Printer Friendly

ESSEX FINANCIAL PARTNERS, L.P., ANNOUNCES THIRD QUARTER RESULTS

 VIRGINIA BEACH, Va., Nov. 17 ~PRNewswire~ -- Essex Financial Partners, L.P. (AMEX: ESX) today announced that a $6.8 million loss for the quarter at the partnership's non-bank mortgage subsidiary resulted in an operating loss for the quarter ended Sept. 30, 1992. The partnership's net loss for the three months ended Sept. 30, 1992, was $6.2 million, compared to net income of $195,000 recognized in the third quarter of 1991. This resulted in a net loss of $2.95 per Class A limited partnership unit for the third quarter of 1992 compared with net income of 9 cents per Class A unit for the third quarter of 1991.
 The partnership's operating results, which were predominantly impacted by the operating results of Essex Mortgage Corporation, the partnership's non-bank mortgage subsidiary, continued to be adversely affected in the third quarter by the trends in mortgage interest rates that have prevailed since 1991. As rates have remained low, there has been an accelerated increase in mortgage loan prepayments. This decline in rates and the accompanying increased level of prepayments have significantly impaired the carrying value of purchased mortgage servicing rights, excess servicing and mortgage loan premiums. As a result of this worsening prepayment trend, which accounted in large part for the partnership's poor operating results during the first two quarters of 1992, additional amortization related to these assets totaling $6.8 million was recognized during the third quarter of 1992. This additional amortization was recognized primarily by Essex Mortgage.
 The already-recognized impairment in the value of purchased mortgage servicing rights has also adversely affected Essex Mortgage's liquidity and capital. The company's liquidity and capital problems are acute, and management has actively pursued restructuring options designed to address these difficulties, especially as they relate to the Essex 11 notes issued in 1991.
 The liquidity problems of Essex Mortgage are of particular concern because Essex Mortgage is required to make note interest and redemption payments totaling approximately $2.5 million on Dec. 31, 1992, and must make an additional sinking fund payment of $2.7 million in February 1993. A third-party commitment for a credit facility in an amount that management believes would provide sufficient liquidity, based on current cash flow projections, for Essex Mortgage to fund the scheduled December and February payments, has been received. However, the credit facility will be subject to a number of conditions, including consummation of the pending merger of the savings banks discussed further herein, which is dependent upon regulatory approval. While management is optimistic, no assurance can be given that the conditions will be satisfied and the proposed credit facility funded.
 The ability of Essex Mortgage to make the scheduled payments on and otherwise comply with conditions related to the Essex 11's may also be adversely affected by Essex Mortgage's capital difficulties, which continue to be the major focus of management's restructuring efforts. The funding of the credit facility described above is also conditioned upon the reaching of a more permanent solution to the capital problem, and while management is engaged in active discussions of restructuring alternatives, no assurance can be given that a satisfactory solution will be found. A breach of Essex Mortgage's obligations with respect to the Essex 11's would result in a default under and an acceleration of the notes, and likely lead to a demand against the guaranty of the Essex 11's executed by the partnership.
 The regulatory capital status of Essex Savings Bank, Inc.-North Carolina (ESB-NC) also presents serious difficulties for the partnership. Although both the Florida and Virginia savings banks exceeded their respective core, tangible and risk-based capital requirements at Sept. 30, 1992, ESB-NC failed to meet its core and risk-based capital requirements by $2.2 million and $5.2 million, respectively. A merger application has been filed with the Office of Thrift Supervision (OTS) to merge the Florida and Virginia savings banks into ESB-NC. If the merger application is approved and management's current estimates as set forth in the merger application and the previously-filed capital plan materialize, the combined institution will return to full capital compliance within 120 days after consummation of the merger. The partnership anticipates significant benefits following the merger of the thrift subsidiaries, such as cost reductions, efficiencies, and improved operating performance. If the merger is not approved on a timely basis, and if ESB-NC suffers negative operating results in the fourth quarter of 1992, ESB-NC could become subject to certain provisions of the Federal Deposit Insurance Corporation Improvement Act of 1991 that takes effect on Dec. 19, 1992. A thrift institution that does not have tangible equity of at least 2 percent, or an approved capital plan, becomes subject on Dec. 19, 1992 to mandatory seizure by the FDIC. At Sept. 30, 1992, ESB-NC's tangible capital ratio was 2.02 percent, and its capital plan, which assumes consummation of the proposed merger, was pending with the OTS.
 Excluding the partnership's difficulties with the Essex 11 notes and the capital deficiency at ESB-NC, other areas of the partnership's operations experienced marked improvement during the quarter ended Sept. 30, 1992. Although the impact of mortgage prepayments has severely impaired the partnership's overall operations, the partnership's other subsidiaries have benefited, although to a much lesser extent, from the lower mortgage interest rate environment. Mortgage banking income has increased from $570,000 for the quarter ended Sept. 30, 1991, to $847,000 for the quarter ended Sept. 30, 1992. This increase in mortgage banking income was primarily attributable to the operations of Essex First Mortgage Corporation, a subsidiary of ESB-NC, which benefited from the high volume of mortgage loan refinancings. As part of ESB-NC's capital plan, mortgage banking operations will continue to be significantly expanded. The majority of the originated loans will be sold with servicing retained, which will assist in replenishing the partnership's mortgage loan servicing portfolio.
 Loans in the 30-59 day and 60-89 day delinquency categories at the partnership's savings banks have decreased by approximately $11 million since Dec. 31, 1991. This represents a decrease of 58 percent in delinquent loans within these categories and, if continued, will have a favorable impact on the partnership's future level of non-performing assets. For the quarter ended Sept. 30, 1992, the provisions for estimated losses on loans and foreclosed properties were $230,000 compared to $676,000 for the same quarter in 1991. The provisions for the third quarter of 1992 were reduced to reflect the improvement in loan delinquencies, in addition to being decreased $390,000 in connection with a settlement of a fully reserved unsecured commercial loan.
 Net gains on sales of longer-term securities and loans increased from $28,000 for the quarter ended Sept. 30, 1991 to $504,000 for the quarter ended Sept. 30, 1992. The sales of longer-term securities and loans occurred during the third quarter of 1992 to reposition the partnership's savings banks as part of asset~liability management efforts designed to provide improved long-term interest rate protection, and to reduce ESB-NC's deficiency in risk-based capital.
 Gene D. Ross, the recently appointed chief executive officer of Essex Bancorp, indicated that management remains optimistic that it will be able to effect the merger of the savings banks during the fourth quarter, and that it will be able to resolve the Essex Mortgage liquidity and capital problems and meet the other conditions to the funding of the credit facility discussed above. Ross noted that despite the magnitude of the third quarter loss, it is important to recognize that exclusive of the effect of asset impairment adjustments caused by mortgage loan prepayments, and exclusive of the other nonrecurring transactions discussed above, the restructuring of the operations of the partnership's savings banks subsidiaries would have allowed the savings banks to recognize consolidated earnings of approximately $491,000 for the quarter ended Sept. 30, 1992.
 -0- 11~17~92
 ~CONTACT Lisa Nasis, investor relations, Essex Financial Partners, L.P., 800-274-9900, ext. 605~
 (ESX)


