DeGeorge Financial Corporation Announces Layoffs.

CHESHIRE, Conn.--(BUSINESS WIRE)--April 28, 1999--

DeGeorge Financial Corporation (DEGE) announced today that it has been forced to layoff a substantial number of its sales and operations staff at the Company's Cheshire, Connecticut headquarters. This action was precipitated by the abrupt cutoff of funding to the Company by Residential Funding Corporation, a subsidiary of General Motors Acceptance Corporation ("GMAC-RFC") in December of last year, and follows significant layoffs of Company personnel which took place in January of this year.

DeGeorge's Chairman and Chief Executive Officer, Peter R. DeGeorge, commented "We are deeply disturbed by the necessity of having to take this action. We are continuing to do everything that we can to find new financing to re-capitalize and save this terrific Company that we've built. Unfortunately, the actions of Residential Funding have limited our options and we are running out of time. Even though our agreement with GMAC-RFC does not expire until June of this year, their refusal to purchase construction loans from us since December or to respond in a positive fashion to any of the numerous proposals which have been made to them by ourselves and potential investors leave us with little flexibility."

In December of 1998, the Company had engaged Lehman Brothers, a top investment banking firm, to assist it in finding an equity investor and new sources of financing to replace GMAC-RFC.

Mr. DeGeorge continued "Although several potential investors have expressed a strong interest in our business, the combination of the false allegations in GMAC-RFC's lawsuit against us (which we believe to be meritless), their constant attacks on our reputation in the marketplace and their refusal to entertain any reasonable proposal short of liquidation of the Company have combined to block our efforts to re-capitalize. The irony of this is that, from the inception of our agreement with GMAC-RFC in 1995 until recently, the Company had a very good relationship with them. GMAC-RFC did not experience any losses on the construction contracts which we sold to them while they were honoring the agreement. GMAC-RFC amended the original contract several times to increase the amount we could borrow, lower our interest rate and lower our reserve requirements. We shared our business plans with them and, with their encouragement, rapidly increased the size of our business. The path that GMAC-RFC has now chosen is destroying our business and will result in massive losses to them."

Gregory J. Hendel, President and Chief Operating Officer of the Company, added "What GMAC-RFC has done to our employees, to our customers, to our stockholders and our Company is, in my opinion, disgraceful. Just when we had the highest sales and customer application levels in the 50-year history of the Company, GMAC-RFC breached the contract, refusing to purchase additional construction loans in accordance with our agreement. We believe that we would have been very profitable in 1999 if the agreement had continued in place. Now what we have is a major lawsuit against GMAC-RFC which we believe will both vindicate our actions and lead to a substantial monetary recovery for the Company. Unfortunately, that will not happen in time to help us."

Mr. Hendel continued "Our people have done a tremendous job holding this place together during this difficult period and I am extremely grateful to them for all their support and loyalty. I can honestly say that this is one of the most talented and dedicated teams that I have ever had the pleasure of working with. We will continue to do everything that we can to find new funding sources to save our company and rehire all of these fine people in the near future."

The Company also announced that its chief financial officer, Mr. Salvatore A. Bucci, is no longer with the Company. There are no allegations of financial impropriety or financial misconduct.

DeGeorge Financial Corporation provides access to home ownership for people who lack a sufficient down payment or sufficient income to support the purchase of the home they desire through conventional mortgage programs. Through its packaging of financial services and customer support, the Company enables its customers to reduce the cost of home construction by eliminating the general contractor, the intent of which is to create an equity position that serves as the down payment for permanent financing upon the conclusion of the home construction process. The Company was founded in 1946 and has enabled more than 40,000 American families to get into the home they need.