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GLENFED ANNOUNCES SECOND QUARTER RESULTS; EXPECTS NOT TO PAY MARCH DEBENTURE INTEREST PAYMENT

 GLENDALE, Calif., Jan. 28 /PRNewswire/ -- GLENFED Inc. (NYSE: GLN), parent company of Glendale Federal Bank, today reported a net loss of $79.4 million, or $2.32 per share, for the second quarter of fiscal 1993, ended Dec. 31, 1992. This compares with net earnings of $27.6 million, or $0.81 per share, for the comparable three-month period ended Dec. 31, 1991.
 For the six months ended Dec. 31, 1992, GLENFED's net loss totaled $96.2 million, or $2.81 per share, compared with earnings of $51.6 million, or $1.51 per share, in the six months ended Dec. 31, 1991.
 The company also reported that it has reimbursed to Glendale Federal Bank the $2.3 million in expenses that were the subject of a September 1992 reimbursement order from the Office of Thrift Supervision (OTS) and, accordingly, does not have sufficient cash or liquid assets to be able to pay the annual installment of interest due on March 15, 1993, on its 7 3/4 percent convertible subordinated debentures. The company has been in contact with certain major holders of the debentures and their financial advisor to discuss possible actions that may be taken, although such discussions are at a very preliminary stage.
 Glendale Federal Bank announced today that it has entered into a definitive agreement with the holders of $105 million of its privately placed subordinated debt and has commenced an exchange offer for $36 million of its publicly traded 14 7/8 percent subordinated capital notes due 1997. In each case, the outstanding debt would be exchanged for new 12 percent non-cumulative perpetual preferred stock of the bank that is expected to be eligible to be included in the bank's core capital. The exchanges are anticipated to increase the bank's core capital by approximately $128 million if all of the conditions for their consummation are satisfied.
 The bank also announced that it has consented to entry by the OTS of a prompt corrective action directive under the terms of the Federal Deposit Insurance Corp. Improvement Act of 1991 (FDICIA). The directive requires that the bank must increase its regulatory core capital ratio to 5.0 percent and its risk-based capital ratio to 10.0 percent by June 30, 1993. These ratios were, at Dec. 31, 1992, 2.56 percent and 6.35 percent, respectively. The directive also imposes on the bank the mandatory sanctions and certain of the discretionary sanctions the OTS is authorized to impose on savings institutions that are "significantly undercapitalized" under FDICIA. The loss reported by the bank for the quarter ended Dec. 31, 1992, caused it to fall into this category.
 Commented Stephen J. Trafton, chairman and chief executive officer, "The company's operations continue to be adversely impacted by borrower difficulties and depressed real estate values that have resulted from persistent economic problems in California. These losses resulted in a reduction in our regulatory capital ratios that has placed the bank in a new category under provisions of FDICIA that became effective on Dec. 19, 1992, pursuant to which the OTS issued the directive to which we have consented. At the same time, we are pleased and encouraged to report significant progress in our efforts to achieve a substantial improvement in our core capital position through the potential restructuring of $141 million of outstanding subordinated debt."
 The results for the fiscal 1993 second quarter reflect a provision for loan losses of $77.2 million, primarily attributable to the bank's California non-residential and multifamily residential real estate loan portfolios. In addition, the company adjusted downward by $13.9 million the carrying value of its real estate investments primarily relating to its real estate development subsidiary, and recorded a provision of $7.6 million for losses related to its real estate acquired in the settlement of loans.
 Total non-performing assets and restructured loans at Dec. 31, 1992, were $915.6 million, or 5.13 percent of total assets, compared with $864.4 million, or 4.21 percent of total assets at Dec. 31, 1991, and $890.1 million, or 4.99 percent at Sept. 30, 1992, respectively. The increase in non-performing assets during the second quarter is primarily attributable to the bank's non- residential and multifamily residential real estate loan portfolios.
 Loan loss reserves totaled $320.4 million at Dec. 31, 1992, compared with $280.7 million at Dec. 31, 1991. As of Dec. 31, 1992, the company's ratio of reserves to non-accrual loans was 72 percent, and the ratio of reserves to total non-performing assets and restructured loans was 35 percent. Charge-offs for the quarter were $68 million, which were primarily related to non-residential and multifamily residential real estate loans. The largest such charge- off during the quarter was an $8.9 million write-down on loans to a real estate developer.
