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NORTHEAST FEDERAL REPORTS FIRST QUARTER NET INCOME

 Hartford, Conn., April 9 /PRNewswire/ -- Northeast Federal Corp. (Northeast Federal or the Company) (NYSE: NSB), the holding company for Northeast Savings, F.A., (Northeast Savings or the Association) today reported first quarter net income of $141,000, or a primary and fully diluted net loss per common share of 26 cents after preferred stock dividend requirements. This compares to net income of $197,000, or a primary and fully diluted net loss per common share of 33 cents for the same period in 1992.
 Commenting on the first quarter results, George Rutland, chairman and chief executive officer said, "As we expected, the ongoing recession in California and New England continues to negatively impact the Company's earnings and level of non-performing assets. The Company's major focus for 1993 is to reduce its overall level of non-performing assets while carefully preserving our capital position."
 At March 31, 1993, the Association continued to exceed all fully phased-in regulatory capital requirements:
 Fully Phased-in March 31, Dec. 31, March 31,
 Regulatory Capital Regulatory 1993 1992 1992
 Requirement Capital Required Regulatory Regulatory Regulatory
 Capital Capital Capital
 (dollars in thousands)
 Tangible core
 capital $ 59,640 $170,852 $170,394 $120,592
 Percent 1.50 pct. 4.30 pct. 4.36 pct 21 pct.
 Core capital $159,068 $171,563 $171,163 $159,155
 Percent 4.00 pct. 4.31 pct. 4.38 pct. 4.24 pct.
 Risk-based capital $150,416 $191,491 $191,465 $175,721
 Percent 8.00 pct. 10.18 pct. 10.00 pct. 9.40 pct.
 The Association's capital ratios remain basically unchanged, with a slight increase in the risk-based capital ratio and a small decrease in the tangible and core captial ratios. The decreases are a result of the Association's increased asset size. Total assets at March 31, 1993 were $4.0 billion compared to $3.9 billion at Dec. 31, 1992 and $3.8 billion at March 31, 1992.
 Net interest income for the current quarter was $19.8 million, $911,000 lower than the comparable quarter in 1992, primarily due to a decrease in the Company's interest rate spread which dropped to an average of 2.17 percent vs. 2.42 percent for the quarter ended March 31,1992. For the same respective periods, the Company's interest rate margin was 2.10 percent and 2.37 percent.


