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GREAT WESTERN FINL $225 MIL 6 3/8 PERCENT SR. NOTES DUE 2000 'A' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, June 30 /PRNewswire/ -- Great Western Financial Corp.'s (NYSE: GWF) $225 million of 6 3/8 percent senior notes due July 1, 2000 are rated 'A' by Fitch. The bonds are noncallable. Proceeds of the issue will be used to assist in the realignment of Aristar to the holding company. This results from the company going ahead with its plan after the bank received regulatory approval of the restructuring. The credit trend is declining.
 The rating is based on the company's strong capital of approximately $2.47 billion, solid liquidity, and positive earnings, which are somewhat offset by a weakening asset quality due to the company's large California mortgage loan portfolio and continued subpar profitability. Nonperforming real estate loans and real estate increased $97 million during 1993's first quarter to $2.08 billion, representing 5.48 percent of total assets. The largest increase in NPAs came from California single-family mortgage loans acquired through foreclosure.
 The company continues to be adversely affected by California's deep economic recession. Great Western added $62.5 million to reserves for loan losses in 1993's first quarter bringing loan loss reserves to $439 million or approximately 40 percent of nonperforming and restructured loans. While the company's average net interest margin continued to widen to 3.91 percent for 1993's first quarter due to the drop in interest rates, interest earning assets declined due to the consumer preference for fixed-rate mortgage loans in this low rate environment. Net earnings for the quarter were $45 million with an annualized ROE and ROA of 7.36 percent and 0.47 percent, respectively.
 The reorganization provides roughly $350 million of capital to the bank, but causes it to lose a very profitable operation. For Aristar, there will be additional operational flexibility, but it loses direct access to Great Western Bank for funding.
 With this announcement, Fitch affirms: Great Western Bank's 'A' senior debt, 'A-' subordinated debt, and 'F-1' commercial paper; Great Western Financial's 'A' senior debt and 'BBB' preferred stock; and Aristar's 'A' senior debt, 'A-' subordinated debt, and 'F-1' commercial paper.
 -0- 6/30/93
 /CONTACT: Teri L. Seelig, 212-908-0638, or Valerie Gerard, 212-908-0577, both of Fitch/
 (GWF)


CO: Great Western Financial ST: New York IN: FIN SU: RTG

TM -- NY095 -- 7440 06/30/93 19:08 EDT
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Publication:PR Newswire
Date:Jun 30, 1993
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