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CALFED INC. REPORTS 1992 SECOND QUARTER, FIRST HALF RESULTS

 CALFED INC. REPORTS 1992 SECOND QUARTER, FIRST HALF RESULTS
 LOS ANGELES, July 20 /PRNewswire/ -- CalFed Inc. (NYSE: CAL) today reported a net loss for the second quarter ended June 30, 1992, of $23.2 million, or $.90 per fully diluted share, compared to a net loss for the second quarter of 1991 of $18.6 million, or $.73 per fully diluted share.
 For the first six months of 1992, CalFed Inc. reported a net loss of $10.1 million, or $.39 per fully diluted share, compared to a 1991 first half net loss of $21.3 million, or $.83 per fully diluted share.
 The 1992 second quarter results reflect higher provisions for losses on the company's income-property loans, and on its foreclosed real estate and real estate investments.
 "Results for the second quarter are disappointing but not surprising; they reflect the continuing weakness in most segments of the California real estate market," said Jerry St. Dennis, chairman and chief executive officer of CalFed Inc. "However, the company has made additional progress during the quarter in reducing expenses to levels lower than any in the last 8 years and by generating record levels of fee income."
 General and administrative expenses for the second quarter of 1992 declined by 14 percent to $84.2 million from $97.5 million for the quarter ended June 30, 1991. For the first six months of 1992, the company's general and administrative expenses totaled $170.3 million, compared to $182.6 million for the first half of 1991. The decline in general and administrative expenses is in large part a result of the elimination of approximately 1,100 positions, or 24 percent, from the company's staffing between June 30, 1991, and June 30, 1992.
 Fee income, an increasingly important component of the company's core earnings, increased to $20.1 million and $41.4 million for the second quarter and first half of 1992, from $16.5 million and $30.5 million for the same 1991 periods. Income from sales of alternative investment products for the first six months of 1992 almost doubled as the bank continued its emphasis on the sales of mutual funds and annuities, capitalizing on providing its customers, especially those on fixed-incomes, alternatives to the lowest- yielding savings accounts in approximately 20 years.
 The continued decline in short-term market interest rates led to a reduced level of retail deposits during the second quarter of 1992. Retail deposits totaled $12.9 billion at June 30, 1992, compared to $13.5 billion at Dec. 31, 1991, and $13.8 billion at June 30, 1991.
 The bank's ability to cross-sell alternative investment products produced record sales of more than $190 million during the second quarter of 1992, resulting in a total of $358 million in sales of these products since the beginning of the year. By providing its customers with alternatives to traditional savings methods, California Federal Bank has maintained valuable customer relationships while generating substantial fee income for the bank.
 The company originated $853.6 million in new loans during the second quarter of 1992, compared to $1.1 billion for the same 1991 period. Over the last year, the company has reduced the average size of its new real estate loans; this and a decrease in home purchases were primarily responsible for the decline in loan origination volume.
 Net interest income for the second quarter totaled $109.4 million, compared to $114.5 million for the same 1991 period. For the first six months of 1992, net interest income totaled $220.1 million, compared to $222.5 million for the first half of 1991. The results reflect a $2.1 billion reduction in interest- earning assets, coupled with a rise in non-performing loans, which was partially offset by an improved interest-rate spread. The company's interest-rate spread increased to 2.67 percent for the three months ended June 30, 1992, from 2.42 percent for the comparable 1991 period.
 Non-performing assets (non-accrual, past due and restructured loans and real estate acquired in settlement of loans) totaled $1,141.8 million, or 6.52 percent of assets, at June 30, 1992, compared to $1,110.1 million, or 6.15 percent of assets, at March 31, 1992, and $944.2 million, or 4.78 percent of assets, at June 30, 1991. Of total non-performing assets at June 30, 1992, approximately $285 million, or 25 percent, continued to perform according to their contractual terms.
 The company also said that the composition of its non-performing loans has continued to shift during the first half of 1992. Residential and multifamily loans, which historically have produced less severe losses than commercial real estate loans, comprised 73 percent of non-performing loans at June 30, 1992, compared to 46 percent at the end of the 1991 second quarter.
 "We expect to see relatively modest growth in non-performing assets during the third quarter, primarily from single- and multi- family loans," said St. Dennis.
 The company's provision for loan losses in the second quarter of 1992 was $51.9 million, compared to $25.4 million for the same 1991 period. CalFed's allowance for loan losses totaled $324 million at June 30, 1992, compared to $231.8 million at June 30, 1991.
 In the second quarter of 1992, the company recorded provisions for losses on real estate held for investment and on foreclosed real estate of $17.0 million and $16.5 million, respectively, reflecting continued deterioration in the real estate markets.
