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HOME FEDERAL FINANCIAL THIRD QUARTER EARNINGS INCREASE 56 PERCENT; NET INCOME TOTALS $1.4 MILLION OR 41 CENTS PER SHARE

 SAN FRANCISCO, Oct. 28 /PRNewswire/ -- Home Federal Financial Corp. (NASDAQ: HFSF), the parent company of Home Federal Savings and Loan Association of San Francisco, today reported net income increased 56 percent to $1.4 million or 41 cents per share, in the third quarter ended Sept. 30, 1993, compared to $900,000 or 27 cents per share, in the third quarter 1992. All per share figures have been adjusted to reflect the 10 percent stock dividend paid March 15, 1993, and the additional 10 percent stock dividend declared Oct. 14, 1993, which will be paid Nov. 15, 1993.
 During the nine months ended Sept. 30, 1993, Home Federal earned $4.6 million or $1.35 per share, compared to $4.3 million or $1.29 per share, during the same period in 1992. Earnings during the first nine months of 1993 reflect improved asset quality and reduced amortization of premium on loan sales which resulted in improved results from loan servicing operations. Earnings were also boosted by a one- time benefit of $300,000 resulting from a change in accounting for income taxes in accordance with SFAS No. 109 which the company had implemented in the first quarter of 1993.
 Stanley E. Bailey, chief executive officer, said, "In 1993, operations have focused on improving non-performing assets, building a loan origination effort that can profitably compete with the expanded number of non-bank financing companies in the Bay Area, and building the company's loan portfolio through purchases of well-secured residential mortgages. To maintain the quality in the portfolio, every loan purchased undergoes rigorous payment performance and underwriting review, including an on-site property review." During the three months ended Sept. 30, 1993, Home Federal's loan originations totaled $36.8 million, unchanged from the like quarter a year ago. Home Federal also purchased $62.3 million of loans and mortgage backed securities in the third quarter compared to $22.6 million in last year's third quarter.
 Total non-performing assets, including real estate owned through foreclosure, decreased 36 percent to $10.9 million or 1.60 percent of assets, at Sept. 30, 1993, compared to $17.1 million, or 2.53 percent of assets one year ago. Home Federal non-performing assets totaled $14.0 million, or 1.99 percent of assets at the close of 1992. "Our policies towards non-performing assets are prevention, strict conformance to loan contracts with consideration for equitable workouts when appropriate, and managing foreclosed properties for quick conversion to an earning asset," said Bailey.
 Net interest income after provision for loan losses, for the three months ended Sept. 30, 1993, were $5.3 million compared to $5.7 million in the like period of 1992. Bailey commented that during the quarter, the yields on the company's portfolio of predominantly adjustable rate loans and investments have continued to decline somewhat faster than rates paid on deposit accounts.
 At Sept. 30, 1993 Home Federal had total assets of $679.5 million and an "off balance sheet" portfolio of loans serviced for others that totaled $310.2 million. At the end of the quarter, Home Federal's tangible capital ratio was 7.49 percent and its risk-based capital ratio was 14.0 percent. The Association's capital ratios significantly exceed federal requirements and place Home Federal in the "well capitalized" category, enabling the company to pay the lowest Federal Deposit Insurance Corp. (FDIC) insurance premium on savings accounts.
 Home Federal Financial Corp.'s thrift institution subsidiary, Home Federal Savings and Loan Association of San Francisco, operates fifteen offices in Northern California, nine of which are in the Bay Area. The Association has been serving Northern California savers and home owners since 1936.
 HOME FEDERAL FINANCIAL CORP.
 FINANCIAL HIGHLIGHTS
 (Unaudited; Dollars in thousands)
 Third Quarter Ended Nine Months Ended
 Sept. 30, 1993 1992 1993 1992
 Interest income $11,744 $12,888 $36,051 $40,043
