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CHARTER PACIFIC BANK 1991 EARNINGS UP 33 PERCENT, ACHIEVES RETURN ON ASSETS OF 2.11 PERCENT

 CHARTER PACIFIC BANK 1991 EARNINGS UP 33 PERCENT,
 ACHIEVES RETURN ON ASSETS OF 2.11 PERCENT
 AGOURA HILLS, Calif., Jan. 29 /PRNewswire/ -- Charter Pacific Bank today announced record results for the year ended Dec. 31, 1991.
 For the year, Charter Pacific reported a 33 percent increase in net income to $1.7 million, or 49 cents per share, up from $1.3 million, or 37 cents per share in 1990. In the fourth quarter, earnings doubled to $291,000, or 8 cents per share, up from $140,000 or 4 cents per share in the prior year. Over the last five years, earnings have grown 42 percent compounded annually, easily outpacing the industry.
 Allen Blum, president and CEO, said, "During 1991, Charter Pacific earned a return on average assets of 2.11 percent and a return on average equity of 21.45 percent, making us one of the most profitable banks in the country. These results reflect our continued focus on generating fee income rather than expanding lending operations in the current economic environment. Looking ahead, we believe we can continue to expand at our historically rate while maintaining our strong rates of return through a selective, focused strategy of building fee-generating services -- including credit draft processing and mortgage brokerage services -- while maintaining a conservative balance sheet and lending portfolio."
 "As expected, the continued recession in Southern California contributed to a decline in net interest income for the year to $4.6 million, down from $5.1 million a year ago. A lower net interest margin, resulting from the decline in interest rates nationwide, more than offset the growth in interest income generated by a 10 percent increase in earning assets," Blum explained.
 Charter achieved a net interest margin of 6.66 percent for the year, well ahead of most other California regional banks. However, this was down from 8.77 percent in 1990. Blum explained, "Charter Pacific has maintained a strong net interest margin, despite the general drop in rates, because the majority of our variable rate construction loans are negotiated with firm floor and ceiling rates. Many of our loans have already reached this floor and we do not expect a further deterioration in interest income rates."
 Charter Strengthens Reserves in
 Response to Southern California Economy
 For the year, Charter recognized $1 million in provisions for potential loan losses compared with $309,000 in 1990. "We increased our provision for losses substantially," said Blum, "in response to an increase in non-performing loans. We maintain very conservative lending standards, limiting real estate to less than 70 percent of value. As a result, the bank has never lost money on a real estate loan. However, the ongoing recession and the weak housing market in Southern California has affected many of our customers."
 The increased provision doubled the bank's allowance for loan losses to $1.2 million, representing $796,000 for loans and $400,000 for other contingencies. The total allowance now accounts for 2.15 percent of total loans, compared with $632,000, or 1.15 percent of loans, a year ago. At year-end, non-performing loans represented 5.31 percent of total loans outstanding, up from less than 1 percent at the end of 1990.
 Blum said, "While we believe many of these loans will be worked out, we have taken a conservative posture reserving for approximately 40 percent of non-performing loans. In addition, two local residential projects account for more than half of the non-performing loan portfolio. Our development subsidiary, CPB Development, will take over both projects and plans to have them completed by the third quarter of 1992. We believe we can recoup our principal and some of our costs when we sell these projects."
 Non-interest Income Drives Bottom Line Growth
 Charter Pacific's merchant credit draft processing operations expanded rapidly in 1991, contributing to a 277 percent growth in non- interest income to $8.4 million, up from $2.2 million in the prior year. Non-interest expense increased at a lower rate than non-interest income, up 84 percent to $9 million in 1991 from $4.9 million in 1990, as the bank capitalized on economies of scale in its credit card operations.
 The bank added approximately 300 new credit draft processing lines in 1991 as monthly processing volume increased from approximately $3 million monthly in the first quarter to more than $12 million monthly in the fourth quarter. Going forward, management believes it has the capacity to process approximately $200 million in credit card charges annually.
 Fourth Quarter Financial Results
 For the quarter, a 20 percent increase in non-interest income and a 9 percent drop in non-interest expense, contributed to a 108 percent increase in net income. For the quarter, net income was $291,000, or 8 cents per share, compared with $140,000, or 4 cents per share in the same quarter of 1990. Net interest income declined 5 percent to $1,174,000 from $1,236,000 in the fourth quarter of 1990.
 A Strong Capital Position Provides Base for Continued Growth
 At Dec. 31, 1991, total assets of $81.2 million were up 15 percent from $70.6 million a year earlier. Shareholders' equity was up almost 33 percent to $8.8 million, or $2.51 per share, from $6.7 million, or $1.89 per share. Loans grew at a slower rate, 9 percent, to $54.5 million, up from $49.9 million, increasing the banks liquidity.
 At year-end, the banks core capital ratio was 10.71 percent, up from 9.44 percent a year earlier and well above the regulatory mandated level of 7.5 percent. The total risk-based capital ratio of 13.79 percent increased from 11.60 percent a year ago.
 Bank Sees Opportunities in 1992
 Looking at the year ahead, Blum said, "While the economy in Southern California may continue to languish through much of this year, we still see many opportunities for profitable expansion. Our core banking operations remain strong with a stable base of depositors and borrowers. Our conservative lending policies have forestalled many of the problems being experienced by our peers. And, we continue to believe we can profitably provide financing for premier developers within our target market.
 "Of course, our most exciting opportunity remains the consolidation of our position as the leading provider of credit draft processing services to audiotext merchants nationwide and our expansion into other niche processing markets that require our level of expertise. Analysts have estimated that the audiotext industry currently commands annual sales of $870 million and is growing 50 percent annually. As one of the largest providers of processing services for this rapidly growing market, we believe Charter Pacific is well positioned to grow with the market. In addition, as we have established the systems and operating personnel necessary to service this highly demanding market, we believe we have the necessary resources to expand into related areas. In 1992, we have plans for a concerted push into credit draft processing for small specialty catalogue and other direct marketers with unique needs being underserviced by the larger banks."
 Charter Pacific Bank, one of the most profitable banks in California, operates three branches in the affluent Southern California communities of Beverly Hills, Calabasas and Agoura Hills. The bank's experienced management team focuses on two key market areas, real estate lending to high-end residential developers and credit draft processing for specialty merchants primarily in the audiotext industry. Conservative lending practices have led to an enviable record; the bank has never lost money on a real estate loan. This conservatively managed core business coupled with aggressive expansion in fee-generating services has produced superior earnings growth over the last five years while maintaining a strong capital base.
 Charter Pacific Bank
 30141 Agoura Road
 Agoura Hills, Calif., 91301
 Traded: OTC
 -0- 1/29/92
 /CONTACT: Eugene Volkerding, CFO of Charter Pacific Bank, 818-991-8512, or Lise Needham of the Financial Relations Board, 415-986-1591/ CO: Charter Pacific Bank ST: California IN: FIN SU: ERN


CK -- NY059 -- 4869 01/29/92 15:55 EST
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