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GLENDALE FEDERAL BANK CAPITAL PLAN APPROVED; PCA DIRECTIVE REVISED TO REMOVE JUNE 30 DEADLINE FOR RECAPITALIZATION

 GLENDALE, Calif., June 23 /PRNewswire/ -- Glendale Federal Bank, the principal subsidiary of GLENFED Inc., (NYSE: GLN), today announced that the Office of Thrift Supervision (OTS) has approved the Bank's capital restoration plan and amended the prompt corrective action (PCA) directive issued in January 1993 to, among other changes, remove the June 30, 1993 deadline previously imposed on the Bank to reach regulatory capital levels of 5 percent core and 10 percent risk-based capital.
 The primary focus of the capital plan is the proposed recapitalization transactions announced by the Bank on June 14, 1993. The amended directive requires that the Bank complete these transactions no later than Aug. 31, 1993. The transactions include a merger of GLENFED into a subsidiary of the Bank, an exchange offer of Bank common stock and stock purchase rights for outstanding subordinated debt of GLENFED, a reclassification of outstanding preferred stock of the Bank, a shareholder rights offering of between $250 million and $300 million of Bank common stock, such offering to be backed by standby commitments from institutional and other investors, and a $125 million offering to institutional investors of Bank preferred stock.
 Stephen J. Trafton, chairman and chief executive officer, said, "OTS approval of our capital plan recognizes the progress we have made to recapitalize the Bank. Having cleared this significant hurdle, we can now concentrate on obtaining the required GLENFED stockholder approval of the recapitalization plan and completing successfully the capital raising steps we have outlined."
 The amended PCA directive requires that the Bank achieve capital ratios at the Sept. 30, 1993 quarterly measurement date of 4.5 percent core capital and 9.0 percent risk-based capital -- levels which the Bank expects to be able to meet upon completion of the proposed recapitalization transactions. In acknowledgement of the possibility that the Jan. 1, 1994 phaseout from regulatory capital of half of the supervisory goodwill currently included in the capital calculations may cause the Bank to fall below those levels, the amended directive requires the Bank to remain above 4 percent core and 8 percent risk-based capital for the next two quarters and to again meet the 4.5 percent core and 9 percent risk-based capital levels by June 30, 1994. Finally, the amended directive requires the Bank to attain 5 percent core and 10 percent risk-based capital by Dec. 31, 1994.
 The amended directive provides that the directive will be automatically terminated if the Bank reaches the 5 percent core and 10 percent risk-based capital levels at any time prior to Dec. 31, 1994. After such early termination, the Bank would no longer be subject to any restrictions not otherwise applicable under governing law and OTS regulations.
 Trafton stated, "The capital plan provides for the Bank to meet the 5 percent core and 10 percent risk-based capital requirements after completion of the proposed recapitalization without having to raise additional new equity capital that would result in further dilution of equity interests. Depending upon the amount of new capital raised in the currently contemplated transactions, the Bank expects to be able to reach the higher capital standards through a further reduction in asset size, such as from the sale of selected branch offices, in combination with earnings enhancement and cost reduction strategies."
 The amended PCA directive also removed several of the operating restrictions imposed in the original directive issued in January of this year. The remaining restrictions include those required under the mandatory provisions of the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA), including restrictions on dividends and other capital distributions, asset growth, expansion of operations and activities and compensation of senior executive officers. With respect to such dividend limitations, the capital plan contemplates payment of cash dividends on the new preferred stock that would be issued in the proposed recapitalization. By approving the capital plan, the OTS has agreed in principle to permit such payments, subject to specific approval at the time the proposed transactions are finalized and specific dividend amounts may be determined.
 The amended directive also continues in effect certain discretionary operating restrictions, including restrictions on the payment of interest on deposits, certain transactions with affiliates, entering into or modifying employment contracts with senior executive officers and directors, entering into material transactions outside the ordinary course of the Bank's business, amending the Bank's charter or bylaws or making any material change in accounting methods.
 Glendale Federal Bank provides community banking services through 215 bank offices in California, Florida and Washington State.
 -0- 6/23/93
 /CONTACT: Judy Cunningham, 818-500-2274 or Jeff Misakian, 818-500-2824, both of Glendale Federal Bank/
 (GLN)


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

EH -- LA011 -- 4901 06/23/93 09:48 EDT
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Date:Jun 23, 1993
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