 GLENFED's net interest income (before provision for loan losses) totaled $85.7 million for the quarter and $184.3 million for the six months ended Dec. 31, 1992. In the same periods a year ago, net interest income amounted to $125.7 million and $255.9 million, respectively. The decline in net interest income is primarily attributable to the reduction in average loans receivable and investment securities from $19.6 billion to $16.1 billion for the quarters ended Dec. 31, 1991 and Dec. 31, 1992, respectively.
 Net interest income also was negatively impacted by a reduction in the interest rate spread -- the difference between the company's rate on earning assets and its cost of funds -- which was 2.49 percent at Dec. 31, 1992, compared with 2.90 percent at Dec. 31, 1991. The reduction in interest rate spread is primarily attributable to a liquidity portfolio of $1.3 billion which Glendale Federal Bank holds at a yield substantially less than could be generated from other investments. Management continues to pursue the reinvestment of portions of this portfolio into higher yielding securities. At Dec. 31, 1992, the bank's regulatory liquidity position was $1.1 billion, and its regulatory liquidity ratio for the month of December was 6.04 percent.
 Operating expenses (excluding goodwill amortization) declined, totaling $69.0 million for the quarter and $140.0 million for the six months ended Dec. 31, 1992. This compares with $72.7 million and $144.9 million, respectively, for the quarter and six-month period a year ago.
 Since the company uses a calendar year for income tax purposes, it had recognized all the tax benefits available for calendar year 1992 by June 30, 1992. Therefore, no tax benefit was recognized in connection with the loss recorded for the second quarter and for the six months ended Dec. 31, 1992.
 In December 1992, thrift institutions became subject to a 2.0 percent "tangible equity" requirement mandated by FDICIA. "Tangible equity" has been defined by the OTS to mean core capital. At Dec. 31, 1992, the bank had 2.56 percent core capital.
 The Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) mandates compliance with three capital ratios. At Dec. 31, 1992, Glendale Federal Bank did not meet the required core and risk-based capital ratios. The bank had capital ratios of 1.52 percent tangible capital, 2.56 percent core capital, and 6.35 percent risk-based capital, compared with the mandated federal requirements of 1.5 percent, 3.0 percent, and 8.0 percent, respectively.
 Effective Jan. 1, 1993, an additional phase-out of supervisory goodwill from core and risk-based capital and an increase in the amount of the bank's investment in non-permissible subsidiaries which must be excluded from capital reduced all three FIRREA capital ratios. Glendale Federal's capital ratios as of Dec. 31, 1992, stated on a pro forma basis to reflect these changes, were 1.46 percent tangible capital, 2.24 percent core capital, and 5.87 percent risk-based capital.
 The directive issued by the OTS requires the bank to achieve the previously announced 5 percent core and 10 percent risk-based capital levels by June 30, 1993, by issuance of additional capital stock or, in the alternative, by merger or acquisition. As previously reported, an active search for such a sale of control transaction is underway. The operating restrictions imposed by the directive affect a broad range of activities of the bank and implement a number of recommendations made in the 1992 OTS examination of the bank.
 The definitive agreement with the holders of the bank's $105 million of subordinated capital notes implements the agreement in principle announced last December. Under the agreement noteholders will exchange their Series A and Series B capital notes for Series B and Series C preferred stock with a liquidation preference equal to the face value of exchanged capital notes. The transaction is contingent upon several conditions, including acceptance of an exchange by the holders of 90 percent of the $36 million in principal amount outstanding of the bank's 14 7/8 percent subordinated capital notes and necessary regulatory and corporate approvals.
 An exchange offer on substantially similar terms was commenced today for the 14 7/8 notes. In the exchange offer, however, if 90 percent or more of the notes are tendered, the noteholders will also receive warrants for between 2.5 percent and 5 percent of the common stock of the bank, depending on the percentage of notes tendered.
 GLENFED Inc. is the parent company of Glendale Federal Bank, the nation's fifth largest savings bank. It provides community banking services through 214 banking offices in California, Florida and Washington.
