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COMMERCIAL FEDERAL CORPORATION
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[Commercial Federal Corporation Letterhead]
November 10, 1995
"We stand on our record!"
Dear Fellow Stockholder:
As your Company's Chairman and CEO, I continue to be
disappointed by CAI's criticism and distortion of the facts.
Quite frankly, we're proud to stand on our record of success.
I urge you to look at the facts.
Commercial Federal went public in 1984, issuing stock
at $8.50 per share. Only two years later, we approved a stock
split bringing per share costs down to $5.66. By fiscal 1987,
our stock price had more than tripled to over $19.00 per share.
Difficult times, however, were ahead.
In June 1989, it became obvious to us that Congress
would enact legislation negatively affecting the thrift
industry. Tough steps were required, and your Board and I acted
decisively. We took immediate action to downsize the organiza-
tion, closing 25 branches, reducing staff by 400, and
liquidating or selling all service corporations that did not
qualify under FDIC guidelines. It was painful, but necessary
for our very survival.
In August 1989, the threat became reality and the
legislation, FIRREA, passed. With the stroke of a Congres-
sional pen, Commercial Federal went from a healthy to a sick
company as we lost $204 million of previously-includable
regulatory capital. Supervisory goodwill totaling $144 million
was put on the books due to acquisitions previously encouraged
by the government and $60 million was added from a convertible,
cumulative preferred stock with a 20-year term, as opposed to
the new FIRREA guidelines of requiring regulatory capital to
include only perpetual, non-cumulative instruments.
Obviously, our decision to downsize was the right one
because we garnered a tremendous amount of support from our
regulators for a company that was, by new regulatory defini-
tions, seriously undercapitalized. Now, management's new
objective was to return to a position of strength through
improved earnings. Through sacrifice and hard work, we suc-
ceeded in 1992 when we were declared a "well capitalized com-
pany" -- the highest possible regulatory rating. The goodwill
story's not over yet -- twenty months ago we filed suit against
the federal government for the loss of the supervisory goodwill
and the damages that the "FIRREA" legislation brought on the
Company. This suit is similar to the one filed by Glendale
Federal, which was decided in Glendale's favor in the Court of
Appeals. We intend to pursue our case vigorously.
As a result of our success, in late 1992, we set new,
growth-oriented objectives. Two of our main targets were to
achieve a return on average assets of 1.0 percent and continue
expanding our valuable Midwest franchise. As of June 30, 1995,
our operating earnings equaled 85 basis points of average
assets and I am confident that we will meet the objective of
1.0 percent during the next 24 months. That achieved,
Commercial Federal will be among the top 10 percent of earners
in the industry.
During the past two and one-half years, we have
acquired five thrifts, adding 41 branches to our system and an
additional $1.4 billion to our savings base. We have an addi-
tional acquisition pending final approval which will add
another nine branches and deposits of approximately $200
million. Significantly, each one of these acquisitions were
accretive to our earnings.
In another significant improvement, since 1990 we
have increased our mortgage servicing portfolio for third par-
ties to $4.6 billion, creating approximately $26.6 million in
annual gross loan fee income. That income will increase as we
take full advantage of new technology to expand the number of
loans we can service without creating additional expense.
Commercial Federal is proud that we are operating as
one of the most efficient institutions in the country. This
trend will continue, even as we execute additional acquisitions
to further enhance our franchise. There's much more and I urge
you to read closely our annual report to understand fully the
foundation we've established for future growth.
Since the passage of FIRREA, our stock has grown in
value from $5.00 in June, 1989, to $37.00 in September, 1995,
an increase of 640%. If this is what CAI refers to as "busi-
ness as usual," then we would agree that you should vote for
the current Board of Directors of Commercial Federal. We stand
on our record and your vote will let the Board know that our
accomplishments are exactly what you would like a lot more of.
With the continuing and ongoing assistance of Merrill
Lynch, one of the world's premier investment banking firms,
your Board of Directors will continue to explore all options
for maximizing the value of your investment. We are mindful of
the changing face of our industry and we have not foreclosed
any option to achieve our goal. You can endorse the Board's
successes, protect your future interests, and let the Board
know that you expect their continued open-minded guardianship
by signing, dating and mailing your WHITE proxy card.
The CAI nominees have gone out of their way to dis-
tort the facts, provide you with misleading information and
attack our record and me personally. Are these the type of
individuals you, as stockholders, want to represent you and
your best interests? Your current Commercial Federal Board has
always had, and always will have, your best interest as its
number one priority.
Thank you for your support.
Sincerely,
/s/ William A. Fitzgerald
William A. Fitzgerald
Chairman of the Board and
Chief Executive Officer
IMPORTANT
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your Board of Directors by signing, dating and mailing today
your WHITE proxy card.
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your broker can vote your shares on your behalf and only
after receiving your specific instructions. Please call your
broker and instruct him/her to execute a WHITE proxy card on
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