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GLENFED REPORTS FIRST QUARTER FISCAL 1993 RESULTS

 GLENFED REPORTS FIRST QUARTER FISCAL 1993 RESULTS
 GLENDALE, Calif., Oct. 27 /PRNewswire/ -- GLENFED Inc.,


(NYSE: GLN), parent company of Glendale Federal Bank, today reported a net loss of $16.8 million, or $0.49 per share for the first quarter of fiscal 1993, ended Sept. 30, 1992. This compares with net earnings of $24.1 million, or $0.70 per share for the quarter ended Sept. 30, 1991.
 The results for the quarter reflect a provision for loan losses of $63.8 million, compared with $55.2 million for the comparable quarter a year ago. The loan loss provisions during fiscal 1993 were attributable primarily to the bank's California commercial and multifamily real estate loan portfolios, while the fiscal 1992 provisions related primarily to the commercial (asset-based) loan portfolios. In addition, the company adjusted downward by $8.4 million the carrying value of its real estate investments primarily relating to its real estate development subsidiary, and recorded a provision of $7.3 million for losses related to its real estate acquired in the settlement of loans. The current quarter's results also include 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 and a $4.1 million extraordinary loss from the prepayment of borrowings incurred to fund these securities.
 Commented Stephen J. Trafton, chairman and chief executive officer, "The substantial provision for loan losses reflects a higher level of non-performing assets, and our belief that reserve levels should be increased in light of the persistent weakness in the California economy and real estate markets, which could result in future loan losses. While the bank ceased its commercial (asset- based) lending activities and curtailed income property lending in 1990, severe economic problems continue to impact the performance of loans made in the 1980s which remain on our books."
 Total non-performing assets and restructured loans at Sept. 30, 1992 were $890.1 million or 4.99 percent of total assets, compared with non-performing assets and restructured loans of $798.6 million, or 3.75 percent of total assets at Sept. 30, 1991. At June 30, 1992, total non-performing assets and restructured loans were $827.1 million, or 4.62 percent of total assets.
 Loan loss reserves totaled $307.1 million at Sept. 30, 1992, compared with $273.2 million at Sept. 30, 1991 and $281.4 million at June 30, 1992. As of Sept. 30, 1992, the company's ratio of reserves to non-accrual loans was 65 percent and the ratio of reserves to total non-performing assets and restructured loans was 34 percent.
 Trafton noted that the company continues to make substantial progress in the disposition of the assets of its non-core subsidiaries, which are primarily engaged in commercial (asset-based) lending and real estate development, and which have been the major contributor to pre-tax losses over the past two years. The total of such assets has declined from $1.3 billion at June 30, 1990 and $341 million at June 30, 1992, to $287 million at Sept. 30, 1992.
 Net interest income (before provision for loan losses) during the first quarter of fiscal 1993 totaled $98.6 million, compared with $130.2 million in the first quarter of fiscal 1992. The reduction in net interest income reflects a decrease in the company's average earning assets from $19.6 billion for the quarter ended Sept. 30, 1991, to $16.4 billion for the quarter ended Sept. 30, 1992. Total assets at Sept. 30, 1992 were $17.8 billion, compared with $21.3 billion a year ago. The decrease was due primarily to the sale of real estate and consumer loans and the reduction in assets of the bank's commercial (asset-based) lending and real estate development subsidiaries. A reduced volume of loan originations and higher loan prepayments due to borrowers' refinancings have also contributed to the decrease in assets.
 Net interest income was also adversely affected 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 2.54 percent at Sept. 30, 1992, compared with 2.88 percent at Sept. 30, 1991. The reduction in the interest rate spread is attributable in part to the sale during the quarter of $1.4 billion of fixed-rate mortgage-backed securities and the retention of a substantial portion of the proceeds of that sale in Glendale Federal Bank's liquidity portfolio, which provides a lower return. Management continues to pursue the reinvestment of these sale proceeds into higher yielding securities. At Sept. 30, 1992, the bank's regulatory liquidity position was $1.0 billion and its regulatory liquidity ratio for the month of September was 6.09 percent.
 Following implementation of the company's cost reduction program in fiscal 1992, operating expenses have remained flat. First quarter operating expenses for fiscal 1993 (excluding goodwill amortization) were $71.0 million, compared with $72.2 million during the first quarter of fiscal 1992.
 The company uses a calendar year for income tax purposes and at June 30, 1992 the company had recognized all the tax benefit available for calendar year 1992 losses. Therefore, no tax benefit was recognized in connection with the loss recorded for the quarter ended Sept. 30, 1992.
 After December 1992, thrift institutions will be subject to a 2.0 percent "tangible equity" requirement mandated by the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA). Under recently promulgated regulations of the Office of Thrift Supervision (OTS), "tangible equity" is defined to mean core capital. At Sept. 30, the bank had 3.01 percent core capital.
