EXHIBIT 99.1
NEWS GOLDEN STATE BANCORP
FOR INFORMATION CONTACT: Ken Preston (818) 409-4550
Jeff Misakian (818) 500-2824
FOR IMMEDIATE RELEASE
GOLDEN STATE BANCORP TO ACQUIRE REDFED BANCORP
--Acquisition to be immediately accretive to earnings--
--Glendale Federal to have significant presence in Inland Empire--
GLENDALE, CA, December 1, 1997 - Golden State Bancorp Inc. (NYSE:GSB), parent
company of Glendale Federal Bank, and RedFed Bancorp Inc. (NASDAQ:REDF), parent
company of Redlands Federal Bank, today announced the signing of a definitive
agreement for Golden State to acquire RedFed. The acquisition is expected to be
immediately accretive to Golden State's earnings, while also expanding its
franchise in the Inland Empire.
Golden State will issue $20.75 of its common stock for each RedFed common
share, representing a total transaction value of approximately $158 million, or
1.96 times RedFed's book value at September 30, 1997. The transaction will be a
tax-free exchange with the exact number of shares to be distributed to RedFed
stockholders to be determined based on Golden State's average closing stock
price for the ten trading days prior to the second business day before the close
of the transaction. The agreement is subject to regulatory and RedFed
stockholder approval.
The transaction will be accounted for as a purchase. Golden State Bancorp
will purchase its common shares in the open market in an amount equal to the
amount that will be issued in the transaction. The acquisition is expected to
close in the second calendar quarter of 1998. At that time, Redlands Federal
Bank will be merged into Glendale Federal Bank.
Stephen J. Trafton, chairman and chief executive officer of Golden State
Bancorp, stated: "The acquisition of RedFed enhances stockholder value in
several ways. It expands Glendale Federal's franchise in the Inland Empire
region of Southern California where we are currently under-represented and will
increase our deposit base by 7.7 percent, with estimated cost savings of 40
percent of RedFed's operating expense base. It will also be immediately
accretive to reported and cash earnings by approximately 1.8 percent and 4.8
precent, respectively, for the fiscal year ended June 30, 1999. In addition,
the transaction will be significantly accretive to our operating and cash
returns on equity, while also accelerating the achievement of our financial
objectives. We estimate that our operating return on average equity will
increase by more than
-more-
-2-
50 basis points, on a pro forma basis and including the impact of our pending
acquisition of CENFED Financial Corp., while cash return on equity is estimated
to increase by 200 basis points. The transaction also results in modest
improvements in Glendale Federal's efficiency ratio, the ratio of fee income to
expenses and the interest rate spread."
Trafton explained that Redlands Federal is an ideal strategic fit for
Glendale Federal in that it has pursued a similar community banking strategy.
For example, Redlands Federal has 12 percent of its deposits in checking
accounts and 36 percent in total transaction accounts, including checking, money
market and savings accounts. These low-cost deposits have helped Redlands
Federal increase its net interest margin to 3.30 percent, well above the average
of California's larger savings and loans.
On a pro forma basis as of September 30, 1997, including the impact of both
the CENFED Financial Corp. acquisition scheduled to close in early 1998 and
RedFed, Golden State Bancorp would have consolidated assets of $19.6 billion,
total deposits of $11.7 billion and 211 banking offices. Redlands Federal Bank
has 14 offices in Riverside and San Bernardino counties.
"Redlands Federal offers Glendale Federal an important opportunity to
significantly expand its presence in the growing Inland Empire and make it one
of the top five banks serving that area. Because Redlands Federal's offices
represent new markets, Glendale Federal does not anticipate closing any Redlands
Federal offices," Trafton said. "This is an area of Southern California that is
very conducive to business and consumer product growth. We will be able to
leverage our growing business and consumer banking lines in the Inland Empire by
offering a wider range of products to Redlands Federal Bank customers. In
addition, Redlands Federal customers will benefit from our larger and rapidly
growing proprietary ATM network."
"We are pleased with the proposed merger with Glendale Federal," said Anne
Bacon, president and chief executive officer of RedFed. "It provides an
excellent return to our stockholders. In addition, by joining RedFed's strong
presence in the Inland Empire to Glendale Federal's statewide presence, we can
provide our customers with a much larger range of products and services than we
could if we were to remain independent."
Trafton noted Glendale Federal will continue to operate in all markets
served by Redlands Federal. "Through our acquisitions, we have been able to
enhance the array of products and services provided to all areas served and to
determine ways to expand those services," Trafton said. "This includes ensuring
that banking services continue to be provided in the low- and moderate-
- more -
income and minority communities served by Redlands Federal. Our ultimate goal is
to have a stronger presence in the area than before the two banks combined."
Given the importance of the Inland Empire as an emerging growth area for
California, Trafton said Glendale Federal will also look to open offices in new
locations there in the future.
In October 1997, Golden State announced plans to distribute Litigation
Tracking Warrants(TM) (LTW(TM)) to its security holders representing the right
to receive, upon exercise of the LTW(TM)s, Golden State common stock equal in
value to 85 percent of the net after-tax proceeds, if any, from Glendale
Federal's pending goodwill lawsuit against the United States Government. On
November 20, 1997, Golden State proposed a $1.5 billion settlement of the
goodwill litigation. Regardless of the closing date of the RedFed transaction,
the transaction is not expected to have a material impact on the number of
LTW(TM)s distributed, given Golden State Bancorp's intention to purchase an
equivalent number of shares to be issued to RedFed stockholders.
Golden State Bancorp, with $16.4 billion in assets, is the parent company
of Glendale Federal Bank - California's leading community bank, serving the
business and consumer banking needs of Californians through 179 banking offices
and 26 loan offices. Customers can reach the bank by calling 1-800-41FEDUP, or
get information through its Internet site at HTTP://WWW.GLENFED.COM.
###
This news release contains estimates of future financial condition, and certain
future earnings results, for Golden State Bancorp Inc. and RedFed Bancorp Inc.
on a pro forma combined basis, as well as statements regarding the expected
structure and impact of the proposed Merger. These estimates and statements
constitute forward-looking statements (within the meaning of the Private
Securities Litigation Reform Act of 1995), which involve significant risks and
uncertainties. Actual results may differ materially from the results discussed
in these forward-looking statements. Factors that might cause such a difference
include, but are not limited to: (1) expected cost savings from the Merger
cannot be fully realized or realized within the expected time frame; (2)
revenues following the Merger are lower than expected; (3) competitive pressures
among depository institutions increase significantly; (4) costs or difficulties
related to the integration of the business of Golden State and RedFed are
greater than expected; (5) changes in the interest rate environment reduce
interest margins; (6) general economic and credit conditions, either nationally
or in the region in which the combined company will be doing business, are less
favorable than expected; (7) legislative or regulatory changes adversely affect
the business in which the combined company would be engaged; and (8) the outcome
of Glendale Federal's "goodwill" litigation against the United States.