EXHIBIT 3
LIFE FINANCIAL CORPORATION ANNOUNCES RECENT EVENTS
RIVERSIDE, Calif., March 22, 2001-- LIFE Financial Corporation (NASDAQ: LFCO)
(the "Company"), the holding company of LIFE Bank, F.S.B. (the "Bank"'),
announced that the Bank has stipulated to the issuance of a Prompt Corrective
Action Directive (the "PCA Directive") by the Office of Thrift Supervision (the
"OTS"). In addition, NASDAQ notified the Company on March 20, 2001 that the
Company's common stock has failed to maintain a minimum market value of public
float of $5,000,000 over the last 30 consecutive trading days. The Company also
announced the restatement of its results of operations for the quarter and year
ended December 31, 2000.
The PCA Directive requires the Bank to raise sufficient capital to achieve total
risk-based capital of 8.0%; Tier 1 risk-based capital of 4.0%; and a leverage
ratio of 4.0% by June 30, 2001 or to be recapitalized by merging or being
acquired prior to September 30, 2001 among other things. In addition, the Bank
is subject to other prompt corrective action provisions including limitations on
capital distributions, restrictions on the payment of management fees, asset
growth, acquisitions, branching, and new lines of business, senior executive
officers' compensation, and on other activities. The Bank must also restrict the
rates the Bank pays on deposits to the prevailing rates of interest on deposits
of comparable amounts and maturities in the region where the Bank is located.
The Bank is prohibited from entering into any material transaction other than in
the normal course of business without the prior consent of the OTS. Steven R.
Gardner, President and Chief Executive Officer stated "We continue to work
closely with our investment bankers to identify the best alternative to satisfy
the regulatory capital requirments while maximizing shareholder value. We have
taken significant steps in restructuring and reducing the risk profile of the
Bank while making progress to return to core operating profitability."
The NASDAQ notification stated the Company has until June 18, 2001 to regain
compliance with the minimum market value of public float rule. If at anytime
before June 18, 2001, the market value of the public float of the Company's
common stock is at least $5,000,000 for a minimum of 10 consecutive trading days
the NASDAQ staff will make a determination as to compliance with the rule. If
the Company is unable to demonstrate compliance with the rule on or before June
18, 2001, or has not submitted an application to transfer to The NASDAQ SmallCap
Market, NASDAQ will provide the Company with written notification that its
securities will be delisted. At that time the Company may appeal the decision to
a NASDAQ Listing Qualifications Panel. The Company previously disclosed it had
been notified on January 5, 2001 by NASDAQ that the Company's common stock had
failed to maintain a minimum bid of $1 for 30 consecutive business days and that
it had until April 5, 2001 to attain compliance with the minimum bid rule. At
that time the Company may appeal the decision to a NASDAQ Listing Qualifications
Panel. The Company may be delisted for failure to maintain compliance with the
minimum bid rule as well as the minimum market value of public float rule.
On January 29, 2001 the Company announced its fourth quarter and year-end
results for 2000. Due to events subsequent to that date, the Company is
restating its fourth quarter and year end results. The fourth quarter of 2000
loss is $6.1 million, or ($.92) per basic and diluted share, compared with a
loss of $21.3 million, or ($3.23) per basic and diluted share for the quarter
ended December 31, 1999. The
fourth quarter loss included a $2.2 million provision for loan losses, a $5.4
million write-down of the Bank's Participation Contract and a $2.2 million
provision for income taxes. The net loss for the year ended December 31, 2000 is
$18.0 million, or ($2.70) per basic and diluted share, compared to net loss of
$17.8 million, or ($2.71) per basic and diluted share, for the year ended
December 31, 1999.
