For more information:
Patricia B. Sweet
Senior Vice President
Corporate Communications
Phone: (203) 578-6296
Fax: (203) 578-6279
CENTER FINANCIAL CORPORATION ANNOUNCES 19% INCREASE
IN EARNINGS FOR FIRST QUARTER
Waterbury, CT - April 23, 1996 . . . Center Financial Corporation (CFCX/NASDAQ),
the holding company of Centerbank, today reported net income of $5.5 million, or
$0.38 per share, for the first quarter of 1996, an increase of $0.9 million over
net income of $4.6 million, or $0.32 per share, for the first quarter of 1995.
This represents an improvement of 19.6 percent.
The company also announced that the Board of Directors declared a regular
quarterly dividend of $0.07 per share, payable May 13, 1996, to shareholders of
record on May 2, 1996. This is the Company's sixth consecutive quarterly
dividend since restoring the dividend in the first quarter of 1995.
In making the announcement, Center Financial President and Chief Executive
Officer Robert J. Narkis commented, "I am gratified to report a healthy 40
percent increase in our noninterest income during the first quarter due, in
part, to securities gains and strong mortgage banking activity. I expect this
trend will continue, particularly in light of the high volume of loan
applications seen last month." He continued, "Noninterest expenses also improved
slightly this quarter as we began to see the results of our reengineering
efforts initiated in 1995."
Net interest margin for the quarter ended March 31, 1996 was 3.39 percent, down
32 basis points from a year earlier, but up from the fourth quarter 1995 level
of 3.24 percent . Total shareholders' equity, at $223.9 million, was 6.10
percent of total assets at March 31, 1996, representing a $22.6 million increase
from $201.4 million at March 31, 1995. Total assets were $3.7 billion at the
close of the first quarter, an increase of 6.9 percent over the first quarter of
1995. Book value at March 31, 1996 was $15.46 per share.
Center Financial Corporation completed the merger of Great Country Bank of
Ansonia, Connecticut, with Centerbank on December 15, 1995. The transaction was
accounted for as a pooling of interests. The 1995 historical results of
operations and financial condition of the company have been restated to reflect
Center Financial's financial position and its results of operations on a
combined basis with Great Country.
"The remainder of 1996 will be an exciting time at Center Financial. In April,
we completed the transaction with Watertown-based Heritage Bank and we are
looking forward to opening our first supermarket branch during the second
quarter and anticipate seven additional supermarket branches by the end of the
year. Our investigation of other alternative delivery systems, such as PC-based
home banking, banking on the Internet, and advanced telemarketing, coupled with
the impending introduction of a Centerbank MasterCard(R) and the national
expansion of our consumer finance subsidiary, Center Credit Corporation, should
serve us well," Mr. Narkis added.
Center Financial Corporation is the holding company for Centerbank, Centerbank
Mortgage Company, Center Capital Corporation and Affiliated Business Credit
Corporation. It recently signed an agreement with Edwards Super Food Stores to
place full-service branches in their stores located in Clinton, Meriden, Orange,
Shelton and Southington.
Centerbank delivers banking services throughout central Connecticut via 44
branches in 27 communities and through alternative delivery systems, such as
ATMs and telephone banking. It is insured by the FDIC. Centerbank Mortgage
Company is a full-service mortgage banking company with a residential servicing
portfolio of $7.3 billion. Center Capital Corporation is an equipment leasing
firm that provides lease financing services nationwide to manufacturers and
end-users of capital equipment. Affiliated Business Credit Corporation is a
commercial finance company serving the Northeast.
