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GLENFED INC. REPORTS THIRD FISCAL QUARTER RESULTS

    GLENDALE, Calif., May 11 /PRNewswire/ -- GLENFED Inc. (NYSE: GLN), parent company of Glendale Federal Bank, today reported net earnings of $45.2 million, or $1.28 per share, for the third fiscal quarter ended March 31, 1993, vs. a net loss of $146.6 million, or $4.28 per share for the same quarter a year ago. For the nine-months ended March 31, 1993, GLENFED reported a net loss of $51.0 million, or $1.49 per share, vs. a net loss of $94.9 million, or $2.77 per share for the comparable period ended March 31, 1992.
    The results for the 1993 third quarter and nine-month periods include an extraordinary net gain of $56.8 million, or $1.66 per share, and $58.3 million, or $1.71 per share, respectively, of which $56.3 million resulted from the completion in March 1993 of an exchange offer in which $137.3 million of subordinated debt of Glendale Federal Bank was exchanged for preferred stock of the bank. The net loss before taxes and extraordinary items was $50.4 million for the current quarter and $148.1 million for the nine months ended March 31, 1993, compared to $190.7 million and $98.0 million for the same periods of fiscal 1992.
    During the quarter, Glendale Federal Bank successfully completed debt for preferred stock exchanges with holders of $105 million of privately placed subordinated capital notes and with holders of $32.3 million, or 90.6 percent, of its outstanding publicly held 14 7/8 percent capital notes.  In each instance, the outstanding debt was exchanged for new 12 percent non-cumulative perpetual preferred stock, Series B and C, of the bank.
    Stephen J. Trafton, chairman and chief executive officer, commented, "The debt-for-equity transaction added $130 million to tangible and core capital and $19 million to risk-based capital.  At March 31, 1993, the bank's core capital ratio was 2.76 percent, above the 2.0 percent level below which the OTS is required to place an institution in conservatorship or receivership.  We are hopeful that this progress toward recapitalization of the bank supports an environment in which we may successfully complete the additional capital raising efforts now underway."
    Under the regulatory capital requirements mandated by the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), the bank is required to meet three separate minimum regulatory capital-to-assets ratio tests.  At March 31, 1993, Glendale Federal Bank did not meet its core and risk-based capital requirements, but the bank was in compliance with its tangible capital requirement.  The bank had capital ratios of 1.98 percent tangible capital, 2.76 percent core capital and 5.73 percent risk- based capital, compared with the mandated federal requirements of 1.5 percent, 3.0 percent and 8.0 percent, respectively.
    Despite the improvement in the bank's capital ratios resulting from the debt for preferred stock exchange completed during the quarter, the bank continues to be classified as a significantly undercapitalized institution under regulations adopted by the OTS pursuant to the Federal Deposit Insurance Corp. Improvement Act of 1991 (FDICIA).  As required by a prompt corrective action (PCA) directive issued by the OTS under FDICIA in January 1993, the bank has filed an amendment to its capital restoration plan that contemplates a series of transactions intended to substantially improve its capital position.  In April the OTS expressed its preliminary non-objection to the bank's pursuing these plans and, subject to demonstrating satisfactory progress in accomplishing the proposed transactions, has indicated that it may be willing to extend the time deadline for completing the recapitalization of the bank beyond the June 30, 1993, date set forth in the PCA Directive. Discussions are ongoing with representatives of certain of the company's and the bank's securities holders and the company hopes to be able to announce progress on the proposed transactions by the end of May.
    Trafton said, "Glendale Federal has made substantial progress in correcting past problems, while developing our capital restoration strategy.  The first stage of that strategy was implemented successfully through our completion of the debt restructuring transactions in March.  We are continuing to work toward implementation of the next stage of the recapitalization of the bank."
    GLENFED's net interest income (before provision for loan losses) totaled $93.3 million for the quarter and $277.6 million for the nine months ended March 31, 1993.  This compares with net interest income of $126.6 million and
$382.4 million, respectively, in the comparable fiscal 1992 periods.   The decline in net interest income is primarily attributable to a significant reduction in average loans receivable, mortgage-backed securities and investment securities from $19.2 billion for the nine months ended March 31, 1992, to $16.3 billion for the nine months ended March 31, 1993.
    Net interest income also was negatively impacted by a reduction in the interest rate spread -- the difference between the company's rate received on earning assets and its rate paid on deposits and borrowings -- which was 2.44 percent at March 31, 1993, compared with 3.01 percent at March 31, 1992.  The reduction in interest rate spread is partially attributable to an increase of $590 million in the balance of the bank's liquidity portfolio, which it holds at a yield substantially less than could be earned on other investments. Management continues to pursue the reinvestment of portions of its liquidity portfolio into higher-yielding loans and mortgage-backed securities.
