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STATEMENT BY WESTFED HOLDINGS OVER THE SEIZURE OF WESTERN FEDERAL SAVINGS AND LOAN

 MARINA DEL REY, Calif., June 4 /PRNewswire/ -- WestFed Holdings announced today that federal banking regulators had seized its subsidiary, Western Federal Savings and Loan Association, a federal savings bank with headquarters in Marina del Rey. The seizure followed WestFed's notice to the Office of Thrift Supervision ("OTS") that it was unable to meet, on a timely basis, the regulatory capital requirements for Western Federal demanded by federal regulators.
 This decision follows several years of efforts to reorganize and recapitalize Western Federal following the federal government's repudiation of an agreement it signed with the investment group which acquired Western Federal in 1988. Federal regulators entered into that agreement, which set forth explicit capital standards, in order to induce the investors to acquire Western Federal and merge it with an insolvent thrift, Bell Savings and Loan. Litigation initiated by WestFed against the federal government in connection with that breach of contract will continue. Today's action reflects also the severely depressed California real estate market, which has resulted in significant write-downs in the value of Western Federal's mortgage portfolio. Finally, the action reflects the refusal of the federal government to consider any steps that will fulfill its obligations to which it had agreed.
 Background
 In 1988 an investment group which included Gerald Parsky, the family of William E. Simon and Preston Martin, a former vice chairman of the Federal Reserve Board, entered into a written agreement with FSLIC and FHLBB (the predecessor to OTS) under which this group would acquire Western Federal and merge with a failed thrift, Bell Savings and Loan. Under this agreement FSLIC induced the investors to acquire a combined bank with a weak capital position by agreeing that Western Federal would be treated as being in capital compliance.
 FSLIC negotiated a detailed business plan by which the combined entity would greatly expand investments in, for example, interest- bearing securities, without the constraints imposed by regular capital requirements. In this way, FSLIC argued, the combined bank could earn its way out of its weak capital position. Based on this agreement, the investor group invested $210 million.
 Only one year after the regulators entered into these explicit agreements with Western Federal, they repudiated them, citing the new standards of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), which imposed stringent capital requirements on banking institutions.
 The effects of FIRREA on Western Federal were immediate and dramatic. The lower capital standard under the FSLIC agreement was replaced by FIRREA's much more stringent capital standards. Western Federal was thus immediately put out of compliance with the new guidelines. As a direct result, Western Federal's business plan, negotiated with banking regulators, was rendered obsolete. Western Federal was thrown overnight into a workout scenario, struggling to achieve impossible capital standards.
 The deep recession in California coincided with this regulatory double-cross and has made it impossible for Western Federal to achieve the new capital standards required by federal law.
 Background on Western Federal
 Western Federal has 27 branches and provides more than 800 jobs in Southern California. Most of Western Federal's assets are single- and multifamily mortgages in Southern California. Except for depreciation in the value of its mortgage portfolio, mainly attributable to the deep recession in California, Western Federal's operations are profitable. Western Federal has earned the highest Community Reinvestment Act ratings and, unlike some banking institutions, was willing to lend in the minority neighborhoods of Los Angeles. Many of these neighborhoods, however, were affected by the riots of 1992, further weakening Western Federal's asset values.
 Robert W. MacDonald, chairman of WestFed Holdings, made the following statement:
 "Since 1989, when new legislation led regulators to repudiate the agreed-upon business plan for Western Federal, the thrift's management has struggled to manage Western Federal into compliance with the new capital guidelines. It is a pity that Western Federal's new management did not have the opportunity to complete its plans, which had led to marked improvement in operations and which we believe would have enabled Western Federal to weather the California recession.
 "WestFed deeply regrets the effect the receivership will have on Western Federal's over 800 employees and on the community served by Western Federal. Western Federal was top-rated as a bank willing to lend in the minority neighborhoods of Los Angeles, and it will no longer be available to service that market.
 "This is indeed an unnecessary tragedy for all of us associated with or served by Western Federal."
 -0- 6/4/93
 /CONTACT: Robert W. MacDonald, chairman of WestFed Holdings, 310-996-8720/


CO: WestFed Holdings; Western Federal Savings and Loan Association ST: California IN: FIN SU:

JL-LS -- LA023 -- 5681 06/04/93 19:21 EDT
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Date:Jun 4, 1993
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