 On July 1, 1992, California Federal Bank announced an agreement to file a modified capital plan with the Office of Thrift Supervision (OTS) which will call for the bank to reach core and risk-based capital ratios of 5.0 percent and 9.0 percent, respectively, by June 30, 1993. The plan will also call for the bank to further achieve a 10.0 percent risk-based capital ratio by Jan. 1, 1995.
 A required part of the bank's modified capital plan, which will be filed with the OTS by July 31, 1992, is the successful completion of an exchange offer with CalFed Inc.'s bondholders involving common stock of the company and preferred stock of the bank, and the concurrent merger of CalFed Inc. into a subsidiary of the bank. The OTS expects the company to complete these transactions by Dec. 31, 1992.
 California Federal Bank's capital ratios exceeded current regulatory requirements by increased margins during the second quarter of 1992. At June 30, 1992, the bank's tangible, core and risk-based capital ratios were 2.96 percent, 4.00 percent and 7.49 percent, respectively, well above the corresponding regulatory requirements of 1.50 percent, 3.00 percent and 7.20 percent.
 CalFed Inc.'s total assets were $17.5 billion at June 30, 1992, compared to $19.8 billion at the end of the 1991 second quarter. Stockholders' equity stood at $845.6 million at June 30, 1992, a $155.2 million decrease, compared to June 30, 1991. The company's equity-to-asset ratio at June 30, 1992, was 4.83 percent, compared to 5.06 percent at the end of the same 1991 quarter.
 CalFed Inc.'s tangible book value totaled $21.38 per share at June 30, 1992, compared to $26.68 per share at June 30, 1991.
 CalFed Inc. is a Los Angeles-based financial services holding company. Its principal subsidiary, California Federal Bank, FSB, provides home mortgage loans and consumer banking services through 179 offices in California, Florida, Nevada and Georgia.
 CALFED INC. AND SUBSIDIARIES
 Consolidated Statements of Financial Condition
 (Dollars in millions)
 June 30, March 31, Dec. 31, June 30,
 1992 1992 1991 1991
 Assets
 Cash $509.8 $933.2 $450.4 445.9
 Certificates of deposit 26.8 67.2 55.8 13.7
 Federal funds sold 300.0 300.0 --- ---
 Securities purchased under
 agreements to resell --- --- 398.2 ---
 Investment securities 595.8 147.7 16.9 1,134.2
 Securities held for sale 293.6 447.0 834.3 ---
 Mortgage-backed
 securities 2,483.5 2,057.8 1,197.6 1,195.2
 Mortgage-backed
 securities held for
 sale --- --- 189.7 ---
 Loans receivable 11,827.7 12,568.3 13,377.8 14,538.4
 Loans held for sale 50.9 107.2 209.7 701.5
 Other FDIC-related
 earning assets 10.3 10.3 14.6 51.3
 Federal Home Loan Bank
 stock 149.3 148.1 146.3 168.6
 Interest receivable 120.6 119.2 119.8 160.9
 Real estate held for
 sale or investment 163.2 178.0 224.6 345.1
 Real estate acquired in
 settlement of loans 335.3 310.9 273.0 323.6
 Prepaid expenses
 and other assets 201.1 206.0 215.4 164.2
 Deferred income tax
 receivable 13.2 13.1 13.1 17.7
 Premises and equipment 137.3 142.6 149.3 162.5
 Goodwill 297.0 301.0 309.6 317.5
 Assets of discontinued
 operations --- --- 34.4 32.2
 Total assets $17,515.4 $18,057.6 $18,230.5 $19,772.5
 Liabilities and
 Stockholders' Equity
 Deposits $13,613.0 $14,121.5 $14,827.7 $15,543.3
 Advances from Federal
 Home Loan Banks 1,965.6 2,065.6 1,566.2 1,881.2
 Securities sold under
 agreements to
 repurchase 336.6 227.5 68.1 238.0
 Convertible subordinated
 debentures 122.6 122.6 122.6 122.6
 Other borrowings 385.0 394.7 461.5 584.4
 Other liabilities 247.0 256.8 321.3 395.8
 Liabilities of discontinued
 operations --- --- 7.3 6.4
 Total liabilities 16,669.8 17,188.7 17,374.7 18,771.7
 Stockholders' equity:
 Common stock 25.7 25.7 25.7 25.6
 Additional paid-in
 capital 478.3 478.3 478.3 478.2
 Net unrealized losses
 on equity securities (.6) (.5) (.5) (3.6)
 Retained earnings 342.2 365.4 352.3 500.6
 Total stockholders'
 equity 845.6 868.9 855.8 1,000.8
 Total liabilities and
 stockholders'
 equity $17,515.4 $18,057.6 $18,230.5 $19.772.5
 CALFED INC. AND SUBSIDIARIES
 Consolidated Statements of Operations
 (Dollars in millions, except per share data)
 For the For the
 Three months ended Six months ended
 June 30, June 30,
 1992 1991 1992 1991
 Interest income:
 Loans receivable $271.6 $405.6 $574.2 $817.9
 Mortgage-backed
 securities 40.8 29.5 76.1 81.0
 Investment securities 19.2 36.1 41.5 81.7
 Total interest
 income 331.6 471.2 691.8 980.6
 Interest expense:
 Deposits 179.6 284.7 384.0 596.1
 Borrowings 42.6 72.0 87.7 162.0
 Total interest
 expense 222.2 356.7 471.7 758.1
 Net interest income 109.4 114.5 220.1 222.5
 Provision for
 loan losses 51.9 25.4 73.8 38.2
 Net interest income
 after provision for
 loan losses 57.5 89.1 146.3 184.3
 Other income:
 Fee income 20.1 16.5 41.4 30.5
 Gain on sales of loans 2.8 4.0 4.7 6.1
 Gain (loss) on sales of
 mortgage-backed
 securities (.4) 1.9 1.1 8.6
 Gain (loss) on sale of
 securities .1 --- (1.9) ---
 Operations of
 real estate held
 for investment (17.8) (26.0) (26.0) (32.0)
 Operations of real
 estate acquired in
 settlement of loans
 net of FDIC capital
 loss coverage (18.4) (10.2) (29.3) (25.4)
 Other 9.2 6.7 13.9 7.6
 Total other income (4.4) (7.1) 3.9 (4.6)
 Other expenses:
 Compensation 34.9 42.8 70.8 83.6
 Office occupancy 14.1 15.1 28.2 29.3
 Other general and
 administrative 26.4 29.8 53.8 50.1
 Amortization of
 goodwill 4.0 4.0 12.6 7.9
 Federal deposit
 insurance premiums
 and special
 assessments 8.8 9.8 17.5 19.6
 Total other expenses 88.2 101.5 182.9 190.5
 Earnings (loss) from
 continuing operations
 before income tax
 expense (35.1) (19.5) (32.7) (10.8)
 Income tax expense
 (benefit) (11.9) (.1) (6.6) 12.8
 Net loss from
 continuing
 operations (23.2) (19.4) (26.1) (23.6)
 Earnings from
 discontinued
 operations, net
 of taxes --- .8 --- 2.3
 Gain on sale of
 discontinued
 operations, net
 of taxes --- --- 16.0 ---
 Net earnings (loss) ($23.2) ($18.6) ($10.1) ($21.3)
 Primary (loss) per
 share from
 continuing
 operations ($.90) ($.76) ($1.02) ($.92)
 Fully diluted (loss)
 per share from
 continuing
 operations ($.90) ($.76) ($1.02) ($.92)
 Primary earnings (loss)
 per share ($.90) ($.73) ($.39) ($.83)
 Fully diluted earnings
 (loss) per share ($.90) ($.73) ($.39) ($.83)
 CALFED INC. AND SUBSIDIARIES
 Selected Financial Data
 June 30, June 30,
 1992 1991
 For the quarter ended:
 Primary loss per share from
 continuing operations ($.90) ($.76)
 Fully diluted loss per share from
 continuing operations (.90) (.76)
 Primary loss per share (.90) (.73)
 Fully diluted loss per share (.90) (.73)
 Dividends per common share --- .03
 For the six months ended:
 Primary loss per share from
 continuing operations ($1.02) ($.92)
 Fully diluted loss per share from
 continuing operations (1.02) (.92)
 Primary loss per share (.39) (.83)
 Fully diluted loss per share (.39) (.83)
 Dividends per common share --- .06
 End of period:
 Book value per common share $32.95 $39.08
 Tangible book value per common
 share(A) 21.38 26.68
 Selected ratios:
 Return on average assets
 (annualized) (.20 pct) (.19 pct)
 Return on average equity
 (annualized) (4.26) (4.21)
 Dividend payout ratio --- (7.22)
 Stockholders' equity as a
 percentage of total assets 4.83 5.06
 Average equity to average assets
 ratio 4.76 4.59
 Other data:
 Number of full-service savings
 offices 179 191
 (A) The tangible book value per common share excludes goodwill totalling $297.0 million at June 30, 1992, and $317.5 million at June 30, 1991.
 -0- 7/20/92
 /CONTACT: James F. Hurley, 213-930-9750, or Frank W. Moore, 213-932-4203, both of CalFed/
 (CAL) CO: CalFed Inc. ST: California IN: FIN SU: ERN


AL-JL -- LA009 -- 0545 07/20/92 08:04 EDT
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