CRESTMONT FINANCIAL CORP. ANNOUNCES SECOND QUARTER EARNINGS
CRESTMONT FINANCIAL CORP. ANNOUNCES SECOND QUARTER EARNINGS EDISON, N.J., Oct. 27 /PRNewswire/ -- Crestmont Financial Corp.
(NASDAQ-NMS: CRES), the holding company for Crestmont Federal Savings and Loan Association, announced today that earnings for its fiscal second quarter ended Sept. 30, 1992 were $463,000 or $0.12 per share compared with earnings of $287,000 or $0.08 per share in the corresponding period a year ago. For the first six months of fiscal 1993, earnings were $1,175,000 or $0.03 per share compared with $376,000 or $0.10 per share a year ago. The company's tangible book value per share at Sept. 30, 1992 was $15.22.
At Sept. 30, 1992, Crestmont Federal's tangible, core, and risk-based capital ratios as calculated in accordance with Office of Thrift Supervision (OTS) regulations were 5.21 percent, 5.21 percent, and 10.33 percent, respectively. This compares with 4.84 percent, 4.84 percent, and 9.32 percent at March 31, 1992 and 4.44 percent, 4.44 percent, and 8.74 percent at Sept. 30, 1991. The improvement in the capital ratios during fiscal 1993 was primarily due to the decrease in total assets of $43.1 million since March 31, 1992, as well as the increase in net earnings for the fiscal year and the increase in market valuation of purchased mortgage servicing rights resulting from the sales agreement price on the servicing rights of mortgage loans. Crestmont sold previously purchased servicing rights on $399 million of mortgage loans to an investment banking firm on Oct. 15, 1992. The gain on sale, which will be approximately $509,000 before taxes, will be reflected in the consolidated statements of operations for the Dec. 31, 1992 quarter. The ratio of stockholders' equity to total assets was 5.27 percent at Sept. 30, 1992. The OTS has recently proposed an amendment to its risk-based capital requirement that would require institutions with more than a "normal" level of interest rate risk to maintain additional capital. The OTS has stated that it intends to issue a final interest rate risk component regulation in late 1992 or early 1993 with an effective date of Jan. 1, 1994. Until the final regulation is adopted and evaluated, the association cannot predict if it will be required to increase its level of risk-based capital. Net interest income for the fiscal second quarter was $8.4 million compared with $7.7 million for the September quarter last year. For the first six months of fiscal 1993, net interest income was $17.6 million compared with $15.0 million for the same period one year ago. The increases in net interest income for the quarter and fiscal year to date were primarily due to reduced interest expense on deposits and borrowed money resulting from declines in market interest rates compared with the corresponding periods last fiscal year. The net interest margins for the three and six month periods ended Sept. 30, 1992 were 3.38 percent and 3.49 percent, respectively, as compared with 2.78 percent and 2.62 percent for the same periods one year earlier. Average earning assets declined from $1.2 billion for the quarter ended Sept. 20, 1991 to $1.0 billion for the quarter ended Sept. 30, 1992, partially offsetting the benefit from the decrease in market interest rates. During the quarter, provisions for loan and real estate owned (REO) losses were $250,000 and $1.0 million, respectively. At Sept. 30, 1992, nonperforming assets were $52.4 million compared with $56.6 million at June 30, 1992, $66.7 million at March 31, 1992, and $67.6 million at Sept. 30, 1991. Nonperforming assets consisted of $19.2 million of nonaccrual loans, including $13.4 million of residential mortgage loans, and $33.2 million of REO and in-substance foreclosures. Included in nonperforming assets were approximately $7.5 million under contract for sales. The $14.3 million reduction in nonperforming assets since March, 31, 1992 included a $4.9 million loan returning to performing status, the sale of three multifamily and three residential construction REO properties totalling $5.7 million, and total loan and REO chargeoffs of $2.3 million. Not included in nonperforming assets was a troubled debt restructured loan with an outstanding balance of $12.4 million at Sept. 30, 1992, which is current with respect to its interest payments and has a principal reduction of $141,000 fiscal year to date. At Sept. 30, 1992, the allowances for loan and REO losses were $13.4 million and $5.2 million, respectively, compared with $13.2 million and $5.1 million at June 30, 1992, and $13.1 million and $4.9 million at March 31, 1992. We are pleased with the 21.4 percent reduction in nonperforming assets since March 31, 1992, and several assets are moving toward resolution as evidenced by the increase in nonperforming assets under contract for sale which increased from $3.2 million as of June 30, 1992 to $7.5 million at Sept. 30, 1992. However, we are also cognizant that the economy continues to be weak, and these prevailing conditions may cause future problems. Any significant future increase in nonperforming 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 conditioned dictate. Also note that the OTS has announced it will be adopting different standards for the valuation of problem assets. What impact this will have on Crestmont and the level of its reserves for loan and REO losses, if any, cannot be determined until the new procedures and their implementation are made known. Loan servicing income declined from $943,000 for the quarter ended Sept. 30, 1991 to a loss of $1.9 million for the quarter ended Sept. 30, 1992. For the first six months of fiscal 1993, the loan servicing loss was $3.2 million compared with income of $1.7 million for the same period one year earlier. 