 Interest expense $ 6,207 $ 7,129 $19,104 $22,547
 Provision for loan
 losses $ 250 $ 100 $ 625 $ 647
 Net interest income
 after provision for
 loan losses $ 5,287 $ 5,659 $16,322 $16,849
 Non-interest income
 Loan service fees $ 440 $ 550 $ 1,443 $ 2,210
 Amortization of deferred
 premium on loan sales $( 300) $( 937) $(1,551) $(3,297)
 Other fees $ 194 $ 215 $ 629 $ 679
 Gain on sale of loans
 and securities $ 437 $ 508 $ 1,862 $ 2,633
 Other income $ 148 $ 64 $ 384 $ 292
 Income (loss) from real
 estate operations $ 4 $( 881) $( 253) $(1,335)
 Total non-interest
 income $ 923 $( 481) $ 2,514 $ 1,182
 Non-interest expense $ 3,724 $ 3,548 $11,425 $10,354
 Income tax provision $ 1,078 $ 730 $ 3,113 $ 3,338
 Net operating income $ 1,408 $ 900 $ 4,298 $ 4,339
 Cumulative effect of
 change in accounting $ -0- $ -0- $ 300 $ -0-
 Net income $ 1,408 $ 900 $ 4,598 $ 4,339
 Earnings per share(A) $ .41 $ 0.27 $ 1.35 $ 1.29
 Weighted average shares
 outstanding(A) 3,401,352 3,371,218 3,395,869 3,360,305
 Sept. 30, 1993 Dec. 31, 1992
 Total assets $679,514 $704,314
 Stockholders' equity $ 51,851 $ 48,471
 Book value per share(A) $ 15.83 $ 14.85
 Tangible book value
 per share(A) $ 15.54 $ 14.50
 (A) Adjusted to reflect the 10 percent stock dividend distributed March 15, 1993, and the 10 percent stock dividend declared Oct. 14, 1993, which is to be distributed Nov. 15, 1993.
 ADDITIONAL FINANCIAL HIGHLIGHTS
 (RATIOS ANNUALIZED)
 (Dollars in thousands)
 3rd Quarter Ended 1993 1992
 Return on average assets 0.84 pct. 0.56 pct.
 Return on average equity 10.96 pct. 7.58 pct.
 Efficiency ratio (operating
 expense / revenue) 57.6 pct. 67.2 pct.
 Operating expense / average assets 2.22 pct. 2.21 pct.
 Net interest margin 3.43 pct. 3.74 pct.
 Average financial assets /
 Average financial liabilities 106.35 pct. 106.17 pct.
 Average equity / average loans &
 mortgage-backed securities 8.62 pct. 8.76 pct.
 Number of full-time equivalent
 employees 196 194
 Earnings per employee $ 7,184 $ 4,639
 Assets per employee $ 3,467 $ 3,492
 Stockholders' equity to assets 7.63 pct. 7.02 pct.
 Tangible capital ratio 7.49 pct. 6.50 pct.
 Core capital ratio (subject to
 final adjustment) 7.60 pct. 6.67 pct.
 Risk-based capital ratio (subject to
 final adjustment) 13.96 pct. 12.45 pct.
 LOANS:
 LOAN ORIGINATIONS:
 Volume
 Refinance $ 25,769 $ 29,925
 Purchase $ 11,017 $ 6,853
 Percent
 Refinance 70.1 pct. 81.4 pct.
 Purchase 29.9 pct. 18.6 pct.
 LOANS BY COLLATERAL TYPE:
 Residential real estate $384,853 $352,744
 Multifamily real estate $ 44,122 $ 16,039
 Commercial real estate $ 87,712 $106,242
 Construction $ 526 $ 1,391
 Consumer $ 1,332 $ 986
 Total loan gross receivables $518,545 $477,402
 ADDITIONAL FINANCIAL HIGHLIGHTS
 (RATIOS ANNUALIZED)
 ALLOWANCE FOR LOAN LOSSES(Dollars in thousands):
 3rd Quarter Ended 1993 1992
 Balance at beginning of quarter $ 2,510 $ 2,500
 Provision for loan losses $ 250 $ 100
 Charge offs (net of recoveries) $( 161) $ -0-
 Balance at end of quarter $ 2,599 $ 2,600
 Loan loss allowance / total net
 loans (excluding loans held
 for sales) 0.50 pct. 0.55 pct.
 Loan loss allowance /
 non-performing loans 45.2 pct. 34.1 pct.
 ALLOWANCE FOR REO LOSS:
 Balance at beginning of quarter $ 473 $ -0-
 Provision for REO loss $ -0- $ 847
 (Charge offs) recoveries, net $ 220 $( 847)
 Balance at end of quarter $ 693 $ -0-
 REO loss allowance / total REO 13.5 pct. -0- pct.
 NON-PERFORMING ASSETS:
 Non-accrual loans (90 days
 past due)(B) $ 5,754 $ 7,635
 Total non-performing loans $ 5,754 $ 7,635
 REO $ 5,150 $ 9,491
 Total non-performing assets $ 10,904 $ 17,126
 Total non-performing assets /
 total assets 1.60 pct. 2.53 pct.
 Loan and REO loss allowance as a
 percent of non-performing assets 30.2 pct. 15.2 pct.
 (B) All loans 90 days past due are placed in non-accrual status.
 -0- 10/28/93
 /CONTACT: John Okubo, executive vice president/chief financial officer, of Home Federal Financial, 415-982-4560/
 (HFSF)


CO: Home Federal Financial Corp. ST: California IN: FIN SU: ERN

JH -- SE003 -- 7681 10/28/93 07:51 EDT
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