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ROCHESTER COMMUNITY REPORTS 8 PERCENT RISE IN NET INCOME FOR 1992 SECOND QUARTER

 ROCHESTER COMMUNITY REPORTS 8 PERCENT RISE IN
 NET INCOME FOR 1992 SECOND QUARTER
 Quarterly earnings are $2.6 million
 ROCHESTER, N.Y., June 24 /PRNewswire/ -- Rochester Community Savings Bank (NASDAQ: RCSB), today reported net income of $2.6 million or $.19 per share for the second quarter ended May 31, 1992, an increase of 7.6 percent from net income of $2.4 million or $.18 per share in the 1991 second quarter. RCSB's net income for the first half of fiscal 1992 of $4.7 million or $.34 per share was 5.3 percent higher than net income of $4.4 million or $.32 per share for the first half of 1991.
 In commenting on RCSB's recent financial performance, Chairman and CEO Leonard S. Simon stated, "Although this level of profitability is modest, we're encouraged that we were able to increase earnings while still moving through the work-out process for commercial real estate. Positive indicators for the future are that retail banking, mortgage banking, and automobile lending continued to perform very well and that our level of nonperforming assets appears to have stabilized. Our capital ratios also remained strong and substantially above regulatory requirements."
 Net interest income was $22.7 million in the 1992 second quarter, compared to $23.3 million in the 1991 second quarter. For the first half of 1992, net interest income was $44.9 million, compared to $47.8 million for the same period in fiscal 1991. Recent levels of net interest income reflect lower earning asset volumes in 1992. RCSB's net interest margin increased to 2.67 percent in the 1992 first half from 2.44 percent in the 1991 first half. The favorable impact of lower funding costs on the margin was partially offset by higher levels of nonperforming assets in 1992. A declining rate environment contributed to an increase in RCSB's interest rate spread for the 1992 first half to 2.85 percent, up from 2.42 percent in the 1991 first half.
 The Bank's provision for loan losses was $4.3 million in the 1992 second quarter, compared to $9.2 million in the 1991 second quarter. Lower levels of loan loss provisions in the recent quarter reflect a shift in the composition of nonperforming assets as a substantial portion of nonaccrual loans has moved to the other real estate (ORE) category. In the 1992 second quarter, provisions for incremental reserves on ORE and joint ventures were taken in the real estate and other category of the Bank's income statement. Simon noted that the higher concentration of ORE provides the Bank with increased control in the management and disposition of nonperforming assets.
 Noninterest income was $22.8 million in the 1992 second quarter, comparable to $22.7 million in the year-ago quarter. On a year-to- date basis, noninterest income increased by 19.1 percent to $39.3 million. For the recent quarter, substantial gains in noninterest income from RCSB's core businesses and securities sales were partially offset by losses of $7.8 million in the real estate and other category. The real estate and other category includes provisions for reserves associated with ORE and the Bank's joint venture investments as well as the operating results of these real estate holdings.
 Mortgage banking income, the largest contributor to noninterest income, increased to $16.0 million in the 1992 second quarter, 41.0 percent higher than the prior year's quarter. Growth in mortgage banking income reflects both strong refinancing and purchase activity, which resulted in record residential mortgage originations of $597.5 million in the 1992 second quarter for American Home Funding (AHF), 53.6 percent higher than originations of $389.1 million in the 1991 second quarter. Noninterest income from retail banking rose 27.0 percent, primarily reflecting continued growth in income from the Bank's insurance and stock brokerage subsidiaries, which operate in the Rochester and New Jersey markets. Despite continued weakness in auto sales, automobile loan banking income remained strong at $6.7 million in the 1992 second quarter, comparable to the year-ago quarter. Securities sale gains of $3.6 million in the recent quarter were largely attributable to mortgage-backed securities sold in anticipation of lower future values due to accelerated prepayments resulting from the widespread refinancing of residential mortgages.
 Simon commented on the strength of the Bank's noninterest income: "Each of our core businesses--retail banking, automobile loan banking and residential mortgage banking--has been an important contributor in the building of our noninterest income base to its current substantial levels. These earnings have been a significant help in reducing the impact of our current commercial real estate problems and also position us to deliver stronger bottom-line results once we put these problems behind us."
 Operating expenses for the second quarter of 1992 were $34.9 million, compared to expenses of $31.2 million in the year-ago quarter. Year-to-date, operating expenses were $66.6 million compared to $58.6 million in 1991. Increased operating expenses were largely due to additional costs associated with record levels of mortgage originations at AHF during the 1992 first half.
