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

ESSEX FINANCIAL PARTNERS, L.P., ANNOUNCES SECOND QUARTER RESULTS
 VIRGINIA BEACH, Va., Aug. 12 /PRNewswire/ -- As anticipated in its July 15, 1992, press release, Essex Financial Partners, L.P. (AMEX: ESX), today announced an operating loss for the quarter ended June 30, 1992. The net loss for the three months ended June 30, 1992, was $5.3 million compared to a net loss of $3.6 million recognized in the second quarter of 1991. This resulted in a net loss of $2.53 per Class A limited partnership unit for the second quarter of 1992 compared with a net loss of $1.70 per Class A unit for the second quarter of 1991. As discussed below, non-recurring items represented $5.8 million of the second quarter loss.
 Gene D. Ross, the recently appointed chief executive officer of Essex Bancorp, indicated that, despite the magnitude of the loss, it is important to recognize that the partnership is now positioned to return to profitability as early as the fourth quarter of 1992. The implementation of the new business plan designed by Ross and new management is expected to speed a return to profitability. That plan focuses on merging the partnership's three savings bank subsidiaries, eliminating duplicative costs, increasing the volume of mortgage loan originations and retaining servicing of originated loans, tightening underwriting standards, terminating the production of commercial real estate loans and improving risk management and collection efforts. A return by the partnership to core profitability is also dependent upon favorable market conditions.
 For the quarter ended June 30, 1992, the provisions for estimated losses on loans and foreclosed properties were $2.3 million compared to $3.9 million for the same quarter in 1991. Certain segments of the partnership's loan and foreclosed property portfolios continue to be affected by declining real estate values. The second quarter provision for 1992 includes $818,000 to provide for new management's assessment of remaining portfolio losses.
 Ross noted, however, that loans in the 30-59 day and 60-89 day delinquency categories at the partnership's savings bank have decreased in excess of $8 million since Dec. 31, 1991. This represents a decrease of 44 percent in delinquent loans within these categories and, if continued, will have a favorable impact on the partnership's future level of foreclosed properties and non-accrual loans.
 The partnership's operating performance for the second quarter of 1992 was also adversely impacted by management's decision to provide for loss reserves related to amounts due to the partnership from Essex Financial Group, Inc. (EFG), the former general partner, and its subsidiaries. On May 1, 1992, the investment committee of the partnership voted to approve Thrift Management Services I, Inc., as the new interim general partner of the partnership and concurrently to remove EFG as the general partner. Following the change in control, an evaluation of all tro?ns with and amounts receivable from EFG was made to determine the collectibility of amounts due the partnership from EFG. This evaluation led to a provision to provide for a $900,000 specific loss reserve. Furthermore, a one-time charge for legal and personnel severance expenses of $847,000 was incurred by the partnership to complete the change of control.
 The partnership's operating results have also been adversely affected by recent trends in mortgage interest rates. As these rates have declined, there has been an increasing rate of loan prepayment that has impaired the carrying value of purchased mortgage servicing rights, excess servicing, and mortgage loan premiums. As a result of the unanticipated prepayments of loans, additional non-recurring amortization totaling $2.9 million was recognized during the second quarter of 1992.
 On July 1, 1992, a new capital plan for the partnership's North Carolina savings bank, Essex Savings Bank, Inc. (ESB/NC), was submitted to the Office of Thrift Supervision (OTS). As part of the plan, a merger of the partnership's savings banks is proposed. The merger will require that ESB/NC be converted from a state-chartered to a federally-chartered thrift, after which the partnership's Virginia and Florida savings banks will be merged into ESB/NC. North Carolina regulatory authorities have recently approved the conversion plan. The merger is expected to enable ESB/NC to return to full capital compliance within six to 12 months, will allow for significant operating cost savings and will simplify a complex and redundant organizational structure. However, the merger is also subject to federal regulatory approval, and there is no assurance that such approval will be received. A one-time charge of $320,000 in severance costs associated with the proposed merger was incurred by the partnership.
 In summary, Ross indicated his belief that the non-recurrence of the significant second quarter adjustments of approximately $5.8 million, coupled with the immediate implementation and execution of the new business plan, should provide the basis for the partnership's return to profitable operating results. Furthermore, Ross noted that he was encouraged by continued decreases in the levels of foreclosed assets and non-accrual loans, net of specific reserves and the decreases in delinquent loans. The ratio of loan and real estate loss reserves to total assets was 1.82 percent at June 30, 1992, compared to 1.30 percent at Dec. 31, 1991.
 -0- 8/12/92
 /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 -- DC038 -- 6364 08/12/92 16:35 EDT
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Publication:PR Newswire
Date:Aug 12, 1992
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