 The Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) mandates compliance with three capital ratios. At Sept. 30, 1992, Glendale Federal Bank had capital ratios of 1.97 percent tangible capital vs. the federal requirement of 1.5 percent; 3.01 percent core capital, compared with the 3.0 percent FIRREA requirement; and 6.85 percent risk-based capital, compared with the 7.2 percent federal requirement.
 Because of the combination of operating losses and increasing regulatory capital requirements mandated by FIRREA, the bank is currently out of compliance with its risk-based capital requirement. The bank filed a capital restoration plan with the OTS on June 1, 1992. Subsequently, the OTS required the bank to amend the plan to provide for the bank to achieve ratios of 5 percent core capital and 10 percent risk-based capital by June 30, 1993.
 Amendments to the capital plan have been filed with the OTS and discussions continue regarding the means by which the bank will seek to attain the higher capital levels required by the OTS. There can be no assurance that the OTS will approve the bank's amended capital plan or that the bank will be able to complete its capital restructuring transactions as contemplated. The ability of the bank to complete its capital restructuring transactions is subject to substantial uncertainty stemming from, among other things, economic and real estate market conditions affecting the bank's operations and the substantial amount of capital the bank is required to raise by June 30, 1993. If the bank is unable to develop a capital plan acceptable to the OTS, or if the bank is unable to remain in compliance with an approved capital plan, the OTS could severely restrict the operations of the bank, or impose additional sanctions, including the appointment of a conservator or receiver for the bank. Under the "prompt corrective action" provisions of FDICIA and recently adopted implementing regulations of the OTS, the OTS would be required to place the bank in conservatorship or receivership, subject to limited exceptions, if its core capital ratio were to fall below 2.0 percent after Dec. 31, 1992.
 The bank presently expects that its capital plan will provide for the achievement of the required capital ratios primarily through a restructuring of subordinated debt and a sale of control or merger of the company and/or the bank and may also provide for further sales of assets. The bank's contemplated capital restructuring transactions would require substantial dilution of the equity ownership of the common shareholders of the company and/or the company's ownership of the bank.
 In July 1992, the U.S. Claims Court found in favor of Glendale Federal Bank in its suit against the government, ruling that the government breached its express contractual commitment to permit the bank to include supervisory goodwill in its regulatory capital and that the bank is entitled to seek financial compensation. The ruling has been appealed by the government and the bank has been granted an expedited appeal process. The presentation of written briefs will be completed by mid-November, with oral arguments to be scheduled as soon thereafter as possible. In addition, the bank has petitioned the Claims Court for the right to commence the discovery process during the pendency of the appeal so that the damages portion of the litigation can proceed immediately after the appellate court's decision. A settlement of this litigation could restore the bank to full regulatory capital compliance, but there can be no assurance that the government would agree to any settlement.
 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. FIRST QUARTER EARNINGS(a)
 Financial Highlights
 (Dollars in thousands except per-share data)
 (Unaudited)
 Three months ended Sept. 30(b) 1992 1991
 Net Interest Income
 Before Provision
 for Loan Losses $98,612 $130,191
 Earnings (Loss) Before
 Extraordinary Item ($12,702) $24,069
 Extraordinary Item ($4,100) ---
 Net Earnings (Loss) ($16,802) $24,069
 Earnings (Loss) Per Share:
 Primary:
 Earnings (Loss) Before
 Extraordinary Item ($.37) $.70
 Net Earnings (Loss) ($.49) $.70
 Fully Diluted:
 Earnings (Loss) Before
 Extraordinary Item ($.37) $.68
 Net Earnings (Loss) ($.49) $.68
 At Sept. 30(b)
 Assets $17,840,131 $21,295,475
 Cash, Short-Term and Other
 Investment Securities 2,033,721 1,360,339
 Loans and Mortgage-Backed
 Securities, Net 14,063,725 17,867,635
 Excess Cost Over Fair Value
 of Net Assets Acquired 397,504 414,883
 Deposits 13,284,854 15,553,530
 Borrowings 3,659,465 4,634,251
