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VIRGINIA BEACH FEDERAL FINANCIAL CORPORATION ANNOUNCES THIRD QUARTER RESULTS INCLUDING 24 PERCENT REDUCTION IN FORECLOSED REAL ESTATE

 VIRGINIA BEACH, Va., Oct. 21 /PRNewswire/ -- Virginia Beach Federal Financial Corporation (NASDAQ-NMS: VABF) today reported consolidated net income of $20,000 (0 cents per share) for the third quarter of 1993 compared with $884,000 (18 cents per share) for the third quarter of 1992. This decrease is primarily the result of lower net interest income. These 1993 earnings bring net income for the year to $1,095,000 (22 cents share), compared to $2,187,000 (44 cents per share) for 1992.
 In addition, the corporation reported that it significantly reduced its foreclosed real estate by consummating the sale of a retirement home facility which had been foreclosed on during 1992. At quarter-end, foreclosed real estate totaled $13,755,000 (1.96 percent of assets) compared to $18,148,000 (2.62 percent of assets) at June 30, 1993. "This significant reduction in foreclosed real estate exemplifies our efforts to dispose of these properties, particularly several large properties related to the lending activities of the bank during the 1980s," noted John A.B. (Andy) Davies Jr., president, Virginia Beach Federal Financial Corporation. Similarly, nonperforming assets, which include foreclosed real estate, decreased to $22,963,000 (3.28 percent of assets) as compared to $28,623,000 (4.53 percent of assets) at Dec. 31, 1992, and $24,970,000 (3.65 percent of assets) at Sept. 30, 1992.
 Mortgage banking activities during the quarter continued at a rapid pace. Originations totaled $117.2 million for the quarter, compared to $105.0 million during 1992, bringing year-to-date originations to $310.5 million, compared to $192.6 million during 1992. The majority of these originations are sold into the secondary market with the servicing retained by the bank. As a result, the bank's portfolio of fee- producing loan servicing was $369.5 million compared to $191.0 million at Dec. 31, 1992. "We are continuing to pursue aggressively a strategy of building a fee-producing loan servicing portfolio consistent with the production capability of our mortgage banking business," commented Dennis R. Stewart, executive vice president and chief financial officer. Stewart noted that many financial institutions sell their loan servicing in order to produce current period gains, but in doing so, give up the future servicing revenue and the on-going customer contract. Stewart also noted that the customer relationships acquired through mortgage banking activities are important to the bank's retail banking business.
 The bank's net interest income continues to be adversely affected by early repayment of mortgage loans, and the bank's high cost of deposits, included $60 million of 13 percent certificates of deposit issued during 1987 that mature during the third quarter of 1994.
 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 58-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, Williamsburg, Richmond and Fairfax.
 VIRGINIA BEACH FEDERAL FINANCIAL CORPORATION
 SELECTED FINANCIAL INFORMATION
 (dollars in thousands, except per share data)
 Quarter Ended
 Sept. 30, 1993 Sept. 30, 1992
 Balance Sheet
 Loans held for sale $ 44,827 $ 48,018
 Loans receivable 370,727 377,423
 Foreclosed real estate 13,755 18,664
 Total assets 700,242 683,408
 Deposits 435,459 454,880
 Stockholders' equity 41,653 42,494
 Book value per share 8.51 8.68
 Stock price per share 7.00 5.00
 Core capital ratio 5.56 pct. 5.80 pct.
 Risk based capital ratio 12.86 pct. 11.65 pct.
 Quarter Ended
 Sept. 30, 1993 Sept. 30, 1992
 Income Statement
 Interest income 11,964 14,087
 Interest expense 9,073 10,222
 Net interest income 2,891 3,865
 Loan loss provision 0 300
 Other income 2,303 2,134
 Foreclosed real estate provision 250 450
 Other expense 4,913 3,749
 Net income 20 884
 Earnings per share $ 0.00 $ 0.18
 For the Nine Months Ended
 Sept. 30, 1993 Sept. 30, 1992
 Income Statement
 Interest income 35,192 43,081
 Interest expense 26,706 33,015
 Net interest income 8,486 10,066
 Loan loss provision 600 1,281
 Other income 7,546 5,676
 Foreclosed real estate provision 1,050 450
 Other expense 13,845 10,272
 Cumulative effect of change in
 accounting method for income taxes 700 0
 Net income 1,095 2,187
 Earnings per share:
 Before accounting change effect $ 0.08 $ 0.44
 After accounting change effect $ 0.22 $ 0.44
 -0- 10/21/93
 /CONTACT: Dennis R. Stewart of Virginia Beach Federal Financial Corporation, 804-428-9331, or after hours, 804-425-2438/
 (VABF)


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

KD-IH -- DC055 -- 2155 10/21/93 17:57 EDT
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Date:Oct 21, 1993
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