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ANCHOR BANCORP ANNOUNCES INCREASED THIRD QUARTER EARNINGS

 HEWLETT, N.Y., April 22 /PRNewswire/ -- Anchor Bancorp, Inc., (NASDAQ: ABKR), parent company of Anchor Savings Bank FSB, reported net income for the third fiscal quarter ended March 31, 1993 of $19.3 million before the accumulation of $2.9 million in preferred stock dividends as compared to net income of $11.9 million before the accumulation of $3.1 million in preferred stock dividends for the comparable quarter of last year. This amounted to primary earnings per common share of $.89 for the third fiscal quarter of 1993 as compared to $.51 for the comparable prior year quarter. The current quarter's results included $11.0 million in non-core pretax gains primarily from the sale of deposits as compared to only $7.9 million in the prior year quarter.
 For the first nine months of fiscal 1993, Anchor's net income amounted to $41.5 million or primary earnings per common share of $1.80. This compares to net income of $34.5 million or primary earnings per common share of $1.43 in the comparable prior year period.
 Mr. James M. Large, Jr., chairman and chief executive officer, noted that "Net income for the current quarter included core pretax earnings of $23.1 million, up 21 percent from $19.1 million in the comparable prior year quarter and, once again, the highest in Anchor's history." He continued, "While this marks the fourteenth consecutive increase in core income, the rate of growth continues to slow due to pressure on asset yields from the downward repricing of adjustable rate loans and the continued high prepayment levels experienced in the Bank's loan and mortgage-backed securities portfolio. Core pretax income for the previous quarter, which ended December 31, 1992, was $22.9 million. The net yield on average interest earning assets amounted to 2.70 percent during the current quarter, down from the 2.84 percent posted in the immediately preceding quarter."
 The quarterly results also reflect a $9.8 million gain on the sale of Anchor's western New York state franchise, which was comprised of 14 branches. The sale was consistent with Anchor's strategy of focusing on the Metropolitan New York and New Jersey markets.
 Anchor reported that its leverage capital ratio stood at 4.09 percent at March 31, 1993, earning Anchor the "adequately capitalized" designation under the prompt corrective action guidelines of the Office of Thrift Supervision ("OTS"). Its risk-based capital ratio of 11.45 percent alone would warrant the "well capitalized" designation. The OTS has determined that Anchor's leverage capital ratio at March 31, 1993 meets the 4 percent leverage capital requirement to be deemed "adequately capitalized" under the prompt corrective action guidelines. Assuming, as is expected, that the OTS confirms the 4.0 percent level upon receipt of Anchor's quarterly regulatory report filing, Anchor will be allowed to withdraw the Capital Restoration Plan it submitted in February and will not be subject to the restrictions imposed on "undercapitalized" financial institutions. Mr. Large stated, "The next quarter will be an exciting time in the life of Anchor as we prepare to raise at least $50 million through the public offering of common stock in order to bolster our capital and earn a "well capitalized" designation. The previously announced repurchase of Anchor's preferred stock from the FDIC should clear the way for a successful offering."
 Third Quarter Fiscal 1993 Operating Statistics
 Net interest income amounted to $52.9 million in the third quarter of fiscal 1993 as compared to $50.4 million in the comparable prior year period, an increase of 4.9 percent. The net yield on average earning assets amounted to 2.70 percent, an improvement from the 2.63 percent reported in the third quarter of last year. The sharp decline of short- term rates and an aggressive approach to liability pricing were the principal factors underlying the year-to-year improvement.
 However, during the last two quarters the downward repricing of assets, which has lagged the liability repricing, and the accelerated level of prepayments, has resulted in a decline in asset yields that has outpaced the decline in liability costs. As a result, net interest margins have narrowed and the net yield has declined from the 2.94 percent and 2.84 percent levels achieved in the first and second quarters of the current year, respectively.
 The total provision for credit losses amounted to $4.1 million for the current quarter, down $1.0 million from the comparable prior year quarter. Net loans charged off to the allowance for credit losses were $2.0 million in the current quarter as compared to $2.9 million in the third quarter of fiscal 1992. Anchor's allowance for credit losses amounted to $33.3 million with non-accrual loans and real estate owned of $55.9 million or 0.70 percent of total assets at March 31, 1993, as compared to the allowance for credit losses of $26.1 million and non- accrual loans and real estate owned of $78.6 million or 1.02 percent of total assets at March 31, 1992.
 Mortgage banking and other income totaled $20.5 million for the quarter, up $5.5 million from the prior year quarter. This was due primarily to the $9.8 million gain on the sale of branches as compared to only $6.7 million in gains from branch sales in the prior year quarter. In addition, annuity and mutual fund sales commissions increased as did the mortgage-servicing portfolio and the resulting fee income.
 General and administrative expenses for the third quarter amounted to $31.6 million, up $1.0 million from the comparable prior year quarter. The increase related primarily to a $.9 million increase in the cost of deposit insurance as the previous rate charged to Anchor was increased by 30 percent due to the FDIC's implementation of a risk-based premium system.
 The amortization and write-down of loan servicing rights totaled $3.0 million in the third quarter of fiscal 1993, up $1.5 million from the comparable prior year quarter. This increase was due to a larger purchased servicing portfolio and a charge associated with a lower valuation being placed on the portfolio due to increased prepayment activity. The method of accounting used for valuing PMSR's in fiscal 1993 is somewhat similar to the "lower of cost or market" theory.
 ANCHOR BANCORP, INC. AND SUBSIDIARIES
 Consolidated Statements of Financial Condition
 (unaudited, dollars in thousands)
 3/31/93 6/30/92
 ASSETS
 Cash and due from banks $ 50,663 $ 71,835
 Money market investments 245,963 277,187
 Interest-earning assets available for sale 269,303 314,608
 Investment securities 131,600 117,942
 Mortgage-backed securities 5,106,983 4,635,240
 Loans receivable:
 First mortgage loans 937,104 1,090,574
 Cooperative apartment loans 373,233 408,527
 Consumer and commercial loans 652,304 706,139
 Less allowance for credit losses (33,276) (28,011)
 Loans receivable, net 1,929,365 2,177,229
 Accrued interest receivable 42,380 48,636
 Premises and equipment 36,516 40,381
 Excess of cost over fair value
 of net assets acquired 103,238 108,827
 Cost of loan servicing rights acquired 31,641 38,010
 Other assets 76,307 108,690
 Total $8,023,959 $7,938,585
 LIABILITIES, PREFERRED STOCK OF
 FINANCE SUBSIDIARY AND STOCKHOLDERS'
 EQUITY
 Liabilities:
 Deposits $5,629,661 $6,239,025
 Borrowed funds 1,912,612 1,180,681
 Mortgage escrow funds 61,902 59,591
 Accrued expenses and other liabilities 50,540 56,775
 Total 7,654,715 7,536,072
 Preferred stock of finance subsidiary -- 75,000
 Stockholders' equity:
 Preferred stock:
 Class A cumulative preferred stock,
 $1.00 par value; 3,140,000 shares
 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:
 $.01 par value, 70,000,000 shares authorized;
 17,707,663 and 17,623,331 shares issued and
 outstanding at March 31, 1993
 and June 30, 1992, respectively 177 176
 Additional paid-in capital 192,202 192,015
 Total common stock 192,379 192,191
 Retained income (deficit) 20,412 (21,131)
 Less treasury stock at cost
 (119,000 common shares) (547) (547)
 Total 369,244 327,513
 Total $8,023,959 $7,938,585
 NOTE: Prior period restated for the retroactive adoption of SFAS No. 109.
