not file its quarterly report on Form 10-Q for the quarter ended Sept. 30, 1991, with the Securities and Exchange Commission by the Nov. 14 due date.  Consequently, the company's common stock may be removed from quotation on the National Association of Securities Dealers Automated Quotations (NASDAQ) National Market System.  If this were to occur, the company anticipates that its common stock would continue to trade in the over-the-counter market and be quoted in the "pink sheets."
    -0-       11/12/91
    /CONTACT:  Henry S. Becker, chief financial officer of Polifly Financial, 201-261-6900/
    (PFLY) CO:  Polifly Financial Corporation ST:  New Jersey IN:  FIN SU: JT-FC -- NY092 -- 3682 11/12/91 18:02 EST
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Publication:PR Newswire
Date:Nov 12, 1991
Words:532
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