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ANCHOR BANCORP ANNOUNCES FISCAL 1993 EARNINGS

 HEWLETT, N.Y., July 22 /PRNewswire/ -- Anchor Bancorp, Inc. (NASDAQ: ABKR), parent company of Anchor Savings Bank FSB, today reported net income for the fiscal year ended June 30, 1993 of $52 million before the accumulation of $11.6 million in preferred stock dividends as compared to $64.8 million before the accumulation of $12.7 million in preferred stock dividends for the prior fiscal year. This amounted to fully diluted earnings per common share of $2.22 for fiscal 1993 as compared to $2.98 per common share in the prior year. In making the announcement Mr. James M. Large, Jr., chairman and chief executive officer, stated that fiscal 1992 earnings were increased by a $29.4 million reduction in income tax expense associated with the recognition of deferred tax assets in accordance with the requirements of the Statement of Financial Accounting Standards No. 109 (SFAS No. 109) and fiscal 1993 earnings were impacted by a $7.1 million net charge resulting from the cumulative effect on prior years of a change in accounting principle regarding the carrying value of purchased mortgage servicing rights (PMSR).
 He also pointed out that fiscal 1993 was a year of significant achievement since core pretax earnings increased $21.0 million or 31.2 percent to a record high $88.1 million. Core pretax earnings exclude gains and losses on the sale and revaluation of earning assets and other nonrecurring one-time transactions.
 Mr. Large noted that 1993 core pretax earnings included a $7.2 million write-down of PMSR's. He stated, "The write-downs are reflective of the current interest rate environment and the associated level of mortgage prepayments. If this environment continues, no further write-downs are anticipated; however, no assurances can be given as to future interest rate movements."
 Anchor's net income for the fourth quarter of fiscal 1993 amounted to $10.5 million before the accumulation of $2.7 million in preferred dividends or $0.43 per common share. These results were down from net income of $30.3 million before the accumulation of $3.1 million in preferred dividends or $1.55 per common share reported in the comparable prior year quarter. The decline was due to the fact that the fourth quarter of fiscal 1992 included a $25.5 million reduction in income tax expense relating to the recognition of deferred tax assets in accordance with the requirements of SFAS No. 109 which was somewhat offset by a $9.0 million pretax downward revaluation of Anchor's interest-only segment of its securities portfolio.
 Core pretax amounted to $19.6 million in the fourth quarter of fiscal 1993, down from $19.7 million in the fourth quarter of fiscal 1992 and from the record $23.1 million in the immediately preceding quarter. The decline was primarily due to a $2.1 million PMSR write- down and pressure on asset yields from the downward repricing of adjustable rate assets and the acceleration of prepayment levels experienced in the bank's loan and mortgage-backed securities portfolio. The net yield on average earning assets amounted to 2.63 percent during the current quarter, down from the 2.70 percent posted in the immediately preceding quarter.
 The PMSR write-down was caused by the unprecedented steep decline in the long-term Treasury bond in the fourth quarter which precipitated a strong acceleration of actual and anticipated mortgage prepayments. Without the $0.07 per common share charge associated with the PMSR write-down, quarterly core earnings per share would have amounted to $0.50.
 Mr. Large continued, "Even with the dampening impact of the PMSR write-down and the decline in core earnings, the quarter has been particularly satisfying as Anchor completed for the settlement in July its common stock offering and the preferred stock exchange with the FDIC. We have satisfied the requirements for a 'well capitalized' designation by the regulators and are free to aggressively pursue our business strategies and declare dividends if the Board should choose to do so at some future date."
 As the year ended, Anchor's general and administrative expenses remained tightly controlled, and its loan portfolio continued to perform well. Its allowance for credit losses now approximates 94 percent of total nonaccrual loans. Anchor's regulatory leverage capital amounted to $334.9 million or 4.29 percent of assets at June 30, 1993. Risk- based regulatory capital amounted to $370.9 million or 11.7 percent of risk-weighted assets at that date. On a pro forma basis after considering the effects of the common stock offering that settled on July 8, 1993, Anchor's regulatory leverage capital would have amounted to $401.6 million or 5.10 percent of assets at June 30, 1993.
 Fourth Quarter Fiscal 1993 Operating Statistics
 Net interest income amounted to $50.7 million in the fourth quarter of fiscal 1993 as compared to $51.7 million in the comparable prior year period, a decline of 2.0 percent. The net yield on average earnings assets amounted to 2.63 percent, a decline of 12 basis points from the 2.75 percent reported in the fourth quarter of last year and a reduction of 7 basis points from the prior quarter.
