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FIRSTFED ANNOUNCES THIRD QUARTER EARNINGS

 FIRSTFED ANNOUNCES THIRD QUARTER EARNINGS
 SANTA MONICA, Calif., Oct. 22 /PRNewswire/ -- FirstFed Financial


Corp. (NYSE: FED), holding company for First Federal Bank of California, today announced net earnings of $703,000 or $0.06 per share of common stock for the third quarter of 1992 compared to $8.2 million or $0.75 per share for the third quarter of 1991. Net earnings for the second quarter of 1992 were $8.0 million or $0.73 per share. All per share comparisons are based on shares outstanding after the five-for-four stock split declared Sept. 26, 1991 and distributed Oct. 31, 1991.
 William S. Mortensen, chairman and chief executive officer of FirstFed, commented, "The decrease in earnings compared to the prior year period results from our decision to add $18.1 million to loan loss reserves during the third quarter. These additional reserves were necessitated by a decline in real estate values in certain areas affected by the recent civil unrest in Los Angeles and the continuing economic slump in Southern California." He added, "Our core earnings remained strong during the quarter."
 Net earnings for the first nine months of 1992 were $15.4 million or $1.42 per share, compared to $24.2 million or $2.22 per share for the first nine months of 1991.
 In previous periods, the bank did not give benefit to bad debt deductions for California purposes. During the third quarter, it was determined that an income tax benefit in the amount of $2.2 million after reduction for federal taxes should be recorded.
 The bank added $18.1 million in loan loss reserves during the quarter. Total loss provisions for the first nine months of the year were $34.7 million. The bank's ratio of general loss reserves to loans with loss exposure increased substantially to 0.95 percent at the end of the third quarter from 0.60 percent at the end of the second quarter. In response to the recent civil unrest and the continued weakness in the Southern California economy, the bank undertook a detailed analysis of its loan portfolio during the quarter. The portfolio was evaluated on a variety of factors including property location, date of origination and loan-to-value ratio. The decision to add substantial reserves was based on this study. Management remains concerned about the Southern California economy and the impact that the continued recession could have on the collateral securing its mortgage portfolio.
 Loan charge-offs during the third quarter were $9.2 million, compared to $4.3 million during the second quarter and $1.4 million during the third quarter of 1991. The increase in charge-offs is primarily because of identified losses on loans secured by multifamily properties in areas impacted by the recent civil unrest in the Los Angeles area. Year-to-date charge-offs for the first nine months of 1992 were $18.6 million, compared to $1.9 million for the same period during 1991.
 Non-performing assets were 2.76 percent at Sept. 30, 1992, compared to 2.08 percent at Sept. 30, 1991 and 2.96 percent at June 30, 1992. The increase from the prior year is the result of the continued weakness in the Southern California economy over the last year and the resulting delinquencies and foreclosures on both single- family and multifamily loans. The decrease from June 30, 1992 is the result of a correction in the classification of loans with limited recourse. These loans are sold with a maximum "loss" exposure to the bank. The bank fully reserves its loss exposure for these loans, and they should not have been considered part of the bank's loan portfolio. If the ratio of non-performing assets to total assets at June 30, 1992 and Sept. 30, 1991 were calculated on this same basis, the non-performing asset ratios for those periods would have been 2.62 percent and 2.01 percent, respectively.
 Real estate operations (resulting from the sale and operation of foreclosed properties) produced net gains of $1.3 million for the third quarter and $2.4 million for the first nine months. These gains generally represent recoveries of reserves previously provided by management. As a result of the bank's policy to sell problem assets as quickly as feasible, the bank sold real estate owned of $26.6 million during the quarter. This compares to $11.6 million for the same quarter of the prior year and $11.1 million for the second quarter of this year.
 Because of continued declines in interest rates, margins remained strong throughout the third quarter and first nine months of the year. The bank continued to benefit from the "lag effect" inherent in its portfolio of adjustable rate loans during the third quarter. The bank's interest rate margins of 2.80 percent for the quarter and 2.98 percent for the first nine months of the year were greater than its theoretical margin of 2.60 percent because of this lag effect. Comparable margins for the same quarter and year-to-date period of last year were 3.15 percent and 2.95 percent, respectively.
 Net interest income decreased by 6 percent compared to the third quarter of last year because of increases in non-performing loans and the acceleration of amortization of deferred servicing gains because of increased loan payoffs. On a year-to-date comparative basis, net interest income increased by 6 percent because of slightly higher interest rate margins and growth in interest-bearing assets.
 During the first quarter of 1992, the bank added $1.7 million to its reserve for interest on potential federal tax adjustments. The reserve was established during the third quarter of 1991 with an initial amount of $2.3 million. The potential adjustments relate to industry-wide tax issues with the IRS that may involve litigation. Interest expense of approximately $150,000 per month is being accrued during 1992 for this potential liability. At Sept. 30, 1992, the interest reserve was $5.3 million.