The reduced interest rate spread resulted from several factors. First was an increase of $22.7 million in the level of non-performing assets from March 31, 1992. Second, yields on adjustable rate mortgage loans declined due to loan repricing and higher than normal prepayments. Third, although the total cost of funds was lower in the current quarter than in the same quarter last year, the drop in the cost of funds was not as large as the decrease in mortgage yields. Finally, the interest rate spread was negatively impacted by the Rhode Island Depositors Economic Protection Corporation's repurchase of certain loans which were acquired by Northeast in the 1992 Rhode Island acquisitions.
 The provision for loan losses for the quarter ended March 31, 1993 was $4.9 million, down from $7.5 million for the quarter ended Dec. 31, 1992, but up from $2.8 million for the same quarter last year. The allowance for loan losses has also increased, totaling $21.4 million and $17.1 million at March 31, 1993 and March 31, 1992, respectively.
 Non-performing assets, which include non-accrual loans and real estate and other assets acquired in settlement of loans (REO), totaled $196.0 million at March 31, 1993, compared to $194.4 million at Dec. 31, 1992, and $173.3 million at March 31, 1992. Non-accrual loans were $93.0 million at March 31, 1993, compared to $95.0 million and $112.1 million at Dec. 31, 1992 and March 31, 1992, respectively. At March 31, 1993, approximately 92.5 percent of these non-accrual loans were collateralized by first mortgages on single-family residential properties, virtually all of which have an original loan-to-value ratio of 80 percent or less. On April 7, 1993, the Association sold its portion of a non-accrual income property loan participation at its net book value. The net book value of $4.9 million, which represented the Association's portion of the participation, was included in income property non-accrual loans at March 31, 1993.
 REO was $103.0 million, $99.4 million and $61.2 million at March 31, 1993 and Dec. 31, and March 31, 1992, respectively. Increases in REO have resulted primarily from increased foreclosures on single-family residential real estate, which are symptomatic of the depressed housing markets in New England and California. Expenses relating to REO have increased only moderately, totaling $2.6 million and $2.1 million for the quarters ended March 31, 1993 and 1992, respectively.
 Non-interest income, which includes fee income, gains on sales of securities and loans, and other non-interest income, totaled $7.0 million and $3.6 million for the quarters ended March 31, 1993 and 1992, respectively. For the same respective quarters, fee income totaled $2.8 million and $2.5 million. For the quarter ended March 31, 1993, net gains on sales of securities totaled $3.9 million, an increase of $2.2 million from the same quarter last year. Included in net gains on investment securities are $1.1 million in realized capital gains allocated to the Association by two limited partnerships. The remaining net gains on securities were from sales of securities in the held-for- sale portfolio.
 General and administrative expenses were $17.3 million for the quarter ended March 31, 1993, compared to $16.0 million for the same quarter in 1992. The primary reasons for this increase include the Association's increased number of branches as well as other management costs resulting from the 1992 acquisitions of branches from ComFed and FarWest, the acquisition of assets from the Rhode Island financial institutions, and higher costs related to non-performing assets.
 Single-family residential mortgage loan originations, the Association's ongoing principal use of capital resources, were $178.8 million and $139.5 million for the quarters ended March 31, 1993 and 1992, respectively.
 For the last thirteen quarters, the Board of Directors has suspended the quarterly dividend on Northeast Federal's $2.25 Cumulativeeries A, into 4.75 shares of common stock. The record date for voting on such conversion was March 30, 1993. A special meeting, to be held May 7, 1993, has been called to consider and vote on the conversion.
 Northeast Savings, F.A. is one of the largest thrift institutions based in New England, with almost 160 years of service to its customers. Northeast Savings operates 54 retail branches throughout New York, Connecticut, Massachusetts, Rhode Island, and Southern Califonia, and has mortgage lending offices in San Diego, Calif. Fairfield, Conn.; Denver, Colo.; and Portland, Ore.
 NORTHEAST FEDERAL CORP. AND SUBSIDIARIES
 CONSOLIDATED STATEMENT OF OPERATIONS
 (In Thousands Except Per Share Amounts)
 Three Months Ended
 March 31,
 1993 1992
 CONSOLIDATED OPERATIONS:
 (Unaudited)
 Total interest income $57,448 $69,969
 Total interest expense 37,695 49,305
 Net interest income 19,753 20,664
 Provision for loan losses 4,850 2,800
 Net interest income after
 provision for loan losses 14,903 17,864
 Gain on sale of securities,
 net 3,861 1,661
 Gain on sale of loans, net 322 595
 Other income 2,852 1,377
 General and administrative
 expenses 17,272 16,038
 Amortization of supervisory
 goodwill - 993
 SAIF insurance fund and
 OTS assessments 1,783 2,037
 REO Operations 2,627 2,052
 Income before income taxes
 and extraordinary items 256 377
 Income tax expense 115 198
 Income before extraordinary
 items 141 179
 Extraordinary items, net of tax - 18
 Net income $141 $197
 Preferred stock dividend
 requirement $1,653 $2,071
 Loss before extraordinary
 items applicable to
 common stockholders ($1,512) ($1,892)
 Net loss applicable to
 common stockholders ($1,512) ($1,874)
 Loss per common share before
 extraordinary items:
 Primary and fully diluted ($0.26) ($0.33)
 Net loss per common share:
 Primary and fully diluted ($0.26) ($0.33)
 Average shares for the
 calculation of earnings
 per share:
 Primary 5,773,813 5,720,179
 Fully diluted 5,773,813 5,720,179
 March 31, December 31, March 31,
 1993 1992 1992
 FINANCIAL CONDITION:
 (Unaudited, In Thousands)
 Total assets $3,979,720 $3,910,104 $3,821,342
 Investments 258,673 275,120 511,361
 Mortgage-backed securities 998,903 885,246 680,752
 Real estate acquired in
 settlement of loans 103,002 99,376 61,208
 Loans 2,317,903 2,311,110 2,364,443
 Retail deposits 3,109,909 3,205,654 3,462,339
 Brokered deposits 25,701 25,135 25,700
 Borrowings 620,266 466,564 56,546
 Stockholders' equity 138,023 137,573 191,024
 Book Value $8.12 $8.42 $12.21
 Tangible Book Value $8.12 $8.42 $1.79


Book value per share is calculated using stockholders' equity less preferred equity less dividends in arrears,

while tangible book value per share is calculated using stockholders' equity less preferred equity less

supervisory goodwill, when applicable, less dividends in arrears.
 -0- 4/9/93
 /CONTACT: George P. Rutland, chairman of the board and chief executive officer, 203-280-1100; Kirk W. Walters, president, chief operating officer and chief financial officer, 203-280-1183, both of Northeast Federal/
 (NSB)


CO: Northeast Federal Corp. Northeast Savings, F.A. ST: Connecticut IN: FIN SU: ERN

CH -- NE002 -- 4539 04/09/93 11:46 EDT
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