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ANCHOR BANCORP ANNOUNCES AGREEMENT TO REPURCHASE ITS PREFERRED STOCK FROM THE FDIC

 HEWLETT, N.Y., April 21 /PRNewswire/ -- Anchor Bancorp, Inc. (NASDAQ: ABKR), parent company of Anchor Savings Bank FSB, reported today that the Board of the Federal Deposit Insurance Corp. (FDIC), as manager of the FSLIC Resolution Fund (FRF), approved a letter of intent with Anchor Bancorp which provides for the repurchase by Anchor of $157.0 million of its Class A cumulative preferred stock that is currently outstanding and held by the FRF and the satisfaction of all accumulated but unpaid dividends which amounted to $44.6 million at March 31, 1993.
 Mr. James M. Large Jr., chairman and chief executive officer, stated that in exchange for the preferred stock and all accumulated but unpaid dividends, Anchor will issue to the FDIC $71.0 million in subordinated debentures with a 10-year maturity and market terms that are yet to be negotiated. In addition, Anchor will issue to the FDIC 10-year warrants on between 4,500,000 and 4,750,000 shares of its common stock at an exercise price of $.01 per share. The FDIC will have the right to sell such warrants at their option but only in a widely dispersed public offering or an offering expressly approved by Anchor. The transaction is contingent upon Anchor Bancorp successfully raising $50 million in new equity by July 31, 1993 which is to be downstreamed into the Savings Bank as additional capital. This will occur through a public offering of common stock that will take place as soon as possible and is expected to occur in the month of June. If market conditions permit, Anchor intends to raise new equity in excess of the $50 million requirement.
 The FDIC transaction is subject to the preparation of a definitive agreement and other documents in a form acceptable to the Boards of both Anchor and the FDIC. It is also subject to a fairness opinion from Anchor's financial advisers. Mr. Large noted that these two transactions will, if successfully consummated, bring Anchor's leverage capital ratio close to the 5.0 percent level necessary to earn a "well capitalized designation" under the prompt corrective action regulatory guidelines of the Office of Thrift Supervision (OTS). It will also normalize Anchor's capital structure by substantially increasing the common shareholders' equity portion of its capital which is expected to facilitate access to the capital markets. These actions will also increase Anchor's book value per common share and remove the major existing restriction to the payment of common dividends in the event that Anchor's Board should decide to declare such dividends at some future date. Dilution of future earnings per share is expected since the transactions will increase the number of common shares outstanding from the March 31, 1993 level of 17.7 million shares. However, the dilution will be mitigated by the combined impact of replacing the non- tax deductible preferred dividend requirement, with the after-tax cost to service the subordinated debt and the earnings associated with the additional equity raised.
 Anchor also announced that the OTS has preliminarily determined that Anchor's leverage capital ratio at March 31, 1993 meets the 4 percent leverage capital requirement to be deemed "adequately capitalized" under the prompt corrective action guidelines. Assuming, as is expected, that the OTS confirms the 4.0 percent level upon receipt of Anchor's quarterly regulatory report filing, Anchor will be allowed to withdraw the Capital Restoration Plan it submitted in February and will not be subject to the restrictions imposed on "undercapitalized" financial institutions.
 -0- 4/21/93
 /CONTACT: Thomas K. Hernly of Anchor Bancorp, Inc., 516-596-3902/
 (ABKR)


CO: Anchor Bancorp, Inc. ST: New York IN: FIN SU:

WB -- NY052 -- 8676 04/21/93 11:18 EDT
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Publication:PR Newswire
Date:Apr 21, 1993
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