 Results for the first nine months include a $3.1 million tax benefit recorded during the first quarter as a result of implementing Statement of Financial Accounting Standards No. 109 (SFAS No. 109).
 Loan originations reached $209.9 million for the third quarter, which is comparable to the same quarter of the prior year and slightly less than the second quarter of 1992. The bank continues to focus its efforts on the origination and retention of adjustable rate loans. Adjustable rate loans comprised 85 percent of loans originated during the third quarter. At Sept. 30, 1992, adjustable rate loans comprised 97.0 percent of loans in the total loan portfolio. Adjustable rate loans have been greater than 95 percent of the bank's loan portfolio for the past two years.
 The bank's risk-based capital ratio was 9.51 percent at the end of the third quarter, substantially higher than the regulatory requirement of 7.2 percent. Effective Dec. 31, 1992, the risk-based capital requirement will increase to 8.0 percent. The tangible and core capital ratios were 5.65 percent and 5.76 percent, respectively, at the end of the third quarter, compared with regulatory requirements of 1.5 percent and 3 percent, respectively.
 Mortensen stated that the bank's management continues to focus on resolving problem loan situations and on producing long-term, sustained earnings for stockholders. He commented, "We believe that the Southern California real estate market has not yet stabilized, and we continue to dedicate significant management time and effort towards resolving problem loan situations. We are concentrating our efforts on returning problem assets to interest-earning status so that they will not be a drain on earnings."
 FirstFed Financial Corp. is the holding company for First Federal Bank of California. The company has 24 full-service savings offices and eight loan offices in Southern California.
 Key financial results follow.
 FIRSTFED FINANCIAL CORP. AND SUBSIDIARY
 Key Financial Results
 Three months ended
 Sept. 30,
 1992 1991
 Net earnings $703,000 $8,246,000
 Earnings per share(a):
 Primary $0.06 $0.75
 Fully diluted $0.06 $0.75
 Book value per share(a) $19.48 $17.98
 Weighted average shares
 outstanding(a):
 Primary 10,862,049 10,927,915
 Fully diluted 10,865,412 10,928,014
 Assets $3,483,822,000 $3,278,143,000
 Loans $3,176,075,000 $2,971,072,000
 Deposits $1,873,922,000 $1,738,221,000
 Borrowings $1,342,591,000 $1,260,283,000
 Stockholders' equity $202,345,000 $185,354,000
 Loan originations $209,922,000 $201,754,000
 Net interest income $24,882,000 $26,480,000
 Non-performing assets to
 total assets 2.76 pct. 2.08 pct.
 Net worth to assets ratio 5.81 pct. 5.65 pct.
 Tangible capital ratio 5.65 pct. 5.61 pct.
 Core capital ratio 5.76 pct. 5.61 pct.
 Risk-based capital ratio 9.51 pct. 9.41 pct.
 Interest rate spread during
 the period 2.80 pct. 3.15 pct.
 Percent adjustable mortgages 97.02 pct. 95.80 pct.
 Expense ratios:
 Percent gross income 18.25 pct. 11.52 pct.
 Percent average assets 1.39 pct. 1.08 pct.
 One year "gap" percent of assets 11.50 pct. 7.53 pct.
 Return on average assets 0.08 pct. 1.03 pct.
 Return on average equity 1.39 pct. 18.19 pct.
 Nine months ended
 Sept. 30,
 1992 1991
 Net earnings $15,449,000 $24,208,000
 Earnings per share(a):
 Primary $1.42 $2.22
 Fully diluted $1.42 $2.22
 Book value per share(a) $19.48 $17.98
 Weighted average shares
 outstanding(a):
 Primary 10,912,514 10,887,364
 Fully diluted 10,912,522 10,918,423
 Assets $3,483,822,000 $3,278,143,000
 Loans $3,176,075,000 $2,971,072,000
 Deposits $1,873,922,000 $1,738,221,000
 Borrowings $1,342,591,000 $1,260,283,000
 Stockholders' equity $202,345,000 $185,354,000
 Loan originations $630,802,000 $493,885,000
 Net interest income $78,990,000 $74,391,000
 Non-performing assets to
 total assets 2.76 pct. 2.08 pct.
 Net worth to assets ratio 5.81 pct. 5.65 pct.
 Tangible capital ratio 5.65 pct. 5.61 pct.
 Core capital ratio 5.76 pct. 5.61 pct.
 Risk-based capital ratio 9.51 pct. 9.41 pct.
 Interest rate spread during
 the period 2.98 pct. 2.95 pct.
 Percent adjustable mortgages 97.02 pct. 95.80 pct.