    In the quarter ended March 31, 1993, GLENFED recorded a $64.2 million provision for loan losses to cover charge-offs of $60.1 million during the quarter and to continue to build its allowance for future losses reflecting continued weakness in the California economy and the resulting potential impact on the bank's non-residential and multifamily residential real estate loan portfolios.  The provision for loan losses for the third quarter compares to a provision of $131.8 for the same quarter in fiscal 1992 and $77.2 million in the quarter ended Dec. 31, 1992.  For the nine months ended March 31, 1993, provision for loan losses totaled $205.2 million, compared to $235.8 million for the comparable nine- month period a year ago.
    In addition, in the quarter ended March 31, 1993, the company recorded a provision of $6.9 million for losses related to its real estate acquired in settlement of loans (REO), and adjusted downward by $2.6 million the carrying value of its real estate investments (REI) primarily relating to its real estate development subsidiary. The provisions for REO and REI losses in the third quarter compare to provisions for REO and REI losses in the third quarter of fiscal 1992 of $17.5 million and $63.3 million, respectively, and in the quarter ended Dec. 31, 1992, of $7.6 million and $13.9 million, respectively. For the nine months ended March 31, 1993, provisions for REO and REI losses totaled $21.9 million and $25.5 million, respectively, compared to REO and REI provisions of $28.0 million and $68.4 million, respectively, for the comparable nine-month period of fiscal 1992.
    Allowance for loan losses at March 31, 1993, totaled $331.9 million, representing a ratio of allowance to non-performing assets and restructured loans of 34.2 percent, and a ratio of allowance to total gross loans of 2.89 percent.  Charge-offs in the first nine months of fiscal 1993 declined significantly to $171.5 million from $213.5 million in the first nine months of fiscal 1992, due primarily to decreases in commercial (asset-based) and consumer loans, as the bank nears completion of its withdrawal from these product lines.  The fiscal 1993 charge-offs were primarily related to non-residential and multifamily residential real estate loans.
    Commented Trafton, "While it is still too early to constitute a trend, we are encouraged that the provisions for loan and REO losses have declined in the recent quarter and in the nine-month period.  In addition, provisions for REI losses were down significantly in the current quarter and nine-month periods, due to the continued wind- down of the operations of the bank's real estate development subsidiaries."
    Offsetting these declines, however, total non-performing assets and restructured loans at March 31, 1993, increased to $970.5 million, or 5.46 percent of total assets, compared with $915.6 million, or 5.13 percent of total assets at Dec. 31, 1992, and $930.4 million, or 4.90 percent of total assets at March 31, 1992. The increase in non-performing assets during the third quarter of fiscal 1993 was primarily attributable to a single $65.0 million non- residential loan that was classified as non-accrual.
    Losses on sales of loans and mortgage-backed securities totaled $2.0 million in the three months ended March 31, 1993, compared to gains of $20.7 million in the same period last year.  For the nine months ended March 31, 1993, gains on sales of loans and mortgage- backed securities totaled $34.7 million, compared to $94.8 million for the nine months ended March 31, 1992.  Gains recorded in the current nine-month period were primarily due to a $35.4 million gain from the previously announced July 1992 sale of $1.4 billion of the company's long-term, fixed-rate mortgage-backed securities.  Gains recorded in the prior nine-month period were primarily due to the bank's restructuring activities to reduce future interest-rate and prepayment risk and to strengthen regulatory capital.  The quarter and nine-month periods ended March 31, 1992, also included a $54.5 million valuation allowance to mark to market value the previously mentioned $1.4 billion of mortgage-backed securities that were held for sale.
    Operating expenses (excluding goodwill amortization) for the third quarter of 1993 were $72.2 million, slightly above the $69.3 million operating expenses of the comparable 1992 quarter. However, operating expenses for the nine-month period ended March 31, 1993, declined to $212.2 million from $214.2 million for the first nine months of 1992.
    The bank recorded an income tax benefit before extraordinary items in the first nine months of fiscal 1993 of $38.8 million.  As of June 1992, the bank had recognized all of the available tax benefit which could be realized from a carryback of net operating losses.  Therefore, for the first half of fiscal 1993, the bank was unable to recognize tax benefits despite its losses.  The extraordinary items recorded in March 1993 permitted the bank to recognize a tax benefit on a portion of its previously unbenefitted net operating loss carryover from calendar 1992 and operating losses in calendar 1993.