CENTER FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEET
(Unaudited)
March 31, December 31, March 31,
(In thousands, except share amounts) 1996 1995 1995
Assets
Cash and due from banks $ 93,844 $ 77,069 $ 64,563
Securities:
Federal Home Loan Bank stock, at cost 34,506 32,321 28,248
Available for sale (amortized cost: $324,532, $241,032 and $84,104) 291,562 214,625 61,324
Held to maturity (fair value: $149,327, $160,438 and $430,139) 151,192 161,988 439,783
----------- ----------- -----------
Total securities 477,260 408,934 529,355
----------- ----------- -----------
Loans and leases:
Residential first mortgage loans available for sale 206,268 153,173 119,752
Residential first mortgage loans held for investment 1,702,235 1,732,253 1,542,290
Consumer home equity loans 237,136 247,127 268,739
Other consumer loans 136,951 131,293 110,857
Commercial first mortgage loans:
Permanent 305,263 295,202 290,895
Construction 29,659 33,896 12,260
Other commercial loans 110,399 123,026 122,988
Leases 182,925 193,762 202,201
Allowance for loan and lease losses ( 42,470 ) ( 43,025 ) ( 46,580 )
----------- ----------- -----------
Total loans and leases, net 2,868,366 2,866,707 2,623,402
----------- ----------- -----------
Real estate owned, net 24,467 25,659 32,534
Premises and equipment, net 47,108 46,617 48,011
Accrued interest receivable 20,580 21,816 18,883
Mortgage servicing rights 69,586 65,461 53,394
Excess servicing fees receivable 15,836 15,264 12,170
Deferred tax assets, net 15,835 15,399 16,909
Acquisition related intangibles 14,762 15,277 12,337
Other assets 21,874 22,216 22,271
----------- ----------- -----------
Total assets $ 3,669,518 $ 3,580,419 $ 3,433,829
----------- ----------- -----------
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Demand $ 213,167 $ 216,163 $ 185,179
Savings 644,073 643,816 835,905
Money market 270,700 271,347 128,566
Time 1,397,297 1,345,298 1,275,051
----------- ----------- -----------
Total deposits 2,525,237 2,476,624 2,424,701
----------- ----------- -----------
Escrow on first mortgage loans 60,001 63,546 50,578
Borrowings 828,962 787,385 723,108
Other liabilities 31,388 31,438 34,075
----------- ----------- -----------
Total liabilities 3,445,588 3,358,993 3,232,462
----------- ----------- -----------
Shareholders' equity:
Preferred stock - voting; no par value; 1,000,000 authorized
shares; issued and outstanding - none - - -
Preferred stock - nonvoting; no par value; 10,000,000
authorized shares; issued and outstanding - none - - -
Common stock; par value $1; 75,000,000 authorized shares;
14,487,375, 14,445,649 and 14,535,253 shares issued and
outstanding at March 31,1996, December 31, 1995 and
March 31, 1995, respectively 14,487 14,446 14,535
Paid-in capital 176,480 176,050 174,724
Retained earnings 32,060 27,592 11,457
Net unrealized gain (loss) on securities available for sale,
net of tax effect 903 3,338 651
----------- ----------- -----------
Total shareholders' equity 223,930 221,426 201,367
----------- ----------- -----------
Total liabilities and shareholders' equity $ 3,669,518 $ 3,580 419 $ 3,433,829
----------- ----------- -----------
CENTER FINANCIAL CORPORATION
CONSOLIDATED STATEMENT of OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
Three months ended
March 31,
1996 1995
Interest and Dividend Income
Interest and fees on loans $ 54,672 $ 47,764
Leases 3,861 4,344
----------- -----------
Total interest and fees on loans and leases 58,533 52,108
----------- -----------
Interest on mortgage-backed securities 6,044 8,162
Interest and dividends on other earning assets 762 676
----------- -----------
Total interest income 65,339 60,946
----------- -----------
Interest Expense
Interest on deposits 24,351 20,279
Escrow on first mortgage loans 188 180
Interest on borrowings 12,577 11,342
----------- -----------
Total interest expense 37,116 31,801
----------- -----------
Net interest income 28,223 29,145
----------- -----------
Provision for loan and lease losses 1,587 1,248
----------- -----------
Net interest income after provision for loan and lease losses 26,636 27,897
----------- -----------
Noninterest Income
Customer service fees 1,661 1,574
Mortgage servicing income, net 2,280 2,990
Gain on sale of loans and servicing rights, net 2,588 1,222
Gain on sale of securities, net 1,897 441
Other income 1,016 479
----------- -----------
Total noninterest income 9,442 6,706
----------- -----------
Noninterest Expenses
Salaries and employee benefits 13,093 13,200
Occupancy and equipment 4,411 4,600
Professional and other services 3,489 3,505
Net cost of real estate owned 1,429 1,452