 Expense ratios:
 Percent gross income 16.94 pct. 12.98 pct.
 Percent average assets 1.38 pct. 1.27 pct.
 One year "gap" percent of assets 11.50 pct. 7.53 pct.
 Return on average assets 0.61 pct. 1.03 pct.
 Return on average equity 10.50 pct. 18.61 pct.
 (a) These 1991 amounts have been adjusted for the five-for-four stock split declared effective on Sept. 26, 1991, and distributed on Oct. 31, 1991.
 FIRSTFED FINANCIAL CORP. AND SUBSIDIARY
 Consolidated Statements of Financial Condition
 (In thousands)
 Sept. 30, 1992 Dec. 31, 1991
 (unaudited)
 Assets
 Cash and cash equivalents $133,438 $156,575
 U.S. government and other
 securities, at cost
 (market of $33,499 and $16,991) 32,390 16,172
 Loans receivable 2,554,264 2,322,232
 Mortgage-backed securities
 (market of $549,724 and $540,958) 532,988 519,499
 Loans and mortgage-backed
 securities held for sale
 (market of $91,381 and $159,445) 88,823 154,115
 Accrued interest and dividends
 receivable 24,036 28,798
 Real estate 41,631 25,786
 Office properties and equipment, net 9,779 8,748
 Investment in Federal Home Loan
 Bank stock, at cost 42,542 28,220
 Other assets 23,931 26,914
 Total $3,483,822 $3,287,059
 Liabilities
 Deposits $1,873,922 $1,740,103
 Federal Home Loan Bank advances
 and other borrowings 1,342,591 1,280,372
 Income taxes payable 18,150 31,039
 Accrued expenses and other
 liabilities 46,814 45,369
 Total 3,281,477 3,096,883
 Contingent Liabilities
 Stockholders' Equity
 Common stock, par value $.01 per
 share; authorized 25,000,000
 shares; issued 11,003,438 and
 10,921,891 shares, outstanding
 10,388,018 and 10,405,271
 shares 110 109
 Additional capital 24,033 23,674
 Retained earnings -- substantially
 restricted 189,043 173,594
 Loan to employee stock
 ownership plan (3,875) (1,965)
 Treasury stock, at cost, 615,420
 and 516,620 shares (6,966) (5,236)
 Total 202,345 190,176
 Total liabilities and
 stockholders' equity $3,483,822 $3,287,059
 FIRSTFED FINANCIAL CORP. AND SUBSIDIARY
 Consolidated Statements of Operations
 (Unaudited)
 (In thousands)
 Three months ended Nine months ended
 Sept. 30, Sept. 30,
 1992 1991 1992 1991
 Interest income:
 Interest on loans $60,261 $71,479 $190,404 $219,063
 Interest and dividends
 on investments 1,386 2,178 5,027 6,655
 Total interest income 61,647 73,657 195,431 225,718
 Interest expense:
 Interest on deposits 21,343 28,092 67,567 89,284
 Interest on borrowings 15,422 19,085 48,874 62,043
 Total interest expense 36,765 47,177 116,441 151,327
 Net interest income 24,882 26,480 78,990 74,391
 Provision for loan
 losses 18,098 3,363 34,661 5,570
 Net interest income
 after provision for
 loan losses 6,784 23,117 44,329 68,821
 Other income (expense):
 Loan and other fees 1,405 1,499 4,425 4,527
 Gain on sale of loans 615 268 1,764 842
 Real estate operations,
 net 1,250 (685) 2,431 (1,350)
 Other operating income 807 392 1,700 975
 Total other income 4,077 1,474 10,320 4,994
 Non-interest expense 11,993 8,658 34,863 29,935
 Earnings (loss) before
 income taxes (1,132) 15,933 19,786 43,880
 Income tax provision
 (benefit) (1,835) 7,687 7,412 19,672
 Earnings before
 cumulative effect of
 change in accounting
 principle 703 8,246 12,374 24,208
 Cumulative effect of
 change in accounting
 principle --- --- 3,075 ---
 Net earnings $703 $8,246 $15,449 $24,208
 Primary earnings
 per share(a) $0.06 $0.75 $1.42 $2.22
 Fully diluted earnings
 per share(a) $0.06 $0.75 $1.42 $2.22
 (a) 1991 earnings per share figures have been adjusted for the five-for-four stock split declared on Sept. 26, 1991, and distributed on Oct. 31, 1991.
 -0- 10/22/92
 /CONTACT: Martin Gottlieb, executive VP of FirstFed Financial, 310-319-6000/
 (FED) CO: Firstfed Financial Corp. ST: California IN: FIN SU: ERN


KJ-LS -- LA010 -- 3332 10/22/92 09:06 EDT
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