GLENFED REPORTS SPECIFIC PROGRESS IN STRATEGIC PLAN
Core Earnings, Reserve Levels, Expense Reduction
Streamlined Organization, Market Focus
GLENDALE, Calif., Nov. 7 /PRNewswire/ -- GLENFED Inc. (NYSE: GLN) today said that the company was ahead of schedule in achieving major goals of its comprehensive Strategic Plan, announced in January, 1991, which is designed to strengthen and revitalize the company.
"In the past 10 months, GLENFED has aggressively implemented one of the most comprehensive and rapid restructuring efforts in the financial services industry," noted GLENFED's Chief Executive Officer, Norman M. Coulson.
The company said that net earnings of $17.1 million, or $.50 per share, for the quarter ended Sept. 30. 1991, exceeded its Fiscal 1992 Business Plan by approximately $6.8 million, due primarily to a favorable variance in the cost of funds. In addition, the company said that the quarter's earnings before income taxes, rose 25 percent, to $42.9 million versus $34.2 million in the same period last year. Net interest income -- a key component of core earnings -- rose, before provision for loan losses, from $113 million in the quarter last year to $130.2 million this year, an increase of 15 percent.
Between Sept. 30, 1990, and Sept. 30, 1991, GLENFED's net interest margin -- the difference between the bank's yield on earning assets and its cost of funds -- rose from 2.25 percent to 2.88 percent, representing a 28 percent increase.
As a result of the company's efficiency gains and cost reduction programs, operating expenses (excluding goodwill amortization) for the quarter were cut 34 percent, or $37.8 million, from the same quarter a year ago. GLENFED's annualized operating expenses to average assets ratio also declined dramatically to 1.35 percent at Sept. 30, 1991, from 1.89 percent at Dec. 31, 1990, when the Strategic Plan was initiated.
In addition, at Sept. 30, 1991, GLENFED's ratio of total loan loss reserves to non-performing assets was 34.2 percent, versus 14.45 percent for the comparable year-ago quarter--the highest reserve ratio among the five largest U.S. thrifts. Reserves to total loans were 1.69 percent at Sept. 30, 1991, compared with 0.47 percent at Sept. 30, 1990.
Glendale Federal Bank remained in compliance with all of the current federally mandated capital requirements at Sept. 30, 1991, with a tangible capital ratio of 2.0 percent; a core capital ratio of 3.6 percent; and a risk-based capital ratio of 7.4 percent. This compares with the current federal requirements of 1.5 percent; 3.0 percent; and 7.2 percent, respectively. It is anticipated that the bank's core capital requirement will be increased to at least 4.0 percent in the near future, but the specific requirement that will be applicable to the bank has not yet been determined.
The company's capital generation efforts are focused on both internal and external sources. "Continued improvements in our net interest margin and earnings performance will be the primary source of internally generated capital," said Stephen Trafton, GLENFED's vice chairman. "But we will also be focusing on additional non-interest income and further expense reductions," he added. Trafton added that the company is continuing to consult with its advisors regarding various alternatives to obtain capital from external sources.
GLENFED currently is implementing the third, and final phase of its Strategic Plan -- the restructuring of its retail operations. The company's long-term business strategy is to leverage its strong market position in surburban communities, further developing its community bank franchise. During the quarter ended Sept. 30, 1991, the company realigned its delivery of products and services to focus the coordination and management of all sales activity through its community bank offices. Lending authority has been returned to the bank offices, which will concentrate on gathering deposits, providing a simplified product line, and providing lending for single-family residences.
Glendale Federal Bank is the nation's fourth largest savings bank with 214 branches in California, Washington and Florida.
/CONTACT: Judy Cunningham, 818-500-2274, or Rosanne O'Brien, 818-500-2824, both of GLENFED Inc./
(GLN) CO: GLENFED Inc. ST: California IN: FIN SU: CH -- LA012 -- 2135 11/07/91 10:35 EST