 Total assets at May 31, 1992 were $3.84 billion compared to $3.96 billion at the end of fiscal 1991. At May 31, 1992, nonperforming assets were $293.3 million, comparable to the 1992 first quarter level of $294.0 million. ORE, which is carried at the lower of cost or estimated fair value, comprises 60.8 percent of RCSB's nonperforming assets. The Bank's allowance for possible loan losses at May 31, 1992 was $41.5 million, compared to $41.1 million at the 1992 first quarter-end and $32.2 million at the 1991 second quarter- end. In discussing the Bank's nonperforming assets, Simon noted, "Although it will take some time to completely resolve these problems given the current market environment, we're optimistic that RCSB has started to turn the corner on problem assets based on the stabilization we've seen in the last two quarters and the reductions in our nonaccrual loans to their lowest level in the last year."
 Deposits at May 31, 1992 were $2.85 billion, compared to deposits of $2.84
billion at the end of fiscal 1991. Shareholders' equity at May 31, 1992 was $294.4 million or $21.31 per share, compared to $289.2 million or $20.93 per share at 1991 year-end. Under generally accepted accounting principles, RCSB's ratio of equity to assets was 7.66 percent at May 31, 1992 and is the third highest of the nation's 25 largest publicly held thrifts (Source: SNL Thrift Datasource, June 18, 1992).
 Rochester Community Savings Bank is a publicly owned, state-chartered savings bank headquartered in Rochester, New York. The Bank operates 28 retail banking offices in western New York, and through its wholly owned subsidiary, Shadow Lawn Savings Bank, 18 retail banking offices in central New Jersey. RCSB also owns subsidiaries engaged in mortgage banking, automobile financing, insurance, and securities brokerage.
 THE ROCHESTER COMMUNITY SAVINGS BANK AND SUBSIDIARIES
 FINANCIAL HIGHLIGHTS
 (dollars in thousands, except per share amounts)
 Three Months Ended
 May 31,
 1992 1991
 Income Statement Data:
 Interest income $ 71,078 $ 93,543
 Interest expense 48,398 70,224
 Net interest income 22,680 23,319
 Provision for loan losses 4,273 9,222
 Net interest income after
 provision for loan losses 18,407 14,097
 Noninterest income:
 Mortgage banking 15,964 11,326
 Retail banking 4,421 3,480
 Automobile loan banking 6,707 6,682
 Securities sale gains 3,555 2,795
 Real estate and other (7,826) (1,630)
 Total noninterest income 22,821 22,653
 Operating expenses 34,901 31,223
 Income before taxes 6,327 5,527
 Income tax provision 3,705 3,090
 Net income $ 2,622 $ 2,437
 Net income per share $ 0.19 $ 0.18
 Six Months Ended
 May 31,
 1992 1991
 Income Statement Data:
 Interest income $146,081 $188,224
 Interest expense 101,134 140,472
 Net interest income 44,947 47,752
 Provision for loan losses 6,759 13,041
 Net interest income after
 provision for loan losses 38,188 34,711
 Noninterest income:
 Mortgage banking 26,631 18,796
 Retail banking 8,266 6,180
 Automobile loan banking 8,991 8,139
 Securities sale gains 12,015 2,416
 Real estate and other (16,583) (2,515)
 Total noninterest income 39,320 33,016
 Operating expenses 66,572 58,588
 Income before taxes 10,936 9,139
 Income tax provision 6,277 4,716
 Net income $ 4,659 $ 4,423
 Net income per share $ 0.34 $ 0.32
 May 31, Nov. 30, May 31,
 1992 1991 1991
 Balance Sheet Data:
 Assets $3,844,739 $3,962,687 $4,351,707
 Investment securities 71,801 98,325 180,364
 Mortgage-backed securities 627,845 693,307 850,633
 Loans receivable, net 2,438,205 2,472,223 2,722,530
 Deposits 2,851,783 2,844,361 2,768,176
 Borrowings 463,457 659,596 1,059,833
 Shareholders' equity 294,422 289,208 324,352
 Book value per share 21.31 20.93 23.48
 Shares outstanding (000s) 13,816 13,816 13,816
 Equity as a percent
 of assets 7.66 pct. 7.30 pct. 7.45 pct.
 -0- 6/24/93
 /CONTACT: Richard Dye of Rochester Community Savings Bank, 716-423-7363/
 (RCSB) CO: Rochester Community Savings Bank ST: New York IN: FIN SU: ERN


LC -- CL005 -- 3224 06/24/92 10:50 EDT
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Date:Jun 24, 1992
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