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ROCHESTER COMMUNITY REPORTS FIRST QUARTER EARNINGS OF $2.5 MILLION Earnings Per Share Increase 20 Percent to $.18

 ROCHESTER, N.Y., March 24 /PRNewswire/ -- Rochester Community Savings Bank (NASDAQ: RCSB), today reported net income of $2.5 million or $.18 per share for the first quarter ended February 28, 1993, an increase of 21.9 percent from net income of $2.0 million or $.15 per share in the 1992 first quarter. First quarter results reflect increased net interest income and a lower effective income tax rate, which were offset by provisions for nonperforming assets and anticipated reductions in noninterest income.
 RCSB Chairman and CEO, Leonard S. Simon commented, "First quarter profits are up over 20 percent from last year, but are still at a level below RCSB's potential because problem commercial real estate assets remain a significant drag on earnings. Consequently, achieving substantial reductions in these assets while keeping capital strong will be RCSB's major focus in 1993." Simon added that RCSB has retained the investment banking firm of Bear Stearns to assist the Bank in evaluating strategies and developing a program that would accomplish this key objective.
 Net interest income rose 23.1 percent to $27.4 million in the 1993 first quarter, up from $22.3 million in the 1992 first quarter, due to the combination of a favorable interest rate environment, an increase in certain higher-yielding assets, and declines in borrowed funds. RCSB's net interest margin increased to a record 3.40 percent in the 1993 first quarter from 2.64 percent in the 1992 first quarter, while its interest rate spread for the 1993 first quarter rose to a record 3.47 percent, up from 2.87 percent in the 1992 first quarter. Simon commented, "The substantial improvements in net interest income, margin and spread all point to increasing strength in our traditional banking activities. Also, our recent decision to hold auto loans in RCSB's portfolio, rather than securitizing and selling these loans, has added to interest income."
 The provision for loan losses was $3.1 million in the first quarter of 1993, compared to $2.5 million in the first quarter of 1992, reflecting increases in reserves consistent with higher levels of auto loans in the Bank's loan portfolio. The Bank's allowance for possible loan losses at February 28, 1993 was $39.1 million, comparable to reserves of $38.1 million at 1992 year-end and $41.1 million at the 1992 first quarter-end.
 Noninterest income was $12.8 million in the 1993 first quarter, compared to $16.5 million in the 1992 first quarter. Increases in noninterest income from mortgage banking and retail banking were offset by reduced levels of income from automobile loan banking and securities sale gains, as well as continued losses in the real estate and other category, although at lower levels than the year-ago quarter.
 Mortgage banking income, the largest component of noninterest income, increased to $13.8 million in the 1993 first quarter, 29.0 percent higher than the prior year's quarter. Noninterest income from retail banking rose 10.7 percent, largely reflecting increased fee income from the Bank's insurance brokerage subsidiary, Community Guardian Insurance Agency, Inc. (CGI), which sells insurance and annuity products in the Bank's three retail markets. Automobile loan banking income declined to $.4 million in the 1993 first quarter largely due to reductions in servicing income attributable to lower volumes of sold auto loans serviced for others, a result of the Bank's decision in the second half of 1992 to hold newly originated automobile loans in its own loan portfolio. Securities sale gains in the year-ago quarter reflect the Bank's decision to preserve gains on mortgage-backed securities vulnerable to accelerated prepayments from refinancing. Losses of $5.6 million in the real estate and other category during the recent quarter are primarily attributable to provisions taken to write down other real estate (ORE) based on updated appraisals.
 Operating expenses for the 1993 first quarter were $32.9 million, up from $31.7 million in the year-ago quarter, largely due to increased employee benefit costs and deposit insurance premiums.
 Total assets at February 28, 1993 were $3.70 billion, compared to $3.83 billion at the end of fiscal 1992. Lower asset levels reflect a reduced level of mortgages held for sale, settlement of 1992 fourth quarter securities sales and a reduction in Federal Home Loan Bank borrowings. RCSB's one-year gap, a measure of the sensitivity of RCSB's interest earnings to interest rate movements, was 8.7 percent at quarter-end. At February 28, 1993, nonperforming assets were $278.8 million, down from $294.0 million in the year-ago quarter.
 In commenting on the Bank's plans to reduce nonperforming assets, Simon stated, "Positive indicators are that problem assets have stabilized over several quarters and that we've made further progress over the last year in gaining control of properties, a key step to preparing these assets for sale. We're also encouraged that some liquidity has finally returned to the commercial real estate markets, although values have not risen significantly. Based on these developments, we are currently analyzing several options that would accelerate the reduction of our nonperformers, strengthen our balance sheet and improve long-term earnings." Simon indicated that RCSB was considering a possible capital offering of convertible preferred stock and the liquidation of certain nonperforming assets which may require special additions to reserves.
 Deposits at February 28, 1993 were $2.77 billion, compared to deposits of $2.76 billion at the end of fiscal 1992. Residential mortgage originations at American Home Funding, Inc., RCSB's mortgage banking subsidiary, were $423.8 million, compared to first quarter originations of $480.5 million in 1992. Shareholders' equity at February 28, 1993 was $304.3 million or $22.01 per share, compared to $301.4 million or $21.82 per share at 1992 year-end. Under generally accepted accounting principles, RCSB's ratio of equity to assets was 8.22 percent at February 28, 1993, its highest level in the last five years. The Bank's equity-to-assets ratio, a key measure of capital strength, is the third highest of the nation's 25 largest publicly held thrifts (Source: SNL Thrift Datasource, March 18, 1993). At the recent quarter-end, RCSB also exceeded all current regulatory capital requirements.
 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, 16 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
 February 28, February 29,
 1993 1992
 Income Statement Data:
 Interest income $ 64,183 $ 75,003
 Interest expense 36,781 52,736
 Net interest income 27,402 22,267
 Provision for loan losses 3,066 2,486
 Net interest income after
 provision for loan losses 24,336 19,781
 Noninterest income:
 Mortgage banking 13,757 10,667
 Retail banking 4,258 3,845
 Automobile loan banking 432 2,284
 Net securities sale gains (losses) (33) 8,460
 Real estate and other (5,610) (8,757)
 Total noninterest income 12,804 16,499
 Operating expenses 32,896 31,671
 Income before taxes 4,244 4,609
 Income tax provision 1,761 2,572
 Net income $ 2,483 $ 2,037
 Net income per share $ 0.18 $ 0.15
 Performance Ratios (For the period):
 Net interest margin (percent) 3.40 2.64
 Interest rate spread 3.47 2.87
 Return on average assets 0.27 0.21
 Return on average equity 3.28 2.80
 February 28, November 30, February 29,
 1993 1992 1992
 Balance Sheet Data:
 Assets $3,700,890 $3,829,312 $3,812,421
 Securities held for sale 121,966 169,615 -
 Mortgage-backed and other
 securities 691,165 571,932 563,580
 Loans receivable, net 2,308,858 2,438,070 2,594,771
 Deposits 2,774,650 2,759,745 2,795,866
 Borrowings 477,897 565,453 531,662
 Shareholders' equity 304,270 301,401 291,523
 Book value per share 22.01 21.82 21.10
 Shares outstanding (000s) 13,824 13,816 13,816
 Equity as a percent of
 of assets (percent) 8.22 7.87 7.65
 -0- 3/24/93
 /CONTACT: Richard Dye of Rochester Community Savings Bank, 716-423-7363/
 (RCSB)


CO: Rochester Community Savings Bank ST: New York IN: FIN SU: ERN

BM -- CL004 -- 9116 03/24/93 12:42 EST
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