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CALFED INC. REPORTS 1991 RESULTS; BANK SUBSIDIARY IN CAPITAL COMPLIANCE AT YEAR-END

 CALFED INC. REPORTS 1991 RESULTS;
 BANK SUBSIDIARY IN CAPITAL COMPLIANCE AT YEAR-END
 LOS ANGELES, Jan. 23 /PRNewswire/ -- CalFed Inc. (NYSE: CAL) today reported a net loss for the year ended Dec. 31, 1991, of $139.1 million, or $5.43 per fully diluted share, compared to a net loss of $256.9 million, or $10.16 per fully diluted share, for 1990.
 The loss for 1991 primarily was due to provisions for losses on loans and real estate totaling $336.7 million recorded during the year to address the adverse impact of both a recessionary economy and weak real estate values on the Company's loan and real estate portfolios. Provisions for loan and real estate losses totaled $444.3 million in 1990.
 The high level of loss provisions overshadowed the improvement in the operating strength of the company's core banking business, which posted gains in retail deposit growth and fee income during 1991, while continuing to control operating expenses and remaining in compliance with year-end regulatory capital requirements.
 For the fourth quarter of 1991, CalFed Inc. reported a net loss of $83.6 million, or $3.26 per fully diluted share, compared to a net loss of $130.5 million, or $5.11 per fully diluted share, for the fourth quarter of 1990. The loss for the fourth quarter of 1991 reflects provisions for loan and real estate losses of $171.0 million. Provisions for loan and real estate losses for the comparable 1990 period were $211.6 million. During the fourth quarter of 1991, the company's consumer bank subsidiary, California Federal Bank, FSB, underwent an annual regulatory examination by the Office of Thrift Supervision (OTS), which was concluded in January 1992. No additional provisions for loss are anticipated as a result of the examination.
 Despite the reported loss, California Federal Bank met the regulatory capital requirements in place for the industry at Dec. 31, 1991. At year-end 1991, the bank's tangible, core and risk-based capital ratios were 2.51 percent, 4.01 percent and 7.31 percent, respectively. The corresponding regulatory requirements at Dec. 31, 1991, were 1.5 percent, 3.0 percent and 7.2 percent.
 "Economic and regulatory pressures made 1991 a difficult year for CalFed Inc.," said Jerry St. Dennis, chairman and chief executive officer of CalFed Inc. "With real estate values declining steadily and unemployment rising, particularly in California, problem loans continued to increase during the fourth quarter, and it was prudent for the company to increase its reserves for loan and real estate losses. In addition, CalFed has been subjected to intense regulatory scrutiny," he said.
 Despite these negative factors, retail core deposits increased to $13.5 billion at Dec. 31, 1991, from $13.1 billion at year-end 1990. The bank was particularly successful in establishing new checking account relationships, opening nearly 91,000 checking accounts during the year. Checking, money market and other non-term savings accounts, which represent a source of lower costing funds, comprised 35 percent of the bank's total deposits at Dec. 31, 1991, compared to 24 percent at the end of 1990.
 "This progress in attracting and retaining retail deposits is encouraging, given the uncertain regulatory climate and the tremendous disintermediation that took place throughout the banking sector as deposit rates fell late in the year," said St. Dennis. "This improvement is evidence of California Federal Bank's strong retail banking network and its growing ability to provide quality products and superior service to its customers."
 Fee income, an important component of the company's core earnings, increased 33 percent to $66.0 million in 1991 from $49.6 million in 1990. The increase reflects a 75 percent improvement in fees on sales of alternative investment products and a 46 percent rise in loan servicing income. Sales of alternative investment products totaled $458.7 million in 1991, compared to $197.7 million in 1990. The company's portfolio of loans serviced for others totaled $8.6 billion, up $2.3 billion from the end of 1990.
 CalFed originated $3.1 billion in new loans in 1991, 88 percent of which were single-family home loans, compared to $4.8 billion in 1990. The lower origination volume in 1991 reflects a decline in home buying activity as well as the company's strategic decision to discontinue income-property and commercial lending activities in 1991.
 General and administrative expenses declined $13.2 million to $373.6 million in 1991, compared to 1990. Expenses in 1991 included a $5.3 million litigation reserve and $7.0 million in severance and other non-recurring costs associated with an agreement to outsource the management of the company's data processing operations. In the two years since CalFed initiated its restructuring strategies, the company has reduced general and administrative expenses by more than $40 million.
 The principal factors leading to the company's loss for 1991 were an increased level of non-performing assets (non-accrual, past due and restructured loans and real estate acquired in settlement of loans) and the related higher provisions for losses.
 At year-end 1991, non-performing assets totaled $1,032.9 million, or 5.61 percent of assets, compared to $783.0 million, or 3.20 percent of assets, at the end of 1990, due to sharp increases in single- and multi-family residential loan and commercial loan delinquencies. Though residential mortgage delinquencies rose in 1991, the company has not experienced a proportionate increase in losses in that segment of its loan portfolio.
