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GLENDALE FEDERAL BANK REPORTS FIRST QUARTER FISCAL 1994 RESULTS

 GLENDALE, Calif., Oct. 28 /PRNewswire/ -- Glendale Federal Bank (NYSE: GLN) today reported a net loss of $19.9 million, or $0.63 per share, for the first quarter of fiscal 1994, ended Sept. 30, 1993. This compares with a net loss of $16.8 million for the comparable quarter of fiscal 1993. The bank's recently completed recapitalization resulted in a significant change in the capital structure of the bank and its former parent, GLENFED Inc., and comparative per share figures for prior periods are, therefore, not meaningful.
 The current quarter's results include an extraordinary gain of $14.1 million on the exchange of $49.1 million of GLENFED's 7 3/4 percent convertible subordinated debentures for common stock of the bank in the bank's recapitalization. The first quarter of fiscal 1993 included a gain of $35.4 million from the sale of $1.4 billion of long-term, fixed-rate mortgage-backed securities and a $4.1 million extraordinary loss from the prepayment of borrowings incurred to fund these securities. The net loss before taxes and extraordinary items for the quarter was $44.0 million, compared with $12.7 million (after giving effect to the $35.4 million loan sale gain) for the same period of fiscal 1993.
 Stephen J. Trafton, chairman and chief executive officer, stated, "While the bank experienced a loss for the quarter, it was anticipated and we are encouraged by the continued, gradual improvement in asset quality we have been able to achieve. Our non-performing asset (NPA) balances have declined since February 1993, and our outflow/inflow ratio of NPAs -- defined as the ratio of sales, cures and other reductions of NPAs, excluding writedowns of NPA balances, over additions to NPAs -- has improved during the past year from 52 percent in the quarter ended Sept. 30, 1992, to 113 percent in the current quarter."
 The net loss reported for the first quarter of fiscal 1994 was due primarily to provisions for losses in the bank's loan portfolio, reflecting the continuing effects of economic and real estate difficulties in the bank's California markets. Also contributing to the loss for the current quarter, net interest income declined due to a narrowing of the interest rate spread.
 Total non-performing assets and restructured loans have continued their recent declines, from a peak of $1.02 billion, or 5.70 percent of total assets, in February 1993, to $905.0 million, or 5.04 percent of total assets, at Sept. 30, 1993. Non-performing assets and restructured loans at Sept. 30, 1992, totaled $890.1 million, or 4.99 percent of total assets.
 The provision for loan losses also declined for the third consecutive quarter, totaling $44.9 million for the quarter ended Sept. 30, 1993, compared with $46.1 million and $64.2 million in the fourth and third quarters of fiscal 1993, respectively. The provision for loan losses for the quarter ended Sept. 30, 1992, was $63.8 million.
 The bank's allowance for loan losses totaled $347.8 million at Sept. 30, 1993, and represented a ratio of allowance to non-accrual loans of 69.1 percent and a ratio of allowance to total gross loans of 3.46 percent. At June 30, 1993, the allowance for loan losses totaled $334.8 million, and the comparable ratios were 68.6 percent and 3.01 percent, respectively, while at Sept. 30, 1992, the allowance for loan losses totaled $307.1 million, and the comparable ratios were 64.7 percent and 2.47 percent, respectively.
 Assets of the commercial (asset-based) lending and real estate development subsidiaries have been reduced to $107.7 million (including $14.5 million of cash) at Sept. 30, 1993. Losses on operations of real estate held for sale or investment (REI) continued to decline, totaling $1.0 million for the first quarter of fiscal 1994, compared with $10.2 million for the same period a year ago. Losses on operations of real estate acquired in settlement of loans (REO) totaled $3.1 million, compared to $13.1 million in the first quarter last year. The loss from REO operations in the current quarter includes $4.5 million of operating expenses and $3.5 million in provisions for estimated losses, offset by $4.8 million in net gains after mark-to-market writedowns recorded on the sale of REO.
 Trafton noted, "The bank has recorded net gains (after mark-to- market writedowns) on the sale of REO for four successive quarters. While not substantial in amount, these gains serve as confirmation of our asset valuation and reserve determination practices."
 Net interest income before provisions for loan losses totaled $71.3 million for the quarter ended Sept. 30, 1993, compared with $81.7 million and $98.6 million for the quarters ended June 30, 1993, and Sept. 30, 1992, respectively.
 The reduction in the interest rate spread, which was 2.02 percent at Sept. 30, 1993, compared with 2.54 percent at Sept. 30, 1992, was primarily due to a decline in the yield on the bank's interest-earning assets, partially offset by a decrease in its cost of funds. The decrease in the yield on interest-earning assets was due to a combination of the declining interest rate environment and the substantial repayment and prepayment of higher-yielding loans and mortgage-backed securities, coupled with the lack of availability for investment by the bank of loans and mortgage-backed securities with yields equivalent to those repaid. In addition, the bank purchased a significant amount of short-duration collateralized mortgage obligations that have experienced prepayments at rates in excess of those estimated at the time of purchase, resulting in a faster than expected amortization of their related purchase premium.