The restatement of the fourth quarter loss and the loss for the year ended
December 31, 2000 resulted in part from an OTS field review of the Bank's
valuation of the Participation Contract during the first quarter of 2001. The
OTS field review was conducted in conjunction with the February 16, 2001
notification of their intent to issue a Prompt Corrective Action Directive. The
proposed PCA Directive included a requirement to sell or otherwise dispose of
the Bank's Participation Contract by March 31, 2001. During their field review,
the OTS made recommendations regarding the assumptions used to value the
Participation Contract and has removed the requirement to dispose of the asset
from the PCA Directive. Additionally, the Bank will limit the Participation
Contract to 25% of Tier 1 capital consistent with the proposed capital rule
changes for the treatment of residual interests as published by the regulatory
agencies on September 27, 2000. The Bank has increased the discount rate from
20% to 40% to value its interest in the Participation Contract, which in part
decreased the valuation by $5.4 million. Mr. Gardner commented "this decrease in
value is ironic given the fact that the overall performance of each of the three
loan pools in the securitizations are generally performing better than the
current assumptions we employ to value the future cash flows. However, given the
heightened regulatory concern over residuals and the absence of an active market
for these assets, we feel the discount rate is appropriate."
FORWARD-LOOKING COMMENTS
The statements contained in this release that are not historical facts are
forward-looking statements based on management's current expectations and
beliefs concerning future developments and their potential effects on the
Company. There can be no assurance that future developments affecting the
Company will be the same as those anticipated by management.
Actual results may differ from those projected in the forward-looking
statements. These forward-looking statements involve risks and uncertainties.
These include, but are not limited to, the following risks:
- Changes in the performance of the financial markets;
- Changes in the demand for and market acceptance of the Company's
products and services;
- Changes in general economic conditions including interest rates,
presence of competitors with greater financial resources, and the
impact of competitive products and pricing;
- The effect of the Company's policies;
- The continued availability of adequate funding sources; and
- various legal, regulatory and litigation risks.
FOR INFORMATION ON LIFE FINANCIAL-PLEASE E-MAIL YOUR REQUEST TO
rpainter@lifebank.net OR CALL ROY L. PAINTER, CHIEF FINANCIAL OFFICER AT
909.637.4095 OR STEVEN R. GARDNER, PRESIDENT AND CHIEF EXECUTIVE OFFICER AT
909.637.4110. PLEASE INCLUDE YOUR PHONE, FACSIMILE AND MAILING ADDRESS.
LIFE FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
UNAUDITED (In thousands)
(Restated)
December 31, December 31,
ASSETS 2000 1999
- ----------------------------------------------- --------- -------------
Cash and cash equivalents $ 7,810 $ 17,315
Federal Funds Sold 730 3,000
Securities Held under Repurchase Agreements 25,000 --
Participation Contract 4,429 9,288
Investment Securities Available for Sale 42,370 --
Investment Securities Held to Maturity -- 32,833
Loans:
Loans held for sale -- 330,727
Loans held for investment 321,723 106,350
Allowance for loan losses (4,999) (2,749)
--------- -------------
Net loans 316,724 434,328
Mortgage servicing rights 5,652 6,431
Accrued interest receivable 3,187 3,676
Foreclosed real estate 1,683 2,214
Premises and equipment 3,100 6,003
Income taxes receivable 201 18,653
Deferred income taxes 902 5,196
Other assets 2,633 12,964
--------- -------------
TOTAL ASSETS $ 414,421 $ 551,901
========= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ----------------------------------------------
LIABILITIES:
