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ROCHESTER COMMUNITY REPORTS FOURTH QUARTER PROFIT AND 1991 LOSS

 ROCHESTER COMMUNITY REPORTS FOURTH QUARTER PROFIT AND 1991 LOSS
 ROCHESTER, N.Y., Jan. 22 /PRNewswire/ -- Rochester Community Savings Bank (NASDAQ: RCSB) today reported a net loss of $30.9 million or $2.24 per share for the fiscal year ended Nov. 30, 1991, compared to net income of $7.9 million or $.57 per share for the 1990 fiscal year. Following a loss in the 1991 third quarter, the bank returned to profitability in the fourth quarter, reporting net income of $1.3 million or $.09 per share. The loss for the full year, RCSB's only annual loss in its six years of public ownership, was attributable to significant provisions for loan and real estate investment losses taken in response to continued illiquidity and further deterioration in commercial real estate markets nationally during the second half of 1991.
 Leonard S. Simon, RCSB's chairman and CEO commented, "Near-record results from our core businesses -- retail banking, automobile financing and mortgage banking -- lessened the impact of commercial real estate losses on RCSB's bottom line during 1991 and helped us maintain a strong capital position. In a regulatory and banking environment where capital is considered critically important, RCSB remained a leader in capital strength among the nation's largest public thrifts, as well as all thrifts and commercial banks in its three retail banking markets."
 Simon added that the on-site portions of the FDIC and New York State Banking Department's 1991 examinations of RCSB had been completed. As part of the examination process, key RCSB initiatives with respect to loan chargeoffs and reserves that are reflected in 1991's financial results were discussed with its regulators.
 Total loan chargeoffs for 1991 were $50.5 million, compared to $21.8 million in 1990, largely reflecting further reductions in commercial real estate values. Following substantial chargeoffs in the fourth quarter, RCSB's allowance for loan losses at 1991 year-end was $41.3 million, a 70.3 percent increase from $24.3 million at 1990 year-end.
 "While our largest provisions for loan losses occurred in the third quarter, we took another $17.5 million in the fourth quarter and still produced a modest bottom line profit for the quarter," Simon stated. "At this point, we believe that the majority of the necessary actions to address this issue occurred in 1991, provided that commercial real estate markets don't experience significant further deterioration." Simon also noted that historically most of RCSB's commercial real estate lending is related to residential development, rather than the severely overbuilt office and retail sectors.
 Net interest income, RCSB's largest source of earnings, held steady at $90.8 million, nearly matching record levels in 1990 despite lower earning asset volumes in 1991. A favorable interest-rate environment and reductions in lower-yielding assets contributed positively to interest income and increases in RCSB's net interest margin and interest rate spread. RCSB's margin rose from 2.30 percent in 1990 to 2.35 percent in 1991, while its interest-rate spread for 1991 was 2.37 percent, up from 2.16 percent in 1990. The bank's interest earnings remain well-protected from volatile rate movements due to its low one-year rate-sensitivity gap, which was a positive 4.7 percent at 1991 year-end.
 Noninterest income was $58.3 million in 1991, compared to $62.7 million in 1990. Substantial noninterest income from RCSB's core businesses was partially offset by losses of $25.1 million in the real estate and other category which primarily represent writedowns and losses on the bank's joint venture investments. Mortgage banking income, the largest component of noninterest income, was a record $44.0 million in 1991, an 11.4 percent increase over 1990. Noninterest income from retail banking increased by 33.0 percent, reflecting fee income from RCSB and its New Jersey subsidiary, Shadow Lawn Savings Bank (SLSB), as well as record income from the Bank's retail subsidiaries, Community Guardian Insurance Agency (CGI) and Community Securities Inc. (CSI).
 Despite weak car sales, automobile loan banking income increased to a record $19.8 million in 1991, largely due to high volumes and favorable pricing conditions which enhanced gains generated through the company's active auto loan securitization program. A restructuring of the bank's investment portfolios resulted in net securities sales gains of $6.0 million in 1991. Simon commented, "Increases in noninterest income from our core businesses underscore the strength of RCSB's diversification strategy, which is based on building revenues without adding significant assets and related risk to our balance sheet."