 The bank's cost of funds also decreased due to declines in interest rates. However, these declines were offset by higher deposit costs incurred as a result of paying higher rates on certain deposit products to retain retail deposits during the period of widespread publicity of the bank's capital deficiency and resulting regulatory sanctions.
 Commented Trafton, "As a result of our successful recapitalization, we expect to be able to reduce our deposit rates to prevailing market levels. We also intend to reinvest our higher than normal liquidity portfolio balances, made necessary by our past financial condition and further increased by the substantial rate of repayments on loans, into higher-yielding loans and mortgage-backed securities."
 While Glendale Federal's total assets increased only slightly, from $17.8 billion at Sept. 30, 1992, to $18.0 billion at Sept., 30, 1993, the composition
of its assets and liabilities changed significantly during the year. Loans receivable decreased to $9.6 billion at


Sept. 30, 1993, from $10.7 billion and $12.0 billion at June 30, 1993, and Sept. 30, 1992, respectively. Mortgage-backed securities increased to $5.1 billion at Sept. 30, 1993, from $4.0 billion at June 30, 1993, and $2.1 billion
at Sept. 30, 1992. This shift from loans receivable to mortgage-backed securities included $1.6 billion of loans that were securitized by the bank from Sept. 30, 1992, to Sept. 30, 1993, including $914 million that were securitized in the first quarter of fiscal 1994.
 Deposits at Sept. 30, 1993, totaled $11.3 billion, a decrease of $2.0 billion from the $13.3 billion held at Sept. 30, 1992. These outflows reflected the widespread publicity during the past year of the bank's financial difficulties and also historically low interest rates that caused deposit outflows throughout the banking industry. These deposits were replaced by increasing borrowings, primarily short-term repurchase agreements. Borrowings at Sept. 30, 1993, totaled $5.4 billion, compared with $3.7 billion in the comparable year-ago period.
 First quarter operating expenses for fiscal 1994 (excluding goodwill amortization) increased slightly, to $72.9 million from $69.5 million last quarter and $71.0 million in the first quarter of fiscal 1993. Stated Trafton, "The bank is currently seeking to identify additional cost-saving measures to further reduce future operating expenses. While these measures may include the consolidation of some back-office operations, we do not expect any major layoffs to result."
 Glendale Federal Bank concluded its $451 million recapitalization transaction Sept. 17, 1993, and, subsequently, the Office of Thrift Supervision (OTS) rescinded its prompt corrective action (PCA) directive to the bank. As a result, the bank is deemed to be "adequately capitalized" under generally applicable federal regulatory standards. At Sept. 30, 1993, Glendale Federal had capital ratios of 4.00 percent tangible capital; 4.77 percent core capital; and 9.93 percent risk-based capital, compared with the required minimum regulatory capital ratios of 1.5 percent, 3.0 percent and 8.0 percent, respectively.
 Trafton commented, "With the successful recapitalization behind us, we are unleashing an aggressive marketing campaign designed to enhance relationships with existing customers, re-establish relationships with previous customers and attract new customers to the bank. We are aggressively seeking to take advantage of our strength as a community bank meeting the family financial needs of our customers with a high degree of customer satisfaction and trust."
 Glendale Federal Bank is one of the nation's largest savings institutions, providing community banking services through 215 banking offices in California, Florida and Washington state.
