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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) June 23, 1995
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UnionFed Financial Corporation
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(Exact Name of Registrant as Specified in Charter)
DELAWARE 1-9594 95-4074126
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State or Other Jurisdiction Commission IRS Employer
of Incorporation File Number Identification No.
330 EAST LAMBERT ROAD, BREA, CALIFORNIA 92621
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (714) 255-8100
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N/A
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(Former Name or Former Address, if Changed Since Last Report)
Total of sequentially numbered pages: .
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The Exhibit Index for this Form 8-K is located at sequentially numbered page
.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
GLENDALE FEDERAL TRANSACTION
On June 23, 1995, Union Federal Bank ("Bank"), a federal savings
bank and wholly-owned subsidiary of UnionFed Financial Corporation, a
Delaware corporation ("Registrant") completed its previously announced sale
of 13 retail banking offices and approximately $820 million of related
deposit liabilities to Glendale Federal Bank, Federal Savings Bank ("Glendale
Federal") pursuant to an Asset Purchase and Liability Assumption Agreement
dated May 20, 1995, as amended by Amendment No. 1 dated June 23, 1995,
(collectively the "Purchase Agreement"). At the closing of the transaction,
the Bank transferred cash and other assets, principally single family and
non-classified commercial multi-family real estate loans valued at the Bank's
book value, to Glendale Federal in an amount necessary to offset the deposit
and other liabilities assumed by Glendale Federal.
In connection with the transaction, the Bank received $6.9 million
and a right to receive a contingent payment based upon the actual performance
of certain multi-family, commercial and industrial real estate loans
("Contingent Portfolio") transferred to Glendale Federal to the extent that
such loans are repaid or otherwise finally resolved by June 30, 1998
("Resolved Loans"). The amount of such contingent payment, if any, will equal
50% of the amount by which the aggregate net proceeds collected by Glendale
Federal on Resolved Loans exceed the agreed-upon aggregate base amount assigned
to such loans as of the closing date after taking into account interim costs or
recoveries as provided in the Purchase Agreement. At March 31, 1995, loans in
the Contingent Portfolio had an aggregate unpaid principal balance of $187
million and a net book value of $185 million. The Contingent Portfolio has an
agreed upon aggregate base amount of $174 million as of March 31, 1995. Under
the Purchase Agreement, Glendale Federal is entitled to treat the Contingent
Portfolio as its sole property and is free to determine whether to hold, sell,
foreclose upon or otherwise deal with loans in the Contingent Portfolio without
regard to the impact, if any, of such action on the contingent payment. The
Bank will not be entitled to any contingent payment based upon Contingent
Portfolio loans paid or otherwise finally resolved after June 30, 1998. There
are no assurances as to whether the Bank will receive any contingent payment, or
if it does, the amount of such contingent payment.
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CLASSIFIED ASSET SALES
In connection with the Glendale Federal transaction, the Bank
also completed the sale of approximately $111 million in net book value of its
classified commercial, industrial and multi-family loan and real estate
portfolio, principally to "bulk sale" institutional buyers, for cash proceeds
of $92 million, including $3.6 million escrowed for potential representation
and warranty breaches.
RESULTING BANK
The Bank retained approximately $37 million in assets following
the closing of the Glendale Federal and classified asset sales transactions
and will continue its business through its downtown Los Angeles retail banking
office, which presently has approximately $34 million in deposits. The Bank
had an unaudited net worth of approximately $2.0 million as of June 30, 1995.
As of that date it was "under capitalized" for federal regulatory purposes,
with core capital in excess of 5% and risk-based capital of approximately 7.9%.
Its principal assets include approximately $27 million in book value of
classified loan and real estate assets, including two commercial real estate
owned (REO) properties in Key West, Florida and Los Angeles, California, and
cash, including escrowed funds.
The potential sources for generating a future return for the
Registrant's stockholders primarily consists of the gain, if any, realized
upon the disposition of the classified assets retained by the Bank, the
contingent consideration, if any, to be received from Glendale Federal in
three years and any consideration received from any sale of the Bank's
remaining business operations. There will be no distribution to the Registrant's
stockholders following the Glendale Federal closing as the remaining cash will
be required for the Bank's ongoing operations. There can be no assurance that
the Registrant will be able to generate sufficient resources to provide any
future return to stockholders. In addition, the Bank's operations and future
prospects as a federally-chartered thrift will continue to be subject to
regulatory attitudes and actions, including those of the OTS and Federal
Deposit Insurance Corporation, within applicable legal constraints.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
Not Applicable
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(b) Pro Forma Financial Information.
