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VIRGINIA BEACH FEDERAL ANNOUNCES CONSOLIDATED EARNINGS FOR 1992

 VIRGINIA BEACH, Va., Feb. 5 /PRNewswire/ -- Virginia Beach Federal Financial Corporation (NASDAQ-NMS: VABF) today reported full year 1992 earnings of $1,033,000 or 21 cents per share compared with $4,846,000 or 97 cents per share for 1991. The most significant reason for the decline in 1992 earnings was the $8,953,000 pretax gain on sales of Federal Home Loan Mortgage Corporation (Freddie Mac) common stock which occurred in 1991. There were no such gains during 1992.
 Earnings for 1992 included an extraordinary charge of $1,068,000 or 22 cents per share related to the prepayment during the fourth quarter of $30 million in Federal Home Loan Bank advances. Income before the extraordinary charge was $2,101,000 or 43 cents per share for the 1992 fiscal year. Fourth quarter 1992 results before the extraordinary charge produced a net loss of $86,000 or 1 cent per share compared with net income of $640,000 or 13 cents per share during the fourth quarter of 1991. A $969,000 loan loss provision, discussed below, is the major reason for the decrease.
 Total assets were $631 million at year-end 1992 compared with $667 million at Dec. 31, 1991. The savings bank's core and tangible capital rations were 6.00 percent at year-end 1992, the same level as a year earlier. The risk-based capital ratio was 12.55 percent at Dec. 31, 1992, up from 11.50 percent at the end of 1991. "The savings bank is considered well capitalized under recently effective federal deposit insurance regulations," noted John A.B. (Andy) Davies Jr., president and chief executive officer, who further added, "Capital continues to be the cornerstone of our business plan."
 Loan originations at the savings bank's mortgage banking subsidiary, Beach Fed Mortgage Corp, were a record $296,153,000, up from $106,115,000 during 1991. Also of significance is the growth in the savings bank's portfolio of loans serviced for others, primarily Freddie Mac, which grew to $190,474,000 at Dec. 31, 1992, from $16,016,000 at year-end 1991, mainly through retention of the servicing rights associated with Beach Fed's conventional loan originations. During 1993 the savings bank expects to retain the servicing rights on both conventional and government (FHA and VA) originations. Dennis R. Stewart, executive vice president and chief financial officer, said: "As part of our franchise value building strategy, we believe that it is essential to forego the immediate income from sale of the loan servicing rights in order to retain these customer relationships and provide a steady stream of loan servicing revenue in future years."
 Net interest income increased by nearly 26 percent and totaled $13,512,000 for 1992 compared with $10,762,000 in 1991, reflecting continued improvement in the savings bank's core operations.
 Non-interest income for 1992 was $7,382,000 compared to $13,214,000 during 1991. After adjusting for $8,953,000 in gains during 1991 on the sale of the savings bank's remaining common stock of Freddie Mac, non-interest income increased by $3,121,000, or 73 percent, during 1992, largely the result of a nearly $1 million increase in gains on sales of loans originated by Beach Fed and a $1.2 million increase in gains on sales of foreclosed real estate.
 Two significant events affected fourth quarter results: a restructuring of the savings bank's Federal Home Loan Bank advances, as previously mentioned, and additions to the savings bank's loan loss provision related to two specific troubled assets. During the quarter, the savings bank prepaid $30 million of its Federal Home Loan Bank advances and incurred an extraordinary charge of $1,068,000 (net of applicable tax benefit of $601,000), or 22 cents per share. "The restructuring of the advances was designed to improve the net interest margin in the future by lowering interest expense," noted Stewart.
 Also during the fourth quarter, the savings bank added $969,000 to its provision for loan losses, largely due to the non-performance of two loans in Virginia Beach totaling $3.9 million. At year-end, the savings bank's non-performing assets totalled $28,623,000, or 4.53 percent of total assets, compared with $25,511,000, or 3.83 percent of total assets, at year-end 1991. The real estate acquired through foreclosure (REO) component of non-performing assets was $17,585,000 at Dec. 31, 1992, compared with $20,363,000 a year earlier. During the year, $10,090,000 in REO was sold, while $7,312,000 was added. Sales included $4,819,000 of property from the Jeremy Ranch, the savings bank's single largest REO property, which produced approximately $2.2 million in gains. Additions to REO included $2,910,000 spent during the year to obtain complete ownership of the Jeremy Ranch, as previously reported. The Jeremy Ranch had a carrying value of $5,702,000 at Dec. 31, 1992, compared with $7,589,000 at Dec. 31, 1991, as a result of these activities. While the sale of REO continues to be the focus of an intense effort, marketing of larger REO properties is a lengthy process which is delayed further by a difficult commercial real estate market and the unique nature of these properties.
 During the year, the savings bank increased its total loan loss reserves to $4,651,000, which is 1.30 percent of gross loans and 16.25 percent of non-performing assets at Dec. 31, 1992. At Dec. 31, 1991, the total loan loss reserves were $2,650,000, or 0.63 percent of loans and 10.39 percent of non-performing assets. The general, or unallocated, portion of loan loss reserves was $3,790,000 at year-end 1992 compared to $2,461,000 at Dec. 31, 1991.
 Non-interest expense for the year 1992 was $15,108,000, compared to $14,263,000 during 1991. The net increase during 1992 generally reflects a $2.2 million reduction in REO loss provisions and net expenses associated with foreclosed real estate, offset by a $3.0 million increase in salaries and other expenses associated mainly with the increased originations at Beach Fed.
 Virginia Beach Federal Financial Corporation is a unitary savings and loan holding company whose sole subsidiary is Virginia Beach Federal Savings Bank. The savings bank, headquartered in Virginia Beach, is a 57-year-old institution providing full financial services to customers in the Hampton Roads area of Virginia. Beach Fed Mortgage Corp, a wholly owned subsidiary of the savings bank, originates residential mortgage loans through its offices in Virginia Beach, Newport News and Richmond.
 -0- 2/5/93
 /CONTACT: Dennis R. Stewart of Virginia Beach Federal Financial Corporation, 804-428-9331/
 (VABF)


CO: Virginia Beach Federal Financial Corporation ST: Virginia IN: FIN SU: ERN

IH -- DC015 -- 3532 02/05/93 12:45 EST
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Date:Feb 5, 1993
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