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 CHICAGO, Oct. 18 /PRNewswire/ -- Cragin Financial Corp. (NASDAQ-NMS: CRGN), the parent holding company of Cragin Federal Bank for Savings, today announced that net income for the quarter ended Sept. 30, 1993, was $9.3 million, or $0.67 per primary share. Third quarter earnings remained relatively constant when compared to the $9.2 million earned in the third quarter of 1992. Income before the cumulative effect of a change in accounting for income taxes for the nine months ended Sept. 30, 1993, was $29.7 million, or $2.09 per primary share, compared to net income of $26.6 million, or $1.72 per primary share for the nine months ended Sept. 30, 1992. The company adopted Statement of Financial Accounting Standards No. 109 (SFAS 109) relating to the method of accounting for income taxes during the first quarter of 1993. The effect of adopting SFAS 109 resulted in an increase in income of $3.5 million in the first quarter of 1993. Including the effect of the accounting change, net income for the nine months ended Sept. 30, 1993, was $33.2 million, or $2.33 per primary share.
 On July 6, the company announced that it had entered into a definitive agreement with ABN AMRO North America, Inc. under which ABN AMRO North America, with approximately $40 billion in U.S. assets, has agreed to purchase all of the outstanding common stock of Cragin Financial Corp. for $38 per share, which reflects the 3 for 2 stock split on Dec. 28, 1992, or $57 per share on a pre-split basis, in an all cash deal. ABN AMRO North America Inc. is the parent holding company for the LaSalle Banks, with assets exceeding $16 billion in over 60 offices in the Chicago area. ABN AMRO North America has completed its due diligence investigation and all of the initial applications have been filed with the appropriate regulatory authorities.
 Quarterly earnings remained stable, despite a decrease in interest margins during the current quarter, primarily due to an increase in non- interest income. Net interest income before provision for loan losses decreased $1.2 million to $26.6 million for the 1993 third quarter from $27.8 million for the 1992 third quarter.
 The company's net interest margin decreased to 4.02 percent for the third quarter of 1993 compared to 4.57 percent during the comparable 1992 third quarter. Net interest-earning average assets were $27.5 million higher in the 1993 period. The yield on average interest- earning assets decreased 133 basis points, from 8.93 percent for the third quarter of 1992 to 7.60 percent for the third quarter of 1993, while the cost of average interest-bearing liabilities decreased 84 basis points from 4.73 percent to 3.89 percent over the same period. Additional deterioration in spreads is likely in the future as higher- yielding assets are reinvested or refinanced at lower rates.
 Returns on average assets and average equity were 1.32 percent and 11.49 percent, respectively, for the 1993 third quarter. This compares to returns of 1.41 percent and 11.95 percent for the comparable 1992 quarter.
 Adam A. Jahns, chairman, commented, "It has been one of our goals to diversify our revenue sources in order to moderate fluctuations in net interest income. We believe we are beginning to realize this goal as evidenced by our consistent quarterly earnings despite a slight decrease in net interest income this quarter. We are pleased to also report that preparations for the acquisition by ABN AMRO North America are progressing as scheduled and we are looking forward to a closing date in early 1994." Jahns also noted that the capital of Cragin Federal Bank continues to substantially exceed all fully phased-in capital requirements set by the Financial Institutions Reform, Recovery and Enforcement Act.
 Provisions for loan losses of $500,000 were recorded in the third quarter of 1993, compared to $750,000 during the third quarter of 1992. The provisions reflect the bank's policy of conservatively evaluating its loan and investment portfolios, levels of non-performing loans and the general state of the economy. The provisions recorded in the third quarter of 1993 bring the cumulative allowance for loan losses to $22.4 million, which covered 119.6 percent of non-performing loans at Sept. 30, 1993. The ratio of non-performing loans to loans receivable, net was 1.26 percent at Sept. 30, 1993, as compared to 1.50 percent at Dec. 31, 1992. Non-performing assets decreased to $22.8 million, or 0.80 percent of total assets, at Sept. 30, 1993, from $27.5 million, or 1.15 percent of total assets, at Dec. 31, 1992. There were two charge-offs totaling $39,400 during the third quarter of 1993.
 Non-interest income was $3.3 million in the current quarter, an increase of $492,000 from the $2.9 million recorded in the comparable 1992 quarter. Income from real estate operations contributed $530,000 to 1993 third quarter earnings, compared to $179,000 in earnings for the 1992 comparable quarter. Included in other non-interest income is a $397,000 gain on the disposition of a multifamily foreclosed real estate property in which the company had a participating interest. The company had a net book balance of $1.6 million and received proceeds of $2.0 million from the sale of this property.
 Non-interest expense totaled $13.7 million in the current quarter compared to $12.7 million in the comparable 1992 quarter. The increase of $1.0 million was primarily due to higher compensation and benefits expenses and other expenses. Compensation and benefits increased $742,000 between comparable quarters, primarily due to additional expense relating to the implementation of SFAS 106, "Employer's Accounting for Post-Retirement Benefits other than Pensions," and overall increases in other compensation related expenses.
 Total assets increased $84.4 million to $2.83 billion at Sept. 30, 1993, from $2.74 billion at Dec. 31, 1992. The bank's mortgage-backed securities portfolios increased by $211.8 million during the first nine months of 1993, primarily due to the excess liquidity resulting from continued high levels of repayments. The increase in mortgage-backed securities was partially offset by a $100.3 million decrease in the company's investment securities portfolios.
 Deposits remained virtually unchanged at $2.10 billion at both Sept. 30, 1993, and Dec. 31, 1992. The average cost of deposits declined steadily over the nine months ended Sept. 30, 1993, in response to movements in short-term interest rates to average 3.74 percent for the nine months, compared to 4.91 percent for the nine months ended Sept. 30, 1992.
 Borrowed funds increased $79.5 million since Dec. 31, 1992, primarily from $100.0 million in new advances secured from the Federal Home Loan Bank-Chicago. These advances were procured in an attempt to more closely match the maturities of the company's liabilities with the maturities of its assets.
 Stockholders' equity totaled $329.3 million at Sept. 30, 1993. Common shares outstanding totaled 12,822,349 and book value per common share was $25.68. During the second quarter of 1993, the company announced the initiation of its fourth five percent (total 671,058 shares) stock buyback program. As of June 30, 1993, the company had repurchased 607,250 shares of common stock at an average cost of $22.31 per share. No shares were repurchased during the third quarter.
 -0- 10/18/93
 /CONTACT: Adam Jahns, chairman, 312-804-4500, or Fredric G. Novy, president and CEO, 312-804-4501, or Stanley G. Magiera, CFO, 708-773-0027, all of Cragin Financial Corp.

CO: Cragin Financial Corporation ST: New York IN: FIN SU: ERN

TM -- NY095 -- 3612 10/18/93 17:26 EDT
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Publication:PR Newswire
Date:Oct 18, 1993

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