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CITADEL HOLDING CORP. ANNOUNCES DECEMBER 31, 1992 EARNINGS

 GLENDALE, Calif., Feb. 24 /PRNewswire/ -- Citadel Holding Corporation (AMEX: CDL), parent company of Fidelity Federal Bank, FSB, today reported fourth quarter net earnings of $6.4 million or $1.94 per share, compared with net earnings of $12.3 million or $3.73 per share in the fourth quarter of 1991. For the year 1992 net earnings were $2.0 million or $.62 per share, compared with 1991 net earnings of $2.7 million or $.81 per share.
 The decrease in year over year earnings is due primarily to increased provisions for estimated loan and real estate losses recorded during 1992. The decrease is also due to a reduction in net interest income, caused by a decline in the level of interest-earning assets. During 1992, interest-earning assets decreased from $4.7 billion to $4.3 billion. These factors were offset by lower operating expenses in 1992 and by the favorable resolution of certain tax issues in 1992 that allowed the Company to decrease its reserves for taxes by $4.1 million.
 The combined provision for estimated loan and real estate losses was $69.0 million for 1992 compared with a provision of $58.4 million for 1991. The Company added $11.0 million to its provision for such losses in the fourth quarter of 1992 compared to $6.0 million in the fourth quarter of 1991. The increased loan and real estate loss provisions in 1992 over 1991 reflect the continuing deterioration in the general economic conditions and the real estate markets in Southern California. At December 31, 1992, the Company's general valuation allowance (GVA) was $75.6 million or 1.81 pct. of total loans and real estate, down from $77.9 million or 1.86 pct. at September 30, 1992, and up from $52.4 million or 1.13 pct. at December 31, 1991. During 1992, the Company charged off a total of $41.2 million on loans and real estate compared to $25.6 million for the corresponding 1991 period.
 During 1992, nonperforming assets (NPAs) increased to $234.4 million or 4.99 pct. of total assets from $124.7 million or 2.43 pct. of total assets at December 31, 1991. Due to the increase in total NPAs, the ratio of the GVA to NPAs decreased to 32.3 pct. at December 31, 1992, from 42.0 pct. at December 31, 1991. The Company has modified the terms of certain loans in its portfolio which resulted in various concessions to the borrower with respect to the borrower's payment schedule or other loan terms in response to the borrower's financial difficulties. These restructurings have caused the Company to categorize the loans in question as troubled debt restructurings (TDRs). TDRs increased from $6.9 million or 0.14 pct. of total assets at December 31, 1991, to $87.3 million or 1.86 pct. of total assets at December 31, 1992. However, $43.0 million of the $87.3 million in TDRs are paying interest at market rates and were not considered classified assets for regulatory purposes at December 31, 1992.
 Richard M. Greenwood, President and Chief Executive Officer, said: "The Company continues to monitor the performance of its $4.1 billion loan and real estate portfolio and additions to its allowance for estimated loan and real estate losses may be made, depending on the performance of the Southern California real estate market and economy and the Company's loan portfolio. If current downward trends continue and the amount of the Company's troubled assets continues to increase, it is likely that the Company will need to further increase its allowance for estimated loan and real estate losses."
 Loans on single family and multifamily properties are generally believed to have less credit risk than commercial, industrial or construction loans. However, current Southern California economic conditions have adversely impacted the credit risk profile of the Company's loan portfolio. At December 31, 1992, the Company's loans on residential properties totalled 91.1 pct. of its total loan portfolio. Adjustable rate mortgages represent 96.5 pct. of the total loan portfolio. Approximately 90.9 pct. of the Company's total loan portfolio is comprised of loans secured by California residential real estate. The Company has emphasized California apartment lending in recent years, and approximately 70.4 pct. of the total loan portfolio is comprised of such loans.
 Net interest income decreased $11.3 million or 8.0 pct. for 1992 from the corresponding 1991 period. The decrease resulted from an average 12.4 pct. balance sheet decline reducing net interest income by $12.8 million. This decrease in net interest income was partially offset by a 13 basis point increase in the effective yield on interest-earning assets which added $1.5 million to net interest income. The effective yield was 2.81 pct. and 2.68 pct. for 1992 and 1991, respectively. The effective yield is the interest rate margin adjusted for the difference in the balances of interest-earning assets and interest-bearing liabilities.
 Operating expenses for 1992 were reduced slightly by $2.2 million or 2.82 pct. over operating expenses for 1991. The Company's operating efficiency ratio, which measures the relationship between operating expenses and income generated, increased to 54.3 pct. for 1992 from 48.7 pct. for the 1991 period. This worsening of the efficiency ratio is the result of lower interest income due to increases in nonperforming assets and a smaller balance sheet. However, the 1992 ratio of operating expenses to average assets increased to 1.57 pct. from 1.42 pct. for the 1991 period as a result of a reduction in asset size from $5.1 billion at December 31, 1991, to $4.7 billion at December 31, 1992.