Deposit accounts $ 345,093 $ 468,859
Other borrowings 47,120 17,873
Subordinated debentures 1,500 1,500
Accrued expenses and other liabilities 6,808 29,207
--------- -------------
Total liabilities 400,521 517,439
--------- -------------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value 67 67
Additional paid-in capital 42,575 42,525
Retained earnings (26,110) (8,130)
Accumulated adjustments to stockholders' equity (2,632) --
--------- -------------
Total stockholders' equity 13,900 34,462
--------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 414,421 $ 551,901
========= =============
LIFE FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
UNAUDITED (IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED TWELVE MONTHS ENDED
---------------------- -----------------------
(Restated) (Restated)
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
INTEREST INCOME: 2000 1999 2000 1999
- ---------------------------------------------------------------------- -------------------------------------------------------
Loans $ 7,661 $ 11,555 $ 39,262 $ 40,991
Other interest-earning assets 2,410 366 4,809 5,387
----------- ----------- ----------- -----------
Total interest income 10,071 11,921 44,071 46,378
INTEREST EXPENSE:
Interest-bearing deposits 5,766 6,144 25,572 22,000
Subordinated debentures 53 53 472 210
Other borrowings 500 876 2,402 3,367
----------- ----------- ----------- -----------
Total interest expense 6,319 7,073 28,446 25,577
----------- ----------- ----------- -----------
NET INTEREST INCOME 3,752 4,848 15,625 20,801
PROVISION FOR LOAN LOSSES 2,194 2,744 2,910 5,382
----------- ----------- ----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,558 2,104 12,715 15,419
NONINTEREST INCOME:
Loan servicing fee income 594 1,446 3,344 4,967
Bank and other fee income 155 102 568 355
Net gain (loss) on mortgage banking operations 204 (45) (5,684) 8,599
Net gain/ (loss) from participation contract and investment securities (650) -- (1,675) --
Net gain (loss) on residual mortgage-backed securities 131 (31,901) 295 (31,888)
Other income/ (loss) 174 100 546 789
----------- ----------- ----------- -----------
Total noninterest income 608 (30,298) (2,606) (17,178)
NONINTEREST EXPENSE:
Compensation and benefits 2,139 3,358 10,848 12,394
Premises and occupancy 820 1,117 4,059 4,037
Data processing 236 529 1,072 1,642
Net loss on foreclosed real estate 270 90 589 31
Restructuring charges 335 -- 849 --
Other expense 1,147 2,165 5,710 9,381
----------- ----------- ----------- -----------
Total noninterest expense 4,947 7,259 23,127 27,485
----------- ----------- ----------- -----------
LOSS FROM OPERATIONS (2,781) (35,453) (13,018) (29,244)
PROVISION (BENEFITS) FOR INCOME TAXES 3,339 (14,134) 4,962 (11,405)
----------- ----------- ----------- -----------
NET LOSS FROM OPERATIONS $ (6,120) $ (21,319) $ (17,980) $ (17,839)
=========== =========== =========== ===========
Basic Average Shares Outstanding 6,668,436 6,606,316 6,668,231 6,575,189
Basic Earnings (Loss) per Share ($0.92) ($3.23) ($2.70) ($2.71)
Diluted Average Shares Outstanding 6,668,436 6,606,316 6,668,231 6,575,189
Diluted Earnings (Loss) per Share ($0.92) ($3.23) ($2.70) ($2.71)
LIFE FINANCIAL CORPORATION AND SUBSIDIARIES
STATISTICAL INFORMATION
UNAUDITED (IN THOUSANDS)
(Restated)
ASSET QUALITY:
Non-accrual loans $ 22,616
Real estate owned $ 1,683
Charge offs $ 407
Charge offs to average loans 0.10%
Non-accrual loans to total loans 6.75%
Non-accrual loans to total assets 5.46%
Allowance for credit losses to total loans 1.49%
Allowance for credit losses to non-accrual loans 22.49%
AVERAGE BALANCE SHEET:
Total assets $ 522,082
Loans $ 417,507
Deposits $ 432,409
Borrowings $ 37,839
NET INTEREST MARGIN 3.28%
SHARE DATA:
Book value $ 2.08
Market value(Closing Price) $ 0.6875
LIFE BANK CAPITAL RATIOS:
Tangible Equity Capital Ratio 4.33%
Core Capital Ratio 4.33%
Tier 1 Risk-based Capital Ratio 5.73%
Risk-based Capital Ratio 6.99%