St. Francis Capital Corporation Announces First Quarter Earnings.

BROOKFIELD, Wis.--(BUSINESS WIRE)--Jan. 26, 1998--St. Francis Capital Corporation (NASDAQ:STFR) today reported earnings for the three months ended December 31, 1997, the first quarter of its fiscal year and announced the declaration of a quarterly dividend to shareholders.

Net income for the three months ended December 31, 1997 was $3.8 million compared with $3.2 million for the three months ended December 31, 1996. Diluted earnings per share increased to $0.72 for the three months ended December 31, 1997 compared with $0.59 for the three months ended December 31, 1996. Basic earnings per share increased to $0.77 for the three month period compared with $0.62 in the prior period. The increase in net income was primarily due to an increase in net interest income and gains on mortgage loan sales partially offset by increased general and administrative expenses.

"We continue to be pleased with the growth in our core earnings," noted Thomas R. Perz, President and Chief Executive Officer of St. Francis Capital Corporation. "Excluding the effects of gain activity, our level of earnings per share has grown significantly over the last several years."

The increase in net interest income is primarily due to a higher level of earning assets and a modestly higher net interest margin. Average earning assets increased $197.1 million over last year to $1.5 billion during the three months ended December 31, 1997. The increase was the result of assets of Kilbourn State Bank which the Company purchased in February, 1997, along with growth in the loan and mortgage-backed securities portfolios. The net interest margin increased modestly to 2.72% compared with 2.67% in the prior year. Over the last several years, the margin has been affected by decreasing interest rate spreads that the Company has been experiencing in its asset and liability base and a changing asset mix which includes a higher level of non-interest earning assets. Over the last year, the net interest margin has been relatively constant, fluctuating by only a few basis points between each quarter. The Company increased its investment in affordable housing units to $52.5 million at December 31, 1997 compared with $39.6 million at December 31, 1996. This investment strategy provides returns primarily through income tax credits but is not an interest earning asset and thus has the effect of decreasing the Company's net interest margin.

During the three months ended December 31, 1997, the Company recorded gains on the sale of mortgage-backed and related securities of $527,000 ($0.06 diluted per share after-tax) compared with $476,000 ($0.05 diluted per share after-tax) for the three months ended December 31, 1996. The Company does not consider gains on the sale of securities as a predictable source of earnings as such sales are based on the Company's ongoing review of the individual securities within the Company's available for sale portfolio whereby securities may be sold and replaced with ones that offer a better combination of interest income, interest rate risk or credit risk than the security sold. Gains on sale of mortgage loans held for sale increased to $1.0 million for the three months ended December 31, 1997 compared with $227,000 for the prior year due to an increased level of sales during the period. During the current quarter, the Company sold $52.1 million in mortgage loans compared with $27.1 million in the prior fiscal year's first quarter. The decreasing interest rate environment has increased the level of the Company's fixed rate loan production which is sold into the secondary market. In addition to the increased loan production, the falling interest rates have led to a greater gain level on loans than in the prior year. Income from affordable housing increased to $1.0 million for the three months ended December 31, 1997 compared with $550,000 in the prior year. The Company had 25 affordable housing projects in operation at December 31, 1997 compared with 19 at December 31, 1996.

General and administrative expenses were higher for the three months ended December 31, 1997 compared with the prior period. The current three month period includes the expenses of Kilbourn State Bank which was purchased in February, 1997, and thus is not included in the prior periods numbers and also includes increased levels of compensation and other costs associated with new branches and other activity connected with the Company's higher level of earning assets. In addition, the aforementioned affordable housing projects have resulted in a higher level of general and administrative expenses to go along with the increased revenue stream. "We are putting the infrastructure in place to continue to expand and diversify our various business lines," stated Perz. "The increased expenses of growing our commercial and retail banking operations is also leading to a higher stream of revenues that we believe will improve franchise value."

Total assets at December 31, 1997 were $1.60 billion, a decrease of $63 million or 3.8% from the $1.66 billion at September 30, 1997. The primary reason for the decrease was a decline in mortgage-backed and related securities available for sale of $55.6 million to $565.1 million. At the end of the prior fiscal year, the Company recorded an impairment loss on four mortgage-backed securities issues. During the first quarter of fiscal 1998, the Company continued to review its mortgage-backed securities portfolio with particular attention to the interest rate and credit risk nature of the portfolio. The review of the portfolio, along with the Company's internal view of its investment management position, resulted in the sale of some of the Company's mortgage-backed and related securities with much of the proceeds being used to pay down Federal Home Loan Bank advances or brokered certificates. The use of these proceeds to reduce liabilities rather than reinvest in other assets resulted in total assets being lower at the end of the quarter.

Non-performing assets totaled $3.4 million, or 0.21% of total assets, at December 31, 1997 compared with $3.4 million, or 0.21% of total assets at September 30, 1997. The amount at December 31, 1997 includes $481,000 of purchased auto loans which are past due or in default compared with $1.1 million of such loans at September 30, 1997. Both periods also include a $845,000 commercial real estate loan that was added to non-performing status at the end of the prior fiscal year. Net charge-offs were $374,000 for the three months ended December 31, 1997 and were primarily the result of the previously mentioned auto loans. The provision for loan losses was $200,000 for the three months ended December 31, 1997 compared with $261,000 for the three months ended December 31, 1996.

The Company also announced its tenth consecutive quarterly dividend in the amount of $0.14 per share payable on February 20, 1998 to shareholders of record as of February 10, 1998. The dividend had been raised to $0.14 per share during the previous quarter.

