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CALIFORNIA FEDERAL BANK ANNOUNCES STRATEGIC DIRECTION

 LOS ANGELES, Jan. 5 /PRNewswire/ -- California Federal Bank (NYSE: CAL) Chief Executive Officer Edward G. Harshfield today announced that a decision has been made by the bank's board to pursue a "hold and fix" business strategy designed to maximize value for the bank's shareholders. Harshfield said the bank's strategy was developed over the past six months by its board and management, in consultation with Smith Barney Shearson Inc., the bank's financial advisor. The bank outlined three key elements of its strategy:
 Focus on Core California Operations
 The bank will concentrate its operations in California and Nevada and focus all efforts on maximizing its operating profits in that region. To that end, the bank has engaged Smith Barney Shearson to sell its Southeast Division, which consists of 43 branches located in Florida and one branch in Georgia with combined deposits in excess of $4 billion. The sale would strengthen the bank's regulatory capital position and provide the flexibility to strengthen its core California business. The bank said marketing efforts are under way to sell its Southeast Division and that it expects to begin receiving bids in early 1994. The bank expects that the sale of the division, including required regulatory approvals, could be completed no later than the third quarter of 1994.
 Capital Raising
 The bank intends to raise between $200-$300 million in new capital through the sale of preferred stock and a rights offering to the holders of its common stock. The rights are expected to be freely transferable, and the bank expects that the offering will be backed by standby agreements. The bank expects to file registration statements relating to these offerings early in the first quarter of 1994. These offerings will only be made by means of an offering circular.
 Non-Performing and Other High Risk Assets
 The bank has engaged CS First Boston to advise it as to the potential benefits and costs of accelerating dispositions of its non- performing assets. In the interim, the bank will continue its ordinary course, loan-by-loan, property-by-property method of working out and disposing of its non-performing assets. The bank has also engaged CS First Boston to advise it as to the potential benefits and costs of securitization or other credit enhancements with respect to a portion of its performing California multifamily and commercial loans to further reduce the bank's real estate risk. Approximately $2.9 billion of the bank's multifamily and commercial loan portfolio is concentrated in California. While these loans are now performing, some uncertainty continues to exist with respect to the future short range prospects for the California economy. At the same time, the low interest rates have created an active market for securitized multifamily and commercial loans. CS First Boston has been directed to complete its study by the end of the first quarter of 1994.
 "Our strategy to maximize value for Cal Fed's shareholders should result in a strong, well capitalized bank," Harshfield said. "In determining to pursue this course, the board carefully considered a variety of alternatives including a sale of the bank," Harshfield added. "There have been rumors that the Bank was for sale, and, in fact, we have received expressions of interest in pursuing discussions to purchase the bank," he said. "However, after a review of various alternatives and after considering the advice and analysis provided by Smith Barney Shearson and the board's other advisors, the board has decided that the chosen strategy clearly presents the superior opportunity to maximize value for our shareholders," Harshfield said.
 "In my time at California Federal, I have been impressed by the ability and dedication of our management team," Harshfield said. "We have assembled an impressive team of outside advisors to assist us in meeting our objectives, and, while it will require hard work by all, I believe the goals are achievable. When they have been completed, the bank should be positioned as a strongly capitalized, vital competitor among other California consumer banks," Harshfield added.
 Separately, the bank said it will report detailed results for its 1993 fourth quarter and full year as is customary in late January. The bank anticipates that the results for the fourth quarter will be comparable to its 1993 third quarter results.
 California Federal Bank, FSB, is the nation's fifth-largest publicly traded savings institution. The bank provides retail banking services through its 183 savings and lending offices in California, Florida, Nevada and Georgia.
 -0- 1/5/94
 /CONTACT: Edward G. Harshfield, 213-932-4681, or James F. Hurley, 213-930-9750/
 (CAL)


CO: California Federal Bank ST: California IN: FIN SU:

JB-LS -- LA044 -- 9507 01/05/94 17:09 EST
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Date:Jan 5, 1994
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