 In response to the increase in foreclosures and delinquencies during 1991, the company increased its loan loss reserves. The company's provision for loan losses for 1991 was $171.2 million, compared to $286.9 million for 1990. CalFed's allowance for loan losses totaled $321.6 million at Dec. 31, 1991, compared to $239.6 million at year-end 1990.
 The company's interest-rate spread for 1991 improved to 2.37 percent from 2.30 percent for 1990, reflecting the overall reduction in market interest rates. The interest rate spread at the end of 1991 was 2.60 percent, a 34 basis-point improvement from the end of 1990. However, the increase in non-performing assets and a $3.8 billion reduction in interest earning assets during 1991 mitigated the benefit of the improved interest rate spread. Net interest income for 1991 was $430.3 million, compared to $481.7 million in 1990. The reduction in assets is consistent with the company's strategy for complying with increasing regulatory capital requirements and was accomplished primarily through sales of loans and mortgage-backed certificates.
 During the fourth quarter of 1991, the OTS directed a subsidiary of California Federal Bank to write down its investment in a group of real estate
assets by $41.0 million. As a result, the company's


1991 provision for losses on real estate held for investment (REI) was $97.2 million, compared to a provision of $124.4 million in 1990.
 After sales of approximately $210 million and the effects of the write-downs during the year, the company's REI totaled $224.6 million at year-end 1991, compared to $448.0 million at the end of 1990. Since Dec. 31, 1989, the company has reduced its REI by approximately 58 percent.
 As a result of a concerted restructuring strategy to improve regulatory capital ratios and emphasize its consumer banking business, CalFed's total assets declined by over $6 billion since the end of 1990 to equal $18.4 billion at Dec. 31, 1991. In 1991, the company sold its life insurance subsidiary, which accounted for $2 billion of the decline in assets.
 At Dec. 31, 1991, stockholders' equity stood at $1.0 billion, a $136.6 million decrease from year-end 1990. The company's equity-to-asset ratio at the end of 1991 was 5.47 percent, compared to 4.66 percent at the end of 1990. Tangible book value per share was $20.23 on 25,642,288 common shares outstanding at Dec. 31, 1991, compared to $24.81 per share on 25,563,438 common shares outstanding at Dec. 31, 1990.
 Although California Federal Bank has $973.6 million in equity capital and has consistently met the industry's regulatory capital requirements since their implementation, the OTS in November notified the bank that it is proposing an individual minimum capital requirement (IMCR) that would require the bank to increase equity capital by $375 million by June 30, 1992. Subsequently, the OTS notified CalFed Inc. that the regulatory agency intends to demand a capital contribution from the parent company in the event the bank does not meet the IMCR if it becomes effective. Calling the proposed requirement "excessive" and "counterproductive," California Federal Bank filed a formal response with the OTS in December. The OTS has not yet indicated to the bank if the proposed IMCR will be imposed, modified or withdrawn.
 On Jan. 1, 1992, industry regulations required that the amount of supervisory goodwill included in the bank's core and risk-based capital be reduced by $86.6 million. Had this reduction been effective at Dec. 31, 1991, the bank would not have been in compliance with its risk-based capital requirement though it would have continued to meet its tangible and core capital requirements. The company continues to evaluate various alternatives to increase the bank's regulatory capital.
 During the third quarter of 1991, California Federal Bank's trust subsidiary, Trust Services of America Inc., agreed to sell a substantial portion of its fiduciary operations. The agreement is under review by the California State Banking Department.
 CalFed Inc. is a Los Angeles-based financial services holding company. Its principal subsidiary, California Federal Bank, FSB, provides home mortgage loans and consumer banking services through offices in California, Florida, Nevada and Georgia.