 During the past three quarters Anchor's net yields have declined as asset yields have adjusted downward faster than liability costs, primarily due to high prepayment activity, which has caused an acceleration of amortization of premiums paid on mortgage-backed securities and because of the continued downward ARM loan repricing to market rates in accordance with their contractual terms, which has lagged behind liability repricing. In addition, a Anchor's higher yielding loans have been paid down or prepaid, the proceeds generally have been reinvested at the lower prevailing market rates. The net yields are likely to continue to decline until the repricing is completed. However, it is possible that such declines may be offset by improvements in other areas.
 The total provision for credit losses amounted to $3.0 million for the current quarter as compared to $5.1 million in the comparable prior year quarter. Net loans charged off to the allowance for credit losses were $2.5 million in the current quarter as compared to $3.2 million in the fourth quarter of fiscal 1992. Anchor's allowance for credit losses amounted to $33.8 million with nonaccrual loans and real estate owned of $53.2 million or 0.67 percent of total assets at June 30, 1993, as compared to the allowance for credit losses of $28.0 million and nonaccrual loans and real estate owned of $73.2 million or 0.92 percent of total assets at June 30, 1992.
 Mortgage banking and other banking fee income amounted to $10.6 million, up from the $8.4 million earned in the comparable prior year quarter, primarily due to increased retail banking fees and mortgage servicing fees.
 General and administrative expenses for the fourth quarter amounted to $32.9 million or $0.6 million more than that in the comparable prior year quarter. The increase in expense related primarily to an increase in deposit insurance premiums and real estate owned expense partially offset by the elimination of expenses associated with the sale of Anchor's western New York franchise.
 The amortization and write-down of loan servicing rights totaled $4.1 million in the fourth quarter of fiscal 1993, up $2.5 million from the comparable prior year quarter. This increase was due to a larger purchased servicing portfolio due to increased prepayment activity. The method of accounting used for valuing PMSR's, as required by the bank's regulators, currently results in a carrying value which is less than market value.
 Anchor Savings Bank is among the 14 largest U.S. thrifts with deposits of over $5.6 billion as of June 30, 1993. It operates branches in two market areas: Metropolitan New York/New Jersey and Florida.
 ANCHOR BANCORP, INC. AND SUBSIDIARIES
 Consolidated Statements of Income
 (Unaudited, in thousands, except per share amounts)
 Three months Year
 Period ended June 30, 1993 1992 1993 1992
 Interest income:
 Loans receivable and loans
 available for sale
 First mortgage loans $ 18,083 $ 26,850 $ 87,734 $ 119,870
 Cooperative apartment
 loans 6,723 9,105 29,830 40,166
 Consumer and commercial
 loans 12,788 15,334 55,052 69,268
 Mortgage-backed securities
 and mortgage-backed securities
 available for sale 76,853 86,383 325,229 366,021
 Money market investments 2,312 2,127 8,308 18,924
 Investment securities and
 investment securities
 available for sale 2,777 2,636 10,842 12,894
 Total interest income 119,536 142,435 516,995 627,143
 Interest expense:
 Deposits 50,341 75,565 237,678 366,726
 Borrowed funds and
 preferred stock of
 finance subsidiaries 18,496 15,137 65,593 66,971
 Total interest expense 68,837 90,702 303,271 433,697
 Net interest income 50,699 51,733 213,724 193,446
 Provision for credit
 losses 3,000 5,100 17,300 20,400
 Net interest income after provision
 for credit losses 47,699 46,633 196,424 173,046
 Non-interest income:
 Gain (loss) on sales and
 revaluations of earnings
 assets, net 140 (8,971) 8,249 865
 Mortgage banking income 4,364 3,902 18,058 16,274
 Other 6,279 4,511 32,746 24,501
 Total non-interest income 10,783 (558) 59,053 41,640
 Non-interest expense:
 General and administrative:
 Compensation and benefits 13,681 14,514 55,135 57,246
