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GLENDALE FEDERAL BANK ANNOUNCES EXCHANGE OFFER FOR BANK DEBT AND CONSENT TO ISSUANCE OF CAPITAL DIRECTIVE

 GLENDALE, Calif., Jan. 28 /PRNewswire/ -- Glendale Federal Bank, the primary subsidiary of GLENFED Inc. (NYSE: GLN), announced that it has commenced an exchange offer for $36 million of its publicly traded 14 7/8 percent subordinated capital notes due 1997, and has entered into a definitive agreement with the holders of $105 million of its privately placed subordinated debt. In each case, the outstanding debt would be exchanged for new 12 percent non-cumulative perpetual preferred stock of the bank that is expected to be eligible to be included in the bank's core capital. The exchanges are anticipated to increase the bank's core capital by approximately $128 million if all of the conditions for their consummation are satisfied.
 The bank also announced that the Office of Thrift Supervision (OTS), with the consent of the bank, has issued a "prompt corrective action directive" to the bank, based on the bank's status as a "significantly undercapitalized" institution under provisions of the Federal Deposit Insurance Corp. Improvement Act of 1991 (FDICIA) that became effective on Dec. 19, 1992. The directive consists of two principal elements; one is a requirement to improve capital, and the other is the implementation of a series of operating restrictions.
 The directive directs the bank to raise additional capital by selling a sufficient number of shares, voting shares, or obligations to achieve a 5.0 percent core capital ratio and a 10.0 percent risk- based capital ratio by June 30, 1993. At Dec. 31, 1992, the bank's core and risk-based capital ratios were 2.56 percent and 6.35 percent, respectively. As an alternative to issuance of securities, the bank is directed to recapitalize by merger or be acquired no later than June 30, 1993.
 The directive requires the bank and its board of directors to make diligent and good faith efforts to seek sufficient capital by June 30, 1993. The bank is required to provide monthly reports to the OTS concerning its actions in this regard, and the OTS reserves the right to take additional action if it determines that the bank is failing to make adequate progress towards achieving the specified capital requirements.
 A key element of the bank's plan to increase its capital position is the restructuring of its outstanding subordinated debt. The exchange offer with the 14 7/8 capital noteholders is part of this restructuring. The offer provides for the exchange for each $1,000 principal amount of the bank's capital notes of 100 shares of a new series B, non-cumulative preferred stock of the bank, and, if 90 percent or more of the capital notes are tendered in the exchange offer, common stock warrants. The preferred stock in the bank will bear a $10 liquidation preference and a 12 percent ($1.20) annual cash dividend. The warrants would be exercisable without additional consideration one year from the date of issuance for an amount of common stock equal to between 2.5 percent and 5 percent of the common stock of the bank, dependent upon the percentage of capital notes, in excess of 90 percent, tendered in the exchange offer.
 The exchange offer is conditioned upon, among other things, acceptance of the offer by holders of at least 90 percent of the outstanding principal amountreement for the same new preferred stock; and various corporate, stockholder and regulatory approvals. The exchange offer expires Feb. 25, 1993.
 Restructuring of the bank's $141.7 million of subordinated debt into equity capital is designed to help meet higher regulatory capital levels by June 30, 1993, and to avoid possible receivership or conservatorship.
 The exchange offer will be made only by the offering circular. This release does not constitute either an offer to sell or a solicitation of an offer to buy these securities. Copies of the offering circular may be obtained from the Information Agent, McCormick & Pryor Ltd. at 800-572-4845.
 The directive issued by the OTS incorporates certain mandatory restrictions under FDICIA, including restrictions on capital distributions, asset growth, and expansion of operations and activities and compensation of senior executive officers. The directive also imposes certain additional discretionary operating restrictions on the bank.
 In addition, the bank is also required to obtain the prior written consent of the OTS before entering into any material transaction, such as an investment, expansion, acquisition, sale of assets or other similar action with respect to which the bank is required to provide notice to the OTS; amending its charter or bylaws; or making any material change in accounting methods.
 The bank is further required to take certain actions to implement recommendations made in the 1992 regulatory examination of the bank.
 The OTS further advised the bank that the capital plan previously submitted by the bank under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) does not meet the requirements for a capital restoration plan under FDICIA. As a result, the bank was directed to amend its pending capital plan to meet the additional requirements for capital restoration plans under FDICIA.
 Glendale Federal Bank is the nation's fifth largest savings bank. It provides community banking services through 214 banking offices in California, Florida and Washington.
 -0- 1/28/92
 /CONTACT: Judy Cunningham, 818-500-2274, or Rosanne O'Brien, 818-500-2824, both of Glendale Federal Bank/
 (GLN)


CO: Glendale Federal Bank, GLENFED Inc. ST: California IN: FIN SU: OFR

LS-JB -- LA016 -- 0087 01/28/93 09:17 EST
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Date:Jan 28, 1993
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