 ANCHOR BANCORP, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF INCOME
 (Unaudited, in thousands, except per share amounts)
 Periods ended Three Months Nine Months
 March 31 1993 1992 1993 1992
 Interest income:
 Loans receivable and
 loans available for sale:
 First mortgage loans 20,488 29,327 69,651 93,020
 Cooperative apartment loans 7,161 9,736 23,107 31,061
 Consumer and commercial loans 13,365 16,255 42,264 53,934
 Mortgage-backed securities
 and mortgage-backed securities
 available for sale 79,158 89,685 248,376 279,638
 Money market investments 2,030 3,440 5,996 16,797
 Investment securities and
 investment securities available
 for sale 2,616 3,229 8,065 10,258
 Total interest income 124,818 151,672 397,459 484,708
 Interest expense:
 Deposits 56,627 86,231 187,337 291,161
 Borrowed funds and preferred
 stock of finance subsidiaries 15,276 15,001 47,097 51,834
 Total interest expense 71,903 101,232 234,434 342,995
 Net interest income 52,915 50,440 163,025 141,713
 Provision for credit losses (4,100) (5,100) (14,300) (15,300)
 Net interest income after
 provision for credit losses 48,815 45,340 148,725 126,413
 Non-interest income:
 Gain on sales and revaluations
 of earning assets, net 1,239 1,216 8,109 9,836
 Mortgage banking income 4,333 4,184 13,694 12,372
 Other 16,196 10,874 26,467 19,990
 Total non-interest income 21,768 16,274 48,270 42,198
 Non-interest expense:
 General and administrative:
 Compensation and benefits 13,247 14,366 41,454 42,732
 Occupancy and equipment 4,127 4,652 13,335 14,471
 Federal deposit insurance premiums 4,664 3,765 11,791 11,471
 Other 9,592 7,854 28,359 23,895
 Total 31,630 30,637 94,939 92,569
 Amortization of excess of cost
 over fair value of net
 assets acquired 1,788 2,460 5,388 7,645
 Amortization and write-down
 of cost of loan servicing
 rights acquired 3,015 1,469 10,164 4,397
 Restructuring charges -- 2,533 -- 3,205
 Total non-interest expense 36,433 37,099 110,491 107,816
 Income before income
 tax expense and
 cumulative effect
 of a change in
 accounting principle 34,150 24,515 86,504 60,795
 Income tax expense 14,868 12,575 37,895 26,279
 Income before cumulative
 effect of accounting
 principle 19,282 11,940 48,609 34,516
 Cumulative effect on
 prior years of a change
 in accounting principle,
 net of income tax benefit of $5,055 -- -- (7,066) --
 Net income 19,282 11,940 41,543 34,516
 Dividends on Class A cumulative
 preferred stock 2,944 3,081 8,890 9,558
 Net income applicable to
 common stock 16,338 8,859 32,653 24,958
 Earnings per share amounts:
 Primary earnings per share:
 Income before cumulative effect of
 a change in accounting principle 0.89 0.51 2.19 1.43
 Cumulative effect on prior years
 of a change in accounting
 principle, net of income
 tax benefit -- -- (0.39) --
 Net income 0.89 0.51 1.80 1.43
 Fully diluted earnings per share:
 Income before cumulative effect of
 a change in accounting principle 0.89 0.51 2.18 1.43
 Cumulative effect on prior years of
 a change in accounting principle,
 net of income tax benefit -- -- (0.39) --
 Net income 0.89 0.51 1.79 1.43
 Pro forma amounts assuming
 the change in accounting principle
 is applied retroactively:
 Net income 19,282 11,854 41,543 31,918
 Primary earnings per share 0.89 0.50 1.80 1.28
 Fully diluted earnings per share 0.89 0.50 1.79 1.28
 Note: Prior periods restated for the retroactive adoption of SFAS No. 109.
 -0- 4/22/93
 /CONTACT: Thomas K. Hernly of Anchor Bancorp, Inc., 516-596-3902/
 (ABKR)


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

TS -- NY063 -- 9435 04/22/93 12:19 EDT
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