 GLENFED INC. SECOND QUARTER EARNINGS(a)
 Financial Highlights
 (Dollars in thousands except per-share data)
 (Unaudited)
 1992 1991
 Three Months Ended Dec. 31,(b)
 Net interest income before
 provision for loan losses $85,695 $125,674
 Earnings (loss) before
 extraordinary item ($85,011) $27,574
 Extraordinary item $5,647 ---
 Net earnings (loss) ($79,364) $27,574
 Earnings (loss) per share:
 Primary:
 Earnings (loss) before
 extraordinary item ($2.49) $0.81
 Net earnings (loss) ($2.32) $0.81
 Fully diluted:
 Earnings (loss) before
 extraordinary item ($2.49) $0.78
 Net earnings (loss) ($2.32) $0.78
 Six Months Ended Dec. 31,(b)
 Net interest income before
 provision for loan losses $184,307 $255,865
 Earnings (loss) before
 extraordinary item (97,713) 51,643
 Extraordinary item 1,547 ---
 Net earnings (loss) ($96,166) $51,643
 Earnings (loss) per share:
 Primary:
 Earnings (loss) before
 extraordinary item ($2.86) $1.51
 Net earnings (loss) ($2.81) $1.51
 Fully diluted:
 Earnings (loss) before
 extraordinary item ($2.86) $1.46
 Net earnings (loss) ($2.81) $1.46
 At Dec. 31,(b)
 Assets $17,855,795 $20,546,698
 Cash, short-term and other
 investment securities 1,425,816 1,553,683
 Loans and mortgage-backed
 securities, net 14,696,873 16,966,141
 Excess cost over fair value of
 net assets acquired 393,225 410,298
 Deposits 12,475,252 15,221,350
 Borrowings 4,546,011 4,213,068
 Stockholders' equity 607,352 876,049
 Book value per common share 17.77 25.60
 Shares outstanding 34,170,901 34,226,301
 Loan Volume
 For the Three Months Ended Dec. 31,
 Loans originated $508,928 $620,404
 Loans purchased $59,206 $34,173
 Mortgage-backed securities
 purchased $1,109,144 $753,601
 Loans and mortgage-backed
 securities sold $188,737 $1,352,939
 For the Six Months Ended Dec. 31,
 Loans originated $947,262 $1,343,010
 Loans purchased $71,745 $63,990
 Mortgage-backed securities
 purchased $1,887,454 $1,658,942
 Loans and mortgage-backed
 securities sold $1,892,162 $2,256,516
 Average Interest Rates at Dec. 31,
 Loans and mortgage-backed
 securities 7.27 pct. 9.05 pct.
 Investments 3.77 pct. 5.30 pct.
 Loans and investment portfolio 6.98 pct. 8.74 pct.
 Deposits 4.42 pct. 5.74 pct.
 Borrowings 4.70 pct. 6.19 pct.
 Deposits and borrowings 4.49 pct. 5.84 pct.
 Interest rate spread 2.49 pct. 2.90 pct.
 Non-Performing Assets and Restructured
 Loans at Dec. 31,
 Consolidated:
 Non-accrual loans $444,058 $498,914
 REO and other assets 366,150 212,243
 Total non-performing assets 810,208 711,157
 Restructured loans 105,356 153,287
 Total non-performing assets and
 restructured loans $915,564 $864,444
 Glendale Federal Bank:
 Non-accrual loans $401,418 $354,354
 REO and other assets 352,713 180,755
 Total non-performing assets 754,131 535,109
 Restructured loans 105,356 117,670
 Total non-performing assets and
 restructured loans $859,487 $652,779
 Non-Performing Assets and Restructured
 Loans Ratios at Dec. 31,(c)
 Consolidated:
 Non-accrual loans 2.49 pct. 2.43 pct.
 REO and other assets 2.05 pct. 1.03 pct.
 Total non-performing assets 4.54 pct. 3.46 pct.
 Restructured loans 0.59 pct. 0.75 pct.
 Total non-performing assets and
 restructured loans 5.13 pct. 4.21 pct.
 Glendale Federal Bank:
 Non-accrual loans 2.28 pct. 1.79 pct.
 REO and other assets 2.01 pct. 0.91 pct.
 Total non-performing assets 4.29 pct. 2.70 pct.
 Restructured loans 0.60 pct. 0.59 pct.
 Total non-performing assets and
 restructured loans 4.89 pct. 3.29 pct.