 CALFED INC. AND SUBSIDIARIES
 Consolidated Statements of Financial Condition
 (Dollars in millions)
 Dec. 31,
 1991 1990
 Assets:
 Cash $450.4 $367.2
 Certificates of deposit 55.8 5.8
 Federal funds sold --- 210.0
 Investment securities 415.1 1,137.4
 Securities held for sale 834.3 ---
 Mortgage-backed
 securities 1,197.6 1,557.6
 Loans receivable 13,292.5 15,403.5
 Loans receivable and
 mortgage-backed securities
 held for sale 484.7 1,618.1
 Other FDIC-related
 earning assets 14.6 154.0
 Interest receivable 119.8 161.9
 Real estate held for
 sale or investment 224.6 448.0
 Real estate acquired in
 settlement of loans 273.0 282.0
 Federal Home Loan Bank
 stock 146.3 178.4
 Prepaid expenses
 and other assets 215.4 186.7
 Premises and equipment 149.3 174.6
 Goodwill 487.6 508.7
 Assets of discontinued
 operations 34.4 2,057.8
 Total assets $18,395.4 $24,451.7
 Liabilities and Stockholders' Equity
 Deposits $14,827.7 $17,210.4
 Advances from Federal
 Home Loan Banks 1,566.2 2,381.2
 Securities sold under
 agreements to repurchase 68.1 434.0
 Convertible subordinated
 debentures 122.6 122.6
 Federal funds purchased --- 31.3
 Other borrowings 461.5 806.9
 Other liabilities 335.7 394.0
 Liabilities of discontinued
 operations 7.3 1,928.4
 Total liabilities 17,389.1 23,308.8
 Commitments and contingencies
 Stockholders' equity:
 Common stock 25.7 25.6
 Additional paid-in
 capital 478.3 478.0
 Net unrealized losses
 on equity securities (.5) (4.1)
 Retained earnings 502.8 643.4
 Total stockholders'
 equity 1,006.3 1,142.9
 Total liabilities and
 stockholders' equity $18,395.4 $24,451.7
 CALFED INC. AND SUBSIDIARIES
 Consolidated Statements of Operations
 (Dollars in millions)
 For the For the
 Three months ended Twelve months ended
 Dec. 31, Dec. 31,
 1991 1990 1991 1990
 Interest income:
 Loans receivable $331.6 $440.7 $1,515.6 $1,847.5
 Mortgage-backed
 securities 28.7 61.4 135.9 201.6
 Investment securities 25.2 42.7 136.9 172.4
 FDIC-related
 earning assets --- 2.9 6.0 13.4
 Total interest
 income 385.5 547.7 1,794.4 2,234.9
 Interest expense:
 Deposits 238.3 330.9 1,096.3 1,267.6
 Borrowings 46.2 101.1 267.8 485.6
 Total interest
 expense 284.5 432.0 1,364.1 1,753.2
 Net interest income 101.0 115.7 430.3 481.7
 Provision for
 loan losses 97.3 177.9 171.2 286.9
 Net interest income
 after provision for
 loan losses 3.7 (62.2) 259.1 194.8
 Other income:
 Fee income 18.7 12.5 66.0 49.6
 Gain (loss) on
 sales of loans 1.7 (1.5) 11.7 (1.9)
 Gain on sales of
 mortgage-backed
 securities 2.8 5.8 13.1 5.8
 Gain (loss) on sales
 of investment
 securities 9.9 (.3) 8.1 (.3)
 Operations of
 real estate held
 for investment (56.8) (17.4) (102.3) (122.2)
 Operations of
 real estate acquired
 in settlement
 of loans (37.6) (15.7) (112.7) (46.8)
 FDIC capital loss
 coverage on real
 estate acquired in
 settlement of loans 19.4 (3.6) 34.4 14.3
 City business license
 tax refund 35.6 --- 35.6 ---
 Other (3.6) (2.1) 2.8 (3.6)
 Total other income (9.9) (22.3) (43.3) (105.1)
 Other expenses:
 Compensation 41.3 41.4 165.0 174.4
 Office occupancy 17.8 16.9 62.3 65.3
 Other general and
 administrative 34.1 41.4 108.3 112.2
 Amortization of
 goodwill 5.2 5.3 21.1 21.3
 Federal deposit
 insurance premiums
 and special
 assessments 9.3 8.6 38.0 34.9
 Total other expenses 107.7 113.6 394.7 408.1
 Earnings (loss) from
 continuing operations
 before income tax
 expense (benefit) (113.9) (198.1) (178.9) (318.4)
 Income tax expense
 (benefit) (40.5) (66.8) (47.0) (93.7)
 Net loss from
 continuing
 operations (73.4) (131.3) (131.9) (224.7)
 Earnings from
 discontinued
 operations, net
 of taxes .6 .8 3.6 9.3
 Loss on sale of
 discontinued
 operations, net
 of taxes (10.8) --- (10.8) (41.5)
 Net loss ($83.6) ($130.5) ($139.1) ($256.9)
 Primary loss per
 common share
 from continuing
 operations ($2.86) ($5.14) ($5.15) ($8.89)
 Fully diluted loss
 per common share
 from continuing
 operations ($2.86) ($5.14) ($5.15) ($8.89)
 Primary loss per
 common share ($3.26) ($5.11) ($5.43) ($10.16)
 Fully diluted loss
 per common share ($3.26) ($5.11) ($5.43) ($10.16)
 -0- 1/23/92
 /CONTACT: James F. Hurley, 213-930-9750, or Rhanda Kahawaii Dunn, 213-932-2283, both of CalFed Inc./
 (CAL) CO: CalFed Inc. ST: California IN: FIN SU: ERN


EH-JL -- LA009 -- 2580 01/23/92 07:17 EST
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