 Stockholders' Equity 686,713 848,474
 Book Value Per Common Share 20.09 24.79
 Shares Outstanding 34,179,401 34,226,301
 GLENFED INC. FIRST QUARTER EARNINGS(a)
 Financial Highlights (continued)
 (Dollars in thousands)
 (Unaudited)
 Loan Volume
 For the Three Months Ended
 Sept. 30: 1992 1991
 Loans Originated $438,334 $722,606
 Loans Purchased $12,539 $29,817
 Mortgage-Backed Securities
 Purchased $778,310 $905,341
 Loans and Mortgage-Backed
 Securities Sold $1,694,329 $903,577
 Average Interest Rates
 at Sept. 30:
 Loans and Mortgage-Backed
 Securities 7.72 pct 9.45 pct
 Investments 3.83 pct 6.50 pct
 Loans and Investment Portfolio 7.25 pct 9.25 pct
 Deposits 4.60 pct 6.22 pct
 Borrowings 5.12 pct 6.88 pct
 Deposits and Borrowings 4.71 pct 6.37 pct
 Interest Rate Spread 2.54 pct 2.88 pct
 Non-Performing Assets and Restructured
 Loans at Sept. 30:
 Consolidated:
 Non-Accrual Loans $474,890 $443,302
 REO and Other Assets 326,258 216,442
 Total Non-Performing Assets 801,148 659,744
 Restructured Loans 89,000 138,874
 Total Non-Performing Assets
 and Restructured Loans $890,148 $798,618
 Glendale Federal Bank:
 Non-Accrual Loans $414,295 $294,118
 REO and Other Assets 312,557 182,027
 Total Non-Performing Assets 726,852 476,145
 Restructured Loans 89,000 109,029
 Total Non-Performing Assets
 and Restructured Loans $815,852 $585,174
 GLENFED INC. FIRST QUARTER EARNINGS(a)
 Financial Highlights (continued)
 (Unaudited)
 1992 1991
 Non-Performing Assets and
 Restructured Loans Ratios
 at Sept. 30:(c)
 Consolidated:
 Non-Accrual Loans 2.66 pct 2.08 pct
 REO and Other Assets 1.83 pct 1.02 pct
 Total Non-Performing Assets 4.49 pct 3.10 pct
 Restructured Loans 0.50 pct 0.65 pct
 Total Non-Performing Assets and
 Restructured Loans 4.99 pct 3.75 pct
 Glendale Federal Bank:
 Non-Accrual Loans 2.37 pct 1.44 pct
 REO and Other Assets 1.78 pct 0.89 pct
 Total Non-Performing Assets 4.15 pct 2.33 pct
 Restructured Loans 0.51 pct 0.53 pct
 Total Non-Performing Assets and
 Restructured Loans 4.66 pct 2.86 pct
 Glendale Federal
 Capital Ratios at Sept. 30, 1992: Federal Bank Requirement
 FIRREA-based capital requirements:
 Tangible capital 1.97 pct 1.50 pct
 Core capital 3.01 pct 3.00 pct
 Risk-based capital 6.85 pct 7.20 pct
 FDICIA test:(d) 3.01 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 Statement of Operations for the three months ended Sept. 30, 1991 and the excess cost over fair value of net assets acquired and stockholders' equity at Sept. 30, 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 Corporation 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. FIRST QUARTER EARNINGS(a)
 Consolidated Statement of Operations
 (Dollars in Thousands)
 (Unaudited)
 Three Months Ended
 Sept. 30,
 1992 1991(b)
 Interest income:
 Loans $254,802 $400,098
 Mortgage-backed securities 40,223 40,608
 Investments 14,516 22,932
 Total interest income 309,541 463,638
 Interest expense:
 Deposits 161,009 250,691
 Short-term borrowings 11,570 11,583
 Other borrowings 38,350 71,173
 Total interest expense 210,929 333,447
 Net interest income 98,612 130,191
 Provision for loan losses 63,820 55,177
 Net interest income after
 provision for loan losses 34,792 75,014
 Non-interest income:
 Loan servicing income (expense) (516) 11,215
 Other fees & service charges 12,154 13,268
 Gain on sale of loans, net 3,419 12,842
 Gain on sale of mortgage-
 backed securities, net 36,416 15,788
 Gain on sale of investments, net --- ---
 Operations of real estate held
 for sale or investment (10,178) (1,403)
 Operations of real estate acquired
 in settlement of loans (13,135) (6,775)
 Other operating income
 (expense), net (337) (162)
 Total non-interest income 27,823 44,773
 Non-interest expense:
 Compensation and employee benefits 31,318 32,174
 Occupancy expense, net 10,469 10,223
 Regulatory insurance 8,715 9,525
 Other general and
 administrative expense 20,536 20,249
 Amortization of excess
 cost over fair value of
 net assets acquired 4,279 4,318
 Total non-interest expense 75,317 76,489
 Earnings (loss) before income
 tax expense (12,702) 43,298
 Income tax expense --- 19,229
 Earning (loss) before
 extraordinary item (12,702) 24,069
 Extraordinary item (4,100) ---
 Net earnings (loss) ($16,802) $24,069
 (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 Statement of Operations for the three months ended Sept. 30, 1991 reflects this change.
 -0- 10/27/92
 /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


EH -- LA013 -- 5296 10/27/92 10:33 EST
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