Glenfed Open to Possible Merger Bids
Glenfed Inc., the struggling parent of the nation’s fourth-largest thrift, is looking at merger possibilities but is not currently in talks with any potential partners, according to Glenfed Chairman Norman M. Coulson.
“As far as mergers, acquisitions, all these kinds of things, we are spending an inordinate amount of time looking at opportunities,” he told stockholders at the company’s annual meeting last week.
Noting the wave of merger proposals in the banking industry, such as the one between giants BankAmerica Corp. and Security Pacific Corp., Coulson said “there’s no question that consolidation in the financial services business is essential” to maximizing earnings.
But Coulson said Glenfed, which runs Glendale Federal Bank, must first bolster its capital base before it seriously entertains any merger plans. Capital is that financial cushion a thrift must keep on hand against future losses.
“The question continues to be the amount of capital that is available to make those kinds of things happen,” he said.
Hurt by problem loans and restructuring costs, Glenfed lost $232 million in its fiscal year that ended June 30, but bounced back with a profit of $17.1 million in its fiscal first quarter that ended Sept. 30. Coulson said he’s comfortable with analysts’ estimates that Glenfed will earn between $51 million and $85.5 million for all of fiscal 1992.
Coulson also said Glenfed’s board is re-evaluating the company’s practice of signing employment contracts with key executives in light of the controversy surrounding the departure in June of Keith P. Russell Jr. as Glenfed’s president.
When Russell left, Glenfed paid him his salary for the remaining 30 months of his contract, which amounted to $994,276. At Glenfed’s annual meeting, several stockholders complained about the payment being made just as Glenfed was suffering its huge fiscal 1991 loss.
Russell, who spearheaded Glenfed’s diversification efforts in the 1980s, quit “by mutual agreement” with the board after Glenfed decided to again focus only on making single-family mortgage loans, Coulson said. “We ran out of things for him to do,” Coulson said of Russell.
Glenfed’s new No. 2 executive under Coulson is Stephen J. Trafton, who is vice chairman of Glenfed and chief financial officer of both Glenfed and Glendale Federal Bank.
After the annual meeting, Glenfed said Trafton, 45, has also been named president and chief operating officer of Glendale Federal Bank.
