Citadel Holding Reports 4th-Quarter Drop in Profit

Citadel Holding Corp., the Glendale-based parent of Fidelity Federal Savings and Loan, said its net income for the fourth quarter that ended Dec. 31 fell 26% to $3.61 million from $4.88 million a year earlier. The thrift’s assets on Dec. 31 were $4.98 billion, 7% higher than a year before when assets were $4.64 billion.

For the full year 1989, net income dropped 66% to $8.14 million from $24.08 million in 1988.

The fourth-quarter results included $5.3 million in “non-recurring legal charges,” according to Citadel. Samuel McCarver, Citadel’s executive vice president, declined to explain the charges.

Without the charges, Citadel said, the thrift would have recorded a 39% increase in net income for the fourth quarter to $6.8 million. That’s because Fidelity Federal’s net interest margin--the difference between the average rate of interest it earns on loans and other investments and the average of what it pays on deposits and borrowings--increased to 2.16% on Dec. 31, 1989, from 1.41% a year earlier.

But for most of the year, Citadel, like many thrifts, suffered from a narrower net interest margin, squeezed between low interest rates it offered on adjustable-rate mortgages and the increasing cost of its borrowings.

Citadel also said it met all three of the new federal guidelines for capital reserve levels, which are meant to ensure that thrifts maintain an adequate cushion against losses.