The following unaudited pro forma condensed consolidated statements
of financial condition as of March 31, 1995 and the unaudited pro forma
condensed consolidated statements of operations of UnionFed Financial
Corporation and its subsidiaries for the year ended June 30, 1994 and the nine
months ended March 31, 1995 have been prepared to illustrate the effect of the
Glendale Federal transaction and the classified asset sales as though these
transactions had occurred on July 1, 1993, in the pro forma statements of
operations. The pro forma adjustments on which they are based are described in
the accompanying Notes to UnionFed Financial Corporation Unaudited Pro Forma
Condensed Consolidated Financial Statements.
The UnionFed Financial Corporation unaudited pro forma condensed
consolidated financial statements are presented for illustrative purposes only
and are not necessarily indicative of the consolidated financial position or
consolidated results of operations of UnionFed Financial Corporation that would
have been reported had the Glendale Federal transaction and the classified asset
sales occurred on the dates indicated, nor do they represent a forecast of the
consolidated financial position of UnionFed Financial Corporation at any future
date or the consolidated results of operations of UnionFed Financial Corporation
for any future period.
UNIONFED FINANCIAL CORPORATION AND SUBSIDIARIES
UNAUDITED PRO-FORMA CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands except share and per share amounts)
<TABLE>
<CAPTION>
March 31, March 31,
1995 1995
Actual Debits Credits Pro-forma
--------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Assets
Cash and cash equivalents $ 46,759 B,C,D $306,309 A $ 347,800 $ 5,268
Investment securities, net 55,571 -- A,C 53,072 2,499
Mortgage backed securities, net 179,129 -- A,C 179,129 --
Loans receivable, net of allowance for losses
of $500 at 3/31/95 527,757 -- A,C,D 525,513 2,244
Interest receivable 5,824 -- A,C,D 5,733 91
Real estate, net 31,259 D 906 A,B 7,214 24,951
Investment in Federal Home Loan Bank stock,
at cost 5,619 D 61 A 5,580 100
Premises and equipment, net 16,726 -- A,D 16,383 343
Other assets 7,740 D 13 A 5,998 1,755
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$876,384 $307,289 $1,146,422 $ 37,251
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--------- -------- ---------- ---------
Liabilities and Stockholders' Equity
Liabilities
Savings deposits 852,126 A,D 817,956 -- 34,170
Other borrowings 1,643 A,D 1,643 -- --
Accounts payable and accrued liabilities 2,504 A 7,643 D 5,733 594
Deferred income taxes 591 D 200 -- 391
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Total liabilities 856,864 827,442 5,733 35,155
Stockholders' equity
Preferred stock-par value $.01 per share;
authorized 1,000,000 shares, issued and
outstanding, none -- -- -- --
Common stock-par value $.01 per share;
authorized 60,000,000 shares, issued
and outstanding, 27,201,993 shares 272 -- -- 272
Additional paid-in capital 107,943 -- -- 107,943
Accumulated deficit (88,695) B,D 22,336 A,C 4,912 (106,119)
--------- -------- ---------- ---------
Total stockholders' equity 19,520 22,336 4,912 2,096
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$876,384 $849,778 $ 10,645 $ 37,251
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--------- -------- ---------- ---------
</TABLE>
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UNIONFED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO-FORMA CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands)
<TABLE>
<CAPTION>
DEBITS CREDITS
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<S> <C> <C> <C>
A. Savings deposits $812,805
Other borrowings 1,531
Accounts payable and accrued liabilities 7,643
Loans receivable, net $398,411
Real estate, net 3,217
Investment securities, net 13,974
Mortgage backed securities, net 23,800
Premises and equipment, net 15,963
Cash and cash equivalents 347,800
Investment in Federal Home Loan Bank stock 5,580
Other assets 5,998
Accrued interest receivable 2,711
Accumulated deficit (Gain on sale of branches) 4,525
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$821,979 $821,979
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To record the Pro-Forma "Asset Purchase and Liability Assumption Agreement," between
Glendale Federal Bank and Union Federal Bank.
B. Cash and cash equivalents 92,878
Accumulated deficit (Loss on Bulk Sale of Loans and Real Estate 18,254
Loans receivable, net 107,135
Real estate, net 3,997
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$111,132 $111,132
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To record the Pro-Forma Bulk Sale of Loans and Real Estate.
C. Cash and cash equivalents 195,814
Accumulated deficit (Gain on sale of Securities Portfolios) 387
Investment securities, net 39,098
Mortgage backed securities, net 155,329
Accrued interest receivable 1,000
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$195,814 $195,814
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To record the Pro-forma sale of the Investment Securities and Mortgage Backed
Securities Portfolios.
