THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Tuesday, February 7, 1995 TAG: 9502070291
SECTION: BUSINESS PAGE: D3 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
LENGTH: Short : 50 lines
The parent of Virginia Beach Federal Savings Bank, whose earnings were battered during 1994 by the reduced value of an interest-rate swap, said Monday that it lost $571,000 for the year.
The loss materialized despite its $1.01 million profit for the three months ended Dec. 31, Virginia Beach Federal Financial Corp. said.
In August, Virginia Beach Federal announced that it had taken charges totaling $1.31 million against its first-quarter and second-quarter earnings to cover the eroding value of its swap.
The company said its thrift entered into the swap transaction in mid-1993 to maintain a certain spread between the cost of its deposits and the yield on its loans and investments.
However, the swap's value was wiped out during 1994 by rapidly rising interest rates, and accounting rules required that its value be marked down immediately, Virginia Beach Federal said last August.
The thrift holding company's 1994 loss, which came to 12 cents a share, compared with net income of $1.15 million, or 23 cents a share, in 1993.
The company's fourth-quarter profit of $1.15 million, or 21 cents a share, was up sharply from net income of $57,000, or 1 cent a share, for the year-earlier period.
Virginia Beach Federal said earnings for the Dec. 31 quarter were helped by a 28 percent increase in its net interest income, the difference between the cost of funds and what it earned on loans and investments.
In previous quarters, the company's net interest income had been depressed by the double-digit interest rates it had been paying on more than $70 million of long-term certificates of deposit.
Virginia Beach Federal's earnings for the recent quarter also were helped by $2.43 million of pre-tax gains on the sale of loan servicing rights.
However, the company registered a pre-tax loss of $829,000 in the quarter from the sale of investment securities.
Virginia Beach Federal, blaming the adverse impact of rising rates on demand for home loans, said the volume of loan originations at its mortgage banking unit plunged 65 percent in the fourth quarter to $47.96 million.
For the full year, loan originations at mortgage banking company Beach Fed Mortgage Corp. skidded 37 percent to $283.17 million.
Separately, Virginia Beach Federal said its board declared a regular quarterly dividend of 4 cents a share, payable Feb. 24 to shareholders of record Feb. 10. by CNB