Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, May 8, 1993                   TAG: 9305080084
SECTION: BUSINESS                    PAGE: A-4   EDITION: METRO 
SOURCE: GEORGE KEGLEY STAFF WRITER
DATELINE:                                 LENGTH: Medium

S&L WRITES OFF LOST `GOODWILL'

Charter, reporting financial results for its third quarter ended March 31, said the accounting action resulted in a net loss of $39.1 million for the period, although it had $2 million in net earnings from operations.

The operating profit, equal to 55 cents per share of common stock, was up 43 percent from $1.4 million, or 37 cents per share, in the third quarter of last year.

In the first three quarters, Charter's net operating earnings were $3.1 million or 83 cents a share, 21 percent less than the $3.9 million or $1.06 a share last year.

"This puts the goodwill issue behind us and simplifies both our balance sheet and income statement," said Cecil R. McCullar, Charter president and chief executive. "It eliminates an asset that provides no ongoing benefit."

The goodwill was an accounting credit awarded Charter by federal regulators when it agreed in 1982 and 1985 to take over four troubled thrifts in Virginia and Tennessee. In exchange, the government let Charter count those thrifts' debts as an asset, calling it "supervisory goodwill." But in 1989, when Congress passed tougher standards with the savings and loan cleanup, regulators no longer allowed the use of such credits to meet capital requirements.

That prompted Charter to sue the Federal Deposit Insurance Corp. and the Office of Thrift Supervision. Charter lost the case in March when the U.S. Supreme Court refused to allow it to cancel the takeover of the troubled thrifts if it were forced to write off the goodwill.

Removal of the amortization of goodwill will add about $2.6 million a year to net income, McCullar said.

But Reid Nagle of SNL Securities, a financial analyst in Charlottesville, said the write-off is irrelevant because it's only an accounting entry. Charter is reducing its equity and increasing earnings, he said.

Charter also has called a special June 1 meeting for stockholders to vote on increasing the number of authorized shares of common stock from 12.5 million to 50 million shares. The restructuring was required by regulators after the adverse court ruling in March. Without goodwill, Charter had a capital deficiency by federal standards.

Charter said its third-quarter operating profitability produced a 1.09 percent return on average assets, up from 0.69 percent a year earlier.