D. Cash and cash equivalents 17,617
Real estate, net 906
Savings deposits 5,151
Other borrowings 112
Investment in Federal Home Loan Bank stock 61
Other assets 13
Accumulated deficit 4,082
Deferred income taxes 200
Loans receivable, net 19,967
Accounts payable and accrued liabilities 5,733
Accrued interest receivable 2,022
Premises and equipment, net 420
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$ 28,142 $ 28,142
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To record the Pro-Forma activity for discontinued operations.
</TABLE>
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UNIONFED FINANCIAL CORPORATION AND SUBSIDIARIES
UNAUDITED PRO-FORMA CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
<TABLE>
<CAPTION>
Nine Months Nine Months Twelve Months Twelve Months
Ended Ended Ended Ended
March 31, 1995 March 31, 1995 June 30, 1994 June 30, 1994
(actual) Debits Credits (Pro-forma) (actual) Debits Credits (Pro-forma)
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest on loans $ 31,766 $31,559 -- $ 207 $ 53,104 $52,202 -- $ 902
Interest on
mortgage-backed
securities 9,092 9,092 -- -- 6,093 6,093 -- --
Interest and
dividends on
investments 3,806 3,806 -- -- 4,937 4,937 -- --
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Total interest
income 44,664 44,457 -- 207 64,134 63,232 -- 902
Interest on savings
deposits 26,003 -- 25,316 687 32,586 -- 31,676 910
Interest on
borrowings 717 -- 667 50 3,711 -- 3,711 --
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Total interest
expense 26,720 -- 25,983 737 36,297 -- 35,387 910
Net interest income
before provision
for estimated loan
losses 17,944 44,457 (25,983) (530) 27,837 63,232 (35,387) (8)
Provision for loan
losses 13,639 -- 13,639 -- 14,350 -- 13,661 689
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Net interest income
after provision
for estimated loan
losses 4,305 44,457 (39,622) (530) 13,487 63,232 (49,048) (697)
Non-interest income:
Gain/(loss) on sale
of loans and loan
servicing 445 445 -- -- 919 919 -- --
(1,158) -- 1,158
Gain/(loss) on sale
of mortgage-backed
securities and
investment securities (70) -- 70 -- -- -- -- --
Loan servicing fees, net 634 634 -- -- 893 893 -- --
Loan fees 262 262 -- -- 832 832 -- --
Gain on sale of
branches -- -- -- -- 1,496 1,496 -- --
Other, net 2,228 2,201 -- 27 2,488 2,448 -- 40
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Total non-interest
income 3,499 3,542 70 27 5,470 6,588 1,158 40
Non-interest expense:
Compensation and
related expense 7,682 -- 7,594 88 12,160 -- 12,064 96
Premises and
occupancy 3,292 -- 2,994 298 4,251 -- 3,930 321
SAIF insurance
premium 1,902 -- 1,848 54 2,918 -- 2,840 78
Other general and
administrative
expense 6,345 -- 5,896 450 9,677 -- 9,077 600
-------------- -------- --------- -------------- ------------- -------- --------- --------------
Total general and
administrative
expense 19,221 -- 18,331 890 29,006 -- 27,911 1,095
Real estate
operations, net 5,195 -- 1,286 3,909 15,743 -- 10,506 5,237
Core deposit
intangible
amortization 648 -- 603 45 662 -- 614 48
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Total
non-interest
expense 25,064 -- 20,220 4,844 45,411 -- 39,031 6,380
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Loss before income
taxes (17,260) 47,999 (59,772) (5,347) (26,454) 69,820 (86,921) (7,037)
Income tax expense
(benefit) (2,096) 2,096 -- -- 3 -- 3 --
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Net loss $(15,164) $45,903 $(59,772) $(5,347) $(26,457) $69,820 $(86,924) $(7,037)
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</TABLE>
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(c) Exhibits.
EXHIBIT DESCRIPTION
2.1 Asset Purchase and Liability Assumption Agreement dated May 20, 1995
between Glendale Federal Bank, Federal Savings Bank and Union
Federal Bank, a federal savings Bank (1) (2)
2.2 Amendment No. 1 dated June 23, 1995 to Asset Purchase and Liability
Assumption Agreement dated May 20, 1995 between Glendale Federal
Bank, Federal Savings Bank and Union Federal Bank, a federal
savings Bank
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(1) Incorporated by reference to Exhibit No. 2.1 of the Registrant's Current
Report on Form 8-K filed with the Securities and Exchange Commission on
June 2, 1995 (Commission File No. 1-9594)
(2) Exhibit 2.1 contains a listing of the schedules to the exhibit document.