    Commented Trafton, "Separate and apart from our actions to recapitalize the bank, we also are pursuing a prompt and just settlement of the bank's supervisory goodwill lawsuit against the government.  While legal redress for the government's breach of contract is appropriate, we are not depending upon a settlement to solve the bank's capital requirements.  We are moving ahead with our recapitalization steps, and hope to be able to announce further progress before month-end."
    GLENFED Inc., the parent company of Glendale Federal Bank, provides community banking services through 215 bank offices in California, Florida and Washington.
               GLENFED INC. THIRD QUARTER EARNINGS(a)
                        Financial Highlights
            (Dollars in thousands except per share data)
                             (Unaudited)
    Three months ended March 31,       1993            1992
    Net Interest Income
     Before Provision for Loan Losses $93,323         $126,551
    Loss Before Extraordinary Items  ($11,620)       ($146,572)
    Extraordinary Items, net           56,797              ---
    Net Earnings (Loss)               $45,177        ($146,572)
    Earnings (Loss) Per Share:
     Primary
      Loss Before Extraordinary Items  ($0.34)          ($4.28)
      Net Earnings (Loss)               $1.32           ($4.28)
     Fully Diluted
      Loss Before Extraordinary Item   ($0.29)          ($4.28)
      Net Earnings (Loss)               $1.28           ($4.28)
    Nine months ended March 31
    Net Interest Income Before
     Provision for Loan Losses       $277,630          $382,416
    Loss Before Extraordinary Items ($109,333)         ($94,929)
    Extraordinary Items, net           58,344               ---
    Net Loss                         ($50,989)         ($94,929)
    Loss Per Share:
     Primary
      Loss Before Extraordinary Items  ($3.20)          ($2.77)
      Net Loss                         ($1.49)          ($2.77)
     Fully Diluted
      Loss Before Extraordinary Items  ($3.20)          ($2.77)
      Net Loss                         ($1.49)          ($2.77)
    At March 31
    Assets                        $17,790,013      $18,993,720
    Cash, Short-Term and Other
     Investment Securities          1,406,940          772,737
    Loans and Mortgage-Backed
     Securities, net               14,708,301       16,283,997
    Excess Cost Over Fair Value of
     Net Assets Acquired              388,946          406,061
    Deposits                       12,286,275       14,711,391
    Borrowings                      4,593,378        3,323,618
    Stockholders' Equity              652,534          729,492
    Book Value Per Common Share         19.10            21.34
    Shares Outstanding             34,158,601       34,180,801
    LOAN VOLUME
    For the Three Months
     Ended March 31:
    Loans Originated                 $382,675         $768,855
    Loans Purchased                    11,792           18,681
    Mortgage-Backed
     Securities Purchased             447,527        1,534,660
    Loans and Mortgage-Backed
     Securities Sold                  106,085        1,918,917
    For the Nine Months
     Ended March 31:
    Loans Originated               $1,329,937       $2,111,865
    Loans Purchased                    83,537           82,671
    Mortgage-Backed
     Securities Purchased           2,334,981        3,193,602
    Loans and Mortgage-Backed
     Securities Sold                1,998,247        4,175,433
    Average Interest Rates
     at March 31:
    Yield on Loan Portfolio              7.02 pct         8.41 pct
    Yield on Investment Portfolio        4.21 pct         5.28 pct
    Yield on Earning Assets              6.80 pct         8.27 pct
    Cost of Customer Deposits            4.40 pct         5.07 pct
    Cost of Borrowings                   4.25 pct         6.13 pct
    Cost of Money                        4.36 pct         5.26 pct
    Earnings Spread                      2.44 pct         3.01 pct
    Non-Performing Assets and
     Restructured Loans at March 31:
    Consolidated:
     Non-Accrual Loans               $489,959         $595,102
     REO and Other Assets             385,725          251,475
     Total Non-Performing Assets      875,684          846,577
     Restructured Loans                94,808           83,838
     Total Non-Performing Assets and
      Restructured Loans             $970,492         $930,415
    Glendale Federal Bank:
    Non-Accrual Loans                $465,873         $470,165
    REO and Other Assets              373,636          228,742
    Total Non-Performing Assets       839,509          698,907
    Restructured Loans                 94,808           49,822
    Total Non-Performing Assets and
     Restructured Loans              $934,317         $748,729
    Non-Performing Assets and
     Restructured Loan Ratios
     at March 31(b):
    Consolidated:
    Non-Accrual Loans                    2.76 pct         3.13 pct
    REO and Other Assets                 2.17 pct         1.33 pct
    Total Non-Performing Assets          4.93 pct         4.46 pct
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Date:May 11, 1993
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