 Occupancy and equipment 4,344 4,872 17,679 19,343
 Federal deposit insurance
 premiums 4,353 3,766 16,144 15,237
 Other 10,516 9,123 38,875 33,018
 Total 32,894 32,275 127,833 124,844
 Amortization of excess of
 cost over fair value 1,782 2,203 7,170 9,848
 Amortization and write-down
 of purchased mortgage
 servicing rights 4,075 1,587 14,239 5,984
 Restructuring charges --- 513 --- 3,718
 Total non-interest expense 38,751 36,578 149,242 144,394
 Income before income tax
 expense and cumulative
 effect of a change in
 accounting principle 19,731 9,497 106,235 70,292
 Income tax expense
 (benefit) 9,269 (20,753) 47,164 5,526
 Income before cumulative
 effect of a change in
 accounting principle 10,462 30,250 59,071 64,766
 Cumulative effect on prior
 years of a change in
 accounting principle for
 purchased mortgage servicing
 rights, net of income tax
 benefit of $5,055 --- --- (7,066) ---
 Net income 10,462 30,250 52,005 64,766
 Dividends on Class A
 cumulative pref. stock 2,669 3,120 11,559 12,678
 Net income applicable
 to common stock 7,793 27,130 40,446 52,088
 Primary earnings per share:
 Income before cumulative
 effect of a change in
 accounting principle $0.43 $1.55 $2.61 $2.98
 Cumulative effect on prior
 years of a change in
 accounting principle, net
 of income tax benefit --- --- (0.39) ---
 Total $0.43 $1.55 $2.22 $2.98
 Fully diluted earnings per share:
 Income before cumulative
 effect of a change in
 accounting principle $0.43 $1.55 $2.61 $2.98
 Cumulative effect on prior
 years of a change in
 accounting principle,
 net of income tax benefit --- --- (0.39) ---
 Total $0.43 $1.55 $2.22 $2.98
 Pro forma amounts assuming the
 change in accounting principle
 is applied retroactively:
 Net income $10,462 $25,782 $59,071 $57,700
 Primary earnings per share $.43 $1.30 $2.61 $2.58
 Fully diluted earnings
 per share $.43 $1.30 $2.61 $2.58
 Note: The 1992 amounts have been restated for the retroactive adoption of SFAS No. 109.
 Consolidated Statements of Financial Condition
 (In thousands)
 Period ending June 30, 1993 1992
 Assets
 Cash and due from banks $ 73,112 $ 71,835
 Money market investments 326,460 277,187
 Interest-earning assets
 available for sale 288,874 314,608
 Investment securities 130,568 117,942
 Mortgage-backed securities 4,955,598 4,635,240
 Loans receivable:
 First mortgage loans 902,587 1,090,574
 Cooperative apartment loans 362,332 408,527
 Less allowance for credit losses (33,773) (28,011)
 Loans receivable, net 1,864,022 2,177,229
 Accrued interest receivable 39,645 48,636
 Premises and equipment 35,978 40,381
 Excess of cost over fair value
 of net assets acquired 100,791 108,827
 Purchased mortgage servicing
 rights 28,340 38,010
 Other assets 73,152 108,690
 Total $7,916,540 $7,938,585
 Liabilities, preferred stock of finance
 subsidiary and stockholders' equity
 Deposits $5,608,846 $6,239,025
 Borrowed funds 1,809,309 1,180,681
 Mortgage escrow funds 64,998 59,591
 Accrued expenses and other
 liabilities 53,498 56,775
 Total 7,536,651 7,536,072
 Preferred stock of finance
 subsidiary --- 75,000
 Stockholders' equity:
 Preferred stock:
 Class A cumulative preferred
 stock, $1 par value;
 3,140,000 share authorized,
 issued and outstanding 3,140 3,140
 Additional paid - in capital 153,860 153,860
 Total preferred stock 157,000 157,000
 Common stock:
 $0.01 par value, 70 million shares
 authorized; 17,799,162 and 17,623,331
 shares issued at June 30, 1993 and
 June 30, 1992, respectively 178 176
 Additional paid - in capital 192,384 192,015
 Total common stock 192,562 192,191
 Retained income (deficit) 30,874 (21,131)
 Less treasury stock at cost
 (119,000 common shares) (547) (547)
 Total 379,889 327,513
 Total: $7,916,540 $7,938,585
 Note: The 1992 amounts have been restated for the retroactive adoption of SFAS No. 109.
 -0- 7/22/93
 /CONTACT: Thomas K. Hernly of Anchor Bancorp, 516-596-3902/
 (ABKR)


CO: Anchor Bancorp, Inc. ST: New York IN: FIN SU: ERN

TM-PG -- NY086 -- 4828 07/22/93 17:38 EDT
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Date:Jul 22, 1993
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