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POUGHKEEPSTE SAVINGS BANK REPORTS THIRD QUARTER RESULTS AND FURTHER COST-REDUCTION EFFORTS

        POUGHKEEPSTE SAVINGS BANK REPORTS THIRD QUARTER RESULTS
                  AND FURTHER COST-REDUCTION EFFORTS
    POUGHKEEPSIE, N.Y., Nov. 1 /PRNewswire/ -- Poughkeepsie Savings Bank, FSB (NASDAQ: PKPS) today reported a net loss of $3.0 million, or $0.82 per share, for the third quarter of 1991 compared with a net loss of $12.4 million, or $3.49 per share, for the same period in 1990.  The bank had a net loss of $11.0 million, or $3.04 per share, for the first nine months of 1991 compared to a net loss of $31.0 million, or $8.70 per share, for the same period in 1990.  The loss for the first nine months of 1990 reflected income tax benefits of $7.0 million.  The bank has no income tax benefit recognition available in 1991.
    At Sept. 30, 1991, shareholders' equity was $34.8 million.  The bank's tangible capital, core capital and risk-weighted capital ratios were 2.8 percent, 2.8 percent and 5.7 percent, respectively.  As a result, it did not meet the required minimum 3.0 percent core capital and 7.2 percent risk-weighted capital ratios at Sept. 30, 1991.  The bank expects to submit a capital plan to its primary regulator, the Office of Thrift Supervision (OTS) upon receipt of its anticipated capital directive.  The capital plan, which must be reviewed and accepted by the OTS, details the bank's plans to return to capital compliance.
    Non-performing assets net of reserves at Sept. 30, 1991, including loans delinquent 90 days or more, non-accrual loans, loans in foreclosure, other real estate owned and investment in joint ventures, totaled $81.0 million, or 6.6 percent of assets, compared to $74.8 million at June 30, 1991, and $72.1 million at Sept. 30, 1990.
    The provisions for loan losses for the third quarter and first nine months of 1991 were $1.1 million and $5.2 million, respectively, compared with $9.1 million and $24.6 million for the same periods in 1990.  At Sept. 30, 1991, the allowance for loan losses totaled $22.2 million, equivalent to 3.5 percent of total loans (excluding mortgage- backed securities).
    Operating expenses for the third quarter and first nine months of 1991 included $1.3 million and $2.7 million, respectively, of writedowns in value of other real estate owned and investments in joint ventures. This compares to $1.7 million and $7.3 million in writedowns in value of other real estate owned and investments in joint ventures during the same periods in 1990.
    Total assets were $1.2 billion at Sept. 30, 1991.  Loans amounted to $1.0 billion and deposits were $697.6 million.  The bank's deposits are insured by the FDIC.
    Over the past two years, the bank has made progress in reducing certain expenses of its Mid-Hudson community banking operation, particularly compensation expense.  The continuing high cost of resolving problems in the bank's loan portfolios has, however, necessitated more drastic measures.  Earlier, the bank engaged outside experts to identify further cost-reduction opportunities.  Their report projected potential savings of approximately $7.0 million, or 33 percent of the community bank's normalized operating expense.  While it remains uncertain whether the full amount of projected savings can be achieved, various restructuring initiatives are currently underway.  They include a reorganization of the bank, the outsourcing of certain functions, such as data processing, which are now being performed in-house, and significant staff reductions.  The bank anticipates that implementation will be completed by mid-1992.
    Commenting on the cost-reduction project, Christoph H. Schmidt, chairman and chief executive officer, said, "We believe this project to be an integral step in the bank's return to profitability.  It will be difficult, and it will impact all levels of the organization.  As we proceed with our implementation we will continue to be open and honest with our employees and to ensure that our actions are reasonable and fair.  While we hope to attain the $7.0 million target, our efforts will be tempered by our commitment to provide quality products and services to our customers and our community."
    Poughkeepsie Savings Bank is a community banking institution whose principal market is the Mid-Hudson Valley region of New York, where it operates eight branches.  Its Market Street mortgage subsidiary has loan production offices in Florida, Georgia, Virginia and Maryland.
                  POUGHKEEPSIE SAVINGS BANK, FSB
              CONSOLIDATED CONDENSED FINANCIAL DATA
            (Unaudited -- In thousands, except per share)
    Periods Ended                  Three Months          Nine Months
    Sept. 30                     1991       1990       1991       1990
    Net interest income         $4,619     $5,628    $15,752    $19,637
    Provision for loan losses    1,098      9,057      5,158     24,580
    Net interest income (loss)
     after provision             3,521     (3,429)    10,594     (4,943)
    Other income                 3,975      2,460     10,746      4,542
    Other expenses              10,467     11,224     32,303     37,553
    Loss before taxes           (2,971)   (12,193)   (10,963)   (37,954)
    Income tax expense (benefit)    --        233         --     (6,982)
    Net loss                    (2,971)   (12,426)   (10,963)   (30,972)
    Loss per share              $(0.82)    $(3.49)    $(3.04)    $(8.70)
    Net interest spread           1.76       1.61       1.94       1.76
    Net interest margin           1.61       1.66       1.78       1.85
    Return on average
     assets (pct.)               (0.95)     (3.47)     (1.11)     (2.80)
    Return on average
     equity (pct.)              (32.78)    (80.26)    (36.52)    (58.98)
    SELECTED ASSET AND LIABILITY DATA
                                      (Unaudited)
                                        9/30/91       12/31/90
    Total assets                      $1,230,672     $1,355,869
    Net loans                          1,008,350      1,146,958
    Allowance for loan losses             22,194         21,535
    Deposits                             697,596        706,479
    Shareholders' equity                  34,764         45,727
    Book value per share                   $9.65         $12.84
    Earning assets to costs
     liabilities (pct.)                     97.9           96.7
    -0-                   11/1/91
    /CONTACT:  Christoph H. Schmidt, chairman and chief executive officer, 914-431-6211, or Kevin Timmons, senior vice president and treasurer, 914-431-6291, both of Poughkeepsie Savings Bank/
    (PKPS) CO:  Poughkeepsie Savings Bank, FSB ST:  New York IN:  FIN SU:  ERN PS -- NY001 -- 0068 11/01/91 08:31 EST
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Date:Nov 1, 1991
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