 GLENDALE FEDERAL BANK FIRST QUARTER EARNINGS(a)
 Financial Highlights
 (Dollars in thousands except per-share data)
 (Unaudited)
 Three months ended Sept. 30: 1993 1992
 Net interest income before provision
 for loan losses $71,303 $98,612
 Loss before income tax benefit ($43,957) ($12,702)
 Income tax benefit (9,927) ---
 Loss before extraordinary items (34,030) (12,702)
 Extraordinary items, net 14,092 (4,100)
 Net loss ($19,938) ($16,802)
 Loss per share(b):
 Primary
 Loss before extraordinary items ($1.07) N/A
 Net loss ($0.63) N/A
 Fully diluted
 Loss before extraordinary items ($1.07) N/A
 Net loss ($0.63) N/A
 At Sept. 30:
 Assets $17,957,472 $17,840,131
 Cash, short-term and other
 investment securities 1,672,509 2,033,721
 Loans receivable 9,607,950 12,002,726
 Mortgage-backed securities 5,104,402 2,060,999
 Excess cost over fair value of
 net assets acquired 381,465 397,504
 Deposits 11,311,818 13,284,854
 Borrowings 5,376,107 3,659,465
 Stockholders' equity 1,086,304 686,713
 Book value per common share(b) 25.34 N/A
 Tangible book value per common share(b) 13.33 N/A
 Shares outstanding(b) 31,774,344 N/A
 1993 1992
 Loan Volume
 For the three months ended Sept. 30:
 Loans originated $427,381 $438,334
 Loans purchased 11,651 12,539
 Mortgage-backed securities purchased 1,044,764 778,310
 Loans and mortgage-backed
 securities sold 211,714 1,703,425
 Average Interest Rate at Sept. 30:
 Loans and mortgage-backed securities 6.38 pct 7.72 pct
 Investments 4.19 pct 3.83 pct
 Loans and investment portfolio 6.16 pct 7.25 pct
 Deposits 4.22 pct 4.60 pct
 Borrowings 3.99 pct 5.12 pct
 Deposits and borrowings 4.14 pct 4.71 pct
 Interest rate spread 2.02 pct 2.54 pct
 Non-Performing Assets and
 Restructured Loans at Sept. 30:
 Non-accrual loans $502,917 $474,890
 REO and other assets 339,253 326,258
 Total non-performing assets 842,170 801,148
 Restructured loans 62,856 89,000
 Total non-performing assets and
 restructured loans $905,026 $890,148
 1993 1992
 Non-performing assets and restructured
 loan ratios at Sept. 30(c):
 Non-accrual loans 2.80 pct 2.66 pct
 REO and other assets 1.89 pct 1.83 pct
 Total non-performing assets 4.69 pct 4.49 pct
 Restructured loans 0.35 pct 0.50 pct
 Total non-performing assets and
 restructured loans 5.04 pct 4.99 pct
 Glendale Federal
 Capital Ratios at Sept. 30, 1993: Federal Bank Requirement
 Tangible capital 4.00 pct 1.50 pct
 Core capital 4.77 pct 3.00 pct
 Risk-based capital 9.93 pct 8.00 pct
 (a) Glendale Federal Bank's fiscal year ends June 30. Additionally, GLENFED Inc. was merged into a subsidiary of the bank. The financial information reflects the consolidated financial statements of the bank, including GLENFED Inc. for all periods presented.
 (b) Completion of the bank's recapitalization resulted in a significant change in the capital structure of the bank and its former parent, GLENFED Inc. Comparisons to the former capital structure of GLENFED Inc. are, therefore, not meaningful. Accordingly, share and per share figures for prior periods are not applicable, and the per share figures for the current quarter are based on common shares outstanding at the end of the quarter.
 (c) As a percentage of total assets.
 GLENDALE FEDERAL BANK FIRST QUARTER EARNINGS
 Consolidated Statement of Operations(a)
 (Dollars in thousands)
 (Unaudited)
 Three Months Ended
 Sept. 30,
 1993 1992
 Interest income:
 Loans receivable $186,864 $254,802
 Mortgage-backed securities 46,202 40,223
 Investments 12,443 14,516
 Total interest income 245,509 309,541
 Interest expense:
 Deposits 123,831 161,009
 Short-term borrowings 22,777 11,570
 Other borrowings 27,598 38,350
 Total interest expense 174,206 210,929
 Net interest income 71,303 98,612
 Provision for loan losses 44,901 63,820
 Net interest income after
 provision for loan losses 26,402 34,792
 Non-interest income:
 Loan servicing income (expense) 2,399 (516)
 Other fees and service charges 10,849 12,154
 Gain on sale of loans, net 392 3,419
 Gain on sale of mortgage-backed
 securities, net 291 36,416
 Operations of real estate held
 for sale or investment (1,048) (10,178)
 Operations of real estate acquired
 in settlement of loans (3,146) (13,135)
 Other operating expense, net (2,919) (337)
 Total non-interest income 6,818 27,823
 Non-interest expense:
 Compensation and
 employee benefits 32,321 31,318
 Occupancy expense, net 10,207 10,469
 Regulatory insurance 9,859 8,715
 Other general and
 administrative expenses 20,501 20,536
 Amortization of excess
 cost over fair value of
 net assets acquired 4,289 4,279
 Total non-interest expense 77,177 75,317
 Loss before income tax benefit (43,957) (12,702)
 Income tax benefit (9,927) ---
 Loss before extraordinary items (34,030) (12,702)
 Extraordinary items, net 14,092 (4,100)
 Net loss ($19,938) ($16,802)
 -0- 10/28/93
 /CONTACT: Judy Cunningham, 818-500-2274, or Jeff Misakian, 818-500-2824, both of Glendale Federal Bank/
 (GLN)


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

JL-LM -- LA014 -- 7657 10/28/93 07:02 EDT
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Date:Oct 28, 1993
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