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CRESTMONT FINANCIAL ANNOUNCES FIRST QUARTER EARNINGS

 CRESTMONT FINANCIAL ANNOUNCES FIRST QUARTER EARNINGS
 EDISON, N.J., July 28 /PRNewswire/ -- Crestmont Financial Corp., the


holding company for Crestmont Federal Savings and Loan Association (NASDAQ-NMS: CRES), announced today that earnings for its first fiscal quarter ended June 30, 1992, were $712,000 or $0.18 per share. This compares with earnings of $89,000 or $0.02 per share in the year-earlier quarter. The company's tangible book value per share at June 30, 1992, was $15.11.
 At June 30, 1992, Crestmont Federal's tangible, core, and risk-based capital ratios as calculated in accordance with Office of Thrift Supervision (OTS) regulations were 5.32 percent, 5.32 percent, and 10.16 percent, respectively. This compares with 4.84 percent, 4.84 percent, and 9.32 percent at March 31, 1992, and 4.19 percent, 4.19 percent, and 8.24 percent at June 30, 1991. The improvement in the capital ratios during the June 1992 quarter was primarily due to the decrease of total assets of $69.6 million, as well as the increase in market valuation of purchased mortgage servicing rights resulting from the sale agreement price on the servicing rights of $400 million of mortgage loans. The ratio of stockholders' equity to total assets at June 30, 1992, was 5.36 percent.
 Net interest income for the quarter was $9.2 million compared with $7.2 million for the June quarter last year. The increase in net interest income for the quarter was primarily due to reduced interest expense on deposits and borrowed funds resulting from declines in market interest rates compared with the previous June quarter. In addition, approximately $300,000 of net interest income was due to the collection and recognition of prior-period interest income on a loan with a balance of $4.9 million at June 30, 1992, that had formerly been on non-accrual status, and approximately $110,000 was due to a special dividend on Federal Home Loan Bank of New York stock. Both were non-recurring events. The net interest margin for the three-month period ended June 30, 1992, was 3.60 percent compared with 2.44 percent for the same period last year. The increase in net interest income due to the decline in interest rates and the non-recurring events was partially offset by a continued decline in average earning assets. Average earning assets for the first fiscal quarter of 1993 and 1992 were $1 billion and $1.2 billion, respectively.
 During the quarter, provisions for loan and real estate owned (REO) losses were $500,000 and $1 million, respectively. At June 30, 1992, non-performing assets were $56.6 million compared with $66.7 million at March 31, 1992, and $65.2 million at June 30, 1991. Non-performing assets consisted of $19.5 million of non-accrual loans, including $15 million of residential mortgage loans, and $37.1 million of real estate owned and in-substance foreclosures. Included in non-performing assets were approximately $3.2 million under contract for sale. The $10.1 million reduction in non-performing assets since March 31, 1992, was primarily due to the previously mentioned $4.9 million loan returning to performing status, the sale of two multifamily and two residential construction REO properties totalling $2.8 million, and total loan and REO charge-offs of $1.2 million. Not included in non-performing assets was a troubled debt restructured loan with an outstanding balance of $12.4 million at June 30, 1992, which is current with respect to its interest payments and had a principal reduction of $141,000 during the quarter. This is the first significant quarterly net reduction in non- performing assets since the level of non-performing assets reached approximately $65 million in March of 1990. While Crestmont is pleased with this result, the economy in New Jersey continues to be weak. Crestmont is working toward the resolution of additional problem assets, but it is possible that prevailing conditions may cause future problems. Any significant future increase in non-performing assets, or a decline in the current carrying value of assets, may result in increased amounts of loan and/or REO loss provisions in the future as conditions dictate. At June 30, 1992, the allowances for loan and REO losses were $13.2 million and $5.1 million, respectively, compared with $13.1 million and $4.9 million, respectively, at March 31, 1992, and $12 million and $3.4 million, respectively, at June 30, 1991.
 Loan servicing income declined from $734,000 for the quarter ended June 30, 1991, to a loss of $1.3 million for the quarter ended June 30, 1992. The decline was primarily due to the increased amortization of servicing rights purchased and deferred premium on sale of loans resulting from the substantial increase in actual prepayments and prepayment assumptions of loans serviced for others during the quarter. During the June 1992 quarter amortization of servicing rights purchased and deferred premium on sale of loans was $3 million compared with $1.8 million one year earlier. The prepayment increase during the first fiscal quarter was primarily due to mortgage refinance activity resulting from the decrease in mortgage loan rates since last December. Also contributing to the reduction in loan servicing income was the decline in the volume of loans serviced for others which decreased from $1.5 billion at June 30, 1991, to $1.2 billion at June 30, 1992. Because of the potential volatility of interest rate movements, actual loan prepayments, and prepayment estimates, the future trend in loan servicing income is difficult to project. There may be a significant continuing negative impact on loan servicing income due to increased loan prepayments as has been the case in each of the last three quarters.