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 services for others during the quarter. During the three and six month periods ended Sept. 30, 1992, amortization of servicing rights purchased and deferred premium on sale of loans was $3.6 million and $6.5 million, respectively, compared with $1.6 million and $3.4 million one year earlier. Also contributing to the reduction in loan servicing income was the decline in the volume of loans serviced for others which decreased from $1.4 billion at Sept. 30, 1991 to $1.1 billion at Sept. 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 continuing negative impact on loan servicing income in the December 1992 quarter due to increased loan prepayments as has recently been the case. It is significant, however, that servicing rights purchased and deferred premium on sale of loans at Sept. 30, 1992 have been reduced to a balance of $15.1 million, including approximately $5.0 million attributable to the previously discussed purchased servicing rights subsequently sold on Oct. 15, 1992. Total other expenses, excluding provision for REO losses, were $5.6 million for the period ended Sept. 30, 1992 compared with $6.2 million for the same quarter last year. For the first six months of fiscal 1993 and 1992, total other expenses, excluding provision for REO losses, were $11.5 million and $12.3 million, respectively. As a result of the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA), a risk-based assessment system for deposit insurance is being established. This will result in increased federal insurance premium expense effective Jan. 1, 1993, based on the information publicly stated by the Federal Deposit Insurance Corporation. Management and board attention is again being unreasonably diverted by changes in regulations. In response to the requirements of FDICIA, the regulators, including the OTS, are issuing numerous proposals and regulations. There is little in these proposals that address matters not already adequately addressed by existing rules, procedures, and regulations. The regulatory environment changed substantially with the advent of FIRREA in August 1989. Crestmont, along with all other financial institutions, has worked hard to adjust to the myriad of new requirements. Attention that would be better directed at improving our performance will now be devoted to assimilating unnecessary regulatory changes. 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 servicing Essex, Middlesex, Monmouth, Morris, and Union Counties in the state of New Jersey. Crestmont Financial's common stack trades in the over-the-counter market and is listed on the National Association of Securities Dealers Automated Quotation (NASDAQ) National Market System under the symbol "CRES". CRESTMONT FINANCIAL CORP. AND SUBSIDIARY Consolidated Statements of Financial Condition (Dollars in thousands) 9/30/92 3/31/92 Assets (unaudited) Cash and due from banks $15,979 $17,157 Investment securities 30,089 20,245 Loans 596,224 662,044 Less: allowances for loan losses 13,365 13,065 Net loans 582,859 648,988 Mortgage loans held for sale 21,783 29,401 Mortgage-backed securities, net 369,256 332,803 Interest and dividends receivable 9,182 10,983 Real estate owned, net 28,046 35,268 Federal home loan bank stock, at cost 15,165 15,164 Servicing rights purchased and deferred premium, on sale of loans 15,122 21,654 Office properties and equipment, net 3,558 3,843 Other assets 12,150 10,792 Total assets 1,103,179 $1,146,298 Liabilities and Stockholders Equity Deposits 797,529 829,371 Securities sold under repurchase agreements 58,864 59,551 Borrowed money 171,784 177,569 Advance payments by borrower of taxes and insurance 5,188 5,161 Accrued expenses and other liabilities 11,628 17,640 Total liabilities 1,044,993 1,089,292 Stockholder equity: Preferred stock, 10,000,000 shares authorized; none issued -- -- Common stock, par value $1,00, 20,000,000 shares authorized; issued and outstanding, 3,823,179 at Sept. 30, 1992 and 3,820,067 at March 31, 1992 3,823 3,820 Paid-in capital 35,210 35,208 Retained earnings 19,153 17,978 Total stockholders' equity 58,186 57,006 Total liabilities and stockholders equity 1,103,179 1,146,298 CRESTMONT FINANCIAL CORP. AND SUBSIDIARY Consolidated Statements of Operations (Dollars in thousands, except per share amounts - Unaudited) Periods ended Three months Six months Sept. 30 1992 1991 1992 1991 Interest income: interest on loans $14,121 $18,784 $29,990 $37,912 Interest on mortgage- backed securities 7,649 8,696 15,215 17,679 Interest and dividends on investments 841 1,072 1,760 2,315 Total interest income 22,611 28,552 46,965 57,906 Interest expense: Interest on deposits 9,982 14,050 20,632 28,541 Interest on borrowed money 4,221 6,753 8,712 14,985 Total interest expense 14,203 20,803 29,344 42,921 Net interest income 8,408 7,749 17,621 14,985 Provision for loan losses 250 750 750 784 Net interest income after provision for loan losses 8,158 6,999 16,871 14,201 Other income: Loan servicing income (1,869) 943 (3,216) 1,677 Deposit account fees and other income 692 693 1,390 1,454 Real estate owned operations, net (281) (360) (636) (653) Net gain on sales of mortgage loans 328 43 624 101 Net gain (loss) on sales of securities (3) 66 17 12 Net gain (loss) on sales of servicing and other assets 431 (3) 664 2,109 Total other income (702) 1,382 (1,157) 4,700 Other expenses: Salaries and employee benefits 2,504 2,385 5,089 4,892 Occupancy 971 1,429 2,056 2,654 Information and communications 834 1,150 1,911 2,243 Professional and administrative 732 710 1,378 1,371 Federal insurance premiums 454 462 919 942 Provisions for real estate owned losses 1,000 1,250 2,000 5,005 Other 83 58 174 200 Total other expenses 6,578 7,444 13,527 17,307 Income before income tax expense 878 937 2,187 1,584 Income tax expense 415 650 1,012 1,218 Net income $463 $287 $1,175 $376 Net Income Per Share: $0.12 $0.08 $0.30 $0.10 Average number shares of common stock outstanding 3,952 3,895 3,950 3,903 -0- 10/27/92 /CONTACT: Eric P. Graap of Crestmonth Financial Corp., 908-287-3838, ext. 357/ (CRES) CO: Crestmont Financial Corp. ST: New Jersey IN: FIN SU: ERN
TS-LR -- NY070 -- 5466 10/27/92 13:47 EST
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|Date:||Oct 27, 1992|
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