 Operating expenses for 1991 were $121.3 million, compared to expenses of $105.5 million in 1990 primarily due to the addition of a full year of SLSB's operating expenses, increased deposit insurance premiums and additional expenses related to American Home Funding's larger servicing portfolio and record production volumes in 1991. As a result of the loss in 1991, a tax benefit of $7.1 million was recorded for the year of which $2.1 million was recorded in the fourth quarter.
 Total assets at Nov. 30, 1991 were $3.96 billion compared to $4.33 billion at the end of fiscal 1990. At Nov. 30, 1991, nonperforming assets were 7.34 percent of total assets. Other real estate (ORE), which is carried at the lower of cost or estimated fair market value, comprises 58.3 percent of RCSB's nonperforming assets.
 Deposits at Nov. 30, 1991 remained stable at $2.84 billion, compared to deposits of $2.82 billion at the end of fiscal 1990. Total residential mortgage originations for 1991 were a record $1.6 billion, up from $1.4 billion in 1990. Shareholders' equity at 1991 fiscal year-end was $289.2 million or $20.93 per share compared to $323.1 million or $23.39 per share at 1990 year-end. Under generally accepted accounting principles, RCSB's ratio of equity to assets was 7.30 percent at Nov. 30, 1991. At year-end, RCSB exceeded all current regulatory capital requirements and ranked among the best-capitalized large publicly held thrifts in the United States.
 Rochester Community Savings Bank is a publicly owned, state-chartered savings bank headquartered in Rochester, N.Y. 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
 November 30,
 1991 1990
 Income Statement Data:
 Interest income $ 84,100 $ 94,965
 Interest expense 61,914 70,810
 Net interest income 22,186 24,155
 Provision for loan losses 17,513 17,547
 Net interest income after provision
 for loan losses 4,673 6,608
 Noninterest income:
 Mortgage banking 12,424 10,880
 Retail banking 4,021 3,062
 Automobile loan banking 10,338 3,266
 Securities sale gains 6,401 389
 Real estate and other (8,268) (146)
 Total noninterest income 24,916 17,451
 Operating expenses 30,407 28,088
 Income (loss) before taxes (818) (4,029)
 Income tax provision (benefit) (2,069) 1,155
 Net income (loss) $ 1,251 $ (5,184)
 Net income (loss) per share $ 0.09 $ (0.38)
 Year Ended
 November 30,
 1991 1990
 Income Statement Data:
 Interest income $360,434 $386,782
 Interest expense 269,680 295,963
 Net interest income 90,754 90,819
 Provision for loan losses 65,832 29,327
 Net interest income after provision
 for loan losses 24,922 61,492
 Noninterest income:
 Mortgage banking 44,006 39,506
 Retail banking 13,623 10,246
 Automobile loan banking 19,751 8,146
 Securities sale gains 6,033 4,124
 Real estate and other (25,087) 686
 Total noninterest income 58,326 62,708
 Operating expenses 121,254 105,542
 Income (loss) before taxes (38,006) 18,658
 Income tax provision (benefit) (7,069) 10,797
 Net income (loss) $(30,937) $ 7,861
 Net income (loss) per share $ (2.24) $ 0.57
 November 30, November 30,
 1991 1990
 Balance Sheet Data:
 Assets $3,962,687 $4,329,535
 Investment securities 98,325 336,552
 Mortgage-backed securities 693,307 782,490
 Loans receivable, net 2,472,223 2,634,686
 Deposits 2,844,361 2,815,999
 Borrowings 659,596 1,017,392
 Shareholders' equity 289,208 323,122
 Book value per share 20.93 23.39
 Shares outstanding (000s) 13,816 13,816
 Equity as a percent
 of assets (percent) 7.30 7.46
 -0- 1/22/92
 /CONTACT: Richard Dye of Rochester Community Savings Bank, 716-423-7363/
 (RCSB) CO: Rochester Community Savings Bank ST: New York IN: FIN SU: ERN


KK -- CL014 -- 2366 01/22/92 13:45 EST
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