The Company currently is authorized to purchase up to 10% of its outstanding stock, or approximately 523,000 shares, over a twelve month period dating back to November 11, 1997. To date, the Company has not purchased any shares under this authorization.

On January 12, 1998, the Company opened its newest full service office located on Oklahoma Avenue on the southwest side of Milwaukee. The office is the Company's 20th full service location and its 24th office. The new office fills in a market area within the Milwaukee metropolitan area not previously served by the Company.

St. Francis Capital Corporation, with $1.6 billion in assets, is the holding company for St. Francis Bank, F.S.B. The Company operates 24 offices in Milwaukee, Waukesha, Ozaukee, Washington, Walworth and Kenosha counties. -0-

St. Francis Capital Corporation and Subsidiary
Financial Highlights (Dollars in thousands, except per share data)
____________________________________________________________________
OPERATING DATA:                                Three months ended
                                            December 31,  December 31,
                                                1997         1996
Interest Income:
   Loans                                     $ 16,014    $ 13,265
   Mortgage-backed and related securities      11,656       9,901
   Other                                        1,790       1,668
                                             ________    ________
    Total interest income                      29,460      24,834

Interest Expense:
   Deposits                                    13,254      10,759
   Advances and other borrowings                5,748       5,125
                                             ________    ________
    Total interest expense                     19,002      15,884
                                             ________    ________
Net interest income before
 provision for loan losses                     10,458       8,950
Provision for loan losses                         200         261
                                             ________    ________
Net interest income                            10,258       8,689
                                             ________    ________
Other Operating Income:
   Loan servicing and loan related fees           555         458
   Depository fees and service charges            809         403
   Gain on sale of securities, net                527         476
   Gain on sales of mortgage
    loans held for sale                         1,042         227
   Trading securities gains
    and commitment fees, net                       83         385
   Gain (loss) on foreclosed properties             5         (14)
   Income from affordable housing               1,017         550
   Other income                                   379         172
                                             ________    ________
   Total other operating income                 4,417       2,657
                                             ________    ________

General and Administrative Expenses:
   Compensation and employee benefits           4,988       3,626
   Office building expenses                       701         543
   Furniture and equipment expenses               689         527
   Federal deposit insurance premiums             146         331
   Affordable housing expenses                  1,180         621
   Other general and administrative expenses    2,263       1,814
                                             ________    ________
   Total general and
    administrative expenses                     9,967       7,462
                                             ________    ________
Income before income tax expense                4,708       3,884
Income tax expense                                910         727
                                             ________    ________
Net income                                   $  3,798    $  3,157
                                             ________    ________
                                             ________    ________
Basic earnings per share                     $   0.77    $   0.62
Diluted earnings per share                   $   0.72    $   0.59


Return on average equity                        11.48%      10.01%
Return on average assets                         0.91%       0.88%
Net interest margin                              2.72%       2.67%
Net interest spread                              2.46%       2.32%
Other operating income to average assets         1.06%       0.74%
G&A expenses to average assets                   2.39%       2.09%
Effective tax rate                              19.33%      18.72%

____________________________________________________________________
FINANCIAL CONDITION:      December 31,    September 30,  December 31,
                              1997            1997          1996
                              ____            ___           ____

Cash and cash equivalents  $   43,483    $   42,858    $   24,951
Trading account securities          0             0             0
Mortgage-backed and related
 securities available
 for sale                     561,431       620,716       517,577
Other assets available
 for sale                      58,266        80,877        69,938
Debt and equity securities      3,829         3,833         5,676
Mortgage-backed and
 related securities            66,455        66,849        68,077
Loans receivable, net         723,248       712,875       624,082
Federal Home Loan Bank stock   20,843        20,843        19,263
Real estate held for
  investment                   52,492        51,476        39,610
Foreclosed properties             258           416           127
Goodwill                       14,332        14,821         6,325
Other assets                   53,011        45,085        33,690
                           __________    __________    __________
     Total Assets          $1,597,648    $1,660,649    $1,409,316
                           __________    __________    __________
                           __________    __________    __________
Deposits                   $1,064,453    $1,087,136    $  894,465
Advances and other
 borrowings                   387,586       420,228       378,491
Other liabilities              13,463        24,755        10,450
                           __________    __________    __________
     Total Liabilities      1,465,502     1,532,119     1,283,406
                           __________    __________    __________

Shareholders'equity           132,146       128,530       125,910
                           __________    __________    __________
     Total Liabilities and
      Shareholders' Equity $1,597,648    $1,660,649    $1,409,316
                           __________    __________    __________
                           __________    __________    __________
Shareholders' equity
  to total assets                8.27%         7.74%         8.93%
Book value per share       $    24.73    $    24.54    $    23.73
____________________________________________________________________
ASSET QUALITY INFORMATION:   December 31,  September 30, December 31,
                                 1997         1997         1996

Non-performing loans        $   3,160    $   2,995    $   4,335
Foreclosed properties             258          416          127
                           __________    __________    __________
   Non-performing assets    $   3,418    $   3,411    $   4,462
                           __________    __________    __________
                           __________    __________    __________
Allowance for loan losses   $   6,034    $   6,202    $   5,060
Non-performing loans
 to gross loans                  0.40%        0.38%        0.64%
Non-performing assets
 to total assets                 0.21%        0.21%        0.32%
Allowance for loan losses
 to gross loans                  0.76%        0.79%        0.75%
Allowance for loan losses to
 non-performing loans          190.95%      207.08%      116.72%

CONTACT: St. Francis Capital Corporation

Jon D. Sorenson, 414/486-8700