FDIC and state assessment 169 1,773
Advertising and public relations 1,200 980
Other expenses 4,096 2,620
----------- -----------
Total noninterest expenses 27,887 28,130
----------- -----------
Income before income taxes 8,191 6,473
Income tax expense 2,712 1,873
----------- -----------
Net income $ 5,479 $ 4,600
----------- -----------
Net income per common share $ 0.38 $ 0.32
----------- -----------
Average common shares outstanding 14,462,674 14,253,174
CENTER FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(In thousands, except per share amounts)
Three months ended
March 31,
1996 1995
Statement of Operations
Interest and dividend income $ 65,339 $ 60,946
Interest expense 37,116 31,801
----------- -----------
Net interest income 28,223 29,145
Provision for loan and lease losses 1,587 1,248
Noninterest income 9,442 6,706
Noninterest expense 27,887 28,130
----------- -----------
Income before income taxes 8,191 6,473
Income tax expense 2,712 1,873
----------- -----------
Net income $ 5,479 $ 4,600
----------- -----------
Net income per common share $ 0.38 $ 0.32
----------- -----------
Average Balance Sheet
Loans and leases, net $ 2,893,679 $ 2,577,742
Securities and other interest-earning assets 437,795 562,238
----------- -----------
Total average interest-earning assets 3,331,468 3,139,980
Cash and due from banks 59,257 54,959
Other assets 223,166 222,840
----------- -----------
Total average assets $ 3,613,891 $ 3,417,779
----------- -----------
Deposits $ 2,483,262 $ 2,406,293
Escrow on first mortgage loans 51,457 47,575
Borrowings 830,583 733,364
Other liabilities 26,604 29,440
Shareholders' equity 221,985 201,107
----------- -----------
Total average liabilities and shareholders' equity $ 3,613,891 $ 3,417,779
----------- -----------
Selected Ratios and Other Data
Return on average assets 0.61 % 0.54 %
Return on average shareholders' equity 9.87 9.15
Dividend payout ratio 18.42 15.63
Average shareholders' equity to average assets 6.14 5.88
Total shareholders' equity to total assets 6.10 5.86
Yield on interest-earning assets 7.85 7.76
Cost of interest-bearing liabilities 4.70 4.29
Net interest spread 3.15 3.47
Net interest margin 3.39 % 3.71 %
Per common share at March 31:
Book value $ 15.46 $ 13.85
Market value (close) 18.13 12.75
Regulatory Ratios
Centerbank:
Leverage ratio 5.77 % 5.50 %
Tier 1 capital to risk-weighted assets 9.07 8.58
Total capital to risk-weighted assets 11.42 9.84
Center Financial Corporation: (as successor to Centerbank)
Leverage ratio 5.79 5.50
Tier 1 capital to risk-weighted assets 9.09 8.58
Total capital to risk-weighted assets 11.44 % 9.84 %
CENTER FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
(Unaudited)
(In thousands)
Summary of Nonperforming Assets
March 31, December 31, March 31,
1996 1995 1995
Nonaccruing loans and leases:
Residential first mortgage loans:
1 - 4 family $ 26,827 $ 24,495 $ 23,275
Other 3,151 3,650 1,380
Home equity and other consumer loans 3,909 3,678 2,599
Commercial first mortgage loans 24,228 20,639 21,856
Other commercial loans 9,769 7,755 9,579
Leases 3,452 3,777 3,112
Total nonaccruing loans and leases, net 71,336 63,994 61,801
Real estate owned ("REO"):
Commercial 23,526 23,682 32,929
Residential 5,187 6,517 7,522
Total real estate owned 28,713 30,199 40,451
Total nonperforming assets $ 100,049 $ 94,193 $ 102,252
Net loan and lease charge-offs during the quarter $ 2,142 $ 3,201 $ 520
Allowance for loan and lease losses (1) 42,470 43,025 46,434
Allowance for losses on REO 4,246 4,540 6,738
Net loan and lease charge-offs to average loans and 0.07 % 0.11 % 0.02 %
Allowance for loan and lease losses to average loan 1.47 1.53 1.80
Allowance for loan and lease losses to nonaccruing
loans and leases 59.54 67.23 75.13
Allowances for loan, lease and REO losses to nonperforming
assets 46.69 50.50 52.00
Nonperforming assets to related asset categories 3.40 3.20 3.77
Nonperforming assets to total assets 2.73 % 2.63 % 2.98 %
<FN>
Summary of Impaired Loans
Center Financial reported $33,997 of impaired loans at March 31, 1996. The
components of the impaired loan balance were as follows: $24,228 of commercial
mortgage loans and $9,769 of other commercial loans.
Summary of Restructured Loans
The total in the "Total nonaccruing loans and leases, net" category listed above
includes $944, $1,005 and $886 of loans that were restructured as of March 31,
1996, December 31, 1995 and March 31, 1995, respectively.
(1) The amount reported for March 31, 1996 includes $1,535 as an allowance for
credit losses on impaired loans totaling $18,641 in accordance 'with SFAS
Nos. 114 and 118.
</FN>