Good earnings and more
RECENT DEVELOPMENTS
The trial to determine damages in the bank's goodwill suit against the federal government, which began on February 24, 1997, is nearly complete. The government is expected to complete its case-in-chief by mid-February. Each side will then present rebuttal testimony with closing briefing and arguments to follow during the June quarter. Glendale Federal is hopeful that a judgment on damages will be entered by the Claims Court during the summer. The judgment could be appealed to the U.S. Court of Appeals for the Federal Circuit, and ultimately to the Supreme Court. If this happens, then final determination of the case could be two to three years away.
Golden State Bancorp Reports Fiscal 1998 Second Quarter Earnings
GLENDALE, Calif.--(BUSINESS WIRE)--Jan. 28, 1998--
-- Quarterly net earnings up 25 percent -- -- Checking account deposits grow by 65 percent -- -- Revenues rise 14 percent -- -- Non-performing assets drop to 0.95% of total assets --
Golden State Bancorp Inc. (NYSE:GSB), parent company of Glendale Federal Bank, today reported net earnings for the fiscal 1998 second quarter of $28.9 million, or $0.41 per diluted share. This represents a 24.5 percent improvement over net earnings of $23.2 million, or $0.30 per diluted share, for the second quarter of fiscal 1997.
Net earnings in the fiscal 1998 second quarter included $5.3 million in pre-tax legal expenses related to the bank's goodwill litigation and $2.5 million in pre-tax restructuring charges related to the pending acquisition of CENFED Financial Corp. and the probable distribution of the Litigation Tracking Warrants(tm) (LTW(tm)). The prior year's second quarter results included $4.9 million in pre-tax goodwill litigation expenses and the effect on per-share results of certain preferred stock conversions. Excluding these non-recurring items, Golden State Bancorp earned $33.8 million, or $0.48 per diluted share, during the fiscal 1998 second quarter, a 29.5 percent improvement over the $26.1 million, or $0.39 per diluted share, reported in the fiscal 1997 second quarter.
Stephen J. Trafton, chairman and chief executive officer of Golden State Bancorp, commented, "The focus on attracting lower-cost deposits and the diversification of our business lines resulted in stronger performance over last year. Our checking account balances, which have experienced internal growth of more than 34 percent in the past 12 months, now account for nearly 16 percent of deposits, while our consumer and commercial loan growth efforts are now beginning to produce tangible results and are having a positive impact on our interest rate spread. In addition, a stronger California economy and aggressive management of problem assets resulted in the lowest level of non-performing assets in nearly a decade and continued reductions in credit-related costs."
Trafton continued, "Partially offsetting these positive developments was a small decline from the previous quarter in interest earnings assets. The current interest rate environment, with lower long-term rates, has resulted in higher prepayments of adjustable-rate loans and increased consumer demand for fixed-rate mortgage products. If interest rates decline further, or persist at lower levels, there could be an adverse impact on earnings due to a shrinking asset base and an impairment to the value of the purchased mortgage servicing asset.
"We believe, however, that this environment will not affect the long-term strategies or earnings potential of the company. We will continue to focus on low-cost checking and other transaction accounts and the generation of prime rate-based business and consumer loans. This strategy has already resulted in a widening of our interest-rate spread and higher fee income and will continue to make the company's earnings less sensitive to changes in interest rates." |
