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DOWNEY SAVINGS ANNOUNCES FIRST QUARTER EARNINGS

 DOWNEY SAVINGS ANNOUNCES FIRST QUARTER EARNINGS
 NEWPORT BEACH, Calif., April 23 /PRNewswire/ -- Downey Savings and


Loan Association (NYSE: DSL) today reported net income of $11,281,000 or $0.70 per share for the first quarter of 1992, compared to net income $12,463,000 or $0.77 per share for the same period last year.
 Robert L. Kemper, chief executive officer of Downey Savings, said, "The first quarter results are strong. The key areas upon which we focused have shown improvements. Downey's capital ratios remain solidly above the minimum requirements. Core and tangible capital was 6.90 percent and risk-based capital was 13.41 percent. Return on average assets for the current quarter is 1.2 percent, and return on average equity for the same period is 16.0 percent. The association's net interest rate spread increased to 3.75 percent at March 31, 1992, as compared with 2.94 percent at March 31, 1991. Non-performing assets comprised 1.17 percent of total assets at March 31, 1992, a slight increase over the Dec. 31, 1991, figure of 0.97 percent, however, still well below the industry average."
 Net interest income increased 20.3 percent to $31 million for the quarter ended March 31, 1992, as compared to the same period last year. Interest expense for deposits continues to decline more rapidly than the interest income on the association's loan portfolio. Loan production of $221.7 million for the quarter ended March 31, 1992, represented a 262 percent increase when compared to the quarter ended March 31, 1991. However, single-family home loan refinancings and prepayments continue to be high, resulting in a decline of $141.7 million during the March 1992 quarter in the association's total loan and mortgage-backed securities portfolio.
 Loan loss provisions for the quarter ended March 31, 1992, decreased $1.5 million from the March 1991 quarter. General loan loss allowances as a percentage of total loans increased to 0.72 percent at March 31, 1992, from 0.54 percent at March 31, 1991. Net charge-offs for the first quarter of 1992 were only $54,000.
 Income from real estate and joint venture operations increased $1.5 million as a result of an improvement in joint venture operations and a reduction in the level of loss allowance requirements.
 In December of 1991, in an effort to enhance the yield on its excess liquidity, the association purchased a $245 million adjustable-rate mortgage-backed security designated as held for trading. As a result of holding this security, net interest income improved during the first quarter of 1992 by $1.3 million over comparable short-term investments. However, because of short-term interest rates suddenly and rapidly increasing, and the association's desire to minimize its interest-rate risk, this security was sold in March of 1992 (for April 1992 settlement) at a gross loss of $3.6 million, bringing the net result of this activity to a net loss of $2.3 million for the quarter. During the first quarter of 1991, the association recorded increases in income of $2.9 million resulting from an increase in the market value of certain mortgage-backed and investment securities held for sale.
 General and administrative expenses increased by 17 percent, or $2.6 million, during the first quarter of 1992, compared to the same period in 1991, and by 6 percent or $1.1 million, compared to the fourth quarter of 1991. This increase is due primarily to a $1.7 million increase in salaries and related costs relative to loan production staff additions and the higher cost of various employee incentive and benefit plans. Increases in other loan origination expense, advertising and insurance costs resulted in a $0.8 million increase in other expenses.
 As a result of the September 1991 payoff of the FSLIC note, the association no longer receives tax-free interest income from this note, which has caused an increase in its effective tax rate.
 At March 31, 1992, deposits totaled $3.2 billion, a decrease of $128 million since Dec. 31, 1991. The decline is because of the March 1992 sale of one Northern California branch office, and the continued industrywide outflow of deposits to higher-paying investments.
 Downey Savings, with assets of $3.6 billion, has 50 offices throughout California.
 DOWNEY SAVINGS & LOAN ASSOCIATION
 Consolidated Statements of Income
 Year Ended March 31,
 1992 1991
 Interest income:
 Interest and fees on loans $67,742,000 $76,649,000
 Investment securities 5,015,000 9,446,000
 RTC note and yield maintenance
 on covered assets 61,000 4,744,000
 Total interest income 72,818,000 90,839,000
 Interest expense:
 Deposits 40,956,000 58,906,000
 Other borrowings 807,000 6,127,000
 Total 41,763,000 65,033,000
 Net interest income 31,055,000 25,806,000
 Provision for loan losses 73,000 1,541,000
 Net interest income after
 provision for loan losses 30,982,000 24,265,000
 Other income:
 Loan and other fees 1,822,000 1,223,000
 Real estate and joint
 venture operations, net 1,477,000 1,000
 Mortgage banking activities:
 Loan servicing fees 487,000 492,000
 Net gains (losses) on sales
 of loans and mortgage-backed
 securities (including
 market valuation
 adjustments) (3,762,000) 1,150,000
 Net gains on sales of
 investment securities
 (including market valuation
 adjustments) 11,000 1,793,000
 Other income 399,000 273,000
 Total 434,000 4,932,000
 General and administrative
 expenses:
 Salaries and related costs 9,828,000 8,127,000
 Premises and occupancy costs 2,828,000 2,750,000
 FDIC insurance premiums and
 special assessments 1,969,000 1,934,000
 Amortization of excess of
 cost over fair value of net
 assets acquired 155,000 153,000
 Other 3,541,000 2,720,000
 Total 18,321,000 15,684,000
 Income before income taxes 13,095,000 13,513,000
 Income taxes 1,814,000 1,050,000
 Net income $11,281,000 $12,463,000
 Per share Information:
 Net income $0.70 $0.77
 Weighted average shares
 outstanding 16,165,068 16,161,443
 DOWNEY SAVINGS AND LOAN ASSOCIATION & SUBSIDIARIES
 Consolidated Financial Highlights
 For the three months ended March 31: 1992 1991
 Revenues (including realized and
 unrealized gains and losses) $73,252,000 95,771,000
 Net interest income $31,055,000 25,806,000
 Net income $11,281,000 12,463,000
 Earnings per share $0.70 0.77
 Weighted average shares outstanding 16,165,068 16,161,443
 Increase (decrease) in savings and
 checking accounts ($128,206,000) 14,528,000
 Decrease in loans (including
 mortgage-backed securities) ($141,741,000) (80,017,000)
 Decrease in assets ($182,658,000) (22,403,000)
 Loans funded $221,703,000 61,244,000
 At March 31:
 Assets $3,595,409,000 4,148,231,000
 Loans (including mortgage-
 backed securities) $2,783,161,000 2,922,424,000
 Savings accounts $2,950,262,000 3,127,157,000
 Checking accounts $277,009,000 248,769,000
 Loans serviced for others $551,422,000 508,344,000
 Stockholders' equity $286,772,000 268,228,000
 Book value per share $17.74 16.60
 Outstanding shares 16,165,068 16,161,443
 Nonperforming assets as a
 percentage of total assets 1.17 pct. 0.37 pct.
 Net interest rate spread (percent) 3.75 pct. 2.94 pct.
 Core and tangible capital 6.90 pct. 5.47 pct.
 Risk-based capital 13.41 pct. 11.48 pct.
 Number of approved offices 50 49
 -0- 4/23/92
 /CONTACT: David T. Hansen, CFO, or Angelika Mayman, investor relations manager, of Downey Savings and Loan Association, 714-854-3100/
 (DSL) CO: Downey Savings and Loan Association ST: California IN: FIN SU: ERN


DM-JL -- LA009 -- 2066 04/23/92 15:52 EDT
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Date:Apr 23, 1992
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