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AMERIFED REPORTS FIRST QUARTER EARNINGS OF $1.5 MILLION

       AMERIFED REPORTS FIRST QUARTER EARNINGS OF $1.5 MILLION
    JOLIET, Ill., Jan. 21 /PRNewswire/ -- AmeriFed Financial Corp. (NASDAQ: AFFC), the holding company of AmeriFed Federal Savings Bank, today announced net income of $1.5 million, or $0.46 per share, for the first quarter ending Dec. 31, 1991 (the company's fiscal year ends Sept. 30).
    Robert B. Breidert, president and chief executive officer, commented on the results, saying, "Our first quarter earnings are indicative of the core earnings capacity of this 57-year-old institution.  We are also pleased that in this, our first quarter as a public company, we initiated a dividend policy and declared a $0.125 quarterly dividend. While our interest rate spread widened slightly to 2.66 percent compared to 2.53 percent a year ago, we recognize that the rapid decline in short term interest rates has had a favorable effect on net interest income since any decline in yields on our assets would tend to be somewhat delayed."
    Net interest income for the quarter was $6.6 million compared to $5.3 million for the quarter ended Dec. 31, 1990.  The increase resulted from an increase in interest income for the quarter ended Dec. 31, 1991 to $18.8 million from $18.2 million for the quarter ended Dec. 31, 1990, and a decrease in interest expense to $12.2 million from $12.9 million for the same period, 1991 and 1990 respectively.
    Partially offsetting the $1.3 million increase in net interest income was an increase in non-interest expense to $4.6 million for the December 1991 quarter compared to $3.9 million for the December 1990 quarter.
    The decrease in interest expense was the result of declining market interest rates.  The cost of funds for the quarter just ended was 6.38 percent compared to 7.20 percent for the December 1990 quarter.
    The gain in interest income was primarily due to an $86.6 million increase in interest earning assets to $834.3 million at Dec. 31, 1991 compared to Dec. 31, 1990.  The average yield on interest bearing assets for the comparable quarters declined to 9.04 percent in 1991 from 9.73 percent in 1990, again reflecting downward pressure on interest rates.
    The increase in earning assets was funded by growth in deposits and proceeds from the stock offering.  The asset growth primarily occurred in mortgage-backed securities and investment securities, partially offset by a decrease in loans receivable.  The decrease in loans receivable is a result of the bank's policy, since August 1990, to sell newly-originated, conforming fixed-rate loans primarily as part of its program to manage interest rate risk.  The bank retains servicing on these loans to maintain the customer relationship and insure quality service for its customers.
    As part of AmeriFed's program to manage interest rate risk, the company restructured its investment securities portfolio, subsequent to the end of the first quarter, into securities with a shorter average life.  The restructuring involved the sale of $155.0 million in long- term U.S. Treasury bonds having an average life of 23 years and the corresponding purchase of a like amount of Federal Home Loan Mortgage Corporation (FHLMC) and Government National Mortgage Association (GNMA) mortgage backed securities with an estimated blended average life of 9 years.  The transaction created a gain of $119,000, which is not expected to have a material impact on second quarter earnings.
    Breidert, commenting on the restructuring, explained, "Over the last several years we have taken several steps to reduce AmeriFed's interest rate risk.  Restructuring our bond portfolio out of long-term treasury bonds and into mortgage-backed securities with much shorter average maturities significantly reduces the interest rate risk in our investment portfolio.  Likewise, the purchase of mortgage-backed securities guaranteed by a government agency is consistent with our tradition of high asset quality.  We do not expect the restructuring to have a material earnings impact in the near term since the yield on securities purchased approximates the yield on the securities sold."
    Asset quality continued to be above the national averages as reflected by a 0.31 percent ratio of non-performing loans and real estate owned to total assets as well as net charge-offs to total loans of 0.01 percent (or 0.07 percent for the trailing 12 months).  Allowance for loan losses currently stands at $3.0 million or 149 percent of non-performing loans.
    Early in the first quarter, on Oct. 10, 1991, the bank completed its initial public offering.  At the same time, the bank converted from a mutual to stock charter and issued 100 percent of its stock to the company.  Because the conversion and stock offering did not occur until fiscal 1992, financial information for fiscal 1991 is for the bank only since the company had no operations prior to Oct. 10, 1991. Accordingly, fiscal 1991 income does not reflect earnings on investment of the stock offering proceeds nor are earnings per share data during fiscal 1991 presented.
    As a result of the stock offering and this quarter's earnings (less the dividend declared), the consolidated capital of the company stands at $79.6 million (9.11 percent of total assets) or $24.73 per share. Consolidated tangible capital represents a 8.37 percent of total assets or $22.71 per share.
    AmeriFed Federal Savings Bank has ten branches in and around Will County, one of the suburban collar counties adjacent to Chicago.
    -0-        1/21/92
    /CONTACT:  Joan Shain of AmeriFed Financial Corp., 815-727-0370, or Gary Strong or Nick Farina of Financial Relations Board, 312-266-7800./
    (AFFC) CO:  AmeriFed Financial Corp. ST:  Illinois IN:  FIN SU:  ERN SM -- NY082 -- 1887 01/21/92 13:16 EST
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Date:Jan 21, 1992
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