CO: Essex Financial Partners, L.P. ST: Virginia IN: FIN SU: ERN

DC -- DC005 -- 1747 11~17~92 10:32 EST
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Nov 17, 1992
Words:1336
Previous Article:VERSAR ANNOUNCES FIRST QUARTER RESULTS
Next Article:REYNOLDS ADDS COLOR SANDWICH BAGS TO ITS PRODUCT LINE
Topics:


Related Articles
NEW MANAGEMENT AT ESSEX FINANCIAL PARTNERS, L.P., FILES CAPITAL PLAN WITH THRIFT BANKING REGULATOR
ESSEX FINANCIAL PARTNERS, L.P., ANNOUNCES SECOND QUARTER RESULTS
ESSEX FINANCIAL PARTNERS, L.P., ANNOUNCES THIRD QUARTER RESULTS
ESSEX FINANCIAL PARTNERS, L.P., ANNOUNCES THIRD QUARTER RESULTS
ESSEX FINANCIAL PARTNERS, L.P. (AMEX: ESX) ANNOUNCES SECOND QUARTER RESULTS
ESSEX BANCORP, INC. ANNOUNCES MERGER OF PARTNERSHIP
ESSEX BANCORP, INC. ANNOUNCES FOURTH QUARTER RESULTS AND STATUS OF CAPITAL RAISING
ESSEX BANCORP, INC. ANNOUNCES SECOND QUARTER RESULTS AND STATUS OF CAPITAL RAISING EFFORTS
ESSEX BANCORP, INC. ANNOUNCES MERGER RECEIVES REGULATORY APPROVAL
ESSEX BANCORP, INC. ANNOUNCES FOURTH QUARTER RESULTS AND ONGOING DEVELOPMENTS

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters