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CHARTER FEDERAL ANNOUNCES INCREASE IN THIRD QUARTER NET OPERATING EARNINGS OF 43 PERCENT AND GOODWILL WRITE-OFF OF $41.1 MILLION

 BRISTOL, Va., May 7 /PRNewswire/ -- Charter Federal (NASDAQ: CHFD) announced today that net operating earnings before the write-off of goodwill for the third quarter of fiscal 1993 amounted to $2.0 million, or $0.55 per share, a 43 percent increase over the $1.4 million, or $0.37 per share, reported in the third quarter of 1992. For the nine month period ended March 31, 1993, Charter's net operating earnings before the write-off of goodwill equaled $3.1 million, or $0.83 per share, as compared to $3.9 million, or $1.06 per share for the same fiscal 1992 period.
 As of March 31, 1993, Charter has written off all of its $41.1 million in goodwill. Cecil R. McCullar, president and chief executive officer, stated: "This puts the goodwill issue behind us and simplifies both our balance sheet and income statement. Specifically, the removal of the amortization of goodwill will add approximately $2.6 million per year to net income and it eliminates an asset that provides no ongoing benefit." Taking into account the write-off of goodwill, Charter reported a net loss for the third quarter of fiscal 1993 of $39.1 million and a net loss of $38.1 million for the nine months of 1993.
 Charter Federal's operating profitability for the third quarter represents a return on average assets of 1.09 percent as compared to 0.69 percent for the comparable period in 1992. A key component of Charter's operating profitability was the company's net interest margin which equaled 3.90 percent for the quarter as compared to 2.77 percent for the March quarter of 1992.
 During the third quarter, Charter Federal's asset quality continued to improve with the company's non-performing loans (non-accruing and restructured loans) falling to 3.34 percent of total loans and real estate owned (REO) at March 31, 1993, from 4.87 percent at Dec. 31, 1992. Non-performing assets (non-performing loans and REO) fell to 2.97 percent of total assets at March 31, 1993, from 3.67 percent of total assets as of Dec. 31, 1992. At period end, Charter Federal's loan loss reserve equaled 77 percent of non-performing loans and 52 percent of non-performing assets.
 McCullar stated that, "It is clear that management's continued focus on our core businesses is paying off in the form of increased operating earnings. Our emphasis on traditional community banking products is driving our improved net interest margin and asset quality. We continue to work toward our goal of achieving capital compliance."
 Charter Federal which began operation in 1920, is a federally- chartered stock savings bank headquartered in Bristol, Va., with 26 offices throughout Southwest and Southside Virginia and the Knoxille, Tenn., area. At March 31, 1993, Charter Federal had $692 million in assets and $592 million in deposits. As of that date, Charter Federal failed to meet all applicable minimum regulatory capital requirements. The company is currently in the process of finalizing its capital restoration plan. Charter Federal's deposit accounts remain insured up to $100,000 by the Federal Deposit Insurance Corporation through the Savings Association Insurance Fund.
 FINANCIAL HIGHLIGHTS
 CHARTER FEDERAL SAVINGS BANK
 March 31, March 31,
 1993 1992
 Period End Balances
 Total Assets $692,343 $822,413
 Loans (Net) 403,743 410,703
 Mortgage-Backed
 Securities 192,004 224,958
 Allowance for Losses 10,615 11,945
 Non-Performing Loans 13,718 22,513
 Non-Performing Assets 20,540 26,933
 Deposits 591,578 621,258
 Borrowings 104,500 167,084
 Shareholders' Equity (12,086) 24,388
 Tangible Shareholders'
 Equity (12,086) (19,315)
 Shares Outstanding 3,656,297 3,656,297
 Three Months Ended Nine Months Ended
 March 31, March 31, March 31, March 31,
 1993 1992 1993 1992
 Results of Operations
 Net Interest Income $6,593 $5,057 $19,064 $12,901
 Provision for Losses 540 250 4,917 3
 Net Interest Income
 after Provision 6,053 4,807 14,147 12,898
 Non-Interest Income 544 1,275 2,789 4,402
 Non-Interest Expense
 Provision for REO Losses 655 284 1,375 564
 Amortization of Goodwill 649 649 1,946 1,946
 Other Non-Interest Expense 3,181 3,719 10,475 10,792
 Provision for Taxes 90 48 90 110
 Net Income before Elim.
 of Goodwill 2,022 1,382 3,050 3,888
 Elimination of Goodwill 41,108 0 41,108 0
 Net Income (Loss) (39,086) 1,382 (38,058) 3,888
 Per Share Data
 Earnings before Elim.
 of Goodwill $0.55 $0.37 $0.83 $1.06
 Earnings (10.69) 0.37 (10.41) 1.06
 Book Value (3.31) 6.67
 Tangible Book Value (3.31) (5.28)
 Selected Ratios
 Performance
 Return on Avg.
 Assets(A)(Pct.) 1.09 0.69 0.54 0.62
 Return on Avg. Equity NM 21.71 NM 24.29
 Net Interest Margin 3.90 2.77 3.66 2.32
 Asset Quality
 NPLs/Loans & REO 3.34 5.42
 NPAs/Assets 2.97 3.27
 Reserves/NPLs 77.38 53.06
 Reserves/NPAs 51.68 44.35
 (A) Income is before elimination of goodwill.
 Dollars in thousand except per share data.
 NM--Not meaningful
 -0- 5/7/93
 /CONTACT: Douglas D. Deppen, Senior Vice President and Chief


Financial Officer, Charter Federal Savings Bank, 703-669-5101/
 (CHFD)


CO: Charter Federal Savings Bank ST: Virginia IN: FIN SU: ERN

CM-MM -- CH004 -- 6023 05/07/93 14:27 EDT
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Date:May 7, 1993
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