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GREAT WESTERN 'A' SENIOR DEBT AFFIRMED BY FITCH, TREND DECLINING -- FITCH FINANCIAL WIRE --

 NEW YORK, Jan. 25 /PRNewswire/ -- The "A" senior debt of Great Western Financial Corp. and Great Western Bank is affirmed by Fitch. Also affirmed are Great Western Financial's "BBB+" preferred stock as well as Great Western Bank's "A-" subordinated debt and "F-1" commercial paper. The credit trends of Great Western Financial and the bank are revised to declining from uncertain. Great Western Bank's wholly owned subsidiary Aristar, Inc.'s "A" senior debt, "A-" subordinated debt, and "F-1" commercial paper are affirmed. Aristar's credit trend remains stable.
 The revised trend of the second largest U.S. savings bank reflects deterioration of single family residential mortgage loans. This will continue to place downward pressure on net earnings despite wider net interest margins and growing banking fees. Single family mortgage loans represent roughly 88 percent of total real estate loans, with a concentration in California. As of Dec. 31, 3.1 percent of single family mortgage loans were delinquent compared to 1.87 percent a year earlier.
 Total nonperforming assets (NPAs) increased $386 million to roughly $2 billion in 1992 and represented 5.12 percent of total assets. The increase in NPAs was attributed mostly to single family mortgage loan delinquencies. To address the increase in delinquencies and its $581 million of nonperforming commercial real estate assets, Great Western boosted its fourth quarter loss provision by $355 million. At year end, total loan loss reserves were $630.1 million or 31.3 percent of NPAs and troubled debt restructurings compared to $269.9 million or 16.6 percent of NPAs a year earlier. With 1992's loss provisions increased substantially and commercial real estate values written down to 59 percent of original loan values, it is expected that Great Western's commercial real estate portfolio is adequately reserved and positioned for aggressive asset disposition. While it is believed that additional provisions for single-family loan losses will be needed as the California recession lingers, the company should remain profitable. Losses in the single family residential mortgage loan portfolio are not expected to be of the magnitude of its commercial portfolio.
 A downward adjustment to Great Western Financial's and Great Western Bank's ratings could result if there is a further acceleration in the nonperforming assets, especially in single-family residential mortgage loans, such that the company would no longer maintain profitability. In addition, it is expected that nonperforming commercial real estate assets will be sold more quickly than in the past.
 Great Western's 1992 net earnings were substantially reduced to $85 million by the deteriorating asset quality and high loss reserves. However, net interest income maintained relatively high spreads and banking fees and commission continue to grow, representing a 43.3 percent increase. The company also benefited from a one-time tax benefit due to an accounting change in 1992's first quarter.
 -0- 1/25/93
 /CONTACT: Teri L. Seelig of Fitch, 212-908-0638/
 (GWF)


CO: Great Western Financial Corp. ST: California IN: FIN SU: RTG

TS -- NY083 -- 8652 01/25/93 15:18 EST
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Publication:PR Newswire
Date:Jan 25, 1993
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