 Other income for 1992 decreased $11.7 million, primarily due to the combined effects of a) an increase in net expense from real estate operations of $11.6 million (which includes a $9.2 million increase in the provision for estimated real estate losses), b) a decrease in gains on sales of mortgage-backed securities of $9.0 million, and c) a increase in other income of $8.0 million due to an accrual for contingent liabilities of $6.0 million in 1991, of which $1.0 million was reversed in 1992 following a favorable resolution of the contingent item.
 At December 31, 1992, Fidelity Federal Bank, the Company's principal subsidiary, met the fully phased-in capital requirements for all three capital ratio measurements based upon regulations currently required by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). At December 31, 1992, Fidelity's tangible, core and risk-based capital ratios were 4.27 pct., 4.35 pct. and 9.76 pct., respectively; while the minimum requirements were 1.50 pct., 3.00 pct. and 8.00 pct., respectively. However, further regulations on the core capital requirements are being contemplated by the Office of Thrift Supervision (OTS). These proposed regulations, if adopted in their current form, will likely increase Fidelity's minimum core capital requirements from 3.00 pct. to a range of 4.50 pct. to 5.00 pct. Accordingly, no assurances can be given that Fidelity will continue to meet all minimum capital requirements. As of December 31, 1992, Fidelity is considered adequately capitalized under regulations recently promulgated by the OTS which implement the "prompt corrective action" system mandated by the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA).
 As previously announced Philip R. Sherringham has resigned as Chief Financial Officer for the Company. The Company does not anticipate any immediate or material effect from Mr. Sherringham's departure.
 Citadel's common stock is traded on the American Stock Exchange under the symbol CDL.
 CITADEL HOLDING CORPORATION AND SUBSIDIARIES
 FINANCIAL HIGHLIGHTS
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (Subject to year-end audit)
 (Dollars in thousands, except per share amounts)
 Quarter Ended Year Ended
 December 31, December 31,
 1992 1991 1992 1991
 INTEREST INCOME:
 Loans $77,437 $115,933 $355,560 $497,005
 Mortgage-backed
 securities 3,148 2,252 5,631 6,016
 Investment securities
 and other 1,638 3,117 9,531 17,103
 Total interest income 82,223 121,302 370,722 520,124
 INTEREST EXPENSE:
 Deposits 37,688 62,859 175,024 278,617
 FHLB Advances 4,375 7,939 20,877 43,024
 Other borrowings 8,738 11,749 36,667 49,003
 Subordinated notes 1,843 1,843 7,373 7,373
 Total interest expense 52,644 84,390 239,941 378,017
 NET INTEREST INCOME 29,579 36,912 130,781 142,107
 Provision for estimated
 loan losses 3,894 4,000 51,180 49,843
 NET INTEREST INCOME
 AFTER PROVISION FOR
 ESTIMATED LOAN LOSSES 25,685 32,912 79,601 92,264
 OTHER INCOME:
 Loan and other fees 2,272 1,469 7,885 5,869
 Gains on sales of
 loans, net 77 1,748 1,117 2,118
 Gains on sales of
 mortgage-backed
 securities, net --- 7,985 --- 8,993
 Real estate
 operations, net (9,060) (2,710) (22,261) (10,622)
 Other income (expense) 2,573 1,209 6,168 (1,791)
 Total other income (4,138) 9,701 (7,091) 4,567
 OPERATING EXPENSE:
 Compensation 8,341 9,143 36,656 36,293
 Occupancy 3,248 3,208 12,705 12,692
 FDIC insurance 2,016 2,191 8,391 8,680
 Other general and
 administrative 4,708 6,175 18,553 20,852
 Total operating
 expense 18,313 20,717 76,305 78,517
 EARNINGS (LOSS) BEFORE
 INCOME TAXES 3,234 21,896 (3,795) 18,314
 Income tax (benefit)
 expense (3,155) 9,618 (5,841) 15,651(1)
 NET EARNINGS $6,389 $12,278 $2,046 $2,663
 NET EARNINGS PER SHARE $1.94 $3.73 $0.62 $0.81
 (1) SFAS 109 was adopted in 1991.
 FINANCIAL DATA
 FOR THE PERIOD:
 Real estate
 loans funded $151,910 $83,202 $435,690 $509,265
 Decrease in
 deposits ($152,507) ($164,461) ($426,789) ($82,781)
 Operating expenses
 to average assets 1.56 pct. 1.55 pct. 1.57 pct. 1.42 pct.
 Operating efficiency
 ratio (1) 58.05 pct. 42.62 pct. 54.31 pct. 48.70 pct.
 Average common and
 common equivalent shares
 outstanding (2) 3,297,812 3,297,812 3,297,812 3,297,812
 FINANCIAL DATA AT END
 OF THE PERIOD:
 Total assets $4,698,326 $5,126,525
 Total loans and
 mortgaged-backed
 securities $4,222,165 $4,583,522
 General valuation
 allowance to loans
 and real estate owned 1.81 pct. 1.13 pct.
 Deposits $3,457,918 $3,884,707
 Borrowings $908,400 $871,150
 Subordinated notes $60,000 $60,000
 Stockholders' equity $223,186 $221,140
 Stockholders' equity per share $67.68 $67.06
 Common shares
 outstanding (2) 3,297,812 3,297,812
 FIDELITY FEDERAL BANK
 REGULATORY CAPITAL RATIOS:
 Tangible capital 4.27 pct. 3.86 pct.
 Core capital 4.35 pct. 4.02 pct.
 Risk-based capital 9.76 pct. 9.85 pct.
 WEIGHTED AVERAGE YIELD
 FOR THE PERIOD:
 Loans 8.17 pct. 9.99 pct.
 Investments 3.84 pct. 6.32 pct.
 Combined loans and
 investments 7.94 pct. 9.80 pct.
 WEIGHTED AVERAGE COST
 FOR THE PERIOD:
 Deposits 4.82 pct. 6.93 pct.
 Borrowings 7.04 pct. 8.36 pct.
 Combined deposits and
 borrowings 5.27 pct. 7.26 pct.
 INTEREST RATE MARGIN
 FOR THE PERIOD 2.67 pct. 2.54 pct.
 EFFECTIVE YIELD FOR THE PERIOD 2.81 pct. 2.68 pct.
 (1) The efficiency ratio is computed by dividing total noninterest expense by net interest income and other income, excluding nonrecurring items and the provision for estimated real estate losses.
 (2) Average common and common equivalent shares outstanding at December 31, 1991, are shown net of 179,700 shares of Treasury Stock.
 Dec. 31, Sept. 30, Dec. 31,
 1992 1992 1991
 NONPERFORMING ASSETS (NPAs):
 Nonaccruing loans $112,041 $118,832 $68,982
 In-substance foreclosures (1) 47,324 41,983 25,490
 Foreclosed real estate (1) 88,659 75,438 30,253
 REO GVA (2) (13,619) --- ---
 Total NPAs $234,405 $236,253 $124,725
 NPAs to total assets 4.99 pct. 4.93 pct. 2.43 pct.
 NPAs AND TROUBLED DEBT
 RESTRUCTURINGS (TDRs):
 Total NPAs $234,405 $236,253 $124,725
 Classified TDRs 44,308 43,730 ---
 Nonclassified TDRs 42,996 34,644 6,939
 Total NPAs and TDRs $321,709 $314,627 $131,664
 NPAs and TDRs to total assets 6.85 pct. 6.56 pct. 2.57 pct.
 CLASSIFIES ASSETS:
 Total NPAs $234,405 $236,253 $124,725
 Performing loans with
 increased risk 108,442 133,218 89,099
 Real estate held
 for investment (2) 10,891 12,253 14,516
 Other assets --- --- 63
 Total Classified Assets $353,738 $381,724 $228,403
 Classified assets
 to total assets 7.53 pct. 7.96 pct. 4.46 pct.
 Loan Delinquencies by Property Type:
 Single Family:
 30-59 days $7,939 $6,416 $6,626
 60-89 days 3,665 1,958 3,370
 90 days and over 14,064 12,671 8,100
 25,668 21,045 18,096
 Multifamily (2-4 units):
 30-59 days 1,432 1,351 416
 60-89 days 1,180 1,079 1,841
 90 days and over 6,372 5,087 1,256
 8,984 7,517 3,513
 Multifamily (5-36 units):
 30-59 days 15,927 13,823 6,515
 60-89 days 9,241 8,983 7,810
 90 days and over 33,627 29,681 12,621
 58,795 52,487 26,946
 Multifamily (37 units and over):
 30-59 days 5,623 13,439 19,453
 60-89 days 1,223 6,157 ---
 90 days and over 23,691 27,566 26,123
 30,537 47,162 45,576
 Commercial & Industrial:
 30-59 days 1,807 12,086 3,041
 60-89 days --- --- 7,869
 90 days and over 15,772 25,341 13,014
 17,579 37,427 23,924
 Total Loan Delinquencies $141,563 $165,638 118,055
 Total Loan Delinquencies to Total
 Loan Portfolio 3.51 pct. 4.06 pct. 2.58 pct.
 (1) Foreclosed real estate and ISF are shown net of 1st trust deeds, where applicable.
 (2) Beginning in December 1992, NPAs and real estate held for investments will be shown net of applicable GVA.
 -0- 2/24/93
 /CONTACT: Albert J. Clemens, Senior Vice President and Marketing Director, Fidelity Federal Bank, 818-549-3630/
 (CDL)


CO: Citadel Holding Corp.; Fidelity Federal Bank ST: California IN: FIN SU: ERN

JL -- LA029 -- 0131 02/24/93 17:57 EST
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