 Total other expenses, excluding provision for REO losses, were $5.9 million for the period ended June 30, 1992, compared with $6.1 million for the same quarter last year. The 11.4 percent reduction in occupancy expense when compared to last year's June quarter was primarily due to the 50 percent reduction in space leased at the company's corporate headquarters since November 1991.
 Crestmont has an agreement with the Resolution Trust Corporation (RTC) to sell previously purchased subservicing rights on approximately $400 million of mortgage loans to an investment banking firm tentatively scheduled for closing in October 1992. The completion of the sale is subject to due diligence by the purchaser, the execution of a mutually acceptable purchase and sale agreement, and the approval of the Federal Home Loan Mortgage Corporation. The gain on sale, which is projected to be approximately $750,000 before taxes, is dependent on the volume of outstanding balances of loans serviced at the time of sale.
 Crestmont Federal Savings and Loan Association, a wholly owned subsidiary of Crestmont Financial Corp., with $1.1 billion in assets, has 15 retail branch locations, and two loan production offices serving Essex, Middlesex, Monmouth, Morris, and Union counties in the state of New Jersey. Crestmont Financial's common stock trades in the over-the- counter market.
 CRESTMONT FINANCIAL CORP. AND SUBSIDIARY
 Consolidated Statements of Financial Condition
 (Dollars in thousands)
 6/30/92 3/31/92
 (Unaudited)
 ASSETS
 Cash and due from banks $ 20,171 $ 17,157
 Investment securities 20,191 20,245
 Loans 625,858 662,044
 Less: Allowance for loan losses 13,235 13,056
 Net loans 612,623 648,988
 Mortgage loans held for sale 14,476 29,401
 Mortgage-backed securities, net 317,511 332,803
 Interest and dividends receivable 9,698 10,983
 Real estate owned, net 32,029 35,268
 Federal Home Loan Bank stock, at cost 15,165 15,164
 Servicing rights purchased and
 deferred premium on sale of loans 18,750 21,654
 Office properties and equipment, net 3,675 3,843
 Other assets 12,373 10,792
 Total assets $1,076,662 $1,146,298
 LIABILITIES AND STOCKHOLDERS' EQUITY
 Deposits $ 817,281 $ 829,371
 Securities sold under repurchase
 agreements 39,796 59,551
 Borrowed money 145,235 177,569
 Advance payments by borrowers for
 taxes and insurance 4,318 5,161
 Accrued expenses and other liabilities 12,311 17,640
 Total liabilities 1,018,941 1,089,292
 Stockholders' equity:
 Preferred stock, 10 million shares
 authorized; none issued -- --
 Common stock, par value $1, 20 million
 shares authorized; issued and outstanding,
 3,821,623 at June 30, 1992, and 3,820,067
 at March 31, 1992 3,822 3,820
 Paid-in capital 35,209 35,208
 Retained earnings 18,690 17,978
 Total stockholders' equity 57,721 57,006
 Total liabilities and stockholders'
 equity $1,076,662 $1,146,298
 CRESTMONT FINANCIAL CORP. AND SUBSIDIARY
 Consolidated Statements of Operations
 (Dollars in thousands, except per share amounts)
 Three months ended June 30 1992 1991
 (Unaudited)
 Interest income:
 Interest on loans $15,869 $19,128
 Interest on mortgage - backed securities 7,566 8,983
 Interest and dividends on investments 919 1,243
 Total interest income 24,354 29,354
 Interest expense:
 Interest on deposits 10,650 14,491
 Interest on borrowed money 4,491 7,627
 Total interest expense 15,141 22,118
 Net interest income 9,213 7,236
 Provision for loan losses 500 34
 Net interest income after provision
 for loan losses 8,713 7,202
 Other income:
 Loan servicing income (1,347) 734
 Deposit account fees and other income 698 761
 Real estate owned operations, net (355) (293)
 Net gain on sales of mortgage loans 296 58
 Net gain (loss) on sales of securities 20 (54)
 Net gain on sales of servicing and other assets 233 2,112
 Total other income (455) 3,318
 Other expenses:
 Salaries and employee benefits 2,585 2,507
 Occupancy 1,085 1,225
 Information and communications 1,077 1,093
 Professional and administrative 646 661
 Federal insurance premiums 465 480
 Provision for real estate owned losses 1,000 3,755
 Other 91 142
 Total other expenses 6,949 9,863
 Income before income tax expense 1,309 657
 Income tax expense 597 568
 Net income $ 712 $ 89
 Net income per share $0.18 $0.02
 Average number shares of common
 stock outstanding 3,947 3,909
 -0- 7/28/92
 /CONTACT: Eric P. Graap of Crestmont Financial Corp., 908-287-3838, ext. 357/
 (CRES) CO: Crestmont Financial Corp. ST: New Jersey IN: FIN SU: ERN


CK-OS -- NY048 -- 4127 07/28/92 13:20 EDT
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