Registrant agrees to furnish supplementally a copy of any omitted schedules to
the Securities and Exchange Commission upon request.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UnionFed Financial Corporation
Date: July 21, 1995 By: /s/ Ronald M. Griffith
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Ronald M. Griffith,
Senior Vice President, General Counsel,
and Secretary
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EXHIBIT INDEX
Exhibit Sequentially
Number Description Numbered Page
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2.1 Asset Purchase and Liability Assumption
Agreement dated May 20, 1995 between Glendale
Federal Bank, Federal Savings Bank and Union
Federal Bank, a federal savings Bank (1) (2)
2.2 Amendment No. 1 dated June 23, 1995 to Asset
Purchase and Liability Assumption Agreement
dated May 20, 1995 between Glendale Federal Bank,
Federal Savings Bank and Union Federal Bank, a
federal savings Bank
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(1) Incorporated by reference to Exhibit No. 2.1 of the Registrant's Current
Report on Form 8-K filed with the Securities and Exchange Commission on
June 2, 1995 (Commission File No. 1-9594)
(2) Exhibit 2.1 contains a listing of the schedules to the exhibit document.
Registrant agrees to furnish supplementally a copy of any omitted schedules
to the Securities and Exchange Commission upon request.
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AMENDMENT NO. 1 TO ASSET PURCHASE AND
LIABILITY ASSUMPTION AGREEMENT
THIS AMENDMENT No. 1 (the "AMENDMENT") is entered into as of June 23,
1995 between GLENDALE FEDERAL BANK, FEDERAL SAVINGS BANK ("BUYER") and UNION
FEDERAL BANK, a federal savings bank ("SELLER") in order to amend as set forth
herein that certain Asset Purchase and Liability Assumption Agreement, dated as
of May 20, 1995 (the "AGREEMENT"), between the same parties. Unless otherwise
indicated, the capitalized terms used in this Amendment have the meanings given
such terms in the Agreement.
WHEREAS, the parties hereto agree and acknowledge that due to the
present financial condition of Seller the amendments described herein are
required and the Alternative Bank Transaction shall be the basis for
consummation of the transactions contemplated by the Agreement and June 23, 1995
shall be the Closing Date.
THEREFORE, the parties hereto agree as follows:
1. The last sentence of the first paragraph of Section 2.4 of the
Agreement is hereby deleted in its entirety.
2. Subsection 2.5(ii) is hereby deleted in its entirety and shall be
replaced with the following:
"The Purchase Price payable by Buyer shall be adjusted by (x)
deducting therefrom the amount by which the Deposits specified in
SECTION 8.1(e) transferred at Closing to Buyer are less than the
amount of the Deposits listed and described in SCHEDULE 2.2(a)
multiplied by .047 and (y) adding $350,000 to the amount determined in
accordance with clause (x);"
3. Notwithstanding the provisions of Section 10.1 of the Agreement to the
contrary, no portion of the Purchase Price shall be retained by Buyer, Section
10.1 is hereby deleted in its entirety, and any references in the Agreement to
defined terms that include the term "Holdback" are hereby deleted.
4. The phrase "Other than post-closing adjustments payable to Buyer that
are paid by means of a reduction of the Purchase Price Holdback," contained in
lines 1 and 2 of Subsection 10.2(c) of the Agreement is hereby deleted in its
entirety.
5. The first sentence of Subsection 10.2(a) is hereby deleted in its
entirety and shall be replaced with the following:
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"GENERAL. The parties hereto acknowledge that certain amounts
referred to herein may not be finally determinable until after the
Closing as a result of the processing of checks and other transactions
on or shortly before the Closing Date, other activity occurring in the
operation of the Facilities or other reasons. Such amounts shall
include any unpaid sales tax liability (as reported by the California
State Board of Equalization in the Sales Tax Certificate to be
obtained by Buyer as provided in SECTION 7.10 hereof) of Seller with
respect to any sale or other transfer occurring on or before the
Closing Date, recording and documentary transfer taxes, sales taxes
and any other fees, charges and assessments described in SECTION 12.5
hereof, and any other amounts payable hereunder after the Closing by
either Buyer or Seller which are not otherwise paid by such party."
6. Except as otherwise set forth above, the terms and provisions of the
Agreement will continue in full force and effect.
IN WITNESS WHEREOF the parties hereto have caused this Amendment to be
executed as of the date first above written.
UNION FEDERAL BANK, A FEDERAL
SAVINGS BANK
By: /s/ David S. Engelman
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Its: CHAIRMAN/CEO
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GLENDALE FEDERAL BANK,
FEDERAL SAVINGS BANK
By: /s/ Richard A. Fink
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Its: SENIOR EXECUTIVE VICE PRESIDENT
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THE UNDERSIGNED HEREBY CONSENTS TO THE FOREGOING AMENDMENT NO. 1 TO THE
AGREEMENT.
UNIONFED FINANCIAL CORPORATION
By: /s/ David S. Engelman
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Its: CHAIRMAN/CEO
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