 Glendale Federal
 Capital Ratios at Dec. 31, 1992: Federal Bank Requirement
 FIRREA-based capital requirements:
 Tangible capital 1.52 pct. 1.50 pct.
 Core capital 2.56 pct. 3.00 pct.
 Risk-based capital 6.35 pct. 8.00 pct.
 FDICIA test:(d) 2.56 pct. 2.00 pct.
 (a) GLENFED Inc.'s fiscal year ends June 30.
 (b) In the third quarter of fiscal 1992, the company implemented Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." The Consolidated Statements of Operations for the three months and six months ended Dec. 31, 1991, and the excess cost over fair value of net assets acquired and stockholders' equity at Dec. 31, 1991, have been restated to reflect this change.
 (c) As a percentage of total assets.
 (d) After December 1992, thrift institutions will be subject to a new 2.0 percent "tangible equity" requirement mandated by the Federal Deposit Insurance Corp. Improvement Act of 1991 (FDICIA). Under recently promulgated regulations of the Office of Thrift Supervision (OTS), "tangible equity" is defined to mean core capital.
 GLENFED INC. SECOND QUARTER EARNINGS(a)
 Consolidated Statement of Operations
 (Unaudited)
 (Dollars in Thousands)
 Three Months Ended Six Months Ended
 Dec. 31, Dec. 31,
 1992 1991(b) 1992 1991(b)
 Interest income:
 Loans $228,582 $362,259 $483,384 $762,357
 Mortgage-backed
 securities 37,979 54,521 78,202 95,129
 Investments 13,603 21,810 28,119 44,742
 Total interest income 280,164 438,590 589,705 902,228
 Interest expense:
 Deposits 144,377 236,013 305,386 486,704
 Short-term borrowings 14,937 18,000 26,507 29,583
 Other borrowings 35,155 58,903 73,505 130,076
 Total interest
 expense 194,469 312,916 405,398 646,363
 Net interest income 85,695 125,674 184,307 255,865
 Provision for loan
 losses 77,181 48,805 141,001 103,982
 Net interest income
 after provision for
 loan losses ? 8,514 76,869 43,306 151,883
 Non-interest income:
 Loan servicing income 1,591 8,339 1,075 19,554
 Other fees & service
 charges 11,252 13,163 23,406 26,431
 Gain (loss) on sale of
 loans, net (1,146) (543) 2,273 12,299
 Gain (loss) on sale of
 mortgage-backed
 securities, net (2,017) 46,051 34,399 61,839
 Loss on sale of
 investments, net (6) --- (6) ---
 Operations of real
 estate held for sale
 or investment (14,894) (5,425) (25,072) (6,828)
 Operations of real
 estate acquired in
 settlement of loans (12,825) (11,549) (25,960) (18,324)
 Other operating
 expense, net (2,228) (521) (2,565) (683)
 Total non-interest
 income (expense) (20,273) 49,515 7,550 94,288
 Non-interest expense:
 Compensation and
 employee benefits 30,257 31,801 61,575 63,975
 Occupancy expense, net 9,736 10,038 20,205 20,261
 Regulatory insurance 8,716 9,814 17,431 19,339
 Other general and
 administrative
 expense 20,264 21,094 40,800 41,343
 Amortization of excess
 cost over fair value of
 net assets acquired 4,279 4,297 8,558 8,615
 Total non-interest
 expense 73,252 77,044 148,569 153,533
 Earnings (loss) before
 income tax expense (85,011) 49,340 (97,713) 92,638
 Income tax expense --- 21,766 --- 40,995
 Earnings (loss) before
 extraordinary item (85,011) 27,574 (97,713) 51,643
 Extraordinary item 5,647 --- 1,547 ---
 Net earnings (loss) ($79,364) $27,574 ($96,166) $51,643
 (a) GLENFED Inc.'s fiscal year ends June 30.
 (b) In the third quarter of fiscal 1992, the company implemented Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." The Consolidated Statements of Operations for the three and six months ended Dec. 31, 1991, have been restated to reflect this change.
 -0- 1/28/93
 /CONTACT: Judy Cunningham, 818-500-2274, or Rosanne O'Brien, 818-500-2824, both of GLENFED/
 (GLN)


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

JB-LS -- LA